<PAGE> 1
As filed with the Securities and Exchange Commission on October 28, 1999
Registration No. 333-______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NETWORK SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 52-1146119
- ------------------------------------------ --------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
505 Huntmar Park Drive
Herndon, VA 20170
- ------------------------------------------ --------------------------------
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
NETWORK SOLUTIONS, INC. 401(k) RETIREMENT PLAN
(Full title of the plan)
<TABLE>
<S> <C>
Copy to:
JAMES P. RUTT JONATHAN W. EMERY
Network Solutions, Inc. Network Solutions, Inc.
505 Huntmar Park Drive 505 Huntmar Park Drive
Herndon, VA 20170 Herndon, VA 20170
(703) 742-0400 (703) 742-0400
- ------------------------------------------ --------------------------------
(Name, address and telephone number,
including area code, of agent for service)
</TABLE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Title of Amount to be Proposed Proposed Amount of
Securities Registered (1) Maximum Offering Maximum Registration
to be Registered Price per Share (2) Aggregate Offering Price (2) Fee (3)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 500,000 shares $91.44 $45,720,000 $12,710.16
par value $.001 per share
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) To be offered pursuant to the Network Solutions, Inc. 401(k) Retirement
Plan (the "Plan"). In addition, pursuant to Rule 416(c ) under the
Securities Act of 1933, this Registration Statement also covers an
indeterminate amount of interests to be offered or sold pursuant to the
Plan.
(2) Computed pursuant to Rule 457(h) solely for the purpose of calculating the
registration fee on the basis of the average of the high and low prices of
the Common Stock as reported on the Nasdaq National Market on October 22,
1999.
(3) The registration fee has been calculated pursuant to Rule 457(h) under the
Securities Act of 1933, as amended (the "1933 Act").
-----------------
<PAGE> 2
The Registration Statement shall become effective upon filing in accordance with
Rule 462 under the 1933 Act.
- --------------------------------------------------------------------------------
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document(s) containing the information specified in Part I of Form S-8
will be sent or given to participating employees as specified by Rule 428(b)(1)
of the Securities Act of 1933, as amended (the "Securities Act"). Such documents
are not being filed with or included in this Form S-8 (by incorporation by
reference or otherwise) in accordance with the rules and regulations of the
Securities and Exchange Commission (the "SEC"). These documents and the
documents incorporated by reference into this Registration Statement pursuant to
Item 3 of Part II of this Registration Statement, taken together, constitute a
prospectus that meets the requirements of Section 10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Incorporated by reference in this Registration Statement are the
following documents heretofore filed by Network Solutions, Inc. (the "Company")
with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"):
(a) The Company's latest annual report filed pursuant to Section
13(a) or 15(d) of the Exchange Act;
(b) All other reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Exchange Act since the end of the fiscal year
covered by the annual report referred to in (a) above; and
(c) The description of the Company's Common Stock, par value $0.001
per share (the "Common Stock"), contained in a registration
statement filed under the Exchange Act, and any amendment or
report filed for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment that indicates that all securities offered hereby have
been sold or that de-registers all such securities then remaining unsold, shall
be deemed to be incorporated by reference in this Registration Statement and to
be part hereof from the dates of filing of such documents.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
The validity of the Common Stock will be passed upon for the Company by
Jonathan W. Emery, its General Counsel.
Item 6. Indemnification of Directors and Officers
The Delaware General Corporation Law (the "Delaware Law") permits a
Delaware corporation to include a provision in its Certificate of Incorporation,
and the Company's Restated Certificate of
<PAGE> 3
Incorporation so provides, eliminating or limiting the personal liability of a
director to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision may not eliminate
or limit the liability of a director (i) for any such breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, or (iii) under Section 174 of the Delaware law which
makes directors personally liable for unlawful dividends or unlawful stock
repurchases or redemptions. Under Delaware law, directors and officers may be
indemnified against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with any threatened, pending or
completed action, suit or proceeding whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation (a
"derivative action")) if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interest of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. In derivative actions,
indemnification extends only to expenses (including attorneys' fees) incurred
in connection with defense or settlement of such an action and, in the event
such person shall have been adjudged to be liable to the corporation, only to
the extent that a proper court shall have determined that such person is fairly
and reasonably entitled to indemnity for such expenses.
In addition to the Company's Restated Certificate of Incorporation, the
Company's Bylaws provide that directors and officers shall be, and at the
discretion of the Board of Directors, non-officer employees may be, indemnified
by the Company to the fullest extent authorized by Delaware law, as it now
exists or may in the future be amended, against all expenses and liabilities
reasonably incurred in connection with service for or on behalf of the Company
and further permits the advancing of expenses incurred in defending claims. The
Bylaws also provide that the right of directors and officers to indemnification
shall be a contract right and shall not be exclusive of any other right now
possessed or hereafter acquired under any Bylaw, agreement, vote of stockholders
or otherwise. The Company has contracted separately with its directors and
officers to indemnify such individuals to the extent permitted under law and in
accordance with the Company's Restated Certificate of Incorporation and Bylaws.
The Company maintains directors' and officers' reimbursement and
liability insurance pursuant to standard form policies. The risks covered by
such policies include certain liabilities under the securities law.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
An Exhibit Index, containing a list of all exhibits filed with this
Registration Statement, is included on page 9. Additionally, the Registrant
hereby undertakes to (i) submit the Network Solutions, Inc. 401(k) Retirement
Plan (the "Plan") and any amendment thereto to the Internal Revenue Service (the
"IRS") in a timely manner and (ii) make all changes required by the IRS in order
to qualify the Plan under Section 401(a) of the Internal Revenue Code of 1986,
as amended.
Item 9. Undertakings
(a) Rule 415 Offering. The Company hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i) include any Prospectus required by Section 10(a)(3) of the
Securities Act, unless the information is contained in periodic reports
filed by the Company pursuant to section 13 or section 15(d) of the
Exchange Act that are incorporated by reference in the Registration
Statement;
<PAGE> 4
(ii) reflect in the Prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement, unless the information is contained in
periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in
the Registration Statement; or
(iii) include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To file a post-effective amendment to remove from registration any
of the securities being registered which remain unsold at the termination of
the offering.
(b) Subsequent Exchange Act Documents. The Company hereby undertakes
that, for purposes of determining any liability under the Securities Act, each
filing of the Company's annual report pursuant to section 13(a) or section 15(d)
of the Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Indemnification. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Herndon, Commonwealth of Virginia, on
October 27, 1999.
NETWORK SOLUTIONS, INC.
By /s/ J. P. RUTT
--------------------------------------
James P. Rutt
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints James P. Rutt and Jonathan W. Emery, and each of
them, his true and lawful attorneys-in-fact and agents, each with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments, including post-effective
amendments, to this Registration Statement, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that each of
said attorneys-in-fact and agents, or their substitute or substitutes, may do or
cause to be done by virtue hereof.
<PAGE> 6
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ J. P. RUTT
- -------------------------- Chief Executive Officer and Director October 27, 1999
James P. Rutt
/s/ MICHAEL A. DANIELS
- -------------------------- Chairman of the Board October 27, 1999
Michael A. Daniels
/s/ ROBERT J. KORZENIEWSKI
- -------------------------- Chief Financial Officer (Principal Financial
Robert J. Korzeniewski Officer) October 27, 1999
/s/ MICHAEL VOSLOW
- -------------------------- Vice President, Finance and Treasurer (Principal
Michael G. Voslow Accounting Officer) October 27, 1999
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C>
/s/ ALAN BARATZ
- ------------------------- Director October 27, 1999
Alan Baratz
/s/ J. R. BEYSTER
- ------------------------- Director October 27, 1999
J. Robert Beyster
/s/ CRAIG FIELDS
- ------------------------- Director October 27, 1999
Craig I. Fields
/s/ JOHN E. GLANCY
- ------------------------- Director October 27, 1999
John E. Glancy
/s/ J. D. HEIPT
- ------------------------- Director October 27, 1999
J. Dennis Heipt
/s/ W. A. ROPER
- ------------------------- Director October 27, 1999
William A. Roper, Jr.
/s/ STRATTON D. SCLAVOS
- ------------------------- Director October 27, 1999
Stratton D. Sclavos
/s/ DONALD N. TELAGE
- ------------------------- Director October 27, 1999
Donald N. Telage
</TABLE>
<PAGE> 8
The Plan. Pursuant to the requirements of the Securities Act of 1933,
the named fiduciary of the Network Solutions, Inc. 401(k) Retirement Plan has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Herndon, Commonwealth of
Virginia, on the 27th day of October, 1999.
NETWORK SOLUTIONS, INC. 401(k)
RETIREMENT PLAN
By: /s/ JAMES M. ULAM
-------------------------------------
James M. Ulam
Authorized Committee Member
(Named Fiduciary)
<PAGE> 9
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
- ----------- ----------------------
<S> <C>
4.1 Second Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3(i) to the Company's Form
S-1 Registration Statement, File No. 333-30705)
4.2 Second Amended and Restated Bylaws of Network Solutions, Inc.
(incorporated by reference to Exhibit 3(ii) to the Company's
Quarterly Report on Form 10-Q for quarterly period ended March
31, 1998)
5 Opinion of Jonathan W. Emery, Network Solutions, Inc.'s General
Counsel (filed herewith)
23.1 Consent of PricewaterhouseCoopers LLP (filed herewith)
23.2 Consent of Jonathan W. Emery, Network Solutions, Inc.'s General
Counsel, is stated within said counsel's opinion at Exhibit No. 5
24 Powers of Attorney (filed herewith - see pages 5-6 of the
Registration Statement)
99(i) Network Solutions, Inc. 401(k) Retirement Plan (filed herewith)
</TABLE>
<PAGE> 1
EXHIBIT 5
October 27, 1999
Network Solutions, Inc.
505 Huntmar Park Drive
Herndon, Virginia 20170
Dear Sirs:
As General Counsel for Network Solutions, Inc., a Delaware corporation (the
"Company"), I have participated in the preparation of the registration statement
on Form S-8 (the "Registration Statement") relating to 500,000 shares of the
Company's common stock, par value $.001 per share (the "Common Stock"), to be
issued pursuant to the Network Solutions, Inc. 401(k) Retirement Plan (the
"Plan").
I am familiar with the written document which comprises the Plan, and in
rendering the opinion expressed below, I have examined and am relying on
originals, or copies certified or otherwise identified to my satisfaction, of
such other corporate records, documents, certificates or other instruments, as
in my judgment are necessary or appropriate as a basis for such opinion. In
rendering such opinion, I have noted that the purchase price of the Common Stock
under the Plan with employee elective deferrals will not be less nor greater
than the fair market value of said shares as of the date of purchase by the
Plan's trustee.
Based on the foregoing, I am of the opinion that authorized but previously
unissued shares of Common Stock which may be issued by the Company for purchase
by the Plan have been duly authorized and when purchased in accordance with the
terms of the Plan will be validly issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion as an exhibit to the Company's
Registration Statement. In giving such consent, I do not thereby admit that I am
within the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ JONATHAN W. EMERY
Jonathan W. Emery
Senior Vice President, General Counsel
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 5, 1999, appearing in the
Annual Report on Form 10-K of Network Solutions, Inc. for the year ended
December 31, 1998.
PricewaterhouseCoopers LLP
McLean, VA
October 22, 1999
<PAGE> 1
June 25, 1999
NETWORK SOLUTIONS, INC.
401(k) RETIREMENT PLAN
<PAGE> 2
NETWORK, SOLUTIONS, INC.
401(k) RETIREMENT PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
- ------- ----
<S> <C>
ARTICLE I NAME, EFFECTIVE DATE AND PURPOSES .......................................1
1.1 Name and Effective Date .................................................1
1.2 Plan Purposes ...........................................................1
ARTICLE II DEFINITIONS .............................................................1
2.1 Accounts ................................................................1
2.2 Additional Company Contribution .........................................2
2.3 Adjustment Factor .......................................................2
2.4 Affiliated Company ......................................................2
2.5 Alternate Payee .........................................................2
2.6 Alternate Payee Account .................................................2
2.7 Anniversary Date ........................................................3
2.8 Applicable Valuation Date ...............................................3
2.9 Annual Addition .........................................................3
2.10 Average Contribution Percentage .........................................3
2.11 Average Deferral Percentage .............................................3
2.12 Beneficiary .............................................................3
2.13 Board of Directors ......................................................3
2.14 Code ....................................................................3
2.15 Committee ...............................................................3
2.16 Company .................................................................3
2.17 Company Contributions ...................................................4
2.18 Company Stock ...........................................................4
2.19 Compensation ............................................................4
2.20 Contribution Percentage .................................................7
2.21 Deferral Percentage .....................................................7
2.22 Disability ..............................................................7
2.23 Distributable Benefit ...................................................7
2.24 Effective Date ..........................................................7
2.25 Elective Deferrals ......................................................7
2.26 Elective Deferral Account ...............................................7
2.27 Eligible Employee .......................................................7
2.28 Employee ................................................................8
2.29 Employment Commencement Date ............................................8
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
2.30 ERISA .....................................................................9
2.31 Excess Aggregate Contributions ............................................9
2.32 Excess Contributions ......................................................9
2.33 Excess Deferrals ..........................................................9
2.34 5% Owner...................................................................9
2.35 Highly Compensated Employee ...............................................9
2.36 Hour of Service ..........................................................10
2.37 Investment Manager .......................................................10
2.38 Limitation Year ..........................................................10
2.39 Matching Contribution Account ............................................10
2.40 Maternity or Paternity Absence ...........................................10
2.41 Nonhighly Compensated Employee ...........................................10
2.42 Normal Retirement ........................................................11
2.43 Normal Retirement Date ...................................................11
2.44 Participant ..............................................................11
2.45 Participation Commencement Date ..........................................11
2.46 Period of Severance ......................................................11
2.47 Plan .....................................................................11
2.48 Plan Administrator .......................................................11
2.49 Plan Year ................................................................11
2.50 Predecessor Plans ........................................................12
2.51 Profit Sharing Account ...................................................12
2.52 Profit Sharing Contributions .............................................12
2.53 Qualified Matching Contribution ..........................................12
2.54 Quarterly Date ...........................................................12
2.55 Required Payment Commencement Date .......................................12
2.56 Rollover Account .........................................................13
2.57 Rollover Contribution ....................................................13
2.58 SAIC Stock ...............................................................13
2.59 SAIC Employee Stock Account ..............................................13
2.60 SAIC Matching Account ....................................................13
2.61 Service ..................................................................13
2.62 Suspended Participant ....................................................14
2.63 Trust and Trust Fund .....................................................14
2.64 Trustee ..................................................................14
2.65 Valuation Date ...........................................................15
2.66 Vested Interest ..........................................................15
2.67 Years of Service .........................................................15
ARTICLE III ELIGIBILITY AND PARTICIPATION ............................................15
3.1 Eligibility to Participate ...............................................15
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
3.2 Commencement of Participation .............................................15
ARTICLE IV COMPANY CONTRIBUTIONS .....................................................16
4.1 Company Matching Contributions ............................................16
4.2 Limitation on Company Matching Contributions ..............................16
4.3 Profit Sharing Contributions ..............................................19
4.4 Form of Company Contributions .............................................19
4.5 Valuation of Company Contributions in the Form of Company Stock ...........19
4.6 Return of Company Contributions ...........................................19
ARTICLE V ELECTIVE DEFERRALS, ROLLOVER CONTRIBUTIONS AND PLAN-TO-PLAN TRANSFERS .....20
5.1 Election ..................................................................20
5.2 Amount Subject to Election ................................................20
5.3 Nondiscrimination Requirement and Distribution of Excess Contributions ....21
5.4 Alternative Testing Groups and Methods ....................................23
5.5 Rollover Contributions From Other Plans ...................................24
5.6 Plan-to-Plan Transfers ....................................................24
ARTICLE VI ACCOUNTING AND ALLOCATION PROCEDURES ......................................26
6.1 Elective Deferral Accounts ................................................26
6.2 Matching Contribution Accounts ............................................26
6.3 Profit Sharing Account ....................................................26
6.4 SAIC Matching Account .....................................................26
6.5 SAIC Employee Stock Account ...............................................26
6.6 Rollover Accounts .........................................................26
6.7 Alternate Payee Account ...................................................26
6.8 Allocation of Company Contributions .......................................26
6.9 Valuation of Accounts .....................................................27
6.10 Allocation of Forfeitures .................................................30
6.11 Company Contributions to Defray Plan Expenses .............................31
6.12 Accounting Procedures .....................................................31
6.13 Suspended Participants ....................................................31
6.14 Accounting for Interest of an Alternate Payee .............................31
ARTICLE VII VESTING IN ACCOUNTS .......................................................31
7.1 No Vested Rights Except as Herein Specified ...............................31
7.2 Participant's Vested Interest -General Rule ...............................32
7.3 Vested Interest- Special Rules ............................................32
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
7.4 Other Accounts ............................................................33
7.5 Alternate Payee Accounts ..................................................33
ARTICLE VIII INVESTMENT OF ACCOUNTS ....................................................33
8.1 Elective Deferral, Profit Sharing and Rollover Accounts ...................33
8.2 Matching Contribution Account .............................................35
8.3 SAIC Accounts .............................................................35
ARTICLE IX PAYMENT OF PLAN BENEFITS, IN-SERVICE WITHDRAWALS AND
DESIGNATION OF BENEFICIARY ................................................38
9.1 Retirement ................................................................38
9.2 Method of Distribution Upon Retirement ....................................38
9.3 Death or Disability Prior to Termination of Employment ....................38
9.4 Death After Termination of Employment .....................................38
9.5 Termination of Employment Prior to Normal Retirement
Date - Deferred Distribution ..............................................39
9.6 Termination of Employment Prior to Normal Retirement
Date - Immediate Distribution .............................................40
9.7 Distributable Benefit; In-Service Withdrawals .............................42
9.8 Designation of Beneficiary ................................................44
9.9 Facility of Payment .......................................................45
9.10 Distribution to Alternate Payees ..........................................45
9.11 Additional Documents ......................................................46
9.12 Direct Rollovers ..........................................................46
ARTICLE X OPERATION AND ADMINISTRATION OF THE PLAN;
VOTING AND OTHER RIGHTS OF COMPANY STOCK ..................................47
10.1 Plan Administration .......................................................47
10.2 Committee Powers ..........................................................47
10.3 Investment Manager ........................................................49
10.4 Periodic Review ...........................................................49
10.5 Committee Procedure .......................................................49
10.6 Compensation of Committee .................................................50
10.7 Resignation and Removal of Members ........................................50
10.8 Appointment of Successors .................................................50
10.9 Records ...................................................................51
10.10 Reliance Upon Documents and Opinions ......................................51
10.11 Requirement of Proof ......................................................51
10.12 Multiple Fiduciary Capacity ...............................................51
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
10.13 Limitation on Liability ...................................................51
10.14 Indemnification ...........................................................52
10.15 Allocation of Fiduciary Responsibility ....................................52
10.16 Prohibition Against Certain Actions .......................................53
10.17 Bonding and Insurance .....................................................54
10.18 Voting and Other Rights of Company Stock and SAIC Stock ...................54
10.19 Plan Expenses .............................................................56
ARTICLE XI MERGER OF COMPANY; MERGER OF PLAN .........................................57
11.1 Effect of Reorganization or Transfer of Assets ............................57
11.2 Merger Restriction ........................................................57
ARTICLE XII PLAN TERMINATION ANDDISCONTINUANCE OF CONTRIBUTIONS .......................57
12.1 Plan Termination ..........................................................57
12.2 Discontinuance of Contributions ...........................................58
12.3 Rights of Participants ....................................................58
12.4 Trustee's Duties on Termination ...........................................58
12.5 Partial Termination .......................................................59
12.6 Failure to Contribute .....................................................59
ARTICLE XIII APPLICATION FOR BENEFITS ..................................................59
13.1 Application for Benefits; Claims Procedure ................................59
13.2 Action on Application .....................................................60
13.3 Appeals ...................................................................60
ARTICLE XIV LIMITATIONS ON ANNUAL ADDITIONS ...........................................61
14.1 Maximum Annual Additions ..................................................61
14.2 Effect of Participation in Other Company Plans ............................61
14.3 Incorporation by Reference of Code Section 415 ............................62
14.4 No Contractual Right to Excess Contributions ..............................62
ARTICLE XV RESTRICTION ON ALIENATION; PARTICIPANT LOANS ..............................62
15.1 General Restrictions Against Alienation ...................................62
15.2 Nonconforming Distributions Under Court Order .............................63
15.3 Authorized Participant Loans ..............................................64
ARTICLE XVI PLAN AMENDMENTS ...........................................................67
16.1 Amendments ................................................................67
16.2 Retroactive Amendments ....................................................67
</TABLE>
v
<PAGE> 7
<TABLE>
<S> <C>
ARTICLE XVII TOP-HEAVY PROVISIONS ....................................................67
17.1 Application .............................................................67
17.2 Criteria ................................................................68
17.3 Definitions .............................................................68
17.4 Adjustment to Fractions .................................................71
17.5 Vesting Requirements ....................................................71
17.6 Minimum Contribution ....................................................71
17.7 Ceiling on Includible Compensation ......................................72
ARTICLE XVIII MISCELLANEOUS ...........................................................72
18.1 No Enlargement of Employee Rights .......................................72
18.2 Mailing of Payments; Lapsed Benefits ....................................72
18.3 Addresses ...............................................................74
18.4 Notices and Communications ..............................................74
18.5 Reporting and Disclosure ................................................74
18.6 Governing Law ...........................................................74
18.7 Interpretation ..........................................................74
18.8 Withholding For Taxes ...................................................74
18.9 Limitation on Company, Committee and Trustee Liability ..................74
18.10 Successors and Assigns ..................................................75
18.11 Counterparts ............................................................75
18.12 No Implied Rights or Obligations ........................................75
18.13 Company, Committee and Trustee Not Responsible for
Adequacy of Trust Fund ..................................................75
</TABLE>
vi
<PAGE> 8
June 25, 1999
NETWORK SOLUTIONS, INC.
401(k) RETIREMENT PLAN
ARTICLE I
NAME, EFFECTIVE DATE AND PURPOSES
1.1 NAME AND EFFECTIVE DATE. Effective July 1, 1999, this Plan
is hereby established and adopted to be known as the Network Solutions, Inc.
