EXHIBIT 4.4
AETNA SERVICES, INC.
INCENTIVE SAVINGS PLAN
AMENDED AND RESTATED
AS OF JANUARY 1, 1999
AETNA SERVICES, INC.
INCENTIVE SAVINGS PLAN
THIS AGREEMENT, made and entered into this 22nd day of December, 1998,
by and between Aetna Services, Inc., a corporation organized and existing under
the laws of the State of Connecticut, with its principal office at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "Company"), and Mellon Bank, N.A., a
national banking association, as trustee of the trust created herein
(hereinafter referred to as the "Trustee").
W I T N E S S E T H :
WHEREAS, the Company heretofore established an Incentive Savings Plan
for Employees to provide retirement benefits to its Eligible Employees; and
WHEREAS, under the terms of the Plan, the Company has the ability to
amend the Plan; and
WHEREAS, it is the intention of the Company that such Plan and its
Trust continue to meet the requirements of Section 401(a) and Section 501(a) of
the Internal Revenue Code;
NOW, THEREFORE
Effective January 1, 1999, except as otherwise provided herein, the
Plan is hereby amended and restated in its entirety to provide as follows:
The Plan and Trust created in accordance with the terms hereof shall be
formally known as the Aetna Services, Inc. Incentive Savings Plan.
PREFACE
The initial effective date of the Plan is September 1, 1972. The Plan
was amended in its entirety, effective as of September 1, 1976 and January 1,
1989. The Plan as in effect on January 1, 1989 was amended periodically since
such date and until the Effective Date hereof to comply with the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the Internal
Revenue Code of 1986, as amended (the "Code"), and other applicable laws, and to
make other desired benefit changes.
The Plan is hereby amended to comply with ERISA, the Code, the
Uniformed Services Employment and Reemployment Rights Act of 1994, the Small
Business Job Protection Act of 1996, and the Taxpayer Relief Act of 1997 and to
make other desired benefit changes. This amended and restated Plan is effective
January 1, 1999, except where specific reference is made herein to a different
effective date, or where any of the laws listed in the preceding sentence
provides for an earlier effective date, in which case such earlier date or dates
shall apply.
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS.......................................................................................... 1
1.1 "ACCOUNT"...................................................................................... 1
1.2 "ACCOUNT VALUE"................................................................................ 1
1.3 "ACTIVE PARTICIPANT"........................................................................... 1
1.4 "ACTUAL CONTRIBUTION PERCENTAGE"............................................................... 1
1.5 "ACTUAL DEFERRAL PERCENTAGE"................................................................... 1
1.6 "ADJUSTED"..................................................................................... 2
1.7 "AFFILIATE".................................................................................... 2
1.8 "ANNUITY STARTING DATE"........................................................................ 2
1.9 "APPEAL COMMITTEE"............................................................................. 3
1.10 "AUTHORIZED LEAVE OF ABSENCE".................................................................. 3
1.11 "BENEFICIARY".................................................................................. 3
1.12 "BENEFIT FINANCE COMMITTEE".................................................................... 3
1.13 "CODE"......................................................................................... 3
1.14 "COMPANY"...................................................................................... 3
1.15 "COMPENSATION DEFERRAL AGREEMENT".............................................................. 3
1.16 "DEFERRAL ACCOUNT"............................................................................. 4
1.17 "DEFERRAL CONTRIBUTIONS"....................................................................... 4
1.18 "DEFERRAL CONTRIBUTION RATE"................................................................... 4
1.19 "DISABILITY"................................................................................... 4
1.20 "DISCRETIONARY CONTRIBUTIONS".................................................................. 4
1.21 "DISCRETIONARY CONTRIBUTION ACCOUNT"........................................................... 4
1.22 "EARNINGS OR PROFITS".......................................................................... 4
1.23 "EFFECTIVE DATE"............................................................................... 4
1.24 "ELIGIBLE EMPLOYEE"............................................................................ 4
1.25 "EMPLOYEE"..................................................................................... 5
1.26 "EMPLOYER"..................................................................................... 5
1.27 "EMPLOYMENT COMMENCEMENT DATE"................................................................. 5
1.28 "FISCAL YEAR".................................................................................. 5
1.29 "GROUP ANNUITY CONTRACT"....................................................................... 5
i
TABLE OF CONTENTS (CONT.)
1.30 "HIGHLY COMPENSATED EMPLOYEE".................................................................. 5
1.31 "HOUR OF SERVICE".............................................................................. 6
1.32 "INCENTIVE CONTRIBUTIONS"...................................................................... 7
1.33 "INCENTIVE CONTRIBUTION ACCOUNT"............................................................... 7
1.34 "INSURER"...................................................................................... 7
1.35 "INVESTMENT FUND".............................................................................. 7
1.36 "LIMITATION YEAR".............................................................................. 7
1.37 "MATCHED DEFERRAL CONTRIBUTION"................................................................ 7
1.38 "MONEY PURCHASE ACCOUNT"....................................................................... 7
1.39 "NET INCOME"................................................................................... 8
1.40 "NONHIGHLY COMPENSATED EMPLOYEE"............................................................... 8
1.41 "NORMAL RETIREMENT AGE"........................................................................ 8
1.42 "NORMAL RETIREMENT DATE"....................................................................... 8
1.43 "PARTICIPANT".................................................................................. 8
1.44 "PARTICIPATING COMPANY"........................................................................ 8
1.45 "PAY".......................................................................................... 8
1.46 "PERIOD OF SEVERANCE".......................................................................... 9
1.47 "PLAN"......................................................................................... 10
1.48 "PLAN ADMINISTRATOR"........................................................................... 10
1.49 "PLAN YEAR".................................................................................... 10
1.50 "PRIOR PLAN"................................................................................... 10
1.51 "RESTATEMENT DATE"............................................................................. 10
1.52 "ROLLOVER ACCOUNT"............................................................................. 10
1.53 "ROLLOVER CONTRIBUTIONS"....................................................................... 10
1.54 "SECTION 414 COMPENSATION"..................................................................... 10
1.55 "SPOUSE"....................................................................................... 11
1.56 "STABLE VALUE OPTION".......................................................................... 11
1.57 "STOCK"........................................................................................ 11
1.58 "STOCK ACCOUNT"................................................................................ 11
1.59 "TERMINATION FROM SERVICE"..................................................................... 11
1.60 "TERMINATION FROM SERVICE DATE"................................................................ 11
ii
TABLE OF CONTENTS (CONT.)
1.61 "TRANSFERRED EMPLOYEE"......................................................................... 11
1.62 "TRUST"........................................................................................ 11
1.63 "TRUSTEE"...................................................................................... 11
1.64 "TRUST FUND"................................................................................... 12
1.65 "UNALLOCATED CONTRIBUTION ACCOUNT"............................................................. 12
1.66 "UNMATCHED DEFERRAL CONTRIBUTIONS"............................................................. 12
1.67 "VALUATION DATE"............................................................................... 12
1.68 "VESTING SERVICE".............................................................................. 12
1.69 "VOLUNTARY CONTRIBUTIONS"...................................................................... 13
1.70 "VOLUNTARY CONTRIBUTION ACCOUNT"............................................................... 13
ARTICLE II - PARTICIPATION IN THE PLAN........................................................................... 14
2.1 CURRENT PARTICIPANTS........................................................................... 14
2.2 OTHER ELIGIBLE EMPLOYEES....................................................................... 14
2.3 REEMPLOYMENT................................................................................... 14
ARTICLE III - CONTRIBUTIONS...................................................................................... 15
3.1 RATE OF DEFERRAL CONTRIBUTIONS................................................................. 15
3.2 WHEN DEFERRAL CONTRIBUTIONS ARE MADE........................................................... 15
3.3 CHANGES IN DEFERRAL CONTRIBUTION RATE.......................................................... 15
3.4 DISCONTINUANCE AND RESUMPTION OF DEFERRAL CONTRIBUTIONS........................................ 15
3.5 SPECIAL LIMITATION ON DEFERRAL CONTRIBUTIONS................................................... 15
3.6 INCENTIVE CONTRIBUTIONS........................................................................ 19
3.7 TIME OF INCENTIVE CONTRIBUTIONS................................................................ 24
3.8 ROLLOVER CONTRIBUTIONS......................................................................... 24
3.9 VOLUNTARY CONTRIBUTIONS........................................................................ 25
3.10 WHEN VOLUNTARY CONTRIBUTIONS ARE MADE.......................................................... 25
3.11 CHANGES IN VOLUNTARY CONTRIBUTION RATE......................................................... 25
3.12 DISCONTINUANCE OF VOLUNTARY CONTRIBUTIONS...................................................... 25
3.13 TRANSFER TO TRUST FUND......................................................................... 26
ARTICLE IV - LIMITATIONS ON CONTRIBUTIONS........................................................................ 27
iii
TABLE OF CONTENTS (CONT.)
4.1 RETURN OF CONTRIBUTIONS........................................................................ 27
4.2 CONTRIBUTIONS FROM EARNINGS AND PROFITS........................................................ 27
4.3 MAXIMUM ANNUAL ADDITION........................................................................ 27
4.4 COMBINED LIMITS................................................................................ 28
4.5 DETERMINATION OF AMOUNT AND TRANSMITTAL OF CONTRIBUTIONS....................................... 29
ARTICLE V - INVESTMENTS.......................................................................................... 30
5.1 RECEIPT OF CONTRIBUTIONS....................................................................... 30
5.2 INVESTMENT OF ACCOUNTS......................................................................... 30
5.3 INVESTMENT IN FUNDS............................................................................ 30
5.4 CHANGE OF INVESTMENT FUND...................................................................... 30
5.5 TRUSTEE MAY HOLD AND DISTRIBUTE CASH........................................................... 30
5.6 PURCHASE OF STOCK; THE STOCK ACCOUNT........................................................... 31
5.7 STOCK ACCOUNTS - RETIREMENT PLANNING........................................................... 31
5.8 CHANGE OF INVESTMENT FUNDS AND NOTICE REQUIREMENTS............................................. 32
ARTICLE VI - ACCOUNTS AND ALLOCATIONS............................................................................ 33
6.1 UNALLOCATED CONTRIBUTION ACCOUNT............................................................... 33
6.2 ALLOCATION OF INVESTMENT EARNINGS.............................................................. 33
6.3 DETERMINATION OF VALUE......................................................................... 33
ARTICLE VII - VESTING............................................................................................ 34
7.1 ACCOUNTS OTHER THAN INCENTIVE CONTRIBUTION ACCOUNT............................................. 34
7.2 INCENTIVE CONTRIBUTION ACCOUNT - PARTICIPANTS ON DECEMBER 31, 1998............................. 34
7.3 INCENTIVE CONTRIBUTION ACCOUNT - PARTICIPANTS AFTER DECEMBER 31, 1999.......................... 34
7.4 OCCURRENCE OF FORFEITURES...................................................................... 34
7.5 FORFEITURES USED FOR INCENTIVE CONTRIBUTIONS................................................... 35
ARTICLE VIII - DISTRIBUTION TO PARTICIPANTS...................................................................... 36
8.1 TIME OF DISTRIBUTION........................................................................... 36
iv
TABLE OF CONTENTS (CONT.)
8.2 DISTRIBUTION UPON PARTICIPANT'S TERMINATION FROM SERVICE FOR REASONS OTHER THAN DEATH
OR DISABILITY.................................................................................. 38
8.3 DISTRIBUTION UPON DEATH OF PARTICIPANT......................................................... 38
8.4 DISTRIBUTION UPON DISABILITY OF PARTICIPANT.................................................... 39
8.5 FORMS OF DISTRIBUTION.......................................................................... 39
8.6 ELECTION OF FORM OF DISTRIBUTION............................................................... 40
8.7 SPOUSAL CONSENT REQUIREMENTS................................................................... 42
8.8 ANNUITY NONTRANSFERABLE........................................................................ 42
8.9 DISTRIBUTION WHERE NO ELECTION BY PARTICIPANT.................................................. 42
8.10 LIMIT ON DISTRIBUTION OF DEFERRAL ACCOUNTS..................................................... 43
8.11 SMALL ACCOUNT VALUES; LUMP SUM CASH-OUT........................................................ 44
8.12 PROCEDURE FOR MISSING PARTICIPANTS OR BENEFICIARIES............................................ 44
ARTICLE IX - WITHDRAWALS AND LOANS............................................................................... 45
9.1 WITHDRAWALS FROM VOLUNTARY CONTRIBUTION AND ROLLOVER ACCOUNTS.................................. 45
9.2 WITHDRAWALS FROM DEFERRAL AND INCENTIVE CONTRIBUTION ACCOUNTS.................................. 45
9.3 HARDSHIP WITHDRAWALS........................................................................... 45
9.4 TIMING OF WITHDRAWALS.......................................................................... 47
9.5 DISTRIBUTION OF AMOUNTS WITHDRAWN.............................................................. 47
9.6 CONSENT TO WITHDRAWALS......................................................................... 47
9.7 LOANS TO PARTICIPANTS.......................................................................... 47
ARTICLE X - PAYMENT OF DEATH BENEFITS............................................................................ 53
10.1 SOURCE OF DEATH BENEFITS....................................................................... 53
10.2 DETERMINATIONS OF VALUES AND CASH-OUTS......................................................... 53
10.3 DEATH BENEFIT ATTRIBUTABLE TO ACCOUNTS OTHER THAN MONEY PURCHASE ACCOUNT....................... 53
10.4 DEATH BENEFIT ATTRIBUTABLE TO MONEY PURCHASE ACCOUNT........................................... 54
10.5 PROOF OF DEATH................................................................................. 56
10.6 LIMITATION OF PAYMENTS......................................................................... 56
ARTICLE XI - TERMINATION OF PLAN................................................................................. 58
v
TABLE OF CONTENTS (CONT.)
11.1 COMPANY'S RIGHT TO TERMINATE................................................................... 58
11.2 EFFECT ON EMPLOYER AND TRUSTEE................................................................. 58
11.3 EFFECT ON PARTICIPANTS......................................................................... 58
11.4 TERMINATION OF PARTICIPATION BY A PARTICIPATING COMPANY........................................ 58
11.5 MERGER, CONSOLIDATION, OR TRANSFER............................................................. 58
ARTICLE XII - AMENDMENT OF THE PLAN.............................................................................. 59
12.1 PROCEDURE FOR AMENDMENT........................................................................ 59
12.2 RESTRICTIONS................................................................................... 59
ARTICLE XIII - MANAGEMENT OF THE PLAN............................................................................ 60
13.1 ALLOCATION OF RESPONSIBILITY................................................................... 60
13.2 POWERS AND DUTIES OF THE PLAN ADMINISTRATOR.................................................... 61
13.3 NOTICES AND ELECTIONS OF PARTICIPANTS.......................................................... 62
13.4 ACCOUNTS AND RECORDS........................................................................... 63
13.5 COMPLIANCE WITH APPLICABLE LAW................................................................. 63
13.6 LIABILITY...................................................................................... 64
13.7 INDEMNIFICATION................................................................................ 64
13.8 AUTHORIZATION OF PAYMENTS...................................................................... 64
13.9 NOTICES TO TRUSTEE............................................................................. 64
ARTICLE XIV - TRUSTEE............................................................................................ 66
14.1 ACCOUNTING..................................................................................... 66
14.2 TRUSTEE'S RESPONSIBILITIES LIMITED............................................................. 66
14.3 INFORMATION AND RECEIPTS....................................................................... 66
14.4 ADMINISTRATIVE SERVICES........................................................................ 67
14.5 EXPENSES....................................................................................... 67
14.6 COMPENSATION OF TRUSTEE........................................................................ 67
14.7 RESIGNATION OR REMOVAL OF TRUSTEE.............................................................. 67
14.8 VOTING OR TENDER OF STOCK...................................................................... 68
14.9 INDEMNIFICATION BY EMPLOYER.................................................................... 70
14.10 LEGAL ACTION BY TRUSTEE........................................................................ 70
vi
TABLE OF CONTENTS (CONT.)
14.11 ACCEPTANCE OF TRUSTEE.......................................................................... 70
14.12 POWERS OF TRUSTEE.............................................................................. 70
14.13 MAINTENANCE OF INDICIA OF OWNERSHIP............................................................ 72
14.14 FORM OF COMMUNICATIONS......................................................................... 72
14.15 INSURANCE CONTRACTS............................................................................ 72
ARTICLE XV - CLAIMS PROCEDURES AND CERTAIN RESTRICTIONS.......................................................... 74
15.1 PROCEDURES FOR PRESENTING AND REVIEWING CLAIMS................................................. 74
15.2 ASSIGNMENT AND ALIENATION PROHIBITED........................................................... 75
15.3 DISTRIBUTION PURSUANT TO A QUALIFIED DOMESTIC RELATIONS ORDER.................................. 75
ARTICLE XVI - ADOPTION OF PLAN BY AFFILIATE...................................................................... 79
16.1 PURPOSE OF ARTICLE............................................................................. 79
16.2 ADOPTION BY AFFILIATE.......................................................................... 79
16.3 PARTICIPATION IN THE PLAN...................................................................... 79
16.4 TERMINATION BY A PARTICIPATING COMPANY......................................................... 80
16.5 PARTICIPATING COMPANY PLAN EXPENSES............................................................ 80
16.6 COMPANY AS AGENT............................................................................... 80
16.7 TRANSFERRED EMPLOYEES.......................................................................... 80
16.8 CONTRIBUTIONS TO TRUST FUND.................................................................... 81
16.9 COMMON PROCEDURES AND RULES.................................................................... 81
ARTICLE XVII - PROVISIONS RELATING TO TOP-HEAVY PLAN............................................................. 82
17.1 APPLICABILITY.................................................................................. 82
17.2 DEFINITIONS.................................................................................... 82
17.3 MINIMUM BENEFIT................................................................................ 87
17.4 SECTION 415 ADJUSTMENTS........................................................................ 87
ARTICLE XVIII - MISCELLANEOUS.................................................................................... 88
18.1 BENEFITS SOLELY FROM TRUST FUND................................................................ 88
18.2 LIABILITY FOR BENEFITS, CONTRIBUTIONS AND EXPENSES............................................. 88
18.3 RIGHTS OF EMPLOYEES............................................................................ 88
vii
TABLE OF CONTENTS (CONT.)
18.4 TAXES AND FEES................................................................................. 89
18.5 DIRECT ROLLOVERS............................................................................... 89
18.6 ROLLOVER CONTRIBUTIONS......................................................................... 90
18.7 APPLICABLE STATE LAW........................................................................... 91
18.8 SECTION 16 OF THE EXCHANGE ACT................................................................. 91
18.9 MANNER OF COMMUNICATIONS....................................................................... 91
18.10 QUALIFIED MILITARY SERVICE..................................................................... 92
ATTACHMENT I............................................................................................ 93
ATTACHMENT II........................................................................................... 94
EXHIBIT A............................................................................................... 95
viii
ARTICLE I - DEFINITIONS
1.1 "ACCOUNT" means the total of the subaccounts maintained by the Plan
Administrator to record the interest of a Participant in the Plan, including the
Deferral Account, the Incentive Contribution Account, the Voluntary Contribution
Account, the Rollover Account, the Discretionary Contribution Account and the
Money Purchase Account.
1.2 "ACCOUNT VALUE" means the fair market value or book value of any
Account on the date assets are required to be valued.
1.3 "ACTIVE PARTICIPANT" means a Participant who is an Eligible
Employee and who has not yet incurred a Termination from Service Date.
1.4 "ACTUAL CONTRIBUTION PERCENTAGE" for a specified group of Active
Participants for a Plan Year shall be the average of the Contribution Percentage
of each Active Participant in such group, where such Contribution Percentage
shall be equal to the ratio of:
(a) (i) the Incentive Contributions and Voluntary
Contributions, and
(ii) any Deferral Contributions and Discretionary
Contributions made pursuant to Section
3.6(d), which are treated as Incentive
Contributions for purposes of the Actual
Contribution Percentage test,
contributed to the Plan on behalf of the Active
Participant for such Plan Year; to
(b) the Active Participant's Section 414 Compensation for
such Plan Year. If the Plan Administrator deems it
desirable, all Contribution Percentages may be
calculated by taking into account Section 414
Compensation only for that portion of the Plan Year
during which the individual was an Active
Participant.
1.5 "ACTUAL DEFERRAL PERCENTAGE" for a specified group of Active
Participants for a Plan Year shall be the average of the Deferral Percentage of
each Active Participant in such group, where such Deferral Percentage shall be
equal to the ratio of:
(a) (i) the Deferral Contributions, and
(ii) any Incentive Contributions and
Discretionary Contributions made pursuant to
Section 3.5(b), which are treated as
Deferral Contributions for purposes of the
Actual Deferral Percentage test,
contributed to the Plan on behalf of the Active
Participant for such Plan Year; to
1
(b) the Active Participant's Section 414 Compensation for
such Plan Year. If the Plan Administrator deems it
desirable, all Deferral Percentages may be calculated
by taking into account Section 414 Compensation only
for that portion of the Plan Year during which the
individual was an Active Participant.
1.6 "ADJUSTED" means the cost of living adjustment factor prescribed by
the Secretary of the Treasury under Section 415(d) of the Code or otherwise, as
applied to such items and in such manner as such Secretary shall provide. The
amounts set forth for the application of adjustments are the amounts prescribed
by law as subject to adjustment and shall be adjusted from the date as
prescribed by applicable law. With respect to a Short Plan Year, items under the
Plan that are subject to adjustment shall be multiplied by a fraction, the
numerator of which is the number of months in the Short Plan Year and the
denominator of which is twelve (12).
1.7 "AFFILIATE" means any entity affiliated with the Company or a
Participating Company within the meaning of Section 414(b) of the Code with
respect to controlled groups of corporations (within the meaning of Section
1563(a) of the Code, determined, however, without regard to Sections 1563(a)(4)
and (e)(3)(C) of the Code), Section 414(c) of the Code with respect to trades or
businesses (whether or not incorporated) under common control with the Company
or a Participating Company, Section 414(m) of the Code with respect to
affiliated service groups, and any other entity required to be aggregated with
the Company or a Participating Company pursuant to regulations under Section
414(o) of the Code; provided, however, that for purposes of applying the
provisions of Section 4.4 with respect to the limitations on contributions, the
rule of Section 415(h) of the Code shall apply to determine which entities are
required to be aggregated with the Company or a Participating Company under
Section 414(b) or (c) of the Code. No entity shall be treated as an Affiliate
for any period during which it is not part of the controlled group, under common
control or otherwise required to be aggregated under Section 414 of the Code.
For this purpose, an affiliated service group is (a) a group consisting
of an entity whose principal business is the performance of medical, legal,
accounting or other services and any other entity that regularly performs
services for or with the first organization or other organizations in the group,
(e.g., a health maintenance organization and a professional corporation
employing physicians who perform medical services for or with the health
maintenance organization), or (b) a group consisting of an entity whose
principal business is the performance of management functions for other entities
and the entities who are so managed and related entities, provided, in each
case, that the common ownership requirements and other conditions of Section
414(m) of the Code and regulations thereunder are met.
1.8 "ANNUITY STARTING DATE" means the Valuation Date as of which
benefits are calculated for purposes of payment, i.e., the first day of the
first month for which an amount is payable as an annuity or, in the case of
another form of benefit, the date on which all events have occurred that entitle
the Participant to such benefit, and not the actual payment date.
2
1.9 "APPEAL COMMITTEE" means the persons appointed by the Company
pursuant to Section 13.1(c) for purposes of assisting with the administration of
the Plan on its behalf and on behalf of any Participating Company.
1.10 "AUTHORIZED LEAVE OF ABSENCE" means any absence authorized in
writing by the Employer under its nondiscriminatory personnel practices,
provided further that the Participant returns to employment within the period
specified in the written instrument which authorizes the leave of absence.
1.11 "BENEFICIARY" means any person or persons or fiduciary designated
by a Participant, or for a Participant in accordance with the terms hereof, to
receive any benefits payable by reason of the death of a Participant, subject to
applicable laws. Such designation shall be made by executing and delivering to
the Employer written notice thereof in such form as may be prescribed by the
Employer at any time prior to the Participant's death, and may be revoked or
changed by subsequent written notices delivered to the Employer form time to
time prior to the Participant's death. If the Participant shall have failed to
make such a designation, or if no designated Beneficiaries shall survive the
Participant, then the Beneficiary shall be (i) the Participant's Spouse, or (ii)
if no Spouse survives the Participant, the Participant's children, or (iii) if
neither a Spouse nor any children survive the Participant, the Participant's
estate. Where appropriate the term "Beneficiary" shall also refer to an
alternate payee under a QDRO. For purposes of this Section 1.11, the term
"Spouse" shall also mean the domestic partner of a Participant working for Aetna
Life Insurance and Annuity Company in the city or county of San Francisco,
California, if the Participant has designated such individual the Participant's
domestic partner on the applicable form provided by the Company for that purpose
and has indicated on such form that the individual shall be the Participant's
beneficiary under the Plan in the absence of a contrary designation.
1.12 "BENEFIT FINANCE COMMITTEE" means the persons appointed as such by
the Company in accordance with the provisions of the Retirement Plan for
Employees of Aetna Services, Inc. and who have the duties described in Section
5.8 with respect to the Plan.
1.13 "CODE" means the Internal Revenue Code of 1986, as amended.
1.14 "COMPANY" means Aetna Services, Inc. or any successor by merger,
consolidation, purchase or otherwise.
1.15 "COMPENSATION DEFERRAL AGREEMENT" means the agreement by which an
Active Participant agrees to defer receipt of Pay in consideration for the
Employer's agreement to make Deferral Contributions in accordance with the terms
of the Plan.
1.16 "DEFERRAL ACCOUNT" means the subaccount established to record the
Participant's Deferral Contributions and the earnings thereon.
1.17 "DEFERRAL CONTRIBUTIONS" means the amount contributed to the Plan
on a pre-tax basis pursuant to an Active Participant's Compensation Deferral
Agreement in accordance with Section 3.1.
3
1.18 "DEFERRAL CONTRIBUTION RATE" means that percentage of a
Participant's Pay designated as a Deferral Contribution in a Compensation
Deferral Agreement in accordance with Section 3.1.
1.19 "DISABILITY" means a physical or mental condition that meets both
of the following conditions: (a) in the opinion of a licensed physician
appointed by the Plan Administrator the disability is believed to be permanent
and to render the Participant unfit to perform the duties for which the
Participant is trained or that are of equal dignity and status, and (b) the
disability results in the Participant receiving disability benefits under either
(i) the Federal Social Security Act or (ii) the long-term disability plan
sponsored by the Employer.
1.20 "DISCRETIONARY CONTRIBUTIONS" means the amount, if any,
contributed to the Plan on behalf of a Participant as a Discretionary
Contribution pursuant to Section 3.5(b) and/or Section 3.6(d).
1.21 "DISCRETIONARY CONTRIBUTION ACCOUNT" means the subaccount
established to record the Participant's Discretionary Contribution and the
earnings thereon.
1.22 "EARNINGS OR PROFITS" means the current or accumulated earnings or
profits of the Employer determined by the Employer in accordance with generally
accepted accounting principles.
1.23 "EFFECTIVE DATE" means the date as of which the Company initially
adopted the Plan and executed the Trust: September 1, 1972.
1.24 "ELIGIBLE EMPLOYEE" means any Employee employed by an Employer
other than (a) an Employee whose employment is governed by the terms of a
collective bargaining agreement between employee representatives (within the
meaning of Section 7701(a)(46) of the Code) and an Employer if such collective
bargaining agreement does not specifically provide for participation in the
Plan; (b) a "leased employee," as such term is defined under Section 414(n) of
the Code; (c) an Employee who is a nonresident alien (within the meaning of
Section 7701(b) of the Code) with no earned income (within the meaning of
Section 911(d)(2) of the Code) from an Employer or Affiliate that constitutes
income from sources within the United States (within the meaning of Section
861(a)(3) of the Code), unless (i) a certificate of coverage has been filed with
the Social Security Administration on behalf of the Employee under Section 233
of the Social Security Act, or (ii) the employee has been designated as an
Eligible Employee by the Employer; or (d) an individual who is designated, or
otherwise determined, to be an independent contractor but who is ultimately
determined to be an employee pursuant to the Code or any other applicable law.
1.25 "EMPLOYEE" means any person who is employed by an Employer or an
Affiliate. The term Employee shall not include any individual the Employer or an
Affiliate designates as, or otherwise determines to be, an independent
contractor. However, the term Employee shall include "leased employees" within
the meaning of Section 414(n) of the Code. Notwithstanding the foregoing, if
leased employees constitute less than twenty percent (20%) of the nonhighly
4
compensated work force of the Employer and all Affiliates (within the meaning of
Section 414 (n)(5)(C)(ii) of the Code), the term Employee shall not include
those leased employees covered by a plan described in Section 414(n)(5) of the
Code. The term Employee shall not include agents, general agents, contract
general agents, career agents or brokers.
1.26 "EMPLOYER" means the Company and any Participating Company.
1.27 "EMPLOYMENT COMMENCEMENT DATE" means the first day for which an
Employee is entitled to be credited with an Hour of Service. "Reemployment
Commencement Date" means the first day for which an Employee is entitled to be
credited with an Hour of Service subsequent to the Employee's Termination from
Service.
1.28 "FISCAL YEAR" means the Employer's fiscal year for Federal Income
Tax purposes.
1.29 "GROUP ANNUITY CONTRACT" means a contract or contracts of the
Insurer that provides the accumulation facilities under Investment Funds
maintained by the Insurer and that also provide facilities for distribution of
Account Value upon a Participant's Termination from Service.
1.30 "HIGHLY COMPENSATED EMPLOYEE" means, effective for Plan Years
beginning on or after December 31, 1998: (a) any Employee who, during the
"look-back year" received compensation (as defined in Section 415(c)(3) of the
Code) in excess of $80,000 (as adjusted pursuant to section 415(d) of the Code);
and (b) any Employee who is a 5-percent owner (as described in Section
17.2(b)(iii) hereof) at any time during the "look-back year" or the
"determination year." For purposes of this Section 1.30 the "determination year"
shall be the calendar year in which the Plan Year ends and the "look-back year"
shall be the twelve-month period immediately preceding the "determination year."
The determination of who is a "highly compensated employee" will be made in
accordance with Section 414(q) of the Code and applicable regulations, rulings
and procedures and permitted elections thereunder. The provisions of the Prior
Plan in this definitional section and related sections of the Plan, relating to
family aggregation are eliminated effective January 1, 1997.
1.31 "HOUR OF SERVICE" means:
(a) each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer or an
Affiliate. These hours will be credited to the Employee for
the computation period in which the duties are performed; and
(b) each hour for which an Employee is paid, or entitled to
payment, by the Employer or an Affiliate on account of a
period of time during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty or an
Authorized Leave of Absence, but not in excess of five hundred
and one (501) hours for any continuous period of nonworking
time for
5
which the Participant is compensated. Hours under this Section
will be calculated and credited pursuant to Section
2530.200b-2 of the Department of Labor Regulations which are
incorporated herein by reference; and
(c) each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer or an
Affiliate with respect to an Employee. The same hours of
service will not be credited both under subsection (a) or
subsection (b), as the case may be, and under subsection (c).
Hours credited under this subsection will be credited to the
Employee for the computation period to which the award or
agreement pertains, rather than the computation period in
which the award, agreement, or payment is made; and
(d) Hours of Service will be credited for employment with an
Affiliate provided, however, if an Employee has previously
been credited with an Hour of Service for any hour of work
with the Company or a Participating Company the Employee shall
not be entitled to be credited for a second hour for the same
period based on employment with an Affiliate.
(e) Hours of Service shall not be credited for any hours for which
an Employee is directly or indirectly paid under a plan
maintained solely for the purpose of complying with applicable
workmen's compensation, unemployment compensation or
disability laws.
(f) Hours of Service shall not be credited for payments which were
made solely to reimburse an Employee for medical or medically
related expenses incurred by the Employee, nor for extra pay
for any period for which Hours have previously been credited,
such as extra pay in lieu of vacation.
(g) For purposes of determining Hours of Service, the following
guidelines shall apply:
(1) Notwithstanding anything in this Plan to the
contrary, an Employee shall be credited with Hours of
Service if so required by any federal law; the nature
and extent of such credit shall be determined under
such law.
(2) Employees compensated on other than an hourly basis
and for whom hours are not required to be counted and
recorded by any other federal law, such as the Fair
Labor Standards Act, shall be credited with
forty-five (45) Hours of Service per week for any
week during which the Employee is credited with one
(1) Hour of Service.
(3) When necessary, Hours of Service completed prior to
January 1, 1976 shall be determined from such records
as an Employer has maintained in the past, making
reasonable approximations where necessary. If these
records are insufficient to make an approximation, a
reasonable estimate of Hours of Service to be
credited will be made.
6
1.32 "INCENTIVE CONTRIBUTIONS" means the amounts contributed by the
Employer in accordance with Section 3.6(a).
1.33 "INCENTIVE CONTRIBUTION ACCOUNT" means the Participant's
subaccount with respect to the Incentive Contributions made pursuant to Section
3.6(a) and earnings thereon.
1.34 "INSURER" means Aetna Life Insurance Company or such other legal
reserve life insurance company with which the Trustee enters into a Group
Annuity Contract or other contract.
1.35 "INVESTMENT FUND" means the Stock Account and such other
investments under the Group Annuity Contract or in other funds or accounts as
are made available for the investment of Participants' Accounts in accordance
with the rules of Article V.
1.36 "LIMITATION YEAR" means the calendar year.
1.37 "MATCHED DEFERRAL CONTRIBUTION" means a Deferral Contribution or
portion thereof for which a corresponding Incentive Contribution is made on
behalf of the Participant.
1.38 "MONEY PURCHASE ACCOUNT" means the subaccount established to
record any amounts transferred to the Plan from a money purchase pension plan
and the earnings thereon.
1.39 "NET INCOME" means the Employer's net profit for the current
fiscal year, as determined by the Employer in accordance with generally accepted
accounting principles and without deduction for contributions under the Plan.
1.40 "NONHIGHLY COMPENSATED EMPLOYEE" means an Employee who is not a
Highly Compensated Employee.
1.41 "NORMAL RETIREMENT AGE" means a Participant's sixty-fifth (65th)
birthday.
1.42 "NORMAL RETIREMENT DATE" means the first day of the month
coinciding with or next following the Participant's attainment of Normal
Retirement Age.
1.43 "PARTICIPANT" means an Eligible Employee who satisfies the
eligibility requirements under Article II and who is participating in the Plan
in accordance with its provisions (whether or not such Eligible Employee elects
to make Deferral Contributions), or a former Employee who participated in the
Plan and who has not yet received a full distribution of his or her Account as
provided in Article VIII.
1.44 "PARTICIPATING COMPANY" means any Affiliate which has adopted the
Plan and Trust in accordance with the terms and conditions set forth herein. A
Participating Company may adopt this Plan with respect to less than all of its
otherwise eligible employees. The Participating Companies are listed in
Attachment II to this Plan.
7
1.45 "PAY" means, effective on and after January 1, 1999, the base
salary or base wages, as applicable, paid to an Active Participant by the
Employer during a Plan Year (or any portion thereof) for personal services
rendered, plus any performance bonus, wage incentive, shift differential, area
differential and overtime, including payments made under the Management
Incentive Plan which are paid at the time awarded (rather than pursuant to a
deferral agreement). Pay shall be determined as if no elective salary reduction
had been made pursuant to Sections 125 and 401(k) of the Code.
Pay shall not include:
(1) payments under any stock option plan or similar
equity program;
(2) compensation paid for service performed as an agent,
career agent, general agent, contract general agent
or broker;
(3) payments made for unused paid time off;
(4) any personal commissions paid to employees for the
sale of any product of a business unit of the
Employer including life insurance commissions, mutual
fund commissions, variable annuity commissions, group
insurance plan commissions, Aetna health plan
commissions, auto insurance commissions, homeowner's
insurance commissions and casualty insurance
commissions;
(5) sign-on bonuses or any other payment made upon
acceptance of employment with the Employer,
(6) any noncash compensation;
(7) severance or salary continuation payments or
benefits, except salary continuation benefits not to
exceed 13 weeks;
(8) lump sum vacation payments;
(9) transfer or relocation payments;
(10) travel and entertainment expenses;
(11) tuition reimbursement;
(12) payments under long term compensation programs;
(13) any stay or retention bonus; or
(14) any bonus which is paid pursuant to a deferral
agreement or program.
