RAYTHEON SAVINGS AND INVESTMENT PLAN
As Amended and Restated Effective January 1, 1999
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 (except as otherwise indicated below), all or a portion of the
following qualified retirement plans shall merge into and become part of the
Plan:
Raytheon Savings and Investment Plan for Specified Hourly Employees
Raytheon 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 (merger effective January 14, 1999) Serv-Air, Inc.
Savings and Retirement Plan (merger effective January 14, 1999) Hughes STX
Corporation 401(k) Retirement Plan (merger effective February 11, 1999) Standard
Missile 401(k) Plan (merger effective in the first quarter of 1999) Raytheon
Stock Ownership Plan Raytheon Stock Ownership Plan for Specified Hourly
Employees.
(c) The Plan is intended to comply with all of the applicable
requirements under sections 401(a), 401(k) and 4975(e)(7) of the Code and the
terms of the Plan shall be interpreted consistent therewith.
1.2 Trust. The Trust shall be the sole source of benefits under the Plan
and the Adopting Employers or any Affiliate shall not have any liability for the
adequacy of the benefits provided under the Plan.
1.3 Effective Date.
(a) General Effective Date: The amended and restated Plan shall be
effective as of January 1, 1999, or such other dates as may be specifically
provided herein or as otherwise required by law for the Plan to satisfy the
requirements of section 401(a) of the Code.
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(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.
(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.
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(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.
(b) An Adopting Employer shall withdraw from the Plan and Trust if the
Plan and Trust, with respect to that Adopting Employer, fail to qualify under
sections 401(a) and 501(a) of the Code (or, in the opinion of the Administrator,
they may fail to so qualify) and the continued sponsorship of that Adopting
Employer may jeopardize the status with respect to the Company or the remaining
Adopting Employers, of the Plan and Trust under sections 401(a) and 501(a) of
the Code. The Adopting Employer shall receive at least thirty (30) days prior
written notice of a withdrawal under this subsection, unless a shorter period is
agreed to.
(c) An Adopting Employer may voluntarily withdraw from the Plan and
Trust for any reason. Such withdrawal requires at least thirty (30) days written
notice to the Administrator and the Trustee, unless a shorter period is agreed
to.
(d) Upon withdrawal, the Trustee shall segregate the assets
attributable to Employees of the withdrawn Adopting Employer, the amount thereof
to be determined by the Administrator and the Trustee. The segregated assets
shall be held, paid to another trust, distributed or otherwise disposed of as is
appropriate under the circumstances; provided, however, that any transfer shall
be for the exclusive benefit of Participants and their Beneficiaries. A
withdrawal of an Adopting Employer from the Plan is not necessarily a
termination under ARTICLE XIV. If the withdrawal is a termination, then the
provisions of ARTICLE XIV shall also be applicable.
ARTICLE II
Definitions
The following terms have the meaning specified below unless the context
indicates otherwise:
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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.
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.
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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)), (8)
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,
(H) 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 (I)
the amount includible in the gross income of an Employee upon making the
election described in section 83(b) of the Code.
(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.
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(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:
(a) is on a United States-Based Payroll;
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(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).
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.
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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
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(3) periods for which back pay (irrespective of mitigation of
damages) is either awarded or agreed to by the Employer.
(c) Hours of Service shall also include each hour for which an
Employee is entitled to credit under subsection (a) as a result of employment
with:
(1) a predecessor company substantially all the assets of which
have been acquired by the Company, provided that where only a portion of the
operations of a company has been acquired, only service with said acquired
portion prior to the acquisition will be included and that the Employee was
employed by said predecessor company at the time of acquisition; or
(2) a division, operation or similar cohesive group of the
Employer excluded from participation in the Plan.
(d) The provisions of subsection (b) shall be further limited to
prevent duplication by only permitting a person to receive credit for one (1)
Hour of Service for any given hour.
(e) Hours of Service shall be computed and credited in accordance with
the Department of Labor regulations under section 2530.200b.
2.31 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.
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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).
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.
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 and ESOP Contribution Accounts.
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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.
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
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(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.
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).
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3.2 Procedure for Joining the Plan. Each Eligible Employee may join the
Plan by communicating with the Recordkeeper in accordance with the instructions
that will be made available to each Eligible Employee. An enrollment in the Plan
shall not be deemed to have been completed until the Eligible Employee has
designated: (i) a percentage by which his or her Compensation shall be reduced
as an Elective Deferral in accordance with the requirements of section 4.1(a);
(ii) election of investment funds in accordance with ARTICLE V; (iii) one or
more Beneficiaries; and (iv) such other information as specified by the
Recordkeeper. Enrollment will be effective as of the first Pay Period following
completion of enrollment for which it is administratively feasible to carry out
such enrollment. The Administrator, in its discretion, may from time to time
make exceptions and adjustments in the foregoing procedures on a uniform and
nondiscriminatory basis.
