RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
As Amended and Restated Effective January 1, 1999
ARTICLE I
Adoption of the Plan
1.1 Amendment and Restatement.
(a) The Raytheon Employee Savings and Investment Plan (the "Plan") was
originally established effective July 1, 1987, as the Badger Savings and
Investment Plan. Raytheon Company, a corporation organized under the laws of the
state of Delaware, adopted the Plan effective May 12, 1993, and changed its name
to the Raytheon Employee Savings and Investment Plan. Raytheon Company desires
to amend and restate the Plan in its entirety effective January 1, 1999. The
amended and restated Plan shall consist of three portions - (1) a profit sharing
plan that includes a cash or deferred arrangement under section 401(k) of the
Code ("401(k) Portion"), (2) a stock bonus plan ("Stock Bonus Portion"), and (3)
a stock bonus plan that constitutes an employee stock ownership plan within the
meaning of section 4975(e)(7) of the Code ("ESOP Portion"). Except as otherwise
provided herein, the provisions of the Plan shall apply in the same manner to
the 401(k), Stock Bonus and ESOP Portions of the Plan.
(b) In accordance with sections 4.5(a) and 15.1 of the Plan, effective
January 1, 1999 (except as otherwise indicated below), all or a portion of the
following qualified retirement plans shall merge into and become part of the
Plan:
Raytheon Savings and Investment Plan for Specified Hourly Employees
Raytheon Tucson Bargaining Savings and Investment Plan (10013)
Raytheon Savings and Investment Plan (10014)
Serv-Air, Inc. Savings and Retirement Plan (merger effective
January 14, 1999)
Raytheon Stock Ownership Plan for Specified Hourly Employees
(c) The Plan is intended to comply with all of the applicable
requirements under sections 401(a), 401(k) and 4975(e)(7) of the Code and the
terms of the Plan shall be interpreted consistent therewith.
1.2 Trust. The Trust shall be the sole source of benefits under the
Plan and the Adopting Employers or any Affiliate shall not have any liability
for the adequacy of the benefits provided under the Plan.
1.3 Effective Date.
(a) General Effective Date: The amended and restated Plan
shall be effective as of January 1, 1999, or such other dates as may be
specifically provided herein or as otherwise required by law for the Plan to
satisfy the requirements of section 401(a) of the Code.
(b) Special Effective Dates: The following special effective
dates apply with respect to the Plan, including the separate plans merged into
the Plan effective January 1, 1999 and identified in section 1.1(b):
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(1) Section 3.6 shall be effective on and after December 12, 1994, in
accordance with the requirements of section 414(u) of the Code.
(2) For Plan Years beginning after December 31, 1997 and before January 1,
1999, the definition of compensation used to apply the limitations on
contributions and benefits under section 415 of the Code shall include any
elective deferral (as defined in section 402(g)(3)), and any amount which is
contributed or deferred by the Employer at the election of a Participant and
which is not includible in the gross income of the Participant by reason of
section 125 or 457 of the Code.
(3) Section 2.31 shall be effective for Plan Years beginning after
December 31, 1996.
(4) Section 8.2(f) shall be effective for Plan Years beginning after
December 31, 1996.
(5) For Plan Years beginning after December 31, 1996, the family
aggregation rules prescribed in sections 414(q) and 401(a)(17) of the Code shall
no longer apply.
(6) Sections 8.2(b) and (c) shall apply with respect to distributions made
on or after the first Pay Period commencing on or after September 25, 1998.
(7) Section 2.34 shall be effective for Plan Years beginning after December
31, 1996.
(8) Sections 4.8 though 4.12 shall be effective for Plan Years beginning
after December 31, 1996.
1.4 Adoption of Plan. With the prior approval of the Senior Vice
President of Human Resources of the Company or other officer to whom authority
to approve participation by an entity is delegated by the Board of Directors,
the Plan and Trust may be adopted by any corporation or other entity
(hereinafter referred to as an Adopting Employer). Such adoption shall be made
by the Adopting Employer taking the actions designated by the Administrator as
appropriate to the proper adoption and operation of the Plan and Trust. In the
event of the adoption of the Plan and Trust by an Adopting Employer, the Plan
and Trust shall be interpreted in a manner consistent with such adoption. The
Adopting Employers shall be listed in Exhibit A attached to this Plan.
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1.5 Withdrawal of Adopting Employer.
(a) An Adopting Employer's adoption of this Plan may be
terminated, voluntarily or involuntarily, at any time, as provided in this
section.
(b) An Adopting Employer shall withdraw from the Plan and
Trust if the Plan and Trust, with respect to that Adopting Employer, fail to
qualify under sections 401(a) and 501(a) of the Code (or, in the opinion of the
Administrator, they may fail to so qualify) and the continued sponsorship of
that Adopting Employer may jeopardize the status with respect to the Company or
the remaining Adopting Employers, of the Plan and Trust under sections 401(a)
and 501(a) of the Code. The Adopting Employer shall receive at least thirty (30)
days prior written notice of a withdrawal under this subsection, unless a
shorter period is agreed to.
(c) An Adopting Employer may voluntarily withdraw from the
Plan and Trust for any reason. Such withdrawal requires at least thirty (30)
days written notice to the Administrator and the Trustee, unless a shorter
period is agreed to.
(d) Upon withdrawal, the Trustee shall segregate the assets
attributable to Employees of the withdrawn Adopting Employer, the amount thereof
to be determined by the Administrator and the Trustee. The segregated assets
shall be held, paid to another trust, distributed or otherwise disposed of as is
appropriate under the circumstances; provided, however, that any transfer shall
be for the exclusive benefit of Participants and their Beneficiaries. A
withdrawal of an Adopting Employer from the Plan is not necessarily a
termination under ARTICLE XIV. If the withdrawal is a termination, then the
provisions of ARTICLE XIV shall also be applicable.
ARTICLE II
Definitions
The following terms have the meaning specified below unless the context
indicates otherwise:
2.1 Account. The entire interest of a Participant in the Trust Fund.
A Participant's Account shall consist of the following subaccounts: an Elective
Deferral Account and, where applicable, an Employee After-Tax Contribution
Account, a Matching Contribution Account, an ESOP Contribution Account, an
Employer Contribution Account, a Rollover Contribution Account and a Qualified
Nonelective Contribution Account. The Administrator may set up such additional
subaccounts as it deems necessary for the proper administration of the Plan.
2.2 Acquisition Loan. A loan or other extension of credit used by the
Trustee to finance the acquisition of Common Stock with respect to the ESOP
Portion of the Plan, which loan may constitute an extension of credit to the
Trust from a party in interest (as defined in ERISA).
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2.3 Administrator. The person, persons, corporation, committee, group
or organization designated to be the Administrator of the Plan and to perform
the duties of the Administrator. Until and unless otherwise designated, the
Administrator shall be the Company.
2.4 Adopting Employers. Any corporation or other entity that elects to
participate in the Plan on account of some or all of its Employees, provided
that participation in the Plan by such entity is approved by the Senior Vice
President of Human Resources of the Company or other officer to whom authority
to approve participation by an entity is delegated by the Board of Directors. If
an adopting entity does not participate in the Plan with respect to all of its
Eligible Employees, the term "Adopting Employer" shall include only those
divisions, operations or similar cohesive groups of the adopting entity that
participate in the Plan. The Adopting Employers, and, if applicable, the
divisions, operations or similar cohesive groups of such Adopting Employers that
participate in the Plan, shall be listed in Exhibit A to this Plan.
2.5 Affiliate. A trade or business that, together with an Adopting
Employer is a member of (i) a controlled group of corporations within the
meaning of section 414(b) of the Code; (ii) a group of trades or businesses
(whether or not incorporated) under common control as defined in section 414(c)
of the Code, or (iii) an affiliated service group as defined in section 414(m)
of the Code, or which is an entity otherwise required to be aggregated with the
Adopting Employer pursuant to section 414(o) of the Code. For purposes of
ARTICLE X, the determination of controlled groups of corporations and trades or
businesses under common control shall be made after taking into account the
modification required under section 415(h) of the Code. All such entities,
whether or not incorporated, shall be treated as a single employer to the extent
required by the Code.
2.6 Authorized Leave of Absence. An absence approved by an Adopting
Employer on a uniform and nondiscriminatory basis not exceeding one (1) year for
any of the following reasons: illness of an Employee or a relative, the death of
a relative, education of the Employee, or personal or family business of an
extraordinary nature, provided in each case that the Employee returns to the
service of the Adopting Employer within the time period specified by the
Adopting Employer.
2.7 Beneficiary. The person or persons (including a trust or trusts)
who are entitled to receive benefits from a deceased Participant's Account after
such Participant's death (whether or not such person or persons are expressly so
designated by the Participant).
2.8 Board of Directors. The Board of Directors of Raytheon Company.
2.9 Code. The Internal Revenue Code of 1986, as amended.
2.10 Common Stock. Raytheon Company Class B common stock.
2.11 Company. Raytheon Company.
2.12 Compensation.
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(a) (1) Except as otherwise provided herein and in Exhibit C
to this Plan, the base pay (including vacation and sick pay for unused vacation
and sick leave), supervisory differentials, shift premiums and sales commissions
paid to a Participant by the Employer, excluding all other earnings from any
source.
(2) In all cases, however, notwithstanding any exclusions
above, Compensation shall include any amount which would otherwise be deemed
Compensation under this subsection 2.13(a) but for the fact that it is deferred
pursuant to a salary reduction agreement under this Plan or under any plan
described in section 401(k) or 125 of the Code.
(b) The Compensation of each Participant for any year shall
not exceed one hundred fifty thousand dollars ($150,000), as adjusted for
increases in the cost-of-living in accordance with section 401(a)(17)(B) of the
Code.
(c) Unless otherwise indicated herein, Compensation shall be
determined only on the basis of amounts paid during the Plan Year, including any
Plan Year with a duration of fewer than twelve (12) months.
(d) The Compensation of a person who becomes a Participant
during the Plan Year shall only include amounts paid after the date on which
such person was admitted as a Participant.
2.13 Current Market Value. The closing price of the Common Stock on the
New York Stock Exchange on the Trade Day immediately preceding the Trade Day on
which the Common Stock is allocated to the Participants' Accounts in accordance
with the terms of the Plan.
2.14 Disability. A Participant who is totally and permanently disabled
by bodily injury or disease so as to be prevented from engaging in any
occupation for compensation or profit. The determination of Disability shall be
made by the Administrator with the aid of competent medical advice. It shall be
based on such evidence as the Administrator deems necessary to establish
Disability or the continuation thereof.
2.15 Effective Date. The effective date of this amendment and
restatement of the Plan shall be January 1, 1999, or such other dates as may be
specifically provided in section 1.3 or as otherwise required by law for the
Plan to satisfy the requirements of section 401(a) of the Code.
2.16 Elective Deferral. A voluntary reduction of a Participant's
Compensation in accordance with section 4.1(a) hereof that qualifies for
treatment under section 402(e)(3) of the Code. A Participant's election to make
Elective Deferrals may be made only with respect to an amount that the
Participant could otherwise elect to receive in cash and that is not currently
available to the Participant.
2.17 Elective Deferral Account. That portion of a Participant's Account
which is attributable to Elective Deferrals, adjusted for withdrawals and
distributions, and the earnings and losses attributable thereto.
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2.18 Eligible Employee. A person who is an Employee of an Adopting
Employer who:
(a) is on a United States-Based Payroll;
(b) is not employed in a position or classification within a
bargaining unit which is covered by a collective bargaining agreement with
respect to which retirement benefits were the subject of good faith bargaining
(unless such agreement provides for coverage hereunder of Employees of such
unit);
(c) is not assigned on the books and records of the Employer
to any division, operation or similar cohesive group of an Adopting Employer
that is excluded from participation in the Plan by the Board of Directors or a
duly authorized officer;
(d) is not eligible to participate in the Raytheon Savings and
Investment Plan or the Raytheon Savings and Investment Plan for Employees in
Puerto Rico; and
(e) is not a Leased Employee or any other person who performs
services for an Adopting Employer other than as an Employee.
