EXHIBIT 4.3
FRONTIER GROUP
BARGAINING UNIT EMPLOYEES' RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
Page
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INTRODUCTION ..................................................... 1
Article I Definitions.......................................... 2
Article II Eligibility.......................................... 7
Article III Participation and Participant
Contributions........................................ 8
Article IV Participating Company Contributions.................. 11
Article V Investment of Contributions.......................... 21
Article VI Participant Accounts................................. 22
Article VII Retirement or Other Termination
of Employment........................................ 25
Article VIII Death................................................ 27
Article IX Payment of Benefits.................................. 28
Article X Withdrawals and Loans During Employment.............. 33
Article XI Plan Administration.................................. 37
Article XII Amendment and Termination............................ 41
Article XIII Top-Heavy Provisions................................. 42
Article XIV General Provisions................................... 44
Appendix A Participating Companies
Appendix B Plan Features Unique to Participating Companies
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INTRODUCTION
This Bargaining Unit Employees' Retirement Savings Plan was established,
effective as of March 1, 1994, by the merger of several bargaining unit defined
contribution plans within the Frontier Group of companies. Since March 1, 1994,
several other plans have been merged into the Plan and it is anticipated that in
the future other 401(k) and savings plans within the Frontier Group will be
merged into this Plan.
The Plan is hereby amended, continued and restated effective January 1,
1999 to provide easier administration and to comply with recent legislation,
except that provisions specifically setting forth other effective dates shall be
effective on such dates. All Participants in this Plan are subject to identical
terms and conditions of participation except as set forth in Appendix B, with
respect to each Participating Company.
The merger of any plan into this Plan shall not reduce any Participant's
accrued benefit in effect immediately preceding the merger.
This Plan is intended to qualify as a profit sharing plan pursuant to the
provisions of Code sections 401(a) and 401(k).
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Article I
Definitions
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l.1 "Affiliated Company" means Frontier Corporation (the "Company") and
(a) any other company which is included within a "controlled group of
corporations" within which the Company is also included, as
determined under section l563 of the Code without regard to
subsections (a)(4) and (e)(3)(C) of said section l563; or
(b) any other trades or businesses (whether or not incorporated) with
which the Company is affiliated which, based on principles
similar to those defining a "controlled group of corporations"
for the purposes of (a) above, are under common control; or
(c) any other entities required to be aggregated with the Company
pursuant to Code section 414.
l.2 "Basic Contributions" means a Participant's contributions to the Plan
in any whole percentage of Compensation up to a 3 percent of
Compensation maximum in accordance with Section 3.2 and, where
applicable, Appendix B.
1.3 "Beneficiary" means the Participant's surviving spouse or, in the
event there is no surviving spouse or the surviving spouse elects in
writing not to receive any death benefits under the Plan, the person
or persons (including a trust) designated by a Participant to receive
any death benefit which shall be payable under this Plan.
l.4 "Board" means the Board of Directors of the Company or any committee
of the Board of Directors authorized to act on behalf of the Board.
Any such Board committee shall be composed of at least three members
of the Board of Directors. As used in this Plan the term
"Board-appointed committee" means the Committee and any other
committee appointed by the Board which need not be comprised of at
least three Board members but may include or consist entirely of
management personnel who are not members of the Board.
1.5 "Code" means the Internal Revenue Code of 1986, as amended.
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l.6 "Committee" means the Employees' Benefit Committee appointed pursuant
to Article XI to administer the Plan.
l.7 "Company" means Frontier Corporation, a New York corporation, its
predecessor or its successor.
1.8 "Company Fixed Contributions" means a contribution by a Participating
Company as specified in Section 4.1 and Appendix B. These
contributions are not contingent on the level of Participant
contributions.
1.9 "Company Profit Sharing Contributions" means the contributions of a
Participating Company that are not contingent on the level of
Participant contributions and are specified, if any, in Appendix B for
each Participating Company.
1.10 "Company Matching Contributions" means the contributions of a
Participating Company that are contingent upon a Participant's Basic
Contributions in an amount specified for the Participating Company in
Appendix B.
1.11 "Company Stock" means Frontier Corporation common stock. Effective as
soon as administratively practicable following the closing date of the
acquisition of the Company by Global Crossing Ltd., "Company Stock"
means Global Crossing Ltd. common stock.
l.12 "Compensation" means the total of a Participant's basic salary or
wages, bonuses, overtime and commissions paid by a Participating
Company for services actually rendered by the Participant to a
Participating Company. A Participant's Compensation shall not include
imputed long term disability premiums, pension payments or any other
form of extra remuneration of whatever nature except bonuses and
commissions included under the preceding sentence, nor any annual
remuneration in excess of $160,000 (adjusted for cost of living
increases as permitted under the Code). For any Participant receiving
disability pay from a Participating Company during a payroll period
(other than a disability pension), the term "Compensation" means such
disability pay. For any Employee who is making Pre-Tax Contributions
pursuant to Section 3.7, or pre-tax contributions under a
Participating Company's cafeteria (section 125) plan, the term
Compensation shall be based on his wages, salary,
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commissions and bonuses, all as defined above, prior to any salary
reduction. Notwithstanding the foregoing, if a particular collective
bargaining agreement requires a modification of the term
"Compensation" as set forth above, the modification shall be set forth
in the appropriate Appendix B and shall be used with respect to any
Participant whose Plan participation is governed by such Appendix B.
1.13 "Early Retirement Age" means age 55.
l.14 "Effective Date" means March 1, 1994. The effective date of this
restatement is January 1, 1999, provided that provisions having other
effective dates shall be effective as may be expressly provided by
such provisions.
1.15 "Election Period" means the period of time during which a Participant
can elect, with the consent of his spouse, to waive the Qualified
Joint and Survivor Annuity or the Qualified Pre-Retirement Survivor
Annuity or can elect to revoke such a waiver. In the case of a
Qualified Joint and Survivor Annuity, the Election Period is the 90
day period preceding the annuity starting date. In the case of a
Qualified Pre- Retirement Survivor Annuity, the Election Period begins
on the first day of the Plan Year in which a Participant attains age
35 and ends on the date of the Participant's death, provided that if a
Participant terminates employment prior to age 35, his Election Period
shall begin on his termination date.
1.16 "Employee" means any individual who is employed by a Participating
Company.
1.17 "ERISA" means the Employee Retirement Income Security Act of l974, as
amended from time to time, and any regulations issued pursuant
thereto.
1.18 "Forfeiture" means that portion of a Participant's Restricted Company
Contribution Account which is forfeited before full vesting.
1.19 "Highly Compensated Employee" means, effective January 1, 1997, any
Employee who:
(a) was a "five percent owner", as defined in Section 416(i)(l) of
the Code, during the current or preceding Plan Year; or
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(b) received Compensation from a Participating Company or an
Affiliated Company which, in total, exceeded $80,000 for the
preceding Plan Year, and, if the Company so elects, was in the
top-paid group for the preceding Plan Year.
The $80,000 dollar amount shall be adjusted for cost of living
increases as provided under the Code. The determination of whether an
Employee is a Highly Compensated Employee will be made in accordance
with Code section 414(q) and the rules and regulations promulgated
thereunder.
1.20 "Investment Manager" means any individual or corporation selected by
the Board or by any Board-appointed committee having the authority to
select such person who (i) is registered as an investment adviser
under the Investment Advisers Act of 1940; or (ii) is a bank, as
defined in that Act; or (iii) is an insurance company qualified to
manage, acquire or dispose of plan assets under the laws of more than
one state and each individual or corporation acknowledges in writing
that he or the corporation, as the case may be, is a fiduciary with
respect to the Plan.
1.21 "Leased Employee" means any person who is not otherwise an Employee
and who, pursuant to an agreement between a Participating Company and
any other person or organization, has performed services for the
Participating Company, or for the Participating Company and related
persons (determined in accordance with section 414(n)(6) of the Code),
on a basis whereby if such person were an Employee, such person would
have become an eligible Employee hereunder either in the initial
eligibility computation period or any Plan Year thereafter, and,
effective January 1, 1997, such services are performed under the
primary direction or control of the Participating Company, provided,
that a person shall not be treated as a Leased Employee for any Plan
Year if, during such Plan Year: (i) such person is covered by a money
purchase pension plan described in section 414(n)(5)(B) of the Code,
and (ii) not more than 20% of the Employees who are not Highly
Compensated Employees are Leased Employees. Once a person is
classified as a Leased Employee, such person shall remain a Leased
Employee for every Plan Year for which the person completes at least
1000 Hours of Service.
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1.22 "Non-Highly Compensated Employee" means an Employee who is not a
Highly Compensated Employee.
1.23 "Normal Retirement Age" means age 65.
1.24 "Participant" means an Employee who meets the eligibility requirements
set forth in Section 2.l.
1.25 "Participant Account" means, as of any Valuation Date, the then amount
of a Participant's contributions and the Participating Company's
contributions allocated on behalf of the Participant adjusted to
reflect any investment earnings and losses attributable to such
contributions, withdrawals and distributions, at the then market value
of the Trust. Where appropriate, a Participant Account shall have the
following subaccounts: a Restricted Company Contribution Account to
record Company contributions that must be invested in Company Stock,
an Unrestricted Company Contribution Account to record Company
contributions which are no longer restricted to investment in Company
Stock, a Participant Pre-Tax Contribution Account to record Pre-Tax
Contributions, a Participant Post-Tax Contribution Account to record
Post-Tax Contributions and a Rollover Account to record rollover
contributions. Earnings associated with each type of contribution
shall be allocated to the account to which the associated
contributions are allocated.
1.26 "Participating Company" means the Company and each Affiliated Company
that has adopted this Plan for the benefit of its eligible Employees.
Participating Companies are listed in Appendix A.
1.27 "Plan" means this Frontier Group Bargaining Unit Employees' Retirement
Savings Plan as set forth herein and as it may be amended from time to
time.
1.28 "Plan Year" means the calendar year. The Plan Year shall be the
limitation year as this term is used in ERISA.
1.29 "Post-Tax Contributions" means a Participant's contributions which are
non-deductible for income tax purposes at the time they are made.
1.30 "Predecessor Company" means any organization which was acquired by the
Company or an Affiliated Company.
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1.31 "Pre-Tax Contributions" means a Participant's contributions which are
not included in his income for income tax purposes at the time they
are made.
1.32 "Qualified Joint and Survivor Annuity" means an annuity for the life
of the Participant with a survivor annuity for the life of the
Participant's spouse which is 50 percent of the amount which is
payable during the joint lives of the Participant and the
Participant's spouse and which is purchased from an insurance company
with the Participant's account balance.
1.33 "Qualified Pre-Retirement Survivor Annuity" means a life annuity
payable to the surviving spouse of a deceased Participant which is
purchased from an insurance company with the Participant's account
balance.
1.34 "Restricted Stock" means Company Stock that has been allocated to a
Participant's Restricted Company Contribution Account for a period of
less than five years from the date of the initial allocation.
1.35 "Supplemental Contributions" means a Participant's contributions to
the Plan in excess of his Basic Contributions in accordance with
Section 3.2.
1.36 "Trust" or "Trust Fund" means the amounts held in trust in accordance with
this Plan and consists of such investment options as from time to time
may be designated by a Board-appointed Committee.
1.37 "Trust Agreement" means any agreement entered into between the Company
and any Trustee to carry out the purposes of the Plan, which agreement
shall constitute a part of this Plan.
1.38 "Trustee" means any bank or trust company selected by the Board or a
Board committee to serve as Trustee pursuant to the provisions of the
Trust Agreement.
1.39 "Valuation Date" means the last day the Trust may have been valued
provided that the Trust shall be valued no less frequently than on the
last day of each calendar quarter.
