RAYOVAC PROFIT SHARING AND SAVINGS PLAN
Restated Effective as of August 1, 1997
Plan Year Ends December 31
RAYOVAC PROFIT SHARING AND SAVINGS PLAN
TABLE OF CONTENTS
Page
Article I. The Plan........................................................................... 1
1.1 Establishment and Amendment of the Plan........................................ 1
1.2 Applicability of the Plan...................................................... 1
1.3 Purpose of the Plan............................................................ 1
Article II. Definitions........................................................................ 2
2.1 Definitions.................................................................... 2
2.2 Gender and Number.............................................................. 6
Article III. Participation and Service.......................................................... 7
3.1 Participation.................................................................. 7
3.2 Duration of Participation...................................................... 7
3.3 Reemployment................................................................... 7
3.4 Leased Employees............................................................... 7
Article IV. Contributions...................................................................... 8
4.1 Employer Contributions......................................................... 8
4.2 Allocation of Employer Contributions........................................... 9
4.3 Before-Tax Employee Contributions.............................................. 9
4.4 Limitations on Contributions................................................... 10
4.5 Limitations on Annual Additions................................................ 10
4.6 Rollover Contributions......................................................... 13
4.7 Maximum Deferral Percentage.................................................... 13
4.8 Prospective Reduction of Before-Tax Employee
Contributions................................................................. 15
4.9 Reduction After Before-Tax Employee Contributions
Have Been Made................................................................ 16
4.10 Nondiscrimination Limitations.................................................. 16
4.11 15% Limitation................................................................. 16
Article V. Vesting in Accounts................................................................ 17
5.1 Before-Tax Employee, Employer and Rollover
Contributions Accounts........................................................ 17
Article VI. Distributions and Withdrawals...................................................... 18
6.1 Distribution Upon Termination.................................................. 18
6.2 Distribution Upon Participant's Death.......................................... 18
6.3 Commencement of Distributions.................................................. 18
6.4 Method of Distribution......................................................... 19
6.5 In-Service Withdrawals......................................................... 19
6.6 Hardship Withdrawals........................................................... 20
6.7 Required Distributions......................................................... 21
6.8 Withholding Taxes.............................................................. 23
6.9 Rollover Distributions......................................................... 23
Article VII. Investment Elections............................................................... 25
7.1 Investment of Contributions.................................................... 25
7.2 Investment Elections........................................................... 25
7.3 Liability for Investment Elections............................................. 25
Article VIII. Accounts and Records of the Plan................................................... 26
8.1 Accounts and Records........................................................... 26
8.2 Trust Fund..................................................................... 26
8.3 Allocation of Income to Accounts............................................... 26
8.4 Valuation of Qualifying Employer Securities.................................... 26
Article IX. Financing.......................................................................... 27
9.1 Financing...................................................................... 27
9.2 Contributions.................................................................. 27
9.3 Nonreversion................................................................... 27
9.4 Rights in the Trust Fund....................................................... 27
Article X. Administration..................................................................... 28
10.1 Plan Administrator and Fiduciary............................................... 28
10.2 Expenses....................................................................... 28
10.3 Administration................................................................. 28
10.4 No Enlargement of Employee Rights.............................................. 29
10.5 Appeals from Denial of Claims.................................................. 29
10.6 Notice of Address and Missing Persons.......................................... 30
10.7 Data and Information for Benefits.............................................. 30
10.8 Indemnity for Liability........................................................ 30
10.9 Effect of a Mistake............................................................ 31
ii
Article XI. Amendment and Termination.......................................................... 32
11.1 Amendment and Termination...................................................... 32
11.2 Limitations on Amendments...................................................... 32
Article XII. Top-Heavy Provisions............................................................... 33
12.1 Application of Top-heavy Provisions............................................ 33
12.2 Definitions.................................................................... 33
12.3 Minimum Contribution........................................................... 36
12.4 Limit on Annual Additions: Combined Plan Limit................................ 36
12.5 Collective Bargaining Agreements............................................... 37
Article XIII. Miscellaneous...................................................................... 38
13.1 Beneficiary Designation........................................................ 38
13.2 Incompetency................................................................... 38
13.3 Nonalienation.................................................................. 39
13.4 Applicable Law................................................................. 39
13.5 Severability................................................................... 39
13.6 No Guarantee................................................................... 39
13.7 Merger, Consolidation or Transfer.............................................. 40
APPENDIX A........................................................................................A-1
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RAYOVAC PROFIT SHARING AND SAVINGS PLAN
Article I. The Plan
-------------------
1.1 Establishment and Amendment of the Plan. Rayovac Corporation (the
"Company") maintains this profit sharing plan for the benefit of its Eligible
Employees. The Plan was established effective as of July 1, 1983 and was last
restated effective as of July 1, 1987. The Plan is hereby further amended and
restated as set forth herein effective as of August 1, 1997.
1.2 Applicability of the Plan. The provisions of the Plan as set forth
herein are applicable only to persons who are Eligible Employees on or after
August 1, 1997, except as specifically provided herein or as otherwise required
by law. Except as provided, any person who was covered under the Plan as in
effect on July 31, 1997, whose service terminated prior to August 1, 1997 and
who was entitled to benefits under the provisions of the Plan as in effect on
July 31, 1997, shall continue to be entitled to the same amount of benefits
without change under the Plan.
1.3 Purpose of the Plan. The purposes of the Plan are to enable
Participants to save on a tax-deferred basis for their retirement and to share
in the profitable operations of the Company. The Plan is intended to qualify as
a profit sharing plan under the Code and shall be interpreted so as to comply
with the applicable requirements thereof, where such requirements are not
clearly contrary to its express terms.
1
Article II. Definitions
-----------------------
2.1 Definitions. Whenever used in the Plan, the following terms shall
have the respective meanings set forth below unless otherwise expressly provided
herein, and when the defined meaning is intended the term is capitalized.
(a) "Account" means the separate account maintained for each
Participant which represents his total proportionate
interest in the Trust Fund as of any Valuation Date and
which consists of the sum of the following subaccounts:
(1) "After-Tax Contributions Account" means that portion
of such Participant's Account which evidences the
value of any after-tax contributions made by him to
the Plan, or any predecessor plan, including any
gains or losses of the Trust Fund attributable
thereto;
(2) "Before-Tax Employee Contributions Account" means
that portion of such Participant's Account which
evidences the value of the Before-Tax Employee
Contributions made on his behalf by the Company,
including any gains and losses of the Trust Fund
attributable thereto;
(3) "Employer Contributions Account" means that portion
of such Participant's Account which evidences the
value of the Employer Contributions made on his
behalf by the Company, including any gains and
losses of the Trust Fund attributable thereto; and
(4) "Rollover Contributions Account" means that portion
of such Participant's Account which evidences the
value of the rollover contributions made by him to
the Plan, including any gains or losses of the Trust
Fund attributable thereto.
(b) "Act" means the Employee Retirement Income Security Act
of 1974, as amended.
(c) "Affiliate" means--
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(1) any corporation which together with the Company is a
member of a "controlled group" of corporations;
(2) any organization which together with the Company is
under "common control"; or
(3) any organization which together with the Company is
an "affiliated service group";
as those terms are used in sections 414(b), 414(c), and
414(m) of the Code.
(d) "Before-Tax Employee Contributions" means the
contributions made by the Company on behalf of a
Participant pursuant to the Participant's election to
reduce Compensation as described in section 4.3.
(e) "Beneficiary" means the person described in section 13.1.
(f) "Board" means the Board of Directors of the Company.
(g) "Code" means the Internal Revenue Code of 1986, as
amended.
(h) "Company" means Rayovac Corporation, a Wisconsin
corporation.