8
Notwithstanding any other provision of the Plan to the contrary, the
annual Pay of each Active Participant taken into account under the Plan for any
Plan Year shall not exceed one hundred fifty thousand dollars ($150,000), as
Adjusted, except that with respect to a Short Plan Year, annual Pay shall not
exceed one hundred fifty thousand dollars ($150,000), as Adjusted, multiplied by
a fraction, the numerator of which is the number of months in the Short Plan
Year and the denominator of which is twelve (12). In the case of any Plan Year
that does not coincide with the calendar year, the annual compensation
limitation used for purposes of calculating annual Pay shall be the limitation
applicable to the calendar year in which the Plan Year begins.
The provisions of the Prior Plan, in this definitional section and in
related sections of the Plan, relating to family aggregation of Pay are
eliminated effective January 1, 1997.
1.46 "PERIOD OF SEVERANCE" means a period beginning on the Termination
from Service Date and ending on the Employee's Reemployment Commencement Date.
In the case of an Employee who would have normally been scheduled to work during
unpaid absence incident to the pregnancy of or birth or adoption of a child by
or to such Employee and the caring for such child immediately thereafter, then
for purposes of calculating a Period of Severance, the Employee's Termination
from Service Date shall be postponed for one year beyond the date which would
otherwise be provided under Section 1.60, but only to the extent that credit for
such unpaid absence has not already been given as an Authorized Leave of
Absence.
1.47 "PLAN" means the Aetna Services, Inc. Incentive Savings Plan as
set forth herein, including any amendments hereto. This Plan is intended to be a
profit sharing plan with a feature satisfying the requirements of Section 401(k)
of the Code.
1.48 "PLAN ADMINISTRATOR" means the Company.
1.49 "PLAN YEAR" means the twelve-(12) month period beginning on each
January 1 and ending on the next subsequent December 31.
All calculations and determinations under the Plan that are based on a
Plan Year shall, with respect to such calculations and determinations for a
Short Plan Year, be made in the manner required by the Code.
1.50 "PRIOR PLAN" means the Plan in effect prior to the Restatement
Date, as modified by any amendments first appearing in this Plan Restatement but
effective prior to January 1, 1999.
1.51 "RESTATEMENT DATE" means January 1, 1999.
1.52 "ROLLOVER ACCOUNT" means the subaccount established to record an
Eligible Employee's Rollover Contributions and earnings thereon.
1.53 "ROLLOVER CONTRIBUTIONS" means the amount contributed to the Plan
as a rollover contribution in accordance with Section 3.8.
9
1.54 "SECTION 414 COMPENSATION" means for any Participant, the
Participant's wages within the meaning of Section 3401(a) of the Code and all
other payments of compensation for which the Employer is required to furnish the
Participant a written statement under Section 6041(d), 6051(a)(3), and 6052 of
the Code, i.e., a Form W-2, but determined without regard to any rules that
limit the remuneration included in wages based on the nature or location of the
employment or the services performed (such as the exception for agricultural
labor in Section 3401(a)(2) of the Code), plus any amounts paid pursuant to any
salary reduction agreement for the year in question under an arrangement
referred to in Sections 125, 403(b) or 401(k) of the Code. Section 414
Compensation shall be measured based on compensation actually paid or made
available to a Participant during the measuring period and not on an accrued
basis. Section 414 Compensation in excess of one hundred fifty thousand dollars
($150,000), as Adjusted, shall not be taken into account under the Plan. The
annual compensation limitation used for purposes of calculating Section 414
Compensation shall be the limitation applicable to the calendar year in which
the Plan Year begins.
1.55 "SPOUSE" means a Participant's legal spouse determined under
applicable law; provided, however, that for purposes of Article X, other than
Section 10.6, an individual shall not be treated as a Participant's Spouse
unless the Participant and spouse have been married throughout the one-year
period ending on the date of the Participant's death. Notwithstanding the above,
with respect to Participants who marry after June 30, 1998, and Employees who
first become Participants after June 30, 1998, the one-year marriage requirement
set forth in the preceding sentence shall not apply.
1.56 "STABLE VALUE OPTION" means an accumulation facility under the
Group Annuity Contract that provides for investment of assets at a stipulated
rate of interest for a fixed period.
1.57 "STOCK" means the common stock of Aetna Inc.
1.58 "STOCK ACCOUNT" means any account established and maintained for
the purpose of investing in Stock, as further described in Section 5.6.
1.59 "TERMINATION FROM SERVICE" means, for any Employee, the
termination of his or her employment upon the occurrence of his or her
Termination from Service Date.
1.60 "TERMINATION FROM SERVICE DATE" means the date which is the
earlier of (i) the earliest of the date an Employee quits, retires, dies or is
discharged from employment with the Employer; or (ii) the first anniversary of
the first date of a period in which the Employee remains absent from service
(with or without pay) for any reason other than quit, retirement, death or
discharge, such as vacation, holiday, sickness, leave of absence or layoff.
Notwithstanding the preceding, a Termination from Service Date shall not occur
earlier than the last day of any (a) Authorized Leave of Absence or (b) period
in which the Employee receives periodic salary continuation benefits not to
exceed 13 weeks.
10
1.61 "TRANSFERRED EMPLOYEE" means a "Transferred Employee" as defined
in the Stock Purchase Agreement dated as of November 28, 1995 between the
Company and The Travelers Insurance Group, Inc.
1.62 "TRUST" means the trust agreement as set forth herein and adopted
by the Company, which is established to hold and invest contributions made under
the Plan.
1.63 "TRUSTEE" means such person or persons or corporation appointed
and acting as Trustee or successor Trustee under the Trust.
1.64 "TRUST FUND" means all assets of any kind or nature, including all
property and income, held by the Trustee under the Trust.
1.65 "UNALLOCATED CONTRIBUTION ACCOUNT" means the account established
and maintained by the Plan Administrator for recording Incentive Contributions
held by the Trustee before allocation in accordance with the provisions of
Article VI.
1.66 "UNMATCHED DEFERRAL CONTRIBUTIONS" means a Deferral Contribution
or portion thereof for which no corresponding Incentive Contribution is made.
1.67 "VALUATION DATE" means the date used to value the Plan's assets.
Generally, each day of the Plan Year shall be a Valuation Date; however, the
Plan Administrator in its sole discretion may designate specific Valuation Dates
for specific purposes.
1.68 "VESTING SERVICE" means the period or periods of an Employee's
employment considered in the determination of vesting.
(a) An Employee's initial period of Vesting Service shall
begin on the Employee's Employment Commencement Date
and end on the next following Termination from
Service Date. If an Employee has a Termination from
Service and is subsequently reemployed, a new period
of Vesting Service shall begin on the Employee's
Reemployment Commencement Date and end on the next
subsequent Termination from Service Date. If,
however, an Employee has a Termination from Service
and again performs an Hour of Service as defined in
Section 1.31(a) within 12 months from the most recent
Termination from Service Date, such Termination from
Service shall be disregarded, and the Employee shall
be credited with all Vesting Service from his or her
most recent Employment Commencement Date or
Reemployment Commencement Date.
An Employee shall be credited with a number of "Years
of Vesting Service" equal to the Employee's periods
of Vesting Service expressed as the number of whole
years within such period or periods. In determining
the number of whole Years of Vesting Service, all
periods of Vesting Service shall be aggregated and
counted on the basis that 12 months of
11
Vesting Service or 365 days of Vesting Service are
equal to one whole Year of Vesting Service.
(b) A period of Vesting Service shall include a period
prior to the date the Employer by which an Employee
is employed became or becomes an Affiliate, but only
to the extent specifically set forth in Attachment I
hereto.
(c) Effective December 12, 1994, in the case of an
Employee who leaves employment to enter service with
the armed forces of the United States, Service shall
include the period of such military service, provided
that the Employee resumes employment with the
Employer or an Affiliate within the period during
which such re-employment rights are protected by
applicable law. The provisions of this Section 1.64
shall be construed in accordance with, and to be
coextensive with, the provisions of Section 414(u) of
the Code.
1.69 "VOLUNTARY CONTRIBUTIONS" means the amount of a Participant's
taxable annual Pay contributed to the Plan in accordance with Section 3.9.
1.70 "VOLUNTARY CONTRIBUTION ACCOUNT" means the subaccount established
and maintained by the Plan Administrator for recording the Participant's
Voluntary Contributions and earnings thereon.
CONSTRUCTION
The masculine gender, where appearing in the Plan, shall be deemed to
include the feminine gender, unless the context clearly indicates to the
contrary. Where appropriate, words used in the singular include the plural and
words used in the plural include the singular. The words "hereof," "herein,"
"hereunder" and other similar compounds of the word "here" shall mean and refer
to this entire Plan, not to any particular provision or section.
12
ARTICLE II - PARTICIPATION IN THE PLAN
2.1 CURRENT PARTICIPANTS. Each individual who was a Participant on
December 31, 1998 shall continue to be a Participant subject to the terms of the
Plan.
2.2 OTHER ELIGIBLE EMPLOYEES. Each other Eligible Employee shall become
an Active Participant as soon as administratively feasible following the later
of the date on which the Eligible Employee: (i) first performs an Hour of
Service; or (ii) attains age eighteen (18).
2.3 REEMPLOYMENT. Any Employee who is re-employed by an Employer shall
become a Participant in the Plan in accordance with the provisions of Section
2.2.
13
ARTICLE III - CONTRIBUTIONS
3.1 RATE OF DEFERRAL CONTRIBUTIONS. Subject to the provisions of this
Article III, an Active Participant may enter into a Compensation Deferral
Agreement to have the Employer make contributions to the Deferral Account on the
Participant's behalf as of each payroll period, in accordance with Section
401(k) of the Code. Such Deferral Contributions may be at a rate of between one
percent (1%) and ten percent (10%), in whole percentages, of the Active
Participant's Pay.
3.2 WHEN DEFERRAL CONTRIBUTIONS ARE MADE. Deferral Contributions shall
begin as soon as practicable after receipt of the Participant's Compensation
Deferral Agreement.
3.3 CHANGES IN DEFERRAL CONTRIBUTION RATE. Subject to the limitations
of this Article III and the Compensation Deferral Agreement, an Active
Participant's Deferral Contribution Rate shall remain in force for any period
for which the Participant receives Pay until the Participant ceases to be an
Active Participant or until the Participant gives notice to the Plan
Administrator of the Participant election to change the Deferral Contribution
Rate. Any such change in the Deferral Contribution Rate shall become effective
as soon as practicable but in no event later than the first day of the second
month after the Participant files a change of election with the Plan
Administrator. A Highly Compensated Employee may not increase the Deferral
Contribution Rate if the Plan Administrator determines that such increase may
cause the Plan to violate the limitation in Section 3.5.
3.4 DISCONTINUANCE AND RESUMPTION OF DEFERRAL CONTRIBUTIONS. An Active
Participant may at any time voluntarily suspend Deferral Contributions by giving
the Plan Administrator notice to that effect. An Active Participant who has been
an Active Participant at all times after discontinuing Deferral Contributions
shall be permitted to resume such contributions by notifying the Plan
Administrator to that effect. Any such discontinuance or resumption of Deferral
Contributions shall become effective as soon as practicable and in no event
later than the first day of the second month after the Active Participant files
a change of election with the Plan Administrator.
3.5 SPECIAL LIMITATION ON DEFERRAL CONTRIBUTIONS.
(a) ACTUAL DEFERRAL PERCENTAGE TEST. The Actual Deferral
Percentage for Active Participants who are Highly
Compensated Employees shall not exceed the prior Plan
Year's Actual Deferral Percentage for Participants
who were Nonhighly Compensated Employees during such
prior Plan Year by the greater of:
(i) one hundred and twenty-five percent (125%);
or
(ii) the lesser of two percentage points or two
hundred percent (200%).
14
The Actual Deferral Percentage for Highly Compensated
Employees entitled to make Deferral Contributions, as
well as similar contributions to or under other plans
maintained by the Employer or any Affiliate, shall be
determined as if such contributions were made under a
single arrangement.
Notwithstanding the above, the Employer may elect to
use Actual Deferral Percentage data for Nonhighly
Compensated Employees for the current Plan Year;
provided, however, that such election shall be made
by amending the Plan, and, once elected, may be
changed only as permitted by applicable law.
(b) DISCRETIONARY CONTRIBUTIONS.
(i) The Plan Administrator shall determine on a
timely basis after the end of a Plan Year
whether the Actual Deferral Percentage test
results satisfy either of the tests
described in Section 3.5(a), as modified by
Section 3.6(c). In the event neither test is
satisfied, or in the event neither of the
tests described in Section 3.6(b), as
modified by Section 3.6(c), is satisfied,
the Employer may elect to make a "qualified
matching contribution" as defined in
Treasury Regulation Section
1.401(k)-1(g)(13), referred to herein as a
Discretionary Contribution, and to use such
contribution to pass such test. Such
Discretionary Contribution shall be made
with respect to the Plan Year as to which
such test was not satisfied.
(ii) The Discretionary Contribution shall first
be allocated solely to the Discretionary
Contribution Accounts of Nonhighly
Compensated Employees whose Pay for the Plan
Year was $15,000 or less, who made Deferral
Contributions with respect to such Plan
Year, and who were Active Participants on
the last day of such Plan Year. Such
Discretionary Contribution shall be
allocated among the group of Participants
identified above proportionately on the
basis of their Section 414 Compensation for
the Plan Year. The amount of any such
Discretionary Contribution shall be such
that the initially failed test described in
(i) above is satisfied, but in no event
shall any such Participant receive an
allocation of greater than three percent
(3%) of the Participant's Section 414
Compensation for the Plan Year.
(iii) In the event that, after making the maximum
Discretionary Contribution permitted under
(ii) above, the initially failed test
described in (i) above is still not
satisfied, and the Employer elects to make a
further Discretionary Contribution, the
process described in (ii) above may be
repeated, with the same maximum allocation
(i.e., 3% of Section 414 Compensation) in
effect, first with respect
15
to such Participants whose Pay for the Plan
Year was between $15,001 and $20,000, then
(if necessary) with respect to such
Participants whose Pay for the Plan Year was
between $20,001 and $25,000, and finally (if
necessary) with respect to such Participants
whose Pay for the Plan Year was between
$25,001 and $30,000, until the initially
failed test is satisfied.
(iv) Any Discretionary Contribution shall be made
within the time period required by any
applicable laws and regulations. Any
Discretionary Contribution allocated
pursuant to this subsection (b) shall be
immediately vested as if it was a Deferral
Contribution, and shall be subject to the
same withdrawal restrictions as
post-December 31, 1988 earnings on Deferral
Contributions.
(c) DISTRIBUTION OF EXCESS CONTRIBUTIONS. If the Employer
does not elect to make Discretionary Contributions
pursuant to paragraph (b) above for a Plan Year in
which neither of the tests described in Section
3.5(a), as modified by Section 3.6(c), is satisfied,
the Plan Administrator may reduce the Deferral
Contributions of Active Participants who are Highly
Compensated Employees and distribute any Excess
Contributions, and any income allocable thereto, as
provided below. Excess Contributions shall mean the
excess of (i) the aggregate amount of the Deferral
Contributions and any Incentive Contributions treated
as Deferral Contributions for purposes of the Actual
Deferral Percentage test actually paid over to the
Trust Fund on behalf of Active Participants who are
Highly Compensated Employees for the Plan Year, over
(ii) the maximum amount of such contributions
permitted under Section 3.5(a), as modified by
Section 3.6(c), determined by reducing the amount of
such contributions of Highly Compensated Employees in
the order of their Deferral Percentages, beginning
with the highest Deferral Percentage, until the
applicable test is satisfied.
Distribution of Excess Contributions shall be
accomplished by reducing the Deferral Contributions
of Highly Compensated Employees, beginning with the
highest contributions (determined by dollar amount)
in the manner set forth in Section 401(k)(8)(C) of
the Code, and continuing until the total amount of
Excess Contributions has been distributed. The
reductions shall be made first from Unmatched
Deferral Contributions and, thereafter, from Matched
Deferral Contributions, with any corresponding
Incentive Contributions forfeited and reallocated
pursuant to Section 3.5(g).
Any amount so distributed shall be adjusted in
accordance with applicable regulations for income or
loss allocable thereto in respect of the Plan Year in
which such Excess Contributions occurred. If such
Participant's Account is invested in more than one
Investment Fund, such distribution
16
shall be made pro rata, to the extent practicable,
from all such Investment Funds.
Distribution of Excess Contributions for any Plan
Year, as determined above, shall be made before the
last day of the next Plan Year.
(d) DEFERRAL LIMITATION. Notwithstanding any other
provision of the Plan to the contrary, the amount to
be contributed for any calendar year on behalf of any
Active Participant pursuant to a Compensation
Deferral Agreement, combined with elective deferrals,
as defined in Section 402(g)(3) of the Code, to any
plan of any Affiliate under Sections 401(k), 408(k)
or 403(b) of the Code, except as provided in Section
402(g) of the Code shall not exceed ten thousand
dollars ($10,000), as Adjusted (the "Deferral
Limitation").
(e) EXCESS DEFERRALS.
(i) "Excess Deferrals" shall mean the amount by
which a Participant's Deferral
Contributions, combined with the aggregate
amount of the Participant's elective
deferrals, as defined in Section 402(g)(3)
of the Code, to any other plans under
Sections 401(k), 408(k) or 403(b) of the
Code except as provided in Section 402(g) of
the Code, whether sponsored by the Employer
or by any other related or unrelated entity,
exceed the Deferral Limitation.
(ii) Notwithstanding any other provision of the
Plan, Excess Deferrals, plus any income and
minus any loss allocable thereto, may be
distributed to Participants to whose
Accounts Excess Deferrals were allocated for
the preceding calendar year and who claim
Excess Deferrals for such calendar year. The
Employer may make a distribution hereunder
before the end of the calendar year to the
extent that the Excess Deferrals for the
calendar year result solely from Deferral
Contributions under the Plan.
(iii) The Participant's claim shall be in writing;
shall be submitted to the Employer no later
than March 1; shall specify the
Participant's Excess Deferrals for the
preceding calendar year; and shall be
accompanied by the Participant's written
statement that if such amounts are not
distributed, the Participant's Deferral
Contributions, when added to elective
deferrals under other plans as described in
Sections 401(k), 408(k) or 403(b) of the
Code, exceed the Deferral Limitation. The
Employer may deem a claim to have been made
in the event that the Excess Deferrals
result in a violation of Section 3.5(d)
above.
17
(iv) Any amount so distributed shall be adjusted
in accordance with applicable regulations
for income or loss allocable thereto in
respect of the Plan Year in which such
Excess Deferrals occurred. If such
Participant's Account is invested in more
than one Investment Fund, such distribution
shall be made pro rata, to the extent
practicable, from all such Investment Funds.
(f) AUTHORITY TO LIMIT DEFERRAL CONTRIBUTIONS. If the
Plan Administrator deems it necessary to satisfy one
of the Actual Deferral Percentage tests, the Deferral
Limitation, the deduction limitation of Section 404
or Section 415(c) of the Code, the Plan
Administrator, either before the beginning of a Plan
Year or at any time during a Plan Year, shall have
the authority to limit the Deferral Contributions for
any Active Participant for such Plan Year (or for any
portion of such Plan Year remaining after the Plan
Administrator exercises the authority granted by this
subsection) to the extent necessary or appropriate to
insure that the Plan satisfies any or all of such
limitations for such Plan Year.
(g) FORFEITURE OF INCENTIVE CONTRIBUTIONS. In the event
of the return of any Excess Contributions or Excess
Deferrals to an Active Participant, no Incentive
Contribution shall be made with respect to such
Excess Contributions or Excess Deferrals and, if a
related Incentive Contribution is made before a
determination of Excess Deferrals or Excess
Contributions, such Incentive Contribution shall be
forfeited as of the date of such return and shall be
used to reduce the contributions to be made by the
Employer for the Plan Year.
(h) COMPLIANCE WITH APPLICABLE LAW. All determinations
and procedures with regard to the matters covered by
this Section 3.5 shall be in accordance with Section
401(k)(3) of the Code and Treasury Regulation Section
1.401(k)-1, including the provisions requiring
aggregate testing of plans that are permissively
aggregated for the purpose of satisfying the
requirements of Section 410(b) of the Code.
3.6 INCENTIVE CONTRIBUTIONS.
(a) GENERAL.
(i) The Employer may, in the sole discretion of
the Company, make an Incentive Contribution
each payroll period for each Active
Participant who makes Deferral Contributions
for the payroll period and who is employed
for any day during the payroll period. The
total Incentive Contribution made on behalf
of each Active Participant who meets the
requirements of this Section 3.6 shall not
exceed the lesser of (I) one hundred percent
(100%) of the Active Participant's Deferral
Contributions during such month (or payroll
period) and (II) five percent (5%) of the
Active
18
Participant's Pay during such month (or
payroll period). The Employer will make any
Incentive Contributions to the Plan as of
the end of each month or at such other
intervals as established by the Employer.
(ii) At the end of each Plan Year, the Employer,
in the sole discretion of the Company, may
make an additional Incentive Contribution to
the Incentive Contribution Account of each
Participant who made Deferral Contributions
during such Plan Year and who is either
still employed or still has an Account
balance on the last day of the Plan Year, in
the amount, if any, necessary to make the
Participant's total Incentive Contributions
for such Plan Year equal to the lesser of
(I) one hundred percent (100%) of the
Participant's Deferral Contributions during
such Plan Year and (II) five percent (5%) of
the Participant's Pay during such Plan Year,
but excluding any Pay prior to the date on
which the Participant commenced Deferral
Contributions during the Plan Year. (The
100% and 5% figures referred to in the
preceding sentence shall automatically
change to be consistent with any changes
made by the Company to the corresponding
figures in (i) above.) The Incentive
Contribution described in this paragraph
(ii) shall only be made to a Participant
whose pay for the prior Plan Year was
$160,000 or less.
(b) ACTUAL CONTRIBUTION PERCENTAGE TEST. The Actual
Contribution Percentage for Active Participants who
are Highly Compensated Employees shall not exceed the
prior Plan Year's Actual Contribution Percentage for
Participants who were Nonhighly Compensated Employees
during such prior Plan Year by the greater of:
(i) one hundred and twenty-five percent (125%);
or
(ii) the lesser of 2 percentage points or two
hundred percent (200%).
The Actual Contribution Percentage for Highly
Compensated Employees entitled to receive Incentive
Contributions under the Plan, as well as similar
contributions to or under other plans maintained by
the Employer or any Affiliate, shall be determined as
if such contributions were made under a single
arrangement.
Notwithstanding the above, the Employer may elect to
use Actual Contribution Percentage data for Nonhighly
Compensated Employees for the current Plan Year;
provided, however, that such election shall be made
by amending the Plan, and, once elected, may be
changed only as permitted by applicable law.
19
(c) ADP AND ACP AGGREGATE LIMITS. If the Actual Deferral
Percentage test set forth in Section 3.5(a) is
satisfied pursuant to Section 3.5(a)(ii) and not
satisfied pursuant to Section 3.5(a)(i), Section
3.6(b)(ii) may be used to satisfy the Actual
Contribution Percentage test only to the extent that
either the "aggregate limit" is not violated or such
use is otherwise permitted by applicable law.
The aggregate limit is the greater of:
(i) The sum of:
(A) 125 percent of the greater of (1)
the prior Plan Year's Actual
Deferral Percentage of Active
Participants who were Nonhighly
Compensated Employees during such
prior Plan Year; or (2) the prior
Plan Year's Actual Contribution
Percentage of Participants who were
Nonhighly Compensated Employees
during such prior Plan Year; and
(B) Two percentage points plus the
lesser of (1) or (2) above, but in
no event greater than 200 percent of
the lesser of (1) or (2) above; or
(ii) The sum of:
(A) 125 percent of the lesser of (1) the
prior Plan Year's Actual Deferral
Percentage of Active Participants
who were Nonhighly Compensated
Employees during such prior Plan
Year or (2) the prior Plan Year's
Actual Contribution Percentage of
Participants who were Nonhighly
Compensated Employees during such
prior Plan Year; and
(B) Two percentage points plus the
greater of (1) or (2) above, but in
no event greater than 200 percent of
the greater of (1) or (2) above.
In the event that the conditions above for
consideration of the aggregate limit are satisfied
and the aggregate limit is exceeded, the Employer may
make Discretionary Contributions under Sections
3.5(b) or 3.6(d) or may reduce the Actual Deferral
Percentage and Actual Contribution Percentage of
Active Participants who are Highly Compensated
Employees in the manner set forth in Section 3.5(c)
or 3.6(e) respectively, in the following order as
specified under Treasury Regulation Section
1.401(m)-2(c) until the aggregate limit is satisfied:
(aa) Voluntary Contributions (and any
income allocable to such
contributions), if any;
20
(bb) Unmatched Deferral Contributions
(and any income allocable to such
contributions); and
(cc) Matched Deferral Contributions and
the related Incentive Contributions
(and any income allocable to such
contributions) proportionately.
The contributions and income shall be distributed
within the respective time periods for distribution
of Excess Contributions and Excess Aggregate
Contributions. Income, if any, shall be calculated
and the order of distribution among the Active
Participants who are Highly Compensated Employees
shall be as specified in Sections 3.5(c) and 3.6(e).
Notwithstanding the above, the Employer may elect to
use Actual Deferral Percentage and Actual
Contribution Percentage data for Nonhighly
Compensated Employees for the current Plan Year;
provided, however, that such election shall be made
by amending the Plan, and, once elected, may be
changed only as permitted by applicable law.
(d) DISCRETIONARY CONTRIBUTIONS.
(i) The Plan Administrator shall determine on a
timely basis after the end of a Plan Year
whether the Actual Contribution Percentage
test results satisfy either of the tests
described in Section 3.6(b), as modified by
Section 3.6(c). In the event neither test is
satisfied, or in the event neither of the
tests described in Section 3.5(a), as
modified by Section 3.6(c), is satisfied,
the Employer may elect to make a "qualified
matching contribution" as defined in
Treasury Regulation Section
1.401(k)-1(g)(13), referred to herein as a
Discretionary Contribution, and to use such
contribution to pass such test. Such
Discretionary Contribution shall be made
with respect to the Plan Year as to which
such test was not satisfied.
(ii) The Discretionary Contribution shall first
be allocated solely to the Discretionary
Contribution Accounts of Nonhighly
Compensated Employees whose Pay for the Plan
Year was $15,000 or less, who made Deferral
Contributions with respect to such Plan
Year, and who were Active Participants on
the last day of such Plan Year. Such
Discretionary Contribution shall be
allocated among the group of Participants
identified above on a per capita basis
(i.e., an equal dollar amount for each such
Participant. The amount of any such
Discretionary Contribution shall be such
that the initially failed test described in
(i) above is satisfied, but in no event
shall
21
any such Participant receive an allocation
of greater than five hundred dollars ($500).
(iii) In the event that, after making the maximum
Discretionary Contribution permitted under
(ii) above, the initially failed test
described in (i) above is still not
satisfied, and the Employer elects to make a
further Discretionary Contribution, the
process described in (ii) above may be
repeated, with the same maximum allocation
(i.e., $500) in effect, first with respect
to such Participants whose Pay for the Plan
Year was between $15,001 and $20,000, then
(if necessary) with respect to such
Participants whose Pay for the Plan Year was
between $20,001 and $25,000, and finally (if
necessary) with respect to such Participants
whose Pay for the Plan Year was between
$25,001 and $30,000, until the initially
failed test is satisfied.
(iv) Any Discretionary Contribution shall be made
within the time period required by any
applicable laws and regulations. Any
Discretionary Contribution allocated
pursuant to this subsection (b) shall be
immediately vested as if it was a Deferral
Contribution, and shall be subject to the
same withdrawal restrictions as
post-December 31, 1988 earnings on Deferral
Contributions.
(e) EXCESS AGGREGATE CONTRIBUTIONS. If the Employer does
not elect to make any Discretionary Contributions
pursuant to paragraph (d) above for a Plan Year in
which neither of the tests described in Section
3.6(b), as modified by Section 3.6(c), is satisfied,
the Plan Administrator may reduce the Incentive
Contributions of Active Participants who are Highly
Compensated Employees and distribute any Excess
Aggregate Contributions, and income allocable
thereto, as provided below. Excess Aggregate
Contributions shall mean the excess of (i) the
aggregate amount for the Plan Year of Incentive
Contributions and Deferral Contributions treated as
Incentive Contributions for purposes of the Actual
Contribution Percentage test which are actually paid
over to the Trust Fund on behalf of the Active
Participants who are Highly Compensated Employees for
such Plan Year; over (ii) the maximum amount of such
contributions permitted under Section 3.6(b), as
modified by Section 3.6(c), determined by reducing
the amount of such contributions for Highly
Compensated Employees in order of their Contribution
Percentages, beginning with the highest Contribution
Percentage, until the applicable test is satisfied.
Distribution of Excess Aggregate Contributions shall
be accomplished by reducing the Incentive
Contributions of Highly Compensated Employees,
beginning with the highest contributions (determined
by dollar amount) in the manner set forth in Section
401(m)(6)(C) of the Code, and continuing
22
until the total amount of Excess Aggregate
Contributions has been distributed.
Any amount so distributed shall be adjusted in
accordance with applicable regulations for income or
loss allocable thereto in respect of the Plan Year in
which such Excess 401(m) Contributions occurred. If
an Account from which such a distribution is to be
made is invested in more than one Investment Fund,
such distribution shall be made pro rata, to the
extent practicable, from all such Investment Funds.
The Excess Aggregate Contributions for any Plan Year,
as determined above, shall be distributed before the
last day of the next Plan Year.
(f) DEDUCTIBILITY OF CONTRIBUTIONS. In no event shall the
contributions by the Employer under this Article III,
when combined with amounts contributed pursuant to
any other provisions of the Plan and any other plan
of the Employer qualified under Section 401(a) of the
Code, exceed the amount deductible pursuant to
Sections 404(a)(3)(A) or 404(a)(7) of the Code, or
any future Code provision limiting deductions with
respect to profit sharing plans.
(g) PLAN ADMINISTRATOR AUTHORITY TO MONITOR TESTING. The
Plan Administrator shall monitor the Plan's
compliance with the limitations of the Actual
Deferral Percentage and Actual Contribution
Percentage tests and other applicable limitations and
shall have the power to take any and all steps it
deems necessary or appropriate to ensure compliance
with these limitations.
(h) COMPLIANCE WITH APPLICABLE LAW. All determinations
and procedures with regard to the matters covered by
this Section 3.6 shall be in accordance with Section
401(m) of the Code and Treasury Regulation Section
1.401(m)-1, including the provisions requiring
aggregate testing of plans that are permissively
aggregated for the purpose of satisfying the
requirements of Section 410(b) of the Code.
3.7 TIME OF INCENTIVE CONTRIBUTIONS. Incentive Contributions shall be
made for each Plan Year within the time permitted by law.
3.8 ROLLOVER CONTRIBUTIONS. An Eligible Employee may roll over to the
Plan all or any portion of the property such Employee receives from a plan
qualified under Section 401(a) of the Code, in accordance with Section 18.6,
provided that (a) the rollover of such amounts to the Plan is permitted under
the Code; (b) the rollover to the Plan is completed within the applicable time
periods prescribed by the Code and subject to the applicable rules of the Code;
(c) no part of such transfer consists of after-tax contributions; and (d) such
rollover consists only of cash. Effective for rollovers made on or after January
1, 1994, each Employee's Rollover Contributions and the earnings thereon will be
accounted for separately. An Eligible Employee is not required to be an Active
Participant to be eligible to make a Rollover Contribution. In
23
addition, a Participant who is no longer an Eligible Employee may roll over to
the Plan an eligible rollover distribution from the Retirement Plan for
Employees of Aetna Services, Inc. and/or the Pension Plan for Employees of U.S.
Healthcare, Inc. pursuant to this Section 3.8 as if he or she were an Eligible
Employee at the time of the rollover.
3.9 VOLUNTARY CONTRIBUTIONS.
(a) An Active Participant may contribute on an after-tax
basis, as Voluntary Contributions to a Voluntary
Contribution Account, amounts from one percent (1%)
to five percent (5%) of Pay, in whole percentages,
pursuant to a written payroll deduction election
delivered to the Plan Administrator. An Active
Participant who is a Highly Compensated Employee is
not permitted to contribute amounts on an after-tax
basis to the Plan as Voluntary Contributions but may
have a Voluntary Contribution Account with respect to
Voluntary Contributions that were made to the Plan
before January 1, 1989.
(b) No Active Participant shall, as a condition of
participation or continued participation, be required
to make any Voluntary Contributions to this Plan. No
Voluntary Contributions shall be permitted from any
Active Participant during any period when the
Participant is absent from employment without pay or
otherwise not receiving Pay. In no event shall any
Voluntary Contributions be matched with Incentive
Contributions.
3.10 WHEN VOLUNTARY CONTRIBUTIONS ARE MADE. Withholding of an Active
Participant's Voluntary Contributions shall begin as soon as practicable after
receipt of an election to withhold such amounts.
3.11 CHANGES IN VOLUNTARY CONTRIBUTION RATE. Subject to the limitations
stated in Section 3.9, an Active Participant may increase or decrease the rate
of Voluntary Contributions. Such increase or decrease shall become effective as
soon as practicable but in no event later than the first day of the second month
after the Participant files a change of election with the Plan Administrator. An
Active Participant shall be permitted to change such rate or resume such
contributions at any time upon notice to the Plan Administrator.
3.12 DISCONTINUANCE OF VOLUNTARY CONTRIBUTIONS. An Active Participant
may at any time discontinue Voluntary Contributions. Subject to Section 3.11, an
Active Participant who discontinues Voluntary Contributions shall be permitted
to resume such contributions upon notice to the Plan Administrator. Any such
discontinuance or resumption of Voluntary Contributions shall become effective
as soon as practicable but in no event later than the first day of the second
month after the Active Participant files a change of election with the Plan
Administrator. Upon Termination from Service with an Employer, an Active
Participant's Voluntary Contributions to the Plan shall automatically cease.
24
3.13 TRANSFER TO TRUST FUND. The Plan Administrator shall transfer to
the Trust Fund the Deferral Contributions and Voluntary Contributions of each
Active Participant as soon as practicable, but in any event within the period
required by applicable law and regulations.
25
ARTICLE IV - LIMITATIONS ON CONTRIBUTIONS
4.1 RETURN OF CONTRIBUTIONS. All Employer contributions under the Plan
are expressly conditioned upon the deductibility of such contributions under
Section 404 of the Code. Therefore, to the extent the deduction of a
contribution is disallowed, such contribution shall be returned to the Employer
within one (1) year after disallowance of the deduction. In addition, if the
Employer makes a contribution under a mistake of fact, such contribution shall
be returned to the Employer within one (1) year after the payment of the
contribution.
The amount of any contribution that may be returned under this
Section shall be equal to the excess of (a) the amount contributed over (b) the
amount that would have been contributed had there not been a mistake in
determining the amount of the allowable deduction or a mistake of fact. Earnings
attributable to the contribution to be returned may not be returned to the
Employer, but losses attributable thereto must reduce the amount to be returned.
Furthermore, the amount to be returned for a disallowed deduction or a mistake
of fact shall be limited to an amount such that no Participant's Account is
reduced to less than the amount which would have been in the Account had the
mistaken or nondeductible contribution not been made.
4.2 CONTRIBUTIONS FROM EARNINGS AND PROFITS. Incentive Contributions
shall be made from Earnings or Profits. The Employer may make Incentive
Contributions in excess of Net Income to the extent that its accumulated
Earnings or Profits are sufficient to cover such excess contributions.