Article II
Eligibility
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2.1 Eligibility Requirements. An Employee who fits within the
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eligible class set forth in Appendix B for his Participating
Company and who is not excluded pursuant to the following
sentence is eligible to become a Participant in accordance with
the provisions set forth in Appendix B. An Employee is not
eligible to participate in this Plan if (1) the Employee is a
temporary or summer employee; (2) the Employee is a Leased
Employee; (3) the Employee is eligible to be an active
participant in the Frontier Group Employees' Retirement Savings
Plan; or (4) the Employee is an independent contractor (or a
person who is treated by a Participating Company as an
independent contractor or who is otherwise classified as not
being an employee of the Company, regardless of his actual
status).
In the discretion of the Committee, an eligible Employee of a
Participating Company that has adopted this Plan who is
transferred to an Affiliated Company that has not adopted this
Plan may participate in the Plan under such arrangements as the
Committee may prescribe.
2.1 2.2 Reemployment. If an Employee terminates employment and is
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subsequently reemployed by a Participating Company, he will be
eligible to begin participation in this Plan on the first day of the
month following completion of one month of service measured from his
reemployment date. All service of such an Employee with a
Participating Company or any Affiliated Company prior to termination
of employment shall be credited to such Employee for purposes of the
vesting provisions of Section 7.2.
Article III
Participation and Participant Contributions
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3.l Participation. An eligible Employee may become a Participant by filing
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a written application with the Committee, or by telephonic or
electronic processing, as the Committee shall determine. The
application shall indicate the amount of his initial Basic and
Supplemental Contributions and whether he intends to have such
Contributions made as Post-Tax Contributions or as Pre-Tax
Contributions. Except as the Committee in its discretion may otherwise
determine, participation will commence with the first payroll period
as is administratively practicable to meet following the date such
election is received by the
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Committee or its designee. Participation shall thereafter continue
until all amounts in the Participant's Account have been distributed
even though current contributions may be suspended.
3.2 Amount of Contributions. Contributions may be made by any Participant
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who has enough Compensation during any payroll period to make a
contribution by payroll deduction. Each Participant may contribute, at
his option, Basic Contributions in any whole percentage of his
Compensation during a payroll period with a minimum contribution of 1
percent of Compensation and a maximum contribution of 3 percent of
Compensation. If a Participant is making Basic Contributions at the
maximum rate of 3 percent of his Compensation, he may also elect to
make Supplemental Contributions of any whole percentage from l to l3
percent of his Compensation during a payroll period. All Participant
contributions will be in cash in the form of Employee-authorized
payroll deductions on either a post-tax basis or, pursuant to Section
3.7, on a pre-tax basis. Notwithstanding any provision of this Plan to
the contrary, contributions, benefits and service credit with respect
to qualified military service will be provided in accordance with
Section 414(u) of the Code.
3.3 Change in Amount of Contributions. The percentage, or percentages if
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more than one, of Compensation designated by the Participant as his
contribution rate will continue in effect, notwithstanding any change
in his Compensation, until he elects to change such percentage. A
Participant, by filing a written election form furnished by the
Committee, or by telephonic or electronic processing, as the Committee
shall determine, may change his percentage of contributions as
frequently during the Plan Year and pursuant to such rules as the
Committee may prescribe. Any such change will become effective on the
first payroll period as is administratively practicable to meet after
the date such election is received by the Committee or its designee.
If a Participant's total contribution rate is in excess of 3 percent
of his Compensation, any such change will first be applied to adjust
the amount of his Supplemental Contributions and then, if necessary,
to adjust the amount of his Basic Contributions. If a Participant's
total contribution rate is less than 3 percent of his Compensation,
any such change will first be applied to adjust the amount of his
Basic Contributions and then, if necessary, to provide for
Supplemental Contributions.
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3.4 Suspension of Participant Contributions. A Participant, by filing a
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written election with the Committee, or by telephonic or electronic
processing, as the Committee shall determine, may elect to suspend
either his Basic or Supplemental Contributions, or both, at any time.
Any such suspension will become effective with the first payroll
period as is administratively practicable to meet after the date such
election is received by the Committee or its designee. A suspension of
all Basic Contributions will automatically suspend all Supplemental
Contributions. In order to resume making contributions, the
Participant must follow the procedure outlined in Section 3.l as
though he were a new Participant. A Participant will not be permitted
to make up suspended contributions. Participant contributions will be
suspended automatically for any payroll period in which the
Participant is not in receipt of Compensation. Such automatic
suspension shall be lifted beginning with the next payroll period that
the Participant receives Compensation. The suspension of Supplemental
Contributions, in the absence of an election to the contrary, will not
affect Basic Contributions.
3.5 Remittance of Participant Contributions to the Trustee. Participant
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contributions will be remitted as soon as administratively practicable
to the Trustee.
3.6 Termination of Participant Contributions. A Participant's
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contributions will terminate effective with the payroll period that
ends or includes the date the Participant terminates employment for
any reason, including retirement or death.
3.7 Pre-Tax Contributions Option. A Participant shall have the option of
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having his Basic and Supplemental Contributions to the Plan made on a
tax-deferred basis pursuant to the terms of this Section. Basic and
Supplemental Pre-Tax Contributions may be made solely pursuant to a
salary reduction agreement between an individual Participant and his
employer. Under this agreement the Participant agrees to reduce his
Compensation by a specified percentage (as outlined in Section 3.2)
and the Participating Company agrees to contribute to the Plan the
identical amount on behalf of the Participant. The agreement shall be
in such form and subject to such rules as the Committee may prescribe.
The Committee, in its sole discretion, may limit the number of salary
reduction agreements a Participant may make during a Plan Year, except
that an
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agreement may be terminated at any time, in which event the
Participant shall specify whether all of his contributions shall cease
or continue to be made as Post-Tax Contributions.
3.8 Rollovers to This Plan. Notwithstanding the limitations on
contributions set forth in the preceding Sections of this Article III,
any active Employee may make rollover contributions (as defined in
sections 402(c)(4), 403(a)(4) and 408(d)(3) of the Code) to the extent
the Committee in its discretion may permit and in accordance with
rules it shall establish. In addition, the Committee in its sole
discretion may arrange for a Participant's account in any other
tax-qualified plan to be transferred directly to this Plan. No
rollover contribution or transfer shall be permitted if it could
adversely affect the tax qualification of this Plan. All rollovers and
transfers to this Plan shall be credited to a Participant's Rollover
Account.
Article IV
Participating Company Contributions
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4.1 Company Contributions. Subject to the limitations of Section 4.4,
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each Participating Company shall contribute Company Fixed
Contributions, Company Matching Contributions or Company Profit
Sharing Contributions as specified in Appendix B for such
Participating Company. All Participating Company contributions shall
be made in cash or in Company Common Stock, and will be invested in
accordance with Article V.
4.2 Remittance of Company Contributions. Company Matching Contributions
-----------------------------------
shall be remitted to the Trustee on a regular and periodic basis
following the payroll period to which they relate but in no event
shall they be made less frequently than quarterly. Company Profit
Sharing Contributions for a Plan Year shall be remitted to the Trustee
by a Participating Company no later than the date the Participating
Company's tax return is due for the year within which ends the Plan
Year to which the contributions relate.
4.3 Effect of Suspension of Participant Contributions on Company
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Contributions. During any period in which a Participant's Basic
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Contributions are suspended,
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Company Matching Contributions on his behalf will also be suspended.
4.4 Maximum Contributions. Notwithstanding the contribution levels
---------------------
specified in Article III and the preceding Sections of this Article
IV, no contributions will be permitted in excess of the limits set
forth below:
1. Code Section 402(g) Limits. A Participant's Pre-Tax Contributions
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to this Plan and any tax-deferred contributions under any other 401(k)
plan in which he may participate shall not exceed $10,000 (adjusted
for cost of living increases for years after 1999 as provided under
the Code) in any taxable year of the Participant. To meet this limit,
no contribution to this Plan in excess of $10,000 (as adjusted) shall
be accepted on behalf of any Participant during a calendar year. If a
Participant participates in more than one plan, he shall notify the
Committee of any excess contribution in a calendar year by March 1 of
the following year. The Committee shall then cause the portion of
such excess allocated to this Plan to be returned to the Participant
by April 15 following the calendar year to which the excess
contribution relates.
2. Code Section 401(k) Limits. The Actual Deferral Percentage, or
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ADP, for Participants who are Highly Compensated Employees for each
Plan Year and the ADP for Participants who are Non-highly Compensated
Employees for the same Plan Year must satisfy one of the following
tests:
(a) The ADP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ADP for Participants who are
Non-highly Compensated Employees for the same Plan Year
multiplied by 1.25; or
(b) The ADP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ADP for Participants who are
Non-highly Compensated Employees for the same Plan Year
multiplied by 2.0, provided that the ADP for Participants who are
Highly Compensated Employees does not exceed the ADP for
Participants who are Non-highly Compensated Employees by more
than two percentage points.
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In applying these tests, the actual deferral percentage for the Highly
Compensated Employees for a Plan Year shall be the average of the
percentages, calculated separately, for each eligible Employee in the
group, obtained by dividing the sum of the Employee's tax-deferred
contributions pursuant to Section 3.2 by the Employee's Compensation
for the Plan Year. The actual deferral percentage for the Non-Highly
Compensated Employees for a Plan Year shall be calculated in the same
manner as for the Highly Compensated Employees, except that tax-
deferred contributions and Compensation used in the calculating the
percentages shall be those of the preceding Plan Year. If an Employee
was not eligible to participate for the entire Plan Year, the
Compensation taken into account for purposes of these tests shall be
his Compensation for the period he was eligible to participate.
The ADP for any Participant who is a Highly Compensated Employee for
the Plan Year and who is eligible to have Elective Deferrals (and
Qualified Non-elective Contributions, if treated as Elective Deferrals
for purposes of the ADP test) allocated to his accounts under two or
more arrangements described in Section 401(k) of the Code, that are
maintained by the Employer, shall be determined as if such Elective
Deferrals (and, if applicable, such Qualified Non-elective
Contributions) were made under a single arrangement. If a Highly
Compensated Employee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or deferred
arrangements ending with or within the same calendar year shall be
treated as a single arrangement.
For purposes of the ADP Test, compensation means compensation as
defined in Section 414(s) of the Code. The period during which
compensation is determined for a Plan Year shall be either the Plan
Year or the calendar year ending with or within the Plan Year as
determined by the Committee. The period selected shall be applied
uniformly to all eligible Employees.
In the event that this Plan satisfies the requirements of Sections
401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one
or more other plans, or if one or more other plans satisfy the
requirements of such Sections of the Code only if aggregated with this
Plan, then this Section shall be applied by determining the ADP of
Employees as if all such plans were a single plan. For Plan Years
beginning after December 31,
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1989, plans may be aggregated in order to satisfy Section 401(k) of
the Code only if they have the same Plan Year.
For purposes of determining the ADP test, Elective Deferrals,
Qualified Non-elective Contributions must be made before the last day
of the twelve-month period immediately following the Plan Year to
which the contributions relate.
The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified Non-elective
Contributions used in such test.
The determination and treatment of the ADP amounts of any Participant
shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
3. Code Section 401(m) Limits. The Average Contribution Percentage,
--------------------------
or ACP, for Participants who are Highly Compensated Employees for each
Plan Year and the ACP for Participants who are Non-highly Compensated
Employees for the same Plan Year must satisfy one of the following
tests:
(a) The ACP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ACP for Participants who are
Non-highly Compensated Employees for the same Plan Year
multiplied by 1.25; or
(b) The ACP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ACP for Participants who are
Non-highly Compensated Employees for the same Plan Year
multiplied by two, provided that the ACP for Participants who are
Highly Compensated Employees does not exceed the ACP for
Participants who are Non-highly Compensated Employees by more
than two percentage points.
