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Registration No. 333-
As filed with the Securities and Exchange Commission on June 5, 1998
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
RAYTHEON COMPANY
(Exact name of issuer as specified in its charter)
DELAWARE 95-1778500
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
141 Spring Street, Lexington, Massachusetts 02173
(Address of Principal Executive Offices) (Zip Code)
Raytheon Savings and Investment Plan
Raytheon Savings and Investment Plan for Specified
Hourly Payroll Employees
Raytheon Employee Savings and Investment Plan
Raytheon Savings and Investment Plan for Specified
Puerto Rico Employees
E-Systems Employee Savings Plan
Raytheon TI Systems Savings Plan
Raytheon Salaried Savings and Investment Plan
Raytheon California Hourly Savings and Investment Plan
Raytheon Tucson Bargaining Savings and Investment Plan
Raytheon Savings and Investment Plan (10014)
(Full title of the plans)
THOMAS D. HYDE
Senior Vice President and General Counsel
RAYTHEON COMPANY
141 Spring Street
Lexington, Massachusetts 02173
(781) 862-6600
(Name and Address of Agent for Service)
CALCULATION OF REGISTRATION FEE
- -------------- ------------ -------------- ---------------------- --------------
Title of Proposed
Securities Amount Maximum Proposed Maximum Amount of
to be to be Offering Price Aggregate Offering Registration
Registered Registered Per Share* Registration Price* Fee
- -------------- ------------ -------------- ---------------------- --------------
Class B
Common Stock, 1,000,000 $ 52.50* $52,500,000 $15,487.50
$.01 par value shares
per share
- -------------- ------------ -------------- ---------------------- --------------
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- ---------------
* This estimate is made pursuant to Rule 457(h) solely for the purpose of
determining the registration fee. It is not known how many shares will be
purchased under the plan or at what price such shares will be purchased. The
above calculation is based on the average of the high and low prices of the
Registrant's Class B Common Stock as reported on the New York Stock Exchange on
June 4, 1998.
In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
Registration Statement also covers an indeterminate number of interests to be
offered pursuant to the employee benefit plan described herein.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The documents 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 Registration Statement
(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
The following documents filed with the SEC by Raytheon Company (the
"Company" or the "Registrant") and the Plans are hereby incorporated by
reference in this Registration Statement:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(2) The Company's Quarterly Report on Form 10-Q for the period ended March
29, 1998;
(3) The Company's Current Reports on Form 8-K dated January 26, 1998 and
March 18, 1998; and
(4) The description of the Company's Class B Common Stock set forth in the
Company's Solicitation Statement/Prospectus filed pursuant to Rule 424(b)(3)
under the Securities Act dated November 10, 1997 under the captions "New
Raytheon Capital Stock" and "Comparison of Rights of Stockholders of
Raytheon and New Raytheon" on pages 110-117 and 118-123, respectively.
In addition, all documents subsequently filed by the Registrant and
the Plans pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act
prior to the filing of a post-effective amendment which indicates that all
securities offered hereby have been sold or which deregisters all of such
securities then remaining unsold, shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the date
of filing of such documents. Any statement contained herein or in a document,
all or a portion of which is incorporated or deemed to be incorporated by
reference herein, shall be deemed to be modified or superseded for purposes of
this Registration Statement to the extent that a statement contained herein or
in any other subsequently filed document or portion thereof which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
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Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts or Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware
sets forth provisions permitting and, in some situations, requiring Delaware
corporations, such as the Company, to provide indemnification to their directors
and officers for losses and litigation expense incurred in connection with their
service to the corporation in those capacities.
Article X of the Registrant's Amended and Restated Certificate of
Incorporation provides as follows:
"Section 1. Limited Liability of Directors. A director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not
permitted under the DGCL as the same exists or may hereafter be amended. Neither
the amendment nor repeal of Section 1 of this Article X shall eliminate or
reduce the effect of Section 1 of this Article X in respect of any matter
occurring, or any cause of action, suit or claim that, but for Section 1 of this
Article X would accrue or arise, prior to such amendment or repeal.
Section 2. Indemnification and Insurance. (a) Right to
Indemnification. Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that such person, or a person of whom such person is the
legal representative, is or was a director or officer of the Corporation or is
or was serving at the request of the Corporation as a director or officer of the
Corporation or is or was serving at the request of the Corporation as a director
or officer of another corporation or of a partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
whether the basis of such proceeding is alleged action in an official capacity
as a director o officer or in any other capacity while serving as a director or
officer shall be indemnified and held harmless by the Corporation to the fullest
extent authorized by the DGCL, as the same exists or may hereafter be amended
(but, in the case of any such amendment, to the fullest extent permitted by law,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgment, fines, amounts paid or to be paid in
settlement, and excise taxes or penalties arising under the Employee Retirement
Income Security Act of 1974, as in effect from time to time) reasonably incurred
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or suffered by such person in connection therewith and such indemnification
shall continue as to a person who has ceased to be a director or officer, and
shall inure to the benefit of such person's heirs, executors and administrators;
provided however, that, except as provided in paragraph (b) of this Section, the
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or party thereof) initiated by such person only if
such proceeding (or part thereof) was authorized by the Board. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to have the Corporation pay the expenses incurred in defending
any such proceeding in advance of its final disposition; any advance payments to
be paid by the Corporation within 20 calendar days after the receipt by the
Corporation of a statement or statements from the claimant requesting such
advance or advances from time to time, provided, however, that, if and to the
extent the DGCL requires, the payment of such expenses incurred by a director or
officer in such person's capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit plan) in
advance of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of such director
or officer, to repay all amounts so advanced from time to time by the Board,
grant rights to indemnification, and rights to have the Corporation pay the
expenses incurred in defending any proceeding in advance of its final
disposition, to any employee or agent of the Corporation to the fullest extent
of the provisions of this Article with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of
this Section is not paid in full by the Corporation within 30 calendar days
after a written claim has been received by the Corporation, the claimant may at
any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the claimant shall
be entitled to be paid also the expense of prosecuting such claim. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standard of
conduct which makes it permissible under the DGCL for the Corporation to
indemnify the claimant for the amount claimed, but the burden of providing such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because the claimant has met the applicable standard of conduct set forth in the
DGCL, nor an actual determination by the Corporation (including its Board,
independent legal counsel, or its stockholders) that the Claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person (including, without limitation, any person other than a officer
or director of the Corporation) may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, By-Laws, agreement, vote of
Stockholders or disinterested directors or otherwise. No repeal or modification
of this Article shall in any way diminish or adversely affect the rights of any
director or officer of the Corporation hereunder in respect of any occurrence or
matter arising prior to any such repeal or modification.
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(d) Insurance. The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the DGCL.
(e) Severability. If any provision or provisions of this Article X
shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(1) the validity, legality and enforceability of the remaining provisions of
this Article X (including, without limitation, each portion of any paragraph of
this Article X containing any such provisions held to be invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable."
In addition, the Company maintains insurance for the benefit of its
directors and officers, and directors and officers of its subsidiaries, against
liabilities and expenses incurred by any of them in certain stated proceedings
and under certain stated conditions.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
The following exhibits are part of this Registration Statement:
4.1 Raytheon Company Restated Certificate of Incorporation, heretofore
filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1997, is hereby incorporated by reference.
4.2 Raytheon Company Amended and Restated By-Laws, heretofore filed as an
exhibit to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997, are hereby incorporated by reference.
4.3 Raytheon Savings and Investment Plan.
4.4 Raytheon Savings and Investment Plan for Specified Hourly Payroll
Employees.
4.5 Raytheon Employee Savings and Investment Plan.
4.6 Raytheon Savings and Investment Plan for Specified Puerto Rico
Employees.
4.7 E-Systems Employee Savings Plan.
4.8 Raytheon TI Systems Savings Plan.
4.9 Raytheon Salaried Savings and Investment Plan.
4.10 Raytheon California Hourly Savings and Investment Plan.
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4.11 Raytheon Tucson Bargaining Savings and Investment Plan.
4.12 Raytheon Savings and Investment Plan (10014).
5.1 Opinion of John W. Kapples, Esq. as to the legality of the securities
being registered.
5.2 Internal Revenue Service determination letter in respect of the
Raytheon Savings and Investment Plan.
5.3 Internal Revenue Service determination letter in respect of the
Raytheon Savings and Investment Plan for Specified Hourly Payroll
Employees.
5.4 Internal Revenue Service determination letter in respect of the
Raytheon Employee Savings and Investment Plan.
5.5 Internal Revenue Service determination letter in respect of the E-
Systems Employee Savings Plan.
5.6 An undertaking that the Registrant will submit the Raytheon Salaried
Savings and Investment Plan, Raytheon California Hourly Savings and
Investment Plan, Raytheon Tucson Bargaining Savings and Investment
Plan and Raytheon Savings and Investment Plan (10014).to the Internal
Revenue Service in a timely manner and will make all changes required
by the Internal Revenue Service in order to qualify such plans.
23.1 Consent of John W. Kapples, Esq. (included in Exhibit 5.1).
23.2 Consent of Coopers & Lybrand L.L.P.
24 Power of Attorney (included on the signature page of the Registration
Statement).
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this 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;
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(iii) To 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;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That for the purpose of determining any liability under the Securities
Act of 1933, 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 remove from registration by means of a post-effective amendment any
of the securities being registered that remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of Securities
Exchange Act of 1934) 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) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant 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 registrant
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 of 1933 and will be governed by the final
adjudication of such issue.
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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 Town of Lexington, Commonwealth of
Massachusetts, on this 29th day of May, 1998.
RAYTHEON COMPANY
/s/ Christoph L. Hoffmann
Christoph L. Hoffmann
Executive Vice President,
Law and Corporate Administration,
and Secretary
POWER OF ATTORNEY
Each person whose signature appears below hereby appoints Peter R.
D'Angelo and Christoph L. Hoffmann, and each of them singly, acting alone and
without the other, his/her true and lawful attorney-in-fact with the authority
to execute in the name of each such person, and to file with the Securities
and Exchange Commission, together with any exhibits thereto and other
documents therewith, any and all amendments (including without limitation
post-effective amendments) to this Registration Statement on Form S-8
necessary or advisable to enable the Registrant to comply with the Securities
Act of 1933, as amended, and any rules, regulations, and requirements of the
Securities and Exchange Commission in respect thereof, which amendments may
make such other changes in the Registration Statement as the aforesaid
attorney-in-fact executing the same deems appropriate.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Dennis J. Picard Chairman of the Board of May 27, 1998
Dennis J. Picard Directors and Chief Executive
Officer (Principal Executive
Officer) and Director
/s/ Peter R. D'Angelo Vice President and Chief Financial May 27, 1998
Peter R. D'Angelo Officer (Principal Financial Officer)
/s/ Michele C. Heid Vice President - Corporate May 27, 1998
Michele C. Heid Controller and Investor Relations
(Principal Accounting Officer)
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/s/ Ferdinand Colloredo-Mansfeld Director May 27, 1998
Ferdinand Colloredo-Mansfeld
/s/ Steven D. Dorfman Director May 27, 1998
Steven D. Dorfman
/s/ Theodore L. Eliot, Jr. Director May 27, 1998
Theodore L. Eliot, Jr.
/s/ Thomas E. Everhart Director May 27, 1998
Thomas E. Everhart
/s/ John R. Galvin Director May 27, 1998
John R. Galvin
/s/ Barbara B. Hauptfuhrer Director May 27, 1998
Barbara B. Hauptfuhrer
/s/ Richard D. Hill Director May 27, 1998
Richard D. Hill
Director
L. Dennis Kozlowski
/s/ James N. Land, Jr. Director May 27, 1998
James N. Land, Jr.
/s/ A. Lowell Lawson Director May 27, 1998
A. Lowell Lawson
Director
Charles H. Noski
/s/ Thomas L. Phillips Director May 27, 1998
Thomas L. Phillips
/s/ Warren B. Rudman Director May 27, 1998
Warren B. Rudman
/s/ Alfred M. Zeien Director May 27, 1998
Alfred M. Zeien
Pursuant to the requirements of the Securities Act of 1933, as amended,
the trustees (or other persons who administer the employee named benefit
plans) have duly caused this registration statement to be signed on their
behalf by the undersigned, thereunto duly authorized, in the Town of
Lexington, Commonwealth of Massachusetts, on this 29th day of May, 1998.
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Raytheon Savings and Investment Plan
Raytheon Savings and Investment Plan for Specified
Hourly Payroll Employees
Raytheon Employee Savings and Investment Plan
Raytheon Savings and Investment Plan for Specified Puerto
Rico Employees
E-Systems Employee Savings Plan
Raytheon TI Systems Savings Plan
Raytheon Salaried Savings and Investment Plan
Raytheon California Hourly Savings and Investment Plan
Raytheon Tucson Bargaining Savings and Investment Plan
Raytheon Savings and Investment Plan (10014)
By: /s/ Gail P. Anderson
Gail P. Anderson
Authorized Representative
Exhibit Index
Exhibit No. Description of Documents
4.1 Raytheon Company Restated Certificate of Incorporation, heretofore
filed as an exhibit to the Registrants Annual Report on Form 10-K for
the year ended December 31, 1997, is hereby incorporated by reference.
4.2 Raytheon Company Amended and Restated By-Laws, heretofore filed as an
exhibit to the Registrants Annual Report on Form 10-K for the year
ended December 31, 1997, are hereby incorporated by reference.
4.3 Raytheon Savings and Investment Plan.
4.4 Raytheon Savings and Investment Plan for Specified Hourly Payroll
Employees.
4.5 Raytheon Employee Savings and Investment Plan.
4.6 Raytheon Savings and Investment Plan for Specified Puerto Rico
Employees.
4.7 E-Systems Employee Savings Plan.
4.8 Raytheon TI Systems Savings Plan.
4.9 Raytheon Salaried Savings and Investment Plan.
4.10 Raytheon California Hourly Savings and Investment Plan.
4.11 Raytheon Tucson Bargaining Savings and Investment Plan.
4.12 Raytheon Savings and Investment Plan (10014).
5 Opinion of John W. Kapples, Esq. as to the legality of the securities
being registered.
5.2 Internal Revenue Service determination letter in respect of the
Raytheon Savings and Investment Plan.
5.3 Internal Revenue Service determination letter in respect of the
Raytheon Savings and Investment Plan for Specified Hourly Payroll
Employees.
5.4 Internal Revenue Service determination letter in respect of the
Raytheon Employee Savings and Investment Plan.
5.5 Internal Revenue Service determination letter in respect of the E-
Systems Employee Savings Plan.
5.6 An undertaking that the Registrant will submit the Raytheon TI Systems
Savings Plan, Raytheon Salaried Savings and Investment Plan, Raytheon
California Hourly Savings and Investment Plan, Raytheon Tucson
Bargaining Savings and Investment Plan and Raytheon Savings and
Investment Plan (10014).to the Internal Revenue Service in a timely
manner and will make all changes required by the Internal Revenue
Service in order to qualify such plans.
23.1 Consent of John W. Kapples, Esq. (included in Exhibit 5.1).
23.2 Consent of Coopers & Lybrand L.L.P.
24 Power of Attorney (included on the signature page of the Registration
Statement).
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EXHIBIT 4.3
RAYTHEON SAVINGS AND
INVESTMENT PLAN
Provisions in Effect
as of May 5, 1998
COMPANIES PARTICIPATING IN RAYTHEON
SAVINGS AND INVESTMENT PLAN
Raytheon Company
Raytheon Air Control Company
Raytheon Engineering and Maintenance Company
Raytheon Europe International Company
Raytheon European Management Company
Raytheon European Management and Systems Company
Raytheon Foreign Trade Company
Raytheon Gulf Systems Company
Raytheon International Support Company, Inc.
(formerly Raytheon Subsidiary Support Company, Inc.)
Raytheon Korean Support Company
Raytheon Logistics Support and Training Company
Raytheon Mediterranean Systems Company
Raytheon Middle East Systems Company
Raytheon Overseas Limited
Raytheon Patriot Support Company
Raytheon Peninsula Systems Company
Raytheon Service Company
Raytheon Southeast Asia Systems Company
Raytheon Systems Company
Raytheon Technical and Administration Services, Ltd.
Raytheon Technical Assistance Company
Raytheon World Services Company
Tube Holding Company, Inc. (formerly The Machlett Laboratories, Incorporated)
TAG Semiconductors Limited - Burlington, Mass., Office Only
Amana Refrigeration, Inc. effective 1/1/85
Speed Queen Company effective 2/1/85
Raytheon Aircraft Credit Corporation, Inc. effective 1/1/86
Raytheon Aircraft Corporation effective 1/1/86
Raytheon Patriot Support Company effective 1/1/86
Raytheon Aircraft Holdings, Inc. effective 1/1/86
Cedarapids, Inc. effective 1/1/87
Raytheon Aerospace Services, Inc. effective 1/1/88
Seiscor Inc. effective 1/1/88
Seismograph Service Corporation effective 1/1/88
Seismograph Service Corporation (Overseas) effective 1/1/88
Patriot Overseas Support Company effective 10/3/88
Data Logic, Inc. effective 1/1/89
Amber Engineering, Inc. effective 2/1/93
Raytheon Engineers & Constructors
International, Inc. effective 3/23/93
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Raytheon Catalytic, Inc. effective 3/23/93
Stearns Catalytic Corporation effective 3/23/93
Raytheon Architects, Ltd. effective 3/23/93
Raytheon Engineers & Constructors Middle East Inc. effective 3/23/93
Catalytic Industrial Maintenance Co., Inc. effective 3/23/93
United Engineers Far East, Ltd. effective 3/23/93
Jackson & Moreland International, Inc. effective 3/23/93
R.E.&C. (Canada) Ltd. effective 3/23/93
United Engineers International, Inc. effective 3/23/93
United Mid-East, Inc. effective 3/23/93
Raytheon Engineers & Constructors
of Ireland, Ltd. effective 3/23/93
UE, Inc. effective 3/23/93
Energy Overseas International, Inc. effective 3/23/93
Raytheon Nuclear Inc. effective 3/23/93
Raytheon Engineers & Constructors Midwest, Inc. effective 3/23/93
Specialty Technical Services, Inc. effective 3/23/93
Raytheon Infrastructure Inc. effective 3/23/93
Stearns Catalytic Michigan, Inc. effective 3/23/93
Badger Catalytic Ltd effective 3/23/93
Raytheon-Ebasco (Malaysia) Sdn Bhd effective 5/12/93
Asia Badger, Inc. (Delaware) effective 5/12/93
Badger B.V. (Netherlands) effective 5/12/93
Badger Energy, Inc. effective 5/12/93
Raytheon Engineers and Constructors (Pty) Ltd. effective 5/12/93
Raytheon Engineers & Constructors Latin America Inc. effective 5/12/93
Raytheon Engineers & Constructors, Inc. effective 5/12/93
Raytheon Engineers & Constructors Germany G.m.b.H. effective 5/12/93
Raytheon Engineers & Constructors Italy S.r.l. effective 5/12/93
Badger Middle East, Inc. effective 5/12/93
Badger Trading Company effective 5/12/93
Canadian Badger Company Limited effective 5/12/93
Chemical Process Corporation effective 5/12/93
Gulf Design Corporation, Inc. effective 5/12/93
McBride-Ratcliff and Associates, Inc. effective 5/12/93
Raytheon Engineers & Constructors France S.a.r.l. effective 5/12/93
Raytheon-Ebasco Indonesia Ltd. effective 5/12/93
Raytheon-Ebasco Overseas Ltd. effective 5/12/93
Raytheon Corporate Jets, Inc. effective 8/6/93
Range Systems Engineering Co. effective 10/1/93
Raytheon Constructors, Inc. effective 1/1/94
Raytheon International, Inc. effective 6/1/94
Arkansas Aerospace, Inc. effective 7/1/94
Harbert-Yeargin, Inc. (non-exempt and
exempt salaried payrolls only) effective 1/1/95
Raytheon Advanced Systems Company effective 1/1/95
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Raytheon Brazil Integrated Systems Company
(Brasil Sistemas De Integracao Ltda) effective 1/1/95
Raytheon Pacific Company effective 1/1/95
Raytheon Systems International Company effective 1/1/95
Raytheon Tennessee Company effective 1/1/95
NEWCS, Inc. (formerly Raytheon Transportation Systems
Company) effective 1/1/95
Standard Havens Inc. effective 4/1/95
Litwin Engineers & Constructors, Inc. effective 8/1/95
E-Systems, Inc. effective 10/1/96
Raytheon Aircraft Parts, Inventory and Distribution Company effective 1/1/97
Raytheon Demilitarization Company effective 1/1/97
Raytheon Quality Inspection Company effective 1/1/97
Raytheon Commercial Laundry, L.L.C. effective 9/10/97
ARTICLE I - PREAMBLE
The Raytheon Savings and Investment Plan (the "Plan"), which became effective
January 1, 1984, provides employees with a tax-effective means of allocating a
portion of their salary to be invested in one or more investment opportunities
specified in the Plan as determined by the employee and set aside for short-term
and long-term needs of the employee. The Plan is applicable only to eligible
employees who meet the requirements for membership on or after January 1, 1984.
It is intended that the Plan will comply with all of the requirements for a
qualified profit sharing plan under Sections 401(a) and 401(k) of the Internal
Revenue Code and will be amended from time to time to maintain compliance with
these requirements. The terms used in the Plan have the meanings specified in
Article XIV unless the context indicates otherwise. The Plan is intended to
constitute a plan described in Section 404(c) of the Employee Retirement Income
Security Act and Title 29 of the Code of Federal Regulations, ss. 2550.404(c)-1.
Participants in the Plan are responsible for selecting their own investment
opportunities from the options available under the Plan and the Plan fiduciaries
are relieved of any liability for any losses which are a direct and necessary
result of investment instructions given by a participant or beneficiary.
The Plan as restated herein shall be effective as of January 1, 1994 or such
other dates as may be specifically provided herein or as otherwise required by
law for the Plan or either of the Merged Plans referred to in Section 13.6 to
satisfy the requirements of Section 401(a) of the Code. The rights of former
Employees whose Severance from Service Date occurred prior to the date of any
amendment shall be governed by the terms of the Plan in effect on their
Severance from Service Date except as otherwise provided herein.
ARTICLE II - ELIGIBILITY
2.1 Eligibility Requirements - Present Employees -- Each Eligible Employee whose
Employment Commencement Date is on or after November 1, 1983, may join the Plan
as of the first Pay Period coincident with or next following completion of a
Period of Service of three (3) consecutive months commencing on said Employment
Commencement Date. Each Eligible Employee whose Reemployment Commencement Date
is on or after November 1, 1984, may join the Plan as of the first Pay Period
next following said Reemployment Commencement Date.
<PAGE>
4
2.2 Procedure for Joining the Plan -- Each Eligible Employee who meets the
requirements of Section 2.1 may join the Plan by communicating with Fidelity in
accordance with instructions in an enrollment kit which will be made available
to each Eligible Employee. An enrollment in the Plan shall not be deemed to have
been completed until the Employee has designated: a percentage by which
Participants' Eligible Compensation shall be reduced as an Elective Deferral in
accordance with the requirements of Section 3.2, subject to the
nondiscrimination test described in Section 3.3; election of investment funds as
described in Article IV; one or more Beneficiaries; and such other information
as specified by Fidelity. Enrollment will be effective as of the first
administratively feasible Pay Period following completion of enrollment. The
Administrator in its discretion may from time to time make exceptions and
adjustments in the foregoing procedure on a uniform and nondiscriminatory basis.
2.3 Transfer Between Companies to Position Covered by Plan -- A Participant who
is transferred from employment with one of the Companies to employment as an
Eligible Employee with another one of the Companies may remain a Participant of
the Plan with his or her new Company.
2.4 Transfer to Position Not Covered by Plan -- If a Participant is transferred
to another position with the Employer in which the Participant is no longer an
Eligible Employee, the Participant will remain a Participant of the Plan with
respect to Elective Deferrals previously made but will no longer be eligible to
have Elective Deferrals made to the Plan on his or her behalf until he or she
again becomes an Eligible Employee. In the event the Participant is subsequently
transferred to a position in which he or she again becomes an Eligible Employee,
the Participant may renew Elective Deferrals by communicating with Fidelity and
providing all of the information requested by Fidelity. The renewal of Elective
Deferrals will be effective as of the first administratively feasible Pay Period
following receipt by Fidelity of the requested information.
ARTICLE III - CONTRIBUTIONS
3.1 Employer Contributions -- The Companies shall contribute to the Trust
established under this Plan from Net Annual Profits or Net Profits an amount
equal to the total amount of Elective Deferrals agreed to be made by the
Companies pursuant to designation by Participants.
3.2 Elective Deferrals -- Elective Deferrals must be made in one percent (1%)
increments with a minimum Elective Deferral of one percent (1%) of Eligible
Compensation and a maximum Elective Deferral of seventeen percent (17%);
provided, however, that effective for any Plan Year beginning on or after
January 1, 1987, in no event may the amount of Elective Deferrals to the Plan,
when taken into account with all other elective deferrals (as defined in Code
Section 402(g)) made by a Participant under any other plan maintained by the
Employer, exceed $7,000 (adjusted for increases in the cost of living under Code
Section 402(g)) in any calendar year. If a Participant participates in another
plan or arrangement which is not maintained by the Employer and which permits
elective deferrals in any calendar year and his total Elective Deferrals under
the Plan and other plan(s) exceed $7,000 (as adjusted) in a calendar year, he
may request to receive a distribution of the amount of the excess deferral (a
deferral in excess of $7,000 (as adjusted)) that is attributable to Elective
Deferrals to this Plan together with earnings thereon, notwithstanding any
limitations on distributions contained in the Plan. Such distribution shall be
made by the April 15 following the Plan Year in which the Elective Deferrals
were made, provided that the Participant notifies the Administrator of the
<PAGE>
5
amount of the excess deferral that is attributable to Elective Deferrals to the
Plan and requests such a distribution. The Participant's notice must be received
by the Administrator no later than the March 1 following the Plan Year of the
excess deferral. In the absence of such notice, the amount of such excess
deferral attributable to Elective Deferrals to this Plan shall be subject to all
limitations on withdrawals and distributions in the Plan. In addition to
distributing excess deferrals at the request of the Participant, the
Administrator shall distribute any deferrals made under this Plan or any other
plan of the Employer in excess of the statutory maximum deferral of $7,000 (as
adjusted). For this purpose as provided in 26 CFR ss.1.402(g)-1(e)(2), a
Participant is deemed to notify the Administrator of any excess deferrals that
arise by taking into account only those Elective Deferrals made to this Plan and
any other plans of this Employer and to request that such excess deferrals be
distributed by the Plan Administrator. The distribution of excess deferrals will
include any earnings or be reduced by any loss allocable to the excess deferrals
pursuant to the Plan method of allocating earnings or losses and calculated to
the last day of the Plan Year in which the excess deferrals were made.
The Administrator may establish prospectively lower limits for Higher Paid
Participants for the purpose of complying with Internal Revenue Code
requirements in an orderly manner.
3.3 Limitations on Elective Deferrals --
(a) In no event may Elective Deferrals made on behalf of all Higher Paid
Eligible Employees with respect to any Plan Year result in an Actual Deferral
Percentage for such group of Higher Paid Eligible Employees which exceeds the
greater of (i) or (ii) where:
(i) is an amount equal to 125 percent of the Actual Deferral Percentage for all
Non-Higher Paid Eligible Employees who have satisfied the eligibility
requirements of Article II with respect to such Plan Year; and
(ii) is an amount equal to the Actual Deferral Percentage for all Non-Higher
Paid Eligible Employees who have satisfied the eligibility requirements of
Article II with respect to such Plan Year and two percent (2%), provided that
such amount does not exceed 200 percent of such Actual Deferral Percentage.
(b) The Administrator shall be authorized to implement rules authorizing or
requiring reductions in Elective Deferrals that may be made by Higher Paid
Eligible Employees during the Plan Year (prior to any contributions to the
Trust) so that the limitation of Section 3.3(a) is satisfied.
(c) The Company may in its discretion make Qualified Nonelective Contributions
to the Accounts of certain Non-Higher Paid Eligible Employees to the extent
required to satisfy the limitations of Section 3.3(a).
(d) If the limitation under Section 3.3(a) is exceeded in any Plan Year, the
Excess Amounts made on behalf of Higher Paid Eligible Employees with respect to
a Plan Year (and earnings allocable thereto) shall then be distributed to such
Employees as soon as practicable after the end of such Plan Year, but no later
than the last day of the immediately following Plan Year. The Excess Amounts
distributed shall include Elective Deferrals and the income allocable thereto.
The amount of income allocable to Excess Amounts shall be determined in
accordance with the regulations issued under Section 401(k) of the Code and
shall include income for the Plan Year for which the Excess Amounts were made.
Any such distributions shall be reduced by the amount of any distributions made
pursuant to Section 3.2 above.
<PAGE>
6
(e) The Administrator may utilize any combination of the methods described in
Sections 3.3(b), (c) and (d) to assure that the limitations of Section 3.3(a)
are satisfied.
(f) For purposes of this Section 3.3, the following definitions and special
rules shall apply:
(i) The term "Annual Earnings" means the Employee's wages which are required to
be reported on IRS Form W-2 for the calendar year which coincides with the Plan
Year.
(ii) The term "Actual Deferral Percentage" shall mean, with respect to any group
of actively employed Eligible Employees who have satisfied the eligibility
requirements of Article II for a Plan Year, the average of the ratios,
calculated separately for each such Eligible Employee in the group, of:
(A) The amount of Elective Deferrals paid to the Trust Fund for such Plan Year,
divided by
(B) The Eligible Employee's Annual Earnings, including any Elective Deferrals
made by the Companies to the Plan on behalf of the Eligible Employee and any
pre-tax elective contributions made by the Companies which are excludible from
the Eligible Employee's income under Section 125 of the Code.
Elective Deferrals shall be taken into account for a Plan Year only if such
amounts are allocated to the Eligible Employee's Account as of a date within
that Plan Year. For this purpose, an Elective Deferral is considered allocated
as of a date within a Plan Year if the allocation is not contingent on
participation or performance of services after such date and the Elective
Deferral is actually paid to the Trust Fund no later than 12 months after the
Plan Year to which the contribution relates.
(iii) The term "Excess Amounts" shall mean with respect to each Higher Paid
Eligible Employee who has satisfied the eligibility requirements of Article II
for a Plan Year, the amount equal to total Elective Deferrals made on behalf of
such Employee (determined prior to the application of the leveling procedure
described below) minus the product of the Employee's Actual Deferral Percentage
(determined after the leveling procedure described below) multiplied by the
amount specified in Section 3.3(f)(ii)(B) above. In accordance with the
regulations issued under Section 401(k) of the Code, Excess Amounts shall be
determined by a leveling procedure under which the Actual Deferral Percentage of
the Higher Paid Eligible Employee with the highest such percentage shall be
reduced to the extent required to enable the limitation of Section 3.3(a) to be
satisfied or, if it results in a lower reduction, to the extent required to
cause such Higher Paid Eligible Employee's Actual Deferral Percentage to equal
the Actual Deferral Percentage of the Higher Paid Eligible Employee with the
next highest Actual Deferral Percentage. This leveling procedure shall be
repeated until the limitation of Section 3.3(a) is satisfied. (iv) The term
"Qualified Nonelective Contributions" means contributions that are made pursuant
to Sections 3.3(c), 3.8(c) or 3.12 meet the requirements of Section 401(m)(4)(C)
of the Code and the regulations issued thereunder, and which are designated as a
Qualified Nonelective Contribution for purposes of satisfying the limitations of
Sections 3.3(c), 3.8(c) or 3.12. Qualified Nonelective Contributions shall be
nonforfeitable when made and are distributable only in accordance with the
distribution and withdrawal provisions that are applicable to Elective Deferrals
under the Plan; provided, however, that Qualified Nonelective Contributions may
not be withdrawn on account of financial hardship. If any Qualified Nonelective
Contributions are made, the Company shall keep such records as necessary to
reflect the amount of such contributions made for purposes of satisfying the
limitations of Sections 3.3(c) or 3.8(c).
<PAGE>
7
(v) In the event the Companies maintain two or more plans that are treated as a
single plan for purposes of Sections 401(a)(4) and 410(b) of the Code (other
than Section 410(b)(2)(A)(ii) of the Code), all elective deferrals made under
the two plans shall be treated as made under a single plan, and if two or more
of such plans are permissively aggregated for purposes of Section 401(k) of the
Code, such plans shall be treated as a single plan for purposes of satisfying
Sections 401(a)(4) and 410(b) of the Code.
(vi) In determining the Actual Deferral Percentage of a Higher Paid Eligible
Employee, all cash or deferred arrangements in which such Higher Paid Eligible
Employee is eligible to participate shall be treated as a single arrangement.
(vii) The family aggregation rules of Section 414(q)(6) of the Code shall apply
to any Higher Paid Eligible Employee who is a five percent owner or one of the
ten most highly compensated Higher Paid Eligible Employees. The Actual Deferral
Percentage for the family group, which is treated as one Higher Paid Eligible
Employee, is the Actual Deferral Percentage determined by combining the
contributions and compensation of all eligible Family Members. Except to the
extent taken into account in this Paragraph (vii), the contributions and
compensation of all Family Members are disregarded in determining the Actual
Deferral Percentages for all Employees.
(g) The limitations of this Section 3.3 shall apply to Plan Years beginning on
or after January 1, 1987.
3.4 Reinstatement of Reduced Amounts -- Any reduction effected pursuant to
Section 3.3 will remain in effect for the remainder of the Plan Year in which
the reduction occurs and will not be automatically reinstated. A Participant
whose Elective Deferral has been reduced may elect to increase his or her
Elective Deferral effective as of any Pay Period subsequent to notice from the
Administrator that Elective Deferrals may be increased as of a specified Pay
Period. This election must be made in accordance with the procedure described in
Section 3.5.
3.5 Change in Elective Deferrals -- Except as provided in Sections 3.3 and 3.4,
any Participant may change his or her Elective Deferral percentage to increase
or decrease said percentage by notifying Fidelity, such change to take effect as
of the next administratively feasible Pay Period.
3.6 Voluntary Reduction of Elective Deferral to Zero -- Notwithstanding the
notice requirements specified in Section 3.5, any Participant may elect to
reduce the level of the Participant's Elective Deferral to zero as of the
beginning of any Pay Period. The reduction will take effect as soon as
practicable following telephone notification by the Participant to Fidelity. A
Participant who has reduced his or her Elective Deferral to zero may again make
Elective Deferrals as of the next administratively feasible Pay Period
subsequent to telephone notification to Fidelity.
3.7 Matching Contributions -- For each Plan Year, commencing on or after January
1, 1994, subject to limitations imposed by the Internal Revenue Code, the
Companies will match from Net Annual Profits or Net Profits the Elective
Deferral of each Participant at the rate of one-half (1/2) of the Participant's
Elective Deferral on an annual basis provided that: (i) for any Pay Period the
matching amount shall not exceed three percent (3%) of the Participant's
Eligible Compensation for that pay period; and (ii) as soon as administratively
feasible subsequent to the end of the Plan Year, the differential, if any, by
which an amount equal to one-half (1/2) of the Participant's Elective Deferral
for the Plan Year exceeds the amount of Matching Contributions actually made to
Participant for that year, to an annual maximum of three percent (3%) of the
Participant's Eligible Compensation for the Plan Year. will be paid into the
Participant's Matching Contribution Account.
<PAGE>
8
3.8 Limitations on Matching Contributions.
(a) In no event may the Matching Contributions made on behalf of all Higher Paid
Eligible Employees, or forfeitures allocated to the Accounts of such Employees,
who have satisfied the eligibility requirements of Article II with respect to
any Plan Year result in an Actual Contribution Percentage for such group of
Higher Paid Eligible Employees which exceeds the greater of (i) or (ii) where:
(i) is an amount equal to 125 percent of the Actual Contribution Percentage for
all Non-Higher Paid Eligible Employees who have satisfied the eligibility
requirements of Article II with respect to such Plan Year; and
(ii) is an amount equal to the Actual Contribution Percentage for all Non-Higher
Paid Eligible Employees who have satisfied the eligibility requirements of
Article II with respect to such Plan Year and two percent (2%), provided that
such amount does not exceed 200 percent of such Actual Contribution Percentage.
(b) The Administrator shall be authorized to implement rules authorizing or
requiring reductions in Matching Contributions that may be made by Higher Paid
Eligible Employees during the Plan Year (prior to any contributions to the Trust
Fund), so that the limitation of Section 3.8(a) is satisfied.
(c) The Company may in its discretion make Qualified Nonelective Contributions
to the accounts of certain Non-Higher Paid Eligible Employees to the extent
required to satisfy the limitations of Section 3.8(a).
(d) If the limitation under Section 3.8(a) is exceeded in any Plan Year, the
Excess Amounts made on behalf of Higher Paid Eligible Employees with respect to
a Plan Year (and earnings allocable thereto) shall then be distributed to such
Higher Paid Eligible Employees as soon as practicable after the end of such Plan
Year (or, if forfeitable under the terms of the Plan, forfeited), but no later
than the last day of the immediately following Plan Year. The Excess Amounts
distributed shall include both the Matching Contributions and the income
allocable thereto. The amount of income allocable to Excess Amounts shall be
determined in accordance with the regulations issued under Section 401(m) of the
Code and shall include income for the Plan Year to which the Excess Amounts
relate.
(e) Elective Deferrals and Matching Contributions shall be further limited to
the extent required to prevent prohibited multiple use of the alternative
limitation described in Sections 401(k)(3)(A)(ii)(II) and 401(m)(2)(A)(ii) of
the Code and the provisions of Reg. ss.1.401(m)-2(b) and any further guidance
issued thereunder. If such multiple use occurs, the Actual Contribution
Percentage for all Higher Paid Eligible Employees (determined after applying the
foregoing provisions of this Section 3.8) shall be reduced in accordance with
Reg. ss.1.401(m)-2(c) and any further guidance issued thereunder in order to
prevent such multiple use of the alternative limitation.
(f) The Administrator may utilize any combination of the methods described in
Sections 3.8(b), (c) and (d) to assure that the limitations of Sections 3.8(a)
and (e) are satisfied.
(g) For purposes of this Section 3.8, the following definitions and special
rules shall apply:
<PAGE>
9
(i) The term "Annual Earnings" shall have the meaning specified in Section
3.3(f)(i).
(ii) The term "Actual Contribution Percentage" shall mean, with respect to any
group of actively employed Eligible Employees who have satisfied the eligibility
requirements of Article II for a Plan Year, the average of the ratios,
calculated separately for each such Eligible Employee in the group, of:
(A) The amount of Matching Contributions paid to the Trust Fund for such Plan
Year on behalf of the Eligible Employee plus the amount of forfeitures allocated
to the Eligible Employee's Account, divided by
(B) The Eligible Employee's Annual Earnings, including any Elective Deferrals
made by the Companies to the Plan on behalf of the Eligible Employee or any
pre-tax election contributions under a "cafeteria plan" (as defined in Section
125 of the Code and applicable regulations) maintained by the Companies for such
Plan Year.
Matching Contributions and forfeitures shall be taken into account for a Plan
Year only if such amounts are allocated to the Eligible Employee's Account as of
a date within that Plan Year, such amounts are actually paid to the Trust no
later than 12 months after the Plan Year to which the contribution relates and
such amounts are contributed on account of Elective Deferrals for such Plan
Year.
(iii) The term "Excess Amounts" shall mean with respect to each Higher Paid
Eligible Employee, the amount equal to the total Matching Contributions made on
behalf of the Eligible Employee together with the forfeitures allocated to the
Eligible Employee's Account (determined prior to the application of the leveling
procedure described below) minus the product of the Eligible Employee's Actual
Contribution Percentage (determined after the leveling procedure described
below) multiplied by the amount specified in Section 3.8(g)(ii)(B) above. In
accordance with the regulations issued under Section 401(m) of the Code, Excess
Amounts shall be determined by a leveling procedure under which the Actual
Contribution Percentage of the Higher Paid Eligible Employee with the highest
such percentage shall be reduced to the extent required to enable the limitation
of Section 3.8(a) to be satisfied or, if it results in a lower reduction, to the
extent required to cause such Higher Paid Eligible Employee's Actual
Contribution Percentage to equal the Actual Contribution Percentage of the
Higher Paid Eligible Employee with the next highest Actual Contribution
Percentage. This leveling procedure shall be repeated until the limitation of
Section 3.8(a) is satisfied.
(iv) The term "Qualified Nonelective Contributions" shall have the meaning
specified in Section 3.3(f)(iv).
(v) In the event the Companies maintain two or more plans that are treated as a
single plan for purposes of Sections 401(a)(4) and 410(b) of the Code (other
than Section 410(b)(2)(A)(ii) of the Code), all Matching Contributions and
forfeitures under the two plans shall be treated as made under a single plan,
and if two or more of such plans are permissibly aggregated for purposes of
Section 401(m) of the Code, such plans shall be treated as a single plan for
purposes of satisfying Sections 401(a)(4) and 410(b) of the Code.
<PAGE>
10
(vi) In determining the Actual Contribution Percentage of a Higher Paid Eligible
Employee, all plans in which such Higher Paid Eligible Employee is eligible to
participate shall be treated as a single arrangement.
(vii) The family aggregation rules of Section 414(q)(6) of the Code shall apply
to any Higher Paid Eligible Employee who is a five percent owner or one of the
ten most highly compensated Higher Paid Eligible Employees. The Actual
Contribution Percentage for the family group, which is treated as one Higher
Paid Eligible Employee, is the Actual Contribution Percentage determined by
combining the contributions and compensation of all eligible Family Members.
Except to the extent taken into account in this Paragraph (vii), the
contributions and compensation of all Family Members are disregarded in
determining the Actual Contribution Percentages for all Employees.
(h) The limitations of this Section 3.8 shall apply to Plan Years beginning on
or after January 1, 1987.
(i) Notwithstanding anything in the Plan to the contrary, if the rate of
Matching Contributions, determined after application of the corrective
mechanisms described in Section 3.3, discriminates in favor of Higher Paid
Eligible Employees, any such amounts attributable to any Excess Amounts (as
described in Subsection 3.3(f)(iii)) of each affected Higher Paid Eligible
Employee shall be forfeited so that the rate of Matching Contribution is
nondiscriminatory. Any such forfeitures shall be made no later than the end of
the Plan Year following the Plan Year for which the Matching Contribution was
made and shall be treated in accordance with Section 3.9.
3.9 Forfeitures --
(a) In the event that a Participant incurs a Severance from Service prior to
attaining a Nonforfeitable right to the Participant's Matching Contribution, the
Matching Contribution Account will be forfeited as of the first day of the month
immediately following the earliest of: (i) the date on which the Participant
incurs a Period of Severance of five consecutive years; (ii) death; or (iii) the
date on which the Participant's Employee Account is distributed in accordance
with Article VI. Forfeitures of Matching Contributions will be used to reduce
future contributions of the Companies to the Plan.
(b) If, in connection with his Severance from Service, a Participant received a
distribution of his Employee Account when he did not have a Nonforfeitable right
to his Matching Contribution Account, the Matching Contributions that were
forfeited, unadjusted by any subsequent gains or losses, shall be restored if he
again becomes an Employee prior to incurring a Period of Severance of five
consecutive years, performs an Hour of Service, and repays the full value of his
prior distributions, unadjusted for subsequent gains and losses, before the
first to occur of (i) the end of the five year period beginning with the date he
again becomes an Employee or (ii) the date on which he incurs a Period of
Severance of five consecutive years.
<PAGE>
11
3.10 Rollover Contributions and Transfers --
(a) Effective April 1, 1991, Participants may transfer into the Plan qualifying
rollover amounts (as defined in Section 402 of the Code) received from other
qualified plans subject to Section 401(k) or Section 401(m) of the Code;
qualified defined contribution pension or profit sharing plans, provided that no
federal income tax has been required to have been paid previously on such
amounts; rollover contributions from an individual retirement account described
in Section 408(d)(3)(A)(ii) of the Code (referred to herein as a "conduit IRA");
or rollover contributions from the Raytheon Stock Ownership Plan by former
Participants in that plan who have incurred a Severance from Service. Such
transfers will be referred to as "rollover contributions" and will be subject to
the following conditions:
(i) the transferred funds are received by the Trustee no later than sixty (60)
days from receipt by the Employee of a distribution from another qualified
Section 401(k) or Section 401(m) plan or, in the event that the funds are
transferred from a conduit IRA, no later than sixty (60) days from the date that
the Participant receives such funds from the individual retirement account,
subject, however, to (v) below where applicable;
(ii) the amount of such rollover contributions shall not exceed the limitations
set forth in Section 402 of the Code;
(iii) rollover contributions shall be taken into account by the Administrator in
determining the Participant's eligibility for a loan pursuant to Article VII;
(iv) rollover contributions may be distributed at the request of the
Participant, subject to the same administrative procedures as apply to other
distributions;
(v) rollover contributions may not be received by the Trustee earlier than the
Pay Period upon which the Participant elects to join the Plan;
(vi) rollover contributions transferred pursuant to this paragraph (a) of
Section 3.10 shall be credited to the Participant's Rollover Contribution
Account. Rollover contributions will be invested upon receipt by the Trustee;
(vii) no rollover contribution will be accepted unless (A) the Employee on whose
behalf the rollover contribution will be made is either a Participant or has
notified the Administrator that he intends to become a Participant on the first
date on which he is eligible therefor, or was a former Participant in the
Raytheon Stock Ownership Plan and the entire amount of the rollover contribution
is comprised of the Participant's account in that plan; and (B) all required
information, including selection of specific investment accounts, is provided to
Fidelity. When the rollover contribution has been deposited, any further change
in investment allocation of future deferrals or transfer of account balances
between investment funds will be effected through the procedures set forth in
Sections 4.2 and 4.3.
(viii) Under no circumstances shall the Administrator accept as a rollover
contribution amounts which have previously been subject to federal income tax.
(b) Effective January 1, 1993, Participants may direct that "eligible rollover
distributions," as defined in Section 402(c) of the Code, be transferred
directly to the Plan. Rules similar to those applicable to "rollover
contributions" shall apply to amounts transferred directly to the Plan.
<PAGE>
12
(c) Participants who are also covered under the Raytheon Stock Ownership Plan
and who are entitled to diversify their accounts under such plan, may direct
that the portion of their account which is eligible for diversification under
such plan be transferred to the Plan. Rules similar to those applicable to
"rollover contributions" shall apply to amounts transferred to this Plan except
that such transferred amounts shall not be eligible for loans or withdrawals.
(d) Account balances held in other defined contribution plans sponsored by
member of the Raytheon controlled group of corporations by Participants in this
Plan shall be transferred to this Plan on the following conditions:
(i) the account balances, including loan balances, held by former Employees of
Serv-Air in the Serv-Air Inc. Savings and Retirement Plan (E-Systems Bright
Plan) will be transferred to this Plan on March 1, 1996, or as soon thereafter
as is administratively feasible, provided that the accounts of those
Participants who notify the local employee benefits office of their desire not
to have their accounts transferred will not be transferred as of March 1, 1996,
but may be transferred in the future as of specified dates by mutual consent of
the respective Plan sponsors and record keepers. The account balances
transferred from the Serv-Air Inc. Savings and Retirement Plan may, at the
election of the member, be distributed in either a lump sum payable in cash or
substantially level periodic installments, or a combination thereof. In the
event distribution is delayed or in the event distribution is in installments,
the allocation of gains and losses shall continue to be applicable to the
transferred balance until fully distributed;
(ii) the account balances of Employees of Seiscor Technologies Inc. which are
being held in the Seiscor Technologies 401(k) Plan (including loan balances,
after-tax contributions and earnings thereon) shall be transferred to this Plan
on March 1, 1996, or as soon thereafter as administratively feasible;
(iii) Participants who were participants in the United Dominion Industries
Compass Plan may transfer pre-tax and after-tax accounts to this Plan on or
after January 1, 1996. Such Participants who were hired by United Dominion
Industries prior to July 1, 1990, may elect, upon retirement, to use all or part
of the Rollover Account (including the after-tax subaccount) received from the
United Dominion Industries Compass Plan and the earnings thereon to purchase an
annuity providing a lifetime monthly benefit. A list of the Participants who
have a right to elect a lifetime annuity with respect to their rollover account
received from the United Dominion Industries Compass Plan is set forth on
Appendix D hereof. If the Participant is married, the annuity will be paid in
the standard form of a 50% joint and survivor annuity with the spouse as the
joint annuitant unless the spouse consents in writing before a notary public to
a different form of annuity.
<PAGE>
13
(iv) Participants who are participants in the E-Systems Inc. Employee Savings
Plan ("E-Systems Savings Plan") may, while in a Period of Service with one of
the Companies, elect to transfer the following accounts held in the E-Systems
Savings Plan to this Plan on or after October 1, 1996: Employer Pre-Tax Basic
(elective deferrals); E-Systems Company Match (matching contributions);
E-Systems ESOP Assets Account; ECAP Profit-Sharing Plan; and rollover
contributions. No other accounts in the E-Systems Savings Plan, including
without limitation the S&I Pre-1987 After-Tax Basic, the VRIF Pre-1987 After-Tax
Basic and the VRIF Post-1986 After-Tax Basic, shall be transferred to this Plan.
Assets transferred from E-Systems Savings Plan accounts shall be held in RAYSIP
accounts as follows:
E-Systems Account RAYSIP Account
Employer Pre-Tax Basic Account Employee Account
ESOP Assets Account and E-Systems Rollover Contributions Account
Rollover Contributions Account
E-Systems Company Match Account and Qualified Non-Elective Contribution
ECAP Employer Profit-Sharing Account Account
(e) Separate subaccounts shall be established for all amounts received from
after-tax accounts in the Seiscor Technologies 401(k) Plan and the United
Dominion Industries Compass Plan, and such other plans from which transfers of
after-tax accounts to this Plan have been approved by the Administrator.
Fidelity shall maintain appropriate records for these after-tax subaccounts for
tax purposes, including determining the appropriate basis upon which earnings
will be taxed at the time of withdrawal or distribution. Participants may not
borrow against the balances in these after-tax subaccounts. Withdrawals may be
made from such accounts pursuant to Section 6.3.
(f) Effective April 1, 1997, an Eligible Employee may transfer into the Plan
qualified rollover amounts (as defined in Section 401 of the Code) received from
other qualified plans subject to Section 401(k) or Section 401(m) of the Code
without regard to whether the Eligible Employee has completed a Period of
Service of three (3) consecutive months commencing on the Employment
Commencement Date or Reemployment Commencement Date as applicable.
3.11 Refund of Contributions to the Companies -- Notwithstanding the provisions
of Article XII, if, or to the extent that, the Companies' deductions for
contributions made to the Plan are disallowed, the Companies will have the right
to obtain the return of any such contributions for a period of one year from the
date of disallowance. For this purpose, all Elective Deferrals and Matching
Contributions are made subject to the conditions that they are deductible under
the Code for the taxable year of the Companies for which the contribution is
made. Furthermore, any contribution made by the Companies on the basis of a
mistake in fact may be returned to the Companies within one year from the date
such contribution was made.
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14
3.12 Qualified Non-Elective Contributions -- Specified Amounts -- Each of the
Companies may make contributions to the Plan on behalf of eligible Employees,
provided that the name of the unit, the effective date of such contributions and
the specified amount are set forth on Appendix B hereto. Such contributions
shall be Qualified Non-Elective Contributions as defined in Section 3.3(f)(iv)
and shall be included in determining the actual deferral percentage under
Section 3.3. If the contributions described in this Section 3.12 are made on
behalf of an Employee who is not a Participant, an Account shall be established
for such Employee and the Employee shall have the right to elect investment
options under Section 4.1. If the Employee does not make a valid election in
which investment options are designated for 100% of the Participant's Account,
then 100% of the Participant's Account shall be invested in Fund B, a fixed
income fund. The Employee may, in accordance with Sections 4.2 and 4.3, change
the investment allocation for future deferrals and transfer account balances
between investment funds.
ARTICLE IV - INVESTMENT OF ACCOUNTS
4.1 Election of Investment Funds -- Upon enrollment in the Plan, each
Participant shall direct that the funds in the Participant's Employee Account
and Matching Contribution Account be invested in increments of one percent (1%)
in one or more of the following investment funds:
Fund A - an equity fund designated by the Administrator;
Fund B - a fixed income fund designated by the Administrator;
Fund C - Raytheon Company common stock fund;
Fund D - a stock index fund designated by the Administrator;
Fund E - a balanced fund designated by the Administrator;
Fund F - a growth fund, designated by the Administrator, investing primarily in
equities of companies of all types and sizes;
Fund G - a growth fund, designated by the Administrator, investing primarily in
equities of well-known and established companies.
In its discretion, the Administrator may from time to time designate new funds
and, where appropriate, preclude investment in existing funds and provide for
the transfer of Accounts invested in those funds to other funds selected by the
Participant or, if no such election is made, to Fund B or similar low risk fixed
income fund as determined by the Administrator in its discretion.
Each election will apply to both accounts so that the Employee Account and
Matching Contribution Account of the Participant will be invested in the same
percentages in the one or more investment funds selected by the Participant.
Officers covered the Securities and Exchange Commission Regulation 16b wil not
be eligible to elect Fund C, the Raytheon common stock fund, until such election
is approved by the shareholders of Raytheon Company. Any request to invest in or
transfer out of the Raytheon Common Stock Fund by an "executive officer," as
that term is defined in the regulations of the Securities Exchange Commission
(SEC) shall not become effective until six (6) months subsequent to the date the
Administrator is notified of the request.
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15
4.2 Change in Investment Allocation of Future Deferrals -- Each Participant may
elect to change the investment allocation of future Elective Deferrals, Matching
Contributions and rollover contributions effective as of the first
administratively feasible Business Day subsequent to telephone notice to
Fidelity. Any changes must be made either in increments of one percent (1%) of
the Participant's Account or in a specified whole dollar amount and must result
in a total investment of one hundred percent (100%) of the Participant's
Account.
4.3 Transfer of Account Balances Between Investment Funds -- Each Participant
may elect to transfer all or a portion of the amount in the Participant's
Employee Account, Matching Contribution Account and Rollover Contribution
Account between investment funds effective as of the first administratively
feasible Business Day following telephone notice to Fidelity. In determining the
amount of the transfer, the Participant's Account shall be valued as of the
close of business on the Business Day on which telephone notice is received;
provided, however, that in any case where the telephone notice is received after
4:00 p.m. Eastern Time (daylight or standard, whichever is in effect on the date
of the call), the Account shall be valued as of the close of business on the
next Business Day. Such transfers must be made in either one percent (1%)
increments of the entire Account or in a specified amount in whole dollars and,
as of the completion of the transfer, must result in investment of one hundred
percent (100%) of the Account. Transfers shall be effected by telephone notice
to Fidelity.
4.4 Ownership Status of Funds -- The Trustee shall be the owner of record of the
assets in the funds specified as Funds A, B, C, D and E and such other funds as
may be established by the Administrator. The Administrator shall have records
maintained as of the Valuation Date for each fund allocating a portion of the
fund to each Participant who has elected that his or her Account be invested in
such fund. The records shall reflect each Participant's portion of Funds A, B, D
and E, and such other funds as may be established by the Administrator, in a
cash amount and shall reflect each Participant's portion of Fund C in cash and
unitized shares of stock.
4.5 Voting Rights -- Participants whose Account has shares of participation in
the Raytheon Company Common Stock Fund on the last business day of the second
month preceding the record date (the "Voting Eligibility Date") for any meeting
of stockholders have the right to instruct the Trustee as to voting at such
meeting. The number of votes is determined by dividing the value of the shares
in the Participant's Account in the Raytheon Common Stock Fund by the closing
price of Raytheon Common Stock on the Voting Eligibility Date. If the Trustee
has not received instructions from a Participant as to voting of shares within a
specified time, then the Trustee shall not vote those shares. If a Participant
furnishes the Trustee with a signed vote direction card without indicating a
voting choice thereon, the Trustee shall vote Participant's shares as
recommended by management. In addition, each Participant shall have the right to
accept or reject any tender or exchange offer for shares of common stock. The
Trustee shall vote (or tender or exchange) all combined fractional shares of
Raytheon Common Stock to the extent possible in the same proportion as the
shares which have been voted (or tendered or exchanged) by each Participant. Any
instructions as to voting (or tender or exchange) received from an individual
Participant shall be held in confidence by the Trustee and shall not be divulged
to the Companies or to any officer or employee thereof or to any other person.
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16
ARTICLE V - VESTING
5.1 Employee, Rollover Contribution and Qualified Non-Elective Contribution
Accounts -- Each Participant shall have a Nonforfeitable right to any amounts in
the Participant's Employee, Rollover Contribution and Qualified Non-Elective
Contribution Accounts.
5.2 Matching Contribution Account -- Each Participant shall have a
Nonforfeitable right to the Participant's Matching Contribution Account upon the
earliest of:
(a) Completion of a Period of Service of five (5) years commencing on or after
January 1, 1984 (for purposes of determining the length of a Period of Service
under this paragraph only, service by Employees on or after January 1, 1984,
with the following Companies, the assets of which have been acquired by the
Company, will be credited as vesting service: Unimac Company, Inc.; Litwin
Engineers & Constructors, Inc.; E-Systems, Inc.; Rust Engineering, Inc.,
including Rust Plant Services. In addition, vesting service credited to an
Employee under Section 6.2(b) of the Speed Queen Company Retirement Savings Plan
will be credited to an Eligible Employee regardless of whether such vesting
service was earned prior to January 1, 1984); or
(b) Completion of a Period of Participation of three (3) years subsequent to
fulfillment of the eligibility requirements in Sections 2.1 or 2.2 (except that,
in applying this paragraph to Employees on the payroll of Arkansas Aerospace
Inc. as of June 30, 1994, who, as of July 1, 1994, become Participants in this
Plan, the Employment Commencement Date (or, if a Period of Severance occurred
since such date, the Reemployment Commencement Date) with Arkansas Aerospace
Inc. shall be deemed to be the date of commencement of participation under this
Plan and, in applying this paragraph to Employees on the payroll of Speed Queen
Company as of December 31, 1994, who, as of January 1, 1995, become Participants
in this Plan, the most recent date on which the Employee commenced participation
in the Unimac Company, Inc. Retirement Plan shall be deemed to be the date of
commencement of participation under this Plan); and, in applying this paragraph
to Employees on the salaried payrolls of Standard Havens, Inc. as of March 31,
1995, who as of April 1, 1995, become Participants in this Plan, the most recent
date on which the Employee commenced participation in the Standard Havens, Inc.
401(k) Profit Sharing Plan shall be deemed the date of commencement of
participation under this Plan; or
(c) The Participant's Retirement, death (while an Employee), Disability or
attainment of Normal Retirement Age; or
(d) The date of layoff of Participants laid off as a result of the permanent
closing of the Oxnard plant; or
(e) November 20, 1992, for those Participants who were employed by Seismograph
Service Corporation or GeoQuest Systems, Inc. as of such date and became
employees of Schlumberger, Inc. or a subsidiary thereof as a result of the sale
of the Raytheon seismic business to Schlumberger; or
(f) The date of Layoff of Participants laid off as a result of the sale of the
Sorensen facility; or
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17
(g) The date of transfer for those Participants permanently transferred to
Standard Missile Company (a joint venture between Raytheon Company and Hughes
Missile Systems Company).
(h) October 31, 1995, for those Participants who were employed by D. C. Heath as
of such date and became employees of Houghton Mifflin Inc., or a subsidiary
thereof, as a result of the sale of the D. C. Heath business to Houghton Mifflin
on October 31, 1995.
(i) June 27, 1997, for those Participants who were employed by Raytheon
Engineers & Constructors, Inc. as of such date in the Process Automation Group
and became employees of Simulations Sciences, Inc., or a subsidiary thereof, as
a result of the sale of the Process Automation business to Simulations Sciences,
Inc. on June 27, 1997.
(j) September 10, 1997 (or such other date on which the merger of Raytheon
Appliances, Inc. with Goodman Manufacturing Company, L.P. is closed), for those
Employees who were employed by Raytheon Appliances, Inc. as of such date and who
did not become Employees of Raytheon Commercial Laundry, L.L.C. as of September
11, 1997 (or, if different, the day immediately following the closing of the
merger of Raytheon Appliances, Inc. and Goodman Manufacturing Company, L.P.).
(k) December 31, 1997, for Participants who as of such date were employed
by either Switchcraft Inc. or Fairchild Semiconductor, Inc. (formerly Raytheon
Semiconductor, Inc.).
(l) April 1, 1998, for Participants who as of such date were employed by Seiscor
Technologies, Inc. and, as "Assumed Employees" as defined in the Acquisition
Agreement, dated as of March 31, 1998, between Seiscor Technologies, Inc. and
Pulse Communications, Inc., became employees of Pulse Communications, Inc. aS of
April 1, 1998.
(m) May 5, 1998, for Participants who as of such date were employed by Raytheon
Commercial Laundry, LLC.
5.3 Break in Service Rules
(a) Periods of Service -- In determining the length of a Period of Service, the
Administrator shall include all Periods of Service, except the following Periods
of Service shall not be taken into account:
(i) in the case of a Participant who has made no Elective Deferrals to the Plan,
the Period of Service before any Period of Severance which equals or exceeds
five consecutive years; and
(ii) in the case of a Participant who has made Elective Deferrals to the Plan
and who has incurred a Period of Severance which equals or exceeds five years,
the Period of Service after such Period of Severance shall not be taken into
account for purposes of determining the nonforfeitable interest of such
Participant in the Matching Contributions allocated to his Account prior to such
Period of Severance.
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(b) Periods of Severance -- In determining the length of a Period of Service for
purposes of Section 14.39, the Administrator shall include any period of time
beginning on an Employee's Severance from Service Date and ending on the date on
which he is next credited with an Hour of Service, provided that such Hour of
Service is credited within the 12 consecutive month period following such
Severance from Service Date.
(c) Other Periods -- In making the determinations described in subsections (a)
and (b) of this Section 5.3, the second, third, and fourth consecutive years of
a Layoff (from the first anniversary of the last day paid to the fourth
anniversary of the last day paid) and any period in excess of one (1) year of an
Authorized Leave of Absence shall be regarded as neither a Period of Service nor
a Period of Severance.
ARTICLE VI - WITHDRAWALS
6.1 In-Service Withdrawals - Matching Contributions -- Upon completion of a
Period of Participation of five (5) years, a Participant may withdraw, subject
to both a minimum withdrawal amount of $250 and the requirement that a
Participant may withdraw no more than twice during a Plan Year, if no loans are
outstanding, and only once during a Plan Year if loans are outstanding, all or
part of the Participant's Matching Contribution Account. Withdrawals will be
based upon the value of the Account as determined under Section 6.9. Withdrawals
from Funds A, B, D, E, F and G, and such other funds as may be established by
the Administrator will be made in cash; withdrawals from Fund C will be made in
cash or stock (with cash for fractional or uninvested shares) as directed by the
Participant. Funds for the withdrawal will be taken on a pro rata basis against
the Participant's investment fund balances in the Participant's Matching
Contribution Account.
6.2 In-Service Withdrawal - Employee and Qualified Non-Elective Contribution
Accounts -- While in a Period of Service, a Participant may withdraw assets from
his or her Accounts as follows:
(a) all or a portion of the Participant's Employee Account and Qualified
Non-Elective Contribution Account upon attainment of age 59 1/2 or
(b) a distributable amount (as defined in Treas. Reg. ss. 1.401(k)-1(d)(2)) on
account of a hardship as defined in the regulation. A distribution is made on
account of a hardship only if the distribution both is made on account of an
immediate and heavy financial need of the Participant and is necessary to
satisfy the financial need. In determining the amount required to satisfy the
financial need, the Administrator shall take into account the federal, state and
local income taxes or penalties reasonably anticipated to result from the
withdrawal. The distributable amount is equal to the Participant's total
Elective Deferrals as of the date of distribution reduced by the amount of
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19
previous distributions on account of hardship and increased by that portion of
income allocable to Elective Deferrals which was credited to the Participant's
Account as of December 31, 1988. Withdrawals from the Employee Accounts of less
than $250 will not be permitted. Withdrawals will be based upon the value of the
Account as determined under Section 6.9. Payment of the amount withdrawn will be
made as soon as reasonably practicable after the effective date of the
withdrawal. Withdrawals from Funds A, B, D, E, F and G, and such other funds as
may be established by the Administrator, will be made in cash; withdrawals from
Fund C will be made in cash or stock (with cash for fractional or unissued
shares) as elected by the Participant. Funds for the withdrawal will be taken on
a pro rata basis against the Participant's investment fund balances in the
Participant's Employee Account.
6.3 In-Service Withdrawal - Rollover Contribution Account -- A Participant may
withdraw all or a portion of the Participant's Rollover Contribution Account.
Withdrawals will be based upon the value of the Account as determined under
Section 6.9. Payment of the amount withdrawn will be made as soon as reasonably
practicable after the effective date of the withdrawal. Withdrawals from Funds
A, B, D, E, F and G will be made in cash. Withdrawals from Fund C will be made
in cash or stock (with cash for fractional or unissued shares) as elected by the
Participant.
6.4 Requirements For Financial Hardship Withdrawals --
(a) A Participant requesting a withdrawal of the distributable amount of the
Participant's Employee Account due to reasons of immediate and heavy financial
need must submit such documentation or information in other form as required by
the Administrator and shall advise Fidelity by telephone notice or such other
means as established by the Administrator's rules then in effect of the
existence of an immediate and heavy financial need and the fact that the need
will be satisfied by the requested distribution.
(b) The Participant shall represent that this financial need cannot be satisfied
by any of the following sources: through reimbursement or compensation by
insurance or otherwise; by liquidation of the Participant's assets; by cessation
of Elective Deferrals under the Plan; or by other distributions or non-taxable
(at the time of the loan) loans currently available from plans maintained by the
Employer or by any other employer, or by borrowing from commercial sources on
reasonable commercial terms.
(c) For purposes of Section 6.2, "immediate and heavy financial need" is limited
to financial need arising from the following specific causes: expenses for
medical care (as described in Section 213(d) of the Code) previously incurred by
the Participant, the Participant's spouse or any dependents (as defined in
Section 152 of the Code) of the Participant, or which are necessary for these
persons to obtain medical care described in Section 213(d) of the Code; costs
directly related to the purchase of a principal residence for the Participant
(excluding mortgage payments); payment of tuition and related educational
expenses for the next twelve months of post-secondary education for the
Participant, or the Participant's spouse, children or dependents (as defined in
Section 152 of the Code); expenses relating to the need to prevent the eviction
from or foreclosure on the Participant's principal residence; or any other
circumstance, as determined by the Administrator based upon all the relevant
facts, establishing substantial justification for the withdrawal.
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20
(d) If a Participant receives a withdrawal for reasons of financial hardship,
his or her Elective Deferrals shall be reduced to six percent (6%), if in excess
thereof as of the date of distribution, and shall not be increased during the
twelve months immediately subsequent to the date of distribution.
6.5 Redeposits Prohibited -- No amount withdrawn pursuant to Section 6.1,
Section 6.2 or Section 6.3 may be redeposited in the Plan.
6.6 Distribution -- Distribution of the Participant's Employee, Rollover
Contribution and Qualified Non-Elective Contribution Accounts and, if the
Participant has a Nonforfeitable right to his or her Matching Contribution
Account pursuant to Section 5.2, the Matching Contribution Account, will be made
at the direction of the Participant (or his legal representative or Beneficiary
in the case of his Disability or death) upon the Retirement, Disability (as
defined in Section 14.13), death, Severance from Service (as defined in Section
14.49) or Layoff (as defined in Section 14.27) of the Participant. In the event
the Participant dies or his Severance from Service occurs after his Normal
Retirement Age, or if the value of the Nonforfeitable portion of the
Participant's Account as of the Valuation Date which coincides with or
immediately precedes the date of distribution is not in excess of $3,500, the
Administrator shall cause the distribution to automatically be made. Payment
will be made in the form of a lump sum distribution of the entire amount in the
Participant's Account (to which the Participant has a Nonforfeitable right)
which will be paid as soon as practicable following notification to the Benefits
and Services Department, Raytheon Company, Lexington, Massachusetts, of the
Retirement, death, Disability or Severance from Service and a telephone request
by the Participant to Fidelity for the distribution. Distributions will be based
upon the value of the Account as determined under Section 6.9. Distribution of
the amounts in said accounts in the funds designated in Funds A, B, D, E, F and
G, and such other funds as may be established by the Administrator, will be made
in cash. Distribution of any amount in said accounts in Fund C (Raytheon Company
stock) will be made in either cash or, if elected by the Participant or, in the
case of death, the Participant's Beneficiary, stock. Partial deferrals will not
be permitted. If there is no Beneficiary surviving a deceased Participant at the
time payment of a Participant's Account is to be made, such payment shall be
made in a lump sum to the person or persons in the first following class of
successive Beneficiaries surviving, any testamentary devise or bequest to the
contrary notwithstanding: the Participant's (a) spouse, (b) children and issue
of deceased children by right of representation, (c) parents, (d) brothers and
sisters and issue of deceased brothers and sisters by right of representation,
or (e) executors or administrators. If no Beneficiary can be located during a
period of seven (7) years from the date of death, the amount of the distribution
shall revert to the Trust and be treated in the same manner as a forfeiture
under Section 3.9.
Except as provided by Section 401(a)(9) of the Code as set forth in this
Section, benefits in the Plan will be distributed to each Participant not later
than the sixtieth (60th) day after the close of the Plan Year in which the
latest of the following events occurs:
(1) attainment by the Participant of Normal Retirement Age;
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21
(2) the tenth (10th) anniversary of the date on which Participant commenced
participation in the Plan; or
(3) Participant's Severance from Service.
If the amount of the benefit payable to a Participant has not been ascertained
by the sixtieth (60th) day after the close of the Plan Year in which the latest
of the three events described in clauses (1), (2) and (3) above occurred, or
Participant cannot be located after reasonable efforts to do so, then payment
retroactive to said sixtieth (60th) day after the close of the Plan Year in
which the latest of the three events occurred may be made no later than sixty
(60) days after the later of the earliest date on which the amount of such
payment can be ascertained under the Plan or the earliest date on which the
Participant is located.
To the extent required by Section 401(a)(9) of the Code, distributions of
Participants' Accounts will be made with respect to Participants who attain age
70 1/2.
In the event amounts are transferred to this Plan from another plan qualified
under Section 401(a) of the Code (other than amounts described in Section
3.10(c)), any distribution or withdrawal rights available to the Participant
under such other plan which are protected under Section 411(d)(6) of the Code
shall be available to the Participant under this Plan.
6.7 Withdrawal/Distribution - Executive Officers -- No withdrawal by or
distribution to an "executive officer," as that term is defined by the SEC, from
an Account in the Raytheon Common Stock Fund will be effective until the
expiration of six (6) months from the date the Administrator receives the
request for the withdrawal or distribution.
6.8 Direct Rollovers -- Effective January 1, 1993, a distributee may elect, at
the time and in the manner prescribed by the Administrator, to have any portion
of an eligible rollover distribution paid directly to an eligible retirement
plan specified by the distributee in a direct rollover. For purposes of this
paragraph, the following terms shall have the following meanings:
(a) 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 beneficiary, or for a specified period of 10
years or more; any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; and the portion of any distribution that is
not includible in gross income.
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22
(b) Eligible retirement plan: An eligible retirement plan is an individual
retirement account described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code, an annuity plan
described in Section 403(a) of the Code or a qualified trust described in
Section 401(a) of the Code that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover distribution to the
surviving spouse, the term is limited to an individual retirement account or
individual retirement annuity.
(c) Distributee: A distributee includes a Participant or former Participant. In
addition, the Participant's or former Participant's surviving spouse and the
Participant's spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in Section 414(p) of the Code,
are distributees with regard to the interest of the spouse or former spouse.
(d) Direct Rollover: A direct rollover is a payment by the Plan to the eligible
retirement plan specified by the distributee.
6.9 Determination of Amount of Withdrawal or Distribution -- In determining the
amount of any withdrawal or distribution hereunder, the Participant's Account
shall be valued as of the close of business on the Business Day on which
telephone notice is received; provided, however, that in any case where the
telephone notice is received after 4:00 p.m. Eastern Time (daylight or standard,
whichever is in effect on the date of the call), the Account shall be valued as
of the close of business on the next Business Day.
6.10 Sale or Divestiture of Business -- Notwithstanding the provisions of
Section 14.50(g), a Participant whose employment is terminated by reason of the
sale or divestiture or assets or stock of a business may withdraw part or all of
his or her Account if otherwise permitted by law.
ARTICLE VII - LOANS
7.1 Availability of Loans -- Participants may borrow against all or a
portion of the balance in the Participant's Employee Account and Rollover
Contribution Account, and the Matching Contribution Account if the Participant
has a Nonforfeitable right thereto pursuant to Section 5.2, subject to the
limitations set forth in this Article. Participants who have incurred a
Severance from Service will not be eligible for a Plan loan. The Vice President,
Human Resources, is authorized to administer this loan program and may establish
uniform and equitable rules to resolve issues not specifically covered in this
Article.
7.2 Minimum Amount of Loan -- No loan of less than $500 will be permitted.
7.3 Maximum Amount of Loan -- No loan in excess of fifty percent (50%) of
the aggregate value of a Participant's Employee Account and Rollover
Contribution Account and the Nonforfeitable portion of Participant's Matching
Contribution Account balances will be permitted. In addition, limits imposed by
the Internal Revenue Code and any other requirements of applicable statute or
regulation will be applied. Under the current requirements of the Internal
Revenue Code, if the aggregate value of a Participant's Employee Account,
Rollover Contribution Account and Nonforfeitable portion of the Matching
Contribution Account exceeds $20,000, the loan cannot exceed the lesser of
one-half (1/2) the Nonforfeitable aggregate value or $50,000 reduced by the
excess of (a) the highest outstanding balance of loans from the Plan during the
one-year period ending on the day before the date on which such loan was made
over (b) the outstanding balance of loans from the Plan on the date on which
such loan was made.
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23
7.4 Effective Date of Loans -- Loans will be effective as specified in the
Administrator's rules then in effect.
7.5 Repayment Schedule - The Participant may select a repayment schedule of
1, 2, 3, 4 or 5 years. If the loan is used to acquire any dwelling which, within
a reasonable time is to be used (determined at the time the loan is made) as the
principal residence of the Participant, the repayment period may be extended up
to 15 years at the election of the Participant. All repayments will be made
through payroll deductions in accordance with the loan agreement executed at the
time the loan is made, except that, in the event of the sale of all or a portion
of the business of the Employer or one of the Companies, or other unusual
circumstances, the Administrator, through uniform and equitable rules, may
establish other means of repayment. The loan agreement will permit repayment of
the entire outstanding balance in one lump sum. The minimum repayment amount per
pay period is $10 for Participants paid weekly and $50 for Participants paid
monthly. The repayment schedule shall provide for substantially level
amortization of the loan.
7.6 Limit on Number of Loans -- No more than two loans may be outstanding
at any time.
7.7 Interest Rate -- The interest rate for a loan pursuant to this Article
will be equal to the prime rate published in The Wall Street Journal on the
first business day in June and December of each year. The rate published on the
first business day in June will apply to loans which are effective at any time
during the period July 1 through December 31 thereafter; the rate published on
the first business day of December will apply to loans which are effective at
any time during the period January 1 through June 30 thereafter.
7.8 Effect Upon Participants Employee Account -- Upon the granting of a
loan to a Participant by the Administrator, the allocations in the Participant's
Account to the respective investment funds will be reduced on a pro rata basis
and replaced by the loan balance which will be designated as an asset in the
Account. Such reduction shall be effected by reducing the Participant's Accounts
in the following sequence, with no reduction of the succeeding Accounts until
prior Accounts have been exhausted by the loan: Matching Contribution Account;
Employee Account; and Rollover Contribution Account. Upon repayment of the
principal and interest, the loan balance will be reduced, the Participant
Accounts will be increased in the reverse order in which they were exhausted by
the loan, and the loan payments will be allocated to the respective investment
funds in accordance with the investment election then in effect.
7.9 Effect of Severance From Service and Non-Payment -- In the event that a
loan remains outstanding upon the Severance from Service of a Participant, the
Participant will be given the option of continuing to repay the outstanding
loan. In any case where payments on the outstanding loan are not made within 90
days of the Participant's Severance from Service Date, the amount of any unpaid
principal will be deducted from the Participant's account and reported as a
distribution. If, as a result of Layoff or Authorized Leave of Absence, a
Participant, although still in a Period of Service, is not being compensated
through the Employer's payroll system, loan payments will be suspended until the
earliest of the first pay date after Participant returns to active employment
with the Employer, the Participant's Severance from Service Date, or the
expiration of twelve (12) months from the date of the suspension. In the event
the Participant does not return to active employment with the Employer, the
Participant will be given the option of continuing to repay the outstanding
loan. If the Participant fails to resume payments on the loan, the outstanding
loan will be reported as a taxable distribution. In no event, however, shall the
loan be deducted from the Participant's Account earlier than the date on which
the Participant (i) incurs a Severance from Service, or, (ii) attains age
59-1/2.
<PAGE>
24
7.10 Loans - Executive Officers -- No loan to an executive officer from an
Account in the Raytheon Common Stock Fund will be effective until the expiration
of six (6) months from the date on which the application for the loan is
received by the Administrator.
ARTICLE VIII - LIMITATIONS OF SECTION 415 OF THE CODE
8.1 Maximum Permissible Amount of a Participant's Annual Addition -- The
total for any Limitation Year of the annual additions to a Participant's Account
under this Plan when added to the annual additions to a Participant's account
under any qualified defined contribution plan maintained by the Employer shall
not exceed the lesser of (i) twenty-five percent (25%) of total compensation
from the Employer, and (ii) $30,000 or, if greater, one-fourth of the defined
benefit dollar limitation set forth in Section 415(b)(1) of the Code as in
effect for the Limitation Year.
For purposes of this Section 8.1, the term "annual addition" shall mean, with
respect to any Limitation Year, Matching Contributions, forfeitures, Qualified
Nonelective Contributions and Elective Deferrals to this Plan, plus the sum of
the following amounts allocable for such Plan Year to the Participant's accounts
in all other qualified plans maintained by the Employer in which he
participates: (1) employer contributions (including pre-tax contributions), (2)
forfeitures which have been reallocated to the Participant's account, (3)
Participant after-tax contributions; and (4) amounts described in Sections
415(l)(1) and 419A(d)(2) of the Code.
For purposes of this Section 8.1, the term "compensation" shall mean all amounts
paid to an Employee for personal services actually rendered to the Companies and
Affiliates, including, but not limited to, wages, salary, commissions, bonuses,
overtime and other premium pay as specified in Reg. Section 1.415-2(d)(2), but
excluding deferred compensation, stock options, and other distributions which
receive special tax treatment as specified in Reg. Section 1.415-2(d)(3).
8.2 Reduction of Annual Additions -- In the event it is determined that the
annual additions to a Participant's Account under this Plan or any other
qualified defined contribution plan maintained by the Employer for any
limitation year would be in excess of the limitations of Section 8.1, such
annual additions shall be reduced to the extent necessary to bring them within
such limitations. If, as a result of the allocation of forfeitures, a reasonable
error in estimating a Participant's Eligible Compensation, a reasonable error in
determining the amount of Elective Deferrals that may be made with respect to
any Participant, or under other limited facts and circumstances which the
Internal Revenue Service finds justify the availability of the remedies
contained herein, the Administrator, in coordination with the administrator of
any other defined contriution plan maintained by the Employer, shall reduce the
annual additions which have been made to a Participant's Account to the
acceptable limit by the following procedures, on a pro rata basis, in the
following order:
(a) by returning to the Participant any voluntary or mandatory Employee
contributions made to the Raytheon Support Services Company Money Accumulation
Plan or any other defined contribution plan maintained by the Employer;
<PAGE>
25
(b) to the extent the limitation is still exceeded, Elective Deferrals to this
Plan, or other defined contribution plan qualified under Section 401(k) of the
Code maintained by the Employer during such Limitation Year, shall be
distributed to the Participant; and
(c) to the extent such limitation is still exceeded, any Qualified Non-Elective
Contribution to Participant's account in this Plan, or other defined
contribution plan qualified under Section 401(k) of the Code maintained by the
Employer during such Limitation Year, shall be reduced to the extent necessary
to reduce annual additions to the acceptable limit;
(d) to the extent the limitation is still exceeded, any Matching Employer
Contributions to this Plan, or other defined contribution plan qualified under
Section 401(k) of the Code maintained by the Employer during such Limitation
Year, shall be reduced to the extent necessary to decrease Participant's annual
additions to the acceptable limit;
(e) to the extent the limitation is still exceeded, excess annual additions in
the Participant's Account in the Raytheon Stock Ownership Plan (RAYSOP) shall be
used to reduce allocations for the next Limitation Year (and succeeding
Limitation Years, as necessary) for that Participant if the Participant is
covered by such Plan at the end of such Limitation Year. In the event the
Participant is not covered by the Plan at the end of the Limitation Year, any
excess annual additions which remain must, as provided in Reg.
ss.1.415-6(b)(6)(ii), be held unallocated in a suspense account for the
Limitation Year and reallocated in the next Limitation Year to all of the
remaining Participants in proportion to their RAYSOP allocation in such Plan
Year.
8.3 Coordination with Limitation on Benefit from All Plans --
Notwithstanding any other provisions in this Plan to the contrary, in the case
of a Participant who also participates in any qualified defined benefit plan
which is maintained by the Employer (whether or not terminated), the sum of the
defined benefit plan fraction and the defined contribution plan fraction may not
exceed 1.0 for any Limitation Year. The defined benefit plan fraction for any
Limitation Year is a fraction, the numerator of which is the projected annual
benefit of the Participant under the plan (determined as of the close of the
Limitation Year); and the denominator of which is the lesser of (i) the product
of 1.25, multiplied by the dollar limitation applicable to defined benefit
plans, in effect under applicable law for such Limitation Year; or (ii) the
product of 1.4 multiplied by one hundred percent (100%) of the Participant's
average compensation for the three consecutive calendar years during which he
had the highest aggregate compensation from the Employer. The defined
contribution plan fraction for any Limitation Year is a fraction, the numerator
of which is the sum of the annual additions (as defined in Section 8.1) to the
Participant's Accounts as of the close of the Limitation Year; and the
denominator of which is the sum of the lesser of the following amounts
determined for the current Limitation Year and each prior Limitation Year: (i)
the product of 1.25 multiplied by the dollar limitation applicable to defined
contribution plans, in effect under applicable law for the Limitation Year; or
(ii) the product of 1.4 multiplied by 25% of such Participant's total
compensation for the Limitation Year. In the event that the limitation set forth
above is exceeded, adjustments shall be made in the defined benefit plan.
