1
Exhibit 4(e)
STATE AUTO INSURANCE COMPANIES
CAPITAL ACCUMULATION PLAN
(AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1989)
THIS INSTRUMENT HAS BEEN EXECUTED IN ____
COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED TO BE
THE ORIGINAL. THIS IS COUNTERPART NUMBER ____.
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TABLE OF CONTENTS
Page
INTRODUCTION 1
ARTICLE I DEFINITIONS 2
ARTICLE II ELIGIBILITY AND PARTICIPATION 10
ARTICLE III CONTRIBUTIONS 12
ARTICLE IV INVESTMENT OF CONTRIBUTIONS 18
ARTICLE V ALLOCATIONS, ACCOUNTING AND ADJUSTMENTS 19
ARTICLE VI VESTING 23
ARTICLE VII TIME AND METHOD OF PAYMENT 25
ARTICLE VIII WITHDRAWALS 29
ARTICLE IX LOANS TO PARTICIPANTS 31
ARTICLE X TOP-HEAVY PROVISIONS 33
ARTICLE XI MANAGEMENT OF FUNDS 38
ARTICLE XII PLAN ADMINISTRATION 39
ARTICLE XIII CLAIMS PROCEDURE 41
ARTICLE XIV AMENDMENT AND TERMINATION 42
ARTICLE XV MISCELLANEOUS 44
APPENDIX A ASSET TRANSFER FROM ROYAL INDEMNITY COMPANY 47
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STATE AUTO INSURANCE COMPANIES
CAPITAL ACCUMULATION PLAN
INTRODUCTION
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Effective June 1, 1982, the Board of Directors (the "Board") of State
Automobile Mutual Insurance Company, an Ohio corporation with its principal
offices located in Columbus, Ohio (the "Company"), by appropriate Board
Resolution, adopted the State Auto Insurance Companies Thrift Savings Plan (the
"Plan").
Effective January 1, 1983, the Board by appropriate Board Resolution
amended the Plan to add an Internal Revenue Code Section 401(k) feature to the
Plan and a voluntary nondeductible contribution feature to the Plan for the
benefit of all its regular Employees. The Plan was amended and restated to
incorporate these changes.
Effective January 1, 1985, the Plan was amended and restated to meet
the requirements of the Deficit Reduction Act of 1984 and the Retirement Equity
Act of 1984.
The Plan is hereby further amended and restated to meet the
requirements of the Tax Reform Act of 1986 and subsequent legislation,
regulation and rulings. This amendment and restatement is generally effective
January 1, 1989. However, certain provisions of this amendment and restatement
are effective as of other dates. These provisions include, without limitation, a
change in the name of the Plan to the "State Auto Insurance Companies Capital
Accumulation Plan" and certain revisions in connection with the adoption of a
daily valuation system, all as of October 1, 1994. Events occurring before the
applicable effective date of any provision of this amendment and restatement
shall be governed by the applicable provision of the Plan as in effect on the
date of the event.
It is intended that this Plan, together with the Trust Agreement, meet
all the pertinent requirements of the Internal Revenue Code of 1954, as amended
(the "Code"), and the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and shall be interpreted to comply with the terms of the Code
and ERISA and all formal regulations and rulings issued thereunder.
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STATE AUTO INSURANCE COMPANIES
CAPITAL ACCUMULATION PLAN
ARTICLE I
DEFINITIONS
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Whenever used herein with the initial letter capitalized, words and
phrases shall have the meanings stated below unless a different
meaning is plainly required by the context. All masculine terms shall
include the feminine and all singular terms shall include the plural
in all cases in which they could thus be applied unless the context
clearly indicates the gender or the number.
1.01 ACCOUNT(S)
The separate account or accounts which are maintained for each
Participant.
1.02 APPROVED LEAVE OF ABSENCE
An absence from work approved by the Employer or Related Employer
under uniform rules and conditions for all Employees, including a
"maternity or paternity leave of absence."
A "maternity or paternity leave of absence" shall mean, for any Plan
Year beginning on or after January 1, 1985, an absence from work (for
such period as may be required under Section 102(e) of the Retirement
Equity Act of 1984 or regulations thereunder) by reason of the
Participant's pregnancy, birth of the Participant's child, placement
of a child with the Participant in connection with the adoption of
such child, or any absence for the purpose of caring for such child
for a period immediately following such birth or placement.
1.03 ANNIVERSARY DATE
The first day of the Plan Year.
1.04 ATTAINED AGE
The age in years of an Employee as of the last anniversary of the
Employee's date of birth.
1.05 AVERAGE SALARY REDUCTION PERCENTAGE
The average of the Salary Reduction Percentage for all eligible
Employees of the Employer. Salary Reduction Percentage means the
total Salary Reduction Contributions made by a Participant under the
Plan for a Participant during a Plan Year under Section 3.01(a),
expressed as a percentage of the Test Compensation of such
Participant for such Plan Year.
1.06 AVERAGE SUPPLEMENTAL PERCENTAGE
The average of the Supplemental Participant Contribution Percentages
for all eligible Employees of the Employer. Supplemental Participant
Contribution Percentage means the total Supplemental Participant
Contributions and Regular Matching Contributions made by or on behalf
of a Participant under the Plan during a Plan Year under Section
3.02(a) and Section
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3.03(a), expressed as a percentage of the Test Compensation of such
Participant for such Plan Year.
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1.07 BEGINNING BALANCE
The fair market value of the Trust Fund, each Investment Fund, each
Salary Reduction Contribution Account, each Supplemental Contribution
Account, each Rollover Account, and each Employer Contribution
Account as of the Valuation Date immediately preceding the event for
which the Beginning Balance is being determined.
1.08 BENEFICIARY
Any person or persons (or a trust) designated by a Participant or
former Participant in such form and manner as the Committee shall
prescribe to receive any death benefit that may become payable under
this Plan if such person or persons survives the Participant or
former Participant. This designation may be revoked by a Participant
or former Participant as prescribed in Section 7.05.
1.09 BOARD
The board of directors of State Automobile Mutual Insurance Company.
1.10 CLOSING BALANCE
The fair market value of the Trust Fund, each Investment Fund, each
Salary Reduction Contribution Account, each Supplemental Participant
Contribution Account, each Rollover Account, and each Employer
Contribution Account as of the Valuation Date coincident with or next
following the event for which the Closing Balance is being
determined.
1.11 CODE
The Internal Revenue Code of 1986, as amended, and each formal
regulation or ruling issued thereunder as may pertain to the tax
status of this Plan.
1.12 COMMITTEE
The Administrative Committee appointed by the Chief Executive Officer
as empowered by the Board pursuant to Article XII.
1.13 COMPANY
State Automobile Mutual Insurance Company, an Ohio corporation with
principal offices located in Columbus, Ohio; its successors and
assigns and, subject to the provisions of Article XV, any corporation
into which the Company may be merged or consolidated or to which all
or substantially all of its assets may be transferred.
1.14 COMPENSATION
An Employee's basic earnings. Such amount shall exclude all overtime,
bonuses, and extra direct or indirect remuneration. Such amount shall
include amounts, if any, deferred under a salary reduction agreement
in accordance with Section 401(k) of the Code. Effective for each
Plan Year beginning on or after January 1, 1989, in no event shall
the amount of Compensation taken into account under the Plan exceed
the adjusted annual limitation permitted under Code Section
401(a)(17) for such Plan Year. Such adjusted annual limitation shall
be, for each Plan Year beginning on and after January 1, 1989 and
prior to January 1, 1994, $200,000 as adjusted for such year in the
same manner as under Section 415(d) of the Code and, for each Plan
Year
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beginning on and after January 1, 1994, $150,000 as adjusted for such
year as provided under Section 401(a)(17)(B) of the Code.
Compensation of an Employee for purposes of the foregoing annual
limitation, the Compensation paid to any Family Member shall be
aggregated with the Compensation of such Employee; provided, however,
that for purposes of this Section Family Member shall include only
the spouse of the Employee and any lineal descendant of the Employee
who has not attained age nineteen (19) before the end of the calendar
year. If, as a result of the family aggregation rules, the adjusted
annual limitation is exceeded, then the limitation shall be prorated
among such Family Members in proportion to each individual's
Compensation as determined under this paragraph without regard to the
adjusted annual limitation.
1.15 CONSOLIDATED NET ACCUMULATED OR CURRENT EARNINGS OF THE COMPANY
The consolidated net accumulated or current earnings of the Company
and all affiliated companies as reported in the published financial
statements of the Company or affiliated companies.
1.16 CONTRIBUTION PERCENTAGE LIMIT
The maximum percentage for any Plan Year (determined in accordance
with the provision of Section 3.01 hereof) of Regular Matching
Contributions and Supplemental Participant Contributions which may be
contributed to the Plan under Section 401(m) of the Code and
regulations issued thereunder. The Company shall establish the
Contribution Percentage Limit from time to time for the Plan Year for
the purpose of meeting the nondiscrimination tests of Section 401(m)
of the Code and applicable regulations, and shall apply the limit to
such Employees as is necessary to assure compliance with such tests.
1.17 EFFECTIVE DATE
January 1, 1989, the Effective Date of this amended and restated
Plan.
1.18 EMPLOYEE
Any person employed as a common law employee by an Employer or a
Related Employer.
1.19 EMPLOYER
The Company, State Auto Property and Casualty Insurance Company (a
South Carolina corporation with its principal offices located in
Greer, South Carolina), and any other Related Employer which, with
the approval of the Board, shall adopt this Plan for the benefit of
its Employees, according to an appropriate written resolution of the
board of directors of such Related Employer. Such a Related Employer
shall execute such documents as may be necessary.
1.20 EMPLOYER CONTRIBUTION ACCOUNT
The separate Account maintained for each Participant to reflect
Regular Matching Contributions made on behalf of the Participant and
any earnings thereon.
1.21 EMPLOYMENT COMMENCEMENT DATE
The date on which an Employee completes his first hour of Service for
an Employer or a Related Employer.
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1.22 ERISA
The Employee Retirement Income Security Act of 1974, as amended, and
each formal regulation or ruling thereunder governing the management
and operation of this Plan as in effect from time to time.
1.23 FAMILY MEMBER
The spouse, and lineal ascendants and descendants, and the spouses of
such lineal ascendants and descendants, of a 5% owner or of the 10
most highly paid Highly-Compensated Employees.
1.24 FORFEITURE
The portion of a Participant's or former Participant's Employer
Contribution Account to which he is not entitled at the termination
of his employment as determined in Section 6.03.
1.25 HIGHLY-COMPENSATED EMPLOYEE
Any Employee of the Employer or a Related Employer who meets any of
the following requirements in either the prior Plan Year (the
"lookback year") or the current Plan Year (the "determination year"):
(a) is more than a five percent owner of an Employer;
(b) earns $75,000 or more in Test Compensation;
(c) earns $50,000 or more in Test Compensation and is among the
top 20% of Employees when ranked on the basis of Test
Compensation during the given year excluding, however,
Employees who
(i) have less than six months of Service,
(ii) ordinarily work less than six months per year,
(iii) are under age 21,
(iv) ordinarily work less than 17-1/2 hours per week, or
(v) are non-resident aliens;
(d) is an officer of an Employer (as described in Section 416(i)
of the Code) who earns Test Compensation of more than 50% of
the amount in effect under Section 415(b)(1)(A) of the Code
for such year; or
(e) is a former Employee who was a Highly-Compensated Employee
upon separation from service prior to the determination year,
performs no service for an Employer during the determination
year or was a Highly-Compensated Employee at any time after
age 55.
In addition, the Test Compensation paid to any Family Member shall be
aggregated with the Test Compensation of the Highly-Compensated
Employee for the purposes of this definition. Notwithstanding the
foregoing, an Employee will not be a Highly-Compensated Employee for
the current year merely by compensation or officer status, unless he
is in the top 100
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Employees ranked by Test Compensation. The amounts indicated in (b)
and (c) above shall be adjusted for cost of living by the Secretary
of the Treasury at the same time and in the same manner as under Code
Section 415(d). To the extent permitted under regulations and other
guidance promulgated by the Internal Revenue Service, the Company and
Related Employers may elect to determine the status of
Highly-Compensated Employees on a basis other than that provided
above.
1.25 A HOUR OF SERVICE
Hour of Service shall mean:
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for an Employer or a
Related Employer. These hours shall be credited to the
Employee for the computation period or periods in which the
duties are performed;
(b) Each hour for which an Employee is paid, or entitled to
payment, by an Employer or a Related Employer on account of a
period of time during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty, or
leave of absence;
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Employer or
Affiliate. The same Hours of Service shall not be credited
both under subsections (a) or (b) above, as the case may be,
and under this subsection (c). These hours shall be credited
to the Employee for the computation period or periods to which
the award or agreement pertains, rather than the computation
period in which the award, agreement, or payment is made;
(d) Except as provided in subsection (e) below, hours under the
foregoing subsections shall be calculated and credited
pursuant to the minimum requirements prescribed under Section
2530.200b-2 of the Department of Labor Regulations, which are
incorporated herein by this reference;
(e) Notwithstanding the foregoing, in the case of any Employee for
whom an Employer's records do not accurately reflect the
actual number of Hours of Service as determined above, such
Employee shall be credited with 45 Hours of Service for each
week in which he is credited with at least one Hour of
Service.
1.26 INVESTMENT FUND
An investment fund offered by the Committee under the Plan to
Participants for the purpose of enabling them to direct investment of
their Accounts under the procedures described in Section 4.01. The
Committee may, in its discretion, offer additional Investment Funds
or cease to offer any Investment Fund(s) at such time as it may deem
appropriate.
1.27 NORMAL RETIREMENT AGE
Age 65.
1.28 ONE-YEAR BREAK IN SERVICE
The first day of the month following the period of 12 consecutive
months during which the Employee does not complete an Hour of
Service.
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1.29 PARTICIPANT
An Employee who has met the requirements of Article II for
participation in the Plan.
1.30 PARTICIPATION DATE
The first day of any pay period on which a Participant commences
participation in the Plan after meeting the eligibility requirements
of Article II and submitting the appropriate election forms in a
manner prescribed by the Committee.
1.31 PENSION PLAN
The State Auto Insurance Companies Employee Retirement Plan,
including any Appendix hereto, as the same may be amended from time
to time.
1.32 PLAN
The State Auto Insurance Companies Capital Accumulation Plan.
1.33 PLAN YEAR
A 12-consecutive month period from January 1 to December 31 each
year.
1.34 REGULAR MATCHING CONTRIBUTIONS
The contributions made to the Employer Contribution Account of a
Participant by an Employer as provided in Section 3.02.