4.3 MAXIMUM ANNUAL ADDITION. All contributions to the Plan are subject
to the limitations of Section 415 of the Code, which are incorporated herein by
reference. The maximum "Annual Addition" credited to a Participant's Account
during any Limitation Year shall not exceed the lesser of (a) $30,000, as
Adjusted (or, if greater, 25% of the dollar limitation in effect under Section
415(b)(1)(A) of the Code ($90,000, as Adjusted)), or (b) 25% of the
Participant's compensation (as defined below) from the Employer and all
Affiliates during the Limitation Year.
For purposes of Sections 4.3 and 4.4, the term 'compensation'
shall mean wages as reported for purposes of federal income tax on Form W-2 and
in addition, effective January 1, 1998, elective deferrals as defined in Section
402(g)(3) of the Code and salary reduction contributions of the Participant not
includible in his or her gross income by reason of Section 125 of the Code.
For purposes of this Section, "Annual Addition" means, for
each Limitation Year, the sum of:
(a) The contributions made by the Employer and all
Affiliates to any defined contribution plans, which
include Deferral Contributions (including any Excess
Contributions and Discretionary Contributions) and
Incentive Contributions (including any Excess
Aggregate Contributions and Discretionary
Contributions);
26
(b) Any forfeitures allocable to any Participant with
respect to any defined contribution plans (as defined
in Section 414(i) of the Code) maintained by the
Employer or any Affiliate;
(c) Any Voluntary Contributions and any other
contributions (other than Rollover Contributions)
made by a Participant to any such defined
contribution plans; and
(d) Any amounts described in Sections 415(l)(1) or
419A(d)(2) of the Code.
If the limitations of this Section 4.3 are exceeded, the Plan
Administrator shall take the following steps to the extent necessary to correct
such error:
(i) return of Voluntary Contributions to the affected
Participants;
(ii) return of Unmatched Deferral Contributions to the
affected Participants; and
(iii) return of Matched Deferral Contributions to the
affected Participants and forfeiture of related
Incentive Contributions equally. Forfeited Incentive
Contributions shall be applied to reduce future
Incentive Contributions.
4.4 COMBINED LIMITS. The provisions of this Section are applicable only
through December 31, 1999. In the event any Participant is also a participant in
one or more defined benefit plans maintained by the Employer or any Affiliate,
the sum of the defined benefit plan fraction and the defined contribution plan
fraction for any Limitation Year shall not exceed 1.0. The defined benefit plan
fraction for any Limitation Year is a fraction, the numerator of which is the
projected annual benefit of the Participant under such plans (determined as of
the close of the Limitation Year), and the denominator of which is the lesser of
(a) 100% of the average of the Participant's three highest years' compensation
multiplied by 140% or (b) the maximum dollar limitation for the Limitation Year
under Section 415(b)(1)(A) of the Code multiplied by 125%. The defined
contribution plan fraction for any Limitation Year is a fraction, the numerator
of which is the sum of the Annual Additions to the Participant's accounts under
any defined contribution plans as of the close of the Limitation Year and the
denominator of which is the sum of the maximum allowable amount of the Annual
Additions computed for the current Limitation Year and each prior Limitation
Year. Such maximum Annual Additions will be computed for each such Limitation
Year using the lesser of (a) 25% of the Participant's compensation for such year
multiplied by 140% or (b) $30,000, as Adjusted (or, if greater, 25% of the
dollar limitation in effect under Section 415(b)(1)(A) of the Code ($90,000, as
Adjusted)), multiplied by 125%. For the purpose of applying the limitations
contained in this Section, all defined benefit plans (whether or not terminated)
maintained by the Employer or any Affiliate shall be treated as one defined
benefit plan, and all defined contribution plans (whether or not terminated)
maintained by the Employer or any Affiliate shall be treated as one defined
contribution plan.
27
If the limitations of this Section 4.4 would be exceeded with
respect to any Participant, the Employer shall first reduce the annual benefit
otherwise payable to the Participant under any defined benefit plan of the
Employer and any Affiliate (but not below zero) so that the sum of the defined
benefit fraction and the defined contribution fraction equals 1.0. If such
adjustment is not sufficient to reduce the sum to 1.0, the Plan Administrator
shall make a corrective allocation as is necessary under this Plan in the manner
specified under Section 4.3 or any other defined contribution plan of the
Employer and any Affiliate in which the Participant participates, to reduce the
total amount of the Participant's Annual Additions so that the sum of the
defined benefit and defined contribution fractions equals 1.0.
4.5 DETERMINATION OF AMOUNT AND TRANSMITTAL OF CONTRIBUTIONS. The
Employer shall be solely responsible for determining the amount that it may be
required to contribute under the terms of the Plan. In making its determination,
the Employer may rely upon estimates of Earnings and Profits by its principal
accounting officer or independent accountants. The Employer's determination of
the amount of any contributions shall be binding on all Participants,
Beneficiaries, the Trustee, and the Employer. In the event the Employer is
unable to determine the correct amount of its allowable Plan contribution within
the time required for payment, it shall pay an estimated amount, and any
deficiency shall be paid as soon as finally determined. The Trustee shall have
no duty to collect contributions under the Plan and shall be solely accountable
for monies or properties actually received by it. The Employer shall be solely
responsible for the transmittal of contributions to the Trustee.
28
ARTICLE V - INVESTMENTS
5.1 RECEIPT OF CONTRIBUTIONS. All contributions received by the Trustee
shall become assets of the Trust Fund, to be held, invested, and distributed in
accordance with the terms of this Plan. All expenses chargeable to the Trust
Fund hereunder shall be paid as described in Section 14.5.
5.2 INVESTMENT OF ACCOUNTS. Amounts held in a Participant's Account
shall be invested in accordance with the selection made by the Participant from
among the Investment Funds made available in accordance with the rules of this
Article V. The Plan Administrator shall inform the Trustee of the manner in
which all contributions to and assets of the Trust Fund are to be allocated
between the Investment Funds, pursuant to the elections of Participants. For
this purpose, the Plan Administrator shall aggregate all Participant elections
and notify the Trustee of the net results of such elections.
5.3 INVESTMENT IN FUNDS. Each Active Participant may elect, as to
future contributions to be made to the Participant's Account, to invest such
contributions in one or more Investment Funds. Investment elections shall be
made by filing with the Plan Administrator a notice that shall remain in effect
for all subsequent periods until revised. The notice shall specify the whole
percentages of future contributions that the Participant elects to have invested
in the available Investment Funds, with the total not to exceed 100%.
Notwithstanding the preceding sentence, twenty-five percent (25%) of the
Incentive Contributions made with respect to Participants who are Highly
Compensated Employees shall be invested in the Stock Account unless and until
the Participant makes a contrary election under Section 5.7.
5.4 CHANGE OF INVESTMENT FUND. A Participant may, by request filed with
the Plan Administrator, alter the investment election for amounts held in the
Participant's Account and for future contributions in accordance with Sections
5.2, 5.3 and 5.7. The investment of amounts in a Participant's Incentive
Contribution Account may be altered, in a like manner, only for such
contributions made on or after January 1, 1984, except as otherwise provided
under Section 5.7. Notwithstanding the foregoing, the Company may impose
restrictions on the amount or percentage of a Participant's investment in any
Investment Fund that may be transferred to any other Investment Fund to the
extent that the Company determines, in its sole discretion, that such
restrictions are in the best interests of Plan Participants, generally. The Plan
Administrator shall notify Participants of such restrictions as promptly as
possible following the time the Company determines such restrictions are
appropriate or necessary. Any request under this Section shall be processed as
soon as practicable after the Plan Administrator's receipt of the Participant's
request, but in no event more than ninety (90) days later.
5.5 TRUSTEE MAY HOLD AND DISTRIBUTE CASH. The Trustee may hold assets
of the Trust Fund and make distributions therefrom in the form of cash without
liability for interest, if for administrative purposes it becomes necessary or
practical to do so.
5.6 PURCHASE OF STOCK; THE STOCK ACCOUNT.
29
(a) Subject to the rules of Section 5.6(b), the Trustee
shall purchase Stock from or through such broker or
dealer, at such times, in such manner, and at such
price as the Trustee, in its sole discretion shall
determine. Such purchases may, in the Trustee's sole
discretion, be on the open market, through privately
negotiated transactions, or from treasury or
authorized but unissued Stock made available by the
Company for direct purchases. Purchase of treasury or
authorized but unissued Stock shall be at the
prevailing sales price for such Stock on the New York
Stock Exchange at the time of purchase by the
Trustee, as valued by the closing price on the New
York Stock Exchange for the day, and shall be subject
to any restrictions imposed by law.
(b) A portion of the assets held in the Stock Account may
be held in cash or temporary investments, if the
Company directs that the Trustee is (i) to maintain a
pool of temporary investments to enable the movement
of assets into and out of the account to accommodate
Participant elections or (ii) to temporarily refrain
from making an investment in Stock because market
conditions are such that the Company determines such
investment could be disruptive or could not be
accomplished. The Company shall be solely responsible
for determining whether or not the investment in the
Stock is prudent.
(c) The Trustee shall be permitted to net all purchases
and sales for the Stock Account; provided, however,
both sales and purchases will be at market value and
the books and records of the Trustee shall clearly
reflect such fact.
(d) Should the Trustee for any reason be unable to
acquire or dispose of the Stock in the manner
provided by this Section, it shall notify the Plan
Administrator of such fact and shall thereafter make
no purchases or sales of Stock, until instructions
are received from the Company.
5.7 STOCK ACCOUNTS - RETIREMENT PLANNING.
(a) An Active Participant who has attained age forty-nine
(49) may elect to have all of the Incentive
Contributions made before January 1, 1984 and
earnings attributable thereto transferred from the
Stock Account to another Investment Fund. Thereafter,
the Participant may change the investment of such
amounts in accordance with Section 5.4, without
regard to this Section 5.7.
(b) An Active Participant who prior to January 1, 1996
was classified as a Class seventy-eight (78) or
higher Employee and who has attained age forty-nine
(49) may elect to have all of the Incentive
Contributions made to the Stock Account under the
automatic investment feature in effect after December
31, 1983 and prior to January 1, 1996, and earnings
attributable
30
thereto transferred from the Stock Account to another
Investment Fund. Thereafter, the Participant may
change the investment of such amounts in accordance
with Section 5.4, without regard to this Section 5.7.
(c) An Active Participant who is a Highly Compensated
Employee and who has attained age forty-nine (49) may
elect to have the twenty-five percent (25%) of
Incentive Contributions that are otherwise
automatically invested in the Stock Account directed
to another Investment Fund. Such Participant may also
elect to have all of the value of prior contributions
made to the Stock Account under the automatic
investment feature and earnings attributable thereto
transferred to another Investment Fund. Thereafter,
the Participant may change the investment of such
amounts in accordance with Section 5.4, without
regard to this Section 5.7.
(d) A Participant who is not an Active Participant may
elect to have all of the Incentive Contributions
which were invested in the Stock Account under the
automatic investment feature transferred from the
Stock Account to another Investment Fund. Thereafter,
the Participant may change the investment of such
amounts in accordance with Section 5.4, without
regard to this Section 5.7.
(e) Any request under this Section shall be processed as
soon as practicable after the Plan Administrator's
receipt of the Participant's request, but in no event
more than ninety (90) days later.
5.8 CHANGE OF INVESTMENT FUNDS AND NOTICE REQUIREMENTS. From time to
time, the Company, in its sole discretion, may, by action of any Vice President
or Assistant Vice President charged with the responsibility for the
administration of the Plan, designate Investment Funds, withdraw the designation
of Investment Funds or change Investment Funds. Whenever any change in the
Investment Funds is contemplated, the Benefit Finance Committee shall advise the
Company regarding the selection of appropriate Investment Funds or the
appropriateness of any other change.
31
ARTICLE VI - ACCOUNTS AND ALLOCATIONS
6.1 UNALLOCATED CONTRIBUTION ACCOUNT. The Plan Administrator may
establish an Unallocated Contribution Account and credit such account with all
Incentive Contributions held by the Trustee before any allocation by the Plan
Administrator.
6.2 ALLOCATION OF INVESTMENT EARNINGS. All investment earnings shall be
reinvested and credited in the same Investment Fund and Account in which they
are held. All contributions will be allocated to Participants' Accounts as soon
as practicable after their receipt in the Trust in accordance with the Plan's
contribution and allocation formulas.
All interest, dividend income, gains or losses, with respect
to Participants' Accounts, will be allocated to each Participant's Account as
soon as practicable after they accrue or arise in proportion to the Account
Value of the Participant's Account that is invested in the accumulation
facilities from which such interest, dividend income, gains, losses or expenses
accrue or arise.
6.3 DETERMINATION OF VALUE. The Account Value of a Participant's
Account will be determined for each allocation, distribution or withdrawal, but
in no event will such determination be made less frequently than once each
month. The net value of each Investment Fund reduced by any investment fees or
expenses charged to Participants shall be determined by the Trustee by valuing
the assets other than cash at their fair market value on the Valuation Date and
deducting all expenses for which the Trustee has not received reimbursement from
the Employer or the Trust Fund, except that the Stock Account shall be valued
based on the closing price of the Stock on the New York Stock Exchange on any
Valuation Date.
(a) In determining the fair market value of securities
other than Stock held in the Trust Fund, if such
securities are listed on a registered stock exchange
the Trustee shall value the securities at the prices
they were last traded on such exchange preceding the
close of business on the Valuation Date. Any unlisted
security held in the Trust Fund shall be valued at
its bid price next preceding the close of business on
the Valuation Date, which bid price shall be obtained
from a registered broker or an investment banker. In
determining the fair market value of assets other
than securities for which trading or bid prices can
be obtained, the Trustee shall appraise such assets
in the manner directed by the Company.
(b) Notwithstanding the foregoing, the value of any
Investment Fund maintained by the Insurer shall be
determined by the Insurer, and the Trustee shall
conclusively rely on the Insurer's valuation.
32
ARTICLE VII - VESTING
7.1 ACCOUNTS OTHER THAN INCENTIVE CONTRIBUTION ACCOUNT. A Participant's
Account, other than such Participant's Incentive Contribution Account, shall be
100% vested at all times.
7.2 INCENTIVE CONTRIBUTION ACCOUNT - PARTICIPANTS ON DECEMBER 31, 1998.
The Incentive Contribution Account of any Participant who was a Participant on
December 31, 1998 shall be 100% vested.
7.3 INCENTIVE CONTRIBUTION ACCOUNT - PARTICIPANTS AFTER DECEMBER 31,
1999. Effective January 1, 1999, the Incentive Contribution Account of any
Participant that is not 100% vested pursuant to Section 7.2 shall be nonvested
and forfeitable until the occurrence of any of the following events, at which
time it shall become 100% vested:
(a) The Participant's Normal Retirement Date;
(b) The Participant's death while an Employee;
(c) The Participant's Disability while an Employee;
(d) The Employer discontinues contributions or terminates or
partially terminates the Plan as provided in Article XI
hereof.
(e) The Participant's satisfaction of the service requirement set
forth in whichever of the following schedules is applicable:
(i) Participants first employed prior to January 1, 1999
Years of Vesting Service Vesting Percentage
Less than 1 0%
1 100%
(ii) Participants first employed on or after January 1, 1999
Years of Vesting Service Vesting Percentage
Less than 3 0%
3 100%
7.4 OCCURRENCE OF FORFEITURES. Except as more specifically provided
herein, a forfeiture of a Participant's non-vested interest, if any, shall occur
at the end of a Plan Year during which a Participant shall have incurred a
Period of Severance of 5 years or more. In the event that a Participant ceases
to be employed by the Employer and, before the end of the period set forth in
the preceding sentence, receives a lump-sum distribution of the vested portion
of the Participant's Account pursuant the terms of the Plan, then the portion of
the Participant's Account that is not vested shall be treated as a forfeiture as
of the last day of the Plan Year in which the Participant ceased to be employed
by the Employer. If such former Participant later becomes an Employee and has
not, as of the last day of the Plan Year in which the Participant
33
again becomes an Employee, incurred a Period of Severance of five years or more,
such Participant's Account will be restored to the dollar value it had on the
date of distribution if the Participant repays to the Plan the full amount of
the distribution within the earlier of (1) five years after the date in which
the Participant again becomes an Employee, or (2) the close of the first period
of five consecutive Breaks in Service commencing after the distribution. For
purposes of this Section:
(a) in accordance with Section 1.401(k)-1(c)(1)(ii) of
the Treasury Regulations, a Participant's Deferral
Account shall be treated separately from the
remainder of the Participant's Account, and the rules
of this Section shall be applied to each such portion
as if it were the entire Account; and
(b) with respect to each portion referred to in (a)
above, if a Participant has no vested interest, the
Participant shall be deemed to have received a
distribution as of the last day of the Plan Year in
which the Participant ceased to be employed, and
shall be deemed to have immediately repaid such
distribution to the Plan in the event the Participant
later becomes an Employee prior to incurring a Period
of Severance of five years or more.
7.5 FORFEITURES USED FOR INCENTIVE CONTRIBUTIONS. Forfeitures arising
during a Plan Year shall be used by the Employer to fund its Incentive
Contributions to the Plan for such Plan Year and, if any forfeitures still
remain, for subsequent Plan Years.
34
ARTICLE VIII - DISTRIBUTION TO PARTICIPANTS
8.1 TIME OF DISTRIBUTION.
(a) GENERAL. Except as otherwise provided in Article IX
and subsection (b), distribution of a Participant's
vested Account Value shall be made only following the
Participant's Termination from Service, termination
of the Plan or as described in Sections 8.8(a)(iii)
and (iv). Except for a distribution pursuant to
termination of the Plan, which may be delayed in the
discretion of the Plan Administrator until after
receipt of Internal Revenue Service approval,
distributions to a Participant or Beneficiary shall
be made or begun as soon as administratively feasible
following the Valuation Date as of which the
distribution is requested in writing by the
Participant.
Notwithstanding the foregoing, neither a Participant
nor a Beneficiary shall receive a distribution as of
a Valuation Date more than ninety (90) days or less
than thirty (30) days after the Plan Administrator
has provided the Participant the written notice
described in Section 8.6; provided, however, that the
Participant may waive the 30-day period in accordance
with Section 8.6(d). The Valuation Date referred to
in this paragraph shall be deemed the Annuity
Starting Date. In addition, unless a Participant
otherwise elects to defer distribution to a date no
later than permitted under Section 8.1(b),
distribution of a Participant's vested Account Value
shall be made or begun not later than sixty (60) days
after the close of the Plan Year in which the latest
of the following occurs: (i) the Participant's
attainment of Normal Retirement Age, (ii) the 10th
anniversary of the Participant's commencement of
participation in the Plan, or (iii) the Participant's
Termination from Service. A Participant who does not
make a request in writing for commencement of
benefits by such date shall be deemed to have elected
to defer distribution.
(b) MINIMUM REQUIRED DISTRIBUTIONS.
(i) Notwithstanding any other provision of the
Plan to the contrary, (1) Participants who
attained age seventy and one-half (70-1/2)
before January 1, 1988 and whose Termination
from Service did not occur before January 1,
1988, shall have distribution of their
vested Account Value made or begun not later
than the April 1st following the calendar
year of the Participant's Termination from
Service; provided, however, that any such
Participant may elect to begin receiving
distribution on or after the April 1st
following the calendar year in which the
Participant attained age seventy and
one-half (70-1/2) even though such
distribution precedes the Participant's
Termination from Service; and (2) the
distribution of
35
any other Participant's vested Account Value
(regardless of whether such Participant is
an Employee) shall be made or begun not
later than the April 1st following the
calendar year in which the Participant
attains age seventy and one-half (70-1/2).
Benefit payments under this subsection shall
be calculated on the basis of the
Participant's life expectancy, or at the
option of the Participant, on the basis of
the joint life expectancies of the
Participant and his or her Beneficiary, all
in accordance with the applicable
regulations; provided, however, that,
effective October 1, 1994, the Participant
must obtain spousal consent in the manner
described in Section 8.7 in order to elect
distribution over joint life expectancies of
the Participant and a Beneficiary other than
his or her Spouse. Life expectancies of
Participants and their Spouse Beneficiaries
shall be recalculated annually. A
Participant may elect the time during the
year at which such minimum benefit payments
will be made and, if no election is made,
such payments will be made during the last
month in which such minimum distribution is
required to be made or at such other time
determined by the Plan Administrator in its
sole discretion, but no earlier than six
months prior to the last month in which the
distribution is required.
(ii) A Participant whose Termination from Service
precedes the attainment of age 70-1/2 may
defer distribution of the payment of any
benefits until the April 1st following the
calendar year in which the Participant
attains age seventy and one-half (70-1/2),
at which time benefit payments shall
commence as provided above unless and until
the Participant elects to begin distribution
in accordance with Section 8.6. Until a
Participant elects a form of distribution
under Section 8.5 and 8.6, the Participant
may (1) request up to three (3) withdrawals
each Plan Year (exclusive of any
distribution during the Plan Year pursuant
to Section 8.1(b)), and (2) alter investment
elections in accordance with the rules of
Article V. Any request for withdrawal must
be in writing and must be filed with the
Plan Administrator in accordance with
Article IX.
(iii) In the case of a Participant who has a Money
Purchase Account, all distributions made
pursuant to paragraphs (i) and (ii) above
shall be subject to the notice and spousal
consent requirements of Sections 8.6 and
8.7. If a married Participant and his or her
Spouse do not consent to a distribution as
described in paragraphs (i) or (ii),
distribution of the Participant's Money
Purchase Account shall commence in the form
of a qualified joint and fifty percent (50%)
survivor annuity with his or her Spouse (or,
if the Participant's Money Purchase Account
is attributable to a money purchase plan
under which the normal form of distribution
was a qualified joint and one hundred
percent (100%) survivor annuity, a qualified
joint and one hundred
36
percent (100%) survivor annuity with the
Spouse). If a single Participant does not
consent to a distribution as described in
paragraphs (i) and (ii), distribution of the
Participant's Money Purchase Account shall
commence in the form of a single life
annuity.
(iv) The Plan shall be interpreted and
administered in accordance with Section
401(a)(9) of the Code and the regulations
thereunder (including without limitation,
Treasury Regulation Section 1.401(a)(9)-2),
which provisions shall control in the event
of any conflict with the terms of the Plan.
(v) Withdrawals under this Section 8.1(b) shall
be drawn from a Participant's Accounts in
the following order: Voluntary Account,
Rollover Account, Post-1983 Incentive
Contribution Account other than any portion
automatically invested in Stock, remaining
Post-1983 Incentive Contribution Account,
Pre-1984 Incentive Contribution Account,
Post-1983 Deferral Account, Post-1986
Incentive Contribution Account other than
any portion automatically invested in Stock,
remaining Post-1986 Incentive Contribution
Account, Post-1986 Deferral Account
attributable to Unmatched Deferral
Contributions, Post-1986 Deferral Account
attributable to Matched Deferral
Contributions, and Money Purchase Account.
Subject to the above, withdrawals shall be charged pro rata
against a Participant's investments in the available Investment Funds.
8.2 DISTRIBUTION UPON PARTICIPANT'S TERMINATION FROM SERVICE FOR
REASONS OTHER THAN DEATH OR DISABILITY. A Participant whose Termination from
Service is the result of reasons other than death or Disability may elect to
have his or her vested Account Value distributed as provided in Section 8.1. The
form of such distribution shall be determined in accordance with the election of
the Participant under Section 8.5.
8.3 DISTRIBUTION UPON DEATH OF PARTICIPANT. Upon the death of a
Participant before distribution of the Participant's vested Account Value has
been made or begun, the Plan Administrator shall direct the Trustee to
distribute all assets allocated to and held in the Participant's Account in the
manner specified under the provisions of Article X. Upon the death of a
Participant following the time the distribution of the Participant's vested
Account Value has been made or begun (a) under Section 8.6, death benefits shall
be payable only as provided under the form of distribution being used, or (b)
under Section 8.1(b), death benefits shall be payable in accordance with Section
8.1(b) or in the manner specified under Article X, but in no event in a manner
that provides for payments less rapidly than payments were being made to the
Participant.
37
8.4 DISTRIBUTION UPON DISABILITY OF PARTICIPANT. A Participant whose
Termination from Service is the result of a total and permanent Disability may
elect to have his or her vested Account Value distributed as provided in Section
8.1. The form of distribution shall be determined in accordance with Sections
8.5 and 8.6. A Participant's Termination from Service by reason of Disability
shall be deemed to occur on the date the Plan Administrator makes a
determination that the Participant has incurred a Disability.
8.5 FORMS OF DISTRIBUTION.
(a) Subject to the rules regarding the manner of making
an election set forth in Section 8.6 and the rules of
Section 8.1(b), a Participant may elect to have his
or her vested Account Value distributed in any of the
following forms of distribution:
(i) a joint and survivor annuity under which the
Participant will receive an actuarially
reduced monthly benefit during his or her
lifetime with such payments to continue
after the Participant's death to a
Beneficiary designated by the Participant as
a monthly benefit in the amount of 50%,
66-2/3%, 75% or 100% of the monthly benefit
received by the Participant during his or
her lifetime;
(ii) an annuity, payable monthly for the life of
the Participant, with no benefits paid
thereafter;
(iii) payment to the Participant of an actuarially
reduced monthly benefit for the life of the
Participant, with benefit payments
guaranteed to the Participant or the
Participant's Beneficiary for either one
hundred eighty, one hundred twenty or sixty
months;
(iv) monthly installments for one hundred eighty,
one hundred twenty or sixty months, with any
unpaid amounts at the Participant's death
paid to the Participant's Beneficiary in a
lump sum;
(v) annual installments for fifteen, ten or five
years, with any unpaid amounts at the
Participant's death paid to the
Participant's Beneficiary in a lump sum;
(vi) a cash lump sum;
(vii) a lump sum payment of some or all of the
Participant's Stock Account Value in kind,
by issuance of Stock, with any fractional or
remaining shares of Stock paid in cash;
(viii) a combination of the above.
38
(b) In the event a Participant elects to receive his or
her vested Account Value in more than one of the
above forms of distribution, the Participant shall
specify the dollar amount or percentage of the vested
Account Value to be paid in each form of
distribution. In the event a Participant elects to
receive any portion of his or her vested Account
Value in installments, the installments shall be
provided from a Group Annuity Contract or individual
annuity contract purchased from the Insurer.
8.6 ELECTION OF FORM OF DISTRIBUTION.
(a) When a Participant requests that distribution begin,
the Plan Administrator shall notify the Participant
in writing of each of the optional forms of
distribution that the Participant may elect. The
notice shall be given within no more than 90 days and
no less than 30 days before the Annuity Starting
Date. The notice shall also provide, in nontechnical
language, a general explanation stating that:
(i) a Participant who is married on the date of
distribution must obtain spousal consent to
elect a form of benefit other than a
qualified joint and survivor annuity with
his or her Spouse under Option (i) of
Section 8.5(a) above;
(ii) the normal form of distribution for a
Participant who has a Money Purchase Account
shall be a single life annuity, if the
Participant is single or a qualified joint
and fifty percent (50%) survivor annuity
with his or her Spouse if the Participant is
married (or, if the Participant's Money
Purchase Account is attributable to a money
purchase plan under which the normal form of
distribution was a qualified joint and one
hundred percent (100%) survivor annuity, a
qualified joint and one hundred percent
(100%) survivor annuity with his or her
Spouse);
(iii) a Participant who has a Money Purchase
Account and who is not married on the date
of distribution must consent in writing to
receive a form of benefit other than a
single life annuity with respect to the
Money Purchase Account; and
(iv) if the Participant files a written request
as provided below, the Participant shall be
furnished with a further written
explanation.
The explanation provided by this paragraph (a) shall
inform the Participant of the general effect of such
election, the means of exercising such election and
the right to revoke, and the effect of a revocation
of, such election.
39
If a Participant to whom the general explanation
described above is furnished files a written request
with the Plan Administrator within 60 days after such
general explanation is first mailed or delivered to
the Participant, the Plan Administrator shall furnish
such Participant with a written explanation in
nontechnical language of the terms and conditions of
the joint and fifty percent (50%) survivor annuity
(or joint and one hundred percent (100%) survivor
annuity) with his or her Spouse or life annuity, as
applicable, and the financial effect upon such
Participant of any election of an optional form of
distribution under Section 8.5(a).
(b) A Participant shall elect the form of distribution by
filing a written election with the Plan Administrator
not more than ninety (90) days before the Annuity
Starting Date. Any election under this Section may be
revoked in writing before the end of the election
period referred to above. If a Participant makes an
election to receive distribution in a form other than
a qualified joint and survivor annuity with his or
her Spouse, any such election must be consented to by
the Participant's Spouse, if any, as provided herein.
No election pursuant to this Section shall be
effective unless made in writing on forms
satisfactory to the Plan Administrator and filed with
the Plan Administrator before the end of the election
period.
(c) If the Plan Administrator is not able to provide
notice as described in this Section 8.6 to a
Participant at least thirty (30) days prior to the
Participant's Annuity Starting Date, then, subject to
the rules of subsection (d), the Participant's
Annuity Starting Date shall be delayed until the
first day of the month on or next following the date
which is thirty (30) days after the date the
Participant receives the notice. In that event, the
benefit payable to the Participant shall be adjusted
to reflect the delayed commencement of benefits.
(d) Notwithstanding any provision of this Section 8.6,
the Participant's Annuity Starting Date shall not be
delayed if the following requirements are met: (i)
the Plan Administrator provides the Participant with
the notice described in this Section 8.4 at least
eight (8) days before the Annuity Starting Date, (ii)
the Participant is clearly informed of the
Participant has the right to consider for at least
thirty (30) days whether to receive payment of
benefits in the form applicable under this Article or
an optional form and whether to defer commencement of
benefits, if applicable, and (iii) no later than the
Annuity Starting Date, the Participant waives the
right to the thirty (30) day minimum election period
and elects a form of benefit.
8.7 SPOUSAL CONSENT REQUIREMENTS.
(a) When a Participant who has a Spouse elects, subject
to the Spouse's consent, a payment option other than
a qualified joint and survivor annuity
40
with his or her spouse, as described in option (i) of
Section 8.5(a) or, in such other circumstances where
the terms of this Plan require that the consent of a
Participant's Spouse be obtained, the Participant's
Spouse's consent shall be valid only if it: (1) is in
writing; (2) is witnessed by a notary public; (3)
contains an acknowledgment by such Spouse of the
effect of the consent and the election of the Spouse;
and (4) designates a Beneficiary and the form of
benefits, neither of which may be changed without the
further consent of the Spouse, unless such initial
consent (i) specifically permits designations by the
Participant without any requirement of further
consent of the Spouse or (ii) acknowledges that the
Spouse has the right to limit the consent to the
specific beneficiary or form of benefits and that the
Spouse voluntarily elects to relinquish either or
both of such rights.
(b) The consent of a Participant's Spouse shall not be
required in any of the following events: (1) the
Participant establishes to the satisfaction of the
Plan representative that he or she has no Spouse or
that the Spouse cannot be located; (2) the
Participant is legally separated or has been
abandoned (within the meaning of local law) and the
Participant has a court order establishing such legal
separation or abandonment (unless a QDRO requires the
Spouse's consent); (3) the form of benefit elected
provides a qualified joint and survivor annuity
(within the meaning of Section 417(b) of the Code) to
the Participant and the Spouse; or (4) such other
circumstances as may be permitted under applicable
Treasury Department regulations have occurred with
respect to the Participant. If a Participant's Spouse
is legally incompetent to give consent, the Spouse's
legal guardian may give consent.
8.8 ANNUITY NONTRANSFERABLE. Any annuity issued to a Participant or
Beneficiary under the terms of this Plan shall be endorsed nontransferable.
8.9 DISTRIBUTION WHERE NO ELECTION BY PARTICIPANT. The Plan
Administrator will make a reasonable attempt to elicit an election as to the
form and timing of distributions. If following the Participant's Termination
from Service no such election is made, distribution shall be made in the manner
and as of the Participant's required beginning date determined under Section
8.1(b). In the event distribution is to be made under this Article in the form
of a qualified joint and fifty percent (50%) survivor annuity or a qualified
joint and one hundred percent (100%) survivor annuity and the Plan Administrator
has not received information regarding the age of a Participant's Spouse that is
satisfactory to the Plan Administrator, it shall be assumed that the Spouse is
ten (10) years younger than the Participant.
8.10 LIMIT ON DISTRIBUTION OF DEFERRAL ACCOUNTS.
(a) Notwithstanding any other provision of the Plan to
the contrary, no distribution shall be made from a
Participant's Deferral Account before:
41
(i) Termination from Service, provided however,
that a distribution may not be made on
account of Termination from Service if such
distribution would fail to comply with
Section 401(k)(2)(B) of the Code;
(ii) termination of the Plan without
establishment or maintenance of another
defined contribution plan (other than an
employer stock ownership plan as defined in
Section 4975(e)(7) of the Code);
(iii) the disposition by an Employer of
substantially all of the assets (within the
meaning of Section 409(d)(2) of the Code)
used by the Employer in a trade or business
of the Employer, but only with respect to an
Employee who continues employment with the
corporation acquiring such assets;
(iv) the disposition by an Employer of its
interest in a subsidiary (within the meaning
Section 409(d)(3) of the Code), but only
with respect to an Employee who continues
employment with such subsidiary;
(v) the attainment of age fifty-nine and
one-half (59-1/2) by the Participant; or
(vi) in the case of the Deferral Contributions
(but not earnings thereon credited after
December 31, 1988), the Participant
experiences a Hardship, as defined in
Section 9.3 below.
(b) With regard to subparts (ii), (iii) and (iv) of
paragraph (a) above, any distribution must be a lump
sum distribution (as defined in Section
401(k)(10)(B)(ii)). With regard to subparts (iii) and
(iv) of paragraph (a) above, such event shall be
deemed covered by such subpart only if the Employer
continues to maintain the Plan after the disposition.
The foregoing limitations on distributions are
intended to comply with the requirements of Section
401(k)(2)(B) of the Code and shall be interpreted in
accordance with such Section and Treasury Regulation
Sections 1.401(k)-1(d)(3) through (6).
8.11 SMALL ACCOUNT VALUES; LUMP SUM CASH-OUT. If, upon a Participant's
Termination from Service Date, or on an annual basis thereafter, or at the time
of any distribution from the Plan, the Participant's vested Account Value is not
in excess of five thousand dollars ($5,000) (or such greater amount as permitted
under the Code), the Plan, to the extent permitted by law and applicable
regulations, shall make a single lump sum payment to the Participant or
Beneficiary entitled to such benefit. In the event the vested Account Value is
not in excess of such dollar limitation at the time the Plan Administrator
initially determines to pay the benefit, but the benefit is not immediately paid
because the Participant (or Beneficiary) cannot be located or there is an
administrative delay in making payment, distribution shall be made to the
42
Participant (or Beneficiary) in a lump sum at such time as the Plan
Administrator locates the Participant (or Beneficiary) or the issue causing the
administrative delay is resolved, provided that the Participant's vested Account
Value at that time is not in excess of the dollar limit. For purposes of this
Section, in accordance with Section 1.401(k)-1(c)(1)(ii) of the Treasury
Regulations, a Participant's Deferral Account shall be treated separately from
the remainder of the Participant's Account, and the rules of this Section shall
be applied to each such portion as if it were the entire Account. This Section
shall not apply to any Participant who is repaying a loan by personal check
pursuant to Section 9.7(g)(ii), until the earlier of the date on which the loan
is repaid in full or the date on which the Participant's entire loan balance
becomes due and payable as a result of nonpayment.
8.12 PROCEDURE FOR MISSING PARTICIPANTS OR BENEFICIARIES. The Plan
Administrator must use all reasonable measures to locate Participants or
Beneficiaries who are entitled to distributions from the Plan. In the event that
the Plan Administrator cannot locate a Participant or Beneficiary who is
entitled to a distribution from the Plan after using all reasonable measures to
locate him or her, the Plan Administrator shall, after the expiration of 2 years
after the benefit becomes payable, treat the amount distributable as a
forfeiture in accordance with Section 7.4 and allocate it in accordance with the
terms of the Plan. If the Participant or Beneficiary is later located, the Plan
Administrator shall restore to the Plan the amount forfeited, without interest.