401(k) Retirement Plan (the "Plan").
1.2 PLAN PURPOSES. This Plan is designed to constitute a
tax-qualified profit sharing plan for purposes of Code sections 401(a) and
501(a).
ARTICLE II
DEFINITIONS
2.1 ACCOUNTS. The term "Accounts" shall include the following
Accounts that are maintained pursuant to the terms of this Plan:
(a) The Elective Deferral Account opened and maintained for each
Participant under Article VI for purposes of holding and
accounting for Company Contributions representing Elective
Deferrals, Qualified Matching Contributions or Additional
Company Contributions held in the Elective Deferral Accounts
and allocated to Participants.
(b) The Matching Contribution Account opened and maintained for
each Participant under Article VI for purposes of holding
and accounting for Company Contributions which constitute
matching contributions (other than Qualified Matching
Contributions) held in such Accounts and allocated to
Participants.
(c) The Profit Sharing Account opened and maintained for each
Participant under Article VI for purposes of holding and
accounting for Company Contributions which constitute Profit
Sharing Contributions held in such Accounts and allocated to
Participants and amounts contributed under the Predecessor
Plans that were not Elective Deferrals or credited to the
SAIC Matching Account or the SAIC Employee Stock Account.
(d) The SAIC Matching Account (if any) maintained for each
Participant under Article VI in respect of SAIC Stock
transferred from a Predecessor Plan.
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June 25, 1999
(e) The SAIC Employee Stock Account (if any) maintained for each
Participant under Article VI in respect of SAIC Stock
transferred from a Predecessor Plan.
(f) The Rollover Account (if any) maintained for each
Participant who has made a Rollover Contribution pursuant to
the provisions of Article VI.
(g) The Alternate Payee Account (if any) maintained for each
Alternate Payee who is awarded an interest in a
Participant's benefits under the Plan pursuant to the
provisions of Articles VI and XV.
2.2 ADDITIONAL COMPANY CONTRIBUTION. "Additional Company
Contribution" shall mean a contribution by the Company pursuant to Section 5.3
which is intended to qualify as a qualified nonelective contribution pursuant
to Code section 401(k)(3)(D)(ii)(II).
2.3 ADJUSTMENT FACTOR. "Adjustment Factor" shall mean the cost
of living adjustment factor or method prescribed by the Secretary of the
Treasury under Code section 415(d) as applied to the items and in the manner
prescribed by the Secretary of the Treasury.
2.4 AFFILIATED COMPANY. "Affiliated Company" shall mean:
(a) Any corporation that is included in a controlled group of
corporations, within the meaning of Code section 414(b),
that includes the Company;
(b) Any trade or business that is under common control with the
Company within the meaning of Code section 414(c);
(c) Any member of an affiliated service group, within the
meaning of Code section 414(m), that includes the Company;
and
(d) Any entity required to be included under Code section
414(o).
2.5 ALTERNATE PAYEE. "Alternate Payee" shall mean an individual
awarded a portion of a Participant's benefits under the Plan pursuant to a
qualified domestic relations order, as defined in Code section 414(p) and
Section 15.2 of the Plan. Any limitation or condition imposed by the Plan upon
a Participant or his rights hereunder shall, unless expressly indicated
otherwise, also serve to limit or condition the rights of an Alternate Payee of
the Participant's Account(s).
2.6 ALTERNATE PAYEE ACCOUNT. "Alternate Payee Account" shall
mean the account opened up and maintained to reflect the interest of an
Alternate Payee under the Plan.
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June 25, 1999
2.7 ANNIVERSARY DATE. "Anniversary Date" shall mean the last
day of each Plan Year.
2.8 APPLICABLE VALUATION DATE. "Applicable Valuation Date"
shall mean the most recent date on which the Trust Assets were valued in
accordance with the rules of Article VI.
2.9 ANNUAL ADDITION. "Annual Addition" shall mean "annual
addition" as defined in Code section 415(c)(2) and the regulations thereunder.
2.10 AVERAGE CONTRIBUTION PERCENTAGE. "Average Contribution
Percentage" shall mean the average of the Contribution Percentages of the
Participants who are in the Highly Compensated Employee group for the
applicable Plan Year or the Nonhighly Compensated Employee group for the
preceding Plan Year, as applicable. The Company may elect, in accordance with
Code section 401(m)(2)(A), to use the current Plan Year rather than the
preceding Plan Year to determine the Average Contribution Percentage of the
Nonhighly Compensated Employee group.
2.11 AVERAGE DEFERRAL PERCENTAGE. "Average Deferral Percentage"
shall mean the average of the Deferral Percentages of the Participants who are
in the Highly Compensated Employee group for the applicable Plan Year or the
Nonhighly Compensated Employee group for the preceding Plan Year, as
applicable. The Company may elect in accordance with Code section
401(k)(3)(A), to use the current Plan Year rather than such preceding Plan Year
to determine the Average Deferral Percentage of the Nonhighly Compensated
Employee group.
2.12 BENEFICIARY. "Beneficiary" or "Beneficiaries" means the
person or persons designated in Section 9.8 to receive the interest of a
deceased Participant.
2.13 BOARD OF DIRECTORS. "Board of Directors" shall mean the
Board of Directors (or its delegate, to the extent the duties of the Board of
Directors are delegated to such person) of the Company, as it may from time to
time be constituted.
2.14 CODE. "Code" shall mean the Internal Revenue Code of 1986,
as in effect on the Effective Date and as thereafter amended from time to time.
2.15 COMMITTEE. "Committee" shall mean the Committee described
in Article X.
2.16 COMPANY. "Company" shall mean Network Solutions, Inc., or
any successor thereof, if its successor shall adopt this Plan. In addition,
unless the context indicates otherwise, as used in this Plan the term Company
shall also mean and include any Affiliated Company (or similar entity) which
has been granted permission by the
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June 25, 1999
Board of Directors to participate in this Plan. This permission shall be
granted upon such terms and conditions as the Board of Directors deems
appropriate.
2.17 COMPANY CONTRIBUTIONS. "Company Contributions" shall mean
all amounts (whether in cash or other property, including Company Stock) paid
by the Company into the Trust Fund established and maintained under the
provisions of this Plan for the purpose of providing benefits for Participants
and their Beneficiaries, and shall include Elective Deferrals, Qualified
Matching Contributions, Additional Company Contributions, Company matching
contributions, Profit Sharing Contributions and any Company Contributions to
pay Plan expenses.
2.18 COMPANY STOCK. "Company Stock" shall mean the common stock,
par value $.001 per share, of the Company.
2.19 COMPENSATION. "Compensation" shall mean:
(a) An Employee's wages, salaries, fees for professional
services and other amounts received (without regard to
whether or not an amount is paid in cash) for personal
services actually rendered in the course of employment with
the Company to the extent that the amounts are includible in
gross income including, but not limited to, commissions paid
salespersons, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums,
tips, bonuses, fringe benefits, and reimbursements or other
expense allowances under a nonaccountable plan, as described
in Income Tax Regulations, section 1.162-10;
(b) In the case of an Employee who is an Employee within the
meaning of Code section 401(c)(1) and the regulations
thereunder, the Employee's earned income (as described in
section 401(c)(2) and the regulations thereunder);
(c) Amounts described in Code sections 104(a)(3), 105(a) and
105(h), but only to the extent that these amounts are
includible in the gross income of the Employee;
(d) Amounts paid or reimbursed by the Company for moving
expenses incurred by an Employee, but only to the extent
that at the time of payment it is reasonable to believe that
these amounts are not deductible by the Employee under Code
section 217;
(e) The value of a nonqualified stock option granted to an
Employee by the Company, but only to the extent that the
value of the option is includible in the gross income of the
Employee for the taxable year in which granted; and
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June 25, 1999
(f) The amount includible in the gross income of the Employee
upon making the election described in Code section 83(b).
Subsections (a) and (b) above shall include foreign earned income as defined in
Code section 911(b), whether or not excludible from gross income under section
911. Compensation described in subsection (a) above is to be determined without
regard to the exclusions from gross income in Code sections 931 and 933.
Similar principles will be applied with respect to income subject to Code
sections 931 and 933 in determining Compensation described in subsection (b)
above.
For purposes of this subsection 2.19, "Compensation" shall not
include items such as:
(a) Company Contributions to a plan of deferred compensation
that are not includible in the Employee's gross income for
the taxable year in which contributed, or Company
Contributions under a simplified employee pension within the
meaning of Code section 408(k) to the extent such
Contributions are excludible from gross income by the
Employee, or any distributions from a plan of deferred
compensation; however, any amounts received by an Employee
pursuant to an unfunded nonqualified plan of deferred
compensation are permitted to be considered as Compensation
for Code section 415 purposes in the year the amounts are
includible in the gross income of the Employee;
(b) Amounts realized from the exercise of a nonqualified stock
option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(c) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified or incentive
stock option; and
(d) Other amounts that received special tax benefits, such as
premiums for group-term life insurance (but only to the
extent that the premiums are not includible in the gross
income of the Employee) or Company Contributions (whether or
not under a salary reduction agreement) towards the purchase
of an annuity described in Code section 403(b) (whether or
not the amounts are actually excludible from the gross
income of the Employee).
Notwithstanding the foregoing, "Compensation" for purposes of this
subsection 2.19 shall include Elective Deferrals under Code section 402(g)(3)
and amounts
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June 25, 1999
contributed under Code section 125, by the Company at the Employee's election
that are not included in the Employee's gross income.
(a) For purposes of determining who is a Highly Compensated
Employee, "Compensation" shall be "Compensation" as defined
above, but determined without regard to Code sections 125,
402(e)(3) and 402(h)(1)(B) and, in the case of Company
Contributions made pursuant to a salary reduction agreement,
without regard to Code section 403(b).
(b) For purposes of determining the Contribution Percentage and
Deferral Percentage of a Participant, "Compensation" shall
mean the amount determined above.
(c) For purposes of determining the amount that may be deferred
as provided in Article V, "Compensation" shall mean the
Participant's salary or wages (as otherwise would be
reflected in his regular payroll stub before reductions by
amounts the Participant elects to defer pursuant to Article
V) plus one hundred percent (100%) of any cash sums paid to
the Participant (or payable, but for an election by a
Participant pursuant to Article V) and exclusive of (i) any
stock bonus regardless of whether it was fully vested when
awarded and (ii) any taxable assignment allowances paid to
any Employee who is on assignment away from normal work
location(s) and entitled to receive one or more taxable
allowances or adjustments to Compensation based on such
assignment.
(d) In addition to other applicable limitations set forth in the
plan, and notwithstanding any other provision of the plan to
the contrary, the annual compensation of each employee taken
into account under the plan shall not exceed the OBRA '93
annual compensation limit. The OBRA '93 annual compensation
limit is $150,000, as adjusted by the Commissioner for
increases in the cost of living in accordance with section
401(a)(17)(B) of the Internal Revenue Code. The
cost-of-living adjustment in effect for a calendar year
applies to any period, not exceeding 12 months, over which
compensation is determined (determination period) beginning
in such calendar year. If a determination period consists
of fewer than 12 months, the OBRA '93 annual compensation
limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period,
and the denominator of which is 12.
Any reference in this plan to the limitation under section 401(a)(17)
of the Code shall mean the OBRA '93 annual compensation limit set forth in this
provision.
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June 25, 1999
If compensation for any prior determination period is taken into
account in determining an employee's benefits accruing in the current plan
year, the compensation for that prior determination period is subject to the
OBRA '93 annual compensation limit in effect for that prior determination
period.
2.20 CONTRIBUTION PERCENTAGE. "Contribution Percentage" shall
mean the ratio of Company Contributions which constitute matching contributions
under Code section 401(m)(4) to the Participant's Compensation for the Plan
Year.
2.21 DEFERRAL PERCENTAGE. "Deferral Percentage" shall mean the
ratio (expressed as a percentage) of (i) a Participant's Elective Deferrals
(including Excess Deferrals) plus Qualified Matching Contributions and
Additional Company Contributions made on behalf of the Participant for the Plan
Year to (ii) the Participant's Compensation for the Plan Year.
2.22 DISABILITY. "Disability" or "Disabled" shall mean the
status of disability determined conclusively by the Committee based on
certification of disability by the Social Security Administration, effective
upon receipt of such certification by the Committee.
2.23 DISTRIBUTABLE BENEFIT. "Distributable Benefit" shall mean
the Vested Interest of a Participant in this Plan that is determined and
distributable to him in accordance with the provisions of Article IX and which
shall include his Vested Interest in his Elective Deferral Account, Matching
Contribution Account, SAIC Matching Account, SAIC Employee Stock Account,
Profit Sharing Account and Rollover Account, if any. In the case of an
Alternate Payee, the Distributable Benefit shall mean the Vested Interest in
the Alternate Payee Account.
2.24 EFFECTIVE DATE. The Effective Date of this Plan is July 1,
1999.
2.25 ELECTIVE DEFERRALS. "Elective Deferrals" shall mean
contributions paid over by the Company to the Trustee at the election of a
Participant in lieu of cash Compensation pursuant to Section 5.1 and
contributions of a similar nature contributed under a Predecessor Plan and
transferred to the Plan.
2.26 ELECTIVE DEFERRAL ACCOUNT. "Elective Deferral Account"
shall mean the account opened and maintained for each Participant pursuant to
the provisions of Section 6.1.
2.27 ELIGIBLE EMPLOYEE. "Eligible Employee" shall include each
Employee except the following:
(a) Any Employee who is covered by a collective bargaining
agreement to which the Company or an Affiliated Company is a
party, unless the
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June 25, 1999
collective bargaining agreement provides for participation
by bargaining unit employees in this Plan.
(b) Any Employee who is a nonresident alien and who receives no
earned income (within the meaning of Code section 911(d)(2))
from the Company which constitutes income from sources
within the United States (within the meaning of Code section
861(a)(3)), unless the Employee is within a group or
classification of nonresident alien Employees designated as
eligible to participate in the Plan by the Board of
Directors or its delegate.
(c) Any individual who is a leased Employee within the meaning
of Code section 414(n)(2) or who is not classified for the
relevant eligibility period as an employee of the Company or
Affiliated Company under Code section 3121(d) (including,
but not limited to an individual classified by the Company
or Affiliated Company as an independent contractor, a
non-employee consultant or as an employee of an entity other
than the Company or Affiliated Company), even if such
classification is determined to be erroneous, or is
retroactively revised by a governmental agency, by court
order or as a result of litigation, or otherwise. In the
event the classification of an individual who was excluded
from the definition of Eligible Employee under the preceding
sentence is determined to be erroneous or is retroactively
revised, the individual shall nonetheless continue to be
excluded from treatment as an Eligible Employee for all
periods prior to the date the Company determines that its
classification of the individual was erroneous.
2.28 EMPLOYEE. "Employee" shall mean each common-law employee of
the Company or Affiliated Company. For purposes of determining the number or
identity of Highly Compensated Employees and for purposes of the requirements
of Code sections 414(n)(3)(A) and (B), the term "Employee" shall include any
person who is a leased employee within the meaning of Code section 414(n)(2)
unless (i) such leased employees constitute less than 20% of the Company's
nonhighly compensated workforce within the meaning of Code section
414(n)(5)(C)(ii) and (ii) such person is covered by a plan meeting the
requirements of Code section 414(n)(5)(B).
2.29 EMPLOYMENT COMMENCEMENT DATE. "Employment Commencement
Date" shall mean each of the following:
(a) The date on which an Employee performs an Hour of Service as
an Employee of the Company or an Affiliated Company.
(b) In the case of an Employee whose employment is terminated
and who is subsequently reemployed by the Company or an
Affiliated Company, the
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June 25, 1999
term "Employment Commencement Date" shall also mean the
first day following the termination of employment on which
the Employee again performs an Hour of Service as an
Employee of the Company or an Affiliated Company.
Unless the Board of Directors or its delegate shall expressly
determine otherwise, an Employee shall not, for the purposes of determining his
Employment Commencement Date, be deemed to have commenced employment with an
Affiliated Company prior to the date on which such entity became an Affiliated
Company.
2.30 ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
2.31 EXCESS AGGREGATE CONTRIBUTIONS. "Excess Aggregate
Contributions" shall mean, with respect to any Plan Year, the excess of the
aggregate amount of Company Contributions which constitute matching
contributions as provided in Code section 401(m)(4) made on behalf of Highly
Compensated Employees for such Plan Year over the maximum amount of such
contributions permitted under the limitations of Code section 401(m)(2)(A).
2.32 EXCESS CONTRIBUTIONS. "Excess Contributions" shall mean the
aggregate amount of contributions with respect to a Plan Year which are taken
into account in computing the Deferral Percentages of Highly Compensated
Employees and which are actually made on behalf of such Employees in excess of
the maximum amount of such contributions permitted under the nondiscrimination
test set forth in Article V of the Plan.
2.33 EXCESS DEFERRALS. "Excess Deferrals" shall mean the
contributions made on behalf of a Participant under any qualified cash or
deferred arrangements described in Code section 401(k), 408(k) or 403(b) for a
calendar year which exceed the limitation set forth in Article V of the Plan
and which are includible in the Participant's gross income under Code section
402(g).
2.34 5% OWNER. "5% Owner" shall mean an individual who owns (or
is considered as owning, within the meaning of Code section 318) more than 5%
of the outstanding stock of the Company or stock possessing more than 5% of the
total combined voting power of all stock of the Company.
2.35 HIGHLY COMPENSATED EMPLOYEE. "Highly Compensated Employee"
shall mean any Employee who:
(a) was at any time a 5% Owner during the Plan Year or the
preceding Plan Year, or
(b) for the preceding Plan Year
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June 25, 1999
(i) had Compensation in excess of $80,000 adjusted by the
Adjustment Factor; and
(ii) if the Company elects the application of this clause
for such preceding Plan Year, was in the top-paid group
of Employees for such preceding Plan Year.
For purposes of this Section 2.35, the "top paid group" shall be the group
consisting of the top 20 percent of the Employees when ranked on the basis of
Compensation paid during such Plan Year.
Highly Compensated Employees shall also include any former Employee
who was an active Highly Compensated Employee for either (i) such Employee's
year in which he separated from service, or (ii) any determination year ending
on or after the Employee's fifty-fifth birthday.
2.36 HOUR OF SERVICE. "Hour of Service" means any hour for which
an Employee is paid or is entitled to be paid for performance of duties for the
Company or entitled to be paid by the Company for a period of time when no
duties are performed due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty, or leave of absence during the
Plan Year, determined in accordance with Department of Labor regulation Section
2530.200b-2(a)(1) (as the same may be amended from time to time).
2.37 INVESTMENT MANAGER. "Investment Manager" shall mean the one
or more Investment Managers, if any, appointed pursuant to Section 10.3.
2.38 LIMITATION YEAR. "Limitation Year" shall mean the calendar
year.
2.39 MATCHING CONTRIBUTION ACCOUNT. "Matching Contribution
Account" shall mean the account opened up and maintained for a Participant who
receives Company matching contributions as provided for in Article VI.
2.40 MATERNITY OR PATERNITY ABSENCE. "Maternity or Paternity
Absence" shall mean an absence from work for any period by reason of (a) an
Employee's pregnancy, (b) the birth of a child of such Employee, (c) the
placement of a child with the Employee in connection with the adoption of such
child by such Employee, or (d) the caring for a natural or adopted child for a
period beginning immediately following such birth or placement.
2.41 NONHIGHLY COMPENSATED EMPLOYEE. "Nonhighly Compensated
Employee" shall mean an Employee who is not a Highly Compensated Employee.
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June 25, 1999
2.42 NORMAL RETIREMENT. "Normal Retirement" shall mean a
Participant's termination of employment with the Company as a result of such
Participant attaining his Normal Retirement Date.
2.43 NORMAL RETIREMENT DATE. "Normal Retirement Date" shall be
the day on which a Participant attains age 59-1/2.
2.44 PARTICIPANT. "Participant" shall mean any Eligible Employee
who has satisfied the eligibility requirements set forth in Section 3.1 and has
been enrolled in this Plan in accordance with Section 3.1 hereof.
2.45 PARTICIPATION COMMENCEMENT DATE. "Participation
Commencement Date" shall mean the day on which an Employee's participation in
this Plan commences in accordance with the provisions of Article III.
2.46 PERIOD OF SEVERANCE. "Period of Severance" means a period
commencing on the date as of which an individual's employment with the Company
is severed and ending with the day before the first day for which he is
credited with an Hour of Service on account of recommencement of his employment
with the Company, so long as such period is at least one year. However, a
Period of Severance shall not be deemed to have commenced (and an individual's
employment shall not be deemed to have been severed) on account of an
authorized vacation or approved leave of no more than two years' duration for
sickness or disability or in furtherance of the Employee's education or
employment skills, or for family or medical reasons, until the end of such
vacation or leave, and no Period of Severance shall be deemed to have occurred
by reason of any period of military service if such Employee returns to active
employment with the Company within the period during which his right to
re-employment is protected by law. For purposes of determining whether a
Period of Severance has occurred, periods of absence of two years or less that
are attributable to a Maternity or Paternity Absence shall not be taken into
account.
Notwithstanding the foregoing, any Employee whose employment with the
Company is severed by a transfer to an Affiliated Company, shall not be deemed
to commence a Period of Severance for any provision of this Plan.
2.47 PLAN. "Plan" shall mean the Network Solutions, Inc. 401(k)
Retirement Plan herein set forth, and as it may be amended from time to time.
2.48 PLAN ADMINISTRATOR. "Plan Administrator" shall mean the
administrator of the Plan, within the meaning of Section 3(16)(A) of ERISA.
The Plan Administrator shall be Network Solutions, Inc.
2.49 PLAN YEAR. "Plan Year" shall mean the calendar year, except
that the first Plan Year shall commence on the Effective Date.
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June 25, 1999
2.50 PREDECESSOR PLANS. "Predecessor Plans" means the Science
Applications International Corporation Profit Sharing Retirement Plan, the
Science Applications International Corporation Employee Stock Retirement Plan,
and the Science Applications International Corporation Cash or Deferred
Arrangement.