In applying these tests, the actual contribution percentage for the
Highly Compensated Employees for a Plan Year shall be the average of
the percentages, calculated separately, for each eligible Employee in
the group, obtained by dividing the sum of the Employee's Post-Tax
Contributions if applicable under Section 3.2 and the Employer's
matching contributions under Section 4.1 by the Employee's
Compensation for
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the Plan Year. The actual deferral percentage for the Non-Highly
Compensated Employees for a Plan Year shall be calculated in the same
manner as for the Highly Compensated Employees, except that Post-Tax
Contributions, matching contributions and Compensation used in the
calculating the percentages shall be those of the preceding Plan Year.
If an Employee was not eligible to participate for the entire Plan
Year, the Compensation taken into account for purposes of these tests
shall be his Compensation for the period he was eligible to
participate.
If one or more Highly Compensated Employees participate in both a cash
or deferred arrangement as defined in Section 401(k) of the Code and a
plan subject to the ACP test maintained by the Employer and the sum of
the ADP and ACP of those Highly Compensated Employees subject to
either or both tests exceeds the Aggregate Limit, then the ADP of
those Highly Compensated Employees who also participate in the plan
subject to the ACP test will be reduced (beginning with the Highly
Compensated Employee whose ADP is the highest) so that the limit is
not exceeded. The amount by which each Highly Compensated Employee's
Actual Deferral Percentages is reduced shall be treated as an Excess
Contribution. If reduction of the ADP's of Highly Compensated
Employees fails to result in the Plan's satisfying the Aggregate
Limit, then the ACP of those Highly Compensated Employees who also
participate in the cash or deferred arrangement will next be reduced
(beginning with the Highly Compensated Employee whose ACP is the
highest) so that the limit is not exceeded. The amount by which each
Highly Compensated Employee's Contribution Percentage Amounts is
reduced shall be treated as an Excess Aggregate Contribution. The ADP
and ACP of the Highly Compensated Employees are determined after any
corrections required to meet the ADP and ACP tests. Multiple use does
not occur if both the ADP and ACP of the Highly Compensated Employees
does not exceed 1.25 multiplied by the ADP and ACP of the Non-highly
Compensated Employees.
For purposes of this Section, the Contribution Percentage for any
Participant who is a Highly Compensated Employee and who is eligible
to have Contribution Percentage Amounts allocated to his account under
two or more plans described in Section 401(a) of the Code, or
arrangements described in Section 401(k) of the Code that are
maintained by the Employer, shall be determined as if the total of
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such Contribution Percentage Amounts was made under each plan. If a
Highly Compensated Employee participates in two or more cash or
deferred arrangements that have different Plan Years, all cash or
deferred arrangements ending with or within the same calendar year
shall be treated as a single arrangement.
In the event that this Plan satisfies the requirements of Sections
401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or
more other plans, or if one or more other plans satisfy the
requirements of such Sections of the Code only if aggregated with this
Plan, then this Section shall be applied by determining the
Contribution Percentages of Employees as if all such plans were a
single plan. For Plan Years beginning after December 31, 1989, plans
may be aggregated in order to satisfy Section 401(m) of the Code only
if they have the same Plan Year.
For purposes of determining the Contribution Percentage of a
Participant who is a Five Percent Owner or one of the ten most highly-
paid Highly Compensated Employees, the Contribution Percentage Amount
and Compensation of such Participant shall include the Contribution
Percentage Amounts and Compensation for the Plan Year of family
members (as defined in Section 414(g)(6) of the Code). Family
members, with respect to Highly Compensated Employees, shall be
disregarded as separate employees in determining the Contribution
Percentages both for Participants who are Non-highly Compensated
Employees and for Participants who are Highly Compensated Employees.
For purposes of determining the Contribution Percentage test, Matching
Contributions and Qualified Non-elective Contributions will be
considered made for a Plan Year if made no later than the end of the
twelve-month period beginning on the day after the close of the Plan
Year.
The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified Non-elective
Contributions used in such test.
The Committee shall have the responsibility for monitoring compliance
with this test and shall have the power to take any steps it deems
appropriate to ensure compliance, including limiting the amount of
salary reduction permitted by the Highly Compensated Employees
- 17 -
or requiring that the contributions for the Highly Compensated
Employees be delayed or held in escrow before being paid over to the
Trustee until such time as the Committee determines that contributions
can be made on behalf of the Highly Compensated Employees without
violating the requirements of Code section 401(k). Within two and
one-half months following the end of a Plan Year the Committee shall
distribute such contributions (and earnings attributable thereto) as
may be in excess of the amounts required to satisfy the special
nondiscrimination test under this Section, or shall make such
additional contributions under Sections 3.4 and 3.5 as necessary to
satisfy the test.
The determination and treatment of the Contribution Percentage of any
Participant shall satisfy such other requirements as may be prescribed
by the Secretary of the Treasury.
4. Distribution of Excess Contributions. Notwithstanding any other
------------------------------------
provision of this Plan, Excess Contributions, plus any income and
minus any loss allocable thereto, shall be distributed no later than
the last day of each Plan Year to Participants to whose accounts such
Excess Contributions were allocated for the preceding Plan Year. If
such excess amounts are distributed more than 2 1/2 months after the
last day of the Plan Year in which such excess amounts arose, a ten
percent excise tax will be imposed on the Employer maintaining the
Plan with respect to such amounts. Such distributions shall be made
to Highly Compensated Employees on the basis of the respective
portions of the Excess Contributions attributable to each of such
Employees.
Excess Contributions shall be adjusted for any income or loss up to
the date of distribution. The income or loss allocable to Excess
Contributions is the sum of: (1) income or loss allocable to the
Participant's Elective Deferral Account (and, if applicable, the
Qualified Non-elective Contribution Account) for the Plan Year
multiplied by a fraction, the numerator of which is such Participant's
Excess Contributions for the Year and the denominator of which is the
Participant's account balance attributable to Elective Deferrals (and
Qualified Non-elective Contributions, if any of such contributions are
included in the ADP test) without regard to any income or loss
occurring during such Plan Year; and (2) ten percent of the amount
- 18 -
determined under (1) multiplied by the number of whole calendar months
between the end of the Plan Year and the date of distribution,
counting the month of distribution if distribution occurs after the
15th of such month.
Excess Contributions shall be distributed from the Participant's
Elective Deferral Account (if applicable) in proportion to the
Participant's Elective Deferrals (to the extent used in the ADP test)
for the Plan Year. Excess Contributions shall be distributed from the
Participant's Qualified Non-elective Contribution Account only to the
extent that such Excess Contributions exceed the balance in the
Participant's Elective Deferral Account.
5. Distribution of Excess Aggregate Contributions. Notwithstanding
----------------------------------------------
any other provision of this Plan, Excess Aggregate Contributions, plus
any income and minus any loss allocable thereto, shall be forfeited,
if forfeitable, or if not forfeitable, distributed, no later than the
last day of each Plan Year to Participants to whose accounts such
Excess Aggregate Contributions were allocated for the preceding Plan
Year. If such Excess Aggregate Contributions are distributed more
than 2 1/2 months after the last day of the Plan Year in which such
excess amounts arose, a ten percent excise tax will be imposed on the
Employer maintaining the Plan with respect to those amounts. Excess
aggregate contributions shall be treated as annual additions under the
Plan.
Excess Aggregate Contributions shall be adjusted for any income or
loss up to the date of distribution. The income or loss allocable to
Excess Aggregate Contributions is the sum of: (1) income or loss
allocable to the Participant's Matching Contribution Account (if any,
and if all amounts therein are not used in the ADP test) and, if
applicable, Qualified Non-elective Contribution Account and Elective
Deferral Account for the Plan Year multiplied by a fraction, the
numerator of which is such Participant's Excess Aggregate
Contributions for the Year and the denominator of which is the
Participant's account balance attributable to Contribution Percentage
Amounts without regard to any income or loss occurring during such
Plan Year; and (2) ten percent of the amount determined under (1)
multiplied by the number of whole calendar months between the end of
the Plan Year and the date of distribution, counting the month of
- 19 -
distribution if distribution occurs after the 15th of such month.
Forfeitures of Excess Aggregate Contributions may either be
reallocated to the accounts of Non-highly Compensated Employees or
applied to reduce Employer contributions, as elected by the Employer
in the Adoption Agreement.
Excess Aggregate Contributions shall be forfeited, if forfeitable or
distributed on a pro-rata basis from the Participant's Matching
Contribution Account (and, if applicable, the Participant's Qualified
Non-elective Contribution Account or Elective Deferral Account, or
both).
6. Code Section 415 Limits. Pursuant to Code section 415, the total
-----------------------
of the Employee and Participating Company contributions on behalf of a
Participant for each Plan Year (his "annual additions") shall not
exceed the lesser of $30,000 (or such larger amounts as reflect cost
of living increases pursuant to section 415 of the Code) or 25 percent
of the Participant's total compensation for such Plan Year. For
purposes of this Section, the term "annual additions" means the total
each Plan Year of a Participating Company's contributions, the
Employee's contributions and Forfeitures. Rollover contributions and
loan repayments are not annual additions for this purpose. For
purposes of applying these limitations, the term "compensation" shall
have the meaning ascribed to it in regulations under Code section 415.
In general, these regulations define compensation to mean an
Employee's W-2 compensation from a Participating Company but excluding
income derived from the exercise of stock options, from the
disqualification of an incentive stock option, from restricted stock
or from income imputed from the payment of life insurance premiums,
and shall include, effective January 1, 1998, any elective deferral
(as defined in Code Section 402(g)(3)), and any amount which is
contributed or deferred by the Employer at the election of the
Participant and which is not includible in the gross income of the
Participant by reason of Code Sections 125 or 457.
In addition to the amounts calculated under this Plan, annual
additions shall include such amounts, similarly calculated, that are
contributed with respect to the Participant to any other defined
contribution plan
- 20 -
maintained by a Participating Company or by any Affiliated Company and
Participating Company contributions to an individual medical account
as described in Code sections 415(1) and 419A(d)(2). In determining
whether a corporation is an Affiliated Company for this purpose only,
the percentage control test set forth in section 1563(a) of the Code
shall be a 50 percent test in place of the 80 percent test each place
the 80 percent test appears in said Code section.
If Plan contributions exceed the limits of this Section, first the
Participant's contributions shall be reduced, as necessary, to
eliminate the excess, in the following order of priority: Post-Tax
Supplemental Contributions; Post-Tax Basic Contributions; Pre-Tax
Supplemental Contributions; and Pre-Tax Basic Contributions. Post-Tax
and Pre-Tax Contributions by a Participant which cause the excess,
plus the earnings attributable to such contributions may be returned
to the Participant in the event the excess is caused by a reasonable
error in estimating a Participant's annual compensation or any other
cause which is acceptable under Treasury Regulation section 1.415-
6(b)(6). If an excess still exists, the Participating Company's
contribution shall be reduced as necessary.
The provisions of this paragraph are effective for Plan Years
beginning prior to January 1, 2000. For Plan Years beginning on and
after January 1, 2000, these provisions shall no longer be applicable.
If a person participates at any time in both a defined benefit plan
and a defined contribution plan maintained by a Participating Company
or an Affiliated Company, the sum of the defined benefit plan fraction
and the defined contribution plan fraction for any Plan Year may not
exceed l.0. For purposes of this Section, the defined contribution
plan fraction for any Plan Year is a fraction the numerator of which
is the person's annual additions in such Plan Year and all prior years
of employment, as determined above, and the denominator of which is
the lesser of the following amounts for such Year and for each prior
Year: (a) l.25 times the dollar limitation of Code section
4l5(c)(l)(A) for the pertinent Year or (b) l.4 times the amount that
could be taken into account under the limitation of Code section
4l5(c)(l)(B) for the Participant. The defined benefit plan fraction
for any Plan Year is a fraction the numerator of which is the
Participant's projected annual benefit under all plans maintained by a
Participating Company or an Affiliated Company and the
- 21 -
denominator of which is the lesser of the following amounts for such
Year: (a) l.25 times the dollar limitation of Code section
4l5(b)(l)(A) for such Year or (b) l.4 times the amount that could be
taken into account under the percentage limitation of Code section
4l5(b)(l)(B) for the Participant for such Year.
