Exhibit 10.2a
RETIREMENT INCOME PLAN FOR
SELECTIVE INSURANCE COMPANY OF AMERICA
Amended and Restated Effective January 1, 1997
RETIREMENT INCOME PLAN FOR
SELECTIVE INSURANCE COMPANY OF AMERICA
As Amended and Restated Effective January 1, 1997
TABLE OF CONTENTS
Article I. The Plan
1.1 The Plan 1
1.2 Applicability of the Plan 2
Article II. The Definitions
2.1 Accrued Benefit 3
2.2 Act 3
2.3 Actuarial Equivalent 3
2.4 Actuary 4
2.5 Affiliated Corporation or Affiliate 4
2.6 Annuity Starting Date 4
2.7 Approved Leave of Absence 4
2.8 Automatic Joint and Survivor Annuity 4
2.9 Average Monthly Compensation 5
2.10 Beneficiary 5
2.11 Benefit Service 5
2.12 Board of Directors 5
2.13 Break Year 5
2.14 Code 5
2.15 Committee 5
2.16 Company 6
2.17 Compensation 6
2.18 Deferred Retirement Date 8
2.19 Early Retirement Age 8
2.20 Early Retirement Date 8
2.21 Effective Date 8
2.22 Eligible Employee 8
2.23 Employee 8
2.24 Employment Commencement Date 8
2.25 Highly Compensated Employee 8
2.26 Hour of Service 9
2.27 Member 11
2.28 Normal Retirement Age 11
2.29 Normal Retirement Benefit 11
2.30 Normal Retirement Date 11
2.31 One-Year Period of Severance 11
2.32 Participating Company 11
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2.33 Plan Year 11
2.34 Prior Plan 12
2.35 Severance from Service 12
2.36 Single Life Annuity 12
2.37 Social Security Benefit 12
2.38 Termination of Employment 13
2.39 Total Disability 13
2.40 Trust Agreement 13
2.41 Trust Fund 13
2.42 Trustee 13
2.43 Vested Retirement Age 13
2.44 Vested Retirement Date 13
2.45 Vesting Service 13
2.46 Year of Eligibility Service 13
Article III. Membership and Service
3.1 Eligible Employee 14
3.2 Commencement of Membership 14
3.3 Year of Eligibility Service 14
3.4 Vesting Service 14
3.5 Benefit Service 16
3.6 Transferred Employees 18
3.7 Acquisitions 19
3.8 Duration 19
3.9 Military Service 19
Article IV. Amount and Commencement of Date of Benefits
4.1 Normal Retirement Benefits 20
4.2 Early Retirement Benefits 21
4.3 Deferred Vested Retirement Benefits 22
4.4 Disability Retirement Benefits 23
4.5 Deferred Retirement Benefit 24
4.6 Adjustment for In-Service Payments 25
4.7 Notification and Special Rules for Permanent Withholding
of Benefits 25
Article V. Alternative Forms of Payment
5.1 Automatic Joint and Surviving Spouse Annuity 27
5.2 Other Optional Forms of Payment 30
5.3 Restrictions on Distributions 32
5.4 Payment of Small Amounts 35
5.5 Distribution of Annuity Contract 35
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Article VI. Death Benefits
6.1 Automatic Preretirement Surviving Spouse Benefits 36
6.2 Amount 36
6.3 Commencement and Duration 36
6.4 Lump Sum Distribution 37
Article VII. Administration
7.1 Committee 38
7.2 Compensation and Expenses 38
7.3 Manner of Action 38
7.4 Chairman, Secretary, an Employment of Specialists 38
7.5 Records 38
7.6 Administration 38
7.7 Application for Benefits 39
7.8 Appeals from Denial of Claims 39
7.9 No Enlargement of Employee Rights 39
7.10 Expenses of Administration 40
7.11 Facility of Distribution 40
7.12 Indemnity 40
7.13 Non-Alienation 40
Article VIII. Financing
8.1 Financing 41
8.2 Contributions 41
8.3 Non-Reversion 41
Article IX. Amendment and Termination
9.1 Amendments to Conform with Law 42
9.2 Other Amendments and Termination 42
9.3 Form of Amendment 42
9.4 Limitations on Amendments 42
9.5 Distribution on Termination 42
9.6 Merger of Consolidation or Transfer 44
Article X. Restrictions on Benefits
10.1 Restrictions on Benefits 45
Article XI. Applicable Law
11.1 Applicable Law 46
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Article XII. Top-Heavy Provisions
12.1 General Rule 47
12.2 When Plan is Top-Heavy 47
12.3 When Plan is in Top-Heavy Group 47
12.4 Minimum Benefit 48
12.5 Accelerated Vesting 48
12.6 Limitation on Compensation 49
12.7 Adjustment in Maximum Benefit Limitation 49
12.8 Definitions 49
12.9 Modification of Top-Heavy Rules 50
Article XIII. Leased Employees
13.1 Treatment of Leased Employees Under the Plan 52
13.2 Service Not Counted 52
13.3 Definitions 52
13.4 Construction 53
Article XIV. Qualified Domestic Relations Orders
14.1 Establishment of Procedures 54
14.2 Procedures for Period During Which the Qualified Status
of an Order is Being Determined 54
14.3 Definitions 55
14.4 Actuarial Assumptions 55
Article XV. Maximum Benefit Limitations
15.1 General Rule 56
15.2 Limitation for Member Also Covered Under Defined
Contribution Plan 57
15.3 Adjustment for Other Forms of Payment 57
15.4 Adjustment for Benefits Commencing Before Social
Security Retirement Age 58
15.5 Adjustment for Benefits Commencing After Social Security
Retirement Age 58
15.6 Adjustment of Limitation for Years of Service 58
15.7 Preservation of Benefits Accrued 59
15.8 Limitation Year 59
15.9 Definitions 59
15.10 Plan Provisions Subject to Section 415 of the Code 62
Appendix A Prior Plan Benefits A1 - A36
Appendix B Participating Companies B1
Appendix C Cost of Living Adjustment C1
Appendix D Special Early Retirement Benefits D1
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RETIREMENT INCOME PLAN FOR
SELECTIVE INSURANCE COMPANY OF AMERICA
Amended and Restated Effective January 1, 1997
Article I. The Plan
1.1. The Plan. SELECTIVE INSURANCE COMPANY OF AMERICA established a
defined benefit plan for the benefit of its Eligible Employees effective as of
January 1, 1986 known as the RETIREMENT INCOME PLAN FOR EMPLOYEES OF SELECTIVE
INSURANCE COMPANY OF AMERICA AND SUBSIDIARIES (the "1986 Plan"). The 1986 Plan
conformed in all respects with the requirements of the Tax Equity and Fiscal
Responsibility Act of 1982, the Deficit Reduction Act of 1984, and the
Retirement Equity Act of 1984.
The 1986 Plan was amended to freeze all Members' benefit accruals as of December
31, 1988, until the Company could determine whether the Plan could satisfy the
nondiscrimination requirements of Code sections 410(b) and 401(a)(4). The
cessation of benefit accruals was accomplished by the adoption of Model
Amendment III, as issued by the Internal Revenue Service in Notice 88-131. The
cessation of benefit accruals, pursuant to Model Amendment III, was later
revoked pursuant to a resolution of the Board of Directors. The Company
simultaneously adopted Model Amendment IID, however, freezing the benefits of
all "super highly compensated Employees" of the Company as of December 31, 1988.
Model Amendment IID was subsequently revoked by a Board of Directors resolution.
The revocation of Model Amendment IID was effectuated only after the Company had
established that the 1986 Plan benefit formula had satisfied the
nondiscrimination requirements of Code sections 410(b) and 401(a)(4) for the
1989, 1990, and 1991 Plan Years.
The 1986 Plan was subsequently amended and restated, effective as of January 1,
1987, to conform to the requirements of the Tax Reform Act of 1986, the Omnibus
Budget Reconciliation Act of 1986, the Technical and Miscellaneous Revenue Act
of 1988, and other recent law and design changes. In addition, effective January
1, 1993, the 1986 Plan was renamed "THE RETIREMENT INCOME PLAN FOR SELECTIVE
INSURANCE COMPANY OF AMERICA" (the "Plan"). Subsequent to its January 1, 1987
restatement, the Plan was amended (1) to reflect changes in law implemented by
the Unemployment Compensation Amendments Act of 1992, the Omnibus Budget
Reconciliation Act of 1993, and various other changes requested by the Internal
Revenue Service in connection with the issuance of a favorable determination
letter; (2) to incorporate changes in the method by which lump sum present
values are calculated consistent with the Retirement Protection Act of 1994; (3)
to reflect a cost-of-living increase in the monthly retirement benefits provided
to Members; and (4) to increase the lump sum cashout threshold in accordance
with the Taxpayer Relief Act of 1997.
The Plan is hereby restated effective as of January 1, 1997, to incorporate the
aforementioned amendments and to reflect changes in law implemented by the
Uniformed Services Employment and Reemployment Rights Act of 1994, the
provisions of the Retirement Protection Act applicable to limits on benefits
under Section 415 of the Code, the Small Business Job Protection
Act of 1996, the Internal Revenue Service Restructuring and Reform Act of 1998
and the Community Renewal Tax Relief Act of 2000.
In addtion, the Plan is amended effective January 1, 2002 to reflect certain
provisions of the Economic Growth and Tax Relief Reconciliation Act of
2001("EGTRRA"). This amendment is intended as good faith compliance with the
requirements of EGTRRA and is to be construed in accordance with EGTRRA and
guidance issued thereunder. This amendment shall supersede the provisions of the
Plan to the extent those provisions are inconsistent with the provisions of this
amendment.
1.2. Applicability of the Plan. Except as otherwise provided in the text
of the Plan, the provisions of this restatement are applicable only to Employees
in the employ of the Company or an Affiliate on or after January 1, 1997. As
restated, the Plan preserves all rights accrued and not forfeited by Members
under January 1, 1987 restatement.
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Article II. Definitions
Whenever used in the Plan, the following terms shall have the respective
meanings set forth below unless otherwise expressly provided herein. Except when
otherwise indicated by the context, any masculine terminology herein shall also
include the feminine, and the definition of any term herein in the singular
shall also include the plural.
2.1. "Accrued Benefit" shall mean, as of any given date, the monthly
amount of retirement income which would be payable under subsection 4.1, in the
form of a Single Life Annuity commencing on the Member's Normal Retirement Date
(or date of Termination of Employment, if later), based on the Member's Benefit
Service, the Member's Average Monthly Compensation, and Social Security Benefit
as of the date of calculation.
2.2. "Act" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
2.3. "Actuarial Equivalent" shall mean a form of benefit differing in
time, period, or number of payments from a specific benefit provided under the
Plan, but having the same value when computed using mortality and interest rate
assumptions consistent with generally accepted actuarial principles applied on a
consistent basis. These assumptions are outlined as follows:
(a) General Rule. Except as provided in subsections (b) and (c) below,
in determining the amount of a benefit payable in an optional form,
actuarial equivalence shall be based on the 1984 Unisex Pension
Mortality Table (UP-1984) set back two years for both males and
females and a 8 percent assumed rate of interest.
(b) Lump Sum Distributions.
(1) In determining the amount of a lump sum distribution under the
Plan, actuarial equivalence shall be determined on the basis
of the Applicable Mortality Table and the Applicable Interest
Rate, as defined below:
(A) The "Applicable Mortality Table" shall be the 1983 Group
Annuity Mortality table or such other mortality table as
is prescribed by the Internal Revenue Service based on
the prevailing Commissioner's standard table used to
determine reserves for group annuity contracts issued on
the date as of which present value is being determined.
(B) The "Applicable Interest Rate" for a month is the annual
interest rate on 30-year Treasury securities as
specified by the Commissioner for the second full
calendar month preceding the first day of the Plan Year
during which the Annuity Starting Date occurs rounded
down to the next lowest .25%.
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(2) Notwithstanding the foregoing, effective June 1, 1995 and
until May 31, 1996, in determining the amount of a lump sum
distribution under the Plan, actuarial equivalence shall be
determined on the basis of the assumptions below which produce
the largest benefit:
(A) the Applicable Mortality Table and the Applicable Interest
Rate; or
(B) the Applicable Mortality Table and the Applicable Interest
Rate; provided, however, that such interest rate shall instead
be determined as of the beginning of the month in which the
Annuity Starting Date occurs.
(c) In determining the adjusted maximum benefit limitations under
subsection 15.4(b) (for payments commencing before age 62) and
subsection 15.5 (for benefits commencing after Social Security
Retirement Age), actuarial equivalence shall be based on a 5 percent
assumed rate of interest and on the mortality basis outlined in (a)
above.
2.4. "Actuary" means a person (or firm of which he is a member) who is an
enrolled actuary under the Act and who is engaged by, but is independent of, the
Company.
2.5. "Affiliated Corporation or Affiliate" means any corporation, trade,
or business if it and the Company are members of a controlled group of
corporations, or under common control, or are members of an affiliated service
group (within the meaning of sections 414(b), 414(c), and 414(m) of the Internal
Revenue Code, respectively).
2.6. "Annuity Starting Date" shall mean the earlier of --
(1) the first day of the first period for which an amount is
scheduled to commence under the Plan in a benefit form
requiring periodic payments, or
(2) the date on which the Member becomes entitled to receive
nonperiodic benefits under the Plan.
2.7. "Approved Leave of Absence" shall mean any extraordinary absence
authorized by the Company, under the Company's standard personnel practices,
provided that all persons under similar circumstances must be treated alike in
the granting of such Approved Leaves of Absence and provided further that the
employee returns to employment with the Company within the period of authorized
absence. An absence due to service in the Armed Forces of the United States
shall be considered an Approved Leave of Absence, provided that the absence is
caused by war or other emergency, or provided that the Employee is required to
serve under the laws of conscription in time of peace, and further provided that
the Employee returns to employment with the Company within the period provided
by law.
2.8. "Automatic Joint and Survivor Annuity" means an annuity described in
subsection 5.1.
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2.9. "Average Monthly Compensation" shall be defined as follows:
(a) General Rule. In the case of a Member with at least 60 complete
calendar months within the last 120 complete calendar months as an
Eligible Employee receiving Compensation from the Company or an
Affiliate before his Termination of Employment, "Average Monthly
Compensation" shall mean the monthly average of a Member's
Compensation received for the period of the 60 such complete
calendar months during the last 120 calendar months immediately
preceding the Member's Termination of Employment for which the
Member's Compensation is the highest.
(b) Less Than 60 Complete Months of Compensation Within the Last 120
Complete Calendar Months. In the case of a Member with fewer than 60
complete calendar months within the last 120 complete calendar
months as an Employee receiving Compensation from the Company or an
Affiliate preceding his Termination of Employment, "Average Monthly
Compensation" shall mean the monthly average of a Member's
Compensation based upon the average of all consecutive full calendar
months an Employee receiving Compensation from the Company or an
Affiliate prior to his Termination of Employment.
Notwithstanding the foregoing, a Member's Accrued Benefit under the Plan shall
not be less than the Member's Accrued Benefit as of earlier of (a) the Member's
Termination of Employment, or (b) December 31, 1986, calculated using the
definition of "Average Monthly Compensation" then in effect.
2.10. "Beneficiary" means any person, persons, or entity last designated
by a Member on a form supplied by the Committee to receive benefits payable in
the event of the death of the Member. If no such designation is in effect at the
time of death of the Member, or if no person, persons, or entity so designated
shall survive the Member, the Beneficiary shall be deemed to be the Member's
surviving spouse, if any; otherwise the Beneficiary shall be the estate of the
Member.
2.11. "Benefit Service" shall have the meaning set forth in section 3.5.
2.12. "Board of Directors" means the Board of Directors of the Selective
Insurance Company of America.
2.13. "Break Year" shall mean a Plan Year in which the Employee is
credited with 500 or fewer Hours of Service.
2.14. "Code" means the Internal Revenue Code of 1986, as it may be amended
from time to time.
2.15. "Committee" means the Committee appointed under the terms of section
7.1 hereof.
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2.16. "Company" means Selective Insurance Company of America, and with the
approval of the Board, any other Affiliate which adopts the Plan for the benefit
of its employees and is designated a Participating Company hereunder.
Notwithstanding the foregoing, if the Company or its Affiliates has a
significant ownership interest in, or business relationship with, another entity
(although not sufficient to cause the other entity to be an Affiliate of the
Company), then by written resolution of the Board, and in accordance with
Proposed Treasury Regulation section 1.401(a)(4)-11(d)(3)(B) and Internal
Revenue Service Notice 92-31, such entity may be treated for certain limited
purposes as a "Participating Company" such that the employees of such entity may
be treated, for purposes of determining Years of Eligibility Service, Vesting
Service, and/or Benefit Service, as "Eligible Employees" for purposes of this
Plan.