2.51 PROFIT SHARING ACCOUNT. "Profit Sharing Account" shall mean
the account opened up and maintained for each Participant pursuant to Article
VI to which are credited Company contributions made pursuant to Section 4.3 and
certain amounts transferred to the Plan from the Predecessor Plans which are
not credited to the Participant's Elective Deferral Account, SAIC Matching
Account or SAIC Employee Stock Account.
2.52 PROFIT SHARING CONTRIBUTIONS. "Profit Sharing
Contributions" shall mean the Company Contributions made pursuant to Section
4.3.
2.53 QUALIFIED MATCHING CONTRIBUTION. "Qualified Matching
Contribution" shall mean a contribution made on account of a Participant's
Elective Deferrals pursuant to Article IV and which are intended to qualify as
matching contributions pursuant to Code section 401(k)(3)(D)(ii)(I) and which
are designated by the Committee to be included in the Deferral Percentage.
2.54 QUARTERLY DATE "Quarterly Date" shall mean each of the
dates established in October 1999 and January, April and July 2000 as of which
a Participant may direct the sale of SAIC Stock held in the Participant's SAIC
Stock Account.
2.55 REQUIRED PAYMENT COMMENCEMENT DATE. "Required Payment
Commencement Date" in the case of a Participant other than a 5% Owner, shall be
the sixtieth day after the close of the latest Plan Year in which occurs:
(a) The Participant's Normal Retirement Date;
(b) The tenth anniversary of the date the Participant commenced
participation in the Plan; or
(c) The Participant's termination of employment with the Company
or an Affiliated Company, unless a Participant elects,
pursuant to procedures established by the Committee (which
procedures may provide that no affirmative election is
treated as an election to defer distribution), to defer
distribution until no later than the quarter following the
quarter the Participant attains age 70-1/2.
In the case of a 5% Owner, the Required Payment Commencement Date
shall be the earlier of the date specified in the preceding sentence and April
1 following the
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June 25, 1999
calendar year in which the Participant attains age 70-1/2, whether or not the
Participant has retired. If a Participant becomes a 5% Owner after attaining
age 70-1/2, the Required Payment Commencement Date shall not be later than the
last day of the calendar year in which the Participant becomes a 5% Owner.
2.56 ROLLOVER ACCOUNT. "Rollover Account" shall mean the account
opened up and maintained for an Employee making a Rollover Contribution as
provided for in Article VI.
2.57 ROLLOVER CONTRIBUTION. "Rollover Contribution" shall mean a
contribution to the Plan by an Eligible Employee of amounts which qualify for
exclusion from gross income pursuant to Code section 402(c), subject to the
timing, maximum amount limitations, and other requirements of Code section
402(c).
2.58 SAIC STOCK. "SAIC Stock" shall mean SAIC Class A Common
Stock par value $.01 per share.
2.59 SAIC EMPLOYEE STOCK ACCOUNT. "SAIC Employee Stock Account"
shall mean the account opened up and maintained for each Participant pursuant
to Article VI for the purpose of holding SAIC Stock transferred from the
Science Applications International Corporation Employee Stock Retirement Plan
and held under the Plan in SAIC Stock for the limited period and subject to the
conditions set forth in the Plan.
2.60 SAIC MATCHING ACCOUNT. "SAIC Matching Account" shall mean
the account opened up and maintained for each Participant pursuant to Article
VI for the purpose of holding SAIC Stock transferred from the Science
Applications International Corporation Cash or Deferred Arrangement and held
under the Plan in SAIC Stock for the limited period and subject to the
conditions set forth in the Plan. Together with the SAIC Employee Stock
Account, the "SAIC Stock Account".
2.61 SERVICE. "Service" shall mean the period of time elapsed
from the date an Employee first performs an Hour of Service (or first performs
an Hour of Service following a Period of Severance) and continuing until the
earlier of (i) the date the Employee retires, is dismissed, resigns or dies and
(ii) the date which is 12 months after the date the Employee is first absent
from employment for any reason other than a reason specified in clause (i);
provided that the Service of an Employee who severs from service in accordance
with clause (i) or (ii) above, and who, within 12 months of the date described
with such section, performs an Hour of Service, shall include the period of
time from the date of such severance from service to the date he performs such
Hour of Service.
For purposes of determining an Employee's Service, (i) an Employee's
employment with the Company shall be deemed to have been severed on the date of
his resignation, retirement, death or discharge (whether with or without
cause), as applicable
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June 25, 1999
and (ii) the employment with the Company of an Employee who has not resigned,
retired, died or been discharged (whether with or without cause) shall be
deemed to have been severed on account of an authorized vacation or leave
referred to in the second sentence of the definition of Period of Severance
when such absence exceeds two years in length. The period of an Employee's
Service shall be determined solely by reference to the Employer's records. In
determining the period of a Employee's Service hereunder, a full month shall be
deemed to have 30 days and a full year shall be deemed to have 12 months or 365
days. Subject to the following paragraph, an Employee's Service shall be the
sum of all periods (years and months, the latter expressed as fractions of a
year) of his employment with the Company.
An Employee whose interest in the Trust Fund derived from
contributions by the Employer is not vested to any extent as of the first day
of a Period of Severance which is equal to or exceeds in length the greater of
(i) five years or (ii) the period of Service with which such Employee was
credited on the first day of such Period of Severance shall forfeit all of the
Service with which he was credited on the first day of such Period of
Severance. An Employee shall not forfeit any Service as a result of a Period
of Severance commencing on or after the Effective Date to which the preceding
sentence does not apply. Notwithstanding the foregoing provisions of this
paragraph, in the case of an Employee who has a Period of Severance of five
years or more, Years of Service after such Period of Severance shall not be
taken into account for purposes of determining his Vested Interest in Company
Contributions made prior to such Period of Severance.
Notwithstanding any provision of this Plan to the contrary, Service
credit with respect to qualified military service will be provided in
accordance with Section 414(u) of the Code.
2.62 SUSPENDED PARTICIPANT. "Suspended Participant" shall mean
any Participant who remains an Employee but who ceases to be eligible to
participate in this Plan by virtue of ceasing to be an Eligible Employee.
Status as a Suspended Participant shall commence as of the date such
Participant ceases to be an Eligible Employee. A Suspended Participant shall
not be deemed a Participant except for those purposes specified in this Plan or
as required by law.
2.63 TRUST AND TRUST FUND. "Trust" or "Trust Fund" shall mean
the one or more trusts created for funding purposes under the Plan. The Trust
Fund may be commingled for investment purposes with the assets of other
qualified retirement plans maintained by the Company by investing through a
master trust fund operated pursuant to a master trust agreement between the
Company and the Trustee.
2.64 TRUSTEE. "Trustee" shall mean Vanguard Fiduciary Trust
Company or any successor or other corporation acting as a trustee of the Trust
Fund.
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June 25, 1999
2.65 VALUATION DATE. "Valuation Date" shall mean the date as of
which the Trustee shall determine the value of the assets in the Trust Fund and
the value of each Account, which shall be the last day of each Plan Year and
such other dates as may be determined in rules prescribed by the Committee,
which rules may prescribe different dates for the various investment funds
comprising the Trust Fund.
2.66 VESTED INTEREST. "Vested Interest" shall mean the interest
of a Participant in his Matching Contribution Account, Profit Sharing Account,
SAIC Matching Account and SAIC Employee Stock Account which has become vested
in accordance with the rules of Article VII and the entire balance of his
Elective Deferral Account and Rollover Account, if any. The Vested Interest of
an Alternate Payee in his Alternate Payee Account shall be determined as set
forth in Article VII.
2.67 YEARS OF SERVICE. "Years of Service" shall mean the number
of whole and partial years determined by dividing the number of days in an
Employee's period of Service by 365.
(a) In no event shall any Employee who was a Participant in any
Predecessor Plan be credited with less Years of Service
under this Plan than he or she had in such Predecessor Plan
immediately prior to the Effective Date, nor shall any
Participant who was credited with 850 Hours of Service under
a Predecessor Plan for the portion of the relevant plan year
thereof completed prior to the Effective Date of this Plan
be credited in respect of the 1999 Plan Year with less than
one full Year of Service for 1999, regardless of if his or
her employment terminates prior to December 31, 1999.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY TO PARTICIPATE. Elective Deferrals and
Matching Contributions. Subject to Section 3.2, each Eligible Employee shall
become eligible to make Elective Deferrals and receive Company matching
contributions with respect thereto on the first day of the calendar month
commencing coincident with or next following his Employment Commencement Date.
(a) Profit Sharing. Subject to Section 4.3, each Eligible
Employee shall become a Participant (if not already a
Participant under Section 3.1) and shall be eligible to
receive Profit Sharing contributions on the first day of the
calendar month commencing on or after the date on which such
Eligible Employee completes one Year of Service.
3.2 COMMENCEMENT OF PARTICIPATION. The Committee may prescribe
such rules as it deems necessary or appropriate regarding the procedures for an
Eligible
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June 25, 1999
Employee to elect to participate in the Plan by electing to defer receipt of a
portion of his Compensation as provided in Section 5.1. No Eligible Employee
shall become entitled to receive Company matching contributions under Article
IV until after the date as of which such Eligible Employee has completed the
necessary enrollment forms (or otherwise enrolled in the Plan under such other
procedures as the Committee may establish from time to time) and authorized
Elective Deferrals. An Eligible Employee who has not authorized Elective
Deferrals shall automatically become a Participant in the first Plan Year for
which an allocation is made to his Profit Sharing Account in accordance with
Section 4.3.
(a) A former Participant who satisfied the eligibility
requirements of this Section 3.1 who is reemployed by the
Company as an Eligible Employee or a Suspended Participant
who again becomes an Eligible Employee shall be entitled to
commence participation on the first day of the calendar
month following the date on which such person again becomes
an Eligible Employee.
(b) The Committee may adopt rules and procedures regarding the
pay period in which Elective Deferrals commence to be
deducted from Compensation following completion of an
appropriate form (or compliance with such other procedures
as the Committee may establish from time to time) by an
Eligible Employee.
ARTICLE IV
COMPANY CONTRIBUTIONS
4.1 COMPANY MATCHING CONTRIBUTIONS. The Company shall pay over
to the Trustee an amount equal to fifty percent of the first six percent of
Compensation, if any, that each Participant elects (pursuant to Article V) to
have contributed to the Plan on his behalf as Elective Deferrals. Such
contributions shall be made as soon as practicable after the corresponding
Elective Deferrals are withheld from the Participant's Compensation, but in no
event later than the due date for filing the federal income tax return
(including extensions) of the Company for the taxable year with respect to
which the contribution is made. The Company may, in its discretion, make
additional contributions at any time to defray Plans expenses as provided in
Section 6.11.
4.2 LIMITATION ON COMPANY MATCHING CONTRIBUTIONS. Excess
Aggregate Contributions (which shall be determined after determining Excess
Deferrals and Excess Contributions) shall be reduced or distributed as provided
below to the extent necessary to satisfy one of the tests described in
paragraphs (i) or (ii) of subsection (a) below, taking into account the Average
Contribution Percentages of all Eligible Employees in the Highly Compensated
Employee group or Nonhighly Compensated Employee group, as applicable. For
this purpose, an Eligible Employee is any Employee who is directly or
indirectly eligible to receive an allocation of Company matching contributions
pursuant to
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June 25, 1999
Section 4.1 and includes an Employee who would be entitled to receive Company
matching contributions but for the failure to make Elective Deferrals. In the
case of an Eligible Employee who is eligible but who makes no Elective
Deferrals and who receives no Company matching contributions, the Contribution
Percentage that is to be included in determining the Average Contribution
Percentage is zero.
(a) The Average Contribution Percentage of Highly
Compensated Employees who are Eligible Employees is not
more than the product of 1.25 and the Average
Contribution Percentage of Nonhighly Compensated
Employees; or
(i) The Average Contribution Percentage of Highly
Compensated Employees who are Eligible Employees is not
more than the lesser of:
(A) Two hundred percent (200%) of the Average
Contribution Percentage of Nonhighly
Compensated Employees; and
(B) The Average Contribution Percentage of
Nonhighly Compensated Employees plus two (2)
percentage points or such lesser amount as
the Secretary of the Treasury shall
prescribe in order to prevent the multiple
use of the alternative limitation with
respect to any Highly Compensated Employee.
(ii) If any Highly Compensated Employee is eligible to make
elective salary deferrals under a cash or deferred
arrangement and to make after-tax Employee
contributions or to receive matching contributions
under the Plan or any other plan maintained by the
Company, the disparity between the Average Contribution
Percentage of the Highly Compensated Employee group and
the Nonhighly Compensated Employee group shall be
reduced as provided in Income Tax Regulations, Section
1.401(m)-2.
(b) Excess Aggregate Contributions (and income thereon if
required by applicable regulations) shall be distributed to
the appropriate Highly Compensated Employees (or forfeited,
if forfeitable) after the close of the Plan Year in which
the Excess Aggregate Contributions arose and in any event
within twelve (12) months after the close of such Plan Year.
Excess Aggregate Contributions shall be treated as Annual
Additions. In the event of a complete termination of the
Plan during a Plan Year in which Excess Aggregate
Contributions arose, such distributions shall be made after
the date of termination of the Plan and as soon as
administratively feasible, but in no event later than the
close of the twelve-month period following the date of such
termination. The income
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<PAGE> 25
June 25, 1999
allocable to Excess Aggregate Contributions shall be equal
to the sum of the allocable gain or loss for the Plan Year
and the allocable gain or loss for the period between the
end of the Plan Year and the date of distribution. Income
includes all earnings and appreciation, including such items
as interest, dividends, rents, royalties, gains from sale of
property, appreciation in the value of stocks, bonds,
annuity and life insurance contracts, and other property,
without regard to whether such appreciation has been
realized. A corrective distribution of Excess Aggregate
Contributions (and income thereon if required by applicable
regulations) may be made without regard to any notice or
consent that otherwise would be required under sections 411
and 417 of the Code.
The amount of Excess Aggregate Contributions for a Highly
Compensated Employee shall be determined as follows: First,
the matching contributions of the Highly Compensated
Employee with the highest dollar amount of matching
contributions is reduced to the extent necessary to satisfy
the Average Contribution Percentage test set forth above or
to cause such dollar amount of matching contributions of
such Highly Compensated Employee to equal the next highest
dollar amount of matching contributions for any Highly
compensated Employee. Second, this process is repeated
until the Average Contribution Percentage test set forth
above is satisfied. The amount of Excess Aggregate
Contributions for a Highly Compensated Employee is then
equal to the reduction in matching contributions as
determined above.
(i) Forfeitures of Company matching contributions shall be
applied in accordance with Section 6.10.
(ii) Distributions or forfeitures, as applicable, of Excess
Aggregate Contributions shall be made from the
Participant's Matching Contribution Account. No
distribution shall be made of Excess Aggregate
Contributions to any Highly Compensated Employee as
long as any other Highly Compensated Employee has a
higher dollar amount of matching contributions.
(c) Special Rules.
(i) The Contribution Percentage of a Highly Compensated
Employee who is eligible to participate in two or more
plans maintained by the Company or an Affiliated
Company to which matching contributions, or elective
salary deferrals (with respect to the same
Compensation) are made shall be aggregated for purposes
of determining such Employee's Contribution Percentage.
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June 25, 1999
(ii) If this Plan satisfies the requirements of section
410(b) of the Code only if aggregated with one or more
other plans or if one or more other plans satisfy the
requirements of section 410(b) of the Code only if
aggregated with this Plan, then this Section 4.2 shall
be applied by determining the Contribution Percentages
of Participants as if all such plans were a single
plan. Plans may be aggregated only if they have the
same plan year.
The determination and treatment of the Contribution Percentage of any
Employee shall satisfy any other requirements prescribed by the Secretary of
the Treasury.
No benefit other than matching contributions shall be conditioned
(directly or indirectly) upon the Employee's election to make or not to make
Elective Deferrals under the Plan.
4.3 PROFIT SHARING CONTRIBUTIONS. Profit Sharing Contributions
shall be allocated (based on the Participant's Compensation for the relevant
Plan Year) to those Participants who (a) were employed as of the last day of
the Plan Year for which such contribution is made or whose employment
terminated during such Plan Year due to death, Disability or retirement and (b)
who had completed at least one Year of Service by the last day of such Plan
Year.
4.4 FORM OF COMPANY CONTRIBUTIONS. Except as otherwise provided
for in this Article IV, the Company Contributions to the Trust Fund shall be
paid in cash, Company Stock, or such other property as the Board of Directors
may from time to time determine.
4.5 VALUATION OF COMPANY CONTRIBUTIONS IN THE FORM OF COMPANY
STOCK. Company Stock contributed by the Company to the Trust Fund shall be
valued using the rules set forth in Section 6.9(a)(ii).
4.6 RETURN OF COMPANY CONTRIBUTIONS. The Company shall have no
right or title to, nor interest in, the contributions made to the Trust Fund,
and no part of the Trust Fund shall revert to the Company except that funds may
be returned to the Company as follows:
(a) In the case of a Company Contribution which is made by a
mistake of fact, that contribution shall be returned to the
Company within one (1) year after such contribution is made.
(b) All Company Contributions to the Plan are conditioned upon
the deductibility of those contributions under Code section
404. To the extent a deduction is disallowed, the
contribution shall, at the election of
19
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June 25, 1999
the Company, be returned to the Company within one (1) year
after the disallowance.
ARTICLE V
ELECTIVE DEFERRALS, ROLLOVER
CONTRIBUTIONS AND PLAN-TO-PLAN TRANSFERS
5.1 ELECTION. At the time or times established from time to
time by the Committee and subject to the terms and conditions of the Plan, each
Participant may elect, pursuant to such procedures as shall be established by
the Committee from time to time, to defer the receipt of a portion of his
Compensation for that Plan Year and to have the deferred amount contributed
directly by the Company to the Trust Fund as Elective Deferrals.
Notwithstanding the foregoing, no Elective Deferrals shall be taken with
respect to employee referral bonuses or other non-recurring cash payments, made
at the Company's sole discretion, and not forming a significant part of the
Participant's compensation.
(a) The Committee may, in its discretion, estimate, as soon as
is reasonably possible prior to the close of the Plan Year,
the extent (if any) to which deferral treatment under Code
section 401(k) may not be available to any Participant (or
class of Participants). If, pursuant to these estimates by
the Committee, a Participant (or a class of Participants) is
not eligible for deferral treatment for any or all of the
amounts deferred pursuant to the election set forth above in
Section 5.1, then the Committee may authorize a suspension
of Elective Deferrals made pursuant to the provisions of
this Article V. This suspension shall be made pursuant to
rules promulgated by the Committee. These rules may include
provisions authorizing the suspension of Elective Deferrals
above a specified dollar amount of Compensation, or any
other means that the Committee believes will help to ensure
that deferral treatment will be available for all
Participants.
(b) A Participant may at any time, pursuant to such procedures
as shall be established by the Committee, request that he
wishes to terminate, alter the rate of, or resume his
Elective Deferrals made pursuant to this Article V. Any
such request for termination, alteration, or resumption
shall be effective as soon as practicable after the date
made in accordance with the applicable procedures.
5.2 AMOUNT SUBJECT TO ELECTION. Subject to the provisions of
Section 5.3, the maximum percentage of an individual's Compensation that may be
deferred subject to the election provided in Section 5.1 shall be eighteen
percent (18%). For purposes of this Section 5.2, the amount of the
individual's Compensation shall be determined prior to the
20
<PAGE> 28
June 25, 1999
reduction caused by the deferral (if any) of a portion of his Compensation
pursuant to this Article V.
(a) The maximum amount of Elective Deferrals contributed on
behalf of a Participant under the Plan shall not exceed
$7,000 (adjusted by the Adjustment Factor) during any
calendar year. If, during a calendar year, (i) an Employee
participates in this Plan and one or more other plans with
qualified cash or deferred arrangement described in Code
section 401(k), 408(k)(6) or 403(b), (ii) the Employee's
Elective Deferrals under all such plans (including this
Plan) exceed $7,000 (adjusted by the Adjustment Factor), and
(iii) all or any portion of such Employee's Elective
Deferrals under this Plan constitute Excess Deferrals by
virtue of an allocation and notification by the Employee
pursuant to Code section 402(g)(2)(A)(i), such Excess
Deferrals shall be distributed to such Employee as permitted
by Code section 402(g)(2)(A)(ii).
5.3 NONDISCRIMINATION REQUIREMENT AND DISTRIBUTION OF EXCESS
CONTRIBUTIONS. The Committee shall determine if Excess Contributions exist
(which shall be determined after determining Excess Deferrals) by
recharacterizing Elective Deferrals as Excess Contributions to the extent
necessary such that the remaining Elective Deferrals not so recharacterized
satisfy the Average Deferral Percentage test of either paragraph (i) or (ii)
below (together referred to as the "ADP test").
(i) The Average Deferral Percentage of Participants
who are Highly Compensated Employees is not more
than the Average Deferral Percentage for Nonhighly
Compensated Employees multiplied by 1.25; or
(ii) The Average Deferral Percentage of Participants
who are Highly Compensated Employees is not more
than two hundred percent (200%) of the Average
Deferral Percentage of Nonhighly Compensated
Employees and is also not more than the Average
Deferral Percentage of Nonhighly Compensated
Employees plus two (2) percentage points.
(a) Excess Contributions for a Highly Compensated Employee shall
be determined as follows:
(i) First, the Elective Deferrals of the Highly Compensated
Employee with the highest dollar amount of Elective
Deferrals is reduced to the extent necessary to satisfy
the Average Deferral Percentage (ADP) test set forth in
Section 5.3(a) above or to cause such dollar amount of
Elective Deferrals to equal the dollar amount of
Elective
21
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June 25, 1999
Deferrals of the Highly Compensated Employee with the
next highest dollar amount of Elective Deferrals.
(ii) Second, this process is repeated until the ADP test is
satisfied. The amount of Excess Contributions for a
Highly Compensated Employee is then equal to the
reduction in Elective Deferrals made to satisfy the ADP
test.
