EXHIBIT 10(j)
21st CENTURY INSRUANCE GROUP
SAVINGS AND SECURITY PLAN
CONTENTS
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ARTICLE I GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Plan Name and Purpose.. . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Affiliated Company. . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Beneficiary.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Committee.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Company.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Company Stock.. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 Compensation Deferral Contributions.. . . . . . . . . . . . . . . . 5
2.11 Deferral Limitation.. . . . . . . . . . . . . . . . . . . . . . . . 5
2.12 Distributable Benefit.. . . . . . . . . . . . . . . . . . . . . . . 5
2.13 Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.14 Eligible Employee.. . . . . . . . . . . . . . . . . . . . . . . . . 5
2.15 Employee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.16 Employment Commencement Date. . . . . . . . . . . . . . . . . . . . 7
2.17 ERISA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.18 Hardship. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.19 Highly Compensated Employee.. . . . . . . . . . . . . . . . . . . . 8
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2.20 Hour of Service.. . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.21 Investment Fund.. . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.22 Investment Manager. . . . . . . . . . . . . . . . . . . . . . . . . 9
2.23 Leave of Absence. . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.24 Matching Contributions. . . . . . . . . . . . . . . . . . . . . . . 10
2.25 Normal Retirement.. . . . . . . . . . . . . . . . . . . . . . . . . 10
2.26 Normal Retirement Date. . . . . . . . . . . . . . . . . . . . . . . 10
2.27 Participant.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.28 Participant Voluntary Contributions.. . . . . . . . . . . . . . . . 10
2.29 Participation Commencement Date.. . . . . . . . . . . . . . . . . . 10
2.30 Participating Employer. . . . . . . . . . . . . . . . . . . . . . . 10
2.31 Period of Service.. . . . . . . . . . . . . . . . . . . . . . . . . 10
2.32 Period of Severance.. . . . . . . . . . . . . . . . . . . . . . . . 11
2.33 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.34 Plan Administrator. . . . . . . . . . . . . . . . . . . . . . . . . 12
2.35 Plan Year.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.36 Reserved for Plan Modification. . . . . . . . . . . . . . . . . . . 13
2.37 Reserved for Plan Modification. . . . . . . . . . . . . . . . . . . 13
2.38 Postponed Retirement Date.. . . . . . . . . . . . . . . . . . . . . 13
2.39 Spouse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.40 Total and Permanent Disability. . . . . . . . . . . . . . . . . . . 13
2.41 Trust and Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . 13
2.42 Trust Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.43 Trustee.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.44 Valuation Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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2.45 Vested Interest.. . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . . . . . . . . . 15
3.1 Eligibility to Participate. . . . . . . . . . . . . . . . . . . . . 15
3.2 Date of Commencement of Participation.. . . . . . . . . . . . . . . 15
3.3 Reemployment as an Eligible Employee. . . . . . . . . . . . . . . . 15
3.4 Employee Responsibility.. . . . . . . . . . . . . . . . . . . . . . 15
3.5 USERRA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV TRUST FUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.1 Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.2 Contributions to the Trust Fund.. . . . . . . . . . . . . . . . . . 17
4.3 Investments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.4 Company, Committee and Trustee Not Responsible for Adequacy of
Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE V EMPLOYEE CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . 18
5.1 Compensation Deferral Contributions.. . . . . . . . . . . . . . . . 18
5.2 Participant Voluntary Contributions.. . . . . . . . . . . . . . . . 18
5.3 Change or Revocation of Election to Make Compensation Deferral
Contributions or Participant Voluntary Contributions. . . . . . . . 18
5.4 Character of Amounts Contributed as Compensation Deferrals. . . . . 19
5.5 Amount Subject to Deferral. . . . . . . . . . . . . . . . . . . . . 19
5.6 Limitation on Compensation Deferral Contributions.. . . . . . . . . 19
5.7 Provisions for Return of Annual Compensation Deferral Contributions
in Excess of the Deferral Limitation. . . . . . . . . . . . . . . . 22
5.8 Provision for Return of Excess Deferrals by Highly Compensated
Employees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.9 Limitations on Participant Voluntary Contributions and Matching
Contributions.. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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5.10 Provision for Disposition of Excess Participant Voluntary
Contributions or Matching Company Contributions on Behalf of Highly
Compensated Employees.. . . . . . . . . . . . . . . . . . . . . . . 27
5.11 Forfeiture of Matching Contributions Attributable to Excess
Deferrals or Contributions. . . . . . . . . . . . . . . . . . . . . 28
5.12 Participant Rollover/Transfer Contributions.. . . . . . . . . . . . 28
ARTICLE VI COMPANY CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . 30
6.1 Amount of Contributions.. . . . . . . . . . . . . . . . . . . . . . 30
6.2 Insufficient Profits. . . . . . . . . . . . . . . . . . . . . . . . 30
6.3 Time of Company Contribution. . . . . . . . . . . . . . . . . . . . 31
6.4 Irrevocability. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII PARTICIPANT ACCOUNTS AND ALLOCATIONS. . . . . . . . . . . . . . . . 32
7.1 General.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2 Allocation of Participating Employer Contributions. . . . . . . . . 32
7.3 Investment Funds. . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.4 Participant Investment Fund Designations. . . . . . . . . . . . . . 33
7.5 Responsibility for Investment Results.. . . . . . . . . . . . . . . 34
7.6 Accounting Procedures.. . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VIII SPECIAL PROVISIONS CONCERNING COMPANY STOCK EFFECTIVE AS OF
JULY 1, 1993. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.1 Securities Transactions.. . . . . . . . . . . . . . . . . . . . . . 35
8.2 Valuation of Company Securities.. . . . . . . . . . . . . . . . . . 35
8.3 Allocation of Stock Dividends and Splits. . . . . . . . . . . . . . 35
8.4 Reinvestment of Dividends.. . . . . . . . . . . . . . . . . . . . . 36
8.5 Voting of Company Stock.. . . . . . . . . . . . . . . . . . . . . . 36
8.6 Certain Offers for Company Stock. . . . . . . . . . . . . . . . . . 37
8.7 Confidentiality Procedures. . . . . . . . . . . . . . . . . . . . . 40
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8.8 Securities Law Limitation.. . . . . . . . . . . . . . . . . . . . . 40
ARTICLE IX VESTING; PAYMENT OF PLAN BENEFITS . . . . . . . . . . . . . . . . . 41
9.1 Vesting.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.2 Distribution Upon Retirement. . . . . . . . . . . . . . . . . . . . 41
9.3 Distribution Upon Death Prior to Commencement of Benefits.. . . . . 42
9.4 Distribution Upon Death After Commencement of Benefits. . . . . . . 43
9.5 Distribution Upon Disability Prior to Retirement Date.. . . . . . . 43
9.6 Termination of Employment Prior to Normal Retirement Date.. . . . . 43
9.7 Forms and Methods of Distributions. . . . . . . . . . . . . . . . . 44
9.8 Election for Direct Rollover of Vested Interest to Eligible
Retirement Plan.. . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.9 Forfeitures/Repayment.. . . . . . . . . . . . . . . . . . . . . . . 47
9.10 Withdrawals.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
9.11 Designation of Beneficiary. . . . . . . . . . . . . . . . . . . . . 49
9.12 Facility of Payment.. . . . . . . . . . . . . . . . . . . . . . . . 51
9.13 Payee Consent.. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.14 Additional Documents. . . . . . . . . . . . . . . . . . . . . . . . 51
9.15 Loans.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE X VALUATION OF ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . 54
10.1 Valuation of Participant Accounts.. . . . . . . . . . . . . . . . . 54
ARTICLE XI OPERATION AND ADMINISTRATION OF THE PLAN. . . . . . . . . . . . . . 55
11.1 Plan Administration.. . . . . . . . . . . . . . . . . . . . . . . . 55
11.2 Committee Powers. . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.3 Investment Manager. . . . . . . . . . . . . . . . . . . . . . . . . 56
11.4 Periodic Review.. . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.5 Committee Procedure.. . . . . . . . . . . . . . . . . . . . . . . . 57
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11.6 Compensation of Committee.. . . . . . . . . . . . . . . . . . . . . 57
11.7 Resignation and Removal of Members. . . . . . . . . . . . . . . . . 57
11.8 Appointment of Successors.. . . . . . . . . . . . . . . . . . . . . 57
11.9 Records.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
11.10 Reliance Upon Documents and Opinions. . . . . . . . . . . . . . . . 58
11.11 Requirement of Proof. . . . . . . . . . . . . . . . . . . . . . . . 58
11.12 Reliance on Committee Memorandum. . . . . . . . . . . . . . . . . . 59
11.13 Multiple Fiduciary Capacity.. . . . . . . . . . . . . . . . . . . . 59
11.14 Limitation on Liability.. . . . . . . . . . . . . . . . . . . . . . 59
11.15 Indemnification.. . . . . . . . . . . . . . . . . . . . . . . . . . 59
11.16 Bonding.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
11.17 Prohibition Against Certain Actions.. . . . . . . . . . . . . . . . 60
11.18 Plan Expenses.. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XII MERGER OF COMPANY; MERGER OF PLAN . . . . . . . . . . . . . . . . . 61
12.1 Effect of Reorganization or Transfer of Assets. . . . . . . . . . . 61
12.2 Merger Restriction. . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE XIII PLAN TERMINATION AND DISCONTINUANCE OF CONTRIBUTIONS. . . . . . . 62
13.1 Plan Termination. . . . . . . . . . . . . . . . . . . . . . . . . . 62
13.2 Discontinuance of Contributions.. . . . . . . . . . . . . . . . . . 62
13.3 Rights of Participants. . . . . . . . . . . . . . . . . . . . . . . 63
13.4 Trustee's Duties on Termination.. . . . . . . . . . . . . . . . . . 63
13.5 Partial Termination.. . . . . . . . . . . . . . . . . . . . . . . . 63
13.6 Failure to Contribute.. . . . . . . . . . . . . . . . . . . . . . . 64
13.7 Distributions Upon Sale of Assets or Sale of Subsidiary.. . . . . . 64
ARTICLE XIV APPLICATION FOR BENEFITS. . . . . . . . . . . . . . . . . . . . . . 65
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14.1 Application for Benefits. . . . . . . . . . . . . . . . . . . . . . 65
14.2 Action on Application.. . . . . . . . . . . . . . . . . . . . . . . 65
14.3 Appeals.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XV LIMITATIONS ON CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . 67
15.1 General Rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
15.2 Annual Additions. . . . . . . . . . . . . . . . . . . . . . . . . . 67
15.3 Other Defined Contribution Plans. . . . . . . . . . . . . . . . . . 67
15.4 Combined Plan Limitation (Defined Benefit Plan).. . . . . . . . . . 68
15.5 Adjustments for Excess Annual Additions.. . . . . . . . . . . . . . 69
15.6 Disposition of Excess Company Contribution Amounts. . . . . . . . . 70
15.7 Affiliated Company. . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE XVI RESTRICTION ON ALIENATION . . . . . . . . . . . . . . . . . . . . . 71
16.1 General Restrictions Against Alienation.. . . . . . . . . . . . . . 71
16.2 Qualified Domestic Relations Order. . . . . . . . . . . . . . . . . 71
ARTICLE XVII PLAN AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 74
17.1 Amendments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
17.2 Retroactive Amendments.. . . . . . . . . . . . . . . . . . . . . . 74
17.3 Amendment of Vesting Provisions. . . . . . . . . . . . . . . . . . 74
ARTICLE XVIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 75
18.1 No Enlargement of Employee Rights. . . . . . . . . . . . . . . . . 75
18.2 Mailing of Payments; Lapsed Benefits.. . . . . . . . . . . . . . . 75
18.3 Addresses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
18.4 Notices and Communications.. . . . . . . . . . . . . . . . . . . . 76
18.5 Reporting and Disclosure.. . . . . . . . . . . . . . . . . . . . . 77
18.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 77
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18.7 Interpretation.. . . . . . . . . . . . . . . . . . . . . . . . . . 77
18.8 Withholding for Taxes. . . . . . . . . . . . . . . . . . . . . . . 77
18.9 Limitation on Company; Committee and Trustee Liability.. . . . . . 77
18.10 Successors and Assigns.. . . . . . . . . . . . . . . . . . . . . . 77
18.11 Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE XIX TOP-HEAVY PLAN RULES . . . . . . . . . . . . . . . . . . . . . . . 78
19.1 Applicability. . . . . . . . . . . . . . . . . . . . . . . . . . . 78
19.2 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
19.3 Top-Heavy Status.. . . . . . . . . . . . . . . . . . . . . . . . . 79
19.4 Minimum Contributions. . . . . . . . . . . . . . . . . . . . . . . 81
19.5 Maximum Annual Addition. . . . . . . . . . . . . . . . . . . . . . 82
19.6 Vesting Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . 82
19.7 Non-Eligible Employees.. . . . . . . . . . . . . . . . . . . . . . 82
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2000 RESTATEMENT OF
21ST CENTURY INSURANCE GROUP
SAVINGS AND SECURITY PLAN
ARTICLE I
GENERAL
1.1 Plan Name and Purpose.
The name of this Plan is the "21st Century Insurance Group Savings and
Security Plan" (the "Plan"). The purpose of this instrument is to restate the
Plan in its entirety to effectuate the change of the name of the Company from
20th Century Industries to 21st Century Insurance Group and to incorporate the
First and Second Amendments to the 1989 Amendment and Restatement of the Plan.
This Plan is intended to qualify under Code Section 401(a) as a profit
sharing plan and, with respect to the portion hereof intended to qualify as a
qualified cash or deferred arrangement, to satisfy the requirements of Code
Section 401(k).
1.2 Effective Date.
This 2000 Restatement of the Plan sets forth the provisions of the Plan as
it has been amended from time to time. The effective dates of said amendments
are as set forth in the various documents amending the Plan, up to and including
the First and Second Amendments to the 1989 Amendment and Restatement.
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ARTICLE II
DEFINITIONS
When capitalized, the following terms shall have the meanings set forth in
this Article II:
2.1 Accounts.
"Accounts" or "Participant's Accounts" means the following Plan accounts
maintained by the Committee for each Participant as required by Article VII:
(a) "Compensation Deferral Account" shall mean the account
established and maintained for each Participant under Article VII for
purposes of holding and accounting for amounts held in the Trust Fund which
are attributable to Compensation Deferral Contributions made in accordance
with Section 5.1(a) hereof.
(b) "Participant Voluntary Contribution Account" shall mean the
account established and maintained for each Participant under Article VII
for purposes of holding and accounting for amounts held in the Trust Fund
which are attributable to Participant Voluntary Contributions in accordance
with Section 5.2 hereof.
(c) "Company Contribution Account" shall mean the account
established and maintained for each Participant under Article VII for
purposes of holding and accounting for amounts held in the Trust Fund which
are attributable to Matching Contributions made under Section 6.1(b) hereof
and any discretionary contributions made under Section 6.1(c) hereof.
(d) "Rollover/Transfer Account" shall mean the account established
and maintained under Article V for a Participant to reflect amounts held in
the Trust Fund which are attributable to Participant rollover or transfer
contributions under Section 5.12.
2.2 Affiliated Company.
"Affiliated Company" shall mean:
(a) Any corporation that is included in a controlled group of
corporations, within the meaning of Section 414(b) of the Code, that
includes the Company,
(b) Any trade or business that is under common control with the
Company within the meaning of Section 414(c) of the Code,
(c) Any member of an affiliated service group, within the meaning
of Section 414(m) of the Code, that includes the Company, and
(d) Any other entity required to be aggregated with the Company
pursuant to regulations under Section 414(o) of the Code.
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2.3 Beneficiary.
"Beneficiary" or "Beneficiaries" means the person or persons last
designated by a Participant as set forth in Section 9.11 or, if there is no
designated Beneficiary or surviving Beneficiary, the person or persons
designated in Section 9.11 to receive the interest of a deceased Participant in
such event.
2.4 Board of Directors.
"Board of Directors" shall mean the Board of Directors of 21st Century
Insurance Group as it may from time to time be constituted or the Executive
Committee of the Board of Directors (if duly authorized to act for and in place
of the Board of Directors).
2.5 Code.
"Code" shall mean the Internal Revenue Code of 1986, as in effect on the
date of execution of this Plan document and as thereafter amended from time to
time.
2.6 Committee.
"Committee" shall mean the Committee described in Article XI hereof.
2.7 Company.
"Company" shall mean 21st Century Insurance Group.
2.8 Company Stock.
"Company Stock" shall mean whichever of the following is applicable:
(a) So long as the Company has only one class of stock, that class
of stock.
(b) In the event the Company at any time has more than one class
of stock, the class (or classes) of the Company's stock constituting
"employer securities" as that term is defined in Section 409A(1) of the
Code.
2.9 Compensation.
(a) "Compensation" shall mean any cash compensation paid by the
Company during a Plan Year by reason of services performed by an Employee,
including overtime pay, bonuses, shift-differential pay, and special
allowances and compensation, plus Compensation Deferral Contributions by a
Participant and amounts excludable from income under Code Section 125 or
129 subject, however, to the following special rules and to the provisions
of Subsections 2.9(b) and (c) below. The following shall not be taken into
account in determining Compensation:
(i) Fringe benefits, and contributions by the Company to and
benefits under any employee benefit plan, except for amounts that are
excluded from an Employee's income under Code Sections 402(e)(3), 125
and 129;
3
(ii) Amounts paid or payable by reason of services performed
during any period in which an Employee is not a Participant under this
Plan;
(iii) Amounts included in any Employee's gross income with
respect to life insurance as provided by Code Section 79;
(iv) Amounts paid to Employees as special remuneration based
on profits, discretionary judgment bonuses, severance pay or other
special payments;
(b) Solely for purposes of Article XV (relating to certain
limitations on certain annual additions to or benefits from employee
pension benefit plans) and Article XIX of this Plan (relating to special
rules applicable to certain Top-Heavy plans), the term "Compensation" shall
mean wages as defined in Section 3401(a) for purposes of income tax
withholding at the source but determined without regard to any rules that
limit the remuneration included in wages based on the nature or location of
the employment or the services performed (such as the exception for
agricultural labor in Section 3401(a)(2)). For purposes of applying the
limitations of Article XV, Compensation as defined in this Subsection (c)
for a Limitation Year (as defined in Article XV) shall be subject to the
limitations of Paragraphs (i) and (ii) below.
(i) For Limitation Years that begin after December 31, 1991
and before January 1, 1998, Compensation shall include only amounts
actually paid or includible in gross income during such Limitation
Year.
(ii) For Limitation Years beginning on and after January 1,
1998, in addition to amounts taken into account under Paragraph (i)
above, Compensation shall also include amounts not actually paid or
includible in income that are either (A) deferred by the Participant
in accordance with the provisions of Section 5.1 and which qualify for
treatment under Code Section 401(k), or (B) deducted from a
Participant's remuneration under a plan which satisfies the
requirements of Section 125 or 129 of the Code.
For purposes of applying the requirements of Article XX, Compensation for a
Plan Year determined in accordance with this Subsection (b) shall be
limited as provided in Subsection (d) below.
(c) Solely for purposes of Sections 5.6 and 5.9, "Compensation"
means compensation determined by the Committee in accordance with the
requirements of Section 414(s) of the Code, including, to the extent
elected by the Committee, amounts deducted from an Employee's wages or
salary that are excludable from income under Sections 125, 129, or
402(e)(3) of the Code.
(d) "Compensation" of any Employee taken into account under
Article V or VI for any Plan Year that begins on or after January 1, 1989
shall not exceed the annual compensation limit in effect under Section
401(a)(17) of the Code on the January 1 coinciding with or immediately
preceding the first day of such Plan Year, as provided in this Subsection.
4
(i) "Compensation" of any Employee taken into account under
Article V or VI for any Plan Year that begins on or after January 1,
1994 shall not exceed $150,000, as that amount is adjusted in
accordance with Section 401(a)(17)(B) of the Code. For Plan Years
commencing on and after January 1, 2000, the annual compensation limit
in effect under Section 401(a)(17) of the Code is increased to
$170,000.
(ii) "Compensation" of any Employee taken into account under
Article V or VI for any Plan Year that begins on or after January 1,
1989 and before January 1, 1994, shall not exceed $200,000, as that
amount is adjusted at the same time and in the same manner as under
Section 415(d) of the Code.
(iii) If Compensation for a period of less than twelve (12)
months is taken into account for any Plan Year, then, to the extent
required by regulations under Section 401(a)(17) of the Code, the
otherwise applicable annual Compensation limit provided under this
Subsection is reduced in the same proportion as the reduction in the
twelve-month period.
2.10 Compensation Deferral Contributions.
"Compensation Deferral Contributions" shall mean contributions described in
Section 5.1(a).
2.11 Deferral Limitation.
"Deferral Limitation" shall mean the dollar limitation on the exclusion of
elective deferrals from a Participant's gross income under Section 402(g) of the
Code, as in effect with respect to the taxable year of the Participant.
2.12 Distributable Benefit.
"Distributable Benefit" shall mean the Vested Interest of a Participant in
this Plan which is determined and distributable to the Participant upon
termination of the Participant's employment in accordance with the provisions of
Articles IX and X.
2.13 Effective Date.
This 2000 Restatement of the Plan sets forth the provisions of the Plan as
it has been amended from time to time. The effective dates of said amendments
are as set forth in the various documents amending the Plan, up to and including
the First and Second Amendments to the 1989 Restatement of the Plan.
2.14 Eligible Employee.
"Eligible Employee" shall mean any Employee of a Participating Employer,
except as provided below in this Section 2.14:
(a) The term "Eligible Employee" shall not include any person in
one or more of the following categories:
5
(i) Any person who is covered by a collective bargaining
agreement to which a Participating Employer is a party, unless the
collective bargaining agreement provides for coverage under this Plan.
(ii) Any non-resident alien who receives no earned income
(within the meaning of Code Section 911(d)(2)) from a Participating
Employer that constitutes income from sources within the United States
(within the meaning of Code Section 861(a)(3)).
(iii) Any person who is a "leased employee" within the
meaning of Code Section 414(n).
(iv) Any person who is an "employee" within the meaning of
Code Section 401(c)(3).
(v) Any person who is recorded on the books and records of a
Participating Employer or an Affiliated Company as an independent
contractor, a worker provided by a temporary staffing agency, and an
individual with respect to whom a written agreement governing the
relationship between such person and a Participating Employer or
Affiliated Company provides in substance that such person shall not be
an Eligible Employee hereunder.