2.19 Employee. Except to the extent otherwise provided herein, any
person employed by an Employer who is expressly so designated as an employee on
the books and records of the Employer and who is treated as such by the Employer
for federal employment tax purposes. Any person who, after the close of a Plan
Year, is retroactively treated by the Employer or any other party as an employee
for such prior Plan Year shall not, for purposes of the Plan, be considered an
Employee for such prior Plan Year unless expressly so treated as such by the
Employer.
2.20 Employee After-Tax Contributions. Voluntary contributions made by
Participants on an after-tax basis in accordance with section 4.1(b) of the
Plan.
2.21 Employee After-Tax Contribution Account. That portion of a
Participant's Account which is attributable to Employee After-Tax Contributions,
adjustments for withdrawals and distributions, and the earnings and losses
attributable thereto.
2.22 Employer. An Adopting Employer and any Affiliate thereof (whether
or not such Affiliate has elected to participate in the Plan).
2.23 Employer Contributions. Any contribution by the Adopting Employers
to the Trust pursuant to section 4.1(d).
2.24 Employer Contribution Account. That portion of a Participant's
Account which is attributable to Employer Contributions received pursuant to
section 4.1(d), adjusted for withdrawals and distributions, and the earnings and
losses attributable thereto.
2.25 Employment Commencement Date. The date on which an individual
first performs an Hour of Service with the Employer.
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2.26 ERISA. The Employee Retirement Income Security Act of 1974,
as amended.
2.27 ESOP Contributions. Any contribution by the Adopting Employers to
the Trust pursuant to section 4.3(a).
2.28 ESOP Contribution Account. That portion of a Participant's Account
which is attributable to ESOP Contributions received pursuant to section 4.3(a),
adjusted for withdrawals and distributions, and the earnings and losses
attributable thereto.
2.29 Fiduciary. Any person who exercises any discretionary authority or
discretionary control over the management of the Plan, or exercises any
authority or control respecting management or disposition of Plan assets; who
renders investment advice for a fee or other compensation, direct or indirect,
as to assets held under the Plan, or has any authority or discretionary
responsibility in the administration of the Plan. This definition shall be
interpreted in accordance with section 3(21) of ERISA.
2.30 Financed Shares. Shares of Common Stock acquired by the Trust with
the proceeds of an Acquisition Loan.
2.31 Highly Compensated Employee.
(a) Any Employee who:
(1) is a five percent (5%) owner at any time during the Plan
Year or the preceding Plan Year; or
(2) for the preceding Plan Year received Compensation in excess
of the amount specified in section 414(q)(1)(B)(i) of the Code.
(b) A former Employee will be treated as a Highly Compensated
Employee if the former Employee was a Highly Compensated Employee at the time of
his or her separation from service or the former Employee was a Highly
Compensated Employee at any time after attaining age fifty-five (55).
(c) The dollar amount incorporated under subsection (a)(2)
shall be adjusted as provided in section 414(q)(1) of the Code.
(d) For purposes of this section, the term "Compensation"
means compensation as defined under section 414(q)(4) of the Code.
(e) This section shall be interpreted in a manner consistent
with section 414(q) of the Code and the regulations thereunder and shall be
interpreted to permit any elections permitted by such regulations to be made.
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2.32 Hour of Service.
(a) Any hour for which any person is directly or indirectly
paid (or entitled to payment) by the Employer for the performance of duties as
an Employee, as determined from the appropriate records of the Employer.
(b) In computing Hours of Service, a person shall also be
credited with Hours of Service based on the person's previous customary service
with the Employer (not exceeding either eight (8) hours per day or forty (40)
hours per week), for the following periods:
(1) periods (limited to a maximum of five hundred one
(501) hours for any single, continuous period) for which the person is directly
or indirectly paid for reasons other than the performance of duties, such as
vacation, holiday, sickness, disability, layoff, jury duty or military duty;
(2) periods for which any federal law requires that
credit for service be given;
and
(3) periods for which back pay (irrespective of mitigation
of damages) is either awarded or agreed to by the Employer.
(c) Hours of Service shall also include each hour for which an
Employee is entitled to credit under subsection (a) as a result of employment
with:
(1) a predecessor company substantially all the assets of
which have been acquired by the Company, provided that where only a portion of
the operations of a company has been acquired, only service with said acquired
portion prior to the acquisition will be included and that the Employee was
employed by said predecessor company at the time of acquisition; or
(2) a division, operation or similar cohesive group
of the Employer excluded from participation in the Plan.
(d) The provisions of subsection (b) shall be further limited
to prevent duplication by only permitting a person to receive credit for one (1)
Hour of Service for any given hour.
(e) Hours of Service shall be computed and credited in
accordance with the Department of Labor regulations under section 2530.200b.
2.33 Layoff. An involuntary interruption of service due to reduction of
work force with the possibility of recall to employment when conditions warrant.
2.34 Leased Employee. Any person (other than an Employee) who, pursuant
to an agreement between the Employer and any other person, has performed
services for the Employer (or any related person as provided in section
414(n)(6) of the Code) on a substantially full-time basis for a period of at
least one (1) year and such services are performed under primary direction or
control of the Employer. Leased Employees are not eligible to participate in the
Plan.
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2.35 Matching Contributions. Contributions made to the Trust in
accordance with section 4.2 hereof.
2.36 Matching Contribution Account. That portion of a Participant's
Account which is attributable to Matching Contributions received pursuant to
section 4.2, adjusted for withdrawals and distributions, and the earnings and
losses attributable thereto.
2.37 Normal Retirement Age. The Participant's sixty-fifth (65th)
birthday.
2.38 Participant. An individual who is enrolled in the Plan pursuant to
ARTICLE III and has not received a distribution of all of the funds credited to
his or her Account (or had such funds fully forfeited). In the case of an
Eligible Employee who makes a Rollover Contribution to the Plan under section
4.4(a)(3) prior to enrollment under ARTICLE III, such Eligible Employee shall,
until he or she enrolls under ARTICLE III, be considered a Participant for the
limited purposes of maintaining and receiving his or her Rollover Contribution
Account under the terms of the Plan.
2.39 Pay Period. A period scheduled by an Adopting Employer for payment
of wages or salaries.
2.40 Period of Participation. That portion of a Period of Service
during which an Eligible Employee was a Participant and had an Elective Deferral
Account in the Plan or another plan merged into this Plan and identified in
section 1.1(b) (with no more than five (5) years of participation credited with
respect to such merged plans).
2.41 Period of Service. The period of time beginning on the Employee's
Employment Commencement Date or Reemployment Commencement Date, whichever is
applicable, and ending on the Employee's Severance from Service Date.
2.42 Period of Severance. The period of time beginning on the
Employee's Severance from Service Date and ending on the Employee's Reemployment
Commencement Date.
2.43 Plan. The Raytheon Employee Savings and Investment Plan as
amended from time to time.
2.44 Plan Year. The annual twelve- (12) month period beginning on
January 1 of each year and ending on December 31 of each year.
2.45 Qualified Military Service. Any period of duty on a voluntary or
involuntary basis in the United States Armed Forces, the Army National Guard and
the Air National Guard when engaged in active duty for training, inactive duty
for training or full-time National Guard duty, the commissioned corps of the
Public Health Service and any other category of persons designated by the
President of the United States in time of war or emergency. Such periods of duty
shall include active duty, active duty for training, initial active duty for
training, inactive duty training, full-time National Guard duty and absence from
employment for an examination to determine fitness for such duty.
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2.46 Qualified Nonelective Contributions. Any contributions by the
Adopting Employers to the Trust pursuant to section 4.1(c). Qualified
Nonelective Contributions are one hundred percent (100%) vested when made and
are subject to the special distribution restrictions prescribed in section
8.2(e).
2.47 Qualified Nonelective Contribution Account. That portion of a
Participant's Account that is attributable to Qualified Nonelective
Contributions received pursuant to section 4.1(c), adjusted for withdrawals and
distributions, and the earnings and losses attributable thereto.
2.48 Recordkeeper. The organization designated by the Administrator to
be the recordkeeper for the Plan. Until and unless otherwise designated, the
Recordkeeper shall be Fidelity Investments.
2.49 Reemployment Commencement Date. The first date on which the
Employee performs an Hour of Service following a Period of Severance that is
excluded under section 6.4 in determining whether a Participant has a
nonforfeitable right to his or her Matching Contribution and ESOP Contribution
Accounts.
2.50 Retirement. A termination of employment that occurs after a
Participant has either attained age 55 and completed a Period of Service of at
least ten (10) years or has attained Normal Retirement Age.
2.51 Rollover Contributions. A transfer that qualifies under either
section 402(c) or 403(a)(4) of the Code.
2.52 Rollover Contribution Account. That portion of a Participant's
Account which is attributable to Rollover Contributions received pursuant to
section 4.4, adjusted for withdrawals and distributions, and the earnings and
losses attributable thereto.
2.53 Severance from Service. The termination of employment by reason of
quit, Retirement, discharge, Layoff or death; or the failure to return from
Authorized Leave of Absence, Qualified Military Service or Disability.
2.54 Severance from Service Date. The earliest of:
(a) the date on which an Employee resigns, retires, is
discharged, or dies; or
(b) except as provided in paragraphs (c), (d), (e) and (f)
hereof, the first anniversary of the first date of a period during which an
Employee is absent for any reason other than resignation, retirement, discharge
or death, provided that, on an equitable and uniform basis, the Administrator
may determine that, in the case of a Layoff as the result of a permanent plant
closing, the Administrator may designate the date of Layoff or other appropriate
date before the first anniversary of the first date of absence as the Severance
from Service Date; or
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(c) in the case of a Qualified Military Service leave of
absence from which the Employee does not return before expiration of recall
rights, Severance from Service Date means the first day of absence because of
the leave; or
(d) in the case of an absence due to Disability, Severance
from Service Date means the earlier of the first anniversary of the first day of
absence because of the Disability or the date of termination of the Disability;
or
(e) in the case of an Employee who is discharged or resigns
(i) by reason of the pregnancy of the Employee, (ii) by reason of the birth of a
child to the Employee, (iii) by reason of the placement of a child with the
Employee in connection with the adoption of such child by the Employee or (iv)
for purposes of caring for such child for a period beginning immediately
following such birth or placement, "Severance from Service Date, for the sole
purpose of determining the length of a Period of Service, shall mean the first
anniversary of the resignation or discharge; or
(f) in the case of an Employee who is absent from service
beyond the first anniversary of the first day of absence (i) by reason of the
pregnancy of the Employee, (ii) by reason of the birth of a child to the
Employee, (iii) by reason of the placement of a child with the Employee in
connection with the adoption of such child by the Employee or (iv) for purposes
of caring for such child for a period beginning immediately following such birth
or placement, the Severance from Service Date shall be the second anniversary of
the first day of such absence. The period between the first and second
anniversaries of the first day of absence is neither a Period of Service nor a
Period of Severance.
2.55 Surviving Spouse. A person who was legally married to the
Participant immediately before the Participant's death.
2.56 Trade Day. Days on which the Recordkeeper is able to make
transfers of Plan assets.
2.57 Trust. The Raytheon Company Master Trust for Defined Contribution
Plans and any successor agreement made and entered into for the establishment of
a trust fund of all contributions which may be made to the Trustee under the
Plan.