2.17. "Compensation"
(a) General Rule. Compensation means an Employee's basic salary and
wages paid by the Company, excluding all overtime pay, bonuses,
commissions, fees, and amounts contributed by the Company under this
Plan. For limitation years beginning on and after January 1, 2001,
for purposes of applying the limitations described in Section
15.9(d) of the Plan, Compensation paid or made available during each
limitation year shall include elective amounts that are not
includible in the gross income of the Employee by reason of Code
Section 132(f).
Compensation shall be calculated on a monthly basis, subject to the
limitations described at the end of this section 2.17.
(b) Employees who Earn Less than A Year of Benefit Service In a
Computation Period. For Members who earn less than a year of Benefit
Service in any given computation period within the meaning of
section 2.26(b)(5), the annual equivalent of such Employee's basic
rate of compensation shall be used if it produces a greater amount
than paragraph (a) above, which shall be determined in the following
manner.
(1) Employees Paid On a Bi-Weekly Basis. The annual equivalent of
an Employee's basic rate of compensation shall equal the
bi-weekly basic rate of compensation multiplied by 26. The
annual equivalent determined hereunder shall be adjusted to
reflect any increases in the basic rate which are effective
during the course of any Plan Year.
(2) Employees Paid On an Hourly Basis. The annual equivalent of an
Employee's basic rate of compensation shall equal the hourly
basic rate of compensation multiplied by 1,950. The annual
equivalent determined hereunder shall be adjusted to reflect
any increases in the basic rate which are effective during the
course of any Plan Year.
Once the annual equivalent of an Employee's basic rate of
compensation is determined, such amount shall be divided by 12
to produce a monthly compensation equivalent.
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(c) Effective for Plan Years beginning after December 31, 1988, the
maximum amount of Compensation taken into account under the Plan for
any Plan Year shall be $200,000, or such other amount as is
determined by the Secretary of the Treasury to reflect a
cost-of-living adjustment under the Code section 401(a)(17).
In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the contrary,
for Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Employee taken into account under the Plan
shall not exceed the OBRA '93 Annual Compensation Limit. The OBRA
'93 Annual Compensation Limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in accordance with
Code section 401(a)(17)(B). The cost-of-living adjustment in effect
for a calendar year applies to any period, not exceeding 12 months,
over which Compensation is determined (determination period)
beginning in such calendar year. If a determination period consists
of fewer than 12 months, the OBRA '93 Annual Compensation Limit will
be multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is
12.
For Plan Years beginning on or after January 1, 1994, any reference
in this Plan to the limitation under Code section 401(a)(17) shall
mean the OBRA '93 Annual Compensation Limit set forth in this
provision.
If Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the
current Plan Year, the Compensation for that prior determination
period is subject to the OBRA '93 Annual Compensation Limit in
effect for that prior determination period. For this purpose, for
determination periods beginning before the first day of the first
Plan Year beginning on or after January 1, 1994, the OBRA '93 Annual
Compensation Limit is $150,000.
Notwithstanding the foregoing, the Annual Compensation of each
Participant taken into account in determining benefit accruals in
any Plan Year beginning after December 31, 2001, shall not exceed
$200,000, as adjusted for cost-of-living increases in accordance
with Section 401(a)(17)(B) of the Code. Annual Compensation means
compensation during the Plan Year or such other consecutive 12-month
period over which compensation is otherwise determined under the
Plan (the determination period). Furthermore, in determining benefit
accruals in Plan Years beginning before January 1, 2002, the Annual
Compensation of each Participant taken into account shall be
$150,000 for any determination period beginning in 1996 or earlier,
$160,000 for any determination period beginning in 1997, 1998 or
1999; and $170,000 for any determination period beginning in 2000 or
2001. The cost-of-living adjustment in effect for a calendar year
applies to Annual Compensation for the determination period that
begins with or within such calendar year.
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2.18. "Deferred Retirement Date" means the first day of the calendar month
next following the date a Member's employment with the Company terminates on or
after Normal Retirement Age.
2.19. "Early Retirement Age" means a Member's age when he has both
attained age 55 and completed at least ten years of Vesting Service.
2.20. "Early Retirement Date" means the first day of the calendar month
next following the date a Member's employment with the Company terminates on or
after his attainment of Early Retirement Age but before his Normal Retirement
Age.
2.21. "Effective Date" means January 1, 1986, with respect to the Plan as
originally adopted. The Effective Date of this restatement is January 1, 1997.
2.22. "Eligible Employee" means an Employee who has satisfied the
provisions of subsection 3.1.
2.23. "Employee" means any person who is actively employed by the Company
or an Affiliate. Notwithstanding the foregoing, effective as of January 1, 2001,
the term Employee shall not include (1) an Employee who does not receive
payments for services directly from the Company's United States payroll; (2)
employees of employment agencies; and (3) persons whose services are rendered
pursuant to written agreements that expressly states that the service provider
is not eligible for participation in the Plan. If an individual who is not
classified as an Employee is retroactively reclassified as an Employee, he or
she will not be eligible for benefits under the Plan for any period prior to
such reclassification, nor for periods following such reclassification, unless
otherwise specified by the Company.
2.24. "Employment Commencement Date" shall mean the date on which an
Employee first performs an Hour of Service for the Employer.
2.25. "Highly Compensated Employee" shall mean an Employee who:
(a) at any time during the Plan Year or the preceding year was a more
than 5% owner of the Company or an Affiliate (applying the
constructive ownership rules of Section 318 of the Code); or
(b) for the preceding year had Compensation in excess of $80,000 (as
adjusted by the Commissioner of Internal Revenue for the relevant
year).
The term "Highly Compensated Employee" also includes any former Employee who
separated from service (or has a deemed separation from service, as determined
under Treasury regulations) prior to the Plan Year, performs no service for the
Company or an Affiliate during the Plan Year, and was a Highly Compensated
Employee either for the separation year or any Plan Year ending on or after his
or her 55th birthday. If the former Employee's separation from service occurred
prior to January 1, 1987, he or she is a Highly Compensated Employee only if he
or she satisfied the definition of Highly Compensated Employee as then in effect
or received Compensation in excess of $50,000 during: (1) the year of his or her
separation from service (or the prior year); or (2) any year ending after his or
her 54th birthday. The Committee shall also
8
have discretion to use any other definition of "Highly Compensated Employee"
promulgated by the Secretary of Treasury.
2.26. "Hour of Service".
(a) General Rules. The words "Hour of Service" shall mean each hour for
which the Employee is directly or indirectly paid or entitled to
payment by the Company or an Affiliate --
(1) for the performance of duties,
(2) on account of a period of time during which no duties are
performed due to vacation, holiday, illness, incapacity
(including disability), layoff, Duty, or Approved Leave of
Absence, or
(3) for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Company or an Affiliate;
provided, however, that no hour shall be credited as an Hour of
Service under more than one of the preceding clauses.
(b) Applicable Computation Period.
(1) Hours of Service described in subsection 2.26(a)(1) shall be
credited to the computation period (as defined below) in which
the duties are performed.
(2) Hours of Service described in subsection 2.26(a)(2) shall be
credited to the computation period for which the Employee is
compensated.
(3) Hours of Service described in subsection 2.26(a)(3) shall be
credited to the computation period to which the award or
agreement for back pay pertains.
(4) Notwithstanding anything to the contrary in paragraph (1),
(2), or (3), in the case of Hours of Service to be credited to
the Employee in connection with a payroll period of no more
than 31 days which extends beyond the end of a computation
period, all such Hours of Service shall be credited to the
following computation period.
(5) For purposes of this section, the term "computation period"
shall mean the Plan Year, except that in determining whether
an Employee completes a Year of Eligibility Service under
section 3.3 during the 12-month period following his
commencement of employment, the term "computation period"
shall mean that 12-month period.
(c) Hours Not Counted. This subsection limits the Hours of Service
credited for periods during which no duties are performed and
applies whether or not Hours of
9
Service otherwise would have been counted for such periods under
subsection 2.26(a)(2).
(1) Unpaid Time. An hour for which an Employee is not paid, either
directly or indirectly, shall not be credited except in the case of
an Approved Leave of Absence.
(2) Worker's Compensation, Disability Insurance, Unemployment
Compensation. An hour for which an Employee is directly or
indirectly paid or entitled to payment on account of a period during
which the employee performed no duties-
(A) may be credited in the sole discretion of the Committee if
such payment is made or due under a plan maintained solely for
the purpose of complying with an applicable worker's
compensation or disability insurance law, but
(B) shall not be credited if such payment is made or due under a
plan maintained solely for the purpose of complying with an
applicable unemployment compensation law.
(3) Medical Reimbursement. Hours of Service shall not be credited for a
payment which solely reimburses the Employee for medical or
medically-related expenses incurred by the Employee.
(4) 501 Hour Limitation. Except in the case of an Approved Leave of
Absence, not more than 501 Hours of Service shall be credited under
subsection 2.26(a)(2) on account of any single period during which
the Employee performs no duties (whether or not such period occurs
in a single calendar year).
The Committee shall credit Hours of Service under this subsection (c) in
accordance with the rules of subsections (b) and (c) of Department of
Labor Reg. Section 2530.200(b)-2, which the Plan, by this reference,
specifically incorporates in full within this subsection (c).
(d) Maternity and Paternity Absence. Solely for purposes of determining
whether a Break Year has occurred, an Employee shall be credited with an
Hour of Service for each hour which would have been credited to such
Employee but for such Employee's absence from employment for maternity or
paternity reasons. An absence from work for maternity or paternity reasons
shall mean an absence
(1) by reason of the pregnancy of the Employee,
(2) by reason of the birth of a child of the Employee,
(3) by reason of the placement of a child with the Employee in
connection with the adoption of such child by such Employee, or
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(4) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
No more than 501 Hours of Service shall be credited under this subsection
for any such absence. Hours of Service under this subsection shall be
credited in the Plan Year in which the absence from employment commences
if the crediting is necessary to prevent a Break Year or, in all other
cases, such Hours of Service shall be credited in the following Plan Year.
2.27. "Member" means any Employee who has met the eligibility requirements
to become a Member as set forth in Article III hereof. A Member shall also
include "Retired Participants," as defined under the Prior Plan (which Prior
Plan is incorporated herein by reference), solely to the extent of an amount to
supplement the benefits payable pursuant to such Prior Plan for such Retired
Participants and such increase is granted after December 31, 1985.
2.28. "Normal Retirement Age" means the later of age 65 or five years of
Vesting Service.
2.29. "Normal Retirement Benefit" means a benefit described in subsection
4.1.
2.30. "Normal Retirement Date" means the first day of the calendar month
next following the date a Member attains his Normal Retirement Age.
2.31. "One-Year Period of Severance".
(a) A One-Year Period of Severance means each 12-consecutive-month
period beginning on the date an Employee incurs a Severance from
Service and ending on each anniversary of such date, provided that
the Employee does not perform an Hour of Service for the Company or
any Affiliate during such period.
(b) Solely for purposes of determining whether a One-Year Period of
Severance has occurred, in the case of an Employee who is absent
from work beyond the first anniversary of the first date of an
absence and the absence is for maternity or paternity reasons, the
date the Employee incurs a Severance from Service shall be the
second anniversary of the Employee's absence from employment. The
period between the first and second anniversary of the first date of
absence will not constitute vesting Service. For purposes of this
subsection, an absence from work for maternity or paternity reasons
means an absence (1) by reason of pregnancy of the Employee, (2) by
reason of the birth of a child of the Employee, (3) by reason of the
placement of a child with the Employee in connection with the
adoption of such child by such Employee, or (4) for purposes of
caring for such child for a period beginning immediately following
such birth or placement.
2.32. "Participating Company" means those Affiliated Corporations set
forth in Appendix B, attached hereto.
2.33. "Plan Year" means the calendar year.
11
2.34. "Prior Plan" means the Retirement Income Plan for Employees of
Selected Risks Insurance Company and Subsidiaries effective November 1, 1960 and
terminated December 31, 1985.
2.35. "Severance from Service". A Severance from Service shall occur on
the earlier of (a) or (b) below:
(a) the date as of which the Employee ceases his employment with the
Company and all Affiliates by reason of a quit, discharge,
retirement, or his death, or
(b) the first anniversary of the first day of an Employee's absence from
employment with the Company and its Affiliates for any reason other
than in (a), above.
Notwithstanding the foregoing, an Employee who is absent on account of service
in the armed forces of the United States of America shall not incur a Severance
from Service in contravention of federal law.
2.36. "Single Life Annuity" means an annuity providing equal monthly
payments for the lifetime of a Member with no survivor benefits.
2.37. "Social Security Benefit" means the estimated monthly amount of an
Employees' Primary Insurance Amount that a Member would be entitled to receive
at age 65 under the Social Security Act in effect on the January 1 coincident
with or next preceding the earlier of Termination of Employment or age 65,
whichever is applicable, without regard to whether the Member receives such
benefit and without regard to any changes made after said January 1. For
purposes of the Plan, such estimated amount shall be determined using the
following basis to determine the Member's history of covered earnings:
(a) an average of the Member's earnings for the five complete calendar
years preceding the calendar year of Termination of Employment or
age 65, if earlier;
(b) the assumption that earnings for calendar years preceding the
calendar year of Termination of Employment (or age 65 if earlier)
would produce the average in (a) above when assumed to increase at
the same rate as the Average Per Worker Total Wages as reported by
the Social Security Administration;
(c) the Member's earnings for each year in and subsequent to the
calendar year of Termination of Employment to age 65 are equal to
earnings for the calendar year preceding Termination of Employment.
The Social Security Benefit may be estimated using a table of
amounts for varying pay ranges reflecting the foregoing assumptions.
Notwithstanding the foregoing, upon submission to the Committee by a
Member of documentation of actual earnings history for years
previously estimated, within a reasonable period of time as
determined by the Committee following the later of the Member's
Termination of Employment or the time when the Member is notified of
the benefit to which he is entitled, the Social Security Benefit
will be adjusted based on such documentation.
12
2.38. "Termination of Employment" shall mean the last date on which the
Member performs duties as an Employee of the Company or an Affiliate.
2.39. "Total Disability" means a total mental or physical inability to
perform work which entitles the Employee to a disability benefit under the
Company's Long-Term Disability Plan.
2.40. "Trust Agreement" means the agreement entered into between the
Company and the Trustee to carry out the provisions of the Plan.
2.41. "Trust Fund" means the cash and other properties arising from
contributions made by the Company in accordance with the provisions of this Plan
and held and administered by the Trustee pursuant to the Trust Agreement to
carry out the provisions of the Plan.
2.42. "Trustee" means the Trustee or Trustees by whom the funds of the
Plan are held as provided in Article VIII.
2.43. "Vested Retirement Age" means a Member's age when he has completed
five years of Vesting Service.
2.44. "Vested Retirement Date" means, for a Member whose employment with
the Company terminates after he has attained his Vested Retirement Age for
reasons other than normal or early retirement or death, the first day of any
calendar month following his fifty-fifth birthday as of which he makes
application for the vested retirement benefit to begin, but in no event later
than his Normal Retirement Age.
2.45. "Vesting Service" shall have the meaning set forth in subsection
3.4.
2.46. "Year of Eligibility Service" shall have the meaning set forth in
subsection 3.3.
13
Article III. Membership and Service
3.1. Eligible Employee. Each Employee who is employed by the Company shall
be an Eligible Employee except for the following:
(a) a leased employee within the meaning of Code section 414(n).
3.2. Commencement of Membership. Each Member who was a Member of the Plan
in effect on December 31, 1996 shall continue to be a Member of the Plan. Any
other Eligible Employee of the Company shall become a Member of the Plan on the
first day of the calendar month coincident with or next following the latest of
- --
(a) the date on which he attains age 21;
(b) the date the Employee completes one year of Eligibility Service; or
(c) the date on which he becomes an Eligible Employee.
3.3. Year of Eligibility Service.
(a) General Rule. An Employee shall be credited with a Year of
Eligibility Service for any 12-month period, during which the
Employee completes 1,000 Hours of Service, beginning on (a) the
Employee's first day of compensated work for the Company or an
Affiliate or (b) any January 1 thereafter.
(b) Special Rule for Employees of Exchange Insurance Company. Solely for
purposes of determining an Employee's Years of Eligibility Service
under this Plan, each Employee who
(1) was employed by Exchange Insurance Company on June 30, 1993,
and
(2) became an Employee of the Company on July 1, 1993, shall
receive credit under this Plan for his hours of service earned
while employed by Exchange Insurance Company prior to July 1,
1993 and such service shall be deemed to be Hours of Service
performed for the Company under section 3.3(a) above.