The Committee shall monitor the contributions and benefits with
respect to each Participant under all plans maintained by a
Participating Company and any Affiliated Company. The Committee, in
its sole discretion, shall reduce any such contributions or benefits
to prevent the combined fractions from exceeding 1.0.
Article V
Investment of Contributions
---------------------------
5.1 Investment Funds. The Trustee shall establish a Company Stock fund
----------------
and such other investment funds as shall be designated from time to
time by any Board-appointed committee authorized to select investment
funds.
5.2 Investment of Company Contributions. All Participating Company
-----------------------------------
contributions and the earnings thereon shall be invested initially in
Company Stock. All Company Stock so invested shall remain in the
Company Stock fund until the fifth anniversary of the date of
investment (the "Restricted Stock"). At the expiration of the five
year period the Restricted Stock in a Participant's Account shall lose
its investment restriction and may be invested by the Participant,
pursuant to Section 5.5 and any rules established by the Committee
thereunder, in any other fund option or left in the Company Stock
fund.
5.3 Investment of Participant Contributions. Each Participant will
---------------------------------------
direct, at the time he elects to become a Participant under the Plan,
that his Participant contributions be invested in one or more
available fund options in accordance with any rules the Committee in
its discretion may establish. In the event no election is made, all
contributions will be invested in a fixed income fund option
designated by the Committee for this purpose.
5.4 Changing the Current Investment Election. A Participant's investment
----------------------------------------
election for his Participant contributions will continue in effect
until changed by
- 22 -
the Participant. A Participant may change his current investment
election as to his future Participant contributions effective no later
than the first payroll period as is administratively practicable after
the date such election to change is received by the Committee or its
designee. Such changes may be made only as frequently as the Committee
in its sole discretion may permit and in accordance with any rules the
Committee in its discretion may establish.
5.5 Changing the Investment of Accumulated Contributions. A Participant
----------------------------------------------------
may change his investment election as to some or all of his entire
Participant Account balance except for the Restricted Stock. Such
changes may be elected only as frequently as the Committee in its sole
discretion may permit and in accordance with any rules the Committee
in its discretion may establish.
5.6 Voting Rights with Respect to Company Stock. Each Participant shall
-------------------------------------------
have the right to vote all shares of Company Stock held in the
Participant's Account. Each Participant shall also have the right to
direct the Trustee whether to tender such shares of Company Stock in
the event an offer is made by any person other than the Company to
purchase such shares. The Committee shall make any such arrangements
with the Trustee as may be appropriate to pass such voting or tender
offer rights through to a Participant. In the event a Participant
fails to vote his shares or fails to indicate his preference with
respect to a tender offer, the Trustee shall vote the Participant's
shares or tender his shares in the same proportions as those Plan
Participants who did respond, cast their votes or tendered their
shares.
Article VI
Participant Accounts
--------------------
6.l Individual Accounts. The Committee shall create and maintain (or
-------------------
direct to be created and maintained) individual accounts as records
for disclosing the interest in the Trust of each Participant, former
Participant and Beneficiary. Such accounts shall record credits and
charges in the manner herein described. When appropriate, a
Participant shall have five separate accounts, a Restricted Company
Contribution Account, an Unrestricted Company Contribution Account, a
Participant Pre-Tax Contribution Account, a Participant Post-Tax
- 23 -
Contribution Account and a Rollover Account. The maintenance of
individual accounts is only for accounting purposes, and a segregation
of the assets of the Trust to each account shall not be required.
6.2 Account Adjustments. Participant Accounts shall be adjusted as
-------------------
follows:
(a) Earnings: The earnings (including losses as well as gains) of
--------
the Trust shall be allocated to the Participant Accounts of
Participants who have balances in their Accounts on each
Valuation Date. The allocation shall be made in the proportion
that the amounts in each Participant Account bear to the total
amounts in all of the Participant Accounts similarly invested.
In determining the value of Plan assets, each valuation shall be
based on the fair market value of assets in the Trust on the
Valuation Date.
Notwithstanding the foregoing paragraph or any other provision of
the Plan, to the extent that Participants' Accounts are invested
in mutual funds or other assets for which daily pricing is
available ("Daily Pricing Media"), all amounts contributed to the
Trust Fund will be invested at the time of their actual receipt
by the Daily Pricing Media, and the balance of each Account shall
reflect the results of such daily pricing from the time of actual
receipt until the time of distribution. Investment elections and
changes pursuant to Article V shall be effective upon receipt by
the Daily Pricing Media. References elsewhere in the Plan to the
investment of contributions "as of" a date other than that
described in this Section 6.2(a) shall apply only to the extent,
if any, that assets of the Trust Fund are not invested in Daily
Pricing Media.
(b) Participating Company contributions: If Daily Pricing Media is
-----------------------------------
in effect as described in Section 6.2(a) Company Fixed, Matching
and Profit Sharing Contributions will be invested at the time of
actual receipt by the Daily Pricing Media. If Daily Pricing
Media is not in effect, as of the end of each month the Company
Fixed, Matching and Profit Sharing Contributions on behalf of a
Participant during the month shall be allocated to the
Participant's Restricted Company Contribution Account.
- 24 -
(c) Participant contributions: If Daily Pricing Media is in effect
-------------------------
as described in Section 6.2(a) a Participant's contributions will
be invested at the time of actual receipt by the Daily Pricing
Media. If Daily Pricing Media is not in effect, a Participant's
contributions made during a month shall be allocated to his Pre-
Tax or Post-Tax Contribution Account, as the case may be, as of
the end of each month.
(d) Distributions and withdrawals: Distributions and withdrawals
-----------------------------
from a Participant's Account shall be charged to the Account as
of the date paid.
(e) Forfeitures: As of the end of each Plan Year, Forfeitures which
-----------
have become available during such Plan Year and are not required
for allocation under Section 6.2(f) below shall be used to reduce
the Participating Company's current or its next succeeding
contributions to the Plan.
(f) Forfeiture Account: In the event a Participant is entitled to
------------------
receive a vested benefit pursuant to the terms of Section 7.2 but
later returns to the service of a Participating Company prior to
incurring five consecutive one year breaks in service, the
nonforfeitable amount in his pre-termination Restricted Company
Contribution Account plus the amount of his Forfeiture at the
time of termination shall be credited to a separate account as of
the end of the Plan Year when he returns. The restoration of the
Forfeiture shall be made, first, from any other Forfeitures
arising in such Year prior to disposition under Section 6.2(e)
and, if not available from such Forfeitures, from Participating
Company contributions for the Year. At any relevant time, the
Participant's nonforfeitable portion of the separate account will
be equal to an amount ("X") determined by the formula:
X = P(AB + (R x D)) - (R x D)
For purposes of applying this formula: P is the nonforfeitable
percentage at the relevant time; AB is the account balance at the
relevant time; D is the amount of the distribution; and R is the
ratio of the account balance at the relevant time to the account
balance after distribution.
- 25 -
The separate account need not be maintained after a Participant
has incurred five consecutive one year breaks in service after
the distribution of benefits to him. For purposes of this
Section a one year break in service means a Plan Year during
which an Employee performs no services for a Participating
Company or an Affiliated Company.
6.3 Statements to Participants. On a periodic basis, but no less
--------------------------
frequently than once during each Plan Year, the Committee (or its
designee) will provide each Participant with a statement showing his
interests in the Plan's various investment funds. The statement may
show a Participant's interest in the Company Stock fund in terms of
the number of shares of Company Stock, their dollar value, or both.
As an alternative to showing the dollar or stock value of each
Account, the Committee in its discretion may express each
Participant's interest in terms of units.
6.4. Transfer of Accounts Among Related Company Plans. If a Participant
------------------------------------------------
ceases to be within an eligible class of Participants under this Plan
but becomes covered by a substantially similar 401(k) plan sponsored
by Frontier Corporation or any corporation or business entity in which
it has a 50 percent or more ownership or profits interest, the
Committee may in its sole discretion transfer the Participant's
accounts to the other 401(k) plan without the Participant's consent.
Similarly, if a Participant in this Plan previously participated in
another such 401(k) plan, the Participant's accounts in the other
401(k) plan may be transferred to this Plan without the Participant's
consent. In any event, the value of the Participant's accounts
subject to any such transfer shall be the same immediately following
the transfer as they were immediately prior to the transfer and any
other benefits, rights and features of the transferor plan which are
"protected benefits" within the meaning of Code section 411(d)(6)
shall continue to apply to the transferred funds within the transferee
plan. The timing and the mechanics of any transfer shall be within
the sole discretion of the Committee.
Article VII
Retirement or Other Termination of Employment
---------------------------------------------
7.1 Retirement or Disability. If a Participant's employment with a
------------------------
Participating Company is terminated
- 26 -
(i) at or after his Normal Retirement Age, (ii) at or after his Early
Retirement Age, or (iii) at an earlier age because of disability, the
Participant's accounts shall all be fully vested and he shall be
entitled to receive the entire balance of such accounts in accordance
with the provisions of Article IX. For purposes of this Section 7.1
the term "disability" means a physical or mental condition which, in
the judgment of the Committee, based on medical reports and other
evidence satisfactory to the Committee, will permanently prevent an
Employee from satisfactorily performing his usual duties for a
Participating Company and which entitle the Employee to receive Social
Security disability benefits.
If a Participant terminates employment, whether voluntarily or
involuntarily, prior to suffering a disability or prior to age 55, he
shall receive only that portion of his accounts that have become
vested under Section 7.2.
7.2 Vested Benefits. If a Participant terminates employment with a
---------------
Participating Company before he reaches age 55 or suffers a
disability, he shall be entitled to receive the entire amount credited
to his Participant Pre-Tax Contribution Account, his Participant Post-
Tax Contribution Account and his Rollover Account plus the amount in
his Restricted Company Contribution Account which has become vested.
The vested amount in the Restricted Company Contribution Account shall
be determined in accordance with the provisions of Appendix B.
If any Plan amendment changes the Plan's vesting schedule, each
Participant in the Plan as of the date the new schedule is adopted
shall have his vested percentage determined under the vesting schedule
which provides him with the greatest vested benefit at any particular
point in time.
Any Forfeiture that may arise by virtue of the application of this
Section shall be treated in accordance with the provisions of Section
6.2(e).
Notwithstanding the foregoing, any benefit that is currently payable
from the Plan to a recipient who cannot be located despite reasonable
efforts to do so, shall be forfeited. All forfeitures with respect to
lost Participants and Beneficiaries shall be used to reduce a
Participating Company's current or next
- 27 -
succeeding contributions to the Plan. In the event the lost
Participant or Beneficiary subsequently makes a claim for the
forfeited benefits, the Participating Company shall restore to the
Plan the forfeited benefit plus earnings based on returns from the
Plan's fixed income investment option from the date of forfeiture to
the date the forfeited benefit is restored.
Article VIII
Death
-----
8.l Death While Actively Employed. If a Participant dies while actively
-----------------------------
employed, the Participant's Beneficiary will be entitled to receive
l00 percent of the value of his Participant Account. This amount
shall consist of the Account's value as of the distribution date.
8.2 Death After Retirement. If a Participant dies after retirement, any
----------------------
benefit payable to the Participant's Beneficiary will depend upon the
method that has been employed to distribute the value of his
Participant Account in accordance with Article IX.
