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EXHIBIT 10.8
SOUTHWEST AIRLINES CO.
PROFIT SHARING PLAN
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SOUTHWEST AIRLINES CO.
PROFIT SHARING PLAN
TABLE OF CONTENTS
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ARTICLE I PURPOSE.............................................................1
ARTICLE II DEFINITIONS AND CONSTRUCTION.......................................2
2.1 Definitions ..............................................................2
2.2 Construction .............................................................8
ARTICLE III ELIGIBILITY AND PARTICIPATION.....................................8
3.1 Eligibility Requirements..................................................8
3.2 Notification of Eligibility...............................................9
3.3 Reentry of Prior Members..................................................9
ARTICLE IV CONTRIBUTIONS.....................................................10
4.1 Company Contributions....................................................10
ARTICLE V ADJUSTMENT OF INDIVIDUAL ACCOUNTS..................................11
5.1 Individual Accounts......................................................11
5.2 Method of Adjustment.....................................................12
ARTICLE VI ALLOCATIONS.......................................................13
6.1 Company Contribution.....................................................13
6.2 Allocation of Forfeitures................................................13
6.3 Notification to Members..................................................14
6.4 Maximum Annual Addition to Account or Benefit............................14
ARTICLE VII RETIREMENT.......................................................16
7.1 Normal or Late Retirement................................................16
7.2 Benefit 16
ARTICLE VIII DEATH...........................................................16
8.1 Designation of Beneficiary...............................................16
8.2 Benefit .................................................................17
8.3 No Beneficiary ..........................................................17
ARTICLE IX DISABILITY........................................................18
9.1 Benefit .................................................................18
ARTICLE X TERMINATION OF EMPLOYMENT AND FORFEITURES..........................18
10.1 Eligibility and Benefits................................................18
10.2 Time of Payment.........................................................19
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10.3 Forfeitures ............................................................19
10.4 Forfeiture for Cause....................................................19
ARTICLE XI WITHDRAWALS.......................................................20
11.1 Withdrawals ............................................................20
ARTICLE XII INVESTMENT OF THE TRUST FUND.....................................21
12.1 [deleted] ..............................................................21
12.2 Member Direction of Investment..........................................21
12.3 Conversion of Investments...............................................22
ARTICLE XIII ADMINISTRATION..................................................23
13.1 Appointment of Committee................................................23
13.2 Committee Powers and Duties.............................................24
13.3 Duties and Powers of the Plan Administrator.............................25
13.4 Rules and Decisions.....................................................26
13.5 Committee Procedures....................................................26
13.6 Authorization of Benefit Payments.......................................26
13.7 Payment of Expenses.....................................................26
13.8 Indemnification of Members of the Committee.............................27
ARTICLE XIV NOTICES..........................................................27
14.1 Notice to Trustee.......................................................27
14.2 Subsequent Notices......................................................27
14.3 Reliance upon Notice....................................................27
ARTICLE XV BENEFIT PAYMENTS..................................................28
15.1 Method of Payment.......................................................28
15.2 Time of Payment.........................................................28
15.3 Cash Out Distribution...................................................32
15.4 Minority or Disability Payments.........................................33
15.5 Distributions Under Domestic Relations Orders...........................33
15.6 Direct Rollover of Eligible Rollover Distributions......................35
ARTICLE XVI TRUSTEE..........................................................36
16.1 Appointment of Trustee..................................................36
16.2 Appointment of Investment Manager.......................................36
16.3 Responsibility of Trustee and Investment Manager........................37
16.4 Bonding of Trustee and Investment Manager...............................37
ARTICLE XVII AMENDMENT AND TERMINATION OF PLAN...............................38
17.1 Amendment of Plan.......................................................38
17.2 Termination of Plan.....................................................39
17.3 Suspension and Discontinuance of Contributions..........................39
17.4 Liquidation of Trust Fund...............................................39
17.5 Consolidation or Merger.................................................40
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ARTICLE XVIII GENERAL PROVISIONS.............................................40
18.1 No Employment Contract..................................................40
18.2 Manner of Payment.......................................................40
18.3 Nonalienation of Benefits...............................................41
18.4 Titles for Convenience Only.............................................41
18.5 Validity of Plan........................................................41
18.6 Plan Binding ...........................................................42
18.7 Return of Contributions.................................................42
18.8 Missing Members or Beneficiaries........................................42
18.9 Voting Rights ..........................................................43
18.10 Acquisition Loans......................................................45
18.11 Preretirement Diversification Rights...................................46
18.12 Qualified Military Service.............................................48
ARTICLE XIX TOP-HEAVY RULES..................................................49
19.1 Definitions ............................................................49
19.2 Determination of Top-Heavy Status.......................................50
19.3 Minimum Company Contribution............................................51
19.4 Minimum Vesting.........................................................52
ARTICLE XX FIDUCIARY PROVISIONS..............................................53
20.1 General Allocation of Duties............................................53
20.2 Fiduciary Duty .........................................................53
20.3 Fiduciary Liability.....................................................54
20.4 Co-Fiduciary Liability..................................................54
20.5 Delegation and Allocation...............................................54
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SOUTHWEST AIRLINES CO.
PROFIT SHARING PLAN
PREAMBLE
WHEREAS, SOUTHWEST AIRLINES CO., a corporation formed under the laws of
the State of Texas (the "Company") has previously adopted a plan and trust
designated as the Southwest Airlines Co. Profit Sharing Plan (the "Prior Plan"),
effective January 1, 1973, which was subsequently amended and restated in its
entirety, effective January 1, 1986, and again amended and restated in its
entirety, effective January 1, 1991, as amended from time to time thereafter;
WHEREAS, the Company now desires to continue the plan by again amending
and restating the Prior Plan for compliance with the Small Business Job
Protection Act of 1996, the Taxpayer Relief Act of 1997, and subsequent
legislation, and to incorporate amendments which have previously been made to
the plan;
NOW, THEREFORE, in consideration of the premises and to carry out the
purposes and intent as set forth above, the Prior Plan is hereby restated and
amended in its entirety, superseded and replaced by this Plan, effective January
1, 1996, except as otherwise specifically provided herein. There will be no gap
or lapse in time or effect between such plans, and the existence of a qualified
plan and trust shall be continuous and uninterrupted.
The terms and conditions of this restated Plan are as follows:
ARTICLE I
Purpose
The purpose of this Plan is to reward Employees of the Company for
their loyal and faithful service, to provide the Employees with a retirement
benefit, and to provide funds for their beneficiaries in the event of death or
disability. The Plan is designed to invest primarily in
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qualifying employer securities, as such term is defined in Section 4975(e)(7) of
the Code, and is thus formally designated as an employee stock ownership plan
and a money purchase defined contribution plan. The benefits provided by this
Plan will be paid from a Trust Fund established by the Company and will be in
addition to the benefits Employees are entitled to receive under any other
programs of the Company and under the Social Security Act.
This Plan and the separate related Trust forming a part hereof are
established and shall be maintained for the exclusive benefit of the Members
hereunder and their Beneficiaries. No part of the Trust Fund can ever revert to
the Company, except as hereinafter provided, or be used for or diverted to
purposes other than the exclusive benefit of the Members of this Plan and their
Beneficiaries.
ARTICLE II
Definitions and Construction
2.1 Definitions: Where the following words and phrases appear in this
Plan, they shall have the respective meanings set forth below, unless their
context clearly indicates to the contrary:
(a) Affiliate: A member of a controlled group of corporations
(as defined in Section 414(b) of the Code), a group of trades or
businesses (whether or not incorporated) which are under common control
(as defined in Section 414(c) of the Code), or an affiliated service
group (as defined in Section 414(m) of the Code) of which the Company
is a member, or any entity otherwise required to be aggregated with the
Company pursuant to Section 414(o) of the Code and the regulations
issued thereunder.
(b) Allocation Date: The date on which Company Contributions
and forfeitures are to be allocated, such date to be the last day of
each Plan Year.
(c) Annual Compensation: The total amounts paid by the Company
or any Eligible Affiliate to an Employee as remuneration for personal
services rendered during each Plan Year, including expense allowances
(to the extent includible in the gross income of the Employee) and any
amounts not includible in the gross income of the Employee pursuant to
Sections 125 or 402(g)(1) of the Code, but excluding director's fees,
expense reimbursements and nontaxable expense allowances, prizes and
awards, items of imputed income contributions made by the Company under
this Plan or any
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other employee benefit plan or program it maintains, such as group
insurance, hospitalization or like benefits, amounts realized or
recognized from qualified or nonqualified stock options or when
restricted stock or property held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk of
forfeiture, and amounts, if any, paid to an Employee in lieu of a
Company Contribution to this Plan in the event that such Company
Contribution would constitute an annual addition, as defined in Section
415(c)(2) of the Code, in excess of the limitations under Section
415(c) of the Code. Annual Compensation shall include amounts otherwise
includible, as provided above, which are paid by the Company or an
Eligible Affiliate to the Employee through another person, pursuant to
the common paymaster provisions of Sections 3121(s) and 3306(p) of the
Code.
The Annual Compensation of each Member or former Member taken
into account under the Plan for any Plan Year shall not exceed
$150,000, as adjusted by the Secretary of the Treasury for increases in
the cost of living at the time and in the manner set forth in Section
401(a)(17)(B) of the Code. Furthermore, for purposes of an allocation
under the Plan based on Annual Compensation, Annual Compensation shall
only include amounts actually paid to an Employee during the period he
is a Member of the Plan.
(d) Beneficiary: A person designated by a Member or former
Member to receive benefits hereunder upon the death of such Member or
former Member.
(e) Break in Service: An Employee shall have a Break in
Service for each Plan Year in which he completes less than 501 Hours of
Service with the Company or an Eligible Affiliate unless he is on a
leave of absence authorized by the Company or an Eligible Affiliate in
accordance with its leave policy.
(f) Code: The Internal Revenue Code of 1986, as amended.
(g) Committee: The persons who may be appointed to administer
the Plan in accordance with Article XIII.
(h) Common Stock: The common stock of the Company.
(i) Company: Southwest Airlines Co., or its successor or
successors.
(j) Company Contributions: Contributions which are made by the
Company for each Plan Year pursuant to the provisions of Section 4.1
hereof.
(k) Deductible Contributions: A Member's voluntary
contributions, if any, to the Plan, made prior to January 1, 1987 and
deductible by such Member for federal income tax purposes in accordance
with Section 219 of the Internal Revenue Code, as then in effect.
(l) Deductible Contribution Account: A separate subaccount to
which is credited a Member's Deductible Contributions, if any, and any
earnings attributable thereto, adjusted to reflect any withdrawals,
distributions or investment losses attributable thereto.
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(m) Disability: A physical or mental condition which, in the
judgment of the Committee, totally and presumably permanently prevents
the Employee from engaging in any substantial gainful employment with
the Company or an Eligible Affiliate. A determination of Disability
shall be based upon competent medical evidence satisfactory to the
Committee. The Committee shall apply the rules with respect to
Disability uniformly and consistently to all Employees in similar
circumstances.
(n) Effective Date: January 1, 1996, except as otherwise
specifically provided herein.
(o) Employee: Any person who is receiving remuneration for
personal services rendered to the Company or any Eligible Affiliate, or
who would be receiving such remuneration except for an authorized leave
of absence; provided, however, that any individual whose conditions of
employment are governed by a collective bargaining agreement between
the Company and a labor union shall not be considered an Employee
unless the collective bargaining agreement provides for coverage of
such individual under the Plan. In no event shall any individual
employed by TranStar Airlines or any other Affiliate or subsidiary of
the Company be considered an Employee unless such Affiliate or
subsidiary has specifically been designated by the Company as an
Eligible Affiliate. Notwithstanding the foregoing, individuals whose
conditions of employment are governed by a collective bargaining
agreement which does not provide for coverage of such individual under
the Plan shall nonetheless be deemed to be an Employee for purposes of
crediting service pursuant to the provisions of subsections 2.1(t),
(gg) and (kk) hereunder.
The term "Employee" shall also include any "leased employee,"
as such term is defined below, deemed to be an employee of an Employer
or any Affiliate as provided in Sections 414(n) or (o) of the Code. The
term "leased employee" means any person (other than an employee of the
recipient) who, pursuant to an agreement between the recipient and any
other person ("leasing organization"), has performed services for the
recipient (or for the recipient and related persons determined in
accordance with Section 414(n)(6) of the Code) on a substantially
full-time basis for a period of at least one year, and such services
are performed under primary direction or control by the recipient.