43
ARTICLE IX - WITHDRAWALS AND LOANS
9.1 WITHDRAWALS FROM VOLUNTARY CONTRIBUTION AND ROLLOVER ACCOUNTS. A
Participant may withdraw all or part of the value of the Voluntary Contribution
or Rollover Account for any reason after providing notice to the Plan
Administrator of up to thirty (30) days as required by the Plan Administrator.
Such notice shall be in writing and shall specify the value to be withdrawn in
terms of dollars or a percentage of the Voluntary Contribution or Rollover
Account Value.
9.2 WITHDRAWALS FROM DEFERRAL AND INCENTIVE CONTRIBUTION ACCOUNTS. A
Participant may not make withdrawals from the Deferral Account or the Incentive
Contribution Account before Termination from Service, except: (a) upon
attainment of age 59-1/2; or (b) in the event of Hardship as provided in Section
9.3. No withdrawals may be made from the Incentive Contribution Account until
the Participant is vested in accordance with the provisions of Article VII.
9.3 HARDSHIP WITHDRAWALS.
(a) In the event of Hardship (as defined below) and upon
notice of up to thirty (30) days to the Plan
Administrator as required by the Plan Administrator,
a Participant shall have the right to withdraw the
amount necessary to relieve the Hardship from (i) the
Deferral Account accumulated after December 31, 1986
(provided, that earnings after December 31, 1988 on
Deferral Contributions may not be withdrawn), and
(ii) the portion of the Incentive Contribution
Account attributable to contributions made from
January 1, 1984 through December 31, 1986 and
earnings on such amounts.
(b) For the purposes of this Section 9.3, a "Hardship"
shall be deemed to exist if, and only if, such
Participant experiences an immediate and heavy
financial need (as defined in (c) below) and the
withdrawal is necessary to satisfy the financial need
of the Participant (as defined in (d) below).
(c) A Participant will be deemed to experience an
immediate and heavy financial need if, and only if,
the withdrawal is required for one of the following
reasons:
(i) payment of otherwise unreimbursable expenses
for medical care described in Section 213(d)
of the Code previously incurred by the
Participant, the Participant's spouse, or
any dependents of the Participant (as
defined in Section 152 of the Code) or
necessary for such persons to obtain such
medical care;
44
(ii) purchase of a lot on which to build the
Participant's principal residence if
construction will begin within six (6)
months of the purchase of the lot;
(iii) payment of post-secondary educational
expenses of the Participant or the
Participant's spouse, children or dependents
(as defined in Section 152 of the Code) for
the next semester or quarter, and, effective
August 8, 1991, for the next twelve (12)
months;
(iv) payment of amounts necessary to prevent the
eviction of the Participant from his or her
principal residence or foreclosure on the
mortgage on the Participant's principal
residence;
(v) purchase (excluding mortgage payments) or
construction of Participant's principal
residence if such request is received before
closing;
(vi) payment of expenses related to the adoption
of a child by the Participant; or
(vii) payment of expenses related to the death of
a member of the Participant's immediate
family. For purposes of this Section, a
member of the Participant's immediate family
shall include the Participant's Spouse and
the Participant's lineal ascendants or
descendants, as well as any other person who
raised the Participant or the Participant's
Spouse or was raised by the Participant.
(d) A withdrawal will be deemed necessary to satisfy the
financial need of a Participant if, and only if:
(i) the withdrawal is not in excess of the
amount of the immediate and heavy financial
need of the Participant. The amount of the
immediate and heavy financial need may
include any amounts necessary to pay any
federal, state, or local income taxes or
penalties reasonably anticipated to result
from the distribution; and
(ii) the Participant represents and certifies to
the Plan Administrator in writing that the
financial need cannot be met with other
funds reasonably available to the
Participant, the Participant's Spouse or the
Participant's minor children including:
(A) through reimbursement or
compensation by insurance or
otherwise;
(B) by reasonable liquidation of the
Participant's assets without
creating another immediate and
heavy financial need;
45
(C) by cessation of Deferral and
Voluntary Contributions to this
Plan; and
(D) by other distributions or
nontaxable (at the time of the
loan) loans from plans maintained
by the Employer including this
Plan, or by any other employer, or
by borrowing from commercial
sources on reasonable commercial
terms in an amount sufficient to
satisfy the need.
9.4 TIMING OF WITHDRAWALS. No more than three (3) withdrawals of any
kind may be made within any calendar year.
9.5 DISTRIBUTION OF AMOUNTS WITHDRAWN. Upon receipt of the Plan
Administrator's approval of a request for withdrawal in accordance with the
provisions of Sections 9.1, 9.2 or 9.3, the Trustee shall, to the extent
necessary, and in accordance with directions provided by the Plan Administrator,
convert Account assets to cash and distribute the requested amount to the
Participant. Any conversion to cash pursuant to this provision shall be made by
converting the portion of the Participant's Account Value equal to the amount of
the withdrawal invested in each Investment Fund pro rata.
Withdrawals shall be made from the Participant's Accounts in
the following order: (1) Voluntary Contribution Account, (2) Rollover Account,
(3) Incentive Contribution Account, and (4) Deferral Account.
9.6 CONSENT TO WITHDRAWALS. If a Participant is married as of the
effective date of a withdrawal, any withdrawal shall require the written consent
of the Participant's Spouse in the same manner as provided for in Section 8.7,
except that clause (4) of Section 8.7(a) shall not apply. A Participant may not
receive a withdrawal on a date more than 90 days or less than 30 days after the
Plan Administrator has provided the Participant with a withdrawal form and with
the information set forth in Section 8.6(a), except as provided in Section
8.6(d).
9.7 LOANS TO PARTICIPANTS.
(a) An Active Participant receiving a regular paycheck
from the Employer may apply for one or more loans
from the Plan. A Participant who is on leave (with or
without pay) or who is receiving long-term disability
benefits or severance pay, as well as retirees,
temporary employees and beneficiaries, may not apply
for a loan. Subject to limitations described herein,
loans shall be approved by the Plan Administrator or
its designees in their sole discretion. In no event
shall the amount of the loan be less than $1,000, and
the amount of the loan, when added to the aggregate
amount of all Plan loans to the Participant then
outstanding, may not exceed the lesser of:
46
(i) $50,000, reduced by the excess (if any) of
(A) the highest outstanding balance of loans
from the Plan during the one-year period
ending on the day before the date on which
such loan was made, over (B) the outstanding
balance of loans from the Plan on the date
on which such loan was made; or
(ii) one-half of the Participant's vested Account
Value on the date of the loan.
(b) Loans made to Participants for purposes other than
for the purchase of the Participant's principal
residence shall be for terms of not less than one (1)
nor more than five (5) years. Loans made to
Participants for the purchase of the Participant's
principal residence shall be for terms of not less
than one (1) nor more than thirty (30) years.
Effective January 1, 1999, a Participant shall only
be permitted to have outstanding one (1) principal
residence loan and one (1) general purpose loan.
Notwithstanding the foregoing, a Participant who had
one or more general purpose loans outstanding on
December 31, 1998 shall be permitted to have two (2)
general purpose loans outstanding until the last of
such pre-January 1, 1999 general purpose loans has
been paid off.
(c) Any loan to a Participant hereunder shall be
considered an investment of the Participant's
Account, and loan funds will be drawn from the
following portions of the Participant's total Account
in the following order: Money Purchase Account, the
portion of the Participant's Post-1986 Incentive
Contribution Account automatically invested in the
Stock Account as provided under Section 5.3, the
remaining Post-1986 Incentive Contribution Account,
Post-1983 Deferral Account, Post-1986 Deferral
Account attributable to Unmatched Deferral
Contributions, remaining Post-1986 Deferral Account,
Pre-1984 Incentive Contribution Account, the portion
of the Participant's Pre-1987 Incentive Contribution
Account automatically invested in the Stock Account
as provided under Section 5.3, the remaining
Post-1987 Incentive Contribution Account, Voluntary
Contribution Account, and Rollover Account. Subject
to the schedule in the preceding sentence, funds for
a loan will be obtained by liquidating the
Participant's interest in the various Investment
Funds in which the Participant's Accounts are
invested pro rata.
The loan shall bear interest for the period the loan
is outstanding based on a fixed monthly interest rate
that reflects a reasonably competitive interest rate
that would be charged for similar collateralized
loans in accordance with Department of Labor
Regulations Section 2550.408b-1. The interest rate
for loans under the Plan shall be equal to the prime
interest rate stated in The Wall Street Journal for
the last working day of the month preceding the date
of the loan plus 1%. The interest rate in effect for
the entire term of the loan will be the rate in
effect at the time the Plan Administrator
47
receives the loan application. The applicable
interest rate shall be set forth in the loan
agreement. The Plan Administrator shall provide any
Participant who requests a loan with disclosure of
interest rate information required by Regulation Z of
the Federal Reserve Board promulgated pursuant to the
Truth in Lending Act, 15 U.S.C. Section 1601, et seq.
(d) As security for such loan, the Participant shall
pledge the portion of his or her Account Value
represented by the loan and earnings thereon (as set
forth in the promissory note representing the loan).
The Plan Administrator shall have the rights of a
secured creditor under the Uniform Commercial Code
and otherwise at law with respect to any portion of
the Participant's Account pledged as security. If any
amount is outstanding upon the occurrence of an event
giving rise to a withdrawal or distribution under
this Plan and such withdrawal or distribution would
require distribution of a secured portion of the
Account, the amount of the loan that would become
unsecured shall be charged against such withdrawal or
distribution and paid from and upon such distribution
or withdrawal.
If a Participant does not repay the amount of any
loan made hereunder within the specified time, (i)
the Plan Administrator shall report the default as a
distribution for federal income tax purposes, and
(ii) the Plan Administrator shall cause the amount of
the unpaid debt (including any interest thereon) to
be deducted from the secured portion of the Account,
as soon as a distribution or withdrawal is legally
permitted from such portion of the Account (without
regard to limitations in the Plan that are more
restrictive than required by the Code). If the amount
of such interest, payment or distribution is not
sufficient to repay the unpaid balance of said debt,
the Participant shall remain liable for said
remaining debt.
(e) Loan repayments will be credited to the Participant's
then current investment elections. If the Participant
ceases making contributions to the Plan, repayments
will be credited pursuant to the Participant's most
recent investment elections. If the Participant has
not made post-1983 contributions to the Plan,
repayments will be credited to the Stable Value
Option. Notwithstanding anything to the contrary in
this Section 9.7(e), effective October 1, 1994, if
any of a Participant's loan funds were drawn from the
portion of the Participant's Post-1986 Incentive
Contribution Account automatically invested in the
Stock Account as provided under Section 5.3, a
percentage of each loan repayment, equal to the
percentage of loan funds that were drawn from the
portion of the Participant's Post-1986 Incentive
Contribution Account automatically invested in the
Stock Account as provided under Section 5.3, shall be
credited to the Stock Account, unless the
restrictions in Section 5.3 are no longer applicable.
48
(f) Loan Repayment.
(i) Except as otherwise provided herein, or in
(g) below, loans will be repaid by regular
deduction from the Participant's paycheck
from the Employer, beginning with the first
paycheck issued in the second calendar month
following the calendar month in which the
loan is made.
(ii) If a Participant is a Transferred Employee,
the Participant's loan shall be repaid by
regular deduction from the Participant's
paycheck from the successor employer of the
Transferred Employees or any member of a
controlled group (within the meaning of
Section 414(b) of the Code) including such
employer, and such repayments shall be
transmitted to the Company or any other
Employer on a regular basis as agreed to
between the Company and the acquiring
company; provided that the Company may
instead allow repayment by personal check in
accordance with (g)(ii)(5) below; and
provided further, that upon such
Participant's termination of employment with
the successor employer of the Transferred
Employees and all members of a controlled
group (within the meaning of Section 414(b)
of the Code) including such employer (except
in the case of a Transferred Employee who is
re-employed by an Employer), the
Participant's entire loan balance will
become immediately due and payable.
(iii) A Participant who terminated employment on
August 10, 1996 and immediately thereafter
commenced employment with ▇▇▇▇▇ Business
Forms, Inc. may continue to repay the loan
in installments, by regular deduction from
the Participant's paycheck from ▇▇▇▇▇
Business Forms, Inc.; provided that the
Company may instead allow repayment by
personal check in accordance with (g)(ii)(5)
below; and provided further, that upon such
Participant's termination of employment with
▇▇▇▇▇ Business Forms, Inc., the
Participant's entire loan balance will
become immediately due and payable.
(iv) Loan repayments will be suspended under this
Plan as permitted under Section 414(u)(4) of
the Code.
(g) Failure to Repay; Exceptions.
(i) If a Participant fails to make two months
worth of loan payments, the Plan
Administrator will send the Participant a
notice indicating that the Participant is
delinquent in repaying the loan. Upon the
earliest of a Participant's:
49
(1) failure to make up any delinquent
loan payments during a legally
permissible grace period provided
by the Company following receipt of
the notice described in the
preceding sentence; or
(2) Separation from Service;
the Participant's entire loan balance will
become immediately due and payable.
(ii) Notwithstanding (g)(i)(2) above, a
Participant who:
(1) terminates employment upon or after
attaining age 45 with ten (10)
Years of Vesting Service and with a
combined age and Years of Vesting
Service totaling at least 65;
(2) becomes covered by the Employer's
long-term disability plan;
(3) takes an unpaid Authorized Leave of
Absence;
(4) effective October 1, 1998, becomes
eligible, on or after such date, to
receive job elimination benefits
under the Company's severance and
salary continuation benefits plan
or similar benefits under an
agreement with the Employer; or
(5) if the Company so elects with
respect to all Participants
continuing employment with a
particular successor company after
a sale or outsourcing, terminates
employment in connection with such
sale our outsourcing and continues
employment with the successor
company;
may elect to pay the entire loan balance as
described in (g)(i) above, or to make
monthly payments to repay the loan by
sending personal checks to the Plan
Administrator or by assigning a portion of
his or her retirement benefits to the Plan
Administrator to the extent permitted on a
uniform basis for all similarly situated
Participants by the Plan Administrator,
consistent with the requirements of Section
401(a)(13) of the Code and Section 206(d) of
ERISA.
(h) If a Participant is married as of the date of the
loan, any loan which could result in a potential
reduction of benefits payable to or with respect to
such Participant in the event of non-payment of such
loan shall require consent of the Participant's
Spouse in the same manner as provided for in Section
50
8.7, except that clause (4) of Section 8.7(a) shall
not apply. Consent of the Participant's Spouse shall
also be required in the event of any renegotiation,
extension, renewal or other revisions of a loan to
the Participant.
(i) No loan shall be made in the event that the interest
rate required to be charged pursuant to Section
9.7(c) would violate any applicable usury law.
(j) A Participant shall not be granted a withdrawal and a
loan under the Plan in the same month. If a
Participant requests both a withdrawal and a loan in
the same month, the loan request will be considered
to have been made first, and the withdrawal request
will become effective in the next month.
(k) A Participant may not receive a loan on a date more
than 90 days or less than 30 days after the Plan
Administrator has provided the Participant with a
loan application form and with information explaining
the spousal consent rules set forth in Sections 8.6
and 8.7, except as provided in Section 8.6(d).
(l) All loan repayment schedules shall provide for
substantially level amortization of the loan.
(m) The Plan Administrator shall administer this Section
9.7 pursuant to the foregoing and such additional
rules and regulations as it shall promulgate in
accordance with Section 72(p) of the Code and
Department of Labor Regulations Section 2550.408b-1.
51
ARTICLE X - PAYMENT OF DEATH BENEFITS
10.1 SOURCE OF DEATH BENEFITS. Death benefits are payable from or with
assets held by the Trustee on behalf of the deceased Participant as of the date
on which the Plan Administrator receives written notification of the
Participant's death in a manner acceptable to the Plan Administrator; provided,
that the death benefit will be available to a Participant's Spouse or other
Beneficiary, as applicable, within ninety (90) days of the receipt of notice of
death. This Article X applies only if the Participant's death precedes the
commencement of distribution of a Participant's vested Account Value under
Section 8.6. If a Participant dies after commencing distribution of his or her
vested Account Value under Section 8.6, death benefits shall be payable only as
provided under the form of distribution in which the Participant's vested
Account Value are being paid.
10.2 DETERMINATIONS OF VALUES AND CASH-OUTS. The death benefit under
this Article X shall be equal to the vested Account Value held by the Trustee
for the Beneficiary of a deceased Participant as of the date of distribution to
the Beneficiary; provided, however, that death benefits with respect to amounts
held in a Money Purchase Account shall be payable as a Qualified Pre-Retirement
Survivor Annuity, unless the Participant makes a contrary written election with
the consent of his or her Spouse, if any, as set forth in Section 10.4.
Notwithstanding any other provision of the Plan to the contrary, if a
Participant's vested Account Value have not at the time of any distribution
exceeded five thousand dollars ($5,000) (or such greater amount as permitted
under the Code), upon a Participant's death, or on an annual basis thereafter,
such vested Account Value will be immediately distributed to the Participant's
Beneficiary(ies) in the form of a lump sum. In the event the vested Account
Value is not in excess of such dollar limitation at the time the Plan
Administrator initially determines to pay the benefit, but the benefit is not
immediately paid because the Participant (or Beneficiary) cannot be located or
there is an administrative delay in making payment, distribution shall be made
to the Participant (or Beneficiary) in a lump sum at such time as the Plan
Administrator locates the Participant (or Beneficiary) or the issue causing the
administrative delay is resolved, provided that the Participant's vested Account
Value at that time is not in excess of the dollar limit. For purposes of this
Section, in accordance with Section 1.401(k)-1(c)(1)(ii) of the Treasury
Regulations, a Participant's Deferral Account shall be treated separately from
the remainder of the Participant's Account, and the rules of this Section shall
be applied to each such portion as if it were the entire Account.
10.3 DEATH BENEFIT ATTRIBUTABLE TO ACCOUNTS OTHER THAN MONEY PURCHASE
ACCOUNT. Each Participant shall have a right to designate one or more
Beneficiaries to receive any death benefits that may become payable under the
Plan with respect to all Accounts other than any Money Purchase Account by
filing with the Plan Administrator the forms specified for this purpose, subject
to the waiver and spousal consent requirements under Section 8.7.
Notwithstanding the provisions of Section 1.11, the Beneficiary of a Participant
who is married to his or her Spouse immediately before death shall be the
Participant's Spouse, unless the Participant elects otherwise with the consent
of the Spouse obtained in the same manner
52
provided for in Section 8.6 and 8.7. The Beneficiary of a Participant who has no
Spouse immediately before death shall be as set forth in Section 1.11.
The form of payment of the death benefit, other than that attributable
to a Money Purchase Account, shall be a lump sum equal to 100% of the
Participant's Account Value; provided, however, that the Beneficiary shall have
the right to elect to receive the death benefit in another form of payment set
forth in Section 8.5, subject to the rules set forth in Section 10.6. Any death
benefit payable pursuant to this Section 10.3 shall be paid (or commence as the
case may be) as of the month following the month of the Participant's death or
as of any subsequent month, as elected by the Beneficiary, subject to the rules
set forth in Section 10.6.
10.4 DEATH BENEFIT ATTRIBUTABLE TO MONEY PURCHASE ACCOUNT.
(a) Unmarried Participants. If a Participant has no
Spouse as of the date of death, the death benefit
attributable to the Money Purchase Account shall be
payable as provided under Section 10.3.
(b) Married Participants. If a Participant has a Spouse
as of the date of death, the death benefit
attributable to the Money Purchase Account shall be
paid to the Spouse unless an election has been made
pursuant to (c) below. The form of payment shall be a
monthly annuity for the life of the Spouse, which
form of death benefit shall be known as the Qualified
Pre-Retirement Survivor Annuity. The Participant's
Spouse may direct that payment of the Qualified
Pre-Retirement Survivor Annuity commence as of the
month following the month of the Participant's death
or as of any subsequent month, subject to the rules
set forth in Section 10.6. If the Spouse does not so
direct, payment of such benefit shall commence at the
time the Participant would have attained Normal
Retirement Age. Notwithstanding the foregoing, the
Spouse shall have the right, prior to the Annuity
Starting Date with respect to the Qualified
Pre-Retirement Survivor Annuity, to waive the
Qualified Pre-Retirement Survivor Annuity and to
elect instead one of the forms of payment set forth
in Section 8.5, subject to the rules set forth in
Section 10.6.
(c) Married Participants - Election of Alternate
Beneficiary. A Participant may elect, subject to the
Spouse's consent as provided in Section 8.7, a
Beneficiary other than the Spouse by filing an
election with the Plan Administrator at any time
within the period beginning on the earlier of: (i)
the first day of the Plan Year in which the
Participant attains age 35 (or becomes a Participant,
if later); or (ii) a vested Participant's Termination
from Service Date; and ending on the Participant's
death.
Such election shall name a Beneficiary other than the
Spouse, in which case the form of benefit shall be as
elected by the Beneficiary from among the forms of
payment set forth in Section 8.5, subject to the
rules set forth in Section 10.6.
53
An earlier election (with spousal consent) may be
made provided a written explanation of the
Pre-Retirement Survivor Annuity is given to the
Participant and such election becomes invalid at the
beginning of the Plan Year in which the Participant
attains age 35. Any election under this Section
10.4(c) may be revoked in writing by the Participant
at any time, provided however that an election cannot
be changed or revoked after the Participant's death.
No election pursuant to this Section 10.4(c) shall be
effective unless made in writing on a form
satisfactory to the Plan Administrator and filed with
the Plan Administrator prior to the end of the
election period, and unless such election is
consented to by such Participant's Spouse in
accordance with the provisions of Section 8.7 hereof.
(d) Applicable Period. Within the applicable period with
respect to a Participant, the Plan Administrator
shall provide the Participant a written explanation
of the Qualified Pre-Retirement Survivor Annuity
containing the information specified in subsection
(e) below. For purposes of this paragraph, the term
"applicable period" means, with respect to a
Participant, whichever of the following periods ends
last:
(i) The period beginning with the first day of
the Plan Year in which the Participant
attains age 32 and ending with the close of
the Plan Year preceding the Plan Year in
which the Participant attains age 35;
(ii) A reasonable period after the individual
becomes a Participant. For this purpose, in
the case of an individual who becomes a
Participant after age 32, the explanation
must be provided by the end of the one-year
period beginning with the date on which the
individual becomes a Participant;
(iii) A reasonable period ending after the Plan no
longer fully subsidizes the cost of the
Pre-Retirement Survivor Annuity with respect
to the Participant; or
(iv) A reasonable period ending after Section
401(a)(11) of the Code applies to the
Participant;
provided that in the case of a Termination from
Service, the applicable period, if it has not yet
begun, shall begin upon the Termination from Service,
and shall end one year after such Termination from
Service.
(e) Notice. Within the applicable period, the Plan
Administrator shall provide the Participant with a
written explanation, in nontechnical language,
stating (i) that, unless a contrary election is made,
the Participant's Spouse
54
will receive a Qualified Pre-Retirement Survivor
Annuity; (ii) that such Participant may elect not to
have the Spouse receive a Qualified Pre-Retirement
Survivor Annuity in the event of the Participant's
death before beginning to receive retirement
benefits; (iii) that the Participant's Spouse must
consent to such election in the same manner as
provided in Section 8.7; and (iv) that if the
Participant files a written request as provided
below, the Participant shall be furnished with a
further written explanation. The foregoing
explanation shall also inform the Participant of the
general effect of any such election, and the effect
of revocation of such election.
If a Participant to whom the general explanation
described above is furnished files a written request
with the Plan Administrator within 60 days after such
general explanation is first mailed or delivered to
the Participant, the Plan Administrator shall furnish
such Participant with a written explanation in
nontechnical language of the Qualified Pre-Retirement
Survivor Annuity provided under this Section 10.4 and
the financial effect upon such Participant of any
election not to have his or her Spouse receive such a
Qualified Pre-Retirement Survivor Annuity. Such
specific explanation shall conform to the
requirements of the regulations issued pursuant to
Sections 401(a)(11) and 417 of the Code.
10.5 PROOF OF DEATH. The Trustee may rely exclusively on the Plan
Administrator's determination of the fact of death of a Participant and of the
right of any person to receive all or part of any death benefit. In making such
determination, the Plan Administrator may require such proof of death and other
evidence as the Plan Administrator deems to be necessary. The Plan
Administrator's determination shall be conclusive upon any person having or
claiming any right to death benefits as a consequence of the death of the
Participant.
10.6 LIMITATION OF PAYMENTS. Notwithstanding any other provision of the
Plan to the contrary, the payment of any death benefit payable to any
Beneficiary shall be subject to the rules and restrictions of Section 401(a)(9)
of the Code and the regulations thereunder (including without limitation,
Treasury Regulation Section 1.401(a)(9)-2), which restrictions shall not expand
the requirements of this Article X with regard to payment upon death. For
purposes of this Section 10.6, "Commencement Date" as used below shall mean the
earlier of (i) the Participant's required beginning date under Section 401(a)(9)
of the Code and the regulations thereunder, but determined as if the Participant
had terminated employment prior to age 70-1/2; or (ii) if distribution has
irrevocably commenced in the form of an annuity, the date on which such
distribution commenced. The following rules shall apply:
(a) If the Participant dies after the Commencement Date,
such death benefit must be distributed to the
Beneficiary under a method that is at least as rapid
as the method under which the distributions were
being made to the Participant as of the date of the
Participant's death;
55
(b) If the Participant dies before the Commencement Date
and the Beneficiary is not the Participant's Spouse,
the entire interest of the Participant must be
distributed over a period which does not exceed five
(5) years from the date of such Participant's death;
(c) If the Participant dies before the Commencement Date
and any portion of such Participant's interest is
payable to, or for the benefit of, such Participant's
Spouse as designated Beneficiary, distribution of
such portion must commence not later than the later
of the December 31st of the calendar year immediately
following the calendar year of the Participant's
death or the December 31st of the calendar year in
which the Participant would have attained age seventy
and one-half (70-1/2), and such portion may be
distributed over a period that does not exceed the
life or life expectancy of the Spouse;
(d) In the event that a Participant shall have designated
his or her Spouse as designated Beneficiary and such
Spouse shall die after the death of the Participant
and before the commencement of distributions to the
Spouse, the Participant's Spouse shall be substituted
for the Participant in applying the provisions of
this Section 10.6, but only for the purpose of
determining the period over which payment of benefits
may be made;
(e) For purposes of this Section 10.6, life expectancies
of Participants and their Spouse Beneficiaries shall
be recalculated annually; and
(f) For purposes of this Section 10.6, and in accordance
with the applicable regulations, any death benefit
payable to a Participant's child shall be treated as
if it had been paid to such Participant's surviving
Spouse if such amount will become payable to such
surviving Spouse upon such child's reaching the age
of majority (or upon the occurrence of such other
event as may be designated by the applicable
regulations).
56
ARTICLE XI - TERMINATION OF PLAN
11.1 COMPANY'S RIGHT TO TERMINATE. While the Company intends this Plan
to continue indefinitely, the Company reserves the right to terminate the Plan
or to discontinue contributions from time to time to any extent that it may, in
its sole and complete discretion, deem advisable. No such termination shall have
the effect of diverting any part of the principal or income of the Trust Fund
for any purpose other than for the exclusive benefit of Participants or their
Beneficiaries or of reducing a Participant's or Beneficiary's interest in the
Trust Fund. The Plan as a whole shall be terminated and all contributions shall
be discontinued only pursuant to a resolution of the Board of Directors of the
Company. The Plan may be terminated in part or contributions may be discontinued
in part in the same manner as is prescribed for the adoption of amendments to
the Plan. Any total or partial termination or discontinuance of contributions
shall become effective upon the date specified in the resolution of the Board of
Directors or a written instrument of termination.
11.2 EFFECT ON EMPLOYER AND TRUSTEE. The Employer shall make no further
contributions after termination of the Plan. The Trust shall be continued in
existence, however, as long as the Trustee deems it to be necessary for the
effective discharge of any remaining duties by the Trustee.
11.3 EFFECT ON PARTICIPANTS. Upon termination in whole or in part of
the Plan, the Plan Administrator shall make an allocation in the manner
prescribed by Section 6.3, after payment of any expenses properly charged to the
Trust Fund and adjustments for capital gain and loss in the Interest
Accumulation Account. The Plan Administrator shall then direct the Trustee to
distribute to the Participants for whom the Plan is being terminated all assets
remaining in the Trust Fund.
11.4 TERMINATION OF PARTICIPATION BY A PARTICIPATING COMPANY. Any
Participating Company may withdraw from participation in the Plan at any time by
delivering to the Plan Administrator certified copies of a resolution to that
effect adopted by its board of directors; provided that a Participating Company
shall cease to be a Participating Company, without further action, upon ceasing
to be an Affiliate of the Company. In the event of a termination under this
Section, the assets of the Trust Fund allocable to such Participating Company's
Participants shall be distributed in the manner prescribed by Section 11.3 for
the exclusive benefit of those Participants.
11.5 MERGER, CONSOLIDATION, OR TRANSFER. In the event of any merger or
consolidation with, or transfer of assets or liabilities to, any other plan, the
benefit that a Participant would receive upon a termination of such plan
immediately after such merger, consolidation, or transfer shall be equal to or
greater than the benefit the Participant would have been entitled to receive
immediately before the merger, consolidation, or transfer if the Plan had then
terminated.
57
ARTICLE XII - AMENDMENT OF THE PLAN
12.1 PROCEDURE FOR AMENDMENT. Subject to the restrictions of Section
12.2, the Company reserves the right to amend this Plan from time to time in any
respect. Any amendments to this Plan by the Company shall be in writing and
executed by the Chairman or the President; provided, however, that to the extent
that the Chairman or the President has delegated the authority to amend the
Plan, directly or indirectly, to any designated individual, any such amendment
shall be made in writing and executed by such designated individual.
Notwithstanding the foregoing, any amendment which is made to comply with a
change in law or to secure the approval of the Plan or an amendment by the
Internal Revenue Service, which does not materially increase the cost of the
Plan to the Employer, and which involves no significant choice regarding the
manner in which such change shall be implemented may be executed by any Vice
President or Assistant Vice President charged with responsibility for the
administration of the Plan.
12.2 RESTRICTIONS.
(a) Except as provided in Section 4.1, no amendment or
act shall result in the distribution or diversion of
any part of the assets of the Trust Fund for purposes
other than the exclusive benefit of Participants or
their Beneficiaries.
(b) No amendment or modification of the Plan shall
deprive any Participant or Beneficiary retroactively
of benefits accruing from contributions made before
such amendment or modification unless the amendment
or modification is necessary to conform the Plan to
any law, governmental regulation or ruling, or to
enable the Plan and Trust to satisfy the requirements
of Sections 401 and 501 of the Code.
(c) No amendment shall reduce the vested percentage of
any Participant below the percentage in effect for
such Participant as of the later of (i) the effective
date of the amendment or (ii) the date of adoption of
the amendment. If an amendment changes the vesting
provision under the Plan, in accordance with
applicable regulations, any Participant may choose to
have the amount of his or her vested benefit
determined on the basis of the Plan provisions in
effect immediately before the effective date of the
amendment.
(d) No amendment shall affect the rights, duties or
responsibilities of the Trustee without its prior
written consent. The Trustee shall receive copies of
any amendment promptly following execution of the
same.
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ARTICLE XIII - MANAGEMENT OF THE PLAN
13.1 ALLOCATION OF RESPONSIBILITY. The following named Fiduciaries
shall have only those specific powers, duties, responsibilities and obligations
as are specifically given them under this Plan and Trust.
(a) COMPANY. The Company shall have the sole authority to
appoint and remove the Trustee, the Plan
Administrator, and the Appeal Committee (and/or any
or all members thereof) as described herein.
(b) PLAN ADMINISTRATOR. The Plan Administrator shall have
the sole responsibility for the administration of the
Plan as described herein.
(c) APPEAL COMMITTEE. The Appeal Committee shall consist
of one or more members appointed by the Company and
shall have the sole responsibility to review and make
determinations regarding benefit claims and to make
such other determinations delegated to the Appeal
Committee under the Plan.
(d) BENEFIT FINANCE COMMITTEE. The Benefit Finance
Committee shall consist of those members appointed by
the Company pursuant to the provisions of the
Retirement Plan for Employees of Aetna Services Inc.,
and, with respect to this Plan, the Benefit Finance
Committee shall have an advisory role with respect to
the selection of Investment Funds as further
described in Section 5.8.
(e) TRUSTEE. The Trustee shall have the sole
responsibility for the administration and accounting
of the Trust Fund as described herein.
(f) RELIANCE ON CO-FIDUCIARY. Each Fiduciary warrants
that any directions given, information furnished or
action taken by it shall be in accordance with the
provisions of the Plan and Trust, as the case may be,
authorizing or providing for such direction,
information or action. Furthermore, each Fiduciary
may rely upon any such direction, information or
action of another Fiduciary as being proper under the
Plan and Trust and is not required under the Plan and
Trust to inquire into the propriety of any such
direction, information or action unless such
Fiduciary has reason to believe an impropriety
exists. It is intended under the Plan and Trust that
each Fiduciary shall be independently responsible for
the proper exercise of its own respective powers,
duties, responsibilities and obligations under the
Plan and Trust and, in the absence of knowledge,
shall not be responsible for any act or failure to
act of another Fiduciary. No Fiduciary guarantees the
Trust Fund in any manner against investment loss or
depreciation in asset value.
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13.2 POWERS AND DUTIES OF THE PLAN ADMINISTRATOR. The Plan shall be
administered by a Plan Administrator who shall be the Company or, in the
alternative, one or more persons who shall be appointed by the Company. The Plan
Administrator may delegate to any person or entity any powers or duties of the
Plan Administrator under the Plan. To the extent of any such delegation, the
delegate shall become the named fiduciary responsible for administration of the
Plan (if the delegate is a fiduciary by reason of the delegation), and
references to the Plan Administrator shall apply instead to the delegate. Any
action by the Company assigning any of its responsibilities as Plan
Administrator to specific persons who are all directors, officers, or Employees
of the Company shall not constitute delegation of the Plan Administrator's
responsibilities but rather shall be treated as the manner in which the Company
has determined internally to discharge such responsibility. The Plan
Administrator may be removed at any time without cause.
Compensation of the Plan Administrator and all usual and
reasonable expenses of administration, including but not limited to actuarial,
legal and accounting fees may be paid in whole or in part by the Employer, and
any expenses not paid by the Employer shall be paid by the Trustee out of the
principal or income of the Trust Fund. The source of such payments may differ
from year to year. No Employee shall receive compensation with respect to
services as the Plan Administrator.
(a) The Plan Administrator shall have such duties and
powers as may be necessary to discharge its duties
hereunder, including, but not by way of limitation,
the following:
(i) to construe and interpret the terms and
intent of the Plan, decide all questions of
eligibility and determine the amount, manner
and time of payment of any benefits
hereunder except that the Plan Administrator
shall have no power to add to, subtract from
or modify any of the terms of the Plan, or
to change or add to any benefits provided by
the Plan, or to waive or fail to apply any
requirements of eligibility for a benefit
under the Plan;
(ii) to prescribe procedures to be followed and
information to be supplied by Participants
or Beneficiaries filing applications for
benefits;
(iii) to prepare and distribute in writing, in
such manner as the Plan Administrator
determines to be appropriate, information
explaining the Plan;
(iv) to receive from the Employer, the Trustee,
Participants and Beneficiaries such
information as shall be necessary for the
proper administration of the Plan;
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(v) to furnish to the Employer, upon request,
such annual reports with respect to the
administration of the Plan as are reasonable
and appropriate;
(vi) to receive, review and keep on file (as it
deems convenient or proper) reports of the
financial condition, and of the receipts and
disbursements, of the Trust Fund from the
Trustee;
(vii) to appoint or employ individuals to assist
in the administration of the Plan and any
other agents it deems advisable, including
legal and actuarial counsel;
(viii) to defend or initiate any lawsuit on behalf
of the Plan or the Participants and
Beneficiaries without the consent of the
Employer if the Plan Administrator deems it
reasonably necessary to protect the Plan or
its Participants and Beneficiaries. Legal
fees and costs of litigation shall be borne
by the Trust Fund to the extent not paid by
the Employer; and
(ix) to implement a loan or other borrowing on
behalf of the Trustee as directed by the
Company.
