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Exhibit 4.2
AMENDMENT
TO THE
WESTCORP
EMPLOYEE STOCK OWNERSHIP AND SALARY SAVINGS PLAN
WHEREAS, Section 12.01 of the Westcorp Employee Stock Ownership and Salary
Savings Plan (the "Plan") provides that the Plan may be amended by action of the
Board of Directors;
NOW, THEREFORE, the Plan shall be amended as follows:
1. Article I shall be amended by replacing "5 consecutive one year Breaks
in Service" in subparagraph (c) under "Year of Service" with the
following:
"the greater of 5 or the aggregate number of Years of Service completed
as of such Separation From Service, consecutive one year Breaks in
Service".
2. Section 2.03 of the Plan shall be amended by adding the following to the
last paragraph of the Section:
"Notwithstanding the foregoing, if an Employee completed the
requirements of Sections 2.01 and 2.02, but his employment terminated
prior to the Entry Date and is subsequently rehired, he shall commence
participation immediately."
3. Section 3.10(b) of the Plan shall be amended by restating the Section in
its entirety as follows:
"(b) All contributions to this made by the Employer are conditioned
upon the Plan's initial qualification. If the Commissioner of
Internal Revenue determines that the Plan does not qualify, then
the contribution made incident to the initial qualification by
the Employer shall be returned within one year after the date of
denial of initial qualification of the Plan; provided that the
application for initial qualification is made by the time
prescribed by law for filing the Employer's tax return for the
taxable year in which the Plan is adopted, or such later date as
the Secretary of the Treasury may prescribe."
4. Section 3.05 shall be amended by adding the following as the second
paragraph of Section 3.05(a):
"In the event that this Plan is aggregated with one or more other plans
so that this Plan or such other plan satisfies the requirements of Code
Sections 401(m), 401(a)(4) or 410(b), then this Section shall be applied
by determining the actual contribution percentages of Employees as if
all such plans were a single plan. If
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this Plan is permissively aggregated with one or more other plans for
purposes of Code Section 401(m), then such aggregated plans must satisfy
Code Sections 401(a)(4) and 410(b) as though they were a single plan."
5. Section 3.05 of the Plan shall be amended by adding the following
paragraphs at the end of Section 3.05(a):
"The actual contribution percentage of a Participant who is a Highly
Compensated Employee shall be determined by treating all plans of the
Employer which are subject to Code Section 401(m) and under which the
Highly Compensated Employee participates (other than those plans that
may not be permissively aggregated) as a single plan.
For purposes of determining the actual contribution percentage of a
Participant who is a five-percent owner or one of the ten most
highly-paid Highly Compensated Employees, the contributions and
Compensation of such Participant shall include the contributions and
Compensation for the Plan Year of members of the Family of such Highly
Compensated Employees. Family members, with respect to Highly
Compensated Employees, shall be disregarded as separate Employees in
determining the average of the actual contribution percentages, both for
Participants who are Highly Compensated Employees and for all other
Participants. "Family" members of an Employee include the spouse and
lineal ascendants or descendants of the Employee and the spouses of such
lineal ascendants and descendants."
6. Section 3.13 of the Plan shall be amended by adding the following as the
third paragraph of Section 3.13:
"In the event that this Plan is aggregated with one or more other plans
so that this Plan or such other plan satisfies the requirements of Code
Sections 401(k), 401(a)(4) or 410(b), then this Section shall be applied
by determining the deferral ratios of Employees as if all such plans
were a single plan. If this Plan is permissively aggregated with one or
more other plans for purposes of Code Section 401(k), then such
aggregated plans must satisfy Code Sections 401(a)(4) and 410(b) as
though they were a single plan.
The deferral ratio of a Participant who is a Highly Compensated Employee
shall be determined by treating all plans of the Employer which are
subject to Code Section 401(k) and under which the Highly Compensated
Employee participates (other than those plans that may not be
permissively aggregated) as a single plan.