Contributions or benefits provided by the leasing organization that are
attributable to services performed for the recipient shall be treated
as provided by the recipient. Notwithstanding the foregoing, a leased
employee shall not be considered an employee of the recipient if: (i)
such employee is covered by a money purchase pension plan that
provides: (1) a nonintegrated employer contribution rate of at least
ten percent (10%) of compensation, as defined in Section 415(c)(3) of
the Code, but including amounts contributed pursuant to a salary
reduction agreement that are excludable from the employee's gross
income under Section 125, Section 402(e)(3), Section 402(h)(1)(B), or
Section 403(b)of the Code, immediate vesting; and (ii) leased employees
do not constitute more than twenty percent (20%) of the recipient's
nonhighly compensated work force.
(p) Employer Savings Account: A separate subaccount to which
is credited a Member's Company Contributions and forfeitures, if any,
and any earnings attributable
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thereto, adjusted to reflect any withdrawals, distributions or
investment losses attributable thereto.
(q) Entry Date: January 1st of each year.
(r) ERISA: The Employee Retirement Income Security Act of
1974, as amended.
(s) Fund or Trust Fund: All assets of whatsoever kind or
nature held from time to time by the Trustee in the Trust forming a
part of this Plan, without distinction as to income and principal and
without regard to source, i.e., allocations, Company contributions,
earnings, forfeitures or gifts.
(t) Hour of Service: An Hour of Service shall include all
hours for which pay is received or for which an Employee is entitled to
payment, whether worked or not, plus service credit on the basis of the
number of his regularly scheduled working hours for any other period of
absence for which the Employee is paid or entitled to payment and which
is authorized by the Company in accordance with its uniform leave
policy for vacation, holiday, sick leave, illness, Disability, layoff,
military service or civic duty. In no event shall credit for the number
of Hours of Service attributable to a single continuous period for
which no duties are performed exceed 501. Service credit shall also be
given for each other leave of absence authorized by the Company for
which the Employee is paid or entitled to payment.
Hours of Service shall be computed on an equivalency basis,
whereby for each month during which an Employee would be credited with
at least one Hour of Service (or, in the case of flight attendants or
pilots, one trip), such Employee shall be credited with one hundred
ninety (190) Hours of Service.
These hours must be credited to Employees in the computation
period during which the duties were performed, or, if no duties were
performed, during which the applicable period of absence occurred, and
not when paid, if different. Credit must also be given, without
duplicating any hours described above, for each hour for which back
pay, irrespective of mitigation of damages, has been awarded or agreed
to by the Company or any Eligible Affiliate. These hours must be
credited in the computation period or periods to which the award or
agreement pertains rather than that in which the payment, award or
agreement was made.
In determining the number of Hours of Service to be credited
to an Employee in the case of a payment which is made or due to an
Employee under the provisions of the paragraphs above, the Committee
shall apply the rules set forth in Department of Labor Regulations
2530.200b-2(b) and (c), which rules are incorporated into and made a
part of this Plan by reference.
Effective for Plan Years beginning after 1984, for purposes of
determining whether an Employee has incurred a Break in Service as
defined in Section 2.1(e), the Committee shall credit an Employee with
Hours of Service during absence from work for maternity or paternity
reasons which would otherwise have been credited to such
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Employee but for such absence. For purposes of this Plan, an Employee
shall be deemed to be on maternity or paternity leave if the Employee's
absence from work is (1) by reason of the pregnancy of the Employee,
(2) by reason of the birth of a child of the Employee, (3) by reason of
the placement of a child with the Employee in connection with the
adoption of such child by the Employee, or (4) for purposes of caring
for such child for a period beginning immediately following such birth
or placement. The Hours of Service credited under this paragraph shall
be limited to the lesser of (1) the number necessary to prevent the
Employee from incurring a Break in Service or (2) 501 Hours of Service.
Hours of Service credited under this paragraph shall be credited in the
Plan Year in which the absence begins, but if the Employee does not
need those Hours of Service to prevent a Break in Service in the Plan
Year in which the absence began, then they shall be credited in the
immediately following Plan Year.
Hours of Service during the period prior to January 1, 1976
shall be determined from whatever records may be reasonably accessible
to the Company and, if such records are insufficient, the Company may
make whatever calculations are necessary to approximate Hours of
Service for such period in a manner uniformly applicable to all
Employees similarly situated. These provisions shall be construed by
resolving any questions or ambiguities in favor of crediting Employees
with Hours of Service.
(u) Individual Account: The account or record maintained by
the Committee showing the monetary value of the individual interest in
the Trust Fund of each Member, former Member and Beneficiary.
(v) Investment Managers: The qualified and acting Investment
Managers, as defined in ERISA, who under this Plan may be appointed by
the Company to invest and manage Plan assets as fiduciaries.
(w) Member: An Employee who has met the eligibility
requirements for participation in this Plan, as set forth in Article
III hereof.
(x) Named Fiduciary: The Committee shall be the Named
Fiduciary designated to manage the operation and administration of the
Plan.
(y) Nondeductible Contributions: A Member's voluntary
contributions, if any, to the Plan, made prior to January 1, 1987,
which are not deductible by such Member for federal income tax
purposes.
(z) Nondeductible Contribution Account: A separate subaccount
to which is credited a Member's Nondeductible Contributions, if any,
and any earnings attributable thereto, adjusted to reflect any
withdrawals, distributions or investment losses attributable thereto.
(aa) Normal Retirement Date: The date on which a Member
attains the age of fifty-nine and one-half (59 1/2) years.
(bb) Plan: Southwest Airlines Co. Profit Sharing Plan, as
amended from time to time.
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(cc) Plan Administrator: Such person or persons as designated
by the Committee, which shall be the Committee unless and until it
designates such other person or persons.
(dd) Plan Year: The annual period beginning January 1st and
ending December 31st, both dates inclusive of each year.
(ee) Prior Plan: The Southwest Airlines Co. Profit Sharing
Plan, effective January 1, 1973, as heretofore amended and restated
from time to time.
(ff) Retirement: Termination of employment after a Member has
reached his Normal Retirement Date. Retirement shall be considered as
commencing on the day immediately following a Member's last day of
employment.
(gg) Service: A period or periods of employment by an Employee
used in determining eligibility for Plan participation or in
determining the amount of benefits. If the Company is a member of a
controlled group of corporations (as defined in Section 414(b) of the
Code), is one of a group of trades or businesses (whether or not
incorporated) which are under common control (as defined in Section
414(c) of the Code), is a member of an affiliated service group (as
defined in Section 414(m) of the Code) or is otherwise required to be
aggregated with any entity pursuant to Section 414(o) of the Code and
the regulations issued thereunder, then Service shall include any
employment with any such Affiliate from and after the date such entity
becomes an Affiliate, including Service prior to the Effective Date.
(hh) Trust: Southwest Airlines Co. Profit Sharing Trust, as
amended from time to time, the Trust established to hold and invest
contributions made under the Plan and Prior Plan for the exclusive
benefit of the Members included in the Plan from which the benefits
will be distributed.
(ii) Trustee: The qualified and acting Trustee under the
Trust, who shall be the fiduciary designated to invest and manage the
Plan assets, other than those which may be managed exclusively by an
Investment Manager, and to operate and administer the Trust Fund.
(jj) Valuation Date: Each business day on which the financial
markets are open for trading activity.
(kk) Vesting Service: Vesting Service is the period of
employment used in determining eligibility for benefits. A year of
Vesting Service shall be granted for each Plan Year in which an
Employee has completed 1,000 or more Hours of Service with the Company
or an Affiliate, subject to the following exceptions:
(i) Vesting Service prior to January 1, 1973 shall be
excluded.
(ii) Vesting Service completed after December 31,
1972 and prior to January 1, 1976 shall be excluded if such
service would have been disregarded under the break in service
rules of the Prior Plan, as then in effect. For this
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purpose, break in service rules are those rules which result
in the loss of prior vesting because of service termination or
failure to complete a required period of service within a
specified time.
(iii) In the case of an Employee who has a Break in
Service, his years of Vesting Service before such Break in
Service shall not be taken into account until he has completed
a year of Vesting Service following his reemployment. Prior to
January 1, 1985, in the case of an Employee who has any Break
in Service, all years of Vesting Service incurred after such
Break shall be disregarded for purposes of measuring years of
Vesting Service before such Break. However, effective January
1, 1985, and thereafter, in the case of an Employee who has
five (5) or more consecutive Breaks in Service, all years of
Vesting Service incurred after such Breaks in Service will be
disregarded for purposes of measuring years of Vesting Service
before such Breaks in Service.
(iv) Prior to January 1, 1985, if an Employee who
does not have any nonforfeitable right to his Employer Savings
Account incurs a period of consecutive Breaks in Service that
equals or exceeds the aggregate number of years of Vesting
Service incurred before such period, then all of his prior
years of Vesting Service before such period shall no longer be
credited to him. However, effective January l, 1985, and
thereafter, if an Employee who does not have any
nonforfeitable right to his Employer Savings Account incurs a
period of consecutive Breaks in Service that equals or exceeds
the greater of (1) five or (2) the aggregate number of years
of Vesting Service incurred before such period, then all of
his prior years of Vesting Service before such period shall no
longer be credited to him.
(ll) Eligible Affiliate: An Affiliate, the employees of which
the Company has specifically designated as being eligible to
participate in the Plan.
2.2 Construction: The masculine gender, where appearing in the Plan,
shall be deemed to include the feminine gender, unless the context clearly
indicates to the contrary. The words "hereof," "herein," "hereunder," and other
similar compounds of the word "here" shall mean and refer to the entire Plan,
not to any particular provision or section. The Plan and Trust shall each form a
part of the other by reference and terms shall be used therein interchangeably.
ARTICLE III
Eligibility and Participation
3.1 Eligibility Requirements: Every Employee on the Effective Date, who
was a Member in the Prior Plan on the day before the Effective Date, shall
continue to be a Member in
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the Plan. Every other Employee shall be eligible to become a Member in the Plan
as of the first Entry Date concurrent with or next following his employment
commencement date or the date on which his employer became an Eligible
Affiliate, whichever is later. The employment commencement date is the first day
for which an Employee is entitled to be credited hereunder with an Hour of
Service. Non-resident aliens who receive no earned income from the Company which
constitutes income from sources within the United States shall not be eligible
to participate in the Plan.
3.2 Notification of Eligibility: The Committee shall promptly notify in
writing each Employee of his qualification as a Member and shall furnish each
new Member a copy of such explanation of the Plan as the Committee shall provide
for that purpose. Any Employee who is eligible to become a Member may elect to
participate in the Plan upon the date on which he first becomes eligible by
executing and filing with the Committee, prior to or upon such date, an
application form furnished by the Committee. An Employee who does not become a
Member on the date on which he first becomes eligible may become a Member on any
subsequent Entry Date by executing and filing with the Committee, prior to or
upon such date, an application form furnished by the Committee.
3.3 Reentry of Prior Members: An Employee who terminates employment
after becoming a Member hereunder shall be eligible to participate immediately
upon his completion of one Hour of Service following his reemployment by the
Company or an Eligible Affiliate. An Employee who terminates employment after
satisfying the requirements of Section 3.1 hereof, but prior to the first Entry
Date following the satisfaction of such requirements, shall be eligible to
participate immediately upon his completion of one Hour of Service following his
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reemployment by the Company or an Eligible Affiliate, or, if later, the first
Entry Date following the satisfaction of such requirements.
ARTICLE IV
Contributions
4.1 Company Contributions: For each Plan Year, the Company shall
contribute to the Trust Fund a contribution for each Member and former Member
who is entitled to have a contribution made on his behalf for such Plan Year, as
set forth in Section 6.1 hereof. The contribution made on behalf of each Member
and former Member so entitled shall be that uniform percentage (but in no event
less than one-tenth of one percent (.1%)) of the Annual Compensation of each
such Member and former Member that is cumulatively equal to 15% of ANP, with
such cumulative amount reduced by the contribution made to the Southwest
Airlines Co. Deferred Compensation Plan for Pilots for such Plan Year pursuant
to section 3.2 thereof.
For purposes of the foregoing, ANP is the operating profit of the
Company for such Plan Year. As used herein, the term 'operating profit' of the
Company for any Plan Year shall mean its income for such Plan Year before income
taxes, derived in accordance with generally accepted accounting principles, and
as set forth in the Company's audited statement of income included in the annual
report to shareholders, before provision for any contribution to this Plan,
excluding (1) nonoperating and non-recurring gains or losses not arising from
the Company's usual business operations, including gains or losses from the sale
or exchange of capital assets, as set forth in the Company's audited statement
of income, and (2) profits or losses incurred by TranStar or any separately
definable division of the Company; provided, however that notwithstanding the
foregoing, profits and losses incurred by Morris Air Corporation shall be taken
into account for Plan Years beginning after December 31, 1993. In no event shall
the
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Company Contribution for a Plan Year exceed the total amount deductible as a
Plan contribution for such Plan Year under the applicable provisions of the
Code.