(b) The preceding provisions of this Section 2.14 shall be given
effect notwithstanding any classification or reclassification of a person
as an employee or common law employee of a Participating Employer or
Affiliated Company or as a member of any other category of person not
excluded under the preceding provisions of this Section 2.14, by reason of
action taken by any tax or other governmental authority. In the event that
a person rendering services to a Participating Employer or to an Affiliated
Company in an excluded category is classified or reclassified by reason of
action taken by any tax or other governmental authority, or by a
Participating Employer or Affiliated Company, such individual shall
continued to be excluded under this Plan unless specifically included
hereunder by the terms of an amendment to this Plan or by the terms of a
written instrument executed by such person and a Participating Employer.
(c) The categories of excluded persons described above in this
Section 2.14 are not mutually exclusive, it being contemplated that certain
categories described above may include persons in one or more other
categories, with the result that an individual may be excluded under more
than one category set forth herein.
2.15 Employee.
(a) "Employee" shall mean each person currently employed in any
capacity by the Company or an Affiliated Company, any portion of whose
Compensation paid by the Company or an Affiliated Company is subject to
withholding of income tax and/or for whom Social Security contributions are
made by the Company or an Affiliated Company;
(b) In addition, "Employee" shall mean "leased employees" within
the meaning of Section 414(n)(2) of the Code. Notwithstanding the
foregoing, if such leased employees constitute less than twenty percent of
6
the Company's non-highly compensated work force within the meaning of
Section 414(n)(5)(C)(ii) of the Code, the term "Employee" shall not include
those leased employees covered by a plan described in Section 414(n)(5) of
the Code unless otherwise provided by the terms of this Plan.
(c) Although Eligible Employees are the only class of Employees
eligible to participate in this Plan, the term "Employee" is used to refer
to persons employed in a non-Eligible Employee capacity as well as Eligible
Employee category. Thus, those provisions of this Plan that are not limited
to Eligible Employees, such as those relating to Hours of Service, apply to
both Eligible and non-Eligible Employees.
2.16 Employment Commencement Date.
"Employment Commencement Date" shall mean each of the following:
(a) The date on which an Employee first performs an Hour of
Service in any capacity for the Company or an Affiliated Company with
respect to which the Employee is compensated or is entitled to cash
remuneration by the Company or the Affiliated Company.
(b) In the case of an Employee whose employment is terminated and
who is reemployed by the Company or an Affiliated Company after he/she
incurs a Period of Severance, the term "Employment Commencement Date" shall
also mean the first day following the termination of employment on which
the Employee performs an Hour of Service for the Company or an Affiliated
Company with respect to which he/she is compensated or entitled to cash
remuneration by the Company or an Affiliated Company.
2.17 ERISA.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
2.18 Hardship.
"Hardship" shall be determined in accordance with regulations promulgated
under Section 401(k) of the Code. "Hardship" shall be deemed to exist with
respect to a distribution necessary to meet the immediate and heavy financial
needs of the Participant, if the amount required to meet such financial needs is
not readily available to the Participant from other resources, including a
distribution for:
(a) expenses for medical care described in Code Section 213(d) of
Participant and his/her Spouse or dependents,
(b) payment of tuition, fees and other expenses for college or
graduate school education of the Participant or his/her Spouse or
dependents for the next twelve (12) months, or
(c) costs directly related for the purchase of a primary residence
by a Participant.
7
(d) payments necessary to prevent the eviction of the Participant
from the Participants' principal residence or foreclosure on the mortgage
of such residence.
The existence of a Participant's financial hardship and the amount required to
meet the need created by the hardship shall be determined by the Committee in
accordance with Section 9.10 and rules of uniform application which the
Committee may from time to time prescribe.
2.19 Highly Compensated Employee.
(a) "Highly Compensated Employee" shall mean any Employee who
(i) was a Five Percent Owner at any time during the Plan Year
or the preceding Plan Year, or
(ii) for the preceding year received Compensation from a
Participating Employer in excess of $85,000, as adjusted by the
Secretary of the Treasury at the same time and in the same manner as
under Code Section 415(d), except that the base period for such
adjustment shall be the calendar quarter ending September 30, 1996.
(b) Determination of a Highly Compensated Employee shall be in
accordance with the following special rules:
(i) An Employee shall be treated as a Five Percent Owner for
any Plan Year if at any time during such Plan Year such Employee was a
Five Percent Owner (as defined in Section 19.2(b)).
(ii) For purposes of this Section, the term "Compensation"
means Compensation as set forth in Section 2.9(b)(i); provided,
however, the determination under this Paragraph (ii) shall be made
without regard to Sections 125, 402(e)(3), and 401(h)(1)(B), and in
the case of Participating Employer contributions made pursuant to a
salary reduction agreement, without regard to Section 403(b).
(iii) A former Employee shall be treated as a Highly
Compensated Employee if:
(A) such Employee was a Highly Compensated Employee when
such Employee incurred a severance, or
(B) such Employee was a Highly Compensated Employee at
any time after attaining age fifty-five (55).
(iv) Code Sections 414(b), (c), (m), (n), and (o) shall be
applied before the application of this Section 2.19.
(c) To the extent permissible under Code Section 414(q), the
Committee may determine which Employees shall be categorized as Highly
8
Compensated Employees by applying a simplified method and calendar year
election prescribed by the Internal Revenue Service.
2.20 Hour of Service.
(a) "Hour of Service" of an Employee shall mean the following:
(i) Each hour for which the Employee is paid by the
Participating Employer or an Affiliated Company or entitled to payment
for the performance of services as an Employee.
(ii) Each hour in or attributable to a period of time during
which the Employee performs no duties (irrespective of whether he/she
has terminated his/her Employment) due to a vacation, holiday,
illness, incapacity (including pregnancy or disability), layoff, jury
duty, military duty or a Leave of Absence, for which he/she is so paid
or so entitled to payment, whether direct or indirect. However, no
such hours shall be credited to an Employee if such Employee is
directly or indirectly paid or entitled to payment for such hours and
if such payment or entitlement is made or due under a plan maintained
solely for the purpose of complying with applicable workmen's
compensation, unemployment compensation or disability insurance laws
or is a payment which solely reimburses the Employee for medical or
medically related expenses incurred by him/her.
(iii) Each hour for which he/she is entitled to back pay,
irrespective of mitigation of damages, whether awarded or agreed to by
the Participating Employer or an Affiliated Company, provided that
such Employee has not previously been credited with an Hour of Service
with respect to such hour under paragraphs (i) or (ii) above.
(b) Hours of Service under Subsections (a)(ii) and (a)(iii) shall
be calculated in accordance with Department of Labor Regulation 29 C.F.R.
Sec. 2530.200b-2(b). Hours of Service shall be credited to the appropriate
computation period according to the Department of Labor Regulation Sec.
2530.200b-2(c). However, an Employee will not be considered as being
entitled to payment until the date when the Participating Employer or the
Affiliated Company would normally make payment to the Employee for such
Hour of Service.
2.21 Investment Fund.
"Investment Fund" shall mean any of the separate Investment Funds
established by the Committee for purposes of the investment of amounts
contributed to this Plan, as provided in Section 7.3.
2.22 Investment Manager.
"Investment Manager" means the one or more Investment Managers, if any,
that are appointed pursuant to Section 11.3.
9
2.23 Leave of Absence.
"Leave of Absence" shall mean any absence without pay authorized by the
Company or an Affiliated Company which employs an Employee under the standard
personnel practices of such Company or Affiliated Company. All persons under
similar circumstances shall be treated alike in the granting of such Leaves of
Absence.
2.24 Matching Contributions.
"Matching Contributions" shall mean contributions described in Section
6.1(b).
2.25 Normal Retirement.
"Normal Retirement" shall mean a Participant's termination of employment on
or after attaining the Plan's Normal Retirement Date (other than by reason of
death or Total and Permanent Disability).
2.26 Normal Retirement Date.
"Normal Retirement Date" shall be the first day of the month coinciding
with or next following the Participant's sixty-fifth birthday.
2.27 Participant.
"Participant" shall mean any Eligible Employee who has satisfied the
participation requirements set forth in Article III and has begun participation
in this Plan.
2.28 Participant Voluntary Contributions.
"Participant Voluntary Contributions" are after-tax contributions made
pursuant to Section 5.2.
2.29 Participation Commencement Date.
"Participation Commencement Date" shall mean the day on which an Employee's
participation in this Plan may commence in accordance with the provisions of
Article III.
2.30 Participating Employer.
"Participating Employer" shall mean each unit, division or other segment of
21st Century Insurance Group to which this Plan is extended by action of the
Board of Directors, and each unit, division or other segment of an Affiliated
Company (or similar entity), which unit, division or segment has been granted
permission by the Board of Directors to participate in this Plan, provided
contributions are being made hereunder for Eligible Employees of such
Participating Employer. This permission shall be granted under such conditions
and upon such conditions as the Board of Directors deems appropriate.
2.31 Period of Service.
"Period of Service" shall mean a period of time computed under an "elapsed
time" method, as follows:
10
(a) An Employee shall be credited with a Period of Service equal
to the elapsed time between his/her Employment Commencement Date and the
date on which he/she commences a Period of Severance.
(b) If an Employee incurs a Period of Severance and is
subsequently reemployed by a Participating Employer, he/she shall be
credited with a Period of Service pursuant to the following rules:
(i) An Employee shall receive credit for a Period of
Severance as if it were a Period of Service if such Period of
Severance commences by reason of a quit, discharge or retirement and
the Participant is reemployed by a Participating Employer within 12
months after the commencement of such Period of Severance.
(ii) An Employee shall receive credit for a Period of
Severance as if it were a Period of Service if such Period of
Severance commences by reason of a quit, discharge or retirement
during a time in which such Employee is absent from service for a
reason other than quit, discharge or retirement and the Employee is
reemployed by a Participating Employer within 12 months after his/her
initial absence from service.
(iii) Except as provided in Paragraphs 2.31(b)(i) and (ii)
hereof, the Period of Severance shall not be included in the
Employee's Period of Service and, subject to Subsection 2.31(c)
hereof, all of an Employee's Periods of Service shall be aggregated
for purposes of the Plan.
(c) If an Employee who has earned no vested interest in his/her
Accounts has a Period of Severance equal to the greater of (i) five years,
or (ii) the aggregate number of years of his/her Period of Service before
such Period of Severance, then his/her prior Periods of Service shall be
disregarded for all purposes of the Plan. Otherwise an Employee's total
Period of Service shall be determined by aggregating all of the Employee's
individual Periods of Service; however, no Periods of Service shall be
included that are not required to be taken into account under Code Section
411(a)(6).
(d) Notwithstanding any other provision of this Plan, service
performed by Employees for an Affiliated Company (or a unit or division of
such company or the Company) prior to the date as of which such entity
becomes an Affiliated Company (or a unit or division of such company or the
Company) shall not be taken into account in computing Periods of Service
for any purpose of this Plan, except to the extent and in the manner
determined by resolution of the Board of Directors.
2.32 Period of Severance.
"Period of Severance" means:
(a) The period of time commencing on the earlier of
11
(i) the date on which an Employee quits, retires, is
discharged, or dies; or
(ii) the first anniversary of the first date of a period in
which an Employee remains absent from service (with or without pay)
with the Company and all Affiliated Companies for any reason other
than quit, retirement, discharge or death (such as vacation, holiday,
sickness, disability, leave of absence or layoff), and continuing
until the first day, if any, on which the Participant completes one or
more hours of service for which he/she is directly or indirectly paid
by the Company or an Affiliated Company for the performance of duties
as an Employee.
(b) In the case of an Employee who is absent from work for
maternity or paternity reasons, no Period of Severance shall commence until
the second anniversary of the first date of such leave of absence. The
period between the date of commencement of an absence for maternity or
paternity reasons and the first anniversary thereof shall be considered a
Period of Service; the period between the first and second anniversaries of
the commencement of such absence shall be considered neither a Period of
Service nor a Period of Severance. For purposes of this Subsection 2.32(b),
an absence from work for maternity or paternity reasons means an absence
(i) By reason of pregnancy of the Employee,
(ii) By reason of the birth of a child of the Employee,
(iii) By reason of the placement of a child with the employee
in connection with the adoption of such child by such employee or
(iv) For purposes of caring for such child for a period
beginning immediately following such birth or placement.
2.33 Plan.
"Plan" shall mean the 21st Century Insurance Group Savings and Security
Plan herein set forth, and as it may be amended from time to time.
2.34 Plan Administrator.
"Plan Administrator" shall mean the administrator of the Plan, within the
meaning of Section 3(16)(A) of ERISA. The Plan Administrator shall be 21st
Century Insurance Group.
2.35 Plan Year.
"Plan Year" shall mean the twelve month period beginning each January 1 and
ending on the following December 31.
12
2.36 Reserved for Plan Modification.
2.37 Reserved for Plan Modification.
2.38 Postponed Retirement Date.
"Postponed Retirement Date" shall mean the first day of any month following
a Participant's Normal Retirement Date on which such Participant's termination
of employment occurs.
2.39 Spouse.
"Spouse" shall mean the person to whom a Participant is legally married as
of the date of the payment of all or a portion of the Participant's
Distributable Benefit, or in the case of a payment after the Participant's
death, the person to whom the Participant is legally married as of the date of
the Participant's death. To the extent required under a qualified domestic
relations order, a former spouse shall be treated as a Spouse.
2.40 Total and Permanent Disability.
An individual shall be considered to be suffering from a "Total and
Permanent Disability" if the Committee determines that he/she is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment. An individual's disabled status
shall be determined by the Committee, based on such evidence as the Committee
determines to be sufficient, including, but not limited to, examination at the
Company's expense by a physician of the Company's choice.
2.41 Trust and Trust Fund.
"Trust" or "Trust Fund" shall mean the assets of the trust established
under the trust agreement pursuant to Article IV.
2.42 Trust Agreement.
"Trust Agreement" shall mean the one or more trust agreements entered into
by the Company in accordance with the provisions of Article IV for the purpose
of holding contributions and earnings under this Plan.
2.43 Trustee.
"Trustee" shall mean the corporation or person or persons duly appointed
pursuant to the terms of the Trust Agreement to act as trustee of all or a
portion of the assets of the Trust Fund.
2.44 Valuation Date.
"Valuation Date" shall mean each date as of which the fair market value of
the assets of an Investment Fund and the Trust Fund are determined for purposes
of determining the value of each Participant Account held therein. Such
Valuation Date shall be each day the New York Stock Exchange is open for
business.
13
2.45 Vested Interest.
"Vested Interest" or "Vested Right" shall mean the interest of a
Participant in his/her Accounts which is vested and nonforfeitable pursuant to
the provisions of Article IX of this Plan.
14
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility to Participate.
(a) Every Eligible Employee shall be eligible to elect to
participate in this Plan on the first day of the month following the date
he or she attains age twenty (20).
(b) Notwithstanding the preceding rules of this Section 3.1, the
actual date upon which an Eligible Employee will commence participation
will be determined pursuant to the rules of Section 3.2 below.
3.2 Date of Commencement of Participation.
(a) Every Eligible Employee who has satisfied the requirements of
Section 3.1 for participation in the Plan shall become a Participant in the
Plan by filing an election to make Compensation Deferral Contributions or
Participant Voluntary Contributions as set forth in Sections 5.1 and 5.2.
The Committee may prescribe or approve such rules as it deems appropriate
in connection with the filing of an election to make contributions, and may
make telephonic or other electronic communication or filing methods
available for such elections
(b) Each Participant shall complete such forms as may be
prescribed or approved by the Committee, designate a Beneficiary, as
provided in Section 9.11, and designate one or more of the Investment Funds
for the investment of contributions allocated to his/her Accounts, as
provided in Article VII.
3.3 Reemployment as an Eligible Employee.
A vested Participant or a non-vested Participant whose Period of Service
cannot be disregarded under Section 2.31(c) whose employment terminates and who
is reemployed after a Period of Severance shall be eligible to participate
immediately as of his/her subsequent Employment Commencement Date as an Eligible
Employee.
3.4 Employee Responsibility.
It shall be the responsibility of each Participant who elects to contribute
to this Plan to verify that amounts of his/her contributions are in accordance
with his/her election, and investment of such contributions is in accordance
with his/her investment designation. It shall also be the responsibility of each
Participant to periodically review his/her Beneficiary designation and any other
elections under this Plan. In the case of an Eligible Employee who ceases to be
an Eligible Employee and then again becomes an Eligible Employee, it shall be
such Eligible Employee's responsibility to determine when he/she will become
eligible to contribute, as provided in Section 3.1, and to file any required
contribution election form in accordance with Section 3.2 (and any other
applicable forms) if he/she wishes to contribute to the Plan.
15
3.5 USERRA.
Notwithstanding any provision of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with Section 414(u) of the Code.
16
ARTICLE IV
TRUST FUND
4.1 Trust Fund.
To carry out the purposes of this Plan, the Company shall enter into a
Trust Agreement providing that funds received by the Trustee as contributions
under the Plan shall be held for the benefit of Participants or their
Beneficiaries and managed, invested and distributed in accordance with the Plan.
In addition, funds may be held under an insurance company contract that meets
the requirements of Code Section 401(f).
4.2 Contributions to the Trust Fund.
The Company shall transfer to the Trustee all contributions made under the
terms of this Plan as soon as is practicable after such contributions are made.
In no event shall a Participant's Compensation Deferral Contributions or
Participant Voluntary Contributions be paid to the Trustee later than the
fifteenth (15th) business day of the month following the month in which such
amount would otherwise be payable to the Participant but for the election to
contribute unless, in accordance with the requirements of Department of Labor
Regulation Section 2510.3-102(d), the Company elects to extend the fifteen (15)
business day maximum period for an additional ten (10) business days.
4.3 Investments.
The Trust Fund is authorized to invest in Company Stock and such other
assets as the Committee or the Investment Manager (if applicable) may direct. To
the extent provided in Section 7.3, Participants may direct the investment of
the assets in their Accounts in the Trust Fund from among the Investment Funds
which the Committee may from time to time make available.
4.4 Company, Committee and Trustee Not Responsible for Adequacy of Trust Fund.
The Company, Committee and Trustee shall not be liable or responsible for
the adequacy of the Trust Fund to meet and discharge any or all payments and
liabilities hereunder. All Plan benefits will be paid only from the Trust
assets, and neither the Company, the Committee nor the Trustee shall have any
duty or liability to furnish the Trust with any funds, securities or other
assets except as expressly provided in the Plan. Except as required under the
Plan or Trust or under Part 4 of Title I of ERISA, the Company shall not be
responsible for any decision, act or omission of the Trustee, the Committee, or
the Investment Manager (if applicable), and shall not be responsible for the
application of any moneys, securities, investments or other property paid or
delivered to the Trustee.
17
ARTICLE V
EMPLOYEE CONTRIBUTIONS
5.1 Compensation Deferral Contributions.
(a) Each Employee who is eligible to join the Plan and who desires
to make Compensation Deferral Contributions shall file an election pursuant
to Section 3.2 to have a percentage of his/her Compensation deferred for
each payroll period for which such election is in effect, except that the
Committee shall determine the frequency of payroll deductions for a
Participant whose Compensation is paid less frequently than monthly. The
Participant may defer from one percent (1%) to twelve percent (12%) of
his/her Compensation in whole multiples of one percent (1%).
(b) The election to make Compensation Deferral Contributions shall
be filed prior to the date it becomes effective and shall remain in effect
until such election is changed or revoked pursuant to Section 5.3, the
Participant's right to make contributions is suspended in accordance with
Section 9.10(e) due to a Hardship withdrawal, or the Participant ceases to
be an Eligible Employee. An election to make Compensation Deferral
Contributions shall be made in such form and manner as the Committee may
prescribe or approve.
5.2 Participant Voluntary Contributions.
Each Employee who is eligible to join the Plan and who desires to make
Participant Voluntary Contributions to the Plan, shall file an election pursuant
to Section 3.2 to have a percentage of his/her Compensation for each payroll
period contributed as Participant Voluntary Contributions, subject to the
following provisions of this Section 5.2. An election to make Participant
Voluntary Contributions shall be filed prior to the date it is to become
effective and shall remain in effect until changed or revoked pursuant to
Section 5.3, the Participant's right to make contributions is suspended in
accordance with Section 9.10(e) due to a Hardship withdrawal, or the Participant
ceases to be an Eligible Employee. An election to make Participant Voluntary
Deferral Contributions shall be made in such form and manner as the Committee
may prescribe or approve.
(a) The Participant Voluntary Contribution shall be, in whole
multiples of one percent (1%), a designated amount from one percent (1%) to
five percent (5%) of his/her total Compensation during each pay period.
(b) In no event may any Participant make Participant Voluntary
Contributions to this Plan which, when aggregated with voluntary after-tax
contributions made by the Participant to any other qualified plan sponsored
by the Company or an Affiliated Company, would exceed five percent (5%) of
the Participant's monthly Compensation.
5.3 Change or Revocation of Election to Make Compensation Deferral
Contributions or Participant Voluntary Contributions.
(a) A Participant may at any time elect to change or revoke
his/her election to make Compensation Deferral Contributions or Participant
Voluntary Contributions by filing a new election prior to the effective
date of such new election in accordance with rules and procedures as may be
18
prescribed or approved by the Committee. A new election shall remain in
effect until subsequently changed or revoked pursuant to this Section 5.3,
the Participant's right to make contributions is suspended due to a
Hardship withdrawal, as provided in Section 9.10(e), or the Participant
ceases to be an Eligible Employee.
(b) A Participant who revokes his/her contribution election
pursuant to this Section 5.3, or whose right to make contributions is
suspended under Section 9.10(e), may make a new election to contribute in
accordance with such rules and procedures as the Committee may prescribe or
approve from time to time; provided he/she is an Eligible Employee and
otherwise eligible under Article III.
5.4 Character of Amounts Contributed as Compensation Deferrals.
Amounts deferred pursuant to the Compensation deferral agreement described
above in Section 5.1 (and which qualify for treatment under Code Section 401(k)
and are contributed to the Trust Fund pursuant to Article IV) shall be treated,
for federal and state income tax purposes, as Company contributions.
5.5 Amount Subject to Deferral.
(a) Solely for purposes of satisfying one of the tests prescribed
under Section 5.6, the Committee may prescribe such rules as it deems
necessary or appropriate regarding the maximum amount that a Participant
may defer under Section 5.1(a) and the timing of such an election. These
rules may provide that the maximum percentage of Compensation that a
Participant may defer will be a lower percentage of his/her Compensation
above a certain dollar amount of Compensation than the maximum deferral
percentage below that dollar amount of Compensation. These rules shall
apply to all individuals eligible to enter into a Compensation deferral
agreement described in Section 5.1, except to the extent that the Committee
prescribes special or more stringent rules applicable only to Highly
Compensated Employees.