(b) If there shall arise any misunderstanding or
ambiguity concerning the meaning of any of the
provisions of the Plan arising out of the
administration thereof, the Plan Administrator shall
have the sole right to construe such provisions.
Subject to the limitations of the Plan and applicable
law, the Plan Administrator may make such rules and
regulations as it deems necessary or proper for the
administration of the Plan and the transaction of
business hereunder. All rules and decisions of the
Plan Administrator shall be uniformly and
consistently applied to all Participants in similar
circumstances. When making a determination or
calculation, the Plan Administrator shall be entitled
to rely upon information furnished by a Participant
or Beneficiary, the Employer, the legal counsel of
the Employer, the Appeal Committee or the Trustee.
(c) The decisions of the Plan Administrator with respect
to any matter it is empowered to act upon shall be
made by it in its sole discretion based on the Plan
documents and shall be final, conclusive and binding
on all persons. Further, findings of fact by the Plan
Administrator as to matters relating to a
Participant's employment record are binding on the
Participant (or the Participant's Beneficiary) for
the purposes of the Plan.
13.3 NOTICES AND ELECTIONS OF PARTICIPANTS.
(a) All persons shall be required to furnish information
and proof to the Plan Administrator as to any and all
facts that the Plan Administrator may
61
reasonably require concerning any person affected by
the terms of the Plan (including date of birth and
satisfactory proof, by personal endorsement on
benefit checks or otherwise, of the survival of any
payee to the due date of any payment).
Each terminated Participant shall inform the Plan
Administrator of any changes of address. All notices
to any persons from the Plan Administrator will be
sent to the last known address of such person, and
there shall be no further obligation to such person
in the event any such communication is not received
by the person.
There will be no obligation to make any payment to a
payee under the Plan until proof is received that the
payee was living on the due date of the payment. If
such proof is not received within seven years of the
due date of the payment, the obligation to make any
payments under the Plan shall be limited to the
benefit that would be payable had the payee died
immediately before such due date. Notwithstanding any
other provision of the Plan to the contrary, if,
after the expiration of such period, it is
established that the payee was living on the due date
of such payment, any right to payments established by
such proof, less any amounts paid as a death benefit,
shall be reinstated.
If any fact relating to a Participant or any other
payee has been misstated, the correct fact may be
used to determine the amount of the benefit payable
to the Participant or to such other payee. If
overpayments or underpayments have been made because
of such incorrect statement, the amount of any future
payments shall be adjusted appropriately.
(b) Any request, notice or election to be filed with the
Plan Administrator by a Participant or Beneficiary
shall be filed in the manner required by the Plan
Administrator. A request, notice or election by a
Participant or Beneficiary shall be effective only if
made on such form or in such manner required by the
Plan Administrator.
13.4 ACCOUNTS AND RECORDS. The Plan Administrator shall maintain such
accounts and records regarding the fiscal and other transactions of the Plan and
such other data as may be required to carry out its functions under the Plan and
to comply with all applicable laws. The Plan Administrator shall hold the
promissory notes and other instruments documenting or pertaining to Participant
loans made pursuant to Section 9.7 as custodian therefore.
13.5 COMPLIANCE WITH APPLICABLE LAW. The Plan Administrator shall be
responsible for the preparation and filing of any required returns, reports,
statements or other filings with appropriate governmental agencies. The Plan
Administrator shall also be responsible for the preparation and delivery of
information to persons entitled to such information under any applicable law.
62
13.6 LIABILITY. The functions of the Appeal Committee, Plan
Administrator, Trustee and the Benefit Finance Committee under the Plan are
fiduciary in nature and each shall be carried out solely in the interest of the
Participants and other persons entitled to benefits under the Plan for the
exclusive purpose of providing the benefits under the Plan (and for the
defraying of reasonable expenses of administering the Plan). Each such entity or
person shall carry out its respective functions in accordance with the terms of
the Plan with the care, skill, prudence and diligence under the circumstances
then prevailing that a prudent person acting in a like capacity and familiar
with such matters would use in the conduct of an enterprise of a like character
and with like aims. No members of the Appeal Committee or the Benefit Finance
Committee and no officer, director, or Employee shall be liable for any action
or inaction with respect to his or her functions under the Plan unless such
action or inaction is adjudicated to be a breach of the fiduciary standard of
conduct set forth above. Further, no Employee nor any member of the Appeal
Committee or Benefit Finance Committee shall be personally liable hereunder
merely by virtue of any instrument executed by him or her or on his or her
behalf as the Plan Administrator or as a member of such committee.
13.7 INDEMNIFICATION. To the fullest extent permitted by law, the Plan
(and, to the extent ERISA prohibits indemnification by the Plan, the Employer)
shall indemnify officers and directors of the Employer (and any Employee
involved in carrying out the functions of the Employer under the Plan) and each
member of the Appeal Committee and the Benefit Finance Committee against any
expenses, including attorneys' fees and expenses and amounts paid in settlement
(to the extent approved by the Employer) of a liability, which are reasonably
incurred in connection with any legal action to which such person is a party by
reason of his or her duties or responsibilities with respect to the Plan.
13.8 AUTHORIZATION OF PAYMENTS. The Plan Administrator shall issue
directions to the Trustee concerning all benefits and expenses that are to be
paid from the Trust Fund pursuant to the provisions of the Plan and warrants
that all such directions are in accordance with this Plan. In the discretion of
the Plan Administrator, any distribution of benefits to or on behalf of a
Participant may be made directly to the person specified by the Plan
Administrator or deposited in a checking account maintained by the Plan
Administrator for the purpose of making payments to the person or persons
entitled to such benefit payments under the Plan, or to an account maintained by
some other entity which the Plan Administrator may designate to make payments.
13.9 NOTICES TO TRUSTEE. Any Vice President or Assistant Vice President
charged with responsibility for the administration of the Plan shall notify the
Trustee of the names and titles of those persons authorized to communicate with
the Trustee by and on behalf of the Plan Administrator and issue directions to
the Trustee on behalf of the Plan Administrator. As otherwise specified herein,
the Trustee shall be entitled to rely upon all directions and communications
from such persons and only such persons, unless and until the Trustee is
notified to the contrary by any Vice President or Assistant Vice President
charged with responsibility for the administration of the Plan. To the extent
that the Plan provides that the Trustee shall act only upon or pursuant to a
direction of the Company, any such direction of the Company shall be
communicated to the Trustee by those person authorized to communicate with the
Trustee on behalf of the Plan Administrator; provided, however, that when such
persons are
63
communicating with the Trustee on behalf of the Company they shall do so as
agents for the Company.
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ARTICLE XIV - TRUSTEE
14.1 ACCOUNTING. The Trustee shall keep an accurate and detailed
account of all receipts, investments, disbursements and other transactions
hereunder. All accounts, books and records relating to such transactions shall
be open to inspection and audit at all reasonable times by any person designated
by the Company or the Plan Administrator. Within seventy-five (75) days
following the end of each Plan Year and within seventy-five (75) days after any
removal or resignation of the Trustee as provided in Section 14.7, the Trustee
shall file with the Plan Administrator a written account setting forth (a) the
transfer of funds to the Trust Fund; (b) the gains, or losses, realized by the
Trust Fund upon sales or other disposition of the assets; (c) the increase, or
decrease, in the value of the Trust Fund; (d) the transfer of funds from the
Trust Fund; and (e) such further reasonable information as the Employer and/or
Plan Administrator may request, as agreed to by the Trustee during such Plan
Year or during the period from the end of the last Plan Year to the date of such
removal or resignation, and setting forth the current value of all Trust assets
and liabilities. Upon the expiration of ninety (90) days from the date of filing
such annual or other accounts, the Trustee shall be forever released and
discharged from all liability and accountability with respect to the propriety
of its acts and transactions shown in such account, except with respect to any
such acts or transactions as to which the Plan Administrator or the Company
shall file with the Trustee written objections within such 90-day period.
14.2 TRUSTEE'S RESPONSIBILITIES LIMITED. The Trustee may rely on the
representation of the Plan Administrator that the Plan and Trust hereby created
are qualified within the meaning of Section 401(a) of the Code, and the Trustee
shall have no obligation to inquire into such continuing qualification.
The Trustee shall not be responsible for administration of the
Plan and shall not be obliged to determine whether any particular instruction or
direction of the Plan Administrator regarding distribution or any other matter
relating to Plan administration accords with the terms and conditions of same.
Neither shall the Trustee be obliged to collect contributions due under this
Plan, to determine whether contributions are in accordance therewith, or to
account for allocations to Participants. The investment and management of the
Trust Fund assets shall be determined in accordance with Article V and Section
14.8. The Trustee shall not invest, sell, exchange, encumber or otherwise act
with respect to the assets without specific direction of the Plan Administrator
pursuant to the direction of a Participant. The Trustee shall not borrow or
authorize a borrowing on behalf of the Trust Fund without specific direction of
the Company. The Trustee shall not establish a new Investment Fund, or implement
any change with respect to an Investment Fund without specific direction of the
Company. The Trustee shall incur no liability by complying with any such
direction and shall be under no duty or obligation to review, evaluate or
reevaluate the investments made pursuant to such directions.
14.3 INFORMATION AND RECEIPTS. The Plan Administrator shall accompany
each transfer of contributions to the Trust Fund with such information as the
Trustee may reasonably require for purposes of discharging its duties.
65
14.4 ADMINISTRATIVE SERVICES. The Trustee may appoint one or more
administrative agents or custodians or contract for the performance of such
administrative and service functions as it may deem necessary or desirable for
the effective operation of the Trust and Plan.
14.5 EXPENSES. All expenses chargeable to the Trust Fund hereunder
shall be paid by the Trust Fund; provided that the Company may direct in its
sole discretion that all or certain expenses chargeable to the Trust Fund shall
be paid by the Employer. To the extent, however, that funds are available from
commissions, 12b-1 fees or other fees chargeable in connection with investments,
expenses shall be charged first against such available funds, and remaining
expenses shall be paid from the Trust Fund, unless paid by the Employer as
provided above. Expenses chargeable to the Trust Fund shall include but not be
limited to the following:
(a) commissions and other sales or service charges;
(b) taxes of any kind;
(c) administrative and clerical costs;
(d) legal fees; and
(e) the Trustee's fee.
Generally, expenses paid from the Trust Fund shall be
allocated to the Accounts of Participants in proportion to Participants' Account
Value. Investment fees and expenses shall be charged to the Accounts of
Participants who have invested in the applicable Investment Fund unless paid by
the Employer as provided above, provided that expenses of any Investment Fund to
be charged to Participants shall be charged to all Participants investing in
that Investment Fund on the same basis. To the extent funds available from
commissions, 12b-1 fees or other fees chargeable in connection with investments
in Investment Funds exceed the costs of administering the Plan which are
permitted by law to be paid from Plan assets and have not otherwise been paid
from Plan assets, the Company shall, in its discretion, take one or more of the
following courses of action with respect to any excess: (i) use the excess to
provide additional services to the Plan; (ii) allocate the excess to the
Accounts of Participants with balances in such Investment Funds, pro rata based
on the balances in such Investment Funds; or (iii) waive the excess fees.
14.6 COMPENSATION OF TRUSTEE. The Trustee shall be compensated from the
Trust Fund or, at the direction of the Company, by the Employer for its services
by payment of the Trustee's fee, the amount of which shall be agreed upon from
time to time between the Company and the Trustee.
14.7 RESIGNATION OR REMOVAL OF TRUSTEE. The Trustee may resign as
Trustee at any time by providing the Company with written notice of the
resignation. Upon receipt of such notice the Company shall forthwith appoint a
successor Trustee who shall notify the Trustee in writing that it has accepted
the appointment as successor Trustee. Upon receiving such notice of acceptance,
the Trustee may first reserve and liquidate such assets as are necessary for the
66
payment of its compensation and expenses and for the payment of any liabilities
involving the Trustee. It shall then transfer to the successor Trustee the
remaining assets of the Trust Fund and all records pertinent thereto.
If a successor Trustee is not appointed within thirty (30)
days after the giving of notice or removal, the Trustee may apply to a court of
competent jurisdiction for the appointment of a successor. The Trustee shall be
entitled to reimbursement from the Trust for all expenses incurred by it in
connection with the settlement of its accounts and the transfer and delivery of
the Trust Fund to its successor. If the Trustee is removed, it shall be entitled
to full compensation as if the Trust Fund had terminated while it was still
acting. If the Trustee resigns, it shall be entitled to compensation then
accrued but unpaid.
Except for removal for cause, the Company may remove the
Trustee only by first designating a successor Trustee and by providing the
Trustee with no less than sixty (60) days' notice of the removal. The removal
shall not be effective until the Trustee is notified in writing by the successor
Trustee that it has accepted the appointment as successor. In such case the
Trustee, after first receiving and liquidating such assets as may be necessary
for the payment of its compensation and expenses and for the payment of any
liabilities involving the Trustee, shall transfer to the successor Trustee the
remaining assets of the Trust Fund and records pertinent thereto.
14.8 VOTING OR TENDER OF STOCK.
(a) Each Participant shall be considered a named
fiduciary for the limited purpose set forth in this
Section and shall have the right, based upon the
Stock held in the Stock Account attributable to the
Participant's Account, to direct the Trustee in
writing as to the manner in which to vote such shares
or to respond to a tender or exchange offer for such
Stock, and the Trustee shall vote or tender or not
tender such Stock for each Participant's Account
based upon such instructions.
(b) The Trustee shall utilize its best efforts to
distribute or cause to be distributed in a timely
fashion to each Participant such identical written
information (if any), and only such information, as
will be distributed to stockholders of the Company in
connection with any such vote or tender or exchange
offer and a voting or tender or exchange offer
instruction form for return to the Trustee or its
designee. In the event that the Trustee determines
that the Trustee is required pursuant to ERISA to
provide Participants with additional information or
guidance not previously provided to all other
stockholders, the Trustee shall notify the Company in
advance of providing such additional information to
Participants. The notice to the Company shall be
reasonably calculated to allow the Company an
opportunity to determine whether it must provide such
additional information to other stockholders at the
same time it is provided to Participants or whether
the Company must take any other action with respect
to such information.
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(i) The voting or offer instruction form shall
show the number of shares of Stock
attributable to the Participant's Account
and shall provide a means for the
Participant to (A) instruct the Trustee how
to vote or whether or not to tender or
exchange such shares and (B) specify the
Investment Fund under the Plan in which the
proceeds of any sale shall be invested in
the event such shares are sold pursuant to a
tender offer.
(ii) Such form shall also advise each Participant
in the Stock Account (A) that voting or
tender or exchange instructions provided to
the Trustee shall be held in strict
confidence and shall not be divulged or
released to any other person, including any
officer or Employee of the Company; (B) the
manner in which the Trustee shall vote or
tender or exchange shares of Stock as to
which timely instructions were not received
by the Trustee, and (C) that in the event a
Participant's Stock is sold and the
Participant has not specified the Investment
Fund in which the proceeds shall be
invested, such proceeds shall be invested in
the Stable Value Option until a contrary
investment election is made by the
Participant pursuant to the Plan.
(c) Upon receipt of such instructions, the Trustee shall
vote or tender or not tender (or withdraw from
tender) or exchange such Stock in accordance with
such instructions, and the Trustee shall vote or
tender or not tender (or withdraw from tender) or
exchange any Stock as to which timely instructions
were not received by the Trustee in the same
proportion as the Trustee votes or tenders or
exchanges any Stock for which instructions were
received, unless the Trustee determines in its sole
discretion that voting or tender in such manner is
not consistent with ERISA, in which case the Trustee
shall determine in its sole discretion the manner in
which or the extent to which the Trustee shall vote
or tender or exchange any Stock for which
instructions were not timely received. Instruction
forms received from the Participant shall be retained
by the Trustee and shall not be provided, or the
instructions divulged, to the Company or to any
officer or Employee thereof or to any other person.
(d) In implementing the foregoing procedures, the Trustee
will act fairly, in the best interests of each
Participant, and in a manner that will not impose
undue pressure on any Participant as to the voting or
tender or exchange offer instructions he or she
should give to the Trustee. An instruction to the
Trustee to tender or exchange Stock shall not be
deemed to constitute withdrawal or suspension from
the Plan or forfeiture of any portion of a
Participant's interest in the Plan. In the case of a
tender or exchange, Accounts shall be adjusted
appropriately to reflect the Trustee's execution of
Participants' instructions.
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14.9 INDEMNIFICATION BY EMPLOYER. To the fullest extent permitted by
law, the Employer hereby covenants and agrees that it will at all times
indemnify and hold harmless the Trustee from any and all liability that may
arise in connection with this Trust and which does not arise from the negligence
or willful misconduct of the Trustee.
14.10 LEGAL ACTION BY TRUSTEE. The Trustee shall not be required to
institute or engage in any legal action or to take any action other than
required by this Trust, unless it expressly agrees in writing to do so and
unless arrangements have been made to indemnify it fully for all expenses that
may be incurred in connection therewith.
14.11 ACCEPTANCE OF TRUSTEE. Effective upon its execution of this
Trust, the Trustee accepts the Trust created hereunder and agrees to be bound by
all the terms set forth herein and to hold the Trust Fund in trust. The Trustee
shall not have any duty to inquire into the administration of the Plan or
actions taken by any prior trustee.
14.12 POWERS OF TRUSTEE. The Trustee in administering the Trust is
authorized and empowered, subject to the provisions of Article V and this
Article XIV:
(a) To purchase and subscribe for any securities or other
property and to retain such securities and other
property in trust;
(b) To sell at public or private sale, for cash, or upon
credit, or otherwise dispose of any property, real or
personal; and no person dealing with the Trustee
shall be bound to see to the application or to
inquire into the validity, expediency or propriety of
any such sale or other disposition;
(c) To adjust, settle, contest, compromise and arbitrate
any claims, debts, or damages due or owing to or from
the Trust Fund, and to ▇▇▇, commence or defend any
legal proceedings in reference therein;
(d) To exercise any conversion privilege subscription
rights or other options pertaining to or in
connection with securities or other property held by
it; to consent to or otherwise participate in any
reorganization, consolidation, merger or adjustment
pertaining to any corporate reorganization or any
other changes affecting corporate securities, to
deposit any property with any committee or
depositary, and to pay any assessments or other
charges in connection therewith;
(e) To exercise itself, or by general or limited power of
attorney, any right, including the right to vote,
incident to any securities or other property held by
it;
(f) To invest all or part of the Trust Fund in
interest-bearing deposits with the Trustee, or with a
bank or similar financial institution related to the
Trustee if such bank or other institution is a
fiduciary with respect to the
69
Plan as defined in ERISA, including but not limited
to investments in time deposits, savings deposits,
certificates of deposit or time accounts which bear a
reasonable interest rate;
(g) To invest in, to the extent they are a part of any
authorized Investment Fund, any collective or common
trust fund or composite security owned, operated and
maintained by the Trustee or its affiliates,
including, but not limited to, demand notes,
short-term notes and cash equivalent funds and any
collective, common or pooled trust fund operated or
maintained exclusively for the commingling and
collective investment of monies or other assets
including any such fund operated or maintained by the
Trustee or its affiliates. Notwithstanding the
provisions of this Trust which place restrictions
upon the actions of the Trustee, to the extent monies
or other assets are utilized to acquire units of any
collective trust, the terms of the collective trust
indenture shall solely govern the investment duties,
responsibilities and powers of the trustee of such
collective trust and, to the extent required by law,
such terms, responsibilities and powers shall be
incorporated herein by reference and shall be part of
this Trust. For purposes of valuation, the value of
the interest maintained by the Trust Fund in such
collective trust shall be the fair market value of
the collective fund units held, determined in
accordance with generally recognized valuation
procedures. The Company expressly understands and
agrees that any such collective fund may provide for
the lending of its securities by the collective fund
trustee and that such collective fund's trustee will
receive compensation for the lending of securities
that is separate from any compensation of the Trustee
hereunder, or any compensation of the collective fund
trustee for the management of such collective fund;
(h) To register any investment held in the Trust Fund in
its own name or in the name of a nominee or to hold
any investment in bearer form;
(i) To employ suitable agents, accountants and counsel to
pay their reasonable expenses and compensation;
(j) To hold any part or all of the Trust Fund uninvested;
(k) To make, execute and deliver as Trustee any and all
advances, contracts, waivers, releases or other
instruments in writing necessary or proper in the
employment of any of the foregoing powers;
(l) To exercise, generally, any of the powers which an
individual owner might exercise in connection with
property either personal or mixed held by the Trust,
and to do all other acts that the Trustee may deem
necessary or proper to carry out any of the powers
set forth in this Article XIV or otherwise in the
best interests of the Plan Participants;
70
(m) The Trustee may defend or initiate any lawsuit
without the consent of the Employer if the Trustee
deems it reasonably necessary to protect the
principal or income of any asset held by the Trust
Fund. Legal fees and costs of litigation shall be
borne by the Trust Fund to the extent not paid by the
Employer; and
(n) To borrow on behalf of the Trust Fund upon specific
direction of the Company and to authorize the Plan
Administrator to implement such borrowing.
14.13 MAINTENANCE OF INDICIA OF OWNERSHIP. The Trustee shall not
maintain indicia of ownership of any asset of the Trust Fund held by it outside
the jurisdiction of the District Courts of the United States unless such holding
is approved through ruling or regulations promulgated under ERISA by the
Secretary of Labor.
14.14 FORM OF COMMUNICATIONS. All notices, directions and other
communications to the Trustee shall be in writing or in such other form,
including transmission by electronic means through the facilities of third
parties or otherwise, specifically agreed to in writing by the Trustee and the
Trustee shall be fully protected in acting in accordance therewith.
14.15 INSURANCE CONTRACTS.
(a) The Trustee, upon the direction of the Company, shall
acquire and maintain Group Annuity Contracts to the
extent any Investment Funds are maintained under a
Group Annuity Contract, and upon the direction of the
Plan Administrator shall acquire an insurance or
annuity contract for purposes of distributing
benefits.
(b) The Trustee shall execute the application for any
Contract to be applied for under the Plan.
(c) The Trustee shall be the absolute owner of all
Contracts which shall be held in the Trust.
(d) No Insurer issuing any contract or contracts held in
the Trust Fund shall be deemed to be a party to this
Trust for any purpose, or to be responsible in any
way for its validity, or to have any liability other
than as stated in any contracts that are so issued by
it. Any Insurer may deal with the Trustee as absolute
owner of any contract issued by it and held in the
Trust Fund, without inquiry as to the authority of
the Trustee to so act, and may accept and rely upon
any written notice, instruction, direction,
certificate or other communication from the Trustee
believed by the Insurer to be genuine and to be
signed by an officer of the Trustee and shall incur
no liability or responsibility by so doing. Any sums
paid by an Insurer under any of the terms of a
contract issued by it and held in the Trust Fund
either to the Trustee, or, in accordance with the
direction of the Trustee to any other
71
person or persons designated in such contract as the
person or persons to whom such payment shall be made
shall be a full and complete discharge of the
liability to pay such sums, and the Insurer shall
have no obligation to look to the disposition of any
sums so paid. No Insurer shall be required to look
into the terms of this Trust or to inquire into any
action of the Trustee or as to whether any action of
the Trustee is authorized by the term of this Trust.
(e) The Trustee shall follow directions of the Plan
Administrator concerning the exercise or non-exercise
of any powers or options concerning any contract held
in the Trust Fund. To the extent permitted by law,
neither the Employer, the Plan Administrator nor the
Trustee shall be liable for the refusal of any
insurance company to issue, modify or convert any
contract or contracts, to take any other action
requested by the Trustee, nor be liable for the form,
genuineness, validity, sufficiency or effect of any
contract or contracts held in the Trust Fund, nor for
the act of any person or persons that may render any
such contract or contracts null and void; nor for the
failure of any insurance company to pay the proceeds
and avails of any such contract or contracts as and
when the same shall become due and payable; nor for
any delay in payment resulting from any provision
contained in any such contract; nor for the fact that
for any reason whatsoever any contract shall lapse or
otherwise be uncollectible. Notwithstanding any other
provision of this Trust to the contrary, the Employer
hereby agrees to indemnify the Trustee and hold it
harmless from and against any claim or liability
which may be asserted against the Trustee by reason
of its acting on any direction from the Plan
Administrator or failing to act in the absence of any
such direction with respect to any contract or the
acquisition of any contract or exercise or
non-exercise of any right or option thereunder.
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ARTICLE XV - CLAIMS PROCEDURES AND CERTAIN RESTRICTIONS
15.1 PROCEDURES FOR PRESENTING AND REVIEWING CLAIMS. A written request
for a Plan benefit made by either a Participant or Beneficiary shall be a claim.
The person making such claim shall be a claimant.
Each claim shall be presented to the Appeal Committee which
shall, within 90 days from receipt of the claim (180 days in the event of
special circumstances), either accept or deny the claim (wholly or partially)
and within that time notify the claimant of such acceptance or denial.
If a claim is wholly or partially denied, the Appeal Committee
shall furnish to the claimant a written notice setting forth in a manner
calculated to be understood by the claimant:
(a) the specific reason(s) for the denial;
(b) specific reference(s) to pertinent Plan provisions on
which any denial is based;
(c) a description of any additional material or
information necessary for the claimant to perfect the
claim, and an explanation of why such material or
information is necessary; and
(d) an explanation of the Plan's review procedures.
If a claimant does not receive notification of acceptance or
denial within 90 days from submission of a claim, the claimant may request
review as if the claim had been entirely denied.
In the event of a denial, the claimant is entitled, either in
person or by duly authorized representative, to
(i) make a written request that the Appeal
Committee review the claim. In the case of a
denial as to which written notice of denial
has been given to the claimant, any such
request for review of the claim must be made
within 60 days after receipt by the claimant
of such notice;
(ii) review pertinent documents relating to the
denial;
(iii) submit issues and comments in writing; and
(iv) request a hearing before the Appeal
Committee.
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The Appeal Committee shall make its decision with respect to a
claim review promptly, but not later than 60 days after receipt of the request.
Such 60-day period may be extended for an additional 60 days if the Appeal
Committee finds that special circumstances require an extension of time.
The final decision of the Appeal Committee shall be in
writing, give specific reasons for the decision and make specific references to
the pertinent Plan provisions on which the decision is based. All
interpretations, determinations and decisions of the Appeal Committee in respect
of any claim shall be made in its sole discretion based on the applicable Plan
documents and shall be final, conclusive and binding on all parties.
15.2 ASSIGNMENT AND ALIENATION PROHIBITED. Except as provided below or
otherwise under applicable law, no payee may sell, assign, discount, alienate or
pledge as collateral for a loan or as a security for the performance of an
obligation or for any other purpose, any payment due under this Plan; and any
payment due to a payee hereunder shall be exempt from the claim of creditors of
the payee to the maximum extent permitted under federal and state laws. If the
Plan Administrator determines that a Qualified Domestic Relations Order, within
the meaning of Section 414(p) of the Code and as described in Section 15.3 and
Exhibit A, exists with respect to a benefit due under this Plan, the Plan
Administrator may take such actions and make or authorize such payments, as it
reasonably believes are consistent with the terms of such Order, the Plan and
with applicable law. Any action taken or payment made in accordance with the
preceding sentence shall not be deemed to be an impermissible assignment or
alienation and shall, to the maximum extent permitted by law, discharge the Plan
from all liability for any benefits so paid.
15.3 DISTRIBUTION PURSUANT TO A QUALIFIED DOMESTIC RELATIONS ORDER.
Notwithstanding Section 15.2, effective January 1, 1985, distribution of a
Participant's benefits under this Plan shall be made to a Participant's spouse,
former spouse, child, or other dependent as required pursuant to a Qualified
Domestic Relations Order as defined below.
(a) DEFINITION. A Qualified Domestic Relations Order
("QDRO") is any judgment, decree or order (including
approval of a property settlement agreement) issued
pursuant to the domestic relations law of a state
(including a community property law) that relates to
the provision of child support, alimony payments or
marital property rights to a spouse, former spouse,
child or other dependent of a Participant (an
"alternate payee") and which meets the following
requirements:
(i) The order must create, assign or recognize
the right of an alternate payee to receive
all or part of the Participant's benefits
under the Plan.
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(ii) The order must clearly specify all of the
following information:
(1) The names and last known mailing
addresses of the Participant and
alternate payee(s);
(2) The amount or percentage of the
Participant's benefits to be paid
by the Plan to each alternate payee
or the manner in which such amount
or percentage is to be determined;
(3) The number of payments or period to
which the order applies; and
(4) Each plan to which the order
applies.
(iii) The order must not provide for any type or
form of benefits, or any option not
otherwise provided under the Plan; provided,
however, that effective January 1, 1994, an
order may provide for the commencement of
benefits to an alternate payee at a time
when the Participant is not yet eligible to
receive a distribution under the Plan, and
prior to the Participant's "earliest
retirement age" under Section 414(p) of the
Code.
(iv) The order must not provide for any increased
benefits that would not otherwise be
provided under the Plan.
(v) The order must not require the payment of
benefits to an alternate payee that are
required to be paid to another alternate
payee under another order previously
determined to be a QDRO.
The Plan Administrator shall treat a domestic
relations order executed before January 1, 1985 as a
QDRO if it is paying benefits pursuant to the order
on January 1, 1985. In addition, the Plan
Administrator, in its discretion, may treat a
domestic relations order executed prior to January 1,
1985 as a QDRO even if it does not meet the above
requirements and/or seek a modification of the order
to meet such requirements.
(b) DETERMINATION BY PLAN ADMINISTRATOR. Upon receipt of
any document purporting to be a QDRO, the Plan
Administrator shall: (i) promptly notify by mail the
Participant and each alternate payee of the receipt
of the order, giving an explanation of the procedures
that will be followed by the Plan Administrator in
determining whether the document is a QDRO; (ii)
within a reasonable time determine whether the
document is a QDRO according to reasonable written
procedures to be established pursuant to Section 13.2
and this paragraph; (iii) notify the Participant and
each alternate payee of its determination.
75
The time period for determining the status of an
order and for giving notice as required above shall
be as established by the applicable regulations.
(c) PAYMENTS UNDER QUALIFIED DOMESTIC RELATIONS ORDERS.
The Plan Administrator may establish from time to
time reasonable nondiscriminatory written procedures
pursuant to Section 13.2 and this paragraph to
facilitate orderly distribution of benefits pursuant
to QDROs. A copy of the Plan's procedures regarding
QDROs is attached as Exhibit A. Exhibit A may be
amended from time to time by the Plan Administrator
without a Plan amendment.
(i) Separate Accounting During Determination
Period. During any period in which the issue
of whether a document is a QDRO is being
determined, the Plan Administrator shall
separately account for the amounts, if any,
that would be payable to any alternate payee
during such period if the document is
determined to be a QDRO.
(ii) Payment Upon Determination. The
"determination period" shall be a period of
eighteen (18) months beginning on the date
on which the first payment would be required
to be made under an Order if it is a QDRO.
If the determination that a document is a
QDRO occurs after the end of the
determination period, the QDRO shall only
apply prospectively from the time of the
determination. In addition, if it is
determined that the order is not a QDRO or
if no determination is made within the
determination period, any benefits payable
and segregated during the determination
period shall be paid to the Participant or
other person(s) entitled thereto at the end
of such period as if there had been no
domestic relations order.
If the determination that a document is a QDRO occurs
within the determination period, the Plan
Administrator shall pay benefits payable and
segregated before the determination is made to the
alternate payees entitled thereto pursuant to the
terms of the QDRO.
(d) RESPONSIBILITY OF PLAN ADMINISTRATOR. If the Plan
Administrator acts in accordance with part 4 of Title
I of ERISA, Article XV of the Plan and any
administrative procedures established to carry out
the provisions of this Article XV with respect to
determining the qualified status of a document
purporting to be a QDRO, separating amounts payable
and making payments thereunder, the Plan's obligation
to the Participant and each alternate payee is
discharged to the extent of any payments made.
76
In the event that there is a dispute as to the
qualified status of a QDRO, the Plan Administrator
shall be prohibited from making payments pursuant
thereto until the dispute is resolved or until
expiration of the determination period. The Plan
Administrator may initiate any legal action, in state
or federal court, that it deems necessary to
facilitate a determination, including but not limited
to filing for an injunction and seeking the
modification of a document to comply with the
requirements of this Section 15.3. If an action is
brought in state court and the Plan Administrator
deems that the resolution of the matter is not in the
best interests of the Plan, the Plan Administrator
may seek a restraining order in federal court.
Notwithstanding Section 13.2 hereof, any legal
expenses incurred in resolving a dispute involving
the qualified status of a QDRO shall be borne by the
alternate payee to the extent permissible under
federal pension laws.
77
ARTICLE XVI - ADOPTION OF PLAN BY AFFILIATE
16.1 PURPOSE OF ARTICLE. The purpose of this Article XVI is to describe
the terms and conditions under which an Affiliate may adopt, and become a
Participating Company under, the Plan and Trust for the benefit of some or all
of its Eligible Employees.
16.2 ADOPTION BY AFFILIATE. Any Affiliate may, with the consent of the
Company, become a Participating Company under the Plan and Trust by a vote of
the board of directors of the Participating Company directing that:
(a) The Participating Company shall agree to be bound by
all the provisions of the Plan and Trust in the
manner set forth herein and any amendments thereto.
(b) The Participating Company shall agree to pay its
share of the expenses of the Plan and Trust as they
may be determined from time to time in the manner
specified herein.
(c) The Participating Company shall agree to provide the
Company, Plan Administrator, Trustee, and Appeal
Committee with full, complete, and timely information
on all matters necessary to operation of the Plan and
Trust.
16.3 PARTICIPATION IN THE PLAN.
(a) In the event of the adoption of the Plan and Trust by
an Affiliate, the Affiliate shall become a
Participating Company and all the terms and
conditions of the Plan and Trust as set forth
hereunder shall apply to the participation under the
Plan of such Affiliate and its Employees in the
manner as set forth herein. Notwithstanding the
foregoing, the following rights are specifically
reserved to the Company so long as the Company
participates under the Plan:
(i) the right to designate a Participating
Company;
(ii) the right to appoint the Plan Administrator
and the members of the Appeal Committee;
(iii) the right to direct, appoint, remove,
approve the accounts of, or otherwise deal
with the Trustee ; and
(iv) the right to amend or terminate the Plan and
Trust. Any such amendment, unless otherwise
specified herein, shall be fully binding
with respect to participation by any
Participating Company; provided that this
reservation shall in no event be
78
construed to prevent any Participating
Company from terminating its participation
as a Participating Company under the Plan at
any time, in the manner set forth herein.
(b) With respect to a Participating Company, the term
"Effective Date" shall mean such date specified by
the board of directors of such Participating Company
and approved by the Company, in conjunction with the
adoption of the Plan by the Participating Company.
16.4 TERMINATION BY A PARTICIPATING COMPANY. Any Participating Company
may at any time elect to terminate its participation under the Plan in the
manner set forth herein subject to any unfunded liability attributable to its
respective Employees. Termination of the participation of any Participating
Company shall not affect the participation in the Plan of any other
Participating Company nor terminate the Plan or Trust with respect to such other
Participating Companies and their Employees; provided, that, if the Company
shall terminate its participation in the Plan, then each remaining Participating
Company shall make such arrangements and take such action as may be necessary to
assume the duties of the Company in providing for the operation and continued
administration of the Plan and Trust as the same pertains to the remaining
Participating Companies. Any actions under this Section 16.4 shall only be taken
after compliance with all applicable legal requirements.