8.3 Beneficiary. If a Participant is married, his Beneficiary shall be
-----------
his spouse who shall be entitled to receive his remaining account
balance, upon the Participant's death. Upon the written election of
the Participant, with his spouse's written consent, a Participant may
designate another Beneficiary. This election and spousal consent must
either be notarized or be witnessed by a Plan representative and
returned to the Committee. If such election has been made or if the
Participant is not married, the Participant will designate the
Beneficiary (along with alternate Beneficiaries) to whom, in the event
of his death, any benefit is payable hereunder. Each Participant has
the right, subject to the spousal consent requirement noted above, to
change any designation of Beneficiary. A designation or change of
Beneficiary must be in writing on forms supplied by the Committee and
any change of Beneficiary will not become effective until such change
of Beneficiary is filed with the Committee, whether or not the
Participant is alive at the time of such filing; provided, however,
that any such change will not be effective with respect to any
payments made by the Trustee in accordance with the Participant's last
designation and prior to the time such change was received by the
Committee. The interest of any
- 28 -
Beneficiary who dies before the Participant will terminate unless
otherwise provided. If a Beneficiary is not validly designated, or is
not living or cannot be found at the date of payment, any amount
payable pursuant to this Plan will be paid to the spouse of the
Participant if living at the time of payment, otherwise in equal
shares to such children of the Participant as may be living at the
time of payment; provided, however, that if there is no surviving
spouse or child at the time of payment, such payment will be made to
the estate of the Participant.
Article IX
Payment of Benefits
-------------------
9.l Form of Payment. Except as may be restricted by Sections 9.2 and 9.3,
---------------
any Participant or, if the choice is his, any Beneficiary who is
entitled to receive benefits under Articles VII or VIII may elect to
receive the amount in the Participant Account in accordance with one
of the following elections, all of which shall be actuarial
equivalents:
OPTION A: A lump sum.
OPTION B: Periodic payments of substantially equal amounts for a
specified number of years not in excess of twenty. Such periodic
payments shall be made at least annually. In the event periodic
payments are elected, the Participant shall direct how the remaining
balance of his account is to be invested.
OPTION C: For any amounts transferred to this Plan from another plan
containing payment options in addition to Options A & B, any option
available under the other plan as set forth in Appendix B. Payments
under this Option C shall be available only with respect to the
transferred funds. Amounts allocated to a Participant Account after
the transfer date shall be paid out only under Option A or Option B.
9.2 Option C Requirements for Married Participants. If a married
----------------------------------------------
Participant elects an annuity under Option C, unless he makes a
written election, as outlined below, to the contrary his form of
benefit shall be a Qualified Joint and Survivor Annuity. If benefits
become payable on account of the death of a married Participant to
whom an annuity option is available
- 29 -
under Option C, the normal form of benefit shall be a Qualified Pre-
Retirement Survivor Annuity.
These benefits shall become automatically payable unless the
Participant or his spouse, as the case may be, makes a written
election within the Election Period to receive one of the alternate
forms of benefits specified in Section 9.1 or Appendix B. An election
by the Participant must be consented to by his spouse in writing. The
spouse's consent shall acknowledge the effect of the election and
shall be either notarized or witnessed by a Plan representative.
Failure to obtain the spouse's consent or the revocation of a
previously designated optional method of payment shall result in
payment of benefits in the form of a Qualified Joint and Survivor
Annuity or a Qualified Pre-Retirement Survivor Annuity, as the case
may be, unless another election is made.
To assist the Participant and his spouse in making any election with
respect to waiving the Qualified Joint and Survivor Annuity, the
Committee shall provide the Participant, not less than 30 nor more
than 90 days before his 55th birthday a retirement application form
describing the normal and optional forms of benefit payments,
including their relative financial effects in terms of dollars per
annuity payment on the Participant and his spouse. This form shall
provide a place for the Participant to indicate his annuity starting
date and the form of benefit he desires.
A Participant may elect (with the consent of his or her spouse where
spousal consent is required) to waive the requirement that a written
explanation of certain payment options be provided at least 30 days
before the annuity starting date (and the 30 day applicable election
period for making certain elections) if the actual distribution
commences more than seven days after the written explanation is
provided.
In the case of a Qualified Pre-Retirement Survivor Annuity, a
substantially similar notice shall be provided to the Participant
during the period beginning on the first day of the Plan Year in which
the Participant attains age 32 and ending on the last day of the Plan
Year preceding the Plan Year in which the Participant attains age 35.
9.3 Payments from Company Stock Fund. If a recipient elects a lump sum
--------------------------------
payment under Option A of Section 9.l
- 30 -
or installment payments under Option B of Section 9.l, payment from
the Participant's Company Stock fund account may be made either in
cash or in Company Stock. If a person elects, or pursuant to Section
9.2 is required, to receive any annuity option under Section 9.2 or
Option C, the amounts in his Company Stock fund shall be liquidated
and combined with his amounts in all other investment funds to
purchase an annuity contract pursuant to which only cash benefits will
be paid.
9.4 Time of Payment. A Participant or Beneficiary who becomes entitled to
---------------
receive a benefit at any time when the Participant Account is $5,000
or less will be cashed out for the full amount of the account balance
as soon as administratively practicable. If the account balance is in
excess of $5,000 it shall be paid prior to Normal Retirement Age only
with the written consent of the Participant and, if married, with the
consent of the Participant's spouse in a writing which acknowledges
the effect of such consent and which is witnessed by a Plan
representative or is notarized. In the case of death, the written
consent of the Participant's Beneficiary shall be required for amounts
in excess of $5,000.
Benefit payments shall normally begin not later than the April l
following the calendar year during which the event giving rise to the
eligibility for payment shall have occurred. In no event shall
benefits begin later than sixty days after the close of the Plan Year
in which the latest of the following occurs: (1) the Participant's
attainment of age 65; (2) the 10th anniversary of the year in which
the Participant commenced participation in this Plan; (3) the
termination of the Participant's service with a Participating Company;
or (4) the date specified in writing to the Committee by the
Participant (but not later than the year in which he attains age 70
1/2).
Distributions shall commence no later than the April 1 of the calendar
year following the later of the calendar year in which the Participant
attains age seventy and one-half (70-1/2) or the calendar year in
which the Participant terminates employment with the Company.
Notwithstanding the foregoing, a 5 percent owner of the Company shall
commence receipt of benefits no later than the April 1 of the calendar
year following the year he reaches age 70-1/2 even if he remains in
the active employ of the Company.
- 31 -
Notwithstanding any direction by the Participant to the contrary, all
payments must be payable pursuant to a schedule whereby the entire
amount in the Participant's Account is paid over a period that does
not extend beyond the life of the Participant or over the lives of the
Participant and any individual he has designated as his Beneficiary
(or over the life expectancies of the Participant and his designated
individual Beneficiary). In addition, unless the benefit is payable
as a Qualified Joint and Survivor Annuity, the payment method selected
must provide that more than 50 percent of the present value of the
payments projected to be paid to the Participant and his Beneficiary
will be paid to the Participant during his life expectancy.
In the event of the death of a Participant, former Participant or
Beneficiary while benefits are being paid under a schedule which meets
the requirements of the preceding paragraph, payments shall continue
pursuant to a schedule which is at least as rapid as the period
selected. In the event of the death of a Participant or former
Participant before benefit payments have commenced, any death benefit
shall be distributed within five years of death unless the following
conditions are met:
(i) payments are made to an individual Beneficiary designated by the
Participant;
(ii) payments are made for the life of such individual Beneficiary or
over a period not extending beyond his life expectancy; and
(iii) payments commence within one year of death.
If the designated Beneficiary is the Participant's spouse, payments
will be paid within a reasonable period of time after the
Participant's death, but may be delayed until the date the Participant
would have attained age 70 1/2, if the Beneficiary so elects. If the
spouse dies before payments begin, the rules of this paragraph shall
be applied as if the spouse were the Participant. Notwithstanding the
provisions of this Section the distribution requirements of Code
section 401(a)(9) and the regulations thereunder are hereby
incorporated by this reference and shall supersede any conflicting
Plan provisions.
9.5 Death of Participant Prior to Receiving Full Distribution. Except as
---------------------------------------------------------
provided in Section 8.2, if a
- 32 -
Participant dies after having terminated employment and prior to
receiving a distribution of his Participant Account, then the payments
that would otherwise have been made to the Participant will be made to
his Beneficiary, or, in the absence of a Beneficiary, to his estate in
accordance with applicable state law.
9.6 QDROs. Benefits shall be payable under this Plan to an alternate
-----
payee pursuant to the terms of any qualified domestic relations order.
The Committee has the responsibility for determining if a domestic
relations order is qualified and whether its payment terms are
consistent with the terms of the Plan. If appropriate, the amounts
subject to a QDRO may be segregated from the Participant's Account and
placed in a separate account for the benefit of the alternate payee
who shall thereupon be treated for Plan purposes as a Participant.
Any amounts payable to an alternate payee may, at the alternate
payee's request, be paid from the Plan immediately pursuant to the
terms of the QDRO and this Plan.
9.7 Direct Rollovers from this Plan. Notwithstanding any provision of the
-------------------------------
Plan to the contrary that would otherwise limit a Participant's
election under this Section, a Participant may elect, at the time and
in the manner prescribed by the Committee, to have any portion of an
eligible rollover distribution paid directly to an eligible retirement
plan specified by the Participant in a direct rollover. An eligible
rollover distribution is any distribution of all or any portion of the
balance to the credit of the Participant except that an eligible
rollover distribution does not include any distribution that is one of
a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
Participant or the joint lives (or joint life expectancies) of the
Participant and the Participant's designated Beneficiary, or for a
specified period of ten years or more; any distribution to the extent
such distribution is required under section 401(a)(9) of the Code; 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 Company securities); and any withdrawal
on account of hardship as described in Code section
401(k)(2)(B)(i)(IV).
An eligible retirement plan is an individual retirement account
described in section 408(a) of the Code, an
- 33 -
individual retirement annuity described in section 408(b) of the Code,
an annuity plan described in section 403(a) of the Code, or a
qualified trust described in section 401(a) of the Code, that accepts
the Participant's eligible rollover distribution. However, in the case
of an eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account or
individual retirement annuity.
For these purposes, a Participant includes an Employee or former
Employee who has an account balance in the Plan. In addition, the
Employee's or former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in section
414(p) of the Code, are Participants with respect the interest of the
spouse or former spouse. A direct rollover is a payment by the Plan
to the eligible retirement plan specified by the Participant.
Article X
Withdrawals and Loans During Employment
---------------------------------------
10.1 Age 59 1/2 Withdrawals. A Participant who has reached age 59 1/2 but
----------------------
who has not yet terminated employment may withdraw all or a portion of
his vested accumulated account balance under the Plan subject to the
limitations specified in Section 10.4.
10.2 Participant Post-Tax Contributions. A Participant may, by filing a
----------------------------------
request with the Committee, signed by the Participant and the
Participant's spouse, elect to withdraw amounts in his Participant
Post-Tax Contribution Account as follows:
(a) Contributions. A withdrawal of up to l00 percent of Participant
-------------
Post-Tax Contributions or, if less, l00 percent of the then value
of such contributions may be made from the Plan.
(b) Earnings. A withdrawal of up to l00 percent of the earnings on
--------
Post-Tax Contributions may be made by a Participant from the
Plan.
