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EXHIBIT 10.13
REXNORD NON-UNION PENSION PLAN
EFFECTIVE JANUARY 1, 2003
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REXNORD NON-UNION PENSION PLAN
(EFFECTIVE JANUARY 1, 2003)
TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS............................................................2
1.01 ACCRUED BENEFIT...........................................................2
1.02 ACTUARIAL EQUIVALENT......................................................2
1.03 AFFILIATED EMPLOYER.......................................................2
1.04 ALTERNATE PAYEE...........................................................3
1.05 AVERAGE ANNUAL COMPENSATION...............................................3
1.06 BENEFICIARY...............................................................3
1.07 BENEFIT COMMENCEMENT DATE.................................................3
1.08 BOARD.....................................................................3
1.09 CLOSING DATE..............................................................3
1.10 CODE......................................................................3
1.11 COMPENSATION..............................................................3
1.12 CREDITED SERVICE..........................................................4
1.13 DISABILITY OR DISABLED....................................................4
1.14 DISQUALIFYING PERIOD OF SEVERANCE.........................................4
1.15 EARLY RETIREMENT DATE.....................................................4
1.16 EARLY RETIREMENT ELIGIBILITY DATE.........................................4
1.17 EFFECTIVE DATE............................................................4
1.18 ELIGIBLE EMPLOYEE.........................................................4
1.19 EMPLOYEE..................................................................5
1.20 EMPLOYER..................................................................5
1.21 EMPLOYMENT COMMENCEMENT DATE..............................................5
1.22 ERISA.....................................................................5
1.23 FIDUCIARY.................................................................6
1.24 FISCAL YEAR...............................................................6
1.25 HIGHLY COMPENSATED EMPLOYEE...............................................6
1.26 HOUR OF SERVICE...........................................................7
1.27 INTEGRATION LEVEL.........................................................7
1.28 INVESTMENT MANAGER........................................................7
1.29 LATE RETIREMENT DATE......................................................7
1.30 LAYOFF....................................................................7
1.31 LEAVE OF ABSENCE..........................................................7
1.32 LIMITATION YEAR...........................................................7
1.33 NORMAL RETIREMENT AGE.....................................................7
1.34 NORMAL RETIREMENT DATE....................................................7
1.35 PARTICIPANT...............................................................8
1.36 PARTICIPATING EMPLOYER....................................................8
1.37 PERIOD OF SERVICE OR SERVICE..............................................8
1.38 PERIOD OF SEVERANCE.......................................................8
1.39 PLAN......................................................................8
1.40 PLAN YEAR.................................................................9
1.41 PRIOR PLAN................................................................9
1.42 QUALIFIED DOMESTIC RELATIONS ORDER........................................9
1.43 QUALIFIED ELECTION........................................................9
1.44 QUALIFIED JOINT AND SURVIVOR ANNUITY......................................9
1.45 REEMPLOYMENT COMMENCEMENT DATE............................................9
1.46 RETIREMENT COMMITTEE......................................................9
1.47 SEVERANCE FROM SERVICE DATE...............................................9
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1.48 SOCIAL SECURITY RETIREMENT AGE...........................................10
1.49 SOCIAL SECURITY TAXABLE WAGE BASE........................................10
1.50 SPONSORING EMPLOYER......................................................10
1.51 SPOUSE...................................................................10
1.52 TRUSTEE..................................................................10
1.53 TRUST FUND...............................................................10
1.54 VESTING SERVICE..........................................................10
ARTICLE II - PARTICIPATION........................................................11
2.01 PARTICIPATION REQUIREMENTS...............................................11
2.02 PARTICIPATION UPON REEMPLOYMENT..........................................11
2.03 CESSATION OF PARTICIPATION...............................................11
2.04 TRANSFERRED EMPLOYEES....................................................11
ARTICLE III - SERVICE.............................................................13
3.01 VESTING SERVICE..........................................................13
3.02 CREDITED SERVICE.........................................................13
3.03 PERIOD OF SEVERANCE RULES APPLICABLE TO YEARS OF SERVICE, VESTING
SERVICE AND CREDITED SERVICE.............................................13
3.05 QUALIFIED MILITARY SERVICE...............................................13
ARTICLE IV - BENEFITS.............................................................14
4.01 NORMAL RETIREMENT BENEFITS...............................................14
4.02 EARLY RETIREMENT BENEFITS................................................14
4.03 LATE RETIREMENT BENEFITS.................................................15
4.04 TERMINATION OF EMPLOYMENT BEFORE RETIREMENT..............................16
4.05 PRE-RETIREMENT SURVIVING SPOUSE ANNUITY..................................16
4.06 DISABILITY BENEFITS......................................................17
4.07 PAYMENT OF RETIREMENT BENEFITS...........................................18
4.08 TIMING OF DISTRIBUTIONS..................................................23
4.09 DISTRIBUTION FOR MINOR OR INCOMPETENT PAYEE..............................23
4.10 DOUBT AS TO RIGHT OF PAYMENT.............................................23
4.11 PROOF OF DEATH...........................................................24
4.12 SUSPENSION OF BENEFITS...................................................24
4.13 BENEFITS PAYABLE ONLY FROM TRUST FUND....................................25
4.14 DIRECT ROLLOVER DISTRIBUTIONS............................................25
4.18 ACCRUED BENEFIT REDUCED BY PREVIOUS LUMP-SUM DISTRIBUTION................26
ARTICLE V - MAXIMUM BENEFIT LIMITATIONS...........................................28
5.01 MAXIMUM ANNUAL BENEFIT...................................................28
5.02 APPLICATION TO QUALIFIED JOINT AND SURVIVOR ANNUITY......................33
ARTICLE VI - CONTRIBUTIONS........................................................34
6.01 PAYMENT OF CONTRIBUTIONS.................................................34
6.02 APPLICATION OF FORFEITURES...............................................34
6.03 TRUST AGREEMENT..........................................................34
ARTICLE VII - ADMINISTRATION......................................................35
7.01 POWERS AND RESPONSIBILITIES OF THE SPONSORING EMPLOYER...................35
7.02 ASSIGNMENT AND DESIGNATION OF ADMINISTRATIVE AUTHORITY...................35
7.03 POWERS DUTIES AND RESPONSIBILITIES OF THE RETIREMENT COMMITTEE...........35
7.04 POWERS AND RESPONSIBILITIES OF THE TRUSTEE...............................36
7.05 RECORD AND REPORTS.......................................................36
7.06 APPOINTMENT OF COUNSEL AND AGENTS........................................37
7.07 INFORMATION FROM EMPLOYER................................................37
7.08 PAYMENT OF EXPENSES......................................................37
7.09 MAJORITY ACTIONS.........................................................37
7.10 CLAIMS PROCEDURE.........................................................37
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7.11 CLAIMS REVIEW PROCEDURE..................................................38
7.12 NAMED FIDUCIARIES........................................................38
7.13 INDEMNIFICATION..........................................................39
ARTICLE VIII - PLAN AMENDMENT.....................................................40
8.01 AMENDMENT................................................................40
ARTICLE IX - PLAN TERMINATION.....................................................41
9.01 RIGHT TO TERMINATE.......................................................41
9.02 VESTING UPON TERMINATION.................................................41
9.03 PRIORITY OF DISTRIBUTION ON TERMINATION..................................41
9.04 RETURN OF EXCESS ASSETS..................................................41
9.05 RESTRICTION ON BENEFITS..................................................41
ARTICLE X - MERGER, CONSOLIDATION, OR TRANSFER OF ASSETS..........................42
10.01 MERGER, CONSOLIDATION, OR TRANSFER OF ASSETS.............................42
10.02 BENEFITS UPON MERGER, CONSOLIDATION, OR TRANSFER OF ASSETS...............42
ARTICLE XI - TOP HEAVY PROVISIONS.................................................43
11.01 TOP-HEAVY PLAN DEFINITIONS...............................................43
11.02 TOP-HEAVY GENERAL REQUIREMENTS...........................................45
11.03 ADDITIONAL TOP-HEAVY REQUIREMENTS........................................46
ARTICLE XII - GENERAL PROVISIONS..................................................48
12.01 RIGHT OF DISCHARGE RESERVED..............................................48
12.02 ALIENATION...............................................................48
12.03 GENDER AND NUMBER........................................................48
12.04 LEGAL ACTION.............................................................48
12.05 APPROVAL BY INTERNAL REVENUE SERVICE, MISTAKE OF FACT....................49
12.06 UNIFORMITY...............................................................49
12.07 CAPTIONS.................................................................49
12.08 DISTRIBUTIONS LIMITATIONS................................................49
12.09 GOVERNING LAW............................................................50
ARTICLE XIII - PARTICIPATING EMPLOYERS............................................51
13.01 PARTICIPATION BY AFFILIATED EMPLOYERS....................................51
13.02 DESIGNATION OF AGENT.....................................................51
13.03 DISCONTINUANCE OF PARTICIPATION..........................................51
13.04 THE RETIREMENT COMMITTEE'S AUTHORITY.....................................51
APPENDIX A........................................................................52
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DECLARATION
WHEREAS, this Plan, named the Rexnord Non-Union Pension Plan, is established
initially by Rexnord Corporation effective January 1, 2003 to accept the
spin-off of assets and liabilities attributable to current employees of Rexnord
Corporation from the Invensys Pension Plan (the "Prior Plan"); and
WHEREAS, Rexnord Corporation intends to maintain this Plan for purposes of
providing benefits to Participants upon retirement and certain other severances
from service; and
WHEREAS, this Plan document applies to Participants credited with an Hour of
Service on or after the Closing Date; and
WHEREAS, this Plan and its related Trust are intended to qualify under Code
Sections 401(a) and 501(a) and the applicable provisions of ERISA, and will be
interpreted and applied in a manner consistent with that intent; and
WHEREAS, this Plan is for the exclusive benefit of Participants and their
Beneficiaries and, except as otherwise provided in the Plan, no part of the
Trust Fund or any distribution therefrom will be used for or diverted for
purposes other than for the exclusive benefit of Participants and their
Beneficiaries and defraying those reasonable expenses of administering the Plan
and Trust Fund not paid for by Rexnord Corporation; and
WHEREAS, nothing appearing in the Plan will be construed (a) to give any person
any benefit, right or interest except as expressly provided herein, or (b) to
create a contract of employment or to give any Employee the right to continue as
an Employee or to affect or modify his terms of employment in any way; and
WHEREAS, the benefits and rights of a Participant and his Beneficiaries under
the Plan will be determined in accordance with the terms of the Plan that are in
effect on the date of the Participant's retirement, death or other Termination
of Employment, whichever may be applicable;
NOW THEREFORE, in consideration of the foregoing, the Plan is hereby set forth
in this plan document.
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ARTICLE I - DEFINITIONS
1.01 "ACCRUED BENEFIT" means, as of specific date of determination, an amount
equal to 0.9% of the Participant's Average Annual Compensation plus 0.5%
of the Participant's Average Annual Compensation in excess of the
Integration Level, the sum multiplied by the Participant's years of
Credited Service (not to exceed 30 years). Notwithstanding the
foregoing, the Accrued Benefit of a Participant who was a Participant in
the Prior Plan shall be determined in accordance with Appendix A.
1.02 "ACTUARIAL EQUIVALENT" means an amount having equal value when computed
on the basis of a 7% interest rate compounded annually and based on a
blend of 50 percent of the male mortality rate and 50 percent of the
female mortality rates from the 1983 Group Annuity Mortality Table,
except that:
a. For purposes of Section 5.01(c) and (f), an interest rate equal to the
greater of 5% or the rate set forth in the preceding sentence shall be
used. For Benefit Commencement Dates occurring on or after December 31,
2002 the applicable mortality table is the table prescribed in Rev. Rul.
2001-62; and
b. For purposes of determining lump-sum payments under the Plan as provided
in Section 4.07(d) (or other relevant provisions of this Plan),
Actuarial Equivalent shall be based on an interest rate equal to the
annual rate of interest on 30-year Treasury securities for the month of
October immediately preceding the Plan Year in which the Benefit
Commencement Date occurs; and for Benefit Commencement Dates occurring
on or after December 31, 2002 the applicable mortality table is the
table prescribed in Rev. Rul. 2001-62.
1.03 "AFFILIATED EMPLOYER" means any of the following other than an Employer:
a. Any corporation which is a member of a controlled group of corporations
which includes an Employer, determined under the provisions of
Section 414(b) of the Code;
b. Any trade or business (whether or not incorporated) which is under
common control (as defined in Section 414(c) of the Code) with an
Employer;
c. Any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Section 414(m) of the Code)
which includes an Employer for purposes specified and to the extent
required under that Section; and
d. Any other entity required to be aggregated with an Employer pursuant to
regulations under Section 414(o) of the Code, for purposes specified and
to the extent required under that Section.
A corporation, trade or business, or member of an affiliated service
group shall be treated as an Affiliated Employer only while it is a
member of the controlled group.
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1.04 "ALTERNATE PAYEE" means any spouse, former spouse, child, or other
dependent of a Participant recognized by a Qualified Domestic Relations
Order as having a right to receive all, or a portion of, the
Participant's nonforfeitable benefits under the Plan. For purposes of
Section 4.14, however, a child or other dependent of the Participant
shall not be considered an Alternate Payee.
1.05 "AVERAGE ANNUAL COMPENSATION" means the average Compensation of a
Participant for the five (5) calendar years of completed employment with
an Employer during the last ten (10) years of completed employment with
an Employer preceding the date of determination which are the highest.
If a Participant shall have completed five (5) of fewer calendar years
of employment with an Employer before the date of determination, the
calculation shall be based upon his average Compensation for all his
completed calendar years of such employment. Notwithstanding the
foregoing, in determining a Participant's Average Annual Compensation,
the Participant's year of termination of employment or year of hire
shall be included even if the Participant does not receive credit for a
complete year of employment with an Employer for such year if (i) with
respect to the year of termination of employment, the Participant earns
Credited Service from the beginning of the year until his date of
termination of employment, and (ii) with respect to the year of hire or
the year of termination of employment, the inclusion of such year or
years would result in a higher Average Annual Compensation for the
Participant.