The contribution shall be made either (1) in cash, (2) in Common Stock
having a fair market value equal to the amount of the contribution, or (3) in
cash and Common Stock having an aggregate fair market value equal to the amount
of the contribution. The fair market value of any Common Stock contributed shall
be based on the mean of the reported high and low sales prices of Common Stock
on the New York Stock Exchange-Composite Tape on the day of the contribution to
the Plan; except however, if the Company acquires Common Stock on the open
market and contributes it to the Plan immediately following the settlement date,
then the fair market value of the contribution shall be equal to the cost paid
by the Company for the Common Stock, including commissions and other expenses
which the Trustee would incur in the acquisition of Common Stock if the Trustee
acquired the Common Stock directly. Any portion of the contribution made in
Common Stock may be made in the form of authorized but unissued shares or shares
previously issued and reacquired by the Company.
Company Contributions shall be added to and become a part of the Trust
Fund, and, as of each Allocation Date, shall be credited to the Individual
Accounts of the Members, as provided in Section 6.1 hereof.
ARTICLE V
Adjustment of Individual Accounts
5.1 Individual Accounts: The Committee shall establish an Individual
Account for each Member showing the monetary value of the individual interest in
the Trust Fund of each Employee, former Employee and Beneficiary. The Individual
Account of each Member shall be composed of an Employer Savings Account, to
which Company Contributions and forfeitures, if
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any, shall be credited. In addition, if a Member was at any time prior to the
Effective Date a member of the Prior Plan who, prior to January 1, 1987, made
voluntary Deductible Contributions or Nondeductible Contributions, his
Individual Account shall include a Deductible Contribution Account and/or
Nondeductible Contribution Account, as applicable. Such accounts are primarily
for accounting purposes and do not require a segregation of the Trust Fund,
except as otherwise provided herein.
5.2 Method of Adjustment: As of each Valuation Date, before any
restoration of accounts as required pursuant to Section 15.3 hereof and before
taking into account the contributions of the Company and forfeitures for the
period since the last preceding Valuation Date, the Committee or the Trustee, as
directed by the Committee, shall value the assets of each investment fund and
adjust the Individual Accounts of all Members who have elected to participate in
such investment fund as follows:
(a) The Committee shall determine the market value of the
investment fund, including the effect of expenses of administration and
other charges against such investment fund since the last Valuation
Date.
(b) The Committee shall determine the total aggregate value of
all Individual Accounts participating in the investment fund as shown
in its records as of the prior Valuation Date. The Individual Account
balances of Employees, former Employees and Beneficiaries shall be
reduced by any amounts paid to them from the investment fund since the
last Valuation Date.
(c) The Committee shall then adjust the value of each
Individual Account participating in the investment fund by crediting
each Individual Account with its proportion of the difference between
(a) and (b) if (a) is the larger or charging it with its proportion of
the difference between (a) and (b) if (b) is larger; the proportion to
be so credited or charged to each Individual Account shall be
calculated by multiplying the difference between (a) and (b) by a
fraction, the numerator of which is the then value of said Individual
Account and the denominator of which is the then aggregate value of all
Individual Accounts participating in such investment fund.
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ARTICLE VI
Allocations
6.1 Company Contribution: As of each Allocation Date, but after any
adjustment of Individual Accounts, as provided in Section 5.2, and other
applicable provisions herein, the Committee shall credit the Company
Contribution, as described in Section 4.1 hereof, for the Plan Year ending with
said Allocation Date to the Individual Accounts of all Members and former
Members, except those Members and former Members who: (a) failed to complete at
least 1,000 Hours of Service during such Plan Year or (b) terminated employment
prior to the Allocation Date and who do not have any nonforfeitable right to a
benefit hereunder.
6.2 Allocation of Forfeitures: If a Member or former Member forfeits a
portion of his Individual Account as provided in Section 10.3 hereof, then said
forfeited amount shall be used first to restore the Individual Accounts of
rehired Members, as required under Section 15.3 hereof. Any remaining
forfeitures shall be allocated as soon as practicable following the Plan Year in
which said forfeiture occurs among the Individual Accounts of the Members and
former Members who are eligible to have a Company contribution credited on their
behalf for such Plan Year, as set forth in Section 6.1 hereof. The amount of the
forfeiture allocated under this Section 6.2 to the Individual Account of such
Member or former Member shall be in the proportion that his Annual Compensation
for the Plan Year in which the allocation occurs bears to the total Annual
Compensation for such Plan Year of all such Members and former Members.
If a Member or former Member who does not have any nonforfeitable right to his
Individual Account terminates his employment and thereby forfeits his Individual
Account, then in the event such Member or former Member is reemployed before he
has incurred five (5) or more
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consecutive Breaks in Service, his Individual Account which was forfeited shall
be restored by the Company at the time of his reemployment.
6.3 Notification to Members: At least annually, the Committee shall
advise each Member, former Member and Beneficiary for whom an Individual Account
is held hereunder of the then balance in such account.
6.4 Maximum Annual Addition to Account or Benefit:
(a) Limitations. If the Employer maintains this Plan and one
or more other qualified defined contribution plans, the Annual
Additions (as defined in subsection (b) below) allocated under this
Plan to any Member's Individual Account shall be limited in accordance
with the allocation provisions of this subsection 6.4(a).
The amount of the Annual Additions which may be allocated
under this Plan to the Individual Account of any Member as of any
Allocation Date, together with Annual Additions allocated on behalf of
any such Member under any other defined contribution plan of the
Employer for the Limitation Year (as defined in subsection (b) below)
in which such Allocation Date occurs, shall not exceed the Maximum
Permissible DC Amount (as defined in subsection (b) below), based upon
Annual Compensation up to such Allocation Date for such Limitation
Year.
If the Annual Additions allocated on behalf of a Member or
former Member under this Plan and any other defined contribution plan
of the Employer are to be reduced as of any Allocation Date as a result
of exceeding the limitations described in the next preceding two
paragraphs, such reduction shall be, to the extent required, effected
by first reducing the Annual Additions to be allocated on behalf of
such Member or former Member under this Plan as of such Allocation
Date.
If as a result of the first three paragraphs of this
subsection 6.4(a) the allocation of Annual Additions under this Plan is
to be reduced, such reduction shall be allocated to a suspense account
as of such Allocation Date and held therein until the next succeeding
Allocation Date on which Company Contributions and forfeitures could be
allocated under the provisions of the Plan, at which time such
reduction shall be allocated and reallocated to the Individual Accounts
of Members hereunder (in accordance with the provisions of Section 6.1
hereof and subject to the limitations of this Section 6.4) before any
Company Contributions may be made to the Plan for the limitation year
ending on such Allocation Date. In the event of termination of the
Plan, the suspense account shall revert to the Company to the extent it
may not be allocated to any Individual Account. If a suspense account
is in existence at any time during a Limitation Year pursuant to this
Section, it will not participate in the allocation of the Trust Fund's
investment gains and losses.
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(b) Definitions Applicable to Section 6.4. For purposes of
Section 6.4, the following definitions shall apply:
(1) Annual Additions: Annual Additions are the sum of
the following amounts allocated on behalf of a Member or
former Member for a Limitation Year:
(i) all Employer contributions;
(ii) all forfeitures;
(iii) all Employee contributions; and
(iv) amounts allocated after March 31, 1984,
to an individual medical benefit account, as defined
in Code Section 415(1)(2) which is part of a pension
or annuity plan maintained by the Employer, and
amounts derived from contributions paid or accrued
after December 31, 1985, in taxable years ending
after such date, which are attributable to
post-retirement medical benefits allocated to the
separate account of a key employee (as defined in
Code Section 419(d)(3)) under a welfare benefit plan
(as defined in Code Section 419(e) maintained by the
Employer.
The Annual Additions for any Limitation Year
beginning before January 1, 1987, shall not be recomputed to
treat all Employee Contributions as Annual Additions.
(2) Employer: Employer shall mean, in addition to the
Company (as defined in Section 2.1(i) hereof, all members of a
controlled group of corporations (as defined in Section 414(b)
of the Code as modified by Section 415(h)), all commonly
controlled trades or businesses (as defined in Section 414(c)
as modified by Section 415(h)) or affiliated service groups
(as defined in Section 414(m)) of which the Company is a part,
and any other entity required to be aggregated with the
Company pursuant to regulations under Section 414(o) of the
Code.
(3) Limitation Year: The Limitation Year shall be the
twelve (12) consecutive month period ending on the last day of
December or any other twelve (12) consecutive month period for
all qualified plans of the Company pursuant to a written
resolution the Company adopts.
(4) Maximum Permissible DC Amount: The Maximum
Permissible DC Amount for a given Limitation Year is equal to
the lesser of (i) 25% of Annual Compensation (excluding
contributions made by the Employer pursuant to a salary
reduction agreement under a plan subject to Code Section
401(k) or Code Section 125) for such Limitation Year or (ii)
$30,000. Effective January 1, 1998, the Maximum Permissible DC
Amount for a given Limitation Year is equal to the lesser of
(i) 25% of Annual Compensation for such Limitation Year or
(ii) $30,000. If a short Limitation Year is created because of
an amendment changing
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the Limitation Year to a different twelve (12) consecutive
month period, the $30,000 referred to in the previous sentence
is multiplied by a fraction, the numerator of which is equal
to the number of months in the short Limitation Year and the
denominator of which is twelve.
ARTICLE VII
Retirement
7.1 Normal or Late Retirement: A Member, upon reaching his Normal
Retirement Date for the purposes of this Plan, shall be one hundred percent
(100%) vested in his Individual Account and such amount contained therein shall
be nonforfeitable. If a Member continues in the employment of the Company beyond
his Normal Retirement Date, he shall continue to participate in the Plan.
7.2 Benefit: Upon Retirement (whether normal or late Retirement in
accordance with Section 7.1), a Member shall be entitled to the entire amount to
the credit of his Individual Account as of the Valuation Date concurrent with or
next following his date of Retirement, including his portion, if any, of Company
Contributions and forfeitures allocated after his date of Retirement, adjusted
for earnings and losses, if any, which accrue to the Valuation Date immediately
preceding the date of distribution, if later. Upon his Retirement under this
Article VII, a Member shall receive the benefits to which he is entitled at the
time and in the manner provided in Article XV hereof.
ARTICLE VIII
Death
8.1 Designation of Beneficiary: Each Member and former Member may, from
time to time, designate one or more Beneficiaries and alternate Beneficiaries to
receive benefits pursuant to this Article in the event of the death of such
Member or former Member. Such designation shall be made in writing upon a form
provided by the Committee and shall only be
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effective when filed with the Committee. The last such designation filed with
the Committee shall control.
If a Member is married, his spouse shall automatically be his
Beneficiary; provided, however, a Beneficiary other than his spouse may be
designated if (1) his spouse consents in writing to such designation, the
consent acknowledges the effect of such designation and the designation is
witnessed by a member of the Committee or a notary public, or (2) it is
established to the satisfaction of the Committee that there is sufficient reason
why the consent may not be obtained.
8.2 Benefit: Subject to the requirements of Section 18.11 hereof, upon
the death of a Member or former Member, his designated Beneficiary shall be
entitled to the entire amount to the credit of his Individual Account as of the
Valuation Date concurrent with or next following his date of death, including
his portion, if any, of Company Contributions and forfeitures allocated after
the date of his death, adjusted for earnings and losses, if any, which accrue to
the Valuation Date immediately preceding the date of distribution, if later.
Payment shall be made at the time and in the manner provided in Article XV
hereof.
8.3 No Beneficiary: If a Member or former Member dies without a
designated Beneficiary surviving him, or if all his Beneficiaries die before
receiving the payment to which they are entitled, then any amounts to which such
Member, former Member or Beneficiary is entitled hereunder shall be paid to his
estate.
For the purpose of this Plan, the production of a certified copy of the
death certificate of any Employee or other person shall be sufficient evidence
of death, and the Committee shall be fully protected in relying thereon. In the
absence of such proof, the Committee may rely upon such other evidence of death
as it deems necessary or advisable.
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ARTICLE IX
Disability
9.1 Benefit: In the event of the Disability of a Member or former
Member, he shall be entitled to the entire amount to the credit of his
Individual Account as of the Valuation Date concurrent with or next following
the date on which his termination of employment occurs as a result of his
Disability, including his portion, if any, of Company Contributions and
forfeitures allocated after the date of his termination of employment, adjusted
for earnings and losses, if any, which accrue to the Valuation Date immediately
preceding the date of distribution, if later. Payments shall be made at the time
and in the manner provided in Article XV hereof.