3.3 Transfer Between Adopting Employers to Position Covered by Plan. A
Participant who is transferred to a position with another Adopting Employer in
which the Participant remains an Eligible Employee will continue as an active
Participant of the Plan.
3.4 Transfer to Position Not Covered by Plan. If a Participant is
transferred to a position with an Employer in which the Participant is no longer
an Eligible Employee, the Participant will remain a Participant of the Plan with
respect to contributions previously made but shall no longer be eligible to have
Elective Deferrals made to the Plan on his or her behalf until he or she again
becomes an Eligible Employee. In the event the Participant is subsequently
transferred to a position in which he or she again becomes an Eligible Employee,
the Participant may renew Elective Deferrals by communicating with the
Recordkeeper and providing all of the information requested by the Recordkeeper.
The renewal of Elective Deferrals will be effective as of the first Pay Period
following receipt by the Recordkeeper of the requested information for which it
is administratively feasible to re-enroll such Participant.
3.5 Transfer to Position Covered by Plan. If an Employee who is not
eligible to participate in the Plan by reason of his or her position with an
Employer is transferred to a position that is eligible to participate in the
Plan, such Employee may join the plan immediately following the effective date
of the new position in accordance with the procedures prescribed Section 3.2.
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.
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14
(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 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 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.
(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.
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15
(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).
(c) Special Matching Contribution for Allied-Signal 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 Allied-Signal 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
Allied-Signal 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
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16
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 10, 1998 was an employee of AlliedSignal and who
on such date became an Employee of the Company or one of its Affiliates in
connection with the Company's acquisition of AlliedSignal's defense
communications business, 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 and
all 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. Within a reasonable period of time before the allocation to
individual accounts as specified in subsection (b), the Trustee shall use the
ESOP Contribution, to the extent not contributed in Common Stock, to acquire
Common Stock which will be held by the Trustee for the benefit of the
Participants in the Plan.
(b) Allocation of ESOP Contribution: As soon as administratively
feasible after the ESOP Contribution is made to the Plan, the Administrator
shall allocate the ESOP Contribution to the 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
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17
(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.
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18
4.6 Refund of Contributions to the Adopting Employers.
Notwithstanding the provisions of ARTICLE XII, if, or to the extent that, any
Adopting Employer's deductions for contributions made to the Plan are
disallowed, such Adopting Employer will have the right to obtain the return of
any such contributions for a period of one (1) year from the date of
disallowance. For this purpose, all contributions are made, other than Employee
After-Tax Contributions, subject to the condition that they are deductible under
the Code for the taxable year of the Adopting Employers for which the
contributions are made. Furthermore, any contribution made on the basis of a
mistake in fact may be returned to the Adopting Employers within one (1) year
from the date such contribution was made.
4.7 Payment. The Adopting Employers shall pay to the Trustee in
U.S. currency, or by other property acceptable to the Trustee, all contributions
for each Plan Year within the time prescribed by law, including extensions
granted by the Internal Revenue Service, for filing the federal income tax
return of the Company for its taxable year in which such Plan Year ends. Unless
designated by the Adopting Employers as nondeductible, all contributions made,
other than Employee After-Tax Contributions, shall be deemed to be conditioned
on their current deductibility under section 404 of the Code.
4.8 Limits for Highly Compensated.
(a) Elective Deferrals, Employee After-Tax Contributions, Matching
Contributions and Qualified Nonelective Contributions allocable to the Accounts
of Highly Compensated Employees shall not in any Plan Year exceed the limits
specified in this section. The Administrator may make the adjustments authorized
in this section to ensure that the limits of subsection (b) (or any other
applicable limits) are not exceeded, regardless of whether such adjustments
affect some Participants more than others. This section shall be administered
and interpreted in accordance with sections 401(k) and 401(m) of the Code.
(b)(1) The Actual Deferral Percentage of the Highly Compensated
Employees shall not exceed, in any Plan Year, the greater of:
(A) one hundred twenty-five percent (125%) of the Actual
Deferral Percentage for all other Eligible Participants; or
(B) the lesser of two hundred percent (200%) of the Actual
Deferral Percentage for all other Eligible Participants or the Actual Deferral
Percentage for the other Eligible Participants plus two (2) percentage points.
