RAYTHEON SAVINGS AND INVESTMENT PLAN
ARTICLE I
Adoption of the Plan
1.1 Amendment and Restatement.
(a) Raytheon Company, a corporation organized under the laws of the state
of Delaware, originally established the Raytheon Savings and Investment Plan
(the "Plan") effective January 1, 1984. 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, all or a portion of the following qualified retirement plans
shall merge into and become part of the Plan:
Raytheon Salaried Savings and Investment Plan (10011)
Raytheon California Hourly Savings and Investment Plan (10012)
Raytheon TI Systems Savings Plan
E-Systems, Inc. Employee Savings Plan
Serv-Air, Inc. Savings and Retirement Plan
Hughes STX Corporation 401(k) Retirement Plan
Savings and Investment Plan of Standard Missile Company, L.L.C
Raytheon Stock Ownership Plan
The above-referenced qualified retirement plans shall cease to exist as separate
plans after December 31, 1998.
(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):
(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.
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(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 2.29 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 2.32 shall be effective for Plan Years beginning after December 31,
1996.
(8) For Plan Years beginning after December 31, 1996 and before January 1,
1999, for purposes of satisfying the nondiscrimination requirements prescribed
in sections 401(k) and 401(m) of the Code, except as otherwise provided in
Exhibit C to this Plan, the actual deferral percentage and the actual
contribution percentage of the nonhighly compensated employees for the current
Plan Year shall be taken into account.
(9) For Plan Years beginning after December 31, 1996 and before January 1, 1999,
for purposes of allocating excess contributions or excess aggregate
contributions, as applicable, to the Highly Compensated Employees, such excess
contributions and excess aggregate contributions, as applicable, shall be
allocated to the Highly Compensated Employees on the basis of the amount of
contributions by, or on behalf of, each such Highly Compensated Employee in
accordance with sections 401(k)(8)(C) and 401(m)(6)(C) of the Code.
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.
1.5 Withdrawal of Adopting Employer.
(a) An Adopting Employer's participation in this Plan may be terminated,
voluntarily or involuntarily, at any time, as provided in this section.
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(b) An Adopting Employer shall withdraw from the Plan and Trust if the Pla
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, an Employee After-Tax Contribution Account, a Matching
Contribution Account, an ESOP Contribution Account and, where applicable, 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).
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.
The Adopting Employers, and if applicable, the divisions, operations or similar
cohesive groups of the Adopting Employers that participate in the Plan shall be
listed in Exhibit A to this Plan. 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 such entity that participate in the Plan.
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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.
(a)(1) Except as otherwise provided herein, the total wages, salaries, and
fees for professional services and other amounts received (without regard to
whether or not an amount is paid in cash) for personal services actually
rendered in the course of employment with the Employer to the extent that the
amounts are includible in gross income, including, but not limited to (A)
commissions paid salesmen, (B) compensation for services on the basis of a
percentage of profits, (C) commissions on insurance premiums, (D) tips, (E)
bonuses, (F) fringe benefits, (G) reimbursements or other expense allowances
under a nonaccountable plan (as described in Treas. Reg. section 1.62-2(c)), (H)
amounts described in sections 104(a)(3), 105(h) of the Code, but only to the
extent that these amounts are includible in the gross income of the Employee,
(I) the value of a nonqualified stock option granted to an Employee by the
Employer, but only to the extent that the value of the option is includible in
the gross income of the Employee for the taxable year in which granted, and (J)
the amount includible in the gross income of an Employee upon making the
election described in section 83(b) of the Code.
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(2) Notwithstanding the foregoing, Compensation shall not include: (A) Employer
contributions to a plan of deferred compensation which are not includible in the
Employee's gross income for the taxable year in which contributed, or any
distributions from a plan of deferred compensation (regardless of whether such
amounts are includible in the gross income of the Employee when distributed);
(B) amounts realized from the exercise of a nonqualified stock option, or when
restricted stock (or property) held by the Employee either becomes freely
transferable or becomes no longer subject to a substantial risk of forfeiture;
(C) amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; and (D) other amounts which received
special tax benefits, such as premiums for group-term life insurance to the
extent that the premiums are not includible in the gross income of the Employee.
(3) To the extent not otherwise excluded by subsection (a)(2), Compensation also
shall not include: (A) reimbursements or other expense allowances, (B) fringe
benefits (cash and noncash), (C) moving expenses, (D) deferred compensation, and
(E) welfare benefits.