For purposes of determining the deferral ratio of a Participant who is a
five-percent owner or one of the ten most highly-paid Highly Compensated
Employees, the Salary Savings Contributions and Compensation of such
Participant shall include the Salary Savings Contributions and
Compensation for the Plan Year of members of the Family of such Highly
Compensated Employees. Family members, with respect to Highly
Compensated Employees, shall be
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disregarded as separate Employees in determining the Actual Deferral
Percentage, both for Participants who are Highly Compensated Employees
and for all other Participants. "Family" members of an Employee include
the spouse and lineal ascendants or descendants of the Employee and the
spouses of such lineal ascendants and descendants."
7. Article XIII of the Plan shall be amended by adding the following
Section 13.18:
"13.18 Multiple Use Test
Each Plan Year the Plan shall satisfy the multiple use
test of Regulation Section 1.401(m)-2, the provisions of
which are hereby incorporated into this Plan by reference
as provided in Regulation Section 1.401(m)-2(b).
The Committee shall reduce either (but not both of) the
Actual Deferral Percentage or the actual contribution
percentage (as defined in Regulation 1.401(m)-I(f)(1)) for
the Plan Year with respect to all Highly Compensated
Employees for the Plan Year in order to satisfy the
multiple use test."
8. Article I of the Plan shall be amended by making the following changes
to the definition of "Highly Compensated Employee":
In the first sentence, replace "current or preceding Plan Year" with
"current Plan Year or the 12-month period immediately preceding the
current Plan Year";
In subparagraph (d), replace 150 percent of the amount in effect under
Section 415(c)(1)(A)" with "50 percent of the amount in effect under
Code Section 415(b)(1)(A)";
In the next-to-last paragraph, replace "without regard to" with
"including"; and
Add the following at the end of the Section:
"For purposes of this paragraph, "Employer" includes any entities
required to be aggregated with the Employer under Code Sections 414(b),
(c), (m) and (o).".
9. Section 4.05(a) of the Plan shall be amended by adding the following at
the end of the Section:
"If as a result of the allocation of Forfeitures to a Participant's
Account for a Limitation Year there is an excess Annual Addition, the
excess will be disposed of as follows:
If the Participant is covered by the Plan at the end of the
Limitation Year, the excess amount in the Participant's Account
shall be used to reduce
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Employer contributions (including any allocation of Forfeitures)
for such Participant in the next Limitation Year and each
succeeding Limitation Year, if necessary.
If the Participant is not covered by the Plan at the end of the
Limitation Year, the excess amount in the Participant's Account
shall be held unallocated in a suspense account. The suspense
account will be used to reduce Employer contributions (including
any allocation of Forfeitures) for such Participant in the next
Limitation Year and each succeeding Limitation Year, if
necessary. If a suspense account is in existence at any time
during a Limitation Year pursuant to this paragraph, it will not
participate in the allocation of investment gains and losses;
moreover, all amounts in the suspense account must be allocated
and reallocated to Participants' Accounts before any Employer
contributions may be made to the Plan for that Limitation Year.
Excess amounts may not be distributed to Participants or former
Participants."
10. Section 7.01(d) of the Plan shall be amended by adding the following at
the end of the Section:
"If the Participant's vested Accumulation Account exceeded $3,500 at the
time of a prior distribution, then such Participant's vested
Accumulation Account shall be deemed to exceed $3,500."
11. Section 7.01(c)(1) of the Plan shall be amended in its entirety as
follows:
"Unless an optional form of benefit is selected pursuant to a qualified
election within the 90-day period ending on the annuity starting date, a
married Participant's vested Accumulation Account will be applied to the
purchase of an qualified joint and survivor annuity, subject to the
requirements of Section 7.06. The Participant may elect to have such
annuity distributed upon attainment of the earliest retirement age under
the Plan."
12. Article VII of the Plan shall be amended by adding the following Section
7.06:
"7.06 Joint and Survivor Annuity Requirements
(a) The provisions of this Section 7.06 shall apply to any
Participant who is credited with at least one Hour Of
Service with the Employer on or after August 23, 1984.