1.35 RELATED EMPLOYER
Related Employer means one of the following:
(a) a member of a controlled group of corporations as defined in
Section 1563(a) of the Code, determined without regard to
Sections 1563(a)(4) and 1563(e)(3)(C), in which the Company is
a member;
(b) a trade or business which is under common control with the
Company, as determined in accordance with Section 414(c) of
the Code and regulations which may be issued thereunder;
(c) a member of an affiliated service group, as determined in
accordance with Section 414(m) of the Code and regulations
which may be issued thereunder; or
(d) an organization described under Section 414(o) of the Code.
Provided, however, for purposes of Sections 5.05 and 5.06 of this
Plan, the phrase "more than 50%" shall be substituted for the phrase
"at least 80%" in each place it appears in Section 1563(a)(1) of the
Code.
1.36 ROLLOVER ACCOUNT
The separate Account maintained for each Participant who elects to
make a Rollover Contribution as described in Section 3.04 to reflect
any Rollover Contribution made by the Participant and any earnings
thereon.
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1.37 ROLLOVER CONTRIBUTION
Any contribution by an eligible Employee of sums distributed to him
from any other qualified employee benefit plan or from an individual
retirement account, provided such prior distribution meets all the
applicable requirements to qualify for rollover treatment and the
rollover is approved by the Committee. Notwithstanding the foregoing,
the Committee shall not approve the contribution by an eligible
Employee of any sums distributed to such eligible Employee from a
qualified employee benefit plan if the Plan's acceptance of such
contribution would require that distributions under the Plan be made
in the form of a qualified joint and survivor annuity or a qualified
preretirement survivor annuity as prescribed in Sections 401(a)(11)
and 417 of the Code.
1.38 SALARY REDUCTION CONTRIBUTION ACCOUNT
The separate Account maintained for each Participant to reflect
Salary Reduction Contributions and any earnings thereon.
1.39 SALARY REDUCTION CONTRIBUTIONS
The contributions made by an Employee that are attributable to the
reduction in Compensation a Participant agrees to accept from an
Employer each Plan Year as described in Section 3.01.
1.40 SALARY REDUCTION CONTRIBUTION LIMIT
The maximum percentage for any Plan Year (determined in accordance
with the provision of Section 3.01 hereof) of an Employee's
Compensation which may be contributed to the Plan pursuant to a
Salary Reduction Agreement under Section 401(k) of the Code and
regulations issued thereunder. The Employer shall establish the
Salary Reduction Contribution Limit from time to time for the Plan
Year for the purpose of meeting the nondiscrimination tests of
Section 401(k) of the Code and applicable Regulations, and shall
apply the limit to such Employees as is necessary to assure
compliance with such tests.
1.41 SERVICE
The years and months of employment (including Approved Leaves of
Absence, if any) with an Employer or Related Employer, where any
partial month shall constitute a complete month. Such years and
months shall be calculated from the Participant's Employment
Commencement Date to the Participant's final termination date less
any period or periods of non-employment with the Employer or a
Related Employer.
Notwithstanding the foregoing, if a Participant is absent from work
due to any reason other than quit, discharge, retirement, or death,
the period up to the first anniversary of the first day of such
absence (or up to the date of quit, discharge, retirement, or death,
if earlier) shall be counted as Service for all purposes under the
Plan.
Notwithstanding the above, an Employee, whose employer immediately
prior to employment by the Company was Columbus Life Insurance
Company (formerly known as Columbus Mutual Life Insurance Company)
and who was employed by the Company in 1982, shall have all service
with Columbus Life Insurance Company counted as Service for all
purposes under the Plan.
1.42 SUPPLEMENTAL PARTICIPANT CONTRIBUTION ACCOUNT
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The separate Account maintained for each Participant to reflect
Supplemental Participant Contributions and any earnings thereon.
1.43 SUPPLEMENTAL PARTICIPANT CONTRIBUTIONS
The nondeductible contributions made by the Participant as described
in Section 3.03.
1.44 TEST COMPENSATION (EFFECTIVE JANUARY 1, 1987)
An Employee's gross Earnings from the Employer or a Related Employer,
reported under Sections 6041 and 6051 of the Code on Form W-2, plus
Salary Reduction Contributions, as defined in Section 125, 402(a)(8),
402(h) or 403(b) of the Code, used for the purpose of
anti-discrimination testing and highly compensated and key employee
determination. In no event shall the amount of Test Compensation
taken into account under the Plan exceed the adjusted annual
limitation permitted under Section 1.14.
1.45 TOTAL AND PERMANENT DISABILITY
A physical or mental condition which totally and permanently prevents
the Participant from engaging in his regular occupation or employment
for remuneration or profits, except for purposes of rehabilitation
not incompatible with a finding of total and permanent disability.
The determination as to whether a Participant is Totally and
Permanently Disabled shall be made on the basis of any one or all of
the following as determined by the Committee in its sole discretion:
(a) on medical evidence by a licensed physician designated by
the Committee, or
(b) on evidence that the Participant is eligible for
disability benefits under any long-term disability plan
sponsored by his Employer, or
(c) on evidence that the Participant is eligible for
disability benefits under the Social Security Act in
effect at the date of disability.
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Total and Permanent Disability shall exclude disabilities arising
from:
(d) a proven felony or unlawful enterprise on the part of the
Participant, or
(e) intentionally self-inflicted injury or intentionally
self-induced sickness, or
(f) military service where the Participant is eligible to
receive a government-sponsored disability pension.
1.46 TRUST AGREEMENT AND TRUST
Trust Agreement and Trust mean, respectively, the agreement between
the Company and the Trustee governing the administration of the
Trust, as it may be amended from time to time, and the trust
established thereunder.
1.47 TRUST FUND
All money, securities, and other property held under the Trust
Agreement for the purposes of the Plan, together with the income
therefrom.
1.48 TRUSTEE
The person, persons, entity, or entities appointed by the Company as
Trustee of the Trust.
1.49 VALUATION DATE
The last day of each quarter of the Plan Year; provided, however,
that effective October 1, 1994, "Valuation Date" shall mean each day
the New York Stock Exchange is open for business.
1.50 YEAR OF ELIGIBILITY SERVICE
An Eligibility Computation Period (as hereinafter defined) in which
an Employee is credited with at least 1,000 Hours of Service in the
employ of an Employer or a Related Employer.
The initial Eligibility Computation Period with respect to an
Employee shall mean the 12-consecutive month period that begins on
the day on which the Employee first completes an Hour of Service in
the employ of an Employer or a Related Employer (his "date of hire")
and ends on the day preceding the first anniversary of such date.
Thereafter, all subsequent Eligibility Compensation Periods shall
coincide with the Plan Year (beginning with the Plan Year that
commences immediately following the Employee's date of hire). An
Employee who completes 1,000 Hours of Service in both his initial
Eligibility Computation Period and in the Plan Year which commences
immediately after the Employee's date of hire shall be credited with
two Years of Eligibility Service.
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ARTICLE II
ELIGIBILITY AND PARTICIPATION
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2.01 ELIGIBILITY
(a) Each individual who was an Employee of an Employer on
January 1, 1989, and who was a Participant in the Plan on
that date shall continue to be eligible to participate in
the Plan.
(b) Each Employee who is not described in Section 2.01(a), who
is employed by an Employer, and who is hired in a
classification other than that of a temporary Employee or
an Employee employed on a retainer or consultant basis
shall be eligible to become a Participant as of the
January 1 next following the Employee's Employment
Commencement Date and attainment of age 20; provided the
Employee remains in the employment of an Employer as of
such January 1. Effective on and after July 1, 1995, such
Employee shall be eligible to become a Participant as of
the first day of the month next following the Employee's
Employment Commencement Date and attainment of age 20.
(c) Notwithstanding subsections (a) and (b) above, an Employee
who is employed by an Employer and who is hired as a
temporary Employee or as an Employee employed on a
retainer or consultant basis shall be eligible to become a
Participant as of the January 1 or July 1 coincident with
or next following the later of:
(i) such Employee's attainment of the age of 21
years; and
(ii) such Employee's completion of one Year of
Eligibility Service; provided such Employee
remains in the employment of an Employer as of
such January 1 or July 1.
For the purpose of this Section 2.01(c), a temporary
Employee shall be defined as an individual who is not
employed on a regular basis by the Employer and who is
compensated for services performed for such Employer on an
hourly basis. Each temporary Employee shall be notified
upon employment of his status as a temporary Employee. The
Employer shall maintain records documenting the Employee's
temporary status.
For the purpose of this Section 2.01(c), an Employee hired
on a retainer or consultant basis shall be defined as an
Employee who is employed by an Employer because of his
specialized skills to provide strategic guidance to the
Employer. Such employment shall be for an indeterminate
period of time. Each such Employee shall be notified of
his employment status when hired, and the Employer shall
maintain records documenting this status.
2.02 PARTICIPATION
Each Employee who has met the applicable eligibility requirements
described in Section 2.01 shall become a Participant on the
Participation Date which is not later than 15 days following the date
on which he has agreed to make Salary Reduction Contributions to the
Plan.
2.03 PARTICIPATION FORMS
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Employees who are eligible and desire to become Participants shall be
required to enter into a salary reduction agreement as prescribed by
the Company. Each Participant shall designate a Beneficiary on a form
prescribed by the Company as provided in Section 7.05. In addition,
an Employee who meets the requirements of Section 3.03 may make
Supplemental Participant Contributions. Contributions to be made
pursuant to Section 3.03 must be elected by the Participant as
prescribed by Company. Such election shall take effect on the first
day of a pay period following the date on which he has agreed to make
Contributions.
2.04 TERMINATION AND REEMPLOYMENT
(a) If an Employee who has met the eligibility requirements of
Section 2.01 terminates employment and is subsequently rehired
by an Employer, he shall again be eligible to participate in
the Plan on this date of reemployment.
(b) If an Employee who has not met the eligibility requirements of
Section 2.01 terminates employment and is subsequently rehired
by an Employer, he shall be eligible to participate in the
Plan when he meets the eligibility requirements of Section
2.01(b), based upon his original date of employment.
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ARTICLE III
CONTRIBUTIONS
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3.01 SALARY REDUCTION CONTRIBUTIONS
(a) Each Employee who has met the eligibility requirements of
Section 2.01 shall have the option to enter into a salary
reduction agreement with his Employer or a designated
agent of his Employer which shall be applicable to all
Compensation paid thereafter. Such salary reduction
agreement shall be made in writing or, for periods on and
after October 1, 1994, in accordance with
nondiscriminating and uniform procedures established by
the Company and Trustee. The salary reduction agreement
will provide that the Participant agrees to accept a
reduction in salary from the Employer of between 1% and
16% of his Compensation. On an annual basis, such Salary
Reduction Contribution amount shall not exceed the annual
401(k) deferral limit as outlined in Section 402(g) of the
Code. The Employer shall contribute to the Trust Fund, as
soon as practicable after the end of each payroll period
(but not later than 90 days after the Employee would have
received such amounts if he had declined to enter into a
salary reduction agreement or, if earlier, 30 days after
the end of the Plan Year), such Salary Reduction
Contributions.
(b) Any provision of this Plan to the contrary
notwithstanding, no Participant shall be permitted, during
any calendar year beginning on or after January 1, 1987,
to make Salary Reduction Contributions under the Plan
(when combined with the Participant's elective deferrals
under any other plans, contracts, or arrangements
maintained by the Employer or Related Employer) that will
exceed the adjusted limitation in affect for such year
under Section 402(g)(1) of the Code.
(c) In the event any amount of a Participant's Salary
Reduction Contributions for a calendar year exceeds the
limitation applicable under Section 3.01(b) for such
calendar year, such excess amount (hereafter described for
purposes of this Section 3.01(c), as "Excess Deferrals"),
as adjusted for any income or loss allocable thereto in
accordance with regulations, shall be distributed to such
Participant, as provided in subparagraph (i), (ii) and
(iii) below:
(i) At a date not later than the April 1st of the
calendar year immediately following the
calendar year to which such Excess Deferrals
are attributable, any Participant to whom this
Section 3.01 applies may notify, in writing,
the Committee by submitting a form as may be
provided by the Committee which shall specify
the amount of the Participant's Excess
Deferrals for the given calendar year and shall
contain a certified statement by the
Participant indicating that if such amount is
not distributed, such Excess Deferrals will
exceed the limit imposed on the Participant by
Section 402(g) of the Code for the year in
which the Salary Reduction Contribution
occurred. Notwithstanding the foregoing and
solely for the purpose of facilitating a
distribution of Excess Deferrals as required by
regulation, in the event a Participant
hasExcess Deferrals in a given year calculated
by taking into account his Salary Reduction
Contributions hereunder and his elective
deferrals under any other plan, contract, or
arrangement maintained by the Employer or
Related Employer, the Participant will be
deemed to have notified the Committee in the
manner provided in this subparagraph.
(ii) At a date not later than the April 15th of the
calendar year immediately following the
calendar year to which such Excess Deferrals
are attributable, the Plan shall distribute to
the Participant the amount of the Excess
Deferrals allocated to the
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Plan as adjusted for any income or any loss
allocable to such excess. Any Excess Deferrals
distributed pursuant to this subparagraph are
to be included in the gross income of the
Participant for the year to which such Excess
Deferrals relate. Any income that is allocable
to such Excess Deferrals (as determined in
accordance with rules promulgated by the
Secretary of the Treasury or his delegate) that
is distributed pursuant to this subparagraph is
to be included in the gross income of the
Participant for the year in which such amount
is distributed. In making a distribution as
permitted under this Section, the Committee
shall specifically designate the distribution
as that consisting of Excess Deferrals within
the meaning of Section 402(g)(1) of the Code.
Any distribution of less than the entire amount
of Excess Deferrals plus income or loss
attributable to such deferral contributions
shall be treated as a prorata distribution of
such excess deferral contributions and
income/loss.
(iii) To the extent provided by the Secretary of the
Treasury or his delegate, such Excess Deferrals
distributed pursuant to this subparagraph are
to be taken into account for purposes of
applying the actual deferral percentage test
specified in 3.01(f) (except if such excess is
both prohibited under Section 401(a)(30) of the
Code and is attributable to an Employee other
than a Highly Compensated Employee), and for
any other purpose of the Code which may be
prescribed by the Secretary of the Treasury or
his delegate. No corrective distribution under
this Section shall be recognized for purposes
of determining whether the minimum distribution
requirements of Section 401(a)(9) of the Code
are satisfied with respect to any Participant.
(iv) Any distribution in accordance with this
Section 3.01(c) shall be made without regard to
any notice or consent otherwise required under
Sections 411(a)(11) or 417 of the Code.
(d) Prior to October 1, 1994, each Participant may change the
percentage of his Salary Reduction Contributions by
entering into a new salary reduction agreement at least 15
days prior to the January 1, April 1, July 1, or October 1
on which such election is to take effect. In addition,
each Participant may suspend his Salary Reduction
Contribution at any time by entering into a new salary
reduction agreement and electing 0% Salary Reduction
Contributions. Such suspension election shall become
effective on the first day of a pay period which begins
not later than 15 days after the election is made. The
resumption of Salary Reduction Contributions cannot occur
before the next-following January 1, April 1, July 1 or
October 1.