1.06 "BENEFICIARY" means a person, executor, administrator, trust, estate or
other entity designated by a Participant, or by the terms of the Plan as
provided in Section 4.07(c)(iv), who is or who may become entitled to
receive benefits from the Plan. Any person who is an Alternate Payee
shall be considered a Beneficiary for purposes of the Plan.
1.07 "BENEFIT COMMENCEMENT DATE" means in the case of a lump sum payment the
date of payment, in all other cases, the first day of the month on which
distribution of benefits to a Participant or Beneficiary is to begin in
accordance with the provisions of Article IV.
1.08 "BOARD" means the Board of Directors of the Sponsoring Employer.
1.09 "CLOSING DATE" means November 22, 2002 or such other date as agreed to
under the terms of the Stock Purchase Agreement dated as of September
27, 2002 relating to the purchase of the Employer by the Carlyle Group.
1.10 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time. Reference to a specific provision of the Code shall include such
provision, any valid regulation or ruling promulgated thereunder, and
any provision of future law that amends, supplements, or supersedes such
provision.
1.11 "COMPENSATION" means the total amount paid in the Plan Year to the
Employee by the Employer for services rendered as reported on IRS Form
W-2, excluding however (a) any amount paid or payable attributable to
the termination or severance of employment of the Employee, (b) any
amount attributable to an award, grant, right, payment, or exercise
under any stock plan of the Employer, including without limitation
employee stock
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purchase plans, stock option plans, stock awards or grants, stock
appreciation rights, and dividend equivalents paid on any of the
foregoing, and (c) any other taxable fringe benefits. Compensation also
includes contribution made on behalf of an Employee by the Employer
pursuant to a cash or deferred arrangement described in
Section 401(k)(2) of the Code or a cafeteria plan described in
Section 125 of the Code, or an arrangement under Section 132(f)(4) of
the Code.
A Participant's Compensation taken into account for purposes of
determining benefit accruals in any Plan Year beginning after December
31, 2001 for any Participant who is credited with an Hour of Service on
or after the first Plan Year beginning after December 31, 2001 shall not
exceed $200,000 or such other amount as the Secretary of the Treasury
may determine for such Plan Year under Section 401(a)(17) of the Code.
1.12 "CREDITED SERVICE" means, subject to the provisions of Article III,
employment with an Employer as an Eligible Employee on and after the
Closing Date.
1.13 "DISABILITY" OR "DISABLED" as applied to any Participant means a
physical or mental condition of the Participant resulting from bodily
injury, disease, or mental disorder which renders him incapable of
continuing any gainful occupation and which condition constitutes total
disability under the Social Security Act and, for Participants covered
under a long-term disability insurance plan sponsored by an Employer,
the condition constitutes total disability under such plan.
"DISABILITY" or "DISABLED" does not mean, however, any incapacity which
was contracted, suffered, or incurred while the Participant was engaged
in, or resulted from the Participant having engaged in, a felonious
enterprise, or which resulted from the Participant's habitual
drunkenness or addiction to narcotics, a self-inflicted injury, or
service in the armed forces of any county.
1.14 "DISQUALIFYING PERIOD OF SEVERANCE" occurs when an Employee who had no
vested interest in his Accrued Benefit at the commencement of a Period
of Severance incurs a Period of Severance which equals or exceeds the
greater of (a) six years, or (b) the Period of Service completed before
the Period of Severance plus one year.
1.15 "EARLY RETIREMENT DATE" means the date on which a Participant retires
early, pursuant to Section 4.02.
1.16 "EARLY RETIREMENT ELIGIBILITY DATE" means the date on which a
Participant first becomes eligible to retire early, which date shall be
the first day of the calendar month coincident with or next following
the date on which the Participant has both attained age 55 and completed
at least 10 years of Vesting Service.
1.17 "EFFECTIVE DATE" means January 1, 2003.
1.18 "ELIGIBLE EMPLOYEE" means any person who is an Employee of the Employer,
excluding, however:
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a. Any Employee who is a member of a unit of employees covered by a
collective bargaining agreement to which the Employer is a party and
which does not specifically provide for the coverage of such employees
under the Plan;
b. Any Employee who is a nonresident alien receiving no earned income from
sources within the United States or a United States citizen regularly
employed by a foreign subsidiary or affiliate of the Employer;
c. Any Employee who is a leased employee (within the meaning of
Section 414(n)(2) of the Code);
d. Any other Employee in a specified plant, operating unit, or job
classification of an Employer as determined by the Board in its sole
discretion, provided that any such determination shall not discriminate
in favor of Highly Compensated Employees so as to prevent the Plan from
qualifying under Section 401(a) of the Code;
e. Any individual who performs services for an Employer under an agreement
or arrangement (which may be written, oral, and/or evidenced by the
Employer's payroll practice) with such individual or with any other
organization that provides the services of such individual to the
Employer, pursuant to which such individual is treated as an independent
contractor or is otherwise treated as an individual ineligible for
participation in this Plan irrespective of whether he is treated as an
employee of an Employer under common-law employment principles or
pursuant to the provisions of Section 414(m), 414(n) or 414(o) of the
Code; or
f. Any Employee who is an active participant in any other pension plan
maintained by an Employer or Affiliated Employer, unless specifically
determined otherwise by the Board with respect to a particular Employee
or group of Employees.
1.19 "EMPLOYEE" means any person employed by an Employer or Affiliated
Employer including, to the extent permitted by Section 406 of the Code,
any United Stated citizen regularly employed by a foreign subsidiary or
affiliate of the Employer. The term "Employee" also includes any leased
employees of an Employer within the meaning of Section 414(n)(2) of the
Code. If, however, such leased employees constitute twenty percent or
less of an Employer'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.
1.20 "EMPLOYER" means Rexnord Corporation as the Sponsoring Employer, and any
Participating Employer, and any successor which shall maintain this
Plan.
1.21 "EMPLOYMENT COMMENCEMENT DATE" means the date on which an Employee is
first credited with an Hour of Service for an Employer or Affiliated
Employer.
1.22 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time. Reference to a specific provision of ERISA
shall include such
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provision, any valid regulation or ruling promulgated thereunder, and
any provision of future law that amends, supplements, or supersedes such
provision.
1.23 "FIDUCIARY" means any person who:
a. exercises any discretionary authority or discretionary control in
managing the Plan, or exercises any authority or control respecting
management or disposition of its assets;
b. renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Plan, or
has any authority or responsibility to do so; or
c. has any discretionary authority or discretionary responsibility in the
administration of the Plan.
1.24 "FISCAL YEAR" means the accounting period for federal income tax
purposes, which is the period of twelve consecutive months commencing on
January 1 of each year and ending on the following December 31.
1.25 "HIGHLY COMPENSATED EMPLOYEE" means, effective January 1, 1997:
a. Any active or former Employee of the Employer or Affiliated Employer who
performs service during the determination year and is described in one
or more of the following groups:
(1) an individual employed by the Employer or an Affiliated
Employer who is a five percent (5%) owner, as defined in
Section 416(i)(l)(B)(i) of the Internal Revenue Code, at
any time during the determination year or the look-back
year; or
(2) an individual employed by the Employer or an Affiliated
Employer who receives compensation in excess of $90,000
(as may be adjusted under section 415(d) of the Internal
Revenue Code) during the look-back year, and was among
the top paid 20% of Employees of the Employer or an
Affiliated Employer.
b. The term "determination year" shall mean the Plan Year and the
"look-back year" shall mean the calendar year that ends within the
determination year or Plan Year.
c. A Highly Compensated Former Employee includes any Employee of the
Employer who separated or was deemed to have separated from service
prior to the determination year, performs no service for the Employer
during the determination year, and was an active Highly Compensated
Employee for either the separation year or any determination year ending
on or after his 55th birthday.
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d. For purposes of this definition, the term "compensation" shall mean
compensation as defined in section 414(q)(4) of the Internal Revenue
Code. The determination of who is a Highly Compensated employee shall be
made in accordance with section 414(q) of the Internal Revenue Code and
the regulations thereunder.
1.26 "HOUR OF SERVICE" means each hour for which an Employee is paid, or
entitled to payment, for the performance of duties for an Employer or
Affiliated Employer.
The determination of Hours of Service shall be in accordance with the
rules set forth in the Department of Labor Regulations 2530.200b-2(b)
and (c) which are incorporated herein by this reference.
1.27 "INTEGRATION LEVEL" means, as of a specific determination date, a dollar
amount equal to the Social Security Taxable Wage Base for the calendar
year containing the determination date multiplied by forty percent
(40%). This amount shall be rounded to the nearest multiple of $100.
1.28 "INVESTMENT MANAGER" means any person, firm, or corporation who:
a. is a registered investment adviser under the Investment Advisers Act of
1940, a bank, or an insurance company;
b. has the power to manage, acquire, or dispose of Plan assets; and
c. acknowledges in writing a fiduciary responsibility to the Plan.
1.29 "LATE RETIREMENT DATE" means the actual date on which a Participant
retires if such date occurs after his Normal Retirement Date.
1.30 "LAYOFF" means an Employee's cessation of active employment as an
Employee (identified as layoff by the Employer) due to a reduction in
force which (a) is not the result of a plant closing, (b) results in the
loss of employment other than for discharge for cause, voluntary
departure or retirement, and (c) leaves the Employee (through Employer
notification) a reasonable expectation of recall to the same or a
similar job.
1.31 "LEAVE OF ABSENCE" means an absence granted in writing by an Employer or
Affiliated Employer in accordance with the employer's personnel policies
or as required by law, uniformly applied to all employees, including,
but not limited to, absences for reasons of health, education, jury
duty, or service in the armed forces of the United States.
1.32 "LIMITATION YEAR" means the calendar year.
1.33 "NORMAL RETIREMENT AGE" means the Participant's sixty-fifth birthday.
1.34 "NORMAL RETIREMENT DATE" means the first day of the month coincident
with or next following the Participant's attainment of his Normal
Retirement Age.
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1.35 "PARTICIPANT" means any Eligible Employee how participates in the Plan
in accordance with the provisions of Article II. An Eligible Employee
shall cease to be a Participant in the Plan in accordance with the
provisions of Section 2.03.
1.36 "PARTICIPATING EMPLOYER" means any Affiliated Employer to whom
participation in the Plan has been extended.
1.37 "PERIOD OF SERVICE" or "SERVICE" means, subject to Article III, the
aggregate of the following:
a. The period beginning on the Employee's Employment Commencement Date (or
Reemployment Commencement Date) and ending on the Employee's Severance
from Service Date.
b. If an Employee performs an Hour of Service within twelve months of a
Severance from Service Date, on account of an event described in
Section 1.47(a), the period from such Severance from Service Date to
such Hour of Service. Notwithstanding the preceding sentence and except
as otherwise provided in Section 1.37(c), if an Eligible Employee incurs
a Severance from Service Date during a period of absence described in
Section 1.47(a), the Period of Severance shall be counted as a Period of
Service only if the Eligible Employee completes an Hour of Service
within twelve months of the first day of such absence.
c. In the case of an Employee who leaves employment with an Employer or
Affiliated Employer to enter service with the armed forces of the United
States, the period of such military service, provided the individual
resumes employment with an Employer or Affiliated Employer within the
period during which is reemployment rights are protected by applicable
law.
d. In the case of an Eligible Employee who becomes Disabled and is covered
under a long-term disability plan maintained by the Employer or an
Affiliated Employer, and subject to the provisions of Section 4.06, his
period of Disability.
1.38 "PERIOD OF SEVERANCE" means the period beginning on the Employee's
Severance from Service Date and ending on the Employee's Reemployment
Commencement Date.
A one-year Period of Severance is any period of twelve consecutive
months beginning on a Severance from Service Date and any anniversary
thereof, provided that the former Employee has not performed an Hour of
Service for an Employer or Affiliated Employer at any time during such
twelve-month period.
1.39 "PLAN" means the Rexnord Non-Union Pension Plan as set forth herein, and
as may be amended from time to time.
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1.40 "PLAN YEAR" means the twelve consecutive months beginning on January 1
of each year and ending on the following December 31.
1.41 "PRIOR PLAN" means the Invensys Pension Plan and all amendments thereto,
as in effect on the Closing Date.
1.42 "QUALIFIED DOMESTIC RELATIONS ORDER" means a domestic relations order
which meets the requirements of Section 414(p) of the Code, as
determined by the Retirement Committee.
1.43 "QUALIFIED ELECTION" means a Participant's waiver of the Qualified Joint
and Survivor Annuity form of payment. Such waiver must be consented to
in writing on the appropriate form provided by the Retirement Committee
by the Participant's Spouse. Spousal consents must be made in accordance
with the requirements described in Section 4.07(c)(iii).
1.44 "QUALIFIED JOINT AND SURVIVOR ANNUITY" means an annuity for the life of
the Participant with a survivor annuity equal to 50% or 100% thereof, as
elected by the Participant, for the life of the Participant's Spouse as
described in Section 4.07(a)(i).
1.45 "REEMPLOYMENT COMMENCEMENT DATE" means the date on which an Employee is
first credited for an Hour of Service with an Employer or Affiliated
Employer following a Severance from Service Date.
1.46 "RETIREMENT COMMITTEE" means the Retirement Committee appointed by the
Sponsoring Employer as set forth in Section 7.02.