10.3 Participant Pre-Tax Contributions. No earnings in a Participant's
---------------------------------
Pre-Tax Contribution Account may be
- 34 -
withdrawn prior to age 59 1/2. A Participant may withdraw his Pre-Tax
Contributions from his Participant Pre-Tax Contribution Account prior
to age 59 1/2 only if the withdrawal is made on account of an
immediate and heavy financial need of the Participant that cannot be
satisfied from other resources available to the Participant. For
purposes of this Section an immediate and heavy financial need shall
mean (1) expenses incurred for medical care or necessary to obtain
medical care for a Participant, a Participant's spouse or a
Participant's dependent; (2) the purchase of a Participant's principal
residence; (3) tuition and related educational fees for post-secondary
education but only for the next 12 months for a Participant, a
Participant's spouse or a Participant's dependent, or remedial school
tuition; (4) prevention of eviction or mortgage foreclosure; (5)
expenses arising from the death of a spouse or dependent; (6)
financial loss due to a sudden catastrophe; (7) extraordinary legal
expenses; (8) adoption expenses; or (9) any other need recognized by
the IRS in documents of general applicability. A Participant will be
deemed to lack other resources if all of the following conditions are
satisfied: (1) the Participant must have obtained all distributions
(except hardship) and all nontaxable loans available from all plans of
any Participating Company; (2) the Participant may not make any
contributions to any plan of any Participating Company for at least 12
months following the hardship withdrawal and (3) the dollar limit on
pre-tax contributions ($10,000 as indexed for inflation after 1999)
for the calendar year following the hardship shall be reduced by the
amount of the hardship withdrawal. If the foregoing conditions are not
satisfied, the Committee may reasonably rely on statements and
representations made by the Participant with respect to his lack of
other financial resources. The amount of the withdrawal cannot exceed
the amount required to relieve the financial need (including any
amounts necessary to pay federal, state or local income taxes or
penalties reasonably anticipated to result from the distribution).
l0.4 Limitations on In-Service Withdrawals.
-------------------------------------
(a) No more than two in-service withdrawals are permitted in any one
Plan Year.
(b) No withdrawal will be permitted under this Article unless the
amount to be withdrawn is at
- 35 -
least $200 or l00% of the aggregate value of the Participant's
relevant account from which withdrawals are being requested if
such value is less than $200.
(c) Unless otherwise specified by the Participant, any withdrawal of
Participant contributions from his Participant Post-Tax
Contribution Account will be satisfied first by a withdrawal of
his pre-1987 contributions, if any, and then by a withdrawal of
his post-1986 contributions and/or earnings on contributions.
(d) Any withdrawal from a Participant's Post-Tax Contribution Account
will result in an automatic suspension of the Participant's right
to make future Plan contributions for a period of six months from
the date of the withdrawal. During the period of suspension,
Company Matching Contributions will also be suspended. Finally,
after the Participant resumes making contributions to the Plan,
no make-up contributions will be permitted for the period of the
suspension.
10.5 Fund to be Charged with Withdrawal. A Participant may specify the
----------------------------------
investment fund or combination of funds to which a withdrawal is to be
charged. If the Participant fails to make any designation, a
distribution will be made out of the Participant's interest in each of
the funds in proportion to the Participant's share in these funds.
10.6 Loans to Participants. The Trustee shall, if the Committee directs,
---------------------
make a loan to a Participant from any or all of the Participant's
accounts subject to such rules as the Committee may prescribe and
subject to the following conditions:
(a) An application for a loan by a Participant shall be made in
writing to the Committee, or through telephonic or electronic
processing, as the Committee may determine;
(b) Loans will be granted only to active Participants;
(c) A loan must be for a minimum of $500, only two loans (only one
for the purchase of a principal residence) may be outstanding at
any one time, and no refinancings will be permitted except as may
be specifically permitted by the Committee;
- 36 -
(d) No loan shall be made to the extent that such loan when added to
all other loans to the Participant would exceed the lesser of (1)
50 percent of the vested amounts in all of the Participant's
accounts under the Plan or (2) $50,000 reduced by the excess, if
any, of the highest outstanding balance of loans during the one
year period ending on the day before the loan is made over the
outstanding balance of loans to the Participant on the date the
loan is made. In determining whether the foregoing loan limits
are satisfied all loans from all plans of a Participating Company
and of any Affiliated Company shall be aggregated.
(e) The period of repayment for any loan shall be arrived at by
mutual agreement between the Committee and the borrower, but such
period in no event shall exceed five years except that a loan may
be granted for a period not to exceed 25 years if the proceeds
are used to purchase the Participant's principal residence;
(f) All loans must be repaid under a substantially level amortization
period with payments being made at least quarterly;
(g) Each loan shall be made against collateral being the assignment
of 50 percent of the borrower's entire right, title and interest
in and to the Trust Fund, supported by the borrower's collateral
promissory note for the amount of the loan, including interest,
payable to the order of the Trustee and/or such other collateral
as the Committee may require;
(h) Each loan shall bear interest at a rate fixed by the Committee.
The rate shall be commensurate with the rates charged by persons
in the business of lending money for loans which would be made
under similar circumstances. Interest rates granted at different
times and to Participants in differing circumstances may vary
depending on such differences;
(i) A loan shall be treated as a directed investment by the borrower
with respect to his accounts. The interest paid on the loan
shall be credited to the borrower's accounts and he shall not
share in the earnings of the Plan's assets with respect to the
amounts borrowed and not yet repaid;
- 37 -
(j) A loan to a married Participant requires the written, notarized
consent of the Participant's spouse;
(k) No distribution shall be made to any Participant, former
Participant or Beneficiary unless and until all unpaid loans,
including accrued interest thereon, have been liquidated or
offset against the account;
(l) The Committee may, in its discretion, charge a fee to process and
maintain Plan loans, which shall be deducted from the accounts of
Participants who take loans. The amounts of such fees shall be
determined from time to time by the Committee; and
(m) Loan repayments will be suspended under this Plan as permitted
under Section 414(u)(4) of the Code.
Article XI
Plan Administration
-------------------
11.1 Appointment of Committee. The Board shall appoint an Employees'
------------------------
Benefit Committee to administer the Plan. Any person, including an
officer or other employee of a Participating Company, is eligible for
appointment as a member of the Committee. Such members shall serve at
the pleasure of the Board. Any member may resign by delivering his
written resignation to the Board. Vacancies in the Committee shall be
filled by the Board.
11.2 Named Fiduciary and Plan Administrator. The Committee shall be the
--------------------------------------
Named Fiduciary and Plan Administrator as these terms are used in
ERISA. The Committee shall appoint a Secretary who shall also be the
agent for the service of legal process.
11.3 Powers and Duties of Committee. The Committee shall administer the
------------------------------
Plan in accordance with its terms and shall have all powers necessary
to carry out the provisions of the Plan, except such powers as are
specifically reserved to the Board or some other person. The
Committee's powers include the power to make and publish such rules
and regulations as it may deem necessary to carry out the provisions
of the Plan. The Committee shall interpret the Plan and shall
- 38 -
determine all questions arising in the administration, interpretation,
and application of the Plan.
The Committee shall notify the Trustee of the liquidity and other
requirements of the Plan from time to time.
11.4 Operation of Committee. The Committee shall act by a majority of its
----------------------
members at the time in office, and such action may be taken either by
a vote at a meeting or without a meeting. Any action taken without a
meeting shall be reflected in a written instrument signed by a
majority of the members of the Committee. A member of the Committee
who is also a Participant shall not vote on any question relating
specifically to himself. Any such question shall be decided by the
majority of the remaining members of the Committee. The Committee may
authorize any one or more of its members to execute any document on
behalf of the Committee, in which event the Committee shall notify the
Trustee in writing of such action and the name or names of its member
or members so designated. The Trustee thereafter shall accept and
rely upon any document executed by such member or members as
representing action by the Committee until the Committee shall file
with the Trustee a written revocation of such designation. The
Committee may adopt such by-laws or regulations as it deems desirable
for the conduct of its affairs.
The Committee shall keep a record of all its proceedings and acts and
shall keep all such books of account, records, and other data as may
be necessary for the proper administration of the Plan.
11.5 Power to Appoint Advisers. The Committee may appoint such actuaries,
-------------------------
accountants, attorneys, consultants, other specialists and such other
persons as it deems necessary or desirable in connection with the
administration of this Plan. Such persons may, but need not, be
performing services for a Participating Company. The Committee shall
be entitled to rely upon any opinions or reports which shall be
furnished to it by any such actuary, accountant, attorney, consultant
or other specialist.
11.6 Expenses of Plan Administration. The members of the Committee shall
-------------------------------
serve without compensation for their services as such, but their
reasonable expenses shall be paid by the Company. To the extent not
paid from Fund assets, as determined from time to time by any Board-
appointed committee, all reasonable expenses of
- 39 -
administering the Plan shall be paid by the Company, including, but
not limited to, fees of the Trustee, accountants, attorneys,
consultants, and other specialists.
11.7 Duties of Fiduciaries. All fiduciaries under the Plan and Trust shall
---------------------
act solely in the interests of the Participants and their
Beneficiaries and in accordance with the terms and provisions of the
Plan and Trust Agreement insofar as such documents are consistent with
ERISA, and with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent person acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of like character and with like aims. Any person may serve
in more than one fiduciary capacity with respect to the Plan and
Trust.
11.8 Liability of Members. No member of the Committee shall incur any
--------------------
liability for any action or failure to act, excepting only liability
for his own breach of fiduciary duty. To the extent not covered by
insurance, the Company shall indemnify each member of the Committee
and any Board-appointed committee and any employee acting on their
behalf against any and all claims, loss, damages, expense and
liability arising from any action or failure to act.
11.9 Allocation of Responsibility. The Board, Trustee, Investment Manager
----------------------------
and the committees established to administer the Plan possess certain
specified powers, duties, responsibilities and obligations under the
Plan and Trust. It is intended under this Plan that each be solely
responsible for the proper exercise of its own functions and that each
shall not be responsible for any act or failure to act of another,
unless otherwise responsible as a breach of its own fiduciary duty.
(a) Generally, the Board shall be responsible for appointing the
members of the committees it may establish to administer this
Plan. If this Plan shall at any time permit employees to invest
any portion of Plan assets in Company securities, the Board shall
have sole authority to terminate this Plan and to make any
discretionary amendments, while any Board-appointed committee
given such authority shall have authority for making non-
discretionary amendments and for recommending to the Board any
other Plan amendments it deems appropriate.
- 40 -
(b) The Board-appointed committees so authorized shall have the
responsibilities of making Plan amendments not specifically
reserved to the Board in the preceding subsection, including sole
discretion to amend the Plan if employees are not authorized to
invest Plan assets in Company securities, to select Investment
Managers, to direct the Trustee and the Investment Managers with
respect to all matters relating to the investment of Plan assets,
to review and report to the Board on the investment policy and
performance of Plan assets and generally to administer the Plan
according to its terms.
(c) The Trustee or the Investment Manager, as the case may be, is
responsible for the management and control of the Plan's assets
as specifically provided in the Trust Agreement or investment
manager agreement.
(d) The Board may dissolve any committee it appoints or reserve to
itself any of its powers previously delegated to a Board-
appointed committee. In addition, the Board may reorganize the
committees it establishes from time to time and reallocate their
responsibilities among them or assign them to other persons or
committees provided that the Employees' Benefit Committee shall
at all times continue as plan administrator and named fiduciary
as these terms are defined in ERISA unless the Board formally
amends the Plan to reallocate these responsibilities. The Board
and the various committees may designate persons, including
committees, other than named fiduciaries to carry out their
responsibilities (other than trustee responsibilities) under the
Plan.
11.10 Claims Review Procedure. The Committee shall maintain a procedure
-----------------------
under which any Participant or Beneficiary may assert a claim for
benefits under the Plan. Any such claim shall be submitted in writing
to the Committee within such reasonable period as the rules of the
Committee may provide. The Committee shall take action on the claim
within 60 days following its receipt and if it is denied shall at such
time give the claimant written notice which clearly sets forth the
specific reason or reasons for such denial, the specific Plan
provision or provisions on which the denial is based, any additional
information necessary for the claimant to perfect the claim, if
possible, an
- 41 -
explanation of why such additional information is needed, and an
explanation of the Plan's claims review procedure. The review
procedure shall allow a claimant at least 60 days after receipt of the
written notice of denial to request a review of such denied claim, and
the Committee shall make its decision based on such review within 60
days (l20 days if special circumstances require more time) of its
receipt of the request for review. The decision on review shall be in
writing and shall clearly describe the reasons for the Committee's
decision.