(i) "Compensation" means as follows:
(1) for purposes of determining the amount of a
Participant's Before-Tax Employee Contributions
pursuant to section 4.3, his base salary (including
any paid leave), bonuses, commissions and overtime
and shift differential pay;
(2) for purposes of determining the amount of Employer
Contributions to be allocated on behalf of a
salaried Participant pursuant to sections 4.1 and
4.2, his base salary (including any paid leave); and
(3) for purposes of determining the amount of Employer
Contributions to be allocated on behalf of an hourly
3
Participant pursuant to sections 4.1 and 4.2, his
base pay (including any paid leave) for up to 40
hours per week; and
(4) for all other purposes of the Plan (except as
expressly provided otherwise herein), wages within
the meaning of Code section 3401(a) and all other
payments of compensation to an Eligible Employee by
an Employer (in the course of the Employer's trade
or business) for which the Employer is required to
furnish the Eligible Employee a written statement
under Code sections 6041(d), 6051(a)(3) and 6052.
The annual Compensation of each Participant taken into
account under the Plan for any year shall not exceed the
amount permitted pursuant to Code section 401(a)(17), as
adjusted for cost-of-living increases at such time and in
such manner as may be determined by the Secretary of the
Treasury. For purposes of calculating this maximum in any
Plan Year beginning prior to January 1, 1997, for any 5%
owner or highly compensated individual who is in the
group of 10 employees paid the greatest Compensation
during the year, pursuant to Code section 414(q)(6), the
Compensation of a spouse or a lineal descendant under age
19 before the end of the Plan Year shall be treated as if
paid to the employee.
(j) "Eligible Employee" means any person who is employed by
the Company or an Affiliate in a position that is
included within a participating group of employees as
identified in Appendix A of the Plan. Each participating
group of Eligible Employees shall be eligible to
participate in the Plan as of the applicable effective
date identified in Appendix A.
(k) "Employer Contributions" means the contributions made by
the Company on behalf of a Participant as described in
section 4.1.
(l) "Employment Commencement Date" means the first day on
which an Eligible Employee first performs an Hour of
Service for the Company or an Affiliate.
4
(m) "Excess Deferrals" means the amount of a Participant's
Before-Tax Employee Contributions plus amounts deferred
pursuant to plans or arrangements described under Code
section 401(k), 408(k), 408(p) or 403(b) that exceed the
limits described under Code section 402(g).
(n) "Investment Fund" means a subsection of the Trust Fund
which may be designated by the Trustees from time to
time.
(o) "Participant" means any Eligible Employee who has met,
and continues to meet, the eligibility requirements of
the Plan as set forth in section 3.1. Where appropriate,
this term also includes any former Eligible Employee,
Beneficiary, estate or alternate payee with an Account
balance.
(p) "Plan" means this Rayovac Profit Sharing and Savings
Plan.
(q) "Plan Administrator" means the entity which has been
designated as the "plan administrator" as provided in
section 10.1.
(r) "Plan Year" means the 12-consecutive-month period ending
each December 31.
(s) "Qualifying Employer Securities" means common stock of
the Company within the meaning of the Employee Retirement
Income Security Act of 1974, as amended, section 407.
(t) "Trust Agreement" means any agreement establishing a
trust, which forms part of the Plan, to receive, hold,
invest and dispose of the Trust Fund.
(u) "Trustee" means the corporation, or individual or
individuals, or combination thereof, acting as trustees
under the Trust Agreement at any time of reference.
(v) "Trust Fund" means the assets of every kind and
description held under the Trust Agreement.
(w) "Valuation Date," means the last day of the Plan Year and
each business day of a Plan Year.
5
2.2 Gender and Number. Unless the context clearly requires otherwise,
the masculine pronoun whenever used shall include the feminine and neuter
pronoun, and the singular shall include the plural.
6
Article III. Participation and Service
--------------------------------------
3.1 Participation.
(a) Each Eligible Employee who was eligible to participate in
the Plan as of July 31, 1997 shall remain eligible to
participate in the Plan.
(b) Each Eligible Employee (i) whose Employment Commencement
Date was on or after January 1, 1997 and prior to August
1, 1997, or (ii) who becomes an Eligible Employee
effective as of August 1, 1997, shall participate in the
Plan as of August 1, 1997.
(c) Each employee who becomes an Eligible Employee on or
after August 1, 1997 shall participate in the Plan as of
the January 1 next following his Employment Commencement
Date.
(d) Each Eligible Employee who is eligible to participate in
the Plan in accordance with this section 3.1 may make an
election to have Before-Tax Employee Contributions made
on his behalf in accordance with section 4.3. Such
election may be made upon first becoming eligible to
participate in the Plan or as of the first day of any
subsequent month.
3.2 Duration of Participation. A Participant shall continue to be a
Participant until he terminates his employment with the Company or an Affiliate
or, if earlier, the date he no longer is an Eligible Employee; thereafter, he
shall be a Participant for as long as he has an Account balance.
3.3 Reemployment. If a Participant terminates employment with the
Company or an Affiliate and subsequently resumes such employment, the rehired
employee shall resume participation in the Plan as the first day of the month
following his date of rehire; provided he is reemployed as an Eligible Employee.
3.4 Leased Employees. A person who is a "leased employee" within the
meaning of Code sections 414(n) and (o) shall not be eligible to participate in
the Plan, but in the event such a person was participating or subsequently
becomes eligible to participate herein, credit shall be given for the person's
service as a leased employee toward completion of the Plan's eligibility and
vesting requirements, including any service for an Affiliate.
7
Article IV. Contributions
-------------------------
4.1 Employer Contributions. A "qualifying Participant" is a Participant
who is in active employment status, as determined by the Plan Administrator, on
the date the contribution is made.
(a) Fixed Contributions.
-------------------
(1) Salaried Employees. For each pay period during a
Plan Year, the Company shall make a contribution to
the Plan on behalf of each qualifying Participant
who is a salaried employee. A Participant's age, for
purposes of this contribution, shall be determined
as of each January 1. The portion of this
contribution which will be allocated to the Account
of each such qualifying Participant shall equal the
following:
(A) If the Participant has not yet attained age 35,
the contribution allocated shall equal 2% of
his Compensation for such pay period.
(B) If the Participant is age 35 through age 44,
the contribution allocated shall equal 3% of
his Compensation for such pay period.
(C) If the Participant is age 45 through age 49,
the contribution allocated shall equal 4% of
his Compensation for such pay period.
(D) If the Participant is age 50 or older, the
contribution allocated shall equal 5% of his
Compensation for such pay period.
(2) Hourly Employees. For each pay period during a Plan
Year, the Company shall make a contribution to the
Plan on behalf of each qualifying Participant who is
an hourly employee. The portion of this contribution
which will be allocated to the Account of each such
qualifying Participant shall equal 2% of the
Participant's Compensation for the pay period for
which the contribution is made.
8
(b) Discretionary Contributions. For any pay period during a
Plan Year, the Company may make discretionary Employer
Contributions on behalf of each Participant who is a
qualifying Participant during the pay period for which
the contribution is made. Any such Employer Contributions
under the Plan are completely and totally within the
Company's discretion. The portion of such Employer
Contribution, if any, allocated to the Account of a
qualifying Participant shall be a percentage of a
Participant's Compensation during the pay period for
which the contribution is made.
(c) Profit Sharing Bonus Contributions. In addition to the
contributions specified in (a) above, the Company may
make profit sharing bonus contributions as the Company,
in its discretion, may determine. Such profit sharing
bonus contributions, if any, shall be allocated to the
Account of a qualifying Participant and shall be in an
amount equal to a fixed percent of the Participant's
Compensation for 12-month period which ends on the last
day of the calendar quarter prior to the date the
contribution is made.
(d) Any contributions by the Company pursuant to this section
4.1 shall be Employer Contributions and shall be paid to
the Trustee not later than the time prescribed by law for
the Company to obtain a federal income tax deduction for
the Plan Year for which such Employer Contributions are
made.