(4) 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.
2.18 Eligible Employee. A person who is an Employee of an Adopting
Employer who:
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(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 employed in a position covered by the Service Contract Act;
(e) is not eligible to participate in the Raytheon Employee Savings and
Investment Plan or the Raytheon Savings and Investment Plan for Employees in
Puerto Rico; and
(f) 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 participates in the Plan).
2.23 Employment Commencement Date. The date on which an individual
first performs an Hour of Service with the Employer.
2.24 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
2.25 ESOP Contributions. Any contribution by the Adopting Employers to
the Trust pursuant to
section 4.3(a).
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2.26 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.
2.27 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.
2.28 Financed Shares. Shares of Common Stock acquired by the Trust
with the proceeds of an Acquisition Loan.
2.29 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) 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.
2.30 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:
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(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.
2.31 Layoff. An involuntary interruption of service due to reduction
of work force with the
possibility of recall to employment when conditions warrant.
2.32 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.
2.33 Matching Contributions. Contributions made to the Trust in
accordance with section 4.2(a) hereof.
2.34 Matching Contribution Account. That portion of a Participant's
Account which is attributable to Matching Contributions received pursuant to
section 4.2(a), adjusted for withdrawals and distributions, and
the earnings and losses attributable thereto.
2.35 Normal Retirement Age. The Participant's sixty-fifth (65th)
birthday.
2.36 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.
2.37 Pay Period. A period scheduled by an Adopting Employer for
payment of wages or salaries.
2.38 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).
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2.39 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. For this
purpose, a "former AlliedSignal employee" shall receive credit for his or her
period of service with AlliedSignal, Inc and its affiliates. A former
AlliedSignal employee is an Employee who (i) immediately prior to September 11,
1998 was a salaried employee of the Communication Systems division of
AlliedSignal, Inc. (Towson, Maryland location), and (ii) on such date became an
Employee in connection with the Company's acquisition of AlliedSignal's
Communication Systems division.
2.40 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.
2.41 Plan. The Raytheon Savings and Investment Plan as amended from
time to time.
2.42 Plan Year. The annual twelve- (12) month period beginning on
January 1 of each year and ending on December 31 of each year.
2.43 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.
2.44 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).
2.45 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.
2.46 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.
2.47 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 Account.
2.48 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.
2.49 Rollover Contributions. A transfer that qualifies under either
section 402(c) or 403(a)(4) of the Code.
2.50 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.
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2.51 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.
2.52 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
(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.
2.53 Surviving Spouse. A person who was legally married to the
Participant immediately before the Participant's death.
2.54 Trade Day. Days on which the Recordkeeper is able to make
transfers of Plan assets.
2.55 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.
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2.56 Trustee. The Trustee and any successor trustees under the Trust.
2.57 Trust Fund. The cash, securities, and other property held by the
Trustee for the purposes of the Plan.
2.58 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.
2.59 Valuation Date. Any day that the New York Stock Exchange is open
for trading.
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. If the Participant becomes eligible to participate
in the Raytheon Employee Savings and Investment Plan or the Raytheon Savings and
Investment Plan for Puerto Rico Based Employees following such transfer and such
other plan accepts transfers from this Plan, the Participant's Account shall be
transferred to such other plan (which Account under such other plan shall remain
subject to the provisions of this Plan to the extent required by section
411(d)(6) of the Code). 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.
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12
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.
If such an Employee was, immediately prior to such transfer, a participant in
the Raytheon Employee Savings and Investment Plan or the Raytheon Savings and
Investment Plan for Puerto Rico Based Employees, the Employee's Elective
Deferral election and investment directions under such plan shall be deemed to
apply for purposes of this Plan unless the Employee designates otherwise.
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: Subject to the limitations otherwise prescribed
herein, 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 twenty percent (20%) and to have such amount
contributed to the Plan as an Elective Deferral. Notwithstanding the preceding
sentence, a Participant who is eligible to participate in the contributory
portion of either the Raytheon Bargaining Retirement Plan or the Raytheon
Non-Bargaining Retirement Plan (Exhibit A to each plan) may not make Elective
Deferrals that exceed seventeen percent (17%) of his or her Compensation.