(2) The Actual Contribution Percentage of the Highly Compensated
Employees shall not exceed, in any Plan Year, the greater of:
(A) one hundred twenty five percent (125%) of the Actual
Contribution Percentage for all other Eligible Participants; or
(B) the lesser of two hundred percent (200%) of the Actual
Contribution Percentage for all other Eligible Participants or the Actual
Contribution Percentage for the other Eligible Participants plus two (2)
percentage points.
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19
(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).
(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
<PAGE>
20
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.
(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.
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21
(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.
(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.
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22
(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.
(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.
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23
(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.
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24
4.10 Correction of Excess Deferrals.
(a) Excess Deferrals shall be corrected as provided in this section.
The Administrator may also prevent anticipated Excess Deferrals as provided in
this section. The Administrator may use any method of correction or prevention
provided in this section or any combination thereof, as it determines in its
sole discretion. A distribution of an Excess Deferral under this section may be
made without regard to any notice or consent otherwise required pursuant to
sections 411(a)(11) and 417 of the Code. This section shall be administered and
interpreted in accordance with sections 401(k) and 402(g) of the Code.
(b) The Administrator may refuse to accept any or all prospective
Elective Deferrals to be contributed by a Participant.
(c)(1) The Administrator may distribute any or all Excess Deferrals
to the Participant on whose behalf such Excess Deferrals were made before the
close of the Applicable Taxable Year. Distributions under this subsection
include income allocable to the Excess Distribution so distributed, as
determined under this subsection.
(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.
<PAGE>
25
(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.
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.
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(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.
(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).
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27
(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.
(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.
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28
(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
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
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29
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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30
(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.
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31
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.
5.3 Transfer of Account Balances Between Investment Funds. Except as
otherwise prescribed in sections 5.1(b), (c) and (d), each Participant may elect
to transfer all or a portion of the amount in his or her Account between
investment funds effective as of the first Trade Day following notice to the
Recordkeeper by which it is administratively feasible to carry out such
transfer. In determining the amount of the transfer, the Participant's Account
shall be valued as of the close of business on the Trade Day on which notice is
received; provided, however, that in any case where the notice is received after
4:00 p.m. Eastern Time (daylight or standard, whichever is in effect on the date
of the call), the Account shall be valued as of the close of business on the
next Trade Day. Such transfers must be made in either one percent (1%)
increments of the entire Account or in a specified amount in whole dollars and,
as of the completion of the transfer, must result in investment of one hundred
percent (100%) of the Account. Transfers shall be effected by telephone notice
to the Recordkeeper.
5.4 Ownership Status of Funds. The Trustee shall be the owner of
record of the Plan assets. The Administrator shall have records maintained as of
the Valuation Date for each investment option allocating a portion of the
investment option to each Participant who has elected that his or her Account be
invested in such investment option. The records shall reflect each Participant's
portion of Common Stock, Raytheon Company Class A common stock and General
Motors Class H common stock in cash and unitized shares of stock and shall
reflect each Participant's portion of all other investment options as may be
established by the Administrator in a cash amount.
5.5 Voting Rights. Participants whose Accounts are invested in
Common Stock or Raytheon Company Class A common stock on the last business day
of the second month preceding the record date (the "Voting Eligibility Date")
for any meeting of stockholders have the right to instruct the Trustee as to
voting at such meeting. The number of votes is determined by dividing the value
of the shares in the Participant's Account by the closing price of the
respective classes of stock on the Voting Eligibility Date. If the Trustee has
not received instructions from a Participant as to voting of shares within a
specified time, then the Trustee shall not vote those shares. If a Participant
furnishes the Trustee with a signed vote direction card without indicating a
voting choice thereon, the Trustee shall vote the Participant's shares as
recommended by management. In addition, each Participant shall have the right to
accept or reject any tender or exchange offer for shares of the respective
classes of stock. The Trustee shall vote (or tender or exchange) all combined
fractional shares of the respective classes of stock to the extent possible in
the same proportion as the shares which have been voted (or tendered or
exchanged) by each Participant. Any instructions as to voting (or tender or
exchange) received from an individual Participant shall be held in confidence by
the Trustee and shall not be divulged to the Adopting Employers or to any
officer or employee thereof or to any other person.