(b) No Participant shall be permitted to make Compensation
Deferral Contributions under this Plan in excess of the Deferral
Limitation. In the event a Participant's Compensation Deferral
Contributions exceed the Deferral Limitation, excess contributions shall be
subject to the provisions of Section 5.7. No Participant shall be entitled
to Matching Contributions attributable to any Compensation Deferral
Contributions in excess of the Deferral Limitation.
5.6 Limitation on Compensation Deferral Contributions.
With respect to each Plan Year, Participant Compensation Deferral
Contributions under the Plan for the Plan Year shall not exceed the limitations
on contributions by or on behalf of Highly Compensated Employees under Code
Section 401(k), as provided in this Section. In the event that Compensation
Deferral Contributions under this Plan by or on behalf of Highly Compensated
Employees for any Plan Year exceed the limitations of this Section for any
reason, such excess contributions and any income allocable thereto shall be
returned to the Participant, as provided in Section 5.8.
19
(a) The Compensation Deferral Contributions by a Participant for a
Plan Year shall satisfy one of the following tests:
(i) The Compensation Deferral Contributions by a Participant
for a Plan Year shall satisfy the Average Deferral Percentage test set
forth in (i)(A) below, or the alternative Average Deferral Percentage
test set forth in (i)(B) below, and to the extent required by
regulations under Code Section 401(m), also shall satisfy the test
identified in (ii) below:
(i) (A) The "Actual Deferral Percentage" for the current
Plan Year for Eligible Employees who are Highly Compensated
Employees shall not be more than the "Actual Deferral Percentage"
for the preceding year of all other Eligible Employees multiplied
by 1.25, or
(i) (B) The excess of the "Actual Deferral Percentage"
for the current Plan Year for Eligible Employees who are Highly
Compensated Employees over the "Actual Deferral Percentage" for
the preceding year of all other Eligible Employees shall not be
more than two percentage points, and the "Actual Deferral
Percentage" for the current Plan Year for Highly Compensated
Employees shall not be more than the "Actual Deferral Percentage"
for the preceding year of all other Eligible Employees multiplied
by 2.00.
(i) (C) The Participating Employer may elect to apply
Paragraphs (A) and (B) above using the Actual Deferral Percentage
for the current Plan Year rather than for the preceding Plan Year
for Eligible Employees who are not Highly Compensated Employees,
but if such election is made it may not be changed except as
provided by the Secretary of the Treasury.
(ii) Average Contribution Percentage for Highly Compensated
Employees eligible to participate in this Plan and a plan of the
Company or an Affiliated Company that is subject to the limitations of
Section 401(m) of the Code including, if applicable, this Plan, shall
be reduced in accordance with Section 5.10, to the extent necessary to
satisfy the requirements of Treasury Regulations Section 1.401(m)-2.
(b) For the purposes of the limitations of this Section 5.6, the
following definitions shall apply:
(i) "Actual Deferral Percentage" means, with respect to
Eligible Employees who are Highly Compensated Employees and all other
Eligible Employees for a Plan Year, the average of the ratios,
calculated separately for each Eligible Employee in such group, of the
amount of Compensation Deferral Contributions under the Plan allocated
to each Eligible Employee for such Plan Year to such Employee's
"Compensation" for such Plan Year. An Eligible Employee's Compensation
20
Deferral Contributions may be taken into account for purposes of
determining his/her Actual Deferral Percentage for a particular Plan
Year only if such Compensation Deferral Contributions are allocated to
the Eligible Employee as of a date within that Plan Year. For purposes
of this rule, an Eligible Employee's Compensation Deferral
Contributions shall be considered allocated as of a date within a Plan
Year only if (A) the allocation is not contingent upon the Eligible
Employee's participation in the Plan or performance of services on any
date subsequent to that date, and (B) the Compensation Deferral
Contribution is actually paid to the Trust no later than the end of
the twelve month period immediately following the Plan Year to which
the contribution relates. To the extent determined by the Committee
and in accordance with regulations issued by the Secretary of the
Treasury, contributions on behalf of an Eligible Employee that satisfy
the requirements of Code Section 401(k)(3)(C)(ii) may also be taken
into account for the purpose of determining the Actual Deferral
Percentage of such Eligible Employee.
(ii) "Compensation" means compensation determined by the
Committee in accordance with the requirements of Section 414(s) of the
Code, including, to the extent elected by the Committee, amounts
deducted from an Employee's wages or salary that are excludable from
income under Sections 125, 129, or 402(e)(3) of the Code.
(c) In the event that as of the last day of a Plan Year this Plan
satisfies the requirements of Section 401(a)(4) or 410(b) of the Code only
if aggregated with one or more other plans which include arrangements under
Code Section 401(k), then this Section 5.6 shall be applied by determining
the Actual Deferral Percentages of Eligible Employees as if all such plans
were a single plan, in accordance with regulations prescribed by the
Secretary of the Treasury under Section 401(k) of the Code.
(d) For the purposes of this Section, the Actual Deferral
Percentage for any Highly Compensated Employee who is a participant under
two or more Code Section 401(k) arrangements of the Company or an
Affiliated Company shall be determined by taking into account the Highly
Compensated Employee's Compensation under each such arrangement and
contributions under each such arrangement which qualify for treatment under
Code Section 401(k), in accordance with regulations prescribed by the
Secretary of the Treasury under Section 401(k) of the Code.
(e) For purposes of this Section, the amount of Compensation
Deferral Contributions by a Participant who is not a Highly Compensated
Employee for a Plan Year shall be reduced by any Compensation Deferral
Contributions in excess of the Deferral Limitation which have been
distributed to the Participant under Section 5.8, in accordance with
regulations prescribed by the Secretary of the Treasury under Section
401(k) of the Code.
(f) The determination of the Actual Deferral Percentage of any
Participant shall be made after applying the provisions of Section 15.5
relating to certain limits on Annual Additions under Section 415 of the
Code.
21
(g) The determination and treatment of Compensation Deferral
Contributions and the Actual Deferral Percentage of any Participant shall
satisfy such other requirements as may be prescribed by the Secretary of
the Treasury.
(h) The Committee shall keep or cause to have kept such records as
are necessary to demonstrate that the Plan satisfies the requirements of
Code Section 401(k) and the regulations thereunder, in accordance with
regulations prescribed by the Secretary of the Treasury.
5.7 Provisions for Return of Annual Compensation Deferral Contributions in
Excess of the Deferral Limitation.
(a) In the event that due to error or otherwise, a Participant's
Compensation Deferral Contributions under this Plan exceed the Deferral
Limitation for any calendar year (but without regard to amounts of
compensation deferred under any other plan), the excess Compensation
Deferral Contributions for the Plan Year, if any, together with income
allocable to such amount shall be distributed to the Participant on or
before the first April 15 following the close of the calendar year in which
such excess contribution is made. The amount of excess Compensation
Deferral Contributions that may be distributed to a Participant under this
Section for any taxable year shall be reduced by any excess Compensation
Deferral Contributions previously distributed in accordance with Section
5.8 for the Plan Year beginning with or within such taxable year.
(b) Income allocable to a Participant's excess Compensation
Deferral Contributions shall be determined in accordance with any
reasonable method used by the Plan for allocating income to Participant
Accounts, provided such method does not discriminate in favor of Highly
Compensated Employees and is consistently applied to all Participants for
all corrective distributions under the Plan for a Plan Year. The Committee
shall not be liable to any Participant (or his/her Beneficiary, if
applicable) for any losses caused by misestimating the amount of any
Compensation Deferral Contributions in excess of the limitations of this
Article V and any income allocable to such excess.
(c) If in any calendar year a Participant makes Compensation
Deferral Contributions under this Plan and additional elective deferrals,
within the meaning of Code Section 402(g)(3), under any other plan
maintained by the Company or an Affiliated Company, and the total amount of
the Participant's elective deferrals under this Plan and all such other
plans exceed the Deferral Limitation, the Company and each Affiliated
Company maintaining a plan under which the Participant made any elective
deferrals shall notify the affected plans in writing, and corrective
distributions of the excess elective deferrals, and any income allocable
thereto, shall be made from one or more such plans, to the extent
determined by the Company and each Affiliated Company. The determination of
the amount of a Participant's elective deferrals for any calendar year
shall be made after applying the provisions of Section 15.5 relating to
certain limits on Annual Additions under Section 415 of the Code. All
corrective distributions of excess elective deferrals shall be made on or
before the first April 15 following the close of the calendar year in which
the excess elective deferrals were made.
22
(d) In accordance with rules and procedures as may be established
by the Committee, a Participant may submit a claim to the Committee in
which he/she certifies in writing the specific amount of his/her
Compensation Deferral Contributions for the preceding calendar year which,
when added to amounts deferred for such calendar year under any other plans
or arrangements described in Section 401(k), 408(k) or 403(b) of the Code
(other than a plan maintained by the Company or an Affiliated Company),
will cause the Participant to exceed the Deferral Limitation for the
calendar year in which the deferral occurred. Any such claim must be
submitted to the Committee no later than the March 1 of the calendar year
following the calendar year of deferral. To the extent the amount specified
by the Participant does not exceed the amount of the Participant's
Compensation Deferral Contributions under the Plan for the applicable
calendar year, the Committee shall treat the amount specified by the
Participant in his/her claim as a Compensation Deferral Contribution in
excess of the Deferral Limitation for such calendar year and return such
excess and any income allocable thereto to the Participant, as provided in
(a) above. In the event that for any reason such Participant's Compensation
Deferral Contributions in excess of the Deferral Limitation for any
calendar year are not distributed to the Participant by the time prescribed
in (a) above, such excess shall be held in the Participant's Compensation
Deferral Contribution Account until distribution can be made in accordance
with the provisions of this Plan.
(e) To the extent required by regulations under Section 402(g) or
415 of the Code, Compensation Deferral Contributions with respect to a
Participant in excess of the Deferral Limitation shall be treated as Annual
Additions under Article XV for the Plan Year for which the excess
contributions were made, notwithstanding the distribution of such excess in
accordance with the provisions of this Section.
5.8 Provision for Return of Excess Deferrals by Highly Compensated
Employees.
The provisions of this Section 5.8 shall be applied after implementation of
the provisions of Section 5.7.
(a) The Committee shall determine in accordance with the
procedures set forth in Section 5.6, as soon as is reasonably possible
prior to the close of each Plan Year, the extent (if any) to which deferral
treatment under Code Section 401(k) may not be available for Compensation
Deferral Contributions on behalf of any Highly Compensated Employee. If,
pursuant to these determinations by the Committee, a Highly Compensated
Employee's Compensation Deferral Contributions may not be eligible for
deferral treatment, then any excess deferrals together with income
allocable to such amount (or income reasonably estimated to be allocable to
such amount) shall be returned to the Highly Compensated Employee (after
withholding applicable federal, state, and local taxes due on such
amounts). Such return shall be made, if administratively feasible, within
the first two and one-half (2-1/2) months following the Plan Year for which
such excess deferrals were made, provided however, that if any excess
deferrals or income thereon are, due to error or otherwise, not returned by
such date, such amounts as are required to be returned shall be returned
not later than the end of the first Plan Year following the Plan Year for
which such excess deferrals were made.
23
(b) For purposes of this Section, the amount of excess
Compensation Deferral Contributions to be distributed to a Participant for
a Plan Year shall be reduced by the amount of any Compensation Deferral
Contributions in excess of the Deferral Limitation (for the Participant's
taxable year that ends with or within the Plan Year) which have been
distributed to the Participant under Section 5.7, in accordance with
regulations prescribed by the Secretary of the Treasury under Section
401(k) of the Code.
(c) The Committee shall determine the amount of any excess
Compensation Deferral Contributions by Highly Compensated Employees for a
Plan Year by application of the method set forth in Code Section
401(k)(8)(C) under which the dollar amount of Compensation Deferral
Contributions of the Highly Compensated Employee who has the highest such
dollar amount for such Plan Year is reduced by the lesser of the amount
required (i) to enable the Plan to satisfy the Actual Deferral Percentage
test, or (ii) to cause the dollar amount of Compensation Deferral
Contributions by such Highly Compensated Employee to equal the dollar
amount of Compensation Deferral Contributions of the Highly Compensated
Employee with the next highest dollar amount. This process shall be
repeated until the Plan satisfies the Actual Deferral Percentage test.
(d) For purposes of satisfying the Actual Deferral Percentage
test, income allocable to a Participant's excess Compensation Deferral
Contributions shall be determined in accordance with any reasonable method
used by the Plan for allocating income to Participant Accounts, provided
such method does not discriminate in favor of Highly Compensated Employees
and is consistently applied to all Participants for all corrective
distributions under the Plan for a Plan Year. The Committee shall not be
liable to any Participant (or his/her Beneficiary, if applicable) for any
losses caused by misestimating the amount of any Compensation Deferral
Contributions in excess of the limitations of this Article V and any income
allocable to such excess.
(e) To the extent required by regulations under Section 401(k) or
415 of the Code, any excess Compensation Deferral Contributions with
respect to a Highly Compensated Employee shall be treated as Annual
Additions under Article XV for the Plan Year for which the excess
Compensation Deferral Contributions were made, notwithstanding the
distribution of such excess in accordance with the provisions of this
Section.
5.9 Limitations on Participant Voluntary Contributions and Matching
Contributions.
With respect to each Plan Year, Participant Voluntary Contributions and
Matching Contributions under the Plan for the Plan Year shall not exceed the
limitations on contributions by or on behalf of Highly Compensated Employees
under Section 401(m) of the Code, as provided in this Section 5.9. In the event
that Participant Voluntary Contributions and Matching Contributions under the
Plan by or on behalf of Highly Compensated Employees for any Plan Year exceed
the limitations of this Section 5.9 for any reason, such excess Participant
Voluntary Contributions and Matching Contributions and any income allocable
thereto shall be disposed of in accordance with Section 5.10.
24
(a) The Participant Voluntary Contributions and Matching
Contributions for a Plan Year shall satisfy the Average Contribution
Percentage test set forth in (i)(A) below, or the Average Contribution
Percentage test set forth in (i)(B) below:
(i) (A) The "Average Contribution Percentage" for the
current Plan Year for Eligible Employees who are Highly Compensated
Employees shall not be more than the "Average Contribution Percentage"
for the preceding year of all other Eligible Employees multiplied by
1.25, or
(i) (B) The excess of the "Average Contribution
Percentage" for the current Plan Year of Eligible Employees who are
Highly Compensated Employees over the "Average Contribution
Percentage" for the preceding year of other Eligible Employees shall
not be more than two (2) percentage points, and the "Average
Contribution Percentage" for the current Plan Year of Eligible
Employees who are Highly Compensated Employees shall not be more than
the "Average Contribution Percentage" for the preceding year of all
other Eligible Employees multiplied by 2.00.
(i) (C) The Participating Employer may elect to apply
Paragraphs (A) and (B) above using the Average Contribution Percentage
for the current Plan Year rather than for the preceding Plan Year for
Eligible Employees who are not Highly Compensated Employees, but if
such election is made it may not be changed except as provided by the
Secretary of the Treasury.
(ii) The Average Contribution Percentage for Highly
Compensated Employees eligible to participate in this Plan and a plan
of the Company or an Affiliated Company that satisfies the
requirements of Section 401(k) of the Code, including, if applicable,
this Plan, shall be reduced to the extent necessary to satisfy the
requirements of Treasury Regulations Section 1.401(m)-2 or similar
such rule.
(b) For purposes of Sections 5.9 and 5.10 the following
definitions shall apply:
(i) "Average Contribution Percentage" means, with respect to
a group of Eligible Employees for a Plan Year, the average of the
"Contribution Percentages," in such group.
(ii) The "Contribution Percentage" for any Eligible Employee
is determined by dividing the sum of The Eligible Employee's
Participant Voluntary Contributions and Matching Contributions under
the Plan on behalf of each such Eligible Employee for such Plan Year,
by such Eligible Employee's Compensation for such Plan Year. "Matching
Contributions" for purposes of the Average Contribution Percentage
test shall include a Matching Contribution only if it is allocated to
the Participant's Matching Contributions Account during the Plan Year
and is paid to the Trust Fund by the end of the twelfth month
following the close of the Plan Year. To the extent determined by the
25
Committee and in accordance with regulations issued by the Secretary
of the Treasury under Code Section 401(m)(3), the Compensation
Deferral Contributions on behalf of an Eligible Employee and any
"qualified nonelective contributions," within the meaning of Code
Section 401(m)(4)(c), on behalf of an Eligible Employee may also be
taken into account for purposes of calculating the Contribution
Percentage of such Eligible Employee, but shall not otherwise be taken
into account. However, any Matching Contributions taken into account
for purposes of determining the Actual Deferral Percentage of an
Eligible Employee under Section 5.6(a) shall not be taken into account
under this Section 5.9.
(c) In the event that as of the last day of a Plan Year this Plan
satisfies the requirements of Section 410(b) of the Code only if aggregated
with one or more other plans, or if one or more other plans satisfy the
requirements of Section 410(b) of the Code only if aggregated with this
Plan, then this Section 5.9 shall be applied by determining the
Contribution Percentages of Eligible Employees as if all such plans were a
single plan, in accordance with regulations prescribed by the Secretary of
the Treasury under Section 401(m) of the Code.
(d) For the purposes of this Section 5.9, the Contribution
Percentage for any Eligible Employee who is a Highly Compensated Employee
under two or more Code Section 401(a) plans of the Company or an Affiliated
Company shall to the extent required by Code Section 401(m), be determined
in a manner taking into account the participant voluntary contributions and
matching Company contributions for such Eligible Employee under each of
such plans.
(e) The determination of the Contribution Percentage of any
Participant shall be made after first applying the provisions of Section
15.5 relating to certain limits on Annual Additions under Section 415 of
the Code, then applying the provisions of Section 5.7 relating to the
return of Compensation Deferral Contributions in excess of the Deferral
Limitation, then applying the provisions of Section 5.8 relating to certain
limits under Section 401(k) of the Code imposed on Compensation Deferral
Contributions of Highly Compensated Employees, and last, applying the
provisions of Section 6.5 relating to the forfeiture of Matching
Contributions attributable to excess Compensation Deferral or Participant
Voluntary Contributions.
(f) The determination and treatment of the Contribution Percentage
of any Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
(g) The Committee shall keep or cause to have kept such records as
are necessary to demonstrate that the Plan satisfies the requirements of
Code Section 401(m) and the regulations thereunder, in accordance with
regulations prescribed by the Secretary of the Treasury.
(h) If pursuant to estimations by the Committee, Participant
Voluntary Contributions by Highly Compensated Employees for a Plan Year can
reasonably be expected to exceed the limitations of this Section 5.9,
solely for purposes of satisfying these limitations, the Committee may
26
establish a maximum percentage of Compensation that a Highly Compensated
Employee may contribute as Participant Voluntary Contributions for any Plan
Year.
5.10 Provision for Disposition of Excess Participant Voluntary Contributions
or Matching Company Contributions on Behalf of Highly Compensated Employees.
After application of the provisions of Sections 5.7 and 5.8, the following
provisions shall be implemented:
(a) The Committee shall determine, as soon as is reasonably
possible following the close of each Plan Year, the extent (if any) to
which contributions by or on behalf of Highly Compensated Employees may
cause the Plan to exceed the limitations of Section 5.9 for such Plan Year.
If, pursuant to the determination by the Committee, contributions by or on
behalf of a Highly Compensated Employee may cause the Plan to exceed such
limitations, then the Committee shall take the following steps:
(i) First, any excess Participant Voluntary Contributions,
together with income allocable to such amount (determined in
accordance with (b) below) shall be returned to the Highly Compensated
Employee; provided that such amounts as are required to be returned
shall be returned, if administratively feasible, within two and
one-half (2-1/2) months following the close of the Plan Year for which
such excess Participant Voluntary Contributions were made, but in no
event later than the end of the first Plan Year following the Plan
Year for which such excess contributions were made.
(ii) Second, if after the return of all Participant Voluntary
Contributions by the Highly Compensated Employee, and income allocable
thereto, an excess remains, any excess Matching Company Contributions
with respect to the Highly Compensated Employee shall be forfeited, to
the extent forfeitable under the Plan. Amounts of excess Matching
Company Contributions forfeited by Highly Compensated Employees under
this Section 5.10, including any income allocable thereto shall be
applied to reduce Matching Contributions by the Participating Employer
that made the Matching Company Contribution on behalf of the Highly
Compensated Employee for the Plan Year for which the excess
contribution was made.
(iii) If any excess remains after the provisions of (i) and
(ii) above are applied, any excess Matching Contributions which are
nonforfeitable under the Plan, and any income allocable thereto, shall
be distributed to the Highly Compensated Employee within two and
one-half (2-1/2) months following the close of the Plan Year for which
the excess Matching Contribution was made, but in no event later than
the end of the first Plan Year following the Plan Year for which the
excess Matching Contribution was made, notwithstanding any other
provision in this Plan.
(b) The Committee shall determine the amount of any excess
Participant Voluntary Contributions and Matching Contributions made by or
on behalf of Highly Compensated Employees for a Plan Year by application of
27
the method set forth in Code Section 401(m)(6)(C) under which the dollar
amount of Participant Voluntary Contributions and Matching Contributions of
the Highly Compensated Employee who has the highest such dollar amount such
Plan Year is reduced, to the extent required (i) to enable the Plan to
satisfy the Average Contribution Percentage test, or (ii) to cause the
dollar amount of such Highly Compensated Employee's Participant Voluntary
Contributions and Matching Contributions to equal the dollar amount of the
Participant Voluntary Contributions and Matching Contributions of the
Highly Compensated Employee with the next highest dollar amount. This
process shall be repeated until the Plan satisfies the Average Contribution
Percentage test. For each Highly Compensated Employee, the amount of excess
Participant Voluntary and Matching Contributions shall be equal to the
total Participant Voluntary and Matching Contributions (plus any amounts
treated as Matching Contributions) made on behalf of such Highly
Compensated Employee (determined prior to the application of the foregoing
provisions of this Subsection (b)) minus the amount determined by
multiplying the Highly Compensated Employee's Contribution Percentage
(determined after the application of the foregoing provisions of this
Subsection (b)) by his/her Compensation.
(c) For purposes of satisfying the Average Contribution Percentage
test, income allocable to a Participant's excess Participant Voluntary
Contributions or Matching Contributions, as determined under (b) above,
shall be determined by applying procedures comparable to those provided
under Section 5.8.
