EXHIBIT 10.1
EXECUTION COPY
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DEAN WITTER REYNOLDS INC.
PENSION PLAN
Amended and Restated Effective as of January 1, 1995
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TABLE OF CONTENTS
Page
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SECTION 1. INTRODUCTION............................................. 1
SECTION 2. DEFINITIONS.............................................. 2
SECTION 3. PARTICIPATION............................................ 19
SECTION 4. PERIOD OF SERVICE........................................ 20
SECTION 5. RETIREMENT............................................... 24
SECTION 6. RETIREMENT BENEFITS...................................... 26
SECTION 7. VESTED BENEFITS.......................................... 35
SECTION 8. SURVIVING SPOUSE BENEFITS................................ 41
SECTION 9. INCORPORATION OF CERTAIN CODE REQUIREMENTS BY
REFERENCE...................................................... 44
SECTION 10. ESTABLISHMENT OF A FUNDING PROCEDURE; BASIS OF
PAYMENTS; LIMITATION OF OBLIGATION............................. 47
SECTION 11. RESTRICTIONS ON BENEFITS PAID TO HIGHLY COMPENSATED
EMPLOYEES ..................................................... 50
SECTION 12. FIDUCIARY RESPONSIBILITIES AND PLAN ADMINISTRATION...... 52
SECTION 13. CLAIMS PROCEDURE........................................ 54
SECTION 14. REVIEW PROCEDURE........................................ 55
SECTION 15. AMENDMENT; TERMINATION AND NONREVERSION................. 58
SECTION 16. MISCELLANEOUS........................................... 61
SECTION 17. EXECUTION............................................... 66
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APPENDIX A: ANNUAL PENSION EQUIVALENT PER $1.00
PROFIT SHARING PLAN BENEFIT AS OF
AUGUST 31, 1980...................................AA-1
APPENDIX B: DEAN WITTER REYNOLDS INC. PENSION
PLAN ACTUARIAL EQUIVALENTS........................AB-1
SUPPLEMENT A: TOP-HEAVY PROVISIONS...............................A-1
SUPPLEMENT B: SUPPLEMENTAL BENEFITS..............................B-1
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DEAN WITTER REYNOLDS INC.
PENSION PLAN
Amended and Restated Effective as of January 1, 1995
SECTION 1. INTRODUCTION.
The Dean Witter & Co. Incorporated Pension Plan was adopted and amended
effective September 1, 1975 by Dean Witter & Co. Incorporated. Effective January
3, 1978, upon the merger of Dean Witter & Co. Incorporated and Reynolds
Securities Inc., the Plan was amended and renamed the Dean Witter Reynolds Inc.
Pension Plan. Effective as of September 1, 1980, the Plan was amended and
restated to add a benefit for service prior to September 1, 1975, and to
increase the level of benefits provided for service after August 31, 1975.
Effective as of December 31, 1981, the Plan was amended and restated to reflect
the fact that, on December 31, 1981, Dean Witter Reynolds Organization Inc. was
merged into a wholly-owned subsidiary of Sears, Roebuck and Co., and to increase
the benefit provided to Participants who remain in covered employment beyond
their Normal Retirement Date. Effective January 1, 1985, the Plan was amended
and restated to comply with recent changes in the law and to provide a
supplemental retirement benefit to certain employees who transfer from
employment with Sears or Allstate to employment with the Company. Effective
January 1, 1986, the Plan was amended and restated to provide increased
Retirement Benefits to certain Participants and redefine eligibility for
2
Early Retirement Benefits. Effective January 1, 1987 the Plan was amended and
restated for the primary purpose of complying with certain requirements of the
Tax Reform Act of 1986, the Technical and Miscellaneous Revenue Act of 1988 and
other applicable changes in the law. Thereafter, the Plan was amended on six
occassions with the most recent amendment taking effect on January 1, 1995.
Except to the extent required by applicable law, the Plan as amended and
restated applies only to Participants who are employees on and after January 1,
1995.
The purpose of the Plan is to provide Eligible Employees with Retirement
Benefits to supplement the benefits provided by Federal Social Security and the
Dean Witter Reynolds Inc. Employee Retirement Investment Plan and the benefits
accrued under the Dean Witter Reynolds Inc. Profit Sharing Plan as of August 31,
1980. The Plan is intended to qualify for the favorable tax treatment provided
under section 401 and related sections of the Internal Revenue Code of 1986, as
amended. Dean Witter Reynolds Inc. retains the right, as provided in Section 15,
to amend or terminate the Plan at any time and for any reason. SECTION 2.
DEFINITIONS.
When used herein, the following capitalized words and phrases shall have
the following meanings:
"Affiliated Group" means the Company and any corporation, trade or business
required to be aggregated with the Company under Code section 414(b), (c), (m),
or (o).
"Allstate" means Allstate Insurance Company, an Illinois corporation.
3
"Annual Pension Equivalent" means the amount determined by multiplying a
Participant's Profit Sharing Plan Benefit as of August 31, 1980, by the
applicable factor set forth in Appendix A.
"Average Annual Past Service Earnings" means the annual average of an
Employee's Earnings for that portion of the period from January 1, 1984 through
December 31, 1990 during which the Employee was an Eligible Employee provided,
however, that if any such Employee was an employee of a predecessor of any
member of the Affiliated Group during all or any portion of such period, the
Employee's total compensation shall include the total compensation that the
Employee earned for such employment for the portion of such period that
constitutes Years of Past Service.
For purposes of calculating Average Annual Past Service Earnings,
"Earnings" shall be defined as set forth in this Section 2 except that Earnings
in 1990 may not exceed $209,200 and Earnings in each of the years from 1984
through 1989 used to determine Average Annual Past Service Earnings may not
exceed $200,000.
Notwithstanding the foregoing, the Plan Administrator may use a reasonable
estimate of an Employee's Earnings or compensation in determining his Annual
Average Past Service Earnings where records from which a precise determination
could be made are not reasonably available.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company" means Dean Witter Reynolds Inc., a Delaware corporation.
4
"Covered Compensation" means, with respect to any Employee, the average of
the Social Security Wage Bases for each calendar year for the 35-year Period of
Service ending with the last day of the calendar year in which the Employee
attains (or will attain) Social Security Retirement Age. In determining an
Employee's Covered Compensation for any particular Plan Year, the Social
Security Wage Base for the current Plan Year and any subsequent Plan Year shall
be assumed to be the same as the Social Security Wage Base in effect as of the
beginning of the Plan Year for which the determination is being made. A
Participant's Covered Compensation for a Plan Year after such 35-year Period of
service is the Participant's Covered Compensation for the Plan Year during which
the Participant attained Social Security Retirement Age. A Participant's Covered
Compensation for a Plan Year before the 35-year Period of Service described
above is the Social Security Wage Base in effect as of the beginning of such
Plan Year.
"DWDC" means Dean Witter, Discover & Co., a Delaware corporation, formerly
known as Dean Witter Financial Services Group Inc., the successor to Dean Witter
Financial Services Inc., the successor to Dean Witter Reynolds Organization Inc.
"Determination Year" means a Plan Year.
"Earnings" means an Employee's total compensation from any Participating
Company, regardless of when paid, including (i) compensation deferred under the
START Plan or the TDEPP, (ii) for any Plan Year commencing prior to January 1,
1987, compensation deferred under a plan of deferred compensation or a
5
plan intended to qualify under section 125 of the Code, (iii) for any Plan Year
commencing after December 31, 1988, compensation deferred under a plan intended
to qualify under section 125 of the Code and (iv) income realized upon the
exercise of an option to purchase stock of any member of the Affiliated Group or
a predecessor of any such member. For purposes of this definition, the term
"compensation deferred" shall not include any compensation that an Employee
could not have received on a current basis in the absence of an election to
defer receipt of such compensation but shall include compensation deferred
pursuant to an award made under the TDEPP, and the employer of an Employee
described in clause (ii) of the first sentence of this definition shall be
deemed to be a "Participating Company." Notwithstanding the foregoing, Earnings
shall not include (i) any amount unless such amount would be subject to tax
under section 3402 of the Code (or any successor provision thereto) if paid
currently and the Employee were fully subject to Federal income tax with respect
to such amount, (ii) any amount as to which the Employee does not have a
nonforfeitable right, except that amounts of compensation deferred pursuant to a
TDEPP award shall be included in Earnings without regard to forfeitability,
(iii) any employer contribution (other than an elective contribution within the
meaning of section 401(k) of the Code) to a plan which meets the requirements of
section 401(a) and related sections of the Code, and any income, gains or losses
of, or benefits from, any such plan, (iv) any employer contribution to, income,
gains or losses of, or benefits from any plan that is an "excess benefit plan"
within the meaning of section 3(36) of ERISA, (v) any amount which is earned
during a period that the Employee is not an Eligible Employee,
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(vi) any amount earned during any Plan Year prior to the Plan Year in which the
Employee becomes a Participant in the Plan, and (vii) any amount with respect to
which the Employee accrues benefits (whether or not vested) under any funded
retirement plan to which contributions have been made by any member of the
Affiliated Group, other than this Plan, the Profit Sharing Plan, the START Plan
or Federal Social Security.
With respect to accrual of benefits for periods after December 31, 1988,
the annual total compensation of a Participant that may be taken into account
under the Plan as Earnings for any Plan Year shall not exceed $200,000, as
adjusted by the secretary at the same time and in the same manner asunder
section 415(d) of the Code.
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 Earnings of each Participant
taken into account under the Plan shall not exceed the OBRA'93 annual
compensation limit. The OBRA'93 compensation limit is $150,000, as adjusted by
the Commissioner of Internal Revenue for increases in the cost-of-living in
accordance with Section 401(a)(17)(D) of the Code. The cost-of-living adjustment
in effect for a calendar year applies to any period not exceeding 12 months over
which compensation is determined (the "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 which is the number of months in the determination period and the
denominator of which is 12.
7
For Plan Years beginning on or after January 1, 1994, any reference in this
plan under section 401(a)(17) of the Code shall mean the OBRA'93 annual
compensation limit set forth in this provision.
If Earnings for any prior determination period are taken into account in
determining Participants' benefits accruing in the current Plan Year, the
Earnings for that determination period are 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 any other provision of the Plan, each section 401(a)(17)
employee's accrued benefit under this Plan will be the sum of: (a) the
employee'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)(14)-13 of the
regulations; and, (b) the employee's accrued benefit determined under the
benefit formula applicable for the Plan Year beginning on or after January 1,
1994, as applied to the employee's years of service credited to the employee for
Plan Years beginning after January 1, 1994, for purposes of benefit accruals.
A section 401(a)(17) employee means a Participant 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 Earnings for a year beginning prior to
the first day of the Plan Year beginning on or after January 1, 1994, that
exceeded $150,000.
8
In determining the compensation of a Participant for purposes of this
limitation the rules of section 414(q)(6) of the Code shall apply, except, in
applying such rules, the term "family" shall include only the spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the close of the Plan Year. If, as a result of the application of
such rules the adjusted limitation under section 401(a)(17) of the Code is
exceeded, then (except for purposes of determining the portion of compensation
up to the integration level if the Plan provides for permitted disparity), the
limitation shall be prorated among the affected individuals in proportion to
each such individual's compensation as determined under this section prior to
the application of this limitation.
Notwithstanding the foregoing, for purposes of determining whether an
individual is a Highly Compensated Employee or a member of the Top Paid Group,
Earnings shall be determined without regard to the limits imposed by Code
section 401(a)(17).
"Eligible Employee" means (i) any Employee of a Participating Company and
(ii) any Employee of a member of the Affiliated Group that is not a
Participating Company who has been designated in writing by the Plan
Administrator as an Eligible Employee. An Employee shall not be an Eligible
Employee with respect to any period (A) after his Normal Retirement Date if such
Employee did not have at least one Hour of Service in any Plan Year beginning on
or after January 1, 1988, (B) during which he is an employee solely by reason of
the application of section 414(m), (n) or (o) of the Code, nor (C) during which
he is covered by a
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collective bargaining agreement with respect to which a member of the Affiliated
Group is a party, except to the extent that such agreement provides that
Employees covered thereby shall be considered to be Eligible Employees as to
such period. An individual's status as an Eligible Employee shall be determined
by the Plan Administrator and, subject to the review procedure described in
section 14, such determination shall be conclusive and binding upon all persons.
"Employee" means any individual employed by or providing services to any
member of the Affiliated Group.
"Entry Date" means the first day of January or July.
"Equivalent Actuarial Value" means the sum or sums which are determined by
the use of the actuarial assumptions and mathematical calculations to be equal
to the benefits which would have been payable under the Plan at either a later
or an earlier date. Equivalent Actuarial Value shall be determined on the basis
specified in Appendix B hereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
"Family Member" means a spouse, lineal ascendent, lineal descendent or
spouse of a lineal ascendent or lineal descendent of a Highly Compensated
Employee.
"Federal Social Security" means the Social Security Act, as amended from
time to time.
"Five Percent Owner" means any person who owns (or is considered as owning
within the meaning of Code Section 318) more than five percent of the
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outstanding stock of an Affiliated Group member or stock possessing more than
five percent of the total combined voting power of all stock of an Affiliated
Group member or in the case of an unincorporated business, any person who owns
more than five percent of the capital or profits interest in an Affiliated Group
member. In determining percentage of ownership hereunder, Affiliated Group
members that would otherwise be aggregated under Code sections 414(b), (c), (m)
and (o) shall be treated as separate employers.
"Highly Compensated Active Employee" means any individual who is an
Employee during the Determination Year and who, during the Look-back Year:
(1) received Earnings in excess of $75,000 (as adjusted pursuant to Code
section 415(d);
(2) received Earnings in excess of $50,000 (as adjusted pursuant to Code
section 415(d) and was a member of the Top Paid Group; or,
(3) was an officer of any member of the Affiliated Group and received
Earnings greater than 50 percent of the dollar limitation in effect under Code
section 415(b)(l)(A) provided that the number of Employees classified as
officers hereunder shall not exceed the lesser of (i) 50 or (ii) the greater of
3 or 10 percent of all Employees and further provided that if no officer
satisfies the compensation requirement set forth herein during either the
Look-back Year or the Determination Year the highest paid officer for such year
shall be a Highly Compensated Active Employee.