Effective on and after October 1, 1994, each Participant
may at any time elect to change the percentage of his
Salary Reduction Contributions by entering into a new
salary reduction agreement which shall become effective on
the first day of a pay period which begins not later than
15 days after the election is made. Each Participant may
also suspend his Salary Reduction Contributions at any
time by entering into a new salary reduction agreement
(and electing 0% Salary Reduction Contributions) which
shall become effective on the first day of a pay period
which begins not later than 15 days after the election is
made. A Participant who has suspended his Salary Reduction
Contributions may at any time elect to resume his Salary
Reduction Contributions by entering into a new salary
reduction agreement which shall be effective on the first
day of a pay period which begins not later than 15 days
after the election is made. Notwithstanding the foregoing
provisions of this paragraph, the number of changes in
percentage which a Participant may make to his Salary
Reduction Contributions in any given calendar year shall
not exceed four.
18
(e) The Company shall establish and maintain a Salary
Reduction Contribution Account in the name of each
Participant who elects to enter into a salary reduction
agreement.
(f) The Company may amend or revoke any salary reduction
agreement entered into by a Participant if the Company
determines that such a revocation or amendment is
necessary to ensure that the additions to a Participant's
Account for any Plan Year will not exceed the limitations
set forth in Sections 5.05 and 5.06 of the Plan, or to
ensure that the following discrimination tests of Sections
401(k) and 401(m) of the Code are met for any Plan Year
beginning on and after January 1, 1987:
(i) The Average Salary Reduction Percentage of the
group of eligible Highly-Compensated Employees
shall not exceed the Average Salary Reduction
Percentage of all other eligible Employees
multiplied by 1.25.
(ii) The Average Salary Reduction Percentage of the
group of eligible Highly-Compensated Employees
shall not exceed the Average Salary Reduction
Percentage of all other eligible Employees
multiplied by two, provided that the Average
Salary Reduction Percentage of eligible
Highly-Compensated Employees is not more than
two percentage points higher than the Average
Salary Reduction Percentage for all other
eligible Employees.
(g) In accordance with the nondiscrimination requirements of
Section 401(m) of the Code and applicable regulations, for
each Plan Year beginning on and after January 1, 1987, the
Committee shall establish a Contribution Percentage Limit
with respect to Supplemental Participant Contributions and
Regular Matching Contributions credited to a
Highly-Compensated Employee's Account during a Plan Year
and may adjust such percentage limit from time to time
during the year in order to satisfy one of the following
tests:
(i) The Average Supplemental Percentage of the
group of eligible Highly-Compensated Employees
shall not exceed the Average Supplemental
Percentage of all other eligible Employees
multiplied by 1.25.
(ii) To the extent allowed, the Average Supplemental
Percentage of the group of eligible
Highly-Compensated Employees shall not exceed
the Average Supplemental Percentage of all
other eligible Employees, multiplied by two,
provided that the Average Supplemental
Percentage for eligible Highly-Compensated
Employees is not more than two percentage
points higher than the Average Supplemental
Percentage for all other eligible Employees.
Notwithstanding the foregoing, the provisions of this
paragraph (g) shall be deemed to include the provisions of
Section 401(k)(3) and 401(m) of the Code as incorporated
(by this reference).
(h) For purposes of determining the Average Salary Reduction
Percentage and Average Supplemental Percentage under
paragraphs (f) and (g) above, the Test Compensation,
Salary Reduction Contributions, Supplemental Participant
Contributions and Regular Matching Contributions of an
eligible Employee who is a Highly-Compensated Employee and
either a 5% owner or one of the 10 most Highly-Compensated
Employees shall include the Test Compensation, Salary
Reduction Contribution, Supplemental Participant
Contributions, and Regular Matching Contributions, if any,
of a Family Member of such eligible Employee.
19
(i) If the average percentages described in Sections 3.01(f)
and/or 3.01(g) applicable to the group of eligible
Highly-Compensated Employees are expected to exceed the
maximum average percentage necessary to comply with the
rules described in such Sections, the Committee may direct
that the Average Salary Reduction Percentage and/or the
Average Supplemental Percentage, as the case may be, for
each member of the group of eligible Highly-Compensated
Employees be reduced respectively to the extent necessary
to comply with the limit described in Sections 3.01(f)
and/or 3.01(g).
The reduction shall be effected by successive reductions
of the highest individual current Salary Reduction
Percentage and/or current percentage of Supplemental
Participant Contribution and Regular Matching Contribution
attributable to one or more members of the group of
eligible Highly-Compensated Employees until the applicable
average percentage for such group of Highly-Compensated
Employees does not exceed the applicable limit described
in Sections 3.01(f) and 3.01(g) above.
(j) Any provision of Article III to the contrary
notwithstanding, if both the Average Salary Reduction
Percentage and the Average Supplemental Percentage for
Highly-Compensated Employees exceed such percentages for
Non-Highly Compensated Employees by more than 25%, the
Committee shall apply the aggregate alternative limitation
in accordance with Section 1.401(m)-2 of the Income Tax
Regulations, the provisions of which are incorporated
herein by reference. In the event the combined alternative
limitation is not satisfied by any given Plan Year, the
Company shall direct the Committee to reduce the Average
Salary Reduction Percentage of the Average Supplemental
Percentage for Highly-Compensated Employees to the extent
necessary to satisfy the combined alternative limitation.
(k) For purposes of this Section 3.01, if the
nondiscrimination test of Section 401(k) and/or 401(m) of
the Code is not satisfied for a Plan Year, amounts in
excess of the limits described in Sections 3.01(f) and/or
3.01(g) as the case may be, and the earnings thereon,
shall be refunded to such Highly-Compensated Employees, or
in the case of nonvested Regular Matching Contributions,
forfeited, not later than the close of the Plan Year
following the Plan Year in which such excess arose.
Amounts to be refunded to Highly-Compensated Employees
shall be paid in a single payment and shall be deemed to
have been made before the close of the Plan Year in which
such excess contributions arose.
Any Employee who, during the current Plan Year, is not a
Highly-Compensated Employee under Section 1.25 but who is
either a 5% owner, or who satisfies the requirements in
paragraphs (b), (c) or (d) of Section 1.25 above and is
among the top 100 Employees ranked by Test Compensation
for the current Plan Year shall also be considered a
Highly-Compensated Employee.
Highly-Compensated Employees shall also include any
Employee who has a break in service prior to the
applicable Plan Year and was a Highly-Compensated
Employee, as defined above, for either (a) the Plan Year
during which such Employee has a Separation Date, or (b)
any Plan Year ending on or after the Employee's 55th
birthday.
A Highly-Compensated Employee shall be determined in
accordance with the provision of Section 414(q) of the
Code and Regulations promulgated thereunder.
(l) Except under such conditions described in paragraph (h)
above, distribution of a Participant's Salary Reduction
Contribution Account shall not commence prior to the
earliest of his death, the day he incurs a Total and
Permanent Disability, other termination of employment,
attainment of age 59-1/2, or his demonstration of
hardship.
20
3.02 EMPLOYER CONTRIBUTIONS
(a) For each eligible Employee who authorizes Salary Reduction
Contributions during the Plan Year, the Employer will pay to
the Trustee a Regular Matching Contribution equal to:
(i) 75% of the Participant's Salary Reduction Contributions
up to 2% of his Compensation, plus
(ii) 50% of the Participant's Salary Reduction Contributions
in excess of 2% but not in excess of 6% of his Compensation.
Regular Matching Contributions shall be made to the Trustee as
soon as practicable after the end of the quarter of the Plan
Year to which they relate.
(b) The Company shall establish and maintain an Employer
Contribution Account in the name of each Participant on whose
behalf Regular Matching Contributions, if any, are made.
(c) In order to meet the nondiscrimination requirements of Section
401(k) of the Code, the Board, in its sole discretion, may
authorize the Employer to make additional Employer
contributions applicable only to those Participants who earn
less than a specified level of Compensation. Contributions
made under this paragraph (c) shall be deemed for all Plan
purposes to be Salary Reduction Contributions except that no
Regular Matching Contribution will be made based upon such
contributions.
(d) Employer contributions under the Plan (including, for purposes
of this paragraph (d), Salary Reduction Contributions) shall
be made out of the Consolidated Net Accumulated or Current
Earnings of the Company; provided, however, that the total of
such contributions for any Plan Year shall not exceed the
amount allowable as a deduction under Section 404 of the Code,
as amended and in force from time to time.
3.03 SUPPLEMENTAL PARTICIPANT CONTRIBUTIONS
(a) A Participant may elect to make Supplemental Participant
Contributions to the Trust Fund in each Plan Year of
between 1% and 10%, in integral percentages, of an amount
equal to his Compensation for the year less his Salary
Reduction Contributions, if any, for the year. In no
event, however, should a Participant be permitted under
this Article III to make on a combined basis an amount in
excess of 17% of his Compensation. A Participant who
elects to make Supplemental Participant Contributions
prior to October 1, 1994, shall complete an authorization
form as prescribed by the Company. For periods on and
after October 1, 1994, a participant shall make his
Supplemental Participant Contribution election in
accordance with nondiscriminatory and uniform procedures
established by the Company and Trustee. The Employer shall
deduct each Participant's Supplemental Participant
Contributions from his Compensation for each payroll
period. The Employer shall transfer these Supplemental
Participant Contributions to the Trust Fund as soon as
practicable after they are deducted (but not later than 90
days after the Employee would have received such amounts
if he had declined to enter into an election hereunder or,
if earlier, 30 days after the end of the Plan Year).
(b) The Company shall establish and maintain a Supplemental
Participant Contribution Account in the name of each
Participant who elects to make such contributions.
21
(c) Prior to October 1, 1994, a Participant may change the
percentage of his Supplemental Participant Contributions
by filing a new authorization form with the Company, at
least 15 days prior to the January 1, April 1, July 1 or
October 1 on which such election is to take effect. A
Participant may suspend his Supplemental Participant
Contributions at any time by filing a new authorization
form with the Company. Such suspension shall become
effective on the first day of a pay period which begins
not later than 15 days after the authorization form is
filed with the Company. The resumption of Supplemental
Participant Contributions cannot occur before the next
following January 1, April 1, July 1 or October 1.
Effective on and after October 1, 1994, each Participant
may at any time elect to change the percentage of his
Supplemental Participant Contributions by completing a new
authorization which shall become effective on the first
day of a pay period which begins not later than 15 days
after the authorization is made. Each Participant may also
suspend his Supplemental Participant Contributions at any
time by completing a new authorization (and electing 0%
Supplemental Participant Contributions) which shall become
effective on the first day of a pay period which begins
not later than 15 days after the authorization is made. A
participant who has suspended his Supplemental Participant
Contributions may at any time elect to resume his
Supplemental Participant Contributions by completing a new
authorization which shall be effective on the first day of
a pay period which begins not later than 15 days after the
authorization is made. Notwithstanding the foregoing
provisions of this paragraph, the number of changes in
percentage which a Participant may make to his
Supplemental Participant Contributions in any given
calendar year shall not exceed four.
(d) In addition to or in lieu of the foregoing payroll
deduction Supplemental Participant Contributions, a
Participant may also elect, not more frequently than once
a year, to make a Supplemental Participant Contribution by
a cash payment to the Trust Fund in an amount which,
together with all other Supplemental Participant
Contributions made by that Participant in prior years,
will not cause his total Supplemental Participant
Contributions to exceed 10% of the Compensation (less all
Salary Reduction Contributions) received by the
Participant for all years that he has been a Participant
in the Plan.
(e) Before making a Supplemental Participant Contribution in
any Plan Year, the maximum benefit provisions of Sections
5.05 and 5.06 of the Plan will be considered. All
Supplemental Participant Contributions are subject to the
approval of the Committee.
(f) In the event a Participant's Salary Reduction
Contributions are reduced pursuant to Section 3.01(d), his
election under Section 3.03(a) shall not be amended or
revoked except by the Participant pursuant to Section
3.03(c) or the Committee in accordance with Sections
3.01(f), (g) or (i).
3.04 ROLLOVER CONTRIBUTIONS
A Participant may elect to make a Rollover Contribution to the Plan.
An eligible Employee who elects to make a Rollover Contribution shall
complete such forms as may be required by the Company. Subject to the
approval of the Committee (as described in Section 1.37), the Company
shall establish and maintain a Rollover Account in the name of each
eligible Employee who elects to make a Rollover Contribution to the
Plan.
3.05 FORFEITURES
22
Any Forfeiture under the Plan shall be used to reduce Regular
Matching Contributions and shall not be applied to increase the
Accounts of Plan Participants.
3.06 REVERSION OF EMPLOYER CONTRIBUTIONS
At no time shall any part of the corpus or income of the Trust Fund
be used for or diverted to purposes other than for the exclusive
benefit of Participants and their Beneficiaries and to pay the
reasonable expenses of administration of the Plan and Trust, to the
extent that such expenses are not paid by the Employers.
Notwithstanding the above, a contribution which is made by an
Employer by a mistake of fact may be returned to the Employer within
one year after the payment of the contribution to the Trust Fund.
Contributions, other than Supplemental Participant Contributions, are
conditioned upon the deductibility of the contribution under Section
404 of the Internal Revenue Code of 1986 to the extent the deduction
is disallowed, such a contribution shall be returned to the Employer
within one year after the disallowance of the deduction.
3.07 INTER-COMPANY TRANSFERS
If a Participant is transferred from one Employer to another Employer
hereunder, he shall remain a Participant under the Plan and shall
share in the allocation of Employer contributions to the extent the
Employee both continues to be eligible for participation under
Section 2.01 and continues to make Salary Reduction Contributions
with the respective Employer. If a Participant is transferred to a
Related Employer which has not adopted this Plan, he shall continue
to share in the investment experience of the Trust Fund but shall
cease to participate in Employer contributions until such time as he
is again employed by an Employer in a position covered under the Plan
and he begins Salary Reduction Contributions hereunder. If such an
Employee terminates employment without ever again becoming a
Participant, the terms of Section 6.03 shall apply. If an Employee
transfers employment from a Related Employer which is not an Employer
hereunder to an Employer, he shall become a Participant in accordance
with Section 2.01 taking into account his prior employment with the
Related Employer.
3.08 CHANGE IN EMPLOYMENT STATUS
If a Participant becomes ineligible to participate in accordance with
the provisions of Section 2.01(c), he shall continue to share in the
investment experience of the Trust Fund but shall cease to
participate in Employer contributions until such time as he again
becomes a Participant and begins Salary Reduction Contributions
hereunder.