(d) To the extent required by regulations under Section 414(m) or
415 of the Code, any excess Participant Voluntary Contributions or Matching
Contribution forfeited by or distributed to a Highly Compensated Employee
in accordance with this Section shall be treated as an Annual Addition
under Article XV for the Plan Year for which the excess contribution was
made, notwithstanding such forfeiture or distribution.
5.11 Forfeiture of Matching Contributions Attributable to Excess Deferrals
or Contributions.
To the extent any Matching Contributions allocated to a Participant's
Company Contributions Account are attributable to excess Compensation Deferral
Contributions required to be distributed to the Participant in accordance with
Section 5.7 or 5.8, such Matching Contributions, including any income allocable
thereto, shall be forfeited, notwithstanding that such Matching Contributions
may otherwise be nonforfeitable under the terms of the Plan. Any Matching
Contributions forfeited by a Participant in accordance with this Section 5.11
shall be applied to reduce future Matching Contributions by Participating
Employers.
5.12 Participant Rollover/Transfer Contributions.
(a) Effective as of an Eligible Employee's Employment Commencement
Date, or such later date as may be determined by the Committee, the
account, if any, of such Participant held in trust under another plan that
satisfies the requirements of Code Section 401(a), or in an individual
retirement account which is attributable solely to a rollover contribution
within the meaning of Code Section 408(d)(3), may be rolled over to this
Plan and credited to the Participant's Rollover/Transfer Account in
accordance with rules which the Committee shall prescribe from time to
time; provided, however, the Committee determines that the continued
28
qualification of this Plan would not be adversely affected by such rollover
or would cause this Plan to become a "transferee plan," within the meaning
of Code Section 401(a)(11). If a Participant's account under a Plan of an
Affiliated Company is transferred to this Plan, such transfer shall be made
directly from the trustee of the plan of such Affiliated Company to the
Trustee of this Plan and shall be in cash. Amounts rolled over or
transferred to the Plan pursuant to this Section 5.12 shall not be subject
to withdrawal by a Participant prior to his/her termination of employment
with the Company and all Affiliated Companies. Nothing in this Section
5.12, however, shall be construed to permit an Eligible Employee to
commence participation in this Plan solely by reason of such rollover or
transfer. Further, nothing in this Section 5.12 shall be construed to
permit an Eligible Employee to be an active Participant in this Plan solely
by reason of a rollover or transfer pursuant to the provisions hereof.
29
ARTICLE VI
COMPANY CONTRIBUTIONS
6.1 Amount of Contributions.
Subject to the requirements and restrictions of Article V, this Article VI,
and Article XIV, and subject also to the amendment or termination of the Plan or
the suspension or discontinuance of contributions as provided herein,
Participating Employers shall make contributions to the Plan as follows:
(a) For each payroll period in which a Participant has elected
pursuant to Section 5.1 to make a Compensation Deferral Contribution, the
Company shall contribute an amount equal to such Compensation Deferral
Contribution to the Trust Fund, to be allocated to the Participant's
Compensation Deferral Account.
(b) For each payroll period in which a Participant makes a
Compensation Deferral Contribution, the Company shall make a Matching
Contribution equal to the lesser of (i) seventy-five percent (75%) of the
Participant's Compensation Deferral Contributions for such payroll period ,
or (ii) four and one-half percent (4-1/2%) of such Participant's total
Compensation for such payroll period. The Company may change the amount of
such Matching Contributions from time to time by resolution of the Board of
Directors. Amounts contributed to the Trust Fund under this Section 6.1(b)
shall be allocated to the Company Contribution Accounts of Participants as
provided in Article VII.
(c) In addition to the Matching Contribution described in (b)
above, the Company in its sole discretion may make a contribution for each
fiscal year in an amount determined by the Board of Directors. Such
contribution shall be allocated to the Company Contribution Accounts of
Participants as provided in Section 7.2(c).
6.2 Insufficient Profits.
Contributions authorized by Subsection 6.1(c) shall be made only to the
extent that net profits are available. If any Participating Employer is
prevented from making a contribution which it would otherwise have made under
the Plan, by reason of having no current or accumulated earnings or profits or
because such earnings or profits are less than the contributions which it would
otherwise have made, then so much of the contribution which such Participating
Employer was so prevented from making may be made, for the benefit of the
employees of such Participating Employer, by the other Participating Employer,
to the extent of current or accumulated earnings or profits, except that such
contribution by each such other Participating Employer shall be limited, where
all Participating Employers do not file a consolidated return, to that
proportion of its total current and accumulated earnings or profits remaining
after adjustment for its contribution deductible without regard to this Section
6.2 which the total prevented contribution bears to the total current and
accumulated earnings or profits of all the Participating Employers remaining
after adjustment for all contributions deductible without regard to this Section
6.2.
30
Notwithstanding the foregoing, Compensation Deferral Contributions under
Section 5.1(a) and Matching Contributions under Section 6.1(b) shall be made
without regard to current or accumulated profits for the Participating
Employer's tax year; provided, however, the Plan is intended to qualify as a
profit sharing plan under Code Section 401(a).
6.3 Time of Company Contribution.
A Compensation Deferral Contribution on behalf of a Participant for a Plan
Year shall made within the time period prescribed under Section 4.2. In no event
shall contributions made under Sections 6.1(b) or (c) above for any Plan Year be
made later than the time prescribed by law for the deduction of such
contribution for purposes of the Company's Federal income tax, as determined by
the applicable provisions of the Code.
6.4 Irrevocability.
The Company shall have no right or title to, nor interest in, the
contributions made to the Trust Fund, and no part of the Trust Fund shall revert
to the Company except that funds may be returned to the Company as follows:
(a) In the case of a Company contribution which is made by a
mistake of fact, that contribution (and any income allocable to such
contribution) may be returned to the Company within one (1) year after it
is made.
(b) All Company contributions are hereby conditioned upon the Plan
initially satisfying all of the requirements of Code Section 401(a) and
Section 401(k). If the Plan does not initially qualify, at the Company's
written election the Plan or any portion thereof may be revoked and any or
all such contributions with respect to the portion revoked may be returned
to the Company within one year after the date of IRS denial of the initial
qualification of the Plan. Upon such a revocation the affairs of the Plan
and Trust shall be terminated and wound up as the Company shall direct.
(c) All contributions to the Trust Fund are conditioned on
deductibility under Code Section 404. In the event a deduction is
disallowed for any such contribution, such contribution may be returned to
the Company, provided it is returned within one (1) year of the
disallowance of the deduction.
31
ARTICLE VII
PARTICIPANT ACCOUNTS AND ALLOCATIONS
7.1 General.
(a) In order to account for the allocated interest of each
Participant in the Trust Fund, there shall be established and maintained
the Accounts described in Section 2.1.
(b) The fair market value of the Trust Fund shall be determined as
of each Valuation Date.
(c) All gains, losses, dividends and other property acquisitions
and/or transfers that occur with respect to the Trust Fund shall be held,
charged, credited, debited or otherwise accounted for under said Fund on an
unallocated basis until allocated to Participants' Accounts as of the
applicable Valuation Date as provided under this Plan or otherwise used or
applied in accordance with the provisions of this Plan.
7.2 Allocation of Participating Employer Contributions.
(a) The Compensation Deferral Account of each Participant shall be
credited with Compensation Deferral Contributions made in accordance with
Section 5.1(a).
(b) The Company Contributions Account of each Participant shall be
credited with Matching Contributions made in accordance with Sections
6.1(b), and any discretionary contributions under Section 6.1(c), if
applicable.
(c) For the purpose of the allocation among the Plan Participants
of the Participating Employer's discretionary contribution for a Plan Year
under Section 6.1(c), the Participating Employers' contribution shall be
allocated as of the last day of the Plan Year to the Participants on that
date (excluding any Participants whose service has terminated or who have
retired or died, or who became disabled prior to such Plan Year ending) in
the ratio that each Participant's Compensation Deferral Contributions
during the Plan Year bears to the total Compensation Deferral Contributions
during the Plan Year of all Participants.
7.3 Investment Funds.
(a) Contributions by and on behalf of a Participant shall be
invested in accordance with the Participant's investment designations in
one or more Investment Funds established by the Committee from time to time
for this purpose. At any time the Committee may, in its sole discretion,
change the number and type of investment funds made available to
Participants.
(b) The Committee may establish an Investment Fund consisting
solely of Company Stock. If a registration statement is required to be
filed with the Securities and Exchange Commission because Employee
contributions may be invested in Company Stock, no amount in excess of any
Participating Employer contributions, excluding Compensation Deferral
32
Contributions, shall be allocated to such a Company Stock Fund unless such
a registration statement is filed.
(c) Any increase or decrease in the fair market value of an
Investment Fund shall be determined as of the Valuation Date established by
the Committee for such Investment Fund and shall be allocated to the
Accounts of a Participant in proportion to the balance of such
Participant's Accounts invested in such Investment Fund as of such
Valuation Date. For purposes of the allocation of earnings and/or losses to
Participant Accounts, the fair market value of an Investment Fund shall be
determined on each day that the New York Stock Exchange is open for
business.
(d) Investment Funds may, from time to time, hold cash or cash
equivalent investments (including interests in any fund maintained by the
Trustee as provided in the Trust Agreement) resulting from investment
transactions relating to the property of said Fund; provided, however, that
neither the Committee, the Company, the Participating Employer, the Trustee
or any other person shall have any duty or responsibility to cause such
Funds to be held in cash or cash equivalent investments for investment
purposes. In the case of any Investment Fund under the management and
control of an Investment Manager appointed by the Committee in accordance
with Section 11.3, neither the Committee, the Company, the Participating
Employer, the Trustee, nor any other person shall have any responsibility
or liability for investment decisions made by such Investment Manager.
7.4 Participant Investment Fund Designations.
In accordance with rules of uniform application which the Committee may
from time to time adopt or approve, and subject to any limitations set forth
below in this Section, each Participant shall have the right to designate one or
more of the Investment Funds for the investment of his/her Accounts and for the
investment of contributions under the Plan, in accordance with the following
rules:
(a) Investment of contributions by and on behalf of a Participant
in any Investment Fund shall be made in increments of five percent (5%).
Transfer of a Participant's Account balances between Investment Funds shall
be made in increments of five percent (5%) or in a whole dollar amount. The
Committee may establish a minimum dollar amount that may be transferred
between Investment Funds.
(b) A Participant shall make an investment designation by filing
such designation with the Committee or its designee in accordance with
procedures prescribed or approved by the Committee. The Committee may
authorize the use of telephonic or other electronic communication or filing
methods by Participants in order to execute Participant investment
directions.
(c) Subject to the limitations of Subsection (a) above, a
Participant may file a separate investment designation with respect to the
amount standing to such Participant's credit in all of his/her Accounts
under the Plan ("Existing Account Balances"), and future contributions to
his/her Accounts ("Future Contributions"), as follows:
33
(i) Investment designations with respect to Existing Account
Balances may be filed at any time and shall be effective as of the
Valuation Date coinciding with or next following the date filed.
(ii) Investment designations with respect to Future
Contributions may be filed at any time, shall apply to all Future
Contributions (i.e., both Company and Participant, including
repayments of an outstanding loan), and shall be effective as of the
first day of the first payroll period coinciding with or next
following the date filed.
(d) Notwithstanding the foregoing, the Committee may restrict
direct transfers of Existing Account Balances between certain Investment
Funds.
(e) Any investment designation shall be a continuing investment
designation until the Participant files a new investment designation in
accordance with procedures prescribed or approved by the Committee. In all
cases it shall be the responsibility of each Participant to verify that
his/her investment designation is being implemented and that such
investment designation is appropriate to the Participant's circumstances.
(f) Any election or direction made under this Plan by an
individual who is or may become subject to liability under Section 16 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), may
be conditioned upon such restrictions as are necessary or appropriate to
qualify for an applicable exemption under Section 16(b) of the Exchange
Act, or any rule promulgated thereunder. To the extent required by Section
401(a)(4) of the Code, the rules under this Section 7.4(f) shall be
administered in a nondiscriminatory manner.
7.5 Responsibility for Investment Results.
Each Participant or his/her Beneficiary, if applicable, shall be
responsible for the investment of his/her Accounts under the Plan, utilizing
investment options made available under the Plan. The Plan is intended to
constitute a plan described in Section 404(c) of ERISA, with the result that
Plan fiduciaries are not liable for any investment losses which are the direct
and necessary result of investment directions given by a Participant or
Beneficiary. Participants are not entitled to seek or rely on investment advice
from any representative of a Participating Company or of the Plan, but are
encouraged to seek investment advice from qualified independent investment
advisors.
7.6 Accounting Procedures.
The Committee and the Trustee shall establish accounting procedures for the
purpose of making the allocations, valuations and adjustments to Participants'
Accounts provided for in this Article VII and Articles IX and X. From time to
time the Committee and Trustee may modify such accounting procedures for the
purpose of achieving equitable, nondiscriminatory, and administratively feasible
allocations among the Accounts of Participants in accordance with the general
concepts of the Plan and the provisions of this Article VII and Article VIII.
34
ARTICLE VIII
SPECIAL PROVISIONS CONCERNING COMPANY STOCK EFFECTIVE AS OF JULY 1, 1993
8.1 Securities Transactions.
(a) The Trustee shall acquire Company Stock in the open market or
from the Company or any other person, including a party in interest,
pursuant to a Participant's election to invest any Company contributions on
his/her behalf (including Compensation Deferral Contributions), Participant
Voluntary Contributions or amounts in his/her Rollover/Transfer Account in
the Company Stock Fund established by the Committee in accordance with
Section 7.3. No commission will be paid in connection with the Trustee's
acquisition of Company Stock from a party in interest.
(b) To the extent necessary to preserve liquidity, a portion of
the Company Stock Fund may be invested in any short-term interest fund of
the Trustee.
(c) Neither the Company, nor the Committee, nor any Trustee have
any responsibility or duty to time any transaction involving Company Stock
in order to anticipate market conditions or changes in Company Stock value.
Neither the Company, nor the Committee nor any Trustee have any
responsibility or duty to sell Company Stock held in the Trust Fund in
order to maximize return or minimize loss.
8.2 Valuation of Company Securities.
When it is necessary to value Company Stock held by the Plan, the value
will be the current fair market value of the Company Stock, determined in
accordance with this Section 8.2 and applicable legal requirements. In the case
of a transaction between the Plan and a party in interest, the fair market value
of the Company Stock must be determined as of the date of the transaction rather
than as of some other Valuation Date occurring before or after the transaction.
If the Company Stock is publicly traded, fair market value will be based on the
closing price in public trading on the relevant date, as reported in The Wall
--------
Street Journal or any other publication of general circulation designated by the
- --------------
Committee, unless another method of valuation is required by the standards
applicable to prudent fiduciaries. If the Company Stock cannot be valued on the
basis of its closing price in public trading on a relevant date, fair market
value will be determined by the Company in good faith based on all relevant
factors for determining the fair market value of securities. Relevant factors
include an independent appraisal by a person who customarily makes such
appraisals, if an appraisal of the fair market value of the Company Stock as of
the relevant date was obtained.
8.3 Allocation of Stock Dividends and Splits.
The value of Company Stock received by the Trust as a result of a Company
Stock split or Company Stock dividend on Company Stock held in the Company Stock
Fund shall be allocated pro rata as of the Valuation Date coincident with or
following the date of such split or dividend to Participants' Company Stock Fund
subaccounts.
35
8.4 Reinvestment of Dividends.
The value of cash dividends on Company Stock held in the Company Stock Fund
shall be applied pro rata as of the Valuation Date coincident with or following
the date of such dividend to increase the value of the Company Stock Fund
subaccount of each Participant who has such a subaccount.
8.5 Voting of Company Stock.
The Trustee shall have no discretion or authority to vote Company Stock
held in the Trust on any matter presented for a vote by the stockholders of the
Company except in accordance with timely directions received by the Trustee from
Participants.
(a) Each Participant who has a Company Stock Fund subaccount shall
be entitled to direct the Trustee as to the voting of his/her pro rata
portion of the Company Stock held in the Company Stock Fund.
(b) All Participants entitled to direct such voting shall be
notified by the Company, pursuant to its normal communications with
shareholders, of each occasion for the exercise of such voting rights
within a reasonable time before such rights are to be exercised. Such
notification shall include all information distributed to shareholders
either by the Company or any other party regarding the exercise of such
rights. If a Participant shall fail to direct the Trustee as to the
exercise of voting rights arising under his/her pro rata portion of Company
Stock held in the Company Stock Fund, the Trustee shall not be required to
vote such Company Stock. The Trustee shall maintain confidentiality with
respect to the voting directions of all Participants.
(c) No Participant shall be a "fiduciary" (as that term is defined
in ERISA Section 3(21)) with respect to Company Stock for which he/she has
the right to direct the voting under the Plan for the purpose of exercising
voting rights pursuant to this Section 8.5 or tender rights pursuant to
Section 8.6.
(d) In the event a court of competent jurisdiction shall issue an
opinion or order to the Plan, the Company or the Trustee, which shall, in
the opinion of counsel to the Company or the Trustee, invalidate under
ERISA, in all circumstances or in any particular circumstances, any
provision or provisions of this Section regarding the manner in which
Company Stock held in the trust shall be voted or cause any such provision
or provisions to conflict with ERISA, then, upon notice thereof to the
Company or the Trustee, as the case may be, such invalid or conflicting
provisions of this Section shall be given no further force or effect. In
such circumstances the Trustee shall nevertheless have no discretion to
vote Company Stock held in the Trust unless required under such order or
opinion but shall follow instructions received from Participants, to the
extent such instructions have not been invalidated. To the extent required
to exercise any residual fiduciary responsibility with respect to voting,
the Trustee shall take into account in exercising its fiduciary judgment,
unless it is clearly imprudent to do so, directions timely received from
Participants, as such directions are most indicative of what is in the best
interests of Participants.
36
8.6 Certain Offers for Company Stock.
Notwithstanding any other provision of this Plan to the contrary, in the
event an offer shall be received by the Trustee (including, but not limited to,
a tender offer or exchange offer within the meaning of the Securities Exchange
Act of 1934, as from time to time amended and in effect), to acquire any or all
shares of Company Stock held by the Trust (an "Offer"), the discretion or
authority to sell, exchange or transfer any of such shares shall be determined
in accordance with the following rules:
(a) The Trustee shall have no discretion or authority to sell,
exchange or transfer any of such stock pursuant to such Offer except to the
extent, and only to the extent that the Trustee is timely directed to do so
in writing with respect to any Company Stock held by the Trustee subject to
such Offer, by each Participant who has a Company Stock Fund subaccount,
based on such Participant's pro rata share of the Company Stock Fund. Upon
timely receipt of such instructions, the Trustee shall, subject to the
provisions of Subsections (c) and (k), sell, exchange or transfer pursuant
to such Offer, only such shares as to which such instructions were given.
The Trustee shall use its best efforts to communicate or cause to be
communicated to each Participant the consequences of any failure to provide
timely instructions to the Trustee. In the event, under the terms of an
Offer or otherwise, any shares of Company Stock tendered for sale, exchange
or transfer pursuant to such Offer may be withdrawn from such Offer, the
Trustee shall follow such instructions respecting the withdrawal of such
securities from such Offer in the same manner as shall be timely received
by the Trustee from the Participants entitled under this Subsection to give
instructions as to the sale, exchange or transfer of securities pursuant to
such Offer.
(b) In the event that an Offer for fewer than all of the shares of
Company Stock held by the Trustee in the Trust shall be received by the
Trustee, each Participant shall be entitled to direct the Trustee as to the
acceptance or rejection of such Offer (as provided by Subsection (a) above)
with respect to the largest portion of such Company stock as may be
possible given the total number of amount of shares of Company Stock the
Plan may sell, exchange or transfer pursuant to the Offer based upon the
instructions received by the Trustee from all other Participants who shall
timely instruct the Trustee pursuant to this Section to sell, exchange or
transfer such shares pursuant to such Offer, each on a pro rata basis in
--- ----
accordance with the maximum number of shares each such Participant would
have been permitted to direct under Subsection (a) above had the Offer been
for all shares of Company Stock held in the trust.
(c) In the event an Offer shall be received by the Trustee and
instructions shall be solicited from Participants in the Plan pursuant to
Subsection (a) above regarding such Offer, and prior to termination of such
Offer, another Offer is received by the Trustee for the securities subject
to the first Offer, the Trustee shall use its best efforts under the
circumstances to solicit instructions from the Participants to the Trustee
(i) with respect to securities tendered for sale, exchange or transfer
pursuant to the first Offer, whether to withdraw such tender, if possible,
37
and, if withdrawn, whether to tender any securities so withdrawn for sale,
exchange or transfer pursuant to the second Offer, and (ii) with respect to
securities not tendered for sale, exchange or transfer pursuant to the
first Offer, whether to tender or not to tender such securities for sale,
exchange or transfer pursuant to the second Offer. The Trustee shall follow
all such instructions received in a timely manner from Participants in the
same manner as provided in Subsection (a) above. With respect to any
further Offer for any Company Stock received by the Trustee and subject to
any earlier Offer (including successive Offers from one or more existing
offerors), the Trustee shall act in the same manner as described above.
(d) With respect to any Offer received by the Trustee, the Trustee
shall distribute, at the Company's expense, copies of all relevant
material, including, but not limited to, material filed with the Securities
and Exchange Commission with such Offer or regarding such Offer, and shall
seek confidential written instructions from each Participant who is
entitled to respond to such Offer pursuant to Subsection (a) or (b) above.
The identities of Participants, the amount of Company Stock held in Company
Stock Fund subaccounts, and the value of such account, shall be determined
from the list of Participants delivered to the Trustee by the Recordkeeper
(as defined below). The Recordkeeper shall take all reasonable steps
necessary to provide the Trustee with the latest possible information. For
purposes of this Section, the "Recordkeeper" shall mean such person or
entity appointed by the Committee to receive Participant designations and
instructions pursuant to the provisions of this Plan and to carry out such
other administrative duties and responsibilities under the Plan as shall be
agreed to by the Committee and the Recordkeeper.
(e) The Trustee shall distribute and/or make available to each
Participant who is entitled to respond to an Offer pursuant to Subsection
(a) or (b) above an instruction form to be used by each such Participant
who wishes to instruct the Trustee. The instruction form shall state that
(i) if the Participant fails to return an instruction form to the Trustee
by the indicated deadline, the Company Stock for which he/she is entitled
to give instructions will not be sold, exchanged or transferred pursuant to
such Offer, (ii) the Participant will not be a Named Fiduciary (as
described in Subsection (j) below) with respect to shares for which he/she
is entitled to give instructions, and (iii) the Company acknowledges and
agrees to honor the confidentiality of the Participant's instructions to
the Trustee.