11
In determining who is a Highly Compensated Active Employee, the Company
may elect to substitute $50,000 for $75,000 in l above and not apply 2 above
provided that the Affiliated Group maintains significant business activities in
at least two significantly separate geographic areas and meets such other
requirements as the Secretary of the Treasury may prescribe.
The term "Highly Compensated Active Employee" shall also include:
(4) An Employee who is both (i) described in 1, 2 or 3 above if the term
"Determination Year" is substituted for the term "Look-back Year" and (ii) one
of the 100 Employees who received the most Earnings during the Determination
Year;
(5) An Employee who is a Five Percent Owner at any time during the
Determination Year or the Look-back Year; or,
(6) An Employee who during a Determination Year or a Look-back Year is a
Family Member of either (i) a Five Percent Owner who is an active or former
employee or (ii) a Highly Compensated Active Employee who is one of the ten
employees who received the most Earnings during such year provided, however,
that the Family Member and the Five Percent Owner or top ten highly compensated
employee shall be treated as a single Highly Compensated Active Employee whose
earnings, benefits and contributions is the sum of such compensation, benefits
and contributions of the Family Member and the Five Percent Owner or top ten
highly compensated employee.
"Highly Compensated Employee" means a Highly Compensated Active Employee or
a Highly Compensated Former Employee.
12
"Highly Compensated Former Employee" means a former Employee who terminated
employment prior to the Determination Year and was a Highly Compensated Active
Employee in the year of termination of employment or in any Determination Year
after attaining age 55. Notwithstanding the foregoing, an Employee who
terminated employment prior to 1987 will be treated as a Highly Compensated
Former Employee only if during the year (or year preceding the termination) or
any year after the Employee attains age 55 (or the last year ending before the
Employee's 55th birthday), the Employee either received Earnings in excess of
$50,000 (as adjusted pursuant to Code section 415(d)) or was a Five Percent
Owner. Highly Compensated Former Employees shall be treated as Highly
Compensated Employees. The method set forth in this section for determining who
is a Highly Compensated Former Employee shall be applied on a uniform and
consistent basis for all purposes for which the Code section 414(q) definition
is applicable.
"Hour of Service" means each hour for which an Employee is paid or entitled
to parent for the performance of duties for the Employer or for any member of
the Affiliated Group.
"Investment Manager" means a person who is an investment manager within the
meaning of section 3(38) of ERISA and who has been appointed as an Investment
Manager by the Company pursuant to Section 12(b).
"Look-back Year" means twelve month period immediately preceding a
Determination Year.
13
"NationsSecurities" means NationsSecurities, A Dean Witter/NationsBank
Company, a North Carolina partnership.
"NCSI" means NOVUS Credit Services Inc., a Delaware corporation, formerly
known as Sears Consumer Financial Corporation.
"Normal Retirement Age" means age 65.
"Normal Retirement Date" means the last day of the month in which the
Participant attains age 65.
"Participant" means any Employee who is accruing benefits under the Plan
and any Employee or former Employee who is receiving benefits under the Plan, or
who is entitled to receive such benefits, whether on an immediate or a deferred
basis.
"Participating Company" means the Company and any member of the Affiliated
Group that has been designated in writing as a Participating Company by the Plan
Administrator and that has accepted such designation in writing.
"Period of Service" means the period (or periods) of an Employee's
employment by one or more members of the Affiliated Group, determined in
accordance with Section 4.
"Period of Severance" means a continuous period of time during which the
Employee is not employed by the Employer or any member of the Affiliated Group.
A Period of Severance commences on the date the Employee retires, quits or is
discharged, or if earlier, the twelve-month anniversary of the date on which the
Employee was otherwise first absent from service.
14
"Plan" means the Dean Witter Reynolds Inc. Pension Plan, as amended from
time to time.
"Plan Administrator" means Dean Witter Reynolds Inc., a Delaware
corporation.
"Plan Year" means: with respect to periods prior to September 1, 1981, the
twelve-month period ending August 31; and with respect to periods after December
31, 1981, the twelve-month period ending December 31. The four-month period from
September 1, 1981 through December 31, 1981 shall be treated as a "short" Plan
Year in accordance with applicable rules and regulations of the Internal Revenue
Service.
"Profit Sharing Plan" means the Dean Witter Reynolds Inc. Profit Sharing
Plan, as amended from time to time.
"Profit Sharing Plan Benefit as of August 31, 1980" means the sum of:
(i) The balance, if any, in a Participant's Company Contribution
Accounts under the Profit Sharing Plan as of August 31, 1980; and
(ii) Any amount distributed to such Participant after December 31,
1966, and prior to August 31, 1980, from his or her Company Contribution
Account(s) under the Profit Sharing Plan, the Reynolds Securities Inc.
Employees Profit Sharing Plan, the Profit Sharing Plan of J. Barth & Co.,
the Retirement Plan Trust of J. Barth & Co., the Standard and
Poor's/Intercapital Profit Sharing and Retirement Plan, the Profit Sharing
Plan of Laird, Bissell, and Meeds, Inc., the Profit Sharing Plan for
Salesmen of Laird, Bissell, and
15
Meeds, Inc., or the Baker Weeks & Co. Inc. Employees' Deferred Profit
Sharing Plan, plus interest on any such amount compounded at an annual rate
of 6% from the date of the termination or other event (such as becoming a
partner in any partnership that was a predecessor of any member of the
Affiliated Group) that gave rise to such distribution, through August 31,
1980.
Notwithstanding the foregoing, in the case of an Employee who had attained
age 65 before September 1, 1980, "Profit Sharing Plan Benefit as of August 31,
1980" shall mean the balance in his or her Company Contribution Account(s) under
the Profit Sharing Plan, the Reynolds Securities Inc. Employees Profit Sharing
Plan, the Profit Sharing Trust of J. Barth & Co., the Retirement Plan Trust of
J. Barth & Co., the Standard and Poor's/Intercapital Profit Sharing and
Retirement Plan, the Profit Sharing Plan of Laird, Bissell, and Meeds, Inc., the
Profit Sharing Plan for Salesmen of Laird, Bissell, and Meeds, Inc., or the
Baker Weeks & Co. Inc. Employees' Deferred Profit Sharing Plan, as of the last
day of the plan year of such Plan that ended immediately prior to (or coincident
with) the Employee's Normal Retirement Date.
"Quarter" means: with respect to periods prior to December 1, 1981, a
fiscal quarter ending November 30, February 28(29), May 31 or August 31; and,
with respect to periods after December 31, 1981, a calendar quarter ending March
31, June 30, September 30 or December 31.
16
"Retirement Benefit" means the benefit payable under Section 6 to a
Participant who meets the requirements of Section 5(a) (Normal Retirement),
Section 5(b) (Early Retirement) or Section 5(c) (Disability Retirement).
"Reynolds" means Reynolds Securities International Inc., a Delaware
corporation.
"Sears" means Sears, Roebuck and Co., a New York corporation.
"Sears Affiliated Group" means Sears and any corporation, trade or business
required to be aggregated with Sears under Code section 414(b), (c), (m) or (o).
"Social Security Retirement Age" means, with respect to any Employee, the
social security retirement age as defined under section 415(b)(8) of the Code.
"Social Security Wage Base" for any calendar year means the amount that
constitutes "wages" for such calendar year under section 3121(a) of the Code.
"Spin-off" means the distribution by Sears of all of the shares of common
stock of DWDC owned by Sears to shareholders of Sears.
"Spouse" or "Surviving Spouse" means the lawfully married Spouse or
Surviving Spouse of the Participant, provided that a former Spouse will be
treated as the Spouse or Surviving Spouse and a current Spouse will not be
treated as the Spouse or Surviving Spouse to the extent provided under a
qualified domestic relations order as described in section 414(p) of the Code.
"SPS" means SPS Transaction Services, Inc., a Delaware corporation and its
subsidiaries.
17
"START Plan" means the Dean Witter START Plan (Saving Today Affords
Retirement Tomorrow) (formerly, from January 1, 1984 to May 31, 1994, the Dean
Witter Reynolds Inc. Employee Retirement Investment Plan and, from September 1,
1971 to December 31, 1983, the Dean Witter Reynolds Inc. Stock Accumulation
Plan) as amended from time to time, or any successor plan of a Participating
Company intended to qualify under sections 401(a) and 401(k) of the Code.
"Subsidiary" means any corporation trade or business with respect to which
DWDC, directly or indirectly, owns not less than 80% of the voting power of all
classes of stock entitled to vote, the total value of all shares of stock or the
ownership interest.
"Surviving Spouse Benefit" means the benefit payable under Section 8 to the
Surviving Spouse of a deceased Participant.
"Suspendible Month" means a month with respect to which the Plan
Administrator gives timely notice of benefit suspension in accordance with
Department of Labor Regulation Section 2530.203-3 (suspension of benefits upon
reemployment of retirees) and during which there are eight or more days with
respect to which the Participant receives payment from the Company or any
Subsidiary for one or more Hours of Employment. Solely for purposes of this
definition, "Hours of Employment" means:
(i) Each hour for which an Employee is paid, or entitled to payment,
by the Company or any Subsidiary for the performance of duties. These hours
18
shall be credited to the Employees for the day or days on which the duties
are performed.
(ii) Each hour for which an Employee is paid, or entitled to payment,
by the Company or any Subsidiary on account of a period of time during
which no duties are performed due to vacation, holiday, sickness,
incapacity (including disability), leaves of absence, layoff, jury duty, or
military service. The number of hours and the days to which an Employee
shall be credited under this definition shall be determined in accordance
with Department of Labor Regulation sections 2530.200b-2(b) and (c).
"TDEPP" means the Dean Witter, Discover & Co. Tax Deferred Equity
Participation Plan, the SPS Transaction Services, Inc. Tax Deferred Equity
Participation Plan or any successor plan pursuant to which a portion of an
Employee's Earnings are deferred at the election of a Participating Company or
member of the Affiliated Group.
"Termination of Employment" and similar phrases mean the termination of an
Employee's employment, whether voluntary or involuntary, with all members of the
Affiliated Group.
"Top Paid Group" means the top twenty percent of employees who performed
services for the Affiliated Group during the applicable year ranked according to
the amount of Earnings received from the Affiliated Group during such year. For
purposes of this definition Leased Employees shall be considered Employees
unless such Leased Employees are covered by a plan described in Code section
19
414(n)(5) and are not covered in any qualified plan maintained by the Affiliated
Group. Employees who are nonresident aliens and who received no earned income
within the meaning of Code section 911(d)(2) from the Affiliated Group
constituting United Stated source income within the meaning of Code section
861(a)(3) shall not be treated as Employees. Additionally, for the purpose of
determining the number of active Employees in any year the following additional
Employees shall also be excluded; however such Employees shall still be
considered for the purpose of identifying the particular Employees in the Top
Paid Group:
(1) Employees with less than 6 months of service;
(2) Employees who normally work less than 17 1/2 hours per week;
(3) Employees who normally work less than 6 months per year;
(4) Employees who have not yet attained 21; and,
(5) except to the extend provided in regulations, Employees who are
included in a unit of employees covered by an agreement which the Secretary of
Labor finds to be a collective bargaining agreement between employee
representatives and any member of the Affiliated Group.
"Trust" means the trust or trusts created by the Trust Agreement.
"Trust Agreement" means that certain trust agreement dated as of August 20,
1982, between the Company and the United States Trust Company of New York, as
amended from time to time.
20
"Trustee" means the United States Trust Company of New York and any
additional or successor trustee or trustees appointed from time to time under
the Trust Agreement.
"Trust Fund" means the fund or funds established pursuant to the Trust
Agreement.
"Vested Benefit" means the benefit payable under Section 7 to a Participant
who meets the requirements of Section 7.
"Year of Service" means a Period (or Periods) of Service, whether or not
consecutive, equal to twelve months.
"Years of Past Service" means:
(i) with respect to an individual who was an Employee on March 2,
1981, January 1, 1986 or January 1, 1991, Years of Service with a
Participating Company completed prior to January 1, 1991; or
(ii) with respect to any Employee who was not an Employee on March 2,
1981, January 1, 1986 or January 1, 1991, Years of Service with a
Participating Company, if any, completed during the period September 1,
1975 through December 31, 1990, excluding any such Years of Service
completed prior to the Plan Year in which the Employee first became a
Participant in the Plan
Notwithstanding the foregoing, an individual's Years of Past Service shall
not include any period during which he or she was a partner in any partnership
that was a predecessor of any member of the Affiliated Group.
SECTION 3. PARTICIPATION.
21
(a) Commencement of Participation. An Eligible Employee shall automatically
become a Participant in the Plan on the Entry Date coincident with or next
following the earlier of the date he (i) attains age 21 and completes one Year
of Service or (ii) completes two years of continuous full-time employment with
one or more members of the Affiliated Group.
(b) Commencement of Participation - Prior Employees. Notwithstanding the
provisions of Section 3(a), an Eligible Employee who commenced employment with
the Company prior to January 1, 1987 will automatically become a Participant in
the Plan on the last day of the Quarter in which falls the earliest of (i) the
date the Employee completes two years of continuous full-time employment with
one or more members of the Affiliated Group, (ii) the date the Employee has
attained age 21 and completed three continuous months of employment with one or
more members of the Affiliated Group or (iii) the date the Employee has attained
age 21 and completed one Year of Service. An Employee who is not an Eligible
Employee on the last day of the Quarter described in the preceding sentence but
who becomes an Eligible Employee after having satisfied the requirements of
Section 3(b)(i), (ii) or (iii) shall automatically become a Participant in the
Plan on the last day of the Quarter in which he becomes an Eligible Employee.