23
ARTICLE IV
INVESTMENT OF CONTRIBUTIONS
---------------------------
4.01 INVESTMENT OF ACCOUNTS
Each Participant shall elect upon his Participation Date the manner
in which all contributions made to his Accounts are to be invested in
each Investment Fund. A Participant may direct that contributions to
his Accounts shall be allocated to such Investment Fund(s) as the
Participant selects in 10% increments (1% increments, effective
October 1, 1994).
Such investment election shall remain in force until a Participant or
former Participant changes such election in accordance with Section
4.02. If a Participant fails to elect the manner in which the
contributions to his Accounts are to be invested, then the
contributions to his Accounts shall be invested in the fixed income
Investment Fund (or such other Investment Fund as the Company shall
deem appropriate, upon such notice to the Participant as the Company
shall deem appropriate).
4.02 CHANGE IN INVESTMENT ELECTION
(a) Prior to October 1, 1994, a Participant may change the
manner in which future contributions to his Accounts are
to be allocated by filing a new authorization form as
prescribed by the Company at least 15 days prior to the
January 1, April 1, July 1 or October 1 on which the
election is to take effect. In addition, a Participant may
elect to have the investment of his Account or Accounts
reallocated among the Investment Funds in 10% increments
no more than four times in each Plan Year by filing a new
authorization form as prescribed by the Company at least
15 days prior to the January 1, April 1, July 1 or October
1 on which the election is to take effect. Upon
termination of a Participant's or former Participant's
employment (whether by reason of retirement, Total and
Permanent Disability or for other reasons), as of any
January 1, April 1, July 1 or October 1 thereafter, the
Company will transfer the Participant's or former
Participant's Account or Accounts into the fixed income
Investment Fund. Said Account or Accounts will remain
invested in this Investment Fund until withdrawn.
(b) Effective October 1, 1994, a Participant may at any time
elect to (i) change the manner in which future
contributions to his Accounts are to be allocated, and/or
(ii) reallocate the investment of his Account or Accounts
among the Investment Funds. Such elections shall be made
in 1% increments in accordance with nondiscriminatory and
uniform procedures established by the Company and Trustee.
Any election under this Section 4.02(b) shall be effective
as of the Valuation Date on which the completed election
is made or as of the next subsequent Valuation Date in
accordance with nondiscriminatory and uniform procedures
established by the Company and Trustee. Such elections
shall remain in effect until changed by another election
under this Section.
24
ARTICLE V
ALLOCATIONS, ACCOUNTING AND ADJUSTMENTS
---------------------------------------
5.01 VALUATION
As of each Valuation Date, the Trustee shall determine the Closing
Balance of each Investment Fund, and the Committee shall determine
the Closing Balance of the Salary Reduction Contribution Account,
Supplemental Participant Contribution Account, Employer Contribution
Account, and Rollover Account of each Participant and former
Participant. The Closing Balance of these Accounts of each active
Participant and former Participant shall be equal to the Beginning
Balance of such Accounts plus or minus the applicable adjustments
contained in Section 5.03, 5.04, 5.05, or 5.06.
5.02 COMPOSITION OF TRUST FUND
All amounts contributed to the Plan, as increased or decreased by
income, expenditure, appreciation, and depreciation shall constitute
a single fund known as the Trust Fund. A separate Salary Reduction
Contribution Account shall be maintained for each Participant. A
second separate Account, called an Employer Contribution Account,
shall be maintained for each Participant. Additional accounts, if
any, shall be maintained for each Participant who elects to make
Supplemental Participant Contributions pursuant to Section 3.03 and
Rollover Contributions pursuant to Section 3.04. Each Participant's
Accounts shall be further subdivided into one, two or more
sub-accounts to reflect contributions invested in the various
investment funds described in Section 4.01 as appropriate.
5.03 ALLOCATION OF EARNINGS AND LOSSES
(a) As of each Valuation Date, the Accounts of each
Participant or former Participant shall be adjusted to
account for investment earnings or losses. The investment
earnings (or losses) of each Investment Fund shall equal
the sum of all income received and realized and unrealized
appreciation since the last Valuation Date, less all
charges, expenses and realized and unrealized depreciation
since the last Valuation Date.
(b) Prior to October 1, 1994, investment earnings (or losses)
of a given Investment Fund shall be allocated to the
Salary Reduction Contribution Account, Employer
Contribution Account, Supplemental Participant
Contribution Account, and Rollover Account of each active
Participant and former Participant still invested in that
Investment Fund on the Valuation Date in the ratio that
the Beginning Balance of each such account, reduced by any
withdrawals and distributions and increased by one-half of
all contributions made during the quarter and one-half of
all principal and interest repaid during the quarter,
bears to the Beginning Balance of the Salary Reduction
Contribution Account, Employer Contribution Account,
Supplemental Participant Contribution Account, and
Rollover Account of all Participants and former
Participants invested in such Investment Fund as of the
last Valuation Date, reduced by any withdrawals and
increased by one-half of all contributions made during
that quarter and one-half of all principal and interest
repaid during the quarter. For the purposes of allocating
investment earnings (or losses), any withdrawals or other
distributions made during a quarter shall first be
subtracted from the Beginning Balance of the applicable
Account and then to the extent the Beginning Balance is
insufficient to pay the withdrawal or distribution in
full, the excess amount shall be subtracted from
contributions made during the current quarter. Earnings
(or losses) shall then be allocated based upon the reduced
Beginning Balance and one-half of the contributions
remaining that were made since the last Valuation Date.
25
(c) Effective October 1, 1994, investment earnings (or losses)
of a given Investment Fund shall be allocated to the
Salary Reduction Account, Employer Contribution Account,
Supplemental Participant Contribution Account and Rollover
Account of each active Participant and former Participant
still invested in that Investment Fund on the Valuation
Date to reflect his share (if any) of contributions, loan
repayments, withdrawals and distributions since the
preceding Valuation Date. Such allocation of investment
earnings (or losses) shall be made in accordance with
nondiscriminatory and uniform procedures established by
the Company and Trustee and shall be based on the fair
market value of the given Investment Fund.
(d) If a Participant or former Participant has received a loan
from the Plan pursuant to Article IX, then such loan
amount shall be deemed to be a self-directed investment by
the Participant or former Participant, and the interest
charged on the loan amount as determined by the Committee
shall be deemed to be earnings which shall be allocated
directly to the Participant's or former Participant's
appropriate Accounts on each Valuation Date. Loan amounts
outstanding shall not share in the earnings of the Funds.
5.04 CONTRIBUTIONS AND FORFEITURES
(a) As of each pay period, the Salary Reduction Contribution
Account of each Participant shall be increased by any
Salary Reduction Contribution made on behalf of the
Participant for that pay period pursuant to Section 3.01.
The Employer Contribution Account of each such Participant
shall be increased as of that pay period, or not later
than 60 days after the Valuation Date coincident with or
following a pay period, by any allocation of Regular
Matching Contributions made pursuant to Section 3.02. The
aggregate value of Employer Contribution Accounts or
portions thereof forfeited under Section 6.03, if any,
shall be used to reduce Employer contributions for the
next quarter, or a subsequent quarter.
(b) As of each pay period, but not later than 90 days after
the Participant would have received such amounts if he had
declined to make an election to make Supplemental
Participant Contributions, the Participant's Supplemental
Participant Contribution Account of a Participant shall be
increased by any Supplemental Participant Contributions
the Participant made for that pay period pursuant to
Section 3.03.
5.05 MAXIMUM ANNUAL ADDITIONS (EFFECTIVE JANUARY 1, 1987)
(a) The sum of the following additions to a Participant's
Accounts in any Plan Year shall not exceed the lesser of
$30,000 (or, if greater, 25% of the dollar limitation in
effect under Section 415(b)(1)(A) of the Code) or 25% of
the Participant's compensation as defined in Treasury
Regulations Section 1.415-2(d):
(i) The Regular Matching Contributions (Employer
contributions) allocated to such Participant's
Employer Contribution Account.
(ii) The Salary Reduction Contributions allocated to
such Participant's Salary Reduction
Contribution Account.
(iii) The Supplemental Participant Contributions
allocated to such Participant's Supplemental
Participant Contribution Account.
An excess amount resulting from the application
of subsection (b)(ii) or (iii) of this Section
5.05 which reduces Employer contributions in a
succeeding Plan Year
26
shall be considered annual additions for such
Plan Year. Annual additions shall also include
(1) amounts allocated during a Plan Year to an
individual medical account, as defined in
Section 415(1)(2) of the Code, which is part of
a pension or annuity plan maintained by the
Employer, and (2) amounts derived from
contributions paid or accrued after December
31, 1985, in Plan 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
Section 419A(d)(3) of the Code, under a welfare
benefit fund, as defined in Section 419(e) of
the Code, maintained by the Employer.
(b) In the event that such additions to a Participant's
Accounts in any Plan Year are in excess of the maximum
limits described in Section 5.05(a), because of a
reasonable error in estimating the Participant's
Compensation, a reasonable error in determining the amount
of Salary Reduction Contributions that a Participant made
within the limitations of this Section 5.05, or for such
other reasons as may be found justifiable, the following
adjustments shall be made in the order listed, to the
extent necessary to bring the addition within the required
limits. Any such adjustments made pursuant to this
subsection (b) shall be made no later than the end of such
Plan year.
(i) Any Supplemental Participant Contributions, if
any, otherwise allocable to the Participant's
Supplemental Participant Contribution Account
shall be returned to him.
(ii) The Salary Reduction Contributions, if any,
otherwise allocable to the Participant's Salary
Reduction Contribution Account, shall be
distributed to the Participant.
(iii) The Regular Matching Contributions, if any,
otherwise allocable to the Participant's
Employer Contribution Account shall be reduced,
and the amount of such reduction shall be
allocated to a suspense account (which shall
not share in the allocation of earnings under
Section 5.03 and shall be applied to reduce
Employer contributions in the succeeding Plan
Year).
(c) For purposes of this Section 5.05, this Plan and any other
qualified defined contribution plan maintained by an
Employer shall be considered as one defined contribution
plan if a Participant is a participant in both plans. If a
reduction is necessary under paragraph (b), then the
reduction shall be made to the annual addition under one
of such plans as determined by the Committee.
5.06 COMBINED MAXIMUM LIMITATIONS
In the event that any Participant in this Plan is also participating
in any defined benefit plan which is a qualified plan (within the
meaning of Section 401 of the Code) maintained by an Employer, then
for any Plan Year, the sum of the "Defined Benefit Plan Fraction" and
the "Defined Contribution Plan Fraction" for such Plan Year shall not
exceed 1.0. For purposes of this Section 5.06, such sum shall be
determined in accordance with the following:
(a) The "Defined Benefit Plan Fraction" for any year is a
fraction:
(i) The numerator of which is a projected annual
benefit of the Participant under each defined
benefit plan (as determined as of the close of
the year), and
(ii) the denominator of which is the lesser of the
maximum dollar limit allowable for such year
times 1.25, or the percentage of compensation
limit (100% of the
27
average compensation paid during the Employee's
highest three consecutive years of
participation) times 1.4.
(b) The "Defined Contribution Plan Fraction" for any year is a
fraction:
(i) The numerator of which is the sum of the annual
additions to the Participant's accounts under
each defined contribution plan as of the close
of the year, and
(ii) the denominator of which is the sum, for all
years of Service with the Employer(s), of the
lesser of the maximum dollar amount of annual
additions to such accounts which could have
been made under Section 415(c) of the Code for
such year times 1.25, or the percentage of
compensation limit for such year times 1.4.
For purposes of this Section 5.06, all defined benefit plans or
defined contribution plans shall be treated as one plan by class. In
the event the above limitations would otherwise be exceeded in any
Plan Year, the Participant's annual additions under this Plan are to
be limited, and the Committee shall advise any affected Participant
of any additional limitation on his annual benefits required by this
Section 5.06.
5.07 RELATED COMPANIES
In the event that Related Employers become signatory to this Plan,
completely independent records, allocations and contributions may by
maintained for each Employer. The Trustee may invest all Funds
without segregating assets between or among Employers.
28
ARTICLE VI
VESTING
-------
6.01 PARTICIPANT CONTRIBUTION ACCOUNTS
A Participant or former Participant shall at all times be 100% vested
in his Salary Reduction Contribution Account, his Supplemental
Participant Contribution Account, and his Rollover Account.
6.02 EMPLOYER CONTRIBUTION ACCOUNT
An Employee shall be 100% vested in his Employer Contribution Account
on the first to occur of the following:
(a) his Normal Retirement Age,
(b) the date on which he shall be determined to have a Total
and Permanent Disability,
(c) the date of his death, or
(d) completion of five years of Service.
6.03 TERMINATION OF EMPLOYMENT
(a) If an Employee terminates employment prior to the
completion of five years of Service for any reason other
than retirement, Total and Permanent Disability, or death,
he shall be vested in a portion of the Closing Balance of
his Employer Contribution Account in accordance with the
following:
(i) he shall be entitled to 33-1/3% of the
contributions and earnings (or losses)
attributable to these contributions, if any,
allocated to his Employer Contribution Account
for the Plan Year preceding the Plan Year in
which his termination of employment occurs,
plus
(ii) 66-2/3% of the contributions and earnings (or
losses) attributable to these contributions, if
any, allocated to his Employer Contribution
Account for the second Plan Year preceding the
Plan Year in which his termination of
employment occurs, plus
(iii) 100% of the contributions and earnings (or
losses) attributable to these contributions, if
any, allocated to his Employer Contribution
Account for the third Plan Year preceding the
Plan Year in which his termination of
employment occurs, and for all Plan Years prior
to such Plan Year.
(b) An Employee who terminates employment prior to the
completion of five years of Service for any reason other
than retirement, Total and
Permanent Disability, or death shall be entitled to
receive (in accordance with Article VII) the vested
portion of the Closing Balance of his Employer
Contribution Account in accordance with paragraph (a),
adjusted for any loans outstanding and for any withdrawals
made subsequent to the applicable Valuation Date but prior
to the payment of benefits.
29
(c) The portion of an Employee's Employer Contribution Account
determined to be nonvested under Section 6.03(a) shall be
declared a Forfeiture on the Valuation Date next following
a One Year Break in Service; provided, however, that in
the event the Employee failed to receive a distribution of
his Accounts as of such date, the Forfeiture shall be
declared as of the Valuation Date next following the
earlier of:
(i) the distribution of his Accounts, and
(ii) five consecutive One Year Breaks in Service.
Such Forfeitures shall first be applied, as specified in
Section 6.04, to restore to an Employee's Employer
Contribution Account the amount forfeited pursuant to this
Section 6.03(c); remaining Forfeitures, if any, shall be
used to reduce future Employer contributions.
(d) In addition to the vested interest in his Employer
Contribution Account, the Employee, upon termination,
shall be entitled to receive the Closing Balance in his
Supplemental Contribution Account, Salary Reduction
Contribution Account, and Rollover Account.