4.2 Allocation of Employer Contributions. Employer Contributions shall
be allocated to a Participant's Employer Contributions Account as of the date
determined by the Plan Administrator, which date shall be no later than as of
the last day of the Plan Year for which the Employer Contribution is made.
4.3 Before-Tax Employee Contributions. For each pay period, the Company
shall contribute to the Plan on behalf of the Participants an amount equal to
the Participants' Before-Tax Employee Contributions. Each Participant may elect,
on a form provided by the Plan Administrator, to reduce his Compensation by a
whole percentage of not less than 1% and not more than 15%, and to have the
amount by which his Compensation is reduced contributed on his behalf by the
Company as a Before-Tax Employee Contribution to the Plan. Such election may be
effective as of the first day of the payroll period concurrent with or
subsequent to the Participant first becoming eligible to participate, or as of
the first day of any subsequent month upon prior written notice to the Plan
Administrator. Such
9
Participant may elect on a form provided by the Plan Administrator to increase,
decrease, suspend or reinstate (within the percentage limits stated above) his
Compensation reductions effective as of the first day of any subsequent month
upon prior written notice to the Plan Administrator. Such elections shall be
effective only with respect to Compensation not yet earned as of the effective
dates of such elections. The Plan Administrator may adopt rules concerning the
administration of this section. The Before-Tax Employee Contributions made on
behalf of each Participant shall be paid by the Company to the Trustee on the
earliest date on which these amounts can be reasonably segregated from the
Company's general assets following the end of a pay period and allocated to the
Participant's Before-Tax Employee Contributions Account.
4.4 Limitations on Contributions.
----------------------------
(a) In no event shall the Company make Before-Tax Employee
Contributions for any calendar year, with respect to any
Participant, in excess of the limit of Code section
402(g) (as adjusted by the Secretary of the Treasury to
reflect increases in the cost of living).
(b) In the event that in any calendar year a Participant
makes Excess Deferrals to the Plan, such Participant may
request (no later than a date established by the Plan
Administrator) for the Plan to return such Excess
Deferrals to the Participant. Such request shall be made
on a form provided by the Plan Administrator which
specifies the Participant's Excess Deferrals for the
calendar year. Such request shall be accompanied by the
Participant's written statement that if such Excess
Deferrals are not distributed, his Before-Tax Employee
Contributions, when added to amounts deferred under other
plans or arrangements described under Code section
401(k), 408(k), 408(p) or 403(b), will exceed the limit
for such Participant under Code section 402(g). A
distribution of Excess Deferrals, plus earnings, shall be
made no later than April 15 of the calendar year
following the calendar year in which such Excess
Deferrals were made.
4.5 Limitations on Annual Additions.
-------------------------------
(a) Notwithstanding any provision of the Plan to the
contrary, annual additions to the Account of any
Participant for a Plan Year shall not exceed the lesser
of:
10
(1) $30,000 as adjusted pursuant to Code sections
415(c)(1)(A) and (d)(l); or
(2) 25% of the Participant's total compensation (as
defined in Code section 415(c)) for the limitation
year.
The term "annual additions" as used in this subsection
shall mean the total amount of Employer Contributions and
Before-Tax Employee Contributions for the limitation year
allocated to the Account of the Participant.
(b) The Plan is subject to the limitations on benefits and
contributions imposed by Code section 415 which are
incorporated herein by this reference. The limitation
year shall be the Plan Year. In the event that there are
multiple plans, if a Participant also participates in
another qualified defined contribution plan maintained by
the Company, then the sum of his annual additions (as
defined in Code section 415(c)) under this Plan and under
such other plan shall not exceed the limitations
described in subsection (a) of this section. Effective
for Plan Years prior to January 1, 2000, if a Participant
also participates in a defined benefit pension plan
maintained by the Company, the sum of (1) and (2) below
shall not exceed one (1.0):
(1) the sum of the projected annual benefits of the
Participant under all qualified defined benefit
plans of the Company determined as of any December
31, divided by the lesser of (i) the product of 1.4
times the maximum benefit allowable under Code
section 415(b)(1)(B) for such year, or (ii) the
product of 1.25 times the dollar limitation in
effect for such year under Code section
415(b)(1)(A), plus
(2) the sum of all annual additions to the Participant's
Account under this Plan and his accounts under all
other defined contribution plans maintained by the
Company, as of such December 31, divided by the sum
of the lesser of the following amounts for such year
and each prior year of service with the Company: (i)
the product of 1.4 times the maximum annual
11
additions allowable for such year under Code section
415(c)(1)(B), as applicable, or (ii) the product of
1.25 times the dollar limitation in effect for such
year under Code section 415(c)(1)(A).
(c) In the event that in any Plan Year either of the
limitations set forth in subsection (a) and (b) of this
section would otherwise be violated in the case of a
Participant after all adjustments in accrued benefits
provided for in any defined benefit pension plan of the
Company, then, in the following order, to the extent
necessary to satisfy such limitation:
(1) Any Before-Tax Employee Contributions by the
Participant for the Plan Year in excess of such
limitation shall be returned to the Participant
(together with any income allocable thereto for the
Plan Year to which such excess is attributable).
(2) Any Employer Contributions for the Plan Year on
behalf of the Participant in excess of such
limitation shall be allocated to other eligible
Participants' Accounts in the manner set forth in
section 4.1.
If any allocation pursuant to paragraph (2) above would
otherwise cause any limitation under this section 4.5 to
be violated with respect to any other Participant, then
such amount as may be necessary to satisfy such
limitation shall be allocated to other eligible
Participants' Accounts in the manner set forth in section
4.1. If any such allocation is not possible as a result
of the application of this section, then the otherwise
allocable amount shall be credited to a suspense account
and the amounts therein shall be allocable to all
eligible Participants' Accounts, subject to the following
conditions:
(i) amounts in the suspense account shall be allocated
to the Participants' Accounts at such time,
including termination of the Plan, as the foregoing
limitations permit,
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(ii) except as provided in this paragraph (2), no
investment gains or losses shall be allocated to the
suspense account,
(iii) no further Employer Contributions shall be
permitted on behalf of the Participants until the
foregoing limitations permit their allocation to the
Participants' Accounts, and
(iv) upon termination of the Plan, any unallocated
amounts in the suspense account shall revert to the
Company.
4.6 Rollover Contributions. The Board, in writing and on a
nondiscriminatory basis, may designate employees of the Company or an Affiliate,
who participated in another retirement plan and trust qualified pursuant to Code
sections 401(a) and 501(a) (a "qualified plan"), as eligible to deposit in the
Trust Fund any portion of an eligible rollover distribution paid from another
qualified plan in a direct rollover pursuant to Code section 401(a)(31). Before
accepting a direct rollover, the Plan Administrator may require such
documentation and information as it deems necessary to reasonably conclude that
the distributing plan is qualified under Code section 401(a). If an employee who
deposited a direct rollover does not otherwise become a Participant, that
employee shall constitute a Participant only in relation to the amount deposited
as a direct rollover and earnings on such amount. Any contributions made
pursuant to this section 4.6 shall be allocated to a Participant's Rollover
Contributions Account.
4.7 Maximum Deferral Percentage.
(a) Notwithstanding any provision of the Plan to the
contrary, in no event may the Before-Tax Employee
Contributions made on behalf of all eligible Participants
who are highly compensated individuals with respect to
any Plan Year result in a deferral percentage for such
group of Participants which exceeds the greater of (1) or
(2) below:
(1) an amount equal to 125% of the deferral percentage
for all eligible Participants other than eligible
Participants who are highly compensated individuals;
or
(2) an amount that does not exceed 200% of the deferral
percentage for all eligible Participants other than
eligible Participants who are highly compensated
13
individuals, provided that the deferral percentage
of eligible Participants who are highly compensated
individuals does not exceed the deferral percentage
of eligible Participants other than eligible
Participants who are highly compensated individuals
by more than (i) 2 percentage points or (ii) such
lesser amount as the Secretary of the Treasury shall
prescribe to prevent the multiple use of this
alternative limitation with respect to any eligible
Participant who is a highly compensated individual.