1.47 "SEVERANCE FROM SERVICE DATE" means the date on which occurs the earlier
of:
a. The date on which an Employee ceases to be employed by an Employer or
Affiliated Employer because he resigns, retires, is discharged or dies.
b. The first anniversary of the date on which an Employee remains absent
from service (with or without pay) with an Employer or Affiliated
Employer for any reason other than resignation, retirement, discharge or
death, such as vacation, holiday, illness, maternity or paternity leave,
Leave of Absence, or Layoff. Notwithstanding the foregoing, in the event
that the Employee fails to return to active employment upon the
expiration of a Leave of Absence (or, in the case of military leave,
during the period his reemployment rights are protected by applicable
law), the Employee's Severance from Service Date shall mean the date on
which such absence from service began, unless such failure to return is
the result of retirement or death.
c. The date prior to Normal Retirement Age on which a Participant ceases to
be Disabled (if the Participant was earning service while disabled in
accordance with the provisions of Section 4.06 of this Plan) and refuses
an offer of employment from an Employer or Affiliated Employer.
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1.48 "SOCIAL SECURITY RETIREMENT AGE" means:
a. For Participants born before January 1, 1938, age 65;
b. For Participants born on or after January 1, 1938 and before January 1,
1955, age 66; and
c. For Participants born on or after January 1, 1955, age 67.
1.49 "SOCIAL SECURITY TAXABLE WAGE BASE" means the amount of wages from which
Social Security Taxes are required to be withheld in accordance with the
Federal Insurance Contributions Act, or any successor act, which is in
effect at the beginning of the Plan Year.
1.50 "SPONSORING EMPLOYER" means Rexnord Corporation or its successor or
successors.
1.51 "SPOUSE" means the person, if any, to whom the Participant is lawfully
married at the date of his death or at his Benefit Commencement Date,
whichever is earlier, provided, however, that a former spouse will be
treated as the Participant's Spouse to the extent provided under a
Qualified Domestic Relations Order.
1.52 "TRUSTEE" means the Trustee or Trustees appointed by the Sponsoring
Employer to administer the Trust Fund in accordance with Article VII.
1.53 "TRUST FUND" means the trust established to hold and invest the assets
of the Plan.
1.54 "VESTING SERVICE" means, subject to the provisions of Article III, all
Periods of Service with an Employer after the Employer became an
Affiliated Employer.
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ARTICLE II - PARTICIPATION
2.01 PARTICIPATION REQUIREMENTS
Any individual who is an Employee of the Employer on the Closing Date
and who was a Participant in the Prior Plan shall automatically become a
Participant in this Plan.
Any other individual shall become a Participant on the first day of the
month coincident with or next following the date on which he is an
Eligible Employee and completes a Period of Service of one year;
provided, he is then an Eligible Employee. Subject to the provisions of
Section 3.03, in determining Service for Plan eligibility all
nonsuccessive Periods of Service shall be aggregated.
2.02 PARTICIPATION UPON REEMPLOYMENT
a. If a Participant has a Severance from Service Date and he is
subsequently reemployed as an Eligible Employee, he shall resume active
participation in the Plan on his Reemployment Commencement Date.
b. If an Eligible Employee has a Severance from Service Date before he
meets the participation requirements of Section 2.01, the Eligible
Employee shall become a Participant on the day after the date on which
he first meets the participation requirements of Section 2.01, provided
he is then an Eligible Employee.
2.03 CESSATION OF PARTICIPATION
A Participant's participation in the Plan shall continue until the later
of:
a. The Participant's Severance from Service Date, or
b. Such times as all nonforfeitable benefits accrued by the Participant
shall have been distributed in full accordance with the terms of the
Plan (including any distribution of annuity contracts upon termination
of the Plan).
If the nonforfeitable benefits accrued by a Participant on his Severance
from Service Date equal zero, such Participant shall be deemed to have
been paid pursuant to Section 4.07(d) and he will no longer be a
Participant as of his Severance from Service Date.
2.04 TRANSFERRED EMPLOYEES
a. Transfers In
Except as otherwise provided in this Plan, in the event an Employee
becomes a Participant under this Plan and has earned credited service
under a different defined benefit plan sponsored by an Employer, such
Employee's Accrued Benefit shall be equal to the Accrued Benefit
determined under Section 1.01 based solely on his Credited
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Service on or after the later of January 1, 2003 or his date of transfer
to this Plan plus, if applicable, any accrued benefit transferred from
the other defined benefit plan into this Plan.
b. Transfer Out
In the event a Participant ceases to be an Eligible Employee but remains
in the employ of an Employer, his Accrued Benefit under this Plan shall
be equal to the amount determined under Section 1.01 as of the date he
ceases to be an Eligible Employee under this Plan.
2.05 RECLASSIFICATION OF EMPLOYEES
Notwithstanding anything herein to the contrary, an individual who is
not characterized or treated as a common-law employee by a Participating
Employer will not be eligible to participate in the Plan. However, in
the event that such an individual is reclassified or deemed to be
reclassified as a common-law employee, the individual will be eligible
to participate in the Plan no earlier than the actual date of such
reclassification (if each individual otherwise qualifies as an Employee
in the Eligible Class hereunder). If the effective date of any such
reclassification is prior to the actual date of such reclassification,
in no event will the reclassified individual be eligible to participate
in the Plan retroactively to the effective date of such
reclassification.
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ARTICLE III - SERVICE
3.01 VESTING SERVICE
A Participant's entitlement to benefits under the Plan shall be
determined by the Participant's years of Vesting Service.
Subject to the provisions of Section 3.03, all non-successive periods of
Vesting Service shall be aggregated.
Years of Vesting Service shall be measured in terms of years and
fractions of a year, on the basis that twelve months of Service or 365
days of Service equals a whole year of Service, and 30 days of Service
equals a whole month of Service with respect to the aggregation of
fractional months.
3.02 CREDITED SERVICE
Years of Credited Service shall be measured in terms of years and
fractions of a year, on the basis that twelve months of Service or 365
days of Service equals a whole year of Service, and 30 days of Service
equals a whole month of Service with respect to the aggregation of
fractional months.
In the case of an Eligible Employee who becomes Disabled and is covered
under a long-term disability plan sponsored by the Employer or an
Affiliated Employer, his Credited Service shall include his period of
Disability up to the earlier of (i) the date he is no longer Disabled
(as determined under the Employer's long-term disability insurance
plan), (ii) his date of retirement, or (iii) his Normal Retirement Date.
3.03 PERIOD OF SEVERANCE RULES APPLICABLE TO YEARS OF SERVICE, VESTING
SERVICE AND CREDITED SERVICE
In computing Service for Plan eligibility, years of Vesting Service and
years of Credited Service, Period of Service prior to a Period of
Severance of one year or more shall be disregarded, if:
a. The Employee fails to complete a year of Vesting Service following his
Reemployment Commencement Date; or
b. The Employee incurs a Disqualifying Period of Severance.
3.04 QUALIFIED MILITARY SERVICE
Effective for reemployments initiated after December 12, 1994, and
notwithstanding any provision of the Plan to the contrary,
contributions, benefits and service credit with respect to qualified
military service will be provided in accordance with Code
Section 414(u).
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ARTICLE IV - BENEFITS
4.01 NORMAL RETIREMENT BENEFITS
A Participant's right to his Accrued Benefit shall become vested upon
attainment of his Normal Retirement Age while employed by an Employer or
Affiliated Employer.
Subject to the further provisions of this Article IV, a Participant who
retires on or after his Normal Retirement Age but before his Normal
Retirement Date shall receive a monthly Normal Retirement Benefit
commencing on his Normal Retirement Date. The Normal Retirement Benefit
shall be equal to one twelfth (1/12) of the Participant's Accrued
Benefit and shall be payable monthly.
If a Participant continues to be an Employee (or is reemployed as an
Employee) after his Normal Retirement Date and the commencement of his
benefit payments is delayed (or, in the case of reemployment, suspended)
in accordance with the provisions of Section 4.12, the Retirement
Committee shall give written notice to such Participant as required
under Department of Labor Regulations 2530.203-3(b)(4) no later than the
end of the first calendar month or payroll period in which the payment
of benefits would have been made if the Participant had not remained in
or returned to employment.
4.02 EARLY RETIREMENT BENEFITS
Upon attainment of his Early Retirement Eligibility Date, a Participant
may elect to retire on or after such date and before his Normal
Retirement Date, and receive, subject to the further provisions of this
Article IV, a monthly benefit equal to one twelfth (1/12) of his Accrued
Benefit determined as of his Early Retirement Date ("Early Retirement
Benefit").
The Early Retirement Benefit shall be payable to the Participant
commencing on his Normal Retirement Date. The Participant may, however,
elect on the appropriate form provided by the Retirement Committee to
receive payment of his Early Retirement Benefit commencing on the first
day of the month coincident with or next following his Early Retirement
Date, or on the first day of any calendar month thereafter, but not
later than his Normal Retirement Date.
If the Participant elects to commence receiving benefits before his
Normal Retirement Date, the benefit amount shall equal one twelfth
(1/12) of his Accrued Benefit reduced by 5/9ths of 1% for each of the
first 60 months and 5/18ths of 1% for each additional month by which the
Participant's Benefit Commencement Date precedes his Normal Retirement
Date.
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4.03 LATE RETIREMENT BENEFITS
a. Retirements Prior to Age 70 1/2
Each Participant who continues to be an Employee after attaining his
Normal Retirement Date and retires prior to attaining age 70 1/2 shall,
subject to the further provisions of this Article IV, be entitled upon
actual retirement to receive a monthly benefit equal to one twelfth
(1/12) of his Accrued Benefit determined as of his Late Retirement Date
("Late Retirement Benefit").
The Late Retirement Benefit shall be payable to the Participant
commencing on the first day of the month coincident with or next
following the Participant's Late Retirement Date.
b. Commencement of Benefits While Actively Employed
i. The Late Retirement Benefit payable to a Participant who attains
age 70 1/2 and who continues to be an Employee shall be equal to
one twelfth (1/12) of the Participant's Accrued Benefit
determined as of the earlier of:
A. The Participant's Late Retirement Date, or
B. The last day of the Plan Year in which the Participant
attains age 70 1/2.
ii. The Late Retirement Benefit payable monthly under this
Section 4.03(b) shall commence on the earlier of:
A. The first day of the month following in which the
Participant retires, or
B. The first day of the month following the last day of the
Plan Year in which the Participant attains age 70 1/2.
iii. The monthly benefit of a Participant who has begun receiving
benefits and who continues to be an Employee after his
attainment of age 70 1/2 shall be adjusted, effective on the
January 1 following the Plan Year in which the Participant's
benefit commenced and on each succeeding January 1 prior to the
Participant's Late Retirement Date, to reflect the effect of
changes in the Participant's Accrued Benefit since the previous
January 1. The final adjustment shall be made as of the
Participant's Late Retirement Date. Adjustments required by this
paragraph shall include a reduction equal to the Actuarial
Equivalent of any benefit payments already made with respect to
the Participant. In no event, however, will the benefit payable
to the Participant be reduced as a result of this paragraph.
Furthermore, the operation of this paragraph will not affect the
form of benefit payment previously elected by the Participant.
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4.04 TERMINATION OF EMPLOYMENT BEFORE RETIREMENT
If a Participant ceases to be an Employee for reasons other than death,
Disability, or retirement after attaining his Early Retirement Date or
Normal Retirement Age, the Participant shall be entitled to receive his
vested Accrued Benefit, if any, determined as of the Participant's
Severance from Service Date. The vested Accrued Benefit of a Participant
who completes an Hour of Service on or after the Closing Date shall be a
percentage of his Accrued Benefit determined on the basis of the
Participant's number of full years of Vesting Service according to the
following schedule:
<Table>
<Caption>
Years of Vesting Service Vesting Percentage
------------------------ ------------------
Less than 5 years 0%
5 years or more 100%
</Table>
One twelfth (1/12) of the Participant's vested Accrued Benefit shall be
payable to him monthly commencing on his Normal Retirement Date. If,
however, the Participant has completed at least 10 years of Vesting
Service, he may elect, on the appropriate form provided by the
Retirement Committee, to receive one twelfth (1/12) of his vested
Accrued Benefit payable monthly commencing on the first day of any month
coincident with or next following the later of his 55th birthday or
separation from service, but not later than his Normal Retirement Date.
If the Participant elects to commence receiving benefits before his
Normal Retirement Date, the benefit amount shall equal one twelfth
(1/12) of the Participant's vested Accrued Benefit reduced in accordance
with the provisions of Section 4.02 including, if applicable, provisions
pertaining to the use of reduction factors from the Prior Plans whenever
appropriate.
Any Participant who has not completed 10 years of Vesting Service but
completes the years of service required as a condition of his attaining
his Early Retirement Eligibility Date, as described in Section 1.16 of
this Plan, may also elect, on the appropriate form provided by the
Retirement Committee, to receive one twelfth (1/12) of his vested
Accrued Benefit commencing on the first day of any month coincident
with or next following the later of his attaining the corresponding age
condition applicable to the Participant under the definition of "Early
Retirement Eligibility Date" under section 1.16 of this Plan or
separation from service, but not later than his Normal Retirement Date.
If the Participant elects to commence receiving benefits before his
Normal Retirement Date, the benefit amount shall equal one twelfth
(1/12) of the Participant's vested Accrued Benefit reduced in accordance
with the provisions of Section 4.02.
4.05 PRE-RETIREMENT SURVIVING SPOUSE ANNUITY
a. If a Participant who is vested in his Accrued Benefit dies before his
Benefit Commencement Date, his surviving Spouse, if any, to whom the
Participant has been married for at least one year prior to the time of
his death, will receive a Pre-Retirement Surviving Spouse Annuity (as
described in paragraph (b) below).
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b. The term "Pre-Retirement Surviving Spouse Annuity" means a monthly
benefit, beginning on the Starting Date (as defined in paragraph (c)
below) and ending with a payment made on the first day of the month in
which the Spouse's death occurs, in an amount equal to the monthly
benefit that would have been payable to the surviving Spouse if the
Participant had separated from service at the earlier of his actual
termination of employment or date of death, had survived until the
Starting Date and had begun to receive benefits in the form of a
Qualified Joint and Survivor Annuity.
c. The term "Starting Date" means the day that would have been the
Participant's Normal Retirement Date, or in the case of the surviving
Spouse of the Participant who had at least 10 Years of Vesting Service
(or has satisfied the service requirement under the terms of
Section 1.16 applicable to such Participant) and if the surviving Spouse
so elects, the first day of any earlier month following the later of the
day the Participant dies or the day he would have attained age 55 (or
has satisfied the age requirement under the terms of Section 1.16
applicable to the Participant); provided that the Starting Date with
respect to a Participant who dies after his Normal Retirement Date and
before his Benefit Commencement Date shall be the first day of the month
following his death.