ARTICLE X
Termination of Employment and Forfeitures
10.1 Eligibility and Benefits: If a Member's employment with the
Company and all Eligible Affiliates shall terminate for any reason other than
his Retirement Under Article VII, death under Article VIII, or Disability under
Article IX, such Member shall be entitled to all of his Nondeductible
Contribution Account and Deductible Contribution Account and to a percentage of
the amount in his Employer Savings Account as of the Valuation Date concurrent
with or next following the date on which his termination of employment occurs,
including his portion, if any, of Company Contributions and forfeitures
allocated after the date of his termination of employment, adjusted for earnings
and losses, if any, which accrue to the Valuation Date immediately preceding the
date of distribution, if later. The percentage of a Member's Employer Savings
Account to which he is entitled shall be determined in accordance with the
following schedule:
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Percentage
Completed Years of Vesting Service Payable
---------------------------------- ----------
Less than 5 years 0%
5 years or more 100%
The vesting schedule set forth above shall only apply to Members who
have at least one (1) Hour of Service after December 31, 1988.
The provisions of this Section shall be subject to the provisions of
Section 17.3 hereof, which shall be given full effect.
10.2 Time of Payment: The amount to which a Member shall be entitled
under Section 10.1 shall be paid to him at the time and in the manner provided
in Article XV hereof.
10.3 Forfeitures: A Member to whom Section 10.1 is applicable shall
forfeit that portion of the amount in his Individual Account to which he is not
entitled under Section 10.1 and the amount thus forfeited shall remain in the
Trust Fund and shall be allocated pursuant to the provisions of Section 6.2. A
Member who does not have any nonforfeitable right to his Individual Account
shall be deemed to have received a cashout distribution pursuant to Section 15.3
hereof, and shall forfeit the amount in such Individual Account in the Plan Year
in which his termination of employment occurs.
10.4 Forfeiture for Cause: In the event a Member who has not completed
at least five (5) years of Vesting Service is discharged due to his dishonest or
criminal act (proven by conclusive evidence to the unanimous satisfaction of the
Committee) or due to embezzlement, fraud, or dishonesty against and damaging to
the Company whereby the reasons for such discharge are confirmed by resolution
of the board of directors or other governing authority of the Company, the
entire amount credited to the benefit of such Member in his Company Matching
Contribution Account shall be forfeited and neither he nor his Beneficiary shall
be
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entitled to any benefit hereunder with respect to such amounts. Likewise, any
amounts credited, but not distributed, to the Employer Savings Account of a
former Member who has not completed at least five (5) years of Vesting Service
shall be forfeited upon the discovery of any embezzlement, fraud or dishonesty
of such former Member against and damaging to the Company. Notwithstanding the
foregoing, in the event the Plan is top-heavy for any Plan Year pursuant to
Section 19.2 hereof, the provisions of Section 19.4 shall supersede this Section
10.4 and shall be controlling for all purposes hereunder.
ARTICLE XI
Withdrawals
11.1 Withdrawals:
(a) Nondeductible and Deductible Contribution Accounts.
Effective as of any Valuation Date, a Member may, upon prior written
notice to the Committee within the time period established by the
Committee for such elections, elect to withdraw from his Nondeductible
and Deductible Contribution Accounts any or all of the balance thereof,
as of such Valuation Date. If a Member timely elects such a withdrawal,
distribution shall be made as soon as practicable following such
Valuation Date.
(b) Employer Savings Account. Subject to the requirements of
Section 18.11 hereof, on or after the date on which he attains Normal
Retirement Age, a Member who remains employed by the Company or any
Eligible Affiliate shall have the right at any one time prior to the
close of any Plan Year to elect in writing, within the time period
established by the Committee for such elections, to withdraw all, but
not less than all, of his vested interest (determined pursuant to
Section 10.1 hereof, without regard to Articles VII, VIII or IX hereof,
as if he had terminated his employment as of the end of such Plan Year
for a reason other than Disability, Retirement or death) in his
Employer Savings Account as of the end of such Plan Year. A Member who
makes an election under this subsection (b) shall be entitled to have
credited to his Employer Savings Account his allocable share of the
Company Contributions and forfeitures for the Plan Year in which the
election is made. An electing Member's vested interest shall be
distributed to him in one lump sum within ninety (90) days after the
close of the Plan Year in which such election is made, or, if later,
the date as of which the value of the Member's Employer Savings Account
is finally determined. Partial payment may be made, however, prior to
that date in the sole and absolute discretion of the Committee;
provided, however, in no event shall any partial payment be made if
full payment would be made to the Member in more than one taxable year.
A Member who makes an election under this subsection (b) shall be
prohibited from participating further in the Plan (and no Company
Contributions or forfeitures shall be allocated to his Employer Savings
Account) until the first day of
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the first Plan Year beginning one year after the end of the Plan Year
in which the Member's election under this subsection (b) was made.
ARTICLE XII
Investment of the Trust Fund
12.1 [deleted]:
12.2 Member Direction of Investment: Each Member shall have the right
to direct the Committee to instruct the Trustee to invest any whole percentage,
up to one hundred percent (100%), of such Member's current Company Contributions
and forfeitures in one or more of such investment media as the Committee may
designate from time to time. The Committee shall be authorized at any time and
from time to time to modify, alter, delete or add to the funds available for
investment at the direction of a Member. In the event a modification occurs, the
Committee shall notify those Members whom the Committee, in its sole and
absolute discretion, determines are affected by the change, and shall give such
persons such additional time as is determined by the Committee to designate the
manner and percentage in which amounts invested in those funds thereby affected
shall be invested.
The Committee shall not be obligated to substitute funds of similar
investment criteria for existing funds, nor shall it be obligated to continue
the types of investments presently available to the Members. Nothing contained
herein shall constitute any action by the Committee as a direction of investment
of the assets or an attempt to control such direction.
Any Member, on or before his entry into the Plan, within the time
period established by the Committee, may designate the manner and the percentage
in which the Member desires the Trustee to invest his current Company
Contributions and forfeitures, pursuant to the provisions set forth above, which
designation shall continue in effect until revoked or modified by the Member. If
a Member fails to designate the investment of his current Company Contributions
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and forfeitures on or before his entry into the Plan, or if a Member wishes to
change such designation, the Member may make such designation or change, within
the time period established by the Committee, to become effective for all such
future contributions and forfeitures, and such designation or change shall
continue in effect until revoked by the Member in accordance with this Plan.
In the event the nature of any fund shall, in the opinion of the
Committee, change, then the Committee shall notify those Members who the
Committee, in its sole and absolute discretion, determines are affected by the
change, who shall have a reasonable period of time, s determined by the
Committee, to designate the manner and the percentages in which amounts invested
in those funds affected by the change shall be invested.
Any amounts not directed by a Member for investment shall be invested
in the fund or funds designated by the Committee, in its sole and absolute
discretion. The provisions of this Section 12.2 shall be subject to such
administrative rules as may be established by the Committee. All investment
designations shall be made in the manner prescribed by the Committee.
The Committee shall maintain separate subaccounts in the name of each
Member within his Individual Account to reflect such Member's accrued benefit
attributable to his directed investment in the above investment media.
12.3 Conversion of Investments:
(a) Member's Individual Account. Effective as of any Valuation
Date, within the time period prior thereto established by the
Committee, and subject to any restrictions on transfer imposed under
particular investment funds, a Member may, pursuant to guidelines
established by the Committee, direct the Committee to instruct the
Trustee to convert any whole percentage, up to one hundred percent
(100%), of the amount in such Member's Individual Account which is
invested in any of the investment media set forth in Section 12.2
hereof into one or more other of such investment media. Such direction
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shall be effective as soon as practicable following the date of receipt
by the Committee of such direction to convert.
(b) Conversion Directions. A direction to convert by any
eligible Member shall be irrevocable and shall be made in the manner
prescribed by the Committee within the time period established by the
Committee. Any conversion of investments pursuant to this Section 12.3
shall not affect a Member's direction of investments with respect to
his future contributions and forfeitures pursuant to Section 12.2.
(c) Direction of Spouse. If a Member's spouse who is not a
Member in this Plan acquires an interest in a Member's Individual
Account pursuant to a qualified domestic relations order, then the
Member's spouse may direct the Committee to convert the investment of
the interest to which such spouse is thus entitled in the same manner
and at the same time as the Member may direct a conversion of
investments, as provided above. If such spouse becomes a Member of the
Plan, the spouse shall be entitled to convert such investments in
accordance with the rights of Members in the Plan.
If such spouse becomes a Member of the Plan, the spouse shall
be entitled to convert such investments in accordance with the rights
of Members in the Plan.
(d) Miscellaneous. The Committee is authorized to establish
such other rules and regulations, including adding additional times to
convert investments, as it determines are necessary to carry out the
provisions of Sections 12.2 and 12.3, the specific dates of conversion
to be determined by the Committee, and all earnings on the Member's
investments after such dates shall be allocated in accordance with the
Member's Employer Savings Account, as adjusted on such dates. The
Committee shall be authorized to modify the allocations of earnings,
provided such change is made on a reasonable and nondiscriminatory
basis.
ARTICLE XIII
Administration
13.1 Appointment of Committee: The Plan shall be administered
by a Committee consisting of at least three or more persons who shall
be appointed by and serve at the pleasure of the board of directors of
the Company. All usual and reasonable expenses of the Committee shall
be paid by the Trustee out of the principal or income of the Trust and,
to the extent not so paid, shall be paid by the Company. The members of
the Committee shall not receive compensation with respect to their
services for the Committee. The members of the Committee may serve
without bond or security for the performance of their duties hereunder
unless
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applicable law makes the furnishing of such bond or security mandatory
or unless required by the Company. Any member of the Committee may
resign by delivering his written resignation to the Company and to the
other members of the Committee.
13.2 Committee Powers and Duties: The Committee shall have
such powers as may be necessary to discharge its duties hereunder,
including, but not by way of limitation, the following powers and
duties:
(a) to construe and interpret the Plan, decide all questions
of eligibility and determine the amount, manner and time of payment of
any benefits hereunder;
(b) to prescribe procedures to be followed by distributees in
obtaining benefits;
(c) to make a determination as to the right of any person to a
benefit and to afford any person dissatisfied with such determination
the right to a hearing thereon;
(d) to receive from the Company, Eligible Affiliates, and from
Members such information as shall be necessary for the proper
administration of the Plan;
(e) to delegate to one or more of the members of the Committee
the right to act in its behalf in all matters connected with the
administration of the Plan and Trust;
(f) to receive and review reports of the financial condition
and of the receipts and disbursements of the Trust Fund from the
Trustee;
(g) to appoint or employ for the Plan any agents it deems
advisable, including, but not limited to, legal counsel; and
(h) to take any and all further actions from time to time as
the Committee, in its sole and absolute discretion, shall deem
necessary for the proper administration of the Plan.
The Committee shall have no power to add to, subtract from or modify
any of the terms of the Plan, nor to change or add to any benefits provided by
the Plan, nor to waive or fail to apply any requirements of eligibility for
benefits under the Plan. The Committee shall have full and absolute discretion
in the exercise of each and every aspect of its authority under this Plan,
including without limitation, all of the rights, powers and authorities
specified in this Section 13.2 and, if applicable, in Section 13.3 hereof.
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A majority of the members of the Committee shall constitute a quorum
for the transaction of business. No action of the Committee shall be taken
except upon a majority vote of the Committee members, other than as described in
subparagraph (e) above. An individual shall not vote or decide upon any matter
relating solely to himself or vote in any case in which his individual right or
claim to any benefit under the Plan is particularly involved. If, in any case in
which a Committee member is so disqualified to act, and the remaining members
cannot agree, the board of directors of the Company will appoint a temporary
substitute member to exercise all the powers of the disqualified member
concerning the matter in which he is disqualified.
13.3 Duties and Powers of the Plan Administrator: The Plan
Administrator shall have such powers as may be necessary to discharge his duties
hereunder, including, but not by way of limitation, the following powers and
duties:
(a) to file with the Secretary of Labor the annual report,
plan description, summary plan description, and other pertinent
documents which may be requested by the Secretary;
(b) to file with the Secretary of Labor such terminal and
supplementary reports as may be necessary in the event of the
termination of the Plan;
(c) to furnish each Member, former Member and each Beneficiary
receiving benefits hereunder a summary plan description explaining the
Plan;
(d) to furnish any Member, former Member or Beneficiary, who
requests in writing, statements indicating such Member's, former
Member's or Beneficiary's total accrued benefits and nonforfeitable
benefits, if any;
(e) to furnish to a Member a statement containing information
contained in a registration statement required by Section 6057(a)(2) of
the Code;
(f) to maintain all records necessary for verification of
information required to be filed with the Secretary of Labor;
(g) to allocate the assets of the Plan available to provide
benefits to Members in the event the Plan should terminate; and
(h) to report to the Trustee all available information
regarding the amount of benefits payable to each Member, the
computations with respect to the allocation of
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assets, and any other information which the Trustee may require in
order to terminate the Plan.
13.4 Rules and Decisions: The Committee may adopt such rules as it
deems necessary or desirable. All rules and decisions of the Committee shall be
uniformly and consistently applied to all Employees in similar circumstances.