(b) For purposes of the maximum deferral percentage described
in section 4.7(a), the following terms shall have the
following meanings:
(1) "Eligible Participant" means an Employee who is
eligible to participate in the Plan pursuant to
section 3.1 hereof, whether or not he actually
elects to have Before-Tax Employee Contributions
made on his behalf.
(2) Effective as of January 1, 1997, "highly compensated
individual" shall be determined pursuant to Code
section 414(q) and shall include any employee who:
(i) during the current or immediately preceding
Plan Year is or was at any time a 5% owner of
the Company or an Affiliate; or
(ii) for the preceding Plan Year, receives or
received Compensation from the Company or an
Affiliate in excess of $80,000 (or such higher
amount established by Code section 414(q)).
(3) "Deferral percentage" with respect to any specified
group of eligible Participants for a Plan Year shall
mean the average of the ratios (calculated
separately for each eligible Participant in the
group) of:
(i) the amount of the Before-Tax Employee
Contributions allocated to the Account of each
eligible Participant for such Plan Year, to
14
(ii) the eligible Participant' s deferral percentage
compensation for such Plan Year.
"Deferral percentage compensation," for purposes of
this subsection 4.7(b)(3), has the same meaning as
Compensation has under section 2.1(i)(4).
4.8 Prospective Reduction of Before-Tax Employee Contributions.
----------------------------------------------------------
(a) If it is determined by the Plan Administrator at any time
that the maximum deferral percentage described in section
4.7 could be exceeded with respect to any Plan Year, then
the Plan Administrator, in its discretion, may
prospectively reduce the amount of the Before-Tax
Employee Contributions allowed to be made on behalf of
the eligible Participants who are highly compensated
individuals. In such event, the highly compensated
individuals with respect to whom such reduction shall be
made and the amount of such reduction shall be determined
by reducing the maximum allowable Before-Tax Employee
Contributions with respect to eligible Participants who
are highly compensated individuals to such percentage (or
a smaller percentage, in the discretion of the Plan
Administrator) which will, when applied to all eligible
Participants who are highly compensated individuals,
result in the maximum deferral percentage limitation not
being exceeded and reducing Before-Tax Employee
Contributions in the case of each highly compensated
individual with respect to whom such reduced maximum
percentage is exceeded. Once a reduction has been made
hereunder, it shall remain in effect for the remainder of
the Plan Year, unless the Plan Administrator determines
that it is no longer necessary in order for the maximum
deferral percentage limitation to be met.
(b) If it is determined by the Plan Administrator at any time
that the 15% of aggregate Compensation limitation
described in section 4.11 could be exceeded with respect
to any Plan Year, then the Plan Administrator in its
discretion may prospectively reduce the amount of
Before-Tax Employee Contributions allowed to be made on
behalf of eligible Participants. In such event, the
extent of such reduction shall be determined by reducing
the amount of Before-Tax Employee Contributions
15
on behalf of each eligible Participant on a pro rata
basis, such that the sum of Before-Tax Employee
Contributions and Employer Contributions for all eligible
Participants does not exceed the 15% of aggregate
Compensation limitation described in section 4.11. Once a
reduction has been made hereunder, it shall remain in
effect for the remainder of the Plan Year, unless the
Plan Administrator determines that it is no longer
necessary in order for such limitation to be met.
4.9 Reduction After Before-Tax Employee Contributions Have Been Made.
In the event that, notwithstanding section 4.8(a), it is determined by the Plan
Administrator that the maximum deferral percentage described in section 4.7 has
been exceeded with respect to any Plan Year, then the amount of Before-Tax
Employee Contributions that have been made on behalf of the eligible
Participants who are highly compensated individuals shall be reduced in a manner
similar to that described in section 4.8(a), and the excess, to the extent
permitted under rules prescribed by the Secretary of the Treasury and determined
by the Plan Administrator (together with the income allocable thereto for the
Plan Year to which such excess is attributable), shall be distributed to the
affected highly compensated individuals.
4.10 Nondiscrimination Limitations. The limitations on contributions
prescribed in this Article IV are intended to conform with Code section 401(k),
which is hereby incorporated herein by reference. In the event that the Plan
Administrator determines that, in accordance with the Code and rules prescribed
by the Secretary of the Treasury, the limitations of section 401(k) (including,
but not limited to, any definitions related thereto) may be applied in a manner
different from that prescribed in this Article IV, the Plan Administrator, in
its discretion, may make appropriate adjustments.
4.11 15% Limitation. Notwithstanding anything in this Article IV to the
contrary, in no event shall the sum of Before-Tax Employee and Employer
Contributions by the Company exceed 15% of the aggregate Compensation of all of
the employees eligible to participate in this Plan. For purposes of this section
4.11, Compensation shall be reduced by any elective contributions made by the
Company on behalf of an Employee that are not includible in gross income under
Code section 125 or 401(k).
16
Article V. Vesting in Accounts
------------------------------
5.1 After-Tax, Before-Tax Employee, Employer and Rollover Contributions
Accounts. A Participant shall at all times be fully vested and have a
nonforfeitable interest in his After-Tax, Before-Tax Employee, Employer and
Rollover Contributions Accounts.
17
Article VI. Distributions and Withdrawals
-----------------------------------------
6.1 Distribution Upon Termination. Upon a Participant' s termination of
employment with the Company for any reason other than death, he shall be
entitled to receive a distribution of the entire amount credited to his Account.
6.2 Distribution Upon Participant's Death. Upon the death of a
Participant, his Beneficiary shall be entitled to receive a distribution of the
entire amount credited to the deceased Participant's Account.
6.3 Commencement of Distributions.
(a) Subject to the provisions of this section and section
6.7, distributions pursuant to section 6.1 shall be made
or commence to the Participant as soon as practicable
following his termination of employment; provided,
however, that if his Account balance exceeds $3,500
($5,000 effective January 1, 1998), then such
distribution shall not be made or commence to the
Participant without his consent at any time before April
1 of the calendar year immediately following the later of
the calendar year in which the Participant attains age
70-1/2 or retires.
(b) Unless a Participant elects otherwise, distribution of a
Participant's Account will begin not later than the 60th
day after the later of the close of the Plan Year in
which--
(1) he attains age 65; or
(2) his termination of employment occurs.
(c) Distributions pursuant to section 6.2 shall be made or
commence to the Beneficiary as provided in section 6.7.
(d) Account balances distributable hereunder shall continue
to accrue earnings and losses under section 8.4 pending
their distribution.
(e) Participant consent shall not be valid unless the Plan
Administrator provides the Participant with notice of his
right to defer distribution no less than 30 days and no
more than 90 days before the date of distribution.
Distribution,
18
however, may commence less than 30 days after such notice
is provided if (1) the notice clearly informs the
Participant that the Participant has a right to a period
of at least 30 days after receiving the notice to
consider whether or not to elect a distribution and (2)
the Participant, after receiving such notice,
affirmatively elects a distribution.
6.4 Method of Distribution.
(a) Form of Benefits. Distribution of a Participant's Account
balance, if it exceeds $3,500 ($5,000 effective January
1, 1998), prior to the commencement of distributions or
at the time of any prior distribution, shall occur in a
single lump sum.
(b) Mandatory Payments. The Plan Administrator shall direct
distribution in a single lump sum of any Participant's
Account that does not exceed $3,500 ($5,000 effective
January 1, 1998), prior to the commencement of
distributions or at the time of any prior distribution if
such Participant fails to direct a rollover within 30
days of being notified of his right to a direct rollover.
(c) Plan Administration Fees. The Plan Administrator may
charge the Participant's Account any and all fees
incurred by the Trust Fund with respect to distribution
of the Account.