(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 this subsection (a)(2), 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) The Elective Deferrals and Employee After-Tax Contributions made on
behalf of each Participant shall not in the aggregate exceed twenty percent
(20%) of the Participant's Compensation for any Plan Year. Notwithstanding the
preceding sentence, a Participant who is participating in the contributory
portion of either the Raytheon Bargaining Retirement Plan or the Raytheon
Non-Bargaining Retirement Plan (Exhibit A to each plan) may not make Elective
Deferrals and Employee After-Tax Contributions that in the aggregate exceed
seventeen percent (17%) of his or her Compensation.
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13
(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: Subject to the limitations otherwise
prescribed herein, a Participant may authorize an Adopting Employer to reduce
his or her Compensation on an after-tax basis by an amount equal to any whole
percentage of Compensation that does not exceed twenty percent (20%) and to have
such amount contributed to the Plan as an Employee After-Tax Contribution.
Notwithstanding the preceding sentence, a Participant who is participating in
the contributory portion of either the Raytheon Bargaining Retirement Plan or
the Raytheon Non-Bargaining Retirement Plan (Exhibit A to each plan) may not
make Employee After-Tax Contributions that exceed seventeen percent (17%) of his
or her Compensation.
(2) The Elective Deferrals and Employee After-Tax Contributions made on
behalf of each Participant shall not in the aggregate exceed twenty percent
(20%) of the Participant's Compensation for any Plan Year. Notwithstanding the
preceding sentence, a Participant who is participating in the contributory
portion of either the Raytheon Bargaining Retirement Plan or the Raytheon
Non-Bargaining Retirement Plan (Exhibit A to each plan) may not make Elective
Deferrals and Employee After-Tax Contributions that in the aggregate exceed
seventeen percent (17%) of his or her Compensation.
(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) Qualified Nonelective Contributions: 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.
4.2 Stock Bonus Portion of the Plan.
(a) Matching Contributions: Subject to the limitations otherwise prescribed
herein, each Adopting Employer shall make Matching Contributions equal in value
to one hundred percent (100%) of the total Elective Deferrals and Employee
After-Tax Contributions made for each Pay Period by each Participant who is an
Eligible Employee of such Adopting Employer, but the total of such Matching
Contributions for any Participant shall not exceed four percent (4%) of a
Participant's Compensation from such Adopting Employer for each such Pay Period.
(b) The Matching Contribution shall be made in either Common Stock or cash
that is invested in Common Stock. The number of shares of Common Stock
contributed by the Adopting Employer or acquired with Matching Contributions
under this subsection (b) shall be allocated to the Participant's Account by the
Trustee and such allocation shall equal the number of shares of Common Stock
which the Trustee could have purchased for the Participant at the Current Market
Value. Such Matching Contribution shall remain invested in Common Stock in
accordance with section 5.1(b).
<PAGE>
14
(c) Special Matching Contribution for AlliedSignal Participants: Subject to
the limitations otherwise prescribed herein, each Adopting Employer shall make
special Matching Contributions with respect to the Elective Deferrals and
Employee After-Tax Contributions made by AlliedSignal Participants during the
period commencing September 11, 1998 and ending September 10, 1999 (the
"Transition Period"). The special Matching Contributions required under this
subsection (c) shall equal the amount of matching contributions the AlliedSignal
Participants would have received under the AlliedSignal Savings Plan and the
AlliedSignal Thrift Plan (collectively, the "AlliedSignal plans") if they had
continued to participate in the AlliedSignal plans during the Transition Period,
reduced by the amount of Matching Contributions that the AlliedSignal
Participants are entitled to under this Plan with respect to the Elective
Deferrals and Employee After-Tax Contributions made during the Transition
Period. The special Matching Contributions under this subsection (c) shall be
made on or after September 11, 1999, shall be considered Matching Contributions
for the 1999 Plan Year, and shall be treated as Matching Contributions for all
other purposes of the Plan. For purposes of this subsection (c), an
"AlliedSignal Participant" shall mean a Participant who immediately prior to
September 11, 1998 was a salaried employee of AlliedSignal, Inc. and who on such
date became an Employee in connection with the Company's acquisition of the
Communication Systems division of AlliedSignal, Inc. (Towson, Maryland
location), provided such Employee (1) does not voluntarily terminate employment
with the Company and all of its Affiliates prior to September 11, 1999; (2) is
not terminated from employment with the Company or any of its Affiliates for
cause prior to September 11, 1999; (3) is not an hourly employee; and (4) is
otherwise eligible to participate in this Plan during the Transition Period.