4.06 DISABILITY BENEFITS
In the event a Participant becomes Disabled while an Eligible Employee
and such Participant is not covered under a long-term disability plan
maintained by the Employer or an Affiliated Employer, the Participant
shall be eligible to receive a "Disability Benefit", regardless of his
number of years of Vesting Service as his Severance from Service Date.
The Disability Benefit shall commence on the later of (i) the first day
of the month following six months of Disability and (ii) the date of the
Social Security entitlement provided the Employee has applied for a
Disability Benefit under the Plan. A claim for Disability Benefits under
this Plan will not be honored unless all applications and eligibility
conditions have been satisfied within two years from the last day on
which the Employee was active at work with an Employer. The Disability
Benefit shall be equal to one twelfth (1/12) of the Participant's
unreduced Accrued Benefit based on his Average Annual Compensation and
Credited Service as of his Severance from Service Date.
If a Participant becomes Disabled while covered under a long-term
disability plan maintained by the Employer or an Affiliated Employer,
such Participant shall not be entitled to receive Disability Benefits
under this Plan but shall be credited with Credited Service and Vesting
Service for as long as the Participant remains Disabled (or, if sooner,
age 65) and shall be treated as an active Participant during such period
for purposes of Section 4.05 of this Plan. Such Participant's Average
Annual Compensation at the end of such period of Disability shall be
equal to the Participant's Average Annual Compensation determined at the
commencement of the Disability. If upon ceasing to be Disabled (as
determined under the Social Security Act or the Employer's long-term
disability plan) prior to the earlier of his Early Retirement
Eligibility Date or Normal Retirement Date, such Participant refuses an
offer of employment from an Employer or Affiliated Employer, his
Severance from Service Date shall be the date his Disability
17
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began and he shall be entitled to receive only such benefits, if any, to
which he would have been entitled under Article IV at the time of such
Severance from Service Date. If, upon ceasing to be Disabled (as
determined under the Social Security Act or the Employer's long-term
disability plan) prior to the earlier of his Early Retirement
Eligibility Date or Normal Retirement Date, such Participant is not
offered work by an Employer or Affiliated Employer, his period of
Disability shall be taken into account in determining his Vesting
Service and Credited Service, and he shall be deemed to have commenced a
period of Layoff for purposes of the Plan on the date his Disability
ends. However, if such Participant is subsequently offered employment by
an Employer or Affiliated Employer which he refuses, his Layoff period
shall terminate immediately upon such refusal (or within 10 days of the
job offer) for purposes of determining the Participant's Severance from
Service Date.
4.07 PAYMENT OF RETIREMENT BENEFITS
a. NORMAL FORM OF PAYMENT
i. FOR PARTICIPANTS WITH A SPOUSE. If a Participant has a Spouse on
his Benefit Commencement Date, benefits shall be paid in the
form of a Qualified Joint and Survivor Annuity, unless the
Participant has filed with the Retirement Committee a written
election, on the appropriate form provided by the Retirement
Committee, to receive benefits in an optional form of payment
provided by the Plan. Any election by a Participant not to
receive benefits in a Qualified Joint and Survivor Annuity form
of payment must be a Qualified Election pursuant to paragraph
(c)(iii) below. A Qualified Election shall become effective upon
receipt of the completed form by the Retirement Committee.
A QUALIFIED JOINT AND SURVIVOR ANNUITY provides a reduced amount
of monthly income for the life of the Participant, and in the
event of his death, an amount of monthly income equal to 50% or
100% thereof, as elected by the Participant, for the life of the
Participant's surviving Spouse. The Qualified Joint and Survivor
Annuity is the Actuarial Equivalent of the benefit amount which
would otherwise be payable as a Single Life Annuity. If the
Participant fails to make an election, such Participant shall be
deemed to have elected a 50% survivor's annuity.
ii. FOR PARTICIPANTS WITHOUT A SPOUSE. If a Participant does not
have a Spouse on his Benefit Commencement Date, benefits shall
be paid in the form of a Single Life Annuity, unless the
Participant has filed with the Retirement Committee a written
election to receive benefits in an optional form of payment
provided by the Plan.
A SINGLE LIFE ANNUITY provides an amount of monthly income for
the life of the Participant.
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b. OPTIONAL FORMS OF PAYMENT
A Participant may elect in writing on the appropriate form provided by
the Retirement Committee (and subject to the Qualified Election
requirements if the Participant has a Spouse) to receive benefit
payments under one of the optional forms of payment described below. The
benefit amount determined under an optional form of payment shall be the
Actuarial Equivalent of the benefit amount which would otherwise be
payable as a Single Life Annuity.
i. A SINGLE LIFE ANNUITY which provides an amount of monthly income
for the life of the Participant.
ii. A CONTINGENT ANNUITY which provides a reduced amount of monthly
income for the life of the Participant, and, in the event of the
Participant's death, an amount of monthly income equal to 50% or
100% thereof, as elected by the Participant, for the life of his
Beneficiary.
iii. A CERTAIN AND CONTINUOUS ANNUITY which provides a reduced amount
of monthly income for the life of the Participant, with the
provision that no less than a total of 60 or 120 monthly
payments (as elected by the Participant) shall be made in any
event to him; and, in the event of his death prior to completion
of the guaranteed number of payments, the remaining payments
shall be made to such Beneficiary as the Participant shall have
designated.
If the Beneficiary survives the Participant but dies before
having received the entire benefit to which such Beneficiary is
entitled, the remainder of such benefit payments shall be paid
to the person or persons designated by such Beneficiary, or, if
no such designation was made or if such designation shall have
lapsed or failed for any reason, to the estate of the
Participant's Beneficiary.
If there is no Beneficiary surviving at the time of the
Participant's death and the Participant dies before having
received the guaranteed number of monthly payments, the
remainder of the benefit payments to which the Participant is
entitled shall be paid to the estate of the Participant.
c. ELECTION TO BENEFITS
i. NOTICE OF PAYEES. The Retirement Committee shall furnish the
individual with a general notice of distribution at least 30
days prior to the date that payments commence. The notice shall
be in writing, shall be given to the Participant in person or by
mail, and shall set forth an explanation of:
A. The Participant has at least 30 days after receipt of the
notice to make his election.
B. The terms and conditions of the Qualified Joint and Survivor
Annuity;
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C. The Participant's right to elect, and the effect of
electing, to waive the Qualified Joint and Survivor Annuity;
D. The rights of the Participant's Spouse;
E. The right to revoke, and the effect of revoking, an election
to waive the Qualified Joint and Survivor Annuity;
F. The eligibility conditions and material features of the
optional forms of payment available under the Plan; and
G. Such other information as may be required under applicable
regulations.
ii. WAIVER OF QUALIFIED JOINT AND SURVIVOR ANNUITY. A Participant
may revoke an election to waive a Qualified Joint and Survivor
Annuity and elect again to waive a Qualified Joint and Survivor
Annuity at any time and any number of times before the later of
the date benefits actually commence or 30 days after receiving
the notice described in paragraph (i) above by filing the
appropriate election form with the Retirement Committee.
Revocation of a prior waiver may be made by a Participant, in
writing, without consent of the Spouse. The Participant may
elect (with appropriate spousal consent) to waive the 30 day
requirement provided that benefits actually commence more than 7
days after the notice is provided.
iii. QUALIFIED ELECTION.
A. A Participant may designate a Beneficiary while the Spouse
is living only with the written consent of the Spouse,
except if the Spouse is named as Beneficiary under a
Contingent Annuity. If a Participant has a Spouse on his
Benefit Commencement Date, the Participant may waive a
Qualified Joint and Survivor Annuity only with the written
consent of the Spouse.
B. A spousal consent is effective when received by the
Retirement Committee and must:
1. Be in writing on a form provided by the Retirement
Committee;
2. Specify the Beneficiary, including any contingent
Beneficiaries, which may not be changed without spousal
consent;
3. Specify the form of benefit payment elected by the
Participant in lieu of the Qualified Joint and Survivor
Annuity;
4. Acknowledge the effect of such consent; and
5. Be witnessed by a notary public or Plan representative.
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Any such consent will be valid only with respect to the
Spouse who signs the consent. Spousal consent is not
required, however, if the Participant establishes to the
satisfaction of the Retirement Committee that there is no
Spouse, the Spouse cannot be located, or the Participant can
show by the court order that he is legally separated or has
been abandoned by the Spouse within the meaning of local
law, or if otherwise permitted under applicable regulations.
C. A spousal consent to a Participant's designation of his
estate or a trust as his Beneficiary shall be effective only
if the Spouse expressly waives the right to approve any
further Beneficiary designations by the Participant. Such
general consent must acknowledge that the Spouse has the
right to limit consent to a specific Beneficiary and that
the Spouse voluntarily elects to relinquish such right.
D. If the Spouse is legally incompetent to give consent, the
Spouse's legal guardian, who may be the Participant, may
consent to the waiver of the Qualified Joint and Survivor
Annuity.
E. An election to waive a Qualified Joint and Survivor Annuity,
and any required spousal consent thereto, shall be valid
only if it is made no earlier than 90 days before the
Participant's Benefit Commencement Date.
iv. DESIGNATION OF BENEFICIARY. A Participant shall have the right
to designate a Beneficiary, and may, in addition, name a
contingent Beneficiary to receive any benefits provided by the
Plan after the death of the Participant in accordance with the
provisions of Section 4.07(b). Such designation of a Beneficiary
or contingent Beneficiary shall not be effective for any purpose
unless and until it has been filed on an appropriate form by the
Participant with the Retirement Committee; provided that such
designation shall take effect prospectively only and without
prejudice to any payor or payee on account of any payments made
before receipt of the appropriate form by the Retirement
Committee.
Notwithstanding the above, the following provisions shall apply:
A. A Participant's Beneficiary shall be his surviving Spouse,
if the Participant has a surviving Spouse, unless the
Participant has designated another Beneficiary pursuant to
the Qualified Election requirements of paragraph (iii)
above.
B. A Participant may change his Beneficiary any number of times
before his Benefit Commencement Date in the case of an
election of a Contingent Annuity or a Certain and Continuous
Annuity, subject to the Qualified Election requirements
described in paragraph (iii) above.
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C. A Participant may change his Beneficiary after his Benefit
Commencement Date in the case of an election of a Certain
and Continuous Annuity only in the event the named
Beneficiary dies, subject to the Qualified Election
requirements described in paragraph (iii) above.
v. RESTRICTION ON PAYMENT OPTIONS. An election of an optional form
of payment shall not be effective unless the form of payment
elected complies with the requirements of Section 401(a)(9) of
the Code, and the regulations issued thereunder, the provisions
of which are incorporated herein by reference.
vi. TIMING FOR CHANGE OF PAYMENT OPTION. A Participant may change
his election of a form of payment any number of times before the
later of his Benefit Commencement Date or the 30-day period
following receipt of the notice described in paragraph (i)
above, by filing the appropriate form with the Retirement
Committee. If the Participant has a Spouse, the election of a
new form of payment, other than election of a Contingent Annuity
(as described in paragraph (b)(ii) above) naming the Spouse as
Beneficiary, shall be subject to the Qualified Election
requirements of paragraph (iii) above.
d. PAYMENT OF SMALL AMOUNTS
Notwithstanding any provision to the contrary in this Article IV, if the
Actuarial Equivalent value of a Participant's nonforfeitable Accrued
Benefit does not exceed $5,000 on the Benefit Commencement Date, such
amount shall be distributed to the Participant in a single lump-sum cash
payment, subject to the provisions of Section 4.16. If the Actuarial
Equivalent value of the Pre-Retirement Surviving Spouse Annuity payable
to a Participant's Spouse under Section 4.05 does not exceed $5,000 on
the Benefit Commencement Date, such amount shall be distributed to the
Spouse in a single lump-sum cash payment, subject to the provisions of
Section 4.14. Payment of such small amounts shall be in final
satisfaction of any rights with respect to a Participant's benefits
under the Plan. No distribution shall be made under this paragraph (d)
with respect to an annuity for which payments have begun.
Distribution shall be made as soon as practicable after the
Participant's Severance from Service Date or the date the Participant's
death is reported to the Retirement Committee.
`If the Actuarial Equivalent value of the vested portion of a
Participant's Accrued Benefit is zero, the Participant shall be deemed
to have received a single-sum distribution of the vested portion of his
Accrued Benefit on his Severance from Service Date and the nonvested
portion of his Accrued Benefit shall thereupon be forfeited. If such
Participant has not incurred a Disqualifying Period of Severance before
his Reemployment Commencement Date, the nonvested portion of the Accrued
Benefit forfeited pursuant to this paragraph (d) shall be restored.
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4.08 TIMING OF DISTRIBUTIONS
a. Except as provided in paragraph (b) below, distribution of a
Participant's Plan benefits shall be made no later than the 60th day
after the close of the Plan Year following the later of the
Participant's:
i. Normal Retirement Date;
ii. 10th anniversary of Plan participation; or
iii. Separation from service with all Employers and Affiliated
Employers;
provided, however, that payments shall not begin prior to the date on
which the Participant applies for retirement on forms provided by the
Retirement Committee.
b. If the amount of benefit cannot be determined by the date distribution
is required to begin, payment will begin no later than 60 days after the
date the amount of benefit can be determined, and shall include payments
retroactive to the required beginning date.
c. Notwithstanding any provision of the Plan to the contrary, all
distributions under the Plan shall comply with requirements of
Section 401(a)(9) of the Code.