<PAGE>
26
8.4 Effective Date -- This Article VIII shall be effective for Limitation
Years beginning on or after January 1, 1987.
ARTICLE IX - LIMITATIONS OF SECTION 416 OF THE CODE
9.1 General Rule -- In the event that the Plan becomes top heavy with respect to
a Plan Year commencing on or after January 1, 1984, the provisions of this
Article shall apply and shall supersede any conflicting provisions in the Plan.
9.2 Definitions --
(a) Key Employee: Any Employee or former Employee (and the Beneficiaries of such
Employee) who at any time during the determination period was an officer of the
Employer, an owner (or considered an owner under Section 415(c)(1)(A) of the
Code) of one of the ten largest interests in the Employer if such individual's
compensation exceeds 150 percent of the dollar limitation under Section
415(c)(1)(A) of the Code, a five percent (5%) owner of the Employer, or a one
percent (1%) owner of the Employer who has an annual compensation of more than
$150,000. The determination period of the Plan is the Plan Year containing the
determination date and the four (4) preceding Plan Years. The determination of
who is a Key Employee will be made in accordance with Section 416(i)(1) of the
Code and the regulations thereunder.
(b) Non-Key Employee: Any Employee who is not a Key Employee.
(c) Top-Heavy Ratio:
(i) If the Employer maintains one or more defined benefit plans and the Employer
has never maintained any defined contribution plans (including any simplified
employee pension plan) which has covered or could cover a Participant in this
Plan, the Top-Heavy Ratio is a fraction, the numerator of which is the sum of
the present value of accrued benefits of all Key Employees as of the
determination date (including any part of any accrued benefit distributed in the
five-year period ending on the determination date), and the denominator of which
is the sum of all accrued benefits (including any part of any accrued benefit
distributed in the five-year period ending on the determination date) of all
Participants as of the determination date.
(ii) If the Employer maintains one or more defined contribution plans (including
any simplified employee pension plan) and the Employer maintains or has
maintained one or more defined benefit plans which have covered or could cover a
Participant in this Plan, the Top-Heavy Ratio is a fraction, the numerator of
which is the sum of account balances under the defined contribution plans for
all Key Employees and the present value of accrued benefits under the defined
benefit plans for all Key Employees, and the denominator of which is the sum of
the account balances under the defined contribution plans for all Participants
and the present value of accrued benefits under the defined benefit plans for
all Participants. Both the numerator and denominator of the Top-Heavy Ratio are
adjusted for any distribution of an account balance or an accrued benefit made
in the five-year period ending on the determination date and any contribution
due but unpaid as of the determination date.
<PAGE>
27
(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 12-month period ending on the
determination date. The account balances and accrued benefits of a Participant
who is not a Key Employee but who was a Key Employee in a prior year 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 Section 416 of the Code and the regulations thereunder.
Deductible Employee contributions will not be taken into account for purposes of
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. The accrued benefit
of a Participant other than a Key Employee shall be determined under (a) the
method, if any, that uniformly applies for accrual purposes under all defined
benefit plans maintained by the Employer, or (b) if there is no such method, as
if such benefit accrued not more rapidly than the slowest accrual rate permitted
under the fractional rule of Section 411(b)(1)(C) of the Code.
(d) Permissive aggregation group: The required aggregation group of plans plus
any other plan or plans of the Employer which, when considered as a group with
the required aggregation group would continue to satisfy the requirements of
Sections 401(a)(4) and 410 of the Code.
(e) Required aggregation group: (i) Each qualified plan of the Employer in which
at least one Key Employee participates, and (ii) any other qualified plan of the
Employer which enables a plan described in (i) to meet the requirements of
Sections 401(a)(4) and 410 of the Code.
(f) Determination date: For any Plan Year subsequent to the first Plan Year, the
last day of the preceding Plan Year. For the first Plan Year of the Plan, the
last day of that year.
(g) Valuation date: The last day of each Plan Year.
(h) Present Value: Present Value shall be based only on the interest rate used
by the Administrator to determine compliance with the funding requirements under
the Retirement Act and the mortality rates specified on an appropriate current
unisex table.
9.3 Determination as to Whether the Plan is Top Heavy -- The Administrator shall
determine whether the Plan is top heavy within the meaning of Section 416. The
Plan shall be top heavy for any Plan Year beginning after December 31, 1983, if,
as of the last day of the preceding Plan Year (the "determination date"), any of
the following conditions exist:
(a) If the Top-Heavy Ratio for this Plan exceeds sixty percent
(60%) and this Plan is not part of any required aggregation group or permissive
aggregation group of plans;
(b) If this Plan is a part of a required aggregation group of
plans (but which is not part of a permissive aggregation group) and the
Top-Heavy Ratio for the group of plans exceeds sixty percent (60%); or
<PAGE>
28
(c) If this Plan is a part of a required aggregation group of
plans and part of a permissive aggregation group and the Top-Heavy Ratio for the
permissive aggregation group exceeds sixty percent (60%).
In determining whether the Plan is top heavy for Plan Years commencing after
December 31, 1984, the Account balance of a Participant who has not performed an
Hour of Service for the Employer at any time during the five-consecutive-year
period ending on the determination date shall be excluded from the calculation
of the Top Heavy Ratio.
9.4 Minimum Contribution -- For each Plan Year with respect to which the Plan is
top heavy, the minimum amount allocated under the Plan for the benefit of each
Participant who is a Non-Key Employee and who is otherwise eligible for such an
allocation shall be the lesser of:
(a) three percent (3%) of the Non-Key Participant's compensation (within the
meaning of Section 415 of the Code) for the Plan Year, or
(b) the Non-Key Participant's compensation (as defined in Section 415 of the
Code) times a percentage equal to the largest percentage of such compensation
(not exceeding $200,000, $150,000 for Plan Years beginning on or after January
1, 1994) allocated to any Key Employee for the Plan Year under this Plan and all
other defined contribution plans in the same required aggregation group. This
clause (b) shall not apply to any plan required to be included in an aggregation
group if such plan enables a defined benefit plan required to be included in
such group to meet the requirements of Section 401(a)(4) or Section 410 of the
Code.
This paragraph shall not apply to a Participant covered under a qualified
defined benefit plan maintained by the Employer if the Participant's vested
benefit thereunder satisfies the requirements of Section 416(c) of the Code.
Notwithstanding any other language herein, a Non-Key Eligible Employee may not
fail to receive a defined contribution minimum allocation because either (1)
said Eligible Employee was excluded from participation (or accrues no benefit)
merely because the Employee's compensation is less than the stated amount, or
(2) the Employee is excluded from participation (or accrues no benefit) merely
because of a failure to make Elective Deferrals.
9.5 Accelerated Vesting --
(a) For each Plan Year during which the Plan is top heavy, a
vesting schedule which complies with the requirements of Section 416(b)(1)(a) of
the Code will be placed in effect. Each Participant in a Period of Service
during a Plan Year in which the Plan is top-heavy will be entitled to a
Nonforfeitable right to one hundred percent (100%) of the pension benefit
accrued from Employer contributions provided said Participant has completed a
Period of Service with the Employer of at least three (3) years.
(b) In the event that an accelerated vesting schedule must be
placed in effect in accordance with subparagraph (a) of this Section 9.5 and the
Plan is later determined not to be top heavy, no vesting schedule change shall
be made which shall have the effect of providing a benefit to a Participant less
than the accrued cumulative benefit to which the Participant was otherwise
entitled as of the date of said vesting schedule change pursuant to said
subparagraph (a).
<PAGE>
29
ARTICLE X - THE TRUST FUND
10.1 Trust Agreement -- During the period in which this Plan remains in
existence, the Employer or any successor thereto shall maintain in effect a
Trust Agreement with a corporate trustee as Trustee, to hold, invest, and
distribute the Trust Fund in accordance with the terms of such Trust Agreement.
10.2 Investment of Accounts -- The Trustee shall invest and reinvest the
Participant's accounts in investment options as defined in Section 4.1 as
directed by the Administrator or its delegate in writing. The Administrator
shall issue such directions in accordance with the investment options selected
by the Participants which shall remain in force until altered in accordance with
Sections 4.2 and 4.3.
10.3 Expenses -- Expenses of the Plan and Trust shall be paid from the Trust.
ARTICLE XI - ADMINISTRATION OF THE PLAN
11.1 General Administration -- The general administration of the Plan shall be
the responsibility of Raytheon Company (or any successor thereto) which shall be
the Administrator and Named Fiduciary for purposes of the Retirement Act. The
Company shall have the authority, in its sole discretion, to construe the terms
of the Plan and to make determinations as to eligibility for benefits and as to
other issues within the "Responsibilities of the Administrator" described in
Article XI, Section 11.2. All such determinations of the Company shall be
conclusive and binding on all persons.
11.2 Responsibilities of the Administrator -- The Administrator shall assign
responsibility for performance of all necessary administrative duties, including
the following:
(a) Determination of all questions which may arise under the Plan with respect
to eligibility for participation and administration of accounts, including
without limitation questions with respect to membership, vesting, loans,
withdrawals, accounting, status of accounts, stock ownership and voting rights,
and any other issue requiring interpretation or application of the Plan.
(b) Reference of appropriate issues to the Offices of the Executive Vice
President - Chief Financial Officer, the Senior Vice President Treasurer, the
Director of Tax Affairs, the Senior Vice President General Counsel, and the
Senior Vice President - Human Resources, respectively, for advice and counsel.
(c) Establishment of procedures required by the Plan, such as notification to
Employees as to joining the Plan, selecting and changing investment options,
suspending deferrals, exercising voting rights in stock, withdrawing and
borrowing account balances, designation of beneficiaries, election of method of
distribution, and any other matters requiring a uniform procedure.
(d) Submission of necessary amendments to supplement omissions from the Plan or
reconcile any inconsistency therein.
(e) Filing appropriate reports with the Government as required by law.
(f) Appointment of a Trustee or Trustees and investment managers.
<PAGE>
30
(g) Review at appropriate intervals of the performance of the Trustee and such
investment managers as may have been designated.
(h) Appointment of such additional Fiduciaries as deemed necessary for the
effective administration of the Plan, such appointments to be by written
instrument.
11.3 Liability for Acts of Other Fiduciaries -- Each Fiduciary shall be
responsible only for the duties allocated or delegated to said Fiduciary, and
other Fiduciaries shall not be liable for any breach of fiduciary responsibility
with respect to any act or omission of any other Fiduciary unless:
(a) The Fiduciary knowingly participates in or knowingly
attempts to conceal the act or omission of such other Fiduciary and knows that
such act or omission constitutes a breach of fiduciary responsibility by the
other Fiduciary;
(b) The Fiduciary has knowledge of a breach of fiduciary
responsibility by the other Fiduciary and has not made reasonable efforts under
the circumstances to remedy the breach; or
(c) The Fiduciary's own breach of his specific fiduciary
responsibilities has enabled another Fiduciary to commit a breach. No Fiduciary
shall be liable for any acts or omissions which occur prior to his assumption of
Fiduciary status or after his termination from such status.
11.4 Employment by Fiduciaries -- Any Fiduciary hereunder may employ, with the
written approval of the Administrator, one or more persons to render service
with regard to any responsibility which has been assigned to such Fiduciary
under the terms of the Plan including legal, tax, or investment counsel and may
delegate to one or more persons any administrative duties (clerical or
otherwise) hereunder.
11.5 Recordkeeping -- The Administrator shall keep or cause to be kept any
necessary data required for determining the account status of each Participant.
In compiling such information, the Administrator may rely upon its employment
records, including representations made by the Participant in the employment
application and subsequent documents submitted by the Participant to the
Employer. The Trustee shall be entitled to rely upon such information when
furnished by the Administrator or its delegate. Each Employee shall be required
to furnish the Administrator upon request and in such form as prescribed by the
Administrator, such personal information, affidavits and authorizations to
obtain information as the Administrator may deem appropriate for the proper
administration of the Plan, including but not limited to proof of the Employee's
date of birth and the date of birth of any person designated by a Participant as
a Beneficiary.
11.6 Claims Review Procedure -- The Administrator shall make all determinations
as to the right of any person to Accounts under the Plan. Any such determination
by the Administrator shall be made pursuant to the following procedure:
<PAGE>
31
Step 1. Claims with respect to an Account should be filed by a claimant
as soon as practicable after claimant knows or should know that a dispute has
arisen with respect to an Account, but at least thirty (30) days prior to the
claimant's actual retirement date or, if applicable, within sixty (60) days
after the death, Disability or Severance from Service of the Participant whose
account is at issue, by mailing a copy of the claim to the Benefits and Services
Department, Raytheon Company, 141 Spring Street, Lexington, Massachusetts 02173.
Step 2. In the event that a claim with respect to an Account is wholly
or partially denied by the Administrator, the Administrator shall, within ninety
(90) days following receipt of the claim, so advise the claimant in writing
setting forth: the specific reason or reasons for the denial; specific reference
to pertinent Plan provisions on which the denial is based; a description of any
additional material or information necessary for the claimant to perfect the
claim; an explanation as to why such material or information is necessary; and
an explanation of the Plan's claim review procedure.
Step 3. Within sixty (60) days following receipt of the denial of a
claim with respect to an Account, a claimant desiring to have the denial
appealed shall file a request for review with the Administrator by mailing a
copy thereof to the address shown in Step 1.
Step 4. Within thirty (30) days following receipt of a request for
review, the Administrator shall provide the claimant a further opportunity to
present his or her position. At the Administrator's discretion, such
presentation may be through an oral or written presentation. Prior to such
presentation, the claimant shall be permitted the opportunity to review
pertinent documents and to submit issues and comments in writing. Within a
reasonable time following presentation of the claimant's position, which usually
should not exceed thirty (30) days, the Administrator shall inform the claimant
in writing of the decision on review setting forth the reasons for such decision
and citing pertinent provisions in the Plan.
The Administrator is the fiduciary to whom the Plan grants full discretion, with
the advice of counsel, to interpret the Plan; to determine whether a claimant is
eligible for benefits; to decide the amount, form and timing of benefits; and to
resolve any other matter under the Plan which is raised by a claimant or
identified by the Administrator. All questions arising from or in connection
with the provisions of the Plan and its administration, not herein provided to
be determined by the Board of Directors, shall be determined by the
Administrator, and any determination so made shall be conclusive and binding
upon all persons affected thereby.
11.7 Indemnification of Directors and Employees -- The Companies shall indemnify
by insurance or otherwise any Fiduciary who is a director, officer or employee
of the Employer, his heirs and legal representatives, against all liability and
reasonable expense, including counsel fees, amounts paid in settlement and
amounts of judgments, fines or penalties, incurred or imposed upon him in
connection with any claim, action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of acts or omissions in his capacity
as a Fiduciary hereunder, provided that such act or omission is not the result
of gross negligence or willful misconduct. The Companies may indemnify other
Fiduciaries, their heirs and legal representatives, under the circumstances, and
subject to the limitations set forth in the preceding sentence, if such
indemnification is determined by the Board of Directors to be in the best
interests of the Companies.
<PAGE>
32
11.8 Immunity from Liability -- Except to the extent that Section 410(a) of the
Retirement Act prohibits the granting of immunity to Fiduciaries from liability
for any responsibility, obligation, or duty imposed under Title I, Subtitle B,
Part 4, of said Act, an officer, employee, member of the Board of Directors of
the Employer or other person assigned responsibility under this Plan shall be
immune from any liability for any action or failure to act except such action or
failure to act which results from said officer's, Employee's, Participant's or
other person's own gross negligence or willful misconduct.
ARTICLE XII - AMENDMENT OR TERMINATION OF PLAN
12.1 Right to Amend or Terminate Plan
Each of the Companies reserves the right at any time or times, by action of its
Board of Directors, to modify, amend or terminate the Plan in whole or in part
as to its Employees, in which event a certified copy of the resolution of the
Board of Directors, authorizing such modification, amendment or termination
shall be delivered to the Trustee and to the other Companies whose Employees are
covered by this Plan, provided, however, no amendment to the Plan shall be made
which shall:
(a) deprive any Participant of amounts allocated to his Account prior to the
date of the amendment;
(b) except as provided in Section 3.11, make it possible for
any part of the corpus or income of the Trust Fund to be used for or diverted to
purposes other than the exclusive benefit of the Participants or their
beneficiaries prior to the satisfaction of all liabilities with respect to such
Participant or their Beneficiaries;
(c) modify the vesting schedule and deprive a Participant of
his Nonforfeitable rights to amounts allocated to his account prior to the date
of the amendment. Further, if the vesting schedule of the Plan is amended, or
the Plan is amended to directly or indirectly affect a Nonforfeitable percentage
of a Participant's Account, each Participant with a Period of Service of at
least three years may elect, within a reasonable period after the adoption of
the amendment to have his nonforfeitable percentage computed under the Plan
without regard to such amendment. The period during which the election may be
made shall commence with the date the amendment is adopted or the change made
and shall end on the latest of:
(i) 60 days after the amendment is adopted;
(ii) 60 days after the amendment becomes effective, or
(iii) 60 days after the Participant is issued written notice
of the amendment;
(d) increase the duties of liabilities of the Trustee without
its consent.
<PAGE>
33
Notwithstanding the foregoing provisions of this Section or any other provisions
of this Plan, any modification or amendment of the Plan may be made
retroactively if necessary or appropriate to conform the Plan with, or to
satisfy the conditions of, the Retirement Act, the Code, or any other law,
governmental regulation or ruling.
Any termination, modification or amendment of the Plan shall be subject to
approval by the Board of Directors of the Company.
12.2 Maintenance of Plan -- The Company has established the Plan with the bona
fide intention and expectation that it will be able to make its contributions
indefinitely, but the Company is not and shall not be under any obligation or
liability whatsoever to continue its contributions or to maintain the Plan for
any given length of time.
12.3 Termination of Plan and Trust -- The Plan and Trust hereby created shall
terminate upon the occurrence of any of the following events:
(a) Delivery to the Trustee of a notice of termination executed by the Company
specifying the date as of which the Plan and Trust shall terminate;
(b) Adjudication of the Company as bankrupt or general assignment by the
Company to or for the benefit of creditors or dissolution of the Company;
In the event of the complete termination of this Plan or the complete
discontinuance of Matching Contributions under it (but a rescission under
Section 13.2 for failure to qualify initially is not such a termination or
complete discontinuance), the rights of each Participant to the amounts then
credited to his or her Account shall be Nonforfeitable. In the event of the
partial termination of this Plan, the rights of each Employee (as to whom the
Plan is considered terminated) to the amounts then credited to his or her
Account, shall be Nonforfeitable. Whether or not there is a complete or partial
termination of this Plan shall be determined under the regulations promulgated
pursuant to the Internal Revenue Code. To the extent this paragraph is
inconsistent with any provisions contained elsewhere in this Plan or in the
Trust which forms a part of this Plan, this paragraph shall govern. Upon such
termination of the Plan and Trust, after payment of all expenses and
proportional adjustment of accounts to reflect such expenses, fund losses or
profits, and reallocations to the date of termination, each Participant or
former Participant shall, subject to the requirements of Section 401(k)(10) of
the Code and Reg. ss. 1.401(k)-1(d)(3), be entitled to receive any amounts then
credited to his or her Account in the Trust Fund. The Trustee may make payments
in cash or, to the extent permitted by Section 6.6, in stock.
ARTICLE XIII - ADDITIONAL PROVISIONS
13.1 Effect of Merger, Consolidation or Transfer -- In the event of any merger
or consolidation with or transfer of assets or liabilities to any other plan or
to this Plan, each Participant of the Plan shall be entitled to a benefit
immediately after the merger, consolidation or transfer, which is equal to or
greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation or transfer (if the Plan had been
terminated).
<PAGE>
34
13.2 Necessity of Initial Qualification -- This Plan is established with the
intent that it shall qualify under Sections 401(a) and 401(k) of the Code as
that section exists at the time the Plan is established. If the Internal Revenue
Service determines that the Plan initially fails to meet those requirements,
then within thirty (30) days after the date of such determination all of the
assets of the Trust Fund held for the benefit of Participants and their
beneficiaries shall be distributed equitably among the contributors to the Plan
in proportion to their contributions, and the Plan shall be considered to be
rescinded and of no force or effect, unless such inadequacy is removed by a
retroactive amendment pursuant to the Code. Any nonvested Matching Contributions
and earnings attributable thereto shall be returned to the Companies.
13.3 Limitation of Assignment -- No account under the Plan shall be subject in
any manner to attachment, anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, or the vesting of rights in any person by
operation of law or otherwise except as provided under this Plan, including but
not limited to the Trustee or Receiver in Bankruptcy, and any attempt so to
anticipate, alienate, sell, transfer, assign, encumber or charge the same shall
be void, nor shall any such benefit be in any way liable for or subject to the
debts, contracts, liabilities, engagements or torts of any person entitled to
such benefit. If any Participant is adjudicated bankrupt, or attempts to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any
benefit under the Plan, then such benefit shall, in the discretion of the
Administrator, cease and terminate and in that event the Trustee shall hold or
apply the same or any part thereof to or for the benefit of such Participant in
such manner as the Administrator may direct.
Notwithstanding the foregoing, the Administrator is authorized to comply with a
domestic relations order determined by it to be a qualified domestic relations
order as defined in Section 414(p) of the Code. A distribution may be made to an
alternate payee under a qualified domestic relations order in the form of a lump
sum payment at the time specified in such order, regardless of any restrictions
on the commencement of the distribution that then may apply to the Participant
to whom the order relates.
13.4 Limitation of Rights of Employees -- This Plan is strictly a voluntary
undertaking on the part of the Companies and shall not be deemed to constitute a
contract between any of the Companies and any Employee, or to be a consideration
for, or an inducement to, or a condition of the employment of any Employee.
Nothing contained in the Plan shall be deemed to give any Employee the right to
be retained in the service of any of the Companies or shall interfere with the
right of any of the Companies to discharge or otherwise terminate the employment
of any Employee of the Company at any time. No Employee shall be entitled to any
right or claim hereunder except to the extent such right is specifically fixed
under the terms of the Plan.
13.5 Construction -- The Plan shall be construed, regulated, and administered
under the laws of the Commonwealth of Massachusetts, except to the extent that
the Retirement Act otherwise requires. In the event that any provision of this
Plan is inconsistent with any provision in the Retirement Act, the provision in
the Retirement Act shall be deemed to be controlling.
<PAGE>
35
13.6 Merger of United Engineers & Constructors, Inc. Profit Sharing Plan and the
United Engineers & Constructors, Inc. Boston Employees Profit Sharing Plan --
Effective as of December 31, 1994, or such earlier date as is determined to be
administratively feasible (the "Merger Date"), the United Engineers &
Constructors, Inc. Profit Sharing Plan and the United Engineers & Constructors,
Inc. Boston Employees Profit Sharing Plan (the "Merged Plans") shall be merged
into this Plan. All assets held under the trust agreements for each of the
Merged Plans shall be transferred to the Trustee, such transfer to be effective
as of the Merger Date. Amounts held in the various investment accounts under the
trust agreements for each of the Merged Plans shall be transferred to the
investment accounts under the Trust in accordance with procedures established by
the Administrator. Upon such transfer, the assets of the Merged Plans shall
become assets of this Plan for all purposes hereunder, effective as of the
Merger Date, and this Plan shall assume all the liabilities of the Merged Plans,
and benefits shall thereafter be allocated and paid pursuant to the provisions
of this Plan. All participants in the Merged Plans shall remain fully vested in
their accounts which are transferred to this Plan. All withdrawal and
distribution options under each of the Merged Plans shall be made available
under this Plan with respect to the transferred accounts to the extent required
by Section 411(d)(6) of the Code. Any amendments to this Plan which are
effective prior to January 1, 1994 shall be considered as amendments to each of
the Merged Plans as well.
13.7 Transfer of Assets from Raytheon Subsidiary Savings and Investment Plan --
Effective as of December 31, 1994, or such earlier date as is administratively
feasible (the "Transfer Date") the account balances of those participants under
the Raytheon Subsidiary Savings and Investment Plan who are employed on the
non-exempt and exempt salaried payrolls of Harbert-Yeargin, Inc. (the
"Transferred Accounts") shall be transferred into this Plan. Assets equal to the
Transferred Accounts shall be transferred from the Raytheon Subsidiary Savings
and Investment Plan to the Trustee, such transfer to be effective as of the
Transfer Date. Amounts held in the various investment accounts under the
Raytheon Subsidiary Savings and Investment Plan and Trust shall be transferred
to the investment accounts under the Trust in accordance with procedures
established by the Administrator. Upon such transfer, the assets transferred
from the Raytheon Subsidiary Savings and Investment Plan shall become assets of
this Plan for all purposes hereunder, effective as of the Transfer Date, and
this Plan shall assume all the liabilities of the Raytheon Subsidiary Savings
and Investment Plan for the Transferred Accounts, and benefits shall thereafter
be allocated and paid pursuant to the provisions of this Plan. All participants
in the Raytheon Subsidiary Savings and Investment Plan whose accounts are
transferred to this Plan shall remain fully vested in their Transferred
Accounts. All withdrawal and distribution options under the Raytheon Subsidiary
Savings and Investment Plan shall be made available under this Plan with respect
to the Transferred Accounts to the extent required by Section 411(d)(6) of the
Code.
ARTICLE XIV - DEFINITIONS
The following terms have the meaning specified below unless the context
indicates otherwise:
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36
14.1 "Account" means the entire interest of a Participant in the Trust Fund. A
Participant's Account shall consist of an Employee Account, a Matching
Contribution Account and, where applicable, a Rollover Contribution Account and
a Qualified Non-Elective Contribution Account.
14.2 "Administrator" means Raytheon Company.
14.3 "Affiliate" means a trade or business which together with any of the
Companies is a member of (i) a controlled group of corporations within the
meaning of Section 414(b) of the Code; (ii) a group of trades or businesses
(whether or not incorporated) under common control as defined in Section 414(c)
of the Code, or (iii) an affiliated service group as defined in Section 414(m)
of the Code, or which is an entity otherwise required to be aggregated with the
Companies pursuant to Section 414(o) of the Code. For purposes of Article VIII,
the determination of controlled groups of corporations and trades or businesses
under common control shall be made after taking into account the modification
required under Section 415(h) of the Code. This section shall be effective as of
January 1, 1987.
14.4 "Authorized Leave of Absence" means an absence approved by the Companies on
a uniform and nondiscriminatory basis not exceeding one (1) year for any of the
following reasons: illness of Employee or relative, death of relative, education
of Employee, or personal or family business of an extraordinary nature, provided
in each case that the Employee returns to the service of the Companies within
the time period specified by the Companies.
14.5 "Authorized Military Leave of Absence" means any absence due to service in
the Armed Forces of the United States, upon completion of which the Employee is
entitled under any applicable Federal law to reemployment at the termination of
such military service, provided that he returns to the service of the Companies
within the period provided for by such applicable Federal law or such further
period as may be established by the Administrator. As used in this paragraph,
the term "Armed Forces of the United States" excludes the Merchant Marine.
14.6 "Beneficiary" means the person designated by the Participant to receive the
value of his Account in the event of his death; provided, however, that if a
Participant with a spouse designates a Beneficiary other than his spouse, said
designation shall not take effect unless the spouse consents in writing to such
designation and said spousal consent acknowledges the effect of said designation
and is witnessed by a representative of the Plan or a notary public. Said
spousal consent shall be effective only with respect to the spouse granting such
consent, and shall not be required if the Participant can establish that there
is no spouse, that the spouse cannot be located, or that other conditions exist
as may be prescribed by regulations issued by the Secretary of the Treasury. If
there is no Beneficiary designated by the Participant or surviving at the death
of the Participant, payment of his Account shall be made in accordance with
Section 6.6. Subject to the foregoing, a Participant may designate a new
beneficiary at any time by filing with the Administrator a written request for
such change on a form prescribed by the Administrator. Such change shall become
effective only upon receipt of the form by the Administrator, but upon such
receipt of the change shall relate back to and take effect as of the date the
Participant signed such request, whether or not the Participant is living at the
time of such receipt, provided, however, that neither the Trustee nor the
Administrator shall be liable by reason of any payment of the Participant's
Account made before receipt of such form.
<PAGE>
37
14.7 "Board of Directors" means the Board of Directors of Raytheon Company.
14.8 "Business Day" means a day on which Fidelity is open for general business.
14.9 "Code" means the Internal Revenue Code of 1986, as amended.
14.10 "Company" means Raytheon Company but shall not include a Division,
Operation or similar cohesive group of Raytheon Company excluded by the Board of
Directors of Raytheon Company.
14.11 "Companies" means the Company and any Subsidiary of the Company which
elects through an authorized officer to participate in the Plan on account of
its Employees, provided that participation in the Plan by such a Subsidiary is
approved by the Board of Directors of the Company, or an officer to whom
authority to approve participation by a subsidiary is delegated by the Board of
Directors, but shall not include any Division, Operation or similar cohesive
group of a participating Subsidiary excluded by the Board of Directors of the
Subsidiary and the Board of Directors of the Company.
14.12 "Designated Hourly Payroll" means an hourly payroll or portion thereof,
processed in the United States, of one of the Companies which is designated in
writing by the Administrator in accordance with nondiscriminatory and uniform
rules as a payroll the Employees on which are eligible to participate in this
Plan.
14.13 "Disability" means that the Participant is totally and permanently
disabled by bodily injury or disease so as to be prevented from engaging in any
occupation for compensation or profit. The determination of disability shall be
made by the Administrator with the aid of competent medical advice. It shall be
based on such evidence as the Administrator deems necessary to establish
disability or the continuation thereof.
14.14 "Early Retirement Date" means the first day of the month subsequent to the
earliest date on which the Participant has both attained age 55 and completed a
Period of Service of ten (10) years.
14.15 "Elective Deferral" means a voluntary reduction of Participant's
compensation in accordance with Section 3.2 hereof.
14.16 "Eligible Compensation" means the base pay (including vacation, salary
continuance and sick pay and pay for unused vacation), supervisory
differentials, shift premiums and, effective January 1, 1985, and September 23,
1996, respectively, sales commissions and flight pay for pilots at Raytheon
Aircraft Services, paid to a Participant by the Employer, excluding all other
earnings from any source. Effective January 1, 1997, if the base pay of a
Participant (who is not a regularly scheduled part-time employee) is less in any
work week than the equivalent of 40 times the straight time hourly rate,
overtime premium pay may be considered, but only to the extent total Eligible
Compensation for such work week does not exceed 40 multiplied by the
Participant's straight time rate determined on an hourly basis. Effective for
Plan Years beginning on or after January 1, 1989 and prior to December 31, 1993,
<PAGE>
38
in no event shall the amount of Eligible Compensation taken into account under
the Plan for any Plan Year exceed $200,000 (or such larger amount as the
Secretary of the Treasury may determine for such Plan Year under Section
401(a)(17) of the Code). Effective for Plan Years beginning on or after January
1, 1994, in no event shall the amount of Eligible Compensation taken into
account under the Plan for any Plan Year exceed $150,000 (or such larger amount
as the Secretary of the Treasury may determine for such Plan Year under Section
401(a)(17) of the Code). For purposes of this limitation only, in determining
compensation the rules of Section 414(q)(6) of the Code shall apply, except that
in applying such rules, the term "family" shall include only the spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the close of the Plan Year.
14.17 "Eligible Employee" means any Employee on a U.S. based Salaried or
Designated Hourly Payroll of one of the Companies, excluding Employees in
cooperative studies and intern programs, independent contractors reclassified as
a result of an audit by a government agency as common law employees and all
individuals performing services for the Companies who are paid through accounts
payable, as distinguished from the payroll system, and, effective January 1,
1987, a person who is a Leased Employee.
14.18 "Employee" means any person performing compensated services for the
Employer who meets the definition of "Employee" for income tax withholding
purposes under Treas. Regs. 31.3401(c)-1 and any person who is a Leased
Employee. This section shall be effective as of January 1, 1987.
14.19 "Employee Account" means that portion of Participant's Account which is
attributable to Elective Deferrals, adjustments for withdrawals and
distributions, and the earnings and losses attributable thereto.
14.20 "Employer" means Raytheon Company and any Affiliate thereof.
14.21 "Employment Commencement Date" is the date on which the Employee first
performs an Hour of Service with the Employer.
14.22 "Enrollment Agreement" means a salary reduction agreement pursuant to
which an Eligible Employee voluntarily joins the Plan and authorizes deferral of
a portion of the Participant's Eligible Compensation.
14.23 "Fidelity" means Fidelity Investments, the recordkeeper for the Plan.
14.24 "Fiduciary" means a named fiduciary and any other person or group of
persons who assumes a fiduciary responsibility within the meaning of the
Retirement Act under this Plan whether by expressed delegation or otherwise but
only with respect to the specific responsibilities of each for the
administration of the Plan and Trust Fund.
14.25 "Higher Paid Eligible Employee" means an individual described in Section
414(q) of the Code, after giving effect to subsection (12) thereof, and any
regulation, notice or other guidance issued by the Internal Revenue Service
thereunder. The determination of whether an individual is a Higher Paid Eligible
Employee may be made by the Administrator on the basis of any elective provision
permitted under such regulation, notice or other guidance. In general, an
Employee will be considered a Higher Paid Eligible Employee if such individual:
<PAGE>
39
(a) was a five percent owner as defined in Section 416(i)(1)(iii) of the Code
at any time during the current or preceding Plan Year;
(b) received compensation in excess of $50,000 during the current or preceding
Plan Year (adjusted annually for increases in the cost of living in accordance
with Section 415(d) of the Code); or
(c) was at any time an officer within the meaning of Section 416(i) of the Code
during the preceding Plan Year, and who received compensation in the current or
preceding Plan Year greater than 50 percent of the dollar limitation in effect
under Section 415(b)(1)(A) of the Code for such Plan Year. Notwithstanding the
foregoing, no more than 50 or, if lesser, the greater of 3 employees or 10
percent of the Employees shall be treated as officers.
(d) An Employee who is not described in paragraph (b) or (c) above for the
preceding Plan Year shall not be treated as described in paragraph (b) or (c)
unless such Employee is one of the 100 Employees who receive the most
compensation from the Employer during the Plan Year.
(e) A former Employee shall be treated as a Higher Paid Eligible Employee if
such former Employee had a separation year prior to the Plan Year and was a
Higher Paid Eligible Employee for either (1) such Employee's separation year or
(2) any Plan Year ending on or after the Employee's 55th birthday. A separation
year is the Plan Year in which the Employee separates from service.
(f) Notwithstanding anything to the contrary in this Plan, Sections 414(b), (c),
(m), (n), and (o) of the Code are applied prior to determining whether an
Employee is a High Paid Eligible Employee.
(g) "Non-Higher Paid Eligible Employee" shall mean an Employee who is neither a
Higher Paid Eligible Employee nor a family member (within the meaning of Section
414(q)(6) of the Code).
(h) "Compensation" shall mean the Employee's wages which are required to be
reported on IRS Form W-2, increased by any Elective Deferrals made by the
Companies to the Plan on behalf of the Employee and any pre-tax elective
contributions made by the Companies which are excludible from the Employee's
income under Section 125 of the Code.
14.26 (a) "Hour of Service" means an hour with respect to which any Employee is
paid, or entitled to payment, for the performance of duties for the Employer
during the applicable computation period.
(b) "Hour of Service" shall include an hour for which the Employee is entitled
to credit under subparagraph (a) hereof as a result of employment:
(i) with a predecessor company substantially all of the assets of which have
been acquired by the Employer, provided that where only a portion of the
operations of a company have been acquired, only service with said acquired
portion prior to the acquisition will be included and that the Employee was
employed by said predecessor company at the time of acquisition; or
<PAGE>
40
(ii) with a Division, Operation or similar cohesive group of the Employer
excluded from participation in the Plan.
(iii) with a predecessor contractor under the Integrated Range Engineering
Contract (IRE) on Kwajalein Atoll or contracts covered by the Service Contract
Act, provided that the Employee is in a Period of Service with such contractor
on the day immediately preceding the Employee's Employment Commencement date or
Reemployment Commencement Date, as applicable.
(c) To the extent applicable, the rules set forth in 29 CFR Sections
2530.200b-2(b) and (c) for computing an "Hour of Service" are incorporated
herein by reference.
14.27 "Layoff" means an involuntary interruption of service due to reduction of
work force with or without the possibility of recall to employment when
conditions warrant.
14.28 "Leased Employee" means any person (other than an Employee) who, pursuant
to an agreement between the Employer and any other person, has performed
services for the Employer (or any related person as provided in Section
414(n)(6) of the Code) on a substantially full time basis for a period of at
least one year and such services are of the type historically performed by
employees in the business field of the Employer. Leased Employees are not
eligible to participate in the Plan. Notwithstanding the foregoing, if such
"Leased Employees" constitute less than 20% of the nonhighly compensated
workforce of the Employer within the meaning of Section 414(n)(5)(C)(ii) of the
Code, the term "Employee" shall not include Leased Employees covered by a plan
described in Section 414(n)(5) of the Code. This section shall be effective as
of January 1, 1987.
14.29 "Limitation Year" means the calendar year or any other
12-consecutive-month period adopted for all qualified deferred compensation
plans of the Company pursuant to a written resolution adopted by the Company.
14.30 "Matching Contribution" means contribution made to the Trust in accordanc
with Section 3.7 hereof.
14.31 "Matching Contribution Account" means that portion of Participant's
Account which is attributable to Matching Contributions by the Companies,
adjustments for withdrawals and distributions, and the earnings and losses
attributable thereto.
14.32 "Net Annual Profits" means the current earnings of the Companies for the
Plan Year determined in accordance with generally accepted accounting principles
before federal and local income taxes and before contributions to this Plan or
any other qualified plan.
14.33 "Net Profits" means the accumulated earnings of the Companies at the end
of the Plan Year determined in accordance with generally accepted accounting
principles. For the purposes hereof "accumulated earnings at the end of the Plan
Year" shall include Net Annual Profits for such Plan Year calculated before any
deduction is taken for depreciation, if any.
<PAGE>
41
14.34 "Nonforfeitable" means an unconditional right to an Account balance or
portion thereof determined as of the applicable date of determination under this
Plan.
14.35 "Normal Retirement Age" means the Participant's sixty-fifth (65th)
birthday.
14.36 "Participant" means
(i) an individual who is enrolled in the Plan pursuant to Article II and
(ii)an individual who has transferred a Qualified Rollover Account into the Pla
pursuant to Section 3.10(f) provided that the Participant in either category
has not withdrawn the entire amount of his or her Account.
14.37 "Pay Period" means a scheduled period for payment of wages or salaries.
14.38 "Period of Participation" means that portion of a Period of Service during
which the Eligible Employee was a Participant, and had an Employee Account in
the Plan. For the purpose of determining a Period of Participation,
participation in the Raytheon Savings and Investment Plan for Specified Hourly
Payroll Employees and the Raytheon Employee Savings and Investment Plan shall be
considered as participation in this Plan.
14.39 "Period of Service" means the period of time beginning on the Employee's
Employment Commencement Date or Reemployment Commencement Date, whichever is
applicable, and ending on the Employee's Severance from Service Date.
14.40 "Period of Severance" means the period of time beginning on the Employee's
Severance from Service Date and ending on the Employee's Reemployment
Commencement Date.
14.41 "Plan" means the Raytheon Savings and Investment Plan as amended from time
to time.
14.42 "Plan Year" means a calendar year, or a portion thereof occurring prior to
the termination of the Plan.
14.43 "Qualified Non-Elective Contribution Account" means that portion of a
Participant's Account which is attributable to Qualified Non-Elective
Contributions received pursuant to Section 3.12, adjusted for withdrawals and
distributions, and the earnings and losses attributable thereto.
14.44 "Reemployment Commencement Date" means the first date on which the
Employee performs an Hour of Service following a Period of Severance which is
excluded under Section 5.3 in determining whether a Participant has a
Nonforfeitable right to his or her Matching Contribution Account.
14.45 "Retirement" means a Severance from Service when the Participant has
either attained age 55 and completed a Period of Service of at least ten (10)
years or has attained Normal Retirement Age.
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42
14.46 "Retirement Act" means the Employee Retirement Income Security Act of
1974, including any amendments thereto.
14.47 "Rollover Contribution Account" means that portion of a Participant's
Account which is attributable to rollover contributions received pursuant to
Section 3.10, adjustments for withdrawals and distributions, and the earnings
and losses attributable thereto.
14.48 "Salaried Payrolls" means the nonexempt salaried and the exempt salaried
payrolls which are processed in the United States.
14.49 "Severance from Service" means the termination of employment by reason of
quit, Retirement, discharge, death or failure to return from Layoff, Authorized
Leave of Absence, Authorized Military Leave of Absence or Disability.
14.50 "Severance from Service Date" means the earlier of:
(a) the date on which an Employee quits, retires, is discharged, or dies; or
(b) except as provided in paragraphs (c) and (d) hereof, the first anniversary
of the first date of a period during which an Employee is absent for any reason
other than quit, retirement, discharge or death, provided that, on an equitable
and uniform basis, the Administrator may determine that, in the case of a Layoff
as the result of a permanent plant closing, the Administrator may designate the
date of Layoff or other appropriate date prior to the first anniversary of the
first date of absence as the Severance From Service Date; or
(c) in the case of an Authorized Military Leave of Absence from which the
Employee does not return prior to expiration of recall rights, "Severance from
Service Date" means the first day of absence because of the leave; or
(d) in the case of an absence due to Disability, "Severance from Service Date"
means the earlier of the first anniversary of the first day of absence because
of the Disability or the date of termination of the Disability; or
(e) in the case of an Employee who is discharged or quits (i) by reason of the
pregnancy of the Employee, (ii) by reason of the birth of a child to the
Employee, (iii) by reason of the placement of a child with the Employee in
connection with the adoption of such child by the Employee or (iv) for purposes
of caring for such child for a period beginning immediately following such birth
or placement, "Severance from Service Date," for the sole purpose of determining
the length of a Period of Service, shall mean the first anniversary of the quit
or discharge; or
(f) in the case of an Employee who is absent from service beyond the first
anniversary of the first day of absence (i) by reason of the pregnancy of the
Employee, (ii) by reason of the birth of a child to the Employee, (iii) by
reason of the placement of a child with the Employee in connection with the
adoption of such child by the Employee or (iv) for purposes of caring for such
child for a period beginning immediately following such birth or placement, the
Severance from Service Date shall be the second anniversary of the first day of
such absence. The period between the first and second anniversaries of the first
day of absence is neither a Period of Service nor a Period of Severance; or
<PAGE>
43
(g) in the case of an Employee whose employment is terminated by reason of the
sale or divestiture of assets or stock of a business of one of the Companies,
"Severance From Service Date" shall be the earlier of the first anniversary of
the closing date of the transaction or the date the Employee dies or withdraws
the entire amount of his or her Account.
14.51 "Subsidiary" means any corporation designated by the Board of Directors as
a Subsidiary, provided that for the purposes of the Plan no corporation shall be
considered a Subsidiary during any period when less than fifty percent (50%) of
its outstanding voting stock is beneficially owned by the Company.
14.52 "Surviving Spouse" means a lawful spouse surviving the Participant as of
the date of Participant's death.
14.53 "Trust Agreement" means the agreement between the Company and the Trustee,
and any successor agreement made and entered into for the establishment of a
trust fund of all contributions which may be made to the Trustee under the Plan.
14.54 "Trustee" means the Trustee and any successor trustees under the Trust
Agreement.
14.55 "Trust Fund" means the cash, securities, and other property held by the
Trustee for the purposes of the Plan.
14.56 "Valuation Date" means each Business Day.
14.57 Words used in either the masculine or feminine gender shall be read and
construed so as to apply to both genders where the context so warrants. Words
used in the singular shall be read and construed in the plural where they so
apply.
<PAGE>
1
EXHIBIT 4.4
RAYTHEON SAVINGS AND INVESTMENT PLAN FOR
SPECIFIED HOURLY PAYROLL EMPLOYEES
Provisions in Effect as of May 5, 1998
ARTICLE I - PREAMBLE
The Raytheon Savings and Investment Plan for Specified Hourly Payroll
Employees, which became effective on June 30, 1986, provides employees with a
tax-effective means of allocating a portion of their salary to be invested in
one or more investment opportunities specified in the Plan as determined by the
employee and set aside for short-term and long-term needs of the employee. The
Plan is applicable only to eligible employees who meet the requirements for
participation on or after June 30, 1986.
It is intended that the Plan will comply with all of the requirements
for a qualified profit sharing plan under Sections 401(a) and 401(k) of the
Internal Revenue Code and will be amended from time to time to maintain
compliance with these requirements. The terms used in the Plan have the meanings
specified in Article XIV unless the context indicates otherwise.
The Plan is intended to constitute a plan described in Section 404(c)
of the Employee Retirement Income Security Act and Title 29 of the Code of
Federal Regulations, ss. 2550.404(c)-1. Participants in the Plan are responsible
for selecting their own investment opportunities from the options available
under the Plan and the Plan fiduciaries are relieved of any liability for any
losses which are a direct and necessary result of investment instructions given
by a participant or beneficiary.
The Plan as restated herein shall be effective as of July 1, 1994 or
such other dates as may be specifically provided herein. The rights of former
Employees whose Severance from Service Date occurred prior to the date of any
amendment shall be governed by the terms of the Plan in effect on their
Severance from Service Date except as otherwise provided herein.
ARTICLE II - ELIGIBILITY
2.1 Eligibility Requirements -- Each Eligible Employee may join the
Plan as of the first Entry Date coincident with or next following completion of
a Period of Service of three (3) consecutive months commencing on the Employee's
Commencement Date or Reemployment Commencement date, whichever is applicable, or
any subsequent Entry Date selected by the Eligible Employee provided he or she
continues in the same Period of Service or meets the requirements under Section
2.2.
2.2 Procedure for Joining the Plan -- Each Eligible Employee who meets
the requirements of Section 2.1 may join the Plan by communicating with Fidelity
in accordance with instructions in an enrollment kit which will be made
available to each Eligible Employee. An enrollment in the Plan shall not be
deemed to have been completed until the Employee has designated: a percentage by
which Participants' Eligible Compensation shall be reduced as an Elective
Deferral in accordance with the requirements of Section 3.2, subject to the
<PAGE>
2
nondiscrimination test described in Section 3.3; election of investment funds as
described in Article IV; one or more Beneficiaries; and such other information
as specified by Fidelity. Enrollment will be effective as of the first
administratively feasible Pay Period following completion of enrollment. The
Administrator in its discretion may from time to time make exceptions and
adjustments in the foregoing procedure on a uniform and nondiscriminatory basis.
2.3 Transfer to Position Not Covered by Plan -- If a Participant is
transferred to another position with the Employer in which the Participant is no
longer an Eligible Employee, the Participant will remain a Participant of the
Plan with respect to Elective Deferrals previously made but will no longer be
eligible to have Elective Deferrals made to the Plan on his or her behalf until
he or she again becomes an Eligible Employee. In the event the Participant is
subsequently transferred to a position in which he or she again becomes an
Eligible Employee, the Participant may renew Elective Deferrals by communicating
with Fidelity and providing all of the information requested by Fidelity. The
renewal of Elective Deferrals will be effective as of the first administratively
feasible Pay Period following receipt by Fidelity of the requested information.
ARTICLE III - CONTRIBUTIONS
3.1 Employer Contributions -- The Companies shall contribute to the
Trust established under this Plan from Net Annual Profits or Net Profits an
amount equal to the total amount of Elective Deferrals agreed to be made by the
Companies pursuant to designation by Participants.
3.2 Elective Deferrals -- Elective Deferrals must be made in one
percent (1%) increments with a minimum Elective Deferral of one percent (1%) of
Eligible Compensation and a maximum Elective Deferral of seventeen percent
(17%); provided, however, that effective for any Plan Year beginning on or after
January 1, 1987, in no event may the amount of Elective Deferrals to the Plan,
when taken into account with all other elective deferral (as defined in Code
Section 402(g)) made by a Participant under any other plan maintained by the
Employer, exceed $7,000 (adjusted for increases in the cost of living under Code
Section 402(g)) in any calendar year. If a Participant participates in another
plan or arrangement which is not maintained by the Employer and which permits
elective deferrals in any calendar year and his total Elective Deferrals under
the Plan and other plan(s) exceed $7,000 (as adjusted) in a calendar year, he
may request to receive a distribution of the amount of the excess deferral (a
deferral in excess of $7,000 (as adjusted)) that is attributable to Elective
Deferrals to this Plan together with earnings thereon, notwithstanding any
limitations on distributions contained in the Plan. Such distribution shall be
made by the April 15 following the Plan Year in which the Elective Deferrals
were made, provided that the Participant notifies the Administrator of the
amount of the excess deferral that is attributable to Elective Deferrals to the
Plan and requests such a distribution. The Participant's notice must be received
by the Administrator no later than the March 1 following the Plan Year of the
excess deferral. In the absence of such notice, the amount of such excess
deferral attributable to Elective Deferrals to this Plan shall be subject to all
limitations on withdrawals and distributions in the Plan. In addition to
distributing excess deferrals at the request of the Participant, the
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3
Administrator shall distribute any deferrals made under this Plan or any other
plan of the Employer in excess of the statutory maximum deferral of $7,000 (as
adjusted). For this purpose as provided in 26 CFR ss.1.402(g)-1(e)(2), a
Participant is deemed to notify the Administrator of any excess deferrals that
arise by taking into account only those Elective Deferrals made to this Plan and
any other plans of this Employer and to request that such excess deferrals be
distributed by the Plan Administrator. The distribution of excess deferrals will
include any earnings or be reduced by any loss allocable to the excess deferrals
pursuant to the Plan method of allocating earnings or losses and calculated to
the last day of the Plan Year in which the excess deferrals were made.
The Administrator may establish prospectively lower limits for Higher
Paid Participants for the purpose of complying with Internal Revenue Code
requirements in an orderly manner.
3.3 Limitations on Elective Deferrals --
(a) In no event may Elective Deferrals made on behalf of all
Higher Paid Eligible Employees with respect to any Plan Year result in an Actual
Deferral Percentage for such group of Higher Paid Eligible Employees which
exceeds the greater of (i) or (ii) where:
(i) is an amount equal to 125 percent of the Actual Deferral
Percentage for all Non-Higher Paid Eligible Employees who have
satisfied the eligibility requirements of Article II with respect to
such Plan Year; and
(ii) is an amount equal to the Actual Deferral Percentage for
all Non-Higher Paid Eligible Employees who have satisfied the
eligibility requirements of Article II with respect to such Plan Year
and two percent (2%), provided that such amount does not exceed 200
percent of such Actual Deferral Percentage.
(b) The Administrator shall be authorized to implement rules
authorizing or requiring reductions in Elective Deferrals that may be made by
Higher Paid Eligible Employees during the Plan Year (prior to any contributions
to the Trust) so that the limitation of Section 3.3(a) is satisfied.
(c) The Company may in its discretion make Qualified
Nonelective Contributions to the Accounts of certain Non-Higher Paid Eligible
Employees to the extent required to satisfy the limitations of Section 3.3(a).
(d) If the limitation under Section 3.3(a) is exceeded in any
Plan Year, the Excess Amounts made on behalf of Higher Paid Eligible Employees
with respect to a Plan Year (and earnings allocable thereto) shall then be
distributed to such Employees as soon as practicable after the end of such Plan
Year, but no later than the last day of the immediately following Plan Year. The
Excess Amounts distributed shall include Elective Deferrals and the income
allocable thereto. The amount of income allocable to Excess Amounts shall be
determined in accordance with the regulations issued under Section 401(k) of the
Code and shall include income for the Plan Year for which the Excess Amounts
were made. Any such distributions shall be reduced by the amount of any
distributions made pursuant to Section 3.2 above.
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4
(e) The Administrator may utilize any combination of the
methods described in Sections 3.3(b), (c) and (d) to assure that the limitations
of Section 3.3(a) are satisfied.
(f) For purposes of this Section 3.3, the following
definitions and special rules shall apply:
(i) The term "Annual Earnings" means the Employee's wages
which are required to be reported on IRS Form W-2 for the calendar year
which coincides with the Plan Year.
(ii) The term "Actual Deferral Percentage" shall mean, with
respect to any group of actively employed Eligible Employees who have
satisfied the eligibility requirements of Article II for a Plan Year,
the average of the ratios, calculated separately for each such Eligible
Employee in the group, of:
(A) The amount of Elective Deferrals paid to the
Trust Fund for such Plan Year, divided by
(B) The Eligible Employee's Annual Earnings,
including any Elective Deferrals made by the Companies to the
Plan on behalf of the Eligible Employee and any pre-tax
elective contributions made by the Companies which are
excludible from the Eligible Employee's income under Section
125 of the Code.
Elective Deferrals shall be taken into account for a Plan Year only if
such amounts are allocated to the Eligible Employee's Account as of a
date within that Plan Year. For this purpose, an Elective Deferral is
considered allocated as of a date within a Plan Year if the allocation
is not contingent on participation or performance of services after
such date and the Elective Deferral is actually paid to the Trust Fund
no later than 12 months after the Plan Year to which the contribution
relates.
(iii) The term "Excess Amounts" shall mean with respect to
each Higher Paid Eligible Employee who has satisfied the eligibility
requirements of Article II for a Plan Year, the amount equal to total
Elective Deferrals made on behalf of such Employee (determined prior to
the application of the leveling procedure described below) minus the
product of the Employee's Actual Deferral Percentage (determined after
the leveling procedure described below) multiplied by the amount
specified in Section 3.3(f)(ii)(B) above. In accordance with the
regulations issued under Section 401(k) of the Code, Excess Amounts
shall be determined by a leveling procedure under which the Actual
Deferral Percentage of the Higher Paid Eligible Employee with the
highest such percentage shall be reduced to the extent required to
enable the limitation of Section 3.3(a) to be satisfied or, if it
results in a lower reduction, to the extent required to cause such
Higher Paid Eligible Employee's Actual Deferral Percentage to equal the
Actual Deferral Percentage of the Higher Paid Eligible Employee with
the next highest Actual Deferral Percentage. This leveling procedure
shall be repeated until the limitation of Section 3.3(a) is satisfied.
<PAGE>
5
(iv) The term "Qualified Nonelective Contributions" means
contributions that are made pursuant to Sections 3.3(c), 3.8(c) or
3.12, meet the requirements of Section 401(m)(4)(C) of the Code and the
regulations issued thereunder, and which are designated as a Qualified
Nonelective Contribution for purposes of satisfying the limitations of
Sections 3.3(c), 3.8(c) or 3.12. Qualified Nonelective Contributions
shall be nonforfeitable when made and are distributable only in
accordance with the distribution and withdrawal provisions that are
applicable to Elective Deferrals under the Plan; provided, however,
that Qualified Nonelective Contributions may not be withdrawn on
account of financial hardship. If any Qualified Nonelective
Contributions are made, the Company shall keep such records as
necessary to reflect the amount of such contributions made for purposes
of satisfying the limitations of Sections 3.3(c), 3.8(c) or 3.12.
(v) In the event the Companies maintain two or more plans that
are treated as a single plan for purposes of Sections 401(a)(4) and
410(b) of the Code (other than Section 410(b)(2)(A)(ii) of the Code),
all elective deferrals made under the two plans shall be treated as
made under a single plan, and if two or more of such plans are
permissively aggregated for purposes of Section 401(k) of the Code,
such plans shall be treated as a single plan for purposes of satisfying
Sections 401(a)(4) and 410(b) of the Code.
(vi) In determining the Actual Deferral Percentage of a Higher
Paid Eligible Employee, all cash or deferred arrangements in which such
Higher Paid Eligible Employee is eligible to participate shall be
treated as a single arrangement.
(vii) The family aggregation rules of Section 414(q)(6) of the
Code shall apply to any Higher Paid Eligible Employee who is a five
percent owner or one of the ten most highly compensated Higher Paid
Eligible Employees. The Actual Deferral Percentage for the family
group, which is treated as one Higher Paid Eligible Employee, is the
Actual Deferral Percentage determined by combining the contributions
and compensation of all eligible Family Members. Except to the extent
taken into account in this Paragraph (vii), the contributions and
compensation of all Family Members are disregarded in determining the
Actual Deferral Percentages for all Employees.
(g) The limitations of this Section 3.3 shall apply to Plan
Years beginning on or after January 1, 1987 and shall be separately applied to
those Eligible Employees who are included in a unit of Employees covered by a
collective bargaining agreement, and to those Eligible Employees who are not
included in such a collective bargaining unit.
3.4 Reinstatement of Reduced Amounts -- Any reduction effected pursuant
to Section 3.3 will remain in effect for the remainder of the Plan Year in which
the reduction occurs and will not be automatically reinstated. A Participant
whose Elective Deferral has been reduced may elect to increase his or her
Elective Deferral effective as of any Entry Date subsequent to notice from the
Administrator that Elective Deferrals may be increased as of a specified Entry
Date. This election must be made in accordance with the procedure described in
Section 3.5.
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6
3.5 Change in Elective Deferrals -- Except as provided in Sections 3.3
and 3.4, any Participant may change his or her Elective Deferral percentage to
increase or decrease said percentage by notifying Fidelity, such change to take
effect as of the next administratively feasible Pay Period.
3.6 Voluntary Reduction of Elective Deferral to Zero -- Notwithstanding
the notice requirements specified in Section 3.5, any Participant may elect to
reduce the level of the Participant's Elective Deferral to zero as of the
beginning of any Pay Period. The reduction will take effect as soon as
practicable following telephone notification by the Participant to Fidelity. A
Participant who has reduced his or her Elective Deferral to zero may again make
Elective Deferrals as of the next administratively feasible Pay Period
subsequent to telephone notification to Fidelity.
3.7 Matching Contributions -- For each Plan Year, commencing on or
after January 1, 1987, subject to limitations imposed by the Internal Revenue
Code, the Companies will match from Net Annual Profits or Net Profits the
Elective Deferral of each Participant at the rate of one-half (1/2) of the
Participant's Elective Deferral on an annual basis, provided that for any Pay
Period the matching amount shall not exceed three percent (3%) of the
Participant's Eligible Compensation for that pay period.
3.8 Limitations on Matching Contributions --
(a) In no event may the Matching Contributions made on behalf of all
Higher Paid Eligible Employees, or forfeitures allocated to the Accounts of such
Employees, who have satisfied the eligibility requirements of Article II with
respect to any Plan Year, result in an Actual Contribution Percentage for such
group of Higher Paid Eligible Employees which exceeds the greater of (i) or (ii)
where:
(i) is an amount equal to 125 percent of the Actual
Contribution Percentage for all Non-Higher Paid Eligible Employees who
have satisfied the eligibility requirements of Article II with respect
to such Plan Year; and
(ii) is an amount equal to the Actual Contribution Percentage
for all Non-Higher Paid Eligible Employees who have satisfied the
eligibility requirements of Article II with respect to such Plan Year
and two percent (2%), provided that such amount does not exceed 200
percent of such Actual Contribution Percentage. (b) The Administrator
shall be authorized to implement rules authorizing or requiring
reductions in Matching Contributions that may be made by Higher Paid
Eligible Employees during the Plan Year (prior to any contributions
to the Trust Fund), so that the limitation of Section 3.8(a) is
satisfied.
<PAGE>
7
(c) The Company may in its discretion make Qualified Nonelective
Contributions to the accounts of certain Non-Higher Paid Eligible Employees to
the extent required to satisfy the limitations of Section 3.8(a).
(d) If the limitation under Section 3.8(a) is exceeded in any Plan
Year, the Excess Amounts made on behalf of Higher Paid Eligible Employees with
respect to a Plan Year (and earnings allocable thereto) shall then be
distributed to such Higher Paid Eligible Employees as soon as practicable after
the end of such Plan Year (or, if forfeitable under the terms of the Plan,
forfeited), but no later than the last day of the immediately following Plan
Year. The Excess Amounts distributed shall include both the Matching
Contributions and the income allocable thereto. The amount of income allocable
to Excess Amounts shall be determined in accordance with the regulations issued
under Section 401(m) of the Code and shall include income for the Plan Year to
which the Excess Amounts relate.
(e) Elective Deferrals and Matching Contributions shall be further
limited to the extent required to prevent prohibited multiple use of the
alternative limitation described in Sections 401(k)(3)(A)(ii)(II) and
401(m)(2)(A)(ii) of the Code and the provisions of Reg. ss.1.401(m)-2(b) and any
further guidance issued thereunder. If such multiple use occurs, the Actual
Contribution Percentage for all Higher Paid Eligible Employees (determined after
applying the foregoing provisions of this Section 3.8) shall be reduced in
accordance with Reg. ss.1.401(m)-2(c) and any further guidance issued thereunder
in order to prevent such multiple use of the alternative limitation.
(f) The Administrator may utilize any combination of the methods
described in Sections 3.8(b), (c) and (d) to assure that the limitations of
Sections 3.8(a) and (e) are satisfied.
(g) For purposes of this Section 3.8, the following definitions
and special rules shall apply: (i) The term "Annual Earnings"
shall have the meaning specified in Section 3.3(f)(i).
(ii) The term "Actual Contribution Percentage" shall mean,
with respect to any group of actively employed Eligible Employees who
have satisfied the eligibility requirements of Article II for a Plan
Year, the average of the ratios, calculated separately for each such
Eligible Employee in the group, of:
(A) The amount of Matching Contributions paid to the
Trust Fund for such Plan Year on behalf of the Eligible
Employee plus the amount of forfeitures allocated to the
Eligible Employee's Account, divided by
(B) The Eligible Employee's Annual Earnings,
including any Elective Deferrals made by the Companies to the
Plan on behalf of the Eligible Employee or any pre-tax
election contributions under a "cafeteria plan" (as defined in
Section 125 of the Code and applicable regulations) maintained
by the Companies for such Plan Year. Matching Contributions
and forfeitures shall be taken into account for a Plan Year
only if such amounts are allocated to the Eligible Employee's
Account as of a date within that Plan Year, such amounts are
actually paid to the Trust no later than 12 months after
the Plan Year to which the contribution relates and such
amounts are contributed on account of Elective Deferrals for
such Plan Year.
<PAGE>
8
(iii) The term "Excess Amounts" shall mean with respect to
each Higher Paid Eligible Employee, the amount equal to the total
Matching Contributions made on behalf of the Eligible Employee together
with the forfeitures allocated to the Eligible Employee's Account
(determined prior to the application of the leveling procedure
described below) minus the product of the Eligible Employee's Actual
Contribution Percentage (determined after the leveling procedure
described below) multiplied by the amount specified in Section
3.8(g)(ii)(B) above. In accordance with the regulations issued under
Section 401(m) of the Code, Excess Amounts shall be determined by a
leveling procedure under which the Actual Contribution Percentage of
the Higher Paid Eligible Employee with the highest such percentage
shall be reduced to the extent required to enable the limitation of
Section 3.8(a) to be satisfied or, if it results in a lower reduction,
to the extent required to cause such Higher Paid Eligible Employee's
Actual Contribution Percentage to equal the Actual Contribution
Percentage of the Higher Paid Eligible Employee with the next highest
Actual Contribution Percentage. This leveling procedure shall be
repeated until the limitation of Section 3.8(a) is satisfied.
(iv) The term "Qualified Nonelective Contributions" shall have
the meaning specified in Section 3.3(f)(iv).
(v) In the event the Companies maintain two or more plans that
are treated as a single plan for purposes of Sections 401(a)(4) and
410(b) of the Code (other than Section 410(b)(2)(A)(ii) of the Code),
all Matching Contributions and forfeitures under the two plans shall be
treated as made under a single plan, and if two or more of such plans
are permissibly aggregated for purposes of Section 401(m) of the Code,
such plans shall be treated as a single plan for purposes of satisfying
Sections 401(a)(4) and 410(b) of the Code.
(vi) In determining the Actual Contribution Percentage of a
Higher Paid Eligible Employee, all plans in which such Higher Paid
Eligible Employee is eligible to participate shall be treated as a
single arrangement.
(vii) The family aggregation rules of Section 414(q)(6) of the
Code shall apply to any Higher Paid Eligible Employee who is a five
percent owner or one of the ten most highly compensated Higher Paid
Eligible Employees. The Actual Contribution Percentage for the family
group, which is treated as one Higher Paid Eligible Employee, is the
Actual Contribution Percentage determined by combining the
contributions and compensation of all eligible Family Members. Except
to the extent taken into account in this Paragraph (vii), the
contributions and compensation of all Family Members are disregarded in
determining the Actual Contribution Percentages for all Employees. (h)
The limitations of this Section 3.8 shall apply to Plan Years beginning
on or after January 1, 1987, and shall apply only to those Eligible
Employees who are not included in a unit of employees covered by a
collective bargaining unit.
<PAGE>
9
3.9 Forfeitures --
(a) In the event that a Participant incurs a Severance from
Service prior to attaining a Nonforfeitable right to the Participant's Matching
Contribution, the Matching Contribution Account will be forfeited as of the
first day of the month immediately following the earliest of: (i) the date on
which the Participant incurs a Period of Severance of five consecutive years;
(ii) death; or (iii) the date on which the Participant's Employee Account is
distributed in accordance with Article VI. Forfeitures of Matching Contributions
will be used to reduce future contributions of the Companies to the Plan.
(b) If, in connection with his Severance from Service, a Participant
received a distribution of his Employee Account when he did not have a
Nonforfeitable right to his Matching Contribution Account, the Matching
Contributions that were forfeited, unadjusted by any subsequent gains or losses,
shall be restored if he again becomes an Employee prior to incurring a Period of
Severance of five consecutive years, performs an Hour of Service, and repays the
full value of his prior distributions, unadjusted for subsequent gains and
losses, before the first to occur of (i) the end of the five year period
beginning with the date he again becomes an Employee or (ii) the date on which
he incurs a Period of Severance of five consecutive years.
3.10 Rollover Contributions and Transfers --
(a) Effective April 1, 1991, Participants may transfer into the Plan
qualifying rollover amounts (as defined in Section 402 of the Code) received
from other qualified plans subject to Section 401(k) or Section 401(m) of the
Code; qualified defined contribution pension or profit sharing plans, provided
that no federal income tax has been required to have been paid previously on
such amounts; or rollover contributions from an individual retirement account
described in Section 408(d)(3)(ii) of the Code (referred to herein as a "conduit
IRA"); or rollover contributions from the Raytheon Stock Ownership Plan for
Specified Hourly Payroll Employees by former Participants in that plan who have
incurred a Severance from Service. Such transfers will be referred to as
"rollover contributions" and will be subject to the following conditions:
(i) the transferred funds are received by the Trustee no later
than sixty (60) days from receipt by the Employee of a distribution
from another qualified Section 401(k) or Section 401(m) plan or, in the
event that the funds are transferred from a conduit IRA, no later than
sixty (60) days from the date that the Participant receives such funds
from the individual retirement account, subject, however, to (v) below
where applicable;
(ii) the amount of such rollover contributions shall not
exceed the limitations set forth in Section 402 of the Code;
(iii) rollover contributions shall be taken into account by
the Administrator in determining the Participant's eligibility for a
loan pursuant to Article VII;
(iv) rollover contributions may be distributed at the request
of the Partici-pant, subject to the same administrative procedures as
apply to other distributions;
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10
(v) rollover contributions transferred pursuant to this
Section 3.10 shall be credited to the Participant's Rollover
Contribution Account. Rollover contributions will be invested upon
receipt by the Trustee;
(vi) no rollover contribution will be accepted unless (a) the
Employee on whose behalf the rollover contribution will be made is
either a Participant or has notified the Administrator that he intends
to become a Participant on the first date on which he is eligible
therefor, or was a former Participant in the Raytheon Stock Ownership
Plan for Specified Hourly Payroll Employees and the entire amount of
the rollover contribution is comprised of the Participant's account in
that plan; and (b) all required information, including selection of
specific investment accounts, is provided to Fidelity. When the
rollover contribution has been deposited, any further change in
investment allocation of future deferrals or transfer of account
balances between investment funds will be effected through the
procedures set forth in Sections 4.2 and 4.3. (b) Effective January 1,
1993, Participants may direct that "eligible rollover distributions,"
as defined in Section 402(c) of the Code, be transferred directly
to the Plan. Rules similar to those applicable to "rollover
contributions" shall apply to amounts transferred directly to the Plan.
(c) Participants who are also covered under the Raytheon Stock
Ownership Plan or the Raytheon Stock Ownership Plan for Specified Hourly Payroll
Employees and who are entitled to diversify their accounts under either of such
plans, may direct that the portion of their account which is eligible for
diversification under such plan be transferred to the Plan. Rules similar to
those applicable to "rollover contributions" shall apply to amounts transferred
to this Plan except that such transferred amounts shall not be eligible for
loans or withdrawals.
(d) Effective April 1, 1997, an Eligible Employee may transfer into the
Plan qualified rollover amounts (as defined in Section 401 of the Code) received
from other qualified plans subject to Section 401(k) or Section 401(m) of the
Code without regard to whether the Eligible Employee has completed a Period of
Service of three (3) consecutive months commencing on the Employment
Commencement Date or Reemployment Commencement Date as applicable.
3.11 Refund of Contributions to the Companies -- Notwithstanding the
provisions of Article XII, if, or to the extent that, the Companies' deductions
for contributions made to the Plan are disallowed, the Companies will have the
right to obtain the return of any such contributions for a period of one year
from the date of disallowance. For this purpose, all Elective Deferrals and
Matching Contributions are made subject to the conditions that they are
deductible under the Code for the taxable year of the Companies for which the
contribution is made. Furthermore, any contribution made by the Companies on the
basis of a mistake in fact may be returned to the Companies within one year from
the date such contribution was made.
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11
3.12 Qualified Non-Elective Contributions -- Specified Amounts -- Each
of the Companies may make contributions to the Plan on behalf of eligible
Employees, provided that the name of the unit, the effective date of such
contributions and the specified amount are set forth on Appendix B hereto. Such
contributions shall be Qualified Non-Elective Contributions as defined in
Section 3.3(f)(iv) and shall be included in determining the actual deferral
percentage under Section 3.3. If the contributions described in this Section
3.12 are made on behalf of an Employee who is not a Participant, an Account
shall be established for such Employee and the Employee shall have the right to
elect investment options under Section 4.1. If the Employee does not make a
valid election in which investment options are designated for 100% of the
Participant's Account, then 100% of the Participant's Account shall be invested
in Fund B, a fixed income fund. The Employee may, in accordance with Sections
4.2 and 4.3, change the investment allocation for future deferrals and transfer
account balances between investment funds.
ARTICLE IV - INVESTMENT OF ACCOUNTS
4.1 Election of Investment Funds -- Upon enrollment in the Plan, each
Participant shall direct that the funds in the Participant's Employee Account
and Matching Contribution Account be invested in increments of one percent (1%)
in one or more of the following investment funds:
Fund A - an equity fund designated by the Administrator;
Fund B - a fixed income fund designated by the Administrator;
Fund C - Raytheon Company common stock fund;
Fund D - a stock index fund designated by the Administrator;
Fund E - a balanced fund designated by the Administrator;
Fund F - a growth fund, designated by the Administrator,
investing primarily in equities of companies of all types
and sizes;
Fund G - a growth fund, designated by the Administrator,
investing primarily in equities of well-known and
established companies.
In its discretion, the Administrator may from time to time designate
new funds and, where appropriate, preclude investment in existing funds and
provide for the transfer of Accounts invested in those funds to other funds
selected by the Participant or, if no such election is made, to Fund B or
similar low risk fixed income fund as determined by the Administrator in its
discretion. Each election will apply to both accounts so that the Employee
Account and Matching Contribution Account of the Participant will be invested in
the same percentages in the one or more investment funds selected by the
Participant.
4.2 Change in Investment Allocation of Future Deferrals -- Each
Participant may elect to change the investment allocation of future Elective
Deferrals, Matching Contributions and rollover contributions effective as of the
first administratively feasible Business Day subsequent to telephone notice to
Fidelity. Any changes must be made either in increments of one percent (1%) of
the Participant's Account or in a specified whole dollar amount and must result
in a total investment of one hundred percent (100%) of the Participant's
Account.
<PAGE>
12
4.3 Transfer of Account Balances Between Investment Funds -- Each
Participant may elect to transfer all or a portion of the amount in the
Participant's Employee Account, Matching Contribution Account and Rollover
Contribution Account between investment funds effective as of the first
administratively feasible Business Day following telephone notice to Fidelity.
Such transfers must be made in either one percent (1%) increments of the entire
Account or in a specified amount in whole dollars and, as of the completion of
the transfer, must result in investment of one hundred percent (100%) of the
Account. Transfers shall be effected by telephone notice to Fidelity. In
determining the amount of the transfer, the Participant's Account shall be
valued as of the close of business on the Business Day on which telephone notice
is received; provided, however, that in any case where the telephone notice is
received after 4:00 p.m. Eastern Time (daylight or standard, whichever is in
effect on the date of the call), the Account shall be valued as of the close of
business on the next Business Day.
4.4 Ownership Status of Funds -- The Trustee shall be the owner of
record of the assets in the funds specified as Funds A, B, C, D and E and such
other funds as may be established by the Administrator. The Administrator shall
have records maintained as of the Valuation Date for each fund allocating a
portion of the fund to each Participant who has elected that his or her Account
be invested in such fund. The records shall reflect each Participant's portion
of Funds A, B, D and E, and such other funds as may be established by the
Administrator, in a cash amount and shall reflect each Participant's portion of
Fund C in cash and unitized shares of stock.
4.5 Voting Rights -- Participants whose Account has shares of
participation in the Raytheon Company Common Stock Fund on the last business day
of the second month preceding the record date (the "Voting Eligibility Date")
for any meeting of stockholders have the right to instruct the Trustee as to
voting at such meeting. The number of votes is determined by dividing the value
of the shares in the Participant's Account in the Raytheon Common Stock Fund by
the closing price of Raytheon Common Stock on the Voting Eligibility Date. If
the Trustee has not received instructions from a Participant as to voting of
shares within a specified time, then the Trustee shall not vote those shares. If
a Participant furnishes the Trustee with a signed vote direction card without
indicating a voting choice thereon, the Trustee shall vote Participant's shares
as recommended by management. In addition, each Participant shall have the right
to accept or reject any tender or exchange offer for shares of common stock. The
Trustee shall vote (or tender or exchange) all combined fractional shares of
Raytheon Common Stock to the extent possible in the same proportion as the
shares which have been voted (or tendered or exchanged) by each Participant. Any
instructions as to voting (or tender or exchange) received from individual
Participants shall be held in confidence by the Trustee and shall not be
divulged to the Companies or to any officer or employee thereof or to any other
person.
<PAGE>
13
ARTICLE V - VESTING
5.1 Employee, Rollover Contribution and Qualified Non-Elective
Contribution Accounts -- Each Participant shall have a Nonforfeitable right to
any amounts in the Participant's Employee, Rollover Contribution and Qualified
Non-Elective Contribution Accounts.
5.2 Matching Contribution Account -- Each Participant shall have a
Nonforfeitable right to the Participant's Matching Contribution Account upon the
earliest of:
(a) Completion of a Period of Service of five (5) years commencing on
or after June 30, 1986 (for purposes of determining the length of a Period of
Service under this paragraph only, vesting service credited to an Employee under
Section 6.2(b) of the Speed Queen Company Retirement Savings Plan will be
credited to an Eligible Employee regardless of whether such vesting service was
earned prior to June 30, 1986); or
(b) Completion of a Period of Participation of three (3) years
subsequent to fulfillment of the eligibility requirements in Section 2.1;
(c) The Participant's Retirement, death while an Employee, Disability
or attainment of Normal Retirement Age; or
(d) The date of layoff of Participants laid off as a result of the
permanent closing of the Oxnard plant.
(e) September 10, 1997 (or such other date on which the merger of
Raytheon Appliances, Inc. with Goodman Manufacturing Company, L.P. is closed),
for those Employees who are employed by Raytheon Appliances, Inc. as of such
date and who did not become Employees of Raytheon Commercial Laundry, L.L.C. as
of September 11, 1997 (or, if different, the day immediately following the
closing of the merger of Raytheon Appliances, Inc. and Goodman Manufacturing
Company, L.P.).
(f) May 5, 1998, for those Participants employed as of such date by
Raytheon Commercial Laundry, LLC. in the bargaining unit at Raytheon Commercial
Laundry, LLC.'s plants in Ripon and Omro, Wisconsin, represented by Local 1327,
United Steelworkers of America.
Notwithstanding anything in the Plan to the contrary, if the rate of
Matching Contributions, determined after application of the corrective
mechanisms described in Section 3.3, discriminates in favor of Higher Paid
Eligible Employees, any such amounts attributable to any Excess Amounts (as
described in Subsection 3.3(f)(iii)) of each affected Higher Paid Eligible
Employee shall be forfeited so that the rate of Matching Contribution is
nondiscriminatory. Any such forfeitures shall be made no later than the end of
the Plan Year following the Plan Year for which the Matching Contribution was
made and shall be treated in accordance with Section 3.9.
5.3 Break in Service Rules
(a) Periods of Service -- In determining the length of a Period of
Service, the Administrator shall include all Periods of Service, except the
following Periods of Service shall not be taken into account:
(i) a Period of Service prior to a Period of Severance of
twelve (12) months or more, unless subsequent to said Period of
Severance the Participant completes a Period of Service of at least
twelve (12) months; and
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14
(ii) in the case of a Participant who has incurred a Period of
Severance which equals or exceeds five years, the Period of Service
after such Period of Severance shall not be taken into account for
purposes of determining the nonforfeitable interest of such Participant
in the Matching Contributions allocated to his Account prior to such
Period of Severance.
(b) Periods of Severance -- In determining the length of a Period of
Service for purposes of Section 14.39, the Administrator shall exclude all
Periods of Severance, except that in the event a Participant returns from a
quit, discharge, or Retirement, within twelve (12) months from the earlier of:
(i) the date of the quit, discharge, or Retirement, or
(ii) if the Participant was absent from employment for reasons
such as layoff or Authorized Leave of Absence on the day of the quit,
discharge, or Retirement, the first day of such absence, the period of
absence will be included as a Period of Service.
(c) Other Periods -- In making the determinations described in
subsections (a) and (b) of this Section 5.3, the second, third, and fourth
consecutive years of a Layoff (from the first anniversary of the last day paid
to the fourth anniversary of the last day paid) and any period in excess of one
(1) year of an Authorized Leave of Absence shall be regarded as neither a Period
of Service nor a Period of Severance.
ARTICLE VI - WITHDRAWALS AND DISTRIBUTIONS
6.1 In-Service Withdrawals - Matching Contributions -- Upon completion
of a Period of Participation of five (5) years, a Participant may withdraw,
subject to both a minimum withdrawal amount of $250 and the requirement that a
Participant may withdraw no more than twice during a Plan Year, if no loans are
outstanding, all or part of the Participant's Matching Contribution Account.
Withdrawals will be based upon the value of the Account as determined under
Section 6.8. Withdrawals from Funds A, B, D, E, F and G and such other funds as
may be established by the Administrator, will be made in cash; withdrawals from
Fund C will be made in cash or stock (with cash for fractional or uninvested
shares) as directed by the Participant. Funds for the withdrawal will be taken
on a pro rata basis against the Participant's investment fund balances in the
Participant's Matching Contribution Account.
6.2 In-Service Withdrawal - Employee and Qualified Non-Elective
Contribution Accounts -- While in a Period of Service, a Participant may
withdraw assets from his or her Account as follows:
(i) all or a portion of the Participant's Employee Account and
Qualified Non-Elective Contribution Account upon attainment of age
59 1/2; or
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15
(ii) a distributable amount (as defined in Treas. Reg. ss.
1.401(k)-1(d)(2)) on account of a hardship as defined in the
regulation. A distribution is made on account of a hardship only if the
distribution both is made on account of an immediate and heavy
financial need of the Participant and is necessary to satisfy the
financial need. In determining the amount required to satisfy the
financial need, the Administrator shall take into account the federal,
state and local income taxes or penalties reasonably anticipated to
result from the withdrawal. The distributable amount is equal to the
Participant's total Elective Deferrals as of the date of distribution
reduced by the amount of previous distributions on account of hardship
and increased by that portion of income allocable to Elective Deferrals
which was credited to the Participant's Account as of December 31,
1988. Withdrawals from the Employee and Qualified Non-Elective
Contribution Accounts of less than $250 will not be permitted.
Withdrawals will be based upon the value of the Account as determined
under Section 6.8 and will be effected by telephone notice to Fidelity.
Payment of the amount withdrawn will be made as soon as reasonably
practicable after the effective date of the withdrawal. Withdrawals
from Funds A, B, D, E, F and G and such other funds as may be
established by the Administrator, will be made in cash; withdrawals
from Fund C will be made in cash or stock (with cash for fractional or
unissued shares), as elected by the Participant. Funds for the
withdrawal will be taken on a pro rata basis against the Participant's
investment fund balances in the Participant's Employee Account.
6.3 In-Service Withdrawal - Rollover Contribution Account -- A
Participant may withdraw all or a portion of the Participant's Rollover
Contribution Account. Withdrawals will be based upon the value of the account as
determined under Section 6.8 and will be effected by telephone notice to
Fidelity. Payment of the amount withdrawn will be made as soon as reasonably
practicable after the effective date of the withdrawal. Withdrawals from Funds
A, B, D E, F and G will be made in cash. Withdrawals from Fund C will be made in
cash or stock (with cash for fractional or unissued shares) as elected by the
Participant.