(c) Reemployed and Transferred Employees. If an Employee is not employed as
an Eligible Employee on the first Entry Date after he has met the age and
service requirements, he shall become a Participant on the next date he becomes
an Eligible Employee. If a Participant's employment terminates or if he is
transferred to
22
employment in a status other than that of an Eligible Employee, and he is later
rehired as an Eligible Employee or transferred back to such status by any member
of the Affiliated Group, he shall resume participation in the Plan immediately
upon such rehire or resumption in status.
(d) Termination of Participation. A Participant's participation shall
terminate as of the date he ceases to be an Employee, unless the Participant is
entitled to benefits hereunder, in which event participation shall terminate on
the earlier of the date of the Participant's death or the date no amount is
payable to the Participant hereunder.
SECTION 4. PERIOD OF SERVICE.
An Employee's Period of Service shall be determined under the following
rules:
(a) Period of Employment Relationship. An Employee's Period of Service
shall include any period during which he maintains an employment relationship
with any member of the Affiliated Group. An Employee's employment relationship
with a member of the Affiliated Group commences on the date the Employee first
performs an Hour of Service for any member of the Affiliated Group for which he
receives or is entitled to receive Earnings and, subject to Section 4(b) below,
ends on the beginning of a Period of Severance. An Employee shall not be
considered to have "quit" and commenced a Period of Severance under the
following circumstances:
(i) When the Employee is laid-off or takes a leave of absence without
pay approved by
23
the appropriate member of the Affiliated Group. In the case
of an approved leave of absence without pay for a period in excess of
twelve months, the Employee shall be deemed to have quit as of the end of
such twelve-month period if he fails to abide by the terms and conditions
of such leave, which may include a requirement to return to active
employment.
(ii) When the Employee enters the military service of the United
States, provided the Employee returns to active employment with any member
of the Affiliated Group within the time the Employee's reemployment rights
are protected under applicable law. If the Employee does not so return, he
shall be deemed to have quit as of the date of entry into military service.
(iii) When the Employee is unable to work due to disability or
sickness.
(iv) When the Employee is on jury duty, a leave of absence with pay,
an approved vacation or a holiday.
Notwithstanding the foregoing, if an Employee quits, is discharged, dies or
retires while on leave, vacation, holiday or jury duty, or while laid-off,
disabled or sick, then, subject to Section 4(b) below, his Period of Service
with the Affiliated Group shall terminate on the earlier of the date of such
quit, discharge, death or retirement, or twelve months after the commencement of
such leave, vacation, holiday, jury duty, lay-off, disability or sickness. An
Employee shall be deemed to have been discharged as of the earlier of the date
he receives oral or written notice of discharge or
24
the date a written notice is deposited in the United States mail (on a
registered or certified basis) to the Employee's last known address.
(b) Period Following Termination. An Employee's Period of service shall
include any period following the termination of his employment relationship with
a member of the Affiliated Group (determined pursuant to Section 4(a) above) if
the Employee is rehired by any member of the Affiliated Group within the
twelve-month period following such termination.
(c) Service with Reynolds. In the case of any individual who was an
employee of Reynolds Securities International Inc. or any subsidiary thereof at
any time prior to the merger of Reynolds Securities International Inc. with
DWFS, Years of Service for periods prior to January 3, 1978, shall be determined
by applying the rules of this Section 4 to that period of employment. The Years
of Service so determined shall be added to such individual's Years of Service
determined under this Plan, computed as though the individual became an Employee
on the later of January 1, 1978, or the date he is actually employed by a member
of the Affiliated Group.
(d) Other Periods. An Employee's Period of Service also includes any other
period that constitutes a "Period of Service" under written rules or regulations
adopted from time to time by the Plan Administrator.
(e) Aggregation of Periods of Service. All of an Employee's Periods of
Service determined pursuant to this Section 4 shall be aggregated on the basis
of complete months, whether or not such Periods of Service are consecutive,
except that if an Employee's Period of Service commences on other than the first
day of a calendar
25
month and ends on other than the last day of a calendar month, the days in such
months shall be aggregated and one additional month of service shall be credited
if the number of such days is at least 30 but less than 60, and two additional
months shall be credited if the number of such days equals 60.
(f) One Year Period of Severance. Anything in the Plan to the contrary
notwithstanding, if an Employee has a Period of Severance of more than twelve
months, all his Periods of Service prior to his Period of Severance shall be
disregarded until he is credited with one Hour of Service subsequent thereto.
(g) Service with Sears. Solely for purposes of vesting, the Period of
Service of any person who was employed by a member of the Sears Affiliated Group
immediately following the Spin-off and who had an accrued benefit under the Plan
as of the Spin-off shall include, to the extent consistent with the requirements
of the Code and ERISA, the lesser of: The number of years such employee
continues to work for the Sears Affiliated Group after the Spin-off and the
number of years necessary to fully vest such person in an accrued benefit under
the plan.
(h) If, on or after February 25, 1992, a Participant transfers employment
to SPS, or if, on or after June 7, 1993, a Participant transfers employment to
NationsSecurities then for purposes of Sections 5(b) and 7, such transferred
Participant's Period of Service shall include service with SPS or
NationsSecurities but not more than the lesser of such transferred Participant's
service with SPS or NationsSecurities or the service necessary for such
transferred Participant to fully vest
26
in the Participant's accrued Plan benefit, such post-transfer service to be
determined in accordance with this Section 4.
SECTION 5. RETIREMENT.
(a) Normal Retirement. If a Participant's employment by the Affiliated
Group terminates on or after his Normal Retirement Age, he shall be entitled to
a Normal Retirement Benefit, determined under Section 6, commencing as of the
first day of the month next following the date his employment terminates.
(b) Early Retirement. If a Participant's employment by the Affiliated Group
terminates before his Normal Retirement Age and on or after the earlier of the
date he attains age 55, if at such time he has completed ten Years of Service,
or if he commenced employment with the Affiliated Group prior to January 1,
1986, the date he has attained at least age 55 and the sum of his age and Years
of Service totals at least 70, he shall be entitled to an Early Retirement
Benefit determined in the same manner as a Normal Retirement Benefit under
Section 6, commencing as of the first day of the month next following his Normal
Retirement Date.
(c) Disability Retirement. If it is determined that a Participant is
"totally and permanently disabled" on or after attaining age 55, and he has
completed ten Years of Service or, if he commenced employment with the
Affiliated Group prior to January 1, 1986 the sum of his age and Years of
Service equal or exceed 70, he must retire and shall be entitled to a Disability
Retirement Benefit, determined in the same manner as a Normal Retirement Benefit
under Section 6, commencing as of his Normal Retirement Date. A Participant
shall be considered "totally and permanently disabled"
27
only if he is able to establish (to the satisfaction of the Plan Administrator)
that he is entitled to receive disability benefits under Federal Social
Security.
(d) Election of Early Commencement of Benefits. If a Participant makes a
proper election under this Section 5(d), his Early or Disability Retirement
Benefit (as applicable) may commence as of the first day of any month that
follows the Plan Administrator's receipt of the election and precedes his Normal
Retirement Date. That election shall be filed with and shall be made on the
form(s) prescribed by the Plan Administrator. By filing the prescribed form(s)
with the Plan Administrator prior to the date as of which payments are to
commence, a Participant may change or revoke a previous election as to the
commencement of Early or Disability Retirement Benefits. If an election (or a
change or revocation of a previous election) is filed with the Plan
Administrator less than 90 days before the date as of which Early or Disability
Retirement Benefit payments are to commence, the actual commencement of payments
may be delayed for administrative reasons. If any such delay occurs, the first
payment made shall include all amounts due from the date as of which the
Participant elected to have payments commence.
(e) Mandatory Retirement. Notwithstanding anything to the contrary herein,
a Participating Company may require a Participant in its employ to retire and to
receive a Retirement Benefit so long as the Participant (i) has attained Normal
Retirement Age; (ii) has been employed during the two-year period prior to
retirement in a bona fide executive or a high policy-making position; and (iii)
is entitled to an immediate nonforfeitable annual retirement benefit from all
pension, profit-sharing,
28
savings and deferred compensation plans of any member of the Affiliated Group
which equals, in the aggregate, at least $44,000.
SECTION 6. RETIREMENT BENEFITS.
(a) Normal Retirement Benefit. A Participant's Normal Retirement Benefit
shall be an annual amount equal to the sum of his Future Service Benefit as
provided in Section 6(b) plus his Past Service Benefit as provided in Section
6(c) (if any), adjusted for continued employment after attaining his Normal
Retirement Date as provided in Section 6(d).
(b) Future Service Benefit. A Participant's "Future Service Benefit" shall
be an amount equal to the sum of:
(i) 1% of the Participant's Earnings after December 31, 1990; plus,
(ii) 1/2% of the amount, if any, by which the Participant's Earnings
for each Plan Year, during such period, but not in excess of 42.7 years
minus the Participant's Years of Past Service, exceed the Participant's
Covered Compensation for that Plan Year. After a Participant has reached an
aggregate amount of Years of Service and Years of Past Service equal to or
greater than 42.7, no additional Future Service Benefit shall accrue under
this Section 6(b)(ii).
In no event shall an increase in Covered Compensation decrease a
Participant's accrued benefit under the Plan.
(c) Past Service Benefit. A Participant's "Past Service Benefit" shall be
an amount equal to the greater of:
29
(i) the benefit the Participant had accrued under the Plan as of
December 31, 1990 under the terms of the Plan in effect on that date; or
(ii) the sum of (A) 1% of the Participants Average Annual Past Service
Earnings multiplied by the Participant's Years of Past Service; plus, (B)
plus 1/2% of the amount, if any, of the Participant's Average Annual Past
Service Earnings in excess of the Participant's Covered Compensation for
1990, multiplied by the Participant's Years of Past Service but not in
excess of 42.7 years; reduced by, (C) the Annual Pension Equivalent.
(d) Deferred Retirement Benefit. A Participant who continues to be an
Employee after attaining Normal Retirement Date shall not be entitled to payment
of his Retirement Benefit until he ceases to be an Employee. The Normal
Retirement Benefit payable to him shall be:
(i) With respect to any Participant who is credited with at least one
Hour of Service in any Plan Year beginning on or after January 1, 1988, the
greater of
(A) His Normal Retirement Benefit determined under Section 6(b)
and (c) (if any).
(B) His Normal Retirement Benefit determined under Section 6(b)
and (c) (if any) without regard to any increase in such benefit for
the period after his Normal Retirement Date and prior to January 1,
1988, and instead increased for that period by 1/2% for each full
month prior to January 1, 1988 that he remained employed by a
30
Participating Company after his Normal Retirement Date and that is a
Suspendible Month.
(C) His Normal Retirement Benefit determined under Section 6(b)
and (c) (if any) without regard to any increase in such benefit for
the period after his Normal Retirement Date and instead increased (i)
by 1/2% for each full month prior to January 1, 1988 that he remained
employed by a Participating Company after his Normal Retirement Date
and (ii) to the extent required by Section 16(f).
(ii) With respect to any Participant who is not credited with at least
one Hour of Service in any Plan Year beginning on or after January 1, 1988,
his Normal Retirement Benefit as determined under Section 6(b) and (c)
increased (i) by 1/2% for each full month prior to January 1, 1988 that he
remained employed by a Participating Company after his Normal Retirement
Date that is a Suspendible Month and (ii) to the extent required by Section
16(f).
(e) Reduction for Early Commencement. If a Participant begins receiving his
Early or Disability Retirement Benefit prior to his Normal Retirement Date, the
amount otherwise payable to him shall be reduced as provided in Appendix B.
(f) Reduction for Prior Benefit. Notwithstanding any other provision hereof
to the contrary, the amount of any Retirement Benefit payable to a Participant
shall be reduced by the Equivalent Actuarial Value (as determined under the
applicable
31
provisions of Appendix B) of any benefit previously paid in the form of a lump
sum distribution to such Participant hereunder.
(g) Optional Forms of Retirement Benefits. A Participant may elect to have
the Participant's Retirement Benefit paid in any of the following forms:
(i) An individual life annuity, providing an annual benefit to the
Participant for life;
(ii) A joint and survivor annuity, providing a reduced annual benefit
to the Participant for life and, upon the Participant's death after the
date as of which payments begin, an annual benefit continued to the
Participant's joint annuitant (if then living) for the joint annuitant's
life equal to 50%, 75%, or 100% of the reduced benefit payable to the
Participant;
(iii) A term certain and life annuity, providing a reduced annual
benefit to the Participant for life, with payments guaranteed for a minimum
of five or ten years, as the Participant may elect; provided, that
guaranteed payments may not be paid over a period exceeding the joint life
expectancy of the Participant and his joint annuitant, if any; or
(iv) A lump sum payment, in cash, of 100%, 75%, 50% or 25% of the
value of the Participant's Retirement Benefit. In the event a lump sum
payment of less than 100% of the Participant's Retirement Benefit is
elected, the Participant may elect to receive the remaining portion of his
or her benefit in one of the forms set forth in Sections 6(g)(i), (ii) or
(iii) above.
32
The benefit payable to an alternate payee under a qualified domestic
relations order, as defined in section 414(p) of the Code, may be all or a
portion of the Participant's benefit payable as either a lump sum or an annuity
paid for the life of the alternate payee. A benefit paid as an annuity for the
life of the alternate payee shall be actuarially equivalent to the same benefit
paid as an annuity for the life of the Participant.
(h) Election of Form of Retirement Benefit.
(i) Each Participant may elect a form of Retirement Benefit, or change
or revoke a previous election, by filing the prescribed form(s) with the
Plan Administrator. Any such election (or a change or revocation of a
previous election) may be made at any time up to the date as of which the
Participant's Retirement Benefit is to commence.