6.04 EFFECT OF REEMPLOYMENT
(a) If a terminated Employee returns to the employ of an
Employer or Related Employer prior to incurring a period
of severance of more than 60 months, he shall have the
amount forfeited from his Employer Contribution Account
pursuant to Section 6.03(c) restored to such Account, and
he shall continue to vest in such Account. To the extent
the Forfeitures available pursuant to Section 6.03(c) are
not sufficient to fully restore such forfeited amount, the
Employer shall make additional contributions to such
Employee's Employer Contribution Account.
(b) If a terminated Employee returns to the employ of an
Employer or Related Employer after incurring a period of
severance of more than 60 months, the amount forfeited
from his Employer Contribution Account pursuant to Section
6.03(c) shall in no event be restored. However, such
Employee's prior Service shall be restored to him.
(c) As used in this Section 6.04, the term "period of
severance" shall mean the period of time commencing with
an Employee's termination of Service and ending on the day
he next performs an hour of Service.
30
ARTICLE VII
TIME AND METHOD OF PAYMENT
--------------------------
7.01 METHOD OF PAYMENT
(a) The Committee shall direct the Trustee to make payment to
a Participant or former Participant or his Beneficiary
upon termination of the Participant's or former
Participant's employment from all Employers or Related
Employers (whether by reason of retirement, death, Total
and Permanent Disability, or for other reasons) as
provided in this Section 7.01.
(b) For Participants terminating (whether by reason of
retirement, death, Total and Permanent Disability) prior
to January 1, 1986, payment shall be made in cash in one
of the following methods, subject to the provisions of
Section 7.07. A Participant or former Participant who
terminates employment for reasons other than retirement,
death, or Total and Permanent Disability shall receive
payment according to method (i).
(i) In a lump sum equal to the vested value of the
Closing Balance of his Employer Contribution
Account, Salary Reduction Contribution Account,
Supplemental Participant Contribution Account,
and Rollover Account as of the Valuation Date
coincident with or next preceding the date of
payment.
(ii) With the approval of the Committee, in
substantially equal installments payable over a
period not exceeding 10 years from the date of
employment termination (or, in the case of a
retired Participant, over a period not to
exceed his normal life expectancy or the joint
normal life expectancy of the retired
Participant and his designated Beneficiary)
with the amount of each installment calculated
based upon the vested value of the former
Participant's Accounts as of the Valuation Date
coincident with or next preceding the date of
payment. The unpaid balance in that former
Participant's Accounts will share in the
allocation of earnings pursuant to Section
5.03.
(c) For Participants terminating on or after January 1, 1986,
payment shall be made in cash in accordance with method
(i) of Section 7.01(b) to a Participant or former
Participant who terminates employment for any reason.
(d) Payment of a Participant's or former Participant's
Accounts shall be made within 60 days of the Valuation
Date coincident with or next following his termination of
employment or as soon thereafter as the amount of the
payment can be computed. However, the Committee will defer
commencement of payments to a later date, unless the
Participant consents to an immediate payment, but not
later than the applicable date specified in Section 7.02.
7.02 REQUIRED DISTRIBUTION RULES
(a) Notwithstanding any provision in this Plan to the
contrary, a Participant's Accounts shall be distributed to
him not later than April 1 of the calendar year following
the calendar year in which he attains age 70-1/2.
Alternatively, distributions to a Participant must begin
no later than the April 1 following such calendar year and
must be made over a period not in excess of the life
expectancy of the Participant (or the lives of the
Participant and his Beneficiary) or the life expectancy of
the Participant (or the life expectancies of the
Participant and his Beneficiary).
31
(b) If the distribution of a Participant's interest has begun
in accordance with method (ii) under Section 7.01(b) and
the Participant dies before his entire interest has been
distributed to him, the remaining portion of such interest
shall be distributed at least as rapidly as under method
(ii).
(c) If a Participant dies before he has begun to receive any
distributions of his interest under the Plan, his entire
interest shall be distributed within five years after his
death.
(d) For the purposes of this Section 7.02, the life expectancy
of a Participant and a Participant's spouse (other than in
the case of a life annuity) may be redetermined, but not
more frequently than annually and in accordance with such
rules as may be prescribed by Treasury regulations.
(e) The restrictions imposed by this Section 7.02 shall not
apply if a Participant has, prior to January 1, 1984, made
a written designation to have his death benefits paid in
an alternative method acceptable under Section 401(a) of
the Code as in effect prior to the enactment of the Tax
Equity and Fiscal Responsibility Act of 1982. Any such
written designation made by a Participant shall be binding
upon the plan administrator notwithstanding the provisions
of this Section 7.02.
(f) Notwithstanding the foregoing, all distributions under the
Plan shall be made in accordance with regulations under
Section 401(a)(9) of the Code (including Section
1.401(a)(9)-2 of the Income Tax Regulations). Those
provisions reflecting Code Section 401(a)(9) (as included
here by reference if not specifically stated) shall
override any provision hereof inconsistent with Code
Section 401(a)(9).
7.03 DISTRIBUTION OF UNALLOCATED CONTRIBUTIONS
If, on the date of termination of an Employee's employment, the
Employer shall be holding Plan contributions made by or on behalf of
the Employee, but not yet allocated to his specific Accounts, the
Employer shall pay such amounts either directly to the Employee (or
his Beneficiary, as the case may be), or to the Trustee, to be
distributed by the Trustee in accordance with the method of
distribution determined under Section 7.01.
7.04 CERTAIN DELAYED PAYMENTS
If the amount of the payment required to commence on the date
determined under Section 7.01 cannot be ascertained by such date, a
payment retroactive to such date may be made no later than 60 days
after the earliest date on which the amount of such payment can be
ascertained under the Plan.
7.05 BENEFICIARY
(a) Subject to subsection (b) of this Section 7.05, each
Participant or former Participant shall have the right to
designate, by giving a written designation to the
Committee, a person or persons, or entity or entities, to
receive any benefit which may become payable upon his
death or any installments under Section 7.01(b)(ii)
remaining unpaid at his death. Successive designations may
be made, and the last valid designation received by the
Committee prior to his death shall be effective and shall
revoke all prior designations. If a designated person
shall die before the Participant or former Participant,
his interest shall terminate and, unless otherwise
provided in the written designation, such interest shall
be paid in equal shares to those Beneficiaries, if any,
who survive the Participant or former Participant. The
Participant or former Participant shall have the right to
revoke the
32
designation of any Beneficiary without the consent of the
Beneficiary, unless such Beneficiary is the spouse of the
Participant.
(b) Notwithstanding any provision in the Plan to the contrary,
the designated Beneficiary of a married Participant shall
be his spouse, unless the spouse consents, in writing, to
the designation by the Participant of a different
Beneficiary (which designation shall be in accordance with
subsection (a) of this Section 7.05). The spouse's consent
must acknowledge the effect of such consent and be
witnessed by a Plan representative or a notary public.
Such consent shall not be required if it is established to
the satisfaction of the Committee that the required
consent cannot be obtained because there is no spouse, the
spouse cannot be located, or other circumstances that may
be prescribed by Treasury regulations preclude such
consent. The designation made by the Participant and
consented to by his spouse may be revoked by the
Participant in writing without the consent of the spouse
at any time. Any new designation must comply with the
requirements of this Section 7.05(b). A former spouse's
waiver shall not be binding on a new spouse.
(c) If a Participant or former Participant shall fail to
designate a Beneficiary, if such designation shall for any
reason be illegal or ineffective, or if no Beneficiary
shall survive him, his death benefits shall be paid:
(i) to his surviving spouse who was married to the
Participant at the time of the Participant's
death;
(ii) if there is no surviving spouse, to his
descendants (including legally adopted children
and their descendants) per stirpes; or
(iii) if there is neither surviving spouse nor
surviving descendants, to the executor or other
personal representative of the Participant or
former Participant to be distributed in
accordance with his will or applicable law.
(d) The Committee may determine the identity of the
distributees and in so doing may act and rely upon any
information it may deem reliable upon reasonable inquiry,
or upon any affidavit, certificate, or other paper
believed by it to be genuine, or upon any evidence
believed by it sufficient.
7.06 ADMINISTRATIVE POWERS RELATING TO PAYMENTS
If a Participant, former Participant or Beneficiary is under a legal
disability or, by reason of illness or mental or physical disability,
is unable, in the opinion of the Committee, to attend properly to his
personal financial matters, the Trustee may make such payments in
such of the following ways as the Committee shall direct:
(a) directly to such Participant, former Participant or
Beneficiary;
(b) to the legal representative of such Participant, former
Participant or Beneficiary; or
(c) to some relative by blood or marriage, or friend, for the
benefit of such Participant, former Participant, or
Beneficiary.
Any payment made pursuant to this Section 7.06 shall be in complete
discharge of the obligation for such payment under the Plan.
7.07 BEGINNING BALANCE ELECTION
33
Notwithstanding the provisions of Section 7.01 and subject to
approval by the Committee, effective for periods prior to October 1,
1994, a Participant or former Participant or Beneficiary who
qualifies for a distribution under this Plan may elect to receive the
Beginning Balance of his Accounts, subject to the provisions of
Section 6.03(c), in lieu of the Closing Balance as of his date of
retirement, determination of Total and Permanent Disability, death,
or termination, plus any vested Regular Matching Contributions,
Salary Reduction Contributions, or Supplemental Participant
Contributions made since the last Valuation Date and less any
outstanding loans or any withdrawals made since the last Valuation
Date. The Committee shall inform all Plan Participants or former
Participants of the beginning balance election, and it shall approve
or deny requests for such elections in a nondiscriminatory manner in
compliance with the Code and ERISA.
7.08 INVESTMENT OF DEFERRED AMOUNTS
Effective for periods prior to October 1, 1994, as soon as practical
after the amount that is distributable to a former Participant is
finally determined, if the distribution will either be paid in
installments or delayed more than six months if payable in a lump
sum, the former Participant's Accounts shall be transferred to the
fixed income Investment Fund.
7.09 DIRECT ROLLOVER OF ELIGIBLE ROLLOVER DISTRIBUTIONS (EFFECTIVE JANUARY
1, 1993)
Notwithstanding any provision of the Plan to the contrary, a
Distributee may elect, subject to provisions adopted by the Committee
which shall be consistent with income tax regulations, to have any
portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a direct
rollover to such plan. For purposes of this Section:
(a) The term "Distributee" shall mean an Employee or former
Employee. In addition, such an individual's surviving spouse
or such an individual's Eligible Spouse or former spouse who
is an alternate payee within the meaning of Section 414(p)(8)
of the Code are Distributees with respect to the interest of
the Eligible Spouse or former spouse.
(b) The term "Eligible Rollover Distribution" shall mean any
distribution of all or any portion of the balance to the
credit of the Distributee other than: any distribution that is
one of a series of substantially equal periodic payments made
for the life (or life expectancy) of the Distributee or the
joint lives (or joint life expectancies) of the Distributee
and his beneficiary, or for a specified period of ten (10)
years or more; any distribution to the extent such
distribution is required under Section 401(a)(9) of the Code;
and the portion of any distribution that is not includable in
gross income.
(c) The term "Eligible Retirement Plan" shall mean an individual
retirement account or annuity, as described in Code Section
408(a) and 408(b), respectively, an annuity plan described in
Section 403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code that accepts the Distributee's
Eligible Rollover Distribution. However, in the case of an
Eligible Rollover Distribution to a surviving spouse, an
"Eligible Retirement Plan" is an individual retirement account
or annuity.
7.10 DISTRIBUTIONS UNDER A QUALIFIED DOMESTIC RELATIONS ORDER
Upon determination by the Committee that a domestic relations order
is a "qualified domestic relations order" as described in Section
414(p) of the Code, the following shall apply:
(a) If the value of the vested interest is to be distributed to an
alternate payee (as defined in Section 414(p)(8) of the Code)
does not exceed $3,500, such vested interest shall be paid
34
to the alternate payee in the form of a lump sum. Such
payment shall be made as soon as practicable following the
creation of such alternate payee's interest.
(b) If the value of the vested interest to be distributed to an
alternate payee exceeds $3,500, the alternate payee may elect
to receive such vested interest in the form of a lump sum.
Payment pursuant to such election shall be made as soon as
practicable following the creation of such alternate payee's
interest. In lieu of receiving such a payment, the alternate
payee may elect to receive the value of his vested interest in
a lump sum at any time after the "earliest retirement age"
described in Section 414(p)(4)(B) of the Code.
35
ARTICLE VIII
WITHDRAWALS
-----------
8.01 SUPPLEMENTAL PARTICIPANT CONTRIBUTIONS
An Employee may elect in writing to withdraw an amount from his
Supplemental Participant Contribution Account at any time subject to
the following conditions:
(a) Any request for withdrawal which is made prior to October 1,
1994, must be submitted at least 15 days prior to the
effective date of the withdrawal and must be in a form
approved by the Company. Any request for withdrawal which is
made on or after October 1, 1994, must be submitted to the
Trustee in accordance with nondiscriminatory and uniform
procedures established by the Company and Trustee.
(b) A withdrawal shall be no greater than the balance of the
Employee's Supplemental Participant Contribution Account. An
Employee shall be limited to two withdrawals in any Plan Year
under this Section 8.01.
(c) No withdrawal under this Section 8.01 may exceed the balance
in his Supplemental Participant Contribution Account, less any
loans outstanding against this Account.
8.02 ROLLOVER CONTRIBUTIONS
An Employee may elect in writing to withdraw an amount from his
Rollover Contribution Account at any time subject to the following
conditions:
(a) Any request for withdrawal which is made prior to October 1,
1994, must be submitted at least 15 days prior to the
effective date of the withdrawal and must be in a form
approved by the Company. Any request for withdrawal which is
made on or after October 1, 1994, must be submitted to the
Trustee in accordance with nondiscriminatory and uniform
procedures established by the Company and Trustee.
(b) A withdrawal shall be no greater than the balance of the
Employee's Rollover Contribution Account, less any loans
outstanding.
8.03 EMPLOYER CONTRIBUTIONS
An Employee may elect in writing to withdraw an amount from his
Employer Contribution Account at any time subject to the following
conditions:
(a) Any request for withdrawal which is made prior to October 1,
1994, must be submitted at least 15 days prior to the
effective date of the withdrawal and must be in a form
approved by the Company. Any request for withdrawal which is
made on or after October 1, 1994, must be submitted to the
Trustee in accordance with nondiscriminatory and uniform
procedures established by the Company and Trustee.
(b) A withdrawal shall be no greater than the balance of the
Employee's Employer Contribution Account.
(c) No withdrawal under this Section 8.03 may exceed the vested
balance in his Employer Contribution Account, less any loans
outstanding.
36
(d) The Employee must have been a Participant for at least five
years and, for any withdrawal made prior to October 1, 1994,
at least five years must have elapsed since any prior
withdrawal. Subject to the foregoing provisions of this
Section 8.03 and effective October 1, 1994, an Employee who
has been a Participant for at least five years may make a
withdrawal if at least two years have elapsed since any prior
withdrawal under this Section.