4.09 DISTRIBUTION FOR MINOR OR INCOMPETENT PAYEE
In the event a distribution is to be made to a minor or other legally
incompetent person, the Retirement Committee may in its discretion
direct that such distribution be made (a) directly to such individual,
or (b) to the parent or other legal guardian, committee, or conservator
of such individual, or to a custodian for a minor Beneficiary under the
Uniform Gift to Minors Act or the Uniform Transfers to Minors Act, or
any such other applicable state law then in effect. Payment to any such
individual shall fully discharge the Retirement Committee, Trustee,
Employer, Plan and any person or entity making such payment pursuant to
the direction of the Retirement Committee from further liability on
account thereof.
Without in any manner limiting the provisions of this Section 4.09, in
the event that any amount is payable hereunder to a minor or any other
legally incompetent person, the Retirement Committee may in its
discretion utilize the procedures described in Section 4.10.
4.10 DOUBT AS TO RIGHT OF PAYMENT
If any doubt exists as to the right of any person to any payment
hereunder or the amount or time of such payment (including, without
limitation, any case of doubt as to identity or legal competence, or any
case in which any notice has been received from any other person
claiming any interest in amounts payable hereunder, or any case in which
a claim form other persons may exist by reason of community property or
similar laws), the
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Retirement Committee, in its discretion, may direct the Trustee to hold
such sum until such right or amount or time is determined or until order
of a court of competent jurisdiction (in which case distribution will
begin pursuant to Section 4.10(c)), or pay such sum into court in
accordance with appropriate rules of law in such case then provided, or
to make payment only upon receipt of a bond or similar indemnification
(in such amount and in such form as is satisfactory to the Retirement
Committee).
4.11 PROOF OF DEATH
The Retirement Committee may, as a condition precedent to making payment
to any Beneficiary, require that a death certificate, burial
certificate, or other evidence of death acceptable to it be furnished.
4.12 SUSPENSION OF BENEFITS
a. CONDITIONS FOR SUSPENSION
If any Participant is reemployed by an Employer or Affiliated Employer
on or after his Benefit Commencement Date and before age 70 1/2, or if
any Participant continues in employment with an Employer or Affiliated
Employer after his Normal Retirement Date, any benefit payments under
the Plan which have begun shall cease if the Participant receives
payment for any Hours of Service performed on each of 8 or more days (or
separate work shifts) in the calendar month or in the four or five-week
payroll period ending in the calendar month.
b. REDETERMINATION AND FORM OF BENEFITS
Upon the subsequent termination of employment of a Participant who was
eligible to begin receiving payments under the Plan on his prior
Severance from Service Date (whether or not such benefit payments had
actually commenced), the Participant's Accrued Benefit shall be
redetermined in accordance with the provisions of this Plan applicable
to him as of his subsequent Severance from Service Date, as if no prior
benefit payments had been made, and his Accrued Benefit as so
redetermined shall then be reduced by (i) the Actuarial Equivalent of
the benefit payments, if any, previously made to such Participant prior
to his Normal Retirement Date or (ii) in case of a lump-sum payment, the
Actuarial Equivalent of the payment other than the portion of the
payment attributable to the period (if any) after Normal Retirement Date
and before Reemployment Commencement Date. The form of payment of any
Accrued Benefit to which he may thereafter become entitled shall be
determined in accordance with the provisions of this Article IV without
regard to the form in which his Accrued Benefit had previously been
paid, except provided in paragraph (c) below.
The Participant's Accrued Benefit as so determined shall not be less
than his Accrued Benefit prior to the suspension of payments.
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c. RESUMPTION OF BENEFITS
In the case of a Participant who was receiving benefit payments prior to
his reemployment, payment of such benefits shall resume no later than
the first day of the third calendar month following the month in which
the Participant ceases to satisfy the conditions for suspension
described in paragraph (a) above. If the period of suspension is less
than three months, the Participant's benefits shall continue to be paid
in the same form of payment as before suspension.
d. REQUIRED DISTRIBUTION OF BENEFITS
Benefits payable under the Plan to a Participant who is in the employ of
an Employer or Affiliated Employer on or after the date the Participant
attains age 70 1/2 shall begin to be paid or shall continue to be paid,
whichever is applicable, in accordance with the provisions of
Section 4.03.
4.13 BENEFITS PAYABLE ONLY FROM TRUST FUND
All benefits payable under this Plan shall be paid or provided for
solely from the Trust Fund, and neither any Employer nor its
shareholders, directors, employees, or any member of the Retirement
Committee shall have any liability or responsibility therefor. Except
as otherwise provided by law, no Employer assumes any obligations under
this Plan except those specifically stated in the Plan.
4.14 DIRECT ROLLOVER DISTRIBUTIONS
Any other provisions of the plan notwithstanding, upon becoming entitled
to receive an "eligible rollover distribution," a "distributee" may
elect to have the distribution paid in a "direct rollover" to the plan
that is specified, in writing, to the Retirement Committee to be an
"eligible retirement plan." Such a direct rollover is not subject to the
20% income tax withholding that would otherwise be required with respect
to any eligible rollover distribution.
The term "eligible retirement plan" includes individual retirement
accounts described in Section 408(a) of the Code, individual retirement
annuities (other than endowment contracts) described in Section 408(b)
of the Code, qualified trusts described in Section 401(a) of the Code,
and annuity plans described in Section 403(a) of the Code, that accepts
the eligible rollover distribution; provided, however, that with respect
to distributions made prior to January 1, 2002 to the surviving spouse
of a Participant, the term "eligible retirement plan" includes only
individual retirement accounts described in Section 408(a) of the Code,
and individual retirement annuities (other than endowment contracts)
described in Section 408(b) of the Code. For distributions made after
December 31, 2001, the term "eligible retirement plan" shall also
include an annuity contract described in Section 403(b) of the Code, and
an eligible plan described in Section 457(b) of the Code which is
maintained by an eligible employer described in
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Section 457(e)(1)(A) of the Code, which agrees to separately account for
amounts transferred into such plan from this Plan.
An "eligible rollover distribution" is any distribution of all or any
portion of the benefit payable to 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 years or more; any distribution to the extent
such distribution is required under Section 401(a)(9) of the Code; and
for distributions made prior to January 1, 2002, any portion of any
distribution that is not includible in gross income.
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 are distributees with regard
to the interest of the Spouse or former Spouse. A "direct rollover" is a
payment by the Plan to the eligible retirement plan specified by the
distributee.
A distributee is permitted to elect to have a portion of an eligible
rollover distribution paid to an eligible retirement plan in direct
rollover and to have the remainder paid to the distributee provided that
the direct rollover amount totals $500 or more. Distributees are not
permitted to elect rollover treatment with respect to eligible rollover
distributions that are less than $200.
The Retirement Committee will provide the distributee, pursuant to
Section 402(f) of the Code, with a written explanation explaining the
rules under which such distributee may have the eligible rollover
distribution paid in a direct rollover to an eligible retirement plan,
the tax withholding rules for direct rollovers and the 60-day rollover
option, and, if applicable, certain rules regarding the taxation of the
distribution. This notice will be provided to each distributee within a
reasonable period of time before receiving an eligible rollover
distribution.
4.18 ACCRUED BENEFIT REDUCED BY PREVIOUS LUMP-SUM DISTRIBUTION
The Accrued Benefit of any Participant who returns to employment after
receiving a lump-sum distribution under Section 4.07 of the Plan shall
be determined based on his total Credited Service (which term shall
include, solely for purposes of this Section 4.18, credited service
prior to January 1, 2003) reduced by the accrued benefit attributable to
such lump sum previously distributed; provided, however, that the
Accrued Benefit shall not be reduced below the benefit that the
Participant would have received if his prior Credited Service (including
service prior to January 1, 2003, if applicable) had been disregarded on
reemployment and there had been no such offset.
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In no event shall such Participants be entitled to restore to the Plan
any amounts previously distributed by repayment of such amounts to the
Plan or by any other method.
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ARTICLE V - MAXIMUM BENEFIT LIMITATIONS
5.01 MAXIMUM ANNUAL BENEFIT
a. Solely for purposes of this Article V:
i. "AFFILIATE" shall have the meaning of Affiliated Employer as set
forth in Section 1.04, but modified as provided in Section
415(h) of the Code.
ii. "ANNUAL ADDITION" means the sum of any Limitation Year of:
A. employer contributions to a plan (or portion thereof)
subject to Section 415(c) of the Code maintained by an
Employer or Affiliate,
B. forfeitures under all such plans (or portion thereof), if
any, credited to employee accounts,
C. the amount of an employee's own contributions under all such
plans (or portion thereof), and
D. amounts described in Section 419A(d)(2) of the Code
(relating to post-retirement medical benefits of key
employees) or allocated to a pension plan individual medical
account described in Section 415(1) of the Code to the
extent includable for purposes of Section 415(c)(2) of the
Code.
The employee contributions described in clause (C) above shall
not include any rollover contributions, any repayments of loans,
or any prior distributions repaid to a plan upon the exercise of
buy-back rights.
Employer and employee contributions taken into account as Annual
Additions shall include "excess contributions" as defined in
Section 401(k)(8)(B) of the Code, "excess aggregate
contributions" as defined in Section 401(m)(60(B) of the Code
and "excess deferrals" as described in Section 402(g) of the
Code, regardless of whether such amounts are distributed or
forfeited, unless such amounts constitute excess deferrals that
were distributed to the Participant no later than the first
April 15 following the close of the taxable year of the
Participant in which such deferral was made.
The Annual Additions for any Limitation Year beginning before
January 1, 1987 shall not be recomputed to treat all employee
contributions as Annual Additions.
iii. "DOLLAR LIMIT" means $90,000. For Limitation Years beginning
after December 31, 2001, the Dollar Limit means $160,000 for any
Participant who is credited with an Hour of Service on or after
the first Limitation Year beginning after December 31, 2001. The
above Dollar Limit shall be adjusted from time to time (prior to
a Participant's Benefit Commencement Date) to reflect increases
in the
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cost of living pursuant to applicable regulations). The
adjustment to the Dollar Limit required pursuant to the above
for any year shall be the cost-of-living adjustment that is
effective as of the January 1 that occurs in such year. No such
adjustment shall be taken into account before the year for which
such adjustment first takes effect.
iv. "EARNINGS" for any year means total compensation actually paid
or made available by all Employers and Affiliates, or
predecessors of any of them, for such year (without regard to
whether or not an amount is paid in cash), including (A) income
from sources without the United States whether or not excludable
for Federal income tax purposes, (B) amounts paid or reimbursed
for moving expenses to the extent not deductible by the
Participant for Federal income tax purposes, (C) amounts related
to the value of property transferred in connection with
performance of services which are includable for Federal income
tax purposes in the year of transfer under Section 83(b) of the
Code, and (D) taxable income attributable to employer-provided
life insurance.
Earnings shall not include deferred compensation (other than
payments under an unfunded plan that are currently includable in
income), income realized in respect of stock options or other
distributions which receive special tax benefits. Where
applicable, Earnings shall include self-employment income from a
sole proprietorship or partnership which constitutes "earned
income" within the meaning of Section 401(c)(2) of the Code
(without regard to any exclusion under Section 911 of the Code).
Effective January 1, 1998, "Earnings" shall include any elective
deferrals under Code Section 402(g)(3), and any amount which is
contributed or deferred by the Employer at the election of the
Participant and is not includable in gross income by reason of
Code Sections 125, 403(b) and 457, and effective January 1,
2001, shall include any amount which is contributed or deferred
by the Employer at the election of the Participant and is not
includible in gross income by reason of Code Section 132(f)(4).
v. "PERCENTAGE LIMIT" means 100% of the Participant's average
annual Earnings for the three consecutive calendar years (or, if
the Participant's period of employment is less than three years,
for his entire period of employment) as a Participant during
which Earnings were highest (as adjusted form time to time to
reflect increases in the cost of living pursuant to applicable
regulations). The adjustment for any year shall be the
cost-of-living adjustment that if effective as of the January 1
that occurs in such year. No such adjustment shall be taken into
account before the year for which such adjustment is made.
b. The actual or projected annual amount of Accrued Benefit of a
Participant, payable as a qualified joint and survivor annuity (as
defined in Section 417(b) of the Code) or an annuity for life only,
shall not exceed the lesser of the Dollar Limit or the Percentage Limit;
provided, however, that the Percentage Limit shall not apply to a
Participant's benefit if the annual amount of such benefit does not
exceed $10,000, and the Participant
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has not at any time participated in a defined contribution plan
maintained by an Employer or Affiliate.
c. If the benefit payable to a Participant is in any form other than a
qualified joint and survivor annuity (as defined in Section 417(b) of
the Code) or an annuity for life only, the annual amount of Accrued
Benefit payable to the Participant shall not exceed the lesser of the
Actuarial Equivalent of an annuity for life only which does not exceed
the lesser of the Dollar Limit or the Percentage Limit. In making such
actuarial adjustment, no adjustment shall be made for any ancillary
benefit provided under the Plan which is not directly related to
retirement benefits, including, without limitation, disability benefits,
medical benefits and pre-retirement death benefits (including any such
death benefit coverage described in Section 4.05). Effective January 1,
1998, for purposes of this subsection (c), Actuarial Equivalent will be
determined using the assumptions set forth in Section 1.03(b).
d. If payment of the Participant's Plan benefits commences before his
Social Security Retirement Age but on or after the date he attains age
62, the Dollar Limit shall be reduced: (i) if the Participant's Social
Security Retirement Age is 65, by 5/9ths of 1% for each month by which
the commencement of payment of his benefits precedes the month in which
he attains age 65; or (ii) if the Participant's Social Security Age is
66 or 67, by 5/9ths of 1% for each of the first 36 months and 5/12ths of
1% for each additional month by which the commencement of payment of his
benefits precedes the month in which he attains his Social Security
Retirement Age. For Limitation terms beginning after December 31, 2001,
the provisions of this subsection (d) shall no longer apply.
e. If payment of a Participant's Plan benefits commences before age 62, the
Dollar Limit shall be reduced in accordance with applicable regulations,
so that it is the Actuarial Equivalent of the Dollar Limit as applied to
a benefit beginning at age 62. For purposes of this paragraph, Actuarial
Equivalent shall be determined using the assumptions set forth in
Section 1.02, or an interest rate of 5% and the mortality table
referenced in Code Section 417(e)(3), whichever produces the greater
reduction in the Dollar Limit. Any decrease in the Dollar Limit
determined in accordance with this paragraph shall not reflect a
mortality decrement if benefits are not forfeited upon the death of the
Participant. If any benefits are forfeited upon death, the full
mortality decrement is taken into account.
f. If the payment of benefits to a Participant commences after his age 65,
the Dollar Limit shall be increased in accordance with applicable
regulations so that it is the Actuarial Equivalent of the Dollar Limit
as applied to a benefit beginning at his age 65. The probability of the
Participant dying after age 65 and before the age at which the payment
of benefits would commence shall not be taken into account in increasing
the Dollar Limit under this paragraph (f). For purposes of this
paragraph, Actuarial Equivalent shall be determined using the
assumptions specified in Section 1.02, or an interest rate of 5% and the
mortality table referenced in Code Section 417(e)(3), whichever produces
the smaller increase in the Dollar Limit.