In determining the Average Deferral Percentage test of this Section
5.3, the Plan will take into account the Deferral Percentage of all eligible
Employees. For this purpose, an eligible Employee is any Employee who is
directly or indirectly eligible to make a cash or deferred election under the
Plan (i.e., to make Elective Deferrals) for all or a portion of the Plan Year
and includes an Employee who would be a Participant but for the failure to make
Elective Deferrals; an Employee whose eligibility to make Elective Deferrals
has been suspended because of an election not to participate, or to take a
distribution or a loan; and an Employee who cannot make Elective Deferrals
because of the Code section 415 limits on Annual Additions. In the case of an
eligible Employee who makes no Elective Deferrals, the Deferral Percentage that
is included in the Average Deferral Percentage test is zero.
(b) Excess Contributions plus, if required by applicable
regulations, any income and minus any loss allocable to such
Contributions shall be distributed no later than the last
day of each Plan Year to the Highly Compensated Employees to
whose Accounts such Excess Contributions were allocated for
the preceding Plan Year for which such contributions were
allocated. Excess Contributions shall be treated as Annual
Additions. The income or loss allocable to such
Contributions shall include the income or loss for the Plan
Year for which the Excess Contributions were made and income
or loss for the period between the end of the Plan Year and
the date of the distribution. Such income or loss shall be
determined pursuant to procedures established by the
Committee consistent with Code section 401(k)(8)(A) and
Income Tax Regulations, Section 1.401(k)-1(f)(4).
(c) Distribution of Excess Contributions (plus income and minus
loss thereon if required by applicable regulations) shall be
made on the basis of the respective portions of the Excess
Contributions attributable to each Highly Compensated
Employee. Distribution shall be made first from the Plan
Accounts of the Highly Compensated Employees whose Elective
Deferrals represent the highest dollar amount of Elective
Deferrals for the Plan Year. No distribution shall be made
of Excess Contributions to any Highly Compensated Employee
as long as any other Highly Compensated Employee has a
higher dollar amount of Elective Deferrals. Any decrease in
the amount of Elective Deferrals to be made
22
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June 25, 1999
on behalf of a Participant or a distribution of Excess
Contributions under this subsection (c) will also be
effective for purposes of determining the amount of
Qualified Matching Contributions, if any, to be allocated to
such Participant under Section 6.8 below.
(d) The Deferral Percentage for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible
to have salary deferrals described in Code section
402(g)(3)(A) or qualified nonelective contributions
described in Code section 401(m)(4)(C) allocated on his or
her behalf under two or more plans or arrangements described
in Code section 401(k) that are maintained by the Company or
any Affiliated Company shall be determined as if all such
deferrals and contributions were made under a single
arrangement.
(e) The Committee may prescribe such rules as it deems necessary
or appropriate regarding the maximum amount that a
Participant may elect to defer and the timing of such an
election. These rules may prescribe a maximum percentage of
Compensation that may be deferred, or may provide that the
maximum percentage of Compensation that a Participant may
defer will be a lower percentage of his Compensation above a
certain dollar amount of Compensation than the maximum
deferral percentage below that dollar amount of
Compensation. These rules shall apply to all individuals
eligible to make the election described in Section 5.1,
except to the extent that the Committee prescribes special
or more stringent rules applicable only to Highly
Compensated Employees.
(f) Subject to the Company's sole discretion, as an alternative
means for complying with the ADP test, the Company may:
1. make Company Qualified Matching Contributions in
accordance with Code Section 401(m)(4)(a); or
2. qualified nonelective contributions in accordance with
Code Section 401(m)(4)(c).
5.4 ALTERNATIVE TESTING GROUPS AND METHODS. In determining
whether the ADP test (under Section 5.3) and/or Average Contribution Percentage
test (under Section 4.2) is or are satisfied, the Committee may elect to test
separately those Employees who would not be eligible to participate if the Plan
imposed a minimum one Year of Service and minimum age twenty-one (21)
requirement for eligibility.
(a) In applying the ADP test (under Section 5.3) and Average
Contribution Percentage test (under Section 4.2), the Plan
shall use the current year testing method for the 1999
testing year and subsequent years unless and
23
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June 25, 1999
until changed by the Committee to the prior year method
consistent with procedures prescribed by the Internal
Revenue Service pursuant to Code sections 401(k)(3)(A) and
401(m)(2)(A).
5.5 ROLLOVER CONTRIBUTIONS FROM OTHER PLANS. An Eligible
Employee, regardless of whether he has satisfied the participation requirements
of Section 3.1, may transfer to the Trust Fund a Rollover Contribution pursuant
to procedures approved by the Committee from time to time. The Committee shall
develop such procedures and may require such information from an Employee
desiring to make such a transfer as it deems necessary or desirable to
determine that the proposed transfer will meet the requirements of a Rollover
Contribution. Upon approval by the Committee, the amount transferred shall be
deposited in the Trust Fund and shall be credited to a Rollover Account. Such
Rollover Account shall be one hundred percent (100%) vested in the Employee and
shall be valued in accordance with Section 6.9, but shall not share in Company
Contribution allocations. Upon termination of employment, the total amount of
the Rollover Account shall be treated as part of the Employee's "Distributable
Benefit" under Section 9.7 and distributed in accordance with Sections 9.1
through 9.7, as applicable.
Upon such transfer by an Employee who is otherwise eligible to
participate in the Plan but who has not yet completed the participation
requirements of Section 3.1, his Rollover Account shall represent his sole
interest in the Plan until he becomes a Participant.
5.6 PLAN-TO-PLAN TRANSFERS. In its sole discretion, the
Committee may authorize (subject to procedures established by the Committee)
the Plan to accept a transfer, from a plan qualified under Code section 401(a),
of a Participant's Account balance under such transferee plan, but only to the
extent such Account balance satisfies each of the following requirements:
(a) It is comprised solely of pre-tax contributions and/or
earnings; and
(b) It is made to this Plan from a plan (other than a plan of
maintained by an employer who was a member of the same
controlled group of corporation as the Company) under which
annuities were not made available to Participants as a form
of distribution of their benefits thereunder. Any such
transfer shall be allocated to whichever of the
Participant's Account(s) the Committee determines to be
appropriate.
Notwithstanding the foregoing, in connection with the establishment
of the Plan, the Plan shall accept a trust to trust transfer from the
Predecessor Plans, and the amounts transferred from the Predecessor Plan shall
be allocated to the Accounts specified herein.
To the extent required by Code section 411(d)(6), and pursuant to
procedures established by the Committee, an Account balance transferred
pursuant to this Section 5.6
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June 25, 1999
shall retain optional forms of benefit payments that were applicable to such
Account balance prior to the transfer to the Plan.
ARTICLE VI
ACCOUNTING AND ALLOCATION PROCEDURES
6.1 ELECTIVE DEFERRAL ACCOUNTS. The Committee shall open and
maintain a separate Elective Deferral Account for each Participant in the Plan
who has authorized Elective Deferrals or who made elective deferrals subject to
the provisions of Section 401(k) under a Predecessor Plan.
6.2 MATCHING CONTRIBUTION ACCOUNTS. The Committee shall open
and maintain a separate Matching Contribution Account for each Participant in
the Plan who is or has been allocated Company matching contributions from this
Plan.
6.3 PROFIT SHARING ACCOUNT. The Committee shall open and
maintain a separate Profit Sharing Account for each participant in the Plan who
is or has been allocated Profit Sharing Contributions, who had an account under
a Predecessor Plan to which was credited profit sharing contributions or other
amounts invested in assets other than SAIC Stock, or who has an amount
transferred from his SAIC Stock Account in connection with dividends and
distributions on, or the proceeds of sales of, SAIC Stock.
6.4 SAIC MATCHING ACCOUNT. The Committee shall maintain a SAIC
Matching Account for each participant who had been allocated matching
contributions under a Predecessor Plan that were invested in SAIC Stock.
6.5 SAIC EMPLOYEE STOCK ACCOUNT. The Committee shall maintain a
SAIC Employee Stock Account for each Participant who had shares of SAIC Common
Stock transferred to this Plan from a Predecessor Plan. The SAIC Stock Account
for each Participant shall be closed upon the transfer, in accordance with the
provisions of the Plan, of the proceeds from the sale of any remaining SAIC
Stock in such SAIC Stock Account to the Participant's Profit Sharing Account.
6.6 ROLLOVER ACCOUNTS. The Committee shall open and maintain a
separate Rollover Account for each Participant in the Plan who has made a
Rollover Contribution or plan-to-plan transfer to the Plan.
6.7 ALTERNATE PAYEE ACCOUNT. The Committee shall open and
maintain a separate Alternate Payee Account for each Alternate Payee who is
awarded benefits under this Plan pursuant to a qualified domestic relations
order.
6.8 ALLOCATION OF COMPANY CONTRIBUTIONS. All Company
Contributions representing Elective Deferrals shall be allocated to
Participants' Elective Deferral Accounts within thirty (30) days following
their contribution to the Trust.
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June 25, 1999
(a) Profit Sharing Contributions shall be based on the
Compensation of all Participants eligible to receive an
allocation of such Profit Sharing Contributions pursuant to
Section 4.3 and shall be allocated to the Profit Sharing
Account.
(b) All Company Contributions which constitute Qualified
Matching Contributions shall be allocated to Participant's
Elective Deferral Accounts within ninety (90) days following
their contribution to the Trust.
(c) Company matching contributions (i.e., matching contributions
which do not constitute Qualified Matching Contributions)
shall be allocated to the Matching Contribution Accounts of
Participants who have made Elective Deferrals during the
Plan Year as follows:
(i) In no event shall any Company matching contribution be
allocated with respect to Elective Deferrals in excess
of ten percent (10%) of Compensation;
(ii) Subject to subsection (i) above, with regard to
Elective Deferrals by a Participant, an amount of
Company matching contributions equal to fifty percent
(50%) of the first six percent (6%) of such Elective
Deferrals shall be allocated to that Participant.
(d) Company contributions in the form of Additional Company
Contributions shall be allocated so as to allow the Plan to
satisfy the nondiscrimination test set forth in Code section
401(k)(3)(A)(ii) and Section 5.3(a) of the Plan. Subject to
the limitations of Article XIV of this Plan and to the
requirements of Code sections 401(k)(3)(A)(ii) and
401(k)(3)(C)(ii)(II), Additional Company Contributions shall
be allocated as an equal dollar amount to Elective Deferral
Accounts of all Eligible Employees who (i) are Nonhighly
Compensated Employees, (ii) are employed on the last day of
the Plan Year for which such allocation is made and (iii)
either already have, or would otherwise have (without regard
to an allocation of Additional Company Contributions) for
such Plan Year, an Elective Deferral Account established for
their benefit. Such allocation shall be made on or before
the due date of the Company's Federal income tax return for
the fiscal year with which or within which such Plan Year
ends.
(e) Company Contributions which constitute Qualified Matching
Contributions shall be allocated to the Elective Deferral
Accounts of
26
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June 25, 1999
Participants who are Nonhighly Compensated Employees and who
have made Elective Deferrals during the Plan Year as
follows:
(i) In no event shall any Qualified Matching Contribution
be allocated with respect to Elective Deferrals in
excess of ten percent (10%) of Compensation;
(ii) Subject to subsection (i) above, Qualified Matching
Contributions shall be allocated in proportion to the
Elective Deferrals of eligible Participants.
(f) Company Contributions pursuant to Section 6.11 shall not be
allocated to Accounts of Participants but (together with any
gains or income thereon) shall be applied to defray Plan
expenses.
(g) In no event shall amounts be allocated which would cause the
limitation on Annual Additions set forth in Article XIV to
be exceeded.
(h) Company Contributions in the form of Company Stock shall be
allocated to the Accounts of the Participants based on the
fair market dollar value of such contributed Company Stock
as determined under the provisions of Section 6.9(b)(ii),
unless a different valuation method shall be required under
the applicable Treasury Regulations.
6.9 VALUATION OF ACCOUNTS. Within sixty (60) days after each
Valuation Date, within sixty (60) days after the removal or resignation of the
Trustee, and at such other times as determined by the Committee, the Trustee
shall value the assets of the Trust on the basis of fair market values. If the
assets cannot be valued within any of the periods specified in the preceding
sentence, the assets shall be valued as soon thereafter as is practicable.
(a) As soon as is reasonably possible after receipt of these
valuations from the Trustee, the Committee shall value the
Accounts of each Participant, Suspended Participant and
Alternate Payee as of the Applicable Valuation Date so as to
reflect the current fair market value of each Account as of
such Valuation Date. The valuation provisions of this
Section 6.9 shall be applied and implemented in accordance
with the following rules:
(i) If separate subaccounts have been established for
separate investment alternatives, each subaccount shall
be valued separately and the total value of a
Participant's Account(s) shall equal the total value of
his interest in each of the respective subaccounts in
which his Account(s) have been invested.
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<PAGE> 35
June 25, 1999
(ii) Company Stock or SAIC Stock allocated and credited to
an account or subaccount, or to a separate fund within
the Trust Fund in which Participants' Accounts or
subaccounts are invested as provided in Section 8.1,
shall be valued as of the Applicable Valuation Date,
according to the following rules:
(A) Company Stock acquired by the Trust Fund with cash
shall initially be valued at the purchase price
paid for such stock. SAIC Stock transferred to
the Plan shall have the value assigned thereto
under the applicable Predecessor Plan immediately
prior to such transfer. On any subsequent
Valuation Date, such Company Stock or SAIC Stock,
shall be valued in accordance with Section
6.9(a)(ii)(B) or 6.9(a)(ii)(C) below, as
applicable.
(B) If any Company Stock or SAIC Stock does not
consist of securities listed on a national
securities exchange, or traded on a regular basis,
as determined by the Company, in the
over-the-counter market, the fair market value of
(x) the Company Stock shall be determined by the
Committee (or its delegate) and (y) SAIC Stock
shall be such value, as determined for purposes of
the Predecessor Plan by the committee responsible
for the administration thereof, acting in good
faith. A Participant, Beneficiary or Alternate
Payee shall have no right to have a particular
valuation method applied (or continue to be
applied) to his Account(s).
(C) If the Company Stock or SAIC Stock is listed on a
national securities exchange, fair market value of
such Company Stock or SAIC Stock shall be
considered to be equal to the closing price of
such Company Stock or SAIC Stock (as reported in
the consolidated transaction reporting system, or
if not so reported, as reported on the principal
exchange on which such Company Stock or SAIC Stock
is traded or on any national quotation system over
which the Company Stock or SAIC Stock is traded)
on the trading day immediately preceding the
Applicable Valuation Date. If any Company Stock
or SAIC Stock consists of securities traded on a
regular basis, as determined by the Company, in
the over-the-counter market, the fair market value
of such Company Stock or SAIC Stock shall be
considered to be equal to the average between the
high bid price and the low asked price quoted by
the automatic quotation system of a securities
association registered under the federal
securities laws for the trading day immediately
preceding the Applicable Valuation Date.
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<PAGE> 36
June 25, 1999
(iii) The fair market value of any guaranteed interest
contract, trust or fund holding such a contract, or
similar program entered into between an insurance
company and the Plan shall be determined based on the
principal amount of such contract or program, plus the
amount of the guaranteed interest or other increase in
value which is paid or credited to the Plan pursuant
to such contract or program. The provisions of this
subparagraph (iii) shall apply to an investment
alternative established under Section 8.1 which is
invested in one or more of such contracts or programs.
(iv) To the extent that a Participant's Account is invested
in a regulated investment company offered as an
investment alternative under the Trust, the value of
that portion of the Account shall be valued based on
the unit or share value of the regulated investment
company on the Applicable Valuation Date.
(b) The Company, the Committee and Trustee do not in any manner
or to any extent whatsoever warrant, guarantee or represent
that the value of a Participant's Account shall at any time
equal or exceed the amount previously contributed thereto,
or that any valuation or accounting method or practice will
continue to be applied.
(c) Allocation of Company Stock or SAIC Stock Received Pursuant
to Stock Dividends, Splits, Recapitalizations, Etc. Any
Company Stock or SAIC Stock received by the Trustee as a
stock split or dividend, or as a result of a reorganization
or other recapitalization of the Company, shall be allocated
as of the day on which the stock is received by the Trustee
in the same manner as the Company Stock or SAIC Stock to
which it is attributable is then allocated.
(d) Allocation of Stock Rights, Warrants or Options.
(i) In the event any rights, warrants or options are
issued on Company Stock held in the Trust Fund, the
Trustee shall exercise them for the acquisition of
additional Company Stock as directed by the Committee
and to the extent that funds are then available in
the Trust Fund.
(ii) Any Company Stock acquired pursuant to subclause (i)
shall be treated as Company Stock purchased by the
Trustee for the net price paid and shall be allocated
in the same manner as the funds used to purchase the
Company Stock were or would be allocated under the
provisions of this Plan, pursuant to directions of
the Committee.
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<PAGE> 37
June 25, 1999
(iii) Any rights, warrants, or options on Company Stock
which cannot be exercised for lack of available funds
may, as directed by the Committee, be sold by the
Trustee and the proceeds allocated in accordance with
the source of the Company Stock with respect to which
the rights, warrants or options were issued.
(e) Allocation of Cash Dividends and Other Distributions
Received in the Trust Fund.
(i) All cash dividends paid to the Trustee with respect
to Company Stock or SAIC Stock that has been
allocated to an Account (if any) as of the date the
dividend is received by the Trustee shall be
allocated to such Account. If the Company Stock or
SAIC Stock in the Trust Fund is held in a Company
Stock or SAIC Stock fund as an investment alternative
pursuant to Section 8.1, such that Participants have
an interest in such Company Stock or SAIC Stock only
indirectly through an interest in such fund held in a
subaccount, the cash dividends shall be allocated to
such fund and shall thereafter be invested in
accordance with the investment practices of such
fund, and shall not be allocated directly to a
Participant's Account or subaccount.
(ii) Other distributions received by the Trustee with
respect to investments of the Trust shall be
allocated to the applicable fund(s) established
pursuant to Article VIII, as prescribed by the
Committee.
6.10 ALLOCATION OF FORFEITURES. The treatment of all amounts
that are forfeited by reason of the termination of the employment of a
Participant shall be governed by the following rules:
(a) Forfeitures shall be used to offset Company matching
contributions and profit sharing contributions and allocated
to the Matching Contribution Accounts and Profit Sharing
Accounts of those Participants who are entitled to receive
an allocation of Company matching contributions for the Plan
Year according to the rules of Section 4.1 and 4.3.
(b) No forfeitures shall be allocated to any Elective Deferral
Account, Profit Sharing Account, Rollover Account, SAIC
Stock Account or Alternate Payee Account.
(c) The forfeitures to be allocated shall be the amount of
forfeitures occurring since the next preceding allocation
under this Section 6.10 and prior to the date prescribed by
the Committee as the cutoff date for such allocation.
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June 25, 1999
6.11 COMPANY CONTRIBUTIONS TO DEFRAY PLAN EXPENSES. The Company
may, in its discretion, make a Company Contribution at any time for the purpose
of defraying Plan expenses. Such contribution shall be used to defray Plan
expenses and shall not be allocated to Accounts of Participants.
6.12 ACCOUNTING PROCEDURES. The Committee shall establish
accounting procedures for the purpose of making the allocations, valuations and
adjustments to Accounts provided for in this Article VI, as well as the
implementation of investment direction by Participants pursuant to Section 8.1
and transfers between or distributions from subaccounts established pursuant to
Section 8.1(b). From time to time the Committee may modify such accounting
procedures for the purpose of achieving equitable, nondiscriminatory, and
administratively feasible allocations among the Accounts in accordance with the
general concepts of the Plan and the provisions of this Article VI.
A Participant, Beneficiary or Alternate Payee shall have no
contractual or other right to have a particular accounting procedure or
convention apply, or continue to apply, and the Committee shall be free to
alter any such procedure or convention without obligation to any Participant,
Beneficiary or Alternate Payee, consistent with the requirements of Code
section 411(d)(6).
6.13 SUSPENDED PARTICIPANTS. The Accounts of each Suspended
Participant shall be held intact and shall be valued on each Valuation Date as
provided in Section 6.9, but shall not receive any allocation of Company
Contributions related to Service while a Suspended Participant.
6.14 ACCOUNTING FOR INTEREST OF AN ALTERNATE PAYEE. In the event
an Alternate Payee is awarded an interest in the Plan benefits of a Participant
pursuant to a qualified domestic relations order, as defined in Section 15.2,
such interest shall be separated into one or more separate Accounts and
accounted for under rules prescribed by the Committee, pending distribution to
the Alternate Payee.
ARTICLE VII
VESTING IN ACCOUNTS
7.1 NO VESTED RIGHTS EXCEPT AS HEREIN SPECIFIED. No
Participant, Beneficiary or Alternate Payee shall have any vested right or
interest to, or any right of payment of, any assets of the Trust Fund, except
as provided in this Plan. Neither the making of any allocations nor the
crediting of any amounts to the Account of a Participant, Beneficiary or
Alternate Payee shall vest in any Participant, Beneficiary or Alternate Payee
any right, title, or interest in or to any assets of the Trust Fund.
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<PAGE> 39
June 25, 1999
7.2 PARTICIPANT'S VESTED INTEREST - GENERAL RULE. Subject to
the provisions of Section 7.3, the Vested Interest of each Participant or
Suspended Participant in his Matching Contribution Account, Profit Sharing
Account or SAIC Stock Account established pursuant to Article VI, respectively,
shall be equal to the amount determined by multiplying the balance in the
Account on the applicable date by the Vested Interest determined in accordance
with the rules of Section 7.3 and the following schedule:
<TABLE>
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
One year 25%
Two years 50%
Three years 75%
Four years 100%
</TABLE>
7.3 VESTED INTEREST - SPECIAL RULES. The determination of a
Participant's or Suspended Participant's Vested Interest in his Matching
Contribution Account, SAIC Stock Account and Profit Sharing Account shall be
subject to the following special rules:
(a) During an Employee's period of employment with the Company
or an Affiliated Company (including periods while on an
approved leave of absence or a Maternity or Paternity
Absence), in the event of his death, Disability, attainment
of Normal Retirement Date, or a judicial declaration of his
mental incompetence, the Employee's Vested Interest shall be
one hundred percent (100%), regardless of his number of
Years of Service.
(b) A former Employee who is reemployed by the Company or an
Affiliated Company, prior to incurring a Period of Severance
lasting at least five years shall have his Vested Interest
determined as if he had not terminated employment (subject
to the provisions of Section 9.5). If a former Employee
incurs a Period of Severance lasting at least five years,
amounts forfeited from his Matching Contribution Account
shall remain forfeited and shall not be restored.