3.4. Vesting Service.
(a) Plan Years Commencing Prior to January 1, 1987.
(1) General Rule. Subject to the adjustments in subsections (2)
and (3), an Employee shall be credited with a year of Vesting
Service for each Plan Year in which he is credited with at
least 1,000 Hours of Service.
(2) Effect of Break in Service. An Employee's years of Vesting
Service completed prior to a Break Year shall be disregarded
if (A) the Employee was not vested in any part of his benefits
under the Plan prior to such
14
Break Year and (B) the number of consecutive Break Years
equals or exceeds the greater of five or the aggregate number
of years of Vesting Service completed prior to such Break
Years. In determining the aggregate number of years of Vesting
Service for purposes of this paragraph (2), the aggregate
number of years of Vesting Service completed prior to a Break
Year shall not include years of Vesting Service disregarded by
reason of any prior Break Year.
(3) Service Disregarded in Determination of Years of Vesting
Service. For purposes of determining an Employee's years of
Vesting Service under the Plan --
(A) Hours of Service credited before the Plan Year in which
the Employee attains age 18 shall be disregarded, and
(B) Hours of Service prior to November 1, 1976 shall be
disregarded if such Hours of Service were excluded under
the Prior Plan.
(b) Plan Years Commencing on or After January 1, 1987. An Employee shall
be credited with Vesting Service for the Employee's period of
employment with the Company and each Affiliate after December 31,
1986, determined as follows:
(1) Vesting Service shall be determined in completed years and
days, with each 365 days constituting one year of Vesting
Service.
(2) An Employee shall receive credit for Vesting Service from the
date the Employee first performs an Hour of Service after
December 31, 1986 until the Employee's Severance from Service.
(3) If an Employee who has had a Severance from Service is
subsequently reemployed as an Employee, the following
provisions apply:
(A) If the Employee is reemployed before a one-Year Period
of Severance occurs, the Vesting Service he had at such
Severance from Service shall be reinstated upon his
reemployment. If such Severance from Service resulted
from a quit, discharge, or retirement, he shall receive
credit (but not in excess of 12 months) for Vesting
Service for the period between his Severance from
Service and his reemployment. If his Severance from
Service is by reason of a quit, discharge, or retirement
during any absence from employment of 12 months or less
for any reason other than a quit, discharge, retirement,
or death, and the Employee then performs an Hour of
Service within 12 months of the date he was first absent
from employment, he shall receive credit for Vesting
Service for the period between his Severance from
Service and his reemployment.
15
(B) If the Employee is reemployed after a One-Year Period of
Severance occurs, credit for Vesting Service will resume
as of the date the Employee first performs an Hour of
Service upon his rehire. If the Employee had attained a
vested interest in any part of his benefits under the
Plan, the Vesting Service he had at his Severance from
Service shall be reinstated upon his reemployment by the
Company or an Affiliate.
(C) If neither (A) nor (B) is applicable, and if the number
of One-Year Periods of Severance between his Severance
from Service and reemployment does not equal or exceed
the greater of five or the number of years of Vesting
Service he had prior to his Severance from Service, his
prior Vesting Service shall be reinstated upon his
reemployment by the Company or an Affiliate.
Notwithstanding anything to the contrary in this section 3.4, each
Employee with respect to whom the method of crediting Vesting
Service has been changed as described above shall receive credit for
Vesting Service as prescribed in Department of Labor regulation
section 2530.2b-9(g).
(c) Special Rule for Employees of Exchange Insurance Company. Solely for
purposes of determining an Employee's years of Vesting Service under
this Plan and for purposes of determining an Employee's Early
Retirement Age hereunder, each Employee who
(1) was employed by Exchange Insurance Company on June 30, 1993,
and
(2) became an Employee of the Company on July 1, 1993, shall
receive credit under this Plan for his vesting service earned
while employed by Exchange Insurance Company prior to July 1,
1993 and such service shall be deemed to be Vesting Service
performed for the Company under section 3.4(b) above.
3.5. Benefit Service. Benefit Service shall mean the service which shall
be used in determining the amount of a Member's benefit under the Plan,
determined as follows:
(a) Plan Years Commencing Prior to January 1, 1987.
(1) General Rule. A full year of Benefit Service shall be earned
for each Plan Year for which an Eligible Employee is credited
with at least 1,907 Hours of Service. Only those Hours of
Service credited after becoming a Member in the Plan shall be
taken into account under this section 3.5(a).
(2) Partial Year of Benefit Service. An Eligible Employee shall
earn a partial year of Benefit Service if he is credited with
fewer than 1,907 Hours of Service, determined as follows:
16
Hours of Service Year of Benefit Service
---------------- -----------------------
1907 or more 1
1734-1906 11/12
1561-1733 5/6
1387-1560 3/4
1214-1386 2/3
1041-1213 7/12
867-1040 1/2
694-866 5/12
521-693 1/3
347-520 1/4
173-346 1/6
Less than 173 0
(3) Effect of Breaks in Service. Notwithstanding the foregoing, a
Member who incurs one or more Break Years at a time when he is
not entitled to a vested benefit under the Plan shall forfeit
his years of Benefit Service completed before such Break Years
if the number of such consecutive Break Years equals or
exceeds the greater of (A) five or (B) the number of his years
of Vesting Service prior to incurring `such Break Year.
(4) Prior Plan Service. An Employee who was a participant in the
Prior Plan as of December 31, 1985 shall be credited with his
total years of benefit accrual service as of December 31, 1985
as determined in accordance with the Prior Plan provisions
then in effect.
(b) Plan Years Commencing on or After January 1, 1987. An Employee shall
be credited for Benefit Service after December 31, 1986 for the
Employee's period of employment with the Company and each Affiliate
after December 31, 1986, determined as follows:
(1) Benefit Service shall be determined in completed years and
days, with each 365 days constituting one year of Benefit
Service.
(2) An Employee shall receive credit for Benefit Service from the
later of (A) the date the Employee first performs an Hour of
Service after December 31, 1986 and (B) the date the Employee
becomes a Member of the Plan until the Employee's Severance
from Service.
(3) If an Employee who has had a Severance from Service is
subsequently reemployed as an Employee, the following
provisions apply:
(A) If the Employee is reemployed before a one-Year Period
of Severance occurs, the Benefit Service he had at such
Severance from Service shall be reinstated upon his
reemployment.
17
(B) If such Severance from Service resulted from a quit,
discharge, or retirement, he shall receive credit (but
not in excess of 12 months) for Benefit Service for the
period between his Severance from Service and his
reemployment. If his Severance from Service is by reason
of a quit, discharge, or retirement during any absence
from employment of 12 months or less for any reason
other than a quit, discharge, retirement, or death, and
the Employee then performs an Hour of Service within 12
months of the date he was first absent from employment,
he shall receive credit for Benefit Service for the
period between his Severance from Service and his
reemployment.
(C) If the Employee is reemployed-after a one-Year Period of
Severance occurs, credit for Benefit Service will resume
as of the date the Employee first performs an Hour of
Service upon his rehire. If the Employee had attained a
vested interest in any part of his benefits under the
Plan, the Benefit Service he had at his Severance from
Service shall be reinstated upon his reemployment by the
Company or an Affiliate.
(D) If neither (A) nor (B) is applicable, and if the number
of one-Year Periods of Severance between his Severance
from Service and reemployment does not equal or exceed
the greater of five or the number of years of Benefit
Service he had prior to his Severance from Service, his
prior Benefit Service shall be reinstated upon his
reemployment by the Company or an Affiliate.
(E) Notwithstanding anything to the contrary in this section
3.5, each Employee with respect to whom the method of
crediting Benefit Service has been changed as described
above shall receive credit for Benefit Service as
prescribed in Department of Labor Regulation section
2530.2b-9(g).
3.6. Transferred Employees.
(a) An Employee who is transferred from the employ of a
non-participating Affiliate into the employ of the Company or a
Participating Affiliate shall receive credit for Eligibility Service
and Vesting Service computed as provided in sections 3.3 and 3.4,
hereof for all his employment with the Company and Affiliates,
before and after such transfer. He shall be credited with Benefit
Service hereunder for his employment with the Company as an Eligible
Employee after such transfer as provided in section 3.5.
(b) A Member who is transferred to the employ of a non-participating
Affiliate shall continue to accrue Eligibility Service and Vesting
Service as provided in subsections 3.3 and 3.4, hereof but, shall
not receive credit for Benefit Service under this Plan during the
period he is an ineligible employee. Any retirement
18
benefit he may become entitled to under this Plan shall be
determined on the basis of his Vesting Service before and after such
transfer, on the Benefit Service and pay he had prior to the
transfer, and on the applicable benefit formula under the Plan in
effect at the time of the transfer.
3.7. Acquisitions. If the Company or an Affiliate: acquires a controlling
ownership interest in a business entity such that the entity becomes an
Affiliate of the Company, or acquires the assets of another entity so that the
employees of such business entity become Employees of the Company or an
Affiliate, then the following rules will apply with respect to the employees of
the acquired entity:
(a) Solely for purposes of determining whether an Employee has completed
a Year of Eligibility Service, Hours of Service credited to the
Employee while employed by the acquired entity prior to its
acquisition by the Company or its Affiliates shall be deemed to be
Hours of Service performed in the employ of the Company under
section 3.3 above; and
(b) Solely for purposes of determining an Employee's years of Vesting
Service, service credited to the Employee while employed by the
acquired entity prior to its acquisition by the Company or its
Affiliates shall be deemed to be service performed in the employee
of the Company under section 3.4 above;
but only to the extent the Board of Directors approves the recognition of
service for a predecessor employer by written resolution and such resolution is
consistent with Treasury regulations issued under Code section 414(a).
3.8. Duration. An Employee who becomes a Member shall continue to be a
Member until his employment with the Company terminates and he is no longer
entitled to receive any benefits hereunder.
3.9 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.
19
Article IV. Amount and Commencement Date of Benefits
4.1. Normal Retirement Benefits.
(a) Eligibility. A Member's Normal Retirement Benefit shall become
non-forfeitable on attainment of Normal Retirement Age. A Member
whose employment with the Company terminates on or after he has
attained his Normal Retirement Age shall be eligible to receive a
Normal Retirement Benefit under the Plan payable in the form of a
Single Life Annuity, except as provided in Article V below.
(b) Amount. A Member's monthly Normal Retirement Benefit shall be
determined as of his Normal Retirement Age and shall be equal to an
amount which equals the greater of (1) or (2) minus (3), where:
(1) is 2 percent of his Average Monthly Compensation, less 1-3/7
percent of such Member's Social Security Benefit, multiplied
by the Member's Years of Benefit Service, not to exceed a
maximum of 35 years;
(2) is the minimum monthly benefit, if any, accrued by those
Members who were participants in the Prior Plan, on or before
May 1, 1980 (which minimum monthly benefit is determined by
multiplying 1-3/7 percent of the lesser of --
(A) Such Member's Average Monthly Compensation as of May 1,
1980, or
(B) The Member's Compensation for the one month preceding
May 1, 1980, by the Member's Years of Benefit Service as
of May 1, 1980, not to exceed a maximum of 35 years);
and
(3) is the monthly amount, if any, of "Retirement Annuity" payable
under the group annuity contract issued by the Equitable which
was purchased for a Member under the Prior Plan (which amount
is reflected in Appendix A, appended to Plan).
A Member's monthly Normal Retirement Benefit determined
hereunder shall be subject to the adjustments (if any)
described in Appendix C.
Unless otherwise provided under the Plan, each section 401(a)(17)
Member's Accrued Benefit under this Plan will be the greater of the
Accrued Benefit determined for the Member under (i) or (ii) below:
(i) the Member's Accrued Benefit determined with respect to
the benefit formula applicable for the Plan Year beginning on
or after January 1, 1994, as applied to the Member's total
years of Benefit Service taken into account under the Plan for
the purposes of benefit accruals, or
(ii) the sum of:
20
(a) the Member's Accrued Benefit as of the last day of
the last Plan Year beginning before January 1, 1994,
frozen in accordance with section 1.401(a)(4)-13 of the
Regulations.
(b) the Member's Accrued Benefit determined under the
benefit formula applicable for the Plan Year beginning
on or after January 1, 1994, as applied to the Member's
years of Benefit Service credited to the Member for Plan
Years beginning on or after January 1, 1994, for
purposes of benefit accruals.
A Section 401(a)(17) Member means a Member whose current Accrued
Benefit as of a date on or after the first day of the first Plan
Year beginning on or after January 1, 1994, is based on Compensation
for a year beginning prior to the first day of the first Plan Year
beginning on or after January 1, 1994, that exceeded $150,000.
(c) Commencement and Duration. Monthly Normal Retirement Benefit
payments shall begin as of the Member's Normal Retirement Date.
Notwithstanding the preceding sentence and subject to section 4.7, a
Member who attains his Normal Retirement Age but continues his
employment with the Company shall receive a Normal Retirement
Benefit payment for any calendar month in which he completes less
than 40 Hours of Service in accordance with U.S. Department of Labor
regulation 2530.203-3. When payments begin, they shall be paid
monthly thereafter as of the first day of each succeeding month
during his lifetime; provided, however, benefit payments shall be
permanently withheld from any calendar month for which the Member
completes forty (40) or more Hours of Service with the Company. When
normal retirement benefit payments are withheld and then resumed,
the resumed monthly retirement benefit payment shall be redetermined
and calculated and paid as if the Member were then first terminated
under section 4.5, but such benefit shall be actuarially reduced to
account for any normal retirement benefit payments he may have
received under this section 4.1. In no event, however, will a
Member's retirement benefit at a subsequent retirement or
Termination of Employment be less than his benefit at his Normal
Retirement Date.
4.2. Early Retirement Benefits.
(a) Eligibility. A Member whose employment with the Company terminates
on or after he has attained his Early Retirement Age but before his
Normal Retirement Age shall be eligible to receive an early
retirement benefit under the Plan.
(b) Amount. A Member's monthly early retirement benefit shall be an
amount computed in the same manner as a normal retirement benefit
under subsection 4.1(b) as in effect at his Termination of
Employment, reduced by 1/180th per complete calendar month, for the
first 60 months by which his first early retirement benefit payment
precedes his attainment of Normal Retirement Age, and reduced by
1/360th per complete calendar month, for the next 60 months by
21
which his first early retirement benefit payment precedes his
attainment of Normal Retirement Age.
A Member's monthly Early Retirement Benefit determined hereunder
shall be subject to the adjustments (if any) described in Appendix
C.
(c) Commencement and Duration. Monthly early retirement benefit payments
shall begin upon the Member's attainment of age 65 unless he elects
to commence payment at an Early Retirement Date which is on or after
the date he attains his Early Retirement Age. Application for early
commencement in a payment form other than an Automatic Joint and
Surviving Spouse Annuity under section 5.1 must be agreed to by the
Member's spouse, if any, and must be filed no more than 90 days
prior to the date the Member elects to have benefits commence. When
payments begin, they shall be paid monthly thereafter as of the
first day of each succeeding month during his lifetime; provided,
however, subject to the provisions of section 4.7, if he is
reemployed by the Company, his benefit payments shall be permanently
suspended during (1) the period of such reemployment which precedes
his Normal Retirement Age, and (2) any calendar month following the
Normal Retirement Age in which he completes 40 or more Hours of
Service in accordance with U.S. Department of Labor regulation
2530.203-3. Upon his subsequent retirement or Termination of
Employment, his eligibility for a benefit and the amount of the
benefit shall be determined and calculated and paid as if he were
then first terminated, but such benefit shall be actuarially reduced
to account for any early retirement benefit payments he may have
received before his Normal Retirement Age. In no event, however,
will a Member's retirement benefit at a subsequent retirement or
termination be less than his benefit at his prior termination.
4.3. Deferred Vested Retirement Benefits.
(a) Eligibility. A Member whose employment with the Company terminates
on or after he has attained his Vested Retirement Age but before his
Early Retirement Age shall be eligible to receive a deferred vested
retirement benefit under the Plan.
(b) Amount. A Member's monthly deferred vested retirement benefit shall
be an amount computed in the same manner as an early retirement
benefit under subsection 4.2(b) hereof.
(c) Commencement and Duration. Monthly deferred vested retirement
benefits shall begin upon the Member's attainment of Normal
Retirement Age provided, however, that a Member who has completed
ten years of Vesting Service may elect to commence payment at an
earlier Vested Retirement Date after attaining age 55. Application
for early commencement in a payment form other than an Automatic
Joint and Surviving Spouse Annuity under section 5.1 must be agreed
to by the Member's spouse, if any, and must be filed no more than 90
days prior to the date the Member elects to have benefits commence.