6.4 Requirements For Financial Hardship Withdrawals --
(a) A Participant requesting a withdrawal of the distributable amount
of the Participant's Employee Account due to reasons of immediate and heavy
financial need must submit such documentation or information in other form as
required by the Administrator and shall advise Fidelity by telephone notice or
such other means as established by the Administrator's rules then in effect of
the existence of an immediate and heavy financial need and the fact that the
need will be satisfied by the requested distribution.
(b) The Participant shall represent that this financial need cannot be
satisfied by any of the following sources: through reimbursement or compensation
by insurance or otherwise; by liquidation of the Participant's assets; by
cessation of Elective Deferrals under the Plan; or by other distributions or
non-taxable (at the time of the loan) loans currently available from plans
maintained by the Employer or by any other employer, or by borrowing from
commercial sources on reasonable commercial terms.
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16
(c) For purposes of Section 6.2, "immediate and heavy financial need"
is limited to financial need arising from the following specific causes:
expenses for medical care (as described in Section 213(d) of the Code)
previously incurred by the Participant, the Participant's spouse or any
dependents (as defined in Section 152 of the Code) of the Participant, or which
are necessary for these persons to obtain medical care described in Section
213(d) of the Code; costs directly related to the purchase of a principal
residence for the Participant (excluding mortgage payments); payment of tuition
and related educational expenses for the next twelve months of post-secondary
education for the Participant, or the Participant's spouse, children or
dependents (as defined in Section 152); expenses relating to the need to prevent
the eviction from or foreclosure on the Participant's principal residence; or
any other circumstances, as determined by the Administrator based upon all the
relevant facts, establishing substantial justification for the withdrawal.
(d) If a Participant receives a withdrawal for reasons of financial
hardship, his or her Elective Deferrals shall be reduced to six percent (6%), if
in excess thereof as of the date of distribution, and shall not be increased
during the twelve months immediately subsequent to the date of distribution.
6.5 Redeposits Prohibited -- No amount withdrawn pursuant to Section
6.1, Section 6.2 or Section 6.3 may be redeposited in the Plan.
6.6 Distribution -- Distribution of the Participant's Employee,
Rollover Contribution and Qualified Non-Elective Contribution Accounts and, if
the Participant has a Nonforfeitable right to his or her Matching Contribution
Account pursuant to Section 5.2, the Matching Contribution Account, will be made
at the direction of the Participant (or his legal representative or Beneficiary
in the case of his Disability or death) upon the Retirement, Disability (as
defined in Section 14.13), death, or Severance from Service (as defined in
Section 14.49) of the Participant. In the event the Participant dies or his
Severance from Service occurs after his Normal Retirement Age, or if the value
of the Nonforfeitable portion of the Participant's Account as of the Valuation
Date which coincides with or immediately precedes the date of distribution is
not in excess of $3,500, the Administrator shall cause the distribution to
automatically be made. Payment will be made in the form of a lump sum
distribution of the entire amount in the Participant's Account (to which the
Participant has a Nonforfeitable right) which will be paid as soon as
practicable following notification to the Benefits and Services Department,
Raytheon Company, Lexington, Massachusetts, of the Retirement, death, Disability
or Severance from Service and a telephone request by the Participant to Fidelity
for the distribution. Distributions will be based upon the Value of the Account
as determined under Section 6.8. Distribution of the amounts in said accounts in
the funds designated in Funds A, B, D, E, F and G and such other funds as may be
established by the Administrator, will be made in cash. Distribution of any
amount in said accounts in Fund C (Raytheon Company stock) will be made in
either cash or, if elected by the Participant or, in the case of death, the
Participant's Beneficiary, stock. Partial deferrals will not be permitted. If
there is no Beneficiary surviving a deceased Participant at the time payment of
a Participant's Account is to be made, such payment shall be made in a lump sum
to the person or persons in the first following class of successive
Beneficiaries surviving, any testamentary devise or bequest to the contrary
<PAGE>
17
notwithstanding: the Participant's (a) spouse, (b) children and issue of
deceased children by right of representation, (c) parents, (d) brothers and
sisters and issue of deceased brothers and sisters by right of representation,
or (e) executors or administrators. If no Beneficiary can be located during a
period of seven (7) years from the date of death, the amount of the distribution
shall revert to the Trust and be treated in the same manner as a forfeiture
under Section 3.8.
Except as provided in Section 401(a)(9) of the Code as set forth in
this Section, benefits in the Plan will be distributed to each Participant not
later than the sixtieth (60th) day after the close of the Plan Year in which the
latest of the following events occurs:
(1) attainment by the Participant of Normal Retirement Age;
(2) the tenth (10th) anniversary of the date on which
Participant commenced participation in the Plan; or
(3) Participant's Severance from Service.
If the amount of the benefit payable to a Participant has not been
ascertained by the sixtieth (60th) day after the close of the Plan Year in which
the latest of the three events described in clauses (1), (2) and (3) above
occurred, or Participant cannot be located after reasonable efforts to do so,
then payment retroactive to said sixtieth (60th) day after the close of the Plan
Year in which the latest of the three events occurred may be made no later than
sixty (60) days after the later of the earliest date on which the amount of such
payment can be ascertained under the Plan or the earliest date on which the
Participant is located.
To the extent required by Section 401(a)(9) of the Code, distributions
of Participants' Accounts will be made with respect to Participants who attain
age 70 1/2.
In the event amounts are transferred to this Plan from another plan
qualified under Section 401(a) of the Code (other than amounts described in
Section 3.10(b)), any distribution or withdrawal rights available to the
Participant under such other plan which are protected under Section 411(d)(6) of
the Code shall be available to the Participant under this Plan.
6.7 Direct Rollovers -- Effective January 1, 1993, a distributee may
elect, at the time and in the manner prescribed by the Administrator, to have
any portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover. For purposes
of this paragraph, the following terms shall have the following meanings:
<PAGE>
18
(a) 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 beneficiary, or for a specified period of 10
years or more; any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; and the portion of any distribution that is
not includible in gross income.
(b) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code or a qualified trust
described in Section 401(a) of the Code that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover distribution
to the surviving spouse, the term is limited to an individual retirement account
or individual retirement annuity.
(c) Distributee: A distributee includes a Participant or former
Participant. In addition, the Participant's or former Participant's surviving
spouse and the Participant's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Section 414(p) of the
Code, are distributees with regard to the interest of the spouse or former
spouse.
(d) Direct Rollover: A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
6.8 Determination of Amount of Withdrawal or Distribution -- In
determining the amount of any withdrawal or distribution hereunder, the
Participant's Account shall be valued as of the close of business on the
Business Day on which telephone notice is received; provided, however, that in
any case where the telephone notice is received after 4:00 p.m. Eastern Time
(daylight or standard, whichever is in effect on the date of the call), the
Account shall be valued as of the close of business on the next Business Day.
6.9 Sale or Divestiture of Business -- Notwithstanding the provisions
of Section 14.50(g), a Participant whose employment is terminated by reason of
the sale or divestiture of assets or stock of a business may withdraw part or
all of his or her Account if otherwise permitted by law.
ARTICLE VII - LOANS
7.1 Availability of Loans - Effective as of the date shown on Appendix
A which is applicable to the bargaining unit in which Participant is employed,
Participants may borrow against all or a portion of the balance in the
Participant's Employee Account and Rollover Contribution Account subject to the
restrictions set forth in this Article. Participants who have incurred a
Severance from Service will not be eligible for a Plan loan. The Vice President,
Human Resources, is authorized to administer this loan program and may establish
uniform and equitable rules to resolve issues not specifically covered in this
Article.
<PAGE>
19
7.2 Minimum Amount of Loan - No loan of less than $500 will be
permitted.
7.3 Maximum Amount of Loan - No loan in excess of fifty percent (50%)
of the aggregate value of a Participant's Employee Account and Rollover
Contribution Account and the Nonforfeitable portion of Participant's Matching
Contribution Account balances will be permitted. In addition, the limits imposed
by the Internal Revenue Code and any other requirements of applicable statute or
regulation will be applied. Under the current requirements of the Internal
Revenue Code, if the aggregate value of a Participant's Employee Account and
Rollover Contribution Account and Nonforfeitable portion of the Matching
Contribution Account exceeds $20,000, the loan cannot exceed the lesser of
one-half (1/2) the Nonforfeitable aggregate value or $50,000 reduced by the
excess of (a) the highest outstanding balance of loans from the Plan during the
one-year period ending on the day before the date on which such loan was made
over (b) the outstanding balance of loans from the Plan on the date on which
such loan was made.
7.4 Effective Date of Loans -- Loans will be effective as specified in
the Administrator's rules then in effect.
7.5 Repayment Schedule - The Participant may select a repayment
schedule of 1, 2, 3, 4 or 5 years. If the loan is used to acquire any dwelling
which, within a reasonable time is to be used (determined at the time the loan
is made) as the principal residence of the Participant, the repayment period may
be extended up to 15 years at the election of the Participant. All repayments
will be made through payroll deductions in accordance with the loan agreement
executed at the time the loan is made, except that, in the event of the sale of
all or a portion of the business of the Employer or one of the Companies, or
other unusual circumstances, the Administrator, through uniform and equitable
rules, may establish other means of repayment. The loan agreement will permit
repayment of the entire outstanding balance in one lump sum. The minimum
repayment amount per pay period is $10 for Participants paid weekly and $50 for
Participants paid monthly. The repayment schedule shall provide for
substantially level amortization of the loan.
7.6 Limit on Number of Loans -- No more than two loans may be
outstanding at any time.
7.7 Interest Rate -- The interest rate for a loan pursuant to this
Article will be equal to the prime rate published in The Wall Street Journal on
the first business day in June and December of each year. The rate published on
the first business day in June will apply to loans which are effective at any
time during the period July 1 through December 31 thereafter; the rate published
on the first business day of December will apply to loans which are effective at
any time during the period January 1 through June 30 thereafter.
<PAGE>
20
7.8 Effect Upon Participants Employee Account -- Upon the granting of a
loan to a Participant by the Administrator, the allocations in the Participant's
Account to the respective investment funds will be reduced on a pro rata basis
and replaced by the loan balance which will be designated as an asset in the
Account. Such reduction shall be effected by reducing the Participant's Accounts
in the following sequence, with no reduction of the succeeding Accounts until
prior Accounts have been exhausted by the loan: Matching Contribution Account;
Employee Account; and Rollover Contribution Account. Upon repayment of the
principal and interest, the loan balance will be reduced, the Participant
Accounts will be increased in the reverse order in which they were exhausted by
the loan, and the loan payments will be allocated to the respective investment
funds in accordance with the investment election then in effect.
7.9 Effect of Severance From Service and Non-Payment -- In the event
that a loan remains outstanding upon the Severance from Service of a
Participant, the Participant will be given the option on continuing to repay the
outstanding loan. In any case where payments on the outstanding loan are not
made within ninety (90) days of the Participant's Severance from Service Date,
the amount of any unpaid principal will be deducted from the Participant's
Account and reported as a distribution. If, as a result of Layoff or Authorized
Leave of Absence, a Participant, although still in a Period of Service, is not
being compensated through the Employer's payroll system, loan payments will be
suspended until the earliest of the first pay date after Participant returns to
active employment, the Participant's Severance from Service Date, or the
expiration of twelve (12) months from the date of the suspension. In the event
the Participant does not return to active employment with the Employer, the
Participant will be given the option of continuing to repay the outstanding
loan. If the Participant fails to resume payments on the loan, the outstanding
loan will be reported as a distribution. In no event, however, shall the loan be
deducted from the Participant's Account earlier than the date on which the
Participant (i) incurs a Severance from Service or (ii) attains age 59-1/2.
ARTICLE VIII - LIMITATIONS OF SECTION 415 OF THE CODE
8.1 Maximum Permissible Amount of a Participant's Annual Addition --
The total for any Limitation Year of the annual additions to a Participant's
Account under this Plan when added to the annual additions to a Participant's
account under any qualified defined contribution plan maintained by the Employer
shall not exceed the lesser of (i) twenty-five percent (25%) of total
compensation from the Employer, and (ii) $30,000 or, if greater, one-fourth of
the defined benefit dollar limitation set forth in Section 415(b)(1) of the Code
as in effect for the Limitation Year.
For purposes of this Section 8.1, the term "annual addition" shall
mean, with respect to any Limitation Year, Matching Contributions, Qualified
Nonelective Contributions, forfeitures and Elective Deferrals to this Plan, plus
the sum of the following amounts allocable for such Plan Year to the
Participant's accounts in all other qualified plans maintained by the Employer
in which he participates: (1) employer contributions (including pre-tax
contributions), (2) forfeitures which have been reallocated to the Participant's
account, (3) Participant after-tax contributions; and (4) amounts described in
Sections 415(l)(1) and 419A(d)(2) of the Code.
<PAGE>
21
For purposes of this Section 8.1, the term "compensation" shall mean
all amounts paid to an Employee for personal services actually rendered to the
Companies and Affiliates, including, but not limited to, wages, salary,
commissions, bonuses, overtime and other premium pay as specified in Reg.
ss.1.415-2(d)(2), but excluding deferred compensation, stock options, and other
distributions which receive special tax treatment as specified in Reg.
ss.1.415-2(d)(3).
8.2 Reduction of Annual Additions -- In the event it is determined that
the annual additions to a Participant's Account under this Plan or any other
qualified defined contribution plan maintained by the Employer for any
limitation year would be in excess of the limitations of Section 8.1, such
annual additions shall be reduced to the extent necessary to bring them within
such limitations. If, as a result of the allocation of forfeitures, a reasonable
error in estimating a Participant's Eligible Compensation, a reasonable error in
determining the amount of Elective Deferrals that may be made with respect to
any Participant, or under other limited facts and circumstances which the
Internal Revenue Service finds justify the availability of the remedies
contained herein, the Administrator, in coordination with the administrator of
any other defined contribution plan maintained by the Employer, shall reduce the
annual additions which have been made to a Participant's Account to the
acceptable limit by the following procedures, on a pro rata basis, in the
following order:
(a) by returning to the Participant any voluntary or mandatory Employee
contributions made to the Raytheon Support Services Company Money Accumulation
Plan or any other defined contribution plan maintained by the Employer;
(b) to the extent the limitation is still exceeded, Elective Deferrals
to this Plan, or other defined contribution plan qualified under Section 401(k)
of the Code maintained by the Employer during such Limitation Year, shall be
distributed to the Participant; and
(c) to the extent such limitation is still exceeded, any Qualified
Non-Elective Contribution to Participant's account in this Plan or other defined
contribution plan qualified under Section 401(k) of the Code maintained by the
Employer during such Limitation Year, shall be reduced to the extent necessary
to reduce annual additions to the acceptable limit;
(d) to the extent the limitation is still exceeded, any Matching
Employer Contributions to this Plan, or other defined contribution plan
qualified under Section 401(k) of the Code maintained by the Employer during
such Limitation Year, shall be reduced to the extent necessary to decrease
Participant's annual additions to the acceptable limit;
(e) to the extent the limitation is still exceeded, excess annual
additions in the Participant's Account in the Raytheon Stock Ownership Plan
(RAYSOP) shall be used to reduce allocations for the next Limitation Year (and
succeeding Limitation Years, as necessary) for that Participant if the
Participant is covered by the plan at the end of such Limitation Year. In the
event the Participant is not covered by such plan at the end of the Limitation
Year, any excess annual additions which remain must, as provided in Reg.
ss.1.415-6(b)(6)(ii), be held unallocated in a suspense account for the
Limitation Year and reallocated in the next Limitation Year to all of the
remaining Participants in proportion to their RAYSOP allocation in such Plan
Year.
<PAGE>
22
8.3 Coordination with Limitation on Benefit from All Plans --
Notwithstanding any other provisions in this Plan to the contrary, in the case
of a Participant who also participates in any qualified defined benefit plan
which is maintained by the Employer (whether or not terminated), the sum of the
defined benefit plan fraction and the defined contribution plan fraction may not
exceed 1.0 for any Limitation Year. The defined benefit plan fraction for any
Limitation Year is a fraction, the numerator of which is the projected annual
benefit of the Participant under the plan (determined as of the close of the
Limitation Year); and the denominator of which is the lesser of (i) the product
of 1.25, multiplied by the dollar limitation applicable to defined benefit
plans, in effect under applicable law for such Limitation Year; or (ii) the
product of 1.4 multiplied by one hundred percent (100%) of the Participant's
average compensation for the three consecutive calendar years during which he
had the highest aggregate compensation from the Employer. The defined
contribution plan fraction for any Limitation Year is a fraction, the numerator
of which is the sum of the annual additions (as defined in Section 8.1) to the
Participant's Accounts as of the close of the Limitation Year; and the
denominator of which is the sum of the lesser of the following amounts
determined for the current Limitation Year and each prior Limitation Year: (i)
the product of 1.25 multiplied by the dollar limitation applicable to defined
contribution plans, in effect under applicable law for the Limitation Year; or
(ii) the product of 1.4 multiplied by 25% of such Participant's total
compensation for the Limitation Year. In the event that the limitation set forth
above is exceeded, adjustments shall be made in the defined benefit plan.
8.4 This Article VIII shall be effective for Limitation Years
beginning on or after January 1, 1987.
ARTICLE IX - LIMITATIONS OF SECTION 416 OF THE CODE
9.1 General Rule -- In the event that the Plan covers Eligible
Employees who are not included in a unit of Employees covered by a collective
bargaining agreement and becomes top heavy with respect to a Plan Year
commencing on or after January 1, 1984, the provisions of this Article shall
apply and shall supersede any conflicting provisions in the Plan.
9.2 Definitions --
(a) Key Employee: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination period
was an officer of the Employer, an owner (or considered an owner under Section
415(c)(1)(A) of the Code) of one of the ten largest interests in the Employer if
such individual's compensation exceeds 150 percent of the dollar limitation
under Section 415(c)(1)(A) of the Code, a five percent (5%) owner of the
Employer, or a one percent (1%) owner of the Employer who has an annual
compensation of more than $150,000. The determination period of the Plan is the
Plan Year containing the determination date and the four (4) preceding Plan
Years. The determination of who is a Key Employee will be made in accordance
with Section 416(i)(1) of the Code and the regulations thereunder.
(b) Non-Key Employee: Any Employee who is not a Key Employee.
<PAGE>
23
(c) Top-Heavy Ratio:
(i) If the Employer maintains one or more defined benefit
plans and the Employer has never maintained any defined contribution
plans (including any simplified employee pension plan) which has
covered or could cover a Participant in this Plan, the Top-Heavy Ratio
is a fraction, the numerator of which is the sum of the present value
of accrued benefits of all Key Employees as of the determination date
(including any part of any accrued benefit distributed in the five-year
period ending on the determination date), and the denominator of which
is the sum of all accrued benefits (including any part of any accrued
benefit distributed in the five-year period ending on the determination
date) of all Participants as of the determination date.
(ii) If the Employer maintains one or more defined
contribution plans (including any simplified employee pension plan) and
the Employer maintains or has maintained one or more defined benefit
plans which have covered or could cover a Participant in this Plan, the
Top-Heavy Ratio is a fraction, the numerator of which is the sum of
account balances under the defined contribution plans for all Key
Employees and the present value of accrued benefits under the defined
benefit plans for all Key Employees, and the denominator of which is
the sum of the account balances under the defined contribution plans
for all Participants and the present value of accrued benefits under
the defined benefit plans for all Participants. Both the numerator and
denominator of the Top-Heavy Ratio are adjusted for any distribution of
an account balance or an accrued benefit made in the five-year period
ending on the determination date and any contribution due but unpaid as
of the determination date.
(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
12-month period ending on the determination date. The account balances
and accrued benefits of a Participant who is not a Key Employee but who
was a Key Employee in a prior year 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 Section 416 of the Code and the regulations thereunder.
Deductible Employee contributions will not be taken into account for
purposes of 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.
The accrued benefit of a Participant other than a Key Employee
shall be determined under (a) the method, if any, that uniformly
applies for accrual purposes under all defined benefit plans maintained
by the Employer, or (b) if there is no such method, as if such benefit
accrued not more rapidly than the slowest accrual rate permitted under
the fractional rule of Section 411(b)(1)(C) of the Code.
(d) Permissive aggregation group: The required aggregation group of
plans plus any other plan or plans of the Employer which, when considered as a
group with the required aggregation group would continue to satisfy the
requirements of Sections 401(a)(4) and 410 of the Code.
<PAGE>
24
(e) Required aggregation group: (i) Each qualified plan of the Employer
in which at least one Key Employee participates, and (ii) any other qualified
plan of the Employer which enables a plan described in (i) to meet the
requirements of Sections 401(a)(4) and 410 of the Code.
(f) Determination date: For any Plan Year subsequent to the first Plan
Year, the last day of the preceding Plan Year. For the first Plan Year of the
Plan, the last day of that year.
(g) Valuation date: The last day of each Plan Year.
(h) Present Value: Present Value shall be based only on the interest
rate used by the Administrator to determine compliance with the funding
requirements under the Retirement Act and the mortality rates specified on an
appropriate current unisex table.
9.3 Determination as to Whether the Plan is Top Heavy -- The
Administrator shall determine whether the Plan is top heavy within the meaning
of Section 416. The Plan shall be top heavy for any Plan Year beginning after
December 31, 1983, if, as of the last day of the preceding Plan Year (the
"determination date"), any of the following conditions exist:
(a) If the Top-Heavy Ratio for this Plan exceeds sixty percent (60%)
and this Plan is not part of any required aggregation group or permissive
aggregation group of plans;
(b) If this Plan is a part of a required aggregation group of plans
(but which is not part of a permissive aggregation group) and the Top-Heavy
Ratio for the group of plans exceeds sixty percent (60%); or
(c) If this Plan is a part of a required aggregation group of plans and
part of a permissive aggregation group and the Top-Heavy Ratio for the
permissive aggregation group exceeds sixty percent (60%).
In determining whether the Plan is top heavy for Plan Years commencing
after December 31, 1984, the Account balance of a Participant who has not
performed an Hour of Service for the Employer at any time during the
five-consecutive-year period ending on the determination date shall be excluded
from the calculation of the Top Heavy Ratio.
9.4 Minimum Contribution -- For each Plan Year with respect to which
the Plan is top heavy, the minimum amount allocated under the Plan for the
benefit of each Participant who is a Non-Key Employee and who is otherwise
eligible for such an allocation shall be the lesser of:
(a) three percent (3%) of the Non-Key Participant's compensation
(within the meaning of Section 415 of the Code) for the Plan Year, or
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25
(b) the Non-Key Participant's compensation (as defined in Section 415
of the Code) times a percentage equal to the largest percentage of such
compensation (not exceeding $200,000, $150,000 for Plan Years beginning on or
after January 1, 1994) allocated to any Key Employee for the Plan Year under
this Plan and all other defined contribution plans in the same required
aggregation group. This clause (b) shall not apply to any plan required to be
included in an aggregation group if such plan enables a defined benefit plan
required to be included in such group to meet the requirements of Section
401(a)(4) or Section 410 of the Code. This paragraph shall not apply to a
Participant covered under a qualified defined benefit plan maintained by the
Employer if the Participant's vested benefit thereunder satisfies the
requirements of Section 416(c) of the Code. Notwithstanding any other language
herein, a Non-Key Eligible Employee may not fail to receive a defined
contribution minimum allocation because either (1) said Eligible Employee was
excluded from participation (or accrues no benefit) merely because the
Employee's compensation is less than the stated amount, or (2) the Employee is
excluded from participation (or accrues no benefit) merely because of a failure
to make Elective Deferrals.
9.5 Accelerated Vesting --
(a) For each Plan Year during which the Plan is top heavy, a vesting
schedule which complies with the requirements of Section 416(b)(1)(a) of the
Code will be placed in effect. Each Participant in a Period of Service during a
Plan Year in which the Plan is top-heavy will be entitled to a Nonforfeitable
right to one hundred percent (100%) of the pension benefit accrued from Employer
contributions provided said Participant has completed a Period of Service with
the Employer of at least three (3) years.
(b) In the event that an accelerated vesting schedule must be placed in
effect in accordance with subparagraph (a) of this Section 9.5 and the Plan is
later determined not to be top heavy, no vesting schedule change shall be made
which shall have the effect of providing a benefit to a Participant less than
the accrued cumulative benefit to which the Participant was otherwise entitled
as of the date of said vesting schedule change pursuant to said subparagraph
(a).
ARTICLE X - THE TRUST FUND
10.1 Trust Agreement -- During the period in which this Plan remains in
existence, the Employer or any successor thereto shall maintain in effect a
Trust Agreement with a corporate trustee as Trustee, to hold, invest, and
distribute the Trust Fund in accordance with the terms of such Trust Agreement.
10.2 Investment of Accounts -- The Trustee shall invest and reinvest
the Participant's accounts in investment options as defined in Section 4.1 as
directed by the Administrator or its delegate in writing. The Administrator
shall issue such directions in accordance with the investment options selected
by the Participants which shall remain in force until altered in accordance with
Sections 4.2 and 4.3.
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26
10.3 Expenses -- Expenses for the Plan and Trust shall be paid from
the Trust.
<PAGE>
ARTICLE XI - ADMINISTRATION OF THE PLAN
11.1 General Administration -- The general administration of the Plan
shall be the responsibility of Raytheon Company (or any successor thereto) which
shall be the Administrator and Named Fiduciary for purposes of the Retirement
Act. The Company shall have the authority, in its sole discretion, to construe
the terms of the Plan and to make determinations as to eligibility for benefits
and as to other issues within the "Responsibilities of the Administrator"
described in Article XI, Section 11.2. All such determinations of the Company
shall be conclusive and binding on all persons.
11.2 Responsibilities of the Administrator -- The Administrator shall
assign responsibility for performance of all necessary administrative duties,
including the following:
(a) Determination of all questions which may arise under the Plan with
respect to eligibility for participation and administration of accounts,
including without limitation questions with respect to membership, vesting,
loans, withdrawals, accounting, status of accounts, stock ownership and voting
rights, and any other issue requiring interpretation or application of the Plan.
(b) Reference of appropriate issues to the Offices of the Executive
Vice President - Chief Financial Officer, the Senior Vice President Treasurer,
the Director of Tax Affairs, the Senior Vice President General Counsel, and the
Senior Vice President - Human Resources, respectively, for advice and counsel.
(c) Establishment of procedures required by the Plan, such as
notification to Employees as to joining the Plan, selecting and changing
investment options, suspending deferrals, exercising voting rights in stock,
withdrawing and borrowing account balances, designation of beneficiaries,
election of method of distribution, and any other matters requiring a uniform
procedure.
(d) Submission of necessary amendments to supplement omissions from the
Plan or reconcile any inconsistency therein.
(e) Filing appropriate reports with the Government as required by law.
(f) Appointment of a Trustee or Trustees and investment managers.
(g) Review at appropriate intervals of the performance of the Trustee
and such investment managers as may have been designated.
(h) Appointment of such additional Fiduciaries as deemed necessary for
the effective administration of the Plan, such appointments to be by written
instrument.
11.3 Liability for Acts of Other Fiduciaries -- Each Fiduciary shall be
responsible only for the duties allocated or delegated to said Fiduciary, and
other Fiduciaries shall not be liable for any breach of fiduciary responsibility
with respect to any act or omission of any other Fiduciary unless:
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27
(a) The Fiduciary knowingly participates in or knowingly attempts to
conceal the act or omission of such other Fiduciary and knows that such act or
omission constitutes a breach of fiduciary responsibility by the other
Fiduciary;
(b) The Fiduciary has knowledge of a breach of fiduciary responsibility
by the other Fiduciary and has not made reasonable efforts under the
circumstances to remedy the breach; or
(c) The Fiduciary's own breach of his specific fiduciary
responsibilities has enabled another Fiduciary to commit a breach. No Fiduciary
shall be liable for any acts or omissions which occur prior to his assumption of
Fiduciary status or after his termination from such status.
11.4 Employment by Fiduciaries -- Any Fiduciary hereunder may employ,
with the written approval of the Administrator, one or more persons to render
service with regard to any responsibility which has been assigned to such
Fiduciary under the terms of the Plan including legal, tax, or investment
counsel and may delegate to one or more persons any administrative duties
(clerical or otherwise) hereunder.
11.5 Recordkeeping -- The Administrator shall keep or cause to be kept
any necessary data required for determining the account status of each
Participant. In compiling such information, the Administrator may rely upon its
employment records, including representations made by the Participant in the
employment application and subsequent documents submitted by the Participant to
the Employer. The Trustee shall be entitled to rely upon such information when
furnished by the Administrator or its delegate. Each Employee shall be required
to furnish the Administrator upon request and in such form as prescribed by the
Administrator, such personal information, affidavits and authorizations to
obtain information as the Administrator may deem appropriate for the proper
administration of the Plan, including but not limited to proof of the Employee's
date of birth and the date of birth of any person designated by a Participant as
a Beneficiary.
11.6 Claims Review Procedure -- The Administrator shall make all
determinations as to the right of any person to Accounts under the Plan. Any
such determination by the Administrator shall be made pursuant to the following
procedure:
Step 1. Claims with respect to an Account should be filed by a claimant
as soon as practicable after claimant knows or should know that a dispute has
arisen with respect to an Account, but at least thirty (30) days prior to the
claimant's actual retirement date or, if applicable, within sixty (60) days
after the death, Disability or Severance from Service of the Participant whose
account is at issue, by mailing a copy of the claim to the Benefits and Services
Department, Raytheon Company, 141 Spring Street, Lexington, Massachusetts 02173.
<PAGE>
28
Step 2. In the event that a claim with respect to an Account is wholly
or partially denied by the Administrator, the Administrator shall, within ninety
(90) days following receipt of the claim, so advise the claimant in writing
setting forth: the specific reason or reasons for the denial; specific reference
to pertinent Plan provisions on which the denial is based; a description of any
additional material or information necessary for the claimant to perfect the
claim; an explanation as to why such material or information is necessary; and
an explanation of the Plan's claim review procedure.
Step 3. Within sixty (60) days following receipt of the denial of a
claim with respect to an Account, a claimant desiring to have the denial
appealed shall file a request for review with the Administrator by mailing a
copy thereof to the address shown in Step 1.
Step 4. Within thirty (30) days following receipt of a request for
review, the Administrator shall provide the claimant a further opportunity to
present his or her position. At the Administrator's discretion, such
presentation may be through an oral or written presentation. Prior to such
presentation, the claimant shall be permitted the opportunity to review
pertinent documents and to submit issues and comments in writing. Within a
reasonable time following presentation of the claimant's position, which usually
should not exceed thirty (30) days, the Administrator shall inform the claimant
in writing of the decision on review setting forth the reasons for such decision
and citing pertinent provisions in the Plan.
The Administrator is the fiduciary to whom the Plan grants full
discretion, with the advice of counsel, to interpret the Plan; to determine
whether a claimant is eligible for benefits; to decide the amount, form and
timing of benefits; and to resolve any other matter under the Plan which is
raised by a claimant or identified by the Administrator. All questions arising
from or in connection with the provisions of the Plan and its administration,
not herein provided to be determined by the Board of Directors, shall be
determined by the Administrator, and any determination so made shall be
conclusive and binding upon all persons affected thereby.
11.7 Indemnification of Directors and Employees -- The Companies shall
indemnify by insurance or otherwise any Fiduciary who is a director, officer or
employee of the Employer, his heirs and legal representatives, against all
liability and reasonable expense, including counsel fees, amounts paid in
settlement and amounts of judgments, fines or penalties, incurred or imposed
upon him in connection with any claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of acts or omissions
in his capacity as a Fiduciary hereunder, provided that such act or omission is
not the result of gross negligence or willful misconduct. The Companies may
indemnify other Fiduciaries, their heirs and legal representatives, under the
circumstances, and subject to the limitations set forth in the preceding
sentence, if such indemnification is determined by the Board of Directors to be
in the best interests of the Companies.
11.8 Immunity from Liability -- Except to the extent that Section
410(a) of the Retirement Act prohibits the granting of immunity to Fiduciaries
from liability for any responsibility, obligation, or duty imposed under Title
I, Subtitle B, Part 4 of said Act, an officer, employee, member of the Board of
Directors of the Employer or other person assigned responsibility under this
Plan shall be immune from any liability for any action or failure to act except
such action or failure to act which results from said officer's, Employee's,
Participant's or other person's own gross negligence or willful misconduct.
<PAGE>
29
ARTICLE XII - AMENDMENT OR TERMINATION OF THE PLAN
12.1 Right to Amend or Terminate Plan -- Each of the Companies reserves
the right at any time or times, by action of its Board of Directors, to modify,
amend or terminate the Plan in whole or in part as to its Employees, in which
event a certified copy of the resolution of the Board of Directors, authorizing
such modification, amendment or termination shall be delivered to the Trustee
and to the other Companies whose Employees are covered by this Plan, provided,
however, no amendment to the Plan shall be made which shall:
(a) deprive any Participant of amounts allocated to his Account prior
to the date of the amendment;
(b) except as provided in Section 3.11, make it possible for any part
of the corpus or income of the Trust Fund to be used for or diverted to purposes
other than the exclusive benefit of the Participants or their beneficiaries
prior to the satisfaction of all liabilities with respect to such Participant or
their Beneficiaries;
(c) modify the vesting schedule and deprive a Participant of his
Nonforfeitable rights to amounts allocated to his account prior to the date of
the amendment. Further, if the vesting schedule of the Plan is amended, or the
Plan is amended to directly or indirectly affect a Nonforfeitable percentage of
a Participant's Account, each Participant with a Period of Service of at least
three years may elect, within a reasonable period after the adoption of the
amendment to have his nonforfeitable percentage computed under the Plan without
regard to such amendment. The period during which the election may be made shall
commence with the date the amendment is adopted or the change made and shall end
on the latest of:
(i) 60 days after the amendment is adopted;
(ii) 60 days after the amendment becomes effective, or
(iii) 60 days after the Participant is issued written notice of
the amendment;
(d) increase the duties of liabilities of the Trustee without its
consent.
Notwithstanding the foregoing provisions of this Section or any other provisions
of this Plan, any modification or amendment of the Plan may be made
retroactively if necessary or appropriate to conform the Plan with, or to
satisfy the conditions of, the Retirement Act, the Code, or any other law,
governmental regulation or ruling.
Any termination, modification or amendment of the Plan shall be subject
to approval by the Board of Directors of the Company.
12.2 Maintenance of Plan -- The Employer has established the Plan with
the bona fide intention and expectation that it will be able to make its
contributions indefinitely, but the Employer is not and shall not be under any
obligation or liability whatsoever to continue its contributions or to maintain
the Plan for any given length of time.
<PAGE>
30
12.3 Termination of Plan and Trust -- The Plan and Trust hereby created
shall terminate upon the occurrence of any of the following events:
(a) Delivery to the Trustee of a notice of termination executed by the
Employer specifying the date as of which the Plan and Trust shall terminate;
(b) Adjudication of the Employer as bankrupt or general assignment by
the Employer to or for the benefit of creditors or dissolution of the Employer;
In the event of the complete termination of this Plan or the complete
discontinuance of Matching Contributions under it (but a rescission under
Section 13.2 for failure to qualify initially is not such a termination or
complete discontinuance), the rights of each Participant to the amounts then
credited to his or her Account shall be Nonforfeitable. In the event of the
partial termination of this Plan, the rights of each Employee (as to whom the
Plan is considered terminated) to the amounts then credited to his or her
Account, shall be Nonforfeitable. Whether or not there is a complete or partial
termination of this Plan shall be determined under the regulations promulgated
pursuant to the Internal Revenue Code. To the extent this paragraph is
inconsistent with any provisions contained elsewhere in this Plan or in the
Trust which forms a part of this Plan, this paragraph shall govern. Upon such
termination of the Plan and Trust, after payment of all expenses and
proportional adjustment of accounts to reflect such expenses, fund losses or
profits, and reallocations to the date of termination, each Participant or
former Participant shall, subject to the requirements of Section 401(k)(10) of
the Code and Reg. ss. 1.401(k)-1(d)(3), be entitled to receive any amounts then
credited to his or her Account in the Trust Fund. The Trustee may make payments
in cash or, to the extent permitted by Section 6.6, in stock.
ARTICLE XIII - ADDITIONAL PROVISIONS
13.1 Effect of Merger, Consolidation or Transfer -- In the event of any
merger or consolidation with or transfer of assets or liabilities to any other
plan or to this Plan, each Participant of the Plan shall be entitled to a
benefit immediately after the merger, consolidation or transfer, which is equal
to or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation or transfer (if the Plan had been
terminated).
13.2 Necessity of Initial Qualification -- This Plan is established
with the intent that it shall qualify under Sections 401(a) and 401(k) of the
Code as that section exists at the time the Plan is established. If the Internal
Revenue Service determines that the Plan initially fails to meet those
requirements, then within thirty (30) days after the date of such determination
all of the vested assets of the Trust Fund held for the benefit of Participants
and their beneficiaries shall be distributed equitably among the contributors to
the Plan in proportion to their contributions, and the Plan shall be considered
to be rescinded and of no force or effect, unless such inadequacy is removed by
a retroactive amendment pursuant to the Code. Any nonvested Matching
Contributions and earnings attributable thereto shall be returned to the
Companies.
<PAGE>
31
13.3 Limitation of Assignment -- No account under the Plan shall be
subject in any manner to attachment, anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, or the vesting of rights in any
person by operation of law or otherwise except as provided under this Plan,
including but not limited to the Trustee or Receiver in Bankruptcy, and any
attempt so to anticipate, alienate, sell, transfer, assign, encumber or charge
the same shall be void, nor shall any such benefit be in any way liable for or
subject to the debts, contracts, liabilities, engagements or torts of any person
entitled to such benefit. If any Participant is adjudicated bankrupt, or
attempts to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge any benefit under the Plan, then such benefit shall, in the discretion of
the Administrator, cease and terminate and in that event the Trustee shall hold
or apply the same or any part thereof to or for the benefit of such Participant
in such manner as the Administrator may direct.
Notwithstanding the foregoing, the Administrator is authorized to
comply with a domestic relations order determined by it to be a qualified
domestic relations order as defined in Section 414(p) of the Code. A
distribution may be made to an alternate payee under a qualified domestic
relations order in the form of a lump sum payment at the time specified in such
order, regardless of any restrictions on the commencement of the distribution
that then may apply to the Participant to whom the order relates.
13.4 Limitation of Rights of Employees -- This Plan is strictly a
voluntary undertaking on the part of the Companies and shall not be deemed to
constitute a contract between any of the Companies and any Employee, or to be a
consideration for, or an inducement to, or a condition of the employment of any
Employee. Nothing contained in the Plan shall be deemed to give any Employee the
right to be retained in the service of any of the Companies or shall interfere
with the right of any of the Companies to discharge or otherwise terminate the
employment of any Employee of the Company at any time. No Employee shall be
entitled to any right or claim hereunder except to the extent such right is
specifically fixed under the terms of the Plan.
13.5 Construction -- The Plan shall be construed, regulated, and
administered under the laws of the Commonwealth of Massachusetts, except to the
extent that the Retirement Act otherwise requires. In the event that any
provision of this Plan is inconsistent with any provision in the Retirement Act,
the provision in the Retirement Act shall be deemed to be controlling.
13.6 Transfer of Assets from Raytheon Employee Savings and Investment
Plan -- Effective as of December 5, 1994, the account balances of those
participants under the Raytheon Employee Savings and Investment Plan who are
employed by Amana Refrigeration, Inc. in the unit represented by Local 2385,
International Association of Machinists and Aerospace Workers, at Amana's plant
in Fayetteville, Tennessee (the "Transferred Accounts") shall be transferred
into this Plan. Assets equal to the Transferred Accounts shall be transferred
from the Raytheon Employee Savings and Investment Plan to the Trustee, such
transfer to be effective as of December 5, 1994. Amounts held in the various
investment accounts under the Raytheon Employee Savings and Investment Plan and
Trust shall be transferred to the investment accounts under the Trust in
<PAGE>
32
accordance with procedures established by the Administrator. Upon such transfer,
the assets transferred from the Raytheon Employee Savings and Investment Plan
shall become assets of this Plan for all purposes hereunder, effective as of
December 5, 1994, and this Plan shall assume all the liabilities of the Raytheon
Employee Savings and Investment Plan for the Transferred Accounts, and benefits
shall thereafter be allocated and paid pursuant to the provisions of this Plan.
All participants in the Raytheon Employee Savings and Investment Plan whose
accounts are transferred to this Plan shall remain fully vested in their
accounts which are transferred to this Plan. All withdrawal and distribution
options under the Raytheon Employee Savings and Investment Plan shall be made
available under this Plan with respect to the Transferred Accounts to the extent
required by Section 411(d)(6) of the Code.
ARTICLE XIV - DEFINITIONS
The following terms have the meaning specified below unless the context
indicates otherwise:
14.1 "Account" means the entire interest of a Participant in the Trust
Fund. A Participant's Account shall consist of an Employee Account, a Matching
Contribution Accountand, where applicable, a Rollover Contribution Account and
a Qualified Non-Elective Contribution Account.
14.2 "Administrator" means Raytheon Company.
14.3 "Affiliate" means a trade or business which together with any of
the Companies is a member of (i) a controlled group of corporations within the
meaning of Section 414(b) of the Code; (ii) a group of trades or businesses
(whether or not incorporated) under common control as defined in Section 414(c)
of the Code, or (iii) an affiliated service group as defined in Section 414(m)
of the Code, or which is an entity otherwise required to be aggregated with the
Companies pursuant to Section 414(o) of the Code. For purposes of Article VIII,
the determination of controlled groups of corporations and trades or businesses
under common control shall be made after taking into account the modification
required under Section 415(h) of the Code. This section shall be effective as of
January 1, 1987.
14.4 "Authorized Leave of Absence" means an absence approved by the
Companies on a uniform and nondiscriminatory basis not exceeding one (1) year
for any of the following reasons: illness of Employee or relative, death of
relative, education of Employee, or personal or family business of an
extraordinary nature, provided in each case that the Employee returns to the
service of the Companies within the time period specified by the Companies.
14.5 "Authorized Military Leave of Absence" means any absence due to
service in the Armed Forces of the United States, upon completion of which the
Employee is entitled under any applicable Federal law to reemployment at the
termination of such military service, provided that he returns to the service of
the Companies within the period provided for by such applicable Federal law or
such further period as may be established by the Administrator. As used in this
paragraph, the term "Armed Forces of the United States" excludes the Merchant
Marine.
<PAGE>
33
14.6 "Beneficiary" means the person designated by the Participant to
receive the value of his Account in the event of his death; provided, however,
that if a Participant with a spouse designates a Beneficiary other than his
spouse, said designation shall not take effect unless the spouse consents in
writing to such designation and said spousal consent acknowledges the effect of
said designation and is witnessed by a representative of the Plan or a notary
public. Said spousal consent shall be effective only with respect to the spouse
granting such consent, and shall not be required if the Participant can
establish that there is no spouse, that the spouse cannot be located, or that
other conditions exist as may be prescribed by regulations issued by the
Secretary of the Treasury. If there is no Beneficiary designated by the
Participant or surviving at the death of the Participant, payment of his Account
shall be made in accordance with Section 6.6. Subject to the foregoing, a
Participant may designate a new beneficiary at any time by filing with the
Administrator a written request for such change on a form prescribed by the
Administrator. Such change shall become effective only upon receipt of the form
by the Administrator, but upon such receipt of the change shall relate back to
and take effect as of the date the Participant signed such request, whether or
not the Participant is living at the time of such receipt, provided, however,
that neither the Trustee nor the Administrator shall be liable by reason of any
payment of the Participant's Account made before receipt of such form.
14.7 "Board of Directors" means the Board of Directors of Raytheon
Company.
14.8 "Business Day" means a day on which Fidelity is open for general
business.
14.9 "Code" means the Internal Revenue Code of 1986, as amended.
14.10 "Company" means Raytheon Company, but shall not include a
Division, Operation, payroll or similar cohesive group of Raytheon Company
excluded by the Board of Directors of Raytheon Company.
14.11 "Companies" means the Company and any Subsidiary of the Company
which elects through an authorized officer to participate in the Plan on account
of its Employees, provided that participation in the Plan by such a Subsidiary
is approved by the Board of Directors of the Company, or an officer to whom
authority to approve participation by a Subsidiary is delegated by the Board of
Directors, but shall not include any Division, Operation or similar cohesive
group of a participating Subsidiary excluded by the Board of Directors of the
Subsidiary and the Board of Directors of the Company.
<PAGE>
34
14.12 "Covered Hourly Payroll" means a payroll consisting of hourly
payroll Employees in the following bargaining units: production and maintenance
Employees employed at the Company's Eastern Massachusetts plants in the unit
represented by Local 1505, International Brotherhood of Electrical Workers;
production and maintenance Employees employed at the Company's Oxnard,
California, plant in the unit represented by Local 40, International Brotherhood
of Electrical Workers; Employees employed in machinist and related occupations
at the Company's Eastern Massachusetts plants in the unit represented by Lodge
1836, International Association of Machinists and Aerospace Workers; Employees
employed in machinist and related occupations at the Company's Portsmouth, Rhode
Island, plant in the unit represented by Lodge 587, International Association of
Machinists and Aerospace Workers; Employees employed as guards at the Company's
Eastern Massachusetts and New Hampshire plants in the unit represented by the
Raytheon Guards Association, and at the Company's Quincy, Massachusetts, plant
in the unit represented by Local 84, International Union of Police and
Protection Employees, Independent Watchmen's Association; production and
maintenance Employees employed in the units represented by Lodges 733 and 2328,
International Association of Machinists and Aerospace Workers, at Raytheon
Aircraft Company facilities at Wichita and Salinas, Kansas, respectively;
Employees in the unit represented by Lodge 831, International Association of
Machinists and Aerospace Workers, at Cedarapids, Inc.'s facility in Cedar
Rapids, Iowa; and Employees employed on the hourly payroll at Amana
Refrigeration Inc.'s Florence, South Carolina, facility.
14.13 "Disability" means that the Participant is totally and
permanently disabled by bodily injury or disease so as to be prevented from
engaging in any occupation for compensation or profit. The determination of
disability shall be made by the Administrator with the aid of competent medical
advice. It shall be based on such evidence as the Administrator deems necessary
to establish disability or the continuation thereof.
14.14 "Early Retirement Date" means the first day of the month
subsequent to the earliest date on which the Participant has both attained age
55 and completed a Period of Service of ten (10) years.
14.15 "Elective Deferral" means a voluntary reduction of Participant's
compensation in accordance with Section 2.2 hereof.
14.16 "Eligible Compensation" means the base pay (including vacation
and sick pay and pay for unused vacation and sick leave), supervisory
differentials, shift premiums and sales commissions paid to the Participant by
the Employer, excluding all other earnings from any source. Effective January 1,
1997, if the base pay of a Participant (who is not a regularly scheduled
part-time employee) is less in any work week than the equivalent of 40 times the
straight time hourly rate, overtime premium pay may be considered, but only to
the extent total Eligible Compensation for such work week does not exceed 40
multiplied by the Participant's straight time hourly rate. Effective for Plan
Years beginning on or after January 1, 1989 and prior to December 31, 1993, in
no event shall the amount of Eligible Compensation taken into account under the
Plan for any Plan Year exceed $200,000 (or such larger amount as the Secretary
of the Treasury may determine for such Plan Year under Section 401(a)(17) of the
Code). Effective for Plan Years beginning on or after January 1, 1994, in no
event shall the amount of Eligible Compensation taken into account under the
Plan for any Plan Year exceed $150,000 (or such larger amount as the Secretary
of the Treasury may determine for such Plan Year under Section 401(a)(17) of the
Code). For purposes of this limitation only, in determining compensation the
rules of Section 414(q)(6) of the Code shall apply, except that in applying such
rules, the term "family" shall include only the spouse of the Participant and
any lineal descendants of the Participant who have not attained age 19 before
the close of the Plan Year.
<PAGE>
35
14.17 "Eligible Employee" means any Employee on a Covered Hourly
Payroll of one of the Companies, excluding Employees in cooperative studies and
intern programs, independent contractors reclassified as a result of an audit by
a government agency as common law employees and all individuals performing
services for the Companies who are paid through accounts payable, as
distinguished from the payroll system, and, effective January 1, 1987, a person
who is a Leased Employee. No Employee may be an Eligible Employee under this
Plan for any period during which the Employee is an Eligible Employee under the
Raytheon Savings and Investment Plan.
14.18 "Employee" means any person performing compensated services for
the Employer who meets the definition of "Employee" for income tax withholding
purposes under Treas. Regs. 31.3401(c)-1 and any person who is a Leased
Employee. This section shall be effective as of January 1, 1987.
14.19 "Employee Account" means that portion of Participant's Account
which is attributable to Elective Deferrals, adjustments for withdrawals and
distributions, and the earnings and losses attributable thereto.
14.20 "Employer" means Raytheon Company and any Affiliate thereof.
14.21 "Employment Commencement Date" is the date on which the Employee
first performs an Hour of Service with the Employer.
14.22 "Enrollment Agreement" means a salary reduction agreement
pursuant to which an Eligible Employee voluntarily joins the Plan and authorizes
deferral of a portion of the Participant's Eligible Compensation.
14.23 "Fidelity" means Fidelity Investments, the recordkeeper for the
Plan.
14.24 "Fiduciary" means a named fiduciary and any other person or group
of persons who assumes a fiduciary responsibility within the meaning of the
Retirement Act under this Plan whether by expressed delegation or otherwise but
only with respect to the specific responsibilities of each for the
administration of the Plan and Trust Fund.
14.25 "Higher Paid Eligible Employee" means an individual described in
Section 414(q) of the Code, after giving effect to subsection (12) thereof, and
any regulation, notice or other guidance issued by the Internal Revenue Service
thereunder. The determination of whether an individual is a Higher Paid Eligible
Employee may be made by the Administrator on the basis of any elective provision
permitted under such regulation, notice or other guidance. In general, an
Employee will be considered a Higher Paid Eligible Employee if such individual:
<PAGE>
36
(a) was a five percent owner as defined in Section 416(i)(1)(iii) of
the Code at any time during the current or preceding Plan Year;
(b) received compensation in excess of $50,000 during the current or
preceding Plan Year (adjusted annually for increases in the cost of living in
accordance with Section 415(d) of the Code); or
(c) was at any time an officer within the meaning of Section 416(i) of
the Code during the preceding Plan Year, and who received compensation in the
current or preceding Plan Year greater than 50 percent of the dollar limitation
in effect under Section 415(b)(1)(A) of the Code for such Plan Year.
Notwithstanding the foregoing, no more than 50 or, if lesser, the greater of 3
employees or 10 percent of the Employees shall be treated as officers.
(d) An Employee who is not described in paragraph (b) or (c) above for
the preceding Plan Year shall not be treated as described in paragraph (b) or
(c) unless such Employee is one of the 100 Employees who receive the most
compensation from the Employer during the Plan Year.
(e) A former Employee shall be treated as a Higher Paid Eligible
Employee if such former Employee had a separation year prior to the Plan Year
and was a Higher Paid Eligible Employee for either (1) such Employee's
separation year or (2) any Plan Year ending on or after the Employee's 55th
birthday.
A separation year is the Plan Year in which the Employee separates from
service.
(f) Notwithstanding anything to the contrary in this Plan, Sections
414(b), (c), (m), (n), and (o) of the Code are applied prior to determining
whether an Employee is a High Paid Eligible Employee.
(g) "Non-Higher Paid Eligible Employee" shall mean an Employee who is
neither a Higher Paid Eligible Employee nor a family member (within the meaning
of Section 414(q)(6) of the Code).
(h) "Compensation" shall mean the Employee's wages which are required
to be reported on IRS Form W-2, increased by any Elective Deferrals made by the
Companies to the Plan on behalf of the Employee and any pre-tax elective
contributions made by the Companies which are excludible from the Employee's
income under Section 125 of the Code.
14.26 (a) "Hour of Service" means an hour with respect to which any
Employee is paid, or entitled to payment, for the performance of duties for the
Employer during the applicable computation period.
(b) "Hour of Service" shall include an hour for which the Employee is
entitled to credit under subparagraph (a) hereof as a result of employment:
<PAGE>
37
(i) with a predecessor company substantially all of the assets
of which have been acquired by the Employer, provided that where only a
portion of the operations of a company have been acquired, only service
with said acquired portion prior to the acquisition will be included
and that the Employee was employed by said predecessor company at the
time of acquisition; or
(ii) with a Division, Operation or similar cohesive group of
the Employer excluded from participation in the Plan.
(iii) with a predecessor contractor under contracts covered by
the Service Contract Act, provided that the Employee is in a Period of
Service with such contractor on the day immediately preceding
Employee's Employment Commencement Date or Reemployment Commencement
Date, as applicable. (c) To the extent applicable, the rules set forth
in 29 CFR ss.ss. 2530.200b-2(b) and (c) for computing an "Hour of
Service" are incorporated herein by reference.
14.27 "Layoff" means an involuntary interruption of service due to
reduction in the cost of living in accordance with Section of work force with or
without the possibility of recall to employment when conditions warrant.
14.28 "Leased Employee" means any person (other than an Employee) who,
pursuant to an agreement between the Employer and any other person, has
performed services for the Employer (or any related person as provided in
Section 414(n)(6) of the Code) on a substantially full time basis for a period
of at least one year and such services are of the type historically performed by
employees in the business field of the Employer. Leased Employees are not
eligible to participate in the Plan. Notwithstanding the foregoing, if such
"Leased Employees" constitute less than 20% of the nonhighly compensated
workforce of the Employer within the meaning of Section 414(n)(5)(C)(ii) of the
Code, the term "Employee" shall not include Leased Employees covered by a plan
described in Section 414(n)(5) of the Code. This section shall be effective as
of January 1, 1987.
14.29 "Limitation Year" means the calendar year or any other
12-consecutive-month period adopted for all qualified deferred compensation
plans of the Company pursuant to a written resolution adopted by the Company.
14.30 "Matching Contribution" means contribution made to the Trust in
accordance with Section 3.7 hereof.
14.31 "Matching Contribution Account" means that portion of
Participant's Account which is attributable to Matching Contributions by the
Companies, adjustments for withdrawals and distributions, and the earnings and
losses attributable thereto.
14.32 "Net Annual Profits" means the current earnings of the Companies
for the Plan Year determined in accordance with generally accepted accounting
principles before federal and local income taxes and before contributions to
this Plan or any other qualified plan.
<PAGE>
38
14.33 "Net Profits" means the accumulated earnings of the Companies at
the end of the Plan Year determined in accordance with generally accepted
accounting principles. For the purposes hereof "accumulated earnings at the end
of the Plan Year" shall include Net Annual Profits for such Plan Year
calculated before any deduction is taken for depreciation, if any.
14.34 "Nonforfeitable" means an unconditional right to an Account
balance or portion thereof determined as of the applicable date of determination
under this Plan.
14.35 "Normal Retirement Age" means the Participant's sixty-fifth
(65th) birthday.
14.36 "Participant" means (i) an individual who is enrolled in the
Plan pursuant to Article III and (ii) an individual who has transferred a
Qualified Rollover Account into the Plan pursuant to Section 3.10(d) provided
that the Participant in either category has not withdrawn the entire amount of
his or her Account.
14.37 "Pay Period" means a scheduled period for payment of wages or
salaries.
14.38 "Period of Participation" means that portion of a Period of
Service during which the Eligible Employee was a Participant, and had an
Employee Account in the Plan. For the purpose of determining a Period of
Participation, participation in the Raytheon Savings and Investment Plan and the
Raytheon Employee Savings and Investment Plan shall be considered as
participation in this Plan.
14.39 "Period of Service" means the period of time beginning on the
Employee's Employment Commencement Date or Reemployment Commencement Date,
whichever is applicable, and ending on the Employee's Severance from Service
Date.
14.40 "Period of Severance" means the period of time beginning on the
Employee's Severance from Service Date and ending on the Employee's Reemployment
Commencement Date.
14.41 "Plan" means the Raytheon Savings and Investment Plan for
Specified Hourly Payroll Employees as amended from time to time.
14.42 "Plan Year" means a calendar year, or a portion thereof occurring
prior to the termination of the Plan.
14.43 "Qualified Non-Elective Contribution Account" means that portion
of a Participant's Account which is attributable to Qualified Non-Elective
Contributions received pursuant to Section 3.12, adjusted for withdrawals and
distributions, and the earnings and losses attributable thereto.
14.44 "Reemployment Commencement Date" means the first date on which
the Employee performs an Hour of Service following a Period of Severance which
is excluded under Section 5.3 in determining whether a Participant has a
Nonforfeitable right to his or her Matching Contribution Account.
<PAGE>
39
14.45 "Retirement" means a Severance from Service when the Participant
has either attained age 55 and completed a Period of Service of at least ten
(10) years or has attained Normal Retirement Age.
14.46 "Retirement Act" means the Employee Retirement Income Security
Act of 1974, including any amendments thereto.
14.47 "Rollover Contribution Account" means that portion of a
Participant's Account which is attributable to rollover contributions received
pursuant to Section 3.10, adjustments for withdrawals and distributions, and the
earnings and losses attributable thereto.
14.48 "Salaried Payrolls" means the nonexempt salaried and the exempt
salaried payrolls which are processed in the United States.
14.49 "Severance from Service" means the termination of employment by
reason of quit, Retirement, discharge, death or failure to return from Layoff,
Authorized Leave of Absence, Authorized Military Leave of Absence or Disability.
14.49A "Severance from Service Date" means the earlier of:
(a) the date on which an Employee quits, retires, is discharged, or
dies; or
(b) except as provided in paragraphs (c) and (d) hereof, the first
anniversary of the first date of a period during which an Employee is absent for
any reason other than quit, retirement, discharge or death, provided that, on an
equitable and uniform basis, the Administrator may determine that, in the case
of a Layoff as the result of a permanent plant closing, the Administrator may
designate the date of Layoff or other appropriate date prior to the first
anniversary of the first date of absence as the Severance From Service Date; or
(c) in the case of an Authorized Military Leave of Absence from which
the Employee does not return prior to expiration of recall rights, "Severance
from Service Date" means the first day of absence because of the leave; or
(d) in the case of an absence due to Disability, "Severance from
Service Date" means the earlier of the first anniversary of the first day of
absence because of the Disability or the date of termination of the Disability;
or
(e) in the case of an Employee who is discharged or quits (i) by reason
of the pregnancy of the Employee, (ii) by reason of the birth of a child to the
Employee, (iii) by reason of the placement of a child with the Employee in
connection with the adoption of such child by the Employee or (iv) for purposes
of caring for such child for a period beginning immediately following such birth
or placement, "Severance from Service Date," for the sole purpose of determining
the length of a Period of Service, shall mean the first anniversary of the quit
or discharge; or
<PAGE>
40
(f) in the case of an Employee who is absent from service beyond the
first anniversary of the first day of absence (i) by reason of the pregnancy of
the Employee, (ii) by reason of the birth of a child to the Employee, (iii) by
reason of the placement of a child with the Employee in connection with the
adoption of such child by the Employee or (iv) for purposes of caring for such
child for a period beginning immediately following such birth or placement, the
Severance from Service Date shall be the second anniversary of the first day of
such absence. The period between the first and second anniversaries of the first
day of absence is neither a Period of Service nor a Period of Severance; or
(g) in the case of an Employee whose employment is terminated by reason
of the sale or divestiture of assets or stock of a business of one of the
Companies, "Severance From Service Date" shall be the earlier of the first
anniversary of the closing date of the transaction or the date the Employee dies
or withdraws the entire amount of his or her Account.
14.50 "Subsidiary" means any corporation designated by the Board of
Directors of Raytheon Company as a Subsidiary, provided that for the purposes of
the Plan no corporation shall be considered a Subsidiary during any period when
less than fifty percent (50%) of its outstanding voting stock is beneficially
owned by the Company.
14.51 "Surviving Spouse" means a lawful spouse surviving the
Participant as of the date of Participant's death.
14.52 "Trust Agreement" means the agreement between the Company and the
Trustee, and any successor agreement made and entered into for the establishment
of a trust fund of all contributions which may be made to the Trustee under the
Plan.
14.53 "Trustee" means the Trustee and any successor trustees under the
Trust Agreement. 14.54 "Trust Fund" means the cash, securities, and other
property held by the Trustee for the purposes of the Plan.
14.55 "Valuation Date" means each day the New York Stock Exchange is
open for business. 14.56 Words used in either the masculine or feminine gender
shall be read and construed so as to apply to both genders where the context so
warrants. Words used in the singular shall be read and construed in the plural
where they so apply.
<PAGE>
41
APPENDIX A
EFFECTIVE DATES AND AGE REQUIREMENTS
FOR LOAN PROVISIONS
Effective Date of Loan Required Age for Loan
Unit Provisions Eligibility
Local 1836, International
Association of Machinists and January 1, 1987 Less than age 59 1/2
Aerospace Workers
Local 1505, International
Brotherhood of Electrical March 1, 1989 None
Workers
Local 587, International
Association of Machinists and March 1, 1989 None
Aerospace Workers
Local 40, International
Brotherhood of Electrical April 1, 1989 None
Workers
Raytheon Guards Association May 1, 1989 None
Local 84, International Union
of Police and Protection May 1, 1989 None
Employees, Independent
Watchmen's Association
Local 284, International
Brotherhood of Teamsters Nov. 1, 1995
<PAGE>
1
EXHIBIT 4.5
RAYTHEON EMPLOYEE SAVINGS AND INVESTMENT PLAN
Provisions in Effect as of May 1, 1998
ARTICLE I -- ADOPTION AND PURPOSE
The Plan was established effective July 1, 1987, as the Badger Savings
and Investment Plan for the purpose of providing employees with a tax-effective
means of allocating a portion of their salary to be invested in one or more
investment opportunities specified in the Badger Plan as determined by the
employee and set aside for short-term and long-term needs of the employee. The
Badger Plan was applicable only to eligible employees of The Badger Company,
Inc. from July 1, 1987, to May 12, 1993. On May 12, 1993, the Accounts of all
Participants were transferred to the Raytheon Employee Savings and Investment
Plan. Thereafter, the Plan was renamed the Raytheon Employee Savings and
Investment Plan and is applicable to employees of Raytheon Company and its
subsidiaries who are employed in units designated by the Subsidiary or the
Company as a Covered Unit and, in the case of Subsidiary units, approved by an
authorized officer of the Company for participation in the Plan.
It is intended that the Plan will comply with all of the requirements
for a qualified defined contribution plan under Sections 401(a) and 401(k) of
the Internal Revenue Code and will be amended from time to time to maintain
compliance with these requirements. The terms used in the Plan have the meanings
specified in Article XIV unless the context indicates otherwise. The Plan is
intended to constitute a plan described in Section 404(c) of the Employee
Retirement Income Security Act and Title 29 of the Code of Federal Regulations,
2550.404(c)-1. Participants in the Plan are responsible for selecting their own
investment opportunities from the options available under the Plan and the Plan
fiduciaries are relieved of any liability for any losses which are a direct and
necessary result of investment instructions given by a participant or
beneficiary.
The Plan as restated herein shall be effective as of June 1, 1994 or
such other dates as may be specifically provided herein or as otherwise required
by law for the Plan or the Raytheon Subsidiary Savings and Investment Plan,
which is merged into this Plan pursuant to Section 13.6, to satisfy the
requirements of Section 401(a) of the Code. The rights of former Employees whose
Severance from Service Date occurred prior to the date of any amendment shall be
governed by the terms of the Plan in effect on their Severance from Service Date
except as otherwise provided herein.
ARTICLE II -- ELIGIBILITY
2.1 Eligibility Requirements - Present Employees -- Each Eligible
Employee of the Company or a Subsidiary who was in a Period of Service in a
Covered Unit as of the date specified in Appendix A was eligible to join the
Plan as of said date or any subsequent Entry Date selected by the Eligible
Employee provided he or she continues in the same Period of Service or meets the
requirements under Section 2.2.
<PAGE>
2
2.2 Eligibility Requirements - Employees -- Each other Eligible
Employee may join the Plan as of the first Entry Date coincident with or next
following completion of a Period of Service of three (3) consecutive months
commencing on the Employee's Commencement Date or Reemployment Commencement
date, whichever is applicable.
2.3 Procedure for Joining the Plan -- Each Eligible Employee who meets
the requirements of Section 2.1 or Section 2.2 may join the Plan by
communicating with Fidelity in accordance with instructions in an enrollment kit
which will be made available to each Eligible Employee. An enrollment in the
Plan shall not be deemed to have been completed until the Employee has
designated: a percentage by which Participants' Eligible Compensation shall be
reduced as an Elective Deferral in accordance with the requirements of Section
3.3(b) subject to the non-discrimination test described in Section 3.3(a);
election of investment funds as described in Article IV; one or more
Beneficiaries; and such other information as specified by Fidelity. Enrollment
will be effective as of the first administratively feasible Pay Period following
completion of enrollment. The Administrator in its discretion may from time to
time make exceptions and adjustments in the foregoing procedure on a uniform and
nondiscriminatory basis.
2.4 Transfer to Position Not Covered by Plan -- If a Participant is
transferred to another position with the Employer in which the Participant is no
longer an Eligible Employee, the Participant will remain a Participant of the
Plan with respect to Elective Deferrals previously made but will no longer be
eligible to have Elective Deferrals made to the Plan on his or her behalf until
he or she again becomes an Eligible Employee. In the event the Participant is
subsequently transferred to a position in which he or she again becomes an
Eligible Employee, the Participant may renew Elective Deferrals by communicating
with Fidelity and providing all of the information requested by Fidelity. The
renewal of Elective Deferrals will be effective as of the first administratively
feasible Pay Period following receipt by Fidelity of the requested information.
2.5 Break in Service Rules
(a) Periods of Service -- In determining the length of a Period of
Service, the Administrator shall include all Periods of Service, except a Period
of Service prior to a Period of Severance of twelve (12) months or more, unless
subsequent to said Period of Severance the Participant completes a Period of
Service of at least twelve (12) months.
(b) Periods of Severance -- In determining the length of a Period of
Service, the Administrator shall exclude all Periods of Severance, except that
in the event a Participant returns from a quit, discharge, or Retirement, within
twelve (12) months from the earlier of:
(i) the date of the quit, discharge, or Retirement, or
(ii) if the Participant was absent from employment for reasons such as
layoff or Authorized Leave of Absence on the day of the quit,
discharge, or Retirement, the first day of such absence, the period of
absence will be included as a Period of Service.
<PAGE>
3
(c) Other Periods -- In making the determinations described in
subsections (a) and (b) of this Section 2.5, the second, third, and fourth
consecutive years of a Layoff (from the first anniversary of the last day paid
to the fourth anniversary of the last day paid) and any period in excess of one
(1) year of an Authorized Leave of Absence shall be regarded as neither a Period
of Service nor a Period of Severance.
ARTICLE III -- CONTRIBUTIONS
3.1 Elective Deferrals -- Elective Deferrals must be made in one
percent (1%) increments with a minimum Elective Deferral of one percent (1%) of
Eligible Compensation and a maximum Elective Deferral of seventeen percent
(17%); provided, however, that effective for any Plan Year beginning on or after
January 1, 1987, in no event may the amount of Elective Deferrals to the Plan,
when taken into account with all other elective deferrals (as defined in Code
Section 402(g)) made by a Participant under any other plan maintained by the
Employer, exceed $7,000 (adjusted for increases in the cost of living under Code
Section 402(g)) in any calendar year. If a Participant participates in another
plan or arrangement which is not maintained by the Employer and which permits
elective deferrals in any calendar year and his total Elective Deferrals under
the Plan and other plan(s) exceed $7,000 (as adjusted) in a calendar year, he
may request to receive a distribution of the amount of the excess deferral (a
deferral in excess of $7,000 (as adjusted)) that is attributable to Elective
Deferrals to this Plan together with earnings thereon, notwithstanding any
limitations on distributions contained in the Plan. Such distribution shall be
made by the April 15 following the Plan Year in which the Elective Deferrals
were made, provided that the Participant notifies the Administrator of the
amount of the excess deferral that is attributable to Elective Deferrals to the
Plan and requests such a distribution. The Participant's notice must be received
by the Administrator no later than the March 1 following the Plan Year of the
excess deferral. In the absence of such notice, the amount of such excess
deferral attributable to Elective Deferrals to this Plan shall be subject to all
limitations on withdrawals and distributions in the Plan. In addition to
distributing excess deferrals at the request of the Participant, the
Administrator shall distribute any deferrals made under this Plan or any other
plan of the Employer in excess of the statutory maximum deferral of $7,000 (as
adjusted). For this purpose as provided in 26 CFR 1.402(g)-1(e)(2), a
Participant is deemed to notify the Administrator of any excess deferrals that
arise by taking into account only those Elective Deferrals made to this Plan and
any other plans of this Employer and to request that such excess deferrals be
distributed by the Plan Administrator. The distribution of excess deferrals will
include any earnings or be reduced by any loss allocable to the excess deferrals
pursuant to the Plan method of allocating earnings or losses and calculated to
the last day of the Plan Year in which the excess deferrals were made.
The Administrator may establish prospectively lower limits for Higher
Paid Participants for the purpose of complying with Internal Revenue Code
requirements in an orderly manner.
3.2 Limitations on Elective Deferrals --
<PAGE>
4
(a) In no event may Elective Deferrals made on behalf of all Higher
Paid Eligible Employees with respect to any Plan Year result in an Actual
Deferral Percentage for such group of Higher Paid Eligible Employees which
exceeds the greater of (i) or (ii) where:
(i) is an amount equal to 125 percent of the Actual Deferral Percentage
for all Non-Higher Paid Eligible Employees who have satisfied the
eligibility requirements of Article II with respect to such Plan Year;
and
(ii) is an amount equal to the Actual Deferral Percentage for all
Non-Higher Paid Eligible Employees who have satisfied the eligibility
requirements of Article II with respect to such Plan Year and two
percent (2%), provided that such amount does not exceed 200 percent of
such Actual Deferral Percentage.
(b) The Administrator shall be authorized to implement rules
authorizing or requiring reductions in Elective Deferrals that may be made by
Higher Paid Eligible Employees during the Plan Year (prior to any contributions
to the Trust) so that the limitation of Section 3.2(a) is satisfied.
(c) The Company may in its discretion make Qualified Nonelective
Contributions to the Accounts of certain Non-Higher Paid Eligible Employees to
the extent required to satisfy the limitations of Section 3.2(a).
(d) If the limitation under Section 3.2(a) is exceeded in any Plan
Year, the Excess Amounts made on behalf of Higher Paid Eligible Employees with
respect to a Plan Year (and earnings allocable thereto) shall then be
distributed to such Employees as soon as practicable after the end of such Plan
Year, but no later than the last day of the immediately following Plan Year. The
Excess Amounts distributed shall include Elective Deferrals and the income
allocable thereto. The amount of income allocable to Excess Amounts shall be
determined in accordance with the regulations issued under Section 401(k) of the
Code and shall include income for the Plan Year for which the Excess Amounts
were made. Any such distributions shall be reduced by the amount of any
distributions made pursuant to Section 3.1 above.
(e) The Administrator may utilize any combination of the methods
described in Sections 3.2(b), (c) and (d) to assure that the limitations of
Section 3.2(a) are satisfied.
(f) For purposes of this Section 3.2, the following definitions and
special rules shall apply:
(i) The term "Annual Earnings" means the Employee's wages which are
required to be reported on IRS Form W-2 for the calendar which
coincides with the Plan Year.
(ii) The term "Actual Deferral Percentage" shall mean, with respect to any
group of actively employed Eligible Employees who have satisfied the
eligibility requirements of Article II for a Plan Year, the average of
the ratios, calculated separately for each such Eligible Employee in
the group, of:
<PAGE>
5
(A) The amount of Elective Deferrals paid to the Trust Fund for such Plan Year,
divided by
(B) The Eligible Employee's Annual Earnings, including any Elective Deferrals
made by the Companies to the Plan on behalf of the Eligible Employee and any
pre-tax elective contributions made by the Companies which are excludible from
the Eligible Employee's income under Section 125 of the Code.
Elective Deferrals shall be taken into account for a Plan Year only if such
amounts are allocated to the Eligible Employee's Account as of a date within
that Plan Year. For this purpose, an Elective Deferral is considered allocated
as of a date within a Plan Year if the allocation is not contingent on
participation or performance of services after such date and the Elective
Deferral is actually paid to the Trust Fund no later than 12 months after the
Plan Year to which the contribution relates.
(iii) The term "Excess Amounts" shall mean with respect to each Higher Paid
Eligible Employee who has satisfied the eligibility requirements of
Article II for a Plan Year, the amount equal to total Elective
Deferrals made on behalf of such Employee (determined prior to the
application of the leveling procedure described below) minus the
product of the Employee's Actual Deferral Percentage (determined after
the leveling procedure described below) multiplied by the amount
specified in Section 3.2(f)(ii)(B) above. In accordance with the
regulations issued under Section 401(k) of the Code, Excess Amounts
shall be determined by a leveling procedure under which the Actual
Deferral Percentage of the Higher Paid Eligible Employee with the
highest such percentage shall be reduced to the extent required to
enable the limitation of Section 3.2(a) to be satisfied or, if it
results in a lower reduction, to the extent required to cause such
Higher Paid Eligible Employee's Actual Deferral Percentage to equal
the Actual Deferral Percentage of the Higher Paid Eligible Employee
with the next highest Actual Deferral Percentage. This leveling
procedure shall be repeated until the limitation of Section 3.2(a) is
satisfied.
(iv) The term "Qualified Nonelective Contributions" means contributions
that are made pursuant to Sections 3.2(c), meet the requirements of
Section 401(m)(4)(C) of the Code and the regulations issued
thereunder, and which are designated as a Qualified Nonelective
Contribution for purposes of satisfying the limitations of Sections
3.2(c). Qualified Nonelective Contributions shall be nonforfeitable
when made and are distributable only in accordance with the
distribution and withdrawal provisions that are applicable to Elective
Deferrals under the Plan; provided, however, that Qualified
Nonelective Contributions may not be withdrawn on account of financial
hardship. If any Qualified Nonelective Contributions are made, the
Company shall keep such records as necessary to reflect the amount of
such contributions made for purposes of satisfying the limitations of
Sections 3.2(c).
<PAGE>
6
(v) In the event the Companies maintain two or more plans that are treated
as a single plan for purposes of Sections 401(a)(4) and 410(b) of the
Code (other than Section 410(b)(2)(A)(ii) of the Code), all elective
deferrals made under the two plans shall be treated as made under a
single plan, and if two or more of such plans are permissively
aggregated for purposes of Section 401(k) of the Code, such plans
shall be treated as a single plan for purposes of satisfying Sections
401(a)(4) and 410(b) of the Code.
(vi) In determining the Actual Deferral Percentage of a Higher Paid
Eligible Employee, all cash or deferred arrangements in which such
Higher Paid Eligible Employee is eligible to participate shall be
treated as a single arrangement.
(vii) The family aggregation rules of Section 414(q)(6) of the Code shall
apply to any Higher Paid Eligible Employee who is a five percent owner
or one of the ten most highly compensated Higher Paid Eligible
Employees. The Actual Deferral Percentage for the family group, which
is treated as one Higher Paid Eligible Employee, is the Actual
Deferral Percentage determined by combining the contributions and
compensation of all eligible Family Members. Except to the extent
taken into account in this Paragraph (vii), the contributions and
compensation of all Family Members are disregarded in determining the
Actual Deferral Percentages for all Employees.
(g) The limitations of this Section 3.2 shall apply to Plan Years
beginning on or after January 1, 1987.
3.3 Reinstatement of Reduced Amounts -- Any reduction effected
pursuant to Section 3.2(b) will remain in effect for the remainder of the Plan
Year in which the reduction occurs. A Participant whose Elective Deferral has
been reduced may elect, subject to the approval of the Administrator, to
increase his or her Elective Deferral effective as of the Entry Date in January
of the next Plan Year. This election must be made in accordance with the
procedure described in Section 3.4. The reduction described in Section 3.2(b)
will not be automatically reinstated.
3.4 Change in Elective Deferrals -- Except as provided in Sections 3.2
and 3.3, any Participant may change his or her Elective Deferral percentage by
notifying Fidelity, such changes to take effect as of the next administratively
feasible Pay Period.
3.5 Voluntary Reduction of Elective Deferral to Zero -- Any
Participant may elect to reduce the level of the Participant's Elective Deferral
to zero as of the beginning of any pay period. The reduction will take effect as
soon as practicable following telephone notification by the Participant to
Fidelity. A Participant who has reduced his or her Elective Deferral to zero may
again make Elective Deferrals as of the next administratively feasible Pay
Period subsequent to telephone notification to Fidelity.
3.6 Rollover Contributions and Transfers --
(a) Participants may transfer into the Plan qualifying rollover
amounts (as defined in Section 402 of the Code) received from other qualified
plans subject to Section 401(k) or Section 401(m) of the Code; qualified defined
contribution pension or profit sharing plans, provided that no federal income
tax has been required to have been paid previously on such amounts; rollover
contributions from an individual retirement account described in Section
408(d)(3)(A)(ii) of the Code (referred to herein as a "conduit IRA"); or
rollover contributions from the Raytheon Stock Ownership Plan by former
Participants in that plan who have incurred a Severance from Service. Such
transfers will be referred to as "rollover contributions" and will be subject to
the following conditions:
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7
(i) the transferred funds are received by the Trustee no later than sixty
(60) days from receipt by the Employee of a distribution from another
qualified Section 401(k) or Section 401 (m) plan or, in the event that
the funds are transferred from a conduit IRA, no later than sixty (60)
days from the date that the Participant receives such funds from the
individual retirement account, subject, however, to (v) below where
applicable;
(ii) the amount of such rollover contributions shall not exceed the
limitations set forth in Section 402 of the Code;
(iii) rollover contributions shall be taken into account by the
Administrator in determining the Participant's eligibility for a loan
pursuant to Article VII;
(iv) rollover contributions may be distributed at the request of the
Participant, subject to the same administrative procedures as apply to
other distributions;
(v) rollover contributions may not be received by the Trustee earlier than
the Entry Date upon which the Participant elects to join the Plan;
(vi) rollover contributions transferred pursuant to this Section 3.6 shall
be credited to the Participant's Rollover Contribution Account.
Rollover contributions will be invested upon receipt by the Trustee;
(vii) no rollover contribution will be accepted unless (A) the Employee on
whose behalf the rollover contribution will be made is either a
Participant or has notified the Administrator that he intends to
become a Participant on the first date on which he is eligible
therefor, or was a former participant in the Raytheon Stock Ownership
Plan and the entire amount of the rollover contribution is comprised
of the Participant's account in that plan, and (B) all required
information, including selection of specific investment accounts, is
provided to Fidelity. When the rollover contribution has been
deposited, any further change in investment allocation of future
deferrals or transfer of account balances between investment funds
will be effected through the procedures set forth in Sections 4.2 and
4.3.
(viii) under no circumstances shall the Administrator accept as rollover
contributions amounts which have previously been subject to federal
income tax.
(b) Effective January 1, 1993, Participants may direct that "eligible
rollover distributions," as defined in Section 402(c) of the Code, be
transferred directly to the Plan. Rules similar to those applicable to "rollover
contributions" shall apply to amounts transferred directly to the Plan.
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8
(c) Participants who are also covered under the Raytheon Stock
Ownership Plan and who are entitled to diversify their accounts under such plan,
may direct that the portion of their account which is eligible for
diversification under such plan be transferred to the Plan. Rules similar to
those applicable to "rollover contributions" shall apply to amounts transferred
to this Plan except that such transferred amounts shall not be eligible for
loans or withdrawals.
(d) Effective April 1, 1997, an Eligible Employee may transfer into
the Plan qualified rollover amounts (as defined in Section 401 of the Code)
received from other qualified plans subject to Section 401(K) or Section 401(m)
of the Code without regard to whether the Eligible Employee has completed a
Period of Service of three (3) consecutive months commencing on the Employment
Commencement Date or Reemployment Commencement Date as applicable.
(e) Account balances, including loan balances, held in other defined
contribution plans sponsored by members of the Raytheon controlled group of
corporations by Participants in this Plan shall be transferred to this Plan on
the following conditions:
(i) the account balances, including loan balances, held by Participants in
the following six plans: (1) Raytheon Aerospace Support Services, Inc.
Union Salary Savings Plan; (2) Raytheon Aerospace Support Services,
Inc. Non-Union Salary Savings Plan; (3) Raytheon Aerospace Support
Services, Inc. Columbus Air Force Base, Mississippi, Union Salary
Savings Plan; (4) Raytheon Aerospace Support Services, Inc. Columbus
Air Force Base, Mississippi, Non-Union Salary Savings Plan; (5)
Raytheon Aerospace Support Services, Inc. - U.S. Customs Union Salary
Savings Plan; (6) Raytheon Aerospace Support Services, Inc. - U.S.
Customs Non-Union Salary Savings Plan will be transferred to this Plan
on August 1, 1996, or as soon thereafter as is administratively
feasible;
(ii) the account balances held by Participants in the Raytheon Support
Services Company Money Accumulation Plan, except those Participants
who are employees of Raytheon Support Services Company assigned to the
Patrick Air Force Base Logistics Contract, will be transferred to this
Plan on January 1, 1997, or as soon thereafter as is administratively
feasible. Separate sub-accounts shall be established for the
transferred amounts and earnings thereon, all of which are after-tax
monies. Distribution of such sub-accounts shall be made in the form of
a lump sum except that Participants may elect to receive the amount
transferred (but not earnings thereon subsequent to the transfer) in
the form of an immediate annuity or in a combination of lump sum and
immediate annuity as selected by the Participant. The insurer shall
provide a description of the forms of immediate annuity available
under the group annuity contract for purposes of informing
Participants thereof. The forms of immediate annuity available under
the group annuity contract shall always include a qualified joint and
<PAGE>
9
survivor annuity within the meaning of the Retirement Act as amended
from time to time. Any election of a form of annuity payment other
than a qualified joint and survivor annuity must be consented to in
writing by the Participant's spouse (which consent shall be notarized
or witnessed by a representative of the Plan). No method of payment
providing for a guaranteed number of monthly annuity payments may be
selected if such payments would extend beyond the actual life
expectancy of the Participant and his or her spouse, and further
provided that the value of any payment to a beneficiary shall be less
than fifty percent (50%) of the value of Participant's interest under
this Plan determined as of the commencement date of Participant's
annuity.