16.5 PARTICIPATING COMPANY PLAN EXPENSES. Each Participating Company
shall be liable for and shall pay at least annually to the Company its fair
share of the expenses of operating the Plan and Trust, including its share of
any Trustee's fees, as determined annually by the Company. The amount of such
charges to each Participating Company shall be determined by the Company in its
sole discretion; provided, that, except with respect to charges incurred solely
on account of a particular Participating Company, a Participating Company shall
not be charged for a greater portion of any expenses of Plan operation than the
ratio that the number of Participants who are or were its Employees bears to the
total of all Participants nor for a greater proportion of any Trustee's fees
than the ratio that the portion of the Trust Fund pertaining to Participants who
are or were its Employees bears to the total Trust Fund.
16.6 COMPANY AS AGENT. With respect to all of its relations with the
Trustee, Plan Administrator and Appeal Committee for the purpose of this Plan,
each Participating Company shall be deemed to have designated irrevocably the
Company as its agent.
16.7 TRANSFERRED EMPLOYEES. An Employee may be transferred between
Participating Companies, and in the event of any such transfer, the Employee
involved shall retain any accumulated Vesting Service and Accounts. No such
transfer shall constitute a Termination from Service hereunder, and the
Participating Company to which the Employee is transferred shall thereupon
become obligated hereunder with respect to such Employee in the same manner as
was the Participating Company from whom the Employee was transferred.
An Employee who transfers employment from a Participating
Company to an Affiliate who is not a Participating Company shall cease to be an
Active Participant as of the date of such transfer, but such transfer shall not
constitute a Termination from Service. An
79
Employee who transfers employment from an Affiliate that is not a Participating
Company to a Participating Company shall commence participation in the Plan as
provided under Article II, with any Vesting Service credited while an Employee
of the nonparticipating Affiliate taken into account.
16.8 CONTRIBUTIONS TO TRUST FUND. All contributions made by a
Participating Company, as provided for in this Plan, shall be determined
separately on the basis of its respective Employee cost attributable to its
respective Employees' Pay for the Plan Year and shall be paid to and held by the
Trustee for the exclusive benefit of the Employees of such Participating Company
and the Beneficiaries of such Employees, subject to all terms and conditions of
this Plan. The Plan Administrator shall keep separate books and records
concerning the affairs of each Participating Company hereunder and as to the
accounts and credits of the Employees of each Participating Company. The Trustee
may, but need not, register insurance company contracts so as to evidence that a
particular Participating Company is the interested Employer hereunder, but in
the event an Employee transfers from one Participating Company to another, the
employing Employer shall immediately notify the administrator thereof.
16.9 COMMON PROCEDURES AND RULES. The Company shall have authority at
all times upon notice duly given, to make any and all necessary common rules or
regulations, which shall be binding upon all Participating Companies or to
expedite and effectuate the common purposes of this Article XVI. The decisions
of the Company, the Trustee, the Plan Administrator, the Appeal Committee or the
Benefit Finance Committee shall be binding on all Participating Companies.
16.10 CONTRIBUTIONS BY PARTICIPATING EMPLOYER. Contributions by a
Participating Company shall be made based on the Plan Year and shall be made for
its fiscal year which is coincident with or ends within the Plan Year as
designated in Section 1.48.
80
ARTICLE XVII - PROVISIONS RELATING TO TOP-HEAVY PLAN
17.1 APPLICABILITY. The provisions of this Article XVII shall apply to
any Plan Year if, as of the applicable Determination Date, the Plan constitutes
a Top-Heavy Plan.
17.2 DEFINITIONS. The following definitions apply to this Article XVII
and unless otherwise specifically stated in another section hereof do not apply
to any other section of the Plan.
(a) DETERMINATION DATE. With respect to each Plan Year,
the Determination Date shall be the final day of the
immediately preceding Plan Year; provided, however,
that with regard to the Plan's initial Plan Year the
"Determination Date" shall be the last day of the
first Plan Year.
(b) KEY EMPLOYEE. Key Employee shall mean any Employee
who, at any time during the Plan Year as of which a
determination is made or any of the four (4)
preceding Plan Years, is (in accordance with Section
416(i) of the Code and the regulations promulgated
thereunder):
(i) an officer of an Employer or any Affiliate
whose annual compensation from the Employer
and all Affiliates during any such Plan Year
exceeds fifty percent (50%) of the maximum
dollar limitation under Section 415(b)(1)(A)
of the Code as in effect for any such Plan
Year; provided, that no more than fifty (50)
Employees (or, if lesser, the greater of
three (3) or ten (10) percent of the
Employees) shall be treated as officers;
(ii) one of the ten (10) Employees owning or
considered as owning (within the meaning of
Section 318 of the Code) the largest
interests in the Employer or any Affiliate,
excluding, however, any Employee who did not
receive compensation from the Employer and
all Affiliates in excess of the maximum
dollar limitation under Section 415(c)(1)(A)
of the Code as in effect for the calendar
year of the Determination Date; provided,
that for the purposes of this paragraph
(ii), if two (2) Employees have the same
interest in the Employer or an Affiliate,
the Employee whose annual compensation from
the Employer or such Affiliate is greater
shall be treated as having the greater
interest;
(iii) an Employee who owns (or is considered as
owning within the meaning of Section 318 of
the Code) more than five percent (5%) of the
outstanding stock of the Employer or stock
possessing more than five percent (5%) of
the total combined voting power of all stock
of the Employer or any Affiliate; or
81
(iv) an Employee who (A) owns (or is considered
as owning within the meaning of Section 318
of the Code) more than one percent (1%) of
the outstanding stock of the Employer or
more than one percent (1%) of the total
combined voting power of all stock of the
Employer and (B) who receives annual
compensation from the Employer and all
Affiliates in excess of one hundred fifty
thousand dollars ($150,000).
(v) For the purpose of applying Section 318 of
the Code under paragraphs (ii), (iii) and
(iv) of this subsection (b), the phrase "50
percent" in Section 318(a)(2) of the Code
shall be replaced by the phrase "5 percent."
(c) NON-KEY EMPLOYEE. Any Employee who is not a Key
Employee.
(d) AGGREGATED PLANS. "Aggregated Plans" shall mean (i)
all plans of the Employer or any Affiliate (A) that
are qualified under Section 401(a) of the Code and
(B) in which a Key Employee is a participant, and
(ii) all other plans of the Employer or any Affiliate
that enable any plan described in clause (i) above to
meet the requirements of Sections 401(a)(4) or 410(b)
of the Code (the "Required Aggregation Group"). The
Required Aggregation Group shall include each plan
that satisfies the requirements of the preceding
sentence, whether or not any such plan is terminated.
In addition, the term "Aggregated Plans" shall
include any plan of the Employer or any Affiliate
that is not required to be included in the Required
Aggregation Group; provided, that the resulting
group, taken as a whole, continues to meet the
requirements of Sections 401(a)(4) and 410(b) of the
Code (the "Permissive Aggregation Group"). The Plan
Administrator may elect to exclude as an Aggregated
Plan any plan in the Permissive Aggregation Group
that is a collectively bargained plan, if the
necessary information as to participants and benefits
with respect to such plan is not available.
(e) TOP-HEAVY PLAN. The Plan shall constitute a
"Top-Heavy Plan" for any Plan Year if, as of the
applicable Determination Date, the sum of (A) the
accounts of Key Employees under any Aggregated Plan
that is of a defined contribution type and (B) the
present value of the cumulative accrued benefits of
Key Employees under any Aggregated Plan that is of a
defined benefit type exceed sixty percent (60%) of
the sum of (X) the accounts of all Employees under
any Aggregated Plan that is of a defined contribution
type and (Y) the present value of the cumulative
accrued benefits of all Employees under any
Aggregated Plan that is of a defined benefit type.
The above determinations shall be made in accordance
with Section 416(g) of the Code.
82
(f) SUPER TOP-HEAVY PLAN. The Plan shall constitute a
"Super Top-Heavy Plan" for any Plan Year if, as of
the applicable Determination Date, the sum of (A) the
accounts of Key Employees under any Aggregated Plan
that is of a defined contribution type and (B) the
present value of the cumulative accrued benefits of
Key Employees under any Aggregated Plan that is of a
defined benefit type exceed ninety percent (90%) of
the sum of (X) the accounts of all Employees under
any Aggregated Plan that is of a defined contribution
type and (Y) the present value of the cumulative
accrued benefits of all Employees under any
Aggregated Plan that is of a defined benefit type.
The above determination shall be made in accordance
with Sections 416(g) and 416(h)(2)(B) of the Code.
(g) SPECIAL RULES APPLICABLE TO DETERMINATION OF ACCRUED
BENEFIT OR ACCOUNT BALANCES. In determining the
present value of accrued benefits or account balances
for Aggregated Plans, the following rules shall
apply:
(i) The accrued benefit for each current
Employee shall be computed as if the
Employee voluntarily terminated service as
of the Determination Date.
(ii) The interest rate used to determine accrued
benefits shall be the plan's actuarial
equivalent interest rate and post-retirement
mortality shall be determined based on the
1983 Group Annuity Mortality Table for
Males. There shall be no assumption as to
preretirement mortality or future increases
in cost of living.
(iii) If a qualified joint and survivor annuity
within the meaning of Section 401(a)(11) of
the Code is the normal form of benefit, the
spouse of the participant shall be assumed
to be the same age as the participant for
purposes of determining the present value of
the accrued benefit.
(iv) The present value of each accrued benefit
shall reflect a benefit payable commencing
at normal retirement age (or attained age,
if later), provided that if the plan
provides for a nonproportional subsidy, the
benefit shall be assumed to commence at the
age at which the benefit is most valuable.
(v) The employer contribution account shall be
determined as of the most recent valuation
occurring within the twelve (12) month
period ending on the Determination Date.
(vi) An adjustment shall be made for any
contributions due as of the Determination
Date. In the case of a plan not subject to
Section 412 of the Code, such adjustment
shall be the amount of any contributions
actually made after the Valuation Date but
before the
83
Determination Date, except that for the
first Plan Year such adjustment shall also
reflect the amount of any contributions made
after the Determination Date that are
allocated as of a date in the first Plan
Year.
(vii) The accrued benefit or account balance with
respect to any Employee shall be increased
by the aggregate distributions made to such
Employee from any Aggregated Plan during the
five (5) year period ending on the
Determination Date; provided, however, that
any distribution made after a Valuation Date
but before the Determination Date shall not
be counted as a distribution to the extent
already included as of the Valuation Date.
(viii) Any Employee contributions, whether
voluntary or mandatory, shall be included.
However, amounts attributable to tax
deductible qualified employee contributions
shall not be considered to be a part of the
account.
(ix) With respect to unrelated rollovers and
plan-to-plan transfers (ones which are both
initiated by the Employee and made from a
plan maintained by one Employer to a plan
maintained by another Employer), the plan
from which the rollover or plan-to-plan
transfer is initiated shall consider such
amounts to be distributed for the purpose of
this Article XVII. The plan accepting such
rollovers or plan-to-plan transfers shall
not consider rollovers or plan-to-plan
transfers accepted after December 31, 1983
as part of the Employee's benefit. However,
rollovers or plan-to-plan transfers accepted
before January 1, 1984 shall be considered
as part of the Employee's benefit.
(x) Related rollovers and plan-to-plan transfers
(ones which are either not initiated by the
Employee or not made to a plan maintained by
the Employer) shall not be considered as a
distribution for purposes of this Article
XVII. The plan accepting such rollover or
plan-to-plan transfer shall consider such
rollover or plan-to-plan transfer as part of
the Employee's benefit, irrespective of the
date on which such rollover or plan-to-plan
transfer is accepted.
(xi) For purposes of determining whether the
Employer is the same employer under (ix) and
(x) above, the Employer and all Affiliates
shall be treated as the same Employer.
(xii) For purposes of this Article XVII, a
Beneficiary of any deceased Employee shall
be considered a Participant hereunder.
84
(xiii) Notwithstanding any other provision of the
Plan to the contrary, no individual shall be
counted as an Employee or Participant for
the purposes of this Article XVII if such
individual has not received compensation
(other than benefits under the Plan) during
the five (5) year period ending on a
Determination Date.
(viv) Solely for the purpose of determining if the
Plan, or any other plan in the Required
Aggregation Group of which this Plan is
part, is Top-Heavy, the accrued benefit of
an individual other than a Key Employee
shall be determined under (A) the method, if
any, that uniformly applies for accrual
purposes under all plans maintained by
Employers, or (B) if there is no such
method, as if such benefit accrued not more
rapidly than the slowest accrual rate
permitted under the fractional accrual rule
of Section 411(b)(1)(C) of the Code.
(h) TOP-HEAVY PLAN YEAR. "Top-Heavy Plan Year" shall mean
a Plan Year in which the Plan is a Top-Heavy Plan but
shall not include any Plan Year ending before January
1, 1984.
(i) TOP-HEAVY COMPENSATION. "Top-Heavy Compensation"
shall mean compensation from the Employer and all
Affiliates within the meaning of Section 415 of the
Code, which shall mean the compensation stated on an
Employee's Form W-2 for the calendar year that ends
with or within the Plan Year. Includible in
compensation shall be the value of a non-qualified
stock option granted to an employee by the Employer
to the extent that the value of the option is
includible in gross income. Compensation does not
include amounts contributed to a plan of deferred
compensation that are not included in gross income;
any distributions from a plan of deferred
compensation; amounts realized from the exercise of a
non-qualified stock option; and amounts realized from
the sale of stock acquired under a qualified stock
option. In determining average compensation for
Top-Heavy purposes, years for which the Employee did
not earn a year of service shall be disregarded.
Also, compensation received for years ending in Plan
Years beginning before January 1, 1984 and
compensation received for years beginning after the
close of the last Plan Year in which the plan is
Top-Heavy may be disregarded.
(j) TESTING PERIOD. "Testing Period" shall mean the five
(5) consecutive Top-Heavy Plan Years of employment of
the Participant by the Employer or any Affiliate
during which the aggregate Top-Heavy Compensation
paid by the Employer or any Affiliate to such
Participant was the highest, or if the Plan was a
Top-Heavy Plan for less than five (5) Top-Heavy Plan
Years, the number of Top-Heavy Plan Years. Exclusion
of a Plan Year as a Top-Heavy Plan Year because a
year of service was not credited or
85
because of item (i) or (ii) of subparagraph (h) above
shall not be deemed to break the consecutive nature
of the surrounding Top-Heavy Plan Years.
17.3 MINIMUM BENEFIT. Each Non-Key Employee shall receive the minimum
benefit required by Section 416(c) of the Code in each Plan Year in which the
Plan is a Top-Heavy Plan under the Retirement Plan for Employees of Aetna
Services, Inc.
17.4 SECTION 415 ADJUSTMENTS. In the event the Plan is a Top-Heavy Plan
for any Plan Year, 100% shall be substituted for 125% in Section 4.4 unless (a)
the Plan is not a Super Top-Heavy Plan and (b) no additional benefit would be
accrued under Section 17.3 hereof if, for each Plan Year in which the Plan
constituted a Top-Heavy Plan, "3%" was substituted for "2%" and "20%" was
increased by one percent (1%), up to a maximum increase of thirty percent (30%),
under Section 416(c)(1)(B) of the Code.
86
ARTICLE XVIII - MISCELLANEOUS
18.1 BENEFITS SOLELY FROM TRUST FUND. As a condition precedent to
participation in the Plan, each Employee agrees to look solely to the assets of
the Trust for the payment of any Plan benefits to which he or she is entitled.
18.2 LIABILITY FOR BENEFITS, CONTRIBUTIONS AND EXPENSES.
(a) The Employer assumes no responsibility or liability
for the payment of benefits under this Plan. Such
benefits shall be paid solely from the Trust Fund in
accordance with the terms and conditions of this
Plan.
(b) The Employer is not legally obligated to make
contributions (other than Deferral Contributions or
Voluntary Contributions withheld from the Pay of an
Active Participant) to the Trust Fund. No action or
suit shall be brought by any Participant or other
person against the Employer to compel contributions.
(c) If benefits are payable to a minor or incompetent or
to a person incapable of handling the disposition of
his or her property, the Plan Administrator may
instruct the Trustee to pay such benefits to the
guardian, legal representative or person having the
care and custody of such person. Such distribution
shall completely discharge the Employer and Trustee
from all liability with respect to such benefit.
(d) The Employer shall pay all expenses of the Trust Fund
to the extent such expenses are not paid out of the
Trust Fund.
18.3 RIGHTS OF EMPLOYEES. Nothing herein contained shall be deemed to
give any Employee the right to be retained in the service of the Employer or to
interfere with the right of the Employer to discharge such Employee at any time,
nor shall it be deemed to give the Employer the right to require the Employee to
remain in its service, nor shall it interfere with the Employee's right to
terminate service at any time.
87
18.4 TAXES AND FEES.
(a) Any taxes that may be levied or assigned upon the
assets of the Trust Fund or upon the income arising
therefrom or that may be incurred by the Trustee in
the performance of its duties shall be paid pursuant
to the terms of Section 14.5.
(b) Payment of the Trustee's fees and of any indebtedness
incurred by the Trustee in the performance of its
duties shall be made pursuant to the terms of
Sections 14.5 and 14.6.
18.5 DIRECT ROLLOVERS.
(a) This Section 18.5 applies to distributions made on or
after January 1, 1993. Notwithstanding any other
provision of the Plan to the contrary that would
limit a distributee's election under this Section
18.5, a distributee may elect, at the time and in the
manner prescribed by the Plan Administrator, to have
all or any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement
Plan specified by the distributee in a direct
rollover.
(b) An Eligible Rollover Distribution is any distribution
of any portion of the balance to the credit of the
distributee that is greater than the amount permitted
by law to be excluded from the direct rollover
option, except that an Eligible Rollover Distribution
does not include: (i) any distribution that is one of
a series of substantially equal periodic payments (to
be made not less frequently than annually) made for
the life (or life expectancy) of the distributee or
the joint lives (or joint life expectancies) of the
distributee and the distributee's designated
beneficiary, or for a specified period of ten years
or more; (ii) any distribution to the extent such
distribution is required under Section 401(a)(9) of
the Code; (iii) the portion of any distribution that
is not includible in gross income (determined without
regard to the exclusion for net unrealized
appreciation with respect to employer securities);
(iv) corrective distributions of Excess Contributions
or Excess Deferrals, and income allocable to such
contributions; and (v) loans treated as distributions
under Section 72(p) of the Code and loans in default
that are deemed distributions.
88
(c) An Eligible Retirement Plan is an individual
retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described
in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code that is
legally permitted to accept the distributee's
Eligible Rollover Distribution. However, in the case
of an Eligible Rollover Distribution to a surviving
spouse, an Eligible Retirement Plan includes only an
individual retirement account or individual
retirement annuity.
(d) A distributee includes an Employee or former
Employee. In addition, the Employee's or former
Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the
alternate payee under a QDRO are distributees with
regard to the interest of the spouse or former
spouse.
(e) A Direct Rollover is a payment by the Plan to the
Eligible Retirement Plan specified by the
distributee.
18.6 ROLLOVER CONTRIBUTIONS. An Eligible Employee may make a direct
rollover from another retirement plan qualified under Section 401 of the Code to
the Plan. In addition, an Eligible Employee who has had distributed his or her
entire interest in a plan that meets the requirements of Section 401(a) of the
Code may, in accordance with procedures approved by the Plan Administrator,
transfer to the Trustee of this Plan that portion of the distribution, which is
received from such other plan and which satisfies the "rollover" requirements of
Section 402(a)(5) of the Code; provided the following conditions are met:
(a) the transfer occurs on or before the 60th day
following receipt of the distribution from such other
plan (unless such distribution was deposited in an
Individual Retirement Account as described in item
(b) below); or
(b) the distribution from such other plan qualifies as a
lump sum distribution within the meaning of Section
402(e)(4)(A) of the Code and the amount transferred
is equal to the distribution received from such other
plan which was rolled over into an Individual
Retirement Account established solely for the purpose
of holding such distribution (and to which no other
contributions were directed by the Participant), plus
earnings accrued during the period such distribution
was held in the Individual Retirement Account.
89
The Plan Administrator may require such information from an
Employee desiring to make a rollover as it deems necessary or desirable to
determine that the proposed rollover will meet the requirements of this
paragraph 18.6. Any amounts rolled over under this Section 18.6 shall be
transferred to the Trust Fund and shall be credited to such Employee's Rollover
Account, except that, with respect to rollovers made before January 1, 1986, the
amounts transferred shall be allocated among the Participant's Accounts based
upon the nature of the amounts rolled over. The Employee shall at all times be
one hundred percent (100%) vested in amounts rolled over under this Section.
18.7 APPLICABLE STATE LAW. This Plan shall be construed in accordance
with and governed by the laws of the state of Connecticut; provided, however,
that any matters relating solely to actions and operations of the Trustee and
the Trust Fund shall be governed by the laws of the Commonwealth of
Pennsylvania. Notwithstanding the foregoing, to the extent that such laws have
been superseded by Federal law, Federal law shall govern.
18.8 SECTION 16 OF THE EXCHANGE ACT. All elections and transactions
under the Plan by persons subject to Section 16 of the Exchange Act involving
Stock or the Stock Account are intended to comply with all applicable exemptive
conditions under Rule 16b-3. The Employer, by action of the Board (or by action
of any person(s) to which the Board may delegate its authority), may establish
and adopt written administrative guidelines, designed to facilitate compliance
with Section 16(b) of the Exchange Act, as it may deem necessary or proper for
the administration and operation of the Plan and the transaction of business
thereunder. To the extent that any provision of the Plan or any act taken with
respect to the Plan is inconsistent with Section 16 of the Exchange Act,
including, without limitation, Rule 16b-3, such provision, guideline or act
shall be deemed null and void, as permitted by applicable law.
18.9 MANNER OF COMMUNICATIONS. In accordance with procedures
established by the Plan Administrator, and to the extent permissible under
applicable law, any elections, designations or other communications from
Participants, and any communications to Participants, with respect to the Plan
may be made electronically rather than in writing.
90
18.10 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.
IN WITNESS WHEREOF, the Company has caused this Plan to be
duly executed by its agents thereunto duly authorized, and the Trustee, in
acceptance hereof and of the Trust hereby created, has caused this Trust to be
signed and sealed by its individual members, all as of the day and year first
above stated.
AETNA SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________
Title: Senior Vice President
_________________________
Aetna Human Resources
91
ATTACHMENT I
ACQUIRED EMPLOYERS - SERVICE CREDIT
CAUTION: (1) THE PROVISIONS BELOW RELATE ONLY TO EMPLOYEES EMPLOYED
ON THE DATE OF ACQUISITION.
(2) THE PROVISIONS BELOW DO NOT APPLY WHERE A SPECIFIC PLAN
PROVISION STATES OTHERWISE.
(3) SERVICE NOT CONSIDERED BY THE ACQUIRED EMPLOYER WILL
NOT BE GIVEN CREDIT.
-----------------------------------------------------------------------------------------------------------------------
EMPLOYER VESTING SERVICE
-----------------------------------------------------------------------------------------------------------------------
Partners National Health Plans ("PNHP") Date of Hire by PNHP or Date of Hire into HMO acquired by PNHP.
-----------------------------------------------------------------------------------------------------------------------
Human Affairs International ("HAI") Date of Hire by HAI (may be prior to Date of Acquisition).
-----------------------------------------------------------------------------------------------------------------------
Aetna Health Plans of New Jersey Date of Hire by Healthways (may be prior to Date of Acquisition).
(previously known as Healthways)
-----------------------------------------------------------------------------------------------------------------------
Bay Pacific ("BP") Date of Hire by BP (may be prior to the Date of Acquisition).
-----------------------------------------------------------------------------------------------------------------------
Freedom Health Care, Inc. ("FHCI") Date of Hire by FHCI (may be prior to the Date of Acquisition).
-----------------------------------------------------------------------------------------------------------------------
92
ATTACHMENT II
PARTICIPATING COMPANIES
------------------------------------------------------------------------------------------------------------------------------------
B. C. D.
A. ORIGINAL DATE TAX IDENTIFICATION END OF
PARTICIPATING COMPANIES OF INCLUSION NUMBER OF EMPLOYER FISCAL YEAR
------------------------------------------------------------------------------------------------------------------------------------
Aetna Services, Inc. 9/1/72 ▇▇-▇▇▇▇▇▇▇ 12/31
------------------------------------------------------------------------------------------------------------------------------------
Aetna Life Insurance Company 9/1/72 ▇▇-▇▇▇▇▇▇▇ 12/31
------------------------------------------------------------------------------------------------------------------------------------
Aeltus Investment Management Inc. 1/26/73 ▇▇-▇▇▇▇▇▇▇ 12/31
------------------------------------------------------------------------------------------------------------------------------------
Aetna Life Insurance and Annuity Company 9/1/72 ▇▇-▇▇▇▇▇▇▇ 12/31
------------------------------------------------------------------------------------------------------------------------------------
Aetna U.S. Healthcare Dental Plan of California, Inc. 1/1/98 ▇▇-▇▇▇▇▇▇▇ 12/31
------------------------------------------------------------------------------------------------------------------------------------
Aetna Healthcare of California, Inc. 1/1/98 ▇▇-▇▇▇▇▇▇▇ 12/31
------------------------------------------------------------------------------------------------------------------------------------
Aetna International, Inc. 1/1/98 ▇▇-▇▇▇▇▇▇▇ 12/31
------------------------------------------------------------------------------------------------------------------------------------
The Plan as restated herein shall be effective as of January 1, 1999 with
respect to the above Employers for whom the Original Date of Inclusion was
January 1, 1999 or earlier. The Plan shall be effective with respect to any
other Employer as of the applicable Original Date of Inclusion.
93
EXHIBIT A
AETNA SERVICES, INC.
QUALIFIED DOMESTIC RELATIONS ORDERS PROCEDURES
Aetna Services, Inc. Incentive Savings Plan
Aetna Services, Inc. (as Plan Administrator) shall pay benefits to the
person or persons named in a Qualified Domestic Relations Order ("QDRO") as
defined in Section 206(d) of ERISA and as set forth in Section 414(p) of the
Internal Revenue Code in the amount and to the extent provided in such order.
Payment of benefits pursuant to a QDRO shall not be considered a violation of
the prohibition against assignment and alienation contained in Section 15.2 of
the Aetna Services, Inc. Incentive Savings Plan (hereinafter referred to as "the
Plan" or "ISP") document.
Upon receipt of a draft or an actual domestic relations order, the ISP
account of the Participant will be frozen as soon as administratively
practicable. This means that the Participant will not be able to obtain any
distributions, withdrawals or loans. If a court-issued domestic relations order
is not received within 90 days, the "freeze" will be revoked. If a court-issued
domestic relations order is received within 90 days, it will be processed in
accordance with these procedures. The 18-month "determination period" referred
to in Section 4 below will not begin until after a court-issued domestic
relations order is actually received; any period during which an ISP account is
frozen prior to receipt of a court-issued domestic relations order will not be
included within that period.
Final orders must be a certified copy, signed by the judge or clerk of
the court. In order to constitute a QDRO, the order must meet all of the
following requirements:
1. GENERAL.
The order must create or recognize the existence of the right
of an Alternate Payee, (as defined in Section 8 of these
procedures), to, or must assign to an Alternate Payee the
right to, receive all or a portion of the benefits payable
under the Plan with respect to a Participant.
The order must constitute a judgment, decree or order
(including approval of a property settlement agreement) that
relates to provisions of child support, alimony payments or
property rights to a spouse, former spouse, child or other
dependent of a Participant, made pursuant to a state domestic
relations law (including a community property law).
94
2. REQUIREMENTS FOR QUALIFIED DOMESTIC RELATIONS ORDERS.
The order must specify the following information:
(a) The name and last known mailing address (if any) of
the Participant.
(b) The name and mailing address of each Alternate Payee
covered by the order. (If the Alternate Payee is a
minor or legally incompetent, specify the name and
address of the Alternate Payee's legal
representative.)
(c) The dollar amount or 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.
(d) The number of payments or periods to which such order
applies. The order must be as specific as possible
with respect to the dollar amount or percentage of
the participant's benefit to which the Alternate
Payee is entitled. The order must specify the exact
date as of which the account should be valued. ISP
accounts are valued daily. If the Alternate Payee is
entitled to earnings on the benefit to which the
Alternate payee is entitled, the order should so
state. Earnings on the Alternate Payee's interest
will be credited for the period during which the
qualified status of the order is being determined, in
accordance with 4(d) below.
(e) The name of each plan to which the order applies.
(f) The order must not require the Plan to provide any
type or form of benefit, or any option, not otherwise
provided under the terms of the Plan, nor require the
Plan to provide increased benefits (determined on the
basis of actuarial value) nor require the payment of
benefits to an Alternate Payee that are required to
be paid to an Alternate Payee under a previous
Qualified Domestic Relations Order.
Notwithstanding the foregoing, the order may require
the payment of benefits to an Alternate Payee while
the Participant is still employed.
If the order specifies a dollar amount to be paid to
the Alternate Payee such amount may not exceed the
Participant's vested balance in the Plan. Amounts
payable to an Alternate Payee shall be distributed
proportionately from the Participant's account unless
specified otherwise in the order.
Please note, the normal form of payment from ISP is
in the form of one lump sum payment.
95
The order must specify one of the following:
- Immediate distribution to the Alternate
Payee; or
- Deferral of distribution to Alternate Payee.
Separate account to be established for
Alternate Payee, with distribution to be
made:
(i) At election of Alternate Payee.
(ii) At the time Participant begins receipt
of benefits.
(iii) At Participant's attainment of normal
retirement age, or
(iv) On a specified date.
If Participant is already receiving a distribution in
installment payments, distribution of specified
portion of each payment may be made to alternate
Payee.
3. PAYMENTS DURING PARTICIPANT'S EMPLOYMENT.
As indicated above, the normal form of payment from the Plan
is in the form of one lump sum payment. The Alternate Payee
may receive payments in accordance with the terms of the Plan
during the Participant's employment.
The Alternate Payee may receive payments in any form available
under the terms of the Plan.
4. PROCEDURES.
Upon receipt of any domestic relations order by the Plan, the
Plan Administrator shall take the following steps:
(a) Upon receipt of an order, the ISP account of the
Participant will be frozen. (This means that the
Participant will not be able to obtain any
distributions, withdrawals or loans.) The Plan
Administrator shall notify the Participant and any
Alternate Payee named in such order of the receipt of
a domestic relations order and the Plan's procedures
for determining whether such order is a QDRO, unless
notified earlier. The notice to the Alternate Payee
shall include a statement that the Alternate Payee is
entitled to designate a representative for receipt of
copies of any notices that are sent to the Alternate
Payee with respect to a domestic relations order. The
notice shall be sent to the Participant and Alternate
Payee at the address specified in the order, or if
none is specified, at the address of the Participant
or Alternate Payee last known to the Plan
Administrator.
(b) Within a reasonable period of time after receipt of
such order, the Plan Administrator shall determine
whether such order is a QDRO, and notify
96
the Participant and each Alternate Payee of such
determination. In making its determination, the Plan
Administrator may seek the advice of legal counsel as
to whether the order meets the requirements of
Sections 1 and 2 of these procedures and may, but
shall not be required to, invite written or oral
statements by the Participant and the Alternate Payee
or their representatives.
(c) Pending the Plan Administrator's determination of
whether a domestic relations order is a QDRO, the
Plan Administrator shall instruct the Trustee to
separately account for the amounts that would be
payable to the Alternate Payee during such period if
the order is determined to be a QDRO (the "Segregated
Amounts").
(d) If, within 18 months from the date on which the first
payment would be required to be made under the QDRO
(the "determination period"), it is determined that
the order is a QDRO, the Segregated Amounts,
including any interest thereon, shall be transferred
to a segregated account for the Alternate Payee until
payment is made to the Alternate Payee pursuant to
the terms of the QDRO.
(e) If the order is determined not to be a QDRO, the Plan
Administrator will send a notice of the determination
to the affected parties. The parties will have the
opportunity to correct and resubmit the order until
the end of the 18-month period, which begins on the
date on which the first payment would have been made
had the order been a QDRO. During this period, the
amount which would have been payable to the Alternate
Payee (if the order had been a QDRO) will be
separately accounted for as required under section
414(p) of the Internal Revenue Code. If a QDRO is not
received, or if no determination is made by the Plan
Administrator by the end of the 18-month period
described above, the Segregated Amounts will remain
in the account(s) of the person(s) who would have
been entitled to such amount if an order had not been
issued.
(f) If, after the expiration of the 18-month period
described above, it is subsequently determined that
an order is a QDRO, the QDRO shall be applied
prospectively only.
(g) If action is taken in accordance with subparagraphs
(d) through (f), the Plan's obligation to the
Participant and each Alternate Payee shall be
discharged to the extent of any payment made pursuant
to the QDRO.
97
5. RELATIONSHIP TO OTHER PLAN PROVISIONS.
To the extent provided in the QDRO, the Plan shall treat the
former spouse of a Participant as the Spouse of the
Participant for purposes of the Plan to the extent, and only
to the extent, such spouse has rights pursuant to Section
206(d) of ERISA and Sections 401 (a)(11) and 417 of the Code
and any current Spouse of the Participant shall not be treated
as a Spouse of the Participant for such purposes.
6. BENEFICIARY STATUS.
Each Alternate Payee shall be treated as a Beneficiary under
the Plan, with all the rights accorded to other Beneficiaries
under the terms thereof and as otherwise provided by law.
7. EFFECTIVE DATE.
The provisions above are effective for QDROs entered on or
after January 1,1985, except that, in the case of a domestic
relations order entered before January 1, 1985, the Plan
Administrator (i) may treat such order as a QDRO even though
such order fails to meet the requirements of Section 2 of the
Plan document and (ii) must treat such order as a QDRO if
benefits are being paid pursuant to such order on January 1,
1985.
8. DEFINITIONS.
"Alternate Payee" means the Participant's spouse, former
spouse, child or other dependent of the Participant who is
recognized as having a right to receive all, or a portion of,
the benefits payable under the Plan with respect to that
Participant. All other capitalized terms shall have the
meaning set forth in Article I of the Aetna Services, Inc.
Incentive Savings Plan.
9. SERVICE.
Orders should be forwarded to the following address:
AETNA SERVICES, INC.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
c/o Corporate Benefits REAG
98
AMENDMENT NO. 1
TO THE
AETNA SERVICES, INC. INCENTIVE SAVINGS PLAN
(AS AMENDED AND RESTATED JANUARY 1, 1999)
Pursuant to Section 12.1 of the Aetna Services, Inc. Incentive Savings
Plan (the "Plan"), the Plan is hereby amended, effective as of the dates listed
below, as follows:
1. Effective July 1, 1999, Section 5.2 is amended by designating the
existing Section 5.2 as 5.2(a) and by inserting a new paragraph (b) of Section
5.2 to read as follows:
(b) Notwithstanding anything to the contrary in (a) above or in
Sections 5.3 and 5.4, upon a Participant's Termination from
Service, any amounts in the Participant's Account that are not
then vested pursuant to Section 7.3 shall be invested as
directed by the Company (without regard to any election made
by the Participant with respect to the vested portion of the
Participant's Account), until the earlier of (i) the date a
forfeiture occurs, or (ii) the date the Participant becomes
re-employed prior to forfeiture of such amounts pursuant to
Section 7.4. Effective July 1, 1999, the Company has directed
that all such non-vested amounts shall be invested in the
Stable Value Option. The Company shall notify the Trustee of
such direction and of any future changes with respect thereto.
2. Effective January 1, 1999, Section 3.6(a)(ii) is amended by changing
clause (II) thereof to read as follows:
(II) five percent (5%) of the Participant's Pay during the Plan Year,
but excluding any Pay prior to the month in which the Participant
initially commenced Deferral Contributions.
IN WITNESS WHEREOF, the Company has caused this Amendment to be executed this
6th day of July, 1999.