(b) Unless an optional form of benefit has been selected
within the election period pursuant to a qualified
election, if a Participant dies before the annuity
starting date, then his vested Accumulation Account shall
be applied toward the purchase of an annuity for the life
of the surviving spouse. The surviving spouse may elect to
have
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such annuity distributed within a reasonable period after
the Participant's death.
(c) For purposes of Section 7.01(c)(1) and for this Section
7.06, the following definitions shall apply:
(i) "Election period" means the period which begins on
the first day of the Plan Year in which the
Participant attains age 35 and ends on the date of
the Participant's death. If a Participant separates
from service prior to the first day of the Plan
Year in which age 35 is attained, with respect to
the Accumulation Account balance as of the date of
separation, the election period shall begin on the
date of separation.
(ii) "Earliest retirement age" means the earliest date
under the Plan on which the Participant could elect
to receive retirement benefits.
(iii) "Qualified election" means a waiver of a qualified
joint and survivor annuity or qualified
preretirement survivor annuity (as described in
Section 7.06(b)). Such waiver shall not be
effective unless (a) the Participant's spouse
consents in writing to the waiver, (b) the waiver
designates a specific beneficiary, including any
class of beneficiaries or any contingent
beneficiaries, which may not be changed without
spousal consent (or the spouse expressly permits
designations by the Participant without any further
spousal consent), (c) the spouse's consent
acknowledges the effect of the waiver and (d) the
spouse's consent is witnessed by a Plan
representative or a notary public. Additionally,
such a waiver shall not be effective unless the
waiver designates a form of benefit payment which
may not be changed without spousal consent (or the
spouse expressly permits designations by the
Participant without any further spousal consent).
If it is established to the satisfaction of a Plan
representative that there is no spouse or that the
spouse cannot be located, the waiver will be deemed
a qualified election.
Any consent by a spouse obtained under this
provision (or establishment that the consent of a
spouse may not be obtained) shall be effective only
with respect to such spouse. A consent that permits
designations by the Participant without any
requirement of further consent by such spouse must
acknowledge that the spouse has the right to limit
consent to a specific beneficiary and a specific
form of benefit, where applicable, and that the
spouse voluntarily elects to relinquish either or
both of such rights. A revocation
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of a prior waiver may be made by a Participant
without the consent of the spouse at any time
before the commencement of benefits. The number of
such revocations shall not be limited. No consent
obtained under this provision shall be valid unless
the Participant has received notice as provided
below.
(iv) "Qualified joint and survivor annuity" means an
immediate annuity for the life of the Participant
with a survivor annuity for the life of the spouse
which is 50% of the amount of the annuity which is
payable during the joint lives of the Participant
and the spouse and which is the amount of benefit
which can be purchased with the Participant's
vested Accumulation Account.
(v) For purposes of this Section, a former spouse will
not be treated as a spouse or surviving spouse and
a current spouse will not be treated as a spouse or
surviving spouse to the extent provided under a
qualified domestic relations order as described in
Code Section 414(p).
(vi) "Annuity starting date" means the first day of the
first period for which an amount is payable as an
annuity or any other form.
(d) The Committee shall no less than 30 days and no more than
90 days prior to the annuity starting date provide each
participant a written explanation of the terms and
conditions of a qualified joint and survivor annuity, the
Participant's right to make and the effect of an election
to waive the qualified joint and survivor annuity form of
benefit the rights of the Participant's spouse and the
right to make and the effect of a revocation of a previous
election to waive the qualified joint and survivor
annuity.
(e) In the case of a qualified preretirement survivor annuity
as described in Section 7.06(b), the Committee shall
provide each Participant within the applicable period for
such Participant a written explanation of the qualified
preretirement survivor annuity in such terms and in such
manner as would be comparable to the explanation described
in Section 7.06(d).