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32
5.6 Allocation of Earnings.
(a)(1) The Administrator, as of each Valuation Date, shall adjust the
amounts credited to the Accounts (including Accounts for persons who are no
longer Employees) so that the total of such Account balances equals the fair
market value of the Trust Fund assets as of such Valuation Date. Except as
otherwise provided herein, any changes in the fair market value of the Trust
Fund assets since the preceding Valuation Date shall be charged or credited to
each Account in the ratio that the balance in each such Account as of the
preceding Valuation Date bears to the balances in all Accounts as of that
Valuation Date with appropriate adjustments to reflect any distributions,
allocations or similar adjustments to such Account or Accounts since that
Valuation Date.
(2) To the extent that separate investment funds are established (as
provided in section 5.1(a)), the adjustments required by subsection (a)(1) shall
be made by applying subsection (a)(1) separately for each such investment fund
so that any changes in the net worth of each such investment fund are charged or
credited to the portion of each Account invested in such investment fund in the
ratio that the portion of each such Account invested in such investment fund as
of the preceding Valuation Date (reduced by any distributions made from that
portion of such Account since that Valuation Date) bears to the total amount
credited to such investment funds as of that Valuation Date (reduced by
distributions made from such investment fund since that Valuation Date).
(3) Interim valuations, in accordance with the foregoing procedure,
may be made at such time or times as the Administrator directs.
(b) The Administrator may, in its sole discretion, direct the
Trustee to segregate and separately invest any Trust Fund assets. If any assets
are segregated in this fashion, the earnings or losses on such assets shall be
determined apart from other Trust assets and shall be adjusted on each Valuation
Date, or at such other times as the Administrator deems necessary, in accordance
with this section.
ARTICLE VI
Vesting
6.1 Elective Deferral, Employee After-Tax Contribution, Rollover
Contribution, 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.
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33
(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.
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
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34
(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.
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
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35
(D) the need to prevent the eviction of the Participant from his
or her principal residence or the foreclosure on the mortgage of the
Participant's principal residence.
(2) The Administrator may, on the basis of such evidence it deems
relevant, determine that the Participant has experienced an immediate and heavy
financial need for reasons other than those enumerated above in this subsection.
(d)(1) A withdrawal under this subsection will be deemed necessary to
satisfy an immediate and heavy financial need of the Participant if it satisfies
the requirements of this subsection. To the extent the amount of the withdrawal
would be in excess of the amount required to relieve the financial need of the
Participant or to the extent such need may be satisfied from other resources
that are reasonably available to the Participant, such withdrawal shall not
satisfy the requirements of this subsection. For purposes of this subsection, a
Participant's resources shall be deemed to include those assets of his or her
spouse or minor children that are reasonably available to the Participant.
(2) A withdrawal may be treated as necessary to satisfy a financial
need if the Administrator reasonably relies upon the Participant's
representation that the need cannot be relieved:
(A) through reimbursement or compensation by insurance or
otherwise;
(B) by reasonable liquidation of the Participant's assets to
the extent such liquidation would not itself cause an immediate and heavy
financial need;
(C) by cessation of Elective Deferrals under the Plan for at
least twelve (12) months after receipt of the hardship withdrawal; or
(D) by other distributions or nontaxable (at the time of the
loan) loans from plans maintained by the Adopting Employers or by any other
employer or by borrowing from commercial sources on reasonable commercial terms.
(e) If a Participant receives a withdrawal for reasons of financial
hardship, the Participant's Elective Deferrals shall be reduced to four percent
(4%) (or such lower percentage as the Participant shall thereafter designate),
if in excess thereof as of the date of the distribution, and shall not be
increased during the twelve (12) months immediately subsequent to the date of
distribution.
7.2 Employee After-Tax Contributions. Subject to the terms and conditions
prescribed in section 7.5, a Participant may withdraw all or a portion of his
or her Employee After-Tax Contribution Account.
7.3 Matching Contributions. 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.
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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 pro-rata basis
against the Participant's investment balances in his or her Account.
(f) In-service withdrawals may not be redeposited in the Plan.
(g) The Administrator may adopt such other rules and procedures as it
deems necessary, in its sole discretion, to properly administer the in-service
withdrawal provisions in this ARTICLE.
ARTICLE VIII
Distribution of Benefits
8.1 General.
(a) Except as otherwise provided in Exhibit B to this Plan (or
otherwise required by section 4.5(b)), all benefits payable under this Plan
shall be paid in the manner and at the times specified in this ARTICLE.