(f) Each Participant may choose to instruct the Trustee in one of
the following two ways: (i) not to sell, exchange or transfer any shares of
Company Stock for which he/she is entitled to give instructions, or (ii) to
sell, exchange or transfer all Company Stock for which he/she is entitled
to give instructions. The Trustee shall follow up with additional mailings
and postings of bulletins, as reasonable under the time constraints then
prevailing, to obtain instructions from Participants not otherwise
responding to such requests for instructions. The Trustee shall then sell,
exchange or transfer shares according to instructions from Participants,
and shares for which no instructions are received shall not be sold,
exchanged or transferred.
(g) The Company shall furnish former Participants who have
received distributions of Company Stock so recently as to not be
shareholders of record with the information given to Participants pursuant
to Subsections (d), (e) and (f) of this Plan. The Trustee is hereby
38
authorized to sell, exchange or transfer pursuant to an Offer any Company
Stock it may receive from such former Participants in accordance with
appropriate instructions from them.
(h) Neither the Committee nor the Trustee shall express any
opinion or give any advice or recommendation to any Participant concerning
the Offer, nor shall they have any authority or responsibility to do so.
The Trustee has no duty to monitor or police the party making the Offer;
provided, however, that if the Trustee becomes aware of activity which on
its face reasonably appears to the Trustee to be materially false,
misleading, or coercive, the Trustee shall demand promptly that the
offending party take appropriate corrective action. If the offending party
fails or refuses to take appropriate corrective action, the Trustee shall
communicate with affected Participants in such manner as it deems
advisable.
(i) The Trustee shall not reveal or release a Participant's
instructions to the Company, its officers, directors, employees, or
representatives. If some, but not all, Company Stock held by the Trust is
sold, exchanged, or transferred pursuant to an Offer, the Company, with the
Trustee's cooperation, shall take such action as is necessary to maintain
the confidentiality of Participant's records, including, without
limitation, establishment of a security system and procedures which
restrict access to Participant records and retention of an independent
agent to maintain such records. If an independent record keeping agent is
retained, such agent must agree, as a condition of its retention by the
Company, not to disclose the composition of any Participant Accounts to the
Company, its officers, directors, employees, or representatives. The
Company acknowledges and agrees to honor the confidentiality of
Participants' instructions to the Trustee.
(j) No Participant shall be a Named Fiduciary (as that term is
defined in ERISA Section 402(a)(2)) with respect to Company Stock for which
he/she is entitled to issue instructions in accordance with Subsection (a)
above solely for purposes of exercising the rights of a shareholder with
respect to an Offer pursuant to this Section 8.6 and voting rights pursuant
to Section 8.5.
(k) In the event a court of competent jurisdiction shall issue to
the Plan, the Company or the Trustee an opinion or order, which shall, in
the opinion of counsel to the Company or the Trustee, invalidate, in all
circumstances or in any particular circumstances, any provision or
provisions of this Section regarding the determination to be made as to
whether or not Company Stock held by the Trustee shall be sold, exchanged
or transferred pursuant to an Offer or cause any such provision or
provisions to conflict with securities laws, then, upon notice thereof to
the Company or the Trustee, as the case may be, such invalid or conflicting
provisions of this Section shall be given no further force or effect. In
such circumstances the Trustee shall have no discretion as to whether or
not the Company Stock held in the Trust shall be sold, exchanged, or
transferred unless required under such order or opinion, but shall follow
instructions received from Participants, to the extent such instructions
have not been invalidated by such order or opinion. To the extent required
to exercise any residual fiduciary responsibility with respect to such
sale, exchange or transfer, the Trustee shall take into account in
39
exercising its fiduciary judgment, unless it is clearly imprudent to do so,
directions timely received from Participants, as such directions are most
indicative of what action is in the best interests of Participants.
8.7 Confidentiality Procedures.
The Committee shall establish procedures intended to ensure the
confidentiality of information relating to Participant transactions involving
Company Stock, including the exercise of voting, tender and similar rights. The
Committee shall also be responsible for ensuring the adequacy of the
confidentiality procedures and monitoring compliance with such procedures. The
Committee may, in its sole discretion, appoint an independent fiduciary to carry
out any activities that it determines involve a potential for undue Company
influence on Participants with respect to the exercise of their rights as
shareholders.
8.8 Securities Law Limitation.
Neither the Committee nor the Trustee shall be required to engage in any
transaction, including, without limitation, directing the purchase or sale of
Company Stock, which it determines in its sole discretion might tend to subject
itself, its members, the Plan, the Company, or any Participant or Beneficiary to
a liability under federal or state securities laws.
40
ARTICLE IX
VESTING; PAYMENT OF PLAN BENEFITS
9.1 Vesting.
(a) Each Participant shall at all times be one hundred percent
(100%) vested in his/her Accounts under the Plan other than his/her Company
Contribution Account. Each Participant shall become vested in his/her
Company Contribution Account according to the table set forth below:
Number of One-Year
Periods of Service Vested Interest
--------------------- ---------------
Less than two 0%
Two but less than three 20%
Three but less than four 40%
Four but less than five 60%
Five but less than six 80%
Six or more 100%
(b) Effective December 1, 2000, a Participant who is actively
providing services to the Company shall become vested in his/her Company
Contribution Account according to the table set forth below:
Number of One-Year
Periods of Service Vested Interest
--------------------- ---------------
Less than two 0%
Two but less than three 25%
Three but less than four 50%
Four but less than five 75%
Five or more 100%
(c) Notwithstanding the foregoing, a Participant shall become
one hundred percent (100%) vested in his/her Company Contribution Account
upon the occurrence of the following while he/she is employed by the
Company or an Affiliated Company: his/her attainment of age 65, his/her
death, or his/her termination of employment as a result of Total and
Permanent Disability, as defined in Section 2.40.
9.2 Distribution Upon Retirement.
(a) A Participant may retire from the employment of the Company on
his/her Normal Retirement Date. If the Participant continues in the service
of the Company beyond his/her Normal Retirement Date, he/she shall continue
to participate in the Plan in the same manner as Participants who have not
reached their Normal Retirement Dates. At the subsequent termination of the
Participant's employment on his/her Postponed Retirement Date, his/her
Distributable Benefit shall be based upon the Vested Interest of his/her
Accounts as of the applicable Valuation Date determined with reference to
41
the date of his/her subsequent termination of employment. After a
Participant has reached his/her Normal Retirement Date, any termination of
the Participant's employment (other than by reason of death) shall be
deemed a Normal Retirement.
(b) Distribution as provided in Section 9.2(a) shall be made or
commence not later than sixty (60) days after the later of
(i) the close of the Plan Year in which occurs the
Participant's Normal Retirement Date or
(ii) the date the Participant's employment with the Company
and all Affiliated Companies terminates.
(c) Notwithstanding the foregoing, distribution of a Participant's
Distributable Benefit shall be made or commence not later than his/her
"Required Beginning Date" as determined in accordance with this Subsection:
(i) Except as provided in (ii) below, a Participants
"Required Beginning Date" shall mean the April 1 following the later
of the calendar year in which the Participant attains age 70-1/2, or
the calendar year in which the Participant incurs a severance. A
Participant who attains age 70-1/2 and is an Employee on the last day
of the calendar year in which he/she attains age 70-1/2 after December
31, 1995 and before January 1, 1999, shall be permitted, but not
required, to take a distribution for any such year in accordance with
the provisions of Section 401(a)(9) of the Code.
(ii) In the case of a Participant who is a "5-percent owner"
within the meaning of Section 401(a)(9) of the Code, or a Participant
who attained age 70-1/2 prior to January 1, 1996," Required Beginning
Date" shall mean the April 1 following the calendar year in which the
Participant attains age 70-1/2, whether or not such Participant has
incurred a severance or whether or not the Participant consents to the
distribution.
(iii) To the extent required to comply with Section 401(a)(9)
of the Code, the Participant's Distributable Benefit determined as of
the December 31 of the calendar year in which his/her Required
Beginning Date occurs and the December 31 of each subsequent calendar
year shall be distributed not later than the December 31 of the next
following calendar year.
9.3 Distribution Upon Death Prior to Commencement of Benefits.
(a) Upon the death of a Participant prior to the commencement of
his/her benefits under this Plan, the Committee shall direct the Trustee to
make a distribution of the Participant's Distributable Benefit in the Trust
Fund in a lump sum (provided that his/her entire Distributable Benefit
shall be distributed within five (5) years of such Participant's death) to
the Beneficiary designated by the deceased Participant, except as provided
in Section 9.10.
42
(b) Distribution as provided in Section 9.3(a) shall be made or
commence to be made not later than sixty (60) days after the close of the
Plan Year in which all facts required by the Committee to be established as
a condition of payment shall have been established to the satisfaction of
the Committee.
9.4 Distribution Upon Death After Commencement of Benefits.
(a) Upon the death of a Participant after commencement of his/her
benefits but prior to the distribution of his/her entire Distributable
Benefit in the Trust Fund to which he/she is entitled, the Committee shall
direct the Trustee to make a distribution of the balance to which the
deceased Participant was entitled, to the Beneficiary designated by the
deceased Participant, except as provided in Section 9.10.
(b) Distributions as provided in Section 9.4(a) shall be made or
commence to be made not later than sixty (60) days after the close of the
Plan Year in which all facts required by the Committee to be established as
a condition of payment shall have been established to the satisfaction of
the Committee, and such distributions shall be paid for the remainder of
the period over which distributions were being made prior to the
Participant's death.
9.5 Distribution Upon Disability Prior to Retirement Date.
(a) Upon the termination of employment of a Participant as a
result of Total and Permanent Disability, which shall be certified by a
physician designated or approved by the Committee, his/her Distributable
Benefit in the Trust Fund shall be distributed to him/her in the manner
provided in Section 9.7.
(b) Subject to Section 9.6(c), distribution as provided in Section
9.5(a) shall be made or commence to be made not later than sixty (60) days
after the close of the Plan Year in which all facts required by the
Committee to be established as a condition of payment shall have been
established to the satisfaction of the Committee.
9.6 Termination of Employment Prior to Normal Retirement Date.
(a) Subject to the provisions of Section 9.6(b) below, if a
Participant's employment for the Participating Employer and all Affiliated
Companies terminates prior to age 65, payment of his/her Distributable
Benefit shall be made or commence as soon as administratively feasible
following age 65 in accordance with Section 9.7, or prior to age 65 in
accordance with Subsection 9.6(b). Unless the Participant's Distributable
Benefit is payable prior to age 65 in accordance with (b), the Participant
shall be deemed to have elected to defer distribution until age 65. In no
event shall such distribution be later than sixty (60) days after the close
of the Plan Year in which the Participant attains age 65.
(b) If the Participant makes an election in accordance with (c)
below (and without regard to any such election if the Participant's
Distributable Benefit does not exceed $5,000 as of the date of
distribution), payment of his/her Distributable Benefit in accordance with
Section 9.7 shall be made or commence on an earlier date which is prior to
the date the Participant attains age 65.
43
(c) Any election by a Participant to receive payment of his/her
Distributable Benefit prior to age 65 shall not be valid unless such
election is made both (A) after the Participant receives a notice advising
him/her of his/her right to defer payment to age 65, and (B) within the
ninety (90) day period ending on the Participant's "Benefit Starting Date."
The notice to the Participant advising him/her of his/her right to defer
payment shall be given no less than thirty (30) nor more than ninety (90)
days prior to the Participant's Benefit Starting Date (or a summary thereof
if the notice has been given prior to the start of the 90-day notice
period). A Participant may waive the thirty (30) day notice requirement by
making an affirmative election to receive or commence payment of his/her
Distributable Benefit. For purposes of this Subsection(c), "Benefit
Starting Date" shall mean the first day of the first period for which the
Participant's Distributable Benefit is paid.
(d) In the event a Participant is partially vested in his/her
Company Contributions Account under the Plan as of the date his/her
employment with the Participating Employer and all Affiliated Companies
terminates, the portion of such Account which is not vested shall be
forfeited as of the earlier of (i) the date such Account is distributed to
him/her (or, if the distribution is made in periodic payments, on the date
the first such payment is made) or (ii) subject to direction by the
Committee, the date he/she incurs five (5) consecutive one-year Periods of
Severance. If the Participant has zero (0) Vested Interest in his/her
Company Contribution Account as of the date his/her employment with the
Participating Employer and all Affiliated Companies terminates, such
Participant shall be deemed to have received distribution of his/her Vested
Interest in such Account as of such date and the Account shall be
forfeited. Forfeited amounts shall be restored to the Company Contributions
Account of a Participant who is re-employed as an Eligible Employee, as
provided in Section 9.9.
(e) Subject to the requirements of Section 13.7, if a Participant
ceases to be an Employee by reason of the disposition by the Participating
Employer or an Affiliated Company of either (i) substantially all of the
assets used by the Company or an Affiliated Company, as the case may be, in
a trade or business, or (ii) the interest of the Participating Employer or
an Affiliated Company, as the case may be, in a subsidiary, such
Participant shall be entitled to payment of his/her Distributable Benefit
as if, for purposes of this Plan only, such event constitutes a termination
of employment.
9.7 Forms and Methods of Distributions.
(a) Distributions from the Plan shall be in cash, except that any
portion of a Participant's Distributable Benefit held in the Company Stock
Fund following the Participant's termination of employment with the Company
and all Affiliated Companies may be paid in shares of Company Stock if the
Participant makes an election in accordance with this Section 9.7(a) and
such other procedures established by the Committee, to have such payment
made in shares of Company Stock in lieu of cash (which election may apply
to the payment of a direct rollover in accordance with Section 9.8). The
value of any fractional shares attributable to a Participant's Company
Stock Fund subaccount shall be distributable only in cash.
44
(i) If the portion of the Participant's Distributable Benefit
held the Participant's Company Stock Fund subaccount is distributed in
cash, the value of the Participant's Company Stock Fund account shall
be determined as of the Valuation Date the distribution is processed.
(ii) Within a reasonable period of time (at least thirty (30)
days) prior to the date such Participant's Distributable Benefit is to
be paid, the Committee shall notify the Participant of his/her right
to elect to have payment of the portion of his/her Distributable
Benefit held in his/her Company Stock Fund subaccount made in the form
of a Company Stock distribution in lieu of cash (with the value of
fractional shares paid in cash).
(iii) Upon being so notified, the Participant shall have a
reasonable time (ninety (90) days) in which to file an election to
have such payment made in Company Stock.
(iv) If, within ninety (90) days after receiving notification
of his/her right to elect the form of payment of the portion of
his/her Distributable Benefit held in the Company Stock Fund, the
Participant fails to file an election as to the form of such payment,
payment shall be made in cash.
(b) Except as provided in (c) below, distributions under Sections
9.2, 9.5 and 9.6 shall be made by one of the following methods, as the
Participant may elect:
(i) A lump sum;
(ii) Monthly, quarterly or annual installments over a period
certain not to exceed fifteen (15) years, as the Participant elects;
(c) In the case of a Participant whose Distributable Benefit does
not exceed $5,000 as of the date of distribution, such Participant's
Distributable Benefit shall be paid in a lump sum only, and such
Participant shall not be eligible to elect payment in installments. If a
Participant has commenced to receive installment payments in accordance
with Subsection (b)(ii) above, no lump sum payment of the remaining
Distributable Benefit may be made without the consent of the Participant.
(d) If payment of a Participant's Distributable Benefit is made in
installments in accordance with Subsection (b)(ii) above, the amount to be
distributed each year must be at least an amount equal to the quotient
obtained by dividing the Participant's Distributable Benefit by the life
expectancy of the Participant or the joint and last survivor expectancy of
the Participant and designated Beneficiary. Life expectancy and joint and
last survivor expectancy are computed by the use of the return multiples
contained in Treasury Regulations Section 1.72-9. For purposes of this
computation, a Participant's life expectancy shall be recalculated no more
frequently than annually; provided, however, the life expectancy of a
non-spouse Beneficiary shall not be recalculated. If the Participant's
Spouse is not the designated Beneficiary, the method of distribution
selected must assure that at least 50 percent of the present value of the
Participant's Distributable Benefit is paid within the life expectancy of
the Participant.
45
9.8 Election for Direct Rollover of Vested Interest to Eligible Retirement
Plan.
(a) To the extent required by Section 401(a)(31) of the Code, a
Participant whose Distributable Benefit becomes payable in an "eligible
rollover distribution" as defined in (b)(i) below, shall be entitled to
file an election for a direct rollover of all or a portion of the taxable
portion of his/her Distributable Benefit to an "eligible retirement plan,"
as defined in (b)(ii) below. Any non-taxable portion of a Participant's
Distributable Benefit shall be payable to the Participant, as provided in
9.7 above. For purposes of this Article, a Participant who makes a direct
rollover election in accordance with this Section 9.8 shall be deemed to
have received payment of his/her Distributable Benefit as of the date
payment is made from the Plan.
(b) For purposes of this Section,
(i) an "eligible rollover distribution" shall mean any
distribution of all or any portion of the Participant's Distributable
Benefit, except that an eligible rollover distribution does not
include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the Participant or the joint lives
(or joint life expectancies) of the Participant and the Participants
designated Beneficiary, or for a specified period of ten years or
more; any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities), and, to the extent required under
Code Section 402(c)(4), any distribution of Compensation Deferral
Contributions for Hardship.
(ii) an "eligible retirement plan" shall mean any plan
described in Code Section 402(c)(8)(B), except that such plan must be
a defined contribution plan, the terms of which permit the acceptance
of a direct rollover from a qualified plan.
(c) A Participant's direct rollover election under this Section
shall be made in accordance with rules and procedures established by the
Committee and shall specify the dollar or percentage amount of the direct
rollover, the name and address of the eligible retirement plan selected by
the Participant and such additional information as the Committee deems
necessary of appropriate in order to implement the Participant's election.
It shall be the Participant's responsibility to confirm that the eligible
retirement plan designated in the direct rollover election will accept the
direct rollover of the taxable portion of his/her Distributable Benefit.
(d) At least thirty (30) days, but nor more than ninety (90) days,
prior to the date a Participant's Distributable Benefit becomes payable, or
as otherwise required under Code Section 402(f), the Participant shall be
given notice (the "402(f) Notice") of any right he/she may have to elect a
direct rollover of the taxable portion of his/her Distributable Benefit to
an eligible retirement plan (or a summary of the 402(f) Notice if that
notice is given prior to the start of the 90-day notice period); provided,
46
however, a Participant who has received the 402(f) Notice and, if
applicable, the summary thereof, may waive the thirty (30) day notice
requirement by making an affirmative election to make or not to make a
direct rollover of all or a portion of his/her Distributable Benefit.
(e) If a Participant who has attained age 65 or whose
Distributable Benefit does not exceed $5,000 at the date of distribution,
fails to file a properly completed direct rollover election with the
Committee within ninety (90) days after the later of the date the 402(f)
Notice or the date the summary is given, or if the Committee is unable to
effect the rollover within a reasonable time after the election is filed
with the Committee due to the failure of the Participant to take such
actions as may be required by the eligible retirement plan before it will
accept the rollover, the Participant's Distributable Benefit shall be paid
in accordance with Section 9.7, after withholding any applicable income
taxes.
(f) If the eligible retirement plan specified by the Participant
will not accept a direct rollover of any Company Stock includible in the
taxable portion of the Participant's Distributable Benefit, such Company
Stock will be distributed to the Participant.
(g) To the extent required by Section 401(a)(31) of the Code, if
all or a portion of a Participant's Distributable Benefit is payable in a
single sum distribution to the Participant's surviving Spouse, or to a
former Spouse in accordance with a "qualified domestic relations order,"
such surviving Spouse or former Spouse shall be entitled to elect a direct
rollover of all or a portion of such distribution to an individual
retirement account or an individual retirement annuity in accordance with
the provisions of this Section.
9.9 Forfeitures/Repayment.
(a) Amounts forfeited in accordance with Section 9.6(d) shall be
applied as soon as practicable to reduce future Matching Contributions.
(b) If the case of a partially vested Participant who received all
or a portion of his/her Vested Interest in his/her Company Contributions
Account following termination of employment with the Participating Company
and all Affiliated Companies, there shall be restored to the Participant's
Company Contributions Account the dollar amount of any non-vested portion
of such Account that was forfeited in accordance with Subsection 9.6(d) if,
in the event of his/her reemployment as an Eligible Employee, he/she repays
the total amount previously distributed from his/her Company Contributions
Account; provided, however, that no such repayment shall be permitted
unless such repayment is made prior to the date the Participant incurs five
(5) consecutive one-year Periods of Severance and prior to the fifth
anniversary of his/her Employment Commencement Date following the Period of
Severance.
(c) In the case of a non-vested Participant who is deemed to have
received payment of his/her Vested Interest in his/her Company Contribution
Account upon termination of employment with the Participating Company and
all Affiliated Companies, as provided in Section 9.6(d), the dollar amount
of his/her Company Contributions Account previously forfeited shall
47
automatically be restored if the Participant is re-employed as an Eligible
Employee prior to the date the Participant incurs five (5) consecutive
one-year Periods of Severance.
9.10 Withdrawals.
Except as provided in this Section 9.10, no amounts may be withdrawn by a
Participant prior to his/her termination of employment.
(a) Each Participant may twice each Plan Year make a withdrawal
from his/her Participant Voluntary Contribution Account for any reason by
requesting such withdrawal in accordance with procedures prescribed or
approved by the Committee.
(b) Each Participant may once in each Plan Year make a withdrawal
from his/her Compensation Deferral Account in an amount determined by the
Committee after considering a request by such Participant and finding that
the withdrawal is necessary to relieve Hardship to the Participant or
his/her family. For purposes of this Section 9.10(b), a withdrawal may be
considered to be necessary on account of a Hardship of the Participant if
the Committee determines that the amount required to meet such Hardship is
not readily available to the Participant from other resources, in
accordance with regulations prescribed by the Secretary of the Treasury
under Section 401(k) of the Code. A distribution generally may be treated
as necessary on account of a Hardship of a Participant if the Committee
reasonably relies on the Participant's representations to the Committee,
unless the Committee has actual knowledge to the contrary, that the
Hardship cannot be relieved
(i) through reimbursement or compensation by insurance or
otherwise,
(ii) by reasonable liquidation of assets, if such liquidation
would not itself cause an immediate and heavy financial need,
(iii) by the cessation of Participant Compensation Deferral
Contributions to the Plan, or
(iv) by other distributions or non-taxable loans from plans
of the Company or any other employer, or by borrowing from commercial
sources on reasonable commercial terms, unless the obligation to repay
the loan would be inconsistent with the purpose of the withdrawal.