When payments begin,
22
they shall be paid monthly thereafter as of the first day of each
succeeding month during his lifetime; provided, however, subject to
the provisions of section 4.7, if he is reemployed by the Company
any benefit payments shall be permanently suspended during (1) the
period of such reemployment which precedes his Normal Retirement
Age, and (2) any calendar month following the Normal Retirement Age
in which he completes 40 or more Hours of Service in accordance with
U.S. Department of Labor regulation 2530.203-3. Upon his subsequent
retirement or Termination of Employment, his eligibility for a
benefit and the amount of the benefit shall be determined and
calculated and paid as if he were then first retired or terminated,
but such benefit shall be actuarially reduced to account for any
deferred vested retirement 1 pay before his Normal Retirement Age.
In no event, however, will a Member's retirement benefit at a
subsequent retirement or termination be less than his benefit at his
prior termination.
4.4. Disability Retirement Benefits.
(a) Eligibility. A Member who incurs Total Disability shall be eligible
to receive a disability retirement benefit under the Plan.
(b) Amount.
(1) A Member's monthly disability retirement benefit shall be an
amount computed in the same manner as a normal retirement
benefit under subsection 4.1(b) hereof, based upon the Benefit
Service he would have been credited with had he remained
actively employed until his Normal Retirement Age and had
received the same pay in each year as he had received in the
year prior to his Total Disability.
(2) A Member who incurs a Total Disability after completing at
least ten years of Vesting Service may elect to retire and
receive a disability retirement benefit at any time after he
attains age 55 but prior to his Normal Retirement Age. His
benefit shall be computed in the same manner as in
subparagraph (1) above, based on Benefit Service to the date
of his retirement. This benefit amount shall be reduced in
accordance with subsection 4.2(b) for each complete calendar
month, if any, by which his first early disability retirement
benefit precedes his attainment of Normal Retirement Age.
A Member's monthly disability retirement benefit determined
hereunder shall be subject to the adjustments (if any) described in
Appendix C.
(c) Commencement and Duration. Monthly disability retirement benefit
payments shall begin as of the first day of the calendar month next
following the Member's attainment of Normal Retirement Age. The
Member may elect to have benefits commence at an earlier date as
provided in paragraph (b)(2), above. Application for early
commencement in a payment form other than an Automatic Joint and
Surviving Spouse Annuity under section 5.1 must be agreed to by the
Member's
23
spouse, if any, and must be filed no more than 90 days prior to the
date the Member elects to have benefits commence. When payments
begin, they shall be paid monthly thereafter as of the first day of
each succeeding month during his lifetime.
4.5. Deferred Retirement Benefit. A Member who remains an Employee beyond
his Normal Retirement Age shall be entitled to a Deferred Retirement Benefit,
computed in the same manner as a Normal Retirement Benefit under section 4.1,
determined with regard to all years of Benefit Service and Average Monthly
Compensation attributable to all employment with the Employee both before and
after his Normal Retirement Date. Notwithstanding the preceding sentence, a
Member who was a Member in the Plan on or before December 31, 1987, who attained
Normal Retirement Age prior to January 1, 1988 and who performs an Hour of
Service on or after January 1, 1988 shall be entitled to a Deferred Retirement
Benefit equal to the greater of -
(a) his Accrued Benefit as of the earlier of -
(1) January 1, 1988, or
(2) the date of Termination of Employment, determined without
regard to any years of Benefit Service or Average Monthly
Compensation attributable to employment with the Company after
his Normal Retirement Date, but with such monthly benefit
actuarially increased (using the actuarial assumptions set
forth in subsection 2.3(a)) for each full month, if any, by
which his first Deferred Retirement Benefit payment follows
his Normal Retirement Date; or
(b) his Accrued Benefit as of the date of Termination of Employment,
determined with regard to all years of Benefit Service and Average
Monthly Compensation attributable to all employment with the
Company, both before and after his Normal Retirement Date, but
without regard to any actuarial increases attributable to service
performed after his Normal Retirement Date.
A Member's deferred retirement benefit determined hereunder shall be subject to
the adjustments (if any) described in Appendix C.
(c) Commencement of Benefit. Subject to the provisions of Article VI,
and except as provided in subsection (d) with respect to part-time
service, such deferred retirement benefit payments shall commence as
of the first day of the calendar month or next following his
Termination of Employment.
(d) Part-Time Service. Notwithstanding any other provision of the Plan,
with respect to the period from his Normal Retirement Date to the
date of Termination of Employment, the Member shall receive Normal
Retirement Benefit payments for each month with respect to which he
is credited with fewer than 40 Hours of Service.
24
(e) Suspension of Benefits Notice Procedures. In the case of a Member
who remains an Employee beyond his Normal Retirement Age, the
suspension of benefits notice procedures set forth in section 4.7
shall apply for any month commencing after Normal Retirement Age for
which the Participant is credited with 40 or more Hours of Service.
4.6. Adjustment for In-Service Payments. In the case of a Member whose
benefit payments commence prior to his date of Termination of Employment
(pursuant to subsection 5.3(b) and on account of required commencement at age 70
1/2), amounts payable after his Termination of Employment shall be reduced to
reflect the Actuarial Equivalent value of amounts paid prior to his date of
Termination of Employment.
4.7. Notification and Special Rules for Permanent Withholding of Benefits.
(a) Notification. If (1) a Member continues employment after the
attainment of his Normal Retirement Age, or (2) a Member returns to
employment and is employed on or after the attainment of the Normal
Retirement Age, and the Plan withholds benefit payments pursuant to
subsection 4.1(c), the Plan shall notify the Member of such
withholding of benefit payments by personal delivery or first class
mail during the first calendar month after the attainment of the
Normal Retirement Age in which the Plan withholds payments. The
notification shall contain a description of the specific reason for
the withholding of payments, a general description of the Plan
provisions relating to the withholding, a copy of such provisions, a
statement that the relevant Department of Labor regulations may be
found in section 2530.203-3 of title 29, Code of Federal
Regulations, and that a review of such withholding may be obtained
pursuant to the claim procedure in section 7.8 of the Plan. If the
summary plan description ("SPD") contains information which is
substantially the same as the information required by this
paragraph, the notification may refer the Member to the relevant
pages of the SPD, provided that the Member is informed how to obtain
a copy of the SPD or the relevant pages and provided requests for
information are honored within 30 days.
(b) Resumption and Offset of Payments. If benefit payments have been
withheld on account of employment, payments shall resume no later
than the first day of the third calendar month after the calendar
month in which the conditions for withholding no longer exist. The
initial payment upon resumption shall include the payment scheduled
to occur in the calendar month when payments resume and any amounts
withheld during the period between the cessation of the conditions
for withholding and the resumption of payments less any amounts
which are subject to offset. The Plan may offset against benefit
payments any payments previously made which should have been
withheld on account of employment, provided, however, that such
offset shall not exceed in any one month 25 percent of the monthly
benefit payment that would be due without regard to any offset
except that the initial benefit payment upon the resumption of
payments may be offset without limitation.
25
(c) Company Authorization. The Company is authorized to use a four- or
five-week payroll period end calendar month in lieu of calendar
months described in subsections 4.1(c) or 4.2(c) and this section
4.7. The Company is also authorized to adopt a verification and
status determination procedure described in Department of Labor
regulation 2530.203-3.
26
Article V. Alternative Forms of Payment
5.1. Automatic Joint and Surviving Spouse Annuity.
(a) General Rule. In lieu of the retirement benefits otherwise payable
as a Single Life Annuity under Article IV hereof, the benefit of a
married Member who is entitled to receive monthly annuity payments
under the Plan shall be immediately payable in the form of an
Automatic Joint and Surviving Spouse Annuity (as defined below)
unless he has elected otherwise pursuant to paragraph (c).
(b) Definition. "Automatic Joint and Surviving Spouse Annuity" shall
mean an annuity that is the Actuarial Equivalent of a Single Life
Annuity, provides a reduced level monthly benefit to the Member for
his lifetime and, upon his death, an annuity for the life of his
surviving spouse (to whom he is then married) in a monthly amount
equal to one half of the amount payable to the Member during his
life.
(c) Election Procedures.
(1) General Rule. A married Member may elect in writing, on a form
supplied by the Committee, to waive an Automatic Joint and
Surviving Spouse Annuity, and to receive his benefits in the
form of a Single Life Annuity or in accordance with an
optional form of payment described in section 5.2. Any
election by a Member pursuant to this paragraph (1) must be
filed with the Committee within the election period described
in paragraph (5). For such an election to be effective-
(A) the Member's spouse must consent in writing to such
election;
(B) such election must designate a Beneficiary;
(C) the Member's spouse must acknowledge the financial
consequences of such consent; and
(D) such spouse's consent must be witnessed by a notary
public.
(2) Exception to Consent Requirement. The consent of a Member's
spouse shall not be required where-
(A) the Member has elected a joint and survivor benefit with
his spouse as his contingent annuitant under subsection
5.2(b);
(B) the Committee determines that the required consent
cannot be obtained because there is not a spouse or the
Member's spouse could not be located;
(C) the Committee determines that the Member is legally
separated;
27
(D) the Committee determines that the Member has been
abandoned within the meaning of local law and there is a
court order to that effect; or
(E) there exists any other circumstance (as determined by
the Committee) prescribed by law as an exception to the
consent requirement.
(3) Revocation and Modification. An election by a Member, pursuant
to paragraph (1), to waive an Automatic Joint and Surviving
Spouse Annuity may be revoked by the Member, in writing,
without the consent of his spouse at any time during the
election period. Any subsequent election by a Member to waive
an Automatic Joint and Surviving Spouse Annuity or any
subsequent modification of a prior election (other than a
revocation of a waiver of an Automatic Joint and Surviving
Spouse Annuity or a change in the form of payment or
designation of Beneficiary where there is in effect a valid
general consent with respect to the form of payment or
designated Beneficiary (whichever is applicable)), must comply
with the requirements set forth in paragraph (1) above. A
spouse's consent shall be considered a "general consent" if
the following requirements are satisfied-
(A) the consent permits the Member to waive the Automatic
Joint and Surviving Spouse Annuity
(B) the consent permits the Member to change the optional
form of benefit payment and/or the designated
Beneficiary without any requirement of further consent
by the spouse; and
(C) the spouse acknowledges in the consent that
(i) he has the right to limit consent to a specific
optional form of benefit and/or Beneficiary (as
applicable), and
(ii) that he voluntarily relinquishes either or both of
such rights (as applicable).
(4) Validity of Spousal Consent. Any consent or election under
this provision shall be valid only with respect to the spouse
who signs the consent or, if the spouse's consent is excused
by the Committee pursuant to paragraph (2) above, the spouse
so excused, but shall be irrevocable once made.
(5) Election Period. For purposes of this section 5.1, a Member's
"election period" shall be the 90-day period ending on the
Annuity Starting Date.
(d) Notification. With regard to an election, the Committee shall
provide each Member within the notice period described below, a
written explanation of --
28
(1) the terms and conditions of the Automatic Joint and Surviving
Spouse Annuity;
(2) the Member's right to make, and the effect and financial
consequences of, a waiver of the Automatic Joint and Surviving
Spouse Annuity;
(3) for notices required to be provided in Plan Years beginning on
or after January 1, 1989, the relative values of the various
optional forms of benefit under the Plan;
(4) the rights of the Member's spouse regarding a waiver of the
Automatic Joint and Surviving Spouse Annuity; and
(5) the right of the Member to revoke a prior waiver of the
Automatic Joint and Surviving Spouse Annuity and the effect
and financial consequences of such a revocation.
For purposes of this subsection 5.1(d), the "notice period" shall be
the 60-day period beginning 90 days prior to the Annuity Starting
Date.
(e) Notwithstanding anything in Section 5.1(d) to the contrary,
effective January 1, 1997, a distribution under this Plan may
commence less than 30 days after the notice required by this section
5.1 is provided to a Member, provided that:
(1) the Committee clearly informs the Member that the Member has a
right to a period of 30 days after receiving the notice to
consider whether to waive the Automatic Joint and Surviving
Spouse Annuity and consent to another form of distribution;
(2) the Member is permitted to revoke an affirmative distribution
election at least until the Annuity Starting Date, or, if
later, at any time prior to the expiration of the 7-day period
that begins the day after the explanation of the Automatic
Joint and Surviving Spouse Annuity is provided to the Member;
(3) the Annuity Starting Date is after the date that the
explanation of the Automatic Joint and Surviving Spouse
Annuity is provided to the Member, provided, however, that the
Annuity Starting Date may be before the date that any
affirmative distribution election is made by the Member and
before the date that the distribution is permitted to commence
under (9) below; and
(4) distribution in accordance with the affirmative election does
not commence before the expiration of the 7-day period that
begins the day after the explanation of the Automatic Joint
and Surviving Spouse Annuity is provided to the Member.
29
(f) Married Member. A Member shall not be considered to be a "married
Member" for purposes of this section unless he shall have been
legally married to his surviving spouse throughout the one-year
period ending on the earlier of the Member's Annuity Starting Date
and the date of the Member's death. If the Member marries within the
one-year period preceding his Annuity Starting Date, then such
Member and spouse shall be treated as having been married during the
entire one-year period immediately preceding the Member's Annuity
Starting Date; provided, however, that if the Member and spouse do
not remain married for one year, no survivor benefit shall be due
the spouse and any amount paid to the Member shall not be
retroactively corrected.
5.2. Other Optional Forms of Payment.
(a) General. Subject to the provisions of section 5.1, a Member may
elect in writing to be paid in accordance with an optional form of
payment described in this subsection. An election by an unmarried
Member to receive payment of his benefit in an optional form shall
be valid only if he is furnished with an explanation of the material
features and relative values of the optional forms of benefit within
the notice period described in subsection 5.1(d). Any optional form
of payment must be the Actuarial Equivalent of the benefit payable
to the Member as a Single Life Annuity.
The following optional methods of payment are available:
(b) Joint and Survivor Annuity Option. A Member may elect to receive a
reduced monthly retirement benefit during his lifetime after
retirement and to have 100 percent, 75 percent, or 50 percent of
such monthly amount paid to the contingent annuitant as a death
benefit.
(c) Ten Year Certain and Life Annuity Option.
(1) A Member may elect a ten year certain and life annuity option.
This optional form of benefit payment provides for an
actuarially adjusted retirement benefit payable to the Member
during his lifetime with the guarantee that not less than 120
monthly retirement benefit payments will be made to the Member
and his named Beneficiary.
(2) If this optional form of benefit payment is elected and the
Member dies prior to the receipt of 120 monthly payments, the
balance of the guaranteed number of monthly payments will be
paid to the Member's Beneficiary until a total of 120 monthly
payments have been made to the Member and his Beneficiary. The
first such payment to the Beneficiary shall be due and payable
as of the first day of the month following the Member's death.
(3) In the event there is no Beneficiary living at the death of
the Member or if the Beneficiary should die prior to receiving
the balance of the 120 monthly payments, the Actuarial
Equivalent present value of the balance
30
of the 120 monthly payments, which would otherwise have become
payable to the Member's Beneficiary, shall be paid to the
executors or administrators of the Member's estate.
(d) Direct Transfers. Any Member or Beneficiary who receives a
distribution which is an Eligible Rollover Distribution may elect in
writing, on the form or forms approved by the Committee, to make a
direct rollover pursuant to Code section 401(a)(31) and the
regulations thereunder, to an Eligible Retirement Plan; provided
that the amount of Eligible Rollover Distribution for the calendar
year is or is reasonably expected to be at least $200 and, if only a
portion of the Eligible Rollover Distribution is to be rolled over,
the amount of the direct rollover is at least $500. An election to
make or not to make a direct rollover with respect to payments which
are a part of a series of payments shall apply to all subsequent
payments unless a new election is made with respect to subsequent
payments, A direct rollover of an Eligible Rollover Distribution by
a Member or Beneficiary may not be made to more than one Eligible
Retirement Plan. If a Member or Beneficiary fails to make a direct
rollover election before the deadline chosen by the Committee, the
Plan shall distribute the amount as if a direct rollover election
with respect to the distribution had not been made.
For purposes of this Section, the following definitions shall apply:
(1) Eligible Rollover Distribution: Any distribution of all or any
portion of the balance to the credit of the Distributee,
except that an Eligible Rollover Distribution does not
include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life expectancies) of
the Distributee and the Distributee's designated beneficiary,
or for a specified period of ten years or more; any
distribution to the extent such distribution is required under
Section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities). In addition
to the foregoing, effective January 1, 1999, an eligible
rollover distribution shall not include any hardship
distribution described in section 401(k)(2)(B)(i)(IV) of the
Code.