6.5 In-Service Withdrawals.
(a) A Participant may withdraw any or all of his Account
balance attributable to after-tax contributions plus
earnings thereon as of any Valuation Date upon prior
written notice to the Plan Administrator.
(b) On or after attaining age 59-1/2, a Participant may
withdraw all or any portion of his Account upon prior
notice to the Plan Administrator. A Participant shall be
entitled to only one election pursuant to this section
6.5(b) in each Plan Year.
(c) If a Participant terminates employment and elects to
defer distribution of his Account, such Participant may
make a one-time election to withdraw a portion of his
Account. Any
19
subsequent withdrawal must be for the full remaining
balance of the Participant's Account.
6.6 Hardship Withdrawals. Subject to the approval of the Plan
Administrator, a Participant may withdraw all or any portion of his Before-Tax
Employee Contributions Account attributable to elective contributions, and any
earnings credited to such Account prior to January 1, 1989, if the withdrawal
results from a "financial hardship." A withdrawal will be deemed to result from
a financial hardship if the distribution:
(a) Is for the purpose of:
(1) The payment of medical expenses described in Code
section 213(d) incurred by the Participant, his
spouse or dependents or necessary for these persons
to obtain medical care described in Code section
213(d);
(2) Costs directly related to the purchase (excluding
mortgage payments) of a principal residence for the
Participant;
(3) The payment of tuition and related educational fees
for the next 12 months of post-secondary education
for the Participant, his spouse or dependents;
(4) The need to prevent the eviction from, or mortgage
foreclosure of, the Participant's principal
residence; or
(5) Any other purpose specified by the Internal Revenue
Service as a deemed immediate and heavy financial
need; and
(b) Satisfies all the following:
(1) The distribution does not exceed the amount of the
financial need, including any amount necessary to
pay taxes or penalties reasonably anticipated to
result from the distribution;
(2) The financial need cannot be satisfied from other
resources that are readily available to the
employee; and
20
(3) The Plan Administrator reasonably relies upon the
employee's representation that the need cannot be
relieved:
(A) Through reimbursement or compensation by
insurance or otherwise;
(B) By reasonable liquidation of the assets of the
employee and his spouse and minor children, if
any, that are reasonably available to him to
the extent such liquidation would not in itself
cause an immediate and heavy financial need;
(C) By cessation of Before-Tax Employee
Contributions to the Plan; or
(D) By other distributions or nontaxable loans from
plans maintained by the Company or by any other
employer, or by borrowing from commercial
sources on reasonably commercial terms.
6.7 Required Distributions. Notwithstanding any of the preceding
provisions of this Article--
(a) In no event may the distribution of a Participant's
Account balance commence later than the April 1 of the
calendar year following the year in which the Participant
(1) attains age 70-1/2 or (2) retires.
(b) To comply with subsection (a), a Participant's Account
balance must be distributed, beginning not later than his
required beginning date, over the life of the Participant
or over the lives of the Participant and his Beneficiary,
or over a period not extending beyond the life expectancy
of the Participant or the life expectancy of the
Participant and his Beneficiary. For benefits payable
over the life expectancy of the Participant, or the
Participant and his Beneficiary, life expectancies shall
not be recalculated annually.
21
(c) If the distribution of a Participant's Account balance
has begun (on or after his required beginning date) in
accordance with subsection (a) and the Participant dies
before his entire interest has been distributed to him,
the remaining portion of the Participant's Account
balance will be distributed at least as rapidly as under
the method of distribution being used under subsection
(b) as of the date of his death.
(d) If a Participant dies prior to the commencement of the
distribution of his Account balance (on or after his
required beginning date), the balance will be distributed
in a lump sum as soon as practicable (but in no event
more than five years) after the death of such Participant
except as permitted under subsections (e) and (f).
(e) If--
(1) any portion of the Participant's Account
balance is payable to a Beneficiary,
(2) such portion will be distributed over the life
of such Beneficiary or over a period not
extending beyond the life expectancy of the
Beneficiary, and
(3) such distribution begins not later than one
year after the date of the Participant's
death, or such later date as the Secretary of
the Treasury may by regulations prescribe,
the portion referred to in subsection (e)(1) shall be
treated as distributed within the time required under
subsection (d). For purposes of this paragraph (e),
life expectancies shall not be recalculated annually.
(f) If the designated Beneficiary referred to in subsection
(e)(l) is the surviving spouse of the Participant, the
date on which distributions are required to begin under
subsection (e)(3) shall not be earlier than the date on
which the Participant would have attained age 70-1/2.
(g) A Participant's Account balance will be distributed in
accordance with Code section 401(a)(9) and the
22
regulations issued by the Secretary of the Treasury
thereunder, including section 1.401(a)(9)-2, which are
incorporated herein by reference. In addition, the
provisions of this section 6.7 shall apply,
notwithstanding any other Plan provision to the
contrary; provided, however, that Code section 401(a)(9)
and the regulations thereunder override any Plan
provisions inconsistent with such Code section and
regulations. The exceptions to subsection (d) described
in subsections (e) and (f) shall be applied to a
Beneficiary, unless the Participant or Beneficiary
elects to have subsection (d) apply.
6.8 Withholding Taxes. The Company may withhold from a Participant's
compensation and there may be withheld from any distribution under the Plan any
taxes required to be withheld with respect to contributions or benefits under
the Plan and such sum may be reasonably necessary to cover any taxes for which
they may be liable and which may be assessed with respect to contributions or
benefits under this Plan.
6.9 Rollover Distributions.
(a) Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a distributee's
election under this section 6.9, a distributee may
elect, at the time and in the manner prescribed by the
Plan Administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct
rollover.
(b) For purposes of this section 6.9, an eligible rollover
distribution is any distribution of all or any portion
of the balance to the credit of the distributee, 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 distributee or the joint lives (or
joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified
period of ten (10) years or more; any distribution to
the extent such distribution is required under Code
section 401(a)(9); 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).
23
(c) For purposes of this section 6.9, an eligible retirement
plan is an individual retirement account described in
Code section 408(a), an individual retirement annuity
described in Code section 408(b), an annuity plan
described in Code section 403(a), or a qualified trust
described in Code section 401(a) that accepts the
distributee's eligible rollover distribution. However,
in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement
annuity.
(d) Distributee: A distributee includes an employee or
former employee. In addition, the employee's or former
employee's surviving spouse and the employee's or former
employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as
defined in Code section 414(p), are distributees with
regard to the interest of the spouse or former spouse.
(e) Direct rollover: A direct rollover is a payment by the
Plan to the eligible retirement plan specified by the
distributee.
(f) If a distribution is one to which Code sections
401(a)(11) and 417 do not apply, such distribution may
commence less than 30 days after the notice required
under section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that:
(1) the Plan Administrator clearly informs the
Participant that the Participant has a right
to a period of at least 30 days after
receiving the notice to consider the decision
of whether or not to elect a distribution
(and, if applicable, a particular distribution
option), and
(2) the Participant, after receiving the notice,
affirmatively elects a distribution.
24
Article VII. Investment Elections
---------------------------------
7.1 Investment of Contributions. Each Participant may elect to invest
his Account among the available Investment Funds in increments of any whole
percent. Subject to Participant direction, the Trustee may invest up to 100% of
Plan assets in Qualifying Employer Securities.
7.2 Investment Elections. Elections shall be made and verified in a
manner prescribed by the Plan Administrator. Once filed, a Participant's
verified election will remain in effect until amended or discontinued pursuant
to this paragraph. If a Participant fails to direct the investment of all or any
portion of his Account, such amount shall be invested in the fund(s) uniformly
designated by the Plan Administrator on behalf of the Participant.
7.3 Liability for Investment Elections. If the Trustee acts at the
direction of a Participant, the Company, its board of directors, officers and
employees, the Plan Administrator and the Trustee shall not be liable or
responsible for any loss resulting to the Trust Fund or to any Account or for
any breach of fiduciary responsibility by reasons of any act done pursuant to
the direction of the Participant.