Article XII
Amendment and Termination
-------------------------
12.1 Right to Amend or Terminate. Any amendment may be made to this Plan
---------------------------
which does not cause any part of the Plan's assets to be used for, or
diverted to, any purpose other than the exclusive benefit of
Participants, former Participants, or Beneficiaries, provided however,
that any amendment may be made, with or without retroactive effect, if
such amendment is necessary or desirable to comply with applicable law
and provided further that any amendment shall be consistent with the
terms and conditions of any relevant collective bargaining agreement
whose terms and conditions are not in conflict with applicable law.
Except in the case where approved by the Secretary of Labor because of
substantial business hardship, as provided in section 412(c)(8) of the
Code, no amendment shall be made to the Plan if it would decrease the
accrued benefit of any Participant, eliminate or reduce an early
retirement benefit or eliminate an optional form of benefit as may be
provided in regulations under Code section 411(d)(6). If any
provisions of this Plan relating to the percentage of a Participant's
accrued benefit that is vested are changed, any Participant with at
least three years of service may elect, by filing a written request
with the Committee within 60 days after the later of (1) the date the
amendment was adopted, (2) the date the amendment was effective, or
(3) the date the Participant received written notice of such
amendment, to have his vested interest computed under the provisions
of this Plan as in effect immediately prior to such amendment.
12.2 Full Vesting Upon Termination of Plan. Upon full or partial
-------------------------------------
termination of the Plan or upon complete discontinuance of
Participating Company contributions, each affected Participant will
become l00 percent
- 42 -
vested in the value of his Participant Account as of the Valuation
Date next following such termination or discontinuance.
Article XIII
Top-Heavy Provisions
--------------------
13.1 Rules to Apply if Plan is Top-Heavy. Notwithstanding any other
-----------------------------------
relevant provision of this Plan to the contrary, the following rules
will apply for any Plan Year that the Plan becomes "top-heavy" (as
defined in Section 13.2):
(a) Vesting. Vesting will remain 100 percent at all times after
-------
completion of six months' service.
(b) Minimum Contributions. For each top-heavy Plan Year the minimum
---------------------
contribution allocated to the Participant Account of each non-key
employee shall be equal to or greater than the lesser of the
following amounts:
(i) 3 percent of such non-key employee's compensation; or
(ii) the highest percentage-of-compensation allocation made to
the Participant Account of any key employee.
If the highest rate allocated to a key employee is less than 3%
of compensation, amounts contributed as a result of a salary
reduction agreement shall be included in determining the rate of
contribution on behalf of key employees. For purposes of this
subsection, "compensation" shall have the same meaning as in
Section 4.4. Minimum contributions will be made to Participant's
Account without regard to his level of compensation or his hours
of service during a Plan Year.
(c) Limitation on Benefits. In applying the dollar limitations under
----------------------
section 415(e) of the Code, the 1.25 limitation shall be
supplanted by a 1.0 limitation for each year during which the
Plan is top-heavy.
(d) Maximum Compensation. The maximum annual compensation of each
--------------------
employee that may be taken
- 43 -
into account under the Plan shall not exceed $160,000 (or such
larger amount based on cost of living adjustments as may be
permitted under the Code).
13.2 Top-Heavy Definition. For purposes of this Section, the Plan will be
--------------------
considered "top-heavy" if on any given determination date (the last
day of the preceding Plan Year or, in the case of the Plan's first
year, the last day of such Year) the sum of the account balances for
key employees is more than 60 percent of the sum of the account
balances of all employees, excluding former key employees. The
account balances shall include distributions made during any given
Plan Year containing the determination date and the preceding four
Plan Years but shall not include the account balances for any person
who has not received any compensation from any Participating Company
at any time during the five-year period ending on the determination
date. The method of determining the top-heavy ratio shall be made in
accordance with Code section 4l6.
In making the top-heavy calculation, (a) all the Company's plans in
which a key employee participates shall be aggregated with all other
Participating Company plans which enable a plan in which a key
employee participates to satisfy the Code's non-discrimination
requirements; and (b) all Participating Company plans not included in
subparagraph (a), above, may be aggregated with the Participating
Company's plans included in subparagraph (a), above, if all of the
aggregated plans would be comparable and satisfy the Code's non-
discrimination requirements.
13.3 Key Employee Definition. A key employee will be, for the purpose of
-----------------------
this Article, any employee or former employee who at any time during
the Plan Year containing the determination date or the four preceding
Plan Years is such within the meaning of Code section 416. As of the
effective date, the term key employee includes the following
individuals:
(a) an officer (but not more than 50 persons or, if lesser, the
greater of 3 or 10 percent of employees) having an annual
compensation greater than 50 percent of the dollar limit for
benefits payable from a defined benefit plan under Code section
415(b)(1)(A);
- 44 -
(b) one of 10 employees who has annual compensation from the
Participating Company of more than the amount in effect under
Code section 415(c)(1)(A) owning the largest interests of the
Participating Company. The employee having the greater annual
compensation from the Participating Company shall be considered
to own the larger interest in the Participating Company if two or
more employees had the same ownership interest in the
Participating Company;
(c) a five-percent owner of the Participating Company; and
(d) a one-percent owner of the Participating Company whose annual
compensation from the Participating Company exceeds $l60,000.
13.4 Relationship of the Normal and the Top-Heavy Vesting Schedules. If
--------------------------------------------------------------
the Plan's top-heavy status changes and this change alters the Plan's
normal vesting schedule, no Participant's vested accrued benefit
immediately prior to such change in status shall be diminished on
account of the change in the vesting schedule. In addition, the
vesting for each Participant in the Plan at the time of the change in
status shall be determined under whichever schedule provides the
greatest vested benefit at any particular point in time.
13.5 Participation in Other Plans. A non-key employee who participates in
----------------------------
both a defined contribution plan and a defined benefit plan of the
Participating Company shall not be entitled to receive minimum
benefits and/or minimum contributions under all such plans. Instead,
the employee shall receive a minimum benefit equal to the lesser of 20
percent of such non-key employee's average compensation or 2 percent
of his average compensation multiplied by his number of Years of
Service, as set forth in such defined benefit plan.
Article XIV
General Provisions
------------------
14.1 Employment Relationship. Nothing contained herein will be deemed to
-----------------------
give any Employee the right to be retained in the service of a
Participating Company or to interfere with the rights of a
Participating Company to discharge any Employee at any time.
- 45 -
14.2 Non-Alienation of Benefits. Except as provided in Section 9.6,
--------------------------
benefits payable under this Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy of any kind,
either voluntary or involuntary, including any such liability which
arises from the Participant's bankruptcy, prior to actually being
received by the person entitled to the benefit under the terms of the
Plan; and any attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber, charge or otherwise dispose of any right to benefits
payable hereunder, shall be void. The Trust shall not in any manner
be liable for, or subject to the debts, contracts, liabilities,
engagements or torts of any person entitled to benefits hereunder.
Nothing in this Section shall preclude payment of Plan benefits
pursuant to a qualified domestic relations order pursuant to Section
9.6.
14.3 Use of Masculine and Feminine; Singular and Plural. Wherever used in
--------------------------------------------------
this Plan, the masculine gender will include the feminine gender and
the singular will include the plural, unless the context indicates
otherwise.
14.4 Plan for Exclusive Benefit of Employees. No part of the corpus or
---------------------------------------
income of the Trust will be used for, or diverted to, purposes other
than the exclusive benefit of Participants and their Beneficiaries.
Anything in the foregoing to the contrary notwithstanding, the Plan
and Trust are established on the express condition that they will be
considered, by the Internal Revenue Service, as initially qualifying
under the provisions of the Internal Revenue Code. In the event that
the Internal Revenue Service issues an unfavorable determination with
respect to a timely request for a determination that the amended and
restated Plan and Trust qualify under the Internal Revenue Code, the
Plan and Trust will be of no effect and the value of all contributions
made by a Participating Company and Participants since the amendment
and restatement will be returned to the Participating Company and
Participants, respectively, within one year from the date of the
denial of the determination request. Furthermore, if, or to the
extent that, a Participating Company's tax deduction for contributions
made to the Plan is disallowed, the Participating Company will have
the right to obtain the return of any such contributions (to the
extent disallowed) for a period
- 46 -
of one year from the date of disallowance. All Participating Company
contributions to this Plan are contingent upon their deductibility
under the Code. Finally, if a Participating Company's contribution to
the Plan is made by a mistake in fact, the Participating Company will
have the right to obtain the return of such contribution for a period
of one year from the date the contribution was made.
14.5 Merger or Consolidation of Plan. There will be no merger or
-------------------------------
consolidation with, or transfer of any assets or liabilities to, any
other plan, unless each Participant will be entitled to receive a
benefit immediately after such merger, consolidation, or transfer as
if this Plan were then terminated which is at least equal to the
benefit he would have been entitled to receive immediately before such
merger, consolidation, or transfer as if this Plan had been
terminated.
14.6 Payments to Minors and Incompetents. If a Participant or Beneficiary
-----------------------------------
entitled to receive any benefits hereunder is a minor or is deemed by
the Committee, or is adjudged to be, legally incapable of giving valid
receipt and discharge for such benefits, they will be paid to such
persons as the Committee might designate or to the duly appointed
guardian.
14.7 Governing Law. To the extent that New York law has not been preempted
-------------
by ERISA, the provisions of the Plan will be construed in accordance
with the laws of the State of New York.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this Plan document on its behalf this 21st day of September, 1999.
FRONTIER CORPORATION
By: /s/ Barbara J. LaVerdi
------------------------
Its: Assistant Secretary
---------------------
APPENDIX A
Participating Companies
Effective Date of
Name of Company Participation
- --------------- ------------------
Frontier Communications of AuSable Valley, Inc. 3/1/94
Frontier Communications of Illinois, Inc. 7/1/95
Frontier Communications of Iowa, Inc. 3/1/94
Frontier Communications of Lakeside, Inc. 1/1/95
Frontier Communications of Michigan, Inc. 7/1/95
Frontier Communications - Midland, Inc. 1/1/95
Frontier Communications of Minnesota, Inc. 3/1/94
Frontier Communications of Mt. Pulaski, Inc. 1/1/95
Frontier Communications of New York, Inc. 1/1/98
Frontier Communications - Prairie, Inc. 1/1/95
Frontier Communications of Sylvan Lake, Inc. 3/1/94
Frontier Telephone of Rochester, Inc. 1/1/95
[1/1/98]
APPENDIX B
SCHEDULE B(1)
FRONTIER COMMUNICATIONS OF AUSABLE VALLEY, INC.
Class of Eligible Employees: Employees must be within a unit covered by a
collective bargaining agreement that provides for coverage of such employees by
this Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Company):
2000: 3 percent of compensation
2001: 3 percent of compensation
Matching Contributions: Effective May 7, 1998, Frontier Communications of
AuSable Valley, Inc.'s matching contribution will be equal to 100% of the first
3% of a Participant's compensation that he elects to contribute to the Plan.
Discretionary Contributions: None.
Form of Company Contributions: Effective May 7, 1998, all company contributions
will be made in Restricted Stock.
Vesting Schedule: 100% immediately.
Payment Option C: A straight life annuity on the life of the Participant is the
only Option C benefit available.
[1/1/98]
SCHEDULE B(2)
FRONTIER COMMUNICATIONS OF ILLINOIS, INC.