8.04 SALARY REDUCTION CONTRIBUTIONS
An Employee upon the attainment of age 59-1/2 shall be entitled to
withdraw all or a portion of the balance of his Salary Reduction
Contribution Account and Employer Contribution Account upon making a
proper election on a form approved by the Company. For periods prior
to October 1, 1994, such election request must be submitted at least
15 days prior to the effective date of the withdrawal. Any request
for withdrawal which is made on or after October 1, 1994, must be
submitted to the Trustee in accordance with nondiscriminatory and
uniform procedures established by the Company and Trustee. An
Employee shall be limited to two withdrawals in any Plan Year under
this Section 8.04.
8.05 HARDSHIP WITHDRAWALS
In addition to withdrawals described in Sections 8.01, 8.02, 8.03,
and 8.04, an Employee may elect in writing to withdraw any amount up
to the vested balance of his Accounts as of December 31, 1988, plus
any Salary Reduction Contributions made to his account after January
1, 1989 (less any loans outstanding) at any time subject to the
following conditions:
(a) Any request for a withdrawal which is made prior to October 1,
1994, must be submitted at least 15 days prior to the
effective date of the withdrawal and must be in a form
approved by the Company. Any request for withdrawal which is
made on or after October 1, 1994, must be submitted to the
Trustee in accordance with nondiscriminatory and uniform
procedures established by the Company and Trustee.
(b) All hardship withdrawals are subject to approval by the
Committee. Such a withdrawal shall be permitted only to
the extent necessary to allow the Employee to purchase his
principal residence, to pay tuition and related
educational fees for the next 12 months of the
post-secondary education expense for the Employee, the
Employee's spouse or dependents, to meet the cost of
unusual medical expenses described in Section 213(d) of
the Code incurred by the Employee, Employee's spouse or
dependents, or to pay amounts required to prevent
Employee's eviction from his principal residence or
foreclosure of the mortgage on the Employee's principal
residence. The Committee shall administer this Section
8.05 in accordance with the applicable Treasury
Regulations as in effect from time to time.
(c) Such a withdrawal shall only be permitted to the extent the
Employee certifies or demonstrates to the satisfaction of the
Committee that the purpose described in paragraph (b) imposes
an immediate and heavy financial need upon the Employee, and
that the need cannot be met from other resources reasonably
available to him.
(d) Hardship withdrawals shall be applied against the value of the
Employee's Salary Reduction Contribution Account, only after
all withdrawal opportunities have been exercised against the
Employee's Vested Rollover Account, Supplemental Participant
Contribution Account and Employer Contribution Account.
37
ARTICLE IX
LOANS TO PARTICIPANTS
---------------------
9.01 TERMS OF PARTICIPANT LOANS
The Committee may grant a loan to such Employee where the principal
amount of the loan when added to all other outstanding loans of the
Employee from the Plan and any other qualified Plan of an Employer
and Related Employer shall not exceed the lesser of:
(i) $50,000, as reduced by the excess, if any, of the
Employee's highest outstanding loan balance from the Plan
during the one-year period ending on the date before the
date such new loan is secured over the outstanding balance
of loans from the Plan on the date such loan is made; or
(ii) one-half of the value of the vested account maintained on
behalf of the Employee under the Plan.
Loans shall be limited to and applied against the vested value of the
Employee's Salary Reduction Contribution Account, Employee's Rollover
Account, Employer Contribution Account, and Supplemental Participant
Contribution Account.
From and after July 1, 1989 and prior to October 1, 1994, the
Committee will not approve a loan unless and until any outstanding
loan balances are paid in full, except that in cases of financial
hardship as described in Section 8.05, the Committee may approve a
loan even though there remains an outstanding loan balance, provided
that the Employee's Account balances as reduced by the outstanding
loan balance are sufficient to provide for a loan in conformance with
limitations imposed by Treasury Regulations as enacted from time to
time. Loans shall be subject to the approval of the Committee, which
shall follow uniform, nondiscriminatory policies in this regard.
From and after October 1, 1994, the Committee may approve a loan to
an Employee even though the Employee has an outstanding loan balance;
provided, however, that:
(i) the Employee's Account balances as reduced by the
outstanding loan balance are sufficient to provide for a
loan in conformance with limitation imposed by Treasury
Regulations as promulgated from time to time; and
(ii) after approval of the loan, the outstanding loans from the
Plan to the Employee do not exceed the following
limitations based on classification of the loan:
(A) loans used to acquire or construct a principal
residence of the Employee (one);
(B) loans used to relieve a financial hardship
described in Section 8.05(four);
(C) loans used for any purpose other than those
described in (A) or (B) above (one).
Loans shall be subject to the approval of the Committee, which shall
follow uniform, nondiscriminatory policies in this regard. On and
after October 1, 1994, an Employee's application for a loan shall be
submitted to the Trustee in accordance with nondiscriminatory and
uniform procedures established by the Company and Trustee.
38
In addition to such rules and regulations as the Committee may adopt,
all loans shall comply with the following terms and conditions:
(a) Prior to October 1, 1994, an Employee may apply for a loan
only on March 1, June 1, September 1, and December 1 of
each Plan Year. Effective on and after October 1, 1994, an
Employee may apply for a loan at any time in accordance
with nondiscriminatory and uniform procedures established
by the Company and Trustee.
(b) Prior to October 1, 1994, an application for a loan by an
Employee shall be made in writing to the Committee whose
action thereon shall be final. Effective on and after
October 1, 1994, an Employee's application for a loan
shall be made to the Trustee in accordance with
nondiscriminatory and uniform procedures established by
the Company and Trustee. The Committee shall specify the
form of the application and any supporting data required.
(c) Except as follows, the Employee may select a loan
repayment schedule of two years or five years from the
last day of the pay period following the date the loan is
effective. Repayment of the loan shall be made through
payroll deductions. Effective on and after October 1,
1994, the Employee may elect to repay his Plan loan over a
period of from one to five years. Any loan used to acquire
or construct a principal residence of the Employee may be
repaid over a period of from one to ten years. Loans shall
be repayable in substantially equal installments including
interest payable each pay period, beginning with the first
pay period following the date the loan is effective.
(d) Each loan shall bear interest at a rate which is
determined by the Committee, provided that such rate does
not violate any applicable Treasury laws.
(e) Each loan shall be supported by collateral which is
one-half of the Employee's entire vested interest in the
Trust. A loan shall also be supported by the Employee's
promissory note for the amount of the loan, including
interest, payable to the order of the Trustee. The
promissory note shall require that the unpaid principal
and interest will (at the Committee's option) become due
and payable if a loan payment is not made within 30 days
after the due date of any installment.
(f) The minimum loan amount shall be $1,000.
(g) If an Employee is participating in one or more other
qualified plans sponsored by an Employer or Related
Employer, then all other loans which the Employee may have
shall be considered in the application of the limits in
this Section 9.01.
39
ARTICLE X
TOP-HEAVY PROVISIONS
--------------------
10.01 DEFINITIONS
For the purposes of this Article, the following terms, when used with
initial capital letters, shall have the following respective
meanings:
(a) AGGREGATION GROUP
Permissive Aggregation Group or Required Aggregation
Group, as the context shall require.
(b) DETERMINATION DATE
For any Plan Year, the last day of the immediately preceding
Plan Year, except that in the case of the first Plan Year, the
Determination Date shall be the last day of such first Plan
Year.
(c) COMPENSATION
The amount of compensation from the Employer that would be
stated on an Employee's W-2 for Federal Income Tax purposes
for the calendar year that ends with or within the Plan Year.
(d) EXTRA TOP-HEAVY GROUP
An Aggregation Group if, as of a Determination Date, the sum
of the present value of the aggregate accrued benefits for Key
Employees under all defined benefit plans included in the
Aggregation Group and the aggregate of the accounts of Key
Employees under all defined contribution plans included in the
Aggregation Group is more than 90% of a similar sum determined
for all employees in such plans. For purposes of determining
such sums, aggregate distributions made to any employee during
the five consecutive Plan Years ending with the Plan Year that
includes the Determination Date shall be included. For Plan
Years beginning after December 31, 1984, the aggregate accrued
benefits and/or the aggregate of accounts of former employees
who have not performed any service for the employer
maintaining the plan at any time during the five year period
ending on the Determination Date shall be excluded from the
foregoing calculation.
(e) EXTRA TOP-HEAVY PLAN
(i) Except as provided by paragraph (ii) of this
subsection, the Plan shall be an Extra Top-Heavy Plan
if as of a Determination Date:
(A) the aggregate of Top-Heavy Account Balances for
Key Employees is more than 90% of the aggregate
of the Top-Heavy Account Balances for all
Employees, excluding for this purpose the
aggregate Top-Heavy Account Balances of Former
Key Employees; or
(B) the Plan is included in a Required Aggregation
Group which is an Extra Top-Heavy Group.
40
(ii) If the Plan is included in a Permissive Aggregation
Group which is not an Extra Top-Heavy Group, the Plan
shall not be an Extra Top-Heavy Plan notwithstanding
the fact that the Plan would otherwise be an Extra
Top-Heavy Plan under paragraph (i) of this subsection.
41
f) FORMER KEY EMPLOYEE
A Non-key Employee with respect to a Plan Year who was a
Key Employee in a prior Plan Year. Such term shall also
include his Beneficiary in the event of his death.
(g) KEY EMPLOYEE
An Employee or former Employee who, at any time during the
current Plan Year or any of the four preceding Plan Years,
is:
(i) an officer of an Employer having an annual Test
Compensation greater than 50% of the amount in
effect under Section 415(b)(1)(A) of the Code
for any such Plan Year (limited to no more than
50 Employees or, if lesser, the greater of
three or 10% of the Employees);
(ii) one of the 10 Employees who, (A) own (or are
considered as owning within the meaning of
Section 318 of the Code) during the Plan Year
containing the Determination Date or any of the
four preceding Plan Years both more than 1/2%
ownership interests in value and the largest
percentage ownership interests in value of any
of the employees required to be aggregated
under Section 414(b), (c), or (m) of the Code
and (B) have, during the Plan Year of
ownership, annual Test Compensation from the
employer of more than the limitation in effect
under Section 415(c)(1)(A) of the Code for the
calendar year in which such Plan Years ends;
(iii) a 5% owner (as such term is defined in Section
416(i)(1)(B)(i) of the Code); or
(iv) a 1% owner (as such term is defined in Section
416(i)(1)(B)(ii) of the Code) having an annual
Test Compensation of more than $150,000.
The term "Key Employee" shall also include such Employee's
Beneficiary in the event of his death.
(h) NON-KEY EMPLOYEE
An Employee or former Employee who is not a Key Employee. Such
term shall also include his Beneficiary in the event of his
death.
(i) PERMISSIVE AGGREGATION GROUP
The group of qualified plans of an employer consisting of:
(i) the plans in the Required Aggregation Group; plus
(ii) one or more plans designated from time to time by the
Employer that are not part of the Required Aggregation
Group but that satisfy the requirements of Section
401(a)(4) and 410 of the Code when considered with the
Required Aggregation Group.
(j) REQUIRED AGGREGATION GROUP
The group of qualified plans of an employer consisting of:
(i) each plan in which a Key Employee participates, plus
42
(ii) each other plan which enables a plan in which a Key
Employee participates to meet the requirements of
Sections 401(a)(4) or 410 of the Code.
For purposes hereof, a Required Aggregation Group shall
include a terminated plan if such plan was maintained within
the five-year period ending on the Determination Date for the
Plan Year in question and it would be, but for the fact it
terminated, part of a Required Aggregation Group for such Plan
Year.
(k) TOP-HEAVY ACCOUNT BALANCES
An Employee's or former Employee's (or his Beneficiary's)
aggregate balance standing to his Account as of the Valuation
Date coinciding with or immediately preceding the
Determination Date (as adjusted by the amount of any Employer
contributions made or due to be made after such Valuation Date
but before the expiration of the extended payment period in
Section 412(c)(10) of the Code), provided, however, that such
balance shall include the aggregate distributions made to such
Employee or former Employee (or Beneficiary) during the five
consecutive Plan Years ending with the Plan Year that includes
the Determination Date. For Plan Years beginning after
December 31, 1984, the Account of a former Employee who has
not performed any service with the Employer during the five
year period ending on the Determination Date shall be excluded
in determining Top-Heavy Account Balances under the Plan.
(l) TOP-HEAVY GROUP
An Aggregation Group if, as of the Determination Date, the sum
of the present value of the aggregate accrued benefits for Key
Employees under all defined benefit plans included in the
Aggregation Group and the aggregate of the accounts of Key
Employees under all defined contribution plans included in the
Aggregation Group is more than 60% of a similar sum determined
for all employees in such plans. For purposes of determining
such sums, aggregate distributions made to any employee during
the five consecutive Plan Years ending with the Plan Year that
includes that Determination Date shall be included. For Plan
Years beginning after December 31, 1984, the aggregate accrued
benefits and/or the aggregate of accounts of former employees
who have not performed any service for the employer
maintaining the plan at any time during the five year period
ending on the Determination Date shall be excluded from the
foregoing calculation.
(m) TOP-HEAVY PLAN
(i) Except as provided by paragraph (ii) of this
subsection, the Plan shall be a Top-Heavy Plan,
if as of a Determination Date:
(A) the aggregate of Top-Heavy Account Balances for
Key Employees is more than 60% of the aggregate
of the Top-Heavy Account Balances for all
Employees, excluding for this purpose the
aggregate Top-Heavy Account Balances of Former
Key Employees; or
(B) the Plan is included in a Required Aggregation
Group which is a Top-Heavy Group.
(ii) If the Plan is included in a Permissive Aggregation
Group which is not a Top-Heavy Group, the Plan shall
not be a Top-Heavy Plan notwithstanding the fact that
the Plan would otherwise by a Top-Heavy Plan under
paragraph (i) of this subsection.
43
10.02 TOP-HEAVY PLAN REQUIREMENTS
Notwithstanding any other provisions of the Plan to the contrary, if
the Plan is a Top-Heavy Plan for any Plan Year beginning on or after
January 1, 1984, the Plan shall then satisfy the following
requirements for such Plan Year:
(i) the minimum vesting requirement as set forth in Section
10.03;
(ii) the minimum contribution requirement as set forth in
Section 10.04; and
(iii) the adjustment to maximum benefits and allocations as set
forth in Section 10.06.