For purposes of this Section 9.10(b), a Participant's resources shall be
deemed to include those assets of his/her spouse and minor children that
are reasonably available to the Participant.
(c) The amount of the Participant's Compensation Deferral
Contributions available for withdrawal under Section 9.10(b) shall be the
lesser of (i) the total of such Compensation Deferral Contributions, less
any such amounts previously withdrawn or (ii) the value of the
Participant's Compensation Deferral Contributions as of the Valuation Date
immediately preceding the Committee's determination authorizing such
48
withdrawal. Withdrawals under Section 9.10(b) shall be considered as made
from the most recent contributions by Participants. Payment of a withdrawal
shall be made only in cash and shall be allocated pro rata among the
Participant's Investment Fund subaccounts, including any Company Stock Fund
subaccount. The amount at the election of the Participant so withdrawn
shall be paid to the Participant in a cash lump sum.
(d) A withdrawal from the Participant's Compensation Deferral
Contributions Account for Hardship shall result in an automatic 90-day
suspension of a Participant's right to make Compensation Deferral
Contributions, Participant Voluntary Contributions, and have Matching
Contributions made on his/her behalf. It shall be the responsibility of
Participant whose right to make contributions has been suspended under this
Subsection (d) to file a new contribution election in accordance with
Article V if he/she wishes to resume contributions following the expiration
of the 90-day suspension period. Neither the Committee, the Company, a
Participating Employer nor the Trustee shall have an obligation to notify
such Participant that the suspension period provided under this Subsection
(d) has expired.
(e) While still an Employee, a Participant who has attained at
least age fifty-nine and one-half (59-1/2) may, in accordance with such
procedures as may be prescribed or approved by the Committee, make an
election to withdraw all or a portion of his/her Accounts, to the extent
he/she is vested in such Accounts. The amount so withdrawn shall be paid to
the Participant in a lump sum only and shall be allocated pro rata among
the Participant's Investment Fund subaccounts, including any Company Stock
Fund subaccount.
9.11 Designation of Beneficiary.
(a) Subject to the provisions of Subsection 9.11(b) below, each
Participant shall have the right to designate a Beneficiary or
Beneficiaries to receive his/her Vested Interest in the Trust Fund in the
event of his/her death before receipt of his/her entire interest in the
Trust Fund. This designation is to be made on the form prescribed by and
delivered to the Committee. Subject to the provisions of Subsection 9.11(b)
below, a Participant shall have the right to change or revoke any such
designation by filing a new designation or notice of revocation with the
Committee, and no notice to any Beneficiary nor consent by any Beneficiary
shall be required to effect any such change or revocation.
(b) If a Participant designates a Beneficiary and on the date of
his/her death has a Spouse who is not such Beneficiary, no effect shall be
given to such designation unless such Spouse has consented or thereafter
consents in writing to such designation and such consent is witnessed by a
notary public. A Spouse's consent to a Beneficiary designation is not
required under the following circumstances:
(i) if it is established to the satisfaction of the Committee
that there is no Spouse; or
(ii) if the Participant's Spouse cannot be located; or
49
(iii) because of other circumstances under which a Spouse's
consent is not required in accordance with applicable Treasury or
Department of Labor Regulations.
The Committee shall have absolute discretion as to whether the consent of a
Spouse shall be required. The provisions of this Section 9.11 shall not be
construed to place upon the Company or the Committee any duty or obligation
to require the consent of a Spouse for the purpose of protecting the rights
or interests of present or former Spouses of Participants, except to the
extent required to comply with Code Section 401(a)(11) or Section 205 of
ERISA.
(c) If a deceased Participant shall have failed to designate a
Beneficiary, or if the Committee shall be unable to locate a designated
Beneficiary after reasonable efforts have been made, or if for any reason
(including but not limited to application of the rules in Subsection
9.11(b)) the designation shall be legally ineffective, or if the
Beneficiary shall have predeceased the Participant or dies within 30 days
of the death of the Participant without effectively designating a successor
Beneficiary, any distribution required to be made under the provisions of
this Plan shall commence within one (1) year after the Participant's death
to the person or persons included in the highest priority category among
the following, in order of priority:
(i) The Participant's surviving Spouse;
(ii) The Participant's surviving children, including adopted
children;
(iii) The Participant's surviving parents; or
(iv) The Participant's estate.
The determination by the Committee as to which persons, if any, qualify
within the foregoing categories shall be final and conclusive upon all
persons. Notwithstanding the preceding provisions of this Section 9.11(c),
distribution made pursuant to this Subsection 9.11(c) shall be made to the
Participant's estate if the Committee so determines in its discretion.
(d) In the event that the deceased Participant was not a resident
of California at the date of his/her death, the Committee, in its
discretion, may require the establishment of ancillary administration in
California. In the event that a Participant shall predecease his/her
Beneficiary and on the subsequent death of the Beneficiary a remaining
distribution is payable under the applicable provisions of this Plan, the
distribution shall be payable in the same order of priority categories as
set forth above but determined with respect to the Beneficiary, subject to
the same provisions concerning non-California residency, the unavailability
of an estate representative and/or the absence of administration of the
Beneficiary's estate as are applicable on the death of the Participant.
(e) The Committee shall not be required to authorize any payment
to be made to any person following a Participant's death, whether or not
such person has been designated by the Participant as a Beneficiary, if the
50
Committee determines that the Plan may be subject to conflicting claims in
respect of said payment for any reason, including, without limitation, the
designation or continuation of a designation of a Beneficiary other than
the Participant's Spouse without the consent of such Spouse to the extent
such consent is required by Section 401(a)(11) of the Code. In the event
the Committee determines in accordance with this Section 9.11(e) not to
make payment to a designated Beneficiary, the Committee shall take such
steps as it determines appropriate to resolve such potential conflict.
9.12 Facility of Payment.
If any payee under the Plan is a minor or if the Committee reasonably
believes that any payee is legally incapable of giving a valid receipt and
discharge for any payment due him/her, the Committee may have the payment, or
any part thereof, made to the person (or persons or institution) whom it
reasonably believes is caring for or supporting the payee, unless it has
received due notice of claim therefore from a duly appointed guardian or
committee of the payee. Any payment shall be a payment from the Accounts of the
payee and shall, to the extent thereof, be a complete discharge of any liability
under the Plan to the payee.
9.13 Payee Consent.
A Participant's Accounts may not be distributed prior to his/her attainment
of age 65 without his/her consent if his/her Distributable Benefit exceeds
$5,000 at the date of distribution.
9.14 Additional Documents.
(a) The Committee or Trustee, or both, may require the execution
and delivery of such documents, papers and receipts as the Committee or
Trustee may determine necessary or appropriate in order to establish the
fact of death of the deceased Participant and of the right and identity of
any Beneficiary or other person or persons claiming any benefits under this
Article IX.
(b) The Committee or the Trustee, or both, may, as a condition
precedent to the payment of death benefits hereunder, require an
inheritance tax release and/or such security as the Committee or Trustee,
or both, may deem appropriate as protection against possible liability for
state or federal death taxes attributable to any death benefits.
9.15 Loans.
(a) From time to time, the Committee may adopt procedures whereby
a Participant may borrow from his/her Vested Interest in his/her Accounts.
In addition to such other requirements as may be imposed by applicable law,
any such loan shall bear a reasonable rate of interest, shall be adequately
secured by proper collateral, and shall be repaid within a specified period
of time according to a repayment schedule.
(b) In connection with the requirements set forth in (a) above,
the Committee shall establish the applicable interest rate at an annual
percentage rate. For loans certified by the Participant to be used for the
purchase of the Participant's principal residence, such interest rate shall
be equal to the prime rate for home loans as published in the Wall Street
51
Journal as of the first working day of the month (at the time the loan is
approved). For all other loans, such interest rate shall be equal to the
prime rate for home loans as published in the Wall Street Journal as of the
first working day of the month (at the time the loan is approved) plus two
percent (2%). Any loan shall by its terms require repayment within five (5)
years in substantially level payments made not less frequently than
quarterly, except that the repayment period may, if approved by the
Committee, be up to a maximum of fifteen (15) years in the case of a loan
certified by the Participant to be used in connection with the purchase of
any dwelling unit which within a reasonable time is to be used (determined
at the time the loan is made) as a principal residence of the Participant.
Without prejudice to the right of any Participant and the Trustee to enter
into other appropriate arrangements to secure repayment of a loan, a loan
to a Participant hereunder may be secured by an interest in such
Participant's Accounts.
(c) In no event shall the principal amount of a loan hereunder, at
the time the loan is made, together with the outstanding balance of all
other loans to the Participant under this Plan, exceed the lesser of:
(i) fifty percent (50%) of the value of the Participant's
Vested Interest in his/her Accounts under this Plan, determined as of
the applicable Valuation Date for each Investment Fund preceding the
date on which the Participant's loan application is completed in form
satisfactory to the Committee, or
(ii) fifty thousand dollars ($50,000) reduced by the excess
of the Participant's highest loan balance during the preceding
12-month period, over the Participant's outstanding loan balance as of
the date of the new loan.
No loan less than five hundred dollars ($500) will be made. Unless
otherwise determined by the Committee, no Participant may have more than
two loans outstanding under this Plan on any date.
(d) Each Participant desiring to enter into a loan arrangement
pursuant to this Section 9.15 shall apply for a loan in accordance with
such procedures as may be prescribed or approved by the Committee. Such a
Participant may be required to execute such written agreements as may be
necessary or appropriate to establish a bona fide debtor-creditor
relationship between such Participant and the Trustee and to protect
against the impairment of any security for said loan. To the extent
determined by the Committee, loan set-up fees and annual maintenance fees
may be charged to and deducted from a Participant's Accounts.
(e) Any loan made to a Participant shall be secured by a
hierarchical portion of his/her Vested Interest in his/her Investment Fund
subaccounts, including any Company Stock Fund subaccount, as specified by
the Committee and explained in loan rules furnished to Participants. For
purposes of funding a loan to a Participant, the value of a Participant's
Vested Interest in his/her Company Stock Fund subaccount shall be
determined as the Valuation Date the loan is processed. The Committee may
establish a monthly processing date for approved loan applications.
Repayments of a loan by a Participant shall be invested among the
Participant's Investment Fund subaccounts in accordance with the
52
Participant's Future Contributions investment election then in effect, as
provided in Section 7.4(c)(ii).
(f) Loans shall be repaid in accordance with the specified
repayment schedule. Notwithstanding the specified repayment schedule,
however, the full amount of any outstanding loan shall be due and payable
upon the Participant's termination of employment for any reason, including
death. Upon a Participant's termination of employment, the Participant's
Distributable Benefit shall be reduced by any outstanding loan amount which
has become due and payable under the foregoing rule or otherwise, and which
is secured by the Participant's Distributable Benefit, and such loan amount
shall be treated as distributed from the Plan to the Participant, or
his/her Beneficiary, if applicable. Notwithstanding the foregoing, upon a
Participant's termination of employment, a Participant may elect to (i)
repay the outstanding amount of the loan, or (ii) treat the outstanding
loan amount as a partial distribution.
(g) An existing loan may be reamortized one time, provided that
the other requirements of this Section 9.15 are satisfied at the time of
the reamortization. Except in the case of a loan used for the purchase of
the Participant's principal residence, at least one year must have elapsed
after the date the original loan is funded before the loan is reamortized.
The reamortized loan must be repaid within five years of the date the
original loan was made, except that in the case of a loan used for the
purchase of the Participant's principal residence, the repayment period may
extend for up to fifteen years after the date the original loan was made.
(h) In the event a Participant fails to repay a loan in accordance
with the terms of a loan agreement, such loan shall be treated as in
default. The date of the enforcement of the security interest due to a loan
in default shall be determined by the Committee, provided no loss of
principal or income shall result due to any delay in the enforcement of the
security interest due to the default. As of the date of the Participant's
termination of employment for any reason, the Participant's Distributable
Benefit shall be reduced by the outstanding amount of a loan which is then
in default, including any accrued interest thereon, that is secured by the
Participant's Distributable Benefit. Any reasonable costs related to
collection of a loan made hereunder shall be borne by the Participant.
(i) To the extent required to comply with the requirements of
Section 401(a)(4) of the Internal Revenue Code, loans hereunder shall be
made in a uniform and nondiscriminatory manner.
Notwithstanding any statement to the contrary above, the Plan permits a
maximum of only two (2) loans per Participant. A Participant must have made
one (1) year of repayments on the first loan before he/she is eligible to
take out a second loan under the Plan; provided that the one (1) year
-------- ----
requirement does not apply if the second loan is for purposes of purchasing
a primary residence.
53
ARTICLE X
VALUATION OF ACCOUNTS
10.1 Valuation of Participant Accounts.
For purposes of payment of all or any portion of a Participant's
Distributable Benefit under this Plan, the value of a Participant's Accounts
shall be determined by the Plan's recordkeeper in accordance with rules
prescribed or approved by the Committee. Such value shall be determined as of
the Valuation Date coinciding with or immediately preceding the date payment of
the Distributable Benefit is processed. Subject to the provisions of (c) below,
in no event shall such payment be processed prior to both
(a) the occurrence of the event entitling the Participant or
his/her Beneficiary to the distribution, and
(b) the filing of a request for payment with respect to such event
by the Participant (or his/her Beneficiary, if applicable), and the receipt
by the Committee of such forms and documents as the Committee may require
before the payment is processed.
(c) In the case of a Participant whose Distributable Benefit does
not exceed $5,000, payment shall be processed without regard to (b) above
if the Participant fails to file a request for payment within ninety (90)
days following receipt of the tax notice required under Section 9.8,
relating to direct rollovers, and, if applicable, the notice of his/her
right to receive payment from a Company Stock Fund subaccount in Company
Stock.
54
ARTICLE XI
OPERATION AND ADMINISTRATION OF THE PLAN
11.1 Plan Administration.
(a) Authority to control and manage the operation and
administration of the Plan shall be vested in a committee ("Committee") as
provided in this Article XI.
(b) The members of the Committee (the number of which shall be
determined by the Board of Directors) shall be appointed by the Board of
Directors and shall hold office until resignation, death or removal by the
Board of Directors. Members of the Committee may, but need not be,
appointed by appropriate designation of a Committee heretofore constituted
pursuant to the provisions of another employee benefit plan maintained by
the Company.
(c) For purposes of ERISA Section 402(a), the members of the
Committee shall be the Named Fiduciaries of this Plan.
(d) Notwithstanding the foregoing, a Trustee with whom Plan assets
have been placed in trust or an Investment Manager appointed pursuant to
Section 11.3 may be granted exclusive authority and discretion to manage
and control all or any portion of the assets of the Plan.
11.2 Committee Powers.
The Committee shall have all powers necessary to supervise the
administration of the Plan and control its operations. In addition to any powers
and authority conferred on the Committee elsewhere in the Plan or by law, the
Committee shall have, by way of illustration but not by way of limitation, the
following powers and authority:
(a) To allocate fiduciary responsibilities (other than trustee
responsibilities) among the Named Fiduciaries and to designate one or more
other persons to carry out fiduciary responsibilities (other than trustee
responsibilities). However, no allocation or delegation under this Section
11.2(a) shall be effective until the person or persons to whom the
responsibilities have been allocated or delegated agree to assume the
responsibilities. The term "trustee responsibilities" as used herein shall
have the meaning set forth in Section 405(c) of ERISA. The preceding
provisions of this Section 11.2(a) shall not limit the authority of the
Committee to appoint one or more Investment Managers in accordance with
Section 11.3.
(b) To designate agents to carry out responsibilities relating to
the Plan, other than fiduciary responsibilities.
(c) To employ such legal, actuarial, medical, accounting, clerical
and other assistance as it may deem appropriate in carrying out the
provisions of this Plan, including one or more persons to render advice
with regard to any responsibility any Named Fiduciary or any other
fiduciary may have under the Plan.
55
(d) To establish rules and regulations from time to time for the
conduct of the Committee's business and the administration and effectuation
of this Plan.
(e) To administer, interpret, construe and apply this Plan and to
decide all questions which may arise or which may be raised under this Plan
by any Employee, Participant, former Participant, Beneficiary or other
person whatsoever, including but not limited to all questions relating to
eligibility to participate in the Plan, the amount of service of any
Participant, and the amount of benefits to which any Participant or his/her
Beneficiary may be entitled.
(f) To determine the manner in which the assets of this Plan, or
any part thereof, shall be disbursed.
(g) To direct the Trustee, in writing, from time to time, to
invest and reinvest the Trust Fund, or any part thereof, or to purchase,
exchange, or lease any property, real or personal, which the Committee may
designate. This shall include the right to direct the investment of all or
any part of the Trust in any one security or any one type of securities
permitted hereunder. Among the securities which the Committee may direct
the Trustee to purchase are "employer securities" as defined in Code
Section 409(l) or any successor statute thereto or "qualifying employer
securities" within the meaning of Section 407 of ERISA.
(h) To perform or cause to be performed such further acts as it
may deem to be necessary, appropriate or convenient in the efficient
administration of the Plan.
Any action taken in good faith by the Committee in the exercise of authority
conferred upon it by this Plan shall be conclusive and binding upon the
Participants and their Beneficiaries. All discretionary powers conferred upon
the Committee shall be absolute. However, all discretionary powers shall be
exercised in a uniform and nondiscriminatory manner.
11.3 Investment Manager.
(a) The Committee, by action reflected in the minutes thereof, may
appoint one or more Investment Managers, as defined in Section 3(38) of
ERISA, to manage all or a portion of the assets of the Plan.
(b) An Investment Manager shall discharge its duties in accordance
with applicable law and in particular in accordance with Section 404(a)(l)
of ERISA.
(c) An Investment Manager, when appointed, shall have full power
to manage the assets of the Plan for which it has responsibility, and
neither the Company nor the Committee shall thereafter have any
responsibility for the management of those assets.
11.4 Periodic Review.
(a) At periodic intervals, not less frequently than annually, the
Committee shall review the long-run and short-run financial needs of the
Plan and shall determine a funding policy for the Plan consistent with the
objectives of the Plan and the minimum funding standards of ERISA, if
applicable. In determining the funding policy the Committee shall take into
56
account, at a minimum, not only the long-term investment objectives of the
Trust Fund consistent with the prudent management of the assets thereof,
but also the short-run needs of the Plan to pay benefits.
(b) All actions taken by the Committee with respect to the funding
policy of the Plan, including the reasons therefore, shall be fully
reflected in the minutes of the Committee.
11.5 Committee Procedure.
(a) A majority of the members of the Committee as constituted at
any time shall constitute a quorum, and any action by a majority of the
members present at any meeting, or authorized by a majority of the members
in writing without a meeting, shall constitute the action of the Committee.
(b) The Committee may designate certain of its members as
authorized to execute any document or documents on behalf of the Committee,
in which event the Committee shall notify the Trustee of this action and
the name or names of the designated members. The Trustee, Company,
Participants, Beneficiaries, and any other party dealing with the Committee
may accept and rely upon any document executed by the designated members as
representing action by the Committee until the Committee shall file with
the Trustee a written revocation of the authorization of the designated
members.
11.6 Compensation of Committee.
(a) Members of the Committee shall serve without compensation
unless the Board of Directors shall otherwise determine. However, in no
event shall any member of the Committee who is an Employee receive
compensation from the Plan for his/her services as a member of the
Committee.
(b) All members shall be reimbursed for any necessary or
appropriate expenditures incurred in the discharge of duties as members of
the Committee.
(c) The compensation or fees, as the case may be, of all officers,
agents, counsel, the Trustee, or other persons retained or employed by the
Committee shall be fixed by the Committee.
11.7 Resignation and Removal of Members.
Any member of the Committee may resign at any time by giving written notice
to the other members and to the Board of Directors effective as therein stated.
Any member of the Committee may, at any time, be removed by the Board of
Directors.
11.8 Appointment of Successors.
(a) Upon the death, resignation, or removal of any Committee
member, the Board of Directors may appoint a successor.
(b) Notice of appointment of a successor member shall be given by
the Secretary of the Company in writing to the Trustee and to the members
of the Committee.
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(c) Upon termination, for any reason, of a Committee member's
status as a member of the Committee, the member's status as a Named
Fiduciary shall concurrently be terminated, and upon the appointment of a
successor Committee member the successor shall assume the status of a Named
Fiduciary as provided in Section 11.1.
11.9 Records.
(a) The Committee shall keep a record of all its proceedings and
shall keep, or cause to be kept, all such books, accounts, records or other
data as may be necessary or advisable in its judgment for the
administration of the Plan and to properly reflect the affairs thereof.
(b) However, nothing in this Section 11.9 shall require the
Committee or any member thereof to perform any act which, pursuant to law
or the provisions of this Plan, is the responsibility of the Plan
Administrator, nor shall this Section 11.9 relieve the Plan Administrator
from such responsibility.
11.10 Reliance Upon Documents and Opinions.
(a) The members of the Committee, the Board of Directors, the
Company and any person delegated under the provisions hereof to carry out
any fiduciary responsibilities under the Plan ("delegated fiduciary"),
shall be entitled to rely upon any tables, valuations, computations,
estimates, certificates and reports furnished by any consultant, or firm or
corporation which employs one or more consultants, upon any opinions
furnished by legal counsel, and upon any reports furnished by the Trustee.
The members of the Committee, the Board of Directors, the Company and any
delegated fiduciary shall be fully protected and shall not be liable in any
manner whatsoever for anything done or action taken or suffered in reliance
upon any such consultant or firm or corporation which employs one or more
consultants, Trustee, or counsel.
(b) Any and all such things done or actions taken or suffered by
the Committee, the Board of Directors, the Company and any delegated
fiduciary shall be conclusive and binding on all Employees, Participants,
Beneficiaries, and any other persons whomsoever, except as otherwise
provided by law.
(c) The Committee and any delegated fiduciary may, but are not
required to, rely upon all records of the Company with respect to any
matter or thing whatsoever, and may likewise treat those records as
conclusive with respect to all Employees, Participants, Beneficiaries, and
any other persons whomsoever, except as otherwise provided by law.
11.11 Requirement of Proof.
The Committee or the Company may require satisfactory proof of any matter
under this Plan from or with respect to any Employee, Participant, or
Beneficiary, and no person shall acquire any rights or be entitled to receive
any benefits under this Plan until the required proof shall be furnished.