3.7 Refund of Contributions to the Companies -- Notwithstanding the
provisions of Article XII, if, or to the extent that, the Companies' deductions
for contributions made to the Plan are disallowed, the Companies will have the
right to obtain the return of any such contributions for a period of one year
from the date of disallowance. For this purpose, all Elective Deferrals are made
subject to the conditions that they are deductible under the Code for the
taxable year of the Companies for which the contribution is made. Furthermore,
any contribution made by the Companies on the basis of a mistake in fact may be
returned to the Companies within one year from the date such contribution was
made.
3.8 Non-Elective Contributions -- Specified Amounts -- Each of the
Companies may make contributions to the Plan on behalf of Employees in Covered
Units, provided that the name of the unit, the effective date of such
contributions and the specified amount is set forth on Appendix B hereto. Such
contributions and the contributions described in Section 3.9 shall be Qualified
Non-Elective Contributions as defined in Section 3.2(f)(iv) and shall be
included in determining the actual deferral percentage under Section 3.2. If the
contributions described in this Section 3.8 and in Section 3.9 are made on
behalf of an Employee who is not a Participant, an Account shall be established
for such Employee and the Employee shall have the right to elect investment
options under Section 4.1. If the Employee does not make a valid election in
which investment options are designated for 100% of the Participant's Account,
then 100% of Participant's Account shall be invested in Fund B, a fixed income
fund. The Employee may, in accordance with Sections 4.2 and 4.3, change the
investment allocation for future deferrals and transfer account balances between
investment funds.
3.9. Non-Elective Contributions -- Service Contract Act Reconciliation
Amounts -- Each of the Companies may make contributions to the Plan on behalf of
Employees in Covered Units consisting of the entire amount or any part of any
deficiency between health and welfare and/or pension contributions actually made
under a contract covered by the Service Contract Act and the amount of such
contribution or contributions required by a wage determination issued under the
contract. Such amount shall be calculated in accordance with the formula
specified in 29 CFR 4.175 as follows:
The total amount contributed for a month, calendar or contract quarter, or other
specified time is divided by the total hours worked under the contract by
service employees subject to the Act during the period in question to determine
an hourly contribution rate.
<PAGE>
10
The difference between the contribution rate required in the determination and
the actual contribution may be contributed to the Plan on behalf of each
Employee for purposes of fulfilling the Employer's fringe benefit obligations
under the Service Contract Act.
3.10. Matching Contributions - Rust Constructors, Inc. -- Subject to
the limitations imposed by the Internal Revenue Code, Rust Constructors, Inc.
will match from its net annual profits or net profits the Elective Deferral of
each Participant who is employed in the non-union hourly paid unit at one of the
following locations: Amoco Chemical Company, Mt. Pleasant, SC; Dayco Products,
Springfield, MO; Hoechst Celanese Corporation, Salisbury, NC, at the rate of
100% of the Participant's Elective Deferral, provided that, (i) for any pay
period, the matching amount shall not exceed 4.5% percent of Participant's
Eligible Compensation for that pay period; (ii) as soon as administratively
feasible subsequent to the end of the Plan Year, the differential, if any, in
which the amount equal to 100% of the Participant's Elective Deferrals exceeds
the amount of Matching Contributions made for Participant for that year, to an
annual maximum of 4.5% of Participant's Eligible Compensation for the Plan Year,
will be paid into the Participant's Qualified Non-Elective Contribution Account;
and (iii) the Matching Contribution for Participants in the unit at Hoechst
Celanese Corporation will be in effect for the period from June 12, 1996 through
September 30, 1996, only.
3.11 Limitations on Matching Contributions.
(a) In no event may the Matching Contributions made on behalf of all
Higher Paid Eligible Employees, or forfeitures allocated to the Accounts of such
Employees, who have satisfied the eligibility requirements of Article II with
respect to any Plan Year result in an Actual Contribution Percentage for such
group of Higher Paid Eligible Employees which exceeds the greater of (i) or (ii)
where:
(i) is an amount equal to 125 percent of the Actual Contribution
Percentage for all Non-Higher Paid Eligible Employees who have
satisfied the eligibility requirements of Article II with respect to
such Plan Year; and
(ii) is an amount equal to the Actual Contribution Percentage for all
Non-Higher Paid Eligible Employees who have satisfied the eligibility
requirements of Article II with respect to such Plan Year and two
percent (2%), provided that such amount does not exceed 200 percent of
such Actual Contribution Percentage.
(b) The Administrator shall be authorized to implement rules
authorizing or requiring reductions in Matching Contributions that may be made
by Higher Paid Eligible Employees during the Plan Year (prior to any
contributions to the Trust Fund), so that the limitation of Section 3.11(a) is
satisfied.
(c) The Company may in its discretion make Qualified Non-Elective
Contributions to the accounts of certain Non-Higher Paid Eligible Employees to
the extent required to satisfy the limitations of Section 3.11(a).
<PAGE>
11
(d) If the limitation under Section 3.11(a) is exceeded in any Plan
Year, the Excess Amounts made on behalf of Higher Paid Eligible Employees with
respect to a Plan Year (and earnings allocable thereto) shall then be
distributed to such Higher Paid Eligible Employees as soon as practicable after
the end of such Plan Year (or, if forfeitable under the terms of the Plan,
forfeited), but no later than the last day of the immediately following Plan
Year. The Excess Amounts distributed shall include both the Matching
Contributions and the income allocable thereto. The amount of income allocable
to Excess Amounts shall be determined in accordance with the regulations issued
under Section 401(m) of the Code and shall include income or the Plan Year to
which the Excess Amounts relate.
(e) Elective Deferrals and Matching Contributions shall be further
limited to the extent required to prevent prohibited multiple use of the
alternative limitations described in Sections 401(k)(3)(A)(ii)(II) and 401
(m)(2)(A)(ii) of the Code and the provisions of Reg. 1.401(m)-2(b) and any
further guidance issued thereunder. If such multiple use occurs, the Actual
Contribution Percentage for all Higher Paid Eligible Employees (determined after
applying the foregoing provisions of this Section 3.11) shall be reduced in
accordance with Reg. 1.401(m)-2(c) and any further guidance issued thereunder in
order to prevent such multiple use of the alternative limitation.
(f) The Administrator may utilize any combination of the methods
described in Sections 3.11(b), (c) and (d) to assure that the limitations of
Sections 3.11(a) and (e) are satisfied.
(g) For purposes of this Section 3.11, the following definitions and
special rules shall apply:
(i) The term "Annual Earnings" shall have the meaning specified in
Sections 3.2(f)(i).
(ii) The term "Actual Contribution Percentage" shall mean, with respect to
any group of actively employed Eligible Employees who have satisfied
the eligibility requirements of Article II for a Plan Year, the
average of the ratios, calculated separately for each such Eligible
Employee in the group, of:
(A) The amount of Matching Contributions paid to the Trust Fund for such Plan
Year on behalf of the Eligible Employee plus the amount of forfeitures allocated
to the Eligible Employee's Account, divided by
(B) The Eligible Employee's Annual Earnings, including any Elective Deferrals
made by the Companies to the Plan on behalf of the Eligible Employee or any
pre-tax election contributions under a "cafeteria plan" (as defined in Section
125 of the Code and applicable regulations) maintained by the Companies for such
Plan Year.
Matching Contributions and forfeitures shall be taken into account for
a Plan Year only if such amounts are allocated to the Eligible Employee's
Account as of a date within that Plan Year, such amounts are actually paid to
the Trust no later than 12 months after the Plan Year to which the contribution
relates and such amounts are contributed on account of Elective Deferrals for
such Plan Year.
<PAGE>
12
(iii) The term "Excess Amounts" shall mean with respect to each Higher Paid
Eligible Employee, the amount equal to the total Matching
Contributions made on behalf of the Eligible Employee together with
the forfeitures allocated to the Eligible Employee's Account
(determined prior to the application of the leveling procedure
described below) minus the product of the Eligible Employee's Actual
Contribution Percentage (determined after the leveling procedure
described below) multiplied by the amount specified in Section
3.11(g)(ii)(B) above. In accordance with the regulations issued under
Section 401(m) of the Code, Excess Amounts shall be determined by a
leveling procedure under which the Actual Contribution Percentage of
the Higher Paid Eligible Employee with the highest such percentage
shall be reduced to the extent required to enable the limitation of
Section 3.11(a) to be satisfied or, if it results in a lower
reduction, to the extent required to cause such Higher Paid Eligible
Employee's Actual Contribution Percentage to equal the Actual
Contribution Percentage of the Higher Paid Eligible Employee with the
next highest Actual Contribution Percentage. This leveling procedure
shall be repeated until the limitation of Section 3.11(a) is
satisfied.
(iv) The term "Qualified Non-Elective Contributions" shall have the meaning
specified in Section 3.2(f)(iv).
(v) In the event the Companies maintain two or more plans that are treated
as a single plan for purposes of Sections 401(a)(4) and 410(b) of the
Code (other than Section 410(b)(2)(A)(ii) of the Code), all Matching
Contributions and forfeitures under the two plans shall be treated as
made under a single plan, and if two or more of such plans are
permissibly aggregated for purposes of Section 401(m) of the Code,
such plans shall be treated as a single plan for purposes of
satisfying Sections 401(a)(4) and 410(b) of the Code.
(vi) In determining the Actual Contribution Percentage of a Higher Paid
Eligible Employee, all plans in which such Higher Paid Eligible
Employee is eligible to participate shall be treated as a single
arrangement.
(vii) The family aggregation rules of Section 414(q)(6) of the Code shall
apply to any Higher Paid Eligible Employee who is a five percent owner
or one of the ten most highly compensated Higher Paid Eligible
Employees. The Actual Contribution Percentage for the family group,
which is treated as one Higher Paid Eligible Employee, is the Actual
Contribution Percentage determined by combining the contributions and
compensation of all eligible Family Members. Except to the extent
taken into account in this Paragraph (vii), the contributions and
compensation of all Family Members are disregarded in determining the
Actual Contribution Percentages for all Employees.
(h) The limitations of this Section 3.11 shall apply to Plan Years
beginning on or after January 1, 1987.
<PAGE>
13
(I) Notwithstanding anything in the Plan to the contrary, if the rate
of Matching Contributions, determined after application of the corrective
mechanisms described in Section 3.2, discriminates in favor of Higher Paid
Eligible Employees, any such amounts attributable to any Excess Amounts (as
described in Subsection 3.2(f)(iii)) of each affected Higher Paid Eligible
Employee shall be forfeited so that the rate of Matching Contribution is
nondiscriminatory. Any such forfeitures shall be made no later than the end of
the Plan Year following the Plan Year for which the Matching Contribution was
made and shall be used to reduce future Matching Contributions.
ARTICLE IV - INVESTMENT OF ACCOUNTS
4.1 Election of Investment Options -- Upon enrollment in the Plan,
each Participant shall direct that the funds in the Participant's Account be
invested in increments of one percent (1%) in one or more of the following
investment options:
Fund A - an equity fund designated by the Administrator;
Fund B - a fixed income fund designated by the Administrator;
Fund C - Raytheon Company common stock fund;
Fund D - a stock index fund designated by the Administrator,
Fund E - a balanced fund designated by the Administrator;
Fund F - a growth fund, designated by the Administrator, investing primarily in
equities of companies of all types and sizes;
Fund G - a growth fund, designated by the Administrator, investing primarily in
equities of well-known and established companies.
In its discretion, the Administrator may from time to time designate
new funds and, where appropriate, preclude investment in existing funds and
provide for the transfer of Accounts invested in those funds to other funds
selected by the Participant or, if no such election is made, to Fund B or
similar low risk fixed income fund as determined by the Administrator in its
discretion.
In the event that a Participant fails to designate the investment
option for 100% of the Participant's account or erroneously designates the
investment of more than 100%, the investment designation will be a nullity and
the Enrollment Agreement will be returned to the Eligible Employee. If the
Enrollment Agreement is corrected and returned, enrollment will not be effective
until the next Entry Date with respect to which the notice requirements set
forth in Section 2.3 are satisfied.
4.2 Change in Investment Allocation of Future Deferrals -- Each
Participant may elect to change the investment allocation of future Elective
Deferrals and rollover contributions effective as of the first administratively
feasible Business Day subsequent to telephone notice to Fidelity. Any changes
must be made in increments of one percent (1%) of the Participant's Account or
in a specified whole dollar amount and must result in a total investment of one
hundred percent (100%) of the Participant's Account.
<PAGE>
14
4.3 Transfer of Account Balances Between Investment Funds -- Each
Participant may elect to transfer all or a portion of the amount in the
Participant's Employee Account and Rollover Contribution Account between
investment funds effective as of the first administratively feasible Business
Day following telephone notice to Fidelity. Such transfers must be made in
either one percent (1%) increments of the entire Account or in a specified
amount in whole dollars and, as of the completion of the transfer, must result
in investment of one hundred percent (100%) of the Account. Transfers shall be
effected by telephone notice to Fidelity. In determining the amount of the
transfer, the Participant's Account shall be valued as of the close of business
on the Valuation Date on which telephone notice is received; provided, however,
that in any case where the telephone notice is received after 4:00 p.m. Eastern
Time (daylight or standard, whichever is in effect on the date of the call), the
Account shall be valued as of the close of business on the next Valuation Date.
4.4 Ownership Status of Funds -- The Trustee shall be the owner of
record of the assets in the funds specified as Funds A, B, C, D, E, F and G and
such other funds as may be established by the Administrator. The Administrator
shall have records maintained as of the Valuation Date for each fund allocating
a portion of the fund to each Participant who has elected that his or her
Account be invested in such fund. The records shall reflect each Participant's
portion of Funds A, B, D, E, F and G in a cash amount and shall reflect each
Participant's portion of Fund C in cash and unitized shares of stock.
4.5 Voting Rights -- Participants whose Accounts have shares of
participation in the Raytheon Company Common Stock Fund on the last business day
of the second month preceding the record date (the "Voting Eligibility Date")
for any meeting of stockholders have the right to instruct the Trustee as to
voting at such meeting. The number of votes is determined by dividing the value
of the shares in the Participant's Account in the Raytheon Common Stock Fund by
the closing price of Raytheon Common Stock on the Voting Eligibility Date. If
the Trustee has not received instructions from a Participant as to voting of
shares within a specified time, then the Trustee shall not vote those shares. If
a Participant furnishes the Trustee with a signed vote direction card without
indicating a voting choice thereon, the Trustee shall vote Participant's shares
as recommended by management. In addition, each Participant shall have the right
to accept or reject any tender or exchange offer for shares of common stock. The
Trustee shall vote (or tender or exchange) all combined fractional shares of
Raytheon Common Stock to the extent possible in the same proportion as the
shares which have been voted (or tendered or exchanged) by each Participant. Any
instructions as to voting (or tender or exchange) received from an individual
Participant shall be held in confidence by the Trustee and shall not be divulged
to the Companies or to any officer or employee thereof or to any other person.
ARTICLE V - VESTING
5.1 Vesting Status -- Each Participant shall have a Nonforfeitable
right to any amounts in the Participant's Account.
<PAGE>
15
ARTICLE VI - WITHDRAWALS AND DISTRIBUTIONS
6.1 In-Service Withdrawal - Employee and Qualified Non-Elective
Contribution Accounts -- While in a Period of Service, a Participant may
withdraw assets from his or her Account as follows:
(a) all or a portion of the Participant's Employee Account and
Qualified NonElective Contribution Account upon attainment of age 59 1/2 or
(b) a distributable amount (as defined in Treas. Reg. 1.401(k)-1(c)(2)
on account of a hardship as defined in the regulation. A distribution is made on
account of a hardship only if the distribution both is made on account of an
immediate and heavy financial need of the Participant and is necessary to
satisfy the financial need. The distributable amount is equal to the
Participant's total Elective Deferrals as of the date of distribution reduced by
the amount of previous distributions on account of hardship and increased by
that portion of income allocable to Elective Deferrals which was credited to the
Participant's Account as of December 31, 1988.
Withdrawals from the Employee Accounts of less than $250 will not be permitted.
Withdrawals will be based upon the value of the Account as of a date established
by the Administrator through the application of a uniform and equitable rule and
will be effected by telephone notice to Fidelity. Payment of the amount
withdrawn will be made as soon as reasonably practicable after the effective
date of the withdrawal. Withdrawals from Funds A, B, D, E, F and G and such
other funds as may be established by the Administrator, will be made in cash;
withdrawals from Fund C will be made in either cash or stock (with cash for
fractional or unissued shares) as elected by the Participant. Funds for the
withdrawal will be taken on a pro rata basis against the Participant's
investment fund balances in the Participant's Employee Account.
6.2 Documentation Required For Financial Hardship Withdrawals --
(a) A Participant requesting a withdrawal of the distributable amount
of the Participant's Employee Account due to reasons of immediate and heavy
financial need must submit such documentation or information in other form as
required by the Administrator and shall advise Fidelity by telephone notice or
such other means as established by the Administrator's rules then in effect of
the existence of an immediate and heavy financial need and the fact that the
need will be satisfied by the requested distribution.
(b) The Participant shall represent that this financial need cannot be
satisfied by any of the following sources: through reimbursement or compensation
by insurance or otherwise; by liquidation of the Participant's assets; by
cessation of Elective Deferrals under the Plan; or by other distributions or
non-taxable (at the time of the loan) loans currently available from plans
maintained by the Employer or by any other employer, or by borrowing from
commercial sources on reasonable commercial terms.
<PAGE>
16
(c) For purposes of Section 6.1, "immediate and heavy financial need"
is limited to financial need arising from the following specific causes:
expenses for medical care (as described in 213(d) of the Code) incurred by the
Participant, the Participant's spouse or any dependents (as defined in 152 of
the Code) of the Participant, or which are necessary for these persons to obtain
medical care described in 213(d) of the Code; costs directly related to the
purchase of a principal residence for the Participant (excluding mortgage
payments); payment of tuition and related educational expenses for the next
twelve months of post-secondary education for the Participant, or the
Participant's spouse, children, or dependents (as defined in 152 of the Code);
to prevent the eviction from or foreclosure on the Participant's principal
residence; or any other circumstance, as determined by the Administrator based
upon all the relevant facts, establishing substantial justification for the
withdrawal.
6.3 Suspension of Elective Deferrals for Financial Hardship
Withdrawals. If a Participant's application for a hardship withdrawal is
approved and the withdrawal effected, Participant's Elective Deferrals will be
suspended for a period of one year from the date of withdrawal. Thereafter,
Elective Deferrals shall be in the same amount and with the same investment
options as in effect prior to the withdrawal unless notice by telephone or in
writing giving other instructions is received by Fidelity prior to the
expiration of the one-year period from the withdrawal.
6.4 In-Service Withdrawal - Rollover Contribution Account -- A
Participant may withdraw all or a portion of the Participant's Rollover
Contribution Account. Withdrawals will be based upon the value of the account as
of the date established by the Administrator through the application of a
uniform and equitable rule by telephone notice to Fidelity. Withdrawals will be
based upon the value of the Account as determined under Section 6.8. Payment of
the amount withdrawn will be made as soon as reasonably practicable after the
effective date of the withdrawal. Withdrawals from Funds A, B, D and E will be
made in cash. Withdrawals from Fund C will be made in cash or stock (with cash
for fractional or unissued shares) as elected by the Participant.
6.5 Redeposits Prohibited -- No amount withdrawn pursuant to Sections
6.1, 6.4 or 6.6 may be redeposited in the Plan.
6.6 Distribution --
(a) Distribution of the Participant's Employee, Rollover Contribution
and Qualified Non-Elective Contribution Accounts will be made upon the
Retirement, Disability (as defined in Section 14.14), death, Severance from
Service (as defined in Section 14.47) or Layoff (as defined in Section 14.27) of
the Participant; or, to an alternate payee, upon issuance of a Qualified
Domestic Relations Order (as defined in Section 414(p) of the Internal Revenue
Code and the Retirement Equity Act). In the event of the death of a Participant,
the distribution shall be made to the Participant's Beneficiary. The standard
form of distribution will be a lump sum distribution of the entire amount in the
Participant's Account (to which the Participant has a Nonforfeitable right)
which will be paid as soon as practicable following notification to the Benefits
and Services Department, Raytheon Company, Lexington, Massachusetts, of the
Retirement, death, Disability or Severance from Service and a telephone request
by the Participant to Fidelity for the distribution. Distributions will be based
upon the value of the Account as determined under Section 6.8. Distribution of
<PAGE>
17
the amounts in said accounts in the funds designated in Funds A, B, D, E, F and
G and such other funds as may be established by the Administrator, will be made
in cash. Distribution of any amount in said accounts in Fund C (Raytheon Company
stock) will be made in either cash or, if elected by the Participant or, in the
case of death, the Participant's Beneficiary, stock. Partial deferrals will not
be permitted. If there is no Beneficiary surviving a deceased Participant at the
time payment of a Participant's Account is to be made, such payment shall be
made in a lump sum to the person or persons in the first following class of
successive Beneficiaries surviving, any testamentary devise or bequest to the
contrary notwithstanding: the Participant's (a) spouse, (b) children and issue
of deceased children by right of representation, (c) parents, (d) brothers and
sisters and issue of deceased brothers and sisters by right of representation,
or (e) executors or administrators.
(b) In the event that upon a Participant's Severance from Service Date
the Participant has a Nonforfeitable right to an Account in the Plan which
exceeds Thirty-Five Hundred Dollars ($3,500), the Participant shall have the
option of not receiving an immediate distribution of the amount in his or her
Account.
(c) Except as provided by Section 401(a)(9) of the Code as referenced
in this Section, benefits in the Plan will be distributed to each Participant
not later than the sixtieth (60th) day after the close of the Plan Year in which
the latest of the following events occurs:
(1) attainment by the Participant of Normal Retirement Age;
(2) the tenth (10th) anniversary of the date on which Participant commenced
participation in the Plan; or
(3) Participant's Severance from Service.
If the amount of the benefit payable to a Participant has not been
ascertained by the sixtieth (60th) day after the close of the Plan Year in which
the latest of the three events described in clauses (1), (2) and (3) above
occurred, or Participant cannot be located after reasonable efforts to do so,
then payment retroactive to said sixtieth (60th) day after the close of the Plan
Year in which the latest of the three events occurred may be made no later than
sixty (60) days after the later of the earliest date on which the amount of such
payment can be ascertained under the Plan or the earliest date on which the
Participant is located.
(d) To the extent required by Section 401(a)(9) of the Code,
distributions of Participants' Accounts will be made to Participants who attain
age 70 1/2.
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18
(e) In the event amounts are transferred to this Plan from another
plan qualified under Section 401(a) of the Code (other than amounts described in
Section 3.6(b)), any distribution or withdrawal rights available to the
Participant under such other plan which are protected under Section 411(d)(6) of
the Code shall be available to the Participant under this Plan.
6.7 Direct Rollovers -- Effective January 1, 1993, a distributee may
elect, at the time and in the manner prescribed by the Administrator, to have
any portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover. For purposes
of this paragraph, the following terms shall have the following meanings:
(a) 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 beneficiary, or for a specified period of 10
years or more; any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; and the portion of any distribution that is
not includible in gross income.
(b) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code or a qualified trust
described in Section 401(a) of the Code that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover distribution
to the surviving spouse, the term is limited to an individual retirement account
or individual retirement annuity.
(c) Distributee: A distributee includes a Participant or former
Participant. In addition, the Participant's or former Participant's surviving
spouse and the Participant's spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as defined in Section 414(p) of the
Code, are distributees with regard to the interest of the spouse or former
spouse.
(d) Direct Rollover: A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
6.8 Determination of Amount of Withdrawal or Distribution. In
determining the amount of any withdrawal or distribution hereunder, the
Participant's Account shall be valued as of the close of business on the
Valuation Date on which telephone notice is received; provided, however, that in
any case where the telephone notice is received after 4:00 p.m. Eastern Time
(daylight or standard, whichever is in effect on the date of the call), the
Account shall be valued as of the close of business on the next Valuation Date.
6.9 Sale or Divestiture of Business -- Notwithstanding the provisions
of Section 14.50(g), a Participant whose employment is terminated by reason of
the sale or divestiture of assets or stock of a business may withdraw part or
all of his or her Account if otherwise permitted by law.
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19
ARTICLE VII - LOANS
7.1 Availability of Loans - Participants may borrow against all or a
portion of the balance in the Participant's Account subject to the limitations
set forth in this Article. Participants who have incurred a Severance from
Service will not be eligible for a Plan loan. The Vice President, Human
Resources, is authorized to administer this loan program and may establish
uniform and equitable rules to resolve issues not specifically covered in this
Article.
7.2 Minimum Amount of Loan - No loan of less than $500 will be
permitted.
7.3 Maximum Amount of Loan - No loan in excess of fifty percent (50%)
of the aggregate value of a Participant's Account balances will be permitted. In
addition, limits imposed by the Internal Revenue Code and any other requirements
of applicable statute or regulation will be applied. Under the current
requirements of the Internal Revenue Code, if the aggregate value of a
Participant's Account exceeds $20,000, the loan cannot exceed the lesser of
one-half (1/2) the Nonforfeitable aggregate value or $50,000 reduced by the
excess of (a) the highest outstanding balance of loans from the Plan during the
one-year period ending on the day before the date on which such loan was made
over (b) the outstanding balance of loans from the Plan on the date on which
such loan was made.
7.4 Effective Date of Loans -- Loans will be effective as specified in
the Administrator's rules then in effect.
7.5 Repayment Schedule -- The Participant may select a repayment
schedule of 1, 2, 3, 4 or 5 years. If the loan is used to acquire any dwelling
which, within a reasonable time is to be used (determined at the time the loan
is made) as the principal residence of the Participant, the repayment period may
be extended up to 15 years at the election of the Participant. All repayments
will be made through payroll deductions in accordance with the loan agreement
executed at the time the loan is made, except that, in the event of the sale of
all or a portion of the business of the Employer or one of the Companies, or
other unusual circumstances, the Administrator, through uniform and equitable
rules, may establish other means of repayment. The loan agreement will permit
repayment of the entire outstanding balance in one lump sum. The minimum
repayment amount per pay period is $10 for Participants paid weekly and $50 for
Participants paid monthly. The repayment schedule shall provide for
substantially level amortization of the loan.
7.6 Limit on Number of Loans -- No more than two loans may be
outstanding at any time.
7.7 Interest Rate -- The interest rate for a loan pursuant to this
Article will be equal to the prime rate published in The Wall Street Journal on
the first business day in June and December of each year. The rate published on
the first business day in June will apply to loans which are effective at any
time during the period July 1 through December 31 thereafter; the rate published
on the first business day of December will apply to loans which are effective at
any time during the period January 1 through June 30 thereafter.
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20
7.8 Effect Upon Participant's Employee Account -- Upon the granting of
a loan to a Participant by the Administrator, the allocations in the
Participant's Account to the respective investment funds will be reduced on a
pro rata basis and replaced by the loan balance which will be designated as an
asset in the Account. Such reduction shall be effected by reducing the
Participant's Accounts in the following sequence, with no reduction of the
succeeding Accounts until prior Accounts have been exhausted by the loan:
Employee Account and Rollover Contribution Account. Upon repayment of the
principal and interest, the loan balance will be reduced, the Participant
Accounts will be increased in reverse order in which they were exhausted by the
loan, and the loan payments will be allocated to the respective investment funds
in accordance with the investment election then in effect.
7.9 Effect of Severance From Service and Non-Payment -- In the event
that a loan remains outstanding upon Severance from Service of a Participant,
the Participant will be given the option of continuing to repay the outstanding
loan. In any case where payments on the outstanding loan are not made within 90
days of the Participant's Severance from Service Date, the amount of any unpaid
principal will be deducted from the Participant's Account and reported as a
distribution. If, as a result of Layoff or Authorized Leave of Absence, a
Participant, although still in a Period of Service, is not being compensated
through the Employer's payroll system, loan payments will be suspended until the
earliest of the first pay date after Participant returns to active employment
with the Employer, the Participant's Severance from Service Date, or the
expiration of twelve (12) months from the date of the suspension. In the event
the Participant does not return to active employment with the Employer, the
Participant will be given the option of continuing to repay the outstanding
loan. If the Participant fails to resume payments on the loan, the outstanding
loan will be reported as a taxable distribution. In no event, however, shall the
loan be deducted from the Participant's Account earlier than the date on which
the Participant (i) incurs a Severance from Service or (ii) attains age 59-1/2.
ARTICLE VIII - LIMITATIONS OF SECTION 415 OF THE CODE
8.1 Maximum Permissible Amount of a Participant's Annual Addition --
The total for any Limitation Year of the annual additions to a Participant's
Account under this Plan when added to the annual additions to a Participant's
account under any qualified defined contribution plan maintained by the Employer
shall not exceed the lesser of (i) twenty-five percent (25%) of total
compensation from the Employer, and (ii) $30,000 or, if greater, one-fourth of
the defined benefit dollar limitation set forth in Section 415(b)(1) of the Code
as in effect for the Limitation Year.
For purposes of this Section 8.1, the term "annual addition" shall
mean, with respect to any Limitation Year, Elective Deferrals and Qualified
Nonelective Contributions, if any, to this Plan, plus the sum of the following
amounts allocable for such Plan Year to the Participant's accounts in all other
qualified plans maintained by the Employer in which he participates: (1)
employer contributions (including pre-tax contributions), (2) forfeitures which
have been reallocated to the Participant's account, (3) Participant after-tax
contributions; and (4) amounts described in Sections 415(l)(1) and 419A(d)(2) of
the Code.
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21
For purposes of this Section 8.1, the term "compensation" shall mean
all amounts paid to an Employee for personal services actually rendered to the
Companies and Affiliates, including, but not limited to, wages, salary,
commissions, bonuses, overtime and other premium pay as specified in Reg.
1.415-2(d)(2), but excluding deferred compensation, stock options, and other
distributions which receive special tax treatment as specified in Reg.
1.415-2(d)(3).
8.2 Reduction of Annual Additions -- In the event it is determined
that the annual additions to a Participant's accounts under this Plan or any
other qualified defined contribution plan maintained by the Employer for any
limitation year would be in excess of the limitations of Section 8.1, such
annual additions shall be reduced to the extent necessary to bring them within
such limitations. If, as a result of a reasonable error in estimating a
Participant's Eligible Compensation, a reasonable error in determining the
amount of Elective Deferrals that may be made with respect to any Participant,
or under other limited facts and circumstances which the Internal Revenue
Service finds justify the availability of the remedies contained herein, the
Administrator, in coordination with the administrator of any other defined
contribution plan maintained by the Employer, shall reduce the annual additions
which have been made to a Participant's accounts to the acceptable limit by the
following procedures, or a pro rata basis, in the following order:
(a) by returning to the Participant any voluntary or mandatory
Employee contributions made to the Raytheon Support Services Company Money
Accumulation Plan or any other defined contribution plan maintained by the
Employer;
(b) to the extent the limitation is still exceeded, Elective Deferrals
to this Plan, or other defined contribution plan qualified under Section 401(k)
of the Code maintained by the Employer during such Limitation Year, shall be
distributed to the Participant; and
(c) to the extent such limitation is still exceeded, any Qualified
Non-Elective Contribution to Participant's account in this Plan or other defined
contribution plan, or other defined contribution plan qualified under Section
401(k) of the Code maintained by the Employer during such LImitation Year, shall
be reduced to the extent necessary to reduce annual additions to the acceptable
limit;
(d) to the extent the limitation is still exceeded, any Matching
Employer Contributions to this Plan, or other defined contribution plan
qualified under Section 401(k) of the Code maintained by the Employer during
such Limitation Year, shall be reduced to the extent necessary to decrease
Participant's annual additions to the acceptable limit;
(e) to the extent the limitation is still exceeded, excess annual
additions in the Participant's Account in the Raytheon Stock Ownership Plan
(RAYSOP) shall be used to reduce allocations for the next Limitation Year (and
succeeding Limitation Years, as necessary) for that Participant if the
Participant is covered by the plan at the end of such Limitation Year. In the
event the Participant is not covered by such plan at the end of the Limitation
Year, any excess annual additions which remain must, as provided in Reg.
1.415-6(b)(6)(ii), be held unallocated in a suspense account for the Limitation
Year and reallocated in the next Limitation Year to all of the remaining
Participants in proportion to their RAYSOP allocation in such Plan Year.
<PAGE>
22
8.3 Coordination with Limitation on Benefit from All Plans --
Notwithstanding any other provisions in this Plan to the contrary, in the case
of a Participant who also participates in any qualified defined benefit plan
which is maintained by the Employer (whether or not terminated), the sum of the
defined benefit plan fraction and the defined contribution plan fraction may not
exceed 1.0 for any Limitation Year. The defined benefit plan fraction for any
Limitation Year is a fraction, the numerator of which is the projected annual
benefit of the Participant under the plan (determined as of the close of the
Limitation Year); and the denominator of which is the lesser of (i) the product
of 1.25, multiplied by the dollar limitation applicable to defined benefit
plans, in effect under applicable law for such Limitation Year; or (ii) the
product of 1.4 multiplied by one hundred percent (100%) of the Participant's
average compensation for the three consecutive calendar years during which he
had the highest aggregate compensation from the Employer. The defined
contribution plan fraction for any Limitation Year is a fraction, the numerator
of which is the sum of the annual additions (as defined in Section 8.1) to the
Participant's Accounts as of the close of the Limitation Year; and the
denominator of which is the sum of the lesser of the following amounts
determined for the current Limitation Year and each prior Limitation Year: (i)
the product of 1.25 multiplied by the dollar limitation applicable to defined
contribution plans, in effect under applicable law for the Limitation Year; or
(ii) the product of 1.4 multiplied by 25% of such Participant's total
compensation for the Limitation Year. In the event that the limitation set forth
above is exceeded, adjustments shall be made in the defined benefit plan.
8.4 Effective Date -- This Article VIII shall be effective for
Limitation Years beginning on or after January 1, 1987.
ARTICLE IX - LIMITATIONS OF SECTION 416 OF THE CODE
9.1 General Rule -- In the event that the Plan becomes top heavy with
respect to a Plan Year commencing on or after January 1, 1988, the provisions of
this Article shall apply.
9.2 Definitions --
(a) Key Employee: Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during the determination period
was an office of the Employer, an owner (or considered an owner under Section
415(c)(1)(A) of the Code) of one of the ten largest interests in the Employer if
such individual's compensation exceeds 150 percent of the dollar limitation
under Section 415(c)(1)(A) of the Code, a five percent (5%) owner of the
Employer, or a one percent (1%) owner of the Employer who has an annual
compensation of more than $150,000. The determination period of the Plan is the
Plan Year containing the determination date and the four (4) preceding Plan
Years. The determination of who is a Key Employee will be made in accordance
with Section 416(i)(1) of the Code and the regulations thereunder.
(b) Non-Key Employee: Any Employee who is not a Key Employee.
(c) Top-Heavy Ratio:
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23
(i) If the Employer maintains one or more defined benefit plans and the
Employer has never maintained any defined contribution plans
(including any simplified employee pension plan) which has covered or
could cover a Participant in this Plan, the Top-Heavy Ratio is a
fraction, the numerator of which is the sum of the present value of
accrued benefits of all Key Employees as of the determination date
(including any part of any accrued benefit distributed in the
five-year period ending on the determination date), and the
denominator of which is the sum of all accrued benefits (including any
part of any accrued benefit distributed in the five-year period ending
on the determination date) of all Participants as of the determination
date.
(ii) If the Employer maintains one or more defined contribution plans
(including any simplified employee pension plan) and the Employer
maintains or has maintained one or more defined benefit plans which
have covered or could cover a Participant in this Plan, the Top-Heavy
Ratio is a fraction, the numerator of which is the sum of account
balances under the defined contribution plans for all Key Employees
and the present value of accrued benefits under the defined benefit
plans for all Key Employees, and the denominator of which is the sum
of the account balances under the defined contribution plans for all
Participants and the present value of accrued benefits under the
defined benefit plans for all Participants. Both the numerator and
denominator of the Top-Heavy Ratio are adjusted for any distribution
of an account balance or an accrued benefit made in the five-year
period ending on the determination date and any contribution due but
unpaid as of the determination date.
(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 12-month
period ending on the determination date. The account balances and
accrued benefits of a Participant who is not a Key Employee but who
was a Key Employee in a prior year 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 Section 416 of the Code and the regulations
thereunder. Deductible Employee contributions will not be taken into
account for purposes of 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. The accrued benefit of a Participant
other than a Key Employee shall be determined under (a) the method, if
any, that uniformly applies for accrual purposes under all defined
benefit plans maintained by the Employer, or (b) if there is no such
method, as if such benefit accrued not more rapidly than the slowest
accrual rate permitted under the fractional rule of Section
411(b)(1)(C) of the Code.
(d) Permissive aggregation group: The required aggregation group of
plans plus any other plan or plans of the Employer which, when considered as a
group with the required aggregation group would continue to satisfy the
requirements of Sections 401(a)(4) and 410 of the Code.
<PAGE>
24
(e) Required aggregation group: (i) Each qualified plan of the
Employer in which at least one Key Employee participates, and (ii) any other
qualified plan of the Employer which enables a plan described in (i) to meet the
requirements of Sections 401(a)(4) and 410 of the Code.
(f) Determination date: For any Plan Year subsequent to the first Plan
Year, the last day of the preceding Plan Year. For the first Plan Year of the
Plan, the last day of that year.
(g) Valuation date: The last day of each Plan Year.
(h) Present Value: Present Value shall be based only on the interest
rate used by the Administrator to determine compliance with the funding
requirements under the Retirement Act and the mortality rates specified on an
appropriate current unisex table.
9.3 Determination as to Whether the Plan is Top Heavy -- The
Administrator shall determine whether the Plan is top heavy within the meaning
of Section 416. The Plan shall be top heavy for any Plan Year beginning after
December 2, 1987, if, as of the last day of the preceding Plan Year (the
"determination date"), any of the following conditions exist:
(a) If the Top-Heavy Ratio for this Plan exceeds sixty percent (60%)
and this Plan is not part of any required aggregation group or permissive
aggregation group of plans;
(b) If this Plan is a part of a required aggregation group of plans
(but which is not part of a permissive aggregation group) and the Top-Heavy
Ratio for the group of plans exceeds sixty percent (60%); or
(c) If this Plan is a part of a required aggregation group of plans
and part of a permissive aggregation group and the Top-Heavy Ratio for the
permissive aggregation group exceeds sixty percent (60%).
In determining whether the Plan is top heavy for Plan Years commencing
after December 31, 1988, the Account balance of a Participant who has not
performed an Hour of Service for the Employer at any time during the
five-consecutive-year period ending on the determination date shall be excluded
from the calculation of the Top Heavy Ratio.
9.4 Minimum Contribution -- For each Plan Year with respect to which
the Plan is top heavy, the minimum amount allocated under the Plan for the
benefit of each Participant who is a Non-Key Employee and who is otherwise
eligible for such an allocation shall be the lesser of:
(a) Three percent (3%) of the Non-Key Participant's compensation
(within the meaning of Section 415 of the Code) for the Plan Year, or
<PAGE>
25
(b) the Non-Key Participant's compensation (as defined in Section 415
of the Code) times a percentage equal to the largest percentage of such
compensation (not exceeding $200,000, $150,000 for Plan Years beginning on or
after January 1, 1994) allocated to any Key Employee for the Plan Year under
this Plan and all other defined contribution plans in the same required
aggregation group. This clause (b) shall not apply to any plan required to be
included in an aggregation group if such plan enables a defined benefit plan
required to be included in such group to meet the requirements of Section
401(a)(4) or Section 410 of the Code.
This paragraph shall not apply to a Participant covered under a
qualified defined benefit plan maintained by the Employer if the Participant's
vested benefit thereunder satisfies the requirements of Section 416(c) of the
Code. Notwithstanding any other language herein, a Non-Key Eligible Employee may
not fail to receive a defined contribution minimum allocation because either (1)
said Eligible Employee was excluded from participation (or accrues no benefit)
merely because the Employee's compensation is less than the stated amount, or
(2) the Employee is excluded from participation (or accrues no benefit) merely
because of a failure to make Elective Deferrals.
ARTICLE X - THE TRUST FUND
10.1 Trust Agreement -- During the period in which this Plan remains
in existence, the Employer or any successor thereto shall maintain in effect a
Trust Agreement with a corporate trustee as Trustee, to hold, invest, and
distribute the Trust Fund in accordance with the terms of such Trust Agreement.
10.2 Investment of Accounts -- The Trustee shall invest and reinvest
the Participant's Accounts in investment options as defined in Section 4.1 as
directed by the Administrator or its delegate in writing. The Administrator
shall issue such directions in accordance with the investment options selected
by the Participants which shall remain in force until altered in accordance with
Sections 4.2 and 4.3.
10.3 Expenses -- Expenses of the Plan and Trust shall be paid from the
Trust.
ARTICLE XI - ADMINISTRATION OF THE PLAN
11.1 General Administration -- The general administration of the Plan
shall be the responsibility of Raytheon Company (or any successor thereto) which
shall be the Administrator and Named Fiduciary for purposes of the Retirement
Act. The Company shall have the authority, in its sole discretion, to construe
the terms of the Plan and to make determinations as to eligibility for benefits
and as to other issues within the "Responsibilities of the Administrator"
described in Article XI, Section 11.2. All such determinations of the Company
shall be conclusive and binding on all persons.
11.2 Responsibilities of the Administrator -- The Administrator shall
assign responsibility for performance of all necessary administrative duties,
including the following:
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26
(a) Determination of all questions which may arise under the Plan with
respect to eligibility for participation and administration of accounts,
including without limitation questions with respect to membership, vesting,
loans, withdrawals, accounting, status of accounts, stock ownership and voting
rights, and any other issue requiring interpretation or application of the Plan.
(b) Reference of appropriate issues to the Offices of the Executive
Vice President - Chief Financial Officer, and the Vice President - Human
Resources, of Raytheon Company, respectively, for advice and counsel.
(c) Establishment of procedures required by the Plan, such as
notification to Employees as to joining the Plan, selecting and changing
investment options, suspending deferrals, exercising voting rights in stock,
withdrawing and borrowing account balances, designation of beneficiaries,
election of method of distribution, and any other matters requiring a uniform
procedure.
(d) Submission of necessary amendments to supplement omissions from
the Plan or reconcile any inconsistency therein.
(e) Filing appropriate reports with the Government as required by law.
(f) Appointment of a Trustee or Trustees and investment managers.
(g) Review at appropriate intervals of the performance of the Trustee
and such investment managers as may have been designated.
(h) Appointment of such additional Fiduciaries as deemed necessary for
the effective administration of the Plan, such appointments to be by written
instrument.
11.3 Liability for Acts of Other Fiduciaries -- Each Fiduciary shall
be responsible only for the duties allocated or delegated to said Fiduciary, and
other Fiduciaries shall not be liable for any breach of fiduciary responsibility
with respect to any act or omission of any other Fiduciary unless:
(a) The Fiduciary knowingly participates in or knowingly attempts to
conceal the act or omission of such other Fiduciary and knows that such act or
omission constitutes a breach of fiduciary responsibility by the other
Fiduciary;
(b) The Fiduciary has knowledge of a breach of fiduciary
responsibility by the other Fiduciary and has not made reasonable efforts under
the circumstances to remedy the breach; or
(c) The Fiduciary's own breach of his specific fiduciary
responsibilities has enabled another Fiduciary to commit a breach. No Fiduciary
shall be liable for any acts or omissions which occur prior to his assumption of
Fiduciary status or after his termination from such status.
11.4 Employment by Fiduciaries -- Any Fiduciary hereunder may employ,
with the written approval of the Administrator, one or more persons to render
service with regard to any responsibility which has been assigned to such
Fiduciary under the terms of the Plan including legal, tax, or investment
counsel and may delegate to one or more persons any administrative duties
(clerical or otherwise) hereunder.
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27
11.5 Recordkeeping -- The Administrator shall keep or cause to be kept
any necessary data required for determining the account status of each
Participant. In compiling such information, the Administrator may rely upon its
employment records, including representations made by the Participant in the
employment application and subsequent documents submitted by the Participant to
the Employer. The Trustee shall be entitled to rely upon such information when
furnished by the Administrator or its delegate. Each Employee shall be required
to furnish the Administrator upon request and in such form as prescribed by the
Administrator, such personal information, affidavits and authorizations to
obtain information as the Administrator may deem appropriate for the proper
administration of the Plan, including but not limited to proof of the Employee's
date of birth and the date of birth of any person designated by a Participant as
a Beneficiary.
11.6 Claims Review Procedure -- The Administrator shall make all
determinations as to the right of any person to Accounts under the Plan. Any
such determination by the Administrator shall be made pursuant to the following
procedure:
Step 1. Claims with respect to an Account should be filed by a claimant as
soon as practicable after claimant knows or should know that a dispute
has arisen with respect to an Account, but at least thirty (30) days
prior to the claimant's actual retirement date or, if applicable,
within sixty (60) days after the death, Disability or Severance from
Service of the Participant whose Account is at issue, by mailing a
copy of the claim to the Benefits and Services Department, Raytheon
Company, 141 Spring Street, Lexington, Massachusetts 02173.
Step 2. In the event that a claim with respect to an Account is wholly or
partially denied by the Administrator, the Administrator shall, within
ninety (90) days following receipt of the claim, so advise the
claimant in writing setting forth: the specific reason or reasons for
the denial; specific reference to pertinent Plan provisions on which
the denial is based; a description of any additional material or
information necessary for the claimant to perfect the claim; an
explanation as to why such material or information is necessary; and
an explanation of the Plan's claim review procedure.
Step 3. Within sixty (60) days following receipt of the denial of a claim
with respect to an Account, a claimant desiring to have the denial
appealed shall file a request for review with the Administrator by
mailing a copy thereof to the address shown in Step 1.
Step 4. Within thirty (30) days following receipt of a request for review,
the Administrator shall provide the claimant a further opportunity to
present his or her position. At the Administrator's discretion, such
presentation may be through an oral or written presentation. Prior to
such presentation, the claimant shall be permitted the opportunity to
review pertinent documents and to submit issues and comments in
writing. Within a reasonable time following presentation of the
claimant's position, which usually should not exceed thirty (30) days,
the Administrator shall inform the claimant in writing of the decision
on review setting forth the reasons for such decision and citing
pertinent provisions in the Plan.
<PAGE>
28
The Administrator is the fiduciary to whom the Plan grants full
discretion, with the advice of counsel, to interpret the Plan; to determine
whether a claimant is eligible for benefits; to decide the amount, form and
timing of benefits; and to resolve any other matter under the Plan which is
raised by a claimant or identified by the Administrator. All questions arising
from or in connection with the provisions of the Plan and its administration,
not herein provided to be determined by the Board of Directors, shall be
determined by the Administrator, and any determination so made shall be
conclusive and binding upon all persons affected thereby.
11.7 Indemnification of Directors and Employees -- The Companies shall
indemnify by insurance or otherwise any Fiduciary who is a director, officer or
employee of the Employer, his heirs and legal representatives, against all
liability and reasonable expense, including counsel fees, amounts paid in
settlement and amounts of judgments, fines or penalties, incurred or imposed
upon him in connection with any claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of acts or omissions
in his capacity as a Fiduciary hereunder, provided that such act or omission is
not the result of gross negligence or willful misconduct. The Companies may
indemnify other Fiduciaries, their heirs and legal representatives, under the
circumstances, and subject to the limitations set forth in the preceding
sentence, if such indemnification is determined by the Board of Directors to be
in the best interests of the Companies.
11.8 Immunity from Liability -- Except to the extent that Section
410(a) of the Retirement Act prohibits the granting of immunity to Fiduciaries
from liability for any responsibility, obligation, or duty imposed under Title
I, Subtitle B, Part 4, of said Act, an officer, employee, member of the Board of
Directors of the Employer or other person assigned responsibility under this
Plan shall be immune from any liability for any action or failure to act except
such action or failure to act which results from said officer's, Employee's,
Participant's or other person's own gross negligence or willful misconduct.
ARTICLE XII - AMENDMENT OR TERMINATION OF THE PLAN
12.1 Right to Amend or Terminate Plan -- Each of the Companies
reserves the right at any time or times, by action of the Chairman, the
President, the Treasurer or the Vice President, Human Resources of the Company,
to modify, amend or terminate the Plan in whole or in part as to its Employees,
in which event a written direction from an authorized officer, approving such
modification, amendment or termination shall be delivered to the Trustee and to
the other Companies whose Employees are covered by this Plan, provided, however,
no amendment to the Plan shall be made which shall:
(a) deprive any Participant of amounts allocated to his Account prior
to the date of the amendment;
(b) except as provided in Section 3.8, make it possible for any part
of the corpus or income of the Trust Fund to be used for or diverted to purposes
other than the exclusive benefit of the Participants or their beneficiaries
prior to the satisfaction of all liabilities with respect to such Participant or
their Beneficiaries;
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29
(c) modify the vesting schedule and deprive a Participant of his
Nonforfeitable rights to amounts allocated to his account prior to the date of
the amendment. Further, if the vesting schedule of the Plan is amended, or the
Plan is amended to directly or indirectly affect a Nonforfeitable percentage of
a Participant's Account, each Participant with a Period of Service of at least
three years may elect, within a reasonable period after the adoption of the
amendment to have his nonforfeitable percentage computed under the Plan without
regard to such amendment. The period during which the election may be made shall
commence with the date the amendment is adopted or the change made and shall end
on the latest of:
(i) 60 days after the amendment is adopted;
(ii) 60 days after the amendment becomes effective, or
(iii) 60 days after the Participant is issued written notice of the
amendment;
(d) increase the duties of liabilities of the Trustee without its
consent.
Notwithstanding the foregoing provisions of this Section or any other
provisions of this Plan, any modification or amendment of the Plan may be made
retroactively if necessary or appropriate to conform the Plan with, or to
satisfy the conditions of, the Retirement Act, the Code, or any other law,
governmental regulation or ruling.
Any termination, modification or amendment of the Plan shall be
subject to approval by the Board of Directors of the Company.
12.2 Maintenance of Plan -- The Company has established the Plan with
the bona fide intention and expectation that it will continue the Plan
indefinitely, but the Company is not and shall not be under any obligation or
liability whatsoever to maintain the Plan for any given length of time.
12.3 Termination of Plan and Trust -- The Plan and Trust hereby
created shall terminate upon the occurrence of any of the following events:
(a) Delivery to the Trustee of a notice of termination executed by the
Company specifying the date as of which the Plan and Trust shall terminate;
(b) Adjudication of the Company as bankrupt or general assignment by
the Company to or for the benefit of creditors or dissolution of the Company;
In the event of the complete termination of this Plan (but a
rescission under Section 13.2 for failure to qualify initially is not such a
termination), the rights of each Participant to the amounts then credited to his
or her Account shall be Nonforfeitable. In the event of the partial termination
of this Plan, the rights of each Employee (as to whom the Plan is considered
terminated) to the amounts then credited to his or her Account, shall be
Nonforfeitable. Whether or not there is a complete or partial termination of
<PAGE>
30
this Plan shall be determined under the regulations promulgated pursuant to the
Internal Revenue Code. To the extent this paragraph is inconsistent with any
provisions contained elsewhere in this Plan or in the Trust which forms a part
of this Plan, this paragraph shall govern. Upon such termination of the Plan and
Trust, after payment of all expenses and proportional adjustment of accounts to
reflect such expenses, fund losses or profits, and reallocations to the date of
termination, each Participant or former Participant shall, subject to the
requirements of Section 401(k)(10) of the Code and Reg. 1.401(k)-1(d)(3), be
entitled to receive any amounts then credited to his or her Account in the Trust
Fund. The Trustee may make payments in cash or, to the extent permitted by
Section 6.6, in stock.
ARTICLE XIII - ADDITIONAL PROVISIONS
13.1 Effect of Merger, Consolidation or Transfer -- In the event of
any merger or consolidation with or transfer of assets or liabilities to any
other plan or to this Plan, each Participant of the Plan shall be entitled to a
benefit immediately after the merger, consolidation or transfer, which is equal
to or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation or transfer (if the Plan had been
terminated).
13.2 Necessity of Initial Qualification -- This Plan is established
with the intent that it shall qualify under Sections 401(a) and 401(k) of the
Code as that section exists at the time the Plan is established. If the Internal
Revenue Service determines that the Plan initially fails to meet those
requirements, then within thirty (30) days after the date of such determination
all of the vested assets of the Trust Fund held for the benefit of Participants
and their beneficiaries shall be distributed equitably among the contributors to
the Plan in proportion to their contributions, and the Plan shall be considered
to be rescinded and of no force or effect, unless such inadequacy is removed by
a retroactive amendment pursuant to the Code.
13.3 Limitation of Assignment -- No account under the Plan shall be
subject in any manner to attachment, anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, or the vesting of rights in any
person by operation of law or otherwise except as provided under this Plan,
including but not limited to the Trustee or Receiver in Bankruptcy, and any
attempt so to anticipate, alienate, sell, transfer, assign, encumber or charge
the same shall be void, nor shall any such benefit be in any way liable for or
subject to the debts, contracts, liabilities, engagements or torts of any person
entitled to such benefit. If any Participant is adjudicated bankrupt, or
attempts to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge any benefit under the Plan, then such benefit shall, in the discretion of
the Administrator, cease and terminate and in that event the Trustee shall hold
or apply the same or any part thereof to or for the benefit of such Participant
in such manner as the Administrator may direct. Notwithstanding the foregoing,
the Administrator is authorized to comply with a domestic relations order
determined by it to be a qualified domestic relations order as defined in
Section 414(p) of the Code. A distribution may be made to an alternate payee
under a qualified domestic relations order in the form of a lump sum payment at
the time specified in such order, regardless of any restrictions on the
commencement of the distribution that then may apply to the Participant to whom
the order relates.
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31
13.4 Limitation of Rights of Employees -- This Plan is strictly a
voluntary undertaking on the part of the Companies and shall not be deemed to
constitute a contract between any of the Companies and any Employee, or to be a
consideration for, or an inducement to, or a condition of the employment of any
Employee. Nothing contained in the Plan shall be deemed to give any Employee the
right to be retained in the service of any of the Companies or shall interfere
with the right of any of the Companies to discharge or otherwise terminate the
employment of any Employee of the respective company at any time. No Employee
shall be entitled to any right or claim hereunder except to the extent such
right is specifically fixed under the terms of the Plan.
13.5 Construction -- The Plan shall be construed, regulated, and
administered under the laws of the Commonwealth of Massachusetts, except to the
extent that the Retirement Act otherwise requires. In the event that any
provision of this Plan is inconsistent with any provision in the Retirement Act,
the provision in the Retirement Act shall be deemed to be controlling.
13.6 Merger of Raytheon Subsidiary Savings and Investment Plan --
Effective as of December 31, 1994, or such earlier date as is determined to be
administratively feasible (the "Merger Date"), the Raytheon Subsidiary Savings
and Investment Plan shall be merged into this Plan. All assets held pursuant to
the Raytheon Subsidiary Savings and Investment Plan shall be transferred to the
Trustee, such transfer to be effective as of the Merger Date. Amounts held in
the various investment accounts under the Raytheon Subsidiary Savings and
Investment Plan and Trust shall be transferred to the investment accounts under
the Trust in accordance with procedures established by the Administrator. Upon
such transfer, the assets of the Raytheon Subsidiary Savings and Investment Plan
shall become assets of this Plan for all purposes hereunder, effective as of the
Merger Date, and this Plan shall assume all the liabilities of the Raytheon
Subsidiary Savings and Investment Plan, and benefits shall thereafter be
allocated and paid pursuant to the provisions of this Plan. All participants in
the Raytheon Subsidiary Savings and Investment Plan shall remain fully vested in
their accounts which are transferred to this Plan. All withdrawal and
distribution options under the Raytheon Subsidiary Savings and Investment Plan
shall be made available under this Plan with respect to the transferred accounts
to the extent required by Section 411(d)(6) of the Code. Any amendments to this
Plan which are effective prior to January 1, 1994 shall be considered as
amendments to the Raytheon Subsidiary Savings and Investment Plan as well.
13.7 Transfer of Assets to Raytheon Savings and Investment Plan for
Specified Hourly Payroll Employees -- Effective as of December 5, 1994, the
account balances of those Participants who are employed by Amana Refrigeration,
Inc. in the unit represented by Local 2385, International Association of
Machinists and Aerospace Workers, at Amana's plant in Fayetteville, Tennessee
(the "Transferred Accounts") shall be transferred to the Raytheon Savings and
Investment Plan for Specified Hourly Payroll Employees. Plan assets equal to the
Transferred Accounts shall be transferred to the trustee under the Raytheon
Savings and Investment Plan for Specified Hourly Payroll Employees, such
transfer to be effective as of December 5, 1994. Upon such transfer, this Plan
shall cease to have any liability for payment of benefits equal to the
Transferred Accounts.
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32
ARTICLE XIV - DEFINITIONS
The following terms have the meaning specified below unless the
context indicates otherwise:
14.1 "Account" means the entire interest of a Participant in the Trust
Fund and shall consist of an Employee Account and, where applicable, a Rollover
Contribution Account, a Matching Contribution Account and a Qualified
Non-Elective Contribution Account.
14.2 "Administrator" means Raytheon Company.
14.3 "Affiliate" means a trade or business which together with any of
the Companies is a member of (i) a controlled group of corporations within the
meaning of Section 414(b) of the Code; (ii) a group of trades or businesses
(whether or not incorporated) under common control as defined in Section 414(c)
of the Code, or (iii) an affiliated service group as defined in Section 414(m)
of the Code, or which is an entity otherwise required to be aggregated with the
Companies pursuant to Section 414(o) of the Code. For purposes of Article VIII,
the determination of controlled groups of corporations and trades or businesses
under common control shall be made after taking into account the modification
required under Section 415(h) of the Code. This section shall be effective as of
January 1, 1987.
14.4 "Authorized Leave of Absence" means an absence approved by the
Companies on a uniform and nondiscriminatory basis not exceeding one (1) year
for any of the following reasons: illness of Employee or relative, death of
relative, education of Employee, or personal or family business of an
extraordinary nature, provided in each case that the Employee returns to the
service of the Companies within the time period specified by the Companies.
14.5 "Authorized Military Leave of Absence" means any absence due to
service in the Armed Forces of the United States, upon completion of which the
Employee is entitled under any applicable Federal law to reemployment at the
termination of such military service, provided that he returns to the service of
the Companies within the period provided for by such applicable Federal law or
such further period as may be established by the Administrator. As used in this
paragraph, the term "Armed Forces of the United States" excludes the Merchant
Marine.
14.6 "Beneficiary" means the person designated by the Participant to
receive the value of his Account in the event of his death; provided, however,
that if a Participant with a spouse designates a Beneficiary other than his
spouse, said designation shall not take effect unless the spouse consents in
writing to such designation and said spousal consent acknowledges the effect of
said designation and is witnessed by a representative of the Plan or a notary
public. Said spousal consent shall be effective only with respect to the spouse
granting such consent, and shall not be required if the Participant can
establish that there is no spouse, that the spouse cannot be located, or that
other conditions exist as may be prescribed by regulations issued by the
Secretary of the Treasury. If there is no Beneficiary designated by the
Participant or surviving at the death of the Participant, payment of his Account
<PAGE>
33
shall be made in accordance with Section 6.6(a). Subject to the foregoing, a
Participant may designate a new beneficiary at any time by filing with the
Administrator a written request for such change on a form prescribed by the
Administrator. Such change shall become effective only upon receipt of the form
by the Administrator, but upon such receipt of the change shall relate back to
and take effect as of the date the Participant signed such request, whether or
not the Participant is living at the time of such receipt, provided, however,
that neither the Trustee nor the Administrator shall be liable by reason of any
payment of the Participant's Account made before receipt of such form.
14.7 "Board of Directors" means the Board of Directors of Raytheon
Company.
14.8 "Business Day" means a day on which Fidelity is open for general
business.
14.9 "Code" means the Internal Revenue Code of 1986, as amended.
14.10 "Company" means Raytheon Company.
14.11 "Companies" means the Company and any Subsidiary of the Company
which elects through an authorized officer to participate in the Plan on account
of its Employees, provided that participation in the Plan by such a Subsidiary
is approved by the Board of Directors or an authorized officer of the Company,
but shall not include any Division, Operation or similar cohesive group of a
participating Subsidiary excluded by the Board of Directors or an authorized
officer of the Subsidiary and the Board of Directors or an authorized officer of
the Company.
14.12 "Covered Unit" means a unit designated by the Company and a
participating Company as a unit, the employees in which are eligible to
participate in this Plan.
14.13 "Designated Hourly or Salaried Payroll" means an hourly or
salaried payroll or portion thereof, processed in the United States, of one of
the Companies which is designated in writing by the Administrator in accordance
with nondiscriminatory and uniform rules as a payroll the Employees on which are
eligible to participate in this Plan.
14.14 "Disability" means that the Participant is totally and
permanently disabled by bodily injury or disease so as to be prevented from
engaging in any occupation for compensation or profit. The determination of
disability shall be made by the Administrator with the aid of competent medical
advice. It shall be based on such evidence as the Administrator deems necessary
to establish disability or the continuation thereof.
14.15 "Elective Deferral" means a voluntary reduction of Participant's
compensation in accordance with a written direction to the Administrator.
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34
14.16 "Eligible Compensation" means the base pay (including vacation,
severance or salary continuance and sick pay and pay for unused vacation and
sick leave), supervisory differentials, shift premiums and sales commissions
paid to a Participant by the Employer, excluding all other earnings from any
source. Effective January 1, 1997, if the base pay of a Participant (who is not
a regularly scheduled part-time employee) is less in any work week than the
equivalent of 40 times the straight time hourly rate, overtime pay may be
considered, but only to the extent total Eligible Compensation for such work
week does not exceed 40 multiplied by the Participant's straight time rate
determined on an hourly basis. For participants in the Raytheon Constructors,
Inc. unit at Dayco (Springfield, Missouri) only, Eligible Compensation means all
remuneration subject to federal income tax withholding paid to an employee in
each Plan Year and, in addition, deferrals under a plan described in Section
401(k) of the Code and pre-tax contributions pursuant to Section 125 of the
Code. Effective for Plan Years beginning on or after January 1, 1989 and prior
to December 31, 1993, in no event shall the amount of Eligible Compensation
taken into account under the Plan for any Plan Year exceed $200,000 (or such
larger amount as the Secretary of the Treasury may determine for such Plan Year
under Section 401(a)(17) of the Code). Effective for Plan Years beginning on or
after January 1, 1994, in no event shall the amount of Eligible Compensation
taken into account under the Plan for any Plan Year exceed $150,000 (or such
larger amount as the Secretary of the Treasury may determine for such Plan Year
under Section 401(a)(17) of the Code). For purposes of this limitation only, in
determining compensation the rules of Section 414(q)(6) of the Code shall apply,
except that in applying such rules, the term "family" shall include only the
spouse of the Participant and any lineal descendants of the Participant who have
not attained age 19 before the close of the Plan Year.
14.17 "Eligible Employee" means any Employee on a U.S. based
Designated Hourly or Salaried Payroll in a Covered Unit of one of the Companies,
excluding Employees in cooperative studies and intern programs, independent
contractors reclassified as a result of an audit by a government agency as
common law employees and all individuals performing services for the Companies
who are paid through accounts payable, as distinguished from the payroll system,
and, effective January 1, 1987, a person who is a Leased Employee.
14.18 "Employee" means any person performing compensated services for
the Employer who meets the definition of "Employee" for income tax withholding
purposes under Treas. Regs. 31.3401(c)-1 and any person who is a Leased
Employee. This section shall be effective as of January 1, 1987.
14.19 "Employee Account" means that portion of Participant's Account
which is attributable to Elective Deferrals, adjustments for withdrawals and
distributions, and the earnings and losses attributable thereto.
14.20 "Employer" means Raytheon Company and any Affiliates thereof.
14.21 "Employment Commencement Date" is the date on which the Employee
first performs an Hour of Service with the Employer.
14.22 "Enrollment Agreement" means a salary reduction agreement
pursuant to which an Eligible Employee voluntarily joins the Plan and authorizes
deferral of a portion of the Participant's Eligible Compensation.
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35
14.23 "Fidelity" means Fidelity Investments, the recordkeeper for the
Plan.
14.24 "Fiduciary" means a named fiduciary and any other person or
group of persons who assumes a fiduciary responsibility within the meaning of
the Retirement Act under this Plan whether by expressed delegation or otherwise
but only with respect to the specific responsibilities of each for the
administration of the Plan and Trust Fund.
14.25 "Higher Paid Eligible Employee" means an individual described in
Section 414(q) of the Code, after giving effect to subsection (12) thereof, and
any regulation, notice or other guidance issued by the Internal Revenue Service
thereunder. The determination of whether an individual is a Higher Paid Eligible
Employee may be made by the Administrator on the basis of any elective provision
permitted under such regulation, notice or other guidance. In general, an
Employee will be considered a Higher Paid Eligible Employee if such individual:
(a) was a five percent owner as defined in Section 416(i)(1)(iii) of
the Code at any time during the current or preceding Plan Year;
(b) received compensation in excess of $50,000 during the current or
preceding Plan Year (adjusted annually for increases in the cost of living in
accordance with Section 415(d) of the Code); or
(c) was at any time an officer within the meaning of Section 416(i) of
the Code during the preceding Plan Year, and who received compensation in the
current or preceding Plan Year greater than 50 percent of the dollar limitation
in effect under Section 415(b)(1)(A) of the Code for such Plan Year.
Notwithstanding the foregoing, no more than 50 or, if lesser, the greater of 3
employees or 10 percent of the Employees shall be treated as officers.
(d) An Employee who is not described in paragraph (b) or (c) above for
the preceding Plan Year shall not be treated as described in paragraph (b) or
(c) unless such Employee is one of the 100 Employees who receive the most
compensation from the Employer during the Plan Year.
(e) A former Employee shall be treated as a Higher Paid Eligible
Employee if such former Employee had a separation year prior to the Plan Year
and was a Higher Paid Eligible Employee for either (1) such Employee's
separation year or (2) any Plan Year ending on or after the Employee's 55th
birthday.
A separation year is the Plan Year in which the Employee separates
from service.
(f) Notwithstanding anything to the contrary in this Plan, Sections
414(b), (c), (m), (n), and (o) of the Code are applied prior to determining
whether an Employee is a High Paid Eligible Employee.
(g) "Non-Higher Paid Eligible Employee" shall mean an Employee who is
neither a Higher Paid Eligible Employee nor a family member (within the meaning
of Section 414(q)(6) of the Code).
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36
(h) "Compensation" shall mean the Employee's wages which are required
to be reported on IRS Form W-2, increased by any Elective Deferrals made by the
Companies to the Plan on behalf of the Employee and any pre-tax elective
contributions made by the Companies which are excludible from the Employee's
income under Section 125 of the Code.
14.26 "Hour of Service" --
(a) "Hour of Service" means an hour with respect to which any Employee
is paid, or entitled to payment, for the performance of duties for the Employer
during the applicable computation period.
(b) "Hour of Service" shall include an hour for which the Employee is
entitled to credit under subparagraph (a) hereof as a result of employment with
a Division, Operation or similar cohesive group of the Employer excluded from
participation in the Plan.
(c) "Hour of Service" shall include an Hour of Service for which the
Employee is entitled to credit under subsection (a) hereof as a result of
employment with a predecessor contractor under the Service Contract Act,
provided that the Employee is in a Period of Service with such contractor on the
day immediately preceding the Employee's Employment Commencement Date or
Reemployment Commencement Date, as applicable.
(d) To the extent applicable, the rules set forth in 29 CFR
2530.200b-2(b) and (c) for computing an "Hour of Service" are incorporated
herein by reference.
14.27 "Layoff" means an involuntary interruption of service due to
reduction of work force with the possibility of recall to employment when
conditions warrant.
14.28 "Leased Employee" means any person (other than an Employee) who,
pursuant to an agreement between the Employer and any other person, has
performed services for the Employer (or any related person as provided in
Section 414(n)(6) of the Code) on a substantially full time basis for a period
of at least one year and such services are of the type historically performed by
employees in the business field of the Employer. Leased Employees are not
eligible to participate in the Plan. Notwithstanding the foregoing, if such
"Leased Employees" constitute less than 20% of the nonhighly compensated
workforce of the Employer within the meaning of Section 414(n)(5)(C)(ii) of the
Code, the term "Employee" shall not include Leased Employees covered by a plan
described in Section 414(n)(5) of the Code. This section shall be effective
January 1, 1987.
14.29 "Limitation Year" means the calendar year or any other
12-consecutive-month period adopted for all qualified deferred compensation
plans of the Company pursuant to a written resolution adopted by the Company.
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37
14.30 "Matching Contribution Account" means that portion of a
Participant's Account which is attributable to matching contributions pursuant
to Section 3.10 hereof, adjustments for withdrawals and distributions, and the
earnings and losses attributable thereto (At the discretion of the
Administrator, the Matching Contribution Account may be combined with the
Qualified Non-Elective Contribution Account).
14.31 "Nonforfeitable" means an unconditional right to an Account
balance or portion thereof determined as of the applicable date of determination
under this Plan.
14.32 "Normal Retirement Age" means the Participant's sixty-fifth
(65th) birthday.
14.33 "Participant" means
(i) an individual who is enrolled in the Plan pursuant to Article III and
(ii) an individual who has transferred a Qualified Rollover Account into
the Plan pursuant to Section 3.6(d)
provided that the Participant in either category has not withdrawn the entire
amount of his or her Account.
14.34 "Pay Period" means a scheduled period for payment of wages or
salaries.
14.35 "Period of Participation" means that portion of a Period of
Service during which the Eligible Employee was a Participant, and had an Account
in the Plan.
For the purpose of determining a Period of Participation, participation in the
Raytheon Savings and Investment Plan and the Raytheon Savings and Investment
Plan for Specified Hourly Payroll Employees shall be considered as participation
in this Plan.
14.36 "Period of Service" means the period of time beginning on the
Employee's Employment Commencement Date or Reemployment Commencement Date,
whichever is applicable, and ending on the Employee's Severance from Service
Date.
14.37 "Period of Severance" means the period of time beginning on the
Employee's Severance from Service Date and ending on the Employee's Reemployment
Commencement Date.
14.38 "Plan" means the Raytheon Employee Savings and Investment Plan
as amended from time to time.
14.39 "Plan Year" means a calendar year, or a portion thereof
occurring prior to the termination of the Plan.
14.40 "Qualified Non-Elective Contribution Account" means that portion
of a Participant's Account which is attributable to qualified non-elective
contributions received pursuant to Sections 3.8 and 3.9, adjustments for
withdrawals and distributions, and the earnings and losses attributable thereto.
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14.41 "Reemployment Commencement Date" means the first date on which
the Employee performs an Hour of Service following a Period of Severance which
is excluded under Section 2.5 in determining whether a Participant has completed
the required Period of Service for eligibility to participate in the Plan.
14.42 "Retirement" means a Severance from Service when the Participant
has either attained age 55 and completed a Period of Service of at least ten
(10) years or has attained Normal Retirement Age.
14.43 "Retirement Act" means the Employee Retirement Income Security
Act of 1974, including any amendments thereto.
14.44 "Rollover Contribution Account" means that portion of a
Participant's Account which is attributable to rollover contributions received
pursuant to Section 3.6, adjustments for withdrawals and distributions, and the
earnings and losses attributable thereto.
14.45 "Salaried Payrolls" means the nonexempt salaried and the exempt
salaried payrolls which are processed in the United States.
14.46 "Severance from Service" means the termination of employment by
reason of quit, Retirement, discharge, death or failure to return from Layoff,
Authorized Leave of Absence, Authorized Military Leave of Absence or Disability,
or, if designated by the Administrator pursuant to subsection 14.40(b) below,
layoff as the result of a permanent plant closing.
14.47 "Severance from Service Date" means the earlier of:
(a) the date on which an Employee quits, retires, is discharged, or
dies; or
(b) except as provided in paragraphs (c), (d) and (e) hereof, the
first anniversary of the first date of a period during which an Employee is
absent for any reason other than quit, retirement, discharge or death, provided
that, on an equitable and uniform basis, the Administrator may determine that,
in the case of a layoff as the result of a permanent plant closing, the
Administrator may designate the date of layoff or other appropriate date prior
to the first anniversary of the first date of absence as the Severance from
Service Date; or
(c) in the case of an Authorized Military Leave of Absence from which
the Employee does not return prior to expiration of recall rights, "Severance
from Service Date" means the first day of absence because of the leave; or
(d) in the case of an absence due to Disability, "Severance from
Service Date" means the earlier of the first anniversary of the first day of
absence because of the Disability or the date of termination of the Disability;
or
(e) in the case of an Employee who is discharged or quits (i) by
reason of the pregnancy of the Employee, (ii) by reason of the birth of a child
to the Employee, (iii) by reason of the placement of a child with the Employee
in connection with the adoption of such child by the Employee or (iv) for
purposes of caring for such child for a period beginning immediately following
such birth or placement, "Severance from Service Date," for the sole purpose of
determining the length of a Period of Service, shall mean the first anniversary
of the quit or discharge; or
<PAGE>
39
(f) in the case of an Employee who is absent from service beyond the
first anniversary of the first day of absence (i) by reason of the pregnancy of
the Employee, (ii) by reason of the birth of a child to the Employee, (iii) by
reason of the placement of a child with the Employee in connection with the
adoption of such child by the Employee or (iv) for purposes of caring for such
child for a period beginning immediately following such birth or placement, the
Severance from Service Date shall be the second anniversary of the first day of
such absence. The period between the first and second anniversaries of the first
day of absence is neither a Period of Service nor a Period of Severance; or
(g) in the case of an Employee whose employment is terminated by
reason of the sale or divestiture of assets or stock of a business of one of the
Companies, "Severance From Service Date: shall be the earlier of the first
anniversary of the closing date of the transaction or the date the Employee dies
or withdraws the entire amount of his or her Account.
14.48 "Subsidiary" means any corporation designated by the Board of
Directors as a Subsidiary, provided that for the purposes of the Plan no
corporation shall be considered a Subsidiary during any period when less than
fifty percent (50%) of its outstanding voting stock is beneficially owned by the
Company.
14.49 "Surviving Spouse" means a lawful spouse surviving the
Participant as of the date of Participant's death.
14.50 "Trust Agreement" means the agreement between the Company and
the Trustee, and any successor agreement made and entered into for the
establishment of a trust fund of all contributions which may be made to the
Trustee under the Plan.
14.51 "Trustee" means the Trustee and any successor trustees under the
Trust Agreement.
14.52 "Trust Fund" means the cash, securities, and other property held
by the Trustee for the purposes of the Plan.
14.53 "Valuation Date" means each day on which Fidelity is open for
general business.
Words used in either the masculine or feminine gender shall be read
and construed so as to apply to both genders where the context so warrants.
Words used in the singular shall be read and construed in the plural where they
so apply.
<PAGE>
40
APPENDIX A
COVERED UNITS
Name Date on Which Employees
are Eligible to Participate
Raytheon Support Services Company
Salaried Employees at Portsmouth, RI
and Norfolk, VA (SCCS-ISS/ISE) November 1, 1993
Raytheon Support Services Company
All Other Salaried Employees, except
those at Portsmouth, RI and Norfolk,
VA (SCCS-ISS/ISE) January 1, 1994
Raytheon Support Services Company
Hourly Employees in Units Represented by:
Transport Workers Union, Local 25
(Patrick Air Force Base, FL)
Teamsters Local Union No. 769
(Patrick Air Force Base, FL)
International Association of Machinists
and Aerospace Workers, Local Lodge 276
(Robins Air Force Base, GA)
International Brotherhood of Electrical
Workers, Local 898 (El Dorado, TX) June 1, 1994
Cedarapids, Inc.
Hourly Employees in Unit Represented by:
International Association of Machinists
and Aerospace Workers, Local 831
(Cedar Rapids, IA) January 1, 1994
Range Systems Engineering Support Company
Salaried Payroll Employees October 1, 1993
Raytheon Support Services Company
Hourly Employees in Units Represented by:
International Brotherhood of Electrical
Workers (Beale AFB, CA, and Otis AFB, MA) October 1, 1995
Raytheon Support Services Company
Employees in the Unit Represented by
International Brotherhood of Teamsters,
Local 639 (Annapolis Junction, MD) November 1, 1995
Raytheon Support Services Company
Non-represented Hourly Employees at
all Locations January 1, 1996
Raytheon Aerospace Support Services, Inc.
Contract Field Team employees January 1, 1996
<PAGE>
41
Harbert-Yeargin Inc. January 1, 1996 (for
Non-represented Employees at Fort elective deferrals)
Leonard Wood, Missouri September 1, 1993 (for
qualified non-elective
contributions)
Raytheon Aerospace Support Services, Inc. April 1, 1996
T34-44 Contract at
Milton, FL; Corpus Christi, TX; Patuxent
River, MD; NAS Cecil Field, FL;
NAS Fallon, NV; Virginia Beach, VA;
Edwards AFB, CA; El Toro, CA, San
Diego, CA; NAS Lemoore, CA
Columbus AFB, MS Contract
UNFO Contract, NAS Pensacola, FL
Raytheon Aerospace Support Services, Inc. April 1, 1996
U.S. Customs Contract at
Albuquerque, NM; Corpus Christi, TX;
Spring, TX; Jacksonville, FL; Opa
Locks, FL; Belle Chase, LA; Aguadilla, PR;
San Angelo, TX; San Diego, CA; Tucson, AZ;
Ronkonkoma, NY; El Paso, TX; Milton, FL;
Phoenix, AZ; Riverside, CA; San Antonio,
TX; Clearwater, FL; APO AA; Laredo, TX;
Puerta Vallarta, Mexico
<PAGE>
42
APPENDIX B
RAYTHEON COMPANIES MAKING CONTRIBUTIONS UNDER
A PREVAILING WAGE CONTRACT AND/OR ADDITIONAL
COMPANY CONTRIBUTIONS
Location Amount Effective Date
Raytheon Support Services Company:
Hourly Employees in Unit 75 cents per 10/1/95
Represented by International hr. paid up to
Brotherhood of Electrical Workers 40 hrs./week
(Beale AFB, CA)
80 cents per 1/1/97
hr. paid up to
40 hrs./week
85 cents per 1/1/98
hr. paid up to
40 hrs./week
Salaried Employees (Beale AFB, CA) 75 cents per 1/1/96
hr. paid up to
40 hrs./week
80 cents per 1/1/97
hr. paid up to
40 hrs./week
85 cents per 1/1/98
hr. paid up to
40 hrs./week
Hourly Employees in Unit 83 cents per
Represented by International hr. paid up to
Brotherhood of Electrical Workers, 40 hrs./week
Local 223 (Otis AFB, MA) 10/1/95
Salaried Employees (Otis AFB) 1/1/96
88 cents per 1/1/97
hr. paid up to
40 hrs./week
93 cents per 1/1/98
hr. paid up to
40 hrs./week
Employees at Warren/Selfridge, MI 16 cents per 1/1/96
hr. paid up to
40 hrs/week
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43
All Employees at Rock Island, IL 30 cents per 1/1/96
hr. paid up to
40 hrs/week
UNTIL 9/30/97
Employees at Fort Monmouth, NJ 10 cents per
hr. paid up to
40 hrs/week
UNTIL 2/29/96
Salaried Employees at 2.5% of base pay
Annapolis Junction, MD
Hourly Employees at Annapolis 10 cents per
Junction, MD; all employees at hr. paid up to
Chesapeake, VA (ROTHR), Marshall 40 hrs./week
Space Flight Center, AL, McClellan
AFB, CA, NASA Langley, VA, Oklahoma
City, OK (FAA Depot), Springfield,
VA (Trojan),and Englewood, CO (ACC
PMEL)
All Employees on ACC PMEL at 10 cents per
Barksdale AFB, LA , Beale AFB, CA, hr. paid up to
Dyess AFB, TX, Ellsworth AFB, SD, 40 hrs./week
Fairchild AFB, WA, Warren AFB, WY, UNTIL 9/30/97
Grand Forks AFB, ND, Malstrom AFB,
MT, McDonnell AFB, KS, Minot AFB,
ND, Offutt AFB, NE, Plattsburgh AFB,
NY and Whiteman AFB, MO
All Employees on CISF at 40 cents per
Colorado Springs, CO hr. paid up to
40 hrs./week
<PAGE>
44
All Employees on Pave Paws IV 60 cents per 1/1/97
at Eldorado AFB, TX hr. paid up to
40 hrs./week
65 cents per 1/1/98
hr. paid up to
40 hrs./week
Hourly Employees in the Unit 33 cents per
represented by Local 2131, hr. paid up to
International Brotherhood of 40 hrs./week
Electrical Workers at Onizuka AFS,
CA
All Employees on EMC at 15 cents per
Norfolk, VA hr. paid up to
40 hrs./week
UNTIL 9/12/97
All Employees on Pave Paws 60 cents per 1/1/98
Site III, Robins AFB, GA hr. paid up to
40 hrs./week
Exempt Salaried Employees on 60 cents per 1/1/98
STARS/DASR, Installation & Checkout hr. paid up to
and TSSC 40 hrs./week
Non-Exempt Salaried and Hourly 40 cents per 1/1/98
Employees on STARS/DASR, hr. paid up to
Installation & Checkout and TSSC 40 hrs./week
Raytheon Aerospace Support
Services Inc.:
Field Contract Employees 3% of gross pay 1/1/96
Union - T-34/44, Columbus, UNFO; 4/1/96
Non-Union - Columbus
Non-Union - T-34/44 4% with a $500 5/1/97
maximum per year
U.S. Customs Union and Non- 1.75% of gross 4/1/96
Union Employees at DEA pay with a $400 10/1/97
maximum per year
Employees at AETC 1.75% of gross pay 10/1/97
<PAGE>
45
Rust Constructors Inc.
Employees at Fort Leonard Wood 10 cents per 10/1/97
hr. paid up to
40 hrs./week
15 cents per 10/1/98
hr. paid up to
40 hrs./week
Employees at Mt. Pleasant, SC 100% company 6/12/96
and Springfield, MO match up to
4.5% of
eligible comp.