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g. If the Participant has completed fewer than ten years of participation
in the Plan, within the meaning of Section 415(b)(5)(A)(i) of the Code,
the Dollar Limit shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the Participant's number of years of
participation in the Plan or parts thereof and the denominator of which
is 10.
h. If the Participant has completed fewer than ten years of Vesting
Service, the Percentage Limit and the $10,000 limit described in
paragraph (b) above shall be adjusted by multiplying such amounts by a
fraction, the numerator of which is the Participant's number of years of
Vesting Service or parts thereof and the denominator of which is 10.
Solely for purposes of this paragraph (h) and paragraph (k) below,
service with an Affiliate that is not an Affiliated Employer shall be
deemed to be Vesting Service.
i. In no event shall the provisions of paragraphs (g) or (h) above reduce
the Dollar Limit, Percentage Limit or $10,000 limit described in
paragraph (b) above to an amount less than one-tenth of such limit,
determined without regard to the provisions of Sections 5.01(g)(h).
j. The benefits payable under this Plan, as limited by this Article V,
shall be subject to further limitation in order that the amount of
employer-provided benefits payable under all defined benefits plans
maintained by all Employers and Affiliates shall not, in the aggregate,
exceed the benefit limitations described in Section 415 of the Code. If
a reduction in the benefits under such defined benefit plans in the
aggregate is thus required, such reduction shall be applied in the
reverse order in which benefits under such plans would otherwise accrue
except as any such other plan may otherwise expressly provide, provided
that benefits under any multi-employer pension plan shall be reduced
last.
k. If a Participant participates or participated in one or more defined
contribution plans maintained by an Employer or Affiliate (including any
plan so considered as a result of any employee contributions to a
defined benefit plan, or otherwise subject to Section 415(c) of the
Code), the sum of the defined benefit plan fraction and the defined
contribution plan fraction as of the close of any year shall not exceed
1.0.
For any year, the defined benefit plan fraction is a fraction, the
numerator of which is the projected annual benefit within the meaning of
Section 415(e)(2)(A) of the Code (disregarding benefits derived from
employee contributions) determined as of the close of the year of the
Participant under all benefit plans maintained by any Employer or
Affiliate and the denominator of which is the lesser of the following
amounts determined as of the close of the year.
i. 125 percent of the Dollar Limit, or
ii. 140 percentage of the Percentage Limit.
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For purposes of computing the denominator of the defined plan fraction,
(i) the Dollar Limit and the Percentage Limit shall be determined as if
years of Vesting Service for purposes of paragraph (h) above included
future years before the Participant will attain age 65, provided that
the year in which the Participant will attain age 65 shall not count as
a future year unless it can be reasonably anticipated that the
Participant will receive a year of Vesting Service for such year and
(ii) the Dollar Limit shall be determined as if all years of Vesting
Service (determined after application of clause (i) above) were years of
participation (and fractions thereof) solely for purposes of paragraph
(g) above.
For any year, the defined contribution plan fraction is a fraction, the
numerator of which is the sum of the Annual Additions to the
Participant's account(s) under all plans maintained by an Employer or
Affiliate in such year and in all prior years, and the denominator of
which is the sum of the lesser of the following amounts, determined for
such year and for each prior year of service with an Employer or
Affiliate as if the Participant were covered by a defined contribution
plan maintained by such Employer or Affiliate for all such years, but
were not covered by any defined benefit plan for any such year:
A. 125 percent of the maximum dollar limitation applicable to
defined contribution plan allocations for such year as
provided in Section 415(c)(1)(A) of the Code determined
without regard to Section (c)(6), or
B. 35 percent of the Participant's Earnings for such year.
If the sum of a Participant's defined benefit plan fraction and defined
contribution plan fraction determined as of December 31, 1986 would have
exceeded 1.0 had the provisions of this Article V as in effect after
December 31, 1986 been used to compute such sum, an amount shall be
subtracted from the numerator of the defined contribution plan fraction
(not exceeding such numerator) so that the sum of the defined
contribution plan fraction and defined benefit plan fraction as of the
first day of the Limitation Year beginning in 1987 does not exceed 1.0.
Such amount shall be equal to the product of:
i. the sum of the defined contribution plan fraction plus the
defined benefit plan fraction as of the determination date minus
one, times
ii. the denominator of the defined contribution plan fraction as of
the determination date.
Any adjustment necessary to comply with the limitation of this paragraph
(k) shall be made in the Participant's Accrued Benefit payable under
this Plan, provided, however, that under no circumstances may the
Accrued Benefit under this Plan decrease as a result of a plan amendment
to change the combined plan limits. Effective for Limitation Years
beginning on or after January 1, 2000, the provisions of this subsection
(k) shall no longer apply.
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l. The purpose of this Article V is to comply with Section 415 of the Code,
and all provisions of this Article V shall be construed and administered
consistently with said Section. The provisions of this Article V shall
apply to Plan Years beginning on or after January 1, 1987 and shall
apply notwithstanding any contrary provision of this Plan.
m. Any benefits provided under any multi-employer plan to which an Employer
or Affiliate is a party shall be taken into account under this Article V
only to the extent that the benefits provided under such plan exceed the
benefits that would have been provided under such plan if the
Participant had no service with an Employer or any Affiliate.
n. All determinations under this Article shall be made by reference to the
Limitation Year.
o. If a Participant's accrued benefit under a defined benefit plan
maintained by an Employer or Affiliate on May 6, 1986, determined as if
the Participant had terminated employment as of the close of 1986 and
expressed in the form of a qualified joint and survivor annuity (as
defined in Section 417(b) of the Code) or an annuity for life only, as
of January 1, 1987, exceeds the limitation of paragraphs (b) to (k)
above, then the Dollar Limit with respect to such Participant shall be
equal to his accrued benefit determined as described in this
Section 5.01(o). The Dollar Limit as so determined shall include
optional benefit forms and early retirement benefits or retirement
subsidies that are protected under Section 411(d)(6) of the Code,
whether or not the Participant has met all the requirements to qualify
for such forms or benefits or subsidies, if an to the extent that they
remain so protected as of the date on which the limitations of this
Article V area applied.
5.02 APPLICATION TO QUALIFIED JOINT AND SURVIVOR ANNUITY
In the event that the amount of the retirement benefit payable to a
Participant is limited by this Article V, and the Participant's benefit
is payable in the form of a qualified joint and survivor annuity (as
defined in Section 417(b) of the Code), (a) the amount payable to each
of the Participant and his Spouse under such form shall first be
determined without regard to the limitations of Article V, (b) the
amount payable to the Participant under such form shall then be reduced
to the extent necessary to comply with such limitations, and (c) the
benefit payable to the Spouse shall not exceed the benefit payable to
the Participant (as so reduced).
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ARTICLE VI - CONTRIBUTIONS
6.01 PAYMENT OF CONTRIBUTIONS
No contributions shall be required or permitted under the Plan from any
Participant. The Employer shall pay to the Trustee within the time
periods prescribed by applicable federal statute such amounts in cash or
property acceptable to the Trustee as the Sponsoring Employer, acting
upon the advice of an actuary, shall in its sole discretion determine to
be appropriate under the funding policy and method which the Sponsoring
Employer adopts for the Plan. The Sponsoring Employer shall establish
and maintain a funding policy and method consistent with the provisions
of the Plan and the requirements of ERISA, which shall be reviewed
periodically.
6.02 APPLICATION OF FORFEITURES
Any forfeitures arising from the termination of employment or death of a
Participant, or for any other reason, shall be used to reduce the
contributions of the Employer under the Plan and shall not be applied to
increase the benefits that a Participant would otherwise receive under
the Plan at any time prior to the termination of the Plan as set forth
in Section 9.02.
6.03 TRUST AGREEMENT
The Trustee will receive the contributions made under the Plan by an
Employer and will hold, invest and distribute the Trust Fund in
accordance with all the terms and provisions of the Trust Agreement. Any
and all rights or benefits which may accrue to any person under the Plan
shall be subject to all the terms and provisions of the Trust Agreement.
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ARTICLE VII - ADMINISTRATION
7.01 POWERS AND RESPONSIBILITIES OF THE SPONSORING EMPLOYER
The Sponsoring Employer, by acting through its Board, shall be empowered
to appoint and remove the Trustee, any Investment Manager, and the
Retirement Committee from time to time.
7.02 ASSIGNMENT AND DESIGNATION OF ADMINISTRATIVE AUTHORITY
The Sponsoring Employer shall appoint a Retirement Committee of one or
more persons to serve collectively as administrator of the Plan. Any
person, including, but not limited to, the directors, officers and
Employees of an Employer, shall be eligible to serve as a Retirement
Committee member, provided that no Participant shall participate in any
determination of the Retirement Committee specifically relating to the
disposition of his own Accrued Benefit. The members of the Retirement
Committee shall serve without compensation for their services as such
members. A Retirement Committee member may resign by delivering his
written resignation to the Sponsoring Employer, or may be removed by the
Sponsoring Employer by delivery of written notice of removal, to take
effect at a date specified therein, or upon delivery to such Retirement
Committee member if no date is specified.
Upon the resignation, death, disability or removal of a Retirement
Committee member, the Sponsoring Employer may (or, if no Retirement
Committee member would then be serving, the Sponsoring Employer shall)
promptly designate in writing a successor to this position. If the
Sponsoring Employer is required to but does not appoint a successor, the
Board will function as the Retirement Committee.
7.03 POWERS, DUTIES AND RESPONSIBILITIES OF THE RETIREMENT COMMITTEE
The Retirement Committee shall administer the Plan in accordance with
its terms to the extent consistent with applicable law, and shall have
the power and discretion to determine all questions arising in
connection with the administration, interpretation, and application of
the Plan. Any such determination by the Retirement Committee shall be
conclusive and binding upon all persons. The Retirement Committee may
correct any defect, supply any information, or reconcile any
inconsistency in such manner and to such extent as shall be deemed
necessary or advisable to carry out the purpose of the Plan; provided,
however, that any interpretation or construction shall be consistent
with the intent that the Plan shall continue to be deemed a qualified
plan under the terms of Section 401(a) of the Code, and shall comply
with the terms of ERISA. The Retirement Committee shall have all powers
and discretion necessary or appropriate to accomplish its duties under
the Plan. Retirement Committee members may allocate their
responsibilities among themselves.
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The Retirement Committee shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the
following:
a. To determine all questions relating to the eligibility of an Employee to
participate or remain a Participant hereunder.
b. To certify and direct the Trustee with respect to the amount of benefit
to which any Participant or Beneficiary shall be entitled hereunder.
c. To authorize and direct the Trustee with respect to all nondiscretionary
or otherwise directed disbursements from the Trust Fund.
d. To maintain all necessary records for the administration of the Plan.
e. To interpret the provisions of the Plan and to make and publish such
rules for regulation of the Plan as are consistent with the terms
hereof, including, but not limited to, procedures for presenting claims
for benefits under the Plan and for review of claims which are denied in
whole or in part, and procedures for complying with the requirements of
Section 414(p) of the Code with respect to Qualified Domestic Relations
Order.
7.04. POWERS AND RESPONSIBILITIES OF THE TRUSTEE
a. The Trustee shall act in accordance with the terms and provisions of the
Trust Agreement.
b. The Trustee shall have the sole responsibility for managing the assets
held under the Trust Agreement, except those assets, the management of
which has been assigned to an Investment Manager or retained by the
Sponsoring Employer (each of whom shall be solely responsible for the
management of the assets assigned to or retained by it), all as
specifically provided in the Plan and in the Trust Agreement.
c. The Trustee shall accept and rely upon any documents executed by the
appropriate Retirement Committee member until such time as the
Sponsoring Employer or the Retirement Committee files with the Trustee a
written revocation of such designation.
7.05 RECORDS AND REPORTS
The Retirement Committee shall keep such record of actions taken and
such other books of account, records and other data as it may deem
appropriate for proper administration of the Plan, and shall be
responsible for supplying all information and reports to the Internal
Revenue Service, Department of Labor, Participants, Beneficiaries and
others as required by law.
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7.06 APPOINTMENT OF COUNSEL AND AGENTS
The Retirement Committee and/or Sponsoring Employer may employ such
counsel (including legal counsel), accountants, investment advisors,
physicians, agents and such clerical and other services as it may
require in carrying out the provisions of the Plan, and shall charge the
fees, charges and costs resulting from such employment as an expense of
the Trust Fund unless paid by an Employer. Unless otherwise provided by
law, any person so employed by the Retirement Committee may be legal or
other counsel to an Employer or Affiliated Employer, a member of the
Retirement Committee or an officer or member of the board of directors
of an Employer or Affiliated Employer.