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11.12 Reliance on Committee Memorandum.
Any person dealing with the Committee may rely on and shall be fully
protected in relying on a certificate or memorandum in writing signed by any
Committee member or other person so authorized, or by the majority of the
members of the Committee, as constituted as of the date of the certificate or
memorandum, as evidence of any action taken or resolution adopted by the
Committee.
11.13 Multiple Fiduciary Capacity.
Any person or group of persons may serve in more than one fiduciary
capacity with respect to the Plan.
11.14 Limitation on Liability.
(a) Except as provided in Part 4 of Title I of ERISA, no person
shall be subject to any liability with respect to his/her duties under the
Plan unless he/she acts fraudulently or in bad faith.
(b) No person shall be liable for any breach of fiduciary
responsibility resulting from the act or omission of any other fiduciary or
any person to whom fiduciary responsibilities have been allocated or
delegated, except as provided in Part 4 of Title I of ERISA.
(c) No action or responsibility shall be deemed to be a fiduciary
action or responsibility except to the extent required by ERISA.
11.15 Indemnification.
(a) To the extent permitted by law, the Company shall indemnify
each member of the Board of Directors and the Committee, and any other
Employee of the Company with duties under the Plan, against expenses
(including any amount paid in settlement) reasonably incurred by him/her in
connection with any claims against him/her by reason of his/her conduct in
the performance of his/her duties under the Plan, except in relation to
matters as to which he/she acted fraudulently or in bad faith in the
performance of such duties. The preceding right of indemnification shall
pass to the estate of such a person.
(b) The preceding right of indemnification shall be in addition to
any other right to which the Board member or Committee member or other
person may be entitled as a matter of law or otherwise.
11.16 Bonding.
(a) Except as is prescribed by the Board of Directors, as provided
in Section 412 of ERISA, or as may be required under any other applicable
law, no bond or other security shall be required by any member of the
Committee, or any other fiduciary under this Plan.
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(b) Notwithstanding the foregoing, for purposes of satisfying its
indemnity obligations under Section 11.15, the Company may (but need not)
purchase and pay premiums for one or more policies of insurance. However,
this insurance shall not release the Company of its liability under the
indemnification provisions.
11.17 Prohibition Against Certain Actions.
(a) To the extent prohibited by law, in administering this Plan
the Committee shall not discriminate in favor of any class of Employees and
particularly it shall not discriminate in favor of highly compensated
Employees, or Employees who are officers or shareholders of the Company.
(b) The Committee shall not cause the Plan to engage in any
transaction that constitutes a nonexempt prohibited transaction under
Section 4975(c) of the Code or Section 406(a) of ERISA.
(c) All individuals who are fiduciaries with respect to the Plan
(as defined in Section 3(21) of ERISA) shall discharge their fiduciary
duties in accordance with applicable law, and in particular, in accordance
with the standards of conduct contained in Section 404 of ERISA.
11.18 Plan Expenses.
All expenses incurred in the establishment, administration and operation of
the Plan, including but not limited to the expenses incurred by the members of
the Committee in exercising their duties, shall be charged to the Trust Fund and
allocated to Participants' Accounts as determined by the Committee, but shall be
paid by the Company if not paid by the Trust Fund.
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ARTICLE XII
MERGER OF COMPANY; MERGER OF PLAN
12.1 Effect of Reorganization or Transfer of Assets.
In the event of a consolidation, merger, sale, liquidation, or other
transfer of the operating assets of the Company to any other company, the
ultimate successor or successors to the business of the Company shall
automatically be deemed to have elected to continue this Plan in full force and
effect, in the same manner as if the Plan had been adopted by resolution of its
board of directors, unless the successor(s), by resolution of its board of
directors, shall elect not to so continue this Plan in effect, in which case the
Plan shall automatically be deemed terminated as of the applicable effective
date set forth in the board resolution.
12.2 Merger Restriction.
Notwithstanding any other provision in this Article, this Plan shall not in
whole or in part merge or consolidate with, or transfer its assets or
liabilities to any other plan unless each affected Participant in this Plan
would receive a benefit immediately after the merger, consolidation, or transfer
(if the Plan then terminated) which is equal to or greater than the benefit
he/she would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then terminated).
61
ARTICLE XIII
PLAN TERMINATION AND
DISCONTINUANCE OF CONTRIBUTIONS
13.1 Plan Termination.
(a) (i) Subject to the following provisions of this Section
13.1, the Company may terminate the Plan and the Trust Agreements at any
time by an instrument in writing executed in the name of the Company by an
officer or officers duly authorized to execute such an instrument, and
delivered to the Trustee.
(ii) The Plan and Trust Agreements may terminate if the
Company merges into any other corporation, if as the result of the
merger the entity of the Company ceases, and the Plan is terminated
pursuant to the rules of Section 12.1.
(b) Upon and after the effective date of the termination, the
Company shall not make any further contributions under the Plan and no
contributions need be made by the Company applicable to the Plan Year in
which the termination occurs, except as may otherwise be required by law.
(c) The rights of all affected Participants to benefits accrued to
the date of termination of the Plan, to the extent funded as of the date of
termination, shall automatically become fully vested as of that date.
13.2 Discontinuance of Contributions.
(a) In the event the Company decides it is impossible or
inadvisable for business reasons to continue to make Company contributions
under the Plan, the Company by resolution of its Board of Directors may
discontinue contributions to the Plan. Upon and after the effective date of
this discontinuance, the Company shall not make any further Company
contributions under the Plan and no Company contributions need be made by
the Company with respect to the Plan Year in which the discontinuance
occurs, except as may otherwise be required by law.
(b) The discontinuance of Company contributions on the part of the
Company shall not terminate the Plan as to the funds and assets then held
by the Trustee, or operate to accelerate any payments of distributions to
or for the benefit of Participants or Beneficiaries, and the Trustee shall
continue to administer the Trust Fund in accordance with the provisions of
the Plan until all of the obligations under the Plan shall have been
discharged and satisfied.
(c) However, if this discontinuance of Company contributions shall
cause the Plan to lose its status as a qualified plan under Code Section
401(a), the Plan shall be terminated in accordance with the provisions of
this Article XIII.
(d) On and after the effective date of a discontinuance of Company
contributions, the rights of all affected Participants to benefits accrued
to that date, to the extent funded as of that date, shall automatically
become fully vested as of that date.
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13.3 Rights of Participants.
In the event of the termination of the Plan, for any cause whatsoever, all
assets of the Plan, after payment of expenses, shall be used for the exclusive
benefit of Participants and their Beneficiaries and no part thereof shall be
returned to the Company, except as provided in Section 6.3 of this Plan.
13.4 Trustee's Duties on Termination.
(a) On or before the effective date of termination of this Plan,
the Trustee shall proceed as soon as possible, but in any event within six
months from the effective date, to reduce all of the assets of the Trust
Fund to cash and/or common stock and other securities in such proportions
as the Committee shall determine (after approval by the Internal Revenue
Service, if necessary or desirable, with respect to any portion of the
assets of the Trust Fund held in common stock or securities of the
Company).
(b) After first deducting the estimated expenses for liquidation
and distribution chargeable to the Trust Fund, and after setting aside a
reasonable reserve for expenses and liabilities (absolute or contingent) of
the Trust, the Committee shall make required allocations of items of income
and expense to the Accounts.
(c) Following these allocations, the Trustee shall promptly, after
receipt of appropriate instructions from the Committee, distribute in
accordance with Section 9.7 to each former Participant a benefit equal to
the amount credited to his/her Accounts as of the date of completion of the
liquidation.
(d) The Trustee and the Committee shall continue to function as
such for such period of time as may be necessary for the winding up of this
Plan and for the making of distributions in accordance with the provisions
of this Plan.
(e) Notwithstanding the foregoing, distributions to Participants
upon Plan termination in accordance with this Section 13.4 shall not be
made if the Company establishes or maintains a "successor plan" as defined
in regulations issued under Section 401(k)(10) of the Code. In the event
benefits are not distributable upon the termination of the Plan, the
Committee shall direct the Trustee to hold the assets until benefits become
distributable under the Plan, or to transfer such benefits to the
"successor plan" in accordance with regulations prescribed by the Secretary
of the Treasury.
13.5 Partial Termination.
(a) In the event of a partial termination of the Plan within the
meaning of Code Section 411(d)(3), the interests of affected Participants
in the Trust Fund, as of the date of the partial termination, shall become
nonforfeitable as of that date.
(b) That portion of the assets of the Plan affected by the partial
termination shall be used exclusively for the benefit of the affected
Participants and their Beneficiaries, and no part thereof shall otherwise
be applied.
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(c) With respect to Plan assets and Participants affected by a
partial termination, the Committee and the Trustee shall follow the same
procedures and take the same actions prescribed in this Article XIII in the
case of a total termination of the Plan.
13.6 Failure to Contribute.
The failure of the Company to contribute to the Trust in any year, if
contributions are not required under the Plan for that year, shall not
constitute a complete discontinuance of contributions to the Plan.
13.7 Distributions Upon Sale of Assets or Sale of Subsidiary.
(a) Subject to the requirements of (b) below, upon the sale, to an
entity that is not an Affiliated Company with respect to the Participating
Employer, of either
(i) substantially all of the assets used by the Participating
Employer in the trade or business in which the Participant is
employed, or
(ii) the incorporated Participating Employer's interest in a
subsidiary that is also a Participating Employer,
a Participant shall be entitled to payment of his/her Distributable Benefit
in accordance with Article IX.
(b) Payment of a Participant's Distributable Benefit upon a
Participating Employer's sale of assets or subsidiary that satisfies the
requirements of (a) above may only be made if
(i) the Participating Employer continues to maintain the Plan
after the sale and the purchaser does not adopt the Plan;
(ii) the Participant continues employment with the purchaser;
and
(iii) payment is made by the end of the second calendar year
after the calendar year in which the sale occurred.
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ARTICLE XIV
APPLICATION FOR BENEFITS
14.1 Application for Benefits.
The Committee may require any person claiming benefits under the Plan to
submit an application therefore, together with such documents and information as
the Committee may require. In the case of any person suffering from a disability
which prevents the claimant from making personal application for benefits, the
Committee may, in its discretion, permit another person acting on his/her behalf
to submit the application.
14.2 Action on Application.
(a) Within ninety days following receipt of an application and all
necessary documents and information, the Committee's authorized delegate
reviewing the claim shall furnish the claimant with written notice of the
decision rendered with respect to the application.
(b) In the case of a denial of the claimant's application, the
written notice shall set forth:
(i) The specific reasons for the denial, with reference to
the Plan provisions upon which the denial is based;
(ii) A description of any additional information or material
necessary for perfection of the application (together with an
explanation why the material or information is necessary); and
(iii) An explanation of the Plan's claim review procedure.
(c) A claimant who wishes to contest the denial of his/her
application for benefits or to contest the amount of benefits payable to
him/her shall follow the procedures for an appeal of benefits as set forth
in Section 14.3 below, and shall exhaust such administrative procedures
prior to seeking any other form of relief.
14.3 Appeals.
(a) (i) A claimant who does not agree with the decision
rendered with respect to his/her application may appeal the decision to the
Committee.
(ii) The appeal shall be made, in writing, within sixty-five
days after the date of notice of the decision with respect to the
application.
(iii) If the application has neither been approved nor denied
within the ninety day period provided in Section 14.2 above, then the
appeal shall be made within sixty-five days after the expiration of
the ninety day period.
65
(b) The claimant may request that his/her application be given
full and fair review by the Committee. The claimant may review all
pertinent documents and submit issues and comments in writing in connection
with the appeal.
(c) The decision of the Committee shall be made promptly, and not
later than sixty days after the Committee's receipt of a request for
review, unless special circumstances require an extension of time for
processing, in which case a decision shall be rendered as soon as possible,
but not later than one hundred twenty days after receipt of a request for
review.
(d) The decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant with specific reference to the pertinent Plan
provisions upon which the decision is based.
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ARTICLE XV
LIMITATIONS ON CONTRIBUTIONS
15.1 General Rule.
(a) Notwithstanding anything to the contrary contained in this
Plan, and except as provided in paragraph (b) below, the total Annual
Additions under this Plan to a Participant's Plan Accounts for any Plan
Year shall not exceed the lesser of:
(i) the Defined Contribution Dollar Limitation; or
(ii) Twenty-five percent of the Participant's total
Compensation (within the meaning of Section 415(c)(3) of the Code)
from the Company and any Affiliated Companies for the Limitation Year.
(b) For purposes of Section 15.1, "Defined Contribution Dollar
Limitation" shall mean Thirty Thousand Dollars ($30,000), as that amount
may be adjusted for cost of living increases in accordance with Section
415(d) of the Code.
(c) For purposes of this Article XV, the Company has elected a
"Limitation Year" corresponding to the Plan Year.
(d) The compensation limitation referred to in Section 15.1(a)(ii)
shall not apply to:
(i) any contribution for medical benefits (within the meaning
of Section 419A(f)(2) of the Code) after separation from service which
is otherwise treated as an Annual Addition; or
(ii) any amount otherwise treated as an Annual Addition under
Section 415(1)(l) of the Code.
15.2 Annual Additions.
For purposes of Section 15.1, the term "Annual Additions" shall mean the
amount allocated to a Participant's Account under the Plan during the Limitation
Year that constitutes (a) Company contributions, (b) Employee contributions, (c)
forfeitures, and (d) amounts described in Sections 415(1)(l) and 419A(d)(2) of
the Code. The term "Employee Contributions," for purposes of the preceding
sentence, shall mean amounts considered contributed by the Employee and which do
not qualify for tax deferral treatment under Section 401(k) of the Code. The
Annual Addition for any Limitation Year beginning before January 1, 1987 shall
not be recomputed to treat all Employee contributions as an Annual Addition.
15.3 Other Defined Contribution Plans.
If the Company or an Affiliated Company is contributing to any other
defined contribution plan (as defined in Section 415(i) of the Code) for its
Employees, some or all of whom may be Participants in this Plan, then
67
contributions to the other plan shall be aggregated with contributions under
this Plan for the purposes of applying the limitations of Section 15.1.
15.4 Combined Plan Limitation (Defined Benefit Plan).
Effective for Plan Years beginning prior to January 1, 2000, in the event a
Participant hereunder also is a participant in any qualified defined benefit
plan (within the meaning of Section 415(k) of the Internal Revenue Code) of the
Company or an Affiliated Company, then the benefit payable under such other
defined benefit plan, or any of them, shall be reduced for so long and to the
extent necessary to provide that the sum of the "defined benefit fraction" as
defined in subsection (a) below and the "defined contribution fraction" as
defined in subsection (b) below, for any Plan Year shall not exceed 1.
(a) "Defined Benefit Fraction" shall be a fraction, the numerator
of which is the projected benefit of a Participant under all qualified
defined benefit plans adopted by the Company or an Affiliated Company
expressed as either an annual straight life annuity or a qualified joint
and survivor annuity providing the maximum permissible survivor benefit
(determined as of the close of the Plan Year), and the denominator of which
is the lesser of (i) the maximum dollar amount otherwise allowable for such
Plan Year under applicable law times 1.25 or (ii) the Percentage of
compensation limit for such Plan Year times 1.4.
(b) "Defined Contribution Fraction" shall be a fraction, the
numerator of which is the sum of the annual addition of the Participant's
account under this Plan and any other defined contribution plans adopted by
the Company or an Affiliated Company for each Plan Year, and the
denominator of which is the lesser for each such Plan Year of (i) maximum
Annual Addition which could have been made under this Plan and any other
defined contribution plans adopted by the Company or an Affiliated Company
for such Plan Year and for each prior Plan Year of service with the Company
or an Affiliated Company times 1.25 or (ii) the amount determined under the
percentage of compensation limit for such Plan Year times 1.4.
Notwithstanding anything to the contrary in this Plan, in the case of a
Participant who was also a participant before January 1, 1982 in a defined
benefit plan which was in existence on July 1, 1982, and with respect to which
the requirements of Section 415(b) of the Internal Revenue Code had been met for
all Plan Years, if such Participant's current accrued benefit under such plan
exceeds the limitation of Section 415(b) of the Internal Revenue Code for Plan
Years commencing after January 1, 1983, then for purposes of that plan and for
purposes of this Section 15.4, the limitations of Section 415(b) and (c) of
Internal Revenue Code with respect to such individual shall be equal to the
Participant's current accrued benefit under said plan. Solely for purposes of
determining the amount of such limitation, the term "current accrued benefit"
shall mean the Participant's accrued benefit under the defined benefit plan as
of the close of the last Plan Year beginning before January 1, 1983 when
expressed as an annual benefit, within the meaning of Section 415(b)(2) of the
Internal Revenue Code as in effect for such Plan Years; provided, however, that
such Participant's current accrued benefit is not changed after July 1, 1982,
and no cost of living adjustment occurring after July 1, 1982 is taken into
account.
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In applying the provisions of this Section 15.4 in the case of a defined
benefit plan which satisfied the requirements of Section 415 of the Internal
Revenue Code for the last Plan Year commencing prior to January 1, 1983, any
reduction in a Participant's benefit shall be in accordance with Section 415(e)
of the Internal Revenue Code, and any regulations promulgated thereunder by the
Secretary of the Treasury. The reduction of a Participant's benefit due from
qualified defined benefit plans shall be made in accordance with uniform rules
adopted jointly by the parties responsible for the control and management of the
operation and administration of such plans.
If the Plan satisfied the applicable requirements of Section 415 of the
Code as in effect for all Limitation Years beginning before January 1, 1987, an
amount shall be subtracted from the numerator of the Defined Contribution
Fraction (not exceeding the numerator) as prescribed by the Secretary of the
Treasury so that the sum of the Defined Benefit Fraction and Defined
Contribution Fraction computed under Section 415(e)(1) of the Code does not
exceed 1.0 for such Limitation Year.
15.5 Adjustments for Excess Annual Additions.
In general, Annual Additions for any Plan Year under this Plan and any
other defined contribution plan (as defined in Code Section 414(i)) or defined
benefit plan (as defined in Code Section 414(j)) maintained by the Company or an
Affiliated Company will be determined so as to avoid Annual Additions in excess
of the limitations set forth in Sections 15.1 through 15.4. However, if as a
result of a reasonable error in estimating the amount of the Annual Additions to
a Participant's Accounts under this Plan, such Annual Additions (after giving
effect to the maximum permissible adjustments under the other plans) exceed the
applicable limitations described in Sections 15.1 through 15.4, for Plan Years
commencing on and after January 1, 1993, such excess Annual Additions shall be
corrected as follows:
(a) If the Participant made any voluntary after-tax contributions
to this or any other defined contribution plan that is maintained by the
Company or an Affiliated Company, which after-tax contributions were not
matched by matching contributions, within the meaning of Code Section
401(m), such after-tax contributions, and any income attributable thereto,
shall be returned to the Participant, to the extent of any excess Annual
Additions.
(b) If excess Annual Additions remain after the application of the
above rule, if the Participant made any Compensation Deferral Contributions
to this or any other defined contribution plan that is maintained by the
Company or an Affiliated Company, which Compensation Deferral Contributions
were not matched by matching contributions, within the meaning of Code
Section 401(m), such Compensation Deferral Contributions, and any income
attributable thereto, shall be returned to the Participant, to the extent
of any excess Annual Additions.
(c) If excess Annual Additions remain after the application of the
above rule, if the Participant made any after-tax contributions to this or
any other defined contribution plan that is maintained by the Company or an
Affiliated Company, which after-tax contributions were matched by matching
contributions, within the meaning of Code Section 401(m), any such
after-tax contributions, and any income attributable thereto, shall be
69
returned to the Participant and any matching contributions attributable
thereto shall be reduced, to the extent necessary to eliminate any
remaining excess Annual Additions.
(d) If excess Annual Additions remain after the application of the
above rule, if the Participant made any Compensation Deferral Contributions
to this or any other defined contribution plan that is maintained by the
Company or an Affiliated Company, which Compensation Deferral Contributions
were matched by matching contributions, within the meaning of Code Section
401(m), any such Compensation Deferral Contributions, and any income
attributable thereto, shall be returned to the Participant and any matching
contributions attributable thereto shall be reduced, to the extent
necessary to eliminate any remaining excess Annual Additions.
(e) If excess Annual Additions remain after the application of the
above rule, any other Company contributions, and any income attributable
thereto, shall be reduced to the extent necessary to eliminate any
remaining excess Annual Additions.
15.6 Disposition of Excess Company Contribution Amounts.
Any excess Annual Additions attributable to Company contributions on behalf
of a Participant for any Plan Year, and any income attributable thereto, other
than Compensation Deferral Contributions returned to the Participant in
accordance with Section 15.5, shall be held unallocated in a suspense account
for the Plan Year and applied to reduce the Company contributions for the
succeeding Plan Year, or Years, if necessary. No investment gains or losses
shall be allocated to a suspense account established for this purpose.
15.7 Affiliated Company.
For purposes of this Article XV, the status of an entity as an Affiliated
Company shall be determined by reference to the percentage tests set forth in
Code Section 415(h).
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ARTICLE XVI
RESTRICTION ON ALIENATION
16.1 General Restrictions Against Alienation.
(a) The interest of any Participant or Beneficiary in the income,
benefits, payments, claims or rights hereunder, or in the Trust Fund shall
not in any event be subject to sale, assignment, hypothecation, or
transfer. Each Participant and Beneficiary is prohibited from anticipating,
encumbering, assigning, or in any manner alienating his/her interest under
the Trust Fund, and is without power to do so, except as may otherwise be
provided for in the Trust Agreement. The interest of any Participant or
Beneficiary shall not be liable or subject to his/her debts, liabilities,
or obligations, now contracted, or which may be subsequently contracted.
The interest of any Participant or Beneficiary shall be free from all
claims, liabilities, bankruptcy proceedings, or other legal process now or
hereafter incurred or arising; and the interest or any part thereof, shall
not be subject to any judgment rendered against the Participant or
Beneficiary.
(b) In the event any person attempts to take any action contrary
to this Article XVI, that action shall be void and the Company, the
Committee, the Trustees and all Participants and their Beneficiaries, may
disregard that action and are not in any manner bound thereby, and they,
and each of them separately, shall suffer no liability for any disregard of
that action, and shall be reimbursed on demand out of the Trust Fund for
the amount of any loss, cost or expense incurred as a result of
disregarding or of acting in disregard of that action.