Employees at Salisbury, NC 100% company 6/12/96 to
match up to 9/30/96 ONLY
4.5% of
eligible comp.
<PAGE>
1
EXHIBIT 4.6
RAYTHEON SAVINGS AND INVESTMENT PLAN
FOR PUERTO RICO BASED EMPLOYEES
Provisions in Effect as of January 1, 1996
ARTICLE I - PREAMBLE
The Raytheon Savings and Investment Plan for Puerto Rico based
employees, which became effective January 1, 1995, provides employees with a
tax-effective means of allocating a portion of their salary to be invested in
one or more investment opportunities specified in the Plan as determined by the
employee and set aside for short-term and long-term needs of the employee. The
Plan is applicable only to eligible employees who meet the requirements for
membership on or after January 1, 1995. It is intended that the Plan will comply
with all of the requirements for a qualified profit sharing plan under Section
3165(e) of the Revenue Code of Puerto Rico ("Code") and will be amended from
time to time to maintain compliance with these requirements. The terms used in
the Plan have the meanings specified in Article XIII unless the context
indicates otherwise. The Plan is intended to constitute a plan described in
Section 404(c) of the Employee Retirement Income Security Act and Title 29 of
the Code of Federal Regulations, ss.2250.44(c)-1. Participants in the Plan are
responsible for selecting their own investment opportunities from the options
available under the Plan, and the Plan fiduciaries are relieved of any liability
for any losses which are a direct and necessary result of investment
instructions given by a participant or beneficiary.
ARTICLE II - ELIGIBILITY
2.1. Eligibility Requirements - Present Employees -- Each Eligible
Employee who was in a Period of Service from October 1, 1994, through December
31, 1994, may join the Plan as of the first Pay Period in January, 1995, or any
subsequent Pay Period selected by the Eligible Employee provided he or she
continues in the same Period of Service or meets the requirements under Section
2.2.
2.2. Eligibility Requirements - Other Employees -- Each other Eligible
Employee whose Employment Commencement Date is on or after January 1, 1995, may
join the Plan as of the first Pay Period coincident with or next following
completion of a Period of Service of three (3) consecutive months commencing on
said Employment Commencement Date or any subsequent Pay Period selected by the
Eligible Employee during the same Period of Service. Each Eligible Employee
whose Reemployment Commencement Date is on or after January 1, 1995, may join
the Plan as of the first Entry Date next following said Reemployment
Commencement Date.
<PAGE>
2
2.3. Procedure for Joining the Plan -- Each Eligible Employee who meets
the requirements of Section 2.1 or Section 2.2 may join the Plan by
communicating with Fidelity in accordance with instructions in an enrollment kit
which will be made available to each Eligible Employee. An enrollment in the
Plan shall not be deemed to have been completed until the Employee has
designated: a percentage by which Participant's Eligible Compensation shall be
reduced as an Elective Deferral in accordance with the requirements of Section
3.2, subject to the limitations in the Code referred to in Section 3.3; election
of investment funds as described in Article IV; one or more Beneficiaries; and
such other information as specified by Fidelity. Enrollment will be effective as
of the first administratively feasible Pay Period following completion of
enrollment. The Administrator in its discretion may from time to time make
exceptions and adjustments in the foregoing procedure on a uniform and
nondiscriminatory basis.
2.4. Transfer Between Companies to Position Covered by Plan -- A
Participant who is transferred from employment with one of the Companies to
employment as an Eligible Employee with another one of the Companies may remain
a Participant of the Plan with his or her new Company.
2.5. Transfer to Position Not Covered by Plan -- If a Participant is
transferred to another position with the Employer in which the Participant is no
longer an Eligible Employee, the Participant will remain a Participant of the
Plan with respect to Elective Deferrals previously made but will no longer be
eligible to have Elective Deferrals made to the Plan on his or her behalf until
he or she again becomes an Eligible Employee. In the event the Participant is
subsequently transferred to a position in which he or she again becomes an
Eligible Employee, the Participant may renew Elective Deferrals by communicating
with Fidelity and providing all of the information requested by Fidelity. The
renewal of Elective Deferrals will be effective as of the first administratively
feasible Pay Period following receipt by Fidelity of the requested information.
ARTICLE III - CONTRIBUTIONS
3.1. Employer Contributions -- The Companies shall contribute to the
Trust established under this Plan from Net Annual Profits or Net Profits an
amount equal to the total amount of Elective Deferrals agreed to be made by the
Companies pursuant to designation by Participants.
3.2. Elective Deferrals -- Elective Deferrals must be made in one
percent (1%) increments with a minimum Elective Deferral of one percent (1%) of
Eligible Compensation and a maximum Elective Deferral of fifteen percent (15%)
but no Participant may defer more than $7,000 for any Plan Year.
3.3. Revenue Code of Puerto Rico Requirements -- All Elective Deferrals
and Matching Contributions are subject to all of the nondiscrimination tests
established in Section 3165 of the Code, including in particular the limitations
in Section 3165(c)(3).
3.4. Reinstatement of Reduced Amounts -- Any reduction effected
pursuant to Section 3.3 will remain in effect for the remainder of the Plan Year
in which the reduction occurs and will not be automatically reinstated. A
Participant whose Elective Deferral has been reduced may elect to increase his
or her Elective Deferral effective as of any Pay Period subsequent to notice
from the Administrator that Elective Deferrals may be increased as of a
specified Pay Period. This election must be made in accordance with the
procedure described in Section 3.5.
<PAGE>
3
3.5. Change in Elective Deferrals -- Except as provided in Sections 3.3
and 3.4, any Participant may change his or her Elective Deferral percentage to
increase or decrease said percentage by notifying Fidelity, such change to take
effect as of the next administratively feasible Pay Period.
3.6. Voluntary Reduction of Elective Deferral to Zero --Notwithstanding
the notice requirements specified in Section 3.5, any Participant may elect to
reduce the level of the Participant's Elective Deferral to zero as of the
beginning of any pay period. The reduction will take effect as soon as
practicable following telephone notification by the Participant to Fidelity. A
Participant who has reduced his or her Elective Deferral to zero may again make
Elective Deferrals as of the next administratively feasible Pay period
subsequent to telephone notification to Fidelity.
3.7. Matching Contributions -- For each Plan Year, commencing on or
after January 1, 1995, subject to limitations imposed by the Code, the Companies
will match from Net Annual Profits or Net Profits the Elective Deferral of each
Participant at the rate of one-half (1/2) of the Participant's Elective Deferral
on an annual basis provided that: (i) for any Pay Period the matching amount
shall not exceed three percent (3%) of the Participant's Eligible Compensation
for that Pay Period; and (ii) as soon as administratively feasible subsequent to
the end of the Plan Year, the differential, if any, by which an amount equal to
one-half (1/2) of the Participant's Elective Deferral for the Plan Year exceeds
the amount of Matching Contributions actually made to Participant for that year,
to an annual maximum of three percent (3%) of the Participant's Eligible
Compensation for the Plan Year, will be paid into the Participant's Account.
3.8. Forfeitures -- In the event that a Participant incurs a Severance
of Service prior to attaining a Nonforfeitable right to the Participant's
Matching Contribution, the Matching Contribution will be forfeited as of the
Severance from Service Date. Forfeitures of Matching Contributions will be used
to reduce future contributions of the Companies to the Plan. A forfeiture will
occur as of the first day of the month immediately following a month in which a
Severance from Service occurs and results in a forfeiture. In the event that a
Period of Severance is credited to a Participant's Period of Service pursuant to
Section 5.3(b), any forfeiture of a Matching Contribution resulting from said
Period of Severance will be restored to the Participant's Matching Contribution
Account. When a prior Period of Service is reinstated, forfeitures related to
said prior Period of Service will be restored to the extent required by law.
3.9. Rollover Contributions --
(a) Effective January 1, 1995, Participants may transfer
into the Plan qualifying rollover amounts received from other qualified trusts
subject to Section 3165 of the Code. Such transfers will be referred to as
"rollover contributions" and will be subject to the following conditions:
(i) the transferred funds are received by the Trustee
no later than sixty (60) days from receipt by the Employee of a
distribution from a qualified trust, subject, however, to (v) below
where applicable;
<PAGE>
4
(ii) the amount of such rollover contributions shall
not exceed any applicable limitation set forth in the Code;
(iii) rollover contributions shall be taken into
account by the Administrator in determining the Participant's
eligibility for a loan pursuant to Article VII;
(iv) rollover contributions may be distributed at
the request of the Participant, subject to the same administrative
procedures as apply to other distributions;
(v) rollover contributions may not be received by the
Trustee earlier than the Entry Date upon which the Participant elects
to join the Plan;
(vi) rollover contributions transferred pursuant to
this paragraph (a) of Section 3.9 shall be credited to the
Participant's Rollover Contribution Account. Rollover contributions
will be invested upon receipt by the Trustee;
(vii) no rollover contribution will be accepted
unless (A) the Employee on whose behalf the rollover contribution will
be made is either a Participant or has notified the Administrator that
he intends to become a Participant on the first date on which he is
eligible therefor; and (B) all required information, including
selection of specific investment accounts, is provided to Fidelity.
When the rollover contribution has been deposited, any further change
in investment allocation of future deferrals or transfer of account
balances between investment funds will be effected through the
procedures set forth in Sections 4.2 and 4.3.
(viii) Under no circumstances shall the Administrator
accept as a rollover contribution amounts which have previously been
subject to Puerto Rico income tax.
3.10. Refund of Matching Contributions to the Companies
Notwithstanding the provisions of Article XI, the Trustee shall refund to
the Companies, upon written request, Matching Contributions made by the
Companies:
(a) by a mistake of fact, provided that such refund
is made within one (1) year after the making of the Matching
Contribution; or
(b) which would otherwise be an excess contribution
under the Code, to the extent permitted to avoid penalties on such
excess contributions.
<PAGE>
5
3.11. Corrective Qualified Non-Elective Contributions -- In order to
satisfy (or partially satisfy) the non-discrimination tests established in
Section 3165 of the Code, the Company in its sole discretion may make a
Corrective Qualified Non-Elective Contribution to the Plan. Any such Corrective
Qualified Non-Elective Contribution shall be allocated to the Accounts of those
Participants who are non-highly compensated Employees for the Plan Year with
respect to which such Corrective Qualified Non-Elective Contribution is made,
beginning with the Participant with the lowest compensation for such Plan Year
and allocating the maximum amount permissible under Section 3.2 before
allocating any portion of such Qualified Non-Elective Contribution to the
Participant with the next lowest compensation. Such allocations shall continue
until the Plan satisfies the non-discrimination tests in Section 3165 of the
Code or until the amount of such Corrective Qualified Non-Elective Contribution
is exhausted.
The Company, in its sole discretion, may include all or a portion of
the Corrective Qualified Non-Elective Contributions for a Plan Year in aggregate
401(k) contributions taken into account in applying the non-discrimination tests
in Section 3165 of the Code, provided that the requirements of Treasury
Regulation section 1.401(k)-1(b)(5) are satisfied.
ARTICLE IV - INVESTMENT OF ACCOUNTS
4.1. Election of Investment Funds -- Upon enrollment in the Plan, each
Participant shall direct that the funds in the Participant's Employee Account
and Matching Contribution Account be invested in increments of one percent (1%)
in one or more of the following investment funds:
Fund A - an equity fund designated by the Administrator;
Fund B - a fixed income fund designated by the Administrator;
Fund C - Raytheon Company common stock fund (not subject to
additional limitations with respect to transfer and
withdrawal);
Fund D - a stock index fund designated by the Administrator;
Fund E - a balanced fund designated by the Administrator;
Fund F - a growth fund, designated by the Administrator,
investing primarily in equities of companies of all
types and sizes;
Fund G - a growth fund, designated by the Administrator,
investing primarily in equities of well-known and
established companies.
In its discretion, the Administrator may from time to time designate
new funds and, where appropriate, preclude investment in existing funds
and provide for the transfer of Accounts invested in those funds to
other funds selected by the Participant or, if no such election is
made, to Fund B or similar low risk fixed income fund as determined by
the Administrator in its discretion.
<PAGE>
6
Each election will apply to both accounts so that the Employee Account and
Matching Contribution Account of the Participant will be invested in the same
percentages in the one or more investment funds selected by the Participant.
4.2. Change in Investment Allocation of Future Deferrals -Each
Participant may elect to change the investment allocation of future Elective
Deferrals, Matching Contributions and rollover contributions effective as of the
first administratively feasible Business Day subsequent to telephone notice to
Fidelity. Any changes must also be made either in increments of one percent (1%)
of the Participant's Account or in a specified whole dollar amount and must
result in a total investment of one hundred percent (100%) of the Participant's
Account.
4.3. Transfer of Account Balances Between Investment Funds -- Each
Participant may elect to transfer all or a portion of the amount in the
Participant's Employee Account, Matching Contribution Account and Rollover
Contribution Account between investment funds effective as of the first
administratively feasible Business Day following telephone notice to Fidelity.
Such transfers must be made in either one percent (1%) increments of the entire
Account or in a specified amount in whole dollars and, as of the completion of
the transfer, must result in investment of one hundred percent (100%) of the
Account. Transfers shall be effected by telephone notice to Fidelity.
4.4. Ownership Status of Funds -- The Trustee shall be the owner of
record of the assets in the funds specified as Funds A, B, C, D, E, F and G and
such other funds as may be established by the Administrator. The Administrator
shall have records maintained as of the Valuation Date for each fund allocating
a portion of the fund to each Participant who has elected that his or her
Account be invested in such fund. The records shall reflect each Participant's
portion of Funds A, B, D, E, F and G and such other funds as may be established
by the Administrator, in a cash amount and shall reflect each Participant's
portion of Fund C in cash and unitized shares of stock.
4.5. Voting Rights -- Participants whose Account has shares of
participation in the Raytheon Company Common Stock Fund on the last Business Day
of the second month preceding the record date (the "Voting Eligibility Date")
for any meeting of stockholders have the right to instruct the Trustee as to
voting at such meeting. The number of votes is determined by dividing the value
of the shares in the Participant's Account in the Raytheon Common Stock Fund by
the closing price of Raytheon Common Stock on the Voting Eligibility Date. If
the Trustee has not received instructions from a Participant as to voting of
shares within a specified time, then the Trustee shall not vote those shares. If
a Participant furnishes the Trustee with a signed vote direction card without
indicating a voting choice thereon, the Trustee shall vote Participant's shares
as recommended by management. In addition, each Participant shall have the right
to accept or reject any tender or exchange offer for shares of common stock. The
Trustee shall vote (or tender or exchange) all combined fractional shares of
Raytheon Common Stock to the extent possible in the same proportion as the
shares which have been voted (or tendered or exchanged) by each Participant. Any
instructions as to voting (or tender or exchange) received from an individual
Participant shall be held in confidence by the Trustee and shall not be divulged
to the Companies or to any officer or employee thereof or to any other person.
<PAGE>
7
ARTICLE V - VESTING
5.1. Employee, Rollover Contribution and Corrective Qualified
Non-Elective Contribution Accounts -- Each Participant shall have a
Nonforfeitable right to any amounts in the Participant's Employee, Rollover
Contribution and Corrective Qualified Non-Elective Contribution Accounts.
5.2. Matching Contribution Account -- Each Participant shall have a
Nonforfeitable right to the Participant's Matching Contribution Account upon the
earlier of:
(a) Completion of a Period of Service of five (5) years
commencing on or after January 1, 1984; or
(b) Completion of a Period of Service of three (3) years
during which the Participant had an Account under the Plan subsequent
to fulfillment of the eligibility requirements in Section 2.1; or
(c) The Participant's Retirement, death, Disability or
attainment of Normal Retirement Age.
5.3. Break in Service Rules
(a) Periods of Service -- Subject to any requirements of the
Code, in determining the length of a Period of Service, the Administrator shall
include all Periods of Service, except a Period of Service prior to a Period of
Severance of twelve (12) months or more, unless subsequent to said Period of
Severance the Participant completes a Period of Service of at least twelve (12)
months and, if the Participant does not have a Nonforfeitable right to his or
her Matching Contribution Account, the Period of Severance was less than said
prior Period of Service. The Administrator shall also include Periods of Service
prior to Periods of Severance of five (5) years or less.
(b) Periods of Severance -- Subject to any requirements of
the Code, in determining the length of a Period of Service, the Administrator
shall exclude all Periods of Severance, except that in the event a Participant
returns from a quit, discharge, or Retirement, within twelve (12) months from
the earlier of: (i) the date of the quit, discharge, or Retirement, or (ii) if
the Participant was absent from employment for reasons such as layoff or
Authorized Leave of Absence on the day of the quit, discharge, or Retirement,
the first day of such absence, the period of absence will be included as a
Period of Service.
(c) Other Periods -- In making the determinations described
in subsections (a) and (b) of this Section 5.3, the second, third, and fourth
consecutive years of a Layoff (from the first anniversary of the last day paid
to the fourth anniversary of the last day paid) and any period in excess of one
(1) year of an Authorized Leave of Absence shall be regarded as neither a Period
of Service nor a Period of Severance.
<PAGE>
8
ARTICLE VI - WITHDRAWALS AND DISTRIBUTIONS
6.1. In-Service Withdrawal - Employee Account -- While in a Period of
Service, a Participant may withdraw all or a portion of the Participant's
Account upon attainment of age 59 1/2 or, in the case of an immediate and heavy
financial need within the meaning of Section 3165(c)(2)(B)(vi) of the Code.
Withdrawals from the Employee Accounts of less than $250 will not be permitted.
Withdrawals will be based upon the value of the Account as of a date established
by the Administrator through the application of a uniform and equitable rule and
will be effected by telephone notice to Fidelity. Payment of the amount
withdrawn will be made as soon as reasonably practicable after the effective
date of the withdrawal. Withdrawals from Funds A, B, C, D, E, F and G and such
other funds as may be established by the Administrator, will be made in cash.
Funds for the withdrawal will be taken on a pro rata basis against the
Participant's investment fund balances in the Participant's Employee Account.
6.2. In-Service Withdrawal - Rollover Contribution Account -- A
Participant may withdraw all or a portion of the Participant's Rollover
Contribution Account. Withdrawals will be based upon the value of the account as
of the date established by the Administrator through the application of a
uniform and equitable rule by telephone notice to Fidelity. Payment of the
amount withdrawn will be made as soon as reasonably practicable after the
effective date of the withdrawal. Withdrawals from Funds A, B, C, D, E, F and G
will be made in cash.
6.3. Documentation Required For Financial Hardship Withdrawals --
(a) A Participant requesting a withdrawal of the distributable amount of
the Participant's Employee Account due to reasons of immediate and
heavy financial need must submit such documentation or information in
other form as required by the Administrator and shall advise Fidelity
by telephone notice or such other means as established by the
Administrator's rules then in effect of the existence of an immediate
and heavy financial need and the fact that the need will be satisfied
by the requested distribution.
(b) The Participant shall represent that this financial need cannot be
satisfied by any of the following sources: through reimbursement or
compensation by insurance or otherwise; by liquidation of the
Participant's assets; by cessation of Elective Deferrals under the
Plan; or by other distributions or non-taxable (at the time of the
loan) loans currently available from plans maintained by the Employer
or by any other employer, or by borrowing from commercial sources on
reasonable commercial terms.
6.4. Redeposits Prohibited -- No amount withdrawn pursuant to Section
6.l and Section 6.2 may be redeposited in the Plan.
<PAGE>
9
6.5. Distribution --
(a) Distribution of the Participant's Employee Account, Rollover Contribution
Account, Corrective Qualified Non-Elective Contribution Account and, if the
Participant has a Nonforfeitable right to his or her Matching Contribution
Account pursuant to Section 5.2, the Matching Contribution Account, will be made
upon the Retirement, Disability (as defined in Section 13.12), death, Severance
from Service (as defined in Section 13.46) or Layoff (as defined in Section
13.26) of the Participant or, to an alternate payee, upon issuance of a
Qualified Domestic Relations Order. In the event of the death of a Participant,
the distribution shall be made to the Participant's Beneficiary. The standard
form of distribution will be a lump sum distribution of the entire amount in the
Participant's Account (to which the Participant has a Nonforfeitable right)
which will be paid as soon as practicable following notification to the Benefits
and Services Department, Raytheon Company, Lexington, Massachusetts, of the
Retirement, death, Disability or Severance from Service and a telephone request
by the Participant (or Beneficiary, if Participant is deceased) to Fidelity.
Distribution of the amounts in said accounts in the funds designated in Funds A,
B, C, D, E, F and G, and such other funds as may be established by the
Administrator, will be made in cash. Partial deferrals will not be permitted. If
there is no Beneficiary surviving a deceased Participant at the time payment of
a Participant's Account is to be made, such payment shall be made in a lump sum
to the person or persons in the first following class of successive
Beneficiaries surviving, any testamentary devise or bequest to the contrary
notwithstanding: the Participant's (a) spouse, (b) children and issue of
deceased children by right of representation, (c) parents, (d) brothers and
sisters and issue of deceased brothers and sisters by right of representation,
or (e) executors or administrators.
(b) In the event that upon a Participant's Severance From Service Date the
Participant has a Nonforfeitable right to an Account in the Plan which
exceeds Thirty-Five Hundred Dollars ($3,500), the Participant shall
have the option of not receiving an immediate distribution of the
amount in his or her Account.
Benefits in the Plan will be distributed to each Participant not later
than the sixtieth (60th) day after the close of the Plan Year in which the
latest of the following events occurs: (l) attainment by the Participant of
Normal Retirement Age; (2) the tenth (10th) anniversary of the date on which
Participant commenced participation in the Plan; or (3) Participant's Severance
from Service. If the amount of the benefit payable to a Participant has not been
ascertained by the sixtieth (60th) day after the close of the Plan Year in which
the latest of the three events described in clauses (1), (2) and (3) above
occurred, or Participant cannot be located after reasonable efforts to do so,
then payment retroactive to said sixtieth (60th) day after the close of the Plan
Year in which the latest of the three events occurred may be made no later than
sixty (60) days after the later of the earliest date on which the amount of such
payment under the Plan can be ascertained or the earliest date on which the
Participant is located.
<PAGE>
10
ARTICLE VII - LOANS
7.1. Availability of Loans -- Participants may borrow against all or a
portion of the balance in the Participant's Employee Account, Rollover
Contribution Account and Corrective Qualified Non-Elective Contribution Account,
and the Matching Contribution Account if the Participant has a Nonforfeitable
right thereto pursuant to Section 5.2, subject to the limitations set forth in
this Article. Participants who have incurred a Severance from Service will not
be eligible for a Plan loan.
7.2. Minimum Amount of Loan -- No loan of less than $500 will be
permitted.
7.3. Maximum Amount of Loan -- No loan in excess of fifty percent (50%)
of the aggregate value of a Participant's Employee Account, Rollover
Contribution Account and Corrective Qualified Non-Elective Contribution Account,
and the Nonforfeitable portion of Participant's Matching Contribution Account
balances will be permitted. In addition, limits imposed by the Code and any
other requirements of applicable statute or regulation will be applied.
7.4. Effective Date of Loans -- Loans will be effective as specified
in the Administrator's rules then in effect.
7.5. Repayment Schedule - The Participant may select a repayment
schedule of 1, 2, 3, 4 or 5 years. If the loan is used to acquire any dwelling
which, within a reasonable time is to be used (determined at the time the loan
is made) as the principal residence of the Participant, the repayment period may
be extended up to l5 years at the election of the Participant. All repayments
will be made through payroll deductions in accordance with the loan agreement
executed at the time the loan is made, except that, in the event of the sale of
all or a portion of the business of the Employer or one of the Companies, or
other unusual circumstances, the Administrator, through uniform and equitable
rules, may establish for other means of repayment. The loan agreement will
permit repayment of the entire outstanding balance in one lump sum. The minimum
repayment amount per pay period is $10 for Participants paid weekly and $50 for
Participants paid monthly. The repayment schedule shall provide for
substantially level amortization of the loan. Repayments for Participants in a
Period of Service but on an Authorized Leave of Absence or Layoff shall be made
in accordance with procedures established by the Administrator.
7.6. Limit on Number of Loans -- No more than two loans may be
outstanding at any time.
7.7. Interest Rate -- The interest rate for a loan pursuant to this
Article will be equal to the prime rate published in The Wall Street Journal on
the first business day in June and December of each year. The rate published on
the first business day in June will apply to loans which are effective as of any
date during the period July 1 through December 31 thereafter; the rate published
on the first business day of December will apply to loans which are effective
during the period January 1 through June 30 thereafter.
<PAGE>
11
7.8. Effect Upon Participants Account -- Upon the granting of a loan to
a Participant by the Administrator, the allocations in the Participant's Account
to the respective investment funds will be reduced on a pro rata basis and
replaced by the loan balance which will be designated as an asset in the
Account. Such reduction shall be effected by reducing the Participant's Accounts
in the following sequence, with no reduction of the succeeding Accounts until
prior Accounts have been exhausted by the loan: Matching Contribution Account;
Corrective Qualified Non-Elective Contributions Account; Employee Account; and
Rollover Contribution Account. Upon repayment of the principal and interest, the
loan balance will be reduced, the Participant Accounts will be increased in the
reverse order in which they were exhausted by the loan, and the loan payments
will be allocated to the respective investment funds in accordance with the
investment election then in effect.
7.9. Effect of Severance From Service and Non-Payment -- In the event
that a loan remains outstanding upon the Retirement, death or Severance from
Service of a Participant, payments may be made directly to Fidelity on a monthly
basis. If payments are not made in a timely manner, the amount of any unpaid
principal will be deducted from the distribution made to the Participant (or
from the Participant's Account if retained in the Plan). If, as a result of
Layoff or Authorized Leave of Absence, a Participant, although still in a Period
of Service, is not being compensated through the Employer's payroll system, loan
payments will be suspended until the earliest of the first pay date after
Participant returns to active employment, the Participant's Severance from
Service Date, or the expiration of twelve (12) months from the date of the
suspension, at which time the unpaid principal and interest will be deducted
from the Participant's Account and any remaining balance will be paid to the
Participant if the Participant incurs a Severance from Service or requests in
writing payment of such balance.
ARTICLE VIII - LIMITATIONS
8.1. Maximum Permissible Amount of a Participant's Annual Addition --
Notwithstanding any other provision of this Plan, the Maximum Permissible Amount
of a Participant's Annual Addition under this Plan means the lesser of $30,000
or twenty-five percent (25%) of the Participant's compensation for the
Limitation Year. For purposes of this Article VIII, compensation is defined as
the Participant's wages, salaries, fees for professional services, and other
amounts received for personal services actually rendered in the course of
employment with the Employer (including but not limited to sales commissions,
compensation for services on the basis of a percentage of profits, tips, and
bonuses), excluding all items listed in subparagraph (2) of paragraph (d) of 26
CFR Section1.415-2. If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different 12-consecutive-month
period, the Maximum Permissible Amount for the short Limitation Year will be the
lesser of (1) $30,000 (or such larger amount determined by the Commissioner of
Internal Revenue or by statute) multiplied by the following fraction:
number of months in the
short Limitation Year
-----------------
12
or (2) twenty-five percent (25%) of the Participant's compensation for the short
Limitation Year.
8.2. Coordination of Annual Additions -- Notwithstanding any other
provision of this Plan, if any Annual Additions are allocated under other
qualified defined contribution plans maintained by the Employer with respect to
a Participant of this Plan, and the Participant's Elective Deferral or Matching
Contribution that would otherwise be contributed or allocated to the
Participant's Account under this Plan would cause the Annual Additions for the
Limitation Year to exceed the Maximum Permissible Amount specified in Section
8.1, the amount contributed or allocated will be reduced so that the Annual
Additions under all such plans for the Limitation Year will equal said Maximum
Permissible Amount. If the Annual Additions with respect to the Participant
under such other qualified defined contribution plans in the aggregate are equal
to or greater than the Maximum Permissible Amount, as specified in Section 8.1,
any amount contributed or allocated to the Participant's account for the
Limitation Year will be treated as an Excess Amount.
<PAGE>
12
8.3. Coordination with Limitation on Benefit from All Plans --
Notwithstanding the foregoing, the otherwise permissible Annual Addition under
this Plan for any Participant may be further reduced to the extent necessary, as
determined by the Administrator, to prevent disqualification of the Plan under
the Code. In addition, if an individual is a Participant at any time in both a
defined benefit plan and a defined contribution plan maintained by the Employer,
the sum of the defined benefit plan fraction and the defined contribution plan
fraction for any Limitation Year may not exceed 1.0. The defined benefit plan
fraction for any Limitation Year is a fraction, the numerator of which is the
Participant's projected annual benefit under the Plan (determined at the close
of the Limitation Year) and the denominator of which is the lesser of:
(a) 1.25 (1.0 during any Plan Year in which the Plan has
been determined to be top heavy) times the dollar limitation in effect
for that Limitation Year, or
(b) 1.4 times the compensation limitation for that
Limitation Year. The defined contribution plan fraction for any Limitation Year
is a fraction, the numerator of which is the sum of the Annual Additions to the
Participant's accounts in such Limitation Year and all prior Limitation Years
and the denominator of which as of the end of a Limitation Year is the sum of
the defined contribution increments for that year and all prior LimitationYears.
For each Limitation Year, the defined contribution increment is the lesser of
1.25 (1.0 during any Plan Year in which the Plan has been determined to be top
heavy) times the dollar limitation for that year, or 1.4 times the compensation
limitation for that year. For purposes of this limitation, all defined benefit
plans of the Employer whether or not terminated, are to be treated as one
defined benefit plan and all defined contribution plans of the Employer, whether
or not terminated, are to be treated as one defined contribution plan.
ARTICLE IX - THE TRUST FUND
9.1. Trust Agreement -- During the period in which this Plan remains in
existence, the Employer or any successor thereto shall maintain in effect a
Trust Agreement with a corporate trustee as Trustee, to hold, invest, and
distribute the Trust in accordance with the terms of such Trust Agreement.
9.2. Investment of Accounts -- The Trustee shall invest and reinvest
the Participant's accounts in investment options as defined in Section 4.1 as
directed by the Administrator or its delegate in writing. The Administrator
shall issue such directions in accordance with the investment options selected
by the Participants which shall remain in force until altered in writing in
accordance with Sections 4.2 and 4.3.
9.3. Expenses -- Expenses of the Plan and Trust shall be paid from the
Trust.
<PAGE>
13
ARTICLE X - ADMINISTRATION OF THE PLAN
10.1. General Administration -- The general administration of the Plan
shall be the responsibility of the Raytheon Employee Benefit Administration
Committee (the "Committee") which shall be the Administrator and Named Fiduciary
for purposes of the Retirement Act. The Committee shall consist of three or more
individuals appointed by the Vice President, Human Resources of Raytheon
Company, or his delegate, and shall have the authority, in its sole discretion,
to construe the terms of the Plan and to make determinations as to eligibility
for benefits and as to other issues within the "Responsibilities of the
Administrator" described in Article X, Section 10.2. All such determinations of
the Committee shall be conclusive and binding on all persons. The Committee's
address is Raytheon Employee Benefits Administration Committee, 141 Spring
Street, Lexington, MA 02173, Attention: Manager, Corporate Benefits.
10.2. Responsibilities of the Administrator -- The Administrator shall
assign responsibility for performance of all necessary administrative duties,
including the following:
(a) Determination of all questions which may arise under the Plan with
respect to eligibility for participation and administration of accounts,
including without limitation questions with respect to membership, vesting,
loans, withdrawals, accounting, status of accounts, stock ownership and voting
rights, and any other issue requiring interpretation or application of the Plan.
(b) Reference of appropriate issues to the financial, tax and legal
officers of the Company or of Raytheon Company.
(c) Establishment of procedures required by the Plan, such as
notification to Employees as to joining the Plan, selecting and changing
investment options, suspending deferrals, exercising voting rights in stock,
withdrawing and borrowing account balances, designation of beneficiaries,
election of method of distribution, and any other matters requiring a uniform
procedure.
(d) Submission of necessary amendments to supplement omissions from the
Plan or reconcile any inconsistency therein.
(e) Filing appropriate reports with the Government as required by law.
(f) Appointment of a Trustee or Trustees and investment managers.
(g) Review at appropriate intervals of the performance of the Trustee
and such investment managers as may have been designated.
(h) Appointment of such additional Fiduciaries as deemed necessary for
the effective administration of the Plan, such appointments to be by written
instrument.
<PAGE>
14
10.3. Liability for Acts of Other Fiduciaries -- Each Fiduciary shall
be responsible only for the duties allocated or delegated to said Fiduciary, and
other Fiduciaries shall not be liable for any breach of fiduciary responsibility
with respect to any act or omission of any other Fiduciary unless:
(a) The Fiduciary knowingly participates in or knowingly attempts to
conceal the act or omission of such other Fiduciary and knows that such act or
omission constitutes a breach of fiduciary responsibility by the other
Fiduciary;
(b) The Fiduciary has knowledge of a breach of fiduciary responsibility
by the other Fiduciary and has not made reasonable efforts under the
circumstances to remedy the breach; or
(c) The Fiduciary's own breach of his specific fiduciary
responsibilities has enabled another Fiduciary to commit a breach. No Fiduciary
shall be liable for any acts or omissions which occur prior to his assumption of
Fiduciary status or after his termination from such status.
10.4. Employment by Fiduciaries -- Any Fiduciary hereunder may employ,
with the written approval of the Administrator, one or more persons to render
service with regard to any responsibility which has been assigned to such
Fiduciary under the terms of the Plan including legal, tax, or investment
counsel and may delegate to one or more persons any administrative duties
(clerical or otherwise) hereunder.
10.5. Recordkeeping -- The Administrator shall keep or cause to be kept
any necessary data required for determining the account status of each
Participant. In compiling such information, the Administrator may rely upon its
employment records, including representations made by the Participant in the
employment application and subsequent documents submitted by the Participant to
the Employer. The Trustee shall be entitled to rely upon such information when
furnished by the Administrator or its delegate. Each Employee shall be required
to furnish the Administrator upon request and in such form as prescribed by the
Administrator, such personal information, affidavits and authorizations to
obtain information as the Administrator may deem appropriate for the proper
administration of the Plan, including but not limited to proof of the Employee's
date of birth and the date of birth of any person designated by a Participant as
a Beneficiary.
10.6. Claims Review Procedure -- The Administrator shall make all
determinations as to the right of any person to Accounts under the Plan. Any
such determination by the Administrator shall be made pursuant to the following
procedure:
Step l. Claims with respect to an Account should be filed by a claimant
as soon as practicable after claimant knows or should know that a dispute has
arisen with respect to an Account, but at least thirty (30) days prior to the
claimant's actual retirement date or, if applicable, within sixty (60) days
after the death, Disability or Severance from Service of the Participant whose
account is at issue, by mailing a copy of the claim to the Benefits and Services
Department, Raytheon Company, 141 Spring Street, Lexington, Massachusetts 02173.
<PAGE>
15
Step 2. In the event that a claim with respect to an Account is wholly
or partially denied by the Administrator, the Administrator shall, within ninety
(90) days following receipt of the claim, so advise the claimant in writing
setting forth: the specific reason or reasons for the denial; specific reference
to pertinent Plan provisions on which the denial is based; a description of any
additional material or information necessary for the claimant to perfect the
claim; an explanation as to why such material or information is necessary; and
an explanation of the Plan's claim review procedure.
Step 3. Within sixty (60) days following receipt of the denial of a
claim with respect to an Account, a claimant desiring to have the denial
appealed shall file a request for review with the Administrator by mailing a
copy thereof to the address shown in Step 1.
Step 4. Within thirty (30) days following receipt of a request for
review, the Administrator shall provide the claimant a further opportunity to
present his or her position. At the Administrator's discretion, such
presentation may be through an oral or written presentation. Prior to such
presentation, the claimant shall be permitted the opportunity to review
pertinent documents and to submit issues and comments in writing. Within a
reasonable time following presentation of the claimant's position, which usually
should not exceed thirty (30) days, the Administrator shall inform the claimant
in writing of the decision on review setting forth the reasons for such decision
and citing pertinent provisions in the Plan.
The Administrator is the fiduciary to whom the Plan grants full
discretion, with the advice of counsel, to interpret the Plan; to determine
whether a claimant is eligible for benefits; to decide the amount, form and
timing of benefits; and to resolve any other matter under the Plan which is
raised by a claimant or identified by the Administrator. All questions arising
from or in connection with the provisions of the Plan and its administration,
not herein provided to be determined by the Board of Directors, shall be
determined by the Administrator, and any determination so made shall be
conclusive and binding upon all persons affected thereby.
10.7. Indemnification of Directors and Employees -- The Companies shall
indemnify by insurance or otherwise any Fiduciary who is a director, officer or
employee of the Employer, his heirs and legal representatives, against all
liability and reasonable expense, including counsel fees, amounts paid in
settlement and amounts of judgments, fines or penalties, incurred or imposed
upon him in connection with any claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of acts or omissions
in his capacity as a Fiduciary hereunder, provided that such act or omission is
not the result of gross negligence or willful misconduct. The Companies may
indemnify other Fiduciaries, their heirs and legal representatives, under the
circumstances, and subject to the limitations set forth in the preceding
sentence, if such indemnification is determined by the Board of Directors to be
in the best interests of the Companies.
10.8. Immunity from Liability -- Except to the extent that the Code or
any other provision of the Laws of Puerto Rico prohibit the granting of immunity
to Fiduciaries from liability for any responsibility, obligation, or duty
imposed thereunder, an officer, employee, member of the Board of Directors of
the Employer or other person assigned responsibility under this Plan shall be
immune from any liability for any action or failure to act except such action or
failure to act which results from said officer's, Employee's, Participant's or
other person's own gross negligence or willful misconduct.
<PAGE>
16
ARTICLE XI - AMENDMENT OR TERMINATION OF THE PLAN
11.1. Right to Amend or Terminate Plan -- The Company reserves the
right at any time or times, by action of its Board of Directors or authorized
officer, to terminate the contributions of itself or any of the Companies to the
Plan or to modify, amend or terminate the Plan in whole or in part as to its
Employees, in which event a certified copy of the resolution of the Board of
Directors, authorizing such modification, amendment or termination shall be
delivered to the Trustee and to the other Companies whose Employees are covered
by this Plan, provided, however, that the Plan shall not be amended in such
manner as would cause or permit any part of the corpus of the Trust to be
diverted to purposes other than for the exclusive benefit of the Employees or as
would cause or permit any part of such corpus to revert to any of the Companies
prior to the satisfaction of all liabilities under the Plan, and provided
further that the duties or liabilities of the Trustee shall not be increased
without its written consent, and provided further that any such modification or
amendment of the Plan shall be subject to approval by the Board of Directors of
the Company.
11.2. Change in Vesting Schedule -- No amendment to the vesting
schedule shall deprive a Participant of his or her Nonforfeitable rights to
benefits accrued to the date of the amendment.
11.3. Maintenance of Plan -- The Company has established the Plan with
the bona fide intention and expectation that it will be able to make its
contributions indefinitely, but the Company is not and shall not be under any
obligation or liability whatsoever to continue its contributions or to maintain
the Plan for any given length of time.
11.4. Termination of Plan and Trust -- The Plan and Trust hereby
created shall terminate upon the occurrence of any of the following events:
(a) Delivery to the Trustee of a notice of termination executed
by the Company specifying the date as of which the Plan and Trust shall
terminate;
(b) Adjudication of the Company as bankrupt or general
assignment by the Company to or for the benefit of creditors or dissolution of
the Company;
In the event of the complete termination of this Plan or the complete
discontinuance of Matching Contributions under it (but a rescission under
Section 12.2 for failure to qualify initially is not such a termination or
complete discontinuance), the rights of each Participant to the amounts then
credited to his or her Account shall be Nonforfeitable. In the event of the
partial termination of this Plan, the rights of each Employee (as to whom the
Plan is considered terminated) to the amounts then credited to his or her
Account, shall be Nonforfeitable. Whether or not there is a complete or partial
termination of this Plan shall be determined under the regulations promulgated
pursuant to the Internal Revenue Code. To the extent this paragraph is
inconsistent with any provisions contained elsewhere in this Plan or in the
Trust which forms a part of this Plan, this paragraph shall govern. Upon such
termination of the Plan and Trust, after payment of all expenses and
proportional adjustment of accounts to reflect such expenses, fund losses or
profits, and reallocations to the date of termination, each Participant or
former Participant shall be entitled to receive any amounts then credited to his
or her Account in the Trust. The Trustee shall make payments in cash.
<PAGE>
17
ARTICLE XII - ADDITIONAL PROVISIONS
12.1. Effect of Merger, Consolidation or Transfer -- In the event of
any merger or consolidation with or transfer of assets or liabilities to any
other plan or to this Plan, each Participant of the Plan shall be entitled to a
benefit immediately after the merger, consolidation or transfer, which is equal
to or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation or transfer (if the Plan had been
terminated).
12.2. Necessity of Initial Qualification -- This Plan is established
with the intent that it shall qualify under Section 3165 of the Code as that
section exists at the time the Plan is established. If the Secretary of the
Treasury of Puerto Rico determines that the Plan initially fails to meet those
requirements, then within thirty (30) days after the date of such determination
all of the vested assets of the Trust held for the benefit of Participants and
their beneficiaries shall be distributed equitably among the contributors to the
Plan in proportion to their contributions, and the Plan shall be considered to
be rescinded and of no force or effect, unless such inadequacy is removed by a
retroactive amendment pursuant to the Code. Any non-vested Matching
Contributions and earnings attributable thereto shall be returned to the
Companies.
12.3. Limitation of Assignment -- No account under the Plan shall be
subject in any manner to attachment, anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, or the vesting of rights in any
person by operation of law or otherwise except as provided under this Plan,
including but not limited to the Trustee or Receiver in Bankruptcy, and any
attempt so to anticipate, alienate, sell, transfer, assign, encumber or charge
the same shall be void, nor shall any such benefit be in any way liable for or
subject to the debts, contracts, liabilities, engagements or torts of any person
entitled to such benefit. If any Participant is adjudicated bankrupt, or
attempts to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge any benefit under the Plan, then such benefit shall, in the discretion of
the Administrator, cease and terminate and in that event the Trustee shall hold
or apply the same or any part thereof to or for the benefit of such Participant
in such manner as the Administrator may direct.
12.4. Limitation of Rights of Employees -- This Plan is strictly a
voluntary undertaking on the part of the Companies and shall not be deemed to
constitute a contract between any of the Companies and any Employee, or to be a
consideration for, or an inducement to, or a condition of the employment of any
Employee. Nothing contained in the Plan shall be deemed to give any Employee the
right to be retained in the service of any of the Companies or shall interfere
with the right of any of the Companies to discharge or otherwise terminate the
employment of any Employee of the Company at any time. No Employee shall be
entitled to any right or claim hereunder except to the extent such right is
specifically fixed under the terms of the Plan.
12.5. Construction -- The Plan shall be construed, regulated, and
administered under the laws of the Commonwealth of Puerto Rico.
<PAGE>
18
ARTICLE XIII - DEFINITIONS
The following terms have the meaning specified below unless the context
indicates otherwise:
13.1. "Account" means the entire interest of a Participant in the
Trust. A Participant's Account shall consist of an Employee Account, a Matching
Contribution Account and, if applicable, a Rollover Contribution
Account and Corrective Qualified Non-Elective Contribution Account.
13.2. "Administrator" means Raytheon Company.
13.3. "Annual Addition" means a Participant's Matching Contribution
and the Participant's Elective Deferral (and, if applicable, a Corrective
Qualified Non-Elective Contribution) during a Limitation Year.
13.4. "Authorized Leave of Absence" means an absence approved by the
Companies on a uniform and nondiscriminatory basis not exceeding one (1) year
for any of the following reasons: illness of Employee or relative, death of
relative, education of Employee, or personal or family business of an
extraordinary nature, provided in each case that the Employee returns to the
service of the Companies within the time period specified by the Companies.
13.5. "Authorized Military Leave of Absence" means any absence due to
service in the Armed Forces of the United States, upon completion of which the
Employee is entitled under any applicable Federal law to reemployment at the
termination of such military service, provided that he returns to the service of
the Companies within the period provided for by such applicable Federal law or
such further period as may be established by the Administrator. As used in this
paragraph, the term "Armed Forces of the United States" excludes the Merchant
Marine.
13.6. "Beneficiary" means a Participant's Surviving Spouse. If there is
no Surviving Spouse, or if the Surviving Spouse has given written consent to the
designation of another person or persons as Beneficiary, then Beneficiary shall
means said person or persons designated by the Participant to be paid the lump
sum value of the Participant's Account in the event of the Participant's death.
13.7. "Board of Directors" means the Board of Directors of Raytheon
Company.
13.8. "Business Day" means a day on which Fidelity is open for general
business.
13.9 "Code" means the Puerto Rico Tax Code.
13.10. "Company" means Raytheon Catalytic Inc. but shall not include
a Division, Operation or similar cohesive group of Raytheon Company excluded
by the Board of Directors of Raytheon Company.
13.11. "Companies" means the Company and any Subsidiary of the Company
which elects through an authorized officer to participate in the Plan on account
of its Employees, provided that participation in the Plan by such a Subsidiary
is approved by the Board of Directors of the Company, or an officer to whom
authority to approve participation by a subsidiary is delegated by the Board of
Directors, but shall not include any Division, Operation or similar cohesive
group of a participating Subsidiary excluded by the Board of Directors of the
Subsidiary and the Board of Directors of the Company.
<PAGE>
19
13.12. "Corrective Qualified Non-Elective Contribution Account" means
that portion of a Participant's Account which is attributable to corrective
qualified non-elective contributions received pursuant to Section 3.11,
adjustments for withdrawals and distributions and the earnings from losses
attributable thereto.
13.13. "Designated Hourly Payroll" means an hourly payroll or portion
thereof, processed in the United States, of one of the Companies which is
designated in writing by the Administrator in accordance with nondiscriminatory
and uniform rules as a payroll the Employees on which are eligible to
participate in this Plan.
13.14. "Disability" means that the Participant is totally and
permanently disabled by bodily injury or disease so as to be prevented from
engaging in any occupation for compensation or profit. The determination of
disability shall be made by the Administrator with the aid of competent medical
advice. It shall be based on such evidence as the Administrator deems necessary
to establish disability or the continuation thereof.
13.15. "Early Retirement Date" means the first day of the month
subsequent to the earliest date on which the Participant has both attained age
55 and completed a Period of Service of ten (10) years.
13.16. "Elective Deferral" means a voluntary reduction of
Participant's compensation in accordance with Section 3.2 hereof.
13.17. "Eligible Compensation" means the base pay, supervisory
differentials, shift premiums and, effective January 1, 1985, sales commissions,
excluding all other earnings from any source.
13.18. "Eligible Employee" means any Employee on a Puerto Rico based
Salaried or Designated Hourly Payroll of the Company, excluding Employees in
cooperative studies and intern programs and a person who is an Employee solely
by reason of being a leased Employee.
13.19. "Employee" means any person performing compensated services
for the Employer who meets the definition of "Employee" for income tax
withholding purposes under the Code.
13.20. "Employee Account" means that portion of Participant's Account
which is attributable to Elective Deferrals, adjustments for withdrawals and
distributions, and the earnings and losses attributable thereto.
13.21. "Employer" means Raytheon Company and, where the context
requires, any subsidiary of Raytheon Company while such subsidiary is, or was, a
member of a "controlled group of corporations" within the meaning of Section
414(b) of the United States Internal Revenue Code.
13.22. "Employment Commencement Date" is the date on which the
Employee first performs an Hour of Service with the Employer.
13.23. "Enrollment Agreement" means a salary reduction agreement
pursuant to which an Eligible Employee voluntarily joins the Plan and authorizes
deferral of a portion of the Participant's Eligible Compensation.
<PAGE>
20
13.24. "Entry Date" means the first Pay Date in each calendar month.
13.25. "Fidelity" means Fidelity Investments, the recordkeeper for
the Plan.
13.26. "Fiduciary" means a named fiduciary and any other person or
group of persons who assumes a fiduciary responsibility within the meaning of
the Retirement Act under this Plan whether by expressed delegation or otherwise
but only with respect to the specific responsibilities of each for the
administration of the Plan and Trust.
13.27. (a) "Hour of Service" means an hour with respect to which any
Employee is paid, or entitled to payment, for the performance of duties for the
Employer during the applicable computation period.
(b) "Hour of Service" shall include an hour for which the
Employee is entitled to credit under subparagraph (a) hereof as a result of
employment:
(i) with a predecessor company substantially all of the
assets of which have been acquired by the Employer, provided that where
only a portion of the operations of a company have been acquired, only
service with said acquired portion prior to the acquisition will be
included and that the Employee was employed by said predecessor company
at the time of acquisition; or
(ii) with a Division, Operation or similar cohesive group of
the Employer excluded from participation in the Plan.
13.28. "Layoff" means an involuntary interruption of service due to
reduction of work force with or without the possibility of recall to employment
when conditions warrant.
13.29. "Limitation Year" means the calendar year or any other
12-consecutive-month period adopted for all qualified deferred compensation
plans of the Company pursuant to a written resolution adopted by the Company.
13.30. "Matching Contribution" means contribution made to the Trust
in accordance with Section 3.7 hereof.
13.31. "Matching Contribution Account" means that portion of
Participant's Account which is attributable to Matching Contributions by the
Companies, adjustments for withdrawals and distributions, and the earnings and
losses attributable thereto.
13.32. "Net Annual Profits" means the current earnings of the Companies
for the Plan Year determined in accordance with generally accepted accounting
principles before federal and local income taxes and before contributions to
this Plan or any other qualified plan.
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21
13.33. "Net Profits" means the accumulated earnings of the Companies at
the end of the Plan Year determined in accordance with generally accepted
accounting principles. For the purposes hereof "accumulated earnings at the end
of the Plan Year" shall include Net Annual Profits for such Plan Year calculated
before any deduction is taken for depreciation, if any.
13.34. "Nonforfeitable" means an unconditional right to an Account
balance or portion thereof determined as of the applicable date of determination
under this Plan.
13.35. "Normal Retirement Age" means the Participant's sixty-fifth
(65th) birthday.
13.36. "Participant" means an individual who is enrolled in the Plan
pursuant to Article III and has not withdrawn the entire amount of his or he
Account.
13.37. "Pay Period" means a scheduled period for payment of wages or
salaries.
13.38. "Period of Participation" means that portion of a Period of
Service during which the Eligible Employee was a Participant, and had an
Employee Account in the Plan. For purposes of determining a Period of
Participation, participation in the Raytheon Savings and Investment Plan, the
Raytheon Savings and Investment Plan for Specified Hourly Payroll Employees, and
the Raytheon Employees Savings and Investment Plan shall be considered as
participation in this Plan.
13.39. "Period of Service" means the period of time beginning on the
Employee's Employment Commencement Date or Reemployment Commencement Date,
whichever is applicable, and ending on the Employee's Severance from Service
Date.
13.40. "Period of Severance" means the period of time beginning on the
Employee's Severance from Service Date and ending on the Employee's Reemployment
Commencement Date.
13.41. "Plan" means the Raytheon Savings and Investment Plan for
Puerto Rico Based Employees as amended from time to time.
13.42. "Plan Year" means a calendar year, or a portion thereof
occurring prior to the termination of the Plan.
13.43. "Reemployment Commencement Date" means the first date on which
the Employee performs an Hour of Service following a Period of Severance which
is excluded under Section 5.3 in determining whether a Participant has a
Nonforfeitable right to his or her Matching Contribution Account.
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22
13.44. "Retirement" means a Severance from Service when the Participant
has either attained age 55 and completed a Period of Service of at least ten
(10) years or has attained Normal Retirement Age.
13.45. "Retirement Act" means the Employee Retirement Income Security
Act of 1974, including any amendments thereto.
13.46. "Rollover Contribution Account" means that portion of a
Participant's Account which is attributable to rollover contributions received
pursuant to Section 3.9, adjustments for withdrawals and distributions, and the
earnings and losses attributable thereto.
13.47. "Salaried Payrolls" means the nonexempt salaried and the exempt
salaried payrolls which are processed in the United States.
13.48. "Severance from Service" means the termination of employment by
reason of quit, Retirement, discharge, death or failure to return from Layoff,
Authorized Leave of Absence, Authorized Military Leave of Absence or Disability.
13.49. "Severance from Service Date" means the earlier of:
(a) the date on which an Employee quits, retires, is
discharged, or dies; or
(b) except as provided in paragraphs (c) and (d) hereof, the
first anniversary of the first date of a period during which an Employee is
absent for any reason other than quit, retirement, discharge or death, provided
that, on an equitable and uniform basis, the Administrator may determine that,
in the case of a layoff as the result of a permanent plant closing, the
Administrator may designate the date of layoff or other appropriate date prior
to the first anniversary of the first date of absence as the Severance From
Service Date; or
(c) in the case of an Authorized Military Leave of Absence
from which the Employee does not return prior to expiration of recall rights,
"Severance from Service Date" means the first day of absence because of the
leave; or
(d) in the case of an absence due to Disability, "Severance
from Service Date" means the earlier of the first anniversary of the first day
of absence because of the Disability or the date of termination of the
Disability; or
(e) in the case of an Employee who is discharged or quits
(i) by reason of the pregnancy of the Employee, (ii) by reason of the birth of a
child to the Employee, (iii) by reason of the placement of a child with the
Employee in connection with the adoption of such child by the Employee or (iv)
for purposes of caring for such child for a period beginning immediately
following such birth or placement, "Severance from Service Date," for the sole
purpose of determining the length of a Period of Service, shall mean the first
anniversary of the quit or discharge.
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23
13.50. "Subsidiary" means any corporation designated by the Board of
Directors as a Subsidiary, provided that for the purposes of the Plan no
corporation shall be considered a Subsidiary during any period when less than
fifty percent (50%) of its outstanding voting stock is beneficially owned by the
Company.
13.51. "Surviving Spouse" means a lawful spouse surviving the
Participant as of the date of Participant's death.
13.52. "Trust" means all cash and other property contributed, paid or
delivered to the Trustee under the Trust Agreement, all investments made
therewith and proceeds thereof, and all earnings and profits thereon, less
payments, transfers or other distributions which, at the time of reference,
shall have been made by the Trustee as authorized under the Trust Agreement.
13.53. "Trust Agreement" means the Raytheon Company Master Trust for
Defined Contribution Plans dated July 31, 1992, as amended, and any successor
agreement made and entered into for the establishment of a trust fund of all
contributions which may be made to the Trustee under the Plan.
13.54. "Trustee" means the Fidelity Management Trust Company and any
successor or successors thereto under the Trust Agreement.
13.55. "Valuation Date" means the last business day of each calendar
month.
13.56. Words used in either the masculine or feminine gender shall be
read and construed so as to apply to both genders where the context so warrants.
Words used in the singular shall be read and construed in the plural where they
so apply.
<PAGE>
1
EXHIBIT 4.7
E-SYSTEMS SAVINGS AND INVESTMENT PLAN
Article I
PREAMBLE
WHEREAS, effective July 1, 1973, E-Systems, Inc. organized and existing
under the laws of the State of Delaware, established the Employee Stock
Ownership Plan for its eligible Employees (hereinafter referred to as the
"Previous Plan") which was restated January 1, 1976 and January 1, 1989, and
amended thereafter from time to time; and
WHEREAS, the Previous Plan, prior to January 1, 1995, included ESOP and
PAYSOP Accounts, the Tax-Advantaged Capital Accumulation Plan (T-CAP), Savings
and Investment Plan (S & I) accounts, after-tax employee contribution accounts
and certain HRB accounts and rollover accounts; and
WHEREAS, the Previous Plan was amended and restated, effective January
1, 1995, into two separate plans with separate plan documents, with the ESOP and
PAYSOP Accounts continued, on a combined basis, in a restated Employee Stock
Ownership Plan, and the T-CAP, S & I, after-tax employee contribution, HRB and
rollover accounts spun off and continued in a new Employee Savings Plan;
WHEREAS, as a result of the acquisition of E-Systems, Inc. by Raytheon
Company in May, 1995, the final ESOP contribution was made under the ESOP for
the period from January 1, 1995 through April of 1995 and the ESOP was then
merged into the Employee Savings Plan with a new annual Regular Discretionary
Employer Contribution under the Employee Savings Plan, beginning with the period
after the final ESOP contribution; and
WHEREAS, the Corporation now desires to make certain further changes to
the Employee Savings Plan, including: (i) the adoption of full and immediate
vesting of Members in all of their accounts, (ii) providing for an investment
committee to direct the investments of certain specified contributions and
accounts for which no investment direction is given by Members and (iii) the
replacement of the Melpar Division with the new Falls Church Division as a
participating division hereunder;
NOW, THEREFORE, the Employee Savings Plan is hereby restated and
amended, superseded and replaced by this separate restated Employee Savings
Plan, effective January 1, 1995.
There will be no termination and no gap or lapse in time or effect
between such Plans, and the existence of a qualified Plan shall be continuous
and uninterrupted.
This restated Plan, which is a profit sharing plan, is conditioned upon
its qualification under Sections 401(a), 401(k) and 401(m) of the Internal
Revenue Code of 1986, as amended from time to time, with employer contributions
being deductible under Section 404 of said Code or any other applicable sections
thereof, as amended from time to time.
The terms and conditions of this restated Plan are as follows:
<PAGE>
2
ARTICLE II
Purpose and Definitions
2.1 Purpose: The purpose of this Plan is to encourage Employees to save
and invest, systematically, a portion of their current Compensation in order
that they may have a source of additional income upon their Retirement or
Disability, or for their family in the event of death. The benefits provided by
this Plan will be paid from the Trust Fund and will be in addition to the
benefits Employees are entitled to receive under any other programs of the
Employer.
This Plan and the separate related Trust forming a part hereof are
established and shall be maintained for the exclusive benefit of the eligible
Employees of the Employer and their Beneficiaries. No part of the Trust Fund can
ever revert to the Employer or be used for or diverted to any other purpose
other than for the exclusive benefit of the Employees of the Employer and their
Beneficiaries, except as provided in Section 18.4 hereof.
2.2 Definitions: Where the following words and phrases appear in this
Plan, they shall have the respective meanings set forth below, unless the
context clearly indicates otherwise:
(a) Affiliated Employer: Any business entity (including an Employer
hereunder) that, together with an Employer hereunder, constitutes a controlled
group of corporations, a group of trades or businesses under common control, or
an affiliated service group, all as defined in Code Section 414 (subject,
however, to the provisions of Code Section 415(h) when applying the benefit
limitations of Code Section 415).
(b) Allocation Date: The date as of which contributions are
allocated hereunder, which shall be
(1) as soon as practicable after the end of each payroll period as
to Salary Deferral, after-tax Employee and Matching Employer
Contributions,
(2) as soon as practicable after receipt hereunder as to Rollover
Contributions,
(3) the last day of December as to Discretionary Employer
Contributions.
The Committee may use other Allocation Dates if it so desires, but must
have at least one Allocation Date per year for each type of contribution.
(c) Beneficiary: A person designated by a Member to receive benefits
hereunder upon the death of such Member.
<PAGE>
3
(d) Code: The Internal Revenue Code of 1986, as amended from time to
time.
(e) Committee: The persons appointed to administer the Plan in
accordance with Article XIII hereof, but who will have no responsibility as to
the management and investment of Plan assets.
(f) Compensation: As to any payroll period, for purposes of determining
Salary Deferral or Employee Contributions, the base rate of pay of an Employee
applicable for such period, regardless of whether actually paid (including any
base rate of pay amount that is deducted from such Employee's pay for such
period under Code Section 125 or 401(k)).
As to any Plan Year, for purpose of determining Discretionary Employer
Contributions, the lesser of:
(i) the cumulative annual base rate of pay applicable to an
Employee for such year regardless of whether actually paid
(including any base rate of pay amount that is deducted from
such Employee's pay for such year under Code Section 125 or
401(k)) or,
(ii) the sum of the taxable remuneration (as reported on Form W-2
or its equivalent) paid to an Employee by the Employer for
personal services, plus any pre-tax employee contribution made
by the Employee under any Employer plan in accordance with
Code Section 125 or 401(k).
Base rate of pay is an Employee's basic rate of remuneration for
personal services, excluding such items as shift differential, quarterly wage
adjustments, commissions, unused sick pay, severance pay, allowances, awards,
lump sum payments, per diem payments and imputed income.
Compensation will be determined by excluding any amount in excess of
the dollar limit allowed under Code Section 401(a)(17)). If during a year any
Employee ("family member") is the spouse or lineal descendant, below age 19, of
another Employee ("HCE") who either is a five percent (5%) owner (as defined in
Code Section 416(i) or is a highly compensated employee (as defined in Code
Section 414(q) in the group consisting of the ten (10) such highly compensated
employees with the greatest compensation during such year, then, for purposes of
the above dollar limitation, such "family member's" compensation for such year
will be aggregated with such "HCE's" compensation for such year. The dollar
limit applicable to each such Employee's compensation for such year will be the
dollar limit applicable for such year multiplied by a fraction, the numerator of
which is such Employee's unlimited compensation for such year and the
denominator of which is the sum of the unlimited compensation for such year for
all Employees with whom such Employee is a family member, as defined above.
<PAGE>
4
(g) Contributions: Amounts contributed hereunder for allocation to
Members as follows:
(1) Salary Deferral Contributions: The pre-tax contributions made
under Section 4.1a hereof through salary deferral pursuant to
Code Section 401(k).
(2) Employee Contributions: The after-tax contributions made by
Members under Section 4.2 hereof not through salary deferral).
(3) Matching Employer Contributions: The matching Employer
Contributions made under Section 4.1a. hereof.
(4) Regular and Optional Discretionary Employer Contributions: The
contributions made by the Employer, under Section 4.1a hereof,
which are determined at the discretion of the Employer.
(5) Rollover Contributions: The contributions made by an Employee
under Section 4.3 hereof, which constitute the Employee's
distribution from a prior plan.
(h) Corporation: Raytheon E-Systems, Inc., (formerly known as
E-Systems, Inc. prior to July 3, 1996) a corporation organized
and existing under the laws of the State of Delaware or its
successor or successors.
(i) Covered Employment: The employment category for which the
Plan is maintained, which includes any employment with the
Employer, excluding:
employment as a "leased employee" (as such term is defined
within the definition of Employee below)
employment as a non United States citizen who was hired on or
after December 2, 1964, and who is employed outside the
territorial United States or only temporarily within the
territorial United States.
Provided, however, that employment with a subsidiary or affiliate of
the Corporation or employment in any division, subdivision, branch or unit of
the Corporation or in any employment position with an Employer entered into in
connection with a business acquisition on or after January 1, 1995, or in any
employment position created in connection with such a business acquisition shall
only be covered hereunder if so provided in part I or II of the Participation
Exhibit attached to and made a part of this Plan.
<PAGE>
5
(j) Effective Date: January 1, 1995, except as otherwise provided
herein.
(k) Employee: Any person who, on or after the Effective Date, is
receiving remuneration for personal services rendered as a common law employee
of the Employer or Affiliated Employer or who is on a Leave of Absence. A
"leased employee" will also be deemed an Employee. A "leased employee" is any
leased employee within the meaning of Code Section 414(n)(2), except that if
such leased employees constitute less than twenty percent (20%) of the
Employer's nonhighly compensated workforce within the meaning of Code Section
414(n)(5)(C)(ii), then the term "Employee" will not include those leased
employees covered by a plan described in Code Section 414(n)(5) unless otherwise
provided by the terms of such plan (or this Plan).
(l) Employer: The Corporation and any other organization which adopts
the Plan in accordance with Article XV hereof. Any Employer under the Previous
Plan that was participating in the portion of the Previous Plan that is
continuing under this Plan shall automatically become an Employer under this
Plan on the Effective Date.
(m) Employer Stock: Common stock of E-Systems, Inc. prior to the
acquisition of E-Systems, Inc. by Raytheon Company in May, 1995 and thereafter,
the common stock of Raytheon Company.
(n) ERISA: The Employee Retirement Income Security Act of 1974, as
amended from time to time.
(o) Individual Account: Each of the accounts showing the individual
interests in the Trust Fund of each Member, former Member, and Beneficiary, as
described in Section 5.1 hereof. If so provided for in a qualified domestic
relations order (as defined in Code Section 414(p)), an account will be
maintained for an alternate payee representing such alternate payee's interest
hereunder.
(p) Leave Of Absence: Any absence from service authorized by an
Employer under such Employer's standard personnel practices for reasons other
than termination of employment, death, discharge or retirement, provided that
all persons under similar circumstances must be treated alike in the granting of
such Leaves of Absence.
(q) Limitation Year: The calendar year used in applying Code Section
415.
(r) Member: An Employee who has met the eligibility requirements for
participation set forth in Article III hereof.
(s) Plan: E-Systems, Inc. Employee Savings Plan (as restated January 1,
1995), the Plan set forth herein, as amended from time to time, which replaces
the original Employee Savings Plan adopted effective January 1, 1995, which was
spun off from the previous Employee Stock Ownership Plan. This Plan includes:
(i) a salary deferral arrangement under Code Section 401(k), with
matching contributions under Code Section 401(m), sometimes
referred to as the E-Systems, Inc. Tax-Advantaged Capital
Accumulation Plan (T-CAP),
<PAGE>
6
(ii) a voluntary after-tax Employee contribution portion,
(iii) a prior savings and investment plan portion, and
(iv) a discretionary Employer contribution portion,
(v) a prior plan employer contribution portion, and
(vi) a prior ESOP assets portion.
(t) Plan Administrator: The Corporation.
(u) Plan Year: Each annual period beginning on January 1st and
ending on December 31st.
(v) Previous Plan: The E-Systems, Inc. Employee Stock Ownership Plan
(As Restated Effective January 1, 1989) and any predecessor thereto, in force
and effect for the period prior to the Effective Date, the plan from which this
Plan was spun off. Any reference herein to the Previous Plan as of a certain
date or for a certain period shall be deemed a reference to the Previous Plan as
then in effect.
(w) Trust Agreement: The trust agreement maintained in connection with
the Plan, amended from time to time, which constitutes a part of this Plan.
(x) Trust Or Trust Fund: The fund maintained in accordance with the
terms of the Trust Agreement.
(y) Trustee: Any corporation or individuals appointed by the Employer
to administer the Trust in accordance with the Trust Agreement.
(z) Valuation Date: The date as of which the Investment Funds are
valued and gains or losses allocated, which shall be every business day (or such
other dates as may be provided for by the Investment Funds in which such
accounts are invested). The Committee may use other Valuation Dates if it so
desires, from time to time, but must have at least one Valuation Date per year.
2.3 Construction: The masculine gender, where appearing in the Plan,
shall be deemed to include the feminine gender, unless the context indicates to
the contrary.
ARTICLE III
Participation Requirements
3.1 Participation Originating Under The Previous Plan: Employees in
Covered Employment who were participants in the portion of the Previous Plan
spun off into this Plan, immediately prior to the Effective Date, or would have
become participants in such portion of the Previous Plan on the Effective Date,
shall automatically become Members in this restated Plan as of the Effective
Date.
3.2 Participation Originating Under This Plan: Each Employee who does
not become a Member in this Plan in accordance with Section 3.1 hereof, shall
become a Member in this Plan as of his first day of Covered Employment.
<PAGE>
7
3.3 Cessation Of Participation And Reentry: If a Member leaves Covered
Employment, he will cease his participation in this Plan (except as to any
remaining account balance), but will, upon recommencement of Covered Employment,
again become a Member hereunder.
3.4 Participating Divisions, Units, Subsidiaries Or Affiliates: Any
Employee who is employed within a covered class by a division, subdivision,
branch, unit, subsidiary or affiliate of the Employer that has been designated
by the Employer as a participating division, subdivision, branch, unit,
subsidiary or affiliate (as shown in part I of the Participation Exhibit, which
is attached to and made a part of this Plan) shall become a Member in this Plan
upon his employment commencement date or date when such division, subdivision,
branch, unit, subsidiary or affiliate begins its participation in this Plan if
later.
3.5 Participation Of Employees Of New Employers: If, after the
Effective Date hereof, any employer adopts the Plan and Trust as a new Employer
as herein provided, it shall specify in its adoption resolution or decision an
initial date for the application and enrollment of its eligible Employees under
the Plan and shall thereafter be governed by the provisions of this Article III.
3.6 Temporary Part-Time Employees: The 1,000 hour eligibility
requirement, effective July 1, 1994, under Section 3.7 of the previous Employee
Stock Ownership Plan as to any Employee in a temporary part-time job category is
revoked retroactive to July 1, 1994.
ARTICLE IV
Contributions
4.1 Contributions By Employer:
a. Types Of Contributions: The Employer shall, during a Plan
Year, contribute the following to the Trust:
(1) Salary Deferral Contribution, for each Member eligible under
part I or II of the Participation Exhibit attached to this
Plan, employed by such Employer, determined according to such
Member's salary deferral election for such year under b.
below. Such contribution is for allocation, in accordance with
Section 5.2 hereof, to the Member's Salary Deferral
Contribution Account.
(2) Matching Employer Contribution, for each Member eligible under
part I or II of the Participation Exhibit attached to this
Plan, equal to fifty percent (50%) of the matchable portion of
each eligible Member's Salary Deferral Contribution hereunder,
such matchable portion being up to the first three percent
(3%) of Compensation the Member contributes as a Salary
Deferral Contribution during the Plan Year while in a job
classification eligible for a Matching Employer Contribution.
Such contribution is for allocation, in accordance with
Section 5.2 hereof, to such Members' Matching Employer
Contribution Accounts.
<PAGE>
8
(3) Regular Discretionary Employer Contribution, determined at the
discretion of the Employer's Board of Directors, for Members
eligible under part I or II of the Participation Exhibit
attached to this Plan. Such contributions are not to exceed
one and one-half percent (1-1/2%) of Members' Compensation,
with the contribution for the 1995 Plan Year to be only with
respect to Members' Compensation for such year which is in
excess of the Member's compensation used under the prior
Employee Stock Ownership Plan for determining the final 1995
contribution thereunder. Such contribution is for allocation,
in accordance with Section 5.2 hereof, among such Members'
Regular Discretionary Employer Accounts.
(4) Optional Discretionary Employer Contribution, determined at
the discretion of the Employer's Board of Directors for
Members eligible under part I or II of the Participation
Exhibit attached to this Plan, with the contribution amount
determined and allocated separately as to each Employee group
specified in part I of such Participant Exhibit. Such
contribution is for allocation, in accordance with Section 5.2
hereof, among such Member's Optional Discretionary Employer
Accounts.
b. Member (Pre-Tax) Salary Deferral Elections: When he becomes a Member
hereunder and at any time thereafter, a Member who is eligible under part I or
II of the Participation Exhibit attached to this Plan may elect to defer (on a
pre-tax basis) a portion of his Compensation; provided, however:
(1) The Committee may require such contributions to be a whole
dollar or a whole percentage of his Compensation.
(2) Such deferral must meet the deferral percentage test in
Section 10.2 hereof, and the Committee may require
modifications throughout the year in order to meet such test.
(3) Such deferral cannot exceed the dollar limit in Section 10.1
hereof or the amount of cash remuneration actually payable to
a Member during any payroll period.
(4) The Committee may establish a maximum deferral for any year.
A salary deferral agreement shall be entered into in such manner and at
such times as the Committee may prescribe, provided that changes, suspensions or
discontinuance of salary deferrals may be made by the Member at any time, and
may be made by the Committee if called for under Section 10.1 or 10.2 hereof or
if the Employer's deduction limits under Code Section 404(a) would otherwise be
exceeded, or if the annual addition limitations under Code Section 415 would
otherwise be exceeded as to any Employee.
4.2 Member (After-Tax) Contributions: Any Member eligible under part I
or II of the Participation Exhibit attached to this Plan may, through payroll
deduction (unless the Committee approves another method), elect to make Employee
Contributions hereunder (on an after-tax basis); provided, however:
<PAGE>
9
(1) The amount of contribution for any pay period (subject to
Section 10.2 hereof) must be equal to two percent (2%), four
percent (4%), six percent (6%), eight percent (8%), or ten
percent (10%) of his Compensation for such pay period and in
any payroll period cannot exceed the cash remuneration then
actually payable to the Member.
(2) The Committee may require such contributions to be a whole
dollar amount of his Compensation.
(3) Such contribution must meet the contribution percentage test
in Section 10.2 hereof, and the Committee may require
modifications throughout the year in order to meet such test.
(4) The total Employee Contributions made by a Member hereunder
(including any such contributions made under the Previous
Plan) cannot exceed ten percent (10%) of his aggregate
Compensation for all such years while he was a Member
hereunder (and under the Previous Plan).
An election to make such contributions shall be made in such manner and
at such times as the Committee may prescribe, provided that changes, suspensions
or discontinuance of contributions may be made by the Member in accordance with
Committee guidelines, and may be made by the Committee if called for under
Section 10.2 hereof, or if the annual addition limitations under Code Section
415 would otherwise be exceeded as to any Employee.
4.3 Rollover Contribution: If an individual is an Employee in Covered
Employment who has become, or is expected to become, a Member, he may
contribute, or cause to be contributed, to this Plan all or part of any eligible
rollover distribution (as defined in Code Section 402(c)) he has received under
another qualified retirement plan. Such contribution shall only be made in
accordance with Committee guidelines and is for allocation to the Employee's
Rollover Account.
ARTICLE V
Maintenance Of Individual Accounts
5.1 Establishment Of Individual Accounts: The Committee shall create
and maintain adequate records to reflect at all times the interest in the Trust
Fund of each Member. Such records shall be in the form of separate Individual
Accounts for each Member who has an interest in the Trust Fund, such accounts to
be referred to as follows:
a. Salary Deferral Account (T-CAP 401(k)): The account representing
Salary Deferral Contributions made under this Plan and gains or losses allocable
thereto, originally effective under the Previous Plan on January 1, 1984.
b. Regular Employee Contribution Account (After-Tax): The account
representing Employee Contributions made prior to September 25, 1995 and gains
or losses allocable thereto (other than those included in c. and d. below).
<PAGE>
10
c. HRB Employee Contribution Account (HRB After-Tax): The account
representing Employee Contributions by HRB Systems Employees under the Previous
Plan during 1990, and gains or losses allocable thereto.
d. Voluntary Savings Account (Prior Voluntary After-Tax): The account
representing after-tax Employee contributions made under the Previous Plan
voluntary savings program prior to April 1, 1980, and gains or losses allocable
thereto.
e. Employee Contribution Account: Any of the Employee
Contribution Accounts in b., c. or d. above.
f. Matching Employer Contribution Account: The account representing
Matching Employer Contributions made hereunder and gains or losses allocable
thereto, effective January 1, 1995.
g. Prior Plan Employer Contribution Account: The account representing
matching employer contributions made for HRB Systems Employees in 1990 under the
Previous Plan and gains or losses allocable thereto and any account representing
employer contributions made under a prior plan that has been transferred to this
account under this Plan and gains or losses allocable thereto.
h. Regular Discretionary Employer Account (E-CAP): The account
representing Regular Discretionary Employer Contributions and forfeitures, and
gains or losses allocable thereto, effective May, 1995.
i. Optional Discretionary Employer Account: The account representing
Optional Discretionary Employer Contributions and forfeitures, and gains or
losses applicable thereto, effective January 1, 1995.
j. Discretionary Employer Account: The total of the Regular and
Optional Discretionary Employer Accounts.
k. Savings And Investment Account: The account representing Employee
and Employer Contributions made before July 1, 1973 under the prior savings and
investment plan and gains or losses allocable thereto. Subaccounts will be
maintained reflecting the portion of the account attributable to Employee
Contributions and the portion attributable to Employer Contributions.
l. Rollover Account: The account representing Rollover Contributions
and gains or losses allocable thereto.
m. Prior ESOP Assets Account: The account representing a Member's ESOP
Account under the E-Systems, Inc. Employee Stock Ownership Plan (as restated
January 1, 1995), and gains or losses allocable thereto, which account was
transferred to this Plan as part of the merger of such Employee Stock Ownership
Plan into this Plan after the final ESOP Contribution was made for April of
1995.
Credits and charges shall be made to such accounts in the manner herein
described. The Individual Accounts are primarily for accounting purposes, and a
segregation of the assets of the Trust Fund to each account by the Trustee shall
not be required. Distributions and withdrawals made from an account shall be
charged to the account as of the date when paid.
<PAGE>
11
Account balances from the Previous Plan shall be carried forward into
the above-referenced accounts, as applicable.
Account balances from a prior plan (other than the Previous Plan) will
be credited to the appropriate accounts named above upon the transfer of said
plan's assets to this Plan. Account balances from the prior plans listed in part
V of the Participation Exhibit have been transferred to this Plan.
5.2 Allocation Of Contributions: Each contribution for Members
eligible under the provisions below shall be allocated as follows:
a. Salary Deferral Contributions And Employee Contributions: Any Salary
Deferral Contribution or Employee Contribution received hereunder on behalf of a
Member shall be allocated to this Salary Deferral Contribution Account or
Employee Contribution Account, as the case may be, as of the Allocation Date
applicable to such contribution.
b. Matching Employer Contributions: Any Matching Employer Contribution
received hereunder for a Member will be allocated to his Matching Employer
Contribution Account as of the Allocation Date applicable to such contribution.
c. Regular and Optional Discretionary Employer Contributions: On the
applicable Allocation Date for a Regular or Optional Discretionary Employer
Contribution the applicable Regular or Optional Discretionary Employer Account
of each eligible Member who is then employed by the Employer in the class of
Employees eligible for such contribution (or was transferred during the current
year to a job classification with the Employer or an Affiliated Employer in
which the Member ceased to be eligible for such contribution hereunder and was
still so employed at the end of such year) will be credited with the allocable
share of such contribution. The amount to be allocated from any such
contribution to the applicable account of each eligible Member shall be in the
proportion that each eligible Member's Compensation (while he was a Member in a
job classification eligible for such contribution hereunder) for the Plan Year
bears to the total Compensation of all such eligible Members (while they were
such Members) for the Plan Year. However, the 1995 Plan Year allocation of
Regular Discretionary Employer Contributions shall be based only on Members'
Compensation for such year which is in excess of the Members' Compensation used
in determining the final 1995 contribution allocation under the prior Employee
Stock Ownership Plan. The above provisions of this paragraph shall be applied
separately to each of the separate eligible classes of employees as to any
Optional Discretionary Employer Contribution applicable to such class of
Employees under Section 4.1a. hereof.
5.3 Allocation Of Gains And Losses: Each Investment Fund's gains or
losses shall be determined and allocated by its fund manager as of each
Valuation Date.
5.4 Investment Options:
a. Investment Alternatives: The Plan permits a Member or Beneficiary to
exercise control over the assets in his accounts. The Member's or Beneficiary's
exercise of control is intended to bring the Plan within the rule of section
404(c) of ERISA. The Member or Beneficiary may invest the assets in his accounts
in one or more of the available investment alternatives set by the Investment
Committee from time to time pursuant to section 13.9, one of which shall be the
Raytheon Common Stock Fund (as described in c. below).
<PAGE>
12
b. Investment Directions: Investment directions may be given in writing
or orally, pursuant to a procedure set by the Investment Committee. A Member or
Beneficiary who gives oral investment directions shall be provided with an
opportunity to obtain written confirmation of these directions. The Investment
Committee may impose reasonable restrictions on the frequency with which
investment directions may be given with regard to a specific investment
alternative; provided, however, that such restrictions must not prevent the Plan
from complying with section 404(c) of ERISA.
Upon initial participation in the Plan, a Member shall complete an
investment direction for any contributions made on his behalf. Matching Employer
Contributions, Regular Discretionary Employer Contributions, if any, and
Optional Discretionary Contributions, if any, made on behalf of the Member will
be invested in accordance with the direction provided with regard to Salary
Deferral Contributions, unless other investment directions are provided. A
Member or Beneficiary may transfer assets in his accounts between investment
alternatives in accordance with procedures established under the Plan.
The Investment Committee shall be the fiduciary responsible for
receiving all investment directions. The Investment Committee may delegate the
responsibility for receiving these directions to another fiduciary. The
Investment Committee, or the fiduciary designated thereby, must follow any
investment direction given by a Member or Beneficiary; provided, however, that
the Investment Committee or its delegate, shall not follow any investment
direction that:
(1) would generate taxable income to the Plan;
(2) would not be in accordance with the documents and
instruments governing the Plan insofar as such documents and
instruments are consistent with the provisions of Title I of ERISA;
(3) would cause the fiduciary to maintain the indicia of
ownership of any assets of the Plan outside the jurisdiction of the
district courts of the United States, other than as permitted by
section 404(b) of ERISA and DOL Reg. Section 2550.404b-1;
(4) would jeopardize the Plan's tax qualified status under the
Code;
(5 could result in a loss in excess of a Member's or
Beneficiary's account balance; or
(6) would result in a prohibited transaction under Section 406
of ERISA or section 4975 of the Code, including but not limited to a
direct or indirect
<PAGE>
13
(a) sale, exchange, or lease of property between the
Corporation or any Affiliated Employer and the Plan, except
for the acquisition or disposition of any interest in a fund,
subfund, or portfolio managed by the Corporation or any
Affiliated Employer, or the purchase or sale of any qualifying
employer security (as defined in section 407(d)(5) of ERISA)
which meets the conditions of section 408(e) of ERISA and
paragraph (d) of this section 5.4(b)(6);
(b) loan to the Corporation or any Affiliated
Employer;
(c) acquisition or sale of any employer real property
(as defined in section 407(d)(2) of ERISA);
(d) acquisition or sale of any employer security
except to the extent that:
(i) such securities are qualifying employer
securities as defined in section 407(d)(5) of ERISA;
(ii) such securities are stock or an equity
interest in a publicly traded partnership
(as defined in section 7704(b) of the Code),
but only if such partnership is an existing
partnership as defined in section
10211(c)(2)(A) of the Revenue Act of 1987;
(iii) such securities are publicly traded on a
national exchange or other generally
recognized market;
(iv) such securities are traded with sufficient
frequency and in sufficient volume to assure
that Member and Beneficiary directions to
buy or sell the security may be acted upon
promptly and efficiently;
(v) information provided to shareholders of such
securities is provided to Members and
Beneficiaries with accounts holding such
securities;
(vi) voting, tender, and similar rights with
respect to such securities are passed
through to Members and Beneficiaries with
accounts holding such securities; and
<PAGE>
14
(vii) information relating to the purchase,
holding, and sale of securities, and the
exercise of voting, tender, and similar
rights with respect to such securities by
Members and Beneficiaries is maintained in
accordance with procedures established by
the Investment Committee pursuant to section
13.9, which are designed to safeguard the
confidentiality of such information, except
to the extent necessary to comply with
Federal laws or state laws not preempted by
ERISA.
c. Investment In The Raytheon Common Stock Fund. One of the investment
alternatives available under the Plan shall be the Raytheon Common Stock Fund.