(2) Eligible Retirement Plan: An individual retirement account
described in Section 408(a) of the Code, an individual
retirement annuity described in Section Code 408(b) of the
Code, an annuity plan described in Section 403(a) of the Code,
or a qualified trust described in Section 401(a) of the Code,
that accepts the Distributee's Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to
the surviving spouse, an Eligible Retirement Plan is an
individual retirement account or individual retirement
annuity. Notwithstanding the foregoing, effective January 1,
2002, an eligible retirement plan shall also mean an annuity
contract described in Section 403(b) of the Code and an
eligible plan
31
under Section 457(b) of the Code which is maintained by a
state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state
and which agrees to separately account for amounts transferred
into such plan from this Plan. The definition of eligible
retirement plan shall also apply in the case of a distribution
to a surviving spouse, or to a spouse or former spouse who is
the alternate payee under a qualified domestic relation order,
as defined in Section 414(p) of the Code.
(3) Distributee: A Distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's
spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in Section
414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
(4) Direct Rollover: A direct rollover is a payment by the Plan to
the Eligible Retirement Plan specified by the Distributee.
5.3. Restrictions on Distributions.
(a) General Rule. Notwithstanding anything in sections 5.1 or 5.2 to the
contrary, unless the Member otherwise elects in writing,
distribution to such Member shall not commence later than the
sixtieth day after the close of the Plan Year in which occurs the
latest of the following events:
(1) the Member attains age 65;
(2) the Member attains the tenth anniversary of the date on which
he commenced participation in the Plan; or
(3) the Member's Termination of Employment.
Notwithstanding anything to the contrary in the preceding sentence,
the Plan will not commence benefit payments hereunder unless the
Member (or the Member's Beneficiary) files a claim for benefits with
the Committee on the forms prescribed by the Committee. The
provisions of this subsection 5.3(a) are intended to comply with
Code section 401(a)(14) and Treasury Regulation section 1.401(a)-14.
(b) Latest Allowable Commencement Dates.
(1) Basic Rule. Notwithstanding anything contained in sections 5.1
and 5.2 to the contrary, except as provided under paragraphs
(2) and (3), a Member's benefits under the Plan shall commence
to be distributed to him no later than April 1 following the
calendar year in which he attains age 70 1/2, regardless of
whether his employment with the Company and its Affiliates has
terminated. Notwithstanding anything in the preceding
sentence, or in sections 5.1 and 5.2, to the contrary, for a
Member (other than a five-
32
percent (5%) owner) who attains age 70 1/2 on or after
December 31, 1999, benefits under the Plan will not be
required to begin until April 1 of the calendar year following
the year in which his employment with the Company and its
Affiliates terminates. The Accrued Benefit of a Member
affected by the preceding sentence will be actuarially
adjusted to take into account the delay in payment after the
Member attained age 70 1/2; the adjustment will be calculated
as (i) the Actuarial Equivalent of the Member's Accrued
Benefit as of the April 1 following attainment of age 70 1/2,
plus (ii) the Actuarial Equivalent of any benefits accrued
after that date, reduced by (iii) the Actuarial Equivalent of
any distributions made from the Plan after such date. The
following additional provisions shall apply prior to January
1, 2000:
(A) any Member attaining age 70 1/2 in years after 1995 may
elect by April 1 of the calendar year following the year
in which he attained age 70 1/2, (or by December 31,
1997 in the case of a Member who attained age 70 1/2 in
1996) to defer distributions until the calendar year
following the calendar year in which he retires. If no
such election is made, the Member will begin receiving
distributions by the April 1 of the calendar year
following the year in which he attained age 70 1/2 (or
by December 31, 1997 in the case of a Member attaining
age 70 1/2 in 1996); and
(B) any Member who attained age 70 1/2 in years prior to
1997 may elect to stop distributions and recommence by
the April 1 of the calendar year following the year in
which he retires. There shall be a new Annuity Starting
Date upon recommencement of distributions to such a
Member.
(2) Members who Attain Age 70 1/2 Before January 1, 1988. In the
case of a Member who attains age 70 1/2 before January 1,
1988, such a Member's benefits under the Plan shall commence
to be distributed to him no later than the April 1 following
the calendar year in which occurs the later of (A) his
Termination of Employment, or (B) his attainment of age 70
1/2. Notwithstanding the preceding sentence, a Member who is a
5 percent owner (as described in section 416(i) of the Code)
at any time during the Plan Year ending in or with the
calendar year in which such Member attains age 66 1/2, or
during any subsequent Plan Year, shall in any event commence
to have his benefits distributed to him no later than the
April 1 following the calendar year in which such Member
attains age 70 1/2, regardless of whether he has incurred a
Termination of Employment.
(c) Periodic Benefit Payments. No election under this Article V will be
effective unless the Member's total benefit will be distributed over
a period that will not exceed-
(1) the life of the Member; or
33
(2) the lives of the Member and the Member's designated
Beneficiary; or
(3) a period certain not extending beyond the life expectancy of
the Member; or
(4) a period certain not extending beyond the joint life and last
survivor expectancy of the Member and the Member's designated
Beneficiary.
If benefits have commenced and the Member dies prior to receiving
his entire interest under the Plan, the remaining portion of such
interest shall be distributed to his designated Beneficiary at least
as rapidly as under the method of distribution selected by the
Member. If the Member dies prior to the commencement of benefits
under the Plan and the Member has not designated a Beneficiary, any
such remaining interest payable shall be fully paid within the
five-year period following his death.
(d) Required Distributions Where Member Dies Before Entire Interest is
Distributed.
(1) If benefits have commenced and the Member dies prior to
receiving his entire interest under the Plan, the remaining
portion of such interest shall be distributed to his
designated Beneficiary at least as rapidly as under the method
of distribution selected by the Member.
(2) If the Member dies prior to the commencement of benefits under
the Plan and the Member has not designated a Beneficiary, any
such remaining interest payable shall be fully paid within the
five-year period following his death.
(3) If --
(A) any portion of the Member's benefits are payable to a
designated Beneficiary,
(B) such portion will be distributed over the life of such
designated Beneficiary or over a period not extending
beyond the life expectancy of the Beneficiary, and
(C) such distributions begin not later than December 31 of
the calendar year following the calendar year in which
the Member's death occurred, or such later date as the
Secretary of the Treasury may by regulations prescribe,
the portion referred to in subparagraph (3)(A) shall be
treated as-distributed within the time required under
paragraph (2).
(4) If the designated Beneficiary referred to in subparagraph
(3)(A) is the surviving spouse of the Member, the date on
which distributions are required to begin under subparagraph
(3)(C) shall not be earlier than
34
December 31 of the calendar year in which the Member would
have attained age 70 1/2.
(5) Incidental Benefit Requirement. The minimum amount which must
be distributed each calendar year shall be determined in
accordance with the provisions of Q&A 6 and 7 of Treasury
Regulations section 1.401(a)(9)-2.
(e) Distributions to be Made in Accordance with Treasury Regulations.
Distributions under the Plan shall be made in accordance with
Treasury Regulations under section 401(a)(9) of the Code, including
section 1.401(a)(9)-2. With respect to distributions under the Plan
made for calendar years beginning on or after January 1, 2001, the
Plan will apply the minimum distribution requirements of Section
401(a)(9) of the Internal Revenue Code in accordance with the
regulations under Section 401(a)(9) that were proposed on January
17, 2001, notwithstanding any provision of the Plan to the contrary.
This amendment shall continue in effect until the end of the last
calendar year beginning before the effective date of final
regulations under Section 401(a)(9) or such other date as may be
specified in guidance published by the Internal Revenue Service.
5.4. Payment of Small Amounts. The Committee shall direct that the
Actuarial Equivalent of a small amount benefit be paid to the Member (or, where
a married Member has died, his surviving spouse) in a lump sum. A benefit shall
be a small amount benefit for purposes of this subsection if the Actuarial
Equivalent present value of the benefit is less than $3,500 ($5,000, effective
as of May 1, 1998).
5.5. Distribution of Annuity Contract. The Committee may in its sole
discretion direct the distribution of an annuity contract to any Member who has
retired or whose employment has terminated. Any such contract shall provide for
payments in an amount equal to the benefits due the Member under the Plan, and,
at the option of the Committee, such contract shall be made nonassignable or
noncommutable before its delivery to such Member. Delivery of any such contract
to a Member shall be in full satisfaction of the Member's rights hereunder, and,
upon the delivery of any such contract to a Member, the Member shall no longer
have any interest in the Trust Fund, but shall look solely to the insurer
issuing such contract for the payment of his benefits.
35
Article VI. Death Benefits
6.1. Automatic Preretirement Surviving Spouse Benefits. The surviving
spouse of a married Member shall be eligible to receive a surviving spouse
annuity benefit under this Article VI if such Member dies after he has attained
Vested Retirement Age under this Plan and before such Member's Annuity Starting
Date. A Member shall not be considered a "married Member" for purposes of this
section unless he shall have been legally married to his surviving spouse
throughout the entire one-year period preceding the date of his death.
6.2. Amount.
(a) Determination of Benefit. The monthly amount of the automatic
preretirement surviving spouse benefit payable to a spouse eligible
therefor pursuant to this Article VI shall be as follows:
(1) If a Member dies after the date on which such Member has
attained his Earliest Retirement Age (as defined below), the
Member's surviving spouse will receive 100 percent of the
amount of the monthly retirement benefit that the Member would
have been entitled to receive if he had retired with an
immediate 100 percent Joint and Survivor Annuity on the day
preceding his date of death.
(2) If a Member dies on or before the date on which such Member
would have attained his Earliest Retirement Age, the Member's
surviving spouse will receive 100 percent of the amount of the
monthly retirement benefit that the Member would have been
entitled to receive if he had --
(A) terminated employment on the date of his death or, if
earlier, his Termination of Employment;
(B) survived to his Earliest Retirement Age;
(C) retired with an immediate 100 percent Joint and Survivor
Annuity at his Earliest Retirement Age; and
(D) died on the day after the date on which the Member would
have attained his Earliest Retirement Age.
(b) Earliest Retirement Age. For purposes of this Article VI, a Member's
"Earliest Retirement Age" shall mean, in the case of a Member who
has completed ten years of Vesting Service prior to his Normal
Retirement Date, the first day of the month following attainment of
age 55.
6.3. Commencement and Duration. The monthly automatic preretirement
surviving spouse benefit shall be payable to the spouse for life, beginning as
of the first day of the calendar month in which the Member would have attained
age 65 or, if later, the first day of the calendar month following the Member's
death. The surviving spouse may elect to have benefits
36
commence as of an earlier date which shall be the later of the first day of the
calendar month in which the Member would have attained his Earliest Retirement
Age or the first day of the calendar month following the Member's death. Such
election shall be made by filing a written request with the Committee no more
than 90 days prior to such early commencement date.
6.4. Lump Sum Distribution. The Committee shall pay the entire amount of a
surviving spouse's benefit to such surviving spouse in a lump sum payment if the
Actuarial Equivalent value of such surviving spouse's benefit does not exceed
$3,500 ($5,000, as of May 1, 1998).
37
Article VII. Administration
7.1. Committee. The Plan shall be administered by a Committee appointed by
the Board of Directors. The Committee shall be composed of as many members (not
less than three) as may be appointed from time to time and shall hold office at
the pleasure of the Board of Directors. The Committee shall be the administrator
of the Plan, and the Committee shall be a fiduciary under the Plan as a named
fiduciary in accordance with the Act. The Committee may appoint or designate
other fiduciaries hereunder and may allocate fiduciary responsibilities among
them, including members of the Committee.
7.2. Compensation and Expenses. A member of the Committee shall serve
without Compensation for services if he is an Employee of the Company. He may
receive reimbursement by the Company of expenses properly and actually incurred.
All expenses incurred by the Committee, or a member thereof, in carrying out the
duties of the Committee shall be paid by the Company.
7.3. Manner of Action. A majority of the members of the Committee at the
time in office shall constitute a quorum for the transaction of business. All
resolutions adopted and other actions taken by the Committee at any meeting
shall be by vote of a majority of those present at any such meeting. Upon
concurrence in writing of a majority of the members at the time in office,
action of the Committee may be taken without a meeting.
7.4. Chairman, Secretary, and Employment of Specialists. The members of
the Committee shall elect one of their number as Chairman and shall elect a
Secretary who may, but need not, be a member of the Committee. They may
authorize one or more of their number or any agent to execute or deliver any
instrument or instruments in their behalf and may employ at the Company's or
Trust's expense such counsel, auditors, and other specialists and such clerical,
actuarial, and other services as they may require in carrying out the provisions
of the Plan.
7.5. Records. All resolutions, proceedings, acts, and determinations of
the Committee shall be recorded by the Secretary thereof or under his
supervision, and all such records, together with such documents and instruments
as may be necessary for the administration of the Plan, shall be preserved in
the custody of the Secretary.
7.6. Administration. The Committee shall be responsible for the
administration of the Plan, including instructing the Trustee concerning all
payments which should be made out of the Trust Fund pursuant to the provisions
of the Plan. The Committee shall have all such powers as may be necessary to
carry out the provisions hereof and may, from time to time, establish rules for
the administration of the Plan and the transaction of the Plan's business. In
making any such determination or rule, the Committee shall pursue uniform
policies as from time to time established by the Committee. The Committee shall
have the exclusive right to make any finding of fact necessary or appropriate
for any purpose under the Plan including, but not limited to, the determination
of the eligibility for and the amount of any benefit payable under the Plan. The
Committee shall have the exclusive right to interpret the terms and provisions
of the Plan and to determine any and all questions arising under the Plan or in
connection with the administration thereof, including, without limitation, the
right to remedy or resolve possible
38
ambiguities, inconsistencies, or omissions, by general rule or particular
decision. The Committee shall make, or cause to be made, all reports or other
filings necessary to meet the reporting and disclosure requirements of the Act
which are the responsibility of "plan administrators" under the Act. To the
extent permitted by law, all findings of fact, determinations, interpretations,
and decisions of the Committee shall be conclusive and binding upon all persons
having or claiming to have any interest or right under the Plan.
7.7. Application for Benefits. Each person eligible for a benefit under
the Plan shall apply for such benefit by signing an application form to be
furnished by the Committee. Each such person shall also furnish the Committee
with such documents, evidence, data, or information in support of such
application as it considers necessary or desirable.
7.8. Appeals from Denial of Claims. If any claim for benefits under the
Plan is wholly or partially denied, the claimant shall be given notice in
writing of such denial within a reasonable period of time, setting forth the
following information:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent Plan provisions on which the denial
is based;
(c) a description of any additional material or information necessary
for the claimant to perfect the claim and an explanation of why such
material or information is necessary;
(d) an explanation that a full and fair review by the Committee of the
decision denying the claim may be requested by the claimant or his
authorized representative by filing with the Committee, within 90
days after such notice has been received, a written request for such
review; and
(e) if such request is so filed, the claimant or his authorized
representative may review pertinent documents and submit issues and
comments in writing within the same 90-day period specified in
paragraph (d) above.
The decision of the Committee shall be made promptly, and not later than 60 days
after the Committee's receipt of the request for review, unless special
circumstances require an extension of time for processing, in which case a
decision shall be rendered as soon as possible, but not later than 120 days
after receipt of the request for review. If the claim is denied on appeal, in
whole or in part, the claimant shall be given a copy of the decision promptly.
The decision shall be in writing and shall include specific reasons for the
denial, written in a manner calculated to be understood by the claimant, and
specific references to the pertinent Plan provisions on which the denial is
based.
7.9. No Enlargement of Employee Rights. Neither the establishment of the
Plan, nor anything contained herein or in the Trust Agreement nor any
modification thereof, nor the operation of the Trust Fund or any account, nor
the payment of any benefits, shall be deemed to give or be construed as
conferring any legal or equitable rights upon any Employee, Member, Beneficiary,
or other person whomsoever, unless such right shall be specifically provided for
in the Plan or Trust Agreement, or as giving any Employee, Member, or other
person whomsoever
39
the right to require the Company either to continue his employment or to
continue the Plan or the making of contributions thereunder to the Trust, nor
shall it interfere with the right of the Company to discharge or retire any
Employee, Member, or other person whomsoever, at any time, without regard to the
effect which such treatment might have upon him as a Member in the Plan, and all
Employees and Members shall remain subject to discharge to the same extent as if
this Plan had never been adopted.
7.10. Expenses of Administration. The compensation of the Trustee, any
reasonable and proper attorney's fee incurred in the administration of the Trust
Fund, or other reasonable and proper Plan expenses may be paid by the Trust, to
the extent that they are not paid directly by the Company.