2.58 Trustee. The Trustee and any successor trustees under the Trust.
2.59 Trust Fund. The cash, securities, and other property held by the
Trustee for the purposes of the Plan.
2.60 United States-Based Payroll. A payroll maintained by the Company
or an adopting Employer that is designated as a United States payroll on the
books and records of the Company or Adopting Employer and that is subject to
United States Wage Withholding and reporting laws.
2.61 Valuation Date. Any day that the New York Stock Exchange is open
for trading.
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ARTICLE III
Eligibility
3.1 Eligibility Requirements. Each Eligible Employee who is a
Participant in the Plan (or a plan that merged into the Plan and that is
identified in Section 1.1(b)) on the Effective Date (or, if later, the date of
plan merger) shall continue to participate in the Plan, in accordance with the
terms and conditions of the Plan as amended and restated herein. Each other
Eligible Employee and any person who subsequently becomes an Eligible Employee
may join the Plan immediately following his or her Employment Commencement Date
(or, if later, the date an Employee becomes an Eligible Employee).
3.2 Procedure for Joining the Plan. Each Eligible Employee may join the
Plan by communicating with the Recordkeeper in accordance with the instructions
that will be made available to each Eligible Employee. An enrollment in the Plan
shall not be deemed to have been completed until the Eligible Employee has
designated: (i) a percentage by which his or her Compensation shall be reduced
as an Elective Deferral in accordance with the requirements of section 4.1(a);
(ii) election of investment funds in accordance with ARTICLE V; (iii) one or
more Beneficiaries; and (iv) such other information as specified by the
Recordkeeper. Enrollment will be effective as of the first Pay Period following
completion of enrollment for which it is administratively feasible to carry out
such enrollment. The Administrator, in its discretion, may from time to time
make exceptions and adjustments in the foregoing procedures on a uniform and
nondiscriminatory basis.
3.3 Transfer Between Adopting Employers to Position Covered by Plan. A
Participant who is transferred to a position with another Adopting Employer in
which the Participant remains an Eligible Employee will continue as an active
Participant of the Plan.
3.4 Transfer to Position Not Covered by Plan. If a Participant is
transferred to a position with an Employer in which the Participant is no longer
an Eligible Employee, the Participant will remain a Participant of the Plan with
respect to contributions previously made but shall no longer be eligible to have
Elective Deferrals made to the Plan on his or her behalf until he or she again
becomes an Eligible Employee. In the event the Participant is subsequently
transferred to a position in which he or she again becomes an Eligible Employee,
the Participant may renew Elective Deferrals by communicating with the
Recordkeeper and providing all of the information requested by the Recordkeeper.
The renewal of Elective Deferrals will be effective as of the first Pay Period
following receipt by the Recordkeeper of the requested information for which it
is administratively feasible to re-enroll such Participant.
3.5 Transfer to Position Covered by Plan. If an Employee who is not
eligible to participate in the Plan by reason of his or her position with an
Employer is transferred to a position that is eligible to participate in the
Plan, such Employee may join the plan immediately following the effective date
of the new position in accordance with the procedures prescribed Section 3.2.
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3.6 Treatment of Qualified Military Service. Notwithstanding any
provision of this Plan to the contrary, contributions, benefits and service
credit with respect to Qualified Military Service will be provided in accordance
with section 414(u) of the Code.
ARTICLE IV
Contributions
4.1 401(k) Portion of the Plan.
(a) (1) Elective Deferrals: Except as otherwise provided
herein and in Exhibit C to this Plan, a Participant may authorize an Adopting
Employer to reduce his or her Compensation on a pre-tax basis by an amount equal
to any whole percentage of Compensation that does not exceed seventeen percent
(17%) and to have such amount contributed to the Plan as an Elective Deferral.
(2) A Participant shall not be permitted to make
Elective Deferrals during any calendar year in excess of seven thousand dollars
($7,000), as adjusted for increases in the cost-of-living in accordance with
section 402(g)(5) of the Code. A Participant may affirmatively designate that in
the event his or her Elective Deferrals are limited in accordance with the
preceding sentence in this subsection (a)(2) and the Participant is eligible to
make Employee After-Tax Contributions under section 4.1(b), all future deferrals
of Compensation shall be on an after-tax basis and shall be re-characterized as
Employee After-Tax Contributions under section 4.1(b). This re-characterization
shall take effect as of the first Pay Period by which it is administratively
feasible to make such re-characterization.
(3) Except as otherwise provided in Exhibit C to this
Plan, the Elective Deferrals and Employee After-Tax Contributions (if
applicable) made on behalf of each Participant shall not in the aggregate exceed
seventeen percent (17%) of the Participant's Compensation for any Plan Year.
(4) A Participant may change his or her Elective Deferral
percentage to increase or decrease said percentage by notifying the
Recordkeeper, such change to take effect as of the first Pay Period by which it
is administratively feasible to make such change.
(5) A Participant may not make Elective Deferrals with
respect to Compensation that has already been made available to the Participant.
(b) (1) Employee After-Tax Contributions: Except as otherwise
provided herein and in Exhibit C to this Plan, the Eligible Employees of each
Adopting Employer listed in Exhibit C to this Plan may authorize the Adopting
Employer to reduce their Compensation on an after-tax basis by an amount equal
to any whole percentage of Compensation that does not exceed seventeen percent
(17%) and to have such amount contributed to the Plan as an Employee After-Tax
Contribution.
(2) Except as otherwise provided in Exhibit C to this Plan,
the Elective Deferrals and Employee After-Tax Contributions made on behalf of
each Participant shall not in the aggregate exceed seventeen percent (17%) of
the Participant's Compensation for any Plan Year.
<PAGE>
14
(3) A Participant may change his or her Employee After-Tax
Contribution percentage to increase or decrease said percentage by notifying the
Recordkeeper, such change to take effect as of the first Pay Period by which it
is administratively feasible to make such change.
(c) (1) Qualified Nonelective Contributions -- Discretionary
Amounts: Each Plan Year the Adopting Employers may contribute to the Trust such
amounts as determined by the Senior Vice President of Human Resources of the
Company or other officer to whom authority to determine contributions is
delegated by the Board of Directors, in his or her sole discretion. Any amounts
contributed under this subsection are to be designated by the Adopting Employers
as Qualified Nonelective Contributions.
(2) Qualified Nonelective Contributions - Specified Amounts:
Each Adopting Employer listed in Exhibit C to this Plan shall make Qualified
Nonelective Contributions on behalf of its Eligible Employees in accordance with
the Qualified Nonelective Contribution formula prescribed in Exhibit C to this
Plan.
(3) Qualified Nonelective Contributions -- Service
Contract Act Reconciliation
Amounts: Each Plan Year the Adopting Employers may contribute to the Trust
such amounts as determined by the Senior Vice President of Human Resources of
the Company or other officer to whom authority to determine contributions is
delegated by the Board of Directors, in his or her sole discretion, consisting
of the entire amount or any part of any deficiency between health and welfare
and/or pension contributions actually made under a contract covered by the
Service Contract Act and the amount of such contribution or contributions
required by a wage determination issued under the contract. Such amount shall be
calculated in accordance with the formula specified in 29 CFR Section 4.175 as
follows:
The total amount contributed for a month, calendar or contract
quarter, or other specified time is divided by the total hours
worked under the contract by service employees subject to the
Act during the period in question to determine an hourly
contribution rate.
The difference between the contribution rate required in the determination and
the actual contribution may be contributed to the Plan on behalf of each
Eligible Employee for purposes of fulfilling the Employer's fringe benefit
obligations under the Service Contract Act.
(d) Employer Contributions: Each Adopting Employer listed in
Exhibit C to this Plan shall make Employer Contributions on behalf of its
Eligible Employees in accordance with the Employer Contribution formula
prescribed in Exhibit C to this Plan.
<PAGE>
15
4.2 Stock Bonus Portion of the Plan - Matching Contributions. Each
Adopting Employer listed in Exhibit C to this Plan shall make Matching
Contributions on behalf of its Eligible Employees in accordance with the
Matching Contribution formula prescribed in Exhibit C to this Plan.
4.3 ESOP Portion of the Plan.
(a) ESOP Contributions: Each Adopting Employer listed in Exhibit C
to this Plan shall make an ESOP Contribution equal to one-half of one percent
(0.5%) of its Eligible Employees' Compensation for each Plan Year. The ESOP
Contribution may be made in cash, Common Stock or a combination thereof at the
discretion of the Adopting Employers. Within a reasonable period of time before
the allocation to individual accounts as specified in subsection (b) below, the
Trustee shall use the ESOP Contribution, to the extent not contributed in Common
Stock, to acquire Common Stock which will be held by the Trustee for the benefit
of the eligible Participants in the Plan.
(b) Allocation of ESOP Contribution: As soon as administratively
feasible after the ESOP Contribution is made to the Plan, the Administrator
shall allocate the ESOP Contribution to the eligible Participants who received
Compensation during such Plan Year. The ESOP Contribution (consisting of Common
Stock and any residual cash) shall be allocated to those eligible Participants
in the same ratio as each such Participant's Compensation for the Plan Year
bears to the Total Compensation of all such eligible Participants for the Plan
Year.
4.4 Rollover Contributions.
(a) Participants may transfer into the Plan Qualifying
Rollover Amounts from other qualified plans or Conduit IRAs, subject to the
following terms and conditions:
(1) the transferred funds are received by the Trustee no
later than sixty (60) days from receipt by the Participant of a distribution
from another qualified plan or, in the event that the funds are transferred from
a Conduit IRA, no later than sixty (60) days from the date that the Participant
receives such funds from the individual retirement account;
(2) the Rollover Contributions transferred pursuant to this
section 4.4(a) shall be credited to the Participant's Rollover Contribution
Account and will be invested upon receipt by the Trustee; and
(3) a Rollover Contribution will not be accepted unless (A)
the Employee on whose behalf the Rollover Contribution will be made is
either a Participant or an Eligible Employee who has notified the Administrator
that he or she intends to become a Participant as of the first date on which he
or she is eligible therefor, and (B) all required information, including
selection of specific investment accounts, is provided to the Recordkeeper.
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16
(b) For purposes of this section, the following terms shall have
the meanings specified:
(1) Qualifying Rollover Amounts. Amounts that can be
transferred to the Plan under either section 402(c), 403(a)(4) or
408(d)(3)(A)(ii) of the Code.
(2) Conduit IRA. An individual retirement account described in
section 408(d)(3)(A)(ii) of the Code.
4.5 Direct Transfers.
(a) The Plan shall accept a transfer of assets, including
elective transfers in accordance with Treas. Regs. section 1.411(d)-4 Q&A-3(b)
and transfers in connection with a plan merger, directly from another plan
qualified under section 401(a) of the Code only if the Administrator, in its
sole discretion, agrees to accept such a transfer. In determining whether to
accept such a transfer, the Administrator shall consider the administrative
inconvenience engendered by such a transfer and any risks to the continued
qualification of the Plan under section 401(a) of the Code. Acceptance of any
such transfer shall not preclude the Administrator from refusing any such
subsequent transfers.
(b) Any transfer of assets accepted under this subsection
shall be separately accounted for at all times and shall remain subject to the
provisions of the transferor plan (as it existed at the time of such transfer)
to the extent required by section 411(d)(6) of the Code (including, but not
limited to, any rights to qualified joint and survivor annuities and qualified
preretirement survivor annuities) as if such provisions were part of the Plan.
In all other respects, however, such transferred assets will be subject to the
provisions of this Plan. The Administrator may, but is not required to, describe
in Exhibit B to this Plan the special provisions that must be preserved under
section 411(d)(6) of the Code, if any, following the transfer of assets from
another plan in accordance with this subsection (b).