25
Article VIII. Accounts and Records of the Plan
----------------------------------------------
8.1 Accounts and Records. The Accounts and records of the Plan shall be
maintained by the Plan Administrator and shall accurately disclose the status of
the Accounts of each Participant or his Beneficiary in the Plan. Each
Participant shall be advised from time to time, at least quarterly, as to the
status of his Account.
8.2 Trust Fund. Each Participant shall have an undivided proportionate
interest in the Trust Fund which shall be measured by the proportion that the
market value of his Account bears to the total market value of all Accounts as
of the date that such interest is being determined.
8.3 Allocation of Income to Accounts. The Plan Administrator shall
value a Participant's Account as of each Valuation Date in accordance with the
income accounting applicable to each Investment Fund in which the assets of the
Account are invested and adjust the Account to reflect applicable expenses and
all other transactions since the preceding Valuation Date.
8.4 Valuation of Qualifying Employer Securities. For purposes of this
Article 8, the value of Qualifying Employer Securities held by the Plan shall be
the closing price of such Qualifying Employer Securities as reported on the New
York Stock Exchange as of the applicable Valuation Date or the last day
Qualifying Employer Securities were traded if no Qualifying Employer Securities
were traded on the Valuation Date.
26
Article IX. Financing
---------------------
9.1 Financing. The Company shall enter into the Trust Agreement in
order to implement and pay out the provisions of the Plan and to finance the
benefits under the Plan. In such event, all rights which may accrue to any
person under the Plan shall be subject to all the terms and provisions of the
Trust Agreement. The Company and the Trustee may modify the Trust Agreement in
accordance with the terms of that Agreement from time to time to accomplish the
purposes of the Plan.
9.2 Contributions. The Company shall make such contributions to the
Trust Fund as are required by the provisions of the Plan, subject to its right
to amend, modify or terminate the Plan.
9.3 Nonreversion. The Company shall not have any right, title or
interest in the contributions made to the Trust Fund, and no part of the Trust
Fund shall revert to the Company, except that:
(a) if a contribution is made to the Trust Fund by the
Company by a mistake of fact, then such contribution may
be returned to the Company within one year after the
payment of the contribution; or
(b) if any part or all of a contribution is disallowed as a
deduction under Code section 404, then to the extent
such contribution is disallowed as a deduction it may be
returned to the Company within one year after the
disallowance.
9.4 Rights in the Trust Fund. Persons eligible for benefits under the
Plan are entitled to look only to the Trust Fund for the payment of such
benefits and have no claim against the Company, the Plan Administrator or any
other person. No person has any right or interest in the Trust Fund except as
expressly provided in the Plan.
27
Article X. Administration
-------------------------
10.1 Plan Administrator and Fiduciary. The Company shall be the Plan
Administrator within the meaning of section 3(16)(A) of the Act, a fiduciary
with respect to the Plan within the meaning of sections 3(21)(A)(i) and (iii) of
the Act, and the named fiduciary under section 402 of the Act. The Company may
appoint a separate Plan Administrator. Any person, including an employee of the
Company, shall be eligible to serve as Plan Administrator. Two or more persons
may form a committee to serve as Plan Administrator. Persons serving as Plan
Administrator may resign by written notice to the Company, and the Company may
appoint or remove such persons. A Plan Administrator consisting of more than one
person shall act by a majority of its members at the time in office, either by
vote at a meeting or in writing without a meeting. A Plan Administrator
consisting of more than one person may authorize any one or more of its members
to execute any document or documents on behalf of the Plan Administrator, in
which event the Plan Administrator shall notify the Trustee of the member or
members so designated. The Trustee shall accept and rely upon any document
executed by such member or members as representing action by the Plan
Administrator until the Plan Administrator shall file with the Trustee a written
revocation of such designation. No person serving as Plan Administrator shall
vote or decide upon any matter relating solely to himself or solely to any of
his rights or benefits pursuant to the Plan.
10.2 Expenses. All expenses incurred in the administration of the Plan
shall be paid from the Trust Fund to the extent not paid by the Company. Such
expenses shall include any expenses incident to the administration of the Plan,
including, but not limited to, fees of accountants, counsel and other
specialists.
10.3 Administration. The Company shall be responsible for the
administration of the Plan. The Company shall have all such powers as may be
necessary to carry out the provisions hereof and may, from time to time,
establish rules for the administration of the Plan and the transaction of the
Plan's business. In making any such determination or rule, the Company shall
pursue uniform policies as from time to time established by the Company and
shall not discriminate in favor of or against any Participant. The Company shall
have the exclusive right to make any finding of fact necessary or appropriate
for any purpose under the Plan including, but not limited to, the determination
of the eligibility for and the amount of any benefit payable under the Plan. The
Company shall have the exclusive right to interpret the terms and provisions of
the Plan and to determine any and all questions arising under the Plan or in
connection with the administration thereof, including, without limitation, the
right to remedy or resolve possible ambiguities, inconsistencies or omissions,
by general rule or
28
particular decision. The Company shall make, or cause to be made, all reports or
other filings necessary to meet the reporting and disclosure requirements of the
Act which are the responsibility of "plan administrators" under the Act. To the
extent permitted by law, all findings of fact, determinations, interpretations
and decisions of the Company shall be conclusive and binding upon all parties
unless arbitrary and capricious.
10.4 No Enlargement of Employee Rights. Nothing contained in the Plan
shall be deemed to give any employee the right to be retained in the service of
the Company or to interfere with the right of the Company to discharge,
discipline or retire any employee at any time.
10.5 Appeals from Denial of Claims. If any claim for benefits under the
Plan is wholly or partially denied, the claimant shall be given notice in
writing of such denial, within a reasonable period of time after receipt of the
claim by the Plan (not to exceed 90 days after receipt of the claim or, if
special circumstances require an extension of time, written notice of the
extension shall be furnished to the claimant and an additional 90 days will be
considered reasonable) by registered or certified mail, which notice shall be
written in a manner calculated to be understood by the claimant, setting forth
the following information:
(a) the specific reasons for such denial;
(b) specific reference to pertinent Plan provisions on which
the denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is
necessary; and
(d) an explanation of the Plan's claim review procedure.
The claimant also shall be advised that he or his duly authorized representative
may request a review by the Plan Administrator of the decision denying the claim
by filing with the Plan Administrator, within 60 days after such notice has been
received by the claimant, a written request for such review, and that he may
review pertinent documents, and submit issues and comments in writing within the
same 60-day period. If such request is so filed, such review shall be made by
the Plan Administrator within 60 days after receipt of such request, unless
special circumstances require an extension of time for processing, in which case
the claimant shall be so notified and a decision shall be rendered as soon as
possible,
29
but not later than 120 days after receipt of the request for review. The
claimant shall be given written notice of the decision resulting from such
review, which notice shall include specific reasons for the decision, written in
a manner calculated to be understood by the claimant, and specific references to
the pertinent Plan provisions on which the decision is based.
10.6 Notice of Address and Missing Persons. Each person entitled to
benefits under the Plan must file with the Plan Administrator, in writing, his
post office address and each change of post office address. Any communication,
statement or notice addressed to such a person at his latest reported post
office address will be binding upon him for all purposes of the Plan, and
neither the Company nor the Trustee shall be obliged to search for or ascertain
his whereabouts. In the event that such person cannot be located, the Plan
Administrator may direct that such benefit and all further benefits with respect
to such person shall be discontinued, all liability for the payment thereof
shall terminate and the balance of such Participant's Account shall be deemed a
forfeiture; provided, however, that in the event of the subsequent reappearance
of the Participant or Beneficiary prior to termination of the Plan, the benefits
which were due and payable and which such person missed shall be paid in a
single sum, and any future benefits due such person shall be reinstated in full.