The Committee is required to provide a notice in writing to any person whose
claim for benefits under the Plan has been denied, setting forth the specific
reasons for such denial. The Committee shall adopt rules or procedures to carry
out the intent of this Section and to provide a basis for a full and fair review
by the Committee of the decision denying the claim and provide such person with
an opportunity to supply any evidence he has to sustain the claim.
13.5 Committee Procedures: The Committee may adopt such bylaws as it
deems desirable. The Committee shall elect one of its members as chairman. The
Committee shall advise the Trustee of such election in writing. The Committee
shall keep a record of all meetings and forward all necessary communications to
the Trustee.
13.6 Authorization of Benefit Payments: The Committee shall issue
directions to the Trustee concerning all benefits which are to be paid from the
Trust Fund pursuant to the provisions of the Plan. The Committee shall keep on
file, in such manner as it may deem convenient or proper, all reports from the
Trustee.
13.7 Payment of Expenses: All expenses incident to the administration,
termination or protection of the Plan and Trust, including but not limited to,
actuarial, legal, accounting, and Trustee's fees, shall be paid by the Trustee
from the Trust Fund and, until paid, shall constitute a first and prior claim
and lien against the Trust Fund. To the extent such expenses are not paid by the
Trustee from the Trust Fund, they shall be paid by the Company.
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13.8 Indemnification of Members of the Committee: The Company shall, to
the maximum extent permitted under the Company's bylaws, indemnify the members
of the Committee against liability or loss sustained by them by an act or
failure to act in their capacity as members of the Committee.
ARTICLE XIV
Notices
14.1 Notice to Trustee: As soon as practicable after a Member ceases to
be in the employ of the Company for any of the reasons set forth in Articles VII
through X, inclusive, the Committee shall give written notice to the Trustee,
which notice shall include such of the following information and directions as
are necessary or advisable under the circumstances:
(a) name and address of the Member;
(b) name and address of the Beneficiary or Beneficiaries in
case of a Member's death;
(c) amount to which Member is entitled in case of termination
of employment pursuant to Article X; and
(d) manner and amount of payments to be made pursuant to
Article XV.
If a former Member dies, the Committee shall give a like notice to the
Trustee, but only if the Committee learns of his death.
14.2 Subsequent Notices: At any time and from time to time after giving
the notice as provided for in Section 14.1, the Committee may modify such
original notice or any subsequent notice by means of a further written notice or
notices to the Trustee; but, any action theretofore taken or payments
theretofore made by the Trustee pursuant to a prior notice shall not be affected
by a subsequent notice.
14.3 Reliance upon Notice: Upon receipt of any notice as provided in
this Article, the Trustee shall promptly take whatever action and make whatever
payments are called for therein,
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it being intended that the Trustee may rely upon the information and directions
in such notice absolutely and without question. However, the Trustee may call to
the attention of the Committee any error or oversight which the Trustee believes
to exist in any notice.
ARTICLE XV
Benefit Payments
15.1 Method of Payment: As soon as practicable after a Member, former
Member or Beneficiary is entitled to receive benefits hereunder, as provided in
Articles VII, VIII, IX or X and this Article XV, the Committee shall give
written notice to the Trustee. Such benefits shall be paid to the Member, former
Member or his Beneficiary in a lump sum. Any benefit payable hereunder will be
paid in cash or in whole shares of Common Stock, as elected by the Member,
former Member or Beneficiary; provided, however, that such benefit shall in any
event be paid in whole shares of Common Stock to the extent that such Member's,
former Member's or Beneficiary's Individual Account is invested in Common Stock,
pursuant to Article XII hereof. Any fractional shares of Common Stock shall be
converted to, and paid, in cash.
15.2 Time of Payment: Distribution of a Member's benefits shall
commence as soon as administratively practicable, but in no event later than one
(1) year, after the Valuation Date coincident with or immediately following the
date on which a Member, former Member or Beneficiary shall become entitled to
receive a benefit hereunder. Notwithstanding the foregoing, if the
nonforfeitable portion of a Member's or former Member's Individual Account
exceeds (or at the time of any prior distribution exceeded) Three Thousand Five
Hundred and No/100 Dollars ($3,500.00) in Plan Years beginning prior to January
1, 1998, or Five Thousand and No/100 Dollars ($5,000.00) for Plan Years
beginning on or after January 1, 1998, no distributions may commence without the
consent of the Member or former Member until he
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attains age sixty-two (62). The Committee shall notify the Member or former
Member of the right to defer any distribution until the date on which he attains
age sixty-two (62). Such notification shall be provided no less than thirty (30)
days and no more than ninety (90) days prior to the annuity starting date. The
annuity starting date is the first day of the first period for which a benefit
is paid hereunder. Notwithstanding the foregoing, the consent of the Member or
former Member shall not be required to the extent that a distribution is
required to satisfy Section 415 of the Code. In addition, upon termination of
this Plan, if the Plan does not then offer an annuity option, the Member's or
former Member's Individual Account may, without his consent, be distributed to
the Member or former Member or transferred to another defined contribution plan
maintained by an Affiliate.
Distributions shall be made no later than the required beginning date,
which, effective January 1, 1997, is April 1st of the calendar year following
the later of: (a) the calendar year in which a Member attains age 70 1/2, or (b)
the calendar year in which a Member retires; provided that if a Member is a Five
Percent (5%) Owner (as such term is defined in Section 19.1 hereof), then the
required beginning date is April 1st of the calendar year following the calendar
year in which such Member attains age 70 1/2. Subject to the provisions of
Section 18.11 hereof, distribution of the entire Individual Account of a Member
who attains age 70 1/2 on or after September 15, 2000 shall be made in a single
lump sum on or before such Member's required beginning date.
In the case of a Member who is a Five Percent (5%) Owner, subject to
the requirements of Section 18.11 hereof, the minimum installment distribution
required for the calendar year immediately preceding such Member's required
beginning date must be made on or before his required beginning date, and the
minimum installment distribution for other calendar years,
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including the minimum installment distribution for the calendar year in which
the Member's required beginning date occurs, must be made on or before December
31 of such calendar year. All minimum distributions required under this Article
XV shall be determined and made in accordance with the applicable Treasury
Regulations under Section 401(a)(9) of the Code, including the minimum
distribution incidental benefit requirement of Section 1.401(a)(9)2 of the
Treasury Regulations. Neither the life expectancy of the Member nor that of his
spouse may be recalculated for purposes of determining minimum distributions. If
minimum distributions have commenced to a Five Percent (5%) Owner, such that
payments are being made over the life expectancy of the Member, and he dies
before his entire interest has been distributed, then the remaining portion of
such interest shall be distributed at least as rapidly as under the method of
distribution being used as of the date of his death, but in no event later than
one (1) year after the Valuation Date coincident with or immediately following
his death. On the other hand, if such Member dies before the distribution of any
of his benefits has begun, then his entire interest will be distributed no later
than one (1) year after the Valuation Date coincident with or immediately
following his death. If the designated Beneficiary is such Member's surviving
spouse and such surviving spouse dies after the Member, but before payments to
such surviving spouse begin, then the provisions of the preceding sentence shall
be applied as if the surviving spouse were the Member. Furthermore, if the
designated Beneficiary is the surviving spouse of the Member, then distributions
to such surviving spouse will not be required to begin earlier than the later
of: (a) December 31 of the calendar year immediately following the calendar year
of the Member's death and (b) December 31 of the calendar year in which the
Member would have attained age 70 1/2. Distribution of benefits is considered to
have begun, for purposes of this paragraph, on the required beginning date;
provided that if such Member's designated Beneficiary is his surviving
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spouse, and such surviving spouse dies after the Member but before payments to
such surviving spouse have begun, then distribution of benefits is considered to
have begun on the date distribution to the surviving spouse is required to begin
pursuant to the provisions of this paragraph. Any amount paid to the child of
such Member will be treated as if it had been paid to the surviving spouse if
the amount becomes payable when the child reaches the age of majority.
In the case of a Member who attains age 70 1/2 prior to September 15,
2000, subject to the requirements of Section 18.11 hereof, such Member shall
continue to be eligible to receive any benefits commencing after such Member has
attained age 70 1/2 and prior to April 1 of the calendar year following the
calendar year in which such Member attains age 70 1/2 in the form of minimum
installment distributions under the rules of the preceding paragraph.
Notwithstanding any provision herein to the contrary, any Member who
attains age 70 1/2 in a calendar year after 1995 and prior to September 15,
2000, may irrevocably elect, in the manner established by the Committee, by
April 1 of the calendar year following the year in which the Member attains age
70 1/2 (or by December 31, 1997 in the case of a Member who attains age 70 1/2
in 1996) to defer distributions until April 1 of the calendar year following the
calendar year in which the Member retires. If no such election is made, the
Member will begin receiving distributions by April 1 of the calendar year
following the year in which the Member attains age 70 1/2 (or by December 31,
1997 in the case of a Member who attains age 70 1/2 in 1996). Furthermore, any
Member who attains age 70 1/2 in a calendar year prior to 1996 may irrevocably
elect, in the manner established by the Committee, to stop distributions and
recommence distributions as of April 1 of the calendar year following the
calendar year in which such Member retires. In such event, there shall be no new
annuity starting date upon such recommencement.
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Unless a Member or former Member elects otherwise, in writing, no
distribution hereunder shall start later than 60 days after the close of the
Plan Year in which the last to occur of the following occurs:
(a) the Member or former Member attains Normal Retirement Age,
(b) the 10th anniversary of the year in which the Member or
former Member commenced participation in the Plan, or
(c) the Member or former Member terminates service with the
Company.
15.3 Cash Out Distribution: If a Member or former Member who has
received a distribution of his benefits hereunder on or before the last day of
the second Plan Year following the year in which his termination of employment
occurs has forfeited a portion of his Individual Account, then in the event such
Member or former Member is subsequently rehired by the Company or an Eligible
Affiliate prior to the date on which he incurs five (5) consecutive Breaks in
Service, he shall be entitled to repay, at any time prior to the earlier of: (i)
the date which is five (5) years after the first date on which he is
subsequently reemployed by the Company or Eligible Affiliate and (ii) the date
on which he incurs five (5) consecutive Breaks in Service, the amount of the
distribution to him from his Individual Account. Upon such repayment, the
rehired Member's or former Member's Individual Account shall be credited with
the exact amount which was nonvested at the time of termination. In the event a
rehired Member or former Member who has received a distribution hereunder does
not timely repay such distribution from his Individual Account, as provided
above, then the amount he forfeited at the time of his termination of employment
pursuant to the terms of Section 10.3 hereof shall remain forfeited. His prior
years of Vesting Service shall be taken into account, however, for purposes of
determining his vested interest in contributions following reemployment. If a
Member or former Member who does not have any nonforfeitable right to his
Individual Account and thus is
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deemed to have received a cashout distribution, pursuant to the provisions of
Section 10.3 hereof, is subsequently reemployed by the Company or an Eligible
Affiliate and five (5) consecutive Breaks in Service have not occurred, then
upon such reemployment, the rehired Member's or former Member's Individual
Account shall be credited with the exact amount which was nonvested at the time
of termination.
15.4 Minority or Disability Payments: During the minority or Disability
of any person entitled to receive benefits hereunder, the Committee may direct
the Trustee to make payments due such person directly to him or to his spouse or
a relative or to any individual or institution having custody of such person.
Neither the Committee nor the Trustee shall be required to see to the
application of payments so made, and the receipt of the payee (including the
endorsement of a check or checks) shall be conclusive as to all interested
parties.
15.5 Distributions Under Domestic Relations Orders: Nothing contained
in this Plan shall prevent the Trustee, in accordance with the direction of the
Committee, from complying with the provisions of a qualified domestic relations
order (as defined in Section 414(p) of the Code). Effective July 20, 2000, the
Plan specifically permits distribution to an alternate payee under a qualified
domestic relations order at any time, irrespective of whether the Member or
former Member has attained his earliest retirement age under the Plan, as
defined in Section 414(p) of the Code; provided, however, that a distribution to
an alternate payee prior to the Member or former Member's attainment of earliest
retirement age is available only if: (1) the order specifies distribution at
that time or permits an agreement between the Plan and the alternate payee to
authorize an earlier distribution; (2) the order specifies such distribution to
be in the form of a single, lump-sum payment; and (3) if the amount to which the
alternate payee is entitled under the Plan exceeds $5,000, and the order so
requires, the alternate payee consents to
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any distribution occurring prior to the Member or former Member's attainment of
earliest retirement age. Nothing in this Section 15.5 gives a Member or former
Member a right to receive distribution at a time otherwise not permitted under
the Plan nor does it permit the alternate payee to receive a form of payment not
otherwise permitted under the Plan.