(c) If an Employee whose Vested Interest is zero incurs a Period
of Severance lasting at least five years, his Years of
Service accumulated before such Period of Severance shall
not be taken into account for purposes of determining the
Vested Interest in his Matching Contribution Account at any
time or for any purpose. An Employee's aggregate Years of
Service shall not include any Years of Service not required
to be taken into account under this Section 7.3(c) by reason
of any prior Period of Severance.
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<PAGE> 40
June 25, 1999
(d) No Employee shall be given credit for any Years of Service
prior to the date the Employee attained the age of 18.
(e) In the event of a divestiture of an operating group or
division, the Board of Directors or its delegate may, in its
sole discretion, determine, with respect to Eligible
Employees whose employment with the Company terminates as a
result of such divestiture and in lieu of the otherwise
applicable determination of Vested Interest specified in
this Article VII, (i) treat the Eligible Employees' Vested
Interest as 100%, notwithstanding their Years of Service
prior to termination; or (ii) treat such Eligible Employees
as Suspended Participants but credit Years of Service with
the new employer to whom such group is divested for purposes
of determining such Eligible Employees' Vested Interest.
Any such determination for a particular group or division
shall not bind the Company in any way with respect to any
subsequent determination relating to a different group or
division. In the event of a subsequent divestiture from the
new employer, the Board of Directors or its delegate may
make a similar determination regarding vesting acceleration.
(f) In the event the Plan is amended to change any vesting
schedule under the Plan, each Participant having no less
than three Years of Service shall be permitted to elect,
within a reasonable period after the adoption of such
amendment, to have his Vested Interest determined under the
Plan without regard to such amendment.
7.4 OTHER ACCOUNTS. The Vested Interest of each Participant in
his Elective Deferrals Account and Rollover Account (if any) shall at all times
be the entire balance in each such Account.
7.5 ALTERNATE PAYEE ACCOUNTS. In the event that an Alternate
Payee is awarded an interest in the Matching Contribution Account of a
Participant whose Vested Interest in such Account is less than 100%, the Vested
Interest at any time of the Alternate Payee in that portion of the Alternate
Payee Account attributable to such awarded interest shall be the same
percentage as the Participant's Vested Interest in his Matching Contribution
Account at that time, determined in accordance with Sections 7.1 through 7.3.
ARTICLE VIII
INVESTMENT OF ACCOUNTS
8.1 ELECTIVE DEFERRAL, PROFIT SHARING AND ROLLOVER ACCOUNTS.
The Committee shall establish a choice of investment alternatives from among
which each Participant may elect the manner in which his Elective Deferral
Account (if any), Profit Sharing Account and Rollover Account (if any) will be
invested; provided that in no
33
<PAGE> 41
June 25, 1999
event may a Participant elect to invest more than 50% of the contributions to
any such Account in Company Stock or, in connection with a change in the way in
which existing balances in any such Account are invested, direct that more than
50% in the aggregate of the balance then credited to all of the Participant's
Accounts, including, without limitation, his Matching Contributions Account, be
invested in Company Stock. The Committee shall prescribe procedures for
investment of amounts allocated to an Alternate Payee Account.
(a) If such investment alternatives are established, each
Participant may elect to invest the assets of his Accounts
in such alternatives at such time, in such manner, and
subject to such restrictions as the Committee shall specify.
(b) Separate funds within the Trust Fund shall be established to
reflect the available alternatives, and separate subaccounts
shall be established for each investment alternative
selected by a Participant, and each such subaccount shall be
valued separately.
(c) The Committee, in its discretion, may permit Participants to
transfer amounts from one investment alternative to one or
more other investment alternatives. An election to transfer
such amounts shall be made only at such time, in such
manner, and subject to such restrictions as the Committee
may specify. The Committee may provide that future
contributions may be invested in a different investment
alternative than amounts already accumulated in the
Participant's Accounts.
(d) The Committee shall prescribe rules relating to the
investment of the assets in the Accounts of a Participant
who fails to make an effective election, for any reason
whatsoever, as to how all or a portion of his Accounts shall
be invested.
(e) The Committee shall provide notice by arranging for reports
to Participants regarding the investment of their funds
pursuant to their investment elections. Failure of a
Participant to notify the Committee regarding implementation
of his investment election within thirty (30) days following
such notice shall be deemed to be an election to have the
Accounts invested in the manner shown on such report, even
if the manner of investment is different from that specified
in the Participant's election form or investment
instructions. If a Participant has not received a notice
confirming his investment election (or change therein) and
does not notify the Committee or its designated delegate
within thirty (30) days of the date such election (or
change) was to be effective, the Participant shall be deemed
to have elected to have the Accounts invested in the manner
in which they are in fact invested, even if that
34
<PAGE> 42
June 25, 1999
method differs from the Participant's election form or
investment instructions.
8.2 MATCHING CONTRIBUTION ACCOUNT. Amounts allocated to a
Participant's Matching Contribution Account shall be invested entirely in
Company Stock.
8.3 SAIC ACCOUNTS. (a) General Rules. To the extent that any
portion of any of a Participant's Accounts includes SAIC Stock transferred to
this Plan, such Participant may continue to invest the corresponding portion of
such Account in SAIC Stock until the fourth Quarterly Date. No additional SAIC
Stock may be acquired. Any dividends or distributions paid in cash on SAIC
Stock shall be transferred to the Participant's Profit Sharing Account and
invested in proportion to the other investments held in such Profit Sharing
Account. The cash proceeds from the disposition of any such SAIC Stock or any
dividend or distribution on such SAIC Stock made other than in the form of cash
shall be transferred to the Participant's Profit Sharing Account and invested
in such investment choices as the Participant shall direct (or, absent any such
direction, in the investment option which in the opinion of the Plan
Administrator, involves the least risk of loss of principal). A Participant
may at any time elect, in accordance with such rules and procedures as the
Committee may establish, to direct the sale of such SAIC Stock on each or any
of the four Quarterly Dates. All such SAIC Stock not otherwise sold prior to
the fourth Quarterly Date shall be sold and, except as otherwise provided in
Section 8.3(b), the proceeds of any such sale shall be transferred to the
Participant's Profit Sharing Account and invested in the manner described
above.
(b) Special Rules for Mandatory Transferees. A Participant who had
an account balance under the SAIC Employee Stock Retirement Plan with a value
in excess of $5,000 immediately prior to the time at which assets are
transferred from such plan to this Plan had the choice not to transfer such
account balance into this Plan, and thereby preserve the right to continue to
invest in SAIC Stock after the fourth Quarterly Date. A Participant who had an
account balance under the SAIC Employee Stock Retirement Plan with a value of
$5,000 or less immediately prior to the time at which assets are transferred
from such plan to this Plan (a "Mandatory Transferee") did not have such right.
Accordingly, a Mandatory Transferee shall have the right to elect, at the time
that his balance in the SAIC Employee Stock Retirement Plan is to be
transferred to the Plan, to have the cash amount derived from the sale of the
SAIC Stock held in his SAIC Employee Stock Account on the fourth Quarterly Date
retained in such account and thereafter invested in Company Stock. A Mandatory
Transferee who makes such an election shall not have the right to change the
manner in which such SAIC Employee Stock Account is thereafter invested. A
Mandatory Transferee who has either SAIC Stock or Company Stock in his SAIC
Employee Stock Account at the date of his termination of employment may elect
to receive a distribution from such Account (and only such Account) in shares
of such Stock, rather than in cash.
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<PAGE> 43
June 25, 1999
In the event that a Participant receives a distribution from the Plan
consisting in whole or in part of SAIC Stock, such Participant (or the trustee
of any individual retirement account established for the benefit of such
Participant or any Beneficiary of the Participant who has received his or her
rights from the Participant due to the Participant's death or any donee of such
SAIC Stock from the Participant in a bone fide gift) shall have a put option,
having the following terms and conditions:
(1) Upon written notice to SAIC and the Company given within the
sixty-day period following any distribution of such SAIC Stock and stating
the number of shares of distributed SAIC Stock that the Participant
intends to sell, the Participant shall have the right to require Science
Applications International Corporation to purchase all or a portion of
such distributed SAIC Stock held by such Participant.
(2) The purchase price to be paid for any such SAIC Stock shall
be its fair market value determined as of the Applicable Valuation Date
determined in accordance with the valuation rules specified in Section
6.9. However, in the case of a Participant who is a "disqualified person"
(within the meaning of Code section 4975(e)(2)), the value of the SAIC
Stock shall be determined as of the date the Participant gives written
notice to SAIC of his exercise of the put option under this Section
8.3(b).
(3) If the put option available hereunder is not exercised
during the initial sixty-day period, the option right shall temporarily
lapse upon the expiration of such sixty-day period. As soon as is
reasonably practicable following the Anniversary Date of the Plan Year in
which the sixty-day option period expires, SAIC shall notify any person
who had elected not to exercise such put option of the valuation of SAIC
Stock as of that Anniversary Date. During the sixty-day period following
receipt of such valuation notice, such person shall have the right to
require SAIC to purchase all or any portion of the distributed SAIC Stock
that such person then still holds. The purchase price to be paid therefor
shall be based on the Anniversary Date valuation of SAIC Stock. However,
in the case of a transfer between a Participant who is a "disqualified
person" (within the meaning of Code section 4975(e)(2)), the value of the
stock shall be determined as of the date the Participant gives written
notice to SAIC of his exercise of the put option under this Section
8.3(b). If any person fails to exercise his option right under this
Section 8.3(b) with respect to any portion of the distributed SAIC Stock,
no further put options shall be applicable under this Plan and SAIC shall
have no further purchase obligations hereunder.
(4) In the event that a put option is exercised under this
Section 8.3(b), then SAIC shall have the option of paying the purchase
price of SAIC Stock which is subject to the put option ("Option Stock")
under either of the following methods:
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<PAGE> 44
June 25, 1999
(i) A lump-sum payment of the purchase price within ninety
days after the date upon which the put option is exercised ("Exercise
Date") or
(ii) A series of six equal installment payments, with the
first payment to be made within thirty days following the Exercise
Date and the five remaining payments to be made on the five
anniversary dates of the Exercise Date, so that the full amount shall
be paid as of the fifth anniversary of such Exercise Date. If SAIC
elects to pay the purchase price of the Option Stock under the
installment method provided in this subparagraph (ii), then SAIC
shall, within thirty days after the Exercise Date, give the person
who is exercising the put option SAIC's promissory note for the full
unpaid balance of the option price. This note shall, at a minimum,
provide adequate security, state a rate of interest reasonable under
the circumstances but at least equal to the imputed compound rate in
effect as of the Exercise Date pursuant to the Treasury Regulations
promulgated under Code section 483, and provide that the full amount
of the note shall accelerate and become due immediately in the event
that SAIC defaults in the payment of a scheduled installment payment.
(5) The foregoing put options under this Sections 8.3(b) shall
be effective solely against SAIC and shall not obligate the Plan or the
Company in any manner. Notwithstanding anything else contained in this
Section 8.3(b) to the contrary, the foregoing put option shall expire and
be void and without effect at any time that the SAIC Stock is readily
tradeable on an established securities market.
(6) In the event that any person is unable to exercise the put
option provided hereunder because SAIC is prohibited from honoring it by
reason of any applicable Federal or State law, then the sixty-day option
periods during which the put option is exercisable under Sections 8.3(b)
(1) and (3) shall not include any such time during which the put option
may not be exercised due to this reason.
(7) Except as is expressly provided above with respect to any
distributed SAIC Stock, no Participant shall have any put option rights
with respect to SAIC Stock or Company Stock distributed under this Plan,
and neither SAIC, the Company nor this Plan shall have any obligation
whatsoever to purchase any distributed SAIC Stock or Company Stock from
any Participant or any other person.
(8) At the time of distribution of SAIC Stock to a Participant
or Beneficiary, SAIC shall furnish to the Participant or Beneficiary the
most recent annual certificate of value prepared by SAIC with respect to
such SAIC Stock. In addition, SAIC shall furnish to the Participant or
Beneficiary a copy of each subsequent annual certificate of value until
the put options provided for in this Section 8.3(b) with respect to the
distributed SAIC Stock shall expire.
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June 25, 1999
ARTICLE IX
PAYMENT OF PLAN BENEFITS, IN-SERVICE WITHDRAWALS AND
DESIGNATION OF BENEFICIARY
9.1 RETIREMENT. A Participant may retire from the employment
of the Company on or after his Normal Retirement Date, consistent with Company
policies.
(a) If the Participant continues in the service of the Company
beyond his Normal Retirement Date, he shall continue to
participate in the Plan in the same manner as Participants
who have not reached their Normal Retirement Dates, provided
that payment of his Distributable Benefit shall commence no
later than his Required Payment Commencement Date. At the
subsequent termination of the Participant's employment, his
Distributable Benefit shall be based upon the value of his
Accounts as of the Applicable Valuation Date determined with
reference to his date of termination of employment as though
that were his Normal Retirement Date.
9.2 METHOD OF DISTRIBUTION UPON RETIREMENT. Upon retirement a
Participant shall be entitled to a lump-sum distribution of his entire
Distributable Benefit.
(a) Payment of the lump-sum distribution shall be made as soon
as practicable following the Participant's request made
after the Normal Retirement Date provided the Participant
consents to any distribution prior to the Participant
attaining age 62 and provided further that, in any event,
such distribution shall be made no later than the Required
Payment Commencement Date.
9.3 DEATH OR DISABILITY PRIOR TO TERMINATION OF EMPLOYMENT.
Upon the death of a Participant during his employment, or in the event that the
Committee shall determine that a Participant has suffered a Disability while an
Employee of the Company, the Committee shall direct the Trustee to make a
distribution of the Participant's Distributable Benefit to the Participant's
Beneficiary determined under Section 9.8 (in the event of death), or to the
disabled Participant (in the event of Disability).
(a) The form of the Distributable Benefit shall be a lump-sum
distribution, payable within one hundred twenty (120) days
after the close of the Plan Year in which the death of the
Participant occurs, or in which he is determined to be
Disabled, as the case may be, subject to proof of death or
Disability satisfactory to the Committee.
9.4 DEATH AFTER TERMINATION OF EMPLOYMENT. Upon the death of a
former Participant after his retirement, Disability or other termination of
employment, but prior to the distribution of his Distributable Benefit to which
he is entitled, the Committee shall
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<PAGE> 46
June 25, 1999
direct the Trustee to make a distribution of the balance to which the deceased
Participant was entitled, to the Participant's Beneficiary determined under
Section 9.8, such payment to be made within one hundred twenty (120) days after
the close of the Plan Year in which the death of the Participant occurs,
notwithstanding any elections previously made by the Participant.
9.5 TERMINATION OF EMPLOYMENT PRIOR TO NORMAL RETIREMENT DATE
- -DEFERRED DISTRIBUTION. Except as otherwise provided in Section 4.3, 9.3 or
9.6, the following rules of this Section 9.5 shall apply in the case of a
Participant whose employment with the Company terminates prior to his Normal
Retirement Date:
(a) The Participant's Accounts shall continue to be valued
pursuant to Section 6.9, but no further allocations of
Company Contributions under Article VI shall be made to such
Account, except for an allocation of Company Contributions
representing Elective Deferrals made prior to termination
and Company matching contributions related thereto.
(b) The Participant's Distributable Benefit shall be distributed
to him in a lump-sum distribution not later than one hundred
twenty (120) days after the Participant requests such
distribution pursuant to rules prescribed by the Committee,
except as provided in Section 9.5(e) or 9.6, but in any
event not later than the Required Payment Commencement Date.
(c) In the case of a distribution described in Section 9.5(b),
the nonvested portion of the Participant's Matching
Contribution Account, Profit Sharing Account and SAIC Stock
Account shall be forfeited as of the time of distribution.
(d) If the Participant is reemployed by the Company or an
Affiliated Company on (or before) incurring a Period of
Severance lasting at least five years, then:
(i) If no distribution of his Distributable Benefit
following his termination of employment had occurred,
no forfeiture shall occur upon such reemployment; and
(ii) If a distribution of his Distributable Benefit had
previously been made following his termination of
employment (along with a forfeiture of the nonvested
portion of his Plan Account pursuant to Section
9.5(c)), then the Participant shall have the repayment
restoration right set forth in Sections 9.6(a)(ii) and
(iii).
(e) Distribution of benefits under Section 9.5(b) to a
Participant whose Distributable Benefit exceeds (or at the
time of any prior distribution
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June 25, 1999
exceeded) $5,000 may be made prior to age 62 only with the
consent of the Participant.
(f) In lieu of receiving his entire Distributable Benefit in a
single lump-sum distribution as provided in this Section
9.5, a Participant on or after attaining age 59-1/2 may
elect to receive a distribution of that portion of his
Account(s) that is not invested in Company Stock within the
Trust, while leaving in the Plan the remaining portion which
is invested in the Company Stock until a later distribution
prior to the Required Payment Commencement Date. Any such
partial withdrawal shall be subject to such limitations and
restrictions as may be imposed by Committee rule.
9.6 TERMINATION OF EMPLOYMENT PRIOR TO NORMAL RETIREMENT DATE
- -IMMEDIATE DISTRIBUTION. A Participant whose employment with the Company
terminates prior to his Normal Retirement Date shall have his Distributable
Benefit, if any, paid to him within twelve months of the date of his
termination of his employment if:
(i) The Distributable Benefit, if any, is $5,000 or less. A
Distributable Benefit of zero shall be deemed to result
in a distribution of zero.; or
(ii) He so elects (pursuant to rules prescribed by the
Committee).
(a) In the above-described cases, the following rules shall
apply:
(i) The nonvested portion of his Matching Contribution
Account, Profit Sharing Account, SAIC Matching Account
and SAIC Employer Stock Account shall be forfeited as
of the date that his Vested Interest is distributed to
him. In the case of a Participant with no Vested
Interest in his Matching Contribution Account, Profit
Sharing Account, SAIC Matching Account or SAIC Employer
Stock Account, the forfeiture shall occur within the
period commencing on the date of his termination of
employment and ending ninety (90) days following the
end of the Plan Year in which his termination of
employment occurs.
(ii) If the Participant is reemployed by the Company or an
Affiliated Company prior to incurring a Period of
Severance lasting at least five years, the Participant
shall be entitled to have the entire portion of his
Matching Contribution Account, Profit Sharing Account,
SAIC Matching Account and SAIC Employer Stock Account
(including the nonvested portion thereof) reinstated by
repaying the total amount distributed to him. Such
reinstatement shall be made from current forfeitures
or, if necessary, from Company
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June 25, 1999
Contributions and shall not be treated as an Annual
Addition. However, this repayment must be made prior
to the earlier of (1) five years from the date of
reemployment or (2) the occurrence of a Period of
Severance lasting at least five years which commences
after the distribution of the Vested Interest in his
Plan Account following such termination of employment,
provided he is an Eligible Employee during that period.
If such repayment is not made, then the previously
forfeited amounts shall not be restored to the
Participant's Matching Contribution Account, Profit
Sharing Account, SAIC Matching Account and SAIC
Employer Stock Account.
(iii) In the case of a repayment made pursuant to the rules
of Section 9.6(a)(ii) above:
(A) The Participant shall not be required to pay any
interest charge upon the amounts repaid by him;
and
(B) The nonvested portion of his Matching Contribution
Account, Profit Sharing Account, SAIC Matching
Account and SAIC Employer Stock Account (which was
not distributed to him) shall not be adjusted for
gains or losses during the period between the
forfeiture and the repayment of the distributed
amount.
(iv) In the case of a Participant with no Vested Interest in
his Matching Contribution Account, Profit Sharing
Account, SAIC Matching Account or SAIC Employer Stock
Account, who is reemployed prior to incurring a Period
of Severance lasting at least five years, the entire
nonvested portion of such Accounts (unadjusted for
gains or losses during the period between the date of
his forfeiture and the date of his reemployment) shall
be reinstated upon his reemployment, without regard to
the repayment requirement of subsection (iii) above.
(v) In no event shall a Participant who has received a
distribution which includes the balance in his Accounts
and/or Rollover Account be entitled either to repay the
Plan or to have the balance in such Accounts or
Rollover Account reinstated upon reemployment by the
Company or an Affiliated Company. However, if the
previous distribution otherwise qualifies for a
Rollover Contribution, the Participant may make a
Rollover Contribution upon reemployment.
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June 25, 1999
9.7 DISTRIBUTABLE BENEFIT; IN-SERVICE WITHDRAWALS. A
Participant's "Distributable Benefit" shall be distributable in the form of
cash or, if elected in accordance with Section 9.12, by trustee-to-trustee
transfer.
(a) For purposes of determining the amount of Distributable
Benefit that will be distributed to a Participant or
Beneficiary pursuant to the rules of this Article IX, the
value of the Participant's Account shall be determined in
accordance with rules prescribed by the Committee. However,
the value of the Participant's Account shall be increased or
decreased (as appropriate) by any contributions or
distributions properly allocable under the terms of this
Plan to his Account that occurred on or after the Applicable
Valuation Date or for any other reason were not otherwise
properly reflected in the valuation of his Account on such
Valuation Date.
(b) Neither the Committee, the Company, nor the Trustee shall
have any responsibility for any increase or decrease in the
value of a Participant's Account as a result of any
valuation made under the terms of this Plan after the date
of his termination of employment and before the date of the
distribution of his Account to him or his Beneficiary.
Also, neither the Committee, the Company, nor the Trustee
shall have any responsibility for failing to make any
interim valuation of a Participant's Account between the
date of distribution to the Participant of his Account and
the immediately preceding Valuation Date, even though the
Plan Assets may have been revalued in that interim for a
purpose other than to revalue the Accounts under this Plan.