(ii) Unless an optional form of benefit is selected pursuant to a
qualified election within the 90-day period ending on the date his
Retirement Benefit is to commence,
(A) A married Participant's Retirement Benefit will be paid in
the form of a 50% qualified joint and survivor annuity providing a
monthly annuity to the Participant for life and, upon the
Participant's death after monthly payments begin, a monthly amount
equal to 1/2 of the Participant's monthly Retirement Benefit continued
to the Participant's Surviving Spouse (if then living) for such
Spouse's life, provided that the Participant and the Participant's
Surviving Spouse were
33
lawfully married on the date that annuity payments commenced to the
Participant (the amount of such joint and survivor annuity shall be
determined in the manner provided in Section 6(g) with respect to
joint and 50% survivor annuities), and
(B) An unmarried Participants Retirement Benefit will be paid in
the form of an individual life annuity providing a monthly benefit to
the Participant for life equal to 1/12 of the Participant's annual
retirement benefit.
(iii) Qualified election. Any waiver of a qualified joint and survivor
annuity by a Participant shall not be effective unless: (i) the
Participant's Spouse consents in writing to the election; (ii) the election
designates (where applicable) a specific alternate joint annuitant or
beneficiary, including any class of beneficiaries or any contingent
beneficiaries, which may not be changed without spousal consent (or the
Spouse expressly permits designations by the participant without any
further spousal consent); (iii) the Spouse's consent acknowledges the
effect of the election; and (iv) the Spouse's consent is witnessed by a
notary public. Additionally, a Participant's waiver of the qualified joint
and survivor annuity will not be effective unless the election designates a
form of benefit payment which may not be changed without spousal consent
(or the Spouse expressly permits designations by the Participant without
any further spousal consent). If it is established to the satisfaction of a
Plan representative that such written consent may not be obtained because
there is no
34
Spouse or the Spouse cannot be located, a waiver will be deemed a qualified
election. Any consent by a Spouse obtained under this provision (or
establishment that the consent of a Spouse may not be obtained) shall be
effective only with respect to such Spouse. A consent that permits
designations by the Participant without any requirement of further consent
by such Spouse must acknowledge that the Spouse has the right to limit
consent to a specific beneficiary, and a specific form of benefit where
applicable, and that the Spouse voluntarily elects to relinquish either or
both of such rights. A revocation of a prior waiver may be made by a
Participant without the consent of the Spouse at any time prior to the
commencement of benefits. The number of revocations shall not be limited.
No consent obtained under this provision shall be valid unless the
Participant has received notice as provided below.
(iv) Notice Requirement. The Plan Administrator shall provide each
Participant no less than 30 days and no more than 90 days prior to the date
his Retirement Benefit is to commence a written explanation of the terms
and conditions of a qualified joint and survivor annuity; the Participant's
right to make and the effect of an election to waive the qualified joint
and survivor annuity form of benefit; the rights of a Participant's Spouse;
and the right to make, and the effect of, a revocation of a previous
election to waive the qualified joint and survivor annuity.
(i) Claim for Benefits; Required Information. No Retirement Benefit will be
paid to or on behalf of a Participant under the Plan until the Participant (or
the
35
Participant's Spouse, joint annuitant or beneficiary, as appropriate) has
filed a claim for benefits with the Plan Administrator in accordance with
Section 13 and has provided the Plan Administrator with all information that it
may need to determine the amount payable to such person hereunder. Such
information shall include, without limitation, the Participant's date of birth,
the Participant's marital status and, if the Participant is married, the name,
address and birthdate of his Spouse. Such information shall be on the form(s)
prescribed by the Plan Administrator and shall include copies of such proof of
age or marital status as the Plan Administrator may request. If a Participant
has not filed a complete claim for benefits by the date as of which the
Participant's Retirement Benefit is to commence, the first payment made
following the Plan Administrator's receipt of a complete claim shall include all
amounts due from the date as of which such Benefit was to commence.
(j) Commencement of Retirement Benefits. Subject to Section 6(i), the
actual payment of a Participant's Retirement Benefit shall begin as soon as is
reasonably practicable following the date as of which such Retirement Benefit is
to commence. In no event, however, shall payment begin later than 60 days after
the latest of (i) the end of the Plan Year in which the Participant attains
Normal Retirement Age, (ii) the end of the Plan Year in which the Participant's
employment by the Affiliated Group terminates, or (iii) the date the Plan
Administrator is able to determine the amount of such Retirement Benefit. If the
actual payment of a Participant's Retirement Benefit begins after the date as of
which such Retirement Benefit is to
36
commence, the first payment made shall include all amounts due from such date to
the date payment is made.
(k) Joint Annuitants. A Participant may designate the Participant's Spouse
or any other person as the Participant's joint annuitant. Any such designation
shall be made on the form(s) prescribed by the Plan Administrator. If a married
Participant designates anyone other than the Participant's Spouse as joint
annuitant, the Plan Administrator shall require the spouse's written consent as
set forth in Section 6(h) above, and shall require proof that the Participant is
in good health as a condition to the election of a nonspouse joint and survivor
annuity. For purposes of the preceding sentence, "proof" shall be a certificate
issued by a Participant's physician attesting to the Participant's health, which
could be used by the Participant to obtain private health, life or disability
insurance. A Participant may not change a previous designation of a joint
annuitant after the date as of which the Participant's Retirement Benefit is to
commence.
(l) Effect of Death on Election of Form of Retirement Benefits.
(i) If a Participant has elected (or is entitled) to receive
Retirement Benefits in the form of a joint and survivor annuity and the
Participant's joint annuitant dies before the date as of which the
Participant's Retirement Benefit is to commence, the Participant shall be
deemed to have elected a single life annuity and any previous election to
the contrary shall be void. In such a case, the Participant may elect a
different form of Retirement Benefit (in accordance
with Section 6(h)) and/or may designate a new joint annuitant (in
accordance
37
with Section 6(k)) at any time prior to the date as of which the
Participant's Retirement Benefit is to commence.
(ii) If a Participant has elected (or is entitled) to receive
Retirement Benefits in the form of a joint and survivor annuity and the
Participant's joint annuitant dies on or after the date as of which the
Participant's Retirement Benefit is to commence, the Participant shall
continue to receive a reduced annuity.
(iii) If a Participant who has elected to receive Retirement Benefits
in the form of a term certain and life annuity dies within the five-year or
ten-year period specified in the Participant's election and after the date
as of which benefit payments commence, the monthly benefit provided under
the Participant's annuity will be continued for the remainder of such
period to the person (or persons) the Participant has designated as his
beneficiary. Any such designation must be made in writing and must be filed
with the Plan Administrator.
(iv) If the Participant and the Participant's beneficiary die after
the date as of which payments under a term certain and life annuity are to
commence but before the guaranteed number of payments have been made
thereunder, the Equivalent Actuarial Value of the balance of the amount
payable with respect to the Participant (as determined by the Plan
Administrator) shall be paid in a lump sum to the estate of the last to die
of the Participant or the Participant's beneficiary. If the Participant and
the Participant's beneficiary die
38
simultaneously, the beneficiary shall be deemed to have died after the
Participant.
(m) Form of Annuity Payment. Notwithstanding anything to the contrary
herein, a Participant's Retirement Benefit paid in one of the forms described in
clauses (i), (ii) or (iii) of Section 6(g) shall be payable to such Participant
on a monthly basis.
SECTION 7. VESTED BENEFITS.
(a) Participants Who Do Not Have One Hour of Service in Any Plan Year
Beginning After December 31, 1988. The following rules apply in calculating the
Vested Benefit of any Participant who does not have at least one Hour of Service
in any Plan Year beginning after December 31, 1988.
(i) Participants Who Were Employees on March 2, 1981.
(A) If a Participant was an Employee on March 2, 1981, and his
employment by the Affiliated Group terminates upon or after the date
he completes three Years of Service and at a time when he is not
entitled to a Retirement Benefit under Section 5, the Participant
shall be entitled to a Vested Benefit, commencing as of the first day
of the month following his Normal Retirement Date.
(B) The annual Vested Benefit of a Participant described in
Section 7(a)(i)(A) shall be equal to the Participant's Annual Normal
Retirement Benefit (determined as of the date his employment
39
terminates) multiplied by the applicable percentage determined under
the following Vesting Schedule:
VESTING SCHEDULE
Nonforfeitable Percentage
Years of Service of Accrued Benefit to Which
At Termination Participant Is Entitled
- -------------- -----------------------
Less than 3 0%
3 but less than 4 15%
4 but less than 5 20%
5 but less than 6 25%
6 but less than 7 30%
7 but less than 8 40%
8 but less than 9 50%
9 but less than 10 60%
10 or more 100%
(ii) Participants Who Were Not Employees On March 2, 1981.
(A) If a Participant who was not an Employee on March 2, 1981 is
hired or rehired as an Employee after that date and his employment by
the Affiliated Group terminates prior to the date he has completed ten
Years of Service and at a time when he is not entitled to a Retirement
Benefit under Section 5, the Participant shall only be entitled to the
Vested Benefit, if any, to which he was entitled at the time his
employment terminated under and in accordance with the terms of the
Plan as in effect at the time of such termination.
(B) If a Participant who was not an Employee on March 2, 1981 is
hired or rehired as an Employee after that date and his
40
employment by the Affiliated Group terminates upon or after the date
he has completed ten Years of Service and at a time when he is not
entitled to a Retirement Benefit under Section 5, the Participant
shall be entitled to a Vested Benefit, commencing as of the first day
of the month following his Normal Retirement Date.
(C) The annual Vested Benefit of a Participant described in
Section 7(a)(ii)(B) shall be equal to his annual Normal Retirement
Benefit (determined as of the date his employment terminates).
(b) Participants Who Have At Least One Hour of Service In Any Plan Year
Beginning After December 31, 1988. The following rules apply in calculating the
Vested Benefits of any Participant who has at least one Hour of Service in any
Plan Year beginning after December 31, 1988.
(i) If the Participant's employment by the Affiliated Group terminates
upon or after the date he completes five Years of Service, the Participant
shall be entitled to a Vested Benefit commencing as of the first day of the
month following his Normal Retirement Date equal to 100 percent of his
accrued Normal Retirement Benefits, determined as of the date his
employment terminates.
(ii) If the Participant was an Employee on March 2, 1981 and his
employment by the Affiliated Group terminate upon or after the date he
completes three Years of Service and prior to the date he completes five
Years of Service, he shall be entitled to a Vested Benefit commencing as of
the first day of the month following his Normal Retirement Date equal to
the percentage of his accrued Normal
41
Retirement Benefit set forth below, determined as of the date his
employment terminates:
VESTING SCHEDULE
Nonforfeitable Percentage
Years of Service of Accrued Benefit to Which
At Termination Participant Is Entitled
-------------- -----------------------
Less than 3 0%
3 but less than 4 15%
4 but less than 5 20%
5 or more 100%
(c) Reduction for Prior Benefit. Notwithstanding any other provision hereof
to the contrary, the amount of any Vested Benefit payable to a Participant under
Section 7(a) or (b) above shall be reduced by the Equivalent Actuarial Value of
any benefit previously paid in the form of a lump sum distribution to such
Participant hereunder.
(d) Election of Early Commencement of Benefits; Reduction in Amount
Payable. If a Participant makes a proper election under this Section 7(d), his
Vested Benefit may commence as of the first day of any month that follows the
Plan Administrator's receipt of the election and precedes the Participant's
Normal Retirement Date; provided, that the Participant has attained at least age
55 and completed ten Years of Service or, in the case of a Participant who
commenced employment with a member of the Affiliated Group prior to January 1,
1986, has attained at least age 55 and the sum of his age and Years of Service
equals or exceeds 70. A Participant's election to have his Vested Benefit
commence prior to his Normal Retirement Date shall be filed with and shall be
made on the form(s) prescribed by the
42
Plan Administrator. By filing the prescribed form(s) with the Plan Administrator
prior to the date as of which payments are to commence, a Participant may change
or revoke a previous election as to the commencement of Vested Benefits. If an
election (or a change or revocation of a previous election) is filed with the
Plan Administrator less than 90 days before the date as of which Vested Benefit
payments are to commence, the actual commencement of payments may be delayed for
administrative reasons. If any such delay occurs, the first payment made shall
include all amounts due from the date as of which the Participant elected to
have payments commence. If a Participant begins receiving his Vested Benefit
prior to his Normal Retirement Date, the amount otherwise payable to him shall
be reduced as provided in Appendix B.
43
(e) Forfeiture of Non-Vested Benefit. On the date a Participant ceases to
be an Employee, the portion of the benefit payable as to him which is not vested
shall be forfeited and his Period of Service and Earnings to that date shall
thereafter be disregarded. If, after that date, he again performs an Hour of
Service, the non-vested benefit payable as to him and his prior Period of
Service and Earnings shall, subject to the terms of the Plan, be reinstated.
(f) Provisions of Section 6 Apply; Special Rule for Immediate
Distributions.
(i) General Requirements. The provisions of Section 6(g) (Optional
Forms of Retirement Benefit), 6(i) (Claim for Benefits; Required
Information), 6(j) (Commencement of Retirement Benefits), 6(k) (Joint
Annuitants), 6(l) (Effect of Death on Election of Form of Retirement
Benefits) and 6(m) (Form of Annuity Payment) shall apply to Vested Benefits
in the same manner as to Retirement Benefits.
(ii) Special Rule for Immediate Distributions. If a Participant is
entitled to a Vested Benefit under this Section 7 the value of which is
greater than $3,500 and makes a proper election under this Section
7(f)(ii), his Vested Benefit may be immediately distributed to him in the
form provided in Section 6(h)(ii) or, pursuant to a qualified election
described in Section 6(h)(iii), in the form provided in Section 6(g)(iv).