The Plan Administrator shall establish reasonable procedures to
determine the qualified status of a domestic relations order. Upon receiving a
domestic relations order, the Plan Administrator shall promptly notify the
Member or former Member and any alternate payee named in the order, in writing,
of the receipt of the order and the Plan's procedures for determining the
qualified status of the order. Within a reasonable period of time after
receiving the domestic relations order, the Plan Administrator shall determine
the qualified status of the order and shall notify the Member or former Member
and each alternate payee, in writing, of its determination. The Plan
Administrator shall provide notice under this paragraph by mailing to the
individual's address specified in the domestic relations order, or in a manner
consistent with Department of Labor regulations. The Plan Administrator may
treat as qualified any domestic relations order entered prior to January 1,
1985, irrespective of whether it satisfies all the requirements described in
Section 414(p) of the Code.
If any portion of an Individual Account is payable during the period
the Plan Administrator is making its determination of the qualified status of
the domestic relations order, the Committee shall direct the Trustee to
segregate the amounts that are payable into a separate account and to invest the
segregated account solely in fixed income investments. If the Plan Administrator
determines the order is a qualified domestic relations order within eighteen
(18) months of receiving the order, the Committee shall direct the Trustee to
distribute the segregated account in accordance with the order. If the Plan
Administrator does not make its determination
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of the qualified status of the order within eighteen (18) months after receiving
the order, the Committee shall direct the Trustee to distribute the segregated
account in the manner in which the Plan would otherwise distribute if the order
did not exist and shall apply the order prospectively if the Plan Administrator
later determines the order is a qualified domestic relations order.
To the extent it is not inconsistent with the provisions of the
qualified domestic relations order, the Committee may direct the Trustee to
invest any amount that is subject to being paid to an alternate payee pursuant
to said order into a segregated subaccount or separate account and to invest the
account in federally insured, interest-bearing savings account(s) or time
deposit(s) (or a combination of both), or in other fixed income investments. A
segregated subaccount shall remain a part of the Trust, but it alone shall share
in any income it earns, and it alone shall bear any expense or loss it incurs.
The Trustee shall make any payments or distributions required under
this Section 15.5 by separate benefit checks or other separate distribution to
the alternate payee(s).
15.6 Direct Rollover of Eligible Rollover Distributions: An individual
who is entitled to a benefit hereunder, the distribution of which would qualify
as an eligible rollover distribution (as defined in Section 401(a)(31)(C) of the
Code) may, in lieu of receiving any payment or payments from the Plan, direct
the Trustee to transfer all or any of such payment or payments or any portion
directly to the trustee of one or more eligible retirement plans (as defined in
Section 401(a)(31)(D) of the Code). Such election must be made on a form
provided by the Committee for that purpose and received by the Committee no
later than the date established by the Committee preceding the date on which the
distribution is to occur. Any election made pursuant to this Section 15.6 may be
revoked at any time prior to the date established by the Committee
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preceding the date on which the distribution is to occur. If an individual who
is so entitled has not elected a direct rollover within the time and in the
manner set forth above, such distributee shall be deemed to have affirmatively
waived a direct rollover. A distributee who wishes to elect a direct rollover
shall provide to the Committee, within the time and in the manner prescribed by
the Committee, such information as the Committee shall reasonably request
regarding the eligible retirement plan or plans to which the payment or payments
are to be transferred. The Committee shall be entitled to rely on the
information so provided, and shall not be required to independently verify such
information. The Committee shall be entitled to delay the transfer of any
payment or payments pursuant to this Section 15.6 until it has received all of
the information which it has requested in accordance with this Section 15.6.
ARTICLE XVI
Trustee
16.1 Appointment of Trustee: A Trustee (or Trustees) shall be appointed
by the Committee to administer the Trust Fund. The Trustee shall serve at the
pleasure of the Committee and shall have such rights, powers and duties as are
provided to a Trustee under ERISA for the investment of assets and for the
administration of the Trust Fund.
16.2 Appointment of Investment Manager: An Investment Manager (or
Investment Managers) may be appointed by the Committee to manage (including the
power to acquire and dispose of) any part or all of the assets of the Trust
Fund. The Investment Manager shall serve at the pleasure of the Committee, and
shall have the rights, powers and duties provided to a named fiduciary under
ERISA for the investment of the assets assigned to it. (The Investment Manager
may be referred to from time to time hereafter as "he," "they," or "it," or may
be referred to in
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the singular or plural, but all such references shall be to the then acting
Investment Manager or Investment Managers serving hereunder.)
16.3 Responsibility of Trustee and Investment Manager: All
contributions under this Plan shall be paid to and held by the Trustee. The
Trustee shall have responsibility for the investment and reinvestment of the
Trust Fund except with respect to the management of those assets specifically
delegated to the Investment Manager and those funds invested pursuant to the
provisions of Section 15.5. The Investment Manager shall have exclusive
management and control of the investment and/or reinvestment of the assets of
the Trust Fund assigned to it in writing by the Trustee. All property and funds
of the Trust Fund, including income from investments and from all other sources,
shall be retained for the exclusive benefit of Members or former Members, as
provided herein, and shall be used to pay benefits to Members or former Members
or their Beneficiaries, or to pay expenses of administration of the Plan and
Trust Fund to the extent not paid by the Company.
This Plan and the related Trust are intended to allocate to each
fiduciary the individual responsibilities of the prudent execution of the
functions assigned to each. None of the allocated responsibilities or any other
responsibility shall be shared by the fiduciaries or the Trustee unless such
sharing shall be provided for by a specific provision in this Plan or related
Trust.
16.4 Bonding of Trustee and Investment Manager: Neither the Trustee nor
the Investment Manager shall be required to furnish any bond or security for the
performance of their powers and duties hereunder unless the applicable law makes
the furnishing of such bond or security mandatory.
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ARTICLE XVII
Amendment and Termination of Plan
17.1 Amendment of Plan: The Company may, without the assent of any
other party, make from time to time any amendment or amendments to this Plan
which do not cause any part of the Trust Fund to be used for, or diverted to,
any purpose other than the exclusive benefit of Members or former Members of the
Plan. Any such amendment shall be by a written instrument executed by the
Company, and shall become effective as of the date specified in such instrument.
Notwithstanding the foregoing, no amendment to the Plan shall be effective to
the extent that it has the effect of decreasing a Member's or former Member's
accrued benefit, except as provided in Section 412(c)(8) of the Code. For
purposes of the preceding sentence, an amendment which has the effect of
decreasing a Member's or former Member's Individual Account or eliminating an
optional form of benefit, with respect to benefits attributable to service prior
to such amendment shall be treated as reducing an accrued benefit. If any
amendment changes the vesting schedules set forth in Sections 10.1 or 19.4, then
a Member's or former Member's nonforfeitable percentage in his Individual
Account because of a change to the vesting schedule shall not be less than his
nonforfeitable percentage computed under the vesting schedule in effect prior to
the amendment. Furthermore, if any amendment changes the vesting schedules set
forth in Sections 10.1 or 19.4, then each Member or former Member having at
least three (3) Years of Vesting Service may elect to be governed under the
vesting schedules set forth in the Plan without regard to the amendment. The
Member or former Member must file his written election with the Committee within
sixty (60) days after receipt of a copy of the amendment. The Committee shall
furnish the Member or former Member with a copy of the amendment and with notice
of the time within which his election must be returned to the Committee.
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17.2 Termination of Plan: The Company may at any time, effective as
specified, terminate the Plan by resolution of its board of directors. A
certified copy of such resolution shall be delivered to the Trustee.
17.3 Complete Discontinuance of Contributions: In the event the Company
decides it is impossible or inadvisable for it to continue to make its
contributions as provided in Article IV, it shall have the power by appropriate
resolution to either:
(a) discontinue its contributions to the Plan; or
(b) terminate the Plan.
A complete discontinuance of contributions by the Company shall not constitute a
formal termination of the Plan and shall not preclude later contributions, but
all Individual Accounts of Members or former Members not theretofore fully
vested shall be and become 100% vested and nonforfeitable in the respective
Members or former Members, irrespective of the provisions of Sections 10.1 or
19.4. In such event, Employees who become eligible to enter the Plan subsequent
to the discontinuance shall receive no benefit, and no additional benefits shall
accrue to any of such Employees unless such contributions are resumed. After the
date of a complete discontinuance of contributions, the Trust shall remain in
existence as provided in this Section 17.3, and the provisions of the Plan and
Trust shall remain in force as may be necessary in the sole and absolute
discretion of the Committee.
17.4 Liquidation of Trust Fund: Upon termination or partial termination
of the Plan, the Individual Accounts of all Members, former Members and
Beneficiaries shall thereupon be and become fully vested and nonforfeitable.
Thereupon, the Trustee shall convert the Trust Fund to cash after deducting all
charges and expenses. The Committee shall then adjust the balances of all
Individual Accounts, as provided in Section 5.2. Thereafter, the Trustee shall
distribute the
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amount to the credit of each affected Member, former Member and Beneficiary, in
accordance with the provisions of Article XV hereof.
17.5 Consolidation or Merger: This Plan shall not be merged or
consolidated with, nor shall any assets or liabilities be transferred to, any
other plan, unless the benefits payable on behalf of each Member or former
Member if the Plan were terminated immediately after such action would be equal
to or greater than the benefits to which such Member or former Member would have
been entitled if this Plan had been terminated immediately before such action.
The Trustee shall not accept a direct transfer of assets from a plan subject to
the requirements of Section 417 of the Code.
ARTICLE XVIII
General Provisions
18.1 No Employment Contract: Nothing contained in this Plan shall be
construed as giving any person whomsoever any legal or equitable right against
the Committee, the Company, its stockholders, officers or directors or against
the Trustee, except as the same shall be specifically provided for in this Plan.
Nor shall anything in this Plan give any Member, former Member or other Employee
the right to be retained in the service of the Company or an Eligible Affiliate
and the employment of all persons by the Company or an Eligible Affiliate shall
remain subject to termination by the Company or such Eligible Affiliate to the
same extent as if this Plan had never been executed.
18.2 Manner of Payment: Wherever and whenever it is herein provided for
payments or distributions to be made, whether in money or otherwise, said
payments or distributions shall be made directly into the hands of the Member or
former Member, his Beneficiary, his administrator, executor or guardian, or an
alternate payee pursuant to Section 15.5 herein, as the
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case may be. A deposit to the credit of a person entitled to payment in any bank
or trust company selected by such person shall be deemed payment into his hands,
and provided further that in the event any person otherwise entitled to receive
any payment or distribution shall be a minor or an incompetent, such payment or
distribution may be made to his guardian or other person as may be determined by
the Committee.
18.3 Nonalienation of Benefits: Subject to Code Section 414(p) and
Section 15.5 herein relating to qualified domestic relations orders, the
interest of any Member, former Member or Beneficiary hereunder shall not be
subject in any manner to any indebtedness, judgment, process, creditors' bills,
attachments, garnishment, levy, execution, seizure or receivership, nor shall
such interest be in any manner reduced or affected by any transfer, assignment,
conveyance, sale, encumbrance, act, omission, or mishap, voluntary or
incidental, anticipatory or otherwise, of or to said Member, former Member or
Beneficiary, and they and any of them shall have no right or power to transfer,
convey, assign, sell or encumber said benefits and their interest therein, legal
or equitable, during the existence of this Plan. Notwithstanding the foregoing,
no provision of this Plan shall preclude the enforcement of a Federal tax levy
made pursuant to Section 6331 of the Code or collection by the United States on
a judgment resulting from an unpaid tax assessment.
18.4 Titles for Convenience Only: Titles of the Articles and Sections
hereof are for convenience only and shall not be considered in construing this
Plan. Also words used in the singular or the plural may be construed as though
in the plural or singular where they would so apply.
18.5 Validity of Plan: This Plan and each of its provisions shall be
construed and their validity determined by the laws of the State of Texas, and
all provisions hereof shall be
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administered in accordance with the laws of said State, provided that in case of
conflict, the provisions of ERISA shall control.
18.6 Plan Binding: This Plan shall be binding upon the successors and
assigns of the Company and the Trustee and upon the heirs and personal
representatives of those individuals who become Members hereunder.
18.7 Return of Contributions: This Plan and the related Trust are
designed to qualify under Sections 401(a) and 501(a) of the Code. Anything
contained herein to the contrary notwithstanding, if the initial determination
letter is issued by the District Director of Internal Revenue to the effect that
this Plan and related Trust hereby created, or as amended prior to the receipt
of such letter, do not meet the requirements of Section 401(a) and 501(a) of the
Code, the Company shall be entitled at its option to withdraw all contributions
theretofore made, in which event the Plan and Trust shall then terminate.
Each contribution to the Plan is specifically conditioned on the
deductibility of such contribution under the Code. The Trustee, upon written
request from the Company, shall return to the Company the amount of the
Company's contribution made as a result of a mistake of fact or the amount of
the Company's contribution disallowed as a deduction under Section 404 of the
Code. Such return of contribution must be made within one (1) year after (a) the
Company made the contribution by mistake of fact or (b) the disallowance of the
contribution as a deduction. The amount of contribution subject to being
returned hereunder shall not be increased by any earnings attributable to the
contribution, but such amount subject to being returned shall be decreased by
any losses attributable to it.