(c) Assets accepted under this section shall be
nonforfeitable. Notwithstanding the preceding sentence, assets transferred in
connection with the plan mergers identified in section 1.1(b) shall vest in
accordance with the provisions of ARTICLE VI.
4.6 Refund of Contributions to the Adopting Employers. Notwithstanding
the provisions of ARTICLE XII, if, or to the extent that, any Adopting
Employer's deductions for contributions made to the Plan are disallowed, such
Adopting Employer will have the right to obtain the return of any such
contributions for a period of one (1) year from the date of disallowance. For
this purpose, all contributions are made, other than Employee After-Tax
Contributions, subject to the condition that they are deductible under the Code
for the taxable year of the Adopting Employers for which the contributions are
made. Furthermore, any contribution made on the basis of a mistake in fact may
be returned to the Adopting Employers within one (1) year from the date such
contribution was made.
4.7 Payment. The Adopting Employers shall pay to the Trustee in U.S.
currency, or by other property acceptable to the Trustee, all contributions for
each Plan Year within the time prescribed by law, including extensions granted
by the Internal Revenue Service, for filing the federal income tax return of the
Company for its taxable year in which such Plan Year ends. Unless designated by
the Adopting Employers as nondeductible, all contributions made, other than
Employee After-Tax Contributions, shall be deemed to be conditioned on their
current deductibility under section 404 of the Code.
<PAGE>
17
4.8 Limits for Highly Compensated.
(a) Elective Deferrals, Employee After-Tax Contributions,
Matching Contributions and Qualified Nonelective Contributions allocable to the
Accounts of Highly Compensated Employees shall not in any Plan Year exceed the
limits specified in this section. The Administrator may make the adjustments
authorized in this section to ensure that the limits of subsection (b) (or any
other applicable limits) are not exceeded, regardless of whether such
adjustments affect some Participants more than others. This section shall be
administered and interpreted in accordance with sections 401(k) and 401(m) of
the Code.
(b)(1) The Actual Deferral Percentage of the Highly
Compensated Employees shall not exceed, in any Plan Year, the greater of:
(A) one hundred twenty-five percent (125%) of the
Actual Deferral Percentage for all other Eligible Participants; or
(B) the lesser of two hundred percent (200%) of the
Actual Deferral Percentage for all other Eligible Participants or the Actual
Deferral Percentage for the other Eligible Participants plus two (2) percentage
points.
(2) The Actual Contribution Percentage of the Highly
Compensated Employees shall not exceed, in any Plan Year, the greater of:
(A) one hundred twenty five percent (125%) of the
Actual Contribution Percentage for all other Eligible Participants; or
(B) the lesser of two hundred percent (200%) of the
Actual Contribution Percentage for all other Eligible Participants or the Actual
Contribution Percentage for the other Eligible Participants plus two (2)
percentage points.
(3) The sum of the Actual Deferral Percentage and
the Actual Contribution Percentage for the Highly Compensated Employees shall
not exceed, in any Plan Year, the sum of:
(A) one hundred twenty-five percent (125%) of the
greater of:
(i) the Actual Deferral Percentage of the other Eligible
Participants; or
(ii) the Actual Contribution Percentage of the other Eligible
Participants; and
(B) two plus the lesser of:
(i) the amount in paragraph (3)(A)(i); or
(ii) the amount in paragraph (3)(A)(ii); provided that the
amount in this paragraph (3)(B) shall not exceed two hundred percent (200%) of
the lesser of the amount in paragraph (3)(A)(i) or the amount in paragraph
(3)(A)(ii).
<PAGE>
18
(4) The limitations under section 4.8(b)(3) shall be
modified to reflect any higher limitations provided by the Internal Revenue
Service under regulations, notices or other official statements.
(c) The following terms shall have the meanings specified:
(1) Actual Contribution Percentage. The average of the ratios for a designated
group of Employees (calculated separately for each Employee in the group) of the
sum of the Matching Contributions (other than those treated as part of the
Actual Deferral Percentage), Qualified Nonelective Contributions (other than
those treated as part of the Actual Deferral Percentage), Employee After-Tax
Contributions and Elective Deferrals (other than those treated as part of the
Actual Deferral Percentage) allocated for the applicable year on behalf of the
Participant, divided by the Participant's Compensation for such applicable year.
The "applicable year" for determining the Actual Contribution Percentage for the
group of Highly Compensated Employees shall be the current Plan Year. For all
other Eligible Participants, the "applicable year" for determining the Actual
Contribution Percentage shall be the current Plan Year, unless, in accordance
with the procedures prescribed by the Internal Revenue Service, the
Administrator elects to use the immediately preceding Plan Year. In the event
the Administrator elects to use the immediately preceding Plan Year for this
purpose for any Plan Year, the Administrator shall so indicate in Exhibit D to
this Plan.
(2) Actual Deferral Percentage. The average of the ratios for a designated group
of Employees (calculated separately for each Employee in the group) of the sum
of the Elective Deferrals, Qualified Nonelective Contributions and Matching
Contributions (that the Company elects to have treated as part of the Actual
Deferral Percentage) allocated for the applicable year on behalf of a
Participant, divided by the Participant's Compensation for such applicable year.
The "applicable year" for determining the Actual Deferral Percentage for the
group of Highly Compensated Employees shall be the current Plan Year. For all
other Eligible Participants, the "applicable year" for determining the Actual
Deferral Percentage shall be the current Plan Year, unless in accordance with
the procedures prescribed by the Internal Revenue Service, the Administrator
elects to use the immediately preceding Plan Year. In the event the
Administrator elects to use the immediately preceding Plan Year for this purpose
for any Plan Year, the Administrator shall so indicate in Exhibit D to this
Plan.
(3) Compensation. To the extent regulations permit the definition of
Compensation in ARTICLE II to be used, then such definition shall be applied for
purposes of this ARTICLE; provided, however, that to the extent such definition
is not so permitted, then Compensation shall include all compensation required
to be counted under section 414(s) of the Code; provided further, however, that
this definition shall not apply for purposes of the definition of Highly
Compensated Employee in section 2.21.
(4) Eligible Participant. Any Employee of the Company who is authorized under
the terms of the Plan to make Elective Deferrals, Employee After-Tax
Contributions or have Qualified Nonelective Contributions allocated to his or
her Account for the Plan Year.
<PAGE>
19
(d) For purposes of determining whether a plan satisfies the
Actual Contribution Percentage test of section 401(m), all Employee and matching
contributions that are made under two (2) or more plans that are aggregated for
purposes of section 401(a)(4) and 410(b) (other than section 410(b)(2)(A)(ii))
are to be treated as made under a single plan and that if two (2) or more plans
are permissively aggregated for purposes of section 401(m), the aggregated plans
must also satisfy section 401(a)(4) and 410(b) as though they were a single
plan.
(e) In calculating the Actual Contribution Percentage for
purposes of section 401(m), the actual contribution ratio of a Highly
Compensated Employee will be determined by treating all plans subject to section
401(m) under which the Highly Compensated Employee is eligible (other than those
that may not be permissively aggregated) as a single plan.
(f) For purposes of determining whether a plan satisfies the
Actual Deferral Percentage test of section 401(k), all elective contributions
that are made under two (2) or more plans that are aggregated for purposes of
section 401(a)(4) or 410(b) (other than section 410(b)(2)(A)(ii)) are to be
treated as made under a single plan and that if two (2) or more plans are
permissively aggregated for purposes of section 401(k), the aggregated plans
must also satisfy sections 401(a)(4) and 410(b) as though they were a single
plan.
(g) In calculating the Actual Deferral Percentage for purposes
of section 401(k), the actual deferral ratio of a Highly Compensated Employee
will be determined by treating all cash or deferred arrangements under which the
Highly Compensated Employee is eligible (other than those that may not be
permissively aggregated) as a single arrangement.
(h) An elective contribution will be taken into account under
the Actual Deferral Percentage test of section 401(k)(3)(A) of the Code for a
Plan Year only if it is allocated to the Employee as of a date within that Plan
Year. For this purpose, an elective contribution is considered allocated as of a
date within a Plan Year if the allocation is not contingent on participation or
performance of services after such date and the elective contribution is
actually paid to the Trust no later than twelve (12) months after the Plan Year
to which the contribution relates.
4.9 Correction of Excess Contributions.
(a) Excess Contributions shall be corrected as provided in
this section. The Administrator may also prevent anticipated Excess
Contributions as provided in this section. The Administrator may use any method
of correction or prevention provided in this section or any combination thereof,
as it determines in its sole discretion. This section shall be administered and
interpreted in accordance with sections 401(k) and 401(m) of the Code.
(b) The Administrator may refuse to accept any or all
prospective Elective Deferrals to be contributed by a Participant.
<PAGE>
20
(c) (1) The Company may, in its sole discretion, elect to
contribute, as provided in section 4.1(b), a Qualified Nonelective Contribution
in an amount necessary to satisfy any or all of the requirements of section 4.8.
(2) Qualified Nonelective Contributions for a Plan Year
shall only be allocated to the Accounts of Participants who are not Highly
Compensated Employees. Qualified Nonelective Contributions shall be allocated
first to the Participant with the lowest Compensation for that Plan Year and any
remaining Qualified Nonelective Contributions thereafter shall be allocated to
the Participant with the next lowest Compensation for that Plan Year. This
allocation method shall continue in ascending order of Compensation until all
such Qualified Nonelective Contributions are allocated. The allocation to any
Participant shall not exceed the limits under section 415 of the Code. If two or
more Participants have identical Compensation, the allocations to them shall be
proportional.
(3) Qualified Nonelective Contributions for a Plan Year
shall be contributed to the Trust within twelve (12) months after the close of
such Plan Year.
(4) Qualified Nonelective Contributions shall only be
allocated to Participants who receive Compensation during the Plan Year for
which such contribution is made.
(d) The Administrator may, during a Plan Year, distribute to a
Participant (or such Participant's Beneficiary if the Participant is deceased),
any or all Excess Contributions or Excess Deferrals (whether Elective Deferrals,
Company Contributions or Qualified Nonelective Contributions) allocable to that
Participant's Account for that Plan Year, notwithstanding any contrary provision
of the Plan. Such distribution may include earnings or losses (if any)
attributable to such amounts, as determined by the Administrator.
(e) (1) The Administrator may recharacterize any or all Excess
Contributions for a Plan Year as Employee contributions in accordance with the
provisions of this subsection. Any Excess Contributions that are so
recharacterized shall be treated as if the Participant had elected to instead
receive cash Compensation on the earliest date that any Payroll Reduction
Contribution made on behalf of the Participant during the Plan Year would have
been received had the Participant originally elected to receive such amount in
cash and then contributed such amount as an Employee contribution. To the extent
required by the Internal Revenue Service, however, such recharacterized Excess
Contributions shall continue to be treated as if such amounts were not
recharacterized.
(2) The Administrator shall report any recharacterized
Excess Contributions as Employee contributions to the Internal Revenue Service
and to the affected Participants at such times and in accordance with such
procedures as are required by the Internal Revenue Service. The Administrator
shall take such other actions regarding the amounts so recharacterized as may be
required by the Internal Revenue Service.
<PAGE>
21
(3) Excess Contributions may not be recharacterized under
this subsection more than two and one-half (2 1/2) months after the close of the
Plan Year to which the recharacterization relates. Recharacterization is deemed
to occur when the Participant is so notified (as required by the Internal
Revenue Service).
(4) The amount of Excess Contributions to be distributed
or recharacterized shall be reduced by excess deferrals previously distributed
for the taxable year ending in the same Plan Year and Excess Deferrals to be
distributed for a taxable year will be reduced by Excess Contributions
previously distributed or recharacterized for the Plan beginning in such taxable
year.