Such Fund shall be operated in accordance with the requirements of section
5.4(b)(6)(d) of the Plan. A Member or Beneficiary shall be provided information
with regard to the voting, tender, and similar rights appurtenant to the
Member's or Beneficiary's interest in this investment alternative. If the Member
or Beneficiary does not vote the shares attributable to his investment interest
in the Plan, these shares shall not be voted.
d. Lack of Investment Direction: In the event that no investment
directions have been provided with regard to a Member's or Beneficiary's
account, the Investment Committee will invest such amounts in accordance with
Section 13.9.
5.5 Notification To Members: At least once annually the Committee shall
advise each Member for whom an Individual Account is held hereunder the amount
held in such account.
ARTICLE VI
Vesting
6.1 Vesting: A Member shall at all times have a fully vested and
nonforfeitable interest in his Individual Accounts hereunder. Payment shall be
made at the time and in the manner provided in Articles VIII and IX hereof.
ARTICLE VII
Death
7.1 Designation Of Beneficiary: Each Member and former Member may, from
time to time, designate one (1) or more primary Beneficiaries and contingent
Beneficiaries to receive benefits payable hereunder in the event of the death of
such Member or former Member. No Beneficiary designation by a married Employee
of someone other than his spouse as a primary Beneficiary shall be effective
unless the Employee's spouse (if his spouse can be located) consents in writing
to such designation, acknowledges the effect of such designation and has such
consent and acknowledgment witnessed by a Plan representative or a notary
public. Such designation shall be made in writing upon a form provided by the
Committee and shall be filed with the Committee. The last such designation filed
with the Committee shall control. A beneficiary designation filed with the
Committee shall continue in effect following a Member's divorce (unless duly
changed by the Member), except that the designation shall be applied as if the
Member's former spouse had predeceased the Member.
<PAGE>
15
7.2 Benefit: Upon the death of an Employee who is a Member, his
designated Beneficiary, or Beneficiaries, shall be fully vested with respect to
the balance of his Individual Accounts hereunder. Payments shall be made at the
time and in the manner provided in Article XI hereof.
7.3 No Beneficiary: If a Member or former Member dies without a
Beneficiary surviving him, or if all his Beneficiaries die before receiving the
payment to which they are entitled, then the amount, if any, remaining in such
Member's Individual Account shall be paid to the following, with priority as
follows:
a. the Member's surviving spouse; or if none, to
b. the Member's surviving children over age eighteen, and
surviving children under age eighteen with a properly
designated guardian, or if none, to
c. the Member's estate.
A certified copy of a death certificate shall be sufficient evidence of
death and the Committee shall be fully protected in relying thereon. The
Committee may accept other evidence of death at its own discretion.
ARTICLE VII
Death
7.1 Designation Of Beneficiary: Each Member and former Member may, from
time to time, designate one (1) or more primary Beneficiaries and contingent
Beneficiaries to receive benefits payable hereunder in the event of the death of
such Member or former Member. No Beneficiary designation by a married Employee
of someone other than his spouse as a primary Beneficiary shall be effective
unless the Employee's spouse (if his spouse can be located) consents in writing
to such designation, acknowledges the effect of such designation and has such
consent and acknowledgment witnessed by a Plan representative or a notary
public. Such designation shall be made in writing upon a form provided by the
Committee and shall be filed with the Committee. The last such designation filed
with the Committee shall control. A beneficiary designation filed with the
Committee shall continue in effect following a Member's divorce (unless duly
changed by the Member), except that the designation shall be applied as if the
Member's former spouse had predeceased the Member.
7.2 Benefit: Upon the death of an Employee who is a Member, his
designated Beneficiary, or Beneficiaries, shall be fully vested with respect to
the balance of his Individual Accounts hereunder. Payments shall be made at the
time and in the manner provided in Article XI hereof.
7.3 No Beneficiary: If a Member or former Member dies without a
Beneficiary surviving him, or if all his Beneficiaries die before receiving the
payment to which they are entitled, then the amount, if any, remaining in such
Member's Individual Account shall be paid to the following, with priority as
follows:
<PAGE>
16
a. the Member's surviving spouse; or if none, to
b. the Member's surviving children over age eighteen, and
surviving children under age eighteen with a properly
designated guardian, or if none, to
c. the Member's estate.
A certified copy of a death certificate shall be sufficient evidence of
death and the Committee shall be fully protected in relying thereon. The
Committee may accept other evidence of death at its own discretion.
ARTICLE VIII
Withdrawals and Loans
8.1 Withdrawals: In accordance with Committee guidelines, each Member
may, while in the employment of the Employer, withdraw amounts (not outstanding
as a loan under Section 8.2) from this Plan, other than from his Matching
Employer Contribution Account and Discretionary Employer Contribution Account.
Any amount to be so withdrawn will be withdrawn from such available accounts (or
portions thereof) in the order established by the Committee for this purpose,
subject to the restrictions as to financial need described below, as applicable.
Any request for a withdrawal to be made from a Member's Salary Deferral
Account or Prior Plan Employer Contribution Account before the Member has
attained fifty-nine and one-half (59 1/2) years of age must be for hardship
reasons and for this purpose must show that (i) the Member has an immediate and
heavy financial need, and (ii) the withdrawal is necessary to satisfy such need.
The following rules apply:
(1) Immediate And Heavy Financial Need: An immediate heavy
financial need shall be deemed to exist with respect to a
Member only if the withdrawal request is on account of any of
the following:
(A) Expenses for medical care described in Code Section
213(d) incurred by the Member, the Member's spouse,
or any dependents of the Member (as defined in Code
Section 152), including expenses necessary for any
such person to obtain such medical care.
(B) Costs directly related to the purchase (excluding
mortgage payments) of a principal residence for the
Member.
(C) Payment of tuition and related educational fees,
including room and board expenses, for not more than
the next twelve months of post-secondary education
for the Member, his spouse, children, or dependents.
<PAGE>
17
(D) The need to prevent the eviction of the Member from
his principal residence or foreclosure on the
mortgage on the Member's principal residence.
(E) To pay taxes on any such withdrawal.
(2) Necessity Of Withdrawal To Satisfy Immediate And Heavy
Financial Need: A hardship withdrawal request shall be deemed
to be necessary to satisfy an immediate and heavy financial
need only if all of the following conditions are satisfied:
(A) The amount of the withdrawal request is not in excess
of the immediate and heavy financial need of the
Member (including any reasonably anticipated taxes on
such withdrawal).
(B) The Member has obtained all nonhardship distributions
and all nontaxable loans currently available from all
plans maintained by the Employer or Affiliated
Employers. However, a hardship withdrawal from a
Member's Prior Plan Employer Contribution Account is
not available hereunder unless the Member has first
made whatever hardship withdrawal is available from
the Member's Salary Deferral Account.
(C) The Member's right to make elective contributions to
this Plan and all other plans (including nonqualified
deferred compensation plans) maintained by the
Employer or Affiliated Employers is (and shall be)
suspended for twelve (12) months after receipt of the
hardship distribution. In the event more than one (1)
distribution is made hereunder within a twelve (12)
month period, the suspension period shall not be
tacked to the remaining portion of the prior
suspension period but rather shall start anew.
(D) The Member's right to make Salary Deferral
Contributions to this Plan and all other plans
maintained by the Employer or Affiliated Employers in
the taxable year following the taxable year of the
hardship distribution is (and shall be) limited to an
amount equal to the applicable limit under Code
Section 402(g) reduced by the Member's Salary
Deferral Contributions in the taxable year of the
hardship distribution. The term "taxable year" as
used hereunder means the Member's taxable year.
8.2 Loans To Members: Loans to Members who are "parties-in-interest"
(as described in ERISA Section 3(14)) shall be permitted only at the sole
discretion of the Committee and shall only be granted in accordance with the
following provisions, applied in a uniform and nondiscriminatory manner:
<PAGE>
18
a. Loan Status: Each such Member's loan shall be an investment of such
Member's Individual Account and the interest and principal paid on such loan
shall be credited only to such Member's Individual Account. While such
investment exists, the portion of the Member's Individual Account invested in
such loan shall be disregarded when other Trust gains or losses are allocated
among Individual Accounts hereunder.
b. Loan Application: Any Member's application for a loan shall be in
such form, and shall contain such information as required by the Committee and
will require the payment of a reasonable loan processing fee, as determined by
the Committee. Such fee may include an application fee, as well as a continuing
periodic fee assessed during the life of the loan.
c. Loan Restrictions: The Committee shall establish loan guidelines.
Loans will be available only to Members whose repayment can be made through
payroll deduction by the Employer. The Committee may, in its sole discretion,
determine that no loans will be granted to any Members or may at any time cease
granting any further loans. The Committee may, in its sole discretion, determine
that loans to Members will be granted only for certain designated reasons or
only up to certain designated amounts or only for certain minimum amounts or
only from certain of Members' accounts or investment funds. Only one outstanding
loan per Member will be allowed and in no event will any loan to a Member
hereunder, exceed the lesser of:
(1) Fifty Thousand Dollars ($50,000), reduced by the highest
outstanding balance of loan(s) from the Plan to such Member
during the one (1) year period ending on the day before the
date on which such loan was made.
(2) One-half ((OMEGA)) of the Member's interest in the plan.
d. Accounts As Collateral: The account from which the loan is being
made shall, to the extent of the Amount borrowed, serve as collateral regardless
of any other security pledged in conjunction with such loan.
e. Rate Of Interest: Interest on Member loans shall be charged at a
reasonable and fair rate based on the then prevailing rates charged by reputable
financial institutions.
f. Repayment - Collection: Any such loan or loans shall be repaid by
the Member within such time and in such manner as the Committee shall determine,
but in any event within five (5) years (except as to loans used to acquire any
dwelling which is, or within a reasonable time will become, the Member's
principal residence); provided, however, substantially level amortization of
such loan (with payments not less frequently than quarterly), shall be required
over the term of the loan. The loan repayments will be invested hereunder in a
manner consistent with the account from which the loan was made or consistent
with any contribution to such account. In the event that the Member does not
repay such loan within the time or manner prescribed, the Committee may deduct
the total amount of such loan or any portion thereof from any payment or
distribution from the Trust Fund to which such Member or his Beneficiary or
Beneficiaries may be entitled. In the event that the amount of any such payment
or distribution is not sufficient to repay the remaining balance of any such
loan, such Member shall be liable for and continue to make payments on any
balance still due from him.
<PAGE>
19
g. Spousal Consent: Any such loan shall be subject to spousal
consent within ninety (90) days
prior to the date the loan is made.
8.3 Transfer of Salary Deferral (T-CAP Account) to Serv-Air, Inc.
Savings and Retirement Plan: Any Member who is an Employee of Serv-Air, Inc. and
who ceased to be in Covered Employment under the Previous Plan due to the change
in the definition of Covered Employment (as a result of Amendment No. One to the
previous Employee Stock Ownership Plan effective January 1, 1993) shall be
entitled to instruct the Committee to transfer the balance of his Salary
Deferral Account in this Plan to a salary deferral account established in his
name in the Serv-Air, Inc. Savings and Retirement Plan.
ARTICLE IX
Account Distributions And Transfers
9.1 Notice To Trustee: As soon as practicable after a person becomes
entitled to a distribution hereunder and after he has filed with the Committee a
proper written request for payment the Committee shall give written notice to
the Trustee, which notice shall include such of the following information and
directions as are necessary or advisable under the circumstances:
a. Name of the Member.
b. Reason for the distribution.
c. Name and address of the Beneficiary or Beneficiaries in case of a
Member's death.
d. Time, manner and amount of payments to be made pursuant to Section
9.2 hereof.
9.2 Method Of Payment: The Committee shall (subject to Section 9.5)
direct that benefits be paid to the Member or his Beneficiary in the following
ways:
a. Lump Sum: Subject to b. below, all accounts shall be paid as
a lump sum in cash, except that whole shares of Employer Stock will be paid in
kind.
b. Insured Annuity: The Regular Employee Contribution, Voluntary
Savings, and Savings and Investment Accounts may be applied to purchase an
insured annuity, (subject to insurance company requirements).
9.3 Time and Rate of Payment: After termination of employment a Member
shall be given an option to elect either (i) immediate distribution or (ii) a
deferred distribution if the Member has not yet reached age 70(OMEGA). If he
elects immediate distribution, payment shall be made as soon as practicable but
no later than one hundred twenty (120) days after the end of the Plan Year in
which his employment ended. If he elects a deferred distribution, payment shall
be made no later than the required beginning date after attainment of his age
70(OMEGA) under Section 9.4 hereof.
<PAGE>
20
In no event will any distribution be on a period certain annuity basis
over a period greater than the joint life expectancy of the Member and his
Beneficiary.
If a Member dies after receiving partial distribution under an annuity,
the balance will continue to be distributed at least as rapidly as under the
method applicable to the Member at his death.
If a Member dies before his distribution commences, the balance of his
Individual Account will be distributed to his Beneficiary as soon as practicable
but no later than one hundred twenty (120) days after the end of the Plan Year
in which the Member's death occurs, except Beneficiaries as to Member deaths
prior to April 1, 1995 may defer payment, but if the Beneficiary is not the
deceased Member's spouse, such deferral cannot exceed five years.
9.4 Age 70(OMEGA) Restrictions: In no event shall distribution of a
Member's Individual Accounts be delayed beyond April 1st of the calendar year
following the calendar year in which such Member attains age seventy and
one-half (70(OMEGA)), except that on and after January 1, 1997, such payment
will be required only if the Member's employment with all Affiliated Employers
is terminated or the Member is a 5 percent (5%) owner (as defined in Code
Section 416).
In any calendar year when a distribution must be made to a Member whose
employment has not terminated, in accordance with the above provisions of this
section, such distribution shall be made as soon as practicable after the
beginning of such year (but not later than April 1st) and will consist of the
prior December 31st balance in such Member's Individual Accounts. However, on
and after January 1, 1996, if the Member is still employed by an Affiliated
Employer on the date when the Member's initial post age 70(OMEGA) distribution
is to be made, only the minimum required distribution under Code Section
401(a)(9) will be made, unless the Member duly elects a complete distribution.
Any additional amount subsequently credited to such a Member's Individual
Accounts will likewise be distributed as soon as practicable after the end of
the calendar year when so credited, except that on and after January 1, 1996, if
the Member is still so employed by an Affiliated Employer, only the minimum
required distribution under Code Section 401(a)(9) will be made, unless the
Member has duly elected a complete distribution.
9.5 Member May Elect Form Of Payment: In determining which method
permitted in Section 9.2 hereof shall be applicable to a Member, the Committee
shall follow the Member's election.
9.6 Minority Or Disability Payments: During the minority or
incompetency of any person entitled to receive benefits hereunder, the Committee
may direct the Trustee to make payments or distributions to the guardian of such
person, or other persons as may be directed by the Committee. Neither the
Committee nor the Trustee shall be required to see to the application of any
payments so made, and the receipt of the payee (including the endorsement of a
check or checks) shall be conclusive as to all interested parties.
<PAGE>
21
9.7 Qualified Joint And Survivor Annuity Requirements: Notwithstanding
anything above to the contrary, any Member who is married on the date his
benefit is to commence, whose Individual Accounts are in excess of Three
Thousand Five Hundred Dollars ($3,500), and who elects a form of life annuity,
shall be paid such annuity in the form of a monthly Qualified Joint and Fifty
Percent (50%) Survivor Annuity, unless an election to the contrary is in effect
in accordance with the subsequent provisions of this Section. Under this form,
the balance of his applicable Individual Account or Accounts (for which a
Qualified Joint and Fifty Percent (50%) Survivor Annuity is available) shall be
used to purchase a monthly annuity from an insurance company with a monthly
amount paid to the Member for his lifetime, and the spouse (to whom the Member
was married when his benefit commenced), if surviving at the Member's death,
shall receive thereafter for life a monthly benefit of fifty percent (50%) of
the monthly amount paid to the Member. The last payment shall be made as of the
first day of the month in which occurs the death of the last surviving of the
Member and his spouse.
Within a reasonable time before the Member's benefit commencement date,
the Committee shall provide to the Member who elects a life annuity a written
explanation of the terms and conditions of the Qualified Joint and Fifty Percent
(50%) Survivor Annuity described herein and the effect of refusing it. If the
Member wishes to elect a form of life annuity other than the Qualified Joint and
Fifty Percent (50%) Survivor Annuity, such election will not become effective
unless his spouse (if he has a spouse who can be located) consents in writing to
such election, acknowledges the effect of such election and has such consent and
acknowledgment witnessed by a Plan representative or a notary public. A properly
completed benefit election form (furnished by the Committee) shall be returned
to the Committee within the ninety (90) days prior to Member's benefit
commencement date. If the Member files another election form after the earlier
form and prior to his benefit commencement date, the earlier form shall be
deemed annulled; provided, however, that unless the spouse duly revokes the
right of consent as to such changes in election, the spouse's consent is
required in the manner described above.
9.8 Qualified Domestic Relations Orders: Distribution to an alternate
payee under any "qualified domestic relations order" (as defined in Code Section
414(p)) may be made as soon as practicable after receipt of such order by the
Committee hereunder unless such order duly requires later payment. However,
nothing contained in a qualified domestic relations order shall have the effect
of accelerating any vesting of benefits under this Plan.
9.9 Direct Rollovers: This Section applies to distributions, including
in-service withdrawals. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a distributee's distribution election, a
distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover. For purposes of this Section, the following definitions shall apply:
<PAGE>
22
a. 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 ten years or more; any distribution to the extent such distribution is
required under section 401(a)(9) of the Code; 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);
and any distribution under $200 that would otherwise be eligible for direct
rollover, if such distribution includes the reissuance of a check originally
issued prior to January 1, 1996 from a fund not maintained by The Vanguard
Group.
b. Eligible Retirement Plan: An eligible retirement plan is an
individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover distribution
to the surviving spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.
c. 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 alternate
payee under a qualified domestic relations order, as defined in section 414(p)
of the Code, are distributees with regard to the interest of the spouse or
former spouse.
d. Direct Rollover: A direct rollover is a payment by the plan to the
eligible retirement plan specified by the distributee.
9.10 Transfers to Another Plan: If the employment of an Employee
covered under this Plan is transferred to another job classification not covered
by this Plan but covered by another plan of an Affiliated Employer, then the
Employee's Individual Accounts hereunder may be transferred to such other plan
if such other plan provides for receipt of such accounts thereunder.
ARTICLE X
Code Sections 402(g), 401(k) and (m) Limitations
10.1 Dollar Limit: If a Member's Salary Deferral Contributions
hereunder should exceed the dollar limit under Code Section 402(g) (subject to
the cost-of-living adjustment set forth in Code Section 402(g)(5)), in any
taxable year of the Member, the excess (adjusted for earnings or losses thereon)
shall be distributed to the Member. If the Member also participates in another
elective deferral program (within the meaning of Code Section 402(g)(3)) and if,
when aggregating his elective deferrals under all such programs, an excess of
deferral contributions arises under the dollar limitation in Code Section 402(g)
with respect to such Member, the Member shall, no later than March 1st following
the close of the Member's taxable year, notify the Committee as to the portion
of such excess deferrals to be allocated to this Plan and such excess so
allocated to this Plan (adjusted for earnings or losses thereon) shall be
distributed to the Member after reduction by any excess contribution already
distributed for such year under Section 10.2b hereof. Any distribution under
this Section shall be made to the Member no later than the April 15th
immediately following the close of the Member's taxable year for which such
contributions were made.
<PAGE>
23
10.2 Deferral And Contribution Percentage Tests:
a. Highly Compensated Employee: For purposes of this Section, after
1986, the term Highly Compensated Employee shall mean any Employee who, during
the Plan Year of determination or the immediately preceding Plan Year:
(i) was at any time during such year(s) a five percent (5%) owner
(as defined in Code Section 416(i)(1));
(ii) received compensation (as defined below) from the Affiliated
Employers in excess of Seventy-Five Thousand Dollars ($75,000);
(iii) received compensation (as defined below) from the Affiliated
Employers in excess of Fifty Thousand Dollars ($50,000) and
was in the top twenty percent (20%) of the Employees of all
Affiliated Employers (when ranked on the basis of compensation
paid during such year); excluding, however, for purposes of
determining the top twenty percent (20%):
(A) Employees who have not completed at least six (6)
months of service;
(B) Employees who normally work less than seventeen and
one-half (17(OMEGA)) hours per week;
(C) Employees who normally work not more than six (6)
months during any Plan Year;
(D) Employees who have not attained age twenty-one (21);
(E) Employees covered under a collective bargaining
agreement (to the extent permitted in appropriate
regulations); and
(F) Employees who are nonresident aliens and who receive
no earned income (as defined in Code Section
911(d)(2) which constitutes income from sources
within the United States (within the meaning of Code
Section 861(a)(3)); or
(iv) was at any time an officer and received compensation (as
defined below) greater than fifty percent (50%) of the dollar
limitation in effect under Code Section 415(b)(1)(A) for such
Plan Year; provided that, for purposes of this subparagraph
(iv):
(A) no more than fifty (50) Employees (or if lesser, the
greater of three (3) Employees or ten percent (10%)
of the Employees) of the Affiliated Employers shall
be considered as officers, and
<PAGE>
24
(B) if in such Plan Year, no officer satisfied the
requirements set forth in this subparagraph (iv)
above, the highest paid officer of the Affiliated
Employers during such Plan Year shall be considered
an officer.
(1) For purposes of this Section, the term "compensation" shall have
the same meaning as in Code Section 415(c)(3), without regard to Code Sections
125, 402(a)(8), 402(h)(1)(B), and 403(b) in the case of contributions made by an
Affiliated Employer under a salary reduction agreement. Thus "compensation"
includes taxable income reported on form W-2 (or its equivalent) plus salary
reduction amounts under said Code Sections.
(2) For purposes of determining whether an Employee is highly
compensated in the Plan Year for which the determination is being made, any
Employee not described in subparagraphs (ii), (iii), or (iv) above for the
preceding year (disregarding this paragraph (2)), shall not be treated as
described in subparagraphs (ii), (iii), or (iv) above unless such Employee is a
member of the group consisting of the one hundred (100) Employees of the
Employer who were paid the highest compensation during the Plan Year for which
such determination is being made. Notwithstanding the preceding sentence nor the
first sentence in paragraph (a) above in this Section, if the Employer so
elects, the determination described in said paragraph (a) above will be made
only for the Plan Year of determination if such Plan Year is a calendar year and
no such determination will be made for the immediately preceding Plan Year, in
which event the preceding sentence in this such paragraph (2) will not apply;
provided, however, the Employer may only make such election if the same election
is made as to all plans, entities and arrangements of the Employer with respect
to which a determination of Highly Compensated Employees is necessary.
(3) For purposes of this Section, if any individual is a member of the
family (spouse, and lineal ascendants or descendants and the spouses of such
lineal ascendants or descendants) of a five-percent (5%) owner or of a Highly
Compensated Employee in the group consisting of the ten (10) highly compensated
Employees paid the greatest compensation during such Plan Year, then the
following provisions shall be applicable:
(A) such family member shall not be considered a separate Employee,
(B) any compensation paid to such family member (as well as any
applicable contribution (or benefit) paid to or on behalf of
such person) shall be treated as if it were paid to (or on
behalf of) said five-percent (5%) owner or Highly Compensated
Employee, and
(C) any excess as to such aggregated family members under the
following provisions of this Section shall be allocated among
such family members on the basis of their respective
contributions combined for purposes of determining such
excess.
<PAGE>
25
(4) For purposes of this Section, former Employees shall be treated as
Highly Compensated Employees, if:
(A) such an Employee was a highly compensated Employee upon termination
of employment with the Affiliated Employers; or
(B) such an Employee was a highly compensated Employee at any time
after attaining age fifty-five (55).
However, former Employees are disregarded when determining the top
twenty-percent (20%), the top one-hundred (100) or the includible officers group
above.
b. Deferral Percentage Test: Each Plan Year the Committee shall
determine:
(i) The "deferral percentage" for each Employee who is then
eligible for salary deferrals, which shall be the ratio of the
amount of such Employee's salary deferral for such Plan year
to the Employee's compensation (as defined in a.(1) above,
subject to the dollar limitation set forth in Section 2.2(f)
hereof), for such Plan Year.
(ii) The "highly compensated deferral percentage", which shall be
the average of the "deferral percentages" for all Highly
Compensated Employees then eligible for salary deferrals.
(iii) The "nonhighly compensated deferral percentage", which shall
be the average of the "deferral percentages" for all Employees
then eligible for salary deferrals who were not included in
the "highly compensated deferral percentage" in (2) above.
In no event shall the "highly compensated deferral percentage" exceed
the greater of:
(A) a deferral percentage equal to one and one-fourth (1 1/4)
times the "nonhighly compensated deferral percentage"; and
(B) a deferral percentage equal to two (2) times the
"nonhighly compensated deferral percentage" but not
more than two (2) percentage points greater than the
"nonhighly compensated deferral percentage".
If the above deferral percentage test would otherwise be violated as of
the end of the Plan Year, then notwithstanding any other provision hereof, every
contribution included in the "highly compensated deferral percentage" for a
Member whose deferral percentage is greater than the permitted maximum shall
automatically be revoked to the extent necessary to comply with such deferral
percentage test and the amount of such contribution, to the extent revoked,
shall constitute an "excess contribution" to be distributed to such Member
(adjusted for earnings and losses thereon) within two and one-half (2(OMEGA))
months following the close of the Plan Year for which such contribution was
made. Such excess shall first be reduced by any excess deferral for such Plan
<PAGE>
26
Year already distributed to the Member under Section 10.1 hereof. To determine
the amount of the excess contribution and the Members to whom the excess
contributions are to be distributed, the Salary Deferral Contributions of Highly
Compensated Employees shall be reduced in order of the deferral percentages
beginning with the Highly Compensated Employee with the highest of the deferral
percentages. The actual deferral percentage of the Highly Compensated Employee
with the highest actual deferral percentage is reduced by the amount required to
cause the Employee's actual deferral percentage to equal the percentage of the
Highly Compensated Employee with the next highest actual deferral percentage. If
a lesser reduction would satisfy the actual deferral percentage test, only this
lesser reduction shall be made. This process will be repeated until the
deferrals satisfy the actual deferral percentage test. The highest actual
deferral percentage remaining under the Plan after completion of the above
leveling procedure is the highest permitted actual deferral percentage. In no
case may the amount of excess contributions to be distributed for a Plan Year
with respect to any Highly Compensated Employee exceed the amount of Salary
Deferral Contributions made on behalf of the Highly Compensated Employee for the
Plan Year.
If a Highly Compensated Employee participates in two or more plans
maintained by the Employer or Affiliated Employer, that are subject to the
deferral percentage test, then such Employee's deferral percentage shall be
determined by aggregating his participation in all such plans.
c. Contribution Percentage Test: Each Plan Year the Committee shall
(subject to e. below) determine:
(i) The "contribution percentage" for each Employee who is then
eligible to receive Matching Employer Contributions, which
shall be the ratio of the amount of such Employee's Matching
Employer Contribution to the Employee's compensation (as
defined in a.(1) above, subject to the dollar limitation set
forth in Section 2.2(f) hereof), for such Plan Year.
(ii) The "highly compensated contribution percentage", which shall
be the average of the "contribution percentages" for all
eligible Highly Compensated Employees.
(iii) The "nonhighly compensated contribution percentage", which
shall be the average of the "contribution percentages" for all
Employees then eligible who were not included in the "highly
compensated contributions percentage" in (2) above.
In no event shall the "highly compensated contribution percentage"
exceed the greater of:
(A) a contribution percentage equal to one and one-fourth
(1-1/4) times the "nonhighly compensated contribution percentage"; and
(B) a contribution percentage equal to two (2) times the
"nonhighly compensated contribution percentage" but
not more than two (2) percentage points greater than
the "nonhighly compensated contribution percentage".
<PAGE>
27
If the above contribution percentage test would otherwise be violated
as of the end of the Plan Year, then notwithstanding any other provision hereof
every contribution included in the "highly compensated contribution percentage"
for a Member whose contribution percentage is greater than the permitted maximum
shall automatically be revoked to the extent necessary to comply with such
contribution percentages test and the amount of such contribution, to the extent
revoked, shall constitute an "aggregate excess contribution" to be distributed
to such Member (adjusted for earnings or losses thereon) or forfeited, if
applicable, within two and one-half (2(OMEGA)) months following the close of the
Plan Year for which such contribution was made. To determine the amount of
aggregate excess contributions and the Members to whom the aggregate excess
contributions are to be distributed, the applicable contributions of Highly
Compensated Employees are reduced in the order of their contribution percentage
beginning with the Highly Compensated Employee with the highest contribution
percentage. The actual contribution percentage of the Highly Compensated
Employee with the highest actual contribution percentage is reduced by the
amount required to cause the Employee's actual contribution percentage to equal
the percentage of the Highly Compensated Employee with the next highest actual
contribution percentage. If a lesser reduction would satisfy the actual
contribution percentage test, only this lesser reduction shall be made. This
process will be repeated until the Plan satisfies the actual contribution
percentage test. The highest actual contribution percentage remaining under the
Plan after completion of the above leveling procedure is the highest permitted
actual contribution percentage. In no case may the amount of excess aggregate
contributions with respect to any Highly Compensated Employee exceed the amount
of Employee and Matching Employer Contributions made on behalf of the Highly
Compensated Employee for the Plan Year.
If a Highly Compensated Employee participates in two (2) or more plans
maintained by the Employer or Affiliated Employer that are subject to the
contribution percentage test, then such Employee's contribution percentage shall
be determined by aggregating his participation in all such plans. In addition,
if the Employer maintains two (2) or more plans subject to the contribution
percentage test and such plans are treated as a single plan for purposes of the
coverage requirements for qualified plans under Code Section 410(b), then such
plans are treated as a single plan for purposes of the contribution percentage
test.
d. No Multiple Use of Alternative Limitation: As to Members
subject to both of the limits in b. and c. above, additional reductions of the
otherwise applicable limits shall be made as necessary to prevent multiple use
of the alternative limitation (i.e., the two times or two percentage point
limitation) in accordance with Treas. Reg. 1.401(M)-2.
e. Collective Bargaining Employees: Any collective bargaining unit
Employees hereunder shall be disregarded when the above deferral and
contribution percentage tests are applied to nonbargaining Employees. Each
collective bargaining unit with Employees who are eligible to make salary
deferral elections hereunder shall be separately subject to the deferral
percentage test, or, if there is more than one collective bargaining unit with
Employees eligible to make salary deferrals hereunder, such bargaining units may
be aggregated in groups of two or more and each group shall be separately
subject to the deferral percentage test, as determined each year by the
Committee. The above contribution percentage test is deemed to be automatically
met by any collective bargaining unit Employees otherwise subject to such test.
<PAGE>
28
ARTICLE XI
Code Section 415 Limits
11.1 Limit On Annual Additions Under Code Section 415: Contributions
hereunder shall be subject to the limitations of Code Section 415, as provided
in this Section.
a. Definitions: For purposes of this Section the following
definitions shall apply:
(1) "Annual Addition" shall mean the sum of the following additions to
a Member's Individual Account for the Limitation Year:
(a) Employer contributions (including salary reduction
contributions);
(b) His own (after-tax) contributions, if any;
(c) Forfeitures, if any.
Annual Additions to other Employer defined contribution plans
(also taken into account when applying the limitations described below)
shall include any voluntary employee contributions to an account in a
defined benefit plan and any employer contributions to an individual
retirement account or annuity under Code Section 408 or to a medical
account for a key employee under Code Section 401(h) or 419A(d), except
that the 25%-of-pay limit below shall not apply to employer
contributions to a key employee's medical account after his separation
from service.
(2) "Earnings" for any Limitation Year shall be the Employee's
compensation received for personal services actually rendered
in the course of employment with the Employer and reported as
taxable income on Form W-2 (or subsequent equivalent).
b. Defined Contribution Plan(s) Only: The Annual Addition to a Member's
Individual Account hereunder (together with the Annual Additions to the Member's
account(s) under any other qualified defined contribution plan(s) maintained by
an Affiliated Employer) for any Limitation Year may not exceed the lesser of:
(1) Thirty Thousand Dollars ($30,000.00), and for each year
thereafter the dollar amount prescribed by the Secretary of
the Treasury, to take into account any cost-of-living
adjustment under Section 415(d) of the Code, or
(2) Twenty-five percent (25%) of the Member's Earnings for the
Limitation Year.
<PAGE>
29
c. Defined Contribution And Defined Benefit Plans: If, in any
Limitation Year, a Member also participates in one (1) or more qualified defined
benefit plans maintained by any Affiliated Employer (whether or not terminated),
then for such Limitation Year, the sum of the Defined Benefit Plan Fraction (as
defined below) for such Limitation Year and Defined Contribution Plan Fraction
(as defined below) for such Limitation Year shall not exceed one (1.0).
The Defined Benefit Fraction for any Limitation Year shall mean a
fraction (a) the numerator of which is the projected annual benefit of the
member under the qualified defined benefit plan(s) (determined as of the close
of the Limitation Year), and (b) the denominator of which is the lesser of One
Hundred Twenty-Five Percent (125%) of the dollar limitation under Code Section
415(b)(1)(A) or One Hundred Forty Percent (140%) of the percentage limitation
under Code Section 415(b)(1)(B) for the year of determination (taking into
account the effect of Section 235(g)(4) of the Tax Equity and Fiscal
Responsibility Act of 1982).
The Defined Contribution Fraction for any Limitation Year shall mean a
fraction (a) the numerator of which is the sum of the Annual Additions (as
defined during each applicable Limitation Year) to the Member's accounts under
all qualified defined contribution plans maintained by an Affiliated Employer as
of the close of the Limitation Year (subject to reduction to the extent
permitted under the transition rule in Section 235(g)(3) of the Tax Equity and
Fiscal Responsibility Act of 1982), and (b) the denominator of which is the sum
of the lesser of One Hundred Twenty-Five Percent (125%) of the dollar limitation
under Code Section 415(c)(1)(A) or One Hundred Forty Percent (140%) of the
percentage limitation under Code Section 415(c)(1)(B), for such Limitation Year
and for all prior Limitation Years during which the Employee was employed by an
Affiliated Employer (provided, however, at the election of the Committee, the
denominator shall be increased by using for Limitation Years ending prior to
January 1, 1983, an amount equal to the denominator in effect for the Limitation
Year ending in 1982, multiplied by the transition fraction provided in Code
Section 415(e)(6)(B)).
If, in any Limitation Year, the sum of the Defined Benefit Plan
Fraction and Defined Contribution Plan Fraction for a Member would exceed one
(1.0) without adjustment of the amount of Annual Additions that can be allocated
to such Member under paragraph b. of this Section, then the amount of maximum
annual benefit that can be paid to such Member under any qualified defined
benefit plan(s) maintained by an Affiliated Employer, shall be reduced to the
extent necessary to reduce the sum of the Defined Benefit Plan Fraction and
Defined Contribution Plan Fraction for such Member to one (1.0).
d. Excess Allocation: If forfeitures available for allocation or if a
reasonable error in either estimating a Member's Earnings or in determining the
Member's elective deferrals (under Code Section 402(g)(3)) or if other
circumstances acceptable to the Internal Revenue Service would cause the
limitation on Annual Additions described above to be exceeded, then the amount
of such excess shall be disposed of as follows:
(1) The excess will be refunded to the Member from the Member's
after-tax contributions for such year, if any (together with
any investment gain).
<PAGE>
30
(2) If any excess remains, it will be taken from the Member's
elective pre-tax contributions for such year, if any, that are
not eligible for an Employer matching contribution and either
held by the Plan to be applied as an elective pre-tax
contribution for the Member in the following year or refunded
to the Member (together with any investment gain).
(3) If any excess remains, it will be allocated proportionately
between the Member's remaining elective pre-tax contributions,
if any, and Employer matching contributions, if any, for such
year, with the elective pre-tax contribution portion either
applied as an elective pre-tax contribution for the Member in
the following year or refunded to the Member (together with
any investment gain) and the Employer matching contribution
portion forfeited and applied to reduce future Employer
matching contributions hereunder.
(4) If any excess remains, it shall be forfeited from any other
Employer contributions made for such Member for such year and
applied to reduce future Employer contributions hereunder.
(5) If any excess remains attributable to another Affiliated
Employer's defined contribution plan, such excess shall be
disposed of in accordance with such other plan.
To the extent that the Committee determines that contributions not yet
made to the Plan on behalf of Members would cause an excess hereunder if
actually made to the Plan, the Committee may apply the above limitations
prospectively to limit the contribution amount actually receivable by the Plan
for such Member.
ARTICLE XII
Top-Heavy Requirements
12.1 Top-Heaviness and Plan Aggregation:
a. Determination Of Top-Heaviness: Subject to b. of this Section, this
Plan will be considered to be top-heavy in any Plan Year if the aggregate value
of the account balances of key Employees hereunder is greater than sixty percent
(60%) of the aggregate value of all account balances hereunder. For purposes of
determining whether such top-heaviness exists in any such Plan Year the
following provisions shall be applicable:
(1) A key Employee is any individual (whether or not deceased) who, at
any time during the five (5) Plan Years immediately preceding the current Plan
Year, was:
(i) an officer of the Employer or Affiliated Employer
having an annual compensation from the Employer
and/or Affiliated Employer (as reported on income tax
form W-2 or its equivalent) greater than Fifty
Percent (50%) of the defined benefit plan dollar
limitation in effect under Code Section 415(b)(1)(A)
for any such Plan Year (except that no more than
fifty (50) Employees or, if less, the greater of
three (3) and ten percent (10%) of the Employees,
shall be treated as officers), or
<PAGE>
31
(ii) one of the ten (10) Employees having an annual
compensation from the Employer and/or Affiliated
Employer (as reported on income tax form W-2 or its
equivalent) greater than the defined contribution
plan dollar limitation in effect under Code Section
415(c)(1)(A) and owning (or considered as owning
under Code Section 416(i)(1)) both more than a
one-half percent (1/2%) interest and the largest
interests in the Employer, or
(iii) a five percent (5%) owner of the Employer (taking
into account ownership he would be considered to have
under Code Section 416(i)(1)), or
(iv) a one percent (1%) owner of the Employer (taking into
account ownership he would be considered to have
under Code Section 416(i)(1)) having annual
compensation from the Employer and/or an Affiliated
Employer during any calendar year (as reported on
income tax Form W-2 or its equivalent) of more than
One Hundred Fifty Thousand Dollars ($150,000).
The term "compensation" as used above in this paragraph (1)
shall have the same meaning as in Code Section 415(c)(3), without
regard to Code Sections 125, 402(a)(8), and 402(h)(1)(B), and Code
Section 403(b) in the case of contributions made by an Affiliated
Employer under a salary reduction agreement. Thus "compensation"
includes taxable income reported on form W-2 (or its equivalent) plus
salary reduction amounts under said Code Sections.
Any Employee who is not a key Employee is a nonkey Employee.
(2) For purposes of this Section, if a former Employee has not
performed any services for the Employer at any time during the
five (5) Plan Years immediately preceding the current Plan
Year, any account balance remaining hereunder for such former
Employee shall not be taken into account. Also, any account
balance attributable to deductible employee contributions
(under Code Section 219) or attributable to a rollover
initiated by an Employee from the plan of an employer that is
not an Affiliated Employer shall not be taken into account
under this Section.
(3) The value of any account balance shall be determined as of the
most recent Valuation Date within the preceding Plan Year,
except that in the first Plan Year hereunder such account
balance shall be determined as of the most recent Valuation
Date within such first Plan Year. Such value shall include any
contributions allocable as of such date.
<PAGE>
32
(4) The value of any account balance shall be increased to include
any payment thereof made hereunder prior to the Valuation Date
as of which such value is being determined, provided any such
payment was made within the five (5) Plan Years immediately
preceding the current Plan Year. If an account balance has
been fully paid out prior to such Valuation Date, but within
the five (5) Plan Years immediately preceding the current Plan
Year, the amount thereof shall be taken into account, except
that such amount shall not be taken into account hereunder if
the paid out amount was either (i) rolled over or transferred
to another plan of the Employer or Affiliated Employer or (ii)
rolled over or transferred to any other plan but not at the
direction of the Employee who had accrued such account.
(5) If an Employee or former Employee for whom an account balance
was maintained hereunder died prior to such Valuation Date,
the value, if any, taken into account hereunder with respect
to such individual shall include the sum of any payments made
to him prior to such Valuation Date and within the five (5)
Plan Years immediately preceding the current Plan Year,
together with the amount, as of such Valuation Date, of any
remaining account balance payable hereunder to the Beneficiary
of such individual plus the sum of any payments made to such
Beneficiary hereunder prior to such Valuation Date and within
the five (5) Plan Years immediately preceding the current Plan
Year.
(6) If an Employee or former Employee (whether or not deceased)
with respect to whom an account balance would be taken into
account, as described above, was previously a key Employee,
but as of the last day of the immediately preceding Plan Year
was no longer a key Employee, then no account balance or
payments thereof with respect to him or his Beneficiary shall
be taken into account in making the top-heavy determinations
described in this Section.
(7) The top-heavy status of this Plan, including the
identification of key Employees, will be determined as of each
Plan Year's determination date, which shall be (i) as to the
first Plan Year, the last day of such year and (ii) as to each
subsequent Plan Year, the last day of the immediately
preceding Plan Year.
b. Aggregation With Other Plans: The aggregation of this Plan with
other plans for purposes of determining top-heavy status shall be in
accordance with the following:
(1) Required Aggregation: If a key Employee under this Plan also
participates in another plan of the Employer or Affiliated
Employer which is qualified under Code Section 401(a) or which
is a simplified employee pension plan under Code Section
408(k), or if this Plan and another plan must be aggregated so
that either this Plan or the other plan will meet the
antidiscrimination and coverage requirements of Code Section
401(a)(4) or 410, then this Plan and any such other plan will
be aggregated for purposes of determining top heaviness. This
Plan will automatically be deemed top-heavy if such required
aggregation of plans is top-heavy as a group and will
automatically be deemed not top-heavy if such required
aggregate of plans is not top-heavy as a group.
<PAGE>
33
(2) Permissive Aggregation: Any other plan of the Employer or
Affiliated Employer which is qualified under Code Section
401(a) or which is a simplified employee pension plan under
Code Section 408(k), and which is not in the required
aggregation referenced in (1) above, may be aggregated with
this Plan (and with any other plan(s) in the required
aggregation group in (1) above) for purposes of determining
top heaviness if such aggregation would continue to meet the
antidiscrimination and coverage requirements of Code Sections
401(a)(4) and 410. This Plan will automatically be deemed not
top-heavy if such permissive aggregation of plans is not
top-heavy as a group.
(3) Determining Aggregate Top-Heavy Status: The top-heavy status
of the plans as a group is determined by aggregating the
plans' respective top-heavy determinations that are made as of
determination dates that fall within the same calendar year.
12.2 Effects Of Top-Heaviness: If this Plan becomes top-heavy, the
following special provisions shall apply except (i) in the case of an Employee
hereunder who is also covered by another top-heavy qualified defined
contribution plan of an Affiliated Employer, the top-heavy minimum allocation in
a. below shall not apply if the top-heavy minimum allocation under such other
plan is applied to such Employee thereunder, and (ii) in the case of an Employee
hereunder who is also covered by a top-heavy qualified defined benefit plan of
an Affiliated Employer, the top-heavy minimum allocation in a. below shall not
apply if the top-heavy minimum benefit under such other plan is applied to such
Employee thereunder, but if such top-heavy minimum benefit is not applied to
such Employee, then the top-heavy minimum allocation in a. below shall be
applied except that the percentage shall be five percent (5%).
a. Minimum Allocation: If any Employee is covered under this Plan
during any Plan Year when the Plan is top-heavy, he shall, during such Plan
Year, receive an allocated Employer contribution (subject to the vesting
requirements of this Plan and other than an elective contribution under Code
Section 401(k)) at least equal to a percentage of his considered compensation
(defined below) for such Plan Year, which percentage shall be the lesser of:
(i) three percent (3%), and
(ii) the actual percentage that the allocation of Employer
contributions and forfeitures, including elective
contributions under Code Section 401(k), received for such
Plan Year by the key Employee receiving the largest such
allocation, represented as a percentage of such key Employee's
considered compensation (defined below).
An Employee's considered compensation is the amount of compensation he
received from the Employer for such Plan Year (not in excess of the dollar
limitation in Section 2.2(f) hereof) reportable on income tax Form W-2 or its
equivalent.
b. Adjustments To Code Section 415 Limits: If this Plan is top-heavy
during any Plan Year, the combined plan limitations of Code Section 415, as
described in Section 11.1 hereof, shall be applied for such Plan Year by
substituting "One Hundred Percent (100%)" for "One Hundred Twenty-Five Percent
(125%)" wherever the latter term appears in said Section 11.1 hereof.
<PAGE>
34
ARTICLE XIII
Administration
13.1 Appointment Of Committee: Responsibility for administration of
this Plan shall be with the Corporation, which shall be the Plan Administrator
hereunder. The Corporation, as Plan Administrator, shall appoint a Committee
consisting of at least three (3) persons who shall assist the Plan Administrator
in the administration of this Plan, but who shall have no responsibility for the
management or investment of Plan assets. All action taken by the Committee shall
be deemed actions taken by the Plan Administrator and the Plan Administrator
shall, alone, have fiduciary responsibility in connection with such actions,
except with respect to willful misconduct or gross negligence. All usual and
reasonable expenses of the Committee may be paid in whole or in part by the Plan
Administrator, and any expenses not paid by the Plan Administrator shall be paid
by the Trustee out of the principal or income of the Trust. The members of the
Committee shall not receive compensation with respect to their services for the
Committee. The members of the Committee shall serve without bond or security for
the performance of their duties hereunder unless the applicable law makes the
furnishing of such bond or security mandatory or unless required by the Plan
Administrator. The Plan Administrator may pay the premiums on any bond secured
under this Section including the purchase of fiduciary liability insurance for
any person who becomes a fiduciary under this Plan.
13.2 Committee Powers And Duties: The Committee shall have such powers
as may be necessary to discharge its duties hereunder, including, but not by way
of limitation, the following powers and duties:
a. to construe and interpret the Plan, decide all questions of
eligibility and determine the amount, manner and time of payment of any benefits
hereunder;
b. to prescribe rules for the operation of the Plan;
c. to receive from the Employer and from Employees such information as
shall be necessary for the proper administration of the Plan;
d. to employ an independent qualified public accountant to
examine the books, records, and any financial statements and schedules which are
required to be included in the annual report;
e. to file with the appropriate government agency (or agencies) the
annual report, plan description, summary plan description, and other pertinent
documents which may be duly requested;
f. to file such terminal and supplementary reports as may be
necessary in the event of the termination of the Plan;
g. to furnish each Employee and each Beneficiary receiving benefits
hereunder a summary plan description explaining the Plan;
h. to furnish any Employee or Beneficiary, who requests in writing,
statements indicating such Employee's or Beneficiary's total account
balances and nonforfeitable benefits, if any;
<PAGE>
35
i. to furnish to an Employee a statement containing information
contained in a registration statement (Schedule SSA) required by Section 6057(a)
(2) of the Code prior to the time prescribed by law to file such registration if
such statement contains information regarding the Employee;
j. to maintain all records necessary for verification of information
required to be filed with the appropriate government agency (or agencies);
k. to report to the Trustee all available information regarding the
amount of benefits payable to each Employee, the computations with respect to
the allocation of assets, and any other information which the Trustee may
require in order to terminate the Plan;
l. to delegate to one or more of the members of the Committee
the right to act in its behalf in all matters connected with the administration
of the Plan and Trust;
m. to delegate to any individual(s) such of the above powers and
duties as the Committee deems appropriate; and
n. to appoint or employ for the Plan any agents it deems advisable,
including, but not limited to, legal counsel.
The Committee shall have no power to add to, subtract from or modify
any of the terms of the Plan, nor to change or add to any benefits provided by
the Plan, nor to waive or fail to apply any requirements of eligibility for
benefits under the Plan. All rules and decisions of the Committee shall be
uniformly and consistently applied to all Employees in similar circumstances.
A majority of the members of the Committee shall constitute a quorum
for the transaction of business. No action shall be taken except upon a majority
vote of the Committee members. An individual shall not vote or decide upon any
matter relating solely to himself or vote in any case in which his individual
right or claim to any benefit under the Plan is particularly involved. If, in
any case in which a Committee member is so disqualified to act, and the
remaining members cannot agree, the Board of Directors of the Corporation will
appoint a temporary substitute member to exercise all the powers of the
disqualified member concerning the matter in which he is disqualified.
13.3 Claims Procedure: The Committee may prescribe procedures for
obtaining benefits and is required to provide a notice in writing to any person
whose claim for benefits under this Plan has been denied, setting forth (1) the
specific reasons for such denial, (2) the specific reference to pertinent Plan
provisions on which the denial is based, (3) a description of any additional
material or information necessary to the claimant to perfect the claim and an
explanation of why such material or information is necessary, and (4) an
explanation of the Plan's claim review procedure as described below, including
the name and address of the party to whom an appeal should be sent.
A claimant has the right to appeal a denial of claim by written
application to the Committee within sixty (60) days of notice of denial or, if
no such notice has been given, at the end of the expiration of a reasonable
period of time after the claim was filed. The claimant, or a duly authorized
representative, may review pertinent documents and may submit issues and
comments in writing to the Committee.
<PAGE>
36
After the Committee reviews the claims appeal, a final decision shall
be made and communicated to the claimant within sixty (60) days of receipt of
the appeal by the Committee, unless special circumstances require an extension.
Such extension cannot extend beyond one hundred twenty (120) days after receipt
of the appeal by the Committee. The communication shall be set forth in writing
in a manner calculated to be understood by the claimant and shall identify the
reasons for the denial and shall reference any pertinent Plan provisions upon
which the denial is based.
13.4 Committee Procedures: The Committee shall adopt such bylaws as it
deems desirable. The Committee shall elect one of its members as chairman and
shall elect a secretary who may, but need not, be a member of the Committee. The
Committee shall advise the Trustee of such elections in writing. The Secretary
of the Committee shall keep a record of all meetings and forward all necessary
communications to the Trustee.
13.5 Authorization Of Benefit Payments: The Committee shall issue
directions to the Trustee concerning all benefits which are to be paid from the
Trust Fund pursuant to the provisions of the Plan. The Committee shall keep on
file, in such manner, as it may deem convenient or proper, all reports from the
Trustee.
13.6 Payment Of Expenses: All expenses incident to the administration,
termination or protection of the Plan and Trust, including but not limited to,
actuarial, legal, accounting, and Trustee's fees, shall be paid by the Trust
unless paid by the Employer and/or the Employees.
13.7 Unclaimed Benefits: Any unclaimed benefit held hereunder for a
former Member who cannot be found, after reasonable efforts have been made by
the Committee, may be applied to pay plan expenses or to offset any Employer
contributions hereunder, provided that if the Member duly makes a subsequent
claim for such benefit, the Employer will make a special contribution equal to
the amount that was so applied to pay expenses or offset Employer contributions
(together with appropriate interest determined by the Committee) and such
special contribution will then be paid hereunder to said Member.
13.8 Indemnity: The Employer indemnifies and saves harmless any member
of the Board of Directors of the Employer and any Employee of the Employer from
and against any and all loss resulting from liability to which any such person
may be subjected by reason of any conduct (except willful or reckless
misconduct) in a fiduciary capacity under this Plan or Trust, or both, including
all expenses reasonably incurred in such person's defense, in case the Employer
fails to provide such defense. The indemnification provisions of this Section
shall not relieve any such person of any liability he may have under ERISA for
breach of a fiduciary duty.
13.9 Investment Committee:
a. Composition of the Investment Committee: The Board of
Directors of the Corporation shall appoint an Investment Committee of three to
five members.
b. Duties: The Investment Committee is responsible for the following
duties under the Plan:
<PAGE>
37
(i) Selecting investment alternatives offered under the Plan, one
of which shall be the Raytheon Common Stock Fund. The
selection of these investment alternatives shall be made in
accordance with section 404(c) of ERISA and with the intent
that the Plan operate as a section 404(c) plan. In addition,
the Investment Committee shall not select as an investment
alternative any investment that would involve a transaction
between the Plan and the Corporation or any Affiliated
Employer or a loan from the Plan to the Corporation or any
Affiliated Employer.
(ii) Selecting a fund for the investment of assets under the Plan
with regard to which a Member or Beneficiary has the
opportunity to exercise control but for which no investment
direction has been provided.
(iii) Receiving investment direction from Members or Beneficiaries.
This responsibility may be delegated to another Plan fiduciary
by the Investment Committee.
(iv) Establishing the procedures required by section
5.4(b)(6)(d)(vii) of the Plan to keep information related to
investment in or exercise of rights associated with the
Raytheon Common Stock Fund confidential and ensuring that such
procedures are sufficient to preserve the confidentiality of
that information.
(v) Establishing a procedure for the appointment of a fiduciary
not affiliated with the Corporation in the event that the
Investment Committee determines that there exists a situation
in which the potential for undue employer influence upon
Members or Beneficiaries exists with regard to the direct or
indirect exercise of shareholder rights associated with Member
or Beneficiary investment in the Raytheon Common Stock Fund.
ARTICLE XIV
Trust Fund
14.1 Establishment Of Trust Fund: A Trust Fund shall be established for
the purpose of receiving contributions, and paying benefits, under this Plan. A
Trustee (or Trustees) shall be appointed under the terms of a trust agreement to
administer the Trust Fund in accordance with the terms of such trust agreement.
14.2 Payment Of Contributions To Trust Fund: All contributions under
this Plan shall be paid to the Trust Fund and shall be held, invested and
reinvested by the Trustee in accordance with the terms of the trust agreement.
All property and funds of the Trust Fund, including income from investments and
from all other sources, shall be retained for the exclusive benefit of
Employees, as provided in the Plan, and shall be used to pay benefits to
Employees or their beneficiaries, or to pay expenses of administration of the
Plan and Trust Fund, except as provided in Section 18.4 hereof.
<PAGE>
38
14.3 Bonding Of Trustee: No Trustee shall be required to furnish any
bond or security for the performance of its powers and duties hereunder unless
the applicable law makes the furnishing of such bond or security mandatory.
ARTICLE XV
Adoption And Withdrawal By Other Organizations
15.1 Procedure For Adoption: Subject to the further provisions of
Section 15.3, any corporation or other organization with employees, now in
existence or hereafter formed or acquired, which is not already an Employer
under this Plan and which is otherwise legally eligible, may, in the future,
with the consent and approval of the Corporation, by formal resolution of its
own board or governing authority, adopt the Plan hereby created and the related
Trust, for all or any classification of persons in its employment, and thereby,
from and after the specified effective date become an Employer under this Plan.
Such adoption shall be accomplished by and evidenced by a formal designation
resolution of the Corporation, and by such formal resolution of the adopting
organization consented to by the Corporation. The adoption resolution may
contain such specific changes and variations in Plan or Trust terms and
provisions applicable to such adopting Employer and its Employees, as may be
acceptable to the Corporation and the Trustee. However, the sole, exclusive
right of any other amendment of whatever kind or extent, to the Plan or Trust is
reserved by the Corporation. The adoption resolution shall become, as to such
adopting organization and its employees, a part of this Plan, as then amended or
thereafter amended, and the related Trust. It shall not be necessary for the
adopting organization to sign or execute the original or the amended Plan and
Trust documents. The effective date of the Plan for any such adopting
organization shall be that stated in the resolution of adoption, and from and
after such effective date such adopting organization shall assume all the
rights, obligations and liabilities of an individual Employer entity hereunder
and under the Trust. The administrative powers and control of the Corporation,
as provided in the Plan and Trust, including the sole right to amendment, and of
appointment and removal of the Committee and the Trustee and their successors,
shall not be diminished by reason of the participation of any such adopting
organization in the Plan and Trust.
15.2 Withdrawal: Any participating Employer by action of its Board of
Directors or other governing authority and notice to the Corporation and
Trustee, may withdraw from the Plan and Trust at any time without affecting
other Employers not withdrawing, by complying with the provisions of the Plan
and Trust. A withdrawing Employer may arrange for the continuation by itself or
its successor, of this Plan and Trust in separate form for its own Employees,
with such amendments, if any, as it may deem proper, and may arrange for
continuation of the Plan and Trust by merger with an existing plan and trust,
and transfer of Trust assets. The Corporation may, in its absolute discretion,
terminate an adopting Employer's participation at any time when in its judgment
such adopting Employer fails or refuses to discharge its obligations under the
Plan.
<PAGE>
39
15.3 Adoption Contingent Upon Initial And Continued Qualification: The
adoption of this Plan and its related Trust by an organization as provided in
Section 15.1 is hereby made contingent and subject to the condition precedent
that said adopting organization meets all the statutory requirements for
qualified plans, including but not limited to Sections 401(a) and 501(a) of the
Code for its employees. The adopting organization shall request an initial
approval letter of determination from the appropriate District Director of
Internal Revenue Service to the effect that the Plan and Trust herein set forth
or as amended before the receipt of such letter, meets the requirements of the
applicable federal statutes for tax qualification purposes for such adopting
organization and its covered employees. Unless such an initial approval letter
is issued, such adoption shall become void and inoperative and any contribution
made by or for such organization shall be promptly refunded by the Trustee.
Furthermore, if the Plan or the Trust in its operation, becomes disqualified for
such purposes for any reason, as to such adopting organization and its
employees, the portion of the Trust Fund allocable to them shall be segregated
as soon as is administratively feasible, pending either the prompt (1)
requalification of the Plan and Trust as to such organization and its employees
to the satisfaction of the Internal Revenue Service, so as not to affect the
continued qualified status thereof as to other Employers, or (2) withdrawal of
such organization from this Plan and Trust and a continuation by itself or its
successor, of its plan and trust separately from this Plan and Trust, or by
merger with another existing plan and trust, with a transfer of said segregated
portion of Trust assets, as provided by Section 15.2, or (3) taking of such
other action as shall be acceptable to the Corporation.
ARTICLE XVI
Amendments
16.1 Right To Amend: The Board of Directors of the Corporation (or
other body duly authorized by such Board) reserves the right to make from time
to time any amendment or amendments to this Plan which do not permit reversion
of any part of the Trust Fund to the Employers except as provided in Section
18.4 and which do not cause any part of the Trust Fund to be used for, or
diverted to, any purpose other than the exclusive benefit of Employees included
in this Plan and which do not, directly or indirectly, reduce any Member's
account balance unless such amendment is required in order to maintain the
Plan's qualified status under Code Section 401(a). Any one of the Corporation's
three selected Vice Presidents (the selected Vice Presidents are: (i) Vice
President, Corporate Relations and Administration, (ii) Vice President, Finance
and Chief Financial Officer, and (iii) Vice President, Secretary and General
Counsel) is also authorized to make, on behalf of the Corporation, any amendment
or amendments to this Plan (or related Trust), provided any such amendment is
for the purpose of: (i) meeting applicable requirements for compliance with the
Code or ERISA or other applicable law where there are either no options as to
the method of compliance or where the costs associated with each of two or more
alternative methods of compliance are generally the same or not significant in
amount as to the selected method of compliance or (ii) simplifying, improving or
clarifying practices or procedures under the Plan or Trust, without
significantly increasing Employer costs.
<PAGE>
40
Upon delivery to an Employer of an executed copy of an amendment
properly authorized and adopted by the Corporation, the Plan as to such Employer
shall be thereupon amended in accordance therewith.
ARTICLE XVII
Withdrawal And Termination
17.1 Employer Withdrawal: An Employer may at any time, by adoption of a
resolution, withdraw from the Plan with respect to any or all of the Employees
employed by said Employer.
Upon an Employer's liquidation, bankruptcy, insolvency, sale,
consolidation, or merger to or with another organization which is not an
Employer hereunder, or upon an adjudication or other official determination of a
court of competent jurisdiction or other public authority pursuant to which a
conservator, receiver, or other legal custodian is appointed for the purpose of
operation or liquidation of an Employer, such Employer (or its successor) will
automatically be withdrawn from this Plan with respect to all of its Employees,
unless the Corporation and such Employer (or its successor) agree to its
continued participation hereunder.
Any such withdrawal of an Employer from this Plan will be carried out
in a manner intended to meet the requirements of Section 401(a) of the Internal
Revenue Code. The Corporation may require that an advance determination letter
be obtained from the Internal Revenue Service approving the terms of any such
withdrawal.
Upon the consolidation or merger of two (2) or more of the Employers
under this Plan with each other, no such withdrawal will occur, but the
surviving Employer or organization shall succeed to all the rights and duties
under the plan and trust of the Employers involved.
17.2 Transfers Of Plan Assets And Plan Mergers: The Plan and Trust
shall not be merged or consolidated with, nor shall any Plan assets or
liabilities be transferred to, any other plan, unless either (i) each
Participant in the Plan (if the Plan then terminated) receives a benefit
immediately after such merger, consolidation, or transfer, which is equal to or
greater than the benefit he would have been entitled to receive immediately
before such merger, consolidation, or transfer (if the Plan had then terminated)
or (ii) the conditions in (i) are deemed to be met due to compliance with the
procedures set forth in Treasury Regulation 1.414(1)-1 regarding plan mergers
and transfers.
17.3 Plan Termination: The Corporation may at any time, by adoption of
a resolution, terminate this Plan with respect to itself and all other Employers
hereunder. This Plan shall automatically terminate if all Employers cease to
exist and no successor continues the Plan.
A partial termination of this Plan will occur if required under the
qualification requirements of Section 401(a) of the Code.
17.4 Suspension And Discontinuance Of Contributions And Plan
Termination: If the Employer decides it is impossible or inadvisable to continue
to make its contributions hereunder, it shall have the power to:
<PAGE>
41
(a) suspend contributions to the Plan; or
(b) discontinue contributions to the Plan; or
(c) terminate the Plan as to its Employees.
Suspension shall be temporary cessation of contributions and such a
suspension which has not ripened into a complete and permanent discontinuance
shall not require any vesting of Individual Accounts.
In the event of a discontinuance of contributions, Employees who become
eligible to enter the Plan subsequent to the discontinuance shall receive no
benefit, and no additional benefits attributable to Employer contributions shall
accrue to any of the Members unless contributions are resumed. After the date of
discontinuance of contributions, the Trust shall remain in existence as provided
in this Section, and the provisions of the Plan and Trust shall remain in force
as may be necessary in the sole opinion of the Committee. A certified copy of
such decision or resolution shall be delivered to the Trustee, and as soon as
possible thereafter, the Trustee shall send or deliver to each Member or
Beneficiary concerned a copy thereof.
17.5 Liquidation Of Trust Fund: Upon termination, or partial
termination, of the Plan, the proportionate interests of the affected Members
and their Beneficiaries shall be liquidated after provision is made for the
expenses of administration, termination and liquidation, except that a Member's
Employer Stock may not be liquidated without the Member's consent unless
required to pay Plan expenses. Thereafter, the Trustee shall distribute as soon
as administratively feasible the amount to the credit of each such Member and
Beneficiary as the Committee shall direct. All such distributions under this
Section will be subject to the restrictions in 11.4 and 11.7 hereof.
ARTICLE XVIII
General Provisions
18.1 Nonguarantee Of Employment: Nothing contained in this Plan shall
be construed as a contract of employment between an Employer and Employee, or as
a right of any Employee to be continued in the employment of an Employer, or as
a limitation of the right of an Employer to discharge any of its Employees, with
or without cause.
18.2 Manner Of Payment: Wherever and whenever it is herein provided for
payments or distributions to be made, whether in money or otherwise, said
payments or distributions shall be made directly into the hands of the Member,
his Beneficiary, his administrator, executor or guardian, as the case may be.
Deposit for the benefit of a Member in any account selected by a Member or
Beneficiary hereunder shall be deemed payment into his hands, and provided
further, that in the event any person otherwise entitled to receive any payment
or distribution shall be a minor or an incompetent, such payment or distribution
may be made to his guardian or other person as may be determined by the
Committee.
<PAGE>
42
18.3 Nonalienation Of Benefits: Benefits payable under this Plan shall
not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any
kind, either voluntary or involuntary, prior to being received by the person
entitled to the benefit under the terms of the Plan. Any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose
of any right to benefits payable hereunder shall be void. The Trust Fund shall
not in any manner be liable for, or subject to, the debts, contracts,
liabilities, engagements, or torts of any person entitled to benefits hereunder.
None of the unpaid Plan benefits or Trust assets shall be considered an asset of
the Member in the event of his insolvency or bankruptcy.
Notwithstanding the foregoing, the Committee may approve payment to an
alternate payee based upon any "qualified domestic relations order" as defined
in Code Section 414(p), and a Member may pledge his account, to the extent
allowed under Section 10.2 hereof, as security for a loan made to such Member in
accordance with Section 10.2 hereof and such payment or pledge shall not be
deemed a prohibited alienation of benefits.
18.4 Amounts Returnable To An Employer: In no event shall an Employer
receive any amounts from the Trust, except such amounts, if any, as set forth
below:
a. In the event of a contribution made by an Employer by a mistake of
fact, such contribution may be returned to such Employer within one year after
payment thereof.
b. If an Employer's determination letter issued by the District
Director of Internal Revenue referred to in Section 15.3 hereof is an initial
determination letter as to such Employer and is to the effect that the Plan and
Trust herein set forth or as amended prior to the receipt of such letter do not
meet the requirements of Sections 401(a) and 501(a) of the Code, such Employer
shall be entitled at its option to withdraw, within one year of the receipt of
such letter, all contributions made on and after its effective date, in which
event the Plan and Trust shall then terminate as to such Employer and all rights
of the Employees shall be those as if the Plan had never been adopted.
c. Each contribution hereunder is conditioned upon the deductibility of
such contribution under Section 404 of the Code and shall be returned to an
Employer within one year if such deduction is disallowed (to the extent of the
disallowance).
18.5 Governing Law: This Plan and each of its provisions shall be
construed and their validity determined by the application of the laws of the
State of Texas, except to the extent such law is preempted by Federal statute.
<PAGE>
43
ARTICLE XIX
Fiduciary Provisions
19.1 General Allocation Of Duties: Each fiduciary with respect to the
Plan shall have only those specific powers, duties, responsibilities and
obligations as are specifically given him under the Plan. The Board of Directors
of the Corporation shall have the sole responsibility for authorizing Employer
contributions under the Plan and for terminating the Plan and it shall have the
sole authority to appoint and remove the Trustee or members of the Committee.
However, said Board shall not be liable for any acts or omissions of the Trustee
or be under any obligation to invest or otherwise manage any assets of the Trust
Fund which are subject to the management of the Trustee unless it knows that
said Trustee has committed a breach of the obligations and duties set forth in
ERISA.
Except as otherwise specifically provided, the Committee shall have the
sole responsibility for the administration of the Plan, which responsibility is
specifically described herein. Except as otherwise specifically provided, the
Trustee shall have the sole responsibility for the management of the assets held
under the Plan. Members shall be responsible for giving investment direction in
accordance with Section 5.4, except to the extent provided in said Section 5.4
that an investment committee is responsible for the investment direction for
Members not making their own investment selections.
It is intended under the Plan that each fiduciary shall be responsible
for the proper exercise of his own powers, duties, responsibilities and
obligations hereunder and shall not be responsible for any act or failure to act
of another fiduciary, except to the extent provided by law or as specifically
provided herein.
19.2 Fiduciary Duty: Each fiduciary under the Plan, shall discharge his
duties and responsibilities with respect to the Plan:
a. solely in the interest of the Plan participants, for the
exclusive purpose of providing benefits to such participants, and their
beneficiaries, and defraying reasonable expenses of administering the
Plan;
b. with the care, skill, prudence and diligence under the circumstances
then prevailing that a prudent man acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of
a like character and with like aims;
c. the investment committee under Section 13.9 shall diversify the
investments of the Plan not subject to the investment direction of Members so as
to minimize the risk of large losses, unless under the circumstances it is
prudent not to do so; and
d. in accordance with the documents and instruments governing
the Plan insofar as such documents and instruments are consistent with
applicable law.
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44
19.3 Fiduciary Liability: A fiduciary shall not be liable in any way
for any acts or omissions constituting a breach of fiduciary responsibility
occurring prior to the date he becomes a fiduciary or after the date he ceases
to be a fiduciary.
19.4 Co-Fiduciary Liability: A fiduciary shall not be liable for
any breach of fiduciary responsibility by another fiduciary unless:
a. he participates knowingly in, or knowingly undertakes to
conceal, an act or omission or such other fiduciary, knowing such act or
omission is a breach;
b. by his failure to comply with Section 404(a)(1) of ERISA in the
administration of his specific responsibilities which give rise to his
status as a fiduciary, he has enabled such other fiduciary to commit a
breach; or
c. having knowledge of a breach by such other fiduciary, he fails to
make reasonable efforts under the circumstances to remedy the breach.
19.5 Delegation and Allocation: Any fiduciary may appoint individuals
or any other agents as it deems advisable and delegate to any of such appointees
any or all of the powers and duties of the fiduciary to the extent allowed under
ERISA. Such appointment and delegation must clearly specify the powers or duties
delegated. Upon such appointment and delegation, the delegating fiduciary shall
have no liability for the acts or omissions of any such delegate, as long as the
delegating fiduciary does not violate its fiduciary responsibility in making or
continuing such delegation.
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the
foregoing instrument comprising E-Systems, Inc. Employee Savings Plan (As
Restated January 1, 1995), E-SYSTEMS, INC., the Corporation, has caused its
corporate seal to be affixed hereto and these presents to be duly executed in
its name and behalf by its proper officers thereunto authorized this day of , 19
.
ATTEST: E-SYSTEMS, INC.
By
Secretary
Title:
(CORPORATE SEAL)
<PAGE>
45
Participation Exhibit
E-Systems, Inc. Employee Savings Plan
(As Restated January 1, 1995)
This Exhibit sets forth below: (i) the specific subsidiaries, affiliates,
divisions, subdivisions, branches or units for which this Plan (or portion
thereof) is maintained, (ii) any employment position entered into in connection
with a business acquisition on or after January 1, 1995, and any employment
position created in connection with such a business acquisition which is to be
covered by this Plan (or portion thereof), (iii) the pre-acquisition service
that was counted as Vesting Service under the Previous Plan prior to January 1,
1995, (iv) the various separately identifiable portions of this Plan, and (v)
prior plans merged into this Plan.
Divisions, Subsidiaries, Branches, Portions of Plan (as
Units,and Affiliates defined in IV below) For
Which Eligible
- -----------------------------------------------------------------
E-Systems Corporate Division ED ME RD
Greenville Division
Noncollective Bargaining Employees ED ME RD
Collective Bargaining Employees ED(1) ME(1) RD EC(2)
Garland Division
Noncollective Bargaining Employees ED ME RD
not covered by the Global Command and
Control Systems (GCCS) contract
Noncollective Bargaining Employees ED ME covered by the Global Command and
Control Systems (GCCS) contract, effective as soon as practicable after
acceptance of contract
Collective Bargaining Employees - UAW ED ME(3) RD
Collective Bargaining Employees - UPGWA ED ME(4) RD
Raytheon Aircraft Montek Company(Montek
Division prior to July 1, 1996) ED ME RD
ECI Division
Noncollective Bargaining Employees ED ME RD
Collective Bargaining Employees ED ME(5) RD
<PAGE>
46
Melpar Division through September 10, ED ME RD
1995, and thereafter the Falls Church
Division, excluding employees from
Engineering Research Associates, Inc.
until January 1, 1996 or date of
transfer if later
HRB Systems, Inc. ED ME RD
E-Systems Medical Electronics, Inc. ED ME OD
EMASS, Inc. ED ME(6)
Transportation Management Solutions,Inc. ED ME RD OD
Auto-Trac, Inc. (All employees ED ME RD OD
transferred to Transportation
Management Solutions, Inc. during
1996)
Serv-Air, Inc., but only as a ED ME RD salaried Employee who transferred to
Serv-Air, Inc. from a position covered by this Plan (or Previous Plan) or who is
employed at (i) Serv-Air, Inc.'s general office location at Greenville, Texas;
or (ii) any field location where Serv-Air, Inc.'s annual program value is Two
Million Dollars ($2,000,000) or more and who is employed in the top management
position at that location or salary grade 29 or above (and for this purpose, any
Employee in Covered Employment at such a field location will not cease Covered
Employment at that location merely because the annual program value under a
contract is renewed at a level below Two Million Dollars ($2,000,000)); or (iii)
any Serv-Air, Inc. Information Systems Group field location on or after March 8,
1996.
Raytheon Aerospace, but only as to ED ME RD
Employees who were Members in Covered
Employment with Serv-Air, Inc. under this
Plan on December 29, 1995 whose employment
was transferred from Serv-Air, Inc. to
Raytheon Aerospace on or after December 30,
1995.
Advanced Power Technologies, Inc., ED ME RD
effective January 1, 1996
Central Texas Airborne Systems, Inc. (CTAS) ED ME
effective as soon as administratively
practicable after June 14, 1996
Electrospace Systems, Inc. (ESI)
Employees not covered by a contract ED ME RD under the Service Contract Act,
effective as soon as administratively practicable after June 14, 1996 as to ED
and ME and January 1, 1997 as to RD
<PAGE>
47
Employees covered by a contract under ED OD
the Service Contract Act, effective
October 1, 1996
(1) Effective September 25, 1995 (2) Prior to September 25, 1995 (3) Effective
April 8, 1996 (4) Effective March 25, 1996 (5) Effective April 15, 1996
(6) Effective as soon as practicable after August 5, 1996
No employees covered by a collective bargaining agreement entered into after the
Effective Date will be eligible for any portion of this Plan unless the Employer
and the collective bargaining unit have agreed to provide covered hereunder, in
which case said employees will be eligible for such coverage and this exhibit
will be modified to reflect such coverage.
Employment positions with any of the above entities entered into or created in
connection with any business acquisitions on or after January 1, 1995 will be
covered by this Plan (or portion thereof) only if so provided in II below.
In order to allow participation as soon as practicable of any Employee of an
acquired business who enters Covered Employment as a result of such business
acquisition, the Committee may temporarily determine contributions for any such
new Member hereunder on any reasonable and consistent basis (taking into
consideration such payroll information as is then reasonably available) until
such time as the Committee is able to obtain the exact payroll information
necessary for determining contributions in accordance with the contribution
provisions of this Plan.
The one-loan-only restriction in Section 8.2c of this Plan will not apply to any
loans that are part of a Participant's rollover to the Rollover Account under
this Plan in connection with the acquisition of CTAS and ESI referenced in the
above table. The one-loan-only restriction will apply to any new loan requests
originated by such a Participant under this Plan, disregarding any loans rolled
over.
II. Employment Positions With Any
Entities Listed in I. Above
Entered Into or Created In
Connection With the Following Portions of Plan (as
Business Acquisitions On or defined in IV below)
After January 1, 1995: For Which Eligible:
None as of January 1, 1995.
III. Business Acquisitions with Respect to which Pre-Acquisition Service
was Counted as Vesting Service under Previous Plan Prior to January 1,
1995:
Acquisition of Engineering Research Associates, Inc., in 1989
Acquisition of HRB Systems, Inc. in 1990
Acquisition of business (which became part of Transportation
<PAGE>
49
Management Solutions, Inc.) from Westinghouse Electric Corporation in 1994
Acquisition of Fluid Controls Division (which became part of Montek
Division) from BW/IP International, Inc. in 1994
Acquisition of Auto-Trac, Inc. in 1994
Acquisition of Advanced Archival Products, Inc. (which became part of
EMASS, Inc. in 1994)
Acquisition of APTI, Inc. in 1994
Acquisition of Image Data (which became part of E-Systems Medical
Electronics, Inc.) in 1994
Acquisition of Advanced Video Products, Inc. in 1992 (employees became
employed by E-Systems Medical
Electronics, Inc. in 1995)
IV. Portions of Plan are as follows:
ED means Employee Deferrals on pre-tax basis ME means Matching Employer
Contributions RD means Regular Discretionary Employer Contributions OD
means Optional Discretionary Employer Contributions EC means Employee
Contributions on after-tax basis
V. Prior Plans Merged into this Plan:
Advanced Video Products, Inc. 401(k) Plan, merged in 1995
Advanced Archival Products Profit Sharing Plan, merged in 1995
<PAGE>
1
EXHIBIT 4.8
RAYTHEON TI SYSTEMS SAVINGS PLAN
Provisions in Effect as of July 11, 1997
RAYTHEON TI SYSTEMS, INC., a corporation with its principal office in
Lexington, Massachusetts , hereinafter sometimes referred to as "RTIS," does
hereby establish and adopt the Raytheon TI Systems Savings Plan.
In accordance with the foregoing and pursuant to resolutions adopted by
the Board of Directors of the Employer, the Employer hereby adopts the following
Raytheon TI Systems Savings Plan, effective July 8, 1997, subject to the
approval of the Internal Revenue Service.
ARTICLE I - NAME OF PLAN
1.1 Name of Plan. This plan shall be known as the RAYTHEON TI SYSTEMS
SAVINGS PLAN, hereinafter referred to as the "Plan."
ARTICLE II - DEFINITIONS
Where used in this Plan, unless the context otherwise requires, or
unless otherwise expressly provided herein, the following terms shall have the
meaning described in this Article II. Where the context admits, the masculine
shall include the feminine and the singular shall include the plural, and vice
versa.
2.1 Affiliated Company. Any corporation which is a member of a
controlled group of corporations with RTIS (within the meaning of section 414(b)
of the Code) or any partnership, joint venture or other business organization
(whether or not incorporated) which is under common control or is affiliated
with RTIS (within the meaning of section 414(c) of the Code), or any member of
an affiliated service group (within the meaning of section 414(m) of the Code)
of which RTIS is a member, provided that in Sections 4.6(b) and 4.6(f) hereof
the term "Affiliated Company" shall be defined by substituting the phrase "more
than 50 percent" for the phrase "at least 80 percent" wherever such phrase
appears in section 414(b) or (c) of the Code and the regulations thereunder.
2.2 Allocated Stock. Shares of Raytheon Stock held by the Trustee under
the Trust that are attributable to that portion of a Participant's Cash or
Deferred Account invested in the Raytheon Stock Fund.
2.3 Alternate Payee. Any spouse, former spouse, child, or other
dependent of a Participant who has provided the Plan with his or her social
security number and who is recognized under a Qualified Domestic Relations Order
as having a right to receive all, or a portion of, the benefits payable under
this Plan with respect to such Participant.
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2
2.4 Annual Additions. The sum of the following amounts allocated to a
Participant's accounts in all defined contribution plans maintained by an
Employer:
(a) Employer contributions;
(b) Forfeitures;
(c) Employee contributions;
(d) Amounts allocated to an individual medical account as
defined in section 415(l)(2) of the Code, which is part of a pension or annuity
plan maintained by the Employer; and
(e) Amounts derived from contributions which are attributable
to post-retirement medical benefits allocated to the separate account of a Key
Employee under a welfare benefit plan (as defined in section 419(e) of the Code)
maintained by the Employer. The percentage limitation referred to below shall
not apply to (1) any contribution for medical benefits within the meaning of
section 4129A(f)(2) of the Code after separation from service which is otherwise
treated as an "annual addition" or (2) any amount otherwise treated as an annual
addition under section 415(l)(1) of the Code.
2.5 Balanced Fund. A portion of the Trust Fund in which a Participant
may elect to invest all or a portion of his or her Cash or Deferred Account.
Assets in the Balanced Fund shall be invested primarily in a combination of
common stocks and government and corporate bonds, including, without limitation,
index funds and mutual funds.
2.6 Beneficiary.
(a) The spouse of the Participant who is married to the
Participant at the time of the Participant's death, or any person or persons
named by a Participant who is not married as his or her Beneficiary,
co.Beneficiary, or contingent Beneficiary. A married Participant shall be
entitled to designate one or more Beneficiaries or contingent Beneficiaries
other than the Participant's spouse to receive any amount payable by the Trust
in the event of his or her death and from time to time to change such
designation. Such designation shall not take effect unless:
(1) 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 Plan representative or a notary public, or
<PAGE>
3
(2) the Participant establishes to the satisfaction of a Plan
representative that such spouse's consent may not be obtained because there is
no spouse or because the spouse cannot be located.
(b) Any consent by a spouse (or the establishment that a
consent of a spouse may not be obtained) shall be effective only with respect to
that spouse and any such consent by a spouse may be revoked by such spouse by
filing prior to the Termination of Employment of the Participant a revocation in
such form and manner as the Committee shall specify. The Plan representatives
may rely on the representations by the Participant as to whether the Participant
has no spouse or the spouse cannot be located and shall have no liability for
such reliance except as required by Part 4 of Title I of ERISA. All beneficiary
designations shall be made in accordance with such rules and regulations as the
Committee shall prescribe.
(c) Unless otherwise designated by the Participant in accordance with
this section, a Participantis Beneficiary shall be the same person or persons
that such Participant designated as a beneficiary under the TI Employees
Universal Profit Sharing Plan, as such classification existed immediately before
the adoption of the Plan.
(d) A person who is an Alternate Payee under a Qualified
Domestic Relations Order shall be considered a Beneficiary for purposes of this
Plan.
2.7 Board of Directors. The Board of Directors of RTIS unless
specifically stated otherwise.
2.8 Bond Fund. A portion of the Trust Fund in which a Participant may
elect to invest all or a portion of his or her Cash or Deferred Account. Assets
in the Bond Fund shall be invested primarily in U.S government and corporate
bonds including, without limitation, index funds and mutual funds.