(c) Additionally, a Participant shall be entitled to make
withdrawals from his Accounts after the date on which he
attains the age of 59-1/2 even though his employment with
the Company has not yet been terminated. Further, a
Participant may withdraw amounts from his Elective Deferral
Account (and, if his Matching Contribution Account is 100%
vested, from his Matching Contribution Account) prior to
attaining age 59-1/2, upon incurring a hardship as
determined by the Committee, provided that no amount
representing earnings on amounts credited to the
Participant's Elective Deferral Account (including, without
limitation, in respect of a Predecessor Plan after December
31, 1988) may be withdrawn. Any withdrawal permitted under
the second sentence of this Section 9.7(c) shall first be
made from the Participant's Matching Contributions Account,
until all available funds such Account are exhausted. A
withdrawal will be deemed on account of hardship only if the
distribution is made on account of an immediate and heavy
financial need and is necessary to satisfy such financial
need. Any withdrawal made pursuant to this subparagraph (c)
shall be made in accordance with
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<PAGE> 50
June 25, 1999
rules prescribed by the Committee that are consistent with
Regulations under Code section 401(k), and the following
rules:
(i) The determination of whether a Participant has an
immediate and heavy financial need is to be made by the
Committee on the basis of all relevant facts and
circumstances. A distribution will be deemed to be
made on account of an immediate and heavy financial
need of the Participant if the distribution is on
account of:
(A) Medical expenses (as described in Code section
213(d)) of the Participant and his dependent(s)
(as defined in Code section 152) not covered by
insurance;
(B) Purchase of the principal residence for the
Participant;
(C) Payment of tuition and related education fees for
the next twelve months of post-secondary education
for the Participant or the Participant's spouse,
children or dependents (as defined in Code section
152); or
(D) The need to prevent the eviction from the
Participant's principal residence or foreclosure
on the mortgage of the Participant's principal
residence.
(ii) To receive a hardship withdrawal, the following
requirements must first be met by the Participant:
(A) The Participant must sign the appropriate forms
and certify all information requested on that
form;
(B) The Participant must have withdrawn, or must
withdraw at the same time that an application for
hardship withdrawal is submitted, all post-tax
contributions made under all other Company
retirement plans;
(C) The Participant must have applied for all eligible
loans from those Company retirement plans which
permit Participant loans;
(D) The hardship withdrawal normally cannot be less
than $500.00;
(E) The Participant must suspend all Elective
Deferrals for twelve (12) months after receiving
the hardship withdrawal pursuant to rules
prescribed by the Committee; and
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June 25, 1999
(F) The maximum amount of Elective Deferrals for the
calendar year following the year of the hardship
withdrawal will be the maximum amount permitted by
Code section 402(g) for such calendar year less
the amount of any Elective Deferrals made by the
Participant during the calendar year in which such
hardship withdrawal is made.
(iii) In the event that a Participant has elected to have
his Elective Deferral Account invested in more than
one investment alternative pursuant to the rules of
Section 8.1, then the withdrawal shall be made pro
rata from the subaccounts in which his Account is
invested.
(iv) The timing of the payment of the withdrawal shall be
made as soon as practicable following the request in
accordance with the rules established by the
Committee.
(d) A Participant's Distributable Benefit from his Rollover
Account, if any, shall be distributed in the same fashion as
provided in subsection 9.5(a)-(e), 9.6(a)-(b) or 9.7(a)-(d),
as applicable.
9.8 DESIGNATION OF BENEFICIARY. Subject to the provisions of
Section 9.8(e), each Participant shall have the right to designate a
Beneficiary or Beneficiaries to receive his Distributable Benefit in the Trust
Fund in the event of his death before receipt of his entire interest in the
Trust Fund. This designation is to be made on the form prescribed by and
delivered to the Committee or its delegate.
(a) Subject to the provisions of Section 9.8(e), a Participant
shall have the right to change or revoke any such
designation by filing a new designation or notice of
revocation with the Committee or its delegate. Subject to
the provisions of Section 9.8(e), no notice to any
Beneficiary nor consent by any Beneficiary shall be required
to effect any such change or revocation.
(b) If a deceased Participant shall have failed to designate a
Beneficiary, if the Committee shall be unable to locate a
designated Beneficiary after reasonable efforts have been
made, if for any reason the designation shall be legally
ineffective, or if the Beneficiary shall have predeceased
the Participant (and no legally effective contingent
Beneficiary shall have been named), any distribution
required to be made under the provisions of this Plan shall
be payable to the Participant's estate (except as provided
in Section 9.8(e)), and the estate shall be considered the
Beneficiary under this Plan.
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<PAGE> 52
June 25, 1999
(c) In the event that the deceased Participant was not a
resident of Virginia at the date of his death, the
Committee, in its discretion, may require the establishment
of ancillary administration in Virginia. In the event that
a Participant shall predecease his Beneficiary and on the
subsequent death of the Beneficiary a remaining distribution
is payable under the applicable provisions of this Plan, the
distribution shall be payable to the Beneficiary's estate.
(d) If a Participant is married at the time of his death, the
designation by the Participant under Section 9.8 of a person
other than the current Spouse as his Beneficiary shall not
take effect (and the entire Distributable Benefit shall be
paid to such Spouse) (i) unless the Spouse of the
Participant consents in writing to such designation, and the
Spouse's consent acknowledges the effect of such designation
and is witnessed by a notary, or (ii) unless it is
established to the satisfaction of the Committee that such
consent is not required because there is no Spouse, because
the Spouse cannot be located, or because of such other
circumstances as the Secretary of the Treasury may by
regulations prescribe.
(e) The Company, the Committee and the Trustee shall have no
duty to determine whether a Beneficiary designation or
spousal consent made-pursuant to this Section 9.8 was an
informed designation or consent or was freely given, and
shall be entitled to rely upon the Beneficiary designation
filed with the Committee or its delegate, as well as such
other documents as may be required pursuant to Section 9.11,
and shall be under no duty or obligation to protect the
rights of a spouse or former spouse of a Participant, except
as may be required by law.
9.9 FACILITY OF PAYMENT. If any payee under the Plan is a minor
or if the Committee reasonably believes that any payee is legally incapable of
giving a valid receipt and discharge for any payment due him, the Committee may
have the payment, or any part thereof, made to the person (or persons or
institution) whom it reasonably believes is caring for or supporting the payee,
unless it has received due notice of claim therefor from a duly appointed
guardian or committee of the payee. Any payment shall be a payment from the
Accounts of the payee and shall, to the extent thereof, be a complete discharge
of any liability under the Plan to the payee.
9.10 DISTRIBUTION TO ALTERNATE PAYEES. If an Alternate Payee is
entitled to a distribution of benefits from this Plan pursuant to a qualified
domestic relations order, as defined in Section 15.2, the benefits payable to
such Alternate Payee shall be distributed pursuant to such qualified domestic
relations order under rules or procedures described by the Committee. If
permitted by applicable law and regulations, the Committee may require or permit
immediate distribution of such benefits to an Alternate Payee at any time
following the determination by the Committee that such an order is a qualified
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<PAGE> 53
June 25, 1999
domestic relations order. In the event that an Alternate Payee dies prior to
receipt of the amounts due him from an Alternate Payee Account, such amounts
shall be distributed to the estate of the Alternate Payee as soon as practicable
following the date such amounts would have been distributed to such Alternate
Payee.
9.11 ADDITIONAL DOCUMENTS. The Committee or Trustee, or both,
may require (and rely upon) the execution and delivery of such documents,
papers and receipts as the Committee or Trustee may determine necessary or
appropriate in order to establish the fact of death of the deceased Participant
and of the right and identity of any Beneficiary or other person or persons
claiming any benefits under this Article IX.
(a) The Committee or the Trustee, or both, may, as a condition
precedent to the payment of death benefits hereunder,
require an inheritance tax release and/or such security as
the Committee or Trustee, or both, may deem appropriate as
protection against possible liability for State or Federal
death taxes attributable to any death benefits.
9.12 DIRECT ROLLOVERS. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a distributee's election under
this Section 9.12, a distributee may elect, at the time and in the manner
prescribed by the Committee, to have any portion of an eligible rollover
distribution made payable directly to an eligible retirement plan specified by
the distributee in a direct rollover.
(i) Eligible Rollover Distribution. An eligible rollover
distribution is any distribution of all or any portion
of the balance to the credit of the distributee, except
that an eligible rollover distribution does not
include: any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or
joint life expectancies) of the distributee and the
distributee's designated Beneficiary, or for a
specified period of 10 years or more; any distribution
to the extent such distribution is required under Code
section 401(a)(9); and 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).
(ii) Eligible Retirement Plan. An eligible retirement plan
is a retirement plan that accepts the distributee's
eligible rollover distribution and is an individual
retirement account described in Code section 408(a), an
individual retirement annuity described in Code section
408(b), an annuity plan described in Code section
403(a), or a qualified trust described in Code section
401(a). However in the case of an eligible rollover
distribution to the surviving spouse, an eligible
retirement
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June 25, 1999
plan is an individual retirement account or individual
retirement annuity.
(iii) Distributee. 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 Alternative Payee are distributees with regard to
the interest of the spouse or former spouse.
(iv) Direct rollover. A direct rollover is a payment by
the Plan to the eligible retirement plan specified by
the distributee.
ARTICLE X
OPERATION AND ADMINISTRATION OF THE PLAN;
VOTING AND OTHER RIGHTS OF COMPANY STOCK AND SAIC STOCK
10.1 PLAN ADMINISTRATION. Authority to control and manage the
operation and administration of the Plan is hereby allocated to the Committee.
(a) The members of the Committee shall be appointed by the Board
of Directors and shall hold office until resignation, death
or removal by the Board of Directors.
(b) For purposes of ERISA Section 402(a), the Committee and any
Investment Manager appointed pursuant to Section 10.3 shall
be named fiduciaries of this Plan.
(c) The Secretary of the Committee shall cause to be maintained
in the office of the Committee for the purpose of inspection
an accurate schedule listing the names of all persons from
time to time serving as members of the Committee and all
named fiduciaries of the Plan.
10.2 COMMITTEE POWERS. The Committee shall have all powers
necessary to supervise the administration of the Plan and control its
operations. In addition to any powers and authority conferred on the Committee
elsewhere in the Plan or by law, the Committee shall have, by way of
illustration but not by way of limitation, the following powers and authority:
(a) To allocate fiduciary responsibilities (other than trustee
responsibilities) among the Plan's fiduciaries and to
designate one or more other persons to carry out fiduciary
responsibilities (other than trustee responsibilities).
However, no allocation or delegation under this Section
10.2(a) shall be effective until the person or persons to
whom the responsibilities have been allocated or delegated
agree to assume the responsibilities. The
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June 25, 1999
term "trustee responsibilities" as used herein shall have
the meaning set forth in Section 405(c) of ERISA. The
preceding provisions of this Section 10.2(a) shall not limit
the authority of the Committee to appoint one or more
Investment Managers in accordance with Section 10.3.
(b) To designate agents to carry out responsibilities relating
to the Plan, other than fiduciary responsibilities.
(c) To employ such legal, actuarial, medical, accounting,
clerical, administrative and ministerial and other
assistance as it may deem appropriate in carrying out the
provisions of this Plan, including one or more persons to
render advice with regard to any responsibility any named
fiduciary or any other fiduciary may have under the Plan.
(d) To establish rules and regulations from time to time for the
conduct of the Committee's business and the administration
and effectuation of this Plan.
(e) To administer, interpret, construe and apply this Plan and
the Plan's claims procedure and to decide all questions
which may arise or which may be raised under this Plan by
any employee, Participant, former Participant, Beneficiary,
Alternate Payee or other person whatsoever, including but
not limited to all questions relating to eligibility to
participate in the Plan, the amount of service of any
Participant, and the amount of benefits to which any
Participant or his Beneficiary may be entitled on or after
the Effective Date hereof.
(f) To determine the manner in which the assets of this Plan, or
any part thereof, shall be distributed.
(g) To direct the Trustee, in writing, from time to time, to
invest and reinvest the Trust Fund, or any part thereof, or
to purchase, exchange, or lease any property, real or
personal, which the Committee may designate. This shall
include the right to direct the investment of all or any
part of the Trust in any one security or any one type of
securities permitted hereunder. Among the securities which
the Committee may direct the Trustee to purchase are
"employer securities" as defined in Code section 409(1) or
any successor statute thereto.
(h) To select alternative investment options from which
Participants may select from in determining investment of
their Accounts, and to establish rules and procedures
regarding such investment options.
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June 25, 1999
(i) To satisfy accounting, auditing, record keeping, insurance,
bonding and reporting and disclosure requirements.
(j) To perform or cause to be performed such further acts as it
may deem to be necessary, appropriate or convenient in the
efficient administration of the Plan.
Any action taken in good faith by the Committee in the exercise of
authority conferred upon it by this Plan shall be conclusive and binding upon
the Participants and their Beneficiaries and any Alternate Payees. All
discretionary powers conferred upon the Committee shall be absolute, but shall
be exercised in a uniform and nondiscriminatory manner.
10.3 INVESTMENT MANAGER. The Committee, by action reflected in
the minutes thereof, may appoint one or more Investment Managers, as defined in
Section 3(38) of ERISA, to manage all or a portion of the assets of the Plan.
(a) An Investment Manager shall discharge its duties in
accordance with applicable law and in particular in
accordance with Section 404(a)(1) of ERISA.
(b) An Investment Manager, when appointed, shall have full power
to manage the assets of the Plan for which it has
responsibility, and neither the Company nor the Committee
shall thereafter have any responsibility for the management
of those assets, except to the extent such power or
responsibility shall have been reserved to the Company or
Committee in the documents governing the relationship
between or among the Plan, the Company and the Investment
Manager.
10.4 PERIODIC REVIEW. At periodic intervals, not less frequently
than annually, the Committee shall review the long-run and short-run financial
needs of the Plan and shall determine a funding policy for the Plan consistent
with the objectives of the Plan and the minimum funding standards of ERISA, if
applicable. In determining the funding policy the Committee shall take into
account, at a minimum, not only the long-term investment objectives of the
Trust Fund consistent with the prudent management of the assets thereof, but
also the short-run needs of the Plan to pay benefits.
(a) All actions taken by the Committee with respect to the
funding policy of the Plan, including the reasons therefor,
shall be fully reflected in the minutes of the Committee.
10.5 COMMITTEE PROCEDURE. A majority of the members of the
Committee as constituted at any time shall constitute a quorum, and any action
by a majority of the
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June 25, 1999
members present at any meeting, or authorized by a majority of the members in
writing without a meeting, shall constitute the action of the Committee.
(a) The Committee may designate certain of its members as
authorized to execute any document or documents on behalf of
the Committee, in which event the Committee shall notify the
Trustee of this action and the name or names of the
designated members. The Trustee, Company, Participants,
Beneficiaries, and any other party dealing with the
Committee may accept and rely upon any document executed by
the designated members as representing action by the
Committee until the Committee shall file with the Trustee a
written revocation of the authorization of the designated
members.
10.6 COMPENSATION OF COMMITTEE. Members of the Committee shall
serve without compensation unless the Board of Directors shall otherwise
determine. However, in no event shall any member of the Committee who is an
Employee receive compensation from the Plan for his services as a member of the
Committee.
(a) All members shall be reimbursed for any necessary or
appropriate expenditures incurred in the discharge of duties
as members of the Committee.
(b) The compensation or fees, as the case may be, of all
officers, agents, counsel, the Trustee, or other persons
retained or employed by the Committee shall be fixed by the
Committee.
10.7 RESIGNATION AND REMOVAL OF MEMBERS. Any member of the
Committee may resign at any time by giving written notice to the other members
and to the Board of Directors effective as therein stated. Any member of the
Committee may, at any time, be removed by the Board of Directors.
10.8 APPOINTMENT OF SUCCESSORS. Upon the death, resignation, or
removal of any Committee member, the Board of Directors may appoint a
successor.
(a) Notice of appointment of a successor member shall be given
by the Secretary of the Company in writing to the Trustee
and to the members of the Committee.
(b) Upon termination, for any reason, of a Committee member's
status as a member of the Committee, the member's status as
a named fiduciary shall concurrently be terminated, and upon
the appointment of a successor Committee member the
successor shall assume the status of a named fiduciary as
provided in Section 10.1.
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June 25, 1999
10.9 RECORDS. The Committee shall keep a record of all its
proceedings and shall keep, or cause to be kept, all such books, accounts,
records or other data as may be necessary or advisable in its judgment for the
administration of the Plan and to properly reflect the affairs thereof.
10.10 RELIANCE UPON DOCUMENTS AND OPINIONS. The members of the
Committee, the Board of Directors, the Company and any Employee of the Company
delegated under the provisions hereof to carry out any fiduciary responsible
under the Plan ("Delegated Fiduciary"), shall be entitled to rely upon any
tables, valuations, computations, estimates, certificates and reports furnished
by any consultant, or firm or corporation which employs one or more
consultants, upon any opinions furnished by legal counsel, and upon any reports
furnished by the Trustee. The members of the Committee, the Board of
Directors, the Company and any Delegated Fiduciary shall not be liable in any
manner whatsoever for anything done or action taken or suffered in reliance
from any such consultant or firm or corporation which employs one or more
consultants, trustee, or counsel.
(a) Any and all such things done or actions taken or suffered by
the Committee, the Board of Directors, the Company and any
Delegated Fiduciary shall be conclusive and binding on all
Employees, Participants, Beneficiaries, Alternate Payees and
any other persons whomsoever, except as otherwise provided
by law.
(b) The Committee and any Delegated Fiduciary may, but are not
required to, rely upon all records of the Company with
respect to any matter or thing whatsoever, and may likewise
treat those records as conclusive with respect to all
Employees, Participants, Beneficiaries, and any other
persons whomsoever, except as otherwise provided by law.
10.11 REQUIREMENT OF PROOF. The Committee or the Company may, in
its (or their) sole discretion, require satisfactory proof of any matter under
this Plan from or with respect to any Employee, Participant, Beneficiary or
Alternate Payee and no benefits under this Plan need be paid until the required
proof shall be furnished.
10.12 MULTIPLE FIDUCIARY CAPACITY. Any person or group of persons
may serve in more than one fiduciary capacity with respect to the Plan.
10.13 LIMITATION ON LIABILITY. Except as provided in Part 4 of
Title I of ERISA, neither the Company, the Board of Directors (or any member
thereof), nor the Committee (or any member thereof) shall be subject to any
liability with respect to his duties under the Plan unless he or it acts
fraudulently or in bad faith.
(a) Neither the Company, the Board of Directors (or any member
thereof) nor the Committee (or any member thereof) shall be
liable for any breach
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June 25, 1999
of fiduciary responsibility resulting from the act or
omission of any other fiduciary or any person to whom
fiduciary responsibilities have been allocated or delegated,
except as provided in Part 4 of Title I of ERISA.
(b) Neither the Comapny, the Board of Directors (or any member
thereof), the Committee (or any member thereof), nor the
Trustee shall be liable to the extent relief from liability
is provided pursuant to Section 404(c) of ERISA.
(c) This Plan document is not intended to create additional
fiduciary liability, or to characterize actions or
responsibilities as fiduciary in nature, beyond that
required by ERISA or other applicable law.
10.14 INDEMNIFICATION. To the extent permitted by law, the
Company hereby indemnifies each member of the Board of Directors and the
Committee, and any other Employee of the Company with duties under the Plan,
against expenses (including any amount paid in settlement) reasonably incurred
by him in connection with any claims against him by reason of his conduct in
the performance of his duties under the Plan, except in relation to matters as
to which he acted fraudulently or in bad faith in the performance of such
duties. The preceding right of indemnification shall pass to the estate of
such a person.
(a) The preceding right of indemnification shall be in addition
to any other right to which the Board of Directors or
Committee member or other person may be entitled as a matter
of law or otherwise.
10.15 ALLOCATION OF FIDUCIARY RESPONSIBILITY. Section 405(c) of
ERISA permits the division, allocation and delegation among Plan fiduciaries of
the fiduciary responsibilities owed to the Plan Participants and Beneficiaries.
Under this concept, each fiduciary, including a named Fiduciary, is accountable
only for its own functions, except to the extent of his co-fiduciary liability
under Section 405 of ERISA. It is the intent of the Company in establishing
this Plan to comply with Section 405(c) and to have the limitation on liability
set forth in Section 405(c)(2) of ERISA apply to the maximum extent allowed by
law.
(a) Pursuant to Section 405(c) of ERISA, the authority to
control and manage the operation and administration of the
Plan is allocated to the Committee. Except to the extent
expressly provided to the contrary in this Plan document,
and the Trust Agreement, the responsibilities allocated to
the Committee include:
(i) Responsibilities identified as Committee authority and
powers in Section 10.2(a) - (j); and
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June 25, 1999
(ii) Responsibilities identified elsewhere in this Plan
document as applicable to the Committee.
(b) The Chief Executive Officer and the Chief Financial Officer
of the Company are allocated the following responsibilities,
acting with the advice and assistance of the Committee:
(i) Appointing the Trustee;
(ii) Adopting Plan amendments;
(iii) Determining the amount of Company Contributions;
(iv) Determining whether to terminate the Plan or suspend
contributions thereto;
(v) Determining which Affiliated Companies shall
participate in the Plan, and the conditions on which
any such Affiliated Company shall participate;
(vi) Appointing members of the Committee;
(vii) Determining the form of Company Contributions; and
(viii) Performing those duties specifically allocated to it
elsewhere in this Plan document.
(c) The Trustee shall have only those responsibilities which
have been specifically allocated to it under this Plan
document and related Trust Agreement, plus any "trustee
responsibilities", under Section 405(c) of ERISA, which may
not legally be allocated to another person or fiduciary.
Any Investment Manager appointed pursuant to Section 10.3
may be granted exclusive authority and discretion to manage
and control all or any portion of the assets of the Plan,
subject to such limitations as may be provided in the
documents governing the relationship between or among the
Plan, the Company (if applicable) and the Trustee or
Investment Manager.
10.16 PROHIBITION AGAINST CERTAIN ACTIONS. To the extent
prohibited by law, in administering this Plan the Committee shall not
discriminate in favor of any class of employees and particularly it shall not
discriminate in favor of Highly Compensated Employees.
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June 25, 1999
(a) The Committee shall not cause the Plan to engage in any
transaction that constitutes a nonexempt Prohibited
Transaction under Code section 4975(c) or section 406(a) of
ERISA.
(b) All individuals who are fiduciaries with respect to the Plan
(as defined in Section 3(21) of ERISA) shall discharge their
fiduciary duties in accordance with applicable law, and in
particular, in accordance with the standards of conduct
contained in Section 404 of ERISA.
10.17 BONDING AND INSURANCE. Except as provided in Section 412 of
ERISA, as may be required under any other applicable law, or as may be required
by the Committee in its sole discretion, no bond or other security shall be
required by any member of the Committee, or any other fiduciary under this
Plan.