(f)(1) The Administrator may distribute any or all Excess
Contributions for a Plan Year in accordance with the provisions of this
subsection. Such distribution may only occur after the close of such Plan Year
and within twelve (12) months of the close of such Plan Year. In the event of
the termination of the Plan, such distribution shall be made within twelve (12)
months after such termination. Such distribution shall include the income
allocable to the amounts so distributed, as determined under this subsection.
The Administrator may make any special allocations of earnings or losses
necessary to carry out the provisions of this subsection. A distribution of an
Excess Contribution under this subsection may be made without regard to any
notice or consent otherwise required pursuant to sections 411(a)(11) and 417 of
the Code.
(2)(A) The income allocable to Excess Contributions
distributed under this subsection shall equal the allocable gain or loss for the
Plan Year. Income includes all earnings and appreciation, including such items
as interest, dividends, rent, royalties, gains from the sale of property,
appreciation in the value of stock, bonds, annuity and life insurance contracts,
and other property, without regard to whether such appreciation has been
realized.
(B) The allocable gain or loss for the Plan Year may be
determined under any reasonable method consistently applied by the
Administrator. Alternatively, the Administrator may, in its discretion,
determine such allocable gain or loss for the Plan Year under the method set
forth in subparagraph (C).
(C) Under this method, the allocable gain or loss for
the Plan Year is determined by multiplying the income for the Plan Year
allocable to Elective Deferrals (and amounts treated as Elective Deferrals) by a
fraction, the numerator of which is the Excess Contributions by the Participant
for the Plan Year and the denominator of which is the total Account balance of
the Participant attributable to Elective Deferrals (and amounts treated as
Elective Deferrals) as of the beginning of the Plan Year, increased by any
Elective Deferrals (and amounts treated as Elective Deferrals) by the
Participant for the Plan Year.
<PAGE>
22
(3) Amounts distributed under this subsection (or other
provisions of this section) shall first be treated as distributions from the
Participant's subaccounts in the following order:
(A) from the Participant's Payroll Reduction
Contribution subaccount (if such Excess Contribution is attributable to
Elective Deferrals);
(B) from the Participant's Qualified Nonelective
Contribution subaccount (if such Excess Contribution is attributable to
Qualified Nonelective Contributions); and
(C) from the Participant's Company Contribution
subaccount (if such Excess Contribution is attributable to Company
Contributions).
(g)(1) The term "Excess Contribution" shall mean, with
respect to a Plan Year, the excess of the Elective Deferrals (including any
Qualified Nonelective Contributions and Matching Contributions that are treated
as Elective Deferrals under sections 401(k)(2) and 401(k)(3) of the Code) on
behalf of eligible Highly Compensated Employees for the Plan Year over the
maximum amount of such contributions permitted under sections 401(k)(2) and
401(k)(3) of the Code.
(2) Any distribution of Excess Contributions for a Plan
Year shall be made to Highly Compensated Employees on the basis of the amount of
contributions by, or on behalf of, each such Highly Compensated Employee.
(3) The amount of Excess Contributions to be distributed
or recharacterized shall be reduced by Excess Deferrals previously distributed
for the taxable year ending in the same Plan Year and Excess Deferrals to be
distributed for a taxable year will be reduced by Excess Contributions
previously distributed or recharacterized for the Plan beginning in such taxable
year.
4.10 Correction of Excess Deferrals.
(a) Excess Deferrals shall be corrected as provided in this
section. The Administrator may also prevent anticipated Excess Deferrals as
provided in this section. The Administrator may use any method of correction or
prevention provided in this section or any combination thereof, as it determines
in its sole discretion. A distribution of an Excess Deferral under this section
may be made without regard to any notice or consent otherwise required pursuant
to sections 411(a)(11) and 417 of the Code. This section shall be administered
and interpreted in accordance with sections 401(k) and 402(g) of the Code.
(b) The Administrator may refuse to accept any or all
prospective Elective Deferrals to be contributed by a Participant.
(c) (1) The Administrator may distribute any or all Excess
Deferrals to the Participant on whose behalf such Excess Deferrals were made
before the close of the Applicable Taxable Year. Distributions under this
subsection include income allocable to the Excess Distribution so distributed,
as determined under this subsection.
<PAGE>
23
(2) Distribution under this subsection shall only be made
if all the following conditions are satisfied:
(A) the Participant seeking the distribution
designates the distribution as an Excess Deferral;
(B) the distribution is made after the date the
Excess Deferral is received by the Plan; and
(C) the Plan designates the distribution as a
distribution of an Excess Deferral.
(3) The income allocable to the Excess Deferral
distributed under this subsection shall be determined in the same manner as
under subsection (d)(3), except that income shall only be determined for the
period from the beginning of the Applicable Taxable Year to the date on which
the distribution is made.
(d)(1) The Administrator may distribute any or all Excess
Deferrals to the Participant on whose behalf such Excess Deferrals were made
after the close of the Applicable Taxable Year. Distribution under this
subsection shall only be made if the Participant timely provides the notice
required under subsection (d)(2) and such distribution is made after the
Applicable Taxable Year and before the first April 15 following the close of the
Applicable Taxable Year. Distributions under this subsection shall include
income allocable to the Excess Deferrals so distributed, as determined under
this subsection.
(2) Any Participant seeking a distribution of an Excess
Deferral in accordance with this subsection must notify the Administrator of
such request no later than the first March 15 following the close of the
Applicable Taxable Year. The Administrator may agree to accept notification
received after such date (but before the first April 15 following the close of
the Applicable Taxable Year) if it determines that it would still be
administratively practicable to make such distribution in view of the delayed
notification. The notification required by this subsection shall be deemed made
if a Participant's Elective Deferrals to the Plan in any Plan Year create an
Excess Deferral.
(3) The income allocable to the Excess Deferral
distributed under this subsection shall be determined in the same manner as
under section 4.9(f)(2), except that the term "Excess Deferrals" shall be
substituted for "Excess Contributions" and the term "Applicable Taxable Year"
shall be substituted for "Plan Year." The Administrator may make any special
allocations of earnings or losses necessary to carry out the provisions of this
subsection.
(e) The following terms shall have the meanings specified:
(1) Applicable Taxable Year. The taxable year (for
federal income tax purposes)of the Participant in which an Excess Deferral must
be included in gross income (when made) in accordance with section 402(g) of
the Code.
<PAGE>
24
(2) Excess Deferral. A Participant's Elective Deferrals
(and other contributions limited by section 402(g) of the Code), for an
Applicable Taxable Year that are in excess of the limits imposed by section
402(g) of the Code for such Applicable Taxable Year.
4.11 Correction of Excess Aggregate Contributions.
(a) Excess Aggregate Contributions shall be corrected as
provided in this section. The Administrator may use any method of correction or
prevention provided in this section or any combination thereof, as it determines
in its sole discretion. This section shall be administered and interpreted in
accordance with sections 401(k) and 401(m) of the Code.
(b) The Administrator may refuse to accept any or all
prospective Elective Deferrals to be contributed to a Participant.
(c) (1) The Company may, in its sole discretion, elect to
contribute, as provided in section 4.1(b), a Qualified Nonelective Contribution
in an amount necessary to satisfy any or all of the requirements of section 4.8.
(2) Qualified Nonelective Contributions for a Plan Year
shall only be allocated to the Accounts of Participants who are not Highly
Compensated Employees. Qualified Nonelective Contributions shall be allocated
first to the Participant with the lowest Compensation for that Plan Year and any
remaining Qualified Nonelective contributions thereafter shall be allocated to
the Participant with the next lowest compensation for that Plan Year. This
allocation method shall continue in ascending order of Compensation until all
such Qualified Nonelective Contributions are allocated. The allocation to any
Participant shall not exceed the limits under section 415 of the Code. If two or
more Participants have identical Compensation, the allocations to them shall be
proportional.
(3) Qualified Nonelective Contributions for a Plan Year
shall be contributed to the Trust within twelve (12) months after the close of
such Plan Year.
(4) Qualified Nonelective Contributions shall only be
allocated to Participants who receive Compensation during the Plan Year for
which such contribution is made.
(d) The Administrator may, during a Plan Year, distribute to a
Participant (or such Participant's Beneficiary if the Participant is deceased),
any or all Excess Aggregate Contributions allocable to that Participant's
Account for that Plan Year, notwithstanding any contrary provision of the Plan.
Such distribution may include earnings or losses (if any) attributable to such
amounts, as determined by the Administrator.
(e)(1) The Administrator may forfeit any or all Excess
Aggregate Contributions for a Plan Year in accordance with the provisions of
this subsection. The amounts so forfeited shall not include any amounts that are
nonforfeitable under section 6.5.
<PAGE>
25
(2) Any forfeitures under this subsection shall be made in
accordance with the procedures for distributions under subsection (f) except
that such amounts shall be forfeited instead of being distributed.
(f)(1) The Administrator may distribute any or all Excess
Aggregate Contributions for a Plan Year in accordance with the provisions of
this subsection. Such distribution may only occur after the close of such Plan
Year and within twelve (12) months of the close of such Plan Year. Such
distributions shall be specifically designated by the Administrator as a
distribution of Excess Aggregate Contributions. In the event of the complete
termination of the Plan, such distribution shall be made within twelve (12)
months after such termination. Such distribution shall include the income
allocable to the amounts so distributed, as determined under this subsection.
The Administrator may make any special allocations of earnings or losses
necessary to carry out the provisions of this subsection. A distribution of an
Excess Aggregate Contribution under this subsection may be made without regard
to any notice or consent otherwise required pursuant to sections 411(a)(11) and
417 of the Code.
(2)(A)The income allocable to Excess Aggregate
Contributions distributed under this subsection shall equal the allocable gain
or loss for the Plan Year. Income includes all earnings and appreciation,
including such items as interest, dividends, rent, royalties, gains from the
sale of property, appreciation in the value of stock, bonds, annuity and life
insurance contracts, and other property, without regard to whether such
appreciation has been realized.
(B) The allocable gain or loss for the Plan Year may be
determined under any reasonable method consistently applied by the
Administrator. Alternatively, the Administrator may, in its discretion,
determine such allocable gain or loss for the Plan Year under the method set
forth in subparagraph (C).
(C) Under this method, the allocable gain or loss for
the Plan Year is determined by multiplying the income for the Plan Year
allocable to employee contributions, matching contributions and amounts treated
as matching contributions by a fraction, the numerator of which is the Excess
Aggregate Contributions for the Participant for the Plan Year and the
denominator of which is the total Account balance of the Participant
attributable to employee contributions, matching contributions and amounts
treated as matching contributions as of the beginning of the Plan Year,
increased by the employee contributions, matching contributions and amounts
treated as matching contributions for the Participant for the Plan Year.
(3) Amounts distributed under this subsection (or other
provisions of this section) shall first be treated as distributions from the
Participant's subaccounts in the following order:
(A) from the Participant's Employee After-Tax
Contribution subaccount (if such Excess Aggregate Contribution is attributable
to Employee After-Tax Contributions);
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26
(B) from the Participant's Qualified Nonelective
Contribution subaccount (if such Excess Aggregate Contribution is attributable
to Qualified Nonelective Contributions); and
(C) from the Participant's Company Contribution
subaccount (if such Excess Aggregate Contribution is attributable to Company
Contributions).
(g) (1) The term "Excess Aggregate Contribution" shall mean,
with respect to a Plan Year, the excess of the aggregate amount of the matching
contributions and employee contributions (including any Qualified Nonelective
Contributions or elective deferrals taken into account in computing the Actual
Contribution Percentage) actually made on behalf of eligible Highly Compensated
Employees for the Plan Year over the maximum amount of such contributions
permitted under section 401(m)(2)(A) of the Code.
(2) The terms "employee contributions" and "matching
contributions" shall, for purposes of this section, have the meanings set forth
in Treas. Reg. Section 1.401(m)-1(f).