2.9 Break in Credited Service. A 12 consecutive month period commencing
on an Employee's Date of Employment or any anniversary of such date during which
the Employee has no Hours of Service.
2.10 Cash or Deferred Account. The account of a Participant in which is
recorded the Participant's interest in the Trust Fund attributable to:
(a) Employer CODA Contributions and Employer Matched Savings
Contributions;
(b) Participant Rollover Contributions; and
(c) amounts transferred to the Participant's Cash or Deferred
Account pursuant to the provisions of Section 5.3 hereof.
<PAGE>
4
2.11 Child Birth or Adoption Absence. Absence from work (which is not a
Leave of Absence) by reason of pregnancy of the Employee, the birth of a child
of the Employee, the placement of a child with the Employee in connection with
the adoption of such child by the Employee, or for purposes of caring for such
child for a period beginning immediately following such birth or placement.
2.12 Code. The Internal Revenue Code of 1986, as amended from time to
time.
2.13 Committee. The RTIS Employee Benefits Administration Committee.
2.14 Compensation.
(a) The total earnings not in excess of $150,000 as adjusted
from time to time by the Secretary of the Treasury or his or her delegate for
increases in the cost-of-living pursuant to the provisions of section 415(d) of
the Code, paid by an Employer to an Employee during the year that are not
excluded below.
(b) Subject to the limitations contained in this definition,
Compensation shall mean pay received by an Employee including but not limited
to:
(1) base pay
(2) overtime premiums;
(3) sales bonuses;
(4) performance premiums;
(5) earnings which an Employee elects to have the Employer
contribute under the Cash or Deferred Account or contribute to payment of
Employee insurance premiums;
(6) premiums paid in addition to base salary to compensate for
assignments involving hazardous duty, hardship, inconvenience, or other unusual
job factors not excluded below;
(7) earnings paid by a foreign or domestic subsidiary to a
United States citizen treated as an Employee of RTIS as provided in Section
2.29 hereof;
(8) payments for hours during which no duties are performed and
for which an Employee is paid or entitled to payment to the extent such hours
are credited pursuant to Section 2.36 below, and
(9) earnings which an Employee elects to have the Employer
contribute as compensation reductions pursuant to the Raytheon TI Systems
Employees Health Benefit Plan; and
<PAGE>
5
(c) The following items shall be excluded from Compensation:
(1) travel expenses;
(2) resettlement allowances and amounts paid to reimburse the
Employee for expenses incurred as a result of a change in location of job
assignment, such as moving and other transfer expenses;
(3) other payments of or reimbursements for expenses incurred by
the Employee on behalf of the Employer;
(4) differentials paid in addition to base salary to compensate
for differences in living costs;
(5) income realized by an Employee from the exercise of an
Employee stock option, whether restricted, qualified, incentive or nonqualified,
or from disposition of Raytheon Stock acquired upon exercise of an option;
(6) all payments in cash or property that constitute perquisites
or Employee benefits that are not specifically based on services rendered but
solely on status as an employee;
(7) the market value of catalog points awarded and perfect
attendance awards; and
(8) separation pay, severance pay, and similar payments made as a result
of, or in anticipation of, a Termination of Employment.
(d) If an Employee is terminated and subsequently reemployed
in the same year, all Compensation in that year shall be included, and when
determining the Employer Matched Savings Contributions in accordance with the
provisions of Section 4.2, Compensation shall include only Compensation received
by the Participant after the date the Participant first became eligible for such
Employer contributions.
2.15 Computation Period. The 12 consecutive month period beginning with
an Employee's Date of Employment or any anniversary thereof.
2.16 Date of Employment. The date a person first becomes an Employee,
except that in the case of (i) an Employee who has incurred a Break in Credited
Service prior to becoming a Participant in a Plan Account and (ii) an Employee
who has incurred five consecutive Breaks in Credited Service after becoming a
Participant in a Plan Account, the most recent date upon which such Employee
again became an Employee after the Break or Breaks in Credited Service shall be
that Participant's Date of Employment.
2.17 Deferred Compensation Agreement. An agreement in such form as the
Committee shall prescribe which a Participant enters into whereby the
Participant:
<PAGE>
6
(a) assents to the terms and conditions of this Plan;
(b) agrees to accept the same and be bound thereby on behalf of
himself or herself, his or her Beneficiaries and his or her personal
representatives; anthat such agreement shall survive any revocation or amendment
and remain in full force and effect so long as the Participant is a Participant
in this Plan, and
(c) elects to have his or her Employer make Employer CODA
Contributions in lieu of cash payment to the Participant subject to such terms
and conditions and limitations, as may be prescribed from time to time by the
Committee.
2.18 Defined Benefit Fraction. A fraction, the numerator of which is
the projected retirement benefit of the Participant under all defined benefit
plans maintained by an Employer, Subsidiary, or Affiliated Company which are
qualified under section 401(a) of the Code (determined as of the close of the
year), and the denominator of which is the lesser of (i) the product of 1.25
multiplied by the dollar limitation in effect for such year under subsection
415(b)(1)(A) of the Code, or (ii) the product of 1.4 multiplied by the amount
which may be taken into account under subsection 415(b)(1)(B) of the Code with
respect to such Participant for such year.
2.19 Defined Contribution Fraction. A fraction, the numerator of which
is the sum of all of the Participant's Annual Additions for the year and all
prior years of service with an Employer, Subsidiary, or Affiliated Company, and
the denominator of which is the sum of the lesser of the following amounts
determined for such year and each prior year of service with an Employer,
Subsidiary, or Affiliated Company: (i) the product of 1.25 multiplied by the
amount specified in Section 4.5.1(b)(1) hereof in effect for such year, or (ii)
the product of 1.4 multiplied by the amount specified in Section 4.5.1(b)(2)
hereof in effect for such year.
2.20 Depository Fund. That portion of the Trust Fund attributable to
Employer CODA Contributions and Employer Matched Savings Contributions, other
than the assets invested in the Participant Investment Funds, and earnings and
increases thereon. Employer CODA Contributions and Employer Matched Savings
Contributions and earnings thereon shall be invested in the Depository Fund
until invested in the Participant Investment Funds by the Trustee in accordance
with Section 4.9 hereof. Assets in the Depository Fund shall be invested for
short term purposes in bonds, notes and other evidences of indebtedness having a
maturity date not beyond one year from the date of purchase, United States
Treasury bills, commercial paper, bankers' acceptances and certificates of
deposit, and undivided interests or participation therein and (if subject to
withdrawal on a daily basis) participation in common or collective funds
composed thereof.
<PAGE>
7
2.21. Determination Date. The last day of the preceding Plan Year.
2.22 Determination Year. The Plan Year for which testing is being
performed pursuant to Article IV hereof.
2.23 Direct Rollover. A payment by the Plan to the Eligible Retirement
Plan specified by the Distributee.
2.24 Distributee. A Participant, the surviving spouse of a Participant,
or the former spouse of a Participant who is an Alternate Payee under a
Qualified Domestic Relations Order.
2.25 Domestic Relations Order. Any judgment, decree, or order
(including approval of a property settlement agreement) of any court of
competent jurisdiction which relates to the provision of child support, alimony
payments, or marital property rights to a spouse, former spouse, child, or other
dependent of a Participant, and is made pursuant to a state domestic relations
law (including a community property law).
2.26 Earliest Retirement Age. The earliest of (i) the date on which the
Participant is entitled to a distribution under Article VII, or (ii) the later
of (1) the date the Participant attains age 50, or (2) the earliest date on
which the Participant could begin receiving benefits under the Plan following a
Termination of Employment.
2.27 Eligible Retirement Plan.
(a) Any of the following that accepts the Distributee's Eligible
Rollover Distribution:
(1) an individual retirement account described in section 408(a)
of the Code;
(2) an individual retirement annuity described in section 408(b)
of the Code;
(3) an annuity plan described in section 403(a) of the Code; or
(4) a qualified trust described in section 401(a) of the Code.
(b) In the case of an Eligible Rollover Distribution to the
surviving spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
2.28 Eligible Rollover Distribution. 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:
<PAGE>
8
(a) 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 Beneficiary, or for a specified period
of ten years or more;
(b) any distribution to the extent such distribution is required under
section 401(a)(9) of the Code; and
(c) the portion of any distribution that is not included in gross
income (determined without regard to the exclusion for net unrealized
appreciation with respect to Employer securities.)
2.29 Employee.
(a) Any Employee of any Employer, whether full-or part-time,
but shall exclude:
(1) all employees who do not reside within and at the same time
are not citizens of the United States, unless otherwise agreed upon under
special agreements providing for participation in this Plan;
(2) all persons engaged for assignments for whatever period
under special agreements providing for exclusion from participation in this
Plan;
(3) leased employees within the meaning of sections 414(n)(2)
and 414(o)(2) of the Code; and
(4) all persons who are listed on the Employer's records as an
individual contractor or an Employee of another company, even if that person is
subsequently determined to be a common-law employee.
(b) Notwithstanding any provisions of this Plan to the
contrary, a United States citizen who is an employee, whether full or part-time,
either of a foreign subsidiary as such term is defined in section 406(a) of the
Code to which an agreement entered into by RTIS under section 3121(1) of the
Code is applicable, or of a domestic subsidiary, as such term is defined in
section 407(a) of the Code, shall be treated as an Employee of RTIS for all
purposes of this Plan if no contribution under a funded plan of deferred
compensation is provided by any person other than RTIS with respect to the
remuneration paid to such United States citizen by such foreign or domestic
subsidiary which is his or her Employer.
2.30 Employer. Raytheon TI Systems and any other corporation which may
become a party to this Plan.
<PAGE>
9
2.31 Employer CODA Contributions. Employer contributions to the Cash or
Deferred Accounts of Participants in accordance with the provisions of Section
4.1 hereof.
2.32 Employer Matched Savings Contributions. Employer contributions to
the Cash or Deferred Accounts of Participants in accordance with the provisions
of Section 4.2 hereof.
2.33 Equity Fund. A portion of the Trust Fund in which a Participant
may elect to invest all or a portion of his or her Cash or Deferred Account.
Assets in the Equity Fund shall be invested primarily in equity securities or
other investments including, without limitation, index funds and mutual funds.
2.34 ERISA. Public Law No. 93-406, the Employee Retirement Income
Security Act of 1974, as amended from time to time.
2.35 415 Compensation.
(a) (1) A Participant'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 Employer to the extent that the amounts are includable in
gross income (including but not limited to, commissions paid salesmen,
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 section
1.62.2(c) of the regulations under section 62 of the Code);
(2) amounts received through accident or health insurance
for death, personal injuries or sickness (other than amounts received by an
Employee, to the extent such amounts (1) are attributable to contributions by
the Employer which were not includable in the gross income of the Employee, or
(2) are paid by the Employer; provided that amounts received under an accident
or health plan for Employees and amounts received from a sickness and disability
fund for Employees maintained under the law of a state or the District of
Columbia shall be treated as amounts received through accident or health
insurance and amounts paid to highly compensated individuals under a
discriminatory self-insured medical expense reimbursement plan (as such term is
defined in section 105(h) of the Code) shall be considered Compensation, but
only to the extent that these amounts are includable in the gross income of the
Employee;
(3) moving expenses incurred by the Employee, but only to
the extent that at the time of the payment it is reasonable to believe that
these amounts are not deductible by the Employee under section 217 of the Code;
(4) the value of a non-qualified stock option granted to an
Employee, but only to the extent that the value of the option is includable in
the gross income of the Employee for the taxable year in which granted; and
<PAGE>
10
(5) the amount includable in the gross income of an
Employee upon making the election described in section 83(b) of the Code.
(b) 415 Compensation shall not include any other forms of
remuneration, including but not limited to:
(1) contributions made by the Employer to a plan of
deferred compensation to the extent that before the application of the
limitations contained in section 415 of the Code to that plan, the contributions
are not includable in the gross income of the Employee for the taxable year in
which contributed, provided that any distributions from a plan of deferred
compensation are not considered Compensation regardless of whether such amounts
are includable in the gross income of the Employee when distributed, and
provided further that any amounts received by an Employee pursuant to an
unfunded non-qualified plan are permitted to be considered as Compensation for
the year in which the amounts are includable in the gross income of the
Employee;
(2) amounts realized from the exercise of a non-qualified
stock option or when restricted stock or property held by an Employee either
becomes freely transferable or is no longer subject to a substantial risk of
forfeiture;
(3) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option;
(4) other amounts which receive special tax benefits such
as premiums for group-term life insurance (but only to the extent that the
premiums are not includable in the gross income of the Employee), or
contributions made by an Employer towards the purchase of an annuity contract
described in section 403(b) of the Code (whether or not made under a salary
reduction agreement and whether or not the contributions are excludable from the
gross income of the Employee.
(c) In the case of (1) an Employee of two or more corporations
which are members of a controlled group of corporations or of two or more trades
or businesses (whether or not incorporated) that are under common control (as
those terms are defined in section 414(b) of the Code as modified by section
415(h) of the Code), or two or more members of an affiliated service group as
defined in section 414(m) of the Code; and (2) an Employee of two or more
members of any group of Employers who must be aggregated and treated as one
Employer pursuant to section 414(o) of the Code, the term "415 Compensation" for
such Employee includes compensation from all Employers that are members of the
group, regardless of whether the Employee's particular Employer has a qualified
plan.
2.36 Growth Stock Fund. A portion of the Trust Fund in which a
Participant may elect to invest all or a portion of his or her Cash or Deferred
Account. Assets in the Growth Stock Fund shall be invested primarily in stocks
of companies whose earnings are growing faster than average with an emphasis on
long-term price appreciation, including, without limitation, index funds and
mutual funds.
<PAGE>
11
2.37 Highly Compensated Employee.
(a) Any Employee who:
(1) is a five percent owner at any time during the Plan Year
or the preceding Plan Year; or
(2) for the preceding Plan Year:
(i) received Compensation in excess of the amount
specified in section 414(q)(1)(B)(i) of the Code; and
(ii) if the Employer so elects, in accordance with section
414(1)(1)(B)(ii) of the Code, was a member of the Top-Paid Group for such
preceding Plan Year.
(b) Former Employees will be treated as Highly Compensated
Employees if the former Employee was a Highly Compensated Employee at the time
of his or her separation from service or the former Employee was a Highly
Compensated Employee at any time after attaining age 55.
(c) The term iTop-Paid Groupi for any year includes Employees in
the group of Employees specified in section 414(q)(4) of the code, which
consists of the top 20 percent of Employees when ranked on the basis of
Compensation paid during such year.
(d) In determining the number of Employees in the Top-Paid Group
or the number of officers taken into account under subsection (c) of this
section, nonresident aliens with no earned income from the Employer that
constitutes income from sources within the United States shall not be treated as
Employees and (unless the Employer elects otherwise) the following Employees
shall be excluded:
(1) Employees with fewer than six months of service;
(2) Employees who normally work fewer than 17( hours per week;
(3) Employees who normally work during not more than six
months during the year;
(4) Employees who have not attained age 21; and
(5) (to the extent permitted by regulation) Employees who are
included in a unit of Employees covered by a collective bargaining agreement
with the Employer.
<PAGE>
12
(e) The dollar amounts incorporated under subsection (a)(2)(A)
shall be adjusted as provided in section 414(q)(1) of the Code.
(f) For purposes of this section, the term "Compensation" means
compensation as defined under section 415(c)(3) of the Code, without regard to
sections 125, 402(a)(8)) and 402(h)(1)(B) of the Code and without regard to
salary reduction contributions under section 403(b) of the Code. For Plan Years
beginning after December 31, 1997, the term "Compensation" means compensation as
defined under section 415(c)(3) of the Code.
(g) This section shall be interpreted in a manner consistent with
section 414(q) of the Code and the regulations thereunder and shall be
interpreted to permit any elections permitted by such regulations to be made.
2.38 Hour of Service.
(a) Each hour of an individual's employment with the Employer
(including an Affiliated Company), which are members of a controlled group
including an Employer under this Plan or which are under common control with an
Employer under this Plan within the meaning of sections 414(b) and (c) of the
Code, for which the Employee is directly or indirectly paid or entitled to
payment from an Employer or Affiliated Company and for an Employee described in
subsection (b)(5) below each hour during which he is on Leave of Absence.
(b) Employees shall receive credit for Hours of Service as
follows:
(1) Employees whose pay is determined on the basis of
certain amounts for each hour worked and who are regularly scheduled to work
less than 40 hours per week shall receive credit for the number of Hours of
Service completed during each week of employment;
(2) Employees whose pay is determined on the basis of
certain amounts for each hour worked and who are regularly scheduled to work
more than 39 hours per week shall receive credit for the greater of 40 Hours of
Service for each week of employment or the number of Hours of Service completed
during the week;
(3) Employees whose pay is not determined on the basis of
certain amounts for each hour worked shall receive credit for 45 Hours of
Service for each week of employment;
(4) Employees whose pay is not determined on the basis of
certain amounts for each hour worked and who have entered into an agreement with
their Employer to work a schedule that is less than 40 hours per week shall be
credited with Hours of Service by multiplying 40 hours by the quotient obtained
when such Employee's Compensation for that month is divided by the lowest
full-time rate of pay for that Employee for the month; and
<PAGE>
13
(5) Employees who were regularly scheduled to work at least
40 hours per week prior to the commencement of a Leave of Absence shall receive
credit for 40 Hours of Service for each week or one-seventh of 40 Hours of
Service for each day of the Leave of Absence.
(c) Each hour of a Child Birth or Adoption Absence shall be
deemed an Hour of Service and each hour during which no duties are performed for
which an Employee is paid or entitled to payment by an Employer or Affiliated
Company, or by a trust or insurance company to which an Employer or Affiliated
Company makes contributions, due to vacation, holiday, illness, incapacity
(including disability), furlough, reduction in force, layoff, jury duty,
military duty or Leave of Absence shall be deemed an Hour of Service; provided
that, no more than 501 Hours of Service shall be credited to any Employee for a
Child Birth or Adoption Absence or for a single continuous period in which the
Employee is paid or entitled to payment and no duties are performed unless such
Hours of Service are credited pursuant to another paragraph in this Section.
(d) Each hour for which back pay, irrespective of mitigation
of damages, is awarded or agreed to by an Employer or Affiliated Company shall
be deemed an Hour of Service.
(e) Employees shall not be credited with more than one Hour of
Service for any hour of employment.
(f) Hours of Service shall be credited to the Computation
Period during which such hours occur. Hours for a period during which no duties
are performed for which an Employee is paid or entitled to payment not based on
units of time shall be credited to the first of two Computation Periods during
which such period occurs if such period extends beyond one Computation Period.
Hours of Service for Child Birth or Adoption Absence shall be credited to the
Computation Period in which the absence begins if the Participant is prevented
from incurring a Break in Credited Service during such Computation Period solely
by such credit, otherwise, such Hours of Service shall be credited to the
immediately following Computation Period and Hours of Service for which back pay
is awarded or agreed to shall be credited to the Computation Period for which
the back pay was awarded instead of the Computation Period in which paid. Hours
of Service for periods during which no duties are performed shall be determined,
and shall be credited to Computation Periods, in a manner consistent with the
requirements of Department of Labor Regulations section 2530.200b.2(b) and (c).
2.39 Income Fund. A portion of the Trust Fund in which a Participant
may elect to invest all or a portion of his or her Cash or Deferred Account.
Assets in the Income Fund shall be invested primarily in securities and other
investments, including without limitation index funds and mutual funds, with
emphasis on current income and preservation of principal.
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14
2.40 International Stock Fund. A portion of the Trust Fund in which a
Participant may elect to invest all or a portion of his or her Cash or Deferred
Account. Assets in the International Stock Fund shall be invested primarily in
non-U.S. equity securities and debt obligations of companies and governments or
other investments including, without limitation, index funds and mutual funds.
2.41 Investment Contract Fund. A portion of the Trust Fund in which a
Participant may elect to invest all or a portion of his or her Cash or Deferred
Account. Assets in the Investment Contract Fund shall be invested primarily in
contracts with insurance carriers and financial institutions and in fixed-income
securities which are subject to contracts protecting book value for early
withdrawals.
2.42 Key Employee.
(a) Any of the Participants in this Plan or any of the
participants in any plan required to be considered for purposes of Section 16.5
hereof, who, during the Plan Year or any of the preceding four Plan Years:
(1) is an officer of an Employer under this Plan or an
Employer under such other plans ("employer" hereafter) having annual
Compensation exceeding 50 percent of the amount in effect under section
415(b)(1)(A) of the Code for any such Plan Year provided that not more than 50
employees (or, if lesser, the greater of three employees or ten percent of all
employees of an employer) shall be considered Key Employees pursuant to this
clause;
(2) one of the ten Employees owning (or considered as
owning within the meaning of section 318 of the Code) both more than one-half
percent interest and one of the ten largest interests in an Employer;
(3) a five-percent owner of an Employer within the
meaning of section 416(i)(1)(B) of the Code, or
(4) a one-percent owner of an Employer within the meaning
of section 416(i)(1)(B) of the Code.
(b) For purposes of determining five-percent and one-percent
owners, neither the aggregation rules nor the rules of section 414(b), (c), and
(m) of the Code apply.
2.43 Leave of Absence. Absence by reason of:
(a) temporary disability;
(b) temporary layoff;
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15
(c) any period of service in the armed forces of the United
States, or, if a Participant is a national of a country other than the United
States, in the armed forces of the country of which the Participant is a
national;
(d) any period of employment with any Affiliated Company not a
party to this agreement (other than employment specified in Section 2.29(b)
hereof); and
(e) any other absence so designated by the Employer.
2.44 Market Value. The price at which an item of property would change
hands between a willing buyer and a willing seller, neither being under any
compulsion to buy or sell and both having reasonable knowledge of relevant
facts. The Market Value of any item of property is to be determined neither by a
forced sale price nor by the sale price of the item in a market other than the
market in which such item is most commonly sold to the public. All relevant
facts shall be considered. A value determined pursuant to the principles stated
in Section 5.6 hereof as of a time not the Valuation Date shall be deemed to be
as of the Valuation Date, and shall be deemed to be the Market Value.
2.45 Other Defined Contribution Plan. A defined contribution plan,
other than this Plan, maintained by the Employer or any Affiliated Company which
is qualified under section 401(a) of the Code or any section of the Code which
supersedes said section.
2.46 Participant. Any Employee who satisfies any of the eligibility
requirements of Article III hereof and for whose account a credit has been made
under the terms of this Plan through contributions by an Employer or by the
Employee, or for whose account a credit would have been made had his or her
Employer made a contribution. Participant shall also include any former Employee
for whose credit an account is maintained under the terms of this Plan.
2.47 Participant Investment Funds. The Balanced Fund, Bond Fund, Growth
Stock Fund, Equity Fund, Income Fund, International Stock Fund, Investment
Contract Fund, and Raytheon Stock Fund, collectively.
2.48 Permanent Disability. The permanent disability of a Participant
which has been verified to the satisfaction of the Committee.
2.49 Plan Account. The Cash or Deferred Account.
2.50 Plan Year. The period beginning with January 1 and ending with
December 31 of each year.
2.51 Qualified Domestic Relations Order.
(a) A Domestic Relations Order which creates or recognizes the
existence of an Alternate Payee's right, or assigns to an Alternate Payee the
right, to receive all or a portion of the benefits payable with respect to a
Participant under this Plan, and clearly specifies:
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16
(1) the name and last known mailing address (if any) of the
Participant and of each Alternate Payee covered by the order;
(2) the amount or percentage of the Participant's benefits to
be paid by the Plan to each Alternate Payee, or the manner in which such amount
or percentage is to be determined;
(3) the number of payments or period to which such order
applies; and
(4) a statement that such order applies to this Plan.
(b) An order which requires the Plan to provide increased benefits
(determined on the basis of the Participant's account balances), or for the
payment of benefits to an Alternate Payee which are required to be paid to
another Alternate Payee under another order previously determined to be a
Qualified Domestic Relations Order, or requires the Plan to provide any type or
form of benefits or any option not otherwise provided under this Plan shall not
be considered a Qualified Domestic Relations Order.
(c) An order shall not be treated as requiring the Plan to provide
any type or form of benefits or any option not otherwise provided solely because
such order requires that payments of benefits be made to an Alternate Payee:
(1) in the case of any payment before a Participant has had a
Termination of Employment, on or after the date on which such Participant
attains (or would have attained) the Earliest Retirement Age;
(2) as if the Employee had a Termination of Employment on the
date on which such payment is to begin under such Order (but taking into account
only the Employee's account balances actually accrued to such date), or
(3) in any form in which such benefits may be paid under the
Plan to the Participant.
2.52 Qualified Military Service. Any period of duty on a voluntary or
involuntary basis in the United States Armed Forces, the Army National Guard and
the Air National Guard when engaged in active duty for training, inactive duty
for training or full-time National Guard duty, the commissioned corps of the
Public Health Service and any other category of persons designated by the
President of the United States in a time of war or emergency. Such periods of
duty shall include active duty, active duty for training, initial active duty
for training, inactive duty training, full-time national Guard duty and absence
from employment for an examination to determine fitness for such duty.
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17
2.53 Raytheon Stock. The common stock of Raytheon Company.
2.54 Raytheon Stock Fund. A portion of the Trust Fund in which a
Participant may elect to invest all or a portion of his or her Cash or Deferred
Account. Assets in the Raytheon Stock Fund shall be invested primarily in
Raytheon Stock except to the extent deemed necessary by the Trustee to meet the
cash requirements of the Trust. Notwithstanding the foregoing, it is
specifically provided that the Trustee shall not purchase Raytheon Stock under
the terms hereof when, in the opinion of counsel for the Employer, such purchase
may not be made.
2.55 Required Aggregation Group. Each plan of the Employer in which a
Key Employee is a Participant in the Plan Year containing the Determination Date
or any of the four preceding Plan Years, and each other plan of the Employer
which will be required to be aggregated to enable any plan in which a Key
Employee participates to meet the requirements of section 401(a)(4) or 410 of
the Code.
2.56 Required Beginning Date.
(a) Except as otherwise provided in subsection (b), April 1 of the
calendar year following the later of: the calendar year in which the Participant
attains the age of 70(OMEGA), or the calendar year in which the Participant
retires.
(b) In the case of a Participant who is a five-percent owner (as
defined in section 416 of the Code) with respect to the Plan Year ending in the
calendar year in which such Participant attains the age of 70(OMEGA), April 1 of
the calendar year in which the Participant attains the age of 70(OMEGA).
2.57 Retirement. An Employee's first Termination of Employment at or
after the age of 65 or, if earlier, Termination of Employment, pursuant to which
the Employee received or is entitled to receive within 60 days, retirement
benefits pursuant to the provisions of the Raytheon TI Systems Employees Pension
Plan or any successor of such plan, or any other defined benefit retirement plan
maintained by RTIS or any Affiliated Company, but if the Participant shall not
be a Participant in any of such plans, Retirement shall be the time when such
Participant ceases to be an Employee of the Employer or any Affiliated Company
after the attainment of the age of 60 years, even though such age may be prior
to the normal retirement date specified in the Raytheon TI Systems Employees
Pension Plan.
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18
2.58 Rollover Contribution.
(a) A contribution by a Participant of (i) an amount which
shall not exceed an amount previously received by the Participant not more than
60 days preceding the date of such rollover contribution from (1) another
deferred compensation plan qualified under section 401(a) of the Code, or (2) an
individual retirement account which account was created and existed in
accordance with section 408(d)(3) of the Code, or (ii) an amount which is a
direct rollover to the Plan from another qualified plan or from an individual
retirement account as such terms are defined in (i) above. For purposes of this
Section, "direct rollover" shall mean an Eligible Rollover Distribution that is
paid directly to this Plan for the benefit of the Distributee.
(b) Funds which are not eligible for treatment as rollover
contributions pursuant to section 401(a)(31) of the Code shall not be considered
Rollover Contributions.
2.59 Subsequent Employer. The purchaser, other than an Affiliated
Company of (i) all or substantially all of the assets used in a trade or
business of any Employer, or (ii) any Employer's interest in a subsidiary of
that Employer with respect to an Employee who continues in employment with the
purchaser; provided that a purchaser shall not be considered a Subsequent
Employer if that purchaser agrees to maintain this Plan or to maintain or
establish a defined contribution plan that is qualified under section 401(a) of
the Code, to which Plan assets in the amount of the Employee's benefit under
this Plan will be transferred.
2.60 Temporary Layoff. An absence from employment under circumstances
of reduced employment requirements in which the Employer, through its normal
documentation, expresses its intent to recall the Employee within six months,
not including (unless otherwise determined by the Employer) any period of such
absence in excess of six months.
2.61 Tender Offer. A tender offer, or exchange offer, or other offer to
purchase, by any person either alone or in conjunction with others, or a
solicitation of an offer to sell to such person, one percent or more of the
outstanding shares of Raytheon Stock, which offer or solicitation is applicable
to the Raytheon Stock held by the Trustee under the Trust.
2.62 Termination of Employment.
(a) a cessation of the Employer-Employee relationship which is
not a Leave of Absence; or
(b) a failure to return to work after expiration of a Leave of
Absence.
2.63 Top-Heavy Plan. A plan described in Section 16.4 hereof.
2.64 Top-Heavy Plan Year. A Plan Year during which the Plan is
determined to be a Top-Heavy Plan.
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19
2.65 Total Assets. The total assets as shown in the balance sheet
contained in the consolidated financial statements of RTIS and Affiliated
Companies audited by RTISis independent certified public accountants and
reported to shareowners in the published annual report of RTIS.
2.66 Trading Day. Any day on which the New York Stock Exchange is
open for business.
2.67 Trust Agreement. Master Trust Agreement between Raytheon Company
and Fidelity Management Trust Company, dated July 31, 1992, establishing the
Raytheon Company Master Trust for Defined Contribution Plans.
2.68 Trustee. The trustee or trustees acting as such under the Trust
Agreement, including any successor or successors.
2.69 Trust Fund. All money and other property held from time to time by
the Trustee pursuant to the Trust Agreement.
2.70 Unallocated Raytheon Stock. Shares of Raytheon Stock held by the
Trustee under the Trust that are not attributable to that portion of a
Participant's Cash or Deferred Account invested in the Raytheon Stock Fund.
2.71 Valuation Date. Any Trading Day.
2.72 Year of Credited Service.
(a) A 12 consecutive month period commencing on an Employee's Date
of Employment or any anniversary of such date during which the Employee
completes at least 1,000 Hours of Service. Notwithstanding the foregoing, for an
Employee identified in Section 2.38(b)(4) hereof, 750 hours shall be substituted
for 1,000 Hours of Service.
(b) Any Employee who was, immediately before the effective date of
the Plan, an employee of Texas Instruments Incorporated, shall have his or her
Years of Credited Service determined under the preceding provisions of this
section but, in making such determination, employment with Texas Instruments
Incorporated shall be treated as if it were performed for RTIS.
ARTICLE III - ELIGIBILITY AND PARTICIPATION
3.1 Eligibility and Participation. Employees shall be eligible to
participate in this Plan as provided in Section 3.2 below. Participation in any
Plan Account shall be entirely voluntary and such participation shall not be a
condition of continued employment. In order to become a Participant in the Cash
or Deferred Account, an Employee shall sign an appropriate acceptance card at
such time and in such manner as the Committee shall prescribe, indicating his or
her assent to the terms and conditions of this Plan and such Plan Account and
his or her agreement to accept the same and be bound thereby on behalf of
himself or herself and his or her Beneficiaries or personal representatives.
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20
3.2 Participation.
(a) Cash or Deferred Account. Any Employee shall be eligible
to participate in the Cash or Deferred Account on the date he or she becomes an
Employee and shall become a Participant on the date he or she files a Deferred
Compensation Agreement pursuant to Section 3.3 below with the Committee.
(b) Rollovers. Any Employee shall become eligible to make a
Rollover Contribution to the Plan on the date he or she becomes an Employee.
Each Employee who makes a Rollover Contribution shall become a Participant in
the Cash or Deferred Account on the date such Rollover Contribution is made
(such Rollover Contribution being subject to such limitations and terms and
conditions as the Committee may prescribe from time to time), but only to the
extent of the Participant's Rollover Contribution.
3.3 Deferred Compensation Agreement.
(a) In order to authorize Employer CODA Contributions to a
Cash or Deferred Account in his or her name, an Employee shall sign and file a
Deferred Compensation Agreement at such time and in such form as the Committee
shall prescribe. Subject to the terms and conditions hereinafter stated, and
subject to such further limitations, terms and conditions as may be prescribed
from time to time by the Committee, each Participant may enter into, amend or
revoke a Deferred Compensation Agreement. Each such agreement and any amendment
or revocation which conforms to the terms and conditions prescribed by the
Committee shall be effective as soon as practicable after it is received by the
Committee and shall continue in effect until revoked or modified by the
Participant filing a new agreement, amendment, or revocation or by the Committee
acting pursuant to Section 3.4 hereof. Any Employee with respect to whom a
Deferred Compensation Agreement has not been filed or is not effective for any
given payroll period shall be deemed to have elected cash Compensation in lieu
of an Employer CODA Contribution pursuant to Section 4.1 hereof.
(b) The amount of Employer CODA Contributions elected by an
Employee shall be not less than the minimum nor more than the maximum specified
from time to time by the Committee, but in no event shall it exceed $7,000 as
adjusted from time to time by the Secretary of the Treasury or his or her
delegate for increases in the cost-of-living pursuant to the provisions of
section 402(g) of the Code.
(c) Each Deferred Compensation Agreement shall be applicable to all
payroll periods during which such agreement is in effect.
3.4 Committee Amendment or Revocation of Deferred Compensation
Agreement.
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21
(a) The Committee shall have the absolute and unqualified
right to amend or revoke the Deferred Compensation Agreement of any Participant
at any time, if the Committee determines in its sole discretion that such
amendment or revocation is necessary or appropriate to prevent the Employer CODA
Contributions elected by such Participant for any Plan Year from exceeding the
limitations set forth in Sections 4.4 or 4.5 hereof, to maintain the
tax-qualified status of this Plan and the Trust, or to prevent employer
contributions for all participants under this Plan from exceeding the limits
under Section 4.3 hereof.
(b) Notwithstanding the foregoing, the Committee shall have
the absolute and unqualified right to postpone or suspend Compensation deferrals
pursuant to Participant elections if such committee determines, in its sole
discretion, that such postponement or suspension is desirable or necessary for
any reason including, without limitation, the absence or insufficiency of
appropriate facilities, equipment, personnel, computer systems or other
resources or administrative procedures for processing such Deferred Compensation
Agreements or Compensation deferrals.
3.5 Effect of Break in Credited Service. An Employee who has incurred a
Break in Credited Service shall not participate in any Plan Accounts of this
Plan during the Break in Credited Service. Former Participants in one or more
Plan Accounts and Employees who had satisfied the requirements for participation
in one or more Plan Accounts prior to incurring a Break in Credited Service
shall begin participating in such Plan Account or Plan Accounts effective upon
the date of reemployment, provided that in the case of any Plan Account any such
Participant or former Employee (i) who has not completed the number of Years of
Credited Service for Vesting required under such Plan Account, and (ii) whose
number of consecutive Breaks in Credited Service equal or exceed his or her
aggregate number of Years of Credited Service prior to the Break in Credited
Service (excluding Years of Credited Service which have previously been excluded
under this Section), shall begin participating in such Plan Account in
accordance with the provisions of Section 3.2 hereof, and his or her Years of
Credited Service prior to his or her last Break in Credited Service shall be
disregarded in determining such Employee's eligibility to participate in such
Plan Account, provided that, such Years of Credited Service shall not be
disregarded in the case of any Break in Credited Service occurring after
December 31, 1984 unless the number of consecutive Breaks in Credited Service of
the Participant is at least five.
3.6 Treatment of Qualified Military Service. Notwithstanding any
provision of this Plan to the contrary, contributions, benefits and service
credit with respect to Qualified Military Service will be provided in accordance
with section 414(u) of the Code.
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22
ARTICLE IV - CONTRIBUTIONS
4.1 Amount of Employer CODA Contributions. Employers shall from year to
year contribute for the exclusive benefit of the Participants an amount equal to
the total amount of contributions elected by all Participants in their Deferred
Compensation Agreements effective for the Plan Year, subject to the limitations
set forth in Article III hereof and in Sections 4.4, 4.4, and 4.5 hereof;
provided however, that not more than 17 percent of Compensation may be
contributed per pay period.
4.2 Amount of Employer Matched Savings Contributions. Employers shall
contribute on behalf of each Participant for whom contributions are made
pursuant to Section 4.1 hereof, an amount equal to 50 percent of the amount
contributed on behalf of such Participant pursuant to Section 4.1 hereof for
the Plan Year, not to exceed an amount equal to two percent of the amount of
Compensation received by such Participant during the Plan Year.
4.3 Limitation on Employer Contributions. Notwithstanding the foregoing
Sections 4.1 and 4.2 hereof, the Employer contributions pursuant to this Plan
shall be subject to the limitations of Sections 4.4 and 4.5 hereof; and there
shall not be contributed for any Employer more than 15 percent of the total
Compensation paid to all of its participating Employees, determined on a
cumulative basis for all Plan Years computed as of the end of each Plan Year.
4.4 Reduction of Employer CODA Contributions and Employer Matched
Savings Contributions to Meet Section 401(k) and Section 401(m) Discrimination
Tests.
(a) Notwithstanding the provisions of this Article IV, the
Committee may at any time in accordance with the provisions of Section 4.5
hereof, decrease the amount of the Employer CODA Contributions elected by any
Participant and Employee Matched Savings Contribution for any Participant to
meet the requirements of sections 401(k)(3) and 401(m) of the Code. In the event
that the amounts of the Employer CODA Contributions and Employer Matched Savings
Contributions on behalf of any Participant under this Article exceed the amounts
specified in Section 3.3 hereof or the annual allowable deferral amount under
section 401(k)(3) or 401(m) of the Code, the excess contributions and earnings
thereon shall be distributed to the Participant by the end of the Plan Year
following the Plan Year in which such excess contributions were made.
(b) The exclusions in Sections 4.4(d) and 4.4(h) below shall
be applied on a uniform and consistent basis for all purposes for which the
definition contained in section 414(q) of the Code is applicable.
(c) The provisions of section 1.401(m).2(b) of the regulations
under the Code are hereby incorporated by this reference.
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23
(d) In the event that the initial allocations of Employer CODA
Contributions do not satisfy one of the tests set forth in this Section ("excess
contributions" hereafter), such excess contributions shall be adjusted as
follows: on or before the fifteenth day of the third month following the end of
each Plan Year, the Highly Compensated Employee having the highest actual
deferral ratio shall have his or her portion of such excess contributions
distributed to him until one of the tests set forth in this Section is
satisfied, or until his or her actual deferral ratio equals the actual deferral
ratio of the Highly Compensated Employee having the next highest deferral ratio.
This process shall continue until one of the actual deferral percentage tests
set forth in this Section is satisfied.
(e) For each Highly Compensated Employee, the amount of excess
contributions is equal to the Elective Contributions on behalf of such Highly
Compensated Employee (determined prior to the application of this paragraph)
minus the amount determined by multiplying the Highly Compensated Employee's
actual deferral ratio (determined after application of this paragraph) by his or
her Compensation as defined in Section 2.14 hereof. However, in determining the
amount of excess contributions to be distributed with respect to an affected
Highly Compensated Employee as determined herein, such amount shall be reduced
by any excess deferred compensation previously distributed to such affected
Highly Compensated Employee for his or her taxable year ending with or within
such Plan Year and any matching contributions which relate to such excess
deferred compensation.
(f) With respect to the distribution of excess contributions
pursuant to this Section; such distribution:
(1) may be postponed but not later than the close of the
Plan Year following the Plan Year to which they are allocable;
(2) shall be made first from unmatched deferred
compensation and, thereafter, simultaneously from deferred compensation which is
matched and matching contributions which relate to such deferred compensation;
(3) shall be adjusted for income; and
(4) shall be designated by the Employer as a distribution
of excess contributions (and income).
(g) Reduction to Meet Section 401(m) Discrimination Tests. In
the event that the initial allocations of Employer Matched Savings Contributions
for any Participant do not satisfy one of the tests set forth in this Section
("excess aggregate contributions" hereafter), the excess aggregate contributions
shall be adjusted as follows: on or before the fifteenth day of the third month
following the end of each Plan Year, the Highly Compensated Employee having the
highest actual contribution ratio shall have his or her portion of the excess
aggregate contributions distributed to him until one of the tests set forth in
this Section is satisfied, or until his or her actual contribution ratio equals
the actual contribution ratio of the Highly Compensated Employee having the next
highest actual contribution ratio. This process shall continue until one of the
actual contribution percentage tests set forth in this Section is satisfied.
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24
(h) For each Highly Compensated Employee, the amount of excess
aggregate contributions is equal to the Employee Matched Savings Matching
Contributions on behalf of such Highly Compensated Employee (determined prior to
the application of this paragraph) minus the amount determined by multiplying
the Highly Compensated Employee's actual contribution ratio (determined after
application of this paragraph) by his or her Compensation as defined in Section
2.14 hereof.
(i) With respect to the distribution of excess aggregate
contributions pursuant to this Section; such distribution:
(1) may be postponed but not later than the close of the
Plan Year following the Plan Year to which they are allocable;
(2) shall be adjusted for income; and
(3) shall be designated by the Employer as a distribution
of excess aggregate contributions (and income).
4.5 Reduction of Annual Additions.
(a) Annual Additions for Participants shall be reduced in
accordance with Sections 4.5(b) and 4.5(f) below. In the event that any Other
Defined Contribution Plans do not provide for reductions in Annual Additions in
accordance with this Section, then the reductions in the Annual Additions under
this Plan shall be made in the order set forth below, disregarding the specified
priority for reductions in the Annual Additions to such Other Defined
Contributions Plans which do not so provide.
(b) Notwithstanding any other provisions of this Plan to the
contrary, the Annual Additions to a Participant under the Cash or Deferred
Account on behalf of each Participant for any Plan Year, when combined with the
Annual Additions on behalf of such Participant for such Plan Year under all
Other Defined Contribution Plans cannot exceed the lesser of:
(1) $30,000 (or, if greater, one-fourth of the dollar
limitation in effect for such Plan Year under section 415(b)(1)(A) of the Code)
as adjusted from time to time by the Secretary of the Treasury or his or her
delegate for increases in the cost of living pursuant to the provisions of
section 415(d) of the Code; or
(2) 25 percent of the Participant's 415 Compensation
during the Plan Year.
(c) (1) Annual Additions to which a Participant would
otherwise be entitled pursuant to the provisions of this Plan and such Other
Defined Contribution plans which are in excess of the limitations set forth
above shall be reduced in the following order:
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25
(A) Employer CODA Contributions under Section 4.1 hereof;
(B) Employer Matched Savings Contributions under Section
4.2 hereof; and
(C) Forfeitures under Section 5.7 hereof.
(2) In the event that any such Other Defined Contribution
Plans do not provide for reductions in Annual Additions in accordance with this
Section, then the reductions in the Annual Additions under this Plan shall be
made in the order set forth above, disregarding the specified priority for
reductions in the Annual Additions to such Other Defined Contributions Plans
which do not so provide.
(d) The Annual Additions for any year for a Participant who is or
who has been a Participant in one or more defined contribution plans maintained
by an Employer, or Affiliated Company (determined by substituting 50 percent for
80 percent in section 414(b) and (c) of the Code) which is qualified under
section 401(a) of the Code shall be aggregated for purposes of the limitations
contained in this Section.
(e) If as a result of the allocation of Forfeitures, a reasonable
error in estimating a Participant's 415 Compensation, or under other limited
facts and circumstances which the Internal Revenue Commissioner finds justify
the availability of the provisions set forth in this paragraph, the Annual
Additions under this Plan on behalf of any Participant for any Plan Year would
cause the limitations set forth in this Section 4.5(b) to be exceeded for the
Plan Year, such Participants' excess Employer CODA Contribution and income
thereon shall be returned to the Participant to the extent of such excess
amounts, and any excess amounts remaining after such refund shall, if the
Participant is a Participant in this Plan as of the end of the Plan Year in
which the excess occurs, be used to reduce Employer contributions for such
Participant in the following Plan Year (and any succeeding Plan Years until the
excess amount is exhausted); provided that, if such Participant ceases to be a
Participant in this Plan prior to the end of the Plan Year in which the excess
occurs, then the excess amounts shall be unallocated in a suspense account and
allocated and reallocated to the Cash or Deferred Accounts as determined by the
Committee, of all Participants in this Plan (subject to the limitations of this
Section 4.5(b)) in the following Plan Year prior to the allocation of any
Employer contributions and shall reduce the amount of Employer contributions for
such following Plan Year for all Participants in this Plan.
(f) The Annual Additions for any year for a Participant who is
or who has been a Participant in one or more defined benefit plans maintained by
an Employer, or Affiliated Company (determined by substituting 50 percent for 80
percent in section 414(b) and (c) of the Code) which is qualified under section
401(a) of the Code shall not exceed an amount which would result in the sum of
the Participant's Defined Benefit Fraction for any year and the Participant's
Defined Contribution Fraction for the same year exceeding 1.0.
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26
(g) Annual Additions to which a Participant would otherwise be
entitled pursuant to the provisions of this Plan and such Other Defined
Contribution Plans and defined benefit plans which are in excess of the
limitations set forth above shall be reduced in the following order:
(1) All retirement benefits under such defined
benefit plans;
(2) Employer CODA Contributions under Section 4.1
hereof;
(3) Employer Matched Savings Contributions under Section
4.2 hereof; and
(4) Forfeitures under Section 5.7 hereof.
(h) In the event that any such defined benefit plans or Other
Defined Contribution Plans do not provide for reductions in Annual Additions in
accordance with this Section, then the reductions in the Annual Additions under
this Plan shall be made in the order set forth above, disregarding the specified
priority for reductions in the Annual Additions to such Other Defined
Contribution Plans which do not so provide.
(i) If as a result of the allocation of Forfeitures, a
reasonable error in estimating a Participant's 415 Compensation, or under other
limited facts and circumstances which the Internal Revenue Commissioner finds
justify the availability of the provisions set forth in this Paragraph, the
Annual Additions under this Plan on behalf of any Participant for any Plan Year
would cause the limitations set forth in this Section 4.5(i) to be exceeded for
the Plan Year, such Participants' excess Employer CODA Contribution, and income
thereon, shall be returned to the Participant to the extent of such excess
amounts, and any excess contribution amounts remaining after such refund shall,
if the Participant is a Participant in this Plan as of the end of the Plan Year
in which the excess occurs, be used to reduce Employer contributions for such
Participant in the following Plan Year (and any succeeding Plan Years until the
excess amount is exhausted); provided that, if such Participant ceases to be a
Participant in this Plan prior to the end of the Plan Year in which the excess
occurs, then the excess amounts shall be held unallocated in a suspense account
and allocated and reallocated to the Cash or Deferred Accounts as determined by
the Committee, of all Participants in this Plan (subject to the limitations of
this Section 4.5(i) in the following Plan Year prior to the allocation of any
Employer contributions for such following Plan Year for all Participants in this
Plan.
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4.6 Allocation of Employer Contributions Among Employers. Allocation of
Employer CODA Contributions and Employer Matched Savings Contributions Among
Employers. The Employer CODA Contributions and Employer Matched Savings
Contributions of each Employer shall be that portion of the amount determined in
Sections 4.1 and 4.2 hereof which the total amount elected pursuant to Section
4.1 hereof by all Participants employed by the Employer bears to the total
amount elected by all Participants in the Plan for the Plan Year. If, however,
all Employers are members of an affiliated group (as such term is used in the
Code) and any Employer is prevented from making a contribution it would
otherwise have made by reason of having no current or accumulated earnings and
profits (as such terms are used in the Code) or because such earnings and
profits are less than the Employer contribution which it would otherwise have
made, then so much of the contribution which such Employer was prevented from
making may be made for the benefit of the participating Employees of such
Employer by the other Employers of the group to the extent permitted by the
Code.
4.7 Form of Employer Contributions. The amount of each Employer's
Employer CODA Contributions and Employer Matched Savings contributions under
this Plan shall be made to the Trustee in the form of cash and/or other property
of equivalent value as of the date of contribution, including without limitation
authorized and previously unissued Raytheon Stock and Raytheon Stock held as
treasury shares. The value of any Raytheon Stock contributed as of the date of
contribution of the Stock shall be the Market Value of Raytheon Stock on the
Composite Tape of the New York Stock Exchange on the date of contribution (or if
there shall be no trading on such date, then on the first previous date on which
there was such trading).
4.8 Time of Employer Contributions. The Employer CODA Contributions and
the Employer Matched Savings Contributions shall be made as soon as practicable
after each pay period, but in any event such contributions shall be made within
the period prescribed by the provisions of section 401(k) of the Code or any
section of the Code which supersedes said section.
4.9 Investment of Employer Contributions. All Employer CODA
Contributions and Employer Matched Savings Contributions for the Plan Year shall
be made in cash and/or other property of equivalent value as of the date of
contribution to the individual Participant's Cash or Deferred Account which will
be fully invested as soon as practicable after receipt by the Trustee in the
Participant Investment Funds in accordance with each Participant's investment
election then in effect.
4.10 Participant Rollover Contributions.
(a) Subject to the terms and conditions hereinafter stated,
and subject to such further limitations, terms and conditions as may be
prescribed from time to time by the Committee, each Employee may make a Rollover
Contribution to such Participant's Cash or Deferred Account. No Rollover
Contribution may be made with funds which are not eligible for treatment as
rollover contributions pursuant to section 403(a)(4) of the Code. The Committee
shall have the absolute and unqualified power and authority to determine in its
sole discretion whether any such rollover contributions meet the requirements of
the Code and to grant or deny the application of any Employee or Participant to
make Rollover Contributions to this Plan.
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(b) Rollover Contributions shall be made to the Trustee in the
form of cash or check from the prior trustee or financial institution payable to
the order of the Plan.
(c) All Rollover Contributions shall be credited to the
Participant's Cash or Deferred Account and shall be fully invested as soon as
practicable after receipt by the Trustee in accordance with instructions
received from the Participant in accordance with the provisions of Section 5.3
hereof.
ARTICLE V - PARTICIPANTS AND PARTICIPANT ACCOUNTS
5.1 Employer CODA and Matched Savings Contributions. Employer CODA
Contributions and Employer Matched Savings Contributions shall be allocated and
credited to the Participant Investment Funds of the Participants who are
Employees of such Employer in accordance with the Deferred Compensation
Agreement made by the respective Participant for the particular Plan Year;
provided, however, that the amount of any reduction in the Employer's
contribution made with respect to a Participant pursuant to Sections 3.5, 4.4 or
4.5 hereof shall be deducted from the amount which would otherwise be allocated
to such Participant's Cash or Deferred Account. Such contributions shall be
invested as soon as practicable after they are received by the Trustee in the
Participant Investment Funds in accordance with the investment election made by
the Participant.
5.2 Participant Investment Elections.
(a) Subject to the terms and conditions hereinafter stated, and
subject to such further limitations, terms and conditions as may be prescribed
from time to time by the Committee, each Participant may elect the investment of
amounts credited to his or her Plan Accounts in accordance with the provisions
of this Section 5.2.
(b) Subject to the provisions of Section 5.3 hereof, a Participant
may elect to invest all or part of the assets credited to his or her Cash or
Deferred Account in any of the Participant Investment Funds. Such elections may
be made not more often than once each day. Each such election which conforms to
the terms and conditions prescribed by the Committee shall be effective as soon
as practicable after it is made and shall continue in effect until revoked or
modified by a new election.
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5.3 Transfers Between Participant Investment Funds.
(a) Subject to the terms and conditions hereinafter stated,
and subject to such further limitations, terms and conditions as may be
prescribed from time to time by the Committee, each Participant may elect not
more often than once each day to transfer assets credited to his or her Plan
Accounts among any of the Participant Investment Funds in such portions as the
Committee shall prescribe.
(b) (1) Conditions on Elections. Elections made pursuant to
Section 5.3(a) hereof shall be made in such manner, within such time and subject
to such limitations, terms and conditions as the Committee shall prescribe. Each
such election which conforms to the terms and conditions prescribed by the
Committee shall be effective as soon as practicable after it is received by the
Committee.
(2) Notwithstanding any provision of this Plan to the
contrary no transfers may be made of any amounts in any Participant Investment
Funds which are invested in contracts or other instruments that do not expressly
permit transfers. Any transfers of any amounts in any Investment Fund which are
invested in contracts or other instruments that permit transfers shall be
subject to the provisions of such contracts or instruments, including any
penalty provisions.
(c) Limitations on Transfers from Investment Contract Fund. No
transfers may be made from the Investment Contract Fund to the Income Fund and
no funds previously invested in the Investment Contract Fund may be transferred
to the Income Fund from any other Participant Investment Funds until after the
expiration of 90 days from the date those funds were transferred from the
Investment Contract Fund.
5.4 Forfeitures. The Committee shall maintain a separate Forfeiture
account to which shall be credited the amount of the account balances of all
Forfeitures occurring during the Plan Year.
5.5 Valuation of Assets. Property held in the Participant Investment
Funds established in connection with the Plan Accounts shall be valued in
accordance with the following principles:
(a) Valuation of Property in General. The value of each item
of property is its Market Value.
(b) Valuation of Stocks, Bonds, and Other Securities Traded on
an Established Market. Stocks, bonds and other securities traded on an
established market shall be valued at their closing sale prices on the Valuation
Date. If no sale is reported for the Valuation Date, the Market Value shall be
the closing price on the most recent Trading Day on where there was a trade
unless in the opinion of the Trustee the value thus obtained does not fairly
reflect the actual Market Value on the Valuation Date, in which case the
security shall be valued by the reputable broker or investment banker selected
by the Trustee.
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(c) Valuation of Notes. Each note shall be valued at the sum
of its unpaid principal and of interest accrued to the Valuation Date, unless
the Trustee shall obtain evidence satisfactory to the Trustee that the note is
worth less than such sum because of change in interest rate, date of maturity,
or other cause, or that such sum, either in whole or in part, is uncollectible
by reason of insolvency of the party or parties (including any maker, guarantor,
or surety) liable, or for other cause, or that any property pledged or mortgaged
to secure the payment of such sum or any part thereof is insufficient to satisfy
payment of such sum or any part thereof, in which case the note shall be valued
by the Trustee in view of the evidence thus obtained.
(d) Valuation of Commingled Investment Funds. Assets of the
Trust commingled and invested with assets belonging to persons other than the
Trust shall be valued at the fair Market Value thereof on the Valuation Date as
determined by the manager of such assets.
(e) Valuation of Other Property. The valuation of any property
not specifically described in Sections 5.5(b), 5.5(c) and 5.5(d) hereof shall be
made in accordance with the criteria set forth in Section 5.5(a) hereof.
ARTICLE VI - LOANS
6.1 Loans.
(a) Subject to the terms and conditions hereinafter stated,
and subject to such further limitations, terms and conditions as may be
prescribed from time to time by the Committee, the Committee may authorize a
loan or loans to a Participant, who is not on a Leave of Absence, from his or
her Plan Accounts.
(b) Loan repayments will be suspended under this Plan as
permitted under section 414(u) of the Code.
6.2 Limitation on Amount and Number. No loan shall be granted:
(a) which would result in there being a total amount of loans
outstanding to a particular Participant, including accrued interest, in excess
of 50 percent of the combined value of the Participant's then-vested interest in
his or her Cash or Deferred Account as of the date the loan is processed;
(b) which would result in there being a total amount of loans
outstanding to the Participant from this Plan and all Other Defined Contribution
Plans maintained by an Employer or Affiliated Company which are qualified under
the Code, in excess of $50,000 reduced by the highest outstanding balance (if
any) of all loans from the plans to such Participant during the preceding
12-month period;
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31
(c) with respect to amounts attributable to a Participant's
Cash or Deferred Account in an amount which exceeds the value of the
Participant's Cash or Deferred Account, determined pursuant to Section 5.5
hereof as of the date the loan is processed;
(d) which would result in the removal from the Participant's
Account any assets which are invested in contracts or instruments that do not
expressly permit loans; or
(e) with a principal balance of less than $500.
6.3 Terms.
(a) Each loan shall be deducted from a Participant's account,
shall be secured by that portion of the Participant's vested account balance
deducted for the loan, and shall be made for such periods of time, not to exceed
five years, upon such rate of interest, and upon and subject to such other
limitations, terms and conditions as the Committee shall determine. Each loan,
including interest as it accrues, shall be repaid in installments in such
amounts as the Committee shall determine from each payment of Compensation by
the Employer to the Participant, and the Participant in writing shall
irrevocably authorize his or her Employer to withhold the amount of each such
installment repayment from each payment of the Participant's Compensation and to
remit the same to the Trust. Each installment shall be credited to the
Participant's account in accordance with the most recent Participant investment
election pursuant to Section 5.2 hereof. In the event a Participant's
Compensation payments from an Employer are interrupted or for any other reason
loan installment payments cannot be remitted to the Trustee by the Participant's
Employer while any loan is outstanding, the Participant shall make such
installment payments, if any, within such time and such manner as the Committee
shall, in its sole discretion, determine. In the event the Participant fails or
refuses to make installment payments determined by the Committee on any loan
outstanding under this Plan, such committee may, in its sole discretion, waive
or reduce any or all of such payments, or accelerate the maturity of such loan
and in such event the entire unpaid principal balance and all interest accrued
on such loan shall mature and become immediately due and payable and the unpaid
balance of principal and interest, interest accrued thereon, collection costs,
attorneys fees and other amounts due and owing pursuant to the provisions of the
instruments evidencing the loan shall be deemed paid.
(b) The Committee shall have the absolute and unqualified
right, in its sole discretion, to prescribe limitations, terms and conditions
for all loans, and to prescribe, amend with the consent of the Participant, and
waive any installment payments on any loan or loans made hereunder.
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32
6.4 Termination of Employment While Loan Outstanding. In the event the
entire principal balances of, together with all interest accrued on, all loans
made to a Participant have not been fully repaid to the Trust when the
Participant or the Participant's Beneficiary becomes entitled to payment or
distribution (excluding withdrawals made pursuant to Section 7.9 hereof) of any
of the assets in the Participant's Cash or Deferred Account if necessary, the
entire unpaid principal balances and all interest accrued on all loans made to
the Participant shall mature and become immediately due and payable and the
unpaid balances of principal and interest, interest accrued thereon, collection
costs, attorneys fees and other amounts due and owing pursuant to the provisions
of the instruments evidencing the loans shall be deducted from the Participant's
Cash or Deferred Account and applied to payment of such amounts to the Trust
prior to such distribution or payment of any amounts to the Participant or the
Participant's Beneficiary.
6.5 Suspension or Termination. The Committee shall have the absolute
and unqualified right to suspend or terminate any and all rights of Participants
to receive loans under the Plan and the absolute and unqualified right to refuse
to make any and all loans to any Participant if such committee, in its sole
discretion, determines that such action is desirable or necessary to maintain
the status of the Plan and Trust as qualified under the provisions of section
401 of the Code or any other section of the Code which supersedes such section,
or that the Trust has insufficient cash available to make the loan or that the
making of any such loan or loans would or might constitute a violation of laws,
rules, regulations or orders applicable to the Plan. The Committee also shall
have the absolute and unqualified right to suspend or terminate any and all
rights of Participants to receive loans or to delay the effective date of any
and all loans if it, in its sole discretion, determines that such action is
desirable or necessary for any reason, including without limitation, the absence
or insufficiency of appropriate facilities, equipment, personnel, computer
systems or other resources or administrative procedures for processing loans.
ARTICLE VII - PAYMENTS TO PARTICIPANTS AND BENEFICIARIES
7.1 Distributions at Retirement, Permanent Disability or Death. Upon
Termination of Employment of an Employee because of Retirement or Permanent
Disability or in case of the death of any Participant, the full amount of his or
her Plan Accounts shall be payable to the Participant or, in case of death, to
the Beneficiary or Beneficiaries, subject to applicable laws.
7.2 Payments in Absence of Beneficiary. If a Participant does not have
a surviving spouse and fails to designate another Beneficiary or if the
Beneficiary so designated shall not survive the Participant, the Committee may
cause the Participant's interest upon his or her death to be paid to any one or
more surviving descendant or descendants or to any surviving parent or parents
or the executor under his or her will or to the administrator of his or her
estate, or to any one or more of such persons as such committee may direct.
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7.3 Distribution Upon Termination of Employment. A Participant shall be
fully and immediately vested in all amounts credited to his or her Cash or
Deferred Account. No forfeiture of a vested interest in such accounts shall take
place for any reason under this Plan. Upon Termination of Employment of any
Participant for any reason other than death, the Participant shall be entitled
to receive the full amount of his or her Cash or Deferred Account.
7.4 Amount and Form of Distribution.
(a) Distribution in Raytheon Stock. All distributions from the
Raytheon Stock Fund shall be in Raytheon Stock unless the Participant or
Beneficiary elects otherwise, provided that no Raytheon Stock shall be
distributed until an S-8 application has been filed with the Securities Exchange
Commission and all other requirements of law have been satisfied.
Notwithstanding the foregoing, no fractional shares of Raytheon Stock shall be
distributed, and all assets to be distributed in the form of Raytheon Stock from
any Plan Account shall be aggregated for the purposes of such distribution so
that there shall be no more than one fractional share of Raytheon Stock. In lieu
of any fractional shares there shall be distributed in cash the Market Value of
Raytheon Stock as of the Trading Day on which the distribution is processed.
(b) Election for Distribution in Cash. A Participant may
elect, at such time and in such manner as shall be specified by the Committee,
to have all amounts in all of the Participant's Plan Accounts distributed in
cash. In the event the Participant dies without having made an election and
prior to the commencement of any distributions to the Participant, or to the
Participant's Beneficiaries, all primary Beneficiaries of the Participant (or
all contingent Beneficiaries if no primary Beneficiaries survive the
Participant) may elect, at such time and in such manner as shall be specified by
the Committee, to have all amounts in all of the Participant's Plan Accounts
distributed in cash. In the event of such election, all Plan Accounts shall be
valued in accordance with Section 5.5 hereof, as of the Trading Day on which the
distribution is processed.
7.5 Time of Payment.
(a) All amounts distributable shall be paid or distributed to
the Participant or Beneficiary by the Trustee pursuant to instructions by the
Committee commencing, except as set forth in the following sentence, as soon as
practicable after the event giving rise to the distribution if the cumulative
balance in all of the Participant's Plan Accounts (i) does not exceed $3,500, or
(ii) exceeds $3,500 and the Participant, if living, and if not, the
Participant's Beneficiary, consents to such payment in such form and within such
time as the Committee may prescribe.
(b) Any amounts distributable to a Participant or Beneficiary
shall, if not previously distributed, be fully distributed unless the
Participant elects otherwise not later than the sixtieth (60th) day after the
end of the Plan Year of the Participant's (i) attainment of age 65; (ii) tenth
(10th) anniversary of participation hereunder, or (iii) Retirement subject to
the provisions of Section 7.7 hereof.
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(c) Notwithstanding the foregoing, distributions to the
Beneficiaries of any Participant whose death occurs prior to the commencement of
any distributions to such Participant shall be made in such number of
increments, not more than three, as may be elected (i) by the Participant by
written election filed with the Committee prior to his or her death, or (ii) by
all primary Beneficiaries of the Participant (or by all contingent Beneficiaries
of the Participant if no primary Beneficiaries survive the Participant) by
written election filed with the Committee after the death of the Participant and
prior to the commencement of any distributions to the Participant or his or her
Beneficiaries; such elections may be revoked by the Participant, or after the
Participant's death by all primary Beneficiaries of the Participant (or by all
contingent Beneficiaries of the Participant if no primary Beneficiaries survive
the Participant), by notice in writing filed with the Committee prior to the
commencement of any distribution to the Participant or his or her Beneficiaries.
Except as provided in this Section 7.5, all Cash or Deferred Account
distributions to a particular Participant shall be made within the same calendar
year.
7.6 Deferred Payment. A Participant, or, in case of his or her death a
Participant's Beneficiaries whose distribution would equal or exceed $3,500.00
may defer the receipt of all distributions to be made by the Trustee subsequent
to such Participant's Termination of Employment or death until such date as the
Participant or Beneficiaries may elect.
7.7 Maximum Time of Commencement and Completion of Distributions.
Notwithstanding any other provision of this Plan, in no event shall distribution
of the amount distributable to any Participant hereunder commence later than the
Required Beginning Date. In the event the entire amount distributable to a
Participant is not fully paid to the Participant by the end of the Required
Beginning Date, distribution of the entire amount distributable to the
Participant shall be fully paid within a period extending either over the life
of the Participant or over the lives of the Participant and the Participant's
Beneficiary or a period not extending beyond the life expectancy of the
Participant or the joint life and last survivor expectancy of the Participant
and the Participant's Beneficiary. The minimum payment which shall be made in
each year of the foregoing periods shall not be less than the lesser of (i) the
remaining unpaid balance of the amount distributable to the Participant, or (ii)
an amount equal to the quotient obtained by dividing the remaining unpaid
balance of the amount distributable to the Participant at the beginning of the
year by the number of years remaining in the period (determined as of the date
of the Required Beginning Date and, if payable to the Participant's spouse,
redetermined annually), reduced by one for each year commencing after the
Required Beginning Date. In the event a Participant dies before his or her
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35
entire amount distributable has been paid to him or her, the remaining portion
of the amount distributable shall be paid at least as rapidly as under the
method of payment in effect at the time of death. In the event distributions
have not begun at the Participant's death, the entire interest will be fully
paid within five years after the death of the Participant. The preceding
sentence shall not apply if distribution of the amount distributable to the
Participant commences within one year after the Participant's death to a
designated Beneficiary and does not extend beyond the life expectancy of the
Beneficiary. Any distribution pursuant to this Section shall be in accordance
with the requirements of proposed regulations 1.401(a)(9).1 and 1.401(a)(9).2
under the Code, which are hereby incorporated by this reference.
7.8 Withdrawals.
(a) The right of withdrawal shall be cumulative. An Employee
may withdraw in any year all amounts which he was entitled to but did not
withdraw in prior years.
(b) No Employee shall have the right to withdraw any amounts
from his or her Cash or Deferred Account prior to becoming entitled to a
distribution pursuant to Section 7.3 hereof. The election to withdraw shall be
exercisable at such time, in such form and subject to such conditions as the
Committee shall prescribe.
(c) No withdrawal shall be made which would reduce the value
of the Participant's Cash or Deferred Account to less than 200 percent of the
sum of all outstanding and unpaid principal balances and accrued interest on
loans made to the Participant pursuant to Article VI. Any withdrawals of any
assets in a Participant's accounts which are invested in contracts or other
instruments that permit withdrawals shall be subject to the provisions of such
contracts or instruments, including any penalty provisions.
7.9 Suspension or Termination. The Committee shall have the absolute
and unqualified right to suspend or terminate any and all rights of withdrawal
or to delay the effective date of any and all withdrawals if it, in its sole
discretion, determines that such action is desirable or necessary to maintain
the status of the Plan and Trust as qualified under the provisions of section
401 of the Code, or any other section of the Code which supersedes such section,
or for any other reason determined by the committee, in its sole discretion,
including without limitation the absence or insufficiency of appropriate
facilities, equipment, personnel, computer systems or other resources or
administrative procedures for processing withdrawals.
7.10 Qualified Domestic Relations Orders.
(a) The payments or other benefits which a Participant is
entitled to receive pursuant to this Plan shall be paid in accordance with the
applicable requirements of any Qualified Domestic Relations Order.
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(b) Treatment of Spouse. To the extent provided in any
Qualified Domestic Relations Order the former spouse of a Participant shall be
treated as a surviving spouse of such Participant for purposes of Beneficiary
designation pursuant to Section 2.5 hereof.
(c) Procedures Upon Receipt of Domestic Relations Order. Upon
receipt of any Domestic Relations Order by the Plan:
(1) The Committee shall promptly notify the Participant
and any other Alternate Payee of the receipt of such order and the Plan's
procedures for determining the qualified status of Domestic Relations Orders.
(2) Within a reasonable period 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. The Committee shall establish reasonable procedures in accordance
with section 206(d) of ERISA and regulations thereunder to determine the
qualified status of Domestic Relations Orders and to administer distributions
under a Qualified Domestic Relations Order.
(3) 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 any manner it deems appropriate the
amounts 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.
(4) If within 18 months from the date the first payment
would have been required to be paid under the Domestic Relations Order, the
order (or modification thereof) is determined to be a Qualified Domestic
Relations Order, the Plan shall pay the segregated amounts (plus any interest
thereon) to the person or persons entitled thereto.
(5) If within 18 months from the date the first payment
would have been required to be paid under the Domestic Relations Order, 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, then the Plan shall pay the segregated amounts (plus any interest
thereon) to the person or persons who would have been entitled to such amount if
there had been no Order.
(6) Any determination that an order is a Qualified
Domestic Relations Order which is made after the close of the 18.month period
from the date the first payment would have been required to be paid under the
Domestic Relations Order shall be applied prospectively only.
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37
7.11 Direct Rollover. Notwithstanding any provision of this Plan to the
contrary, a Distributee may elect, at the time and in the manner prescribed by
the Committee, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a Direct
Rollover.
ARTICLE VIII - FUNDING
8.1 Funding Policy and Method. The procedure for establishing and
carrying out a funding policy and method consistent with the objectives of this
Plan and the requirements of Title I of ERISA shall be as follows:
(a) Establishment of Funding Policy and Method. The Board of
Directors shall establish, and may from time to time amend, a funding policy and
method for the Plan consistent with the objectives of the Plan and the
requirements of Title I of ERISA.
(b) Carrying Out the Funding Policy and Method. The Committee
shall communicate the funding policy and method and any amendments thereto to
the Trustee, and any other person the Board of Directors may consider
appropriate to carry out the funding policy and method. The Committee and
Trustee shall each comply with such portions of the funding policy and method as
shall be applicable to their activities with respect to the Trust. In
particular, the Trustee shall so comply with respect to investing and
reinvesting the assets of the Depository Fund and Participant Investment Funds
but the Trustee shall have no responsibility for the establishment, amendment,
or adequacy of the funding policy and method.
8.2 Reliance on Documents. In establishing and from time to time
amending the funding policy and method, the Board of Directors shall be entitled
to rely upon, and shall incur no liability in reliance upon statements, tables,
evaluations, estimates, certificates, reports and opinions furnished by the
Committee, the Trustee or any accountant or legal counsel for the Employers,
except as otherwise required by Part 4 of Title I of ERISA.
ARTICLE IX - BOARD OF DIRECTORS
9.1 Administration. The Board of Directors shall have the
responsibility for reviewing the results of the Trustee's performance under the
Trust Agreement.
9.2 Expenses. The members of the Board of Directors shall receive no
compensation for the discharge of their duties hereunder. Expenses of the Board
of Directors or a committee appointed by the Board of Directors incurred in
connection with the administration of the Plan, shall be expenses of the Plan
and shall constitute a charge upon the Trust Fund in accordance with Article XI,
but may be paid by the Employers if, as and when the Employers, in their sole
discretion, deem such payment to be advisable.
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ARTICLE X - RTIS EMPLOYEE BENEFITS ADMINISTRATION COMMITTEE
10.1 Administration. The RTIS Employee Benefits Administration
Committee shall be the administrator of the Plan, shall be charged with the
administration of the Plan and payment to Participants or Beneficiaries entitled
hereunder, and shall have such powers as may be necessary and appropriate for
such purposes, including but not by way of limitation, performance of duties
required of plan administrators under ERISA, defense of lawsuits and conduct of
litigation in the name of the Plan (subject to the approval of the general
counsel of RTIS), the power to interpret and construe this Plan where it
concerns questions of eligibility, of status, and subject to the opportunity for
review of denied claims pursuant to Section 10.6 hereof, rights of Participants
and others hereunder, of the amount allocated under the Plan to the Cash or
Deferred Account of any Participant, of the value of any share or other benefit,
and in general decide any dispute arising under this Plan. In all such cases the
determination of the Committee shall be final and conclusive with respect to
Participants and Beneficiaries. The Committee shall have the responsibility for
reporting the results of the Trustee's performance under the Trust Agreement to
the Participants.
10.2 Number and Selection. The Committee shall be composed of a
minimum of three Participants from time to time appointed by the Board of
Directors.
10.3 Action by Majority. All action of the Committee shall be by a
majority of the persons then comprising the committee. Such action may be taken
at a meeting of the committee or without a meeting by a resolution or memorandum
signed by all the members. No member of the committee shall be entitled to vote
or decide upon any matter pertaining to himself individually but such matter
shall be determined by the remaining members of the committee.
10.4 Organization. The Committee shall appoint one of its members as
chairman and shall appoint a secretary, and may appoint one or more assistant
secretaries and one or more other agents as it shall determine, none of whom
need be a member of the Committee but any of whom may be an officer or Employee
of an Employer. It may delegate to any agent such duties and powers and pay him
such compensation as it deems appropriate. It may authorize one or more of its
members, officers, or agents to sign in its behalf all reporting and disclosure
forms required to be filed with any governmental agency or instrumentality, and
it may designate agents for service of process against the Plan. In addition, it
may authorize one or more of its members, officers, or agents to sign in its
behalf any instructions to the Trustee and the Trustee shall be fully protected
in acting thereon and in assuming that the person holding such office or acting
as such agent continues in that capacity until otherwise advised in writing by
the Committee. It shall keep a record of all of its proceedings.
<PAGE>
39
10.5 Accounts of Participants. The Committee shall maintain records of
all accounts of Participants and such other records and data as may be necessary
and appropriate for the proper administration of the Plan and to determine the
amounts distributable to Participants and Beneficiaries. In the event any
Participant or Beneficiary who is entitled to receive any payment from the Trust
is, at the time of such payment, a minor, mentally incompetent or, in the
opinion of the Committee, under any other legal disability, the Committee may
direct such payment to the legal guardian or parent of such person or to any
person having the apparent custody or control of such Beneficiary or Participant
and such payment shall fully acquit and discharge all parties hereto.
10.6 Rules and Regulations. The Committee may adopt and promulgate such
rules and regulations as it may deem appropriate for the administration of the
Plan. The Committee shall adopt and promulgate written rules governing claims
procedures reasonably calculated to (i) provide adequate written notice to any
Participant or Beneficiary whose claim for share or other benefits under the
Plan has been denied, setting forth the specific reasons for such denial, and
(ii) afford a reasonable opportunity to such Participant or Beneficiary for a
full and fair review by the Committee of the decision denying the claim. The
determination of the Committee upon such review shall be final and conclusive.
10.7 Reliance on Documents. The Committee shall be entitled to rely
upon and shall have no liability in relying upon, except as otherwise required
by Part 4 of Title I of ERISA, any representation made to it by an Employer or
any Employee, upon any paper or document believed by it to be genuine and to
have been signed or sent by the proper person.
10.8 Expenses of the Committee. The members of the Committee shall
receive no compensation for the discharge of their duties as such members.
Expenses of such committee shall be expenses of the Plan and shall constitute a
charge upon the Trust Fund in accordance with Article XI, but may be paid by the
Employers if, as and when the Employers, in their sole discretion, deem such
payment advisable.
10.9 Non-Liability. No member of the Board of Directors (or any
committee appointed by the Board of Directors), nor of the Committee shall be
liable for any act done or omitted by him except for his or her own willful
misconduct, and except as otherwise required by Part 4 of Title I of ERISA.
10.10 Resignation or Removal. Any member of the Committee may resign by
giving written notice to the Board of Directors and may be removed by the Board
of Directors for any reason whatsoever by giving written notice to the member of
the Committee. Upon the death, resignation, removal or inability of any member
of the Committee to act as such member, the Board of Directors shall appoint a
successor.
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40
ARTICLE XI - PLAN AND TRUST EXPENSES
11.1 Expenses of Administering the Cash or Deferred Account. The
expenses incurred by the Trustee, the Board of Directors (or any committee
appointed by the Board of Directors) and the Committee for each Plan Year in
connection with the administration of the Plan and the Trust Fund, including
such compensation of the Trustee as may be agreed upon from time to time between
the Board of Directors and the Trustee, and all other proper charges and
expenses of the Trustee, computed on an accrual basis, shall constitute a charge
upon and shall be paid by the Trustee out of the Trust Fund, but may be paid by
the Employers if, as and when the Employers, in their sole discretion, deem such
payment to be advisable. For purposes of this Section 11.1, expenses of the
Board of Directors (or any committee appointed by the Board of Directors) and
the Committee which are paid by the Trustee, either directly or by way of
reimbursement to any Employer shall be considered as expenses incurred by the
Trustee.
ARTICLE XII - THE TRUST FUND
12.1 Trust Fund. The Trust Fund shall be held and administered by the
Trustee in accordance with the provisions of the Trust Agreement, and the
Trustee shall have such powers, duties and responsibilities, as may be set forth
in the Trust Agreement and this Plan.
12.2 Trustee. The number of Trustees shall be as may be fixed from time
to time by the Board of Directors. Fidelity Management Trust Company shall be
the initial Trustee under this restatement and shall serve as Trustee until its
successor shall be appointed by the Board of Directors. Thereafter, the Board of
Directors shall appoint as Trustee one or more individuals, trust corporations
or national banks having trust powers, in which event any such Trustee shall
continue to serve until a successor shall be appointed by the Board.
12.3 Resignation and Removal. Any Trustee may resign at any time by
giving written notice to the Board of Directors, and may be removed at any time
by the Board of Directors for any reason whatsoever by giving notice to the
Trustee. Upon the death, resignation, removal, or inability of a Trustee to act,
the Board of Directors shall appoint a successor Trustee.
12.4 Trustee's Determinations Conclusive. Subject to Article VIII
hereof, the Trustee shall determine from time to time the manner in which the
Depository Fund and the Participant Income Fund shall be invested. All such
determinations by the Trustee shall be final and conclusive.
12.5 Acquisition of Raytheon Stock. Raytheon Stock may be acquired by
the Trustee from any source, including without limitation, any Employer or any
Raytheon stockholder. If the Trustee elects to purchase Raytheon Stock from an
Employer, it shall be purchased at a price which is equal to the simple average
of the high and the low prices of Raytheon Stock on the composite tape on the
date of purchase (or if there shall be no trading on such date, then on the
first previous date on which there is such trading).
<PAGE>
41
12.6 Determination and Report of Investment Funds Values. The Trustee
shall determine and report to the Committee the aggregate value of all
Participant accounts and of any amounts contained in the Depository Fund
(hereinafter in this Section referred to as "investment funds") as of the end of
each month during the Plan Year. All investment funds shall be valued as of the
end of each Trading Day. The value of an investment fund shall be the sum of the
value, determined pursuant to the principles set forth in Section 5.5 above, of
each item of property in the investment fund reduced by the sum of the accrued
liabilities owing by the investment fund.
ARTICLE XIII - MISCELLANEOUS PROVISIONS
13.1 No Interest in Employer. No Employer shall have any interest in
any of the assets of the Trust Fund and in no event shall any income or corpus
of the Trust Fund revert to the Employer or be used for or devoted to purposes
other than the exclusive benefit of the Participants.
13.2 No Right to Employment. Nothing contained in this agreement shall
be construed to give any Employee any right to employment or to continued
employment.
13.3 Spendthrift. Except as provided in Article VI and Section 7.10
hereof, no interest of any Participant or spouse or of any Beneficiary in any
part of the Trust Fund shall be subject to sale, assignment, hypothecation, or
transfer by the Participant, spouse or Beneficiary, and each Participant, spouse
and Beneficiary is hereby prohibited from anticipating, encumbering, assigning
or in any manner alienating his or her interest under this Plan, and is and
shall be without power so to do; nor shall the interest of any Participant,
spouse or Beneficiary be liable or subject to his or her debts, liabilities or
obligations, nor shall the same or any part thereof be subject to any judgment,
execution, attachment, garnishment or other legal process against such
Participants, spouse or Beneficiary and all of the payments or other benefits
which any Participant, spouse or Beneficiary from time to time may be entitled
to receive under this Plan shall be payable only to such Participant, spouse or
Beneficiary.
13.4 Mergers. In the event of a merger, consolidation, or other
reorganization as a result of which an Employer shall continue as an existing
corporation, no Employee acquired as a result of such transaction shall be
eligible to become a Participant except as a new Employee, unless otherwise
provided in the agreement of merger, consolidation or other reorganization.
13.5 Records of Employers Conclusive. The records of any Employer as to
the employment, classification of employment, severance of employment,
re-employment, Leave of Absence, return to employment and the cause of
unemployment or termination of any Employee shall be final and conclusive upon
all parties.
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42
13.6 Separate Trust Funds. Notwithstanding any provision of this Plan
to the contrary, the Board of Directors may establish one or more additional
separate trust funds for the purpose of holding and administering all or a
portion of the assets under this Plan. The Board of Directors shall select the
trustee or trustees of each such separate trust fund and shall determine the
provisions of the trust agreement. Any trustee or trustees of each such separate
trust fund are authorized to receive all or any portion of a contribution from
any Employer and any Participant and any Employer is authorized to pay all or
any portion of any contribution to any such trustee or trustees of any such
separate trust fund. Upon the direction of the Board of Directors, the Trustee
shall transfer and pay over all or any part of the property held by it to such
other trustee or trustees. Upon the making of any such transfer or payment, the
trustee shall be fully relieved and discharged with respect to such transfer or
payment, and shall have no further responsibility with respect to the
application thereof. The Trustee is authorized to receive such property
constituting assets held under this Plan as may be paid or delivered to it from
time to time by any other trustee or trustees.
13.7 Multiple Fiduciary Capacities. Any person or group of persons may
serve in more than one fiduciary capacity with respect to the Plan (including,
but not by way of limitation, service both as a Trustee and administrator).
13.8 Employment of Advisers. Any person serving in a fiduciary capacity
with respect to the Plan may employ one or more persons to render advice with
regard to any responsibility such fiduciary has under the Plan. The expense of
such employment shall be expenses of the Plan and shall be a charge upon the
Trust Fund in accordance with Article XI, but may be paid by the Employers if,
as and when the Employers, in their sole discretion, deem such payment to be
advisable.