(a) For purposes of satisfying its indemnity obligations under
Section 10.14, the Company may (but need not) purchase and
pay premiums for one or more policies of insurance.
However, this insurance shall not release the Company of its
liability under the indemnification provisions.
10.18 VOTING AND OTHER RIGHTS OF COMPANY STOCK AND SAIC STOCK.
All voting rights of Company Stock and SAIC Stock held in the Trust Fund shall
be exercised in accordance with the following provisions:
(a) Each Participant (which term shall include, for purposes of
this Section 10.18, Beneficiaries and Alternate Payees
having an interest in an Account or fund holding Company
Stock or SAIC Stock) shall be given the opportunity to
instruct the Trustee confidentially on a form (or in such
other manner as is) prescribed and provided by the Company
or Science Applications International Corporation, as
applicable, as to how to vote those shares (including
fractional shares) of Company Stock and SAIC Stock allocated
to his Account(s) under the Plan (directly or indirectly
through an interest in a Company Stock or SAIC Stock fund)
on the date immediately preceding the record date for the
corresponding meeting of shareholders. The Trustee shall
not divulge to the Company or Science Applications
International Corporation, as the case may be, the
instructions of any Participant. The Company may require
verification of the Trustee's compliance with such
confidential voting instructions by an independent auditor
elected by the Company or Science Applications International
Corporation, as the case may be.
(i) All Participants entitled to direct such voting shall
be notified by the Committee (or the Company or Science
Applications International Corporation, as the case may
be, pursuant to its normal communications with
shareholders) of each occasion for the exercise of
these voting rights within a reasonable time (but not
less than the
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June 25, 1999
time period that may be required by any applicable
state or federal law) before these rights are to be
exercised. The notification shall include all
information distributed to other shareholders
regarding the exercise of such rights.
(ii) The Participants shall be so entitled to direct the
voting of fractional shares (or fractional rights to
shares). However, the Committee may, to the extent
possible, direct the Trustee to vote the combined
fractional shares (or fractional rights to shares) so
as to reflect the aggregate direction of all
Participants giving directions with respect to
fractional shares (or fractional rights to shares).
(iii) In the event that a Participant shall fail to direct
the Trustee, in whole or in part, as to the exercise
of voting rights arising under any Company Stock or
SAIC Stock allocated to his Account, then these voting
rights, together with voting rights as to shares, if
any, of Company Stock or SAIC Stock which have not
been allocated, shall be exercised by the Trustee in
the same proportion as the number of shares of Company
Stock or SAIC Stock for which the Trustee has received
direction in such matter (e.g., to vote for, against
or abstain from voting on a proposal, or to grant or
withhold authority to vote for a director or
directors), and the Trustee shall have no discretion
in such matter, except as may be required by
applicable law.
(iv) Except as provided in paragraph (b) below, all rights
(other than voting rights) of Company Stock or SAIC
Stock held in the Trust Fund shall be exercised in the
same manner and to the same extent as provided above
with respect to the voting rights of the Company Stock
or SAIC Stock, subject to the rules prescribed by the
Committee, which rules, among other matters, may
prescribe that no action shall be taken with respect
to shares as to which no direction is received from
Participants. The Trustee shall have no discretion
with respect to the exercise of any such rights,
except as may be required by applicable law.
(v) Neither the Committee nor the Trustee shall make any
recommendation to any Participant regarding the
exercise of the Participant's voting rights or any
other rights under the provisions of this Section
10.18, nor shall the Committee or Trustee make any
recommendation as to whether any such rights should or
should not be exercised by the Participant.
(b) All responses to tender and exchange for Company Stock or
SAIC Stock offers shall be made in accordance with the
following provisions:
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June 25, 1999
(i) Each Participant shall be given the opportunity, to the
extent that shares of Company Stock or SAIC Stock are
allocated to his Account, to direct the Trustee in
writing as to the manner in which to respond to a
tender or exchange offer with respect to Company Stock
or SAIC Stock, and the Trustee shall respond in
accordance with the instructions so received. The
Trustee shall not divulge to the Company or Science
Applications International Corporation, as the case may
be, the instructions of any Participant. The Committee
shall utilize its best efforts to timely distribute or
cause to be distributed to each Participant such
information as will be distributed to shareholders in
connection with any such tender or exchange offer,
together with a form addressed to the Trustee
requesting confidential instructions on whether or not
such shares will be tendered or exchanged. If the
Trustee shall not receive timely direction from a
Participant as to the manner in which to respond to
such a tender or exchange offer, the Trustee shall not
tender or exchange any shares of Company Stock or SAIC
Stock with respect to which such Participant has the
right of direction, and the Trustee shall have no
discretion in such matter, except as may be required by
applicable law.
(ii) Shares of Company Stock or SAIC Stock held by the
Trustee pending allocation to Participants' Accounts
shall be tendered or exchanged (or not tendered or
exchanged) by the Trustee in the same proportion as
shares with respect to which Participants have been
given the opportunity to direct the Trustee pursuant to
paragraph (i) above are tendered or exchanged, and the
Trustee shall have no discretion in such matter, except
as may be required by applicable law.
10.19 PLAN EXPENSES. All expenses incurred in the establishment,
administration and operation of the Plan, including but not limited to the
expenses incurred by the members of the Committee in exercising their duties,
to the extent these expenses are not paid by the Company, shall be charged to
the Trust Fund and accounted for pursuant to the provisions of Article VI.
(a) Costs or expenses which are particular to a specific asset
or group of assets in the Trust Fund, such as interest and
brokerage charges which are included in the cost of
securities purchased by the Trustee (or charged to proceeds
in the case of sales), as determined by the Committee, shall
be charged or allocated in a fair and equitable manner to
the Accounts, subaccounts or funds to which those assets are
allocated pursuant to rules prescribed by the Committee.
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June 25, 1999
ARTICLE XI
MERGER OF COMPANY; MERGER OF PLAN
11.1 EFFECT OF REORGANIZATION OR TRANSFER OF ASSETS. In the
event of a consolidation, merger, sale, liquidation, or other transfer of the
operating assets of the Company to any other company, the ultimate successor or
successors to the business of the Company shall automatically be deemed to have
elected to continue this Plan in full force and effect, in the same manner as
if the Plan had been adopted by resolution of its board of directors, unless
the successor(s), by resolution of its board of directors, shall elect not to
so continue this Plan in effect, in which case the Plan shall automatically be
deemed terminated as of the applicable effective date set forth in the board
resolution.
11.2 MERGER RESTRICTION. This Plan and its related Trust shall
not in whole or in part merge or consolidate with, or transfer its assets or
liabilities to any other plan or trust unless each affected Participant in this
Plan would receive a benefit immediately after the merger, consolidation, or
transfer (if the Plan then terminated) which is equal to or greater than the
benefit he would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then terminated).
ARTICLE XII
PLAN TERMINATION AND
DISCONTINUANCE OF CONTRIBUTIONS
12.1 PLAN TERMINATION. Subject to the following provisions of
this Section 12.1, the Company may terminate the Plan and the Trust Agreements
at any time and for any reason by an instrument in writing executed in the name
of the Company by an officer or officers duly authorized to execute such an
instrument, and delivered to the Trustee. The Company expressly disavows any
contractual obligation, implied or otherwise, to continue this Plan.
(a) The Plan and Trust Agreements may terminate if the Company
merges into any other corporation, if as a result of the
merger the corporate entity of the Company ceases, and the
Plan is terminated pursuant to the rules of Section 11.1.
(b) Upon and after the effective date of the termination, the
Company shall make no further contributions under the Plan
and no contributions need be made by the Company applicable
to the Plan Year in which the termination occurs, except as
may otherwise be required by law.
(c) The rights of all affected Participants to benefits accrued
to the date of termination of the Plan, to the extent funded
as of the date of termination, shall automatically become
fully vested as of that date.
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June 25, 1999
12.2 DISCONTINUANCE OF CONTRIBUTIONS. The Company by
resolution of its Board of Directors may discontinue contributions to the Plan
at any time and for any reason in the Board's sole discretion. Upon and after
the effective date of this discontinuance, the Company shall make no further
Company Contributions under the Plan and no Company Contributions need be made
by the Company with respect to the Plan Year in which the discontinuance
occurs, except as may otherwise be required by law.
(a) The discontinuance of Company Contributions on the part of
the Company shall not terminate the Plan as to the funds and
assets then held by the Trustee, or operate to accelerate
any payments of distributions to or for the benefit of
Participants, Beneficiaries or Alternate Payees, and the
Trustee shall continue to administer the Trust Fund in
accordance with the provisions of the Plan until all of the
obligations under the Plan shall have been discharged and
satisfied.
(b) However, if this discontinuance of Company Contributions
shall cause the Plan to lose its status as a qualified plan
under Code section 401(a), the Plan shall be terminated in
accordance with the provisions of this Article XII.
(c) On and after the effective date of a discontinuance of
Company contributions, the rights of all affected
participants to benefits accrued to that date, to the extent
funded as of that date, shall automatically become fully
vested as of that date.
12.3 RIGHTS OF PARTICIPANTS. In the event of the termination of
the Plan, for any cause whatsoever, all assets of the Plan, after payment of
expenses, shall be used for the exclusive benefit of Participants and their
Beneficiaries and no part thereof shall be returned to the Company, except as
provided in Article IV of this Plan or as otherwise permitted by law.
12.4 TRUSTEE'S DUTIES ON TERMINATION. Upon termination of the
Plan, the Committee shall determine whether to continue the Trust, to
distribute the assets of the Trust to Participants, Beneficiaries and Alternate
Payees, to transfer the assets in the Trust to another qualified plan
maintained by the Company, or to take other action consistent with applicable
law.
(a) If so directed by the Committee upon termination of this
Plan, the Trustee shall proceed as soon as possible to
reduce all of the assets of the Trust Fund to cash and/or
common stock and other securities in such proportions as the
Committee shall determine (after approval by the Internal
Revenue Service, if necessary or desirable, with respect to
any portion of the assets of the Trust Fund held in common
stock or
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June 25, 1999
securities of the Company). After first deducting the
estimated expenses for liquidation and distribution
chargeable to the Trust Fund, and after setting aside a
reasonable reserve for expenses and liabilities (absolute or
contingent) of the Trust, the Committee shall make the
allocations required under Article VI, where applicable,
with the same effect as though the date of completion of
liquidation were an Anniversary Date of the Plan. Following
these allocations, the Trustee shall promptly, after receipt
of appropriate instructions from the Committee, distribute
in accordance with such instructions to each former
Participant, or Beneficiary or Alternate Payee, a benefit
equal to the amount credited to his Accounts as of the date
of completion of the liquidation.
(b) The Trustee and the Committee shall continue to function as
such for such period of time as may be necessary for the
winding up of this Plan and for the making of distributions
in accordance with the provisions of this Plan.
12.5 PARTIAL TERMINATION. In the event of a partial termination
of the Plan within the meaning of Code section 411(d)(3), the interest of
affected Participants in the Trust Fund, as of the date of the partial
termination, shall become nonforfeitable as of that date.
(a) That portion of the assets of the Plan affected by the
partial termination shall be used exclusively for the
benefit of the affected Participants and their
Beneficiaries, and no part thereof shall otherwise be
applied.
(b) With respect to Plan assets and Participants affected by a
partial termination, the Committee and the Trustee shall
follow the same procedures and take the same actions
prescribed in this Article XII in the case of a total
termination of the Plan.
12.6 FAILURE TO CONTRIBUTE. The failure of the Company to
contribute to the Trust in any year, shall not, in and of itself, constitute a
complete discontinuance of contributions to the Plan.
ARTICLE XIII
APPLICATION FOR BENEFITS
13.1 APPLICATION FOR BENEFITS; CLAIMS PROCEDURE. The Committee
may require any person claiming benefits under the Plan to submit an
application therefor in such form or medium as the Committee shall prescribed,
together with such documents and information as the Committee may require. In
the case of any person suffering from a disability which prevents the claimant
from making personal application for benefits,
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June 25, 1999
the Committee may, in its discretion, permit another person acting on his
behalf to submit the application.
13.2 ACTION ON APPLICATION. Within ninety (90) days following
receipt of an application and all necessary documents and information, the
Committee's authorized delegate reviewing the claim shall furnish the claimant
with written notice of the decision rendered with respect to the application.
(a) In the case of a denial of the claimant's application, the
written notice shall set forth:
(i) The specific reasons for the denial, with reference to
the Plan provisions upon which the denial is based;
(ii) A description of any additional information or
material necessary for perfection of the application
(together with an explanation why the material or
information is necessary); and
(iii) An explanation of the Plan's claim review
procedure.
(b) A claimant who wishes to contest the denial of his
application for benefits or to contest the amount of
benefits payable to him shall follow the procedures for an
appeal of benefits as set forth in Section 13.3 below, and
shall exhaust such administrative procedures prior to
seeking any other form of relief.
13.3 APPEALS. A claimant who does not agree with the decision
rendered with respect to his application may appeal the decision to the
Committee.
(i) The appeal shall be made, in writing, within sixty-five
(65) days after the date of notice of the decision with
respect to the application.
(ii) If the application has neither been approved nor denied
within the ninety-day period provided in Section 13.2
above, then the appeal shall be made within sixty-five
days (65) after the expiration of the ninety-day
period.
(a) The claimant may request that his application be given full
and fair review by the Committee. The claimant may review
all pertinent documents and submit issues and comments in
writing in connection with the appeal.
(b) The decision of the Committee shall be made promptly, and
not later than sixty (60) days after the Committee's receipt
of a request for review,
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June 25, 1999
unless special circumstances require an extension of time
for processing, in which case a decision shall be rendered
as soon as possible, but not later than one hundred twenty
(120) days after receipt of a request for review.
(c) The decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner
calculated to be understood by the claimant with specific
reference to the pertinent Plan provisions upon which the
decision is based.
ARTICLE XIV
LIMITATIONS ON ANNUAL ADDITIONS
14.1 MAXIMUM ANNUAL ADDITIONS. The Annual Additions of a
Participant shall not exceed the maximum permissible amount specified in Code
section 415(c)(1).
14.2 EFFECT OF PARTICIPATION IN OTHER COMPANY PLANS. If a
Participant in this Plan is also a Participant in another defined contribution
plan maintained by the Company, the aggregate Annual Additions of the
Participant under this Plan and such other plan(s) shall not exceed the maximum
permissible amount specified in Code section 415(c)(1). In order to avoid
having the aggregate Annual Additions exceed the limit, the Participant's
Elective Deferrals may be limited. If limitation (down to zero) of such
Elective Deferrals does not sufficiently reduce the Annual Additions to come
within the limit, allocations of the Company Contributions to the Participant
shall be reduced.
To the extent allocations to a Participant are reduced, such reduced
amounts shall be allocated and reallocated to other Participants in the
applicable Plan.
If as a result of (i) forfeitures, (ii) a reasonable error in
estimating a Participant's Annual Compensation, (iii) a reasonable error in
determining the amount of Elective Deferrals that may be made with respect to
any individual under the limits of Code section 415, or (iv) under other
limited facts and circumstances that the Commissioner of Internal Revenue finds
as justifying the rules set forth in this subsection 14.2(a), the Annual
Additions under the terms of this Plan and other retirement plans of the
Company would cause the limitations of Code section 415 applicable to that
Participant to be exceeded, the excess amounts shall not be deemed Annual
Additions if Elective Deferrals within the meaning of Code section 402(g)(3)
are distributed to the Participant under the terms of this Plan. Such
distributed amounts shall be disregarded for purposes of Code section 402(g)
and the average deferral percentage test of Code section 401(k)(3).
(a) If a Participant in this Plan is also a Participant in a
defined benefit plan maintained by the Company, the sum of
the Defined Contribution Plan Fraction (as defined in Code
section 415(e)(3)) and the Defined Benefit Plan Fraction (as
defined in Code section 415(e)(2)) shall not exceed 1.0.
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June 25, 1999
The Participant's benefit under such defined benefit plan
shall be reduced, as necessary to satisfy the requirement of
the preceding sentence.
14.3 INCORPORATION BY REFERENCE OF CODE SECTION 415. In order to
ensure compliance with Code section 415, the Plan hereby incorporates said
Section by reference as though it were set out as part of this Plan. In
applying Section 415 to this Plan, the Plan shall include each grandfather or
transition rule provided by such Section or any law amending such Section, in
order to allow the largest benefit otherwise payable hereunder, or under other
plans maintained by the Company, to be paid.
14.4 NO CONTRACTUAL RIGHT TO EXCESS CONTRIBUTIONS. If, in order
to comply with the limitations of this Article XIV, it becomes necessary to
reduce a Participant's Account(s), to reduce or reallocate amounts previously
allocated to such Accounts, or otherwise, such action(s) may be taken by the
Committee and Trustee free of any contractual obligation to the Participant (or
Beneficiary) affected based on prior Account balances or allocations.
ARTICLE XV
RESTRICTION ON ALIENATION; PARTICIPANT LOANS
15.1 GENERAL RESTRICTIONS AGAINST ALIENATION. Except as
otherwise provided by law and as otherwise provided by Sections 15.2 and 15.3:
(a) The interest of any Participant, Beneficiary or Alternate
Payee in the income, benefits, payments, claims or rights
hereunder, or in the Trust Fund shall not in any event be
subject to sale, assignment, hypothecation, or transfer.
Each Participant, Beneficiary or Alternate Payee is
prohibited from anticipating, encumbering, assigning, or in
any manner alienating his or her interest under the Trust
Fund, and is without power to do so, except as may otherwise
be provided for in the Trust Agreement. The interest of any
Participant, Beneficiary or Alternate Payee shall not be
liable or subject to his debts, liabilities, or obligations,
now contracted, or which may be subsequently contracted.
The interest of any Participant, Beneficiary or Alternate
Payee shall be free from all claims, liabilities, bankruptcy
proceedings, or other legal process now or hereafter
incurred or arising; and the interest or any part thereof,
shall not be subject to any judgment rendered against the
Participant, Beneficiary or Alternate Payee.
(b) In the event any person attempts to take any action contrary
to this Article XV, that action shall be void and the
Company, the Committee, the Trustee and all Participants,
their Beneficiaries and Alternate Payees may disregard that
action and are not in any manner bound thereby, and
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June 25, 1999
they, and each of them separately, shall suffer no liability
for any disregard of that action, and shall be reimbursed on
demand out of the Trust Fund for the amount of any loss,
cost or expense incurred as a result of disregarding or of
acting in disregard of that action.
(c) The preceding provisions of this Section 15.1 shall be
interpreted and applied by the Committee in accordance with
the requirements of Code section 401 (a)(13) as construed
and interpreted by authoritative judicial and administrative
rulings and regulations.
15.2 NONCONFORMING DISTRIBUTIONS UNDER COURT ORDER. Benefits
shall be paid to an Alternate Payee if such payment is required pursuant to a
qualified domestic relations order, as defined in Code sections 401(a)(13) and
414(p).
In the event that the Plan receives a domestic relations order, the
Committee or its delegate shall promptly notify the Participant and any
Alternate Payee (i.e., spouse, former spouse, child or other dependent of a
participant who is recognized by a domestic relations order as having a right
to receive all, or a portion of, the benefits payable under the Plan with
respect to such Participant) of the receipt of such order and the Plan's
procedures for determining the qualified status of such orders, and within a
reasonable period of time after receipt of such order, the Committee shall
determine whether such order is a qualified domestic relations order and notify
the Participant and each Alternate Payee of such determination. In determining
the qualified status of a domestic relations order and in administering
distributions under such qualified orders, the Committee shall follow the
following procedures:
(a) When the Plan receives a domestic relations order affecting
Plan benefits, the Committee or its delegate shall promptly
notify each person specified in the order as entitled to
benefits under the Plan (using the address(es) included in
the domestic relations order) of the Plan procedure as set
forth herein (and as supplemented, if necessary, by
Committee procedures)
(b) The Plan shall permit an Alternate Payee to designate a
representative for receipt of copies of notices that are
sent to the Alternate Payee with respect to a domestic
relations order.
(c) The Committee shall review any domestic relations order to
determine if it satisfies the requirements of being a
qualified domestic relations order. In making such
determination, the Committee may seek the advice of legal
counsel to the Plan and may rely upon the legal opinion of
such counsel in determining the qualified status of domestic
relations orders and appropriate measures to resist or
implement such orders. The Committee may, but need not,
enter an appearance on behalf of the Plan
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in the domestic relations lawsuit, if any, and may pursue
such legal remedies as may be desirable for resisting
unqualified orders or in modifying proposed orders.
(d) During any period in which the issue of whether a domestic
relations order is a qualified domestic relations order is
being determined by the Committee, by a court of competent
jurisdiction, or otherwise, the Committee shall segregate in
a separate account in the Plan or in an escrow account the
amounts, if any, which would have been payable to the
Alternate Payee during such period if the order had been
determined to be a qualified domestic relations order. If,
within eighteen (18) months it is determined that the order
is not a qualified domestic relations order or the issue as
to whether such order is a qualified domestic relations
order is not resolved, than the Committee shall pay the
segregated amounts (plus any interest thereon) to the person
or persons who would have been entitled to such amounts if
there had been no order. Any determination that an order is
a qualified domestic relations order which is made after the
close of the aforementioned eighteen-month period shall be
applied prospectively only, should there be any
undistributed benefits of the Participant to which the order
related.
(e) If the Committee or other fiduciary of the Plan acts in
accordance with the foregoing procedures in treating a
domestic relations order as being (or not being) a qualified
domestic relations order or taking action to segregate an
account and ultimately make payment thereof in accordance
with subparagraph (d) above, then the Plan's obligations to
the Participant and each Alternate Payee shall be discharged
to the extent of any payment made pursuant to such act.
15.3 AUTHORIZED PARTICIPANT LOANS. The Committee may authorize
loans from the Trust Fund to Participants (including, for this purpose,
Suspended Participants) pursuant to rules prescribed by the Committee at any
time and from time to time. These rules shall be designed to ensure that
Participant loans satisfy the requirements of Code sections 4975(d)(1) and
72(p), and any other provision of law that is, or may become, applicable. The
decision as to whether or not any Participant Loans shall be made under this
Section 15.3 shall be made in the sole discretion of the Committee, and the
Participant shall not have a contractual right to obtain a loan hereunder.