(c) The preceding provisions of this Section 16.1 shall be
interpreted and applied by the Committee in accordance with the
requirements of Code Section 401(a)(13) as construed and interpreted by
authoritative judicial and administrative rulings and regulations.
16.2 Qualified Domestic Relations Order.
(a) Notwithstanding any other provision of the Plan to the
contrary, upon receipt by the Committee of a court order properly
authenticated by the clerk of the court of record (and found by the
Committee under the provisions of this Section 16.2 to be a qualified
domestic relations order within the meaning of Code Section 414(p)) which
awards any portion of a Participant's Account or Accounts to a former
Spouse and which requires payment thereof to such Spouse as soon as the
provisions of the Plan permit, the amount so awarded shall be promptly paid
in cash in a lump sum to the former Spouse. Such payment may be made prior
to the date the Participant is eligible to receive a distribution of his
Accounts in accordance with the provisions of this Plan. Notwithstanding
the foregoing, no such distribution shall be made if such distribution
could adversely affect the qualified status of the Plan.
(b) In the case of any domestic relations order ("DRO") issued by
a state court under state domestic relations law and received by the Plan,
if requested by any party thereto or if otherwise determined by the
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Committee to be appropriate, the status of such DRO as a "qualified" DRO
under ERISA and the Code shall be determined by the Committee in accordance
with the procedures prescribed herein.
(i) Acknowledgment of Receipt of DRO. Within a reasonable
--------------------------------
time after receiving a DRO to which these procedures apply, the
Committee shall notify the affected Participant and each alternate
payee under the DRO of the receipt by the Plan of the DRO and of this
procedure.
(ii) Notice of Determination of "Qualified" Status of DRO.
----------------------------------------------------
Within a reasonable period after receipt of a DRO to which these
procedures apply, the Committee shall determine whether the DRO is a
"qualified domestic relations order", as defined in Section
206(d)(3)(B) of ERISA, and notify the affected Participant and each
alternate payee (or any representative designated by an alternate
payee by written notice to the Committee) of such determination.
(iii) Commencement of Payments Under a "Qualified" DRO. If
------------------------------------------------
the Committee determines that a DRO is "qualified," under Section
206(d)(3)(B) of ERISA the notice of the Committee's determination as
to the "qualified" status of the DRO shall also state that the
Committee will commence any payment due to an alternate payee under
the Plan and the DRO in accordance with terms of such DRO, unless
prior to the expiration of a period of sixty days from the date of the
mailing of the notice of the determination to the Participant and each
alternate payee, the Committee receives written notice of the
institution of legal proceedings disputing the Committee's
determination that the DRO is "qualified."
(iv) Determination of Amounts Payable. Prior to the date
--------------------------------
payments to an alternate payee are to commence under a "qualified"
DRO, the Committee shall determine the dollar amount payable to each
alternate payee under the terms of the Plan.
(v) Dispute as to "Qualified" Status of DRO. If the
---------------------------------------
Committee receives written notice that there is a dispute as to the
"qualified" status of a DRO, or if the Committee has not determined
the "qualified" status of a DRO, payments of any amounts otherwise
currently due to alternate payees under the DRO shall be deferred. In
that event, the Committee shall direct that the deferred amounts
otherwise currently payable under the DRO be separately accounted for
under the Plan. If within 18 months after the deferral of amounts
otherwise currently due, the "DRO" is determined by the Committee not
to be a valid "qualified domestic relations order," or the status of
the DRO has not been finally determined, any separately accounted for
amounts (including any interest thereon) may, in the discretion of the
Committee, be paid to the person or persons who would have been
entitled to such amounts if there had been no DRO. Any determination
after the expiration of the 18-month period that the DRO is a
"qualified domestic relations order" shall be applied prospectively
only.
(vi) "Alternate Payee" Under a DRO. An "alternate payee"
-----------------------------
includes any spouse, former spouse, child, or other dependent of a
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Participant who is designated by the "qualified domestic relations
order" as having a right to receive all or a portion of the benefits
payable under the Plan with respect to the affected Participant.
(vii) Consultation with Legal Counsel and Actuary. The
-------------------------------------------
Committee may consult with legal counsel for the Plan in connection
with a determination as to whether the DRO is a "qualified" DRO, and
with the actuary for the Plan, if an actuarial determination is
required, in connection with the determination of amounts payable to
the Participant and each alternate payee under the terms of the DRO.
(viii) Not Binding. Nothing in this Section 16.2(b) shall
-----------
prevent the Plan, the Committee, or any other representative of the
Plan from applying such rules and procedures as it determines are
necessary or appropriate to protect the interests of the Plan or to
comply with applicable law, whether or not such action is inconsistent
with the provisions of this Section.
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ARTICLE XVII
PLAN AMENDMENTS
17.1 Amendments.
The Board of Directors may at any time, and from time to time, amend the
Plan by an instrument in writing executed in the name of the Company by an
officer or officers duly authorized to execute such instrument, and delivered to
the applicable Trustee. However, no amendment shall be made at any time, the
effect of which would be:
(a) To cause any assets of the Trust Fund to be used for or
diverted to purposes other than providing benefits to the Participants and
their Beneficiaries, and defraying reasonable expenses of administering the
Plan (except as provided in Section 6.3);
(b) To have any retroactive effect so as to deprive any
Participant or Beneficiary of any accrued benefit to which he/she would be
entitled under this Plan if his/her employment were terminated immediately
before the amendment, to the extent so doing would contravene Code Section
411(d)(6);
(c) To eliminate or reduce a subsidy or early retirement benefit
or an optional form of benefit to the extent so doing would contravene Code
Section 411(d)(6); or
(d) To increase the responsibilities or liabilities of a Trustee
or an Investment Manager without his/her written consent.
17.2 Retroactive Amendments.
Notwithstanding any provisions of this Article XVII to the contrary, the
Plan may be amended prospectively or retroactively (as provided in Section
401(b) of the Code) to make the Plan conform to any provision of ERISA, any Code
provisions dealing with tax-qualified employees' trusts, or any regulation under
either.
17.3 Amendment of Vesting Provisions.
If the Plan is amended in any way that directly or indirectly affects the
computation of a Participant's Distributable Benefit, each Participant who has
completed at least three (3) one-year Periods of Service may elect, within a
reasonable time after the adoption of the amendment, to continue to have his/her
vested interest computed under the Plan without regard to such amendment. The
period during which the election may be made shall commence when the date of the
amendment is adopted and shall end on the latest of: (i) 60 days after the
amendment is adopted; (ii) 60 days after the amendment is effective; or (iii) 60
days after the Participant is issued written notice of the amendment.
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ARTICLE XVIII
MISCELLANEOUS
18.1 No Enlargement of Employee Rights.
(a) This Plan is strictly a voluntary undertaking on the part of
the Company and shall not be deemed to constitute a contract between the
Company and any Employee, or to be consideration for, or an inducement to,
or a condition of, the employment of any Employee.
(b) Nothing contained in this Plan or the Trust shall be deemed to
give any Employee the right to be retained in the employ of the Company or
to interfere with the right of the Company to discharge or retire any
Employee at any time.
(c) No Employee, nor any other person, shall have any right to or
interest in any portion of the Trust Fund other than as specifically
provided in this Plan.
18.2 Mailing of Payments; Lapsed Benefits.
(a) All payments under the Plan shall be delivered in person or
mailed to the last address of the Participant (or, in the case of the death
of the Participant, to the last address of any other person entitled to
such payments under the terms of the Plan) furnished pursuant to Section
18.3 below.
(b) In the event that a benefit is payable under this Plan to a
Participant or any other person and after reasonable efforts such person
cannot be located for the purpose of paying the benefit for a period of two
(2) consecutive years, the person conclusively shall be presumed dead and
upon the termination of such two (2) year period the benefit shall be
forfeited and as soon thereafter as practicable shall be applied to reduce
future Matching Contributions by the Participating Employer who employed
the Participant prior to his/her termination of employment. In the event
any person entitled to payment of a benefit that has been forfeited in
accordance with this Section 19.2 submits a claim for such benefit, payment
shall be made to such person out of current forfeitures, or if necessary,
the Participating Employer shall make an additional contribution for
purposes of paying the benefit.
(c) For purposes of this Section 18.2, the term "Beneficiary"
shall include any person entitled under Section 9.9 to receive the interest
of a deceased Participant or deceased designated Beneficiary. It is the
intention of this provision that the benefit will be distributed to an
eligible Beneficiary in a lower priority category under Section 9.9 if no
eligible Beneficiary in a higher priority category can be located by the
Committee after reasonable efforts have been made.
(d) The Accounts of a Participant shall continue to be maintained
until the amounts in the Accounts are paid to the Participant or his/her
Beneficiary. Notwithstanding the foregoing, in the event that the Plan is
terminated, the following rules shall apply:
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(i) All Participants (including Participants who have not
previously claimed their benefits under the Plan) shall be notified of
their right to receive a distribution of their interests in the Plan;
(ii) All Participants shall be given a reasonable length of
time, which shall be specified in the notice, in which to claim their
benefits;
(iii) All Participants (and their Beneficiaries) who do not
claim their benefits within the designated time period shall be
presumed to be dead. The Accounts of such Participants shall be
forfeited at such time. These forfeitures shall be disposed of
according to rules prescribed by the Committee, which rules shall be
consistent with applicable law.
(iv) The Committee shall prescribe such rules as it may deem
necessary or appropriate with respect to the notice and forfeiture
rules stated above.
(e) Should it be determined that the preceding rules relating to
forfeiture of benefits upon Plan termination are inconsistent with any of
the provisions of the Code and/or ERISA, these provisions shall become
inoperative without the need for a Plan amendment and the Committee shall
prescribe rules that are consistent with the applicable provisions of the
Code and/or ERISA.
18.3 Addresses.
Each Participant shall be responsible for furnishing the Committee with
his/her correct current address and the correct current name and address of
his/her Beneficiary or Beneficiaries.
18.4 Notices and Communications.
(a) All applications, notices, designations, elections, and other
communications from Participants shall be in writing, on forms prescribed
by the Committee and shall be mailed or delivered to the office designated
by the Committee, and shall be deemed to have been given when received by
that office.
(b) Each notice, report, remittance, statement and other
communication directed to a Participant or Beneficiary shall be in writing
and may be delivered in person or by mail. An item shall be deemed to have
been delivered and received by the Participant when it is deposited in the
United States Mail with postage prepaid, addressed to the Participant or
Beneficiary at his/her last address of record with the Committee.
(c) Notwithstanding the foregoing, to the extent permitted by
applicable law, and not inconsistent with the terms of the Plan, the
Committee may make telephonic or other electronic communication or filing
methods available for certain elections, designations, investment
directions or applications for benefits by Participants and for certain
notices, statements or other communications to Participants.
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18.5 Reporting and Disclosure.
The Plan Administrator shall be responsible for the reporting and
disclosure of information required to be reported or disclosed by the Plan
Administrator pursuant to ERISA or any other applicable law.
18.6 Governing Law.
All legal questions pertaining to the Plan shall be determined in
accordance with the laws of the State of California to the extent not superseded
by ERISA. All contributions made hereunder shall be deemed to have been made in
California.
18.7 Interpretation.
(a) Article and Section headings are for convenient reference only
and shall not be deemed to be part of the substance of this instrument or
in any way to enlarge or limit the contents of any Article or Section.
Unless the context clearly indicates otherwise, masculine gender shall
include the feminine, and the singular shall include the plural and the
plural the singular.
(b) The provisions of this Plan shall in all cases be interpreted
in a manner that is consistent with this Plan satisfying the requirements
(of Code Sections 401(a) and 401(k) and related statutes) for qualification
as a qualified cash or deferred arrangement.
18.8 Withholding for Taxes.
Any payments out of the Trust Fund may be subject to withholding for taxes
as may be required by any applicable federal or state law.
18.9 Limitation on Company; Committee and Trustee Liability.
Any benefits payable under this Plan shall be paid or provided for solely
from the Trust Fund and neither the Company, the Committee nor the Trustee
assume any responsibility for the sufficiency of the assets of the Trust to
provide the benefits payable hereunder.
18.10 Successors and Assigns.
This Plan and the Trust established hereunder shall inure to the benefit
of, and be binding upon, the parties hereto and their successors and assigns.
18.11 Counterparts.
This Plan document may be executed in any number of identical counterparts,
each of which shall be deemed a complete original in itself and may be
introduced in evidence or used for any other purpose without the production of
any other counterparts.
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ARTICLE XIX
TOP-HEAVY PLAN RULES
19.1 Applicability.
(a) Notwithstanding any provision in this Plan to the contrary,
the provisions of this Article XIX shall apply in the case of any Plan Year
in which the Plan is determined to be a Top-Heavy Plan under the rules of
Section 19.3.
(b) Except as is expressly provided to the contrary, the rules of
this Article XIX shall be applied after the application of the Affiliated
Company rules of Section 2.2.
19.2 Definitions.
(a) For purposes of this Article XIX, the term "Key Employee"
shall mean any Employee or former Employee who, at any time during the Plan
Year or any of the four (4) preceding Plan Years, is or was --
(i) An officer of the Company having an annual compensation
greater than fifty percent (50%) of the amount in effect under Code Section
415(b)(1)(A) for this Plan Year. However, no more than fifty (50) Employees
(or, if lesser, the greater of three (3) or ten percent (10%) of the
Employees) shall be treated as officers;
(ii) One of the ten (10) employees having annual compensation
from the Company of more than the limitation in effect under Code Section
415(c)(1)(A) and owning (or considered as owning within the meaning of Code
Section 318) the largest interests in the Company. For this purpose, if two
(2) Employees have the same interest in the Company, the employee having
greater annual compensation from the Company shall be treated as having a
larger interest;
(iii) A Five Percent Owner of the Company; or
(iv) A One Percent Owner of the Company having an annual
compensation from the Company of more than one hundred fifty thousand
dollars ($150,000).
(b) For purposes of this Section 19.2, the term "Five Percent
Owner" means any person who owns (or is considered as owning within the
meaning of Code Section 318) more than five percent (5%) of the outstanding
stock of the Company or stock possessing more than five percent (5%) of the
total combined voting power of all stock of the Company. The rules of
Subsections (b), (c), and (m) of Code Section 414 shall not apply for
purposes of applying these ownership rules. Thus, this ownership test shall
be applied separately with respect to every Affiliated Company.
78
(c) For purposes of this Section 19.2, the term "One Percent
Owner" means any person who would be described in Paragraph (b) if "one
percent (1%)" were substituted for "five percent (5%)" each place where it
appears therein.
(d) For purposes of this Section 19.2, the rules of Code Section
318(a)(2)(C) shall be applied by substituting "five percent (5%)" for
"fifty percent (50%)."
(e) For purposes of this Article XIX, the term "Non-Key Employee"
shall mean any Employee who is not a Key Employee.
(f) For purposes of this Article XIX, the terms "Key Employee" and
"Non-Key Employee" include their Beneficiaries.
19.3 Top-Heavy Status.
(a) The term "Top-Heavy Plan" means, with respect to any Plan
Year--
(i) Any defined benefit plan if, as of the Determination
Date, the present value of the cumulative accrued benefits under the
Plan for Key Employees exceeds sixty percent (60%) of the present
value of the cumulative accrued benefits under the plan for all
Employees, and
(ii) Any defined contribution plan if, as of the
Determination Date, the aggregate of the account balances of Key
Employees under the Plan exceeds sixty percent (60%) of the present
value of the aggregate of the account balances of all Employees under
the plan.
For purposes of this Paragraph (a), the term "Determination Date" means,
with respect to any Plan Year, the last day of the preceding Plan Year. In
the case of the first Plan Year of any plan, the term "Determination Date"
shall mean the last day of that Plan Year.
The present value of account balances under a defined contribution
plan shall be determined as of the most recent valuation date that falls
within or ends on the Determination Date. The present value of accrued
benefits under a defined benefit plan shall be determined as of the same
valuation date used for computing plan costs for minimum funding.
(b) Each plan maintained by the Company required to be included in
an Aggregation Group shall be treated as a Top-Heavy Plan if the
Aggregation Group is a Top-Heavy Group. If the Aggregation Group is not a
Top-Heavy Group no plan in such group shall be a Top-Heavy Plan.
(i) The term "Aggregation Group" means --
(A) Each Plan of the Company in which a Key Employee is
a Participant, and
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(B) Each other plan of the Company which enables any
plan described in Subdivision (A) to meet the requirements of
Code Sections 401(a)(4) or 410.
Also, any plan not required to be included in an Aggregation Group under
the preceding rules may be treated as being part of such group if the group
would continue to meet the requirements of Code Sections 401(a)(4) and 410
with the plan being taken into account.
(ii) The term "Top-Heavy Group" means any Aggregation Group
if the sum (as of the Determination Date) of --
(A) The present value of the cumulative accrued benefits
for Key Employees under all defined benefit plans included in the
group, and
(B) The aggregate of the account balances of Key
Employees under all defined contribution plans included in the
group exceeds sixty percent (60%) of a similar sum determined for
all Employees.
(iii) For purposes of determining --
(A) The present value of the cumulative accrued benefit
of any Employee, or
(B) The amount of the account balance of any Employee,
such present value or amount shall be increased by the aggregate
distributions made with respect to the Employee under the plan during the
five (5) year period ending on the Determination Date. The preceding rule
shall also apply to distributions under a terminated plan which, if it had
not been terminated, would have been required to be included in an
Aggregation Group. Also, any rollover contribution or similar transfer
initiated by the Employee and made after December 31, 1983 to a plan shall
not be taken into account with respect to the transferee plan for purposes
of determining whether such plan is a Top-Heavy Plan (or whether any
Aggregation Group which includes such plan is a Top-Heavy Group).
(c) If any individual is not a Non-Key Employee with respect to
any plan for any Plan Year, but the individual was a Key Employee with
respect to the plan for any prior Plan Year, any accrued benefit for the
individual (and the account balance of the individual) shall not be taken
into account for purposes of this Section 19.3.
(d) If any individual has not received any Compensation from the
Company (other than benefits under the Plan) or has not performed any
services for the Company at any time during the five (5) year period ending
on the Determination Date, any accrued benefit for such individual (and the
account balance of the individual) shall not be taken into account for
purposes of this Section 19.3. If such individual returns after the five
(5) year period, such Employee's total accrued benefit shall be included in
determining whether the Plan is Top-Heavy.
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19.4 Minimum Contributions.
For each Plan Year in which the Plan is Top-Heavy, the minimum
contributions for that year shall be determined in accordance with the rules of
this Section 19.4.
(a) Except as provided in (b) below, the minimum contribution for
each Non-Key Employee who has not separated from service as of the last day
of the Plan Year (excluding amounts deferred under a cash or deferred
arrangement under Section 401(k) of the Code and any employer contributions
taken into account under Section 401(k)(3) or 401(m)(3) of the Code) shall
be not less than three percent (3%) of his/her Compensation, regardless of
whether the Non-Key Employee has less than 1,000 Hours of Service during
such Plan Year, his/her level of Compensation, or elected to make
Compensation Deferral Contributions to the Plan Year for such year.
(b) Subject to the following rules of this Paragraph (b), the
percentage set forth in Paragraph (a) above shall not be required to exceed
the percentage at which contributions (including amounts deferred under a
cash or deferred arrangement under Section 401(k) of the Code and any
employer contributions taken into account under Section 401(k)(3) or
401(m)(3) of the Code) are made (or are required to be made) under the Plan
for the year for the Key Employee for whom the percentage is the highest
for the year. This determination shall be made by dividing the
contributions for each Key Employee by so much of his/her total
compensation for the year as does not exceed the maximum amount that may be
taken into account under Section 401(a)(17) of the Code, as provided in
Section 2.9(d). For purposes of this Paragraph (b), all defined
contribution plans required to be included in an Aggregation Group shall be
treated as one plan. However, the rules of this Paragraph (b) shall not
apply to any plan required to be included if an Aggregation Group if the
plan enables a defined benefit plan to meet the requirements of Code
Section 401(a)(4) or 410.
(c) The requirements of this Section 19.4 must be satisfied
without taking into account contributions under chapters 2 or 21 of the
Code, Title II of the Social Security Act, or any other Federal or State
law.
(d) In the event a Participant is covered by both a defined
contribution and a defined benefit plan maintained by the Company, both of
which are determined to be Top-Heavy Plans, the defined benefit minimum,
offset by the benefits provided under the defined contribution plan, shall
be provided under the defined benefit plan.
(e) In no instance may the Plan take into account an Employee's
compensation in excess of the maximum amount that may be taken into account
under Section 401(a)(17) of the Code, as provided in Section 2.9(d). For
purposes of this Section 19.4, an Employee's Compensation shall be as
defined in Section 2.9(b) for purposes of this Article XIX.
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19.5 Maximum Annual Addition.
(a) Except as set forth below, in the case of any Top-Heavy Plan
the rules of Code Section 415(e)(2)(B) and (3)(B) shall be applied by
substituting "1.0" for "1.25."
(b) The rule set forth in Paragraph (a) above shall not apply if
the requirements of both Subparagraphs (i) and (ii), below, are satisfied.
(i) The requirements of this Subparagraph (i) are satisfied
if the rules of Section 18.4(a) above would be satisfied after
substituting "four percent (4%)" for "three percent (3%)" where it
appears therein with respect to Participants covered only under a
defined contribution plan.
(ii) The requirements of this Subparagraph (ii) are satisfied
if the Plan would not be a Top-Heavy Plan if "ninety percent (90%)"
were substituted for "sixty percent (60%)" each place it appears in
Section 18.3(a)(ii).
(c) The rules of Paragraph (a) shall not apply with respect to any
Employee as long as there are no --
(i) Company Contributions, forfeitures, or voluntary
nondeductible contributions allocated to the Employee under a defined
contribution plan maintained by the Company, or
(ii) Accruals by the Employee under a defined benefit plan
maintained by the Company.
19.6 Vesting Rules.
The Plan at all times satisfies the minimum vesting requirements of Section
416 of the Code.
19.7 Non-Eligible Employees.
The rules of this Article XIX shall not apply to any Employee included in a
unit of employees covered by an agreement which the Secretary of Labor finds to
be a collective bargaining agreement between employee representatives and one or
more employers if there is evidence that retirement benefits were the subject of
good faith bargaining between such employee representatives and the employer or
employers.
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IN WITNESS WHEREOF, in order to record the adoption of this Plan, 21st
Century Insurance Group has caused this instrument to be executed by its duly
authorized officers this ________ day of _______________, 2001.
21ST CENTURY INSURANCE GROUP
By: ______________________________
By: ______________________________
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