10.7 Data and Information for Benefits. All persons claiming benefits
under the Plan must furnish to the Plan Administrator or its designated agent
such documents, evidence or information as the Plan Administrator or its
designated agent consider necessary or desirable for the purpose of
administering the Plan, and such person must furnish such information promptly
and sign such documents as the Plan Administrator or its designated agent may
require before any benefits become payable under the Plan.
10.8 Indemnity for Liability. The Company shall indemnify any
individual who is directed by the Company to carry out responsibilities and
duties imposed by the Plan against any and all claims, losses, damages and
expenses, including counsel fees, approved by the Company, and any liability,
including any amounts paid in settlement with the Company's approval, arising
from the individual's action or failure to act, in connection with such person's
responsibilities and duties under the Plant except when the same is judicially
determined to be attributable to the gross negligence or willful misconduct of
such person. Indemnification shall not be deemed the exclusive remedy of any
person entitled to indemnification pursuant to this section. The indemnification
provided hereunder shall continue as to a person who has ceased acting as a
director, officer, agent or employee of the Plan Administrator or Company, and
such person's rights shall inure to the benefit of his heirs and
representatives.
30
10.9 Effect of a Mistake. In the event of a mistake or misstatement as
to the eligibility, participation or service of any Participant, or the amount
of payments made or to be made to a Participant or Beneficiary, the Plan
Administrator shall, if possible, cause to be withheld or accelerated or
otherwise make adjustment for such amounts of payments as will in its sole
judgment result in the Participant or Beneficiary receiving the proper amount of
payments under the Plan.
31
Article XI. Amendment and Termination
-------------------------------------
11.1 Amendment and Termination.
--------------------------
(a) The Company does hereby expressly and specifically
reserve the sole and exclusive right at any time by
action of the Board to amend, modify or terminate the
Plan.
(b) While the Company contemplates carrying out the
provisions of the Plan indefinitely with respect to the
employees, the Company shall not be under any obligation
or liability whatsoever to maintain the Plan for any
minimum or other period of time.
(c) Upon the termination of the Plan, the Company shall give
written notice thereof to the Plan Administrator and the
Trustee.
(d) Except as provided by law, upon any termination of the
Plan, the Company shall not thereafter be under any
obligation, liability or responsibility whatsoever to
make any contribution or payment to the Trust Fund, the
Plan, any Participant, any Beneficiary, or any other
person, trust or fund whatsoever, for any purpose
whatsoever under or in connection with the Plan.
11.2 Limitations on Amendments. The provisions of this Article
are subject to and limited by the following restrictions:
-----------------------------------------------------------
(a) No amendment shall operate either directly or indirectly
to give the Company any interest whatsoever in any funds
or property held by the Trustee under the terms hereof,
or to permit the corpus or income of the Trust to be
used for or diverted to purposes other than the
exclusive benefit of Participants or their Beneficiaries
or to pay expenses incurred by the Plan Administrator in
the proper administration of the Plan.
(b) No such amendment shall operate either directly or
indirectly to deprive any Participant of his vested and
nonforfeitable interest as of the time of such amendment
or eliminate an optional form of distribution for a
previously accrued benefit.
32
Article XII. Top-Heavy Provisions
---------------------------------
12.1 Application of Top-Heavy Provisions.
------------------------------------
(a) Single Plan Determination. Except as provided in
subsection (b)(2), if as of a Determination Date, the
sum of the amount of the Section 416 Accounts of Key
Employees and the Beneficiaries of deceased Key
Employees exceeds 60% of the amount of the Section 416
Accounts of all Employees and Beneficiaries (excluding
former Key Employees), the Plan is top-heavy and the
provisions of this Article shall become applicable.
(b) Aggregation Group Determination.
(1) If as of a Determination Date the Plan is part
of an Aggregation Group which is top-heavy,
the provisions of this Article shall become
applicable. Top-heaviness for the purpose of
this subsection shall be determined with
respect to the Aggregation Group in the same
manner as described in subsection (a) above.
(2) If this Plan is top-heavy under subsection
(a), but the Aggregation Group is not
top-heavy, the Plan shall not be top-heavy and
this Article shall not be applicable.
(c) Plan Administrator. The Plan Administrator shall have
responsibility to make all calculations to determine
whether this Plan is top-heavy.
12.2 Definitions.
------------
(a) "Aggregation Group" means this Plan and all other plans
maintained by the Company and the Affiliates which cover
a Key Employee and any other plan which enables a plan
covering a Key Employee to meet the requirements of Code
section 401(a)(4) or section 410. In addition, at the
election of the Plan Administrator, the Aggregation
Group may be expanded to include any other qualified
plan maintained by an Affiliate if such expanded
Aggregation Group meets the requirements of Code
sections 401(a)(4) and 410.
33
(b) "Determination Date" means the last day of the Plan Year
immediately preceding the Plan Year for which
top-heaviness is to be determined or, in the case of the
first Plan Year of a new plan, the last day of such Plan
Year.
(c) "Key Employee" means a Participant who for the Plan Year
containing the Determination Date or any of the four
preceding Plan Years is
(1) an officer of the Company or an Affiliate who
has annual Wages greater than 150% of the
amount in effect under Code section
415(c)(1)(A) for such Plan Year; provided,
however, that no more than the lesser of--
(A) 50 employees, or
(B) the greater of (i) 3 employees or (ii)
10% of all employees,
shall be treated as officers, and such
officers shall be those with the highest
annual Wages in the 5-year period;
(2) one of the ten employees having annual Wages
from the Company and all Affiliates for such
Plan Year greater than the dollar limit
specified in Code section 415(c)(1)(A) and
owning both more than a one-half of one
percent interest and the largest interests in
the Company or an Affiliate;
(3) a 5% owner of the Company or an Affiliate; or
(4) a 1% owner of the Company or an Affiliate
having annual Wages of more than $150,000.
Ownership shall be determined in accordance
with Code section 416(i)(1)(B) and (C). For
purposes of paragraph (2), if two employees
have the same ownership interest in the
Company or an Affiliate, the employee having
the greater annual Wages from the Company and
all Affiliates shall be treated as having a
larger interest.
34
(d) "Section 416 Account" means--
(1) the amount credited as of a Determination Date
to a Participant's or Beneficiary's account,
under the Plan and under any other qualified
defined contribution plan which is part of an
Aggregation Group (including amounts to be
credited as of the Determination Date but
which have not yet been contributed);
(2) the present value of the accrued benefit
credited to a Participant or Beneficiary under
a qualified defined benefit plan which is part
of an Aggregation Group; and
(3) the amount of distributions to the Participant
or Beneficiary during the five-year period
ending on the Determination Date other than a
distribution which is a tax-free rollover
contribution (or similar transfer) that is not
initiated by the Participant or that is
contributed to a plan which is maintained by
the Company or an Affiliate;
reduced by
(4) the amount of rollover contributions (or
similar transfers) and earnings thereon
credited as of a Determination Date under the
Plan or a plan forming part of an Aggregation
Group which is attributable to a rollover
contribution (or similar transfer) accepted
after December 31, 1983, initiated by the
Participant and derived from a plan not
maintained by the Company or an Affiliate.
The Account of a Participant who was a Key Employee
and who subsequently meets none of the conditions
of subsection (c) for the Plan Year containing the
Determination Date is not a Section 416 Account and
shall be excluded from all computations under this
Article. Furthermore, if a Participant has not
performed services for the Company or an Affiliate
during the five-year period ending on the
Determination Date, any account of such Participant
(and any accrued benefit for such Participant)
shall not be taken into account in computing
top-heaviness under this Article.
35
(e) "Wages" means the Participant's wages, salaries and
other amounts received for personal services rendered in
the course of employment with the Company and any
Affiliates, including those items described in Treasury
Regulation section 1.415-2(d)(1).