(3) Any distribution of Excess Aggregate Contributions
for a Plan Year shall be made to Highly Compensated Employees on the basis of
the amount of contributions by, or on behalf of, each such Highly Compensated
Employee.
4.12 Correction of Multiple Use.
(a) If the limitations of Treas. Reg. ss.1.401(m)-2 are
exceeded for any Plan Year, then correction shall be made in accordance with the
provisions of this section. This section shall be administered and interpreted
in accordance with sections 401(k) and 401(m) of the Code.
(b) Any correction required by this section shall be
calculated and administered in accordance with the provisions for correcting
Excess Contributions (in section 4.9), Excess Aggregate Contributions (in
section 4.11) or both, as the Administrator determines in its sole discretion.
Any correction required by this section, to the extent possible, shall be made
only with respect to those Highly Compensated Employees who are eligible in both
the arrangement subject to section 401(k) of the Code and the Plan, as subject
to section 401(m) of the Code.
ARTICLE V
Investment of Accounts
5.1 Election of Investment Funds.
(a) Except as otherwise prescribed in subsections (b), (c) and
(d) below, upon enrollment in the Plan, each Participant shall direct that the
funds in the Participant's Account be invested in increments of one percent (1%)
in one or more of the investment options designated by the Administrator, which
may include designated investment funds, specific investments or both. The
investment choices made available shall be sufficient to allow compliance with
section 404(c) of ERISA.
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27
(b) Except as otherwise prescribed in Exhibit C to this Plan,
Matching Contributions made with respect to Plan Years beginning on and after
January 1, 1999 must be invested in Common Stock until the beginning of the
fifth (5th) Plan Year following the Plan Year for which such contributions are
made. Thereafter, a Participant may designate the investment of the Matching
Contribution funds in accordance with the provisions of subsection (a) above.
Notwithstanding anything herein to the contrary, the five-year restriction
prescribed in this subsection (b) shall no longer apply immediately following a
Participant's Severance from Service or on or after January 1 of the calendar
year in which a Participant attains age 55.
(c) Except as otherwise determined by the Administrator,
amounts held in a Participant's ESOP Contribution Account shall be invested in
Common Stock. Notwithstanding the preceding sentence, any Participant who has
attained age 55 and completed a Period of Participation of at least ten (10)
years shall be permitted to direct that up to twenty-five percent (25%) of the
total number of shares of Common Stock (rounded to the nearest whole integer)
allocated to the Participant's ESOP Contribution Account as of the December 31
immediately preceding each Plan Year during the Qualified Election Period may be
invested among the otherwise available investment options under the Plan in
accordance with the provisions of subsection (a) above. With respect to a
qualified Participant's final diversification election, fifty percent (50%) is
substituted for twenty-five percent (25%) in determining the amount subject to
the diversification election. Any direction to diversify hereunder may be made
within 90 days after the close of each Plan Year during the Participant's
Qualified Election Period, as defined below. Any direction made during the
applicable 90-day period following any Plan Year may be revoked or modified at
any time during such 90-day period. The diversification of the ESOP Contribution
Account as provided herein shall be made through the sale by the Trustee of the
number of shares of Common Stock directed by the Participant. The amount that
may be invested among the otherwise available investment options under the Plan
shall be equal to the proceeds of such sale. Any such diversification shall be
implemented no later than the 180th day of the Plan Year in which the
Participant's direction is made. All such directions shall be in accordance with
any notice, rulings, or regulations or other guidance issued by the Internal
Revenue Service with respect to section 401(a)(28)(B) of the Code. For the
purposes of this section, the term "Qualified Election Period" shall mean the
six (6) Plan Year period beginning with the later of the Plan Year in which the
Participant attains age 55 or completes a Period of Participation of ten (10)
years.
(d) Notwithstanding subsection (e) below, the Administrator
shall maintain a General Motors Class H Stock Fund ("Fund H") and Raytheon
Company Class A Stock Fund ("Fund I") as investment options under the Plan,
subject to the limitations prescribed in this subsection (d), for four (4)
complete Plan Years following the Effective Date; provided, however, that if at
any time prior to the expiration of such four (4) year period, the aggregate
fair market value of the assets invested in either Fund H or Fund I falls below
five percent (5%) of the highest fair market value of the assets invested in
Fund H or Fund I, respectively, the Administrator may, with six (6) months
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28
written notice to affected Participants, eliminate Fund H or Fund I, as
applicable, as investment options under the Plan. Notwithstanding the foregoing,
the Administrator may eliminate one or both funds at any time if the
Administrator determines in good faith that such elimination is necessary under
applicable law (including without limitation the prudence requirements of
ERISA). When Fund H and Fund I are eliminated in accordance with this section
5.1(d), Participants with assets invested in Fund H or Fund I, as applicable,
shall direct the transfer of such assets to other funds available under the Plan
or, if no such election is made, the Administrator shall transfer such assets to
a low risk fixed income fund as determined by the Administrator in its
discretion. The only assets that may be invested in Fund H or Fund I are the
General Motors Class H Stock Fund and Raytheon Company Class A Stock Fund,
respectively, directly transferred to the Plan in connection with the mergers
identified in Section 1.1(b). A Participant may not direct that any other funds
in the Participant's Account be invested in Fund H or Fund I.
(e) In its discretion, the Administrator may from time to time
designate new funds and, where appropriate, preclude investment in existing
funds and provide for the transfer of Accounts invested in those funds to other
funds selected by the Participant or, if no such election is made, to a low risk
fixed income fund as determined by the Administrator in its discretion.
(f) Except as otherwise prescribed in subsections (b), (c) and
(d) above, a Participant's investment election will apply to the entire Account
of the Participant.
(g) In establishing rules and procedures under section 5.1,
the following shall apply: (1) Each Participant, Beneficiary or Alternate Payee
shall affirmatively elect to self-direct the investment of assets in his or her
Account, but such election may provide for default investments in the absence of
specific directions from such Participant, Beneficiary or Alternate Payee.
(2) The investment directions of a Participant shall
continue to apply after that Participant's death or incompetence until the
Beneficiary (or, if there is more than one Beneficiary for that Account, all of
the Beneficiaries), guardian or other representatives provide contrary
direction.
(3) The Administrator may decline to implement investment
designations if such investment, in the Administrator's judgment:
(A) would result in a prohibited transaction under
section 4975 of the Code;
(B) would generate income taxable to the Trust Fund;
(C) would not be in accordance with the Plan and
Trust;
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29
(D) would cause a Fiduciary to maintain the indicia
of ownership of any assets of the Trust Fund outside the jurisdiction of the
district courts of the United States other than as permitted by section 404(b)
of ERISA and Labor Reg. ss.2550.404(b)-1;
(E) would jeopardize the Plan's tax qualified status
under the Code;
(F) could result in a loss in excess of the amount
credited to the Account; or
(G) would violate any other requirements of the Code
or ERISA.
(4) Except as otherwise prescribed in subsections (b), (c)
and (d) above, the Administrator may establish reasonable restrictions on the
frequency with which investment directions may be given, consistent with section
404(c) of ERISA.
(5) The Administrator may establish limits on the use of
brokers, investment counsel or other advisors that may be utilized, including
specifying that all investments must be made through a designated broker or
brokers.
(6) The Administrator may establish limits on the types
of investments that are permitted.
(h) Except as otherwise prescribed in subsections (b), (c) and
(d) above, the Administrator shall establish such rules and procedures as may be
advisable or necessary to carry out the provisions of this section, with such
rules and procedures being consistent with section 404(c) of ERISA.
(i) The Administrator shall establish such rules and
procedures as may be advisable or necessary to reasonably ensure that all
transactions involving the investment funds comply with all applicable laws,
including the securities laws.
5.2 Change in Investment Allocation of Future Deferrals. Except as
otherwise prescribed in sections 5.1(b), (c) and (d), each Participant may elect
to change the investment allocation of future contributions effective as of the
first Trade Day subsequent to notice to the Recordkeeper by which it is
administratively feasible to make such change. Any changes must be made either
in increments of one percent (1%) of the Participant's Account or in a specified
whole dollar amount and must result in a total investment of one hundred percent
(100%) of the Participant's Account.
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30
5.3 Transfer of Account Balances Between Investment Funds. Except as
otherwise prescribed in sections 5.1(b), (c) and (d), each Participant may elect
to transfer all or a portion of the amount in his or her Account between
investment funds effective as of the first Trade Day following notice to the
Recordkeeper by which it is administratively feasible to carry out such
transfer. In determining the amount of the transfer, the Participant's Account
shall be valued as of the close of business on the Trade Day on which notice is
received; provided, however, that in any case where the notice is received after
4:00 p.m. Eastern Time (daylight or standard, whichever is in effect on the date
of the call), the Account shall be valued as of the close of business on the
next Trade Day. Such transfers must be made in either one percent (1%)
increments of the entire Account or in a specified amount in whole dollars and,
as of the completion of the transfer, must result in investment of one hundred
percent (100%) of the Account. Transfers shall be effected by telephone notice
to the Recordkeeper.
5.4 Ownership Status of Funds. The Trustee shall be the owner of record
of the Plan assets. The Administrator shall have records maintained as of the
Valuation Date for each investment option allocating a portion of the investment
option to each Participant who has elected that his or her Account be invested
in such investment option. The records shall reflect each Participant's portion
of Common Stock, Raytheon Company Class A common stock and General Motors Class
H common stock in cash and unitized shares of stock and shall reflect each
Participant's portion of all other investment options as may be established by
the Administrator in a cash amount.
5.5 Voting Rights. Participants whose Accounts are invested in Common
Stock or Raytheon Company Class A common stock on the last business day of the
second month preceding the record date (the "Voting Eligibility Date") for any
meeting of stockholders have the right to instruct the Trustee as to voting at
such meeting. The number of votes is determined by dividing the value of the
shares in the Participant's Account by the closing price of the respective
classes of stock on the Voting Eligibility Date. If the Trustee has not received
instructions from a Participant as to voting of shares within a specified time,
then the Trustee shall not vote those shares. If a Participant furnishes the
Trustee with a signed vote direction card without indicating a voting choice
thereon, the Trustee shall vote the Participant's shares as recommended by
management. In addition, each Participant shall have the right to accept or
reject any tender or exchange offer for shares of the respective classes of
stock. The Trustee shall vote (or tender or exchange) all combined fractional
shares of the respective classes of stock to the extent possible in the same
proportion as the shares which have been voted (or tendered or exchanged) by
each Participant. Any instructions as to voting (or tender or exchange) received
from an individual Participant shall be held in confidence by the Trustee and
shall not be divulged to the Adopting Employers or to any officer or employee
thereof or to any other person.
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31
5.6 Allocation of Earnings.
(a)(1) The Administrator, as of each Valuation Date, shall
adjust the amounts credited to the Accounts (including Accounts for persons who
are no longer Employees) so that the total of such Account balances equals the
fair market value of the Trust Fund assets as of such Valuation Date. Except as
otherwise provided herein, any changes in the fair market value of the Trust
Fund assets since the preceding Valuation Date shall be charged or credited to
each Account in the ratio that the balance in each such Account as of the
preceding Valuation Date bears to the balances in all Accounts as of that
Valuation Date with appropriate adjustments to reflect any distributions,
allocations or similar adjustments to such Account or Accounts since that
Valuation Date.
(2) To the extent that separate investment funds are
established (as provided in section 5.1(a)), the adjustments required by
subsection (a)(1) shall be made by applying subsection (a)(1) separately for
each such investment fund so that any changes in the net worth of each such
investment fund are charged or credited to the portion of each Account invested
in such investment fund in the ratio that the portion of each such Account
invested in such investment fund as of the preceding Valuation Date (reduced by
any distributions made from that portion of such Account since that Valuation
Date) bears to the total amount credited to such investment funds as of that
Valuation Date (reduced by distributions made from such investment fund since
that Valuation Date).