10.03 MINIMUM VESTING REQUIREMENT
If the Plan is a Top-Heavy Plan for any Plan Year beginning on or
after January 1, 1984, each Employee who has been credited with an
Hour of Service after the Plan becomes a Top-Heavy Plan shall have a
nonforfeitable right to a percentage of his Accrued Benefit derived
from Company contributions determined under the following table:
Years of Nonforfeitable
Service Percentage
---------------- ------------------
less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
The vesting schedule described in the immediately preceding sentence
shall cease to be applicable when the Plan ceases to be a Top-Heavy
Plan, provided that the percentage of an Employee's Accrued Benefit
that becomes nonforfeitable pursuant thereto before the Plan ceases
to be a Top-Heavy Plan shall remain nonforfeitable, and the change in
the vesting schedule which occurs when the Plan ceases to be a
Top-Heavy Plan shall be subject to the provisions of Section
14.01(b).
10.04 MINIMUM CONTRIBUTION REQUIREMENT
(a) If the Plan is a Top-Heavy Plan for any Plan Year beginning on
or after January 1, 1984, then each Participant who is a
Non-key Employee shall be entitled to an allocation from
Employer Contributions and Forfeitures which is at least equal
to 3% of his Compensation for such Plan Year. As used in this
Section 10.04(a), the term "Participant" shall mean:
(i) each Participant who is not separated from service by
the end of the Plan Year (regardless of whether such
Participant completes 1,000 hours of service (or the
equivalent) for such Plan year);
(ii) any Employee who is excluded from participation in the
Plan (or accrues no benefit) solely because the
Employee's compensation is less than a stated amount;
or
44
(iii) any Employee who is excluded from participation in the
Plan (or accrues no benefit) solely because of a
failure to make mandatory employee contributions or,
in the case of a cash or deferred arrangement,
elective contributions.
(b) The percentage minimum contribution requirement set forth in
paragraph (a) with respect to a Plan Year shall not exceed
the percentage at which Employer Contributions are made
(or required to be made) under the Plan for such Plan Year
for the Key Employee for whom such percentage is the
highest for such year. The determination referred to in
the immediately preceding sentence shall be determined for
each Key Employee by dividing the Employer contribution
allocated to such Key Employee in that Plan Year (where,
for this purpose, amounts contributed pursuant to a salary
reduction agreement are to be considered Employer
contributions) by such Key Employee's Compensation.
Except to the extent used for the purpose of determining the
largest percentage of Compensation contributed by an Employer
for a given year on behalf of a Key Employee, Salary Reduction
Contributions shall not be considered Employer Contributions
under this Section 10.04.
(c) The percentage minimum contribution requirement as set forth
in paragraph (a) above may also be reduced or eliminated in
accordance with Section 10.07.
(d) For purposes of paragraph (b) above, contributions taken into
account shall include like contributions under all other
defined contribution plans in the Required Aggregation Group,
excluding any such plan in the Required Aggregation Group if
that plan enables a defined benefit plan in such Required
Aggregation Group to meet the requirements of Section
401(a)(4) or Section 410 of the Code.
10.05 LIMITATION ON COMPENSATION REQUIREMENT
If the Plan is a Top-Heavy Plan for any Plan Year beginning on or
after January 1, 1984, the annual Compensation of each Employee taken
into account under the Plan for such Plan Year shall not exceed the
first $200,000; provided, however, that said $200,000 amount shall be
automatically adjusted each Plan Year to the amount prescribed by the
Secretary of the Treasury, or his delegate, for that Plan Year
pursuant to Section 416(d)(2) of the Code and the Regulations
thereunder.
Notwithstanding the foregoing, with respect to Plan Years beginning
on and after January 1, 1989, the annual Compensation of an Employee
that may be taken into account hereunder shall be limited to the
adjusted annual limitation as provided under Section 1.14.
10.06 ADJUSTMENT TO MAXIMUM BENEFITS AND CONTRIBUTIONS
The Company maintains the State Auto Insurance Companies Employee
Retirement Plan (the "Defined Benefit Plan") which provides benefits
to Participants in this Plan. If this Plan is a Top-Heavy Plan for
any Plan Year beginning on or after January 1, 1984, and if the
Defined Benefit Plan is a top-heavy plan, then:
(a) Each Non-key Employee shall receive the minimum benefit
provided under Section 14.04 of the Defined Benefit Plan.
(b) If the Plan is not an Extra Top-Heavy Plan (but is a Top-Heavy
Plan), and if the Employer desires to use a factor of 1.25 in
computing the denominators of the defined benefit fraction and
the defined contribution fraction under Section 415(e) of the
Code, then each Non-key Employee shall receive the minimum
benefit provided under Section
45
14.04 of the Defined Benefit Plan as in effect on January
1, 1984, as modified by Section 14.06(2) of such Defined
Benefit Plan.
(c) If the Plan is an Extra Top-Heavy Plan, then calculations
under paragraphs (2)(B) and (3)(B) of Section 415(e) of
the Code shall be made by substituting "1.0" for "1.25"
for each place such "1.25" figure appears, and
calculations under Section 415(e)(6)(B)(I) of the Code
shall be made by substituting "$41,500" for "$51,875" for
each place such "$51,875" amount appears.
10.07 COORDINATION WITH OTHER PLANS
(a) In applying this Article, an employer required to be
combined under Section 414(b), (c), or (m) of the Code
shall be treated as a single employer, and the qualified
plans maintained by such single employer shall be taken
into account.
(b) In the event that another defined contribution plan or
defined benefit plan maintained by any employer required
to be combined under Section 414(b), (c), or (m) of the
Code provides contributions or benefits on behalf of
Participants in this Plan, such other plan(s) shall be
taken into account in determining whether this Plan
satisfies Section 10.02; and the minimum contribution
required for a Non-key Employee in this Plan under Section
10.04 will be reduced or eliminated, in accordance with
the requirements of Section 416 of the Code and the
Regulations thereunder, if a minimum contribution or
benefit is made or accrued in whole or in part in respect
of such other plan(s).
46
ARTICLE XI
MANAGEMENT OF FUNDS
-------------------
11.01 TRUST AGREEMENT
State Automobile Mutual Insurance Company has entered into a Trust
Agreement with the Trustee to hold the Funds necessary to provide the
benefits under this Plan. The Trust Agreement shall be deemed to form
a part of the Plan, and all rights of Participants or others under
this Plan shall be subject to the provisions of the Trust Agreement.
11.02 EXCLUSIVE BENEFIT
The Trust Fund shall be received, held in Trust, and disbursed by the
Trustee in accordance with the provisions of the Trust Agreement and
this Plan. No part of the Trust Fund shall be used for or diverted to
purposes other than for the exclusive benefit of Participants,
retired Participants, disabled Participants or their Beneficiaries
under this Plan, except as provided in Sections 3.06 and 15.12. No
person shall have any interest in or right to the Trust Fund or any
part thereof, except as specifically provided for in this Plan and
Trust Agreement.
11.03 REMOVAL OF TRUSTEE
The Board may remove the Trustee at any time upon the notice required
by the terms of the Trust Agreement and, upon such removal or upon
the resignation of the Trustee, the Board shall appoint a successor
Trustee.
11.04 POWERS
The Trustee shall have such powers to hold, invest, reinvest, or to
control and disburse the Funds as at that time shall be set forth in
the Trust Agreement or in this Plan.
11.05 SETTLEMENT OF ACCOUNTS
The Trust Agreement may contain provisions granting authority to the
Company to settle the Accounts of the Trustee on behalf of all
persons having or claiming an interest in the Trust Fund.
47
ARTICLE XII
PLAN ADMINISTRATION
-------------------
12.01 ADMINISTRATIVE COMMITTEE
The Chief Executive Officer of the Company as empowered by the Board
shall appoint an Administrative Committee, to be known as the
"Committee," to assist the Company (which is the Plan administrator,
in accordance with Section 15.07) in the administration of the Plan,
to keep records of Accounts, and to notify each Participant, former
Participant, or Beneficiary of his benefit. The members of the
Committee shall serve at the pleasure of the Board; they may be
officers, directors, or employees of an Employer or any other
individuals. Any member may resign by delivering his written
resignation to the Board. Vacancies arising by resignation, death,
removal or otherwise shall be filled by the Board. The Company shall
advise the Trustee in writing of the names of the members of the
Committee and of any changes in membership. The Committee shall
consist of not less than three persons nor more than five persons.
12.02 POWERS AND DUTIES OF THE COMMITTEE
The Committee shall administer the Plan in accordance with its terms
and shall have all powers necessary to carry out the provisions of
the Plan. The Committee shall direct the Trustee in writing
concerning all payments which shall be made out of the Trust Fund
pursuant to the Plan. Such written order to the Trustee shall specify
the name of the person, his address, and the amount and frequency of
payments. The Committee shall make recommendations to the Board with
respect to the appointment and dismissal of investment managers under
the Trust and will review the performance of the investment managers
periodically. Subject to the stated purposes and provisions of this
Plan Document, the Plan Administrator shall have the full and
exclusive power and authority, in its sole discretion, to determine
all questions of coverage and eligibility for benefits, methods of
providing or arranging for benefits and all other related matters.
The Plan Administrator shall have the full power and authority, in
its sole discretion, to construe and interpret the provisions and
terms of this Plan Document and all other written documents. Any such
determination and any such construction adopted by the Plan
Administrator in good faith shall be binding upon all of the parties
hereto and the beneficiaries thereof. The regularly kept records of
the Employers shall be conclusive and binding upon all persons with
respect to an Employee's Service, date and length of employment,
amount of Compensation, type and length of any absence from work and
all other matters contained therein relating to Employees. All rules
and determination of the Committee shall be uniformly and
consistently applied to all persons in similar circumstances.
12.03 EXERCISE OF THE COMMITTEE'S DUTIES
The Committee shall discharge its duties:
(a) for the exclusive purpose of providing benefits to Plan
Participants, former Participants, and Beneficiaries, and
(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.
12.04 ORGANIZATION AND OPERATIONS OF THE COMMITTEE
48
(a) The Committee shall act by a majority vote of its members at
the time in office, and such action may be taken either by a
vote at a meeting or in writing without a meeting. The
signature of any one of the members on behalf of the Committee
will be sufficient to authorize Committee action. A Committee
member shall not participate in discussions of or vote upon
matters pertaining to his own participation in the Plan,
except to the extent such matters affect Participants
generally.
(b) The Committee may authorize any one of its members or any
other person to execute any document or documents on behalf of
the Committee, in which event the Committee shall notify the
Trustee in writing of such action and the name or names of
such member or person. The Trustee thereafter shall accept and
rely upon any document executed by such members or persons as
representing action by the Committee, until the Committee
shall file with the Trustee a written revocation of such
designation.
(c) The Committee may adopt such by-laws and regulations as it
deems desirable for the conduct of its affairs and, with the
consent of the Company, may appoint such accountants, counsel,
actuaries, and other persons as it deems necessary or
desirable in connection with the administration of this Plan.
The Committee shall be entitled to rely conclusively upon, and
shall be fully protected in any action taken by it in good
faith in relying upon, any opinions or reports which shall be
furnished to it by any such accountant, counsel, actuary, or
other specialist.
12.05 RECORDS AND REPORTS OF THE COMMITTEE
The Committee shall keep a record of all its proceedings and acts and
shall keep all such records and other data as may be necessary for
the proper administration of the Plan. The Committee shall notify the
Trustee and the Company of any action taken by the Committee and,
when required, shall notify any other interested person or persons.
12.06 COMPENSATION AND EXPENSES OF THE COMMITTEE
The members of the Committee shall serve without Compensation for
service as such, but all proper expenses incurred by the Committee
incident to the functioning of the Plan shall be paid by the
Employers.
12.07 INDEMNITY OF THE COMMITTEE MEMBERS
The Company shall indemnify and defend each member of the Committee
against any and all claims, losses, damages, expenses (including
reasonable attorneys' fees), and liability arising from any action or
failure to act in connection with the administration of the Plan,
except when the same is judicially determined or admitted by the
Committee member to be due to the gross negligence or willful
misconduct of such member.
49
ARTICLE XIII
CLAIMS PROCEDURE
----------------
13.01 INFORMAL REVIEW
Any Participant, former Participant, or Beneficiary who wishes to
request an informal review of a claim for benefits or who wishes an
explanation of a benefit or its denial may direct to the Committee a
written request for an informal review. The Committee shall respond
to the request by issuing a notice to the claimant as soon as
possible, but in no event later than 60 days from the date of the
request. This notice furnished by the Committee shall be written in a
manner calculated to be understood by the claimant and shall include
the following:
(a) the specific reason or reasons for denial of benefits;
(b) the specific Plan provisions on which any denial is based;
(c) a description of any further material or information which is
necessary for the claimant to perfect his claim and an
explanation of why the material or information is needed; and
(d) an explanation of the Plan's formal claim review procedure.
If the claimant does not respond to the notice, posted by first class
mail to the address of record of the claimant, within 120 days from
the posting of the notice, the claimant shall be considered satisfied
in all respects. If the Committee fails to respond to the claimant's
written request for an informal review, the claimant shall be
entitled to proceed to the formal claim review procedure described in
Section 13.02.
13.02 FORMAL REVIEW
In the event that the notice concerning the informal review is
insufficient to satisfy the claimant, the claimant or his duly
authorized representative shall submit to the Committee within 120
days of the posting of the notice, a written notification of appeal
of the claim denial. The notification of appeal of the claim denial
shall permit the claimant or his duly authorized representative to
utilize the following formal claim review procedures:
(a) to review pertinent documents; and
(b) to submit issues and comments in writing to which the
Committee shall respond.
The Committee shall furnish a written decision of formal review not
later than 60 days after receipt of the notification of appeal,
unless special circumstances require an extension of the time for
processing the appeal. In no event, however, shall the Committee
respond later than 120 days after a request for a formal review. The
decision on formal review shall be in writing and shall include
specific reasons for the decision, and shall be written in a manner
calculated to be understood by the claimant and contain specific
reference to the pertinent Plan provisions on which the decision is
based.
50
ARTICLE XIV
AMENDMENT AND TERMINATION
-------------------------
14.01 RIGHT TO AMEND OR TERMINATE
(a) The Company reserves to itself the right to alter, amend,
modify, revoke or terminate in whole or in part this Plan
and any Trust that may be established by it to effectuate
and implement this Plan, or both, and each Employer, in
adopting this Plan, consents to any such alteration,
amendment, modification, revocation or termination. The
Company, by the adoption of a resolution of the Board, may
terminate the Plan with respect to any or all Employers.
Each Employer by a resolution of its Board of Directors
may terminate its participation in the Plan. If the Plan
is terminated by fewer than all Employers, it shall
continue in effect for Participants employed by the
remaining Employers. Notwithstanding the foregoing, no
such alteration, amendment, modification, revocation or
termination of this Plan, or of any such Trust shall
operate retroactively, except as provided in Section
15.11, so as to affect adversely the rights of any
Participant, former Participant, or Beneficiary acquired
under the terms of the Plan in effect prior to such
action; nor shall any such action operate to enlarge any
Employer's rights under Section 3.07.