The Plan Administrator shall, in the next calendar year following the
Participant's employment termination, provide the Participant with a
statement as to the value of his Vested Benefit and
44
election forms to be used in connection with an immediate distribution
hereunder. The Participant shall have 90 days from the date such
information and election forms were mailed (or otherwise transmitted) by
the Plan Administrator to elect to make his elections under this Section
7(f)(ii). If the Participant elects to receive such Vested Benefit under
this Section 7(f)(ii), payment shall commence as of the end of such 90-day
period. If payment of an immediate distribution hereunder is made to the
form of an annuity, the amount otherwise payable to the Participant shall
be reduced as provided in Appendix B with respect to payment of Vested
Benefits prior to Normal Retirement Date. If such payment is in the form of
a lump sum, the amount so payable shall be determined as provided in
Appendix B with respect to lump sums. Whether the value of the
Participant's Vested Benefit is greater than $3,500 shall be determined in
the manner provided in Appendix B with respect to lump sums. All
determinations under this Section 7(f)(ii) shall be made as of the end of
the 90-day election period described above, and payment shall be made (or
commence) as of that date. If for any reason the Participant does not elect
to receive an immediate distribution of his Vested Benefit during the
90-day election period as provided in this Section 7(f)(ii), he may elect
to receive his Vested Benefit only as of the date as of which it would
otherwise be payable without regard to this Section 7(f)(ii).
45
SECTION 8. SURVIVING SPOUSE BENEFITS.
(a) Eligibility Requirements. The Surviving Spouse of a married Participant
shall be entitled to a Surviving Spouse Benefit, determined under Section 8(b),
if:
(i) The Participant dies (A) after he is eligible for Normal, Early,
or Disability Retirement, or (B) after he has completed the service
requirement for a Vested Benefit as set forth under Section 7(a) or (b);
(ii) The Participant's death occurs before the date as of which his
Retirement or Vested Benefit is to commence; and
(iii) The Participant and his Surviving Spouse had been married
throughout the twelve-month period ending on the date of the Participant's
death.
(b) Amount of Surviving Spouse Benefit. In the case of a Participant who
dies after becoming eligible for Normal, Early or Disability Retirement Benefit,
the Surviving Spouse Benefit shall be equal to the benefit that the
Participant's Surviving Spouse would have received if the Participant had
retired and commenced receiving Retirement Benefits in the form of a 50% joint
and survivor annuity (with the Participant's Spouse as joint annuitant) as of
the day before the Participant died. In the case of a Participant who dies after
becoming eligible for a Normal Retirement Benefit but before either terminating
employment with the Affiliated Group or commencing benefits pursuant to Section
9(a), the Surviving Spouse Benefit shall be equal to the lump sum value of the
Participant's benefit as if the Participant had retired on his or
46
her date of death and, notwithstanding any provisions of the Plan to the
contrary, shall be payable to the Surviving Spouse, at his or her election, as a
lump sum or as a single life annuity actuarially equivalent to the lump sum,
said actuarial equivalence to be determined using the same assumptions
applicable to the determination of lump sum benefits under the Plan. In the case
of a Participant who dies before becoming eligible for Normal, Early or
Disability Retirement, the Surviving Spouse Benefit shall be equal to the
benefit that the Participant's Spouse would have received if the Participant (i)
had ceased to be an Employee on the date of his death; (ii) had survived until
the day after the earlier of the day on which he would have attained age 65 or
the day after the day on which he would have attained age 55 (or older) and (a)
would have completed ten Years of Service, or (b) the sum of his age and Years
of Service would have equalled or exceeded 70 (if the Participant commenced
employment with the Company prior to January 1, 1986), whichever would have been
earlier; and (iii) had commenced receiving Retirement Benefits in the form of a
50% joint and survivor annuity (with the Participant's Spouse as joint
annuitant) as of the day before the earlier of the days described in clause
(ii).
(c) Commencement of Benefit. Unless a Participant's Surviving Spouse elects
to defer the commencement of the Surviving Spouse Benefit, such Surviving Spouse
Benefit shall commence (i) in the case of a Participant who dies after becoming
eligible for Normal, Early or Disability Retirement Benefit, as of the first day
of the month following the month in which the Participant dies; and (ii) in the
case of a Participant who dies before becoming eligible for Normal, Early or
Disability
47
Retirement Benefit, as of the earliest of the days described in clause (ii) of
Section 8(b) above. By written notice to the Plan Administrator within 30 days
of the date of the Participant's death, a Participant's Surviving Spouse may
elect to defer the commencement of his Surviving Spouse Benefit. If the
Surviving Spouse makes such an election, the amount of his monthly Surviving
Spouse Benefit shall be increased by 1/2% for each full month after the date
such Surviving Spouse Benefit is otherwise payable under the first sentence of
this Section 8(c).
(d) Change of Commencement Date. By written notice to the Plan
Administrator prior to the date as of which a Surviving Spouse has elected to
have his Surviving Spouse Benefit commence, the Surviving Spouse may change the
date Surviving Spouse Benefit payments are to commence to the first day of any
month from the month after the month the Plan Administrator receives the notice.
48
Election of Lump Sum. If the present value of a Surviving Spouse Benefit is
reater than $3,500, the Spouse may elect to have such present value paid in a
lump sum payment of cash. The Plan Administrator, upon receipt of notification
of the Participant's death, shall provide the Surviving Spouse with a statement
as to the value of the Surviving Spouse Benefit and election forms to be used in
connection with a lump sum distribution. The Spouse shall have 60 days from the
date such information and election forms are mailed (or otherwise transmitted)
by the Plan Administrator to elect to receive a lump sum payment. The Plan
Administrator, upon receipt of a proper election to receive a lump sum payment
by the Spouse, shall direct the lump sum payment to be made to the Spouse as
soon as practicable thereafter. For purposes of this Section 8(e), the value of
the Surviving Spouse Benefit, and the lump sum payment in lieu thereof, shall be
determined on the basis provided in Appendix B with respect to lump sums, as of
the date the notice described in the preceding sentence is sent.
SECTI N 9. INCORPORATION BY REFERENCE. CERTAIN CODE REQUIREMENTS BY REFERENCE.
49
(a) Incorporation of Section 401(a)(9). Anything in the Plan to the
contrary notwithstanding, distributions under this Plan shall meet the
requirements of section 401(a)(9) of the Code, which requirements are
incorporated herein by reference; provided, that distributions with respect to a
Participant who attained age 70 1/2 during 1988 shall begin (and be calculated
as if they were required to begin) as of April 1, 1989, distributions with
respect to a Participant who attained age 70 1/2 prior to 1988 shall begin (and
be calculated as if they were required to begin) as of April 1, 1989 if the
Participant so elects, and after the commencement of distributions to the
Participant the payment form elected may not be changed or reduced by the
Participant.
(b) Incorporation of Section 415. Anything in the Plan to the contrary
notwithstanding, benefits under the Plan shall be subject to the limitations on
contributions and benefits under section 415 of the Code, which limitations are
incorporated herein by reference. For purposes of applying section 415 of the
Code: compensation shall mean compensation actually paid to Participant and
included in his gross income for the year; the limitation year shall be the Plan
Year; to the extent that section 415(e) of the Code requires of reduction in
contributions or benefits under this or another plan, reduction shall be made
under this Plan; adjustments to the dollar limitation of section 415(b)(l)(A) of
the Code for benefits which begin before or after the Social Security Retirement
Age shall be made by using the basis provided in Appendix B with respect to
Retirement Benefits which commence before Normal Retirement Date and a 6 percent
per year factor for periods after age 65 or by using an
50
interest rate of 5 percent per annum and the UP - 84 Mortality Table, whichever
produces the smaller adjusted dollar limitation; and actuarial adjustment for
payment in other than the normal form shall be made in accordance with the
provisions of Appendix B applicable to adjustments for such other forms of
payment. Effective January 1, 1990, in applying the limitations on contributions
and benefits under section 415 of the Code, increases in the dollar limits under
section 415(b)(l)(A) and (c)(l)(A) of the Code, which take effect after a
Participant's employment by the Affiliated Group terminates, shall not be taken
into account. For all other purposes, the limitations of section 415 of the Code
shall be applied so as to provide the largest benefit payable thereunder.
(c) Optional Direct Rollover of Eligible Rollover Distributions.
(i) This section 9(c) applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Section, a distributee may
elect at the time and in the manner prescribed by the Plan Administrator to have
any portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
(ii) For purposes of this Section 9(c) the following definitions shall
apply:
(A) "Eligible rollover distribution" means any distribution of all or
any portion of the balance to the credit of the distributee other than any
distribution that is one of a series of substantially equal periodic
payments (not less
51
frequently than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a
specified period of 10 years or more; any distribution to the extent such
distribution is required under Code section 401(a)(9); 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).
(B) "Eligible retirement plan" means an individual retirement account
described in Code section 408(a), an individual retirement annuity
described in Code section 408(b), an annuity plan described in Code section
403(a), or a qualified trust described in Code section 401(a), that accepts
the distributee's eligible rollover distribution. However, in the case of
an eligible rollover distribution to a Surviving Spouse or a Former Spouse,
an eligible retirement plan is an individual retirement account or an
individual retirement annuity.
(C) "Distributee" means an Employee or former Employee. In addition,
the Employee's or former Employee's Surviving Spouse and the Employee's or
former Employee's Spouse or former Spouse who is the alternate payee under
a qualified domestic relations order as defined in Code section 414(p) are
distributees with regard to the interest of the Surviving Spouse or former
Spouse.
SECTION 10. ESTABLISHMENT OF A FUNDING PROCEDURE; BASIS OF
52
PAYMENTS; LIMITATION OF OBLIGATION.
(a) Funding Procedure.
(i) The Company shall engage an actuary, enrolled pursuant to section
3042 of ERISA, to determine the normal cost of the Plan for each Plan Year
and the amount (if any) of the Plan's unfunded past-service liability on
the basis of the funding method established for the Plan, to prepare the
actuarial statement described in section 103(d) of ERISA and to render the
opinion described in section 103(a)(4) of ERISA. Such actuary shall use
actuarial assumptions that in the aggregate are reasonable. Based upon the
determination of such actuary, the Company shall determine the
contributions required to be made for each Plan Year by the Participating
Companies in order to satisfy the minimum funding standard (or alternative
minimum funding standard) for such Plan Year determined pursuant to
sections 302 through 305 of ERISA and section 412 of the Code. The Company
may remove and discharge the actuary so engaged, but in such case it shall
engage a successor enrolled actuary to make the determinations, to prepare
the actuarial statement and to render the opinion described in this Section
10(a)(i).
(ii) After consultation with the actuary engaged pursuant to
Section 10(a)(i), the Company shall determine the funding method
(i.e., the actuarial cost method) to be used in determining costs and
liabilities under the Plan pursuant to section 301 et seq. of ERISA
and section 412 of the Code. With the advice of the actuary, the
Company shall review such funding method from time to time and, if the
Company determines that it is no longer
53
appropriate, the Company shall then petition the secretary of the
Treasury for approval of a change in the funding method.
(iii) The Participating Companies shall contribute to the Plan
for each Plan Year at least the amount necessary to satisfy the
minimum funding standard (or alternative minimum funding standard) for
such Plan Year.
(iv) From time to time the Company shall estimate the benefits
and administrative expenses to be paid out of the Trust Fund during
the period for which such estimate is made and the contributions to be
made to the Plan by the Participating Companies during such period.
The Company shall inform the Trustee of the estimated cash needs of
the Plan for each period with respect to which such estimates are
made. Such estimates shall be made on an annual, quarterly, monthly or
other basis as the Company may determine.
54
(v) The Company shall engage an independent qualified public
accountant to conduct such examinations and to render such opinions as
may be required under section 103(a)(3)(A) of ERISA. The Company in
its discretion may remove and discharge the person so engaged, but in
such case the Company shall engage a successor independent qualified
public accountant to perform such examinations and to render such
opinions.
(b) Basis of Payments to and from Plan.
(i) No contributions shall be required or permitted of
Participants.
(ii) From time to time the Participating Companies shall make
such contributions to the Plan as the Company determines to be
necessary or appropriate to fund the benefits provided by the Plan and
any expenses thereof that are to be paid out of the Trust Fund and to
carry out its obligations under this Section.
(iii) All contributions to the Plan shall be invested and
reinvested by the Trustee in accordance with the Trust Agreement.
(iv) Any amount forfeited by a Participant pursuant to Section 7
shall not be used to increase the Retirement or Vested Benefit of any
other Participant, but shall be used, as appropriate, to reduce the
contributions that would otherwise be made by the Participating
Companies.
(v) All benefits payable under the Plan shall be paid out of the
Trust Fund by the Trustee pursuant to the directions of the Company
and the terms of the Trust Agreement.
55
(vi) Expenses of the Plan and Trust shall be paid out of the
Trust Fund only to the extent provided by the terms of the Trust
Agreement.
(c) Limitation of Obligation. Notwithstanding any other provision hereof,
the Participating Companies shall have no obligation to continue to make
contributions to the Plan after the Plan's termination or partial termination.
Except as otherwise provided by ERISA, none of the Participating Companies, nor
the Trustee, nor any other person shall have any liability or obligation to
provide benefits hereunder after the termination or partial termination of the
Plan (other than the Participating Companies' obligations under (a) and (b)
above as to periods before such termination). After the termination or partial
termination of the Plan, the Participants, joint annuitants and beneficiaries
shall look solely to the Trust Fund for their benefits. In the event of a
partial termination of the Plan, this Section 10(c) shall apply only with
respect to those persons who are affected by such partial termination.
SECTION 11. RESTRICTIONS ON BENEFITS PAID TO HIGHLY COMPENSATED EMPLOYEES
(a) In the event of a Plan termination, the benefit of any Highly
Compensated Employee shall be limited to a benefit that is nondiscriminatory
under Code section 401(a)(4).
(b) In any Plan Year, the payment of benefits to or on behalf of a Highly
Compensated Employee who is one of the twenty-five (25) highest paid Highly
Compensated Employees shall not exceed an amount equal to the payments that
would
56
be made to or on behalf of such Highly Compensated Employee in that Plan
Year under:
(i) a straight life annuity that is the actuarial equivalent of the
accrued benefit and other benefits, if any, to which such Highly
Compensated Employee is entitled under the Plan (other than a social
security supplement); and
(ii) the amount of the payments that such Highly Compensated Employee
is entitled to receive under a social security supplement, if any.