7.11. Facility of Distribution. In the event that the Committee shall find
that a Member or any other person entitled to any distribution under the Plan is
unable to care for his affairs because of illness or accident or any other
reason, any such distributions due may, unless claim shall have been made
therefor by a duly appointed guardian, conservator, or other legal
representative, be made at the direction of the Committee to the spouse, child,
parent, or other blood relative or to any person deemed by it to have incurred
expenses for such Member or other person entitled to distributions under the
Plan, and such distribution so made shall be a complete discharge of the
liabilities of the Plan therefor.
7.12. Indemnity. The Company shall indemnify each member of the Committee
(which, for purposes of this subsection, includes any Employee to whom the
Committee has delegated fiduciary duties) against any and all claims, losses,
damages, and expenses, including counsel fees, incurred by the Committee or
member and any liability, including any amounts paid in settlement with the
Company's approval, arising from the member's or Committee's action or failure
to act, except when the same is judicially determined to be attributable to the
gross negligence or willful misconduct of such member. The right of indemnity
described in the preceding sentence shall be conditioned upon (a) the timely
receipt of notice by the Company of any claim asserted against the Committee
member, which notice, in the event of a lawsuit, shall be given within ten (10)
days after receipt by the Committee member of the complaint, and (b) the receipt
by the Company of an offer from the Committee member of an opportunity to
participate in the settlement or defense of such claim.
7.13. Non-Alienation. No benefit payable at any time under the Plan shall
be subject to the debts or liabilities of a Member or his Beneficiary. Any
attempt to alienate, sell, transfer, assign, pledge, or otherwise encumber any
such benefit, whether presently or thereafter payable, shall be void. No benefit
under the Plan shall be subject in any manner to alienation, sale, transfer,
assignment, pledge, attachment, garnishment, or encumbrance of any kind, except
as provided under Internal Revenue Code sections 401(a)(13) or 414(p) or under
Article XIV of the Plan.
40
Article VIII. Financing
8.1. Financing. The Company shall maintain a Trust Fund as a part of the
Plan in order to implement and carry out the provisions of the Plan and to
finance the benefits under the Plan, by entering into one or more Trust
Agreements. Any Trust Agreement is designated as, and shall constitute, a part
of this Plan, and all rights which may accrue to any person under this Plan
shall be subject to all the terms and provisions of such Trust Agreement. The
Company may modify any Trust Agreement from time to time to accomplish the
purpose of the Plan and may replace any Trustee and appoint a successor Trustee
or Trustees. The Company may appoint an investment adviser (which may be any
person, persons, or organization registered under the Investment Advisers Act of
1940) to direct the Trustee with respect to investments. Each investment adviser
shall acknowledge that he is a fiduciary under the Plan in writing delivered to
the Company and the Trustee. The Company from time to time shall establish a
funding policy which is consistent with the objectives of the Plan and
communicate it to the Trustee and each investment adviser so that they may
coordinate investment policies with such funding policy.
8.2. Contributions. The Company shall make such contributions to the Trust
Fund as shall be required under accepted actuarial principles to at least be
sufficient to maintain the Plan as a qualified employee defined benefit plan
meeting the minimum funding standard requirements of the Internal Revenue Code,
subject to the right of the Company to discontinue the Plan. Forfeitures arising
under the Plan for any reason shall be used as soon as possible to reduce the
Company's contributions under the Plan.
8.3. Non-Reversion. The Company shall have no right, title, or interest in
the contributions made to the Trust Fund under the Plan, and no part of the
Trust Fund shall revert to the Company, except that --
(a) In the event that the Plan is terminated and the Trust Fund is
allocated and distributed as provided herein, any funds remaining in
the Trust Fund after the satisfaction of all fixed and contingent
liabilities under the Plan shall, to the extent permitted by law,
revert to the Company.
(b) In the event that all or part of the Company's deductions under
section 404 of the Internal Revenue Code for contributions to the
Plan on or after the Effective Date are disallowed by the Internal
Revenue Service, the portion of the contributions to which such
disallowance applies shall be returned to the Company.
(c) In the event that a contribution to the Plan on or after the
Effective Date is made by a mistake of fact, then such contribution
shall be returned to the Company.
A return of contributions under paragraph (b) or (c) shall be made either within
one year after the disallowance of deduction, or the payment of the contribution
due to a mistake of fact, as the case may be.
41
Article IX. Amendment and Termination
9.1. Amendments to Conform With Law. The Company reserves the right to
make by amendment such changes in, additions to, and substitutions for the
provisions of this Plan, to take effect retroactively or otherwise, as is deemed
necessary or advisable for the purpose of conforming the Plan to section 401 of
the Internal Revenue Code or to any other present or future federal law relating
to trusts and plans of this or similar nature and to the administrative
regulations promulgated thereunder.
9.2. Other Amendments and Termination. The Company also reserves the right
to amend this Plan at any time, and from time to time, in any manner which it
deems desirable, including, but not by way of limitation, to change or modify
benefits payable under the Plan and to change any provision relating to the
distribution of payment, or both, of any of the assets of the Trust. The Company
further reserves the right to terminate this Plan at any time by resolution of
its Board of Directors.
9.3. Form of Amendment. Any such amendment shall be made by an instrument
in writing, signed by a duly authorized officer or officers of the Company upon
the approval of the amendment by resolution of its Board of Directors or, in the
case of minor amendments required by the Internal Revenue Service, the President
of the Company.
9.4. Limitations on Amendments. The provisions of this section are subject
to and limited by the following restrictions:
(a) No amendment of this Plan shall operate either directly or
indirectly to give the Company any interest whatsoever in any funds
or property held by the Trustee under the terms hereof or to permit
corpus or income of the Trust to be used for or diverted to purposes
other than the exclusive benefit of persons who are at any time on
or after the date hereof Members or the Beneficiaries of such
person, except as provided in section 8.3.
(b) Except to the extent necessary to produce conformity to the laws and
regulations described in section 9.1, no such amendment shall
operate either directly or indirectly to deprive any Member of his
nonforfeitable beneficial interest as it is constituted at the time
of the amendment.
9.5. Distribution on Termination. Notwithstanding any other provision of
this Plan to the contrary, upon either full or partial termination of the Plan,
an affected Member's right to his Accrued Benefit shall be one hundred percent
(100%) Nonforfeitable to the extent funded The assets then held in the Trust
Fund shall be allocated, after payment of all expenses of administration or
liquidation, for the following purposes and in the following manner and order,
to the extent of the sufficiency of such assets:
(a) First, to provide all or that part of the benefit under Article IV
hereof for each Member (or his spouse or Beneficiaries) who either
--
42
(1) began to receive benefit payments at the date which is three
years prior to the date of termination of the Plan, or
(2) could have begun to receive benefit payments at the date which
is three years prior to the date of termination of the Plan if
the Member had retired thereto,
which is equal to the smallest benefit (he was receiving or could
have received) which would be provided for such person under the
Plan based on its provisions as in effect during the five-year
period ending on the date of termination of the Plan; and, for this
purpose, the lowest benefit payment received under (1) above during
the three years prior to the date of termination of the Plan shall
be considered to be the benefit he was receiving at the date which
is three years prior to termination of the Plan. Allocation shall be
made on a pro rata basis based on the then present value of the
benefit under this paragraph.(a), if assets are not sufficient to
provide such benefits in full.
(b) Second, if any assets remain, to provide all or that part of the
benefit under Article IV hereof which is guaranteed under section
4022 of the Act for each remaining Member (or his spouse or
Beneficiaries) who qualifies under (a) above but all of whose
benefit is not provided thereunder or who does not qualify under
above but who --
(1) began to receive benefit payments later than three years prior
to the date of termination of the Plan; or
(2) could have begun to receive benefit payments at the date of
termination of the Plan if the Member had retired prior
thereto; or
(3) had previously terminated employment, or could have terminated
employment at the date of termination of the Plan, with
eligibility to receive deferred vested retirement benefit
payments under section 4.3 of the Plan.
Allocation shall be made on a pro rata basis based on the then
present value of the benefits under this paragraph (b) if assets are
not sufficient to provide such benefits in full.
(c) Third, if any assets remain, to provide that part, if any, of the
benefit under Article IV hereof for each Member (or his spouse or
Beneficiaries) described in (a) and (b) above, which is not provided
for under (a) and (b) above, in the following order of priority if
such remaining assets are not sufficient to provide all or such part
of such benefits for all such persons:
(1) To provide such part of the benefits which would be provided
for such person under the Plan based on its provisions as in
effect at the beginning of the five-year period ending on the
date of termination of the Plan and on a pro rata basis based
on the then present value of such benefits under
43
this paragraph (1) if such assets are not sufficient to
provide such benefits described in this paragraph (1) in full,
provided, however, if such assets are more than sufficient to
provide such benefits described in this paragraph (1) in full,
then the assets available under this paragraph (c) shall be
allocated as provided in (2) below.
(2) To provide such part of the benefits which would be provided
for such persons under the Plan based on its provisions as in
effect as amended by the most recent Plan amendment effective
during the five-year period ending on the date of termination
of the Plan under which the assets under this paragraph (c)
are sufficient to provide such benefits in full, and with any
assets remaining thereafter to be allocated to provide such
part of the benefits which would be provided for such persons
under the Plan based on its provisions as in effect as amended
by each next succeeding Plan amendment effective during such
five-year period.
(d) Fourth, if any assets remain, to provide all other benefits under
Article IV or V hereof for each Member which are not provided for
above, accrued to the date of termination of the Plan, and in the
order of priority described in (c)(1) and (2) above if assets are
not sufficient to provide such benefits in full.
(e) If any assets remain, they shall revert to the Company as provided
in section 8.3 hereof.
Distribution may be implemented through the continuance of the Trust Fund, or
the creation of a new Trust Fund for that purpose, or by purchase of
non-transferable annuity contracts, or by a combination thereof. Provided that
no discrimination in value results, the Committee may direct that any or all of
the benefits to be provided by such allocations may be computed on an actuarial
basis and distributed as an Actuarial Equivalent immediate cash payment. Subject
to the qualified joint and survivor annuity requirements set forth in Article V.
9.6. Merger or Consolidation or Transfer. No merger or consolidation of
the Plan with, or any transfer of assets or liabilities of the Plan to or from,
any other Plan shall occur unless each Member in the Plan would be entitled to
receive a benefit immediately after the merger, consolidation, or transfer (if
the Plan then terminated) which is equal to or greater than the benefit he would
have been entitled to receive immediately before the merger, consolidation, or
transfer (if the Plan had then terminated).
44
Article X. Restrictions on Benefits
10.1. Restriction on Benefits.
(a) General Rule. Notwithstanding anything to the contrary in this Plan,
the annual payments to a "Restricted Employee" (as defined below)
are limited to an amount equal in each Plan Year to the payments
that would be made on behalf of the Restricted Employee under --
(1) a Single Life Annuity that is the Actuarial Equivalent of the
Restricted Employee's Accrued Benefit and any other Benefits
(as defined below) to which the Member is entitled under the
Plan (other than a social security supplement), and
(2) the amount of the payments that the Restricted Employee is
entitled to receive under a social security supplement.
(b) Waiver of Restrictions. The restrictions imposed by this subsection
10.1 do not apply if the requirement of paragraph (1), (2), or (3)
below is satisfied --
(1) after payment to a Restricted Employee of all Benefits payable
to such Restricted Employee under the Plan, the value of Plan
assets equals or exceeds 110 percent of the value of current
liabilities (as defined in Code section 412(l)(7));
(2) the value of the Benefits payable to the Restricted Employee
under the Plan is less than 1 percent of the value of current
liabilities of the Plan before distribution; or
(3) The value of the Benefits payable to the Restricted Employee
under the Plan does not exceed the amount described in Code
section 411(a)(11)(A) (restrictions on mandatory
distributions).
(c) Definitions. For purposes of this section 10.1 the following terms
shall have the respective meanings set forth below.
(1) "Benefit" shall mean loans in excess of the amounts set forth
in Code section 72(p)(2)(A), any periodic income, any
withdrawal values payable to a living Employee, any death
benefits not provided by insurance on the Employee's life, and
any other benefit described in Treasury Regulation section
1.401(a)(4)-5(b)(3)(iii)).
(2) "Restricted Employee" shall mean the 25 Highly Compensated
Employees and highly compensated former Employees with the
greatest Compensation in the current or any prior Plan Year.
45
Article XI. Applicable Law
11.1. Applicable Law. The Plan shall be governed by and construed
according to the laws of the State of New Jersey and the United States of
America.
46
Article XII. Top-Heavy Plan Provisions
12.1. General Rule. In the event that the Plan is top-heavy, or is a
member of a top-heavy group, the provisions of sections 12.4 through 12.7 shall
apply.
12.2. When Plan is Top-Heavy. The Plan shall be top-heavy for a Plan Year
if, as of the Applicable Determination Date (as defined below), the present
value of the cumulative Accrued Benefits under the Plan for Key Employees (as
defined below) exceeds 60 percent of the cumulative Accrued Benefits under the
Plan for all Employees (other than former Key Employees) under the Plan. Such
amounts shall include the value of any distributions made with respect to the
Employee during the five-year period ending on the Applicable Determination
Date. The Accrued Benefits of Members who have not performed services for the
Company or the Affiliates at any time during the five-year period ending on the
Applicable Determination Date shall not be taken into account. The determination
of the foregoing ratio shall be made in accordance with section 416(g) of the
Code, which is incorporated herein by this reference. Notwithstanding the
foregoing, the Plan shall not be top-heavy if it is part of any affiliation
group of plans, as defined in subsection 12.3(a), that is not a top-heavy group.
12.3. When Plan is in Top-Heavy Group. A Plan is a member of a top-heavy
group with respect to a Plan Year if, as of the Applicable Determination Date,
it is part of an affiliation group of plans which is top-heavy. For purposes of
this Article --
(a) An "affiliation group of plans" includes each plan qualified under
section 401(a) of the Code which is maintained by the Company or an
Affiliate and (1) in which a Key employee is a participant, or (2)
which enables any other plan in which a Key employee is a
participant to meet the requirements of section 401(a)(4) or 410 of
the Code.
(b) An affiliation group of plans shall be a "top-heavy group" with
respect to a Plan Year if, as of the applicable determination date,
the sum of:
(1) the present value of the cumulative accrued benefits for Key
Employees under all defined benefit plans included in such
group, and
(2) the aggregate of the accounts of Key Employees under all
defined contribution plans included in such group,
exceeds 60 percent of a similar sum determined for all Employees
(other than former Key Employees) covered under the affiliation
group of plans. Cumulative accrued benefits and account balances
shall be adjusted for any distribution made in the five-year period
ending on the Applicable Determination Date and any contribution due
but unpaid as of said Applicable Determination Date. Account
balances and accrued benefits of Members who have not performed
services for the Company or the Affiliates at any time during the
five-year period ending on the Applicable Determination Date shall
not be taken into account. The determination of the foregoing ratio,
including the extent to which distributions (including distributions
from terminated plans), rollovers, and transfers are taken
47
into account, shall be made in accordance with section 416 of the
Code and the regulations thereunder.
12.4. Minimum Benefit.
(a) Notwithstanding any other section of the Plan to the contrary, for
any Plan Year with respect to which the Plan is top-heavy or is a
member of a top-heavy group, each member who is not a Key Employee
shall accrue a Normal Retirement Benefit of not less than 2 percent
of the Participant's average Limitation Compensation for the five
consecutive Plan Years for which such Limitation Compensation was
the highest.
(b) Subsection (a) shall not apply to a Member credited with fewer than
1,000 Hours of Service for the Plan Year.
(c) No additional benefit accruals shall be provided under subsection
(a) once the total annual benefit payable under the plan in the form
of a Single Life Annuity at age 65 equals or exceeds 20 percent of
the Member's highest average Limitation Compensation for the five
consecutive years for which such Limitation Compensation was the
highest.
(d) If a Member who is not a Key Employee is also a participant under
one or more defined contribution plans in an aggregation group of
plans maintained by the Company in any Plan Year in which this Plan
is top-heavy, such Member shall accrue the minimum benefit described
in subsection (a) above, and no additional contributions to such
defined contribution plans shall be required to be made on behalf of
such Participant pursuant to section 416 of the Code.
(e) Notwithstanding subsections 4.1(c), 4.2(c), and section 4.7, if
payment of the Member's benefit under the Plan is suspended during a
Member's Service after his Normal Retirement Date, the benefits
payable upon the subsequent commencement or resumption of payments
to the Member or his Beneficiary shall be actuarially increased,
using the actuarial assumptions set forth in section 2.3, to reflect
the nonpayment of benefits during such period of employment.