The applicable period for a Participant is whichever of
the following periods ends last: (i) the period beginning
with the first day of the Plan Year in which the
Participant attains age 32 and ending with the close of
the Plan Year preceding the Plan Year in which the
Participant attains age 35; or (ii) the two-year period
beginning one year before the individual becomes a
Participant and ending one
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year after such event. If a Participant separates from
service before the Plan Year in which age 35 ) is
attained, notice shall be provided within the two-year
period beginning one year prior to separation and ending
one year after separation. If such a Participant
thereafter returns to employment with the Employer, the
applicable period for the Participant shall be
redetermined."
13. Article I of the Plan shall be amended by adding "(his Normal Retirement
Age)" after "65" in the definition of "Normal Retirement Date." Sections
6.01 and 6.02 of the Plan shall also be amended by replacing each
instance of "Normal Retirement Date" with "Normal Retirement Age".
14. Section 15.02 of the Plan shall be amended by adding the following to
the first paragraph of the Section after the sentence which begins "The
Minimum Contribution Percentage will be reduced...":
"For a Plan Year for which the Minimum Contribution Percentage is less
than three percent, the contributions for a Key Employee used to
determine such percentage shall include any Salary Savings Contributions
made on behalf of such Key Employee for the Plan Year."
15. Section 15.03 of the Plan shall be restated in its entirety as follows:
"For purposes of this Section 15, "Compensation" for a Plan Year means
wages, tips and other compensation otherwise required to be reported on
Form W-2, determined without regard to any rules under Code Section
3401(a) that limit the remuneration included in wages based on the
nature or location of the employment or the services to be performed.
Compensation shall include amounts contributed by the Employer pursuant
to a salary reduction agreement which are excludable from the Employee's
gross income under Code Sections 125, 402(e)(3), 402(h)(1)(B) or
403(b)."
16. Article I of the Plan shall be amended by replacing the first occurrence
of "commissions" with "35% of commissions" in the definition of
"Earnings".
17. Section 13.14(a) of the Plan shall be amended by adding the following to
the end of the Section:
"Excess contributions of Participants who are subject to the family
aggregation rules shall be allocated among the family members in
proportion to the Salary Savings Contributions of each family member
that is combined to determine the combined deferral ratio."
Section 13.14 of the Plan shall be further amended by adding the
following to the end of the Section:
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"The amount of excess contributions to be distributed to a Participant
for a Plan Year pursuant to this Section shall be reduced by excess
deferrals previously distributed to the Participant for his taxable year
ending with or within the Plan year. The amount of excess deferrals to
be distributed to a Participant for his taxable year, shall be reduced
by excess contributions previously distributed to the Participant for
the Plan Year beginning with or within the taxable year."
18. Article I shall be amended by adding the following definition:
"Qualified Non-elective Contribution:
For purposes of Section 3.13, "qualified non-elective contribution"
means a contribution made by the Employer that is not a Matching
Employer Contribution nor an ESOP contribution which is one hundred
percent (100%) vested and nonforfeitable when made, which a Participant
may not elect to have paid in cash instead of being contributed to the
Plan and which may not be distributed from the Plan prior to the
Separation from Service or death of the Participant or the termination
of the Plan without establishment of a successor plan."
19. Section 3.13 shall be amended by adding the following at the end of the
Section: "Any qualified non-elective contributions for a Plan Year shall
be contributed to the Trust no later than 12 months following the close
of the Plan Year, shall be allocated to Participants' Accounts as of the
last day of the Plan Year and such allocation shall not be contingent
upon any Employee's participation in the Plan or performance of any
services after such date."
20. Article I of the Plan shall be amended by changing the last instance of
"Westcorp, Inc." to "Westcorp" in the definition of "Plan" and each
instance in the definitions of "Board", "Company Stock" and "Employer".
Similarly, the signature page shall provide for adoption of the Plan by
"Westcorp" instead of "Westcorp, Inc.".
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Except as herein modified, all the terms, conditions and provisions of the
Westcorp Employee Stock Ownership and Salary Savings Plan are hereby ratified,
confirmed and carried forward.
IN WITNESS WHEREOF, Westcorp has caused this Amendment to be executed by its
duly authorized officer at ____________________, California, this _____day of
_______________, 19___.
WESTCORP
By: _________________________
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