AETNA SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_________________________
Title: Senior Vice President
_________________________
Aetna Human Resources
AMENDMENT NO. 2 (1999-2)
TO THE
AETNA SERVICES, INC. INCENTIVE SAVINGS PLAN
Pursuant to Section 12.1 of the Aetna Services, Inc. Incentive Savings Plan (the
"Plan"), the Plan is hereby amended, effective August 6, 1999, as follows:
1. A new Section 1.18A is added as follows:
1.18A "DESIGNATED PRU-CARE EMPLOYEE" - means the following Employees:
(a) an Employee who was actively employed by (i) Prudential on August
5, 1999 and (ii) Aetna Life Insurance Company on August 6, 1999 (or
such later date on which the Employee is transferred upon the
termination of a short term disability status that commenced prior to
August 5, 1999) and was transferred as a result of the acquisition by
Aetna Life Insurance Company of the Prudential healthcare business; and
(b) an Employee who was actively employed by Prudential Health Care
Plan, Inc. (TX) or Prudential Health Care Plan of California, Inc. on
both August 5, 1999 and August 6, 1999.
2. Section 1.45, "PAY", is amended to add the following item to the list of
non-included items:
(15) any payment in lieu of flex credit made to Designated Pru-Care
Employees for 1999.
3. A new Section 1.50A is added as follows:
1.50A "PRUDENTIAL" - means Prudential Insurance Company of America.
4. Section 1.68 is amended to add a new subsection (d) as follows:
(d) For any Designated Pru-Care Employee, notwithstanding Section
1.68(a) above, Vesting Service shall also include any period during
which such Employee was employed by Prudential; provided, however: (i)
no Employee shall be credited with Vesting Service for the same period
of time under both this Section 1.68(d) and under Section 1.68(a), (b)
or (c); (ii) for purposes of this Section, the Company shall rely
exclusively on information transmitted by Prudential in determining
what Vesting Service shall be credited; and (iii) service credited as
Vesting Service under this Section 1.68(d) shall not be considered for
eligibility.
5. Section 2.2 is amended by inserting the following sentence at the end
thereof:
Notwithstanding the preceding sentence, an Eligible Employee who is a
Designated Pru-Care Employee shall not become a Participant until
September 20, 1999; provided, however, that for purposes of Section 414
Compensation, participation shall be deemed to begin on August 6, 1999.
6. Section 3.1 is amended by inserting the following sentence at the end
thereof:
Notwithstanding the preceding sentence, a limit of 13% (in lieu of the
10% limit) shall apply during the 1999 Plan Year with respect to a
Participant who is both a Designated Pru-Care Employee and a Nonhighly
Compensated Employee with respect to 1999, unless such Participant
received compensation (as defined in Section 415(c)(3) of the Code)
from Prudential in 1998 (as reported by Prudential) in excess of
$80,000, in which case the 10% limit shall apply.
7. Section 3.6(a)(i) is amended by inserting the following sentence immediately
prior to the last sentence thereof:
Notwithstanding clause (I) of the preceding sentence, a limit of 136%
(in lieu of the 100% limit) shall apply during the 1999 Plan Year with
respect to a Participant who is a Designated Pru-Care Employee.
8. Section 3.6(a)(ii) is amended by inserting the following at the end thereof:
This Section 3.6(a)(ii) shall not apply to a Designated Pru-Care
Employee with respect to the 1999 Plan Year.
9. Section 3.8 is amended in its entirety to read as follows:
3.8 ROLLOVER CONTRIBUTIONS.
(a) An Active Participant may roll over to the Plan all or any portion
of the property such Active Participant receives from a plan qualified
under Section 401(a) of the Code, provided that: (i) the rollover of
such amounts to the Plan is permitted under the Code; (ii) the rollover
to the Plan is completed within the applicable time periods prescribed
by the Code and subject to the applicable rules of the Code; (iii) no
part of such transfer consists of after-tax contributions; and (iv)
such rollover consists only of cash. The Plan Administrator may require
such information from a Participant desiring to make a rollover as it
deems necessary or desirable to determine that the proposed rollover
will meet
2
the requirements of this Section 3.8. Each Participant's Rollover
Contributions and the earnings thereon will be accounted for
separately.
(b) Notwithstanding (a) above, an Eligible Employee who is a Designated
Pru-Care Employee (i) is not required to be an Active Participant in
order to make a Rollover Contribution, and (ii) may roll over an
outstanding loan balance from the Prudential Employee Savings Plan, as
part of a direct rollover of his or her entire account balance from
such plan, if such rollover occurs within the time prescribed by the
Plan Administrator.
(c) Notwithstanding (a) above, an Eligible Employee who is no longer an
Active Participant may roll over to the Plan an eligible rollover
distribution from the Retirement Plan for Employees of Aetna Services,
Inc. and/or the Pension Plan for Employees of U.S. Healthcare, Inc.
pursuant to this Section 3.8 as if he or she were an Active Participant
at the time of the rollover.
10. Section 3.9 is amended by inserting the following sentence at the end of
paragraph (a) thereof:
In addition, for the 1999 and 2000 Plan Years, an Active Participant
who is a Designated Pru-Care Employee and whose compensation (as
defined in Section 415(c)(3) of the Code) for the prior year, including
such compensation from Prudential (as reported by Prudential), exceeded
$80,000, is not permitted to contribute amounts on an after-tax basis
to the Plan as Voluntary Contributions.
11. Section 5.3 is amended by inserting the following sentence at the end
thereof:
For the 1999 and 2000 Plan Years, the preceding sentence shall also
apply to a Participant who is a Designated Pru-Care Employee and whose
compensation (as defined in Section 415(c)(3) of the Code) for the
prior year, including such compensation from Prudential (as reported by
Prudential), exceeded $80,000.
12. Section 18.6, Rollover Contributions, is deleted in its entirety, as it has
been incorporated into Section 3.8.
13. Attachment 1 is amended in its entirety as set forth on the following page:
3
ATTACHMENT I
ACQUIRED EMPLOYERS - VESTING SERVICE CREDIT
CAUTION: (1) THE PROVISIONS BELOW RELATE ONLY TO EMPLOYEES EMPLOYED ON THE
DATE OF ACQUISITION.
(2) THE PROVISIONS BELOW DO NOT APPLY WHERE A SPECIFIC PLAN PROVISION
STATES OTHERWISE.
(3) SERVICE NOT CONSIDERED BY THE ACQUIRED EMPLOYER WILL NOT BE GIVEN
CREDIT; THE COMPANY SHALL RELY EXCLUSIVELY ON INFORMATION
TRANSMITTED BY THE ACQUIRED EMPLOYER IN DETERMINING WHAT SERVICE
WILL BE CREDITED.
EMPLOYER VESTING SERVICE
--------------------------------------------------------------------------------------------------
Partners National Health Plans Date of Hire by PNHP or Date of Hire into HMO acquired by PNHP.
("PNHP")
Human Affairs International Date of Hire by HAI (may be prior to Date of Acquisition).
("HAI")
Aetna Health Plans of New Jersey Date of Hire by Healthways (may be prior to Date of Acquisition).
(previously known as Healthways)
Bay Pacific ("BP") Date of Hire by BP (may be prior to the Date of Acquisition).
Freedom Health Care, Inc. Date of Hire by FHCI (may be prior to the Date of Acquisition).
("FHCI")
Prudential Health Care Plan, Date of Hire by Prudential Health Care Plan, Inc. (TX) or other
Inc. (TX) Prudential affiliate (may be prior to the Date of Acquisition
8/6/99), but shall not be considered for eligibility.
Prudential Health Care Plan of Date of Hire by Prudential Health Care Plan of California, Inc.
California, Inc. or other Prudential affiliate (may be prior to the Date of
Acquisition 8/6/99), but shall not be considered for eligibility.
4
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed this 6th day of August, 1999.
Aetna Services, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
Aetna Human Resources
5
AMENDMENT NO. 3 (1999-3)
TO THE
AETNA SERVICES, INC. INCENTIVE SAVINGS PLAN
Pursuant to Section 12.1 of the Aetna Services, Inc. Incentive Savings
Plan (the "Plan"), the Plan is hereby amended, effective January 1, 1999, as
follows:
1. Section 1.30 is restated in its entirety as follows:
1.30 "HIGHLY COMPENSATED EMPLOYEE" means, effective for
Plan Years beginning on or after December 31, 1996:
(a) any Employee who, during the "look-back year"
received compensation (as defined in Section
415(c)(3) of the Code) in excess of $80,000 (as
adjusted pursuant to section 415(d) of the Code); and
(b) any Employee who is a 5-percent owner (as
described in Section 17.2(b)(iii) hereof) at any time
during the "look-back year" or the "determination
year." For purposes of this Section 1.30 the
"determination year" shall be the Plan Year and the
"look-back year" shall be the twelve-month period
immediately preceding the "determination year," or,
if the Company elects, the calendar year ending with
or within the determination year. The determination
of who is a "highly compensated employee" will be
made in accordance with Section 414(q) of the Code
and applicable regulations, rulings and procedures
and permitted elections thereunder. The provisions of
the Prior Plan in this definitional section and
related sections of the Plan, relating to family
aggregation are eliminated effective January 1, 1997.
2. Section 2.2 is restated in its entirety as follows:
2.2 OTHER ELIGIBLE EMPLOYEES. Each other Eligible
Employee shall become an Active Participant as soon
as administratively feasible (but in no event more
than 90 days) following the later of the date on
which the Eligible Employee: (i) first performs an
Hour of Service; or (ii) attains age eighteen (18).
3. The third paragraph of subsection (c) of Section 3.5 is
restated in its entirety as follows:
Any amount so distributed shall be adjusted in
accordance with applicable regulations for income or
loss allocable thereto for the Plan Year in which
Excess Contributions were made, but not for the gap
period prior to distribution in the following Plan
Year. The income or loss allocable to Excess
Contributions shall be determined in a reasonable
manner consistent with the allocation of income or
loss to a Participant's Account pursuant to Article
6, or in accordance with the "alternative method" set
forth in Treasury Regulation Section
1.401(k)-1(f)(4). If such Participant's
Account is invested in more than one Investment Fund,
such distribution shall be made pro rata, to the
extent practicable, from all such Investment Funds.
4. Subsection (e)(iv) of Section 3.5 is restated in its entirety
as follows:
(iv) Any amount so distributed shall be adjusted in
accordance with applicable regulations for income or
loss allocable thereto for the Plan Year in which
Excess Deferrals were made, but not for the gap
period prior to distribution in the following Plan
Year. The income or loss allocable to Excess
Deferrals shall be determined in a reasonable manner
consistent with the allocation of income or loss to a
Participant's Account pursuant to Article 6, or in
accordance with the "alternative method" set forth in
Treasury Regulation Section 1.401(k)-1(f)(4). If such
Participant's Account is invested in more than one
Investment Fund, such distribution shall be made pro
rata, to the extent practicable, from all such
Investment Funds.
5. The third paragraph of subsection (e) of Section 3.6 is
restated in its entirety as follows:
Any amount so distributed shall be adjusted in
accordance with applicable regulations for income or
loss allocable thereto for the Plan Year in which
Excess Aggregate Contributions were made, but not for
the gap period prior to distribution in the following
Plan Year. The income or loss allocable to Excess
Aggregate Contributions shall be determined in a
reasonable manner consistent with the allocation of
income or loss to a Participant's Account pursuant to
Article 6, or in accordance with the "alternative
method" set forth in Treasury Regulation Section
1.401(m)-1(e)(3). If an Account from which such a
distribution is to be made is invested in more than
one Investment Fund, such distribution shall be made
pro rata, to the extent practicable, from all such
Investment Funds.
6. The first paragraph of Section 4.3 is restated in its entirety
as follows:
4.3 MAXIMUM ANNUAL ADDITION. All contributions to the
Plan are subject to the limitations of Section 415 of
the Code, which are incorporated herein by reference.
The maximum "Annual Addition" credited to a
Participant's Account during any Limitation Year
shall not exceed the lesser of (a) $30,000, as
Adjusted, or (b) 25% of the Participant's
compensation (as defined below) from the Employer and
all Affiliates during the Limitation Year.
2
7. Subsection (b)(i) of Section 8.1 is restated in its entirety
as follows:
(i) Notwithstanding any other provision of the Plan to
the contrary, (1) Participants who attained age
seventy and one-half (70-1/2) before January 1, 1988
and whose Termination from Service did not occur
before January 1, 1988, shall have distribution of
their vested Account Value made or begun not later
than the April 1st following the calendar year of the
Participant's Termination from Service; provided,
however, that any such Participant may elect to begin
receiving distribution on or after the April 1st
following the calendar year in which the Participant
attained age seventy and one-half (70-1/2) even
though such distribution precedes the Participant's
Termination from Service; and (2) the distribution of
any other Participant's vested Account Value
(regardless of whether such Participant is an
Employee) shall be made or begun not later than the
April 1st following the calendar year in which the
Participant attains age seventy and one-half
(70-1/2). Benefit payments under this subsection
shall be calculated on the basis of the Participant's
life expectancy, or at the option of the Participant,
on the basis of the joint life expectancies of the
Participant and his or her Beneficiary, all in
accordance with the applicable regulations; provided,
however, that, effective October 1, 1994, the
Participant must obtain spousal consent in the manner
described in Section 8.7 in order to elect
distribution over joint life expectancies of the
Participant and a Beneficiary other than his or her
Spouse. Life expectancies of Participants and their
Spouse Beneficiaries shall be recalculated annually;
provided, however, a Participant may elect not to
have his or her Spouse's life expectancy
recalculated. A Participant may elect the time during
the year at which such minimum benefit payments will
be made and, if no election is made, such payments
will be made during the last month in which such
minimum distribution is required to be made or at
such other time determined by the Plan Administrator
in its sole discretion, but no earlier than six
months prior to the last month in which the
distribution is required.
8. Subsection (b) of Section 10.6 is restated in its entirety as
follows:
(b) If the Participant dies before the Commencement Date
the entire interest of the Participant must be
distributed no later than the last day of the
calendar year in which the fifth anniversary of the
Participant's death occurs, except to the extent that
the Beneficiary is the Participant's Spouse and the
exception in subsection (c) below applies.
9. Section 17.3 is restated in its entirety as follows:
17.3 MINIMUM BENEFIT. Each Non-Key Employee shall receive
the minimum benefit required by Section 416(c) of the
Code in each
3
Plan Year in which the Plan is a Top-Heavy Plan under
the Retirement Plan for Employees of Aetna Services,
Inc.; provided, however, that if any Non-Key Employee
is not covered by the Retirement Plan for Employees
of Aetna Services, Inc., such Non-Key Employee shall
receive the minimum contribution required by Section
416(c) of the Code under this Plan.
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed this 1st day of November, 1999.
Aetna Services, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
Aetna Human Resources
4
AMENDMENT NO. 4 (1999-4)
TO THE
AETNA SERVICES, INC. INCENTIVE SAVINGS PLAN
Pursuant to Section 12.1 of the Aetna Services, Inc. Incentive Savings
Plan (the "Plan"), the Plan is hereby amended, effective January 1, 1999 except
as otherwise specified, as follows:
1. Section 2.2 is restated in its entirety, effective August 6,
1999, as follows:
2.2 OTHER ELIGIBLE EMPLOYEES. Each other Eligible
Employee shall become an Active Participant as soon as
administratively feasible (but in no event more than 90 days)
following the later of the date on which the Eligible
Employee: (i) first performs an Hour of Service; or (ii)
attains age eighteen (18). Notwithstanding the preceding
sentence, an Eligible Employee who is a Designated Pru-Care
Employee shall not become a Participant until September 20,
1999; provided, however, that for purposes of Section 414
Compensation, participation shall be deemed to begin on August
6, 1999.
2. Section 3.6(a)(i) is restated in its entirety, effective
August 6, 1999, as follows:
(a) GENERAL.
(i) The Employer may, in the sole discretion of
the Company, make an Incentive Contribution
each payroll period for each Active
Participant who makes Deferral Contributions
for the payroll period and who is employed
for any day during the payroll period. The
total Incentive Contribution made on behalf
of each Active Participant who meets the
requirements of this Section 3.6 shall not
exceed the lesser of (i) one hundred percent
(100%) of the Active Participant's Deferral
Contributions during such month (or payroll
period) and (ii) five percent (5%) of the
Active Participant's Pay during such month
(or payroll period). For an Active
Participant who is a Designated Pru-Care
Employee, a special Incentive Contribution
equal to 136% of the amount obtained by
applying the preceding sentence shall be
made, in lieu of the Incentive Contribution
provided in the preceding sentence, during
the 1999 Plan Year. The Employer will make
any Incentive Contributions to the Plan as
of the end of each month or at such other
intervals as established by the Employer.
3. Section 3.6(a)(ii) is amended by deleting "is either still
employed or still" from the first sentence, beginning on the
fourth line.
4. A new subsection (d) is added to Section 3.8 as follows:
(d) Notwithstanding (a) above, a Designated NYLCare Texas
Employee (i) is not required to be an Active
Participant in order to make a Rollover Contribution,
and (ii) may roll over an outstanding loan balance
from the Employee Progress Sharing Investment Plan
(EPSI), as part of a direct rollover of his or her
entire account balance from such plan, if such
rollover occurs within the time prescribed by the
Plan Administrator. For purposes of this subsection,
"Designated NYLCare Texas Employee" shall mean an
individual who: (A) was an Eligible Employee actively
employed by Aetna Life Insurance Company and assigned
to provide services to NYLCare Health Plans of the
Southwest, Inc. and NYLCare Health Plans of the Gulf
Coast, Inc. ("NYLCare Texas") pursuant to the Revised
Final Judgment And Revised Hold Separate Stipulation
And Order filed by the United States Department of
Justice, dated June 21, 1999, as amended on August 4,
1999, as of the day before the closing of the sale of
NYLCare Texas, or certain assets thereof, to Health
Care Services Corporation; (B) was actively employed
by Health Care Services Corporation or an affiliate
as of said closing date; and (C) had an outstanding
loan from EPSI as of said closing date.
5. Section 7.4 is restated in its entirety as follows:
7.4 OCCURRENCE OF FORFEITURES. Except as more
specifically provided herein, a forfeiture of a Participant's
non-vested interest, if any, shall occur at the end of a Plan
Year during which a Participant shall have incurred a Period
of Severance of 5 years or more. In the event that a
Participant ceases to be employed by the Employer and, before
the end of the period set forth in the preceding sentence,
receives a lump-sum distribution of the vested portion of the
Participant's Account pursuant the terms of the Plan, then the
portion of the Participant's Account that is not vested shall
be treated as a forfeiture as of the last day of the Plan Year
in which the Participant ceased to be employed by the
Employer. If such former Participant later becomes an Employee
and has not, as of the last day of the Plan Year in which the
Participant again becomes an Employee, incurred a Period of
Severance of five years or more, such Participant's Account
will be restored to the dollar value it had on the date of
distribution if the Participant repays to the Plan the full
amount of the distribution within the earlier of (1) five
years after the date in which the
2
Participant again becomes an Employee, or (2) the close of the
first period of five consecutive Breaks in Service commencing
after the distribution.
6. Subsection (b)(i) of Section 8.1 is restated in its entirety
as follows:
(i) Notwithstanding any other provision of the Plan to
the contrary, (1) Participants who attained age
seventy and one-half (70-1/2) before January 1, 1988
and whose Termination from Service did not occur
before January 1, 1988, shall have distribution of
their vested Account Value made or begun not later
than the April 1st following the calendar year of the
Participant's Termination from Service; provided,
however, that any such Participant may elect to begin
receiving distribution on or after the April 1st
following the calendar year in which the Participant
attained age seventy and one-half (70-1/2) even
though such distribution precedes the Participant's
Termination from Service; and (2) the distribution of
any other Participant's vested Account Value
(regardless of whether such Participant is an
Employee) shall be made or begun not later than the
April 1st following the calendar year in which the
Participant attains age seventy and one-half
(70-1/2). Subject to the spousal consent requirements
of Section 8.7, benefit payments under this
subsection shall be calculated on the basis of the
Participant's life expectancy, or at the option of
the Participant, on the basis of the joint life
expectancies of the Participant and his or her
Beneficiary, all in accordance with the applicable
regulations. Life expectancies of Participants and
their Spouse Beneficiaries shall be recalculated
annually; provided, however, a Participant may elect
not to have his or her Spouse's life expectancy
recalculated. A Participant may elect the time during
the year at which such minimum benefit payments will
be made and, if no election is made, such payments
will be made during the last month in which such
minimum distribution is required to be made or at
such other time determined by the Plan Administrator
in its sole discretion, but no earlier than six
months prior to the last month in which the
distribution is required. Notwithstanding any
election, benefit payments for a married Participant
whose Spouse does not give his or her consent in
accordance with Section 8.7 shall be made in the form
of a qualified joint and survivor annuity as
described in Option (i) of Section 8.5(a).
7. Section 8.11 is restated in its entirety as follows:
8.11 SMALL ACCOUNT VALUES; LUMP SUM CASH-OUT. If,
upon a Participant's Termination from Service Date, or on an
annual basis thereafter, or at the time of any distribution
from the Plan, the Participant's vested Account Value is not
in excess of five thousand dollars ($5,000) (or such greater
amount as permitted under the Code), the Plan, to the extent
3
permitted by law and applicable regulations, shall make a
single lump sum payment to the Participant or Beneficiary
entitled to such benefit. In the event the vested Account
Value is not in excess of such dollar limitation at the time
the Plan Administrator initially determines to pay the
benefit, but the benefit is not immediately paid because the
Participant (or Beneficiary) cannot be located or there is an
administrative delay in making payment, distribution shall be
made to the Participant (or Beneficiary) in a lump sum at such
time as the Plan Administrator locates the Participant (or
Beneficiary) or the issue causing the administrative delay is
resolved, provided that the Participant's vested Account Value
at that time is not in excess of the dollar limit. This
Section shall not apply to any Participant who is repaying a
loan by personal check pursuant to Section 9.7(g)(ii), until
the earlier of the date on which the loan is repaid in full or
the date on which the Participant's entire loan balance
becomes due and payable as a result of nonpayment.
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed this 17th day of December, 1999.
Aetna Services, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
Aetna Human Resources
4
AMENDMENT NO. 5 (2000-1)
TO THE
AETNA SERVICES, INC. INCENTIVE SAVINGS PLAN
Pursuant to Section 12.1 of the Aetna Services, Inc. Incentive Savings
Plan (the "Plan"), the Plan is hereby amended, effective February 15, 2000, in
order to terminate all mandatory investment rules with respect to the Stock
Account, as follows:
1. Section 5.3, "Investment in Funds," is amended by deleting the
fourth sentence (beginning with the word "Notwithstanding") and the fifth
sentence (beginning with the words "For the 1999 and 2000 Plan Years") of such
section, relating to the automatic investment in the Stock Account for certain
Participants.
2. Section 5.4, "Change of Investment Fund," is amended by: (a)
replacing the words "Sections 5.2, 5.3 and 5.7" at the end of the first sentence
thereof with the words "Sections 5.2 and 5.3"; and (b) deleting the second
sentence thereof (beginning with the words "The investment of amounts in").
3. Section 5.7, "Stock Accounts - Retirement Planning," is deleted in
its entirety.
4. Section 5.8, "Change of Investment Funds and Notice Requirements,"
is renumbered as Section "5.7".
5. Subsection (e) of Section 9.7, Loans to Participants," is amended by
deleting the last sentence of such subsection (beginning with the word
"Notwithstanding").
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed this 13th day of March, 2000.
Aetna Services, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
Aetna Human Resources
AMENDMENT NO. 6 (2000-2)
TO THE
AETNA SERVICES, INC. INCENTIVE SAVINGS PLAN
Pursuant to Section 12.1 of the Aetna Services, Inc. Incentive Savings
Plan (the "Plan"), the Plan is hereby amended, effective March 12, 2000, as
follows:
1. A new Section 1.12A is added to read as follows:
1.12A "CHANGE IN CONTROL" means the happening of any of the
following:
(i) When any "person" as defined in Section 3(a)(9) of
the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and as used in Sections 13(d) and
14(d) thereof, including a "group" as defined in
Section 13(d) of the Exchange Act but excluding
Parent and any Subsidiary thereof and any employee
benefit plan sponsored or maintained by Parent or any
Subsidiary (including any trustee of such plan acting
as trustee), directly or indirectly, becomes the
"beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act, as amended from time to time), of
securities of Parent representing 20 percent or more
of the combined voting power of Parent's then
outstanding securities;
(ii) When, during any period of 24 consecutive months the
individuals who, at the beginning of such period,
constitute the Board (the "Incumbent Directors")
cease for any reason other than death to constitute
at least a majority thereof, provided that a director
who was not a director at the beginning of such
24-month period shall be deemed to have satisfied
such 24-month requirement (and be an Incumbent
Director) if such director was elected by, or on the
recommendation of or with the approval of, at least
two-thirds of the directors who then qualified as
Incumbent Directors either actually (because they
were directors at the beginning of such 24-month
period) or by prior operation of this subsection
(ii); or
(iii) The occurrence of a transaction requiring stockholder
approval for the acquisition of Parent by an entity
other than Parent or a Subsidiary through purchase of
assets, or by merger, or otherwise.
2. Section 7.3, regarding events resulting in 100% vesting of the
Incentive Contributions Account for Participants after December 31, 1998, is
amended by adding the following new subsection (f):
(f) In the event of a Change in Control, the date a
Participant incurs a "Job Elimination", as defined in the
Aetna Severance and Salary Continuation Benefits Plan,
provided such "Job Elimination" occurs within two years of the
date of such Change in Control.
3. A new Section 12.5 is added to read as follows:
12.5 CHANGE IN CONTROL.
a. Notwithstanding any other provision of this Article
12 or Article 13: (i) the Company shall not amend or terminate
the Plan if the effect would be to amend any Change in Control
provisions until March 10, 2002, at or after which time any
amendment shall be prospective only.
b. In the event of a Change in Control, for one year
following the Change in Control, the Company and all
Participating Companies, and all successors to the Company and
all Participating Companies, shall maintain benefit plans, for
persons employed as of the day immediately preceding the
Change in Control who remain employed subsequent to the Change
in Control, the aggregate value of which, on an annual basis,
is not less than the aggregate value of the Benefit Plans
maintained by the Company and all Participating Companies
prior to the Change in Control. For purposes of this
provision, Benefit Plans shall include the following:
1. Aetna Services, Inc. Incentive Savings Plan
2. Retirement Plan for Employees of Aetna
Services, Inc.
3. The Aetna Services, Inc. Supplemental
Incentive Savings Plan
4. The Aetna Services, Inc. Supplemental
Pension Benefit Plan
5. Medical/Dental Plan (including Retiree
Medical)
6. Managed Short-Term Disability Benefits Plan
7. Managed Long-Term Disability Benefits Plan
8. Group Term Life
9. Severance and Salary Continuation Benefits
Plan
2
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed this 25th day of May, 2000.
Aetna Services, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
Aetna Human Resources
3
AMENDMENT NO. 7 (2000-3)
TO THE
AETNA SERVICES, INC. INCENTIVE SAVINGS PLAN
Pursuant to Section 12.1 of the Aetna Services, Inc. Incentive Savings
Plan (the "Plan"), the Plan is hereby amended, effective December 29, 2000, but
in no event earlier than 90 days after the date on which notice is sent to
Participants of the change made hereby, to eliminate all types of life-based
annuities as available forms of benefit, except for Participants with Money
Purchase Accounts. To accomplish this result, the following changes to specific
provisions are made, provided that the entire Plan shall be deemed amended in
any way necessary or appropriate to effectuate the goal articulated in the first
sentence hereof:
1. Subparagraph (a) of Section 8.1 is restated in its entirety as
follows:
(a) GENERAL. Except as otherwise provided in Article IX
and subsection (b), distribution of a Participant's
vested Account Value shall be made only following the
Participant's Termination from Service, termination
of the Plan or as described in Sections 8.10(a)(iii)
and (iv). Except for a distribution pursuant to
termination of the Plan, which may be delayed in the
discretion of the Plan Administrator until after
receipt of Internal Revenue Service approval,
distributions to a Participant or Beneficiary shall
be made or begun as soon as administratively feasible
following the Valuation Date as of which the
distribution is requested in writing by the
Participant.
Notwithstanding the foregoing, neither a Participant
who has a Money Purchase Account nor a Beneficiary of
such a Participant shall receive a distribution as of
a Valuation Date more than ninety (90) days or less
than thirty (30) days after the Plan Administrator
has provided such Participant the written notice
described in Section 8.6; provided, however, that
such Participant may waive the 30-day period in
accordance with Section 8.6(d). The Valuation Date
referred to in this paragraph shall be deemed the
Annuity Starting Date. In addition, unless a
Participant otherwise elects to defer distribution to
a date no later than permitted under Section 8.1(b),
distribution of a Participant's vested Account Value
shall be made or begun not later than sixty (60) days
after the close of the Plan Year in which the latest
of the following occurs: (i) the Participant's
attainment of Normal Retirement Age, (ii) the 10th
anniversary of the Participant's commencement of
participation in the Plan, or (iii) the Participant's
Termination from Service. A Participant who does not
make a request in writing for commencement of
benefits by such date shall be deemed to have elected
to defer distribution.
2. Subparagraph (b)(i) of Section 8.1 is restated in its entirety
as follows:
(i) Notwithstanding any other provision of the Plan to
the contrary, (1) Participants who attained age
seventy and one-half (70-1/2) before January 1, 1988
and whose Termination from Service did not occur
before January 1, 1988, shall have distribution of
their vested Account Value made or begun not later
than the April 1st following the calendar year of the
Participant's Termination from Service; provided,
however, that any such Participant may elect to begin
receiving distribution on or after the April 1st
following the calendar year in which the Participant
attained age seventy and one-half (70-1/2) even
though such distribution precedes the Participant's
Termination from Service; and (2) the distribution of
any other Participant's vested Account Value
(regardless of whether such Participant is an
Employee) shall be made or begun not later than the
April 1st following the calendar year in which the
Participant attains age seventy and one-half
(70-1/2). Benefit payments under this subsection
shall be calculated on the basis of the Participant's
life expectancy, or at the option of the Participant,
on the basis of the joint life expectancies of the
Participant and his or her Beneficiary, all in
accordance with the applicable regulations. Life
expectancies of Participants and their Spouse
Beneficiaries shall be recalculated annually;
provided, however, a Participant may elect not to
have his or her Spouse's life expectancy
recalculated. A Participant may elect the time during
the year at which such minimum benefit payments will
be made and, if no election is made, such payments
will be made during the last month in which such
minimum distribution is required to be made or at
such other time determined by the Plan Administrator
in its sole discretion, but no earlier than six
months prior to the last month in which the
distribution is required.
3. Subparagraph (a) of Section 8.5 is restated in its entirety as
follows:
(a) Subject to the rules regarding the manner of making
an election set forth in Section 8.6 and the rules of
Section 8.1(b), a Participant may elect to have his
or her vested Account Value distributed in any of the
following forms of distribution:
(i) monthly installments for one hundred eighty,
one hundred twenty or sixty months, with any
unpaid amounts at the Participant's death
paid to the Participant's Beneficiary in a
lump sum;
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(ii) annual installments for fifteen, ten or five
years, with any unpaid amounts at the
Participant's death paid to the
Participant's Beneficiary in a lump sum;
(iii) a cash lump sum;
(iv) a lump sum payment of some or all of the
Participant's Stock Account Value in kind,
by issuance of Stock, with any fractional or
remaining shares of Stock paid in cash;
(v) a combination of the above.
4. Subparagraph (b) of Section 8.5 is amended by restating the
last sentence thereof as follows:
In the event a Participant elects to receive any portion of
his or her vested Account Value in installments, the
installments may, at the Plan Administrator's option, be
provided from a Group Annuity Contract or individual annuity
contract purchased from the Insurer.
5. Section 8.6 is restated in its entirety as follows:
(a) When a Participant requests that distribution begin,
the Plan Administrator shall notify the Participant
in writing of each of the optional forms of
distribution that the Participant may elect. With
respect to a Participant who has a Money Purchase
Account, the notice shall be given within no more
than 90 days and no less than 30 days before the
Annuity Starting Date. The notice to a Participant
with a Money Purchase Account shall also provide, in
nontechnical language, a general explanation stating
that:
(i) the normal form of distribution for a
Participant who has a Money Purchase Account
shall be a single life annuity, if the
Participant is single or a qualified joint
and fifty percent (50%) survivor annuity
with his or her Spouse if the Participant is
married (or, if the Participant's Money
Purchase Account is attributable to a money
purchase plan under which the normal form of
distribution was a qualified joint and one
hundred percent (100%) survivor annuity, a
qualified joint and one hundred percent
(100%) survivor annuity with his or her
Spouse);
(ii) a Participant who has a Money Purchase
Account and who is married on the date of
distribution must obtain spousal consent to
elect a form of benefit other than a
qualified
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joint and survivor annuity with his or her
Spouse as described in subsection (i) above;
(iii) a Participant who has a Money Purchase
Account and who is not married on the date
of distribution must consent in writing to
receive a form of benefit other than a
single life annuity with respect to the
Money Purchase Account; and
(iv) if the Participant files a written request
as provided below, the Participant shall be
furnished with a further written
explanation.
The explanation provided by this paragraph (a) shall
inform a Participant with a Money Purchase Account of
the general effect of such election, the means of
exercising such election and the right to revoke, and
the effect of a revocation of, such election.
If a Participant to whom the general explanation
described above is furnished files a written request
with the Plan Administrator within 60 days after such
general explanation is first mailed or delivered to
the Participant, the Plan Administrator shall furnish
such Participant with a written explanation in
nontechnical language of the terms and conditions of
the joint and fifty percent (50%) survivor annuity
(or joint and one hundred percent (100%) survivor
annuity) with his or her Spouse or life annuity, as
applicable, and the financial effect upon such
Participant of any election of an optional form of
distribution under Section 8.5(a).
(b) A Participant shall elect the form of distribution by
filing a written election with the Plan Administrator
not more than ninety (90) days before the Annuity
Starting Date. Any election under this Section may be
revoked in writing before the end of the election
period referred to above. If a Participant with a
Money Purchase Account makes an election to receive
distribution in a form other than a qualified joint
and survivor annuity with his or her Spouse, any such
election must be consented to by the Participant's
Spouse, if any, as provided herein. No election
pursuant to this Section shall be effective unless
made in writing on forms satisfactory to the Plan
Administrator and filed with the Plan Administrator
before the end of the election period.
(c) If the Plan Administrator is not able to provide
notice as described in this Section 8.6 to a
Participant with a Money Purchase Account at least
thirty (30) days prior to such Participant's Annuity
Starting Date, then, subject to the rules of
subsection (d), such Participant's Annuity Starting
Date shall be delayed until the first day of the
4
month on or next following the date which is thirty
(30) days after the date such Participant receives
the notice. In that event, the benefit payable to the
Participant shall be adjusted to reflect the delayed
commencement of benefits.
(d) Notwithstanding any provision of this Section 8.6,
the Annuity Starting Date of a Participant with a
Money Purchase Account shall not be delayed if the
following requirements are met: (i) the Plan
Administrator provides the Participant with the
notice described in this Section 8.6 at least eight
(8) days before the Annuity Starting Date, (ii) the
Participant is clearly informed of the Participant's
right to consider for at least thirty (30) days
whether to receive payment of benefits in the form
applicable under this Article or an optional form and
whether to defer commencement of benefits, if
applicable, and (iii) no later than the Annuity
Starting Date, the Participant waives the right to
the thirty (30) day minimum election period and
elects a form of benefit.
6. Subparagraph (a) of Section 8.7 is restated in its entirety as
follows:
(a) Where the terms of this Plan require that the consent
of a Participant's Spouse be obtained, the consent of
the Participant's Spouse shall be valid only if it:
(1) is in writing; (2) is witnessed by a notary
public; (3) contains an acknowledgment by such Spouse
of the effect of the consent and the election of the
Spouse; and (4) designates a Beneficiary and the form
of benefits, neither of which may be changed without
the further consent of the Spouse, unless such
initial consent (i) specifically permits designations
by the Participant without any requirement of further
consent of the Spouse or (ii) acknowledges that the
Spouse has the right to limit the consent to the
specific beneficiary or form of benefits and that the
Spouse voluntarily elects to relinquish either or
both of such rights.