7.07 INFORMATION FROM EMPLOYER
To enable the Retirement Committee to perform its functions, the
Employer shall supply full and timely information to the Retirement
Committee on all matters relating to the compensation of all
Participants, their Vesting Service, their Credited Service, their
retirement, death, Disability, or termination of employment, and any
such other pertinent facts as the Retirement Committee may require. The
Retirement Committee may rely upon such information as is supplied by
the Employer and shall have no duty or responsibility to verify such
information.
7.08 PAYMENT OF EXPENSES
All expenses of administration shall be paid out of the Trust Fund
unless paid by the Employer. Such expenses shall include any expenses
incident to the functioning of the Retirement Committee and the
Investment Manager, including, but not limited to, fees of accountants,
counsel, and other specialists, and other costs of administering the
Plan. Until paid, the expenses shall constitute a liability of the Trust
Fund. The Employer may, however, reimburse the Trust Fund for any
administration expense incurred pursuant to the above.
7.09 MAJORITY ACTIONS
Except where there has been an allocation and delegation of
administrative authority pursuant to Section 7.03, if there shall be
more than one Retirement Committee member, they shall act by a majority
of their number, but may authorize one or more of them to sign all
papers on their behalf.
7.10 CLAIMS PROCEDURE
Claims for benefits under the Plan shall be filed with the Retirement
Committee on the appropriate form provided by the Employer. Written
notice of the disposition of a claim shall be furnished to the claimant
within 90 days (45 days in the case of a claim for Disability Benefit)
after the application thereof is filed, unless special circumstances
require an extension of time for processing the claim. In the event the
claim is denied, the reasons for the denial shall be specifically set
forth in the notice in language
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calculated to be understood by the claimant, pertinent provisions of the
Plan shall be cited, and, where appropriate, an explanation as to how
the claimant can perfect the claim will be provided. In addition, the
claimant shall be furnished with an explanation of the Plan's claims
review procedure.
If notice is not given within such period, the claim shall be considered
denied as of the last day of such period for purposes of commencement of
a proceeding to review such denial.
7.11 CLAIMS REVIEW PROCEDURE
Upon denial of a claim, in whole or in part, pursuant to Section 7.10, a
claimant, or his duly authorized representative, shall be entitled to
request the Retirement Committee to give a full review of the denied
claim, to review documents pertinent to the denial, and to submit issues
and comments in writing. A request for review must be filed with the
Retirement Committee no later than 60 days (180 days in the case of a
request for review of a claim for Disability Benefits) after receipt of
the written notification provided for in Section 7.10 (or, if
applicable, within 60 days (180 days in the case of a request for review
of a claim for Disability Benefits) after the date on which such denial
is considered to have occurred). This request must set forth all the
reasons why the claimant believes the claim was improperly denied.
The Retirement Committee shall make its decision on review no later than
60 days (45 days in the case of a request for review of a claim for
Disability Benefits) following the Committee's receipt of a complete
request for review (or within 120 days (90 days in the case of a request
for review of a claim for Disability Benefits) if the Retirement
Committee determines special circumstances require an extension of time
for processing the request).
The decision on review shall be communicated by the Retirement Committee
in writing to the claimant. Such communication shall be written in a
manner calculated to be understood by the claimant and shall include
specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.
The Retirement Committee's decision on review shall be deemed conclusive
and binding upon any and all claimants, including but not limited to
Participants and their Beneficiaries and any other persons claiming
through or under them.
7.12 NAMED FIDUCIARIES
The "named Fiduciary" of the Plan is the Sponsoring Employer. The named
Fiduciary, in its capacity as such, shall have only those specific
powers, duties, responsibilities, and obligations as are specifically
given them under this Article VII.
The Sponsoring Employer shall have the sole responsibility for the
administration of the Plan, which responsibility is specifically
described in the Plan.
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The Sponsoring Employer, acting through its Board, shall be the named
Fiduciary with respect to the control or management of the assets of the
Plan.
Each named Fiduciary may rely upon any discretion, information or action
of another named Fiduciary as being proper under the Plan, and is not
required under the Plan or the Trust Agreement to inquire into the
propriety of any such direction, information or action. It is intended
that each named Fiduciary shall be responsible for the proper exercise
of its own powers, duties, responsibilities and obligations under the
Plan and the Trust Agreement.
No named Fiduciary guarantees the Trust Fund in any manner against
investment loss or depreciation in asset value.
7.13 INDEMNIFICATION
The Sponsoring Employer shall indemnify and hold harmless its directors
and employees, and any directors or employees of any Affiliated
Employer, serving in a fiduciary capacity or otherwise under the Plan
from any loss or damage which may arise in connection with the
operation and administration of the Plan, other than loss or damage
arising out of a final judicial finding of gross negligence or willful
misconduct of such director or employee.
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ARTICLE VIII - PLAN AMENDMENT
8.01 AMENDMENT
a. The Sponsoring Employer, by action of its Board, shall have the right at
any time and from time to time to amend, in whole or in part, any or all
of the provisions of this Plan. No such amendment shall, however:
i. Authorize or permit any part of the Trust Fund (other than such
part as is required to pay taxes and administrative expenses) to
be used for or diverted to purposes other than for the exclusive
benefit of the Participants or their Beneficiaries or estates
prior to the satisfaction of all liabilities with respect to the
Participants or their Beneficiaries or estates;
ii. Cause any reduction in the Accrued Benefit of any Participant,
or the elimination of any optional forms of benefit payment or
retirement type subsidies (as defined in applicable regulations)
except as permitted by law; or
iii. Cause or permit any portion of the Trust Fund to revert to or
become the property of the Employer except to the extent
provided under Sections 9.04 and 12.05.
b. If any Plan amendment changes the vesting schedule set forth in
Section 4.04, each Participant who has at least one Hour of Service on
or after January 1, 1989 and who has completed at least three years of
Vesting Service on the effective date of the change in vesting schedule
shall have his vesting percentage computed in accordance with the
vesting schedule which produces the highest vested benefit.
c. All provisions of this Plan, and all benefits and rights granted
hereunder, are subject to any amendments, modifications or alterations
which are necessary from time to time to qualify this Plan under
Section 401(a) of the Code, to continue the Plan as so qualified or to
comply with any other provision of law. Accordingly, notwithstanding any
other provision of this Plan, the Sponsoring Employer may amend, modify,
or alter this Plan with retroactive effect in any respect or manner
necessary to qualify this Plan under Section 401(a) of the Code, or to
continue this Plan as so qualified or to comply with any other provision
of applicable law.
d. If the effect of any amendment is to increase the current liability (as
defined in Section 401(a)(29)(E) of the Code) under the Plan for a Plan
Year, and the funded current liability percentage of the Plan for the
Plan Year in which the amendment would otherwise take effect is less
than sixty percent (60%), including the amount of the unfunded current
liability under the Plan attributable to the amendment, the amendment
shall not take effect until the Employer or Sponsoring Employer (or any
Affiliated Employer) provides security to the Plan. The form and amount
of the security shall satisfy the requirements of Section 401(a)(29)(B)
and (C) of the Code. The security may be released provided the
requirements of Section 401(a)(29)(D) of the Code are satisfied.
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ARTICLE IX - PLAN TERMINATION
9.01 RIGHT TO TERMINATE
The Plan may be terminated at any time by resolution of the Board,
provided that no such action shall permit any part of the assets of the
Trust Fund, whether principal of income, to revert to an Employer or to
be used for or diverted to purposes other than for the exclusive benefit
of Participants and their Beneficiaries shall have been liquidated in
full. Upon termination of the Plan, benefits of missing Participants
shall be treated in accordance with Section 4050 of ERISA.
9.02 VESTING UPON TERMINATION
Upon the termination or partial termination of the Plan (within the
meaning of Section 411(d)(3) of the Code), the rights of all affected
Participants to benefits accrued to the date of such termination or
partial termination, to the extent funded as of such date shall, subject
to the requirements as the Internal Revenue Service shall impose in
order to prevent discrimination (including any applicable provisions of
Section 9.05), be nonforfeitable.
9.03 PRIORITY OF DISTRIBUTION ON TERMINATION
In this Plan is terminated, the assets of the Trust Fund shall be used
and disposed of for the benefit of Participants and Beneficiaries in
accordance with the provisions of Title IV of ERISA. Without limiting
the generality of the foregoing, if the Secretary of the Treasury
determines that any allocation made pursuant to this Section 9.03
(without regard to this sentence) results in discrimination prohibited
by Section 401(a)(4) of the Code, the assets allocated under Sections
4044(a)(4)(B), (a)(5) and (a)(6) of ERISA shall be reallocated to the
extent necessary to avoid such discrimination. Benefits of missing
Participants shall be treated in accordance with Section 4050 of ERISA.
9.04 RETURN OF EXCESS ASSETS
Notwithstanding any provision to the contrary in this Plan or the Trust
Agreement, upon termination of this Plan, the Employers or their
successors or assigns shall be entitled to any balance of the net assets
of the Trust Fund remaining after all liabilities under this Plan to
Participants, their Spouses and Beneficiaries have been satisfied.
9.05 RESTRICTION OF BENEFITS
Notwithstanding any other provision of the Plan, in the event of the
complete termination of the Plan, the benefit of any Highly Compensated
Employee who is a Participant shall be limited to a benefit that is
nondiscriminatory under Section 401(a)(4) of the Code.
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ARTICLE X - MERGER, CONSOLIDATION, OR TRANSFER OF ASSETS
10.01 MERGER, CONSOLIDATION, OR TRANSFER OF ASSETS
Notwithstanding any other provision of this Plan and subject to the
provisions of Section 10.02, the Plan may be amended to provide for the
merger or consolidation of the Plan, in whole or in part, with, or the
transfer of all or part of its assets to, any other qualified plan
within the meaning of Section 401(a) of the Code.
10.02 BENEFITS UPON MERGER, CONSOLIDATION, OR TRANSFER OF ASSETS
In the case of any merger or consolidation with, or transfer of assets
or liabilities to, any other plan, each Participant in this Plan shall
be entitled to a benefit immediately after such merger, consolidation or
transfer equal to or greater than the benefit the Participant would have
received if the Plan had been terminated immediately prior to the
merger, consolidation, or transfer.
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ARTICLE XI - TOP HEAVY PROVISIONS
11.01 TOP HEAVY PLAN DEFINITIONS
For purposes of this Article, the following terms shall have the
meanings indicated below:
a. "Aggregation Group" means either:
i. REQUIRED AGGREGATION GROUP. In determining a Required
Aggregation Group hereunder, each plan of an Employer or
Affiliated Employer in which a Key Employee participates, and
each other plan of an Employer or Affiliated Employer which
enables any plan in which a Key Employee participates to meet
the requirements of Sections 401(a)(4) or 410 of the Code will
be required to be aggregated. Such group shall be known as a
Required Aggregation Group.
Solely for purposes of determining if the Plan or any other plan
in the Required Aggregation Group is a Top Heavy Plan for a Plan
Year, the accrued benefits of Non-Key Employees shall be
determined under the method, if any, which is uniformly applied
for accrual purposes under all defined benefit plans maintained
by an Employer or Affiliated Employer, or, if there is no such
method, as if such benefit accrued not more rapidly than under
the slowest accrual rate permitted under Section 411(b)(1)(C) of
the Code.
In the case of a Required Aggregation Group, each plan in the
group will be considered a Top Heavy Plan if the Required
Aggregation Group is a Top Heavy Group. No plan in the Required
Aggregation Group will be considered a Top Heavy Plan if the
Required Aggregation Group is not a Top Heavy Group.
ii. PERMISSIVE AGGREGATION GROUP. The Sponsoring Employer may also
include any other plan not required to be included in the
Required Aggregation Group, provided the resulting group, taken
as a whole, would continue to satisfy the provisions of
Section 401(a)(4) and 410 of the Code. Such group shall be known
as a Permissive Aggregation Group.
In the case of a Permissive Aggregation Group, only a plan that
is part of the Required Aggregation Group will be considered a
Top Heavy Plan if the Permissive Aggregation Group is a Top
Heavy Group. No plan in the Permissive Aggregation Group will be
considered a Top Heavy Plan if the Permissive Aggregation Group
is not a Top Heavy Group.
Only those plans of an Employer or Affiliated Employer in which
the Determination Dates fall within the same calendar year shall
be aggregated in order to determine whether such plans are Top
Heavy Plans.
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b. "Determination Date" means the last day of the preceding Plan Year,
except that for the first Plan Year the Determination Date is the last
day of such Plan Year.
c. "Employee", "Former Employee", "Key Employee" and "Non-Key Employee"
shall also include Beneficiaries of such an employee.
d. "Key Employee" means any Employee (including a former Employee whether
or not deceased) who at any time during the Plan Year or any of the four
preceding Plan Years is one of the following:
i. An officer of an Employer or Affiliated Employer, if such
individual received compensation (as defined in
Section 414(q)(7) of the Code) of more than 50% of the dollar
limitation in effect under Section 415(b)(1)(A) of the Code. No
more than 50 Employees (or, if lesser, the greater of 3
Employees or 10% of the Employees) shall be treated as officers
(exclusive of Employees described in Section 414(q)(8) of the
Code.
ii. One of the 10 Employees owning or considered as owning (within
the meaning of Section 416(i) of the Code) both more than a 1/2
percent ownership interest and one of the ten largest ownership
interests in an Employer or Affiliated Employer, if such
Employee's compensation (as defined in Section 414(q)(7) of the
Code) exceeds 100% of the maximum annual limit under
Section 415(c)(1)(A) of the Code.
iii. A 5% owner of an Employer or Affiliated Employer. A "5% owner"
means a person owning (or considered as owning, within the
meaning of Section 416(i) of the Code) more than 5% of the
outstanding stock of an Employer or Affiliated Employer, or
stock possessing more than 5% of the total combined voting power
of all stock of an Employer or Affiliated Employer (or having
more than 5% of the capital or profits interest in any Employer
or Affiliated Employer that is not a corporation determined
under similar principles).
iv. A 1% owner of an Employer or Affiliated Employer having
compensation (as defined in Section 414(q)(7) of the Code) of
more than $150,000. A "1% owner" means any person who would be
described in paragraph (d)(iii) above if "1%" were substituted
for "5%" in each place where it appears in paragraph (d)(iii).