12.5. Accelerated Vesting.
(a) For each Plan Year for which the Plan is top-heavy, or the Plan is a
member of a top-heavy group, then a Member's interest in his Accrued
Benefit shall vest in accordance with the following schedule:
48
Completed Years
Of Vesting Service Vested Percentage
------------------ -----------------
Less than 2 0%
At least 2 20%
3 40%
4 60%
5 80%
6 or more 100%
Notwithstanding the foregoing, this subsection (a) shall not apply
to the Accrued Benefit of any Participant who does not have an Hour
of Service after the Plan becomes top-heavy.
If the above accelerated vesting schedule becomes applicable, (1)
the percentage of the Member's Accrued Benefit which is
nonforfeitable under such schedule shall not be less than the
percentage that was nonforfeitable before the Plan became top-heavy
or became a member of a top-heavy group.
(b) In a Plan Year in which the Plan is no longer either top-heavy or a
member of a top-heavy group, the five-year vesting provisions
contained in subsection 4.3(c) shall be restored. Notwithstanding
such restoration, (1) the percentage of the Member's Accrued Benefit
which is nonforfeitable after such restoration shall not be less
than the percentage that was nonforfeitable before the Plan ceased
to be top-heavy or ceased to be a member of a top-heavy group, and
(2) the accelerated vesting schedule set forth in subsection (a)
shall continue to apply in the case of a Member with three or more
years of Vesting Service.
12.6. Limitation on Compensation. The maximum amount of Compensation taken
into account for any Plan Year shall be adjusted under Code section 415(d) to
reflect cost-of-living adjustments.
12.7. Adjustment in Maximum Benefit Limitation. For any Plan Year prior to
January 1, 2000 with respect to which the Plan is top-heavy or is a member of a
top-heavy group, subsection 15.9(b)(1) and (c)(1) shall be applied by
substituting "1.01" for "1.25".
12.8. Definitions. For purposes of this Article:
(a) Applicable Determination Date shall mean, with respect to the Plan,
the determination date for the Plan Year of reference and, with
respect to any other plan, the determination date for any plan year
of such plan which falls within such calendar year as the Applicable
Determination Date of the Plan. For purposes of this subsection, the
term "determination date" shall mean, with respect to the initial
plan year of a plan, the last day of such plan year and, with
respect to any other plan year of a plan, the last day of the
preceding plan year of such plan. The present value of an Accrued
Benefit shall be determined as of the most recent
49
valuation date, used for purposes of section 412 of the Code, which
is within the 12-month period ending on the Applicable Determination
Date. The actuarial assumptions used to calculate the present value
of an Accrued Benefit shall be the same as set forth in Section 2.3.
(b) Key Employee shall mean, as of any Applicable Determination Date,
any Employee or former Employee, or any Beneficiary thereof, who, at
any time during the Plan Year (which includes the Determination
Date) or during the preceding four Plan Years,
(i) is an officer of the Employer who has annual Compensation in
excess of 1/2 times the dollar limit on Annual Additions to a
defined benefit plan under Section 415 of the Code;
(ii) one of the ten Employees owning the largest interests of the
Employer with annual Compensation in excess of the dollar limit on
Annual Additions to a defined contribution plan under Section 415 of
the Code;
(iii) a more than five percent (5%) owner of the Employer; or
(iv) a more than one percent (1%) owner of the Employer who has
annual Compensation of more than $150,000.
The constructive ownership rules of Section 318 of the Code will
apply to determine ownership in the Employer. The Committee will
make the determination of who is a Key Employee in accordance with
Section 416(i)(1) of the Code and the regulations thereunder.
12.9. MODIFICATION OF TOP-HEAVY RULES.
(a) Notwithstanding the foregoing, this Section shall apply for purposes
of determining whether the Plan is a top-heavy Plan under Section
416(g) of the Code for Plan Years beginning after December 31, 2001,
and whether the Plan satisfies the minimum benefits requirements of
Section 416(c) of the Code for such years.
(b) Determination of Top-Heavy Status.
(i) Key Employee. Key Employee means any Employee or former Employee
(including any deceased Employee) who at any time during the Plan
Year that includes the determination date was an officer of the
Employer having Annual Compensation greater than $130,000 (as
adjusted under Section 416(i)(1) of the Code for Plan Years
beginning after December 31, 2002), a 5-percent owner of the
Employer, or a 1-percent owner of the Employer having Annual
Compensation of more than $150,000. For this purpose, annual
Compensation means compensation within the meaning of Section
415(c)(3) of the Code. The determination of who is a Key Employee
will be made in accordance with Section
50
416(i)(1) of the Code and the applicable regulations and other
guidance of general applicability issued thereunder.
(ii) Determination of Present Values and Amounts. This Section (ii)
shall apply for purposes of determining the present values of
accrued benefits and the amounts of Account Balances of Employees as
of the determination date.
(A) Distributions During Year Ending on the Determination
Date. The present values of accrued benefits and the amounts
of Account Balances of an Employee as of the determination
date shall be increased by the distributions made with respect
to the Employee under the Plan and any Plan aggregated with
the Plan under Section 416(g)(2) of the Code during the 1-year
period ending on the determination date. The preceding
sentence shall also apply to distributions under a terminated
plan which, had it not been terminated, would have been
aggregated with the Plan under Section 416(g)(2)(A)(i) of the
Code. In the case of a distribution made for a reason other
than separation from service, death, or disability, this
provision shall be applied by substituting "5-year period" for
"1-year period."
(B) Employees Not Performing Services During Year Ending on
the Determination Date. The accrued benefits and accounts of
any individual who has not performed services for the Employer
during the 1-year period ending on the determination date
shall not be taken into account.
(c) Minimum Benefits.
For purposes of satisfying the minimum benefit requirements of
Section 416(c)(1) of the Code and the Plan, in determining years of
service with the Employer, any service with the Employer shall be
disregarded to the extent that such service occurs during a plan
year when the Plan benefits (within the meaning of Section 410(b) of
the Code) no key employee or former key employee.
51
Article XIII. Leased Employees
13.1. Treatment of Leased Employees Under the Plan.
(a) Eligibility and Vesting. Solely for purposes of determining whether
a Member completed a Year of Eligibility Service and determining the
years of Vesting Service which a Member has completed, service as a
Leased Employee (as defined below) shall be treated as service as an
Employee.
(b) Maximum Benefit Limitation. For purposes of the maximum benefit
limitations set forth in Article XV --
(1) any contributions or benefits which are provided under a plan
maintained by a Leasing organization (as defined below) and
which are attributable to a Member's service as a Leased
Employee performed for the Company or a Related Person (as
defined below) shall be treated as provided by the recipient
of such services, and
(2) aggregate remuneration shall include amounts which are
received by the Member for his service as a Leased Employee.
(c) Benefit Accrual. A Leased Employee shall not be eligible to become a
Member eligible to accrue benefits under the Plan unless and except
to the extent that he shall qualify as an Employee without regard to
the provisions of this Article XIII.
13.2. Service Not Counted. This Article XIII shall not apply to a Leased
Employee for any period:
(a) during which such Member is covered by a Leasing Organization
Pension Plan (as defined below), and
(b) during which no more than 20 percent of the combined nonhighly
compensated work force (within the meaning of section 414(n) of the
Code) of the Recipient Company and its Affiliates is made up of
Leased Employees.
13.3. Definitions. For purposes of this section --
(a) Leased Employee shall mean any Member who provides services for the
Recipient Company and --
(1) such services are provided pursuant to an agreement between
the Recipient Company and a Leasing Organization;
(2) such services are performed under the primary direction or
control of the Recipient Company;
52
(3) such Member is not a common law employee of the Recipient
Company; and
(4) such Member has performed such services for the Recipient
Company and any Related Person, as a Leased Employee or a
common law employee, on a substantially full-time basis for a
period of at least one year.
For purposes of the preceding sentence, a Member is considered to
have performed services on a substantially full-time basis for a
period of at least one year if during any consecutive 12-month
period such person has either (A) performed at least 1,500 hours of
service for the Recipient Company and any Related Person, or (B)
performed services for the Recipient Company and any Related Person
for a number of hours of service at least equal to 75 percent of the
number of hours customarily performed by a common law employee of
the Recipient Company or Related Person in the particular position.
(b) Leasing Organization shall have the same meaning as under section
414(n)(2)(A) of the Code.
(c) Leasing Organization Pension Plan shall mean a plan maintained by a
Leasing organization which with respect to the Leased Employee --
(1) is a money purchase pension plan with a nonintegrated employer
contribution rate of at least 10 percent; and
(2) provides for immediate participation and for full and
immediate vesting; and
(3) provides for immediate participation by each Employee of the
Leasing Organization (other than an Employee who performs
substantially all of his service for such Leasing
Organization) whose "compensation" (within the meaning of
section 414(n)(5)(C)(iii) of the Code) from such Leasing
Organization during any year in the four-year period ending
with the year in question is $1,000 or more.
(d) Recipient Company shall mean the Company or Affiliate for which a
Leased Employee performs services.
(e) Related Person shall have the meaning prescribed in section
144(a)(3) of the Code.
13.4. Construction. The purpose of this Article XIII is to comply with the
provisions of section 414(n) of the Code. All provisions of this section shall
be construed consistently therewith, and, without limiting the generality of the
foregoing, no Member shall be treated as a Leased Employee except as required
under such Code section 414(n).
53
Article XIV. Qualified Domestic Relations Orders
14.1. Establishment of Procedures. The Committee shall establish
procedures, consistent with section 414(p) of the Code, to determine the
qualified status of any Domestic Relations Order (as defined below), to
administer distributions under any Qualified Domestic Relations Order (as
defined below), and to provide to the Member and the Alternate Payee(s) (as
defined below) all notices required under Code section 414(p) with respect to
any Domestic Relations Order.
14.2. Procedures for Period During Which the Qualified Status of an Order
Is Being Determined.
(a) General Rule. During any period in which the qualified status of a
Domestic Relations Order is being determined (by the Committee, by a
court of competent jurisdiction, or otherwise), the Committee shall
cause to be segregated in an escrow account all amounts which would
have been payable to any Alternate Payee(s) during such period if
such order had been determined to be a Qualified Domestic Relations
Order. Such segregated amounts shall be invested in interest-bearing
vehicles selected by the Committee in its sole and absolute
discretion.
(b) Payment to Alternate Payee If Order Is Determined to be a Qualified
Domestic Relations Order. If, by the end of the 18-month period
beginning on the date the first payment would be required to be made
under a Domestic Relations Order, such order (or any modification
thereof) is determined to be a Qualified Domestic Relations Order,
the Committee shall pay all amounts which have been segregated
pursuant to paragraph (a), and any interest having accrued thereon,
to the Alternate Payee(s) entitled thereto and shall instruct the
Trustee to apply, on a prospective basis, the terms and provisions
of such Qualified Domestic Relations Order.
(c) Release of Funds From Escrow Account. If, by the end of the 18-month
period beginning on the date the first payment would be required to
be made under a Domestic Relations Order, either it has been
determined that such order is not a Qualified Domestic Relations
Order or the issue as to whether such order is a Qualified Domestic
Relations Order has not been resolved, the Committee shall pay all
amounts which have been segregated pursuant to paragraph (a), and
any interest having accrued thereon, to the person or persons who
would have been entitled to such amounts if there had been no order.
If the Member or his Beneficiaries are not yet entitled to receive
benefit payments under the Plan, such segregated amounts, and all
interest having accrued thereon, shall be returned to the Trustee to
be invested with the general assets of the Trust.
(d) Subsequent Determination or Order to be Applied Prospectively. If a
determination is made after the release of funds described in
paragraph (c) that a Domestic Relations Order (or any modification
thereof) is a Qualified Domestic Relations Order, such order shall
be applied prospectively only.
54
14.3. Definitions. For purposes of this section:
(a) Alternate Payee shall mean any spouse, former spouse, child, or
other dependent of a Member who is recognized by a Domestic
Relations Order as having a right to receive all, or a portion of,
the benefits payable under the Plan with respect to such Member.
(b) Domestic Relations Order shall mean any judgment, decree, or order
(including approval of a property settlement agreement) which --
(1) relates to the provision of child support, alimony payments,
or marital property rights to a spouse, former spouse, child,
or other dependent of a Member, and
(2) is made pursuant to a state domestic relations law (including
a community property law).
(c) Qualified Domestic Relations Order shall mean a Domestic Relations
Order which meets the requirements of section 414(p)(1) of the Code.
14.4. Actuarial Assumptions. In determining the qualified status of any
Domestic Relations Order, the actuarial assumptions used in determining the
present value of a Participant's Accrued Benefits under the Plan and the present
value of any Company subsidy for early retirement shall be the assumptions
specified in section 2.3.
55
Article XV. Maximum Benefit Limitations
15.1. General Rule. Notwithstanding any provision of the Plan to the
contrary, the annual Normal Retirement Benefit payable under the Plan as either
a Single Life Annuity, or an Automatic Joint and Surviving Spouse Annuity,
commencing at Social Security Retirement Age, together with benefits payable in
the same form under other qualified defined benefit plans maintained by the
Company or an Affiliate, shall in no event exceed the lesser of:
(a) $90,000 or such other amount as shall be determined by the Secretary
of the Treasury under section 415(d) of the Code to reflect
cost-of-living adjustments; or
(b) 100 percent of the Member's average Limitation Compensation (as
defined below) for the three consecutive Plan Years that produce the
highest average.
If the benefit the Member otherwise would accrue in any Plan Year under all such
plans would produce a benefit in excess of such maximum amount, the rate of
accrual under this Plan will be reduced to the extent necessary to avoid such
excess.
Notwithstanding the foregoing, effective for Plan Years ending after
December 31, 2001, Benefit increases resulting from the increase in the
limitations of Section 415(b) of the Code will be provided to all employees
participating in the Plan who have one Hour of Service on or after the first day
of the first limitation year ending after December 31, 2001.
(i) Definitions.
(a) Defined benefit dollar limitation. The "defined benefit dollar
limitation" is $160,000, as adjusted, effective January 1 of each
year, under Section 415(d) of the Code in such manner as the
Secretary shall prescribe, and payable in the form of a straight
life annuity. A limitation as adjusted under section 415(d) will
apply to limitation years ending with or within the calendar year
for which the adjustment applies.
(b) Maximum permissible benefit: The "maximum permissible benefit"
is the lesser of the defined benefit dollar limitation or the
defined benefit compensation limitation (both adjusted where
required, as provided in (1) and, if applicable, in (2) or (3)
below).
(1) If the Participant has fewer than 10 years of participation in
the Plan, the defined benefit dollar limitation shall be multiplied
by a fraction, (i) the numerator of which is the number of years (or
part thereof) of participation in the Plan and (ii) the denominator
of which is 10. In the case of a Participant who has fewer than 10
years of service with the Employer, the defined benefit compensation
limitation shall be multiplied by a fraction, (i) the numerator of
which is the number of years (or part thereof) of service with the
Employer and (ii) the denominator of which is 10.
(2) If the benefit of a Participant begins prior to age 62, the
defined benefit dollar limitation applicable to the Participant at
such earlier age is an
56
annual benefit payable in the form of a straight life annuity
beginning at the earlier age that is the actuarial equivalent of the
defined benefit dollar limitation applicable to the Participant at
age 62 (adjusted under (a) above, if required). The defined benefit
dollar limitation applicable at an age prior to age 62 is determined
as the lesser of (i) the actuarial equivalent (at such age) of the
defined benefit dollar limitation computed using the interest rate
and mortality table (or other tabular factor) specified in Section
8.6(c) of the Plan and (ii) the actuarial equivalent (at such age)
of the defined benefit dollar limitation computed using a 5 percent
interest rate and the applicable mortality table as defined in
Section 8.6(c) of the plan. Any decrease in the defined benefit
dollar limitation determined in accordance with this paragraph (b)
shall not reflect a mortality decrement if benefits are not
forfeited upon the death of the Participant. If any benefits are
forfeited upon death, the full mortality decrement is taken into
account.
(3) If the benefit of a Participant begins after the Participant
attains age 65, the defined benefit dollar limitation applicable to
the Participant at the later age is the annual benefit payable in
the form of a straight life annuity beginning at the later age that
is actuarially equivalent to the defined benefit dollar limitation
applicable to the participant at age 65 (adjusted under (a) above,
if required). The actuarial equivalent of the defined benefit dollar
limitation applicable at an age after age 65 is determined as (i)
the lesser of the actuarial equivalent (at such age) of the defined
benefit dollar limitation computed using the interest rate and
mortality table (or other tabular factor) specified in Section
8.6(c) of the Plan and (ii) the actuarial equivalent (at such age)
of the defined benefit dollar limitation computed using a 5 percent
interest rate assumption and the applicable mortality table as
defined in Section 8.6(c) of the Plan. For these purposes, mortality
between age 65 and the age at which benefits commence shall be
ignored.