(3) Interim valuations, in accordance with the foregoing
procedure, may be made at such time or times as the Administrator directs.
(b) The Administrator may, in its sole discretion, direct the
Trustee to segregate and separately invest any Trust Fund assets. If any assets
are segregated in this fashion, the earnings or losses on such assets shall be
determined apart from other Trust assets and shall be adjusted on each Valuation
Date, or at such other times as the Administrator deems necessary, in accordance
with this section.
ARTICLE VI
Vesting
6.1 Elective Deferral, Employee After-Tax Contribution, Rollover
Contribution and Qualified Nonelective Contribution Accounts. Each Participant
shall have a nonforfeitable right to all amounts in the Participant's Elective
Deferral, Employee After-Tax Contribution, Rollover Contribution and Qualified
Nonelective Contribution Accounts.
6.2 Matching, ESOP and Employer Contribution Accounts. Except as
otherwise prescribed in Exhibit C to this Plan, each Participant shall have a
nonforfeitable right to his or her entire Account, including the Participant's
Matching, ESOP and Employer Contribution Accounts.
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32
6.3 Forfeitures.
(a) In the event that a Participant incurs a Severance from
Service before attaining a nonforfeitable right to his or her Matching, ESOP or
Employer Contributions, the Matching, ESOP or Employer Contribution Accounts
will be forfeited as of the first day of the month immediately following the
earliest of: (i) the date on which the Participant incurs a Period of Severance
of five (5) consecutive years; (ii) death; or (iii) the date on which the
Participant's Elective Deferral Account is distributed in accordance with
ARTICLE VIII. Forfeitures of Matching, ESOP or Employer Contributions will be
used to reduce future contributions of the Adopting Employers to the Plan.
(b) If, in connection with his or her Severance from Service,
a Participant received a distribution of a portion of his or her entire Account
when he or she did not have a nonforfeitable right to his or her Matching, ESOP
or Employer Contribution Account, the Matching, ESOP or Employer Contributions
that were forfeited, unadjusted by any subsequent gains or losses, shall be
restored if he or she again becomes an Employee before incurring a Period of
Severance of five (5) consecutive years.
6.4 Break in Service Rules
(a) Periods of Service. In determining the length of a Period
of Service, the Administrator shall include all Periods of Service, except the
following Periods of Service shall not be taken into account:
(1) in the case of a Participant who has never had a vested account balance, the
Period of Service before any Period of Severance which equals or exceeds five
(5) consecutive years; and (2) in the case of a Participant who has had a vested
account balance and who has incurred a Period of Severance which equals or
exceeds five (5) years, the Period of Service after such Period of Severance
shall not be taken into account for purposes of determining the nonforfeitable
interest of such Participant in the Matching or ESOP Contributions allocated to
his or her Account before such Period of Severance.
(b) Periods of Severance. In determining the length of a
Period of Service, the Administrator shall include any period of time beginning
on an Employee's Severance from Service Date and ending on the date on which he
or she is next credited with an Hour of Service, provided that such Hour of
Service is credited within the twelve- (12) consecutive month period following
such Severance from Service Date.
(c) Other Periods. In making the determinations described in
subsections (a) and (b) of this section, the second, third, and fourth
consecutive years of a Layoff (from the first anniversary of the last day paid
to the fourth anniversary of the last day paid) and any period in excess of one
(1) year of an Authorized Leave of Absence shall be regarded as neither a Period
of Service nor a Period of Severance.
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33
ARTICLE VII
In-Service Withdrawals
7.1 Elective Deferrals and Qualified Nonelective Contributions.
(a) Subject to the terms and conditions prescribed in section
7.5, a Participant may withdraw all or a portion of his or her Elective Deferral
Account or Qualified Nonelective Contribution Account either (1) on or after
attainment of age fifty-nine and one-half (59 1/2), or (2) in the event of a
hardship.
(b) In order to be entitled to a hardship withdrawal under
this section, a Participant must satisfy the requirements of both subsection (c)
and subsection (d). Whether a Participant is entitled to a withdrawal under this
section is to be determined by the Administrator in accordance with
nondiscriminatory and objective standards.
(c) (1) A Participant will be deemed to have experienced an
immediate and heavy financial need necessary to satisfy the requirements of this
subsection if the withdrawal is on account of:
(A) medical expenses described in section 213(d)
of the Code incurred by the Participant, the Participant's spouse or any
dependents of the Participant;
(B) the purchase (excluding mortgage payments) of a
principal resident of the Participant;
(C) payment of tuition for the next twelve (12) months
of post-secondary education for the Participant or his or her spouse, children
or dependents; or
(D) the need to prevent the eviction of the
Participant from his or her principal residence or the foreclosure on the
mortgage of the Participant's principal residence.
(2) The Administrator may, on the basis of such evidence
it deems relevant, determine that the Participant has experienced an immediate
and heavy financial need for reasons other than those enumerated above in this
subsection.
(d)(1) A withdrawal under this subsection will be deemed
necessary to satisfy an immediate and heavy financial need of the Participant if
it satisfies the requirements of this subsection. To the extent the amount of
the withdrawal would be in excess of the amount required to relieve the
financial need of the Participant or to the extent such need may be satisfied
from other resources that are reasonably available to the Participant, such
withdrawal shall not satisfy the requirements of this subsection. For purposes
of this subsection, a Participant's resources shall be deemed to include those
assets of his or her spouse or minor children that are reasonably available to
the Participant.
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34
(2) A withdrawal may be treated as necessary to satisfy a
financial need if the Administrator reasonably relies upon the Participant's
representation that the need cannot be relieved:
(A) through reimbursement or compensation by insurance
or otherwise;
(B) by reasonable liquidation of the Participant's
assets to the extent such liquidation would not itself cause an immediate and
heavy financial need;
(C) by cessation of Elective Deferrals under the Plan
for at least twelve (12) months after receipt of the hardship withdrawal; or
(D) by other distributions or nontaxable (at the time
of the loan) loans from plans maintained by the Adopting Employers or by any
other employer or by borrowing from commercial sources on reasonable commercial
terms.
(e) If a Participant receives a withdrawal for reasons of
financial hardship, the Participant's Elective Deferrals shall be reduced to
four percent (4%) (or such lower percentage as the Participant shall thereafter
designate), if in excess thereof as of the date of the distribution, and shall
not be increased during the twelve (12) months immediately subsequent to the
date of distribution.
7.2 Employee After-Tax Contributions. Subject to the terms and
conditions prescribed in section 7.5, a Participant may withdraw all or a
portion of his or her Employee After-Tax Contribution Account.
7.3 Matching Contributions and Employer Contributions. Subject to the
terms and conditions prescribed in section 7.5, after completion of a Period of
Participation of five (5) years or more, a Participant may withdraw all or a
portion of his or her Matching Contribution Account or Employer Contribution
Account.
7.4 Rollover Contributions. Subject to the terms and conditions
prescribed in section 7.5, a Participant may withdraw all or a portion of his or
her Rollover Contribution Account.
7.5 General Terms and Conditions. All in-service withdrawals are
subject to the following terms and conditions:
(a) In-service withdrawals of less than five hundred dollars ($500)
will not be permitted.
(b) In determining the amount of any in-service withdrawal, the
Participant's Account shall be valued as of the close of business on the Trade
Day on which notice is received; provided, however, that in any case where the
notice is received after 4:00 p.m. Eastern Time (daylight or standard, whichever
is in effect on the date of the call), the Account shall be valued as of the
close of business on the next Trade Day.
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35
(c) Payment of the amount withdrawn will be made as soon as
administratively feasible after the effective date of the withdrawal.
(d) In-service withdrawals from a Participant's Account will
generally be made in cash. However, in-service withdrawals from Accounts
invested in Common Stock, General Motors Class H common stock or Raytheon
Company Class A common stock will be made in cash or stock (with cash for
fractional or unissued shares) as elected by the Participant.
(e) Funds for in-service withdrawals will be taken on a
pro-rata basis against the Participant's investment balances in his or her
Account.
(f) In-service withdrawals may not be redeposited in the Plan.
(g) The Administrator may adopt such other rules and procedures as
it deems necessary, in its sole discretion, to properly administer the
in-service withdrawal provisions in this ARTICLE.
ARTICLE VIII
Distribution of Benefits
8.1 General.
(a) Except as otherwise provided in Exhibit B to this Plan (or
otherwise required by section 4.5(b)), all benefits payable under this Plan
shall be paid in the manner and at the times specified in this ARTICLE.
(b) All payment methods and distributions shall comply with
the requirements of sections 401(a)(4) and 401(a)(9) of the Code and the
regulations thereunder and, if necessary, shall be interpreted to so comply. All
distributions shall comply with the incidental death benefit requirement of
section 401(a)(9)(G) of the Code. Distributions shall comply with the
regulations under section 401(a)(9) of the Code, including Treas. Reg.
ss.1.401(a)(9)-2. The provisions of the Plan reflecting section 401(a)(9) of the
Code override any distribution provisions in the Plan inconsistent with section
401(a)(9) of the Code.
8.2 Commencement of Benefits.
(a) A Participant (or Beneficiary) shall be entitled to a
distribution of the nonforfeitable portion of his or her Account upon Severance
from Service (or if earlier, an event described in subsections (e)(3), (4) and
(5)).
(b) Except as otherwise provided in this section 8.2, payment
of benefits to a Participant (or Beneficiary) shall commence within a reasonable
period of time following the Participant's Severance from Service (or if
earlier, an event described in subsections (e)(3), (4) and (5)).
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36
(c) If the value of the nonforfeitable portion of the
Participant's Account exceeds the maximum amount prescribed in section
411(a)(11) of the Code, then payment to the Participant shall not commence
without the Participant's written consent, except as otherwise required by
Section 8.2(f). Such written consent must be obtained no more than ninety (90)
days before the commencement of the distribution. Notwithstanding the preceding
provisions of this subsection (c), all distributions to a Participant's
Beneficiary shall commence within a reasonable period of time following the
Participant's death (no consent of the Beneficiary is required).
(d) Unless a Participant elects otherwise, distribution to the
Participant shall commence no later than sixty (60) days after the close of the
Plan Year in which the latest of the following events occurs:
(1) attainment by the Participant of Normal Retirement Age;
(2) the tenth (10th) anniversary of the date on which
Participant commenced participation in the Plan; or
(3) Participant's Severance from Service.
(e) Distribution of the nonforfeitable portion of a
Participant's Account attributable to Elective Deferrals and Qualified
Nonelective Contributions shall generally commence in accordance with the
general provisions of this section 8.2, but in no event before the earliest of:
(1) the Participant's Severance from Service;
(2) the Participant's attainment of age fifty-nine
and one-half (59 1/2);
(3) the termination of the Plan without establishment or
maintenance of another defined contribution plan (other than an employee stock
ownership plan);
(4) the disposition of substantially all of the assets used
by the Employer in a trade or business of the Employer but only with respect to
an Employee who continues employment with the entity acquiring such assets;
(5) the disposition of the Employer's interest in a
subsidiary, but only with respect to an Employee who continues employment with
such subsidiary.
(f) A Participant who has attained age seventy and one-half
(70 1/2) and is subject to the mandatory distribution requirements of section
401(a)(9) of the Code shall receive a lump sum distribution of his or her entire
Account at the time distributions must commence in order to comply with such
requirements. If additional amounts are allocated to such Participant's Account
following such lump sum distribution, additional lump sum distributions of his
or her entire Account shall be made at such times any mandatory distributions
are required to comply with section 401(a)(9) of the Code. Such payments shall
be made notwithstanding any contrary provisions of the Plan or election made by
such Participant.