18.8 Missing Members or Beneficiaries: Each Member shall file with the
Committee from time to time in writing a mailing address and any change of
mailing address for himself and
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his designated Beneficiary. Any communication, statement or notice addressed to
a Member or Beneficiary at the last mailing address filed with the Committee, or
if no such address is filed with the Committee, then at his last mailing address
as shown on the Company's records, shall be binding on the Member or his
Beneficiary for all purposes of the Plan. The Committee shall not be required to
search for or locate a Member or Beneficiary. If the Committee notifies any
Member or Beneficiary that he is entitled to a distribution and also notifies
him of the provisions of this Section 18.8 (or makes reasonable effort to so
notify such Member or Beneficiary by certified letter, return receipt requested,
to the last known address, or such other further diligent effort, including
consultation with the Internal Revenue Service or the Social Security
Administration, to ascertain the whereabouts of such Member or Beneficiary as
the Committee deems appropriate) and the Member or Beneficiary fails to claim
his distributive share or make his whereabouts known to the Committee within
three years thereafter, the distributive share of such Member or Beneficiary
will be forfeited and reallocated according to Section 6.2. However, if the
Member or his Beneficiary should, thereafter, make a proper claim for such
share, it shall be distributed to him.
18.9 Voting Rights:
(a) Each Member shall be entitled to direct the Trustee as to
the manner in which any Common Stock allocated to said Member's
Accounts shall be voted. The Committee shall furnish to each Member a
proxy adequate for such purpose. The Trustee shall vote specifically in
accordance with each Member's instructions to the extent of such
Member's whole shares and shall, to the extent possible, vote the
combined fractional shares of such Members in such manner as to reflect
the Members' expressed desires. To the extent permitted under ERISA,
the Trustee shall vote shares of Common Stock with respect to which it
does not receive instructions and shares of Common Stock which have not
been allocated to Members' Accounts under the Plan in the same
proportion as are voted the shares of Common Stock held under the Plan
with respect to which instructions were received by the Trustee from
Members.
(b) Notwithstanding anything to the contrary contained in the
Plan, if a cash tender offer or exchange offer for shares of Common
Stock is made, Common Stock allocated to each Member's accounts under
the Plan shall be tendered or exchanged by
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the Trustee pursuant to such cash tender offer or exchange offer only
in accordance with the written instructions and directions of such
Member to the Trustee to so tender or exchange. If a cash tender offer
or exchange offer for shares of Common Stock is made, the Trustee shall
use its best efforts to take those steps reasonably necessary to
furnish information to, and allow decision by, each Member with respect
to such cash tender offer or exchange offer and the shares of Common
Stock allocated to such Member's accounts under the Plan in
substantially the same manner as would be available to holders of
Common Stock generally, and, in that connection, the Trustee shall:
(1) Inform each Member as to the existence of such
cash tender offer or exchange offer;
(2) Transmit to each Member as soon as practicable
such written information, explanation and other materials
relative to such cash tender offer or exchange offer as are
made available by the Company or by the persons or entities
making such cash tender offer or exchange offer to the holders
of shares of Common Stock generally;
(3) Request detailed written instructions and
directions from each Member as to whether to tender or
exchange the shares of Common Stock allocated to such Member's
accounts under the Plan and as to the time and manner of such
tender or exchange, if so instructed and directed; and
(4) Use its best efforts to effect on a
nondiscriminatory basis the tender or exchange of Common Stock
held under the Plan with respect to such cash tender offer or
exchange offer solely in accordance with written instructions
and directions received from Members. If written instructions
or directions are not timely received from a Member, the
shares of Common Stock allocated to his accounts under the
Plan shall not be tendered or exchanged pursuant to such cash
tender offer or exchange offer.
For purposes of this subparagraph (b), the term cash tender
offer shall include a tender offer for, or request or invitation for
tenders of, shares of Common Stock in exchange for cash, as made to the
Plan or to holders of shares of Common Stock generally; the term
exchange offer shall include a tender offer for, or request or
invitation for tenders of, any shares of Common Stock in exchange for
any consideration other than for all cash, as made to the Plan or to
holders of shares of Common Stock generally.
(c) If any shares of Common Stock held under the Plan are
tendered or exchanged pursuant to a cash tender offer or exchange offer
in accordance with subparagraph (b) above, any cash proceeds obtained
by the Trustee in connection therewith shall be temporarily invested in
such short term investments as the Trustee may determine, until such
time as such temporarily invested cash proceeds are reinvested in
Common Stock. Any other property obtained by the Trustee pursuant to an
exchange offer shall be temporarily held in kind by the Trustee, until
such time as such temporarily held property is sold and the proceeds
therefrom are reinvested in Common Stock.
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18.10 Acquisition Loans. An Acquisition Loan is an installment
obligation incurred by the Trustee in connection with the purchase of Common
Stock. The Trustee may incur Acquisition Loans from time to time to finance (i)
the acquisition of Common Stock by the Trust, or (ii) the repayment of a prior
Acquisition Loan. Each Acquisition Loan shall be for a specific term, shall bear
a reasonable rate of interest, and shall not be payable on demand except in the
event of default. If the lender with respect to an Acquisition Loan is a
disqualified person, as defined in section 4975(e)(2) of the Code, the
Acquisition Loan must provide that Trust assets will be transferred upon default
only upon and to the extent of the failure of the Trust to meet the repayment
schedule of the Acquisition Loan.
(a) Financed Shares. Shares of Common Stock acquired by the
Trustee with the proceeds of an Acquisition Loan shall be described as
"Financed Shares." Except as provided in section 409(1) of the Code,
Treas. Reg. Section 54.4975-7(b) (9) and (10), or as otherwise provided
by applicable law, no shares acquired by the Trustee with the proceeds
of an Acquisition Loan may be subject to a put, call or other option or
buy-sell or similar arrangement while held by and when distributed from
the Plan.
(b) Collateral. An Acquisition Loan may be secured by a
collateral pledge of the Financed Shares so acquired and any other
Trust assets which are a permissible security within the provisions of
Treas. Reg. Section 54.4975-7(b). No other assets of the Trust may be
pledged as collateral for an Acquisition Loan, and no lender shall have
recourse against any other Trust assets.
(c) Loan Payment. Repayment of principal and interest on any
Acquisition Loan shall be made by the Trustee from annual Company
Contributions made pursuant to subsection 4.1 and, to the extent
permitted by applicable law, may also be made from the following
sources:
(i) cash dividends on Financed Shares held in the
Loan Suspense Account (as defined below) and earnings, if any,
thereon; and
(ii) in the event of the sale of Financed Shares, the
proceeds of such sale.
(d) Release of Financed Shares. Financed Shares shall
initially be credited to a "Loan Suspense Account" and shall be
transferred for allocation to the Individual Accounts of Members as
payments are made on the Acquisition Loan by the Trustee, and any
pledge of Financed Shares must, and shall be deemed to, provide for the
release of shares so pledged on a consistent basis.
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The number of Financed Shares to be released from the Loan
Suspense Account for allocation to Members' Individual Accounts as of
each Allocation Date, shall equal the number of Financed Shares held in
the Loan Suspense Account immediately prior to such Allocation Date
multiplied by a fraction, the numerator of which is equal to the
payments of principal and interest (or principal only, if the
requirements of the Treasury Regulations under Code Section 4975 are
met and the Plan Administrator so elects) on the Acquisition Loan for
the period ending on such date, and the denominator of which is equal
to the sum of the numerator plus the total projected payments of
principal and interest (or principal only, if the requirements of the
Treasury Regulations under Code Section 4975 are met and the Plan
Administrator so elects) on the Acquisition Loan over the future years
of the Acquisition Loan.
(e) Allocation of Financed Shares. The released Financed
Shares shall be allocated to the Individual Accounts of eligible
Members in accordance with the provisions of Section 6.1 hereof.
18.11 Preretirement Diversification Rights. If a Member attains age
fifty-five (55) and has ten (10) years of participation in the Plan (hereinafter
referred to as a "Qualified Member"), notwithstanding the provisions of Section
15.1 hereof, the following rules shall apply to any distribution made under the
Plan to or on behalf of such Qualified Member.
(a) Annuity Distributions to Qualified Members. The Committee
shall direct the Trustee to distribute such Member's benefits held in a
Qualified Member's Individual Account in the form of a qualified joint
and survivor annuity, unless the Qualified Member has a valid waiver
election (described in Section 18.11(b) hereof) in effect. A qualified
joint and survivor annuity is an immediate annuity (a) which is payable
for the life of the Qualified Member, with, if the Qualified Member is
married on the annuity starting date, as defined below, a survivor
annuity for the life of the Qualified Member's surviving spouse which
is not less than fifty percent (50%) of the amount of the annuity
payable during the joint lives of the Qualified Member and his spouse,
and (b) which is the actuarial equivalent of a single annuity for the
life of the Qualified Member. On or before the annuity starting date
(the first day of the first period for which the Qualified Member would
receive an amount as an annuity or in any other form), the Committee
shall direct the Trustee to pay the Qualified Member's benefits in a
lump sum, in lieu of a qualified joint and survivor annuity, if the
Qualified Member's vested Individual Account is not greater than $3,500
for Plan Years beginning prior to January 1, 1998, or $5,000 for Plan
Years beginning on or after January 1, 1998.
If a Qualified Member who is married dies prior to
commencement of payment of his benefits, the Committee shall direct the
Trustee to distribute the Qualified Member's Individual Account, as
calculated under Article VIII, to the Qualified Member's surviving
spouse in the form of a preretirement survivor annuity, unless the
Qualified Member has a valid waiver election (as described in Section
18.11(c) hereof) in effect. A preretirement survivor annuity is an
annuity which is payable for the life of the Qualified
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Member's surviving spouse. The surviving spouse may elect to have the
preretirement survivor annuity distributed within a reasonable period
after the Qualified Member's death. The Committee shall direct the
Trustee to pay the Qualified Member's Individual Account in a lump sum,
in lieu of a preretirement survivor annuity, if the Qualified Member's
Individual Account is not greater than $3,500 for Plan Years beginning
prior to January 1, 1998, or $5,000 for Plan Years beginning on or
after January 1, 1998.
The Committee is not required to distribute any survivor
annuity described herein to the spouse of a Qualified Member unless the
Qualified Member and his spouse were married throughout the one-year
period ending on the earlier of the Qualified Member's annuity starting
date or the Qualified Member's death; provided, however, this exception
shall not apply if the Qualified Member marries within one year before
the annuity starting date and has been married for at least a one-year
period ending on or before the date of the Qualified Member's death.
If the Qualified Member has in effect a valid waiver election
regarding the qualified joint and survivor annuity or the preretirement
survivor annuity, the Committee shall direct the Trustee to distribute
the Participant's Individual Account in accordance with Section 15.1.
Furthermore, the Qualified Member's surviving spouse may elect the form
of payment described in Section 15.1 in lieu of the preretirement
survivor annuity. For purposes of applying this Section 18.11, the
Committee shall treat a former spouse as the Qualified Member's spouse
or surviving spouse to the extent required under a qualified domestic
relations order.
(b) Waiver Election - Qualified Joint and Survivor Annuity.
Within a reasonable period of time (no less than thirty (30) days and
no more than ninety (90) days) before the Qualified Member's annuity
starting date, the Committee shall provide the Qualified Member a
written explanation of the terms and conditions of the qualified joint
and survivor annuity, the Qualified Member's right to make, and the
effect of, an election to waive the joint and survivor form of benefit,
the rights of a married Qualified Member's spouse regarding the waiver
election and the Qualified Member's right to make, and the effect of, a
revocation of a waiver election.
A Qualified Member's waiver election is not valid unless:
(1) the Qualified Member makes the waiver election
within the ninety (90) day period ending on his annuity
starting date;
(2) the Qualified Member's spouse (to whom the
survivor annuity is payable under the qualified joint and
survivor annuity) has consented in writing to the waiver
election, the spouse's consent acknowledges the effect of the
election, and a notary public or a Committee member (or its
representative) witnesses the spouse's consent; and
(3) unless the spouse is the Qualified Member's sole
primary Beneficiary, the spouse consents to the Qualified
Member's Beneficiary designation or to any change in the
Qualified Member's Beneficiary Designation.
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Additionally, a Qualified Member's waiver of the
qualified joint and survivor annuity shall not be effective
unless the election designates a form of benefit payment which
may not be changed without spousal consent (or the spouse
expressly permits designations by the Qualified Member without
any further spousal consent).
The Committee may accept as valid a waiver election which does
not satisfy the spousal consent requirements described in paragraphs
(2) and (3) above if the Committee establishes that the Qualified
Member does not have a spouse, the Committee is not able to locate the
Qualified Member's spouse, or other circumstances prescribed by
Treasury Department regulations.