15.2. Limitation for Member Also Covered Under Defined Contribution Plan.
In the case of a Member who is or has been covered under a qualified defined
contribution plan maintained by the Company or an Affiliate, the rate of accrual
under this Plan shall be reduced to the extent necessary to ensure that the sum
of the Member's Defined Benefit Fraction (as defined below) and Defined
Contribution Fraction (as defined below) does not exceed 1.0 for any Plan Year.
Notwithstanding the foregoing, effective with the first Limitation Year
beginning after December 31, 1999 in light of the repeal of Section 415(e) of
the Code as of that date, the combined plan limit set forth in this section
shall no longer be in effect.
15.3. Adjustment for Other Forms of Payment. In the case of benefits
payable in a form other than either a Single Life Annuity, or an Automatic Joint
and Surviving Spouse Annuity, the limitations of sections 15.1 and 15.2 shall be
applied to the amount which would be payable under the Plan if the form was a
Single Life Annuity. For Limitation Years beginning after December 31, 1994,
when adjusting a benefit to the Single Life Annuity form for purposes of the
preceding sentence, the actuarially adjusted Single Life Annuity shall be equal
to the greater of (a) the annuity benefit computed using the interest rate and
mortality table used to
57
determine Actuarial Equivalence under section 2.3(a) of the Plan, and (b) the
annuity benefit computed using a 5 percent interest rate assumption and the
Applicable Mortality Table defined in section 2.3(b) of the Plan. If a Member's
benefit is payable in a form subject to section 417(e)(3) of the Code, the
phrase "the Applicable Interest Rate, as defined in section 2.3(b) of the Plan,"
shall be substituted for the phrase "a 5 percent interest rate assumption" in
the preceding sentence.
15.4. Adjustment for Benefits Commencing Before Social Security Retirement
Age. In the case of benefits commencing before a Member's Social Security
Retirement Age, the applicable dollar limit under subsection 15.1(a) shall be
reduced as follows:
(a) Payments Commencing On or After Age 62. In the case of a Member
whose payments commence on or after age 62, the applicable dollar
limit shall be reduced by --
(1) five-ninths of 1 percent for each of the first 36 months, and
(2) five-twelfths of 1 percent for each additional month (up to 24
months) by which the commencement date of his benefit payments
precedes his Social Security Retirement Age.
(b) Payments Commencing Before Age 62. If the benefit of a Member
commences prior to age 62, the applicable dollar limit under
subsection 15.1(a) shall be an annual benefit that is the actuarial
equivalent of the applicable dollar limit for age 62, as determined
above, reduced for each month by which benefits commence before the
month in which the Member attains age 62. For Limitation Years
beginning after December 31, 1994, the applicable dollar limit
determined pursuant to the preceding sentence shall be the lesser of
(1) the Actuarial Equivalent of the applicable dollar limit amount
for payments commencing at age 62, and (2) the equivalent annual
benefit computed using a 5 percent interest rate and the Applicable
Mortality Table as defined in section 2.3(b) of the Plan.
15.5. Adjustment for Benefits Commencing After Social Security Retirement
Age. If the annual benefit of a Member commences after Social Security
Retirement Age, the applicable amount under subsection 15.1(a) shall be adjusted
so that it is the actuarial equivalent of either a $90,000 Single Life Annuity
benefit, or an Automatic Joint and Surviving Spouse Annuity benefit, whichever
is applicable, commencing at Social Security Retirement Age. For Limitation
Years beginning after December 31, 1994, the equivalent annual benefit beginning
after Social Security Retirement Age determined pursuant to the preceding
sentence shall be the lesser of (a) the Actuarially Equivalent annual benefit;
and (b) the equivalent annual benefit computed using a 5 percent interest rate
and the Applicable Mortality Table as defined in section 2.3(b) of the Plan.
15.6. Adjustment of Limitation for Years of Service.
(a) Dollar Limitation. In the case of a Member with fewer than 120
months of Benefit Service after first becoming a Member, the
applicable dollar limitation
58
under subsection 15.1(a) shall be equal to the amount otherwise
applicable times the greater of --
(1) 10 percent, or
(2) a fraction, the numerator of which is the number of months of
Benefit Service after first becoming a Member, and the
denominator of which is 120.
(b) Compensation Limitation. In the case of a Member with fewer than 10
years of service, the applicable limitation amount under subsection
15.1(b) shall be equal to the amount otherwise applicable times the
greater of --
(1) 10 percent, or
(2) a fraction, the numerator of which is the number of years of
service credited to the Member, and the denominator of which
is 10.
15.7. Preservation of Benefits.
(a) Preservation of Benefits Accrued Prior to January 1, 1987. Nothing
in this Article XV shall limit or prohibit the payment of any
benefit attributable to Benefit Service or years of employment
credited and Compensation and Average Monthly Compensation earned,
prior to January 1, 1987, to the extent that such payment would have
been permitted under the terms of Article XV as in effect prior to
January 1, 1987.
(b) Preservation of Benefits Accrued Prior to January 1, 2000.
Notwithstanding anything to the contrary, nohing in this Article XV
shall cause the maximum amount payable to a Member to be less than
the Member's Retirement Protection Act of 1994 Old Law Benefit.
15.8. Limitation Year. For purposes of applying section 415 of the Code
and applicable regulations, the limitation year for the Plan shall be the Plan
Year.
15.9. Definitions. For purposes of this Article XV,
(a) Annual Addition shall mean the sum, credited to a Member's accounts
under qualified defined contribution plans maintained by the Company
or an Affiliate, of --
(1) Company contributions, including amounts made under cash or
deferred arrangements described in section 401(k) of the Code;
(2) forfeitures;
59
(3) Employee contributions; provided that Employee contributions
for Plan Years prior to 1987 which were disregarded under the
provisions of the Plan in effect prior to January 1, 1987,
shall continue to be disregarded;
(4) for Plan Years beginning after March 31, 1984, amounts
allocated to a Member medical account (as defined in section
415(l) of the Code) which is part of any defined benefit plan
maintained by the Company or an Affiliate; and
(5) amounts (derived from contributions paid after December 31,
1985, in taxable years ending after such date) attributable to
post-retirement medical benefits allocated to the separate
account of a key employee (as defined in section 419A(d)(3) of
the Code) under a welfare benefit fund (as defined in section
419(e) of the Code) maintained by the Company or an Affiliate.
Restored forfeitures, repaid distributions, rollover contributions,
and loan payments shall not be treated as Annual Additions.
Notwithstanding the foregoing, any contributions made after a
Member's Termination of Employment with the Company and its
Affiliates for the purpose of providing medical care (within the
meaning of Code section 419(A)(f)(2)) shall not be treated as an
Annual Addition.
(b) Defined Benefit Fraction shall mean a fraction, the numerator of
which is the sum of the Member's Projected Annual Benefits (as
defined below) under all qualified defined benefit plans (whether or
not terminated) maintained by the Company or an Affiliate, and the
denominator of which is the lesser of --
(1) 1.25 times the dollar limitation of subsection 15.1(a) in
effect for the Plan year, or
(2) 1.4 times the Member's average Limitation Compensation for the
three consecutive Plan Years that produce the highest average.
Notwithstanding the above, if the Member was a Member in one or more
defined benefit plans maintained by the Company or an Affiliate
which were in existence on May 6, 1986, the denominator of this
fraction shall not be less than 1.25 times the sum of the annual
benefits under such plans which the Member had accrued as of the end
of the last limitation year (as defined in Code section 415 and the
regulations promulgated thereunder) beginning before January 1,
1987. The preceding sentence shall apply only if the defined benefit
plans, individually and in the aggregate, satisfied the requirements
of Code section 415 for all limitation years beginning before
January 1, 1987.
(c) Defined Contribution Fraction.
(1) In General. "Defined Contribution Fraction" shall mean a
fraction, the numerator of which is the sum of the Annual
Additions to the Member's
60
accounts under all qualified defined contribution plans
(whether or not terminated) maintained by the Company or an
Affiliate for the current and all prior Plan Years, and the
denominator of which is the sum of the lesser of the following
amounts determined for such year and for each prior year of
service with the Company or its Affiliates --
(A) 1.25 times the dollar limitation in effect under Code
section 415(c)(1)(A) for such year, or
(B) 1.4 times the amount which may be taken into account
under Code section 415(c)(1)(B).
(2) Adjustment Under Tax Reform Act of 1986. Subsection 15.9(c)(1)
notwithstanding, the numerator of the Defined Contribution
Fraction shall be permanently reduced (but not below zero) by
an amount equal to the product of --
(A) the sum (determined as of December 31, 1986) of the
Defined Contribution Fraction plus the Defined Benefit
Fraction minus one, times
(B) the denominator of the Defined Contribution Fraction as
of December 31, 1986.
Solely for purposes of this paragraph, the Defined Benefit
Fraction shall be determined as if the changes to section 415
of the Code under the Tax Reform Act of 1986 were in effect.
(d) Limitation Compensation shall mean the total of regular, overtime,
bonus and other cash Compensation paid or made available to the
Employee during the Plan Year, but not including amounts deferred as
a result of a salary reduction election under section 401(k) of the
Code and the items listed in Treasury Regulation section
1.415-2(d)(2) (relating to deferred Compensation, stock options, and
proceeds from the sale of certain securities). Notwithstanding the
preceding sentence, effective January 1, 1998, Limitation
Compensation shall include any elective deferral (as defined under
section 402(g)(3) of the Code) and any amount which is contributed
by the Company or an Affiliate at the election of the Employee and
which is not includible in gross income under section 125 of the
Code.
(e) Projected Annual Benefit shall mean the annual benefit to which the
Member would be entitled under the terms of the Plan and all other
defined benefit plans maintained by the Company or an Affiliate, if
the Member continued employment until his Normal Retirement Age (or
current age, if later) and the Member's Limitation Compensation for
the Plan Year and all other relevant factors used to determine such
benefit remained constant until Normal Retirement age (or current
age, if later).
61
(f) Retirement Protection Act of 1994 Old Law Benefit ("RPA '94 Old Law
Benefit") shall mean the Member's Accrued Benefit under the terms of
the Plan as of December 31, 1999 (the "RPA '94 Freeze Date"), for
the Annuity Starting Date and optional form and taking into account
the limitations of section 415 of the Code as in effect on December
7, 1994, including the particiation requirements of section
415(b)(5). In determining the amount of a Member's RPA '94 Old Law
Benefit, the following shall be disregarded: (i) any plan amendment
increasing amendments adopted after the RPA '94 Freeze Date; and
(ii) any cost of living adjustments that become effective after such
date. A Member's RPA '94 Old Law Benefit is not increased after the
RPA '94 Freeze Date, but if the limitations of section 415 as in
effect on December 7, 1994, are less than the limitations that were
applied to determine the Member's RPA '94 Old Law Benefit on the RPA
'94 Freeze Date, then the Member's RPA '94 Old Law Benefit will be
reduced in accordance with such reduced limitation. If, at any date
after the RPA '94 Freeze Date, the Member's total Plan benefit,
before the application of section 415, is less than the Member's RPA
'94 Old Law Benefit, the RPA '94 Old Law Benefit will be reduced to
the Member's total Plan benefit. Determinations under this Article
XV that are made before January 1, 2000, shall be made with respect
to a Member's RPA '94 Old Law Benefit on the basis of section
415(b)(2)(E) of the Code as in effect on December 7, 1994, and the
provisions of the Plan in effect on said date.
(g) Social Security Retirement Age shall mean --
(1) age 65 for a Member born before January 1, 1938;
(2) age 66 for a Member born after December 31, 1937, but before
January 1, 1955; and
(3) age 67 for a Member born after December 31, 1954.
15.10. Plan Provisions Subject to Section 415 of the Code. The provisions
of this Article XV are intended to meet, but not exceed, the require-ments of
section 415 of the Code. If the Committee determines a conflict exists between
the Plan and Section 415 of the Code (including, but not limited to, a conflict
arising from the terms of this Article XV imposing limitations not required by
section 415 of the Code), then section 415 of the Code as then in effect will
supersede the provisions of this Article XV.
* * * * * * * * * *
62
IN WITNESS WHEREOF, SELECTIVE INSURANCE COMPANY OF AMERICA has caused this
instrument to be executed by its duly authorized officer on this ______ day of
________________________, ____, effective as of the 1st day of January , 1997.
SELECTIVE INSURANCE COMPANY
OF AMERICA
ATTEST:
By:_____________________________________
By:__________________________________
(CORPORATE SEAL)
63
APPENDIX A
RETIREMENT INCOME PLAN FOR EMPLOYEES OF
SELECTIVE INSURANCE COMPANY OF AMERICA
AND SUBSIDIARIES
The column headings in Appendix A represent the following items:
Column A: Name of Participant
Column B: Social Security Number
Column C: Monthly amount of Retirement Annuity purchased under Group
Annuity Contract (GA 1581) in accordance with the Prior Plan as
constituted on December 31, 1985.
A-1
APPENDIX B
Participating Companies
Selective Insurance Company of America
Alta Services LLC
Consumer Health Network Plus, LLC
FloodConnect LLC
Selective Risk Managers
B-1
APPENDIX C
Cost of Living Adjustments
The monthly retirement benefits payable under Section 4.1, 4.2, 4.4, or 4.5 of
the Plan shall be adjusted for a cost-of-living increase as follows:
(a) Any Member who retired on or before December 1, 1992 (and the
Beneficiaries of each such Member) shall have their monthly retirement
benefit increased, effective July 1, 1996, by .08333 percent per month,
multiplied by the number of complete calendar months from the date the
Member (or the Member's Beneficiary) commenced benefits pursuant to
Sections 4.1, 4.2, 4.4 or 4.5 of the Plan and ending on July 1, 1996, not
to exceed a maximum of 84 complete calendar months. In no event shall a
Member's monthly retirement benefit increase pursuant to this paragraph
(a) by more than 7 percent. Notwithstanding anything herein to the
contrary, the monthly benefit increase described in this paragraph (a)
shall only be applicable to a Member who elected immediately to receive a
Normal Retirement Benefit or an Early Retirement Benefit as of the date
his employment with the Company terminated.
(b) Any Member who retired on or before December 1, 1989 (and the
Beneficiaries of each such Member) shall have their monthly retirement
benefit increased, effective January 1, 1992, by .01667 percent per month,
multiplied by the number of complete calendar months from the date the
Member (or the Member's Beneficiary) commenced benefits pursuant to
sections 4.1, 4.2, 4.4, or 4.5 of the Plan and ending on December 31,
1991, not to exceed a maximum of 84 complete calendar months. In no event
shall a Member's monthly retirement benefit increase by more than 14
percent.
(c) Any Member who retired on or before December 1, 1986 (and the
Beneficiaries of each such Member) shall have their monthly retirement
benefit increased, effective January 1, 1988, by .01667 percent per month
multiplied by the number of complete calendar months from the date the
Member (or the Member's Beneficiary) commenced benefits pursuant to
sections 4.1, 4.2, 4.4, or 4.5 of the Plan and ending on December 31,
1988, not to exceed a maximum of 84 complete calendar months. In no event
shall a Member's monthly retirement benefit increase pursuant to this
paragraph (b) by more than 14 percent.
C-1
APPENDIX D
Special Early Retirement Benefits
(a) Enhanced Early Retirement Benefit Supplement. The retirement benefit of an
Affected Member who voluntarily elects to retire during the Window Period
shall be computed in accordance with the otherwise applicable provisions
of the Plan, except that for purposes of section 4.1 of the Plan (Normal
Retirement Benefits) and section 4.2 of the Plan (Early Retirement
Benefits), his attained age and years of Benefit Service on his Annuity
Starting Date shall be deemed to be five (5) years greater than his actual
age and Benefit Service as of his Annuity Starting Date.
(b) Definitions. For purposes of this Appendix D:
(1) "Affected Member" shall mean a Member whose employment with the
Company and its Affiliate terminates during the Window Period, and
who had both attained age 55 and completed at least 10 years of
Benefit Service as of August 31, 1993.
(2) "Window Period" shall mean the period commencing on July 1, 1993 and
ending on August 16, 1993.
Any capitalized term in this Appendix D and not defined herein shall have
the meaning set forth in the Plan.
(c) Exceptions. The enhanced early retirement benefit or Normal Retirement
Benefit provided for in this Supplement shall not apply to any Member
whose employment with the Company or its Affiliate W terminates after
September 1, 1993, or (ii) terminates employment for any reason other than
as a result of the restructuring of the operations of the Company,
including, without limitation, as a result of voluntary resignation,
discharge for cause, or retirement other than as provided for in this
Supplement.
D-1