7. Section 9.6 is restated in its entirety as follows:
9.6 CONSENT TO WITHDRAWALS. If a Participant with a Money
Purchase Account is married as of the effective date
of a withdrawal, any withdrawal from such Money
Purchase Account shall require the written consent of
the Participant's Spouse in the same manner as
provided for in Section 8.7, except that clause (4)
of Section 8.7(a) shall not apply. A Participant may
not receive a withdrawal from such Money Purchase
Account on a date more than 90 days or less than 30
days after the Plan Administrator has provided the
Participant with a withdrawal form and with the
information set forth in Section 8.6(a), except as
provided in Section 8.6(d).
5
8. Subparagraph (h) of Section 9.7 is restated in its entirety as
follows:
(h) If a Participant with a Money Purchase Account is
married as of the date of the loan, any loan which
could result in a potential reduction of benefits
payable to or with respect to such Participant from
such Money Purchase Account in the event of
non-payment of such loan shall require consent of the
Participant's Spouse in the same manner as provided
for in Section 8.7, except that clause (4) of Section
8.7(a) shall not apply. Consent of the Participant's
Spouse shall also be required in the event of any
renegotiation, extension, renewal or other revisions
of a loan described in the previous sentence.
9. Subparagraph (k) of Section 9.7 is restated in its entirety as
follows:
(k) A Participant may not receive a loan described in
subparagraph (h) above on a date more than 90 days or
less than 30 days after the Plan Administrator has
provided the Participant with a loan application form
and with information explaining the spousal consent
rules set forth in Sections 8.6 and 8.7, except as
provided in Section 8.6(d).
10. Section 10.3 is amended by restating the second sentence
thereof as follows:
Notwithstanding the provisions of Section 1.11, the
Beneficiary of a participant who is married to his or her
Spouse immediately before death shall be the Participant's
Spouse, unless the Participant elects otherwise with the
consent of the Spouse obtained in the same manner provided for
in Section 8.7.
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed this 27th day of September, 2000.
Aetna Services, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
Aetna Human Resources
6
AMENDMENT NO. 8 (2000-4)
TO THE
AETNA SERVICES, INC. INCENTIVE SAVINGS PLAN
Pursuant to Section 12.1 of the Aetna Services, Inc. Incentive Savings
Plan (the "Plan"), the Plan is hereby amended, effective as specified below, as
follows:
1. Effective January 1, 1999, Section 1.35 is restated in its
entirety as follows:
1.35 "INVESTMENT FUND" means the Stock Account and such other
investments under the Group Annuity Contract or in other funds
and accounts as are made available for the investment of the
Participants' Accounts in accordance with the rules of Article
V. Notwithstanding the foregoing, the Investment Fund shall
not include (a) a direct interest in real property, leaseholds
or mineral interests or (b) securities which are not purchased
on a United States Exchange or where evidence of ownership is
held by a custodian outside of the United States.
2. Effective January 1, 2000, Section 1.45, "Pay," is amended by
restating the last sentence of the first paragraph thereof as follows:
Pay shall be determined as if no elective salary reduction had
been made pursuant to Sections 125, 132(f) and 401(k) of the
Code.
3. Effective January 1, 1999, subsection (a)(ii) of Section 3.6,
"Incentive Contributions," is restated in its entirety as follows:
(ii) At the end of each Plan Year, the Employer, in the sole
discretion of the Company, may make an additional Incentive
Contribution to the Incentive Contribution Account of each
Participant who made Deferral Contributions during such Plan
Year, and who is an Employee and has an Account balance on the
last day of the Plan Year, in the amount, if any, necessary to
make the Participant's total Incentive Contributions for such
Plan Year equal to the lesser of (I) one hundred percent
(100%) of the Participant's Deferral Contributions during such
Plan Year and (II) five percent (5%) of the Participant's Pay
during the Plan Year, but excluding any Pay prior to the month
in which the Participant initially commenced Deferral
Contributions. (The 100% and 5% figures referred to in the
preceding sentence shall automatically change to be
consistent with any changes made by the Company to the
corresponding figures in (i) above.) The Incentive
Contribution described in this paragraph (ii) shall only be
made to a Participant whose pay for the prior Plan Year was
$160,000 or less. This Section 3.6(a)(ii) shall not apply to a
Designated Pru-Care Employee with respect to the 1999 Plan
Year.
4. Effective January 1, 1999, the following new Section 5.9 is
added to the Plan:
5.9 CONTRACTUAL INCOME AND SETTLEMENT.
(a) Contractual Income. The Trustee shall credit the
Account with income and maturity proceeds on securities on
contractual payment date net of any taxes or upon actual
receipt as agreed between the Trustee and the Company. To the
extent the Trustee and the Company have agreed to credit
income on contractual payment date, the Trustee may reverse
such accounting entries with back value to the contractual
payment date if the Trustee reasonably believes that it will
not receive such amount.
(b) Contractual Settlement. The Trustee will attend to
the settlement of securities transactions on the basis of
either contractual settlement date accounting or actual
settlement date accounting as agreed between the Company and
the Trustee. To the extent the Company and the Trustee have
agreed to settle certain securities transactions on the basis
of contractual settlement date accounting, the Trustee may
reverse with back value to the contractual settlement date any
entry relating to such contractual settlement where the
related transaction remains unsettled in accordance with
established procedures.
5. Effective January 1, 1999, Section 7.3 is amended to correct a
typographical error by deleting the header and substituting the following new
header:
7.3 INCENTIVE CONTRIBUTIONS ACCOUNT - PARTICIPANTS AFTER
DECEMBER 31, 1998.
6. Effective March 12, 2000, subparagraph (f) of Section 7.3 is
hereby restated as follows:
(f) In the event of a Change in Control, the date a
Participant incurs a "Job Elimination", as defined in the
Aetna Severance and Salary Continuation Benefits Plan,
provided such "Job Elimination" occurs within two years of the
date of such Change in Control, but only with respect to the
Participant's Account as of the date such Job Elimination is
incurred.
7. Effective January 1, 2000, Section 8.4, "Distribution Upon
Disability of Participant," is amended by restating the last sentence thereof as
follows:
A Participant's Termination from Service by reason of
Disability shall be deemed to occur for purposes of this
Section on the date the Plan Administrator makes a
determination that the Participant has incurred a Disability.
The right to elect a distribution pursuant to this Section
shall cease upon the cessation of such Disability.
2
8. Effective January 1, 2000, Section 8.11, "Small Account
Values; Lump Sum Cash-Out," is amended by restating the last sentence thereof as
follows:
This Section shall not apply to any Participant who (A) is
repaying a loan by personal check pursuant to Section
9.7(g)(ii), until the earlier of the date on which the loan is
repaid in full or the date on which the Participant's entire
loan balance becomes due and payable as a result of nonpayment
or (b) has incurred a Termination from Service by reason of
Disability, until such time as such Participant is treated as
having incurred a Termination from Service other than by
reason of Disability.
9. Effective January 1, 1999, Section 10.2, "Determinations of
Values and Cash-Outs," is amended by deleting the last sentence thereof
(beginning with the words "For purposes of this Section").
10. Effective January 1, 1999, the first sentence of Section 11.3,
"Effect on Participants," is restated as follows:
Upon termination in whole or in part of the Plan, the Plan
Administrator shall make an allocation in the manner
prescribed by Section 6.3, after payment of any expenses
properly charged to the Trust Fund and adjustments for capital
gain and loss with respect to the Stable Value Option.
11. Effective January 1, 1999, Section 14.2 is restated in its
entirety as follows:
14.2 TRUSTEE'S RESPONSIBILITIES LIMITED. The Trustee may
rely on the representation of the Plan Administrator that the
Plan and Trust hereby created are qualified within the meaning
of Section 401(a) of the Code, and the Trustee shall have no
obligation to inquire into such continuing qualification.
The Trustee shall not be responsible for
administration of the Plan and shall not be obliged to
determine whether any particular instruction or direction of
the Plan Administrator regarding distribution or any other
matter relating to Plan administration accords with the terms
and conditions of same. Neither shall the Trustee be obliged
to collect contributions due under this Plan, to determine
whether contributions are in accordance therewith, or to
account for allocations to Participants. The investment and
management of the Trust Fund assets shall be determined in
accordance with Article V and Section 14.8. The Trustee shall
not invest, sell, exchange, encumber or otherwise act with
respect to the assets without specific direction of the Plan
Administrator pursuant to the direction of a Participant.
Without specific direction from the Company, the Trustee shall
not borrow or authorize borrowing on behalf of the Trust Fund
or advance cash for any purpose. The Trustee shall not
establish a new Investment Fund, or implement any change with
respect to an
3
Investment Fund without specific direction of the Company. The
Trustee shall incur no liability by complying with any such
direction and shall be under no duty or obligation to review,
evaluate or reevaluate the investments made pursuant to such
directions.
Notwithstanding anything in the Agreement to the
contrary, the Trustee shall not be responsible or liable for
its failure to perform under this Agreement or for any losses
to the Trust Fund, resulting from any event beyond the
reasonable control of the Trustee, its agents or
subcustodians, including but not limited to nationalization,
strikes, expropriation, devaluation, seizure, or similar
action by any governmental authority, de facto or de jure; or
enactment, promulgation, imposition or enforcement by any such
governmental authority of currency restrictions, exchange
controls, levies or other charges affecting the Fund's
property; or the breakdown, failure or malfunction of any
utilities or telecommunications systems (but not including the
Trustee's own internal, proprietary systems); or any order or
regulation of any banking or securities industry including
changes in market rules and market conditions affecting the
execution or settlement of transactions; or acts of war,
terrorism, insurrection or revolution; or acts of God; or any
other similar event. This Section shall survive the
termination of this Agreement.
12. Effective January 1, 1999, Section 14.6 is restated in its
entirety as follows:
14.6 COMPENSATION OF TRUSTEE. The Trustee shall be
compensated from the Trust Fund or, at the direction of the
Company, by the Employer for its services by payment of the
Trustee's fee, the amount of which shall be agreed upon from
time to time between the Company and the Trustee. The Company
acknowledges that, as part of the Trustee's compensation, the
Trustee may earn interest on balances, including without
limitation, disbursement balances and balances arising from
purchase and sales transactions.
If the Trustee advances cash for any purpose, pursuant to
Section 14.2, the Trustee shall be entitled to collect from
the Trust Fund sufficient cash for reimbursement, and if such
cash is insufficient, dispose of the assets of the Trust Fund
to the extent necessary to obtain reimbursement. To the extent
that the Trustee advances funds to the Trust Fund for
disbursements or to effect the settlement of purchase
transactions, the Trustee shall be entitled to collect from
the Trust Fund an amount equal to what would have been earned
on sums advanced (an amount approximating the "federal funds"
interest rate).
13. Effective January 1, 2000, Section 14.8, "Voting or Tender of
Stock," is amended by adding the following subsection (e) and at the end
thereof:
4
(e) To the extent practicable and permitted by applicable
law, other rights with respect to holders of Stock, such as a
dissenter's right with regard to a merger or the right of a
holder of Stock to join in a class action, shall be given to
each Participant as a named fiduciary with respect to Stock in
the Stock Account attributable to the Participant's Account,
so that the Participant, rather than the Trustee, may exercise
discretion with respect to such rights. The Trustee and the
Company may establish appropriate rules, analogous to the
rules in this Section with respect to voting and tender, and
may impose reasonable restrictions on Participants, in order
to effectuate the intent of the preceding sentence.
14. Effective January 1, 2000, the following new Section 14.8A is
added:
14.8A VOTING WITH RESPECT TO INVESTMENT FUNDS OTHER THAN THE STOCK
ACCOUNT. With respect to Investment Funds other than the Stock Account, the
Company shall be responsible for proxy voting and shall direct the Trustee in
writing as to the manner in which to vote the shares of the applicable
Investment Fund; provided, however, that if the Company determines that it has a
conflict of interest with respect to any such vote, then such vote shall be
accomplished by applying the procedures set forth in Section 14.8 as if the
shares of the Investment Fund in any Participant's Account were Stock held in
the Stock Account attributable to such Participant's Account.
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed this 20th day of October, 2000.
Aetna Services, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
Aetna Human Resources
5
AMENDMENT NO. 9 (2000-5)
TO THE
AETNA SERVICES, INC. INCENTIVE SAVINGS PLAN
WHEREAS:
A. As of the close of business on December 13, 2000 (the
"ING Closing Date"), certain companies comprising the
financial services and international businesses of
Aetna Inc. shall cease to be members of the
controlled group of corporations that includes Aetna
U.S. Healthcare, Inc. (such controlled group being
hereafter referred to as "Aetna USHC"). Prior to the
ING Closing Date, the Financial
Services/International Employees, as defined in this
Amendment, were Participants in the Aetna Services,
Inc. Incentive Savings Plan (the "Plan");
B. On the ING Closing Date, the Financial
Services/International Employees will cease to be
employed by Aetna USHC;
C. As more specifically set forth in the ING Employee
Benefits Agreement, as defined in this Amendment,
effective as of the ING Closing Date, the Financial
Services/International Employees shall no longer
participate in, or accrue any further benefits under,
the Plan, or any other benefit program sponsored by
Aetna USHC; and
D. By execution of this Amendment it is the Company's
intention to effectuate the agreements contained in
the ING Employee Benefits Agreement, and to modify
certain other provisions of the Plan.
NOW THEREFORE, pursuant to Section 12.1 of the Plan, the Plan is hereby
amended, effective as specified below, as follows:
1. Effective as of the close of business on December 13, 2000,
Aetna U.S. Healthcare, Inc., a Pennsylvania corporation, shall succeed Aetna
Services, Inc. as sponsor and administrator of the Plan. On or before such date,
Aetna U.S. Healthcare, Inc. shall change its name to Aetna Inc., and all
references in the Plan to Aetna Services, Inc. shall be deemed to refer to Aetna
U.S. Healthcare, Inc. under its new name, Aetna Inc.
2. Effective as of the close of business on December 13, 2000,
Section 1.14 is restated in its entirety as follows:
1.14 "COMPANY" means Aetna Inc., formerly known as Aetna U.S.
Healthcare, Inc., or any successor by merger, consolidation,
purchase or otherwise.
3. Effective as of the close of business on December 13, 2000, a
new Section 1.27A is added to read as follows:
1.27A. "FINANCIAL SERVICES/INTERNATIONAL EMPLOYEE" means each person
who comes within the definition of "AI Employees" contained in
the ING Employee Benefits Agreement.
4. Effective as of the close of business on December 13, 2000,
the following new Section 1.27B is added to read as follows:
1.27B. "FINANCIAL SERVICES/INTERNATIONAL TRANSITION EMPLOYEE" means
an Employee as of the close of business on December 13, 2000,
who is designated and subsequently "employed by the AI
Business" or "hired by AI" pursuant to Article 9 of the ING
Employee Benefits Agreement.
5. Effective as of the close of business on December 13, 2000,
the following new Section 1.33A is added to read as follows:
1.33A. "ING EMPLOYEE BENEFITS AGREEMENT" means the Employee Benefits
Agreement between Aetna Inc. and Aetna U.S. Healthcare, Inc.,
dated as of December 13, 2000.
6. Effective as of the close of business on December 13, 2000,
Section 1.47 is restated in its entirety as follows:
1.47 "PLAN" means the Aetna Inc. Incentive Savings Plan as set
forth herein, including any amendments hereto. This Plan is
intended to be a profit sharing plan with a feature satisfying
the requirements of Section 401(k) of the Code.
7. Effective as of the close of business on December 13, 2000,
Section 1.60 is restated in its entirety as follows:
1.60 "TERMINATION FROM SERVICE DATE" means the date which is the
earlier of (i) the earliest of the date an Employee quits,
retires, dies or is discharged from employment with the
Employer; or (ii) the first anniversary of the first date of a
period in which the Employee remains absent from service (with
or without pay) for any reason other than quit, retirement,
death or discharge, such as vacation, holiday, sickness, leave
of absence or layoff. Notwithstanding the preceding, a
Termination from Service Date shall not occur earlier than the
last day of any (a) Authorized Leave of Absence or
2
(b) period in which the Employee receives periodic salary
continuation benefits not to exceed 13 weeks. See also Section
16.4(b).
8. Effective January 1, 2001, the first sentence of Section 2.2,
"Other Eligible Employees", shall be restated as follows:
Each other Eligible Employee shall become an Active Participant on the
day following the later of the date the Eligible Employee (i) completes
one Year of Vesting Service or (ii) attains age eighteen (18).
9. Effective June 26, 2000, the following new subsection (e) is
added to Section 3.8, "Rollover Contributions":
(e) Notwithstanding (a) above, an Employee who is actively
employed by Integrated Pharmacy Solutions, Inc. on November
29, 2000 (i) is not required to be an Active Participant in
order to make a Rollover Contribution, and (ii) may roll over
an outstanding loan balance from the Integrated Pharmacy
Solutions, Inc. 401(k) Plan, as part of a direct rollover of
his or her entire account balance in the event of an eligible
rollover distribution from such plan, if such rollover occurs
within the time prescribed by the Plan Administrator.
10. Effective as of the close of business on December 13, 2000,
the following new Section 7.3A is added:
7.3A INCENTIVE CONTRIBUTION ACCOUNT - "FINANCIAL
SERVICES/INTERNATIONAL EMPLOYEES". Effective as of the close
of business on December 13, 2000, a Participant who is a
Financial Services/International Employee shall be 100%
vested, but only with respect to the Incentive Contribution
Account as of December 31, 2000.
11. Effective as of the close of business on December 13, 2000,
the following new Section 7.3B is added:
7.3B INCENTIVE CONTRIBUTION ACCOUNT - "FINANCIAL
SERVICES/INTERNATIONAL TRANSITION EMPLOYEES". Effective as of
the date upon which he/she ceases to be employed by any member
of the controlled group of corporations that includes Aetna
Inc., which date shall be after December 13, 2000, a
Participant who is a Financial Services/International
Transition Employee shall be 100% vested, but only if such
Participant immediately becomes "employed by the AI Business"
or "hired by AI", pursuant to Article 9 of the ING Employee
Benefits Agreement, and in any event, only with respect to the
Incentive Contribution Account on such date.
3
12. Effective as of the close of business on December 13, 2000,
the following new Section 9.7A is added:
9.7A LOANS - FINANCIAL SERVICES/INTERNATIONAL EMPLOYEES. Effective
as of the close of business on December 13, 2000,
notwithstanding any provision herein to the contrary, a former
Participant who is a Financial Services/International
Employee, so long as such Participant remains employed by a
member of the controlled group of corporations which includes
ING North America Insurance Corporation and such member has
established a payroll transfer procedure with the Company
which is acceptable to the Plan Administrator, may apply for a
loan. Any such loan must comply with the restrictions set
forth in Section 9.7 above. This Section 9.7A shall cease to
be effective as of December 31, 2001.
13. Effective as of the close of business on December 13, 2000,
Section 11.4 is amended by deleting the last sentence thereof.
14. Effective as of the close of business on December 13, 2000,
Section 11.5 is deleted in its entirety. See new Section 18.6, which
incorporates the rules formerly set forth in Section 11.5.
15. Effective as of the close of business on December 13, 2000,
Section 16.4 is restated in its entirety as follows:
16.4 TERMINATION BY A PARTICIPATING COMPANY; CEASING TO BE AN
AFFILIATE.
(a) Any Participating Company may at any time elect to
terminate its participation under the Plan in the
manner set forth herein subject to any unfunded
liability attributable to its respective Employees.
Termination of the participation of any Participating
Company shall not affect the participation in the
Plan of any other Participating Company nor terminate
the Plan or Trust with respect to such other
Participating Companies and their Employees; provided
that, if the Company shall terminate its
participation in the Plan, then each remaining
Participating Company shall make such arrangements
and take such action as may be necessary to assume
the duties of the Company in providing for the
operation and continued administration of the Plan
and Trust as the same pertains to the remaining
Participating Companies. Any actions under this
subsection (a) shall only be taken after compliance
with all applicable legal requirements.
(b) In the event that a Participating Company ceases to
be an Affiliate, such Participating Company shall be
deemed to have terminated its participation in the
Plan effective immediately, and the Employees of such
Participating Company shall be treated as having
incurred
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a Termination from Service Date effective as of the
date the Participating Company ceased to be an
Affiliate.
16. Effective as of the close of business on December 13, 2000,
the following new Section 18.6 is added:
18.6 MERGER, CONSOLIDATION, OR TRANSFER. In the event of any merger
or consolidation with, or transfer of assets or liabilities
to, any other plan, the benefit that a Participant would
receive upon a termination of the Plan immediately after such
merger, consolidation, or transfer shall be equal to or
greater than the benefit the Participant would have been
entitled to receive immediately before the merger,
consolidation, or transfer if the Plan had then terminated.
The Plan Administrator has the authority to enter into merger
agreements or agreements to directly transfer the assets of
this Plan to other retirement plans described in Section
401(a) of the Code. The Plan Administrator also has the
authority to accept/receive amounts transferred to this Plan
from other retirement plans described in Section 401(a) of the
Code. If it is subsequently determined that any amounts
transferred into this Plan were ineligible to be so
transferred, the Plan Administrator shall direct that any
ineligible amounts, plus earnings attributable thereto, be
distributed from the Plan as soon as administratively
feasible.
17. Effective June 26, 2000, Attachment I is amended in its
entirety and restated as Exhibit A to this Amendment.
18. Effective as of the close of business on December 13, 2000,
Attachment II is amended in its entirety and restated as Exhibit B to this
Amendment.
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed this 13th day of December, 2000.
AETNA INC., AS SUCCESSOR BY MERGER TO
AETNA SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
Aetna Human Resources
5
EXHIBIT A
ATTACHMENT I
ACQUIRED EMPLOYERS - VESTING SERVICE CREDIT
CAUTION: (1) The provisions below relate only to Employees employed on the Date
of Acquisition, or in the case of IPS and BPS, as hereinafter
defined, on June 26, 2000.
(2) The provisions below do not apply where a specific Plan provision
states otherwise.
(3) Service not considered by the Acquired Employer will not be given
credit; the Company shall rely exclusively on information
transmitted by the Acquired Employer in determining what service
will be credited.
EMPLOYER EMPLOYMENT COMMENCEMENT DATE
FOR VESTING SERVICE
---------------------------------------------------------------------------------------------------------
Partners National Health Plans Date of Hire by PNHP or Date of Hire into HMO acquired by PNHP.
("PNHP")
Human Affairs International Date of Hire by HAI (may be prior to Date of Acquisition).
("HAI")
Aetna Health Plans of New Jersey Date of Hire by Healthways (may be prior to Date of Acquisition).
(previously known as Healthways)
Bay Pacific ("BP") Date of Hire by BP (may be prior to the Date of Acquisition).
Freedom Health Care, Inc. Date of Hire by FHCI (may be prior to the Date of Acquisition).
("FHCI")
Prudential Health Care Plan, Date of Hire by Prudential Health Care Plan, Inc. (TX) or other
Inc. (TX) Prudential affiliate (may be prior to the Date of Acquisition 8/6/99),
but shall not be considered for eligibility.
Prudential Health Care Plan of Date of Hire by Prudential Health Care Plan of California, Inc. or
California, Inc. other Prudential affiliate (may be prior to the Date of Acquisition
8/6/99), but shall not be considered for eligibility.
Integrated Pharmacy Solutions, Date of Hire by IPS (may be prior to the Date of Acquisition 8/6/99),
Inc. ("IPS") provided that vesting service shall also include any service with a
Prudential affiliate that was given credit as vesting service under
the Integrated Pharmacy Solutions, Inc. 401(k) Profit Sharing Plan.
BPS Healthcare, Inc. (formerly Date of Hire by BPS (may be prior to the Date of Acquisition 1/13/00).
Benefit Panel Services, Inc.)
("BPS")
EXHIBIT B
ATTACHMENT II
PARTICIPATING COMPANIES
A. B. C. D.
PARTICIPATING COMPANIES ORIGINAL DATE TAX IDENTIFICATION END OF
OF INCLUSION NUMBER OF EMPLOYER FISCAL YEAR
------------------------------------------------------------------------------------------
Aetna Life Insurance Company 9/1/72 ▇▇-▇▇▇▇▇▇▇ 12/31
Aetna U.S. Healthcare Dental Plan of 1/1/98 ▇▇-▇▇▇▇▇▇▇ 12/31
California, Inc.
Aetna Healthcare of California, Inc. 1/1/98 ▇▇-▇▇▇▇▇▇▇ 12/31
The Plan as restated herein shall be effective as of January 1, 1999
with respect to the above Employers for whom the Original Date of
Inclusion was January 1, 1999 or earlier. The Plan shall be effective
with respect to any other Employer as of the applicable Original Date
of Inclusion.
AMENDMENT NO. 10 (2001-1)
TO THE
AETNA INC. INCENTIVE SAVINGS PLAN
Pursuant to Section 12.1 of the Aetna Inc. Incentive Savings Plan (the
"Plan"), the Plan is hereby amended, effective January 31, 2001, as follows:
1. Section 5.9 is renumbered as Section 5.8.
2. The following new Section 18.6A is added:
18.6A TRANSFERS TO ING PLAN.
(a) On a date selected by the Plan Administrator, which date shall
be shortly after December 31, 2001, the Plan Administrator
shall transfer the Account balances of all Financial
Services/International Employees and Financial
Services/International Transition Employees to a qualified
defined contribution plan with Section 401(k) features
maintained by ING North American Insurance Corporation as more
specifically set forth in the ING Employee Benefits Agreement
(the "ING Plan").
(b) On one or more occasions during 2001, the Plan Administrator
is authorized to offer such Financial Services/International
Employees and Financial Services/International Transition
Employees the opportunity to elect to transfer their Account
balances to the ING Plan prior to the transfer described in
subsection (a).
(c) The transfers described in subsections (a) and (b) above arise
from the unique circumstances that are the subject of the ING
Employee Benefits Agreement, and are not intended to establish
a precedent regarding any other Participants in the Plan.
IN WITNESS WHEREOF, the Company has caused this Amendment to be
executed this 12 day of March, 2001.
AETNA INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
Aetna Human Resources
281233 v.02
AMENDMENT NO. 11 (2001-2)
TO THE
AETNA INC. INCENTIVE SAVINGS PLAN
WHEREAS:
A. Effective on or about March 30, 2001, the Integrated
Pharmacy Solutions, Inc. 401(k) Plan (the "IPS Plan")
shall be merged into the Aetna Inc. Incentive Savings
Plan ("the Plan");
B. The IPS Plan offers certain forms of distribution that
are not available under the Plan and that are permitted
by applicable law and the Plan to be eliminated if
certain requirements are met; and
C. Affected participants in the IPS Plan were notified on
March 1, 2001 that such forms of distribution would
cease to be available following the merger.
NOW THEREFORE, pursuant to Section 12.1 of the Plan, the Plan is hereby
amended to provide for the elimination of such forms of distribution and to
modify certain other provisions of the Plan and Trust, effective as specified
below, as follows:
1. Effective on or about March 30, 2001, the Integrated Pharmacy
Solutions, Inc. 401(k) Plan (the "IPS Plan") shall be merged into the Plan;
notwithstanding such merger, all forms of distribution available under the IPS
Plan pursuant to Sections 6.02, 6.04, and any other applicable sections of the
IPS Plan shall remain available with respect to any distribution of assets
transferred from the IPS Plan.
2. Effective June 15, 2001, any forms of distribution available under
the IPS Plan pursuant to paragraph 1 above that are not otherwise available
under the Plan shall be eliminated.
3. Effective January 1, 1999, Section 5.8 is restated in its entirety
as follows:
(a) Contractual Income. In accordance with the Trustee's
standard operating procedure, the Trustee shall credit
the Fund with income and maturity proceeds on securities
on contractual payment date net of any taxes or upon
actual receipt. To the extent the Trustee credits income
on contractual payment date, the Trustee may reverse
such accounting entries to the contractual payment date
if the Trustee reasonably believes that such amount will
not be received.
(b) Contractual Settlement. In accordance with the Trustee's
standard operating procedure, the Trustee will attend to
the settlement of securities transactions on the basis
of either contractual settlement date accounting
or actual settlement date accounting. To the extent the
Trustee settles certain securities transactions on the
basis of contractual settlement date accounting, the
Trustee may reverse to the contractual settlement date
any entry relating to such contractual settlement if the
Trustee reasonably believes that such amount will not be
received.
4. Effective JANUARY 1, 1999, subsection (e) of Section 10.6 is
restated in its entirety as follows:
(e) For purposes of this Section 10.6, life expectancies of
Participants and their Spouse Beneficiaries shall be
recalculated annually, except to the extent that a
Participant has elected otherwise pursuant to Section
8.1(b)(i); and
5. Effective January 1, 1999, Section 13.6 is amended by adding the
following new sentence to the end thereof:
Notwithstanding the foregoing, under no circumstances shall
the Appeal Committee, Plan Administrator, Trustee or Benefit
Finance Committee be liable for any indirect, consequential or
special damages with regard to their respective
responsibilities under this Plan and Trust.
6. Effective January 1, 1999, subsection (g) of Section 14.12 is
restated in its entirety as follows:
(g) To settle investments in any collective investment fund,
including a collective investment fund maintained by the
Trustee or an affiliate, to the extent such investments
are a part of any authorized Investment Fund, and to
appoint agents and sub-trustees. To the extent that any
investment is made in any such collective investment
fund, the terms of the collective trust indenture shall
solely govern the investment duties, responsibilities
and powers of the trustee of such collective investment
fund and, such terms, responsibilities and powers shall
be incorporated herein by reference and shall be a part
of this Agreement. For purposes of valuation, the value
of the interest maintained by the Fund in such
collective investment fund shall be the fair market
value of the collective investment fund units held,
determined in accordance with generally recognized
valuation procedures. The Named Fiduciary expressly
understands and agrees that any such collective
investment fund may provide for the lending of its
securities by the collective investment fund trustee and
that such collective investment fund trustee will
receive compensation for the lending of securities that
is separate from any compensation of the Trustee
hereunder, or any compensation of the collective
investment fund trustee for the management of such fund.
The Trustee is expressly authorized to settle
investments in a collective fund which invests in Mellon
Financial Corporation stock in accordance with the terms
and conditions of the
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Department of Labor Prohibited Transaction Exemption
95-56 (the "Exemption") granted to the Trustee and its
affiliates and to use a cross-trading program in
accordance with the Exemption. The Named Fiduciary
acknowledges receipt of the notice entitled
"Cross-Trading Information", a copy of which is attached
to this Amendment as "Exhibit A."
7. Effective January 1, 1999, Section 14.12 is amended by adding the
following new subsection (o) to the end thereof:
(o) To collect income payable to and distributions due to
the Fund and sign on behalf of the Trust any
declarations, affidavits, certificates of ownership and
other documents required to collect income and principal
payments, including but not limited to, tax
reclamations, rebates and other withheld amounts;
provided that the Trustee shall not be responsible for
the failure to receive payment of (or late payment of)
distributions with respect to securities or other
property of the Fund.
IN WITNESS WHEREOF, the Company and the Trustee have caused this
Amendment to the Plan and Trust be executed this 12th day of March, 2001. In all
other respects, the Plan and Trust shall remain as in effect prior to this
Amendment.
AETNA INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
Aetna Human Resources
TRUSTEE
MELLON BANK, N.A.,
A NATIONAL BANKING ASSOCIATION
By:
-------------------------------------
Its:
-------------------------------------
3
AMENDMENT NO. 12 (2001-3)
TO THE
AETNA INC. INCENTIVE SAVINGS PLAN
Pursuant to Section 12.1 of the Aetna Inc. Incentive Savings Plan (the
"Plan"), the Plan is hereby amended, effective August 6, 2001, except as
otherwise specified below, as follows:
1. Section 1.57 is restated to clarify the definition of "Stock"
based on the terms used in Pennsylvania law, as follows:
1.57 "STOCK" means the common shares of Aetna Inc.
2. Section 3.7 is restated in its entirety as follows:
3.7 TIME AND FORM OF INCENTIVE CONTRIBUTIONS. Incentive
Contributions shall be made for each Plan Year within the time
permitted by law. Incentive Contributions may be made in
Stock or cash at the Company's discretion. With respect to
any Incentive Contributions made in Stock, the number of
shares of Stock to be contributed shall be based on valuation
procedures established by the Plan Administrator from time to
time.
3. Section 5.2 is restated in its entirety as follows:
5.2 INVESTMENT OF ACCOUNTS. Amounts held in a Participant's
Account shall be invested in accordance with the rules of this
Article V. The Plan Administrator shall inform the Trustee of
the manner in which all contributions to and assets of the
Trust Fund are to be allocated between the Investment Funds.
For this purpose, the Plan Administrator shall aggregate all
Participant elections and notify the Trustee of the net
results of such elections.
4. Section 5.3 is restated in its entirety as follows:
5.3 INITIAL INVESTMENT IN FUNDS.
(a) All Incentive Contributions made to a Participant's
Account shall be invested in the Stock Account.
(b) Deferral, Rollover and Voluntary Contributions made
to a Participant's Account shall be invested in one
or more Investment Funds, as elected by the
Participant. An investment election shall be made in
accordance with rules established by the Plan
Administrator. Such election shall remain in effect
for all subsequent periods until revised. The
election shall specify the whole percentages of
future contributions that the Participant elects to
have invested in the available Investment Funds, with
the total not to exceed 100%.
5. Section 5.4 is restated in its entirety as follows:
5.4 CHANGE OF INVESTMENT FUND.
(a) A Participant may elect, in accordance with rules
established by the Plan Administrator, to have all or a
portion of the Incentive Contributions that have been
automatically invested in the Stock Account transferred
from the Stock Account to one or more other Investment
Funds.
(b) A Participant may elect, in accordance with rules
established by the Plan Administrator, to alter the
investment election for amounts held in the
Participant's Account and for future Deferral,
Rollover and Voluntary Contributions. Such election
shall be made in accordance with rules established by
the Plan Administrator and shall remain in effect for
all subsequent periods until revised. The election
shall specify the whole percentages of future
Deferral, Rollover and Voluntary contributions that
the Participant elects to have invested in the
available Investment Funds, with the total not to
exceed 100%.
(c) Any election under subsection (a) or (b) above shall be
processed as soon as practicable after the Plan
Administrator's receipt of such election, but in no
event more than ninety (90) days later.
(d) Notwithstanding the foregoing, the Company may impose
restrictions on the amount or percentage of a
Participant's investment in any Investment Fund that
may be transferred to any other Investment Fund to
the extent that the Company determines, in its sole
discretion, that such restrictions are in the best
interests of Plan Participants generally. The Plan
Administrator shall notify Participants of such
restrictions as promptly as possible following the
time the Company determines such restrictions are
appropriate or necessary. In addition, the Company
has the right to restrict investment changes
regarding the Stock Account in order to comply with
applicable law or internal Company rules regarding
the trading in Stock.
2
(e) Notwithstanding anything to the contrary in
Section 5.3 or this Section 5.4, upon a
Participant's Termination from Service, any
amounts in the Participant's Account that are
not then vested pursuant to Section 7.3 shall
be invested as directed by the Company (without
regard to any election made by the Participant
with respect to the vested portion of the
Participant's Account), until the earlier of
(i) the date a forfeiture occurs, or (ii) the
date the Participant becomes re-employed prior
to forfeiture of such amounts pursuant to
Section 7.4. Effective July 1, 1999, the
Company has directed that all such non-vested
amounts shall be invested in the Stable Value
Option. The Company shall notify the Trustee
of such direction and of any future changes
with respect thereto.
6. Effective January 1, 1999, Subsection (g) of Section 14.12, POWERS OF
TRUSTEE, is amended by restating the last sentence thereof as follows:
The Named Fiduciary acknowledges receipt of the notice entitled
"Cross-Trading Information."
IN WITNESS WHEREOF, the Company has caused this Amendment to be executed
this 1st day of August, 2001.
AETNA INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
Aetna Human Resources
3