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37
(g) If a Participant dies before the time when distribution is
considered to have commenced in accordance with applicable regulations, then any
remaining nonforfeitable portion of the Participant's Account shall be
distributed within five (5) years after the Participant's death. If a
distribution is considered to have commenced in accordance with the applicable
regulations before the Participant's death, the remaining nonforfeitable portion
of the Participant's Account shall be distributed at least as rapidly as under
the method of distribution being used as of the date of the Participant's death.
8.3 Form of Distribution.
(a) Distributions under the Plan shall be made only in the
form of a single, lump-sum payment of the entire nonforfeitable portion of the
Participant's Account.
(b) Distribution of the nonforfeitable portion of the
Participant's Account that is invested in Common Stock, Raytheon Company Class A
common stock (if any) or General Motors Class H common stock (if any) shall be
made in cash or in-kind, at the election of the Participant (or Beneficiary).
All other distributions under the Plan shall be made in cash (or cash
equivalent).
8.4 Determination of Amount of Distribution. In determining the amount
of any distribution hereunder, the nonforfeitable portion of a Participant's
Account shall be valued as of the close of business on the Trade Day on which
notice is received; provided, however, that in any case where the telephone
notice is received after 4:00 p.m. Eastern Time (daylight or standard, whichever
is in effect on the date of the call), the Account shall be valued as of the
close of business on the next Trade Day.
8.5 Direct Rollovers.
(a) A Participant may elect that all or any portion of a
distribution that would otherwise be paid as an Eligible Rollover Distribution
shall instead be transferred as a Direct Rollover.
(b) The Administrator shall determine and apply rules and
procedures as it deems reasonable with respect to Direct Rollovers. The
Administrator may change such rules and procedures from time to time and shall
not be bound by any previous rules and procedures it has applied.
(c) The following terms shall have the meanings specified:
(1) Direct Rollover. An available distribution that is
paid directly to an Eligible Retirement Plan for the benefit of the distributee.
(2) Distributee. A Participant or former Participant. In
addition, the Participant's or former Participant's Surviving Spouse or former
spouse who is the Alternate Payee under a Qualified Domestic Relations Order, as
defined in section 414(p) of the Code, are Distributees with regard to the
interest of the spouse or former spouse.
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(3) Eligible Retirement Plan. An individual retirement
account described in section 408(a) of the Code, an individual retirement
annuity (other than an endowment contract) described in section 408(b) of the
Code, a qualified trust described in section 401(a) of the Code if such
qualified trust is part of a plan that permits acceptance of Direct Rollovers or
an annuity plan described in section 403(a) of the Code. In the case of a Direct
Rollover for the benefit of the spouse or former spouse of a Participant, the
term "Eligible Retirement Plan" shall only include an individual retirement
account described in section 408(a) of the Code and an individual retirement
annuity (other than an endowment contract) described in section 408(b) of the
Code.
(4) Eligible Rollover Distribution. Any distribution under
the Plan to a Participant, a Participant's spouse or a Participant's former
spouse, except for the following:
(A) Any distribution to the extent the distribution is
required under section 401(a)(9) of the Code.
(B) The portion of any distribution that is not
includable in gross income (determined without regard to the exclusion for net
unrealized appreciation described in section 402(e)(4) of the Code).
(C) Returns of elective deferrals described in Treas.
Reg. ss.1.415-6(b)(6)(iv) that are returned as a result of the limitations under
section 415 of the Code.
(D) Corrective distributions of excess contributions
and excess deferrals under qualified cash or deferred arrangements as described
in Treas. Reg. ss.1.401(k)-1(f)(4) and ss.1.402(g)-1(e)(3), respectively, and
corrective distributions of excess aggregate contributions as described in
Treas. Reg. ss.1.401(m)-1(e)(3), together with the income allocable to these
corrective distributions.
(E) Loans treated as distributions under section 72(p)
of the Code and not excepted by section 72(p)(2) of the Code.
(F) Loans in default that are deemed distributions.
(G) Dividends paid on employer securities as
described in section 404(k) of the Code.
(H) The costs of life insurance coverage.
(I) Similar items designated by the Internal Revenue
Service in revenue rulings, notices, and other guidance of general
applicability.
8.6 Notice and Payment Elections.
(a) The Administrator shall provide Participants or other
Distributees of Eligible Rollover Distributions with a written notice designed
to comply with the requirements of section 402(f) of the Code. Such notice shall
be provided within a reasonable period of time before making an Eligible
Rollover Distribution.
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39
(b) Any elections concerning the payment of benefits under
this ARTICLE shall be made on a form prescribed by the Administrator. The
Participant or other Distributee shall submit a completed form to the
Administrator at least thirty (30) days before payment is scheduled to commence,
unless the Administrator agrees to a shorter time period. Any election made
under this section shall be revocable until thirty (30) days before payment is
scheduled to commence.
(c) An election to have payment made in a Direct Rollover
shall only be valid if the Participant or other Distributee provides adequate
information to the Administrator for the implementation of such Direct Rollover
and such reasonable verification as the Administrator may require that the
transferee is an Eligible Retirement Plan.
8.7 Qualified Domestic Relations Orders.
(a) Notwithstanding any contrary provision of the Plan,
payments shall be made in accordance with any judgment, decree or order
determined to be a Qualified Domestic Relations Order.
(b) (1) If the Plan receives a Domestic Relations Order, the
Administrator shall promptly notify the Participant and each Alternate Payee of
the receipt of such order and of the Plan's procedures for determining whether
such order is a Qualified Domestic Relations Order. The Administrator shall,
within a reasonable period after receipt of such order, determine whether it is
a Qualified Domestic Relations Order and notify the Participant and each
Alternate Payee of that determination.
(2) During any period in which the issue of whether a
Domestic Relations Order is a Qualified Domestic Relations Order is being
determined, the Administrator shall separately account for the amounts that
would have been payable to the Alternate Payee during such period if the order
had been determined to be a Qualified Domestic Relations Order.
(c) (1) A Domestic Relations Order meets the requirements of
this subsection only if such order clearly specifies the following:
(A) the name and last known mailing address (if any)
of the Participant and the name and mailing address of each Alternate Payee
covered by the order;
(B) the amount or the percentage of the Participant's
benefits to be paid by the Plan to each such Alternate Payee or the manner in
which such amount or percentage is to be determined;
(C) the number of payments or period to which such
order applies; and
(D) each plan to which such order applies.
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(2) A Domestic Relations Order meets the requirements of
this subsection only if such order does not:
(A) require the Plan to provide any type or form of
benefit or any option not otherwise provided under the Plan;
(B) require the Plan to provide increased benefits
(determined on the basis of actuarial value); and
(C) does not require the payment of benefits to an
Alternate Payee that is required to be paid to another Alternate Payee under
another order previously determined to be a Qualified Domestic Relations Order.
(d) A domestic relations order shall not be treated as failing
to meet the requirements of section 8.7(c)(2)(A) solely because such order
requires that payment of benefits be made to an Alternate Payee:
(1) in the case of any payment before a Participant has
separated from service, on or after the date on which the Participant attains
(or would have attained) the Earliest Retirement Date;
(2) as if the Participant had retired on the date on
which such payment is to begin under such order (but taking into account only
the present value of the benefits actually accrued and not taking into account
the present value of any employer subsidy for early retirement); and
(3) in any form in which such benefits may be paid under
the Plan to the Participant (other than in the form of a qualified joint and
survivor annuity with respect to the Alternate Payee and his or her subsequent
spouse).
(e) A domestic relations order shall not be treated as failing
to meet the requirements of section 8.7(c)(2)(A) solely because such order
requires that payment of benefits be made to an Alternate Payee at a date before
the Participant is entitled to receive a distribution. Such distribution shall
be made to such Alternate Payee notwithstanding any contrary provision of the
Plan.
(f) The following terms shall have the meanings specified:
(1) Alternate Payee. Any spouse, former spouse, child or
other dependent of a Participant who is recognized by a Domestic Relations Order
as having a right to benefits under the Plan with respect to such Participant.
(2) Domestic Relations Order. A judgment, decree or order
relating to child support, alimony or marital property rights, as defined in
section 414(p)(1)(B) of the Code.
(3) Earliest Retirement Date. The earlier of:
(A) the date on which the Participant is entitled to
a distribution under the Plan; or
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41
(B) the later of:
(i) the date the Participant attains age fifty
(50); or
(ii) the earliest date on which the Participant
could begin receiving benefits under the Plan if the Participant separated
from service.
(4) Qualified Domestic Relations Order. A Domestic
Relations Order that satisfies the requirements of subsection (c) and section
414(p)(1)(A) of the Code.
(g) If an Alternate Payee entitled to payment under this
section is the spouse or former spouse of a Participant and payment will
otherwise be made in an Eligible Rollover Distribution, then such spouse or
former spouse may elect that all, or any portion, of such payment shall instead
be transferred as a Direct Rollover. Such Direct Rollover shall be governed by
the requirements of section 8.5.
(h) If a Domestic Relations Order directs that payment be made
to an Alternate Payee before the Participant's Earliest Retirement Date and such
Domestic Relations Order otherwise qualifies as a Qualified Domestic Relations
Order, then the Domestic Relations Order shall be treated as a Qualified
Domestic Relations Order and such payment shall be made to the Alternate Payee,
even though the Participant is not entitled to receive a distribution under the
Plan because he or she continues to be an Employee of the Employer.
(i) This section shall be interpreted and administered in
accordance with section 414(p) of the Code.
8.8 Designation of Beneficiary.
(a) A Participant may designate a Beneficiary (including
successive or contingent Beneficiaries) in accordance with this section 8.8.
Such designation shall be on a form prescribed by the Administrator, may include
successive or contingent Beneficiaries, shall be effective upon receipt by the
Administrator and shall comply with such additional conditions and requirements
as the Administrator shall prescribe. The interest of any person as Beneficiary
shall automatically cease on his or her death and any further payments from the
Plan shall be made to the next successive or contingent Beneficiary.
(b) A Participant may change his or her Beneficiary
designation from time to time, without the consent or knowledge of any
previously designated Beneficiary, by filing a new Beneficiary designation form
with the Administrator in accordance with subsection (a).
(c) If a Participant dies without a designated Beneficiary
surviving, the person or persons in the following class of successive
beneficiaries surviving, any testamentary devise or bequest to the contrary
notwithstanding, shall be deemed to be the Participant's Beneficiary: the
Participant's (1) spouse, (2) children and issue of deceased children by right
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42
of representation, (3) parents, (4) brothers and sisters and issue of deceased
brothers and sisters by right of representation, or (5) executors or
administrators. If no Beneficiary can be located during the period of seven (7)
years from the date of death, the Participant's Account shall be treated in the
same manner as a forfeiture under section 6.3(a).
(d) Notwithstanding the foregoing provisions of this section,
if a Participant is married at the time of his or her death, such Participant
shall be deemed to have designated his or her surviving spouse as Beneficiary,
unless such Participant has filed a Beneficiary designation under subsection (a)
and such spouse has consented in writing to the election (acknowledging the
effect of the election and specifically acknowledging the nonspouse Beneficiary)
and such consent was witnessed by either the Administrator (or its delegate) or
a notary public. Such consent shall not be required if the Participant does not
have a spouse or the spouse cannot be located. Such consent shall not be
required if the Participant is legally separated from his or her spouse or the
Participant has been abandoned (under applicable local law) and the Participant
has a court order to such effect, unless a Qualified Domestic Relations Order
provides otherwise. If the Participant's spouse is legally incompetent to give
consent, the spouse's legal guardian (even if the guardian is the Participant)
may give consent.
8.9 Lost Participant or Beneficiary.