For Plan Years beginning after December 31, 2001, the
determination of whether an Employee or former Employee is a Key
Employee shall be made in accordance with this subsection (d),
but revised as follows:
A. Paragraphs (i), (ii) and (iv) of this subsection (d) shall
be applied by considering the individual's status only with
regard to the Plan Year ending on the Determination Date;
B. Paragraph (ii) of this subsection (d) shall be deleted in
its entirety; and
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C. Paragraph (i) of this subsection (d) shall be revised to
substitute the words "$130,000, as adjusted under
Section 416(i)(1) of the Code" for the words "50% of the
dollar limitation in effect under Section 415(b)(1)(A) of
the Code".
A Key Employee shall be determined in accordance with the
provisions of Section 416(i) of the Code and the regulations
thereunder.
e. "Non-Key Employee" means an Employee who is not a Key Employee,
including any Employee who is former Key Employee.
f. "Valuation Date" means the date used to calculate the value of account
balances or accrued benefits for purposes of determining the top heavy
ratio specified in Section 11.02.
For purposes of this Plan, the Valuation Date shall be the Determination
Date. For each other plan, the Valuation Date shall be subject to
Section 416 of the Code, the most recent Valuation Date which falls
within or ends within the period of twelve months ending on the
applicable determination date for such plan.
11.02 TOP HEAVY GENERAL REQUIREMENTS
The Plan shall be deemed a top heavy plan for a Plan Year if, as of the
Valuation Date preceding the applicable Determination Date, the sum of
the present value of accrued benefits of Key Employees under this Plan
and all other defined benefit plans in the Aggregation Group, and the
account balances of Key Employees under all defined contribution plans
in the Aggregation Group exceeds 60% of the sum of the present value of
accrued benefits of all Participants under this Plan and all other
defined benefit plans in the Aggregation Group and the account balances
of all Participants under all defined contribution plans in the
Aggregation Group (but excluding Participants who are former Key
Employees).
For purposes of this test, the following rules shall apply:
a. Any distributions made during the five Plan Years ending on the
Determination Date shall be taken into account. Provided, however, that
for Plan Years beginning after December 31, 2001, any distributions made
for a reason of separation from service, death or disability, or any
distributions made under a terminated plan which, had it not been
terminated, would have been aggregated with the Plan, during the Plan
Year ending on the Determination Date shall be taken into account; and
any distributions made for any other reason during the five Plan Years
ending on the Determination Date shall be taken into account.
b. The benefits and distributions of all former Employees who have not been
credited with at least one Hour of Service during the period of five
years (for Plan Years beginning after December 31, 2001, the one year
period) ending on the Determination Date shall be
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disregarded, provided, however, that if such former Employee again
completes an Hour of Service with the Employer after such five-year
period (for Plan Years beginning after December 31, 2001, such one year
period), such former Employee's benefits and distributions shall be
taken into consideration.
c. If an Employee is a Non-Key Employee for the Plan Year containing the
Determination Date, but such individual was a Key Employee during any
previous Plan Year, the value of his benefits and distributions shall
not be taken into consideration.
d. The determination of the present value of accrued benefits under all
defined benefit plans in the Aggregation Group shall be based on the
interest rate and mortality table specified in Section 1.02.
11.03 ADDITIONAL TOP HEAVY REQUIREMENTS
a. Notwithstanding any other provision of the Plan to the contrary, for any
Plan Year in which the Plan is deemed to be top heavy, the following
provisions shall apply:
i. MINIMUM VESTING - Any Participant who completes an Hour of
Service in a Plan Year in which the Plan is deemed to be top
heavy a nonforfeitable right to a percentage of his Accrued
Benefit determined on the basis of the Participant's number of
years of Vesting Service, according to the following schedule:
<Table>
<Caption>
Years of Vesting Service Vesting Percentage
------------------------ ------------------
Less than 3 years 0%
3 or more 100%
</Table>
Furthermore, if the vesting schedule under the Plan for any Plan
Year shifts into or out of the above schedule because of the
Plan's top heavy status, such shift shall be regarded as an
amendment to the Plan's vesting schedule and the provisions of
Section 8.01(b) shall be applied.
The provisions of this paragraph (a)(i) shall not be applied to
reduce the Participant's vested interest in accordance with the
provisions of Section 4.04.
ii. MINIMUM BENEFIT - Each Participant who is a Non-Key Employee
shall have an Accrued Benefit calculated as of the last day of
such Plan Year or, if earlier, as of his Severance from Service
Date occurring during such Plan Year, at least equal to the
product of a Non-Key Employee's average "salary" for the five
consecutive calendar years when such Non-Key employee had the
highest aggregate salary from an Employer or Affiliated Employer
and 2% per year of Credited Service credited for service during
a Plan Year in which a Plan is top heavy, not to exceed 10 such
years.
The "salary" required to be taken into account is the
compensation described in Section 415 of the Code not in excess
of the limit under Section 401(a)(17) of the
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Code. Salary received by a Non-Key Employee for Plan Years
beginning after the close of the last year in which the Plan was
a top heavy plan shall, however, be disregarded.
For purposes of this Plan, the minimum annual retirement benefit
means a benefit payable annually in the form a single life
annuity (with no ancillary benefits) beginning at Normal
Retirement Date.
This paragraph (a)(ii) shall not apply to a Non-Key Employee if
contributions for such Non-Key Employee are being made for such
Plan Year to a defined contribution plan included in the
Aggregation Group.
In determining years of Credited Service with the Employer for
purposes of this clause, any service with the Employer shall be
disregarded to the extent that it occurs during a Plan Year when
the Plan benefits (within the meaning of Section 410(b) of the
Code) no Key Employee or former Key Employee.
b. In any Plan Year in which the Plan is top heavy, but not super top heavy
(substituting 90% for 60% in Section 11.02 above), Section 5.01(k) shall
be applied by substituting "100%" for "125%", unless the Sponsoring
Employer amends paragraph (a)(ii) above to substitute "3%" for "2%"
therein.
c. In any Plan Year in which the Plan is super top heavy (substituting 90%
for 60% in Section 11.02 above), the factor of "125%" shall be changed
to "100%" in Section 5.01(k).
d. In any Plan Year that the Plan ceases to be top heavy, the above
provisions shall no longer apply, except that the portion of a
Participant's Accrued Benefit which was vested pursuant to paragraph
(a)(i) above shall remain vested.
e. The provisions of paragraph (a) above shall not apply to any employee
included in a unit of employees covered by a collective bargaining
agreement if, within the meaning of Section 416(i)(4) of the Code,
retirement benefits were the subject of good faith bargaining.
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ARTICLE XII - GENERAL PROVISIONS
12.01 RIGHT OF DISCHARGE RESERVED
This Plan shall not be deemed to constitute a contract between an
Employer and any Participant or to be consideration or an inducement for
the employment of any Participant or Eligible Employee. Nothing
contained in this Plan shall be deemed to give any Participant or
Eligible Employee the right to be retained in the service of an Employer
or to interfere with the right of an Employer to discharge any
Participant or Eligible Employee at any time regardless of the effect
which such discharge shall have upon as a Participant.
12.02 ALIENATION
No benefit which shall be payable out of the Trust Fund to any person
(including a Participant or his Beneficiary) shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be void;
and no such benefit shall in any manner be liable for, or subject to,
the debts, contracts, liabilities, engagements, or torts of any such
person, nor shall it be subject to attachment or legal process for or
against such person, and the same shall not be recognized by the
Trustee, except to such extent as may be required by law.
In the event a Participant's benefits are garnished or attached by order
of any court, the Retirement Committee may bring an action for a
declaratory judgment in a court of competent jurisdiction to determine
the proper recipient of the benefits to be paid by the Plan. During the
pendency of said action, any benefits that become payable shall be paid
into the court as they become payable, to be distributed by the court to
the recipient it deems proper at the close of said action.
This Section 12.02 shall not apply to the creation, assignment, or
recognition of a right to any benefit payable pursuant to a Qualified
Domestic Relations Order.
12.03 GENDER AND NUMBER
The masculine pronoun shall be construed to include the feminine, the
singular to include the plural, and the plural to include the singular
in all cases they would so apply.
12.04 LEGAL ACTION
In the event any claim, suit, or proceeding is brought regarding the
Trust and/or Plan established hereunder to which the Trustee or the
Retirement Committee may be a party, and such claim, suit, or proceeding
is resolved in favor of the Trustee or Retirement Committee, they shall
be entitled to be reimbursed from the Trust Fund for any and all costs,
attorneys' fees, and other expenses pertaining thereto incurred by them
for which they shall have become liable.
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12.05 APPROVAL BY INTERNAL REVENUE SERVICE; MISTAKE OF FACT
Nothing herein shall prohibit return to an Employer, within one year
after payment, of excess sums contributed to the Trust Fund as a result
of a mistake of fact.
Each Employer contribution is hereby conditioned on the current
deductibility of the contribution under Section 404 of the Code, and to
the extent such contribution deduction is disallowed, the contribution
shall be returned to the Employer within one year after the date of
disallowance.
12.06 UNIFORMITY
All provisions of the Plan shall be interpreted and applied in a uniform
and nondiscriminatory manner.
12.07 CAPTIONS
The Captions contained herein and the table of contents prefixed hereto
are inserted only as a matter of convenience and for reference and in no
way defined, limit, enlarge or described the scope or intent of the Plan
nor shall, in any way, affect the Plan or the construction of any
provision herein.
12.08 DISTRIBUTION LIMITATIONS
Distributions to Restricted Participants (as defined below) shall be
limited in accordance with the provisions of this Section 12.08.
a. For purposes of this Section 12.08, the following terms shall have the
indicated meaning:
i. "Benefits" means the sum of the Participant's Accrued Benefit
and all other benefits to which he is entitled under the Plan,
but excluding any death benefit provided for by insurance on the
Participant's life.
ii. "Restricted Participant" means, with respect to a Plan Year, a
Highly Compensated Employee who is a Participant who, if there
are more than 25 Highly Compensated Employees, is one of the 25
Highly Compensated Employees with the highest Total Annual Pay.
An individual who is a Restricted Participant in a Plan Year
shall be a Restricted Participant in a subsequent Plan Year only
if he satisfies the conditions of the previous sentence in that
subsequent Plan Year. If more than one individual has the same
Total Annual Pay, the younger individual shall be deemed to have
the higher Total Annual Pay.
iii. "Total Annual Pay" means, with respect to any Plan Year, (A) in
the case of a Highly Compensated Employee who is not currently
employed by an Employer or an Affiliated Employer, the greater
of his Earnings (as defined in Section
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5.01(a)(iv)) for the Plan Year he ceased to be employed by an
Employer or Affiliated Employer or his Earnings for the Plan
Year immediately preceding that Plan Year and (B) in the case of
a Highly Compensated Employee who is currently employed by an
Employer or Affiliated Employer, the greater of his Earnings for
the Plan Year in question or for the prior Plan Year.
b. Subject to paragraph (c) below, a Restricted Participant may not receive
his benefits under this Plan in the form of a single-sum payment, or
other benefit form under which payments during a single year would
exceed the annual payments that would be made on behalf of the
Participant under (i) a single life annuity that is the Actuarial
Equivalent of his Benefits (other than a social supplement and benefits
described in paragraph (c)(i) below), and (ii) the amount of payments,
if any, the Participant is entitled to receive under a social security
supplement.
c. The limitation of paragraph (b) above shall not apply to:
i. any payment of benefit attributable to transferred balances from
defined contribution plans or to employee contributions,
ii. any payment, if the value of Plan assets after such payment
equals or exceeds 110 percent of the value of the Plan's
"current liabilities" (within the meaning of Section 412(1)(7)
of the Code),
iii. any payment, if the value of the Restricted Participant's
Benefits is less than one percent of the value of such "current
liabilities", or
iv. any payment, if the value of the Restricted Participant's
Benefits does not exceed $5,000.
d. In the event that Congress provides by statute, or the Internal Revenue
Service provides by regulation or ruling, that the limitations set forth
in this Section 12.08 are not necessary for the Plan to meet the
requirements of Section 401(a) or other applicable provisions of the
Code then in effect, such limitations shall become void and shall no
longer apply without necessity of further amendment to the Plan.
12.09 GOVERNING LAW
The Plan will be construed, administered, and enforced according to the
laws of the State of Delaware (without regard to its choice-of-law
principles) to the extent such laws are not inconsistent with or
preempted by ERISA.
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ARTICLE XIII - PARTICIPATING EMPLOYERS
13.01 PARTICIPATION BY AFFILIATED EMPLOYERS
Any Affiliated Employer so designated by the Board shall participate
herein and be known as a Participating Employer. Each such Participating
Employer shall be required to use the same Trustee as provided in the
Plan.
13.02 DESIGNATION OF AGENT
Each Participating Employer shall be deemed to be a party to the Plan,
provided, however, that with respect to all of its relations with the
Trustee and the Retirement Committee for the purpose of the Plan, each
Participating Employer shall be deemed to have designated irrevocably
the Sponsoring Employer as its agent.
13.03 DISCONTINUANCE OF PARTICIPATION
The Board may elect at any time to discontinue the participation of any
Participating Employer under the Plan, in whole or in part with respect
to any of such Participating Employer's divisions, locations or other
employee groups.
13.04 THE RETIREMENT COMMITTEE'S AUTHORITY
The Retirement Committee shall have authority and discretion to make any
and all necessary rules or regulations, binding upon all Participating
Employers and all Participants, to effectuate the purpose of this
Article.
IN WITNESS WHEREOF, the Sponsoring Employer has caused this instrument
to be executed by its duly authorized officer and its corporate seal to be
affixed hereto on this _____ day of _________, 2003.
Rexnord Corporation
By:
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Title:
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APPENDIX A
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