(c) The restrictions set forth in Section 11(b) shall not apply if:
(i) after payment of all benefits payable to or on behalf of a Highly
Compensated Employee described in Section 11(b), the value of Plan assets
equals or exceeds 110 percent of the value of current liabilities, as
defined under Code section 412(l)(7) and determined under any reasonable
and consistent method; or
(ii) the value of the benefits payable to or on behalf of such Highly
Compensated Employee is less than 1 percent of the value of current
liabilities before distribution, as defined under Code section 412(l)(7)
and determined under any reasonable and consistent method; or
(iii) the value of the benefits payable to or on behalf of such Highly
Compensated Employee does not exceed $3,500 and has never exceeded $3,500
at the time of any prior distribution.
(d) For purposes of this Section 11, the term "benefit" includes any
benefit described in Sections 6,7,8 and Supplements A and B of the Plan, loans,
if any, in
57
excess of the amount set forth in Code section 72(p)(2)(A), any
periodic income, any withdrawal values payable to a living Employee and any
death benefits not provided for by insurance on a Participant's life.
(e) A benefit which is otherwise restricted under Section 11(b) may
nevertheless be distributed in full to an affected Highly Compensated Employee
if, prior to receipt of the restricted amount, the Highly Compensated Employee
enters into a written agreement with the Plan Administrator, in a form
satisfactory to the Plan Administrator to secure repayment of the restricted
amount. The restricted amount is the excess of the amounts distributed to the
Highly Compensated Employee (accumulated with reasonable interest) over the
amounts that could have been distributed to such Highly Compensated Employee
under the straight life annuity described in Subsection 11(b)(i) (accumulated
with reasonable interest).
SECTION 12. FIDUCIARY RESPONSIBILITIES AND PLAN ADMINISTRATION.
(a) Named Fiduciary/Plan Administration. The Company is the named fiduciary
that has the authority to control and manage the operation and administration of
the Plan, and is the "plan sponsor" as that term is used in ERISA. The Company,
as Plan Administrator, shall make such rules, regulations, interpretations and
computations, and shall take such other action to administer the Plan, as it may
deem appropriate. In administering the Plan, the Company shall act in a
nondiscriminatory manner to the extent required by section 401 and related
sections of the Code and shall at all times discharge its duties with respect to
the Plan in accordance with the standards set forth in section 404(a)(1) of
ERISA.
58
(b) Named Fiduciary/Management of Plan Assets. The Company is the named
fiduciary with respect to the control and management of the assets of the Plan
only to the extent of (i) having the duty to appoint one or more trustees to
hold the assets of the Plan in trust and to enter into a trust agreement with
each such trustee with respect to the assets held in trust thereunder, (ii)
having the authority to appoint one or more Investment Managers and to enter
into a contract with each such Investment Manager with respect to the management
of such assets as are to be subject to the management of such Investment Manager
and (iii) having the duty to establish a funding policy and method as provided
in Section 10(a). Each trustee so appointed shall have the exclusive authority
and discretion to manage and control the assets of the Plan that it holds in
trust, except to the extent that the authority to manage, acquire and dispose of
such assets is delegated by the Company to one or more Investment Managers. Each
Investment Manager shall have the power to manage, including the power to
acquire and dispose of, those assets held in trust pursuant to the Plan that are
assigned to it by the Company.
(c) Service in Several Fiduciary Capacities. Nothing herein shall prohibit
any person or group of persons from serving in more than one fiduciary capacity
with respect to the Plan (including service both as plan administrator and
trustee).
(d) Duties and Responsibilities of the Plan Administrator. The
responsibilities of the Company under the Plan shall be carried out on its
behalf by its directors, officers, employees and agents, none of whom shall be
fiduciaries unless
59
appointed to the Hearing Panel. The Company may engage the services of such
persons or organizations to render advice or perform services with respect to
its responsibilities under the Plan as it shall determine to be necessary or
appropriate. Such persons or organizations may include (but shall not be limited
to) actuaries, attorneys, accountants and consultants.
(e) Delegation of Fiduciary Responsibilities. In lieu of carrying out any
of its fiduciary responsibilities under the Plan (pursuant to Section 12(d)),
the Company may delegate its fiduciary responsibilities (except "trustee
responsibilities" as defined in section 405(c)(3) of ERISA) to any person or
persons pursuant to a written contract with such other person that specifies the
fiduciary responsibilities so delegated.
SECTION 13. CLAIMS PROCEDURE.
(a) Claims and Inquiries. All claims for benefits and all inquiries
concerning the Plan shall be submitted to the Plan Administrator addressed as
follows: "Dean Witter Reynolds Inc., Plan Administrator under the Dean Witter
Reynolds Inc. Pension Plan, 5 World Trade Center, New York, New York 10048."
Claims for benefits must be in writing on the form(s) prescribed by the Plan
Administrator and must be signed by the person or persons indicated on such
form(s).
(b) Denial of Claims. In the event any claim for benefits is denied, in
whole or in part, the Plan Administrator shall notify the claimant of such
denial in writing and shall advise the claimant of his right to a review
thereof. Such written notice shall set forth, in a manner calculated to be
understood by the claimant, the specific reason or reasons for the denial,
specific reference(s) to the pertinent Plan
60
provision(s) upon which the denial is based, a description of any additional
information or material that is necessary for the claimant to perfect his claim
for benefits, an explanation of why such information or material is necessary
and an explanation of the Plan's review procedure. Such written notice shall be
furnished to the claimant within 90 days after the Plan Administrator receives
the claim, unless special circumstances require an extension of time for
processing the claim. In no event shall such an extension exceed a period of 90
days from the end of the initial 90-day period; If such an extension is
required, written notice thereof shall be furnished to the claimant before the
end of the initial 90-day period. Such notice shall indicate the special
circumstances requiring an extension of time and the date by which the Plan
Administrator expects to render a decision. If written notice of the denial of
the claim for benefits is not furnished within the time specified in this
Section 13(b), the claim shall be deemed denied and the claimant shall be
permitted to appeal such denial in accordance with the review procedure
described in Section 14 below.
SECTION 14. REVIEW PROCEDURE.
(a) The Hearing Panel. The Company shall appoint a "Hearing Panel," which
shall consist of three or more individuals who may (but need not) be employees
of the Company. The Hearing Panel shall be the named fiduciary that shall have
the authority to act with respect to any appeal from the denial of a claim for
benefits under the Plan. The Hearing Panel may adopt such rules and procedures,
consistent with ERISA and the Plan, as it deems necessary or appropriate in
carrying out its responsibilities under this Section 14.
61
(b) Appeals from Claim Denials. Any person whose claim for benefits is
denied, in whole or in part, or such person's duly authorized representative,
may appeal from such denial by submitting a request for review of the claim to
the Hearing Panel within six months after receiving the written notice of denial
from the Plan Administrator (or, in the case of a deemed denial, within six
months after the claim is deemed denied). The Plan Administrator shall give the
claimant (or his representative) an opportunity to review pertinent documents
(except legally privileged materials) and to submit issues and comments in
writing. A request for review shall be in writing and shall be addressed as
follows: "Hearing Panel under the Dean Witter Reynolds Inc. Pension Plan, 5
World Trade Center, New York, New York 10048." The request for review shall set
forth all of the grounds on which it is based, all facts in support thereof and
any other matters that the claimant deems pertinent. The Hearing Panel may
require the claimant (or his representative) to submit such additional facts,
documents or other material as it deems necessary or appropriate in making its
review.
(c) Decision on Review. The Hearing Panel shall act upon a request for
review within 60 days after receipt thereof, unless special circumstances
require an extension of time for processing, in which event a decision shall be
rendered not more than 120 days after the receipt of the request for review. If
such an extension is required, written notice thereof shall be furnished to the
claimant (or his representative) before the end of the initial 60-day period.
The Hearing Panel shall give written notice of its decision to the claimant (or
his representative) and to the Plan Administrator. In
62
the event that the Hearing Panel confirms the denial of the claim for benefits
in whole or in part, such notice shall set forth, in a manner calculated to be
understood by the claimant, the specific reason or reasons for the denial and
specific reference(s) to the pertinent Plan provision(s) upon which such denial
is based. If written notice of the Hearing Panel's decision is not given to the
claimant (or his representative) within the time prescribed in this Section
14(c), the claim shall be deemed denied on review.
(d) Exhaustion of Administrative Remedies. No legal or equitable action for
benefits under the Plan shall be brought unless and until the claimant (i) has
submitted a written claim for benefits in accordance with Section 13(a), (ii)
has been notified that the claim has been denied (or the claim is deemed denied
as provided in Section 13(b) above), (iii) has filed a written request for a
review of the claim in accordance with Section 14(b) above and (iv) has been
notified in writing that the Hearing Panel has affirmed the denial of the claim
(or the claim is deemed denied on review as provided in Section 14(c) above).
(e) The Hearing Panel, in its capacity as "named fiduciary," as defined
under section 402(a)(1) of ERISA, shall have the discretionary authority to
interpret and construe the terms of the Plan and to determine eligibility for
and entitlement to Plan benefits in accordance with the terms of the Plan. Any
reasonable construction or interpretation of the Plan's terms or determination
made by the Hearing Panel as to eligibility or entitlements, adopted in good
faith, shall be final and binding upon the Company, all Participating Companies,
Employees, Participants, Spouses, Surviving Spouses and their heirs, successors
and assigns.
63
SECTION 15. AMENDMENT; TERMINATION AND NONREVERSION.
(a) Amendment of Plan - The Company reserves the right to make, from time
to time, any amendment or amendments to all or any part of the Plan including
amendments which are retroactive in effect. Such amendment or amendments may be
effected by action of the Company's Board of Directors (the "Board"). Also, the
board has specifically authorized the Compensation Committee of the Board to
take such actions. Notwithstanding the foregoing (i) no amendment shall reduce
the benefits of any Participant accrued under the Plan to the date the amendment
is adopted, except to the extent that a reduction in accrued benefits may be
permitted by ERISA; and, (ii) except to the extent provided in Section 15(c)
below, no amendment shall divert any part of the assets of the Trust fund for
purposes other than the exclusive purpose of providing benefits to the
Participants, Spouses, joint annuitants or beneficiaries who have an interest in
the Plan and defraying the reasonable expenses of administering the Plan.
64
(b) Termination of Plan - The Plan is intended to be permanent, but the
Company reserves the right to terminate the plan, in whole or in part at any
time. Such termination may be effected by action of the Board. Also, the Board
has specifically authorized the Compensation Committee of the Board to take such
action. No such action shall have the effect of: (i) reducing benefits of any
Participant accrued under the Plan to the date the amendment is adopted except
to the extent that a reduction in accrued benefits may be permitted by ERISA;
nor, (ii) except to the extent provided in Section 15(c) below, diverting any
part of the assets of the Trust Fund for purposes other than the exclusive
purpose of providing benefits to the Participants, Spouses, joint annuitants or
beneficiaries who have an interest in the Plan and defraying the reasonable
expenses of administering the Plan.
(c) No Reversion of Funds. No part of the Trust Fund shall revert to any
Participating Company nor be used for or diverted to purposes other than the
exclusive purpose of providing benefits to Participants, Spouses, joint
annuitants and beneficiaries who have an interest in the Plan and defraying the
reasonable expenses of administering the Plan; provided, however, that funds may
be returned to Participating Companies under the following circumstances:
(i) Any contribution made as a result of a mistake of fact may be
refunded to the appropriate Participating Company, provided such refund
occurs within one year after the date of such contribution;
(ii) In the event that the Commissioner of Internal Revenue determines
that the Plan is not initially qualified under the Internal Revenue
65
Code, any contribution made incident to that initial qualification by the
employer must be returned to the employer within one year after the date
the initial qualification is denied, but only if the application for the
qualification is made by the time prescribed by law for filing the
employer's return for the taxable year in which the Plan is adopted, or
such later date as the secretary of the Treasury may prescribe.
(iii) Any contribution conditioned upon its deductibility under
section 404 of the Code may be refunded to the appropriate Participating
Company to the extent that it is disallowed as a deduction, provided the
refund is made within one year after the date of disallowance; and
(iv) Upon termination of the Plan, any assets remaining after the
allocation described in Section 15(d) may be returned to the appropriate
Participating Company if (i) all liabilities of the Plan to the
Participants, Spouses, joint annuitants and beneficiaries have been
satisfied and (ii) such return does not contravene any provision of ERISA
or other applicable law.
(d) Full Vesting Upon Termination. Upon termination of the Plan, the right
of each Participant to his benefit accrued under the Plan shall be 100% vested
and nonforfeitable to the extent funded. Upon partial termination of the Plan,
the right of each affected Participant to his benefit accrued under the Plan
shall, to the extent funded, be 100% vested and nonforfeitable. Upon termination
or partial termination of the Plan, the Trust shall continue until the Trust
Fund has been distributed as provided in Section 15(d) below.
66
(e) Allocation of Trust Fund Upon Termination of the Plan. Upon termination
of the Plan, the Trust Fund shall be allocated by the Plan Administrator on an
actuarial basis among Participants, Spouses, joint annuitants and beneficiaries
pursuant to section 4044 of ERISA. In the case of a partial termination, such
allocation shall be limited to the affected Participants.
SECTION 16. MISCELLANEOUS.
(a) Inalienability of Rights. Except as otherwise provided in Section 16(b)
below, the interest and property rights of any person in the Plan, in the Trust
Fund or in any distribution to be made under the Plan shall not be subject to
option nor be assignable, either by voluntary or involuntary assignment or by
operation of law, including (without limitation) bankruptcy, garnishment,
attachment or other creditor's process, and any act in violation hereof shall be
void. Notwithstanding the foregoing, the creation, assignment or recognition of
a right to all or any portion of a Participant's Plan benefit made pursuant to a
state domestic relations order shall not constitute a violation of this Section
16(a), provided that such order is determined to be a "qualified domestic
relations order" (as defined in section 414(p) of the Code) under written
procedures adopted by the Plan Administrator.