12.3 Minimum Contribution.
---------------------
(a) General. If this Plan is determined to be top-heavy
under the provisions of section 12.1 with respect to a
Plan Year, the sum of Company contributions (including
contributions under a salary reduction agreement) and
forfeitures under all qualified defined contribution
plans allocated to the accounts of each Participant in
the Aggregation Group who is not a Key Employee and is
an Employee on the last day of the Plan Year shall not
be less than 3% of such Participant's Wages. This
section 12.3 shall not be applicable with respect to a
Participant who is also covered under a defined benefit
plan maintained by the Company or an Affiliate which
provides the benefit specified by Code section
416(c)(1).
(b) Exception. The contribution rate specified in subsection
(a) shall not exceed the percentage at which Company
contributions and forfeitures are allocated under the
plans of the Aggregation Group to the account of the Key
Employee for whom such percentage is the highest for the
Plan Year. For the purpose of this subsection (b), the
percentage for each Key Employee shall be determined by
dividing the Company contributions and forfeitures for
the Key Employee by the amount of his total Wages for
the year not in excess of the amount permitted pursuant
to Code section 401(a)(17), as adjusted for
cost-of-living increases at such time and in such manner
as may be determined by the Secretary of the Treasury.
36
12.4 Limit on Annual Additions: Combined Plan Limit.
------------------------------------------------
(a) General. The provisions of this section 12.4 shall apply
only to Plan Years beginning prior to January 1, 2000.
If this Plan is determined to be top-heavy under section
12.1, section 4.5(b) of the Plan shall be applied by
substituting 1.0 for 1.25 in applying the provisions of
Code section 415(e)(2) and (e)(3).
(b) Exception. Subsection (a) shall not be applicable if--
(1) section 12.3 is applied by substituting "4%"
for "3%," and
(2) this Plan would not be top-heavy if "90" is
substituted for "60%" in section 12.1.
(c) Transitional Rule. If, but for this subsection (c),
subsection (a) would begin to apply with respect to the
Plan, the application of subsection (a) shall be
suspended with respect to a Participant so long as there
are--
(1) no Company contributions, forfeitures or
voluntary nondeductible contributions
allocated to such Participant, and
(2) no accruals under a qualified defined benefit
plan for such Participant.
12.5 Collective Bargaining Agreements. The requirements of section 12.3
shall not apply with respect to any employee included in a unit of employees
covered by a collective bargaining agreement between employee representatives
and the Company or an Affiliate if retirement benefits were the subject of good
faith bargaining between such employee representatives and the Company or the
Affiliate, as the case may be.
37
Article XIII. Miscellaneous
---------------------------
13.1 Beneficiary Designation.
------------------------
(a) Each unmarried Participant may designate, on a form
provided for that purpose by the Plan Administrator, a
Beneficiary or Beneficiaries to receive his interest in
the Plan in the event of his death, but such designation
shall not be effective for any purpose until it has been
filed by him during his lifetime with the Plan
Administrator. He may, from time to time during his
lifetime, on a form approved by and filed with the Plan
Administrator, change his Beneficiary or Beneficiaries.
(b) The Beneficiary of each Participant who is married shall
be the surviving spouse of such Participant, unless such
spouse consents in writing to the designation of another
Beneficiary or Beneficiaries. Each married Participant
may, from time to time, change his designation of
Beneficiaries; provided, however, that the Participant
may not change his Beneficiary without the written
consent of his spouse.
(c) In the event that a Participant fails to designate a
Beneficiary, or if for any reason such designation shall
be legally ineffective, or if all designated
Beneficiaries predecease him or die simultaneously with
him, distribution shall be made to his estate. If any
such Beneficiary shall die prior to receiving the
distribution that would have been made to such
Beneficiary had such Beneficiary's death not occurred,
then, for the purposes of the Plan, the distribution
that would have been received by such Beneficiary shall
be made to such Beneficiary's estate.
(d) The written consent described in subsection (b) shall
acknowledge the effect of such election and shall be
witnessed by a Plan representative designated by the
Plan Administrator or a notary public.
13.2 Incompetency. Every person receiving or claiming benefits under
the Plan shall be conclusively presumed to be mentally competent and of age
until the Plan Administrator receives written notice, in a form and manner
acceptable to it, that such person is incompetent or a minor, and that a
guardian, conservator or
38
other person legally vested with the care of his estate has been appointed. In
the event that the Plan Administrator finds that any person to whom a benefit is
payable under the Plan is unable to properly care for his affairs, or is a
minor, then any payment due (unless a prior claim therefor shall have been made
by a duly appointed legal representative) may be paid to the spouse, a child, a
parent, a brother or a sister, or to any person deemed by the Plan Administrator
to have incurred expense for such person otherwise entitled to payment. In the
event a guardian or conservator of the estate of any person receiving or
claiming benefits under the Plan shall be appointed by a court of competent
jurisdiction, payments shall be made to such guardian or conservator, provided
that proper proof of appointment is furnished in a form and manner suitable to
the Plan Administrator. To the extent permitted by law, any payment made under
the provisions of this section 13.2 shall be a complete discharge of liability
under the Plan.
13.3 Nonalienation. Except as provided in Code section 401(a)(13),
neither benefits payable at any time under the Plan nor the corpus or income of
the Trust Fund shall be subject in any manner to alienation, sale, transfer,
assignment, pledge, attachment, garnishment or encumbrance of any kind. Any
attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any
such benefit, whether presently or thereafter payable, shall be void. No benefit
nor the Trust Fund shall in any manner be liable for or subject to the debts or
liabilities of any Participant or of any other person entitled to any benefit.
The Plan Administrator shall recognize a qualified domestic relations order with
respect to child support, alimony payments, or marital property rights, if the
Plan Administrator determines that it meets the applicable requirements of Code
section 414(p); if any such order so directs, a distribution of benefits may be
to the alternative payee at a time not permitted for distributions to the
Participant. The Plan Administrator shall establish procedures to determine
whether domestic relations orders are "qualified domestic relations orders" and
to administer distributions under such qualified domestic relations orders.
13.4 Applicable Law. The Plan and all rights hereunder shall be
governed by and construed in accordance with the laws of the State of Wisconsin
to the extent such laws have not been preempted by applicable federal law.
13.5 Severability. If a provision of the Plan shall be held illegal or
invalid, the illegality or invalidity shall not affect the remaining parts of
the Plan and the Plan shall be construed and enforced as if the illegal or
invalid provision had not been included in the Plan.
13.6 No Guarantee. Neither the Plan Administrator, the Company nor the
Trustee in any way guarantees the Trust Fund from loss or depreciation nor the
39
payment of any money which may be or become due to any person from the Trust
Fund. Nothing herein contained shall be deemed to give any Participant or
Beneficiary an interest in any specific part of the Trust Fund or any other
interest except the right to receive benefits out of the Trust Fund in
accordance with the provisions of the Plan and the Trust.
13.7 Merger, Consolidation or Transfer. In the case of any merger or
consolidation of the Plan with, or in the case of any transfer of assets or
liabilities of the Plan to or from, any other plan, each Participant shall
receive a benefit immediately after the merger, consolidation or transfer (if
the Plan had then terminated) which is equal to or greater than the benefit he
would have been entitled to receive immediately before the merger, consolidation
or transfer (if the Plan had then terminated).
IN WITNESS WHEREOF, RAYOVAC CORPORATION has caused this instrument to
be executed by its duly authorized officer as of the 23rd day of October
1997.
RAYOVAC CORPORATION
By Russell E. Lefevre
------------------------
Vice President--Human Resources
Its -----------------------
APPENDIX A
PARTICIPATING GROUPS OF EMPLOYEES GROUP EFFECTIVE DATE*
Salaried Employees 07/01/83
Appleton Plant: Non-union hourly paid employees. 07/01/83
Sauk City Plant: Non-union hourly paid employees 08/26/88
Portage, WI: Non-union hourly paid employees. 08/01/97
Wonewoc, WI: Non-union hourly paid employees. 08/01/97