(b) All payment methods and distributions shall comply with the
requirements of sections 401(a)(4) and 401(a)(9) of the Code and the regulations
thereunder and, if necessary, shall be interpreted to so comply. All
distributions shall comply with the incidental death benefit requirement of
section 401(a)(9)(G) of the Code. Distributions shall comply with the
regulations under section 401(a)(9) of the Code, including Treas. Reg.
ss.1.401(a)(9)-2. The provisions of the Plan reflecting section 401(a)(9) of the
Code override any distribution provisions in the Plan inconsistent with section
401(a)(9) of the Code.
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37
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:
(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.
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38
(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.
(c) The following terms shall have the meanings specified:
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39
(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 for the following:
(A) Any distribution to the extent the distribution is required
under section 401(a)(9) of the Code.
(B) The portion of any distribution that is not includable in
gross income (determined without regard to the exclusion for net unrealized
appreciation described in section 402(e)(4) of the Code).
(C) Returns of elective deferrals described in Treas. Reg.
ss.1.415-6(b)(6)(iv) that are returned as a result of the limitations under
section 415 of the Code.
(D) Corrective distributions of excess contributions and excess
deferrals under qualified cash or deferred arrangements as described in Treas.
Reg. ss.1.401(k)-1(f)(4) and ss.1.402(g)-1(e)(3), respectively, and corrective
distributions of excess aggregate contributions as described in Treas. Reg.
ss.1.401(m)-1(e)(3), together with the income allocable to these corrective
distributions.
(E) Loans treated as distributions under section 72(p) of the
Code and not excepted by section 72(p)(2) of the Code.
(F) Loans in default that are deemed distributions.
(G) Dividends paid on employer securities as described in
section 404(k) of the Code.
(H) The costs of life insurance coverage.
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40
(I) Similar items designated by the Internal Revenue Service in
revenue rulings, notices, and other guidance of general applicability.
8.6 Notice and Payment Elections.
(a) The Administrator shall provide Participants or other Distributees
of Eligible Rollover Distributions with a written notice designed to comply with
the requirements of section 402(f) of the Code. Such notice shall be provided
within a reasonable period of time before making an Eligible Rollover
Distribution.
(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) f the
Participant and the name and mailing address of each Alternate Payee covered by
the order;
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41
(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:
(A) require the Plan to provide any type or form of benefit or
any option not otherwise provided under the Plan;
(B) require the Plan to provide increased benefits (determined on
the basis of actuarial value); and
(C) does not require the payment of benefits to an Alternate
Payee that is required to be paid to another Alternate Payee under another order
previously determined to be a Qualified Domestic Relations Order.
(d) A domestic relations order shall not be treated as failing to meet
the requirements of section 8.7(c)(2)(A) solely because such order requires that
payment of benefits be made to an Alternate Payee:
(1) in the case of any payment before a Participant has separated
from service, on or after the date on which the Participant attains (or would
have attained) the Earliest Retirement Date;
(2) as if the Participant had retired on the date on which such
payment is to begin under such order (but taking into account only the present
value of the benefits actually accrued and not taking into account the present
value of any employer subsidy for early retirement); and
(3) in any form in which such benefits may be paid under the Plan
to the Participant (other than in the form of a qualified joint and survivor
annuity with respect to the Alternate Payee and his or her subsequent spouse).
(e) A domestic relations order shall not be treated as failing to meet
the requirements of section 8.7(c)(2)(A) solely because such order requires that
payment of benefits be made to an Alternate Payee at a date before the
Participant is entitled to receive a distribution. Such distribution shall be
made to such Alternate Payee notwithstanding any contrary provision of the Plan.
(f) The following terms shall have the meanings specified:
(1) Alternate Payee. Any spouse, former spouse, child or other
dependent of a Participant who is recognized by a Domestic Relations Order as
having a right to benefits under the Plan with respect to such Participant.
(2) Domestic Relations Order. A judgment, decree or order relating
to child support, alimony or marital property rights, as defined in section
414(p)(1)(B) of the Code.
(3) Earliest Retirement Date. The earlier of:
(A) the date on which the Participant is entitled to a
distribution under the Plan; or
(B) the later of:
(i) the date the Participant attains age fifty (50); or
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42
(ii) the earliest date on which the Participant could begin
receiving benefits under the Plan if the Participant separated from service.
(4) Qualified Domestic Relations Order. A Domestic Relations Order
that satisfies the requirements of subsection (c) and section 414(p)(1)(A) of
the Code.
(g) If an Alternate Payee entitled to payment under this section is
the spouse or former spouse of a Participant and payment will otherwise be