(b) Overpayments and Underpayments. If any person has received a payment
from the Plan in excess of the amount (if any) to which he was entitled under
the Plan, then the excess shall be withheld from one or more subsequent payments
to such person (or to any person who derives his rights under the Plan from the
person who received the overpayment); provided that no single periodic payment
under the
67
Plan shall be reduced by more than twenty-five percent (25%) on account of one
or more prior overpayments. In addition, the Company may employ any other lawful
means to recover overpayments on behalf of the Plan. If any person has received
less than the amount to which he is entitled under the Plan, then the entire
amount of the deficiency shall be paid to him (or to his representative) as soon
as reasonably practicable after the discovery of the underpayment.
(c) Plan Mergers. The Plan shall not merge or consolidate with nor transfer
assets or liabilities to any other plan unless each Participant would receive a
Retirement or Vested Benefit immediately after the merger, consolidation or
transfer (if the Plan then terminated) that is equal to or greater than the
Retirement or Vested Benefit such Participant would have been entitled to
receive immediately before the merger, consolidation or transfer (if the Plan
had then terminated).
(d) Information to Participants. Each Participant shall be given a general
explanation of the Plan and, not more than once in any twelve-month period, upon
written request addressed to the Plan Administrator, shall be furnished with
reasonable information regarding such Participant's rights under the Plan and
all information required by law.
68
(e) No Right in Trust Fund or to Employment. No person shall have any
rights in or to the Trust Fund, or any part thereof, or under the Plan, except
as, and only to the extent, expressly provided for in the Plan. The
establishment of the Plan, the granting of benefits and any action of any member
of the Affiliated Group or any other person shall not be held or construed to
confer upon any person any right to be continued as an Employee nor, upon
dismissal, to confer any right or interest in the Trust Fund other than as
provided herein. No provision of the Plan shall restrict the right of many
member of the Affiliated Group to discharge any Employee at any time, with or
without cause.
(f) Cessation of Benefit on Reemployment; Suspension of Benefits.
(i) If any Participant is receiving benefits under the Plan and
returns to service as an Employee, payment of his benefits shall cease. The
Years of Service credited to the Participant at the date of his retirement
shall be restored and, on subsequent retirement, the Participant's benefits
shall be paid in accordance with Section 6 or 7, whichever is applicable,
and shall be based on such Participant's Earnings and Years of Service both
before and after the prior retirement; provided, that the Retirement
Benefits payable to the Participant on subsequent retirement shall be
reduced by an amount that reflects the Equivalent Actuarial Value of the
Retirement Benefits previously paid to such Participant.
(ii) Subject to the requirements of Section 9(a), no payment of a
Retirement Benefit shall be made to a Participant during any period of
69
employment as an Employee on or after his Normal Retirement Date. To the
extent provided in Section 6(d), such a Participant's Retirement Benefit
shall be increased by the Equivalent Actuarial Value of the monthly benefit
payments for each month after the Participant's Normal Retirement Date and
before actual retirement that was not a Suspendible Month, that the
Participant would have received had he retired on his Normal Retirement
Date and commenced receipt of benefits in the form of an individual life
annuity.
(g) Competency to Handle Benefits. If, in the opinion of the Plan
Administrator, any person becomes unable to handle properly any property
distributable to such person under the Plan, the Plan Administrator may make any
reasonable arrangement for distribution on such person's behalf as it deems
appropriate.
(h) False or Erroneous Statements. If any person makes any statement which
is false or erroneous, fails to state or furnish any material fact or
information or fails to correct any such information that has been previously
furnished to the Plan Administrator or any other Participating Company, the
benefits payable with respect to such person shall be adjusted upon the
discovery of the accurate facts, the amount of any payments theretofore made in
reliance on incorrect facts shall be recalculated and the amount of any
overpayment made to any Participant, Spouse, joint annuitant or beneficiary
shall be deducted from succeeding payments or legal action shall be taken to
recover such overpayments, as the Plan Administrator shall determine.
(i) Small Benefits.
70
(i) If the monthly benefit payable under this Plan would be less than
$50, the Plan Administrator may pay benefits of Equivalent Actuarial Value
on a quarterly, semi-annual or annual basis.
(ii) If an Employee terminates service, and the present value of the
Employee's vested accrued benefit derived from employer contributions is
not greater than $3,500, or, if an Employee dies prior to the date payments
to him have commenced and the present value of any Surviving Spouse
Benefits payable with respect to him is no greater than $3,500, the
Employee or Surviving Spouse (as applicable) will receive a lump sum
distribution of such present value and the nonvested portion of such
benefit will be treated as a forfeiture in the next calendar year following
the date the Participant terminates employment or dies. If the present
value of an Employee's vested accrued benefit is zero, the Employee shall
be deemed to have received a distribution of such vested accrued benefit.
For purposes of this Section 16(i)(ii), the present value of a
Participant's vested accrued benefit and the present value of a Surviving
Spouse Benefit shall be determined on the basis provided in Appendix B with
respect to lump sums as of the date such benefit is a to be paid or, with
respect to a Surviving Spouse Benefit, as of the date the notice by the
Plan Administrator (as described in Section 8(e)) is sent.
(j) Payee's Location Not Ascertainable or Payee Fails To File Claim. In the
event any benefit has been due and payable under this Plan for a period
71
of more than 60 months and cannot be paid because the location of the payee
cannot be ascertained, or in the event more than 60 months has elapsed since the
date an application for a benefit could have been filed with the Plan
Administrator that would have caused a benefit to be due and payable hereunder,
then the entire amount of any benefit that is or may become payable hereunder
shall constitute a forfeiture; provided, however, in the event the location of
such payee is ascertained, or a claim for benefits is filed, the benefit
forfeited shall be reinstated. In the case of a benefit for which a claim was
filed but the location of the payee could not be ascertained, all back payments,
if any, shall be made in a single lump sum without interest and without any
actuarial adjustment in the amount of the benefit theretofore or thereafter
payable.
(k) Governing Law. This Plan shall be construed in accordance with ERISA
and, to the extent permissible under ERISA, the laws of the State of New York.
(l) Gender and Number. Except where otherwise indicated by the context: (i)
the use of masculine and neuter terminology herein shall also include the
feminine and vice versa; and (ii) the use of singular terminology shall also
include the plural.
72
SECTION 17. EXECUTION.
To record the amendment and restatement of the Plan to read as set forth
herein, the Company has caused its authorized officers to affix the corporate
name and seal hereto effective as of January 1, 1995.
DEAN WITTER REYNOLDS INC.
By____________________________
APPENDIX A
Annual Pension Equivalent Per $1.00 Profit Sharing Plan
Benefit As of August 31, 1980
Years From 8/30/80 To
Normal Retirement Date
(To Nearest Year)
-----------------
45 $1.4729
44 1.3895
43 1.3109
42 1.2367
41 1.1667
40 1.1006
39 1.0383
38 .9796
37 .9241
36 .8718
35 .8225
34 .7759
33 .7320
32 .6906
31 .6515
30 .6146
29 .5798
28 .5470
27 .5160
26 .4868
25 .4593
24 .4333
23 .4087
22 .3856
21 .3638
20 .3432
19 .3238
18 .3054
17 .2881
16 .2718
15 .2564
14 .2419
13 .2282
12 .2153
11 .2031
10 .1916
AA-1
9 .1808
8 .1706
7 .1609
6 .1518
5 .1432
4 .1351
3 .1274
2 .1202
1 .1134
0 .1070
AA-2
APPENDIX B
DEAN WITTER REYNOLDS INC. PENSION PLAN
ACTUARIAL EQUIVALENTS
a. OPTIONAL FORMS OF ANNUITY - REDUCTION FACTORS
1 Joint and Survivor Annuities
The amount of single life annuity otherwise payable to a Participant shall
be reduced by multiplying it by the factor specified below to determine the
amount payable under an optional form of benefits.
Percentage of Single Life
Benefit Payable to
Participant
-----------
Percentage Continued
to Surviving Spouse 50% 75% 100%
-------------------- --- --- ----
Basic Factor if Spouse is the 90.0% 85.0% 80.0%
same age as Participant
Amount to add for each year that .4% .6% .8%
Spouse is older than Participant
or to subtract for each year that
Spouse is younger than Participant
Maximum Factor 98.0% 97.0% 96.0%
Minimum Factor 80.0% 70.0% 60.0%
2 10 Year Certain and Life
Percentage of Single Life Benefit
Payable: 94%
3 5 Year Certain and Life
Percentage of Single Life Benefit
Payable: 98%
AB-1
b. LUMP SUMS
Lump sums will be determined on the basis of the following assumptions:
Mortality: Participants - UP-1984 Table.
Spouses or Beneficiaries - UP-1984 Table with ages set back 3
years.
Interest:
The interest rates specified by the Pension Benefit Guaranty
Corporation ("PBGC") in Appendix B of PBGC Regulation
Section 2619, 29 C.F.R. 2619, for determining the present
value of benefits under a terminated pension plan as of the
first day of the Plan Year in which the lump sum payment is
to be made, provided, however, that if the lump sum benefit
so calculated exceeds $25,000 then the interest assumption
used to determine the lump sum benefit shall be 120% of the
above described PBGC interest rates, provided further,
however that no lump sum benefit determined by using an
interest assumption equal to 120% of the PBGC interest rates
shall be less than $25,000.
If the Participant is eligible for a Retirement Benefit, the lump sum will be
the present value of a Retirement Benefit paid in the form of an immediate
annuity commencing as of the date on which the lump sum will be paid. If the
Participant is not eligible for a Retirement Benefit, the lump sum will be the
present value of the Vested Benefit commencing on the Participant's Normal
Retirement Date.
c. REDUCTION FACTORS FOR DISTRIBUTIONS PRIOR TO NORMAL RETIREMENT AGE
A Retirement or Vested Benefit, distribution of which begins prior to
Normal Retirement Date, shall be reduced by multiplying it by the factor
specified below.
Age at Beginning
of Distribution Early Commencement Factor
--------------- -------------------------
60 70%
55 40%
50 25%
45 20%
AB-2
40 15%
35 10%
30 7%
25 4%
20 3%
15 2%
Reductions are
6% per year from age 55 to age 65
3% per year from age 50 to age 55
1% per year from age 35 to age 50
.6% per year from age 25 to age 35
.2% per year prior to age 25
Minimum Reduction Factor 2%
d. OTHER
For any purpose for which an Equivalent Actuarial Value is not otherwise
specified under the Plan, Equivalent Actuarial Value shall be determined
on the basis of the following assumptions:
Interest: 7%
Mortality: Participants - UP-1984 Table.
Spouse or Beneficiaries - UP-1984 Table with ages set back 3
years.
AB-3
SUPPLEMENT A
TO THE
DEAN WITTER REYNOLDS INC.
PENSION PLAN
SECTION 1. TOP-HEAVY PROVISIONS.
(a) Determination of Top-Heavy Status. Notwithstanding any other provision
of the Plan to the contrary, the following provisions shall become effective for
any Plan Year after the Plan Year ending December 31, 1983 in which the Plan is
a Top-Heavy Plan.
(b) Minimum Benefit.
(i) Notwithstanding any other provision of the Plan to the contrary
except (ii) and (iii) below, for any Plan Year in which this Plan is a
Top-Heavy Plan, each Participant who is not a Key Employee and who has
completed a Year of Service shall accrue a benefit (to be provided solely
by Participating Company contributions and expressed as a life annuity
commencing at Normal Retirement Age) of not less than two percent of his
highest average Compensation for the five consecutive years for which the
Participant had the highest Compensation. The aggregate Compensation for
the years during such five year period in which the Participant was
credited with a Year of Service will be divided by the number of such years
in order to determine average annual Compensation. The minimum accrual
shall be determined without regard to any contributions made or benefits
available under the Social Security Act, and shall be granted even though,
under other Plan provisions, the Participant would not be entitled to
receive an accrual, or would have received a lesser accrual for the Plan
Year because (A) he failed to make mandatory contributions to the Plan, (B)
he received Compensation in an amount less than the minimum required by the
Plan for a Participant to qualify for a benefit accrual, (C) he was not
employed on the last day of the accrual computation period, or (D) the Plan
is integrated with Social Security.
(ii) No additional benefit accruals shall be provided pursuant to (i)
above to the extent that the total accruals on behalf of the Participant
attributable to Participating Company contributions will provide a benefit
expressed as a life annuity commencing at Normal Retirement Age that equals
or exceeds 20
percent of the Participant's highest average compensation for the five
consecutive years for which the Participant had the highest compensation.
All accruals of participating Company benefits, whether or not attributable
to years for which the Plan is a Top-Heavy Plan, may be used in computing
whether the minimum accrual requirements of this subsection are satisfied.
(iii) No benefit accruals shall be provided pursuant to (i) above for
any Plan Year in which company contributions and allocable Forfeitures
(and, for any Plan Year commencing on or after January 1, 1985, Basic
Pre-Tax Contributions) equal to five percent or more of the Participant's
Compensation are allocated to the Participant under the Dean Witter
Reynolds Inc. Employee Retirement Investment Plan.
If the form of benefit is other than a single life annuity, the Employee must
receive an amount that is the Equivalent Actuarial Value of the minimum single
life annuity benefit. If the benefit commences at a date other than at Normal
Retirement Age, the Employee must receive at least an amount that is the
Equivalent Actuarial Value of the minimum single life annuity benefit that
commences at Normal Retirement Age. The minimum accrued benefit required (to the
extent required to be nonforfeitable under section 416(b) of the Code) may not
be forfeited under sections 411(a)(3)(B) or 411(a)(3)(D) of the Code.