4.3 ESOP Portion of the Plan.
(a) ESOP Contributions: For each Plan Year, the Adopting Employers shall
make an ESOP Contribution equal to one-half of one percent (0.5%) of the
Participants' Compensation for such Plan Year. The ESOP Contribution may be made
in cash, Common Stock or a combination thereof at the discretion of the Adopting
Employers.
(b) Allocation of ESOP Contribution: The Administrator shall allocate
the ESOP Contribution to the 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
<PAGE>
15
(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.
(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.
<PAGE>
16
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.
4.8 Limits for Highly Compensated Employees.
(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>
17
(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 C 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 C 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 2.29.
(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>
18
(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.
(c) (1) The Company may, in its sole discretion, elect to contribute, as
provided in section 4.1(c), a Qualified Nonelective Contribution in an amount
necessary to satisfy any or all of the requirements of section 4.8.
<PAGE>
19
(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, Matching
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 Elective Deferrals 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.
(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.
<PAGE>
20
(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.
(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 Elective Deferrals Account (if such Excess
Contribution is attributable to Elective Deferrals);
(B) from the Participant's Qualified Nonelective Contribution Account (if such
Excess Contribution is attributable to Qualified Nonelective Contributions); and
(C) from the Participant's Matching Contribution Account (if such Excess
Contribution is attributable to Matching 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.
<PAGE>
21
(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.
(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.
(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.
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22
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(c), 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 ARTICLE VI.
(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.
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23
(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 Account (if such
Excess Aggregate Contribution is attributable to Employee After-Tax
Contributions);
(B) from the Participant's Qualified Nonelective Contribution Account (if
such Excess Aggregate Contribution is attributable to Qualified Nonelective
Contributions); and
(C) from the Participant's Matching Contribution Account (if such Excess
Aggregate Contribution is attributable to Matching 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.
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24
(2) The terms "employee contributions" and "matching contributions" shall,
for purposes of this section, have the meanings set forth in Treas. Reg.
ss.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.
(b) 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
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25
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 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.
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26
(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;
(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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27
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.
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.
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28
(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, Qualified Nonelective Contribution and ESOP Contribution Accounts.
Each Participant shall have a nonforfeitable right to all amounts in the
Participant's Elective Deferral, Employee After-Tax Contribution, Rollover
Contribution, Qualified Nonelective Contribution and ESOP Contribution Accounts.
6.2 Matching Contribution Account.
(a) Each Participant who performs an Hour of Service on or after January 1,
1999, shall have a nonforfeitable right to his or her entire Account, including
the Participant's Matching Contribution Account.
(b) Each Participant who does not perform an Hour of Service on or after
January 1, 1999 shall have a nonforfeitable right to his or her Matching
Contribution Account in accordance with the terms of the Plan as in effect
before January 1, 1999 (or, if more favorable, under the terms of the transferee
plan in the case of a direct transfer of assets to the Plan in accordance with
sections 1.1(b) and 4.5(c)). For this purpose, before January 1, 1999, the Plan
provided that each Participant would have a nonforfeitable right to his or her
Matching Contribution Account upon the earliest of:
(1) the Participant's completion of a Period of Service of five (5) years;
(2) the Participant's completion of a Period of Participation of three (3)
years;
(3) the Participant's Retirement, death while an Employee, Disability or
attainment of Normal Retirement Age; or
(4) in the case of a Participant who formerly participated in the Raytheon
Salaried Savings and Investment Plan (10011) and the Raytheon California Hourly
Savings and Investment Plan (10012), the Participant's Layoff or Severance from
Service due to Qualified Military Service.
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29
(c) For purposes of this section 6.2, all Hours of Service as a Leased
Employee, if any, shall be taken into account for purposes of determining a
Participant's nonforfeitable right to his or her Matching Contribution Account,
even though Leased Employees are not eligible to participate in the Plan.
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 Contributions, the
Matching Contribution Account 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 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 his or her Elective Deferral Account
when he or she did not have a nonforfeitable right to his or her Matching
Contribution Account, the Matching 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 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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30
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 residence
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.
(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.
(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.
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31
(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. 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.
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.
(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.
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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)).
(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:
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(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.
(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.
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(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.
(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 fo
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.
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35
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.
(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.
(2) A Domestic Relations Order meets the requirements of this
subsection only if such order does not:
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36
(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 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
(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.
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37
(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 Ben