Any consent by a spouse obtained under this Section (or the
establishment that the consent of a spouse may not be obtained) shall
be effective only with respect to such spouse. A consent that permits
designations by the Qualified Member without any requirement of further
consent by such spouse must acknowledge that the spouse has the right
to limit consent to a specific Beneficiary, and a specific form of
benefit where applicable, and that the spouse voluntarily elects to
relinquish either or both of such rights. A revocation of a prior
waiver may be made by a Qualified Member without the consent of the
spouse at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this
Section shall be valid unless the Qualified Member has received an
explanation of the terms and conditions of the qualified joint and
survivor annuity, as provided herein.
(c) Waiver Election - Preretirement Survivor Annuity. The
Committee shall provide each Qualified Member, within a reasonable
period after the Member becomes a Qualified Member, a written
explanation of the terms and conditions of the preretirement survivor
annuity, the Qualified Member's right to make, and the effect of, an
election to waive the preretirement survivor annuity, the rights of the
Qualified Member's spouse regarding the waiver election and the
Qualified Member's right to make, and the effect of, a revocation of a
waiver election.
For purposes of applying this subsection, a reasonable period
is the end of the two-year period beginning one year prior to the date
on which the Member becomes a Qualified Member, and ending one year
after that date.
A Qualified Member's waiver election of the preretirement
survivor annuity is not valid unless the election satisfies the spousal
consent requirements described in Section 18.11(b).
18.12 Qualified Military Service. Notwithstanding any provision of this
Plan to the contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with Section 414 (u)
of the Code.
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ARTICLE XIX
Top-Heavy Rules
19.1 Definitions: For purposes of applying the provisions of this
Article XIX:
(a) "Key Employee" shall mean, as of any Determination Date
(as defined below), any Employee or former Employee who, at any time
during the Plan Year (which includes the Determination Date) or during
the preceding four Plan Years, is (i) an officer having Annual
Compensation greater than fifty percent (50%) of the amount in effect
under Section 415(b)(1)(A) of the Code for any such Plan Year, (ii) one
of the ten Employees having Annual Compensation of more than the
limitation in effect under Section 415(c)(1)(A) of the Code and owning
the largest interests in the Company, (iii) a Five Percent (5%) Owner
of the Company, or (iv) a One Percent (1%) Owner of the Company who has
Annual Compensation of more than $150,000. The constructive ownership
rules of Section 318 of the Code will apply to determine ownership in
the Company. The Committee will make the determination of who is a Key
Employee in accordance with Section 416(i)(1) of the Code and the
regulations under that Code Section. The Beneficiary of a Key Employee
shall be treated as a Key Employee for purposes of determining whether
this Plan is top-heavy.
(b) "Non-Key Employee" is an Employee who does not meet the
definition of Key Employee.
(c) "Required Aggregation Group" means:
(1) Each qualified plan of the Company or an
Affiliated Entity (as defined below) in which at least one (1)
Key Employee participates or participated at any time during
the Plan Year which includes the Determination Date, or during
the preceding four Plan Years (regardless of whether the plan
has terminated); and
(2) Any other qualified plan of the Company which
enables a plan described in (1) to meet the requirements of
Section 401(a)(4) or Section 410 of the Code.
(d) "Permissive Aggregation Group" is the Required Aggregation
Group plus any other qualified plans maintained by the Company, but
only if such group would satisfy in the aggregate the requirements of
Section 401(a)(4) and Section 410 of the Code. The Committee shall
determine which plans to take into account in determining the
Permissive Aggregation Group.
(e) "Determination Date" for any Plan Year is the Allocation
Date of the preceding Plan Year or, in the case of the first Plan Year
of the Plan, the Allocation Date of that Plan Year.
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(f) "Five Percent (5%) Owner" is any person who owns more than
five percent (5%) of the outstanding stock of the Company or stock
possessing more than five percent (5%) of the total combined voting
power of all stock of the Company.
(g) "One Percent (1%) Owner" is any person who owns more than
one percent (1%) of the outstanding stock of the Company or stock
possessing more than one percent (1%) of the total combined voting
power of all stock of the Company.
(h) "Affiliated Entity" shall mean all the members of (i) a
controlled group of corporations as defined in Section 414(b) of the
Code; (ii) a commonly controlled group of trades or businesses (whether
or not incorporated) as defined in Section 414(c) of the Code; (iii) an
affiliated service group as defined in Section 414(m) of the Code of
which the Company is a part; or (iv) a group of entities required to be
aggregated pursuant to Section 414(o) of the Code and the regulations
issued thereunder.
19.2 Determination of Top-Heavy Status: The Plan is top-heavy for a
Plan Year if the top-heavy ratio as of the Determination Date (as defined in
Section 19.1 above) exceeds sixty percent (60%). The top-heavy ratio is a
fraction, the numerator of which is the sum of the present value of the
Individual Accounts of all Key Employees (as defined in Section 19.1 above) as
of the Determination Date, the contributions for all Key Employees that are due
as of the Determination Date, and distributions made to all Key Employees within
the five (5) year period immediately preceding the Determination Date, and the
denominator of which is a similar sum determined for all Employees in the Plan.
If an Employee has not performed any services for the Company or an Eligible
Affiliate at any time during the five (5) year period ending on the
Determination Date, any amount in the Individual Account of such Employee shall
not be taken into account. The Committee shall calculate the top-heavy ratio
without regard to any Non-Key Employee (as defined in Section 19.1 above) who
was formerly a Key Employee. The Committee shall calculate the top-heavy ratio,
including the extent to which it must take into account distributions, rollovers
and transfers, in accordance with Section 416 of the Code and the regulations
under that Code Section.
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If the Company maintains other qualified plans (including a simplified
employee pension plan) this Plan is top-heavy only if it is part of the Required
Aggregation Group (as defined in Section 19.1 above), and the top-heavy ratio
for both the Required Aggregation Group and the Permissive Aggregation Group (as
defined in Section 19.1 above) exceeds sixty percent (60%). The Committee will
calculate the top-heavy ratio in the same manner as required by the first
paragraph of this Section 19.2, taking into account all plans within the
aggregation group. The Committee shall calculate the present value of accrued
benefits and the other amounts the Committee must take into account, under
defined benefit plans or simplified employee pension plans included within the
group in accordance with the terms of those plans, Section 416 of the Code and
the regulations under that Code Section. The Committee shall calculate the
top-heavy ratio with reference to the Determination Dates that fall within the
same calendar year.
19.3 Minimum Company Contribution: Notwithstanding anything contained
herein to the contrary, for any Plan Year in which this Plan is determined to be
top-heavy pursuant to Section 19.2 hereof, each Non-Key Employee who is an
eligible Member shall be entitled to a supplemental contribution equal to three
percent (3%) of such Non-Key Employee's Annual Compensation, reduced by the
amount of Qualified Nonelective Contributions, if any, allocated to a Member's
Salary Reduction Contribution Account under the Southwest Airlines Co. 401(k)
Plan for the applicable Plan Year. For purposes of this Section 19.3, an
eligible Member is a Non-Key Employee who is employed by the Company on the last
day of the applicable Plan Year.
The percentage referred to in the preceding paragraph shall not exceed
the percentage of Annual Compensation at which Company contributions are made or
allocated under this Plan and all other qualified defined contribution plans
maintained by the Company, including Salary
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Reduction Contributions under the Southwest Airlines Co. 401(k) Plan, to the Key
Employee for whom such percentage is the largest; provided, however, this
sentence shall not apply if the Plan is required to be included in an
Aggregation Group and enables a defined benefit plan required to be included in
such group to meet the requirements of Code Sections 401(a)(4) or 410. If the
minimum allocation is made for a Non-Key Employee pursuant to another qualified
plan maintained by the Company, then the minimum allocation requirement will be
considered satisfied for purposes of this Plan.
19.4 Minimum Vesting: For any Plan Year for which the Plan is top-heavy
beginning after December 31, 1983, the Committee shall calculate the percentage
of the amount in a Member's Employer Savings Account which is vested and
nonforfeitable according to a schedule which is no less rapid than the
following:
Percentage
Completed Years of Service Payable
-------------------------- ----------
Less than 2 years 0%
2 years but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 years or more 100%
If the above schedule is less rapid than the vesting schedule which is
applicable under Section 10.1 at the time when the Plan becomes top-heavy, then
the schedule under Section 10.1 shall apply. The Committee shall apply the
vesting schedule set forth above to a Member who earns at least one (1) Hour of
Service after such schedule becomes effective. If the top-heavy status of the
Plan changes so that there is a shift between the vesting schedules set forth
above and set forth in Section 10.1, then a Plan amendment will be deemed to
have occurred so that the provisions of Section 17.1 of the Plan become
applicable.
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ARTICLE XX
Fiduciary Provisions
20.1 General Allocation of Duties: Each fiduciary with respect to the
Plan shall have only those specific powers, duties, responsibilities and
obligations as are specifically given him under the Plan. The board of directors
of the Company shall have the sole responsibility for authorizing its
contributions under the Plan. The Company shall have the sole authority to
appoint and remove the members of the Committee and to amend or terminate this
Plan, in whole or in part. The Committee shall have the sole authority to
appoint and remove the Trustee and Investment Managers. However, neither the
board nor the Committee shall be liable for any acts or omissions of the Trustee
or Investment Manager or be under any obligation to invest or otherwise manage
any assets of the Trust Fund which are subject to the management of the Trustee
or Investment Manager. Except as otherwise specifically provided, the Committee
shall have the sole responsibility for the administration of the Plan, which
responsibility is specifically described herein. Except as otherwise
specifically provided, the Trustee shall have the sole responsibility for the
administration, investment and management of the assets held under the Plan. It
is intended under the Plan that each fiduciary shall be responsible for the
proper exercise of its own powers, duties, responsibilities and obligations
hereunder and shall not be responsible for any act or failure to act of another
fiduciary, except to the extent provided by law or as specifically provided
herein.
20.2 Fiduciary Duty: Each fiduciary under the Plan shall discharge its
duties and responsibilities with respect to the Plan:
(a) solely in the interest of the Members of the Plan, for the
exclusive purpose of providing benefits to such Members and their
Beneficiaries, and defraying reasonable expenses of administering the
Plan;
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(b) with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims;
(c) by diversifying the investments of the Plan so as to
minimize the risk of large losses, unless under the circumstances it is
prudent not to do so; and
(d) in accordance with the documents and instruments governing
the Plan insofar as such documents and instruments are consistent with
applicable law.
20.3 Fiduciary Liability: A fiduciary shall not be liable in any way
for any acts or omissions constituting a breach of fiduciary responsibility
occurring prior to the date it becomes a fiduciary or after the date it ceases
to be a fiduciary.
20.4 Co-Fiduciary Liability: A fiduciary shall not be liable for any
breach of fiduciary responsibility by another fiduciary unless:
(a) it participates knowingly in, or knowingly undertakes to
conceal, an act or omission of such other fiduciary, knowing such act
or omission is a breach;
(b) by its failure to comply with Section 404(a)(1) of ERISA
in the administration of its specific responsibilities which give rise
to its status as a fiduciary, it has enabled such other fiduciary to
commit a breach; or
(c) having knowledge of a breach by such other fiduciary, it
fails to make reasonable efforts under the circumstances to remedy the
breach.
20.5 Delegation and Allocation: The Committee may appoint
subcommittees, individuals or any other agents as it deems advisable and may
delegate to any of such appointees any or all of the powers and duties of the
Committee. Such appointment and delegations must clearly specify the powers and
duties delegated. Upon such appointment and delegation, the delegating Committee
members shall have no liability for the acts or omissions of any such delegate,
as long as the delegating Committee members do not violate their fiduciary
responsibility in making or continuing such delegation.
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IN WITNESS WHEREOF, Southwest Airlines Co. has caused its corporate
seal to be affixed hereto and these presents to be duly executed in its name and
behalf by its proper officers thereunto duly authorized this 14th day of
September, 2000.
SOUTHWEST AIRLINES CO.
ATTEST:
/s/ Colleen C. Barrett By: /s/ Herbert D. Kelleher
- -------------------------------- ------------------------------
Secretary Herbert D. Kelleher, President
60
STATE OF TEXAS (
(
COUNTY OF DALLAS (
BEFORE ME, the undersigned, a Notary Public in and for said County and
State, on this 14th day of September, 2000, personally appeared Herbert D.
Kelleher, to me known to be the individual person who subscribed the name of
SOUTHWEST AIRLINES CO., as its President, to the foregoing instrument and
acknowledged to me that he executed the same as his free and voluntary act and
deed and the free and voluntary act and deed of such corporation, for the uses
and purposes therein set forth.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, the day and year last above
written.
/s/ Linda S. Simmons
-------------------------------------------
Notary Public in and for the State of Texas
My Commission Expires:
12/11/00
- ----------------------