(c) Minimum Vesting. Notwithstanding any provision of Section 7 of the Plan
to the contrary, if a Participant (other than a Participant who did not complete
any Period of Service after the Plan became a Top-Heavy Plan) terminates
employment with the Affiliated Group before his death or retirement but after he
has completed three or more Years of Service and if such termination occurs
while the Plan is a Top-Heavy Plan, such participant shall be eligible for a
Vested Benefit. The amount of such Vested Benefit on a single-life basis,
commencing as of such Participant's Normal Retirement Date shall be equal to 100
percent of his accrued benefit. If a Participant terminates employment with the
Affiliated Group before his death or retirement, while the Plan is a Top-Heavy
Plan, and before the Participant has completed three Years of Service, such
Participant's vested interest in his accrued benefit shall be the percentage
determined in accordance with Section 7 of the Plan.
(d) Effect of Change in Top-Heavy Status on Vesting. If the Plan is a
Top-Heavy Plan at any time and thereafter ceases to be a Top-Heavy Plan, each
Participant who is credited with three or more Years of Service as of December
31 of the last Plan Year in which the Plan is a Top-Heavy Plan shall thereafter
continue to be 100 percent vested in his accrued benefit. Each Participant who
is credited with fewer than three Years of Service as of December 31 of the last
Plan Year in which the Plan is a Top-Heavy Plan shall have his vested percentage
determined under Section 7 of the Plan (unless and until the Plan again becomes
a Top-Heavy Plan) provided that, as long as such Participant had an Hour of
Service after the Plan became a Top-Heavy Plan, no decrease in a Participant's
nonforfeitable percentage may occur in the event the Plan's status as a
Top-Heavy Plan alters during any Plan Year.
(e) Impact on Maximum Benefits. For any Plan Year in which the Plan is a
Top-Heavy Plan or Super Top-Heavy Plan, the number "1.00" shall be
-A-2-
substituted for the number "1.25" wherever it appears in section 415(e)(2) and
(3) of the Code; provided, however, that such substitution shall not have the
effect of reducing any benefit accrued under the Plan or any other defined
benefit plan maintained by any member of the Affiliated Group prior to the first
day of the Plan Year in which this provision becomes applicable.
SECTION 2. PLAN DISTRIBUTIONS.
Notwithstanding any other provision of the Plan to the contrary, the
Retirement Benefit of a Participant who is a five percent owner of the Company
(as defined in section 416(i) of the Code) shall commence, recommence or be paid
no later than April l of the Plan Year following the Plan Year in which he
attains age 70-1/2, whether or not he is still an Employee.
-A-3-
SECTION 3. DEFINITIONS.
For purposes of this Supplement A, the following definitions shall apply:
(a) "Aggregation Group" means a group of qualified plans consisting of:
(i) Each Plan of the Affiliated Group in which a Key Employee
participates, and each other plan of any member of the Affiliated Group
that enables any plan in which a Key Employee participates to meet the
requirements of sections 401(a)(4) and 410 of the Code; or
(ii) All plans of the Affiliated Group included under (i), above,
plus, at the election of the Company, one or more additional plans of the
Affiliated Group that satisfy the requirements of sections 401(a)(4) and
410 of the Code when considered together with the plans included under (i)
above.
(b) "Compensation" means the total compensation actually paid to the
Participant by the Affiliated Group member that employs such Participant, as
reported on the Internal Revenue Service Form W-2 (or its equivalent) issued
with respect to such Participant.
(c)"Determination Date" means, for any Plan Year subsequent to the first
Plan Year, the last day of the preceding Plan Year, and for the first Plan Year
of the Plan, the last day of such year.
(d)"Key Employee" means any Employee or former Employee (and the
beneficiaries of such Employee) who at any time during the Determination Period
was an officer of the Company or Participating Company if such individual's
average Compensation exceeds 50% of the dollar limitation under section
415(b)(1)(A) of the Code, an owner (or considered an owner under section 318 of
the Code) of one of the ten largest interests in the Company or Participating
Company if such individual's Compensation exceeds 100% of the dollar limitation
under section 415(c)(1)(A) of the Code, a 5% owner of the Company or
Participating Company, or a 1% owner of the Company or Participating Company who
has an Annual Compensation of more than $150,000. "Annual Compensation" means
Compensation as defined in section 415(c)(3) of the Code, but including amounts
contributed by the Company or Participating Company pursuant to a salary
reduction agreement which are excludible from the Employee's gross income under
sections 125, 402(a)(8), 402(h) or 403(b) of the Code. The "Determination
Period" is the Plan Year containing the Determination Date and the four
preceding Plan Years. The determination of who is a Key Employee will be made in
accordance with section 416(i) of the Code and the regulations thereunder.
(e) "Permissive Aggregation Group" means the Required Aggregation Group of
plans plus any other plan or plans of the Company or Participating Company
which, when considered as a group.with the Required Aggregation Group, would
continue to satisfy the requirements of sections 401(a)(4) and 410 of the Code.
-A-4-
(f) "Present Value" shall be specified only using the interest and
mortality rates specified in Appendices A and B.
(g) "Required Aggregation Group" means (1) each qualified plan of the
Company or Participating Company in which at least one Key Employee participates
or participated at any time during the Determination Period (regardless of
whether the plan has terminated), and (2) any other qualified plan of the
Company or Participating Company which enables a plan described in (1) to meet
the requirements of sections 401(a)(4) and 410 of the Code.
(h) "Super Top-Heavy Plan" means a Top-Heavy Plan for which the Top-Heavy
Ratio exceeds 90%.
(i) "Top-Heavy Plan" means, for any Plan Year beginning after December 31,
1983, the Plan if any of the following conditions exist:
(i) If the Top-Heavy Ratio for the Plan exceeds 60% and the Plan is
not part of any Required Aggregation Group or Permissive Aggregation Group
of plans;
(ii) If the Plan is part of a Required Aggregation Group of plans but
not part of a Permissive Aggregation Group and the Top-Heavy Ratio for the
group of plans exceeds 60%; or
(iii) If the Plan is a part of a Required Aggregation Group and part
of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
(j) "Top-Heavy Ratio" means as follows:
(i) If the Company or Participating Company maintains one or more
defined contribution plans (including any simplified employee pension
plans) and the Company or Participating Company has not maintained any
defined benefit plan which, during the five-year period ending on the
Determination Date(s) has or has had Vested Benefits, the Top-Heavy Ratio
for the Plan alone or for the Required Aggregation Groups or Permissive
Aggregation Groups as appropriate is a fraction, the numerator of which is
the sum of the account balance of all Key Employees as of the Determination
Date(s) (including any part of any account balance distributed in the
five-year period ending on the Determination Date(s)), and the denominator
of which is the sum of all account balances (including any part of any
account balance distributed in the five-year period ending on the
Determination Date(s)), both computed in accordance with section 416 of the
Code and the regulations thereunder. Both the numerator and the denominator
of the Top-Heavy Ratio are increased to reflect any contribution not
actually made as of the Determination Date, but which is required to be
taken into account on that date under section 416 of the Code and the
regulations thereunder.
-A-5-
(ii) If the Company or Participating Company maintains one or more
defined contribution plans (including any simplified employee pension
plans) and the Company or Participating Company maintains or has maintained
one or more defined benefit plans which, during the five-year period ending
on the Determination Date(s) has or has had any Vested Benefits, the
Top-Heavy Ratio for any Required Aggregation Groups or Permissive
Aggregation Groups as appropriate is a fraction, the numerator of which is
the sum of the account balances under the aggregated defined contribution
plan or plans for all Key Employees, determined in accordance with (i)
above, and the Present Value of accrued benefits under the aggregated
defined benefit plan or plans for all Key Employees as of the Determination
Date(s), and the denominator of which is the sum of the account balances
under the aggregated defined contribution plan or plans for all
Participants, determined in accordance with (i) above, and the Present
Value of accrued benefits under the defined benefit plan or plans for all
Participants as of the Determination Date(s), all determined in accordance
with section 416 of the Code and the regulations thereunder. The accrued
benefits under a defined benefit plan in both the numerator and denominator
of the Top-Heavy Ratio are increased for any distribution of an accrued
benefit made in the five-year period ending on the Determination Date.
(iii) For purposes of (i) and (ii) above, the value of account
balances and the Present Value of accrued benefits will be determined as of
the most recent valuation date that falls within or ends with the
twelve-month period ending on the Determination Date, except as provided in
section 416 of the Code and the regulations thereunder for the first and
second plan years of a defined benefit plan. The account balances and
accrued benefits of a Participant (1) who is not a Key Employee but who was
a Key Employee in a prior year, or (2) who has not been credited with at
least one hour of service with any Company or Participating Company
maintaining the Plan at any time during the five-year period ending on the
Determination Date will be disregarded. The calculation of the Top-Heavy
Ratio, and the extent to which distributions, rollovers, and transfers are
taken into account will be made in accordance with section 416 of the Code
and the regulations thereunder. Deductible Employee contributions will not
be taken into account for purposes of computing the Top-Heavy Ratio. When
aggregating plans the value of account balances and accrued benefits will
be calculated with reference to the Determination Dates that fall within
the same calendar year.
The accrued benefit of a Participant other than a Key Employee shall be
determined under (x) the method, if any, that uniformly applies for accrual
purposes under all defined benefit plans maintained by the Company or
Participating Company, or (y) if there is no such method, as if such benefit
accrued not more rapidly than the slowest accrual rate permitted under the
fractional rule of section 411(b)(1)(C) of the Code.
(k) "Valuation Date" means the date elected by the Company or Participating
Company as of which account balances or Vested Benefits are valued for purposes
of calculating the Top-Heavy Ratio, which is December 31 of each year.
-A-6-
SUPPLEMENT B
TO THE
DEAN WITTER REYNOLDS INC.
PENSION PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE.
Supplement B to the Dean Witter Reynolds Inc. Pension Plan ("Supplement B")
is hereby established effective as of January 1, 1984. The purpose of Supplement
B is to provide supplemental retirement benefits to certain employees who are
transferred from employment with an employer participating in the Sears Pension
Plan, the Allstate Retirement Plan or the NCSI Pension Plan to employment with
the Company. Supplement B is a part of the Plan and shall be administered in
accordance with the provisions thereof, except as expressly provided below.
Capitalized terms used in Supplement B and not defined herein shall have the
same meanings given to such terms in the Plan.
SECTION 2. DEFINITIONS.
(a) "Allstate Retirement Plan" means the Allstate Retirement Plan, as
amended from time to time.
(b) "Sears Pension Plan" means the Sears Pension Plan, as amended from time
to time.
(c) "NCSI Pension Plan" means the NCSI Pension Plan, as amended from time
to time.
(d) "Supplement B Participant" means a Participant described in Section 3
of this Supplement B.
(e) "Supplement B Retirement Benefit" means the benefit payable pursuant to
Section 4 of this Supplement B.
(f) "Sears Employee" means a participant in the Sears Pension Plan.
(g) "Allstate Employee" means a participant in the Allstate Retirement
Plan.
SECTION 3. ELIGIBILITY.
Each individual who is (or was) a Sears Employee or an Allstate Employee
for at least one calendar year and who is transferred from employment with an
employer participating in the Sears Pension Plan or the Allstate Retirement Plan
to employment for at least one full year with the Company after December 31,
1983, shall be a Supplement B Participant.
SECTION 4. AMOUNT OF SUPPLEMENT B BENEFIT.
(a) Former Sears Employees. Each Supplement B Participant who was a Sears
Employee shall be entitled to an annual Supplement B Retirement Benefit that is
equal to (i) the product of (A) the annual benefit that such Supplement B
Participant would have been entitled to under the Sears Pension Plan, as of the
date of his termination of employment with the Company, if his Years of Service
with the Company constituted "service" and his Earnings constituted
"compensation" for all purposes under such Plan, multiplied by (B) the ratio of
such Supplement B Participant's Years of Service credited for benefit purposes
under the Sears Pension Plan divided by the total Years of Service that would
have been credited for benefit purposes under the Sears Pension Plan if service
with the Company had been counted as service with Sears, minus (ii) the benefit
payable to the Supplement B Participant from the Sears Pension Plan.
(b) Former Allstate Employees. Each Supplement B Participant who was an
Allstate Employee shall be entitled to an annual Supplement B Retirement Benefit
that is equal to (i) the product of (A) the annual benefit that such Supplement
B Participant would have been entitled to under the Allstate Retirement Plan, as
of the date of his termination of employment with the Company, if his Years of
Service with the Company constituted "service" and his Earnings constituted
"compensation" for all purposes under such Plan, multiplied by (B) the ratio of
such Supplement B Participant's Years of Service credited for benefit purposes
under the Allstate Retirement Plan divided by the total Years of Service that
would have been credited for benefit purposes under the Allstate Retirement Plan
if service with the Company had been counted as service with Allstate, minus
(ii) the benefit payable to the Supplement B Participant from the Allstate
Retirement Plan.
(c) Former NCSI Employees. Each Supplement B Participant who was an SCFC
Employee shall be entitled to an annual Supplement B Retirement Benefit that is
equal to (i) the product of (A) the annual benefit that such Supplement B
participant would have been entitled to under the NCSI Pension Plan, as of the
date of his termination of employment with the Company, if his Years of Service
with the Company constituted "service" and his Earnings constituted
"compensation" for all purposes under such Plan, multiplied by (B) the ratio of
such Supplement B Participant's Years of Service credited for benefit purposes
under the NCSI Pension Plan divided by the total Years of Service that would
have been credited for benefit purposes under the NCSI Pension Plan if service
with the Company had been counted as service with NCSI, minus (ii) the benefit
payable to the Supplement B participant from the NCSI Pension Plan.
-B-2-
SECTION 5. TIME AND FORM OF PAYMENT.
A Participant's Supplement B Retirement Benefit shall be payable at the
same time and in the same form as his Normal, Early or Disability Retirement
Benefit or Vested Benefit under the Plan.
SECTION 6. SURVIVING SPOUSE BENEFITS.
Any Surviving Spouse Benefit that may be payable to the surviving spouse of
a married Participant pursuant to Section 8 of the Plan shall be calculated by
taking into account any Supplement B Retirement Benefit payable with respect to
such Participant.
-B-3-