These rules shall provide, among other things, that:
(a) The loans are available to all Participants on a reasonably
equivalent basis.
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June 25, 1999
(b) Unless otherwise determined by the Plan Administrator, a
Participant shall direct the source (i.e., from which
Account, and from which investments within an Account, if
the Account from which a loan is to be made has more than
one available investment choice) from which a loan shall be
made. If the Participant fails to direct the source of any
loan, or if the source(s) selected by the Participant is not
sufficient to accommodate the loan, then the loan shall be
taken from all Accounts and all investment choices within an
Account on a pro-rata basis. Notwithstanding the foregoing,
no loan shall be taken from the Participant's SAIC Employer
Stock Account or SAIC Matching Account.
(c) The loans are not made available to Highly Compensated
Employees in amounts greater than the amounts made available
for other Employees. For this purpose, the rules prescribed
by the Committee may restrict the amount of the loan to a
percentage of the Participant's Account balance or to use
different percentages depending upon the amount of the loan,
provided the percentages are applicable to all Participants.
The Committee may also prescribe rules pursuant to which the
portion of an individual's Account that is invested in
Company Stock or SAIC Stock (or a fund within the Trust to
which Company Stock or SAIC Stock is allocated) may (or may
not) be taken into account in determining the maximum loan
he may obtain.
(d) The loans bear interest at the prime rate (as identified in
a source to be selected by the Plan Administrator) or such
other reasonable rate of interest determined by the Plan
Administrator.
(e) The loans are adequately secured. For this purpose, the
amount of the security must be at least equal to the amount
of the loan. The rules to be prescribed by the Committee
may permit a Participant to use up to his entire Vested
Interest under the Plan as security for the loan.
(f) If the loan is to be secured by some or all of the
Participant's Accounts under the Plan, the Participant and
his spouse, if any, must consent to the loan and the
possible reduction in the Accounts in the event of a set off
of the loan against the Account balances as a result of
nonpayment of the loan. Such consent must be given in
writing within a ninety-day period before the Committee
makes the loan. In the event the Participant defaults on
the loan and Participant's Accounts are security for the
loan, the Account balances will not be used to satisfy the
loan obligation prior to the earlier of the Participant's
termination of employment with the Company or an event
resulting in a permissible distribution of his Accounts
under the Plan. In the event of default, the Company shall
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June 25, 1999
offset the amount owed by the Participant against any
amounts owed by the Company to the Participant.
(g) The loan must state the date upon which the loan must be
repaid, which may not exceed five years (except in the case
of loans used to acquire a dwelling unit which, within a
reasonable time after the loan is made, is to be used as the
principal residence of the Participant), and the loan must
be repayable in substantially level payments, with payments
not less frequently than quarterly.
(h) In connection with the making of any loan to a Participant
pursuant to the provisions of this Section 15.3, the
Participant receiving such a loan may be required to execute
such documents as may be required by the Committee and/or
Trustee.
(i) The amount of the loan may not exceed the lesser of:
(i) $50,000 (reduced by the excess of the highest
outstanding balance of loans from the Plan during the
one-year period ending on the date preceding the date
on which such loan is made over the outstanding balance
of loans from the Plan on the date on which such loan
was made); or
(ii) One-half of the present value of the Participant's
Vested Interest in his Accounts. For purposes of this
Section 15.3(i), the Participant's Vested Interest and
outstanding loan balances in all qualified employer
plans (as such term is defined in Code section
72(p)(3)) of the Company shall be aggregated to
determine whether a loan shall be permissible hereunder
and the maximum permissible amount thereof.
(j) In the event the Participant dies prior to distribution of
his Distributable Benefit, the amount payable to his
Beneficiary or spouse, as applicable, shall be reduced by
the amount of the security interest in the Participant's
vested interest held by the Plan by reason of a loan
outstanding to such Participant.
(k) In addition to the foregoing, the loan rules promulgated by
the Committee shall include the following:
(i) The identify of the person or positions authorized to
administer the Participant loan program;
(ii) The procedures for applying for a loan;
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(iii) The basis on which loans will be approved or denied;
(iv) Limitations on the types and amounts of loans offered;
and
(v) The events constituting default and the steps that
will be taken to preserve Plan assets in the event of
such default.
(l) Notwithstanding the foregoing provisions of this section
15.3, loan repayments may be suspended in accordance with
Code section 414(u)(4).
ARTICLE XVI
PLAN AMENDMENTS
16.1 AMENDMENTS. The Board of Directors in its sole discretion
may at any time, and from time to time, amend the Plan by an instrument in
writing executed in the name of the Company by an officer or officers duly
authorized to execute such instrument, and delivered to the applicable Trustee.
However, except as provided in Section 16.2 no amendment shall be made at any
time, the effect of which would be:
(a) To cause any assets of the Trust Fund to be used for or
diverted to purposes other than providing benefits to the
Participants and their Beneficiaries, and defraying
reasonable expenses of administering the Plan, except as
provided in Article IV or as otherwise permitted by law;
(b) To have any retroactive effect so as to deprive any
Participant or Beneficiary of any benefit to which he would
be entitled under this Plan if his employment were
terminated immediately before the amendment; or
(c) To increase the responsibilities or liabilities of a Trustee
or an Investment Manager without its written consent.
16.2 RETROACTIVE AMENDMENTS. The Plan may be amended
prospectively or retroactively (as provided in Code section 401(b)) to make the
Plan conform to any provision of ERISA, any Code provisions dealing with
tax-qualified employees' trusts, or any regulation under either.
ARTICLE XVII
TOP-HEAVY PROVISIONS
17.1 APPLICATION. If the Plan is or becomes top heavy in any
Plan Year, the provisions of this Article XVII will supersede any conflicting
provisions in the Plan.
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17.2 CRITERIA. The Plan shall be top heavy for any Plan Year if
any of the following conditions exist:
(a) The Top-Heavy Ratio for the Plan exceeds 60% and this Plan
is not part of any Required Aggregation Group or Permissive
Aggregation Group of Plans.
(b) This Plan is part of a Required Aggregation Group of plans,
but not part of a Permissive Aggregation Group, and the
Top-Heavy Ratio for the group of plans exceeds 60%.
(c) This Plan is a part of a Required Aggregation Group and part
of a Permissive Aggregation Group of plans and the Top-Heavy
Ratio for the Permissive Aggregation Group exceeds 60%.
17.3 DEFINITIONS. For purposes of this Article XVII, the
following terms shall have the following meanings:
(a) Determination Date: With respect to any Plan Year, (i) the
Determination Date shall be the last day of the preceding
Plan Year, or (ii) in the case of the first Plan year of the
Plan, the last day of such Plan Year.
(b) Key Employee:, Any Employee or former Employee (and the
Beneficiaries of such Employees) who, pursuant to the rules
of Code section 416(i) and the Regulations thereunder, is or
was:
(i) An officer of the Company having an annual
Compensation greater than 50% of the dollar limitation
under Code section 415(b)(1)(A);
(ii) One of the ten Employees having annual Compensation
from the Company of more than the dollar limitation
under Code section 415(c)(1)(A), and owning (or
considered as owning) under Code section 318 the
largest interest in the Company;
(iii) A 5% Owner of the Company; or
(iv) A 1% Owner of the company having Annual Compensation
from the Company of more than $150,000.
The determination period is the Plan Year containing the
Determination Date and the four preceding Plan Years.
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June 25, 1999
(c) Permissive Aggregation Group: The Required Aggregation Group
of plans plus any other plan or plans of the Company that,
when considered as a group with the Required Aggregation
Group, would continue to satisfy the requirements of Code
sections 401 (a)(4) and 410, and which are designated by the
Company to constitute a Permissive Aggregation Group.
(d) Required Aggregation Group: (1) Each plan of the Company in
which a Key Employee is a Participant or was a Participant
at any time during the determination period (regardless of
whether the Plan has terminated) and (2) any other qualified
plan of the Company that enables a plan described in (1) to
meet the requirements of Code section 401(a)(4) or 410.
(e) Top-Heavy Ratio:
(i) If the Company maintains one or more defined
contribution plans (including any Simplified Employee
Pension) and the Company has not maintained any defined
benefit plan that during the five-year period ending on
the Determination Date has or has had accrued benefits,
the Top-Heavy Ratio for this Plan alone or for the
Required Aggregation Group or Permissive Aggregation
Group, as appropriate, is a fraction, the numerator of
which is the sum of the Account balances of Key
Employees as of the Determination Date (including any
part of any account balance distributed in the
five-year period ending on the Determination Date), and
the denominator of which is the sum of all account
balances (including any part of any account balance
distributed in the five-year period ending on the
Determination Date), both computed in accordance with
Code section 416 and regulations thereunder. Both the
numerator and denominator of the Top-Heavy Ratio are
adjusted to reflect any contributions not actually made
as of the Determination Date, but which is to be taken
into account on that date under Code section 416 and
regulations thereunder.
(ii) If the Company maintains one or more defined
contribution plans (including any Simplified Employee
Pension) and the Company maintains or has maintained
one or more defined benefit plans that during the
five-year period ending on the Determination Date has
or has had any accrued benefits, the Top-Heavy Ratio
for any Required or Permissive Aggregation Group, as
appropriate, is a fraction, the numerator of which is
the sum of Account balances under the aggregated
defined contribution plan or plans for all Key
Employees determined in accordance with (1) above and
the present value of accrued benefits under the
aggregated defined benefit plan or plans
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June 25, 1999
for all Key Employees as of the Determination Date,
and the denominator of which is the sum of the Account
balances under the aggregated defined contribution
plan or plans for all Participants determined in
accordance with (1) above, and the present value of
accrued benefits under the defined benefit plan or
plans for all Participants as of the Determination
Date, all determined in accordance with Code section
416 and the regulations thereunder. The accrued
benefits under a defined benefit plan in both the
numerator and denominator of the Top-Heavy Ratio are
adjusted for any distribution of an accrued benefit
made in the five-year period ending on the
Determination Date. Solely for the purpose of
determining if the Plan, or any other plan included in
a Required Aggregation Group is top-heavy (within the
meaning of Code section 416(g)), the accrued benefit
of an Employee other than a Key Employee shall be
determined under (i) the method, if any, that
uniformly applies for accrual purposes under all plans
maintained by the Company and any Affiliated Companies
or (ii) if there is no such method, as if such benefit
accrued not more rapidly than the slowest accrual rate
permitted under the fractional accrual rate of Code
section 411(b)(1)(C).
(iii) For purposes of (i) and (ii) above, the value of
Account balances and the present value of accrued
benefits will be determined as of the most recent
Valuation Date that falls within or ends with the
twelve-month period ending on the Determination Date,
except as provided in Code section 416 and regulations
thereunder for the first and second Plan Years of a
defined benefit plan. The Account balances and
accrued benefits of a Participant (A) who is not a Key
Employee but who was a Key Employee in a prior year or
(B) who has not been credited with at least one Hour
of Service with any Company maintaining the Plan at
any time during the five-year period ending on the
Determination Date will be disregarded. The
calculation of the Top-Heavy Ratio, and the extent to
which distributions, rollovers and transfers are taken
into account, will be made in accordance with Code
section 416 and regulations thereunder. Voluntary
deductible contributions will not be taken into
account in computing the Top-Heavy Ratio. When
aggregating plans, the value of account balances and
accrued benefits will be calculated with reference to
the Determination Dates that fall within the same
calendar year.
(iv) For purposes of establishing the present value in
order to compute the Top-Heavy Ratio any benefit shall
be discounted only for mortality and interest based on
the interest rate that would be used as
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June 25, 1999
of the date of distribution by the Pension Benefit
Guaranty Corporation to determine the present value of
a lump-sum distribution on plan termination.
(f) Valuation Date: The date as of which Account balances or
accrued benefits are valued for purposes of calculating the
Top-Heavy Ratio.
17.4 ADJUSTMENT TO FRACTIONS. In any Plan Year in which the Plan
is Top-Heavy, in applying the limitations of Code section 415, the denominator
of the Defined Benefit Fraction shall be computed using 100% of the dollar
limitation instead of 125%, and the maximum aggregate amount used with respect
to the denominator of the Defined Contribution Fraction shall be computed by
using 100% of the dollar limitation instead of 125%.
17.5 VESTING REQUIREMENTS. If the Plan is determined to be a
Top-Heavy Plan in any Plan Year, then a Participant's right to his Accounts
derived from Company Contributions, determined as of the end of such Plan Year,
shall vest in accordance with the following schedule, unless a more rapid
vesting schedule is then in effect under the terms of the Plan:
<TABLE>
<CAPTION>
YEARS OF VESTING SERVICE VESTING PERCENTAGE
- ------------------------ ------------------
<S> <C>
2 20%
3 40%
4 60%
5 80%
6 or more 100%
</TABLE>
If the Plan ceases to be a Top-Heavy Plan in any Plan Year, then the vesting
schedule set forth in Article VII shall apply for such Plan Year with respect
to any portion of a Participant's Accounts that is forfeitable as of the
beginning of such Plan Year; provided, however, that a Participant with three
or more years of vesting service shall be given the option of remaining under
the vesting schedule set forth above.
17.6 MINIMUM CONTRIBUTION. If this Plan is a Top-Heavy Plan in
any Plan Year, the Company Contributions for such year for each "participant"
(as defined for the purpose of providing mandatory minimum contributions under
regulations) who is not a Key Employee shall not be less than three percent
(3%) of such participant's compensation. If, however, the Plan does not enable
a defined benefit plan to meet the requirements of Section 401(a)(4) or 410,
the Company Contributions shall not exceed that percentage of each
participant's compensation which is equal to the highest percentage of
compensation at which Company Contributions are made for the Plan Year for any
Key Employee (a) under the Plan or (b) if the Plan is part of an Aggregation
Group, under any defined contribution plan in such Group. The percentage of
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June 25, 1999
compensation at which Company Contributions are made for a Key Employee shall
be computed without regard to compensation in excess of the ceiling on
includible compensation set forth in Section 17.7 of this Article XVII. For
Plan Years beginning before January 1, 1989, for purposes of this Section 17.6,
Company Contributions attributable to a salary reduction or similar arrangement
and contributions made pursuant to Chapter 21 of Title 11 of the Social
Security Act shall be disregarded. For Plan Years beginning after December 31,
1988, Company Contributions attributable to a salary reduction or similar
arrangement made by Employees other than Key Employees shall not be taken into
account under this Section 17.6.
17.7 CEILING ON INCLUDIBLE COMPENSATION. If this Plan is
determined to be a Top-Heavy Plan in any Plan Year, then only the first
$150,000 of a Participant's Compensation shall be taken into account in
determining the allocation to the Accounts of such Participant for the Plan
Year. The $150,000 limit shall automatically be adjusted for such Plan Years
and to such extent as is permitted by the Secretary of the Treasury.
ARTICLE XVIII
MISCELLANEOUS
18.1 NO ENLARGEMENT OF EMPLOYEE RIGHTS. This Plan is strictly a
voluntary undertaking on the part of the Company and shall not be deemed to
constitute a contract between the Company and any Employee, or to be
consideration for, or an inducement to, or a condition of, the employment of
any Employee.
(a) Nothing contained in this Plan or the Trust shall be deemed
to give any Employee the right to be retained in the employ
of the Company or to interfere with the right of the Company
to discharge or retire any Employee at any time.
(b) No Employee, or any other person, shall have any right to or
interest in any portion of the Trust Fund other than as
specifically provided in this Plan, and no Employee or any
other person shall be entitled to rely upon any
representations, whether oral or in writing, including
representations made in the summary plan description, any
prospectus or other document, which is inconsistent with
this Plan document.
18.2 MAILING OF PAYMENTS; LAPSED BENEFITS. All payments under
the Plan shall be delivered in person or mailed to the last address of the
Participant or Beneficiary furnished pursuant to Section 18.3 below.
(a) In the event that a benefit is payable under this Plan to a
Participant or Beneficiary and after reasonable efforts such
individual cannot be located for the purpose of paying the
benefit during a period of three consecutive years following
the date payment would otherwise have been made, the
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June 25, 1999
benefit shall be forfeited and allocated in the same manner
as Additional Company Contributions. If the Participant or
Beneficiary later makes a valid claim for the benefit, the
claim shall be paid pursuant to directions by the Committee.
(b) For purposes of this Section 18.2, the term "Beneficiary"
shall include any person entitled under Section 9.9 to
receive the interest of a deceased Participant or deceased
designated Beneficiary and shall also include an Alternate
Payee.
(c) The Accounts of a Participant shall continue to be
maintained until the amounts in the Accounts are paid to the
Participant or his Beneficiary. In the event that the Plan
is terminated and the Committee directs the Trustee to
liquidate the Trust and distribute the assets of the Trust
Fund, the following rules shall apply:
(i) All Participants and Beneficiaries (including
Participants and Beneficiaries who have not previously
claimed their benefits under the Plan) shall be
notified of their right to receive a distribution of
their interests in the Plan.
(ii) All Participants and Beneficiaries shall be given a
reasonable length of time, which shall be specified in
the notice, in which to claim their benefits.
(iii) All Participants (and their Beneficiaries) who do not
claim their benefits within the designated time period
shall be presumed to be dead. The Accounts of such
Participants shall be forfeited at such time. These
forfeitures shall be disposed of according to rules
prescribed by the Committee, which rules shall be
consistent with applicable law. Alternatively the
Committee may, but shall not be required to, deposit
such funds in an applicable state unclaimed property
or similar fund, pursuant to applicable state law.
(iv) The Committee shall prescribe such rules as it may
deem necessary or appropriate with respect to the
notice, deposit or forfeiture rules stated above.
(d) Should it be determined that the preceding rules relating to
forfeiture of benefits upon Plan termination are
inconsistent with any of the provisions of the Code and/or
ERISA, these provisions shall become inoperative without the
need for a Plan amendment and the Committee shall prescribe
rules that are consistent with the applicable provisions of
the Code and/or ERISA.
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June 25, 1999
18.3 ADDRESSES. Each Participant shall be responsible for
furnishing the Committee with his correct current address and the correct
current name and address of his Beneficiary or Beneficiaries.
18.4 NOTICES AND COMMUNICATIONS. All applications, notices,
designations, elections, and other communications from Participants,
Beneficiaries and Alternate Payees shall be in writing, on forms prescribed by
the Committee and shall be mailed or delivered to the office designated by the
Committee, and shall be deemed to have been given when received by that office.
(a) Each notice, report, remittance, statement and other
communication directed to a Participant, Beneficiary or
Alternate Payee shall be in writing and may be delivered in
person or by mail. An item shall be deemed to have been
delivered and received by the Participant, Beneficiary or
Alternate Payee when it is deposited in the United States
Mail with postage prepaid, addressed to the Participant,
Beneficiary or Alternate Payee at his last address of record
with the Committee.
18.5 REPORTING AND DISCLOSURE. The Plan Administrator shall be
responsible for the reporting and disclosure of information required to be
reported or disclosed by the Plan Administrator pursuant to ERISA or any other
applicable law.
18.6 GOVERNING LAW. All legal questions pertaining to the Plan
shall be determined in accordance with the provisions of ERISA and, to the
extent not preempted by ERISA, the laws of the Commonwealth of Virginia. All
contributions made hereunder shall be deemed to have been made in Virginia.
18.7 INTERPRETATION. Article and Section headings are for
convenient reference only and shall not be deemed to be part of the substance
of this instrument or in any way to enlarge or limit the content of any Article
or Section. Unless the context clearly indicates otherwise, masculine gender
shall include the feminine, and the singular shall include the plural and the
plural the singular.
(a) The provisions of this Plan shall in all cases be
interpreted in a manner that is consistent with this Plan
satisfying the requirements of Code section 401(a).
18.8 WITHHOLDING FOR TAXES. Any payments out of the Trust Fund
may be subject to withholding for taxes as may be required by any applicable
federal or state law.
18.9 LIMITATION ON COMPANY, COMMITTEE AND TRUSTEE LIABILITY. Any
benefits payable under this Plan shall be paid or provided for solely from the
Trust Fund
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June 25, 1999
and neither the Company, the Committee nor the Trustee assume any
responsibility for the sufficiency of the assets of the Trust to provide the
benefits payable hereunder.
18.10 SUCCESSORS AND ASSIGNS. This Plan and the Trust established
hereunder shall inure to the benefit of, and be binding upon, the parties
hereto and their successors and assigns.
18.11 COUNTERPARTS. This Plan document may be executed in any
number of identical counterparts, each of which shall be deemed a complete
original in itself and may be introduced in evidence or used for any other
purpose without the production of any other counterparts.
18.12 NO IMPLIED RIGHTS OR OBLIGATIONS. The Company, in
establishing and maintaining this Plan as a voluntary and unilateral
undertaking, expressly disavows the creation of any rights in Employees,
Beneficiaries or Alternate Payees or any obligations on the part of the Company
or the Committee, except as expressly provided herein.
18.13 COMPANY, COMMITTEE AND TRUSTEE NOT RESPONSIBLE FOR ADEQUACY
OF TRUST FUND. Neither the Company, Committee nor Trustee shall be liable or
responsible for the adequacy of the Trust Fund to meet and discharge any or all
payments and liabilities hereunder. All Plan benefits will be paid from the
Trust assets, and neither the Company, the Committee nor the Trustee shall have
any duty or liability to furnish the Trust with any funds, securities or other
assets except as expressly provided in the Plan.
(a) Except as required under the Plan or Trust or under Part 4
of Title I of ERISA, the Company shall not be responsible
for any decision, act or omission of the Trustee, the
Committee, or the Investment Manager (if applicable), and
shall not be responsible for the application of any moneys,
securities, investments or other property paid or delivered
to the Trustee.
(b) The Company expressly disavows any contractual obligation,
implied or explicit, to make any contribution to the Plan or
to contribute any specified amount.
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June 25, 1999
IN WITNESS WHEREOF, in order to record the adoption of this document,
NETWORK SOLUTIONS, INC. has caused this instrument to be executed by its duly
authorized officer this 1st day of July 1999.
NETWORK SOLUTIONS, INC.
a Delaware Corporation
By: /s/ ROBERT J. KORZENIEWSKI
-----------------------------
76