Class of Eligible Employees: Those employees who are represented by the Local
51 of the International Brotherhood of Electrical Workers bargaining unit are
eligible to participate in this Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Company):
1997: $3,000
1998: 3 percent of Compensation
1999: 3 percent of Compensation
2000: 3 percent of Compensation
Matching Contributions: The matching contribution will be equal to 100% of the
first 3% of a Participant's compensation that he elects to contribute to the
Plan.
Profit Sharing Contributions: The Company shall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: The following additional options apply to account balances as
of December 31, 1994:
. Installments over any period up to the joint life expectancies of the
Participant and any designated beneficiary.
. A straight life annuity for unmarried Participants.
. A qualified joint and 50% survivor annuity for married Participants
with the Participant's spouse as the contingent annuitant.
[1/1/98]
SCHEDULE B(3)
FRONTIER COMMUNICATIONS OF IOWA, INC.
Class of Eligible Employees: Those employees who are represented by the CWA
Local 7171 bargaining unit are eligible to participate in this Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions: Each payroll period the Company shall contribute one-half
of one percent (0.5%) of the payroll period Compensation of each of its
employees in the class of eligible employees.
Matching Contributions: Effective January 1, 1997, Frontier Communications of
Iowa, Inc.'s matching contribution will be equal to 100% of the first 3% of a
Participant's compensation that he elects to contribute to the Plan.
Profit Sharing Contributions: To the extent required or permitted in a relevant
collective bargaining agreement, effective January 1, 1997, Frontier
Communications of Iowa, Inc. may contribute each year in its discretion the same
flat dollar amount or percentage of compensation for each of its eligible
employees.
Vesting Schedule: 100% immediately.
Payment Option C: None.
[1/1/98]
SCHEDULE B(4)
FRONTIER COMMUNICATIONS OF LAKESIDE, INC.
Class of Eligible Employees: Those employees who are represented by the Local
51 of the International Brotherhood of Electrical Workers bargaining unit are
eligible to participate in this Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Company):
1997: $3,000
1998: 3 percent of Compensation
1999: 3 percent of Compensation
2000: 3 percent of Compensation
Matching Contributions: The matching contribution will be equal to 100% of the
first 3% of a Participant's compensation that he elects to contribute to the
Plan.
Profit Sharing Contributions: The Company shall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: The following additional options apply to account balances as
of December 31, 1994:
. Installments over any period up to the joint life expectancies of the
Participant and any designated beneficiary.
. A straight life annuity for unmarried Participants.
. A qualified joint and 50% survivor annuity for married Participants
with the Participant's spouse as the contingent annuitant.
[1/1/98]
SCHEDULE B(5)
FRONTIER COMMUNICATIONS OF MICHIGAN, INC.
Class of Eligible Employees: Those employees who are represented by Local 1106
of the International Brotherhood of Electrical Workers bargaining unit are
eligible to participate in this Plan.
Eligibility: A eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Company):
1997: $750
1998: 3 percent of Compensation
1999: 3 percent of Compensation
2000: 3 percent of Compensation
Matching Contributions: Effective January 1, 1998, Frontier Communications of
Michigan, Inc.'s matching contribution will be equal to 100% of the first 3% of
Compensation.
Profit Sharing Contributions: The Company shall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: None.
[1/1/98]
SCHEDULE B(6)
FRONTIER COMMUNICATIONS - MIDLAND, INC.
Class of Eligible Employees: Those employees who are represented by the Local
51 of the International Brotherhood of Electrical Workers bargaining unit are
eligible to participate in this Plan.
Eligibility: A eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Company):
1997: $3,000
1998: 3 percent of Compensation
1999: 3 percent of Compensation
2000: 3 percent of Compensation
Matching Contributions: The matching contribution will be equal to 100% of the
first 3% of a Participant's compensation that he elects to contribute to the
Plan.
Profit Sharing Contributions: The Company shall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: The following additional options apply to account balances as
of December 31, 1994:
. Installments over any period up to the joint life expectancies of the
Participant and any designated beneficiary.
. A straight life annuity for unmarried Participants.
. A qualified joint and 50% survivor annuity for married Participants
with the Participant's spouse as the contingent annuitant.
[1/1/98]
SCHEDULE B(7)
FRONTIER COMMUNICATIONS OF MINNESOTA, INC.
Class of Eligible Employees: Those employees who are represented by the CWA
Local 7270 bargaining unit are eligible to participate in this Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions: Each payroll period the Company shall contribute one-half
of one percent (0.5%) of the payroll period Compensation of each of its
employees in the class of eligible employees.
Matching Contributions: Effective January 1, 1997, Frontier Communications of
Minnesota, Inc.'s matching contribution will be equal to 100% of the first 3% of
a Participant's compensation that he elects to contribute to the Plan.
Profit Sharing Contributions: To the extent required or permitted in a relevant
collective bargaining agreement, effective January 1, 1997, Frontier
Communications of Minnesota, Inc. may contribute each year in its discretion the
same flat dollar amount or percentage of compensation for each of its eligible
employees.
Vesting Schedule: 100% immediately.
Payment Option C: None.
[1/1/98]
SCHEDULE B(8)
FRONTIER COMMUNICATIONS OF MT. PULASKI, INC.
Class of Eligible Employees: Employees must be within a unit covered by a
collective bargaining agreement that provides for coverage of such employees by
this Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Company):
1997: $3,000
1998: 3 percent of Compensation
1999: 3 percent of Compensation
2000: 3 percent of Compensation
Matching Contributions: The matching contribution will be equal to 100% of the
first 3% of a Participant's compensation that he elects to contribute to the
Plan.
Profit Sharing Contributions: The Company shall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: The following additional options apply to account balances as
of December 31, 1994:
. Installments over any period up to the joint life expectancies of the
Participant and any designated beneficiary.
. A straight life annuity for unmarried Participants.
. A qualified joint and 50% survivor annuity for married Participants
with the Participant's spouse as the contingent annuitant.
[1/1/98]
SCHEDULE B(9)
FRONTIER COMMUNICATIONS OF NEW YORK, INC.
Class of Eligible Employees: Those employees who are represented by the Local
503 International Brotherhood of Electrical Workers bargaining unit are eligible
to participate in this Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Company):
1998: None
1999: 3 percent of Compensation
2000: 3 percent of Compensation
Matching Contributions (Company): Effective January 1, 1998, Frontier
Communications of New York, Inc.'s matching contribution will be equal to 100%
of the first 3% of a Participant's compensation that he elects to contribute to
the Plan.
Profit Sharing Contributions (Company): None
Vesting Schedule: 100% immediately.
Payment Option C: With respect to account balances transferred to this Plan
from the Frontier Communications of New York, Inc. Employee Savings and 401(k)
Plan, periodic partial distributions are available prior to termination of
employment as follows:
c. Periodic Partial Distributions. If an Employee so elects during
------------------------------
the month of November of the fourth Plan Year in which he has been a
Participant, or during the month of November of any Plan Year thereafter,
there shall be distributed to him all the fully vested amounts in all
accounts as of December 31, 1997 other than, if he has not reached age 59-
1/2, his Tax-Deferred Contribution Account attributable to the Plan Year
ending three years prior to the end of the Plan Year in which such election
is made. Such an election shall be made on a form provided for this
purpose and shall be signed by the Employee and delivered to the Committee.
For purposes of determining the amount of the
- 2 -
distribution, all valuations shall be made as of the last Valuation Date in
the Plan Year in which the election is made. Such distribution will involve
no forfeiture by the Employee and will not affect his withdrawal rights
under other provisions of the Plan.
[1/1/98]
SCHEDULE B(10)
FRONTIER COMMUNICATIONS - PRAIRIE, INC.
Class of Eligible Employees: Those employees who are represented by the Local
51 of the International Brotherhood of Electrical Workers bargaining unit are
eligible to participate in this Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Company):
1997: $3,000
1998: 3 percent of Compensation
1999: 3 percent of Compensation
2000: 3 percent of Compensation
Matching Contributions: The matching contribution will be equal to 100% of the
first 3% of a Participant's compensation that he elects to contribute to the
Plan.
Profit Sharing Contributions: The Company shall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: The following additional options apply to account balances as
of December 31, 1994:
. Installments over any period up to the joint life expectancies of the
Participant and any designated beneficiary.
. A straight life annuity for unmarried Participants.
. A qualified joint and 50% survivor annuity for married Participants
with the Participant's spouse as the contingent annuitant.
[1/1/98]
SCHEDULE B(11)
FRONTIER COMMUNICATIONS OF SYLVAN LAKE, INC.
Class of Eligible Employees: Those employees who are represented by the Local
320 International Brotherhood of Electrical Workers bargaining unit are eligible
to participate in this Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions (Company):
1998: None
1999: 3 percent of Compensation
2000: 3 percent of Compensation
Matching Contributions (Company): Effective January 1, 1998, Frontier
Communications of Sylvan Lake, Inc.'s matching contribution will be equal to
100% of the first 3% of a Participant's compensation that he elects to
contribute to the Plan.
Profit Sharing Contributions (Company): None
Vesting Schedule: 100% immediately.
Payment Option C: A straight life annuity on the life of the Participant is the
only Option C benefit available.
[6/1/98]
SCHEDULE B(12)
FRONTIER TELEPHONE OF ROCHESTER, INC./CWA
Class of Eligible Employees: Those employees who are represented by the CWA
Local 1170 bargaining unit are eligible to participate in this Plan.
Eligibility: An eligible Employee will begin participation in the Plan on the
first day of the month coincident with or next following his completion of 30
days of employment.
Fixed Contributions: Each payroll period the Company shall contribute one-half
of one percent (0.5%) of the payroll period Compensation of each of its
employees in the class of eligible employees.
Matching Contributions: Each payroll period the Company shall contribute for
each of its employees in the class of eligible employees 100% of such employee's
contribution up to the first 3% of Compensation.
Profit Sharing Contributions: The Company shall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: The following additional payment options are available to a
Participant under Option C:
. A straight life annuity.
. A reduced retirement income payable monthly during his life with the
provision that in the event of his death prior to receiving one
hundred twenty (120) monthly installments, the remainder thereof
shall be paid to his beneficiary.
. For married Participants, a reduced retirement income, payable during
his life, with the provision that after his death such reduced income
shall be continued during the life of, and shall be paid to, the
Participant's spouse.
This revised schedule is effective as of April 9, 1996.
[6/1/98]
SCHEDULE B(13)
FRONTIER TELEPHONE OF ROCHESTER, INC./RTWA
Class of Eligible Employees: Those employees who are represented by the RTWA
bargaining unit are eligible to participate in this Plan.
Eligibility: Eligible Employees will begin participation in the Plan on their
employment date.
Fixed Contributions: Each payroll period the Company shall contribute one-half
of one percent (0.5%) of the payroll period Compensation of each of its
employees in the class of eligible employees.
Matching Contributions: Each payroll period the Company shall contribute for
each of its employees in the class of eligible employees 100% of such employee's
contribution up to the first 3% of Compensation, and 50% of such employee's
contributions up to the next 2% of Compensation.
Profit Sharing Contributions: The Company shall contribute such contributions
depending on the attainment of financial objectives in accordance with the terms
of the relevant collective bargaining agreement.
Vesting Schedule: 100% immediately.
Payment Option C: The following additional payment options are available to a
Participant under Option C:
. A straight life annuity.
. A reduced retirement income payable monthly during his life with the
provision that in the event of his death prior to receiving one
hundred twenty (120) monthly installments, the remainder thereof
shall be paid to his beneficiary.
. For married Participants, a reduced retirement income, payable during
his life, with the provision that after his death such reduced income
shall be continued during the life of, and shall be paid to, the
Participant's spouse.
This revised schedule is effective January 1, 1998.