(b) If any amendment directly or indirectly changes the
vesting schedule for the Employer Contribution Account, a
Participant with three or more years of Service may elect
to have his vested percentage computed under the vesting
schedule in effect prior to the amendment by filing a
written request with the Committee within 60 days after he
has received notice of such amendment.
14.02 TERMINATION
(a) It is the expectation of each Employer that it will
continue this Plan and the payment of contributions
hereunder indefinitely, but the continuation of the Plan
is not assumed as a contractual obligation of any
Employer; and the right is reserved by each Employer at
any time to permanently discontinue its contributions
hereunder. In the event that the Plan is terminated in
whole or in part, or if contributions by the Employers are
completely discontinued, the interest of all affected
Participants shall be fully vested and nonforfeitable.
(b) This Plan may be terminated by the Board at any time,
effective as of the date of the Board action or any
subsequent date determined by the Board.
(c) Upon termination of the Plan, further payment of Employer
contributions to the Trust Fund shall cease. Each affected
Participant shall have a fully vested interest in the
entire amount of his Account balances, and the Trustee
shall make payment to each Participant of such amount in
cash or in assets of the Trust Fund pursuant to the
direction of the Committee. The Board shall have the
authority to retain or distribute each Participant's
Account balances, as it deems appropriate, upon
termination of the Plan.
Notwithstanding the foregoing, no such distribution shall
be made to a Participant prior to his attaining age 59-1/2
unless otherwise permitted by Code Section 401(k) or
regulations thereunder, and all such distributions shall
be in accordance with such Code Section or regulations, as
the case may be.
14.03 PROCEDURE FOR BECOMING AN EMPLOYER
51
A Related Company may become a party to this Plan and Trust Agreement
and an Employer hereunder by delivering to the Board a resolution of
its Board of Directors approving such action and an executed election
form entitled "Election to Become an Employer under the State Auto
Insurance Companies Capital Accumulation Plan." With the consent of
the Board, such Related Company shall become an Employer hereunder as
of an effective date approved by the Board and shall be subject to
the terms and provisions of this Plan and the Trust Agreement as then
in effect or thereafter amended.
14.04 WITHDRAWAL OF AN EMPLOYER
An Employer that wishes to withdraw from this Plan and the Trust
Agreement shall deliver to the Board a resolution of its Board of
Directors which indicates the reason or reasons for such withdrawal.
Withdrawal must be submitted to the Board at least six months prior
to the date the withdrawal is to be effective, unless such time
requirement is waived by the Board.
14.05 PLAN OR BUSINESS TERMINATION
If the withdrawal of an Employer is a part of the complete
termination and dissolution of the Employer's business, or the
discontinuance of the Employer's thrift plan without termination of
its business and without the immediate establishment of a new and
comparable plan, the provisions of Article XIV shall apply to such
Employer's withdrawal as if the withdrawal were a part of the
complete termination of the Plan, but the participation of other
Employers shall not be affected nor shall the continuation of the
Plan with respect to participation of other Employers after the
withdrawal be affected by such withdrawal.
14.06 ESTABLISHMENT OF NEW PLAN
If the withdrawal of an Employer is the result of the establishment
of a new and comparable plan for its employees which will,
immediately upon withdrawal of the Employer, cover employees of the
Employer who are covered by this Plan, the Board, upon being
furnished evidence of the terms of such new plan and that such new
plan has been approved by the Internal Revenue Service as qualified
under Section 401(a) of the Code, shall direct the Trustee to
establish such Employer's interest in the value of the Trust Fund.
The Employer's interest in the Trust Fund so determined, after
reduction for charges and other expenses incurred to process the
withdrawal of the Employer, shall be transferred to the trustee or
trustees of the new plan or to the insurance company which is to hold
the funds of the new plan, whichever is applicable. The Board, in its
sole discretion, shall have the right to transfer the withdrawal
value of that Employer's interest in the Trust Fund to the trustee or
trustees of the new plan or to the designated insurance company in
the form of installments, in cash or in cash and securities over a
period of time not to exceed six months following the effective date
of the Employer's withdrawal.
The application of the withdrawing Employer's interest in the Trust
Fund pursuant to the terms of this Section shall constitute a
complete discharge of the responsibility of the remaining Employers,
the Board and the Trustee without any responsibility on their part
collectively or individually to see to the application thereof.
14.07 NOTICE OF AMENDMENT OR TERMINATION
Affected Participants will be notified of an amendment or termination
of the Plan as required by the applicable provisions of ERISA.
52
ARTICLE XV
MISCELLANEOUS
-------------
15.01 NO CONTRACT OF EMPLOYMENT
Nothing herein contained shall be construed to constitute a contract
of employment between any Employer and any Employee. The employment
records of the Employers and the Trustee's records shall be final and
binding upon all Employees as to liability and participation.
15.02 MERGER OR CONSOLIDATION OF PLAN, TRANSFER OF ASSETS
Any merger or consolidation of the Plan with another plan, or
transfer of Plan assets or liabilities to any other plan, shall be
effected in accordance with such regulations, if any as may be issued
pursuant to Section 208 of ERISA, in such manner that each Plan
Participant would receive, if the merged, consolidated, or
transferred Plan were terminated immediately following such event, a
benefit which is equal to or greater than the benefit he would have
been entitled to receive if the Plan had terminated immediately
before such event.
15.03 DATA
It shall be a condition precedent to the payment of all benefits
under the Plan that each Participant, former Participant, and
Beneficiary must furnish to the Company such documents, evidence or
information as the Company considers necessary or desirable for the
purposes of administering the Plan, or to protect the Company, the
Committee or Trustees.
15.04 RESTRICTIONS UPON ASSIGNMENTS AND CREDITORS' CLAIMS
Except as in the Plan otherwise provided, no Participant, former
Participant, or any Beneficiary, or the estate of any such person,
shall have any power to assign, pledge, encumber, or transfer any
interest in the Trust Fund while the same shall be in the possession
of the Trustee. Any such attempt at alienation shall be void. No such
interest shall be subject to attachment, garnishment, execution,
levy, or any other legal or equitable proceeding or process and any
attempt to so subject such interest shall be void.
Notwithstanding the foregoing, this Section 15.04 shall not apply to
a qualified domestic relations order as defined in Section 414(p) of
the Code. The Committee shall establish a procedure to determine the
qualified status of domestic relations orders and to administer
distributions under such qualified orders. Further, to the extent
provided under a qualified domestic relations order, a former spouse
of a Participant shall be treated as the spouse or surviving spouse
for all purposes under the Plan.
15.05 RESTRICTION OF CLAIMS AGAINST TRUST FUND
The Trust Fund under this Plan and Trust Agreement from its inception
shall be a separate entity aside and apart from each Employer and its
assets. The Trust Fund and the corpus and income thereof shall in no
event and in no manner whatsoever be subject to the rights or claims
of any creditor of an Employer. Neither the establishment of the
Trust Fund, the modification thereof, the creation of any fund or
account, nor the payment of any benefits shall be construed as giving
any Participant or any other person whomsoever any legal or equitable
rights against an Employer or the Trustee unless the same shall be
specifically provided for in this Plan.
15.06 NAMED FIDUCIARIES
53
For the purposes of Part 4 of Title I of ERISA, the Company, the
Trustee, the Committee and those parties to whom any investment
management duties are allocated pursuant to the Trust Agreement shall
each be named fiduciaries. All actions by named fiduciaries shall be
in accordance with the terms of this Plan and of the Trust Agreement
insofar as such documents are consistent with the provisions of Title
I of ERISA. Each named fiduciary shall act solely in the interest of
Participants and Beneficiaries and for the exclusive purpose of
providing benefits and defraying reasonable administrative expenses.
Each named fiduciary shall discharge his or her respective duties
hereunder 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.
15.07 ALLOCATION OF FIDUCIARY DUTIES
The Company shall be responsible for the administration and
management of the Plan except for those duties specifically allocated
to the Trustee or the Committee. The Trustee shall have exclusive
responsibility for all matters specifically delegated to it by the
Company and this Plan. Each fiduciary shall be responsible only for
the specific duties assigned to it and shall not be directly or
indirectly responsible for the duties assigned to another fiduciary.
The Company shall be deemed the administrator for the purposes of
ERISA.
15.08 BENEFITS PAYABLE BY TRUST FUND
All benefits payable under the Plan shall be paid or provided for
solely from the Trust Fund, and the Company and Employers assume no
liability or responsibility therefor.
15.09 SUCCESSOR TO COMPANY OR EMPLOYER
In the event that any successor to the Company or an Employer, by
merger, consolidation, purchase or otherwise, shall elect to adopt
the Plan, such successor shall be substituted hereunder for that
Employer upon filing in writing with the Trustee of its election to
do so.
15.10 APPLICABLE LAW
The Plan shall be construed and administered in accordance with ERISA
and with the laws of Ohio to the extent that such laws are not
preempted by ERISA.
15.11 INTERNAL REVENUE SERVICE APPROVAL
This Plan shall be effective as of January 1, 1989, provided that the
Company shall obtain a favorable determination letter from the
Internal Revenue Service that this Plan and the related Trust
Agreement qualify under Section 401(a) and 501(a) of the Code. Any
modification or amendment of this Plan may be made retroactive as
necessary or appropriate in order to secure or maintain such
qualification.
15.12 DEDUCTIBILITY OF EMPLOYER CONTRIBUTIONS
All contributions under this Plan shall be paid to the Trustee and
deposited in the Trust Fund. However, all contributions made by an
Employer are expressly conditioned upon their deductibility under
Section 404 of the Code. Contributions which do not meet these
conditions may revert to the Employer, in accordance with Section
3.06.
54
PREPARATION AND ADOPTION
OF AMENDED
STATE AUTO INSURANCE COMPANIES
CAPITAL ACCUMULATION PLAN
The undersigned, President of State Automobile Mutual Insurance
Company pursuant to the authority granted by Resolution of the Board of
Directors of State Auto dated ____________________ hereby authorizes and adopts
said State Auto Insurance Companies Capital Accumulation Plan and renders it
effective on ______________________.
STATE AUTOMOBILE MUTUAL INSURANCE COMPANY
By:___________________________________________
President
55
APPENDIX A
SPECIAL PROVISIONS PERTAINING TO TRANSFERS
FROM EMPLOYEE SAVINGS AND PROFIT-SHARING PLAN
OF ROYAL INDEMNITY COMPANY
A.1 PURPOSE AND CONSTRUCTION
The purpose of this Appendix A is to evidence special provisions
applicable to certain Participants affected by the Company's
acquisition of the Milbank Insurance Company, effective August 20,
1993 (the "Closing Date"). The provisions of this Appendix A shall
apply to individuals who, as of the date prior to the Closing Date,
were employees of Milbank Insurance Company (or a related entity) and
who, as of the Closing Date, became Employees of an Employer
(hereinafter "Affected Employees"). To the extent the provisions of
the Plan, as applicable to Affected Employees, are inconsistent with
the provisions of this Appendix A, the provisions of this Appendix A
shall govern. Words and phrases used herein with initial capital
letters which are defined in Article I of the Plan are used herein as
so defined.
A.2 TRUST-TO-TRUST TRANSFERS OF ACCOUNTS
(a) In connection with the Company's acquisition of Milbank
Insurance Company from Globe Indemnity Company (a
subsidiary of Royal Indemnity Company), the Plan shall
accept a transfer of assets and liabilities from the
Employee Savings and Profit-Sharing Plan of Royal
Indemnity Company (the "Royal Plan") which represents the
account balances maintained on behalf of Affected
Employees under the Royal Plan.
(b) The transfer made on behalf of any Affected Employee shall
be credited to such Employee's Accounts under the Plan as
follows: that portion, if any, of the transfer that is
attributable to the Affected Employees "401(k)
Contribution Account" under the Royal Plan shall be
credited to a subaccount within the Affected Employee's
Salary Reduction Contribution Account under the Plan; that
portion, if any, of the transfer that is attributable to
the Affected Employee's "Savings Incentive Contribution
Account" under the Royal Plan shall be credited to a
subaccount with the Affected Employee's Supplemental
Participant Contribution Account under the Plan and that
portion, if any, of the transfer that is attributable to
the Affected employee's "Matching Contribution Account"
and "Qualified Non-Elective Contribution Account" under
the Royal Plan shall be credited to a subaccount within
the Affected Employee's Employer Contribution Account
under the Plan. All amounts transferred pursuant to this
Section A.2 shall be 100% vested and nonforfeitable.
(c) Loans granted under the Royal Plan which are outstanding
as of the Closing Date shall be administered in accordance
with the loan documents then in effect; provided, however,
that to the extent permitted under the Plan, revisions to
such documents may be made by agreement of the Committee
and the Affected Employee.
A.3 PARTICIPATION OF AFFECTED EMPLOYEES
Affected Employees shall become Participants under the Plan effective
as of the Closing Date. An Affected Employee shall be eligible to
make Salary Reduction Contributions as of the Participation Date
which is, or next follows, the Closing Date.
A.4 INVESTMENT OF TRANSFERRED AMOUNTS
56
Notwithstanding any provision of Article IV of the Plan to the
contrary, an Affected Employee on whose behalf a transfer is made
pursuant to Section A.2, shall specify, at or prior to the time such
transfer is made, the manner in which his Accounts shall be invested
in each Investment Fund under the Plan. The investment election shall
specify, in 10% increments, the percentage of each Account to be
invested in each Investment Fund.
A.5 PRE-CLOSING DATE SERVICE OF AFFECTED EMPLOYEES
The period of employment of an Affected Employee prior to the Closing
Date, which shall be recognized as Service hereunder for purposes
including, but not limited to, the determination of the vested status
of Employer contributions made on and after the Closing Date, shall
be equal to the sum of (a) and (b), as follows:
(a) the whole "Years of Service" credited to the Affected
Employee as of the Closing Date under the terms of the
Royal Plan in effect on such date; and
(b) one month of Service for each month of employment with
Milbank Insurance Company or a Related Employer during the
period beginning on the anniversary of the Affected
Employee's "Employment Commencement Date" that next
precedes the Closing Date and ending on the Closing Date
(the "Service Transition Period"); provided, however, that
Service under this paragraph (b) shall be granted only
with respect to Affected Employees who, during the Service
Transition Period, have not completed six or more months
in such service (and who, therefore, are not entitled to a
"Year of Service" under paragraph (a)). Notwithstanding
the foregoing, there shall be no duplication of Service
hereunder with respect to any single period of employment.
A.6 PRESERVATION OF INSTALLMENT OPTION
Notwithstanding any provision of Article VII of the Plan to the
contrary, the installment form of payment available to Affected
Employees under Section 6.5 of the Royal Plan, is in effect on the
Closing Date, shall be preserved under the Plan with respect to all
amounts transferred on behalf of Affected Employees from the Royal
Plan to the Plan, as increased (decreased) by earnings (losses) on
such amounts.