13.9 Delegation of Fiduciary Responsibilities. Any fiduciary named in
the Plan or Trust Agreement may delegate his or her fiduciary responsibilities
(other than any responsibility provided in the Trust Agreement to manage or
control the Trust Fund) to another person. The fiduciary who has so delegated
his or her responsibilities shall not be liable for an act or omission of the
person to whom such responsibilities have been delegated, except as otherwise
required by Part 4 of Title I of ERISA.
13.10 Plan Mergers. In the event of a merger or consolidation of this
Plan with, or a transfer of assets and liabilities of this Plan to, any other
plan, the benefits each Participant would receive immediately after the merger,
consolidation or transfer (if this Plan or such other plan then terminated)
shall be at least equal to the benefits he would have received under this Plan
immediately before the merger, consolidation or transfer (if this Plan had then
terminated).
<PAGE>
43
ARTICLE XIV - AMENDMENT, TERMINATION AND SUSPENSION OF CONTRIBUTIONS
14.1 Amendment.
(a) The Employers jointly, and each Employer with reference to
the fund from time to time held for the benefit of its Employees and with
respect to its Employer contributions and contributions of its Employees,
separately, reserve the power to change, amend, modify, or alter any of the
provisions of this Plan at any time or to transfer the funds or part thereof to
a new trust fund for the Participants' benefit except that no such amendment,
modification, or alteration shall be exercised retroactively to alter or change
the rights of Participants or their Beneficiaries insofar as they relate to past
contributions, nor subject to the provisions of Article XIV and Section 4.5(b)
hereof, shall any such amendment vest in any Employer any right, title or
interest in and to any assets of the Trust Fund, divest any Participant of any
credit theretofore entered in his or her Cash or Deferred Account or permit any
part of the assets to be used for or diverted to purposes other than for the
exclusive benefit of Participants and their Beneficiaries. No amendment shall
require approval by the shareholders of any Employer. No amendment which affects
the powers, duties or responsibilities of the Trustee shall be effective until
consented to in writing by the Trustee.
(b) Should any amendment to this Plan amend the vesting
schedule, a Participant whose nonforfeitable percentage of his or her accrued
benefit derived from Employer contributions is determined under such schedule
and who has at least three years of service with an Employer, may elect to have
the nonforfeitable percentage of his or her accrued benefit derived from
Employer contributions determined without regard to such amendment. Such
election must be made during the period beginning with the date the amended is
adopted and ending no earlier than the latest of the following dates:
(1) the date which is 60 days after the day the amendment
was adopted;
(2) the date which is 60 days after the day the plan
amendment becomes effective;
or
(3) the date which is 60 days after the day the participant
is issued written notice of the plan amendment by the Employer or plan
administrator.
14.2 Termination. The Employers or any Employer insofar as it is
concerned may discontinue this Plan or any Plan Account by giving written notice
to the Committee and to the Trustee. In the event of a complete discontinuance
or a termination or partial termination within the meaning of section 411(d)(3)
of the Code and the regulations thereunder, or in the event of the dissolution
of any corporation or party hereto (except the dissolution of a subsidiary whose
parent is a party hereto), or in the case of adjudication of any such
<PAGE>
44
corporation as a bankrupt, or the loss of the corporate existence of any such
corporation, or a merger into another corporation or corporations which shall
not assume the obligations of this Plan, the Plan or the discontinued Plan
Account shall terminate as to the affected Participants and the portion of the
assets then comprising the Trust Fund allocable to such Participants, as
determined by the Committee, shall be distributed among all such Participants in
proportion to their interest. Employee CODA Contributions shall be distributed
as in accordance with the provisions contained in section 401(k)(10) of the
Code.
ARTICLE XV - TENDER OFFERS FOR RAYTHEON STOCK
15.1 Applicability. Notwithstanding any provision of this Plan to the
contrary, the provisions of this Article XV shall apply in the event of a Tender
Offer. The Trustee may not sell, offer to sell, exchange or otherwise dispose of
Raytheon Stock pursuant to a Tender Offer except as provided in this Article XV.
15.2 Directions to Trustee. Each Participant may direct the Trustee to
sell, offer to sell, exchange or otherwise dispose of Allocated Stock in
accordance with the provisions, conditions and terms of such Tender Offer and
the provisions of this Article XV. Such directions from Participants shall be
confidential and shall not be divulged by the Trustee to anyone, including the
Employers or any director, officer, Employee or agent of the Employers, it being
the intent of this Section 15.2 to ensure that the Employers (and their
directors, officers, Employees and agents) cannot determine the direction given
by any Participant. Such directions shall be in such form and shall be filed in
such manner and at such time as the Trustee may prescribe. The confidentiality
provision of this Section shall likewise apply to the decisions of the Trustee
made pursuant to Section 15.4 hereof.
15.3 Trustee Action On Participant Directions. The Trustee shall sell,
offer to sell, exchange or otherwise dispose of Allocated Stock pursuant to a
Tender Offer with respect to which it has received directions from Participants
to do so under this Article XV. The proceeds of a disposition of Allocated Stock
directed by a Participant from his or her Plan Accounts under this Article XV
shall be allocated to the Participant's Plan Accounts from which the Raytheon
Stock was taken and shall be governed by the provisions of Section 15.5 hereof.
To the extent Participants do not validly direct the Trustee to sell, offer to
sell, exchange or otherwise dispose of Allocated Stock pursuant to a Tender
Offer, the Trustee shall not sell, offer to sell, exchange or otherwise dispose
of such shares pursuant to such Tender Offer.
15.4 Trustee Action on Unallocated Raytheon Stock. The Trustee shall
sell, offer to sell, exchange or otherwise dispose of only that number of shares
of Unallocated Raytheon Stock that bears the same ratio to the total of all
shares of Unallocated Raytheon Stock as the number of shares of Allocated Stock
for which the Trustee has received valid directions from Participants to sell,
offer to sell, exchange or otherwise dispose of bears to the total number of
shares of Allocated Stock in the Plan Accounts of Participants. The proceeds of
a disposition of Unallocated Raytheon Stock shall be held by the Trustee and
invested in accordance with the provisions of Section 15.5 hereof.
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45
15.5 Investment of Plan Assets after Tender Offer. Following the sale,
exchange or other disposition of Raytheon Stock by the Trustee pursuant to a
Tender Offer and in accordance with this Article XV, the following provisions
shall apply.
(a) In the event that, immediately following completion of the
Tender Offer, Raytheon Stock is no longer a "Qualifying Employer Security" (as
defined by ERISA), the Trustee shall retain any new Qualifying Employer
Securities received pursuant to such sale, exchange or other disposition and
invest the other proceeds from such sale, exchange or other disposition in new
Qualifying Employer Securities to the extent available as soon as practicable.
(b) In the event that, immediately following completion of the
Tender Offer, Raytheon Stock continues to be a Qualifying Employer Security,
then the Trustee shall invest the proceeds from such sale, exchange or other
disposition in accordance with the investment provisions of this Plan applicable
to the Plan Accounts from which the Raytheon Stock was sold, exchanged or
disposed of.
(c) Pending the investment of the proceeds from a sale,
exchange or other disposition of Raytheon Stock in accordance with this Section
15.5, or in the event Qualifying Employer Securities do not exist or are not
available, the proceeds from such sale, exchange or other disposition of
Raytheon Stock shall be invested in such manner as the Trustee (or investment
manager appointed by the Board of Directors for such purpose) in its discretion
shall from time to time determine.
ARTICLE XVI - TOP-HEAVY PROVISIONS
16.1 General. The provisions of this Article XVI shall apply if and
only if the Plan shall become Top-Heavy with respect to a Plan Year. In the
event the Plan is determined to be Top-Heavy with respect to a Plan Year, the
provisions of this Article XVI shall apply during such Plan Year in lieu of any
conflicting provisions set forth elsewhere in the Plan with respect to benefit
accrual, vesting, entitlement to benefits, commencement of benefit payments, and
rights of Participants or others under this Plan. None of the provisions set
forth in this Article XVI shall apply to benefit accrual, vesting, entitlement
to benefits, commencement of benefit payments, and rights of Participants or
others during any Plan Year with respect to which this Plan is not determined to
be Top-Heavy, regardless of whether such Plan Year occurs before or after a Plan
Year with respect to which this Plan is determined to be Top-Heavy, provided,
however, that any benefit accrual, vesting, entitlement to benefits,
commencement of benefit payments, or rights of Participants or others which are
protected under sections 411(a)(10) and 411(d)(6) of the Code which accrue
during any Plan Year with respect to which this Plan is determined to be
Top-Heavy, shall not be reduced thereafter.
<PAGE>
46
16.2 Minimum Employer Contributions.
(a) The minimum amount of CODA Contributions pursuant to the
Plan for each Participant who is not a Key Employee and who does not participate
in a defined benefit plan maintained by the Employer or an Affiliated Company of
RTIS which is qualified under section 401(a) of the Code shall be not less than
three percent of such Participant's Compensation during the Plan Year, but such
percent shall be reduced, if necessary, to a percent not exceeding the percent
of Compensation (disregarding any Compensation in excess of $150,000)
contributed under theCash or Deferred Account and any other salary reduction
agreement for the Participant who is the Key Employee during such Plan Year
receiving the highest contributions and Forfeitures from the Cash or Deferred
Account or any other salary reduction agreement for the Plan Year. For purposes
of determining the highest rate allocated to a Key Employee for a year in which
the plan is Top-Heavy under section 416 of the Code, Employer CODA Contributions
must be included in determining the percentage. When providing for the minimum
contribution hereunder pursuant to section 416(c) of the Code, the Employer CODA
Contributions made on behalf of non-Key Employees shall not be considered.
(b) For purposes of this Section, the term "Compensation"
shall have the meaning set forth for such term in Section 2.35 hereof. For
purposes of determining if the minimum contributions set forth herein have been
made in any Plan Year, all Employer contributions made for participants in all
U.S. tax qualified defined contribution plans maintained by RTIS and its
Subsidiaries shall be added to the contributions made for Participants pursuant
to this Plan. Notwithstanding the foregoing, if the Employer maintains more than
one plan which is Top-Heavy, each Employee covered under both a defined
contribution plan and a defined benefit plan which are top-heavy will receive
the defined benefit minimum contribution in the defined benefit plan offset by
the benefits provided under this and any other Top-Heavy defined contribution
plan, provided that if the provisions of Section 16.4 hereof do not apply, i.e.,
1.0 is not substituted for 1.25, then the defined benefit minimum contribution
will be increased by one percentage point (to a maximum of 10 percentage points)
per year of service.
16.3 Top-Heavy. The Plan shall be "Top-Heavy" during a Plan Year if, as
of the Determination Date, the aggregate of the accounts of all Participants who
are Key Employees exceeds 60 percent of the aggregate of the accounts of all
Participants. For purposes of determining if the foregoing condition is met:
(a) the present value of the cumulative accrued benefits of
all participants in all U.S. tax qualified defined benefit plans, and the
aggregate of the accounts of all participants in all U.S. tax qualified defined
contribution plans, maintained by RTIS or any subsidiary of RTIS in which a Key
Employee is a participant and all plans in the Required Aggregation Group shall
be added to the aggregate of all accounts under this Plan;
<PAGE>
47
(b) all distributions made to participants under this Plan and
all such other plans during the five-year period ending on the Determination
Date shall be included;
(c) rollover contributions to this Plan or any other plan
described in this paragraph initiated by a participant shall be excluded;
(d) the accrued benefits and accounts of any participant who
has performed no services for an Employer under this or any such other plan
during the five-year period ending on the Determination Date shall be
disregarded; and
(e) a participant who was a Key Employee on the Determination
Date but who ceased to be a Key Employee in the following Plan Year shall not be
considered a Key Employee for purposes of the determination.
16.4 Limitations on Annual Additions. "1.0" shall be substituted for
"1.25" in the definitions of the terms "Defined Benefit Fraction" and "Defined
Contribution Fraction" unless (i) the requirements in Section 16.3 hereof are
met when the provisions of such Section 16.2 hereof are applied by substituting
"four percent" for "three percent" therein and (ii) this Plan would not be
Top-Heavy if "90 percent" were substituted for "60 percent" in Section 16.3
hereof.
This Plan shall be effective as of July 11, 1997, subject to the
approval of the Internal Revenue Service.
IN WITNESS WHEREOF, this instrument is executed as of the 11th day of
July, 1997.
RAYTHEON TI SYSTEMS, INC.
By:
<PAGE>
1
EXHIBIT 4.9
RAYTHEON SALARIED SAVINGS
AND INVESTMENT PLAN (10011)
Effective December 18, 1997
ARTICLE I
Establishment of the Plan
1.1 Establishment of the Plan. The Raytheon Salaried Savings and
Investment Plan (10011) (the "Plan"), which is effective December 18, 1997,
provides Participants with a tax-effective means of allocating a portion of
their salary to be invested in one or more investment opportunities specified in
the Plan and set aside for the short-term and long-term needs of the
Participants. The Plan also provides retirement benefits for Participants or
their Beneficiaries in the event a Participant becomes disabled or dies before
retirement. It is intended that the Plan will comply with all of the
requirements for a qualified profit sharing plan under sections 401(a) and
401(k) of the Code and will be amended from time to time to maintain compliance
with these requirements. The terms used in the Plan have the meanings specified
in ARTICLE XIV unless the context indicates otherwise. The Plan is intended to
constitute a plan described in section 404(c) of ERISA and Title 29 of the Code
of Federal Regulations, 2550.404(c)-1. Participants in the Plan are responsible
for selecting their own investment opportunities from the options available
under the Plan and the Plan Fiduciaries are relieved of any liability for any
losses which are a direct and necessary result of investment instructions given
by a Participant or Beneficiary.
1.2 Trust. The Trust shall be the sole source of benefits under the
Plan and the Adopting Employers or any Affiliate shall not have any liability
for the adequacy of the benefits provided under the Plan.
1.3 Effective Date. The Plan shall be effective as of December 18,
1997, or such other dates as may be specifically provided herein or as otherwise
required by law for the Plan to satisfy the requirements of section 401(a) of
the Code.
1.4 Adoption of Plan. With the prior approval of the Board of
Directors or an officer of the Company authorized by the Board of Directors to
give such approval, the Plan and Trust may be adopted by any corporation
(hereinafter referred to as an Adopting Employer). Such adoption shall be made
by the Adopting Employer filing with the Administrator and Trustee a certified
copy of a board of directors (or equivalent) resolution adopting the Plan and
Trust. The Administrator may require the Adopting Employer to take such further
actions as it deems appropriate to the proper adoption and operation of the Plan
and Trust. In the event of the adoption of the Plan and Trust by an Adopting
Employer, the Plan and Trust shall be interpreted in a manner consistent with
such adoption.
<PAGE>
2
1.5 Withdrawal of Adopting Employer.
(a) An Adopting Employer's adoption of this Plan may be
terminated, voluntarily or involuntarily, at any time, as provided in this
section.
(b) An Adopting Employer shall withdraw from the Plan and Trust
if the Plan and Trust, with respect to that Adopting Employer, fail to qualify
under sections 401(a) and 501(a) of the Code (or, in the opinion of the
Administrator, they may fail to so qualify) and the continued sponsorship of
that Adopting Employer may jeopardize the status with respect to the Company or
the remaining Adopting Employers, of the Plan and Trust under sections 401(a)
and 501(a) of the Code. The Adopting Emp shall receive at least thirty (30) days
prior written notice of a withdrawal under this subsection, unless a shorter
period is agreed to.
(c) An Adopting Employer may voluntarily withdraw from the
Plan and Trust for any reason. Such withdrawal requires at least thirty (30)
days written notice to the Administrator and the Trustee, unless a shorter
period is agreed to.
(d) Upon withdrawal, the Trustee shall segregate the assets
attributable to Employees of the withdrawn Adopting Employer, the amount thereof
to be determined by the Administrator and the Trustee. The segregated assets
shall be held, paid to another trust, distributed or otherwise disposed of as is
appropriate under the circumstances; provided, however, that any transfer shall
be for the exclusive benefit of Participants and their Beneficiaries. A
withdrawal of an Adopting Employer from the Plan is not necessarily a
termination under ARTICLE XII. If the withdrawal is a termination, then the
provisions of ARTICLE XII shall also be applicable.
ARTICLE II
Eligibility
2.1 Eligibility Requirements. Each Employee who is an Eligible Employee
on the Effective Date shall begin participation in this Plan on the Effective
Date. Each Eligible Employee who transfers to an Adopting Employer from General
Motors Corporation or one of its affiliates after the Effective Date and before
December 1, 1998, and who immediately prior to such transfer was a participant
in the Hughes Salaried Employees' Thrift and Savings Plan, shall begin
participation in this Plan on the date of such transfer. Each other Eligible
Employee and any person who subsequently becomes an Eligible Employee may join
the Plan as of the first Pay Period coincident with or next following completion
of a Period of Service of three (3) consecutive months commencing on his or her
Employment Commencement Date.
<PAGE>
3
2.2 Procedure for Joining the Plan. Each Eligible Employee who meets the
requirements of section 2.1 may join the Plan by communicating with the
Recordkeeper in accordance with instructions in an enrollment kit which will be
made available to each Eligible Employee. An enrollment in the Plan shall not be
deemed to have been completed until the Eligible Employee has designated: a
percentage by which his or her Compensation shall be reduced as an Elective
Deferral in accordance with the requirements of section 3.3, subject to the
nondiscrimination test described in section 3.10; election of investment funds
as described in ARTICLE IV; one or more Beneficiaries; and such other
information as specified by the Recordkeeper. Enrollment will be effective as of
the first administratively feasible Pay Period following completion of
enrollment. The Administrator, in its discretion, may from time to time make
exceptions and adjustments in the foregoing procedure on a uniform and
nondiscriminatory basis.
2.3 Transfer Between Adopting Employers to Position Covered by Plan.
A Participant who is transferred to a position with another Adopting Employer in
which the Participant remains an Eligible Employee will continue as an active
Participant of the Plan.
2.4 Transfer to Position Not Covered by Plan. If a Participant is
transferred to a position with an Employer in which the Participant is no longer
an Eligible Employee, the Participant will remain a Participant of the Plan wit
respect to Elective Deferrals previously made but shall no longer be eligible to
have Elective Deferrals made to the Plan on his or her behalf until he or she
again becomes an Eligible Employee. In the event the Participant is subsequently
transferred to a position in which he or she again becomes an Eligible Employee,
the Participant may renew Elective Deferrals by communicating with the
Recordkeeper and providing all of the information requested by the Recordkeeper.
The renewal of Elective Deferrals will be effective as of the first
administratively feasible Pay Period following receipt by the Recordkeeper of
the requested information.
2.5 Transfer to Position Covered by Plan. If an Employee who is not
eligible to participate in the Plan by reason of his or her position with an
Employer is transferred to a position that is eligible to participate in the
Plan, all service performed as an Employee in such noneligible position shall be
treated as a Period of Service for purposes of this ARTICLE.
2.6 Treatment of Qualified Military Service. Notwithstanding any
provision of this Plan to the contrary, contributions, benefits and service
credit with respect to Qualified Military Service will be provided in accordance
with section 414(u) of the Code.
ARTICLE III
Contributions
3.1 Matching Contributions. (a) (1) Each Adopting Employer shall, in
its discretion, make Matching Contributions with regard to Elective Deferrals
and Employee After-Tax Contributions made by its Eligible Employees during a
Plan Year. Each Adopting Employer shall, in its discretion, determine both the
percentage rate of the Elective Deferrals and Employee After-Tax Contributions
that will be matched and any limits on the maximum Matching Contributions that
will be made for any Participant. Matching Contributions will be made in such
form as is specified in subsection (b).
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(2) Unless otherwise specified by an Adopting Employer, each Adopting
Employer shall make Matching Contributions equal in value to one hundred percent
(100%) of the total Elective Deferrals and Employee After-Tax Contributions made
during that Plan Year by each Participant who is an Eligible Employee of that
Adopting Employer, but the total of such Matching Contributions for any
Participant shall not exceed four percent (4%) of a Participant's Compensation
from that Adopting Emp for that Plan Year.
(3) An Adopting Employer shall not make any Matching Contributions
under subsection (a) for any Participant employed in connection with contracts
governed by the Service Contract Act of 1965.
(b) The Matching Contribution under subsection (a) shall be made
in either Common Stock or cash that is invested in Common Stock. The number of
shares of Common Stock contributed by the Adopting Employer or acquired with
Matching Contributions under subsection (a) shall be allocated to the
Participant's Account by the Trustee and such allocation shall equal the number
of shares of Common Stock which the Trustee could have purchased for the
Participant at the Current Market Value. Such Matching Contribution shall remain
invested in Common Stock until the end of two (2) full Plan Years following the
Plan Year for which such contributions or deferrals are made.
3.2 Qualified Nonelective Contributions. Each Plan Year the Adopting
Employers may contribute to the Trust such amounts as determined by the Board of
Directors in its sole discretion. Any amounts contributed under this subsection
are to be designated by the Adopting Employers as Qualified Nonelective
Contributions.
3.3 Elective Deferrals. (a) A Participant may authorize the Adopting
Employer to reduce his or her Compensation on a pre-tax basis and to
correspondingly contribute to the Plan an amount equal to any whole percentage
of Compensation that does not exceed twelve percent (12%) of his or her
Compensation for that Plan Year.
(b) A Participant shall not be permitted to defer his or her
Compensation under subsection (a) during any calendar year in excess of nine
thousand five hundred dollars ($9,500) (or such amount as may be permitted in
accordance with regulations issued under section 415(d)(1) of the Code).
3.4 Employee After-Tax Contributions. A Participant may authorize the
Adopting Employer to reduce his or her Compensation on an after-tax basis and to
correspondingly contribute to the Plan an amount equal to any whole percentage
of Compensation that does not exceed twelve percent (12%) of his or her
Compensation for that Plan Year.
3.5 Change in Elective Deferrals. Except as provided in section 3.10,
any Participant may change his or her Elective Deferral or Employee After-Tax
Contribution percentage to increase or decrease said percentage by notifying the
Recordkeeper, such change to take effect as of the next administratively
feasible Pay Period.
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5
3.6 Forfeitures. (a) In the event that a Participant incurs a
Severance from Service before attaining a Nonforfeitable right to his or her
Matching Contributions, the Matching Contribution Account will be forfeited as
of the first day of the month immediately following the earliest of: (i) the
date on which the Participant incurs a Period of Severance of five (5)
consecutive years; (ii) death; or (iii) the date on which the Participant's
Elective Deferral Account is distributed in accordance with ARTICLE VI.
Forfeitures of Matching Contributions will be used to reduce future
contributions of the Adopting Employers to the Plan.
(b) If, in connection with his or her Severance from Service, a
Participant received a distribution of his or her Elective Deferral Account when
he or she did not have a Nonforfeitable right to his or her Matching
Contribution Account, the Matching Contributions that were forfeited, unadjusted
by any subsequent gains or losses, shall be restored if he or she again becomes
an Employee before incurring a Period of Severance of five (5) consecutive
years, performs an Hour of Service, and r the full value of his or her prior
distributions, unadjusted for subsequent gains and losses, before the first to
occur of (i) the end of the five- (5) year period beginning with the date he or
she again becomes an Employee or (ii) the date on which he or she incurs a
Period of Severance of five (5) consecutive years.
3.7 Rollover Contributions and Transfers.
(a) Participants may transfer into the Plan qualifying rollover
amounts (as defined in section 402 of the Code) received from other qualified
plans (provided that no federal income tax has been required to have been paid
previously on such amounts); or rollover contributions from an individual
retirement account described in section 408(d)(3)(A)(ii) of the Code (referred
to herein as a "conduit IRA"), subject to the following conditions:
(1) the transferred funds are received by the Trustee no later than
sixty (60) days from receipt by the Employee of a distribution from another
qualified plan or, in the event that the funds are transferred from a conduit
IRA, no later than sixty (60) days from the date that the Participant receives
such funds from the individual retirement account;
(2) the amount of such Rollover Contributions shall not exceed the
limitations set forth in section 402 of the Code;
(3) the Rollover Contributions shall be taken into account by the
Administrator in determining the Participant's eligibility for a loan pursuant
to ARTICLE VII;
(4) the Rollover Contributions may be distributed at the request of
the Participant, subject to the same administrative procedures as apply to other
distributions;
(5) the Rollover Contributions transferred pursuant to this section
3.7(a) shall be credited to the Participant's Rollover Contribution Account and
will be invested upon receipt by the Trustee;
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6
(6) a Rollover Contribution will not be accepted unless (A) the
Employee on whose behalf the Rollover Contribution will be made is either a
Participant or an Eligible Employee who has notified the Administrator that he
or she intends to become a Participant on the first date on which he or she is
eligible therefor, and (B) all required information, including selection of
specific investment accounts, is provided to the Recordkeeper - when a Rollover
Contribution has been deposit any further change in investment allocation of
future deferrals or transfer of account balances between investment funds will
be effected through the procedures set forth in sections 4.2 and 4.3; and
(7) under no circumstances shall the Administrator accept as a
Rollover Contribution amounts which have previously been subject to federal
income tax.
(b)(1) The Plan shall accept a transfer of assets, including elective
transfers in accordance with Treas. Regs. section 1.411(d)-4 Q&A-3(b), directly
from another plan qualified under section 401(a) of the Code only if the
Administrator, in its sole discretion, agrees to accept such a transfer. In
determining whether to accept such a transfer, the Administrator shall consider
the administrative inconvenience engendered by such a transfer and any risks to
the continued qualification Plan under section 401(a) of the Code. Acceptance of
any such transfer shall not preclude the Administrator from refusing any such
subsequent transfers.
(2) Any transfer of assets accepted under this subsection shall be
separately accounted for at all times and shall remain subject to the provisions
of the transferor plan (as it existed at the time of such transfer) to the
extent required by section 411(d)(6) of the Code (including, but not limited to,
any rights to qualified joint and survivor annuities and qualified preretirement
survivor annuities) as if such provisions were part of the Plan. In all other
respects, however, transferred assets will be subject to the provisions of the
Plan. The Administrator may, but is not required to, describe in Exhibit B to
this Plan the special provisions that must be preserved under section 411(d)(6)
of the Code, if any, following the transfer of assets from another plan in
accordance with this subsection.
(3) Assets accepted under this section shall be fully vested and
nonforfeitable.
(4) Eligible Employees who were active participants in the Hughes
Salaried Employees' Thrift and Savings Plan immediately prior to the Effective
Date may elect to transfer their entire vested account balances in such plan,
including after-tax contributions, to the Plan in accordance with this section
3.7(b).
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7
3.8 Refund of Contributions to the Adopting Employers. Notwithstanding
the provisions of ARTICLE XII, if, or to the extent that, any Adopting
Employers' deductions for contributions made to the Plan are disallowed, such
Adopting Employer will have the right to obtain the return of any such
contributions for a period of one (1) year from the date of disallowance. For
this purpose, all contributions are made, other than Employee After-Tax
Contributions, subject to the condition that they are deductible under the Code
for the taxable year of the Adopting Employers for which the contributions are
made. Furthermore, any contribution made on the basis of a mistake in fact may
be returned to the Adopting Employers within one (1) year from the date such
contribution was made.
3.9 Payment. The Adopting Employers shall pay to the Trustee in U.S.
currency, or by other property acceptable to the Trustee, all contributions for
each Plan Year within the time prescribed by law, including extensions granted
by the Internal Revenue Service, for filing the federal income tax return of the
Company for its taxable year in which such Plan Year ends. Unless designated by
the Adopting Employers as nondeductible, all contributions made, other than
Employee After-Tax Contributions, shall be deemed to be conditioned on their
current deductibility under section 404 of the Code.
3.10 Limits for Highly Compensated.
(a) Elective Deferrals, Employee After-Tax Contributions, Matching
Contributions and Qualified Nonelective Contributions allocable to the
Accounts of Highly Compensated Employees shall not in any Plan Year
exceed the limits specified in this section. The Administrator may
make the adjustments authorized in this section to ensure that the
limits of subsection (b) (or any other applicable limits) are not
exceeded, regardless of whether such adjustments affect some
Participants more than others. This section shall be administered and
interpreted in accordance with sections 401(k) and 401(m) of the Code
(b)(1) The Actual Deferral Percentage of the Highly Compensated
Employees shall not exceed, in any Plan Year, the greater of:
(A) one hundred twenty-five percent (125%) of the Actual Deferral
Percentage for all other Eligible Participants; or
(B) the lesser of two hundred percent (200%) of the Actual
Deferral Percentage for all other Eligible Participants or the Actual Deferral
Percentage for the other Eligible Participants plus two (2) percentage points.
(2) The Actual Contribution Percentage of the Highly Compensated
Employees shall not exceed, in any Plan Year, the greater of:
(A)one hundred twenty five percent (125%) of the Actual
Contribution Percentage for all other Eligible Participants; or
(B) the lesser of two hundred percent (200%) of the Actual
Contribution Percentage for all other Eligible Participants or the Actual
Contribution Percentage for the other Eligible Participants plus two (2)
percentage points.
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8
(3) The sum of the Actual Deferral Percentage and the Actual
Contribution Percentage for the Highly Compensated Employees shall not exceed,
in any Plan Year, the sum of:
(A) one hundred twenty-five percent (125%) of the greater of:
(i) the Actual Deferral Percentage of the other Eligible Participants; or
(ii) the Actual Contribution Percentage of the other Eligible Participants; and
(B) two plus the lesser of:
(i) the amount in paragraph (3)(A)(i); or
(ii) the amount in paragraph (3)(A)(ii); provided that the amount in this
paragraph (3)(B) shall not exceed two hundred percent (200%) of the lesser of
the amount in paragraph (3)(A)(i) or the amount in paragraph (3)(A)(ii).
(4) The limitations under section 3.10(b)(3) shall be modified to
reflect any higher limitations provided by the Internal Revenue Service under
regulations, notices or other official statements.
(c) The following terms shall have the meanings specified:
(1) Actual Contribution Percentage. The average of the ratios for a designated
group of Employees (calculated separately for each Eligible Participant in the
group) of the sum of the Matching Contributions, Employee After-Tax
Contributions, Qualified Nonelective Contributions (other than those treated as
part of the Actual Deferral Percentage), and Elective Deferrals (other than
those treated as part of the Actual Deferral Percentage) allocated for the
applicable year on behalf of the Participant, divided by the Participant's
Compensation for such applicable year. The "applicable year" for determining the
Actual Contribution Percentage for the group of Highly Compensated Employees
shall be the current Plan Year. For all other Eligible Participants, the
"applicable year" for determining the Actual Contribution Percentage shall be
the immediately preceding Plan Year, unless in accordance with the procedures
prescribed by the Internal Revenue Service, the Administrator elects to use the
current Plan Year.
(2) Actual Deferral Percentage. The average of the ratios for a designated group
of Eligible Participants (calculated separately for each Eligible Participant in
the group) of the sum of the Elective Deferrals and Qualified Nonelective
Contributions (other than those treated as part of the Actual Contribution
Percentage) allocated for the applicable year on behalf of a Participant,
divided by the Participant's Compensation for such applicable year. The
"applicable year" for determining the Actual Deferral Percentage for the group
of Highly Compensated Employees shall be the current Plan Year. For all other
Eligible Participants, the "applicable year" for determining the Actual Deferral
Percentage shall be the immediately preceding Plan Year, unless in accordance
with the procedures prescribed by the Internal Revenue Service, the
Administrator elects to use the current Plan Year.
(3) Compensation. The Employee's wages that are required to be reported on IRS
Form W-2, increased by any Elective Deferrals made by the Employer on behalf of
the Employee under this Plan or any other plan of the Employer with a qualified
cash or deferred arrangement under section 401(k) of the Code and any pre-tax
elective contributions made by the Employer that are excludible from the
Employee's income under section 125 of the Code.
<PAGE>
9
(4) Eligible Participant. Any Employee of an Adopting Employer who is authorized
under the terms of the Plan to make Elective Deferrals or have Qualified
Nonelective Contributions allocated to his or her Account for the Plan Year.
(d) For purposes of determining whether a plan satisfies the Actual Contribution
Percentage test of section 401(m), all employee and matching contributions that
are made under two (2) or more plans that are aggregated for purposes of
sections 401(a)(4) and 410(b) (other than section 410(b)(2)(A)(ii)) are to be
treated as made under a single plan and that if two (2) or more plans are
permissively aggregated for purposes of section 401(m), the aggregated plans
must also satisfy sections 401(a)(4) and 410(b) as though they were a single
plan.
(e) In calculating the Actual Contribution Percentage for purposes of section
401(m), the actual contribution ratio of a Highly Compensated Employee will be
determined by treating all plans subject to section 401(m) under which the
Highly Compensated Employee is eligible (other than those that may not be
permissively aggregated) as a single plan.
(f) For purposes of determining whether a plan satisfies the Actual Deferral
Percentage test of section 401(k), all elective contributions that are made
under two (2) or more plans that are aggregated for purposes of section
401(a)(4) or 410(b) (other than section 410(b)(2)(A)(ii)) are to be treated as
made under a single plan and that if two (2) or more plans are permissively
aggregated for purposes of section 401(k), the aggregated plans must also
satisfy sections 401(a)(4) and 410(b) as though they were a single plan.
(g) In calculating the Actual Deferral Percentage for purposes of section
401(k), the actual deferral ratio of a Highly Compensated Employee will be
determined by treating all cash or deferred arrangements under which the Highly
Compensated Employee is eligible (other than those that may not be permissively
aggregated) as a single arrangement.
(h) An elective contribution will be taken into account under the Actual
Deferral Percentage test of section 401(k)(3)(A) of the Code for a Plan Year
only if it is allocated to the Employee as of a date within that Plan Year.
For this purpose, an elective contribution is considered allocated as of a date
within a Plan Year if the allocation is not contingent on participation or
performance of services after such date and the elective contribution is
actually paid to the Trust no later than twelve (12) months after the Plan Year
to which the contribution relates.
3.11 Correction of Excess Contributions.
(a) Excess Contributions shall be corrected as provided in this section. The
Administrator may also prevent anticipated Excess Contributions as provided in
this section. The Administrator may use any method of correction or prevention
provided in this section or any combination thereof, as it determines in its
sole discretion. This section shall be administered and interpreted in
accordance with sections 401(k) and 401(m) of the Code.
(b) The Administrator may refuse to accept any or all prospective Elective
Deferrals to be contributed by a Participant.
(c) (1) An Adopting Employer may, in its sole discretion, elect to contribute,
as provided in section 3.2, a Qualified Nonelective Contribution in an amount
necessary to satisfy any or all of the requirements of section 3.10.
<PAGE>
10
(2) Qualified Nonelective Contributions for a Plan Year shall only be allocated
to the Accounts of Participants who are not Highly Compensated Employees.
Qualified Nonelective Contributions shall be allocated first to the Participant
with the lowest Compensation for that Plan Year and any remaining Qualified
Nonelective Contributions thereafter shall be allocated to the Participant with
the next lowest Compensation for that Plan Year. This allocation method shall
continue in ascending order of Compensation until all such Qualified Nonelective
Contributions are allocated. The allocation to any Participant shall not exceed
the limits under section 415 of the Code. If two or more Participants have
identical Compensation, the allocations to them shall be proportional.
(3) Qualified Nonelective Contributions for a Plan Year shall be contributed to
the Trust within twelve (12) months after the close of such Plan Year.
(4) Qualified Nonelective Contributions shall only be allocated to Participants
who receive Compensation during the Plan Year for which such contribution is
made.
(d) The Administrator may, during a Plan Year, distribute to a Participant (or
such Participant's Beneficiary if the Participant is deceased), any or all
Excess Contributions or Excess Deferrals (whether Elective Deferrals or
Qualified Nonelective Contributions) allocable to that Participant's Account for
that Plan Year, notwithstanding any contrary provision of the Plan. Such
distribution may include earnings or losses (if any) attributable to such
amounts, as determined by the Administrator.
(e) (1) The Administrator may recharacterize any or all Excess Contributions for
a Plan Year as Employee After-Tax Contributions in accordance with the
provisions of this subsection. Any Excess Contributions that are so
recharacterized shall be treated as if the Participant had elected to instead
receive cash Compensation on the earliest date that any Elective Deferral made
on behalf of the Participant during the Plan Year would have been received had
the Participant originally elected to receive such amount in cash and then
contributed such amount as an Employee After-Tax Contribution. To the extent
required by the Internal Revenue Service, however, such recharacterized Excess
Contributions shall continue to be treated as if such amounts were not
recharacterized.
(2) The Administrator shall report any recharacterized Excess Contributions as
Employee After-Tax Contributions to the Internal Revenue Service and to the
affected Participants at such times and in accordance with such procedures as
are required by the Internal Revenue Service. The Administrator shall take such
other actions regarding the amounts so recharacterized as may be required by the
Internal Revenue Service.
(3) Excess Contributions may not be recharacterized under this subsection more
than two and one-half (21/2) months after the close of the Plan Year to which
the recharacterization relates. Recharacterization is deemed to occur when the
Participant is so notified (as required by the Internal Revenue Service).
(4) The amount of Excess Contributions to be distributed or recharacterized
shall be reduced by Excess Deferrals previously distributed for the taxable year
ending in the same Plan Year and Excess Deferrals to be distributed for a
taxable year will be reduced by Excess Contributions previously distributed or
recharacterized for the Plan beginning in such taxable year.
<PAGE>
11
(f) (1) The Administrator may distribute any or all Excess Contributions for a
Plan Year in accordance with the provisions of this subsection. Such
distribution may only occur after the close of such Plan Year and within twelve
(12) months of the close of such Plan Year. In the event of the termination of
the Plan, such distribution shall be made within twelve (12) months after such
termination. Such distribution shall include the income allocable to the amounts
so distributed, as determined under this subsection. The Administrator may make
any special allocations of earnings or losses necessary to carry out the
provisions of this subsection. A distribution of an Excess Contribution under
this subsection may be made without regard to any notice or consent otherwise
required pursuant to sections 411(a)(11) and 417 of the Code.
(2)(A) The income allocable to Excess Contributions distributed under this
subsection shall equal the allocable gain or loss for the Plan Year. Income
includes all earnings and appreciation, including such items as interest,
dividends, rent, royalties, gains from the sale of property, appreciation in the
value of stock, bonds, annuity and life insurance contracts, and other property,
without regard to whether such appreciation has been realized.
(B) The allocable gain or loss for the Plan Year may be determined under any
reasonable method consistently applied by the Administrator. Alternatively, the
Administrator may, in its discretion, determine such allocable gain or loss for
the Plan Year under the method set forth in subparagraph (C).
(C) Under this method, the allocable gain or loss for the Plan Year is
determined by multiplying the income for the Plan Year allocable to Elective
Deferrals (and amounts treated as Elective Deferrals) by a fraction, the
numerator of which is the Excess Contributions by the Participant for the Plan
Year and the denominator of which is the total Account balance of the
Participant attributable to Elective Deferrals (and amounts treated as Elective
Deferrals) as of the beginning of the Plan Year, increased by any Elective
Deferrals (and amounts treated as Elective Deferrals) by the Participant for the
Plan Year.
(3) Amounts distributed under this subsection (or other provisions of
this section) shall first be treated as distributions from the Participant's
subaccounts in the following order:
(A) from the Participant's Elective Deferral Account (if such Excess
Contribution is attributable to Elective Deferrals); and
(B) from the Participant's Qualified Nonelective Contribution Account (if such
Excess Contribution is attributable to Qualified Nonelective Contributions).
(g) (1) The term "Excess Contributions" shall mean, with respect to a Plan Year,
the excess of the Elective Deferrals (including any Qualified Nonelective
Contributions and Matching Contributions that are treated as Elective Deferrals
under sections 401(k)(2) and 401(k)(3) of the Code) on behalf of eligible Highly
Compensated Employees for the Plan Year over the maximum amount of such
contributions permitted under sections 401(k)(2) and 401(k)(3) of the Code. For
this purpose, the maximum amount of contributions permitted under sections
401(k)(2) and 401(k)(3) of the Code shall be determined in accordance with the
leveling method prescribed in Treas. Regs. section 1.401(k)-1(f)(2), or such
other method as promulgated thereafter.
<PAGE>
12
(2) Any distribution or recharacterization of Excess Contributions for a Plan
Year, as determined under subsection (1) above, shall be made to the Highly
Compensated Employees on the basis of the amount of contributions by, or on
behalf of, each such Highly Compensated Employee in accordance with the
procedure described herein. The Highly Compensated Employees with the highest
amount of contributions shall have their contributions distributed or
recharacterized to the extent required to eliminate the Excess Contributions or,
if it results in a lower distribution or recharacterization, to the extent
required to cause such Highly Compensated Employees' contributions to equal the
amount of contributions of the Highly Compensated Employees with the next
highest level of contributions. This procedure shall be repeated until the
Excess Contributions are completely distributed or recharacterized.
(3) The amount of Excess Contributions to be distributed or recharacterized
shall be reduced by Excess Deferrals previously distributed for the taxable year
ending in the same Plan Year and Excess Deferrals to be distributed for a
taxable year will be reduced by Excess Contributions previously distributed or
recharacterized for the Plan beginning in such taxable year.
3.12 Correction of Excess Deferrals.
(a) Excess Deferrals shall be corrected as provided in this section. The
Administrator may also prevent anticipated Excess Deferrals as provided in this
section. The Administrator may use any method of correction or prevention
provided in this section or any combination thereof, as it determines in its
sole discretion. A distribution of an Excess Deferral under this section may be
made without regard to any notice or consent otherwise required pursuant to
sections 411(a)(11) and 417 of the Code. This section shall be administered
and interpreted in accordance with sections 401(k) and 402(g) of the Code.
(b) The Administrator may refuse to accept any or all prospective Elective
Deferrals to be contributed by a Participant.
(c) (1) The Administrator may distribute any or all Excess Deferrals to
the Participant on whose behalf such Excess Deferrals were made before the close
of the Applicable Taxable Year. Distributions under this subsection include
income allocable to the Excess Distribution so distributed, as determined under
this subsection.
(2) Distribution under this subsection shall only be made if all the following
conditions are satisfied:
(A) the Participant seeking the distribution designates the
distribution as an Excess Deferral;
(B) the distribution is made after the date the Excess Deferral is
received by the Plan; and
(C) the Plan designates the distribution as a distribution
of an Excess Deferral.
(3) The income allocable to the Excess Deferral distributed under this
subsection shall be determined in the same manner as under subsection (d)(3),
except that income shall only be determined for the period from the beginning of
the Applicable Taxable Year to the date on which the distribution is made.
<PAGE>
13
(d) (1) The Administrator may distribute any or all Excess Deferrals to the
Participant on whose behalf such Excess Deferrals were made after the close of
the Applicable Taxable Year. Distribution under this subsection shall only be
made if the Participant timely provides the notice required under subsection
(d)(2) and such distribution is made after the Applicable Taxable Year and
before the first April 15 following the close of the Applicable Taxable Year.
Distributions under this subsection shall include income allocable to the Excess
Deferrals so distributed, as determined under this subsection.
(2) Any Participant seeking a distribution of an Excess Deferral in accordance
with this subsection must notify the Administrator of such request no later than
the first March 15 following the close of the Applicable Taxable Year. The
Administrator may agree to accept notification received after such date (but
before the first April 15 following the close of the Applicable Taxable Year) if
it determines that it would still be administratively practicable to make such
distribution in view of the delayed notification. The notification required by
this subsection shall be deemed made if a Participant's Elective Deferrals to
the Plan in any Plan Year create an Excess Deferral.
(3) The income allocable to the Excess Deferral distributed under this
subsection shall be determined in the same manner as under section 3.11(f)(2),
except that the term "Excess Deferrals" shall be substituted for "Excess
Contributions" and the term "Applicable Taxable Year" shall be substituted for
"Plan Year." The Administrator may make any special allocations of earnings or
losses necessary to carry out the provisions of this subsection.
(e) The following terms shall have the meanings specified:
(1) Applicable Taxable Year. The taxable year (for federal income tax
purposes) of the Participant in which an Excess Deferral must be included in
gross income (when made) in accordance with section 402(g) of the Code.
(2) Excess Deferral. A Participant's Elective Deferrals (and other
contributions limited by section 402(g) of the Code), for an Applicable Taxable
Year that are in excess of the limits imposed by section 402(g) of the Code for
such Applicable Taxable Year.
3.13 Correction of Excess Aggregate Contributions.
(a) Excess Aggregate Contributions shall be corrected as provided in this
section. The Administrator may use any method of correction or prevention
provided in this section or any combination thereof, as it determines in its
sole discretion. This section shall be administered and interpreted in
accordance with sections 401(k) and 401(m) of the Code.
(b) The Administrator may refuse to accept any or all prospective Elective
Deferrals to be contributed to a Participant.
(c) (1) The Company may, in its sole discretion, elect to contribute, as
provided in section 3.2, a Qualified Nonelective Contribution in an amount
necessary to satisfy any or all of the requirements of section 3.10.
<PAGE>
14
(2) Qualified Nonelective Contributions for a Plan Year shall only be allocated
to the Accounts of Participants who are not Highly Compensated Employees.
Qualified Nonelective Contributions shall be allocated first to the Participant
with the lowest Compensation for that Plan Year and any remaining Qualified
Nonelective Contributions thereafter shall be allocated to the Participant with
the next lowest compensation for that Plan Year. This allocation method shall
continue in ascending order of Compensation until all such Qualified Nonelective
Contributions are allocated. The allocation to any Participant shall not exceed
the limits under section 415 of the Code. If two or more Participants have
identical Compensation, the allocations to them shall be proportional.
(3) Qualified Nonelective Contributions for a Plan Year shall be contributed to
the Trust within twelve (12) months after the close of such Plan Year.
(4) Qualified Nonelective Contributions shall only be allocated to Participants
who receive Compensation during the Plan Year for which such contribution is
made.
(d) The Administrator may, during a Plan Year, distribute to a Participant (or
such Participant's Beneficiary if the Participant is deceased), any or all
Excess Aggregate Contributions allocable to that Participant's Account for that
Plan Year, notwithstanding any contrary provision of the Plan. Such distribution
may include earnings or losses (if any) attributable to such amounts, as
determined by the Administrator.
(e) (1) The Administrator may forfeit any or all Excess Aggregate Contributions
for a Plan Year in accordance with the provisions of this subsection. The
amounts so forfeited shall not include any amounts that are nonforfeitable under
ARTICLE V. (2) Any forfeitures under this subsection shall be made in accordance
with the procedures for distributions under subsection (f) except that such
amounts shall be forfeited instead of being distributed.
(f) (1) The Administrator may distribute any or all Excess Aggregate
Contributions for a Plan Year in accordance with the provisions of this
subsection. Such distribution may only occur after the close of such Plan Year
and within twelve (12) months of the close of such Plan Year. Such distributions
shall be specifically designated by the Administrator as a distribution of
Excess Aggregate Contributions. In the event of the complete termination of the
Plan, such distribution shall be made within twelve (12) months after such
termination. Such distribution shall include the income allocable to the amounts
so distributed, as determined under this subsection. The Administrator may make
any special allocations of earnings or losses necessary to carry out the
provisions of this subsection. A distribution of an Excess Aggregate
Contribution under this subsection may be made without regard to any notice or
consent otherwise required pursuant to sections 411(a)(11) and 417 of the Code.
(2) (A) The income allocable to Excess Aggregate Contributions distributed under
this subsection shall equal the allocable gain or loss for the Plan Year. Income
includes all earnings and appreciation, including such items as interest,
dividends, rent, royalties, gains from the sale of property, appreciation in the
value of stock, bonds, annuity and life insurance contracts, and other property,
without regard to whether such appreciation has been realized.
<PAGE>
15
(B) The allocable gain or loss for the Plan Year may be determined under any
reasonable method consistently applied by the Administrator. Alternatively, the
Administrator may, in its discretion, determine such allocable gain or loss for
the Plan Year under the method set forth in subparagraph (C).
(C) Under this method, the allocable gain or loss for the Plan Year is
determined by multiplying the income for the Plan Year allocable to employee
contributions, matching contributions and amounts treated as matching
contributions by a fraction, the numerator of which is the Excess Aggregate
Contributions for the Participant for the Plan Year and the denominator of which
is the total Account balance of the Participant attributable to employee
contributions, matching contributions and amounts treated as matching
contributions as of the beginning of the Plan Year, increased by the employee
contributions, matching contributions and amounts treated as matching
contributions for the Participant for the Plan Year.
(3) Amounts distributed under this subsection (or other provisions of this
section) shall first be treated as distributions from the Participant's Account
in the following order:
(A) from the Participant's Qualified Nonelective Contribution Account
(if such Excess Aggregate Contribution is attributable to Qualified Nonelective
Contributions);
(B) from the Participant's Employee After-Tax Contribution Account (if
such Excess Aggregate Contribution is attributable to Employee After-Tax
Contributions); and
(C) from the Participant's Matching Contribution subaccount (if such
Excess Aggregate Contribution is attributable to Matching Contributions).
(g) (1) The term "Excess Aggregate Contributions" shall mean, with respect to a
Plan Year, the excess of the aggregate amount of the matching contributions and
employee contributions (including any Qualified Nonelective Contributions or
elective deferrals taken into account in computing the Actual Contribution
Percentage) actually made on behalf of eligible Highly Compensated Employees for
the Plan Year over the maximum amount of such contributions permitted under
section 401(m)(2)(A) of the Code. For this purpose, the maximum amount of
contributions permitted under section 401(m)(2)(A) of the Code shall be
determined in accordance with the leveling method described in section
3.11(g)(1) of the Plan.
(2) Any distribution of Excess Aggregate Contributions for a Plan
Year, as determined under subsection (1) above, shall be made to the Highly
Compensated Employees on the basis of the amount of contributions by, or on
behalf of, each such Highly Compensated Employee in accordance with the
procedure described herein. The Highly Compensated Employees with the highest
amount of contributions shall have their contributions distributed to the extent
required to eliminate the Excess Aggregate Contributions or, if it results in a
lower distribution, to the extent required to cause such Highly Compensated
Employees' Contributions to equal the amount of contributions of the Highly
Compensated Employees with the next highest level of contributions. This
procedure shall be repeated until the Excess Aggregate Contributions are
completely distributed.
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16
(3) The terms "employee contributions" and "matching contributions"
shall, for purposes of this section, have the meanings set forth in Treas. Reg.
1.401(m)-1(f).
3.14 Correction of Multiple Use.
(a) If the limitations of Treas. Reg. 1.401(m)-2 are exceeded for any Plan Year,
then correction shall be made in accordance with the provisions of this section.
This section shall be administered and interpreted in accordance with sections
401(k) and 401(m) of the Code.
(b) Any correction required by this section shall be calculated and administered
in accordance with the provisions for correcting Excess Contributions (in
section 3.11), Excess Aggregate Contributions (in section 3.13) or both, as the
Administrator determines in its sole discretion. Any correction required by this
section, to the extent possible, shall be made only with respect to those Highly
Compensated Employees who are eligible in both the arrangement subject to
section 401(k) of the Code and the Plan, as subject to section 401(m) of the
Code.
ARTICLE IV
Investment of Accounts
4.1 Election of Investment Funds.
(a) Except as otherwise prescribed in subsections (b) and (c) below,
upon enrollment in the Plan, each Participant shall direct that the funds in the
Participant's Account be invested in increments of one percent (1%) in one or
more of the following investment funds:
(1) Fund A. An equity fund designated by the Administrator;
(2) Fund B. A fixed income fund designated by the Administrator;
(3) Fund C. Common Stock fund;
(4) Fund D. A stock index fund designated by the Administrator;
(5) Fund E. A balanced fund designated by the Administrator;
(6) Fund F. A growth fund designated by the Administrator, investing primarily
in equities of companies of all types and sizes;
(7) Fund G. A growth fund designated by the Administrator, investing primarily
in equities of well-known and established companies;
(8) Fund H. General Motors Class H stock fund;
(9) Fund I. Raytheon Company Class A stock fund.
(b) Amounts contributed to a Participant's Matching Contribution Account must be
invested in Fund C (Common Stock fund) until the end of two (2) full Plan Years
following the Plan Year for which such contributions are made. Thereafter, a
Participant may designate the investment of the Matching Contribution funds in
accordance with the provisions of subsection (a) above.
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17
(c) The only assets that may be invested in Fund H or Fund I are the General
Motors Class H stock and cash directly transferred from the Hughes Salaried
Employee's Thrift and Savings Plan pursuant to section 3.7(b)(4). A Participant
may not direct that any other funds in the Participant's Account be invested in
Fund H or Fund I. Notwithstanding subsection (d) below, the Administrator shall
maintain Fund H and Fund I as investment options under the Plan, subject to the
limitations prescribed in this subsection (c), for five (5) complete Plan Years
following the Effective Date; provided, however, that if at any time prior to
the expiration of such five (5) year period, the aggregate fair market value of
the assets invested in either Fund H or Fund I falls below five percent (5%) of
the highest fair market value of the assets invested in Fund H or Fund I,
respectively, the Administrator may, with six (6) months written notice to
affected Participants, eliminate Fund H or Fund I, as applicable, as investment
options under the Plan. Notwithstanding the foregoing, the Administrator may
eliminate one or both funds at any time if the Administrator determines in good
faith that such elimination is necessary under applicable law (including without
limitation the prudence requirements of ERISA). When Fund H and Fund I are
eliminated in accordance with this section 4.1(c), Participants with assets
invested in Fund H or Fund I, as applicable, shall direct the transfer of such
assets to other funds available under the Plan or, if no such election is made,
the Administrator shall transfer such assets to Fund B or a similar low risk
fixed income fund as determined by the Administrator in its discretion.
(d) In its discretion, the Administrator may from time to time designate new
funds and, where appropriate, preclude investment in existing funds and provide
for the transfer of Accounts invested in those funds to other funds selected by
the Participant or, if no such election is made, to Fund B or similar low risk
fixed income fund as determined by the Administrator in its discretion.
(e) Except as otherwise prescribed in subsections (b) and (c) above, a
Participant's investment election will apply to the entire Account of the
Participant.
(f) In establishing rules and procedures under section 4.1, the following shall
apply:
(1) Each Participant, Beneficiary or Alternate Payee shall
affirmatively elect to self-direct the investment of assets in his or her
Account, but such election may provide for default investments in the absence of
specific directions from such Participant, Beneficiary or Alternate Payee.
(2) The investment directions of a Participant shall continue to apply
after that Participant's death or incompetence until the Beneficiary (or, if
there is more than one Beneficiary for that Account, all of the Beneficiaries),
guardian or other representatives provide contrary direction.
(3) The Administrator may decline to implement investment designations
if such investment, in the Administrator's judgment:
(A) would result in a prohibited transaction under section 4975 of the Code;
(B) would generate income taxable to the Trust Fund;
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18
(C) would not be in accordance with the Plan and Trust;
(D) would cause a Fiduciary to maintain the indicia of ownership of any assets
of the Trust Fund outside the jurisdiction of the district courts of the United
States other than as permitted by section 404(b) of ERISA and Labor Reg.
2550.404(b)-1;
(E) would jeopardize the Plan's tax qualified status under the Code;
(F) could result in a loss in excess of the amount credited to the Account; or
(G) would violate any other requirements of the Code or ERISA.
(4) Except as otherwise prescribed in subsections (b) and (c) above,
the Administrator may establish reasonable restrictions on the frequency with
which investment directions may be given, consistent with section 404(c) of
ERISA.
(5) The Administrator may establish limits on the use of brokers,
investment counsel or other advisors that may be utilized, including specifying
that all investments must be made through a designated broker or brokers.
(6) The Administrator may establish limits on the types of investments
that are permitted.
(g) Except as otherwise prescribed in subsections (b) and (c) above, the
Administrator shall establish such rules and procedures as may be advisable or
necessary to carry out the provisions of this section, with such rules and
procedures being consistent with section 404(c) of ERISA.
(h) The Administrator shall establish such rules and procedures as may be
advisable or necessary to reasonably ensure that all transactions involving the
investment funds comply with all applicable laws, including the securities laws.
4.2 Change in Investment Allocation of Future Deferrals. Except as
otherwise prescribed in sections 4.1(b) and (c), each Participant may elect to
change the investment allocation of future contributions effective as of the
first administratively feasible Business Day subsequent to telephone notice to
the Recordkeeper. Any changes must be made either in increments of one percent
(1%) of the Participant's Account or in a specified whole dollar amount and must
result in a total investment of one hundred percent (100%) of the Participant's
Account.
4.3 Transfer of Account Balances Between Investment Funds. Except as
otherwise prescribed in sections 4.1(b) and (c), each Participant may elect to
transfer all or a portion of the amount in his or her Account between investment
funds effective as of the first administratively feasible Business Day following
telephone notice to the Recordkeeper. In determining the amount of the transfer,
the Participant's Account shall be valued as of the close of business on the
Business Day on which telephone notice is received; provided, however, that in
any case where the telephone notice is received after 4:00 p.m. Eastern Time
<PAGE>
19
(daylight or standard, whichever is in effect on the date of the call), the
Account shall be valued as of the close of business on the next Business Day.
Such transfers must be made in either one percent (1%) increments of the entire
Account or in a specified amount in whole dollars and, as of the completion of
the transfer, must result in investment of one hundred percent (100%) of the
Account. Transfers shall be effected by telephone notice to the Recordkeeper.
4.4 Ownership Status of Funds. The Trustee shall be the owner of
record of the assets in the funds specified as Funds A, B, C, D, E, F, G, H and
I and such other funds as may be established by the Administrator. The
Administrator shall have records maintained as of the Valuation Date for each
fund allocating a portion of the fund to each Participant who has elected that
his or her Account be invested in such fund. The records shall reflect each
Participant's portion of Funds A, B, D, E, F and G and such other funds as may
be established by the Administrator, in a cash amount and shall reflect each
Participant's portion of Funds C, H and I in cash and unitized shares of stock.
4.5 Voting Rights. Participants whose Account has shares of
participation in Funds C or I on the last business day of the second month
preceding the record date (the "Voting Eligibility Date") for any meeting of
stockholders have the right to instruct the Trustee as to voting at such
meeting. The number of votes is determined by dividing the value of the shares
in the Participant's Account in Funds C and I, as applicable, by the closing
price of the respective classes of stock on the Voting Eligibility Date. If the
Trustee has not received instructions from a Participant as to voting of shares
within a specified time, then the Trustee shall not vote those shares. If a
Participant furnishes the Trustee with a signed vote direction card without
indicating a voting choice thereon, the Trustee shall vote the Participant's
shares as recommended by management. In addition, each Participant shall have
the right to accept or reject any tender or exchange offer for shares of the
respective classes of stock. The Trustee shall vote (or tender or exchange) all
combined fractional shares of the respective classes of stock to the extent
possible in the same proportion as the shares which have been voted (or tendered
or exchanged) by each Participant. Any instructions as to voting (or tender or
exchange) received from an individual Participant shall be held in confidence by
the Trustee and shall not be divulged to the Adopting Employers or to any
officer or employee thereof or to any other person.
4.6 Allocation of Earnings.
(a)(1) The Administrator, as of each Valuation Date, shall adjust the
amounts credited to the Accounts (including Accounts for persons who are no
longer Employees) so that the total of such Account balances equals the fair
market value of the Trust Fund assets as of such Valuation Date. Except as
otherwise provided herein, any changes in the fair market value of the Trust
Fund assets since the preceding Valuation Date shall be charged or credited to
each Account in the ratio that balance in each such Account as of the preceding
Valuation Date bears to the balances in all Accounts as of that Valuation Date
with appropriate adjustments to reflect any distributions, allocations or
similar adjustments to such Account or Accounts since that Valuation Date.
<PAGE>
20
(2) To the extent that separate investment funds are established (as
provided in section 4.1), the adjustments required by subsection (a)(1) shall be
made by applying subsection (a)(1) separately for each such investment fund so
that any changes in the net worth of each such investment fund are charged or
credited to the portion of each Account invested in such investment fund in the
ratio that the portion of each such Account invested in such investment fund as
of the preceding Valuation Date (reduced by any distributions made from that
portion of such Account since that Valuation Date) bears to the total amount
credited to such investment funds as of that Valuation Date (reduced by
distributions made from such investment fund since that Valuation Date).
(3) Interim valuations, in accordance with the foregoing procedure,
may be made at such time or times as the Administrator directs.
(b) The Administrator may, in its sole discretion, direct the Trustee to
segregate and separately invest any Trust Fund assets. If any assets are
segregated in this fashion, the earnings or losses on such assets shall be
determined apart from other Trust assets and shall be adjusted on each Valuation
Date, or at such other times as the Administrator deems necessary, in accordance
with this section.
ARTICLE V
Vesting
5.1 Elective Deferral, Employee After-Tax Contribution, Rollover
Contribution and Qualified Nonelective Contribution Accounts. Each Participant
shall have a Nonforfeitable right to any amounts in the Participant's Elective
Deferral, Employee After-Tax Contribution, Rollover Contribution and Qualified
Nonelective Contribution Accounts.
5.2 Matching Contribution Account.
(a) Each Participant shall have a Nonforfeitable right to his or her
Matching Contribution Account upon the earliest of:
(1) the Participant's completion of a Period of Service of five (5) years;
(2) the Participant's completion of a Period of Participation of three (3)
years;
(3) the Participant's Retirement, death while an Employee, Disability or
attainment of Normal Retirement Age; or
(4) the Participant's Layoff or Severance from Service due to Qualified Military
Service.
5.3 Break in Service Rules
(a) Periods of Service. In determining the length of a Period of
Service, the Administrator shall include all Periods of Service, except the
following Periods of Service shall not be taken into account:
(1) in the case of a Participant who has not made Elective Deferrals to the
Plan, the Period of Service before any Period of Severance which equals or
exceeds five (5) consecutive years; and
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21
(2) in the case of a Participant who has made Elective Deferrals to the Plan and
who has incurred a Period of Severance which equals or exceeds five (5) years,
the Period of Service after such Period of Severance shall not be taken into
account for purposes of determining the nonforfeitable interest of such
Participant in the Matching Contributions allocated to his or her Account before
such Period of Severance.
(b) Periods of Severance. In determining the length of a Period of
Service for purposes of section 14.40, the Administrator shall include any
period of time beginning on an Employee's Severance from Service Date and ending
on the date on which he or she is next credited with an Hour of Service,
provided that such Hour of Service is credited within the twelve- (12)
consecutive month period following such Severance from Service Date.
(c) Other Periods. In making the determinations described in
subsections (a) and (b) of this section, the second, third, and fourth
consecutive years of a Layoff (from the first anniversary of the last day paid
to the fourth anniversary of the last day paid) and any period in excess of one
(1) year of an Authorized Leave of Absence shall be regarded as neither a Period
of Service nor a Period of Severance.
ARTICLE VI
Withdrawals and Distribution of Benefits
6.1 In-Service Withdrawals - Matching Contributions. Upon completion
of a Period of Participation of five (5) years, a Participant may withdraw,
subject to a minimum withdrawal amount of two hundred fifty dollars ($250), all
or part of the Participant's Matching Contribution Account. Withdrawals will be
based upon the value of the Account as determined under section 6.16.
Withdrawals from Funds A, B, D, E, F and G, and such other funds as may be
established by the Administrator will be made in cash; withdrawals from Funds C,
H and I will be made in cash or stock (with cash for fractional or uninvested
shares) as directed by the Participant. Funds for the withdrawal will be taken
on a pro rata basis against the Participant's investment fund balances in the
Participant's Matching Contribution Account.
6.2 In-Service Withdrawal -- Elective Deferral and Qualified
Nonelective Contribution Accounts. While an Employee, a Participant may withdraw
all or a portion of his or her Elective Deferral Account and Qualified
Nonelective Contribution Account on or after attainment of age fifty-nine and
one-half (59-1/2).
6.3 In-Service Withdrawal -- Hardship.
(a) A Participant who has experienced a hardship, as described in this
section, may withdraw from his or her Elective Deferral Account amounts
attributable to Elective Deferrals (adjusted for net losses, if any). Whether a
Participant is entitled to a withdrawal under this section is to be determined
by the Administrator in accordance with nondiscriminatory and objective
standards. In order to be entitled to a hardship withdrawal under this section,
a Participant must satisfy the requirements of both subsection (b) and
subsection (c).
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22
(b) A Participant will be deemed to have experienced an immediate and
heavy financial need necessary to satisfy the requirements of this subsection if
the withdrawal is on account of:
(1) medical expenses described in section 213(d) of the Code incurred by
the Participant, the Participant's spouse or any dependents of the
Participant;
(2) the purchase (excluding mortgage payments) of a principal resident of
the Participant;
(3) payment of tuition for the next twelve (12) months of post-secondary
education for the Participant or his or her spouse, children or
dependents; or
(4) the need to prevent the eviction of the Participant from his or her
principal residence or the foreclosure on the mortgage of the
Participant's principal residence.
(c) (1) A withdrawal under this subsection will be deemed necessary to
satisfy an immediate and heavy financial need of the Participant if it satisfies
the requirements of this subsection. To the extent the amount of the withdrawal
would be in excess of the amount required to relieve the financial need of the
Participant or to the extent such need may be satisfied from other resources
that are reasonably available to the Participant, such withdrawal shall not
satisfy the requirement of this subsection. For purposes of this subsection, a
Participant's resources shall be deemed to include those assets of his or her
spouse or minor children that are reasonably available to the Participant.
(2) A withdrawal may be treated as necessary to satisfy a financial need if the
Administrator reasonably relies upon the Participant's representation that the
need cannot be relieved:
(A) through reimbursement or compensation by insurance or otherwise;
(B) by reasonable liquidation of the Participant's assets to the extent such
liquidation would not itself cause an immediate and heavy financial need;
(C) by cessation of Elective Deferrals under the Plan for at least twelve (12)
months after receipt of the hardship withdrawal;
(D) by other distributions or nontaxable (at the time of the loan) loans from
plans maintained by the Adopting Employers or by any other employer or by
borrowing from commercial sources on reasonable commercial terms.
(d) If a Participant receives a withdrawal for reasons of financial
hardship, the Participant's Elective Deferrals shall be reduced to four percent
(4%) (or such lower percentage as the Participant shall thereafter designate),
if in excess thereof as of the date of the distribution, and shall not be
increased during the twelve (12) months immediately subsequent to the date of
distribution.
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23
(e) Withdrawals of less than two hundred fifty dollars ($250) will not
be permitted.
(f) Withdrawals will be based upon the value of the Account as
determined under section 6.16.
(g) payment of the amount withdrawn will be made as soon as reasonably
practicable after the effective date of the withdrawal.
(h) Withdrawals from Funds A, B, D, E, F and G, and such other funds
as may be established by the Administrator, will be made in cash. Withdrawals
from Funds C, H and I will be made in cash or stock (with cash for fractional or
unissued shares) as elected by the Participant.
(i) Funds for the withdrawal will be taken on a pro rata basis against
the Participant's investment fund balances in the Participant's Elective
Deferral Account.
6.4 In-Service Withdrawal -- Rollover Contribution Account. A
Participant may withdraw all or a portion of his or her Rollover Contribution
Account. Withdrawals will be based upon the value of the Account as determined
under section 6.16. Payment of the amount withdrawn will be made as soon as
reasonably practicable after the effective date of the withdrawal. Withdrawals
from Funds A, B, D, E, F and G will be made in cash. Withdrawals from Funds C, H
and I will be made in cash or stock (with cash for fractional or unissued
shares) as elected by the Participant. Withdrawals of less than two hundred
fifty dollars ($250) will not be permitted.
6.5 In-Service Withdrawal -- Employee After-Tax Contributions. A
Participant may withdraw all or a portion of his or her Employee After-Tax
Contributions. Withdrawals will be based upon the value of the Account as
determined under section 6.16. Payment of the amount withdrawn will be made as
soon as reasonably practicable after the effective date of the withdrawal.
Withdrawals from Funds A, B, D, E, F and G will be made in cash. Withdrawals
from Funds C, H and I will be made in cash or stock (with cash for fractional or
unissued shares) as elected by the Participant.
6.6 Redeposits Prohibited. No amount withdrawn pursuant to sections
6.1, 6.2, 6.3, 6.4 or 6.5 may be redeposited in the Plan.
6.7 Distribution of Benefits.
(a) All benefits payable under this Plan shall be paid in the manner
and at the times specified in this ARTICLE. Any payments to Participants or
Beneficiaries shall be made in cash (or cash equivalents) except as otherwise
provided herein. Distributions may be made wholly or partly by an in-kind
distribution of assets held by the Trust Fund if the distributee consents to
such an in-kind distribution and the Administrator determines that such an
in-kind distribution is not administratively burdensome.
(b) All payment methods and distributions shall comply with the
requirements of sections 401(a)(4) and 401(a)(9) of the Code and the regulations
thereunder and, if necessary, shall be interpreted to so comply. The provisions
of this ARTICLE apply to all amounts credited to an Account, regardless of the
source of such amounts. All distributions shall comply with the incidental death
benefit requirement of section 401(a)(9)(G) of the Code. Distributions shall
comply with the regulation under section 401(a)(9) of the Code, including Treas.
Reg. 1.401(a)(9)-2. The provisions of the Plan reflecting section 401(a)(9) of
the Code override any distribution provisions in the Plan inconsistent with
section 401(a)(9).
<PAGE>
24
(c) Distribution of the Participant's Account (to which the
Participant has a Nonforfeitable right) will be made at the direction of the
Participant (or his or her legal representative or Beneficiary in the case of
his or her Disability or death) upon the Retirement, Disability, death or
Severance from Service of the Participant. In the event the Participant dies or
his or her Severance from Service occurs after his or her Normal Retirement Age,
or if the value of the Nonforfeitable portion of the Participant's Account as of
the Valuation Date which coincides with or immediately precedes the date of
distribution is not in excess of three thousand five hundred dollars ($3,500),
the Administrator shall cause the distribution to automatically be made.
(d) Payment will be made in the form of a lump-sum distribution of the
entire amount in the Participant's Account (to which the Participant has a
Nonforfeitable right), which will be paid as soon as practicable following
notification to the Benefits and Services Department, Raytheon Company,
Lexington, Massachusetts, of the Retirement, death, Disability or Severance from
Service and a telephone request by the Participant to the Recordkeeper for the
distribution. Distributions will be based upon the value of the Account as
determined under section 6.16. Distribution of the amounts in Funds A, B, D, E,
F and G (if any), and such other funds as may be established by the
Administrator, will be made in cash. Distribution of the amounts in Funds C, H
and I (if any) will be made in either cash or stock, at the election of the
Participant or, in the case of death, the Participant's Beneficiary. Partial
deferrals will not be permitted. If there is no Beneficiary surviving a deceased
Participant at the time payment of his or her Account is to be made, such
payment shall be made in a lump-sum to the person or persons in the first
following class of successive Beneficiaries surviving, any testamentary devise
or bequest to the contrary notwithstanding: the Participant's (1) spouse, (2)
children and issue of deceased children by right of representation, (3) parents,
(4) brothers and sisters and issue of deceased brothers and sisters by right of
representation, or (5) executors or administrators. If no Beneficiary can be
located during a period of seven (7) years from the date of death, the amount of
the distribution shall revert to the Trust and be treated in the same manner as
a forfeiture under section 3.6.
(e) If the Participant dies before the time when distribution is
considered to have commenced in accordance with applicable regulations, then any
remaining portion of the Participant's interest will be distributed within five
(5) years after the Participant's death. If a distribution is considered to have
commenced in accordance with the applicable regulations before the Participant's
death, the remaining interest will be distributed at least as rapidly as under
the method of distribution being used as of the date of the Participant's death.
(f) Except as provided by section 401(a)(9) of the Code as set forth
in this section, benefits in the Plan will be distributed to each Participant
not later than the sixtieth (60th) day after the close of the Plan Year in which
the latest of the following events occurs:
(1) attainment by the Participant of Normal Retirement Age;
(2) the tenth (10th) anniversary of the date on which Participant commenced
participation in the Plan; or
(3) Participant's Severance from Service.
<PAGE>
25
6.8 Mandatory Distributions.
A Participant who has attained age seventy and one-half (701/2) and is
subject to the mandatory distribution requirements of section 401(a)(9) shall
receive a lump sum distribution of the Participant's Account (to which the
Participant has a nonforfeitable right) at the time distributions must commence
in order to comply with such requirements. If additional amounts are allocated
to the Participant's Account following such lump sum distribution, additional
lump sum distributions of the Participant's Account (to which the Participant
has a nonforefeitable right) shall be made at such times any mandatory
distributions are required to comply with section 401(a)(9). Such payments shall
be made notwithstanding any contrary provisions of the Plan or election made by
such Participant.
6.9 Commencement of Benefits.
(a) Except as otherwise provided in this ARTICLE, distribution to a
Participant (or Beneficiary) shall commence within a reasonable period of time
following the Participant's Retirement, Disability, death or Severance from
Service.
(b) If the vested amount in the Participant's Account exceeds or ever
exceeded three thousand five hundred dollars ($3, 500), then payment to the
Participant shall not commence before such Participant has attained age
sixty-five (65), unless the Participant requests an earlier distribution. Such
request must be made not more than ninety (90) days before the commencement of
the distribution.
6.10 Payments to Incompetents. If a Participant or Beneficiary
entitled to receive any benefits hereunder is adjudicated to be legally
incapable of giving valid receipt and discharge for such benefits, the benefits
may be paid to the duly authorized personal representative of such Participant
or Beneficiary.
6.11 Income Tax Withholding. To the extent required by section 3405 of
the Code, distributions and withdrawals from the Plan shall be subject to
federal income tax withholding.
6.12 Direct Rollovers.
(a) A Participant may elect that all or any portion of a distribution
that would otherwise be paid as an Eligible Rollover Distribution shall instead
be transferred as a Direct Rollover.
(b) (1) The Administrator shall determine and apply rules and
procedures as it deems reasonable with respect to Direct Rollovers in addition
to, or in lieu of, those set forth in subsection (b)(2). The Administrator may
change such rules and procedures from time to time and shall not be bound by any
previous rules and procedures it has applied.
(2) Unless otherwise determined by the Administrator, the following
rules and procedures shall apply to this section:
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26
(A) A Direct Rollover shall not be permitted to more than one Eligible
Retirement Plan.
(B) A Direct Rollover shall not be permitted if it constitutes less than the
full amount of the Eligible Rollover Distribution.
(c) The following terms shall have the meanings specified:
(1) Direct Rollover. An available distribution that is paid directly to an
Eligible Retirement Plan for the benefit of the distributee.
(2) Distributee. A Participant or former Participant. In addition, the
Participant's or former Participant's Surviving Spouse or former spouse who is
the Alternate Payee under a Qualified Domestic Relations Order, as defined in
section 414(p) of the Code, are Distributees with regard to the interest of the
spouse or former spouse.
(3) Eligible Retirement Plan. An individual retirement account described in
section 408(a) of the Code, an individual retirement annuity (other than an
endowment contract) described in section 408(b) of the Code, a qualified trust
described in section 401(a) of the Code if such qualified trust is part of a
plan that permits acceptance of Direct Rollovers or an annuity plan described in
section 403(a) of the Code. In the case of a Direct Rollover for the benefit of
the spouse or former spouse of a Participant, the term "Eligible Retirement
Plan" shall only include an individual retirement account described in section
408(a) of the Code and an individual retirement annuity (other than an endowment
contract) described in section 408(b) of the Code.
(1) Eligible Rollover Distribution. Any distribution under the Plan to
a Participant, a Participant's spouse or a Participant's former spouse, except
for the following:
(A) Any distribution to the extent the distribution is required under section
401(a)(9) of the Code.
(B) The portion of any distribution that is not includable in gross income
(determined without regard to the exclusion for net unrealized appreciation
described in section 402(e)(4) of the Code).
(C) Returns of elective deferrals described in Treas. Reg. 1.415-6(b)(6)(iv)
that are returned as a result of the limitations under section 415 of the Code.
(D) Corrective distributions of excess contributions and excess deferrals under
qualified cash or deferred arrangements as described in Treas. Reg.
1.401(k)-1(f)(4) and 1.402(g)-1(e)(3), respectively, and corrective
distributions of excess aggregate contributions as described in Treas. Reg.
1.401(m)-1(e)(3), together with the income allocable to these corrective
distributions.
(E)Loans treated as distributions under section 72(p) of the Code and not
excepted by section 72(p)(2) of the Code.
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27
(F) Loans in default that are deemed distributions.
(G) Dividends paid on employer securities as described in section 404(k) of the
Code.
(H) The costs of life insurance coverage.
(I) Similar items designated by the Internal Revenue Service in revenue rulings,
notices, and other guidance of general applicability.
6.13 Notice and Payment Elections.
(a) The Administrator shall provide Participants or other Distributees
of Eligible Rollover Distributions with a written notice designed to comply with
the requirements of section 402(f) of the Code. Such notice shall be provided
within a reasonable period of time before making an Eligible Rollover
Distribution.
(b) Any elections concerning the payment of benefits under section 6.7
shall be made on a form prescribed by the Administrator. The Participant or
other Distributee shall submit a completed form to the Administrator at least
thirty (30) days before payment is scheduled to commence, unless the
Administrator agrees to a shorter time period. Any election made under this
section shall be revocable until thirty (30) days before payment is scheduled to
commence.
(c) An election to have payment made in a Direct Rollover shall only
be valid if the Participant or other Distributee provides adequate information
to the Administrator for the implementation of such Direct Rollover and such
reasonable verification as the Administrator may require that the transferee is
an Eligible Retirement Plan.
6.14 Qualified Domestic Relations Orders.
(a) Notwithstanding any contrary provision of the Plan, payments shall
be made in accordance with any judgment, decree or order determined to be a
Qualified Domestic Relations Order.
(b) (1) If the Plan receives a Domestic Relations Order, the
Administrator shall promptly notify the Participant and each Alternate Payee of
the receipt of such order and of the Plan's procedures for determining whether
such order is a Qualified Domestic Relations Order. The Administrator shall,
within a reasonable period after receipt of such order, determine whether it is
a Qualified Domestic Relations Order and notify the Participant and each
Alternate Payee of that determination.
(2) During any period in which the issue of whether a Domestic
Relations Order is a Qualified Domestic Relations Order is being determined, the
Administrator shall separately account for the amounts that would have been
payable to the Alternate Payee during such period if the order had been
determined to be a Qualified Domestic Relations Order.
(c) (1) A Domestic Relations Order meets the requirements of this
subsection only if such order clearly specifies the following:
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28
(A) the name and last known mailing address (if any) of the Participant and the
name and mailing address of each Alternate Payee covered by the order;
(B) the amount or the percentage of the Participant's benefits to be paid by the
Plan to each such Alternate Payee or the manner in which such amount or
percentage is to be determined;
(C) the number of payments or period to which such order applies; and
(D) each plan to which such order applies.
(2) A Domestic Relations Order meets the requirements of this
subsection only if such order does not:
(A) require the Plan to provide any type or form of benefit or any option not
otherwise provided under the Plan;
(B) require the Plan to provide increased benefits (determined on the basis of
actuarial value); and
(C) does not require the payment of benefits to an Alternate Payee that are
required to be paid to another Alternate Payee under another order previously
determined to be a Qualified Domestic Relations Order.
(d) A domestic relations order shall not be treated as failing to meet
the requirements of section 6.14(c)(2)(A) solely because such order requires
that payment of benefits be made to an Alternate Payee:
(1) in the case of any payment before a Participant has separated from
service, on or after the date on which the Participant attains (or would have
attained) the Earliest Retirement Date;
(2) as if the Participant had retired on the date on which such
payment is to begin under such order (but taking into account only the present
value of the benefits actually accrued and not taking into account the present
value of any employer subsidy for early retirement); and
(3) in any form in which such benefits may be paid under the Plan to
the Participant (other than in the form of a qualified joint and survivor
annuity with respect to the Alternate Payee and his or her subsequent spouse).
(e) A domestic relations order shall not be treated as failing to meet
the requirements of section 6.14(c)(2)(A) solely because such order requires
that payment of benefits be made to an Alternate Payee at a date before the
Participant is entitled to receive a distribution. Such distribution shall be
made to such Alternate Payee notwithstanding any contrary provision of the Plan.
(f) The following terms shall have the meanings specified:
(1) Alternate Payee. Any spouse, former spouse, child or other
dependent of a Participant who is recognized by a Domestic Relations Order as
having a right to benefits under the Plan with respect to such Participant.
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29
(2) Domestic Relations Order. A judgment, decree or order relating to
child support, alimony or marital property rights, as defined in section
414(p)(1)(B) of the Code.
(3) Earliest Retirement Date. The earlier of:
(A) the date on which the Participant is entitled to a distribution under the
Plan; or
(B) the later of:
(i) the date the Participant attains age fifty (50); or
(ii) the earliest date on which the Participant could begin receiving
benefits under the Plan if the Participantseparated from service.
(4) Qualified Domestic Relations Order. A Domestic Relations Order
that satisfies the requirements of subsection (c) and section 414(p)(1)(A) of
the Code.
(g) If an Alternate Payee entitled to payment under this section is
the spouse or former spouse of a Participant and payment will otherwise be made
in an Eligible Rollover Distribution, then such spouse or former spouse may
elect that all, or any portion, of such payment shall instead be transferred as
a Direct Rollover. Such Direct Rollover shall be governed by the requirements of
section 6.12.
(h) If a Domestic Relations Order directs that payment be made to an
Alternate Payee before the Participant's Earliest Retirement Date and such
Domestic Relations Order otherwise qualifies as a Qualified Domestic Relations
Order, then the Domestic Relations Order shall be treated as a Qualified
Domestic Relations Order and such payment shall be made to the Alternate Payee,
even though the Participant is not entitled to receive a distribution under the
Plan because he or she continues to be an Employee of one of the Adopting
Employers.
(i) This section shall be interpreted and administered in accordance
with section 414(p) of the Code.
6.15 Lost Beneficiary.
(a) All Participants and Beneficiaries shall have the obligation to
keep the Administrator informed of their current address until such time as all
benefits due have been paid.
(b) If any amount is payable to a Participant or Beneficiary who
cannot be located to receive such payment, such amount may, at the discretion of
the Administrator, be forfeited; provided, however, that if such Participant or
Beneficiary subsequently claims the forfeited amount, it shall be reinstated and
paid to such Participant or Beneficiary. Such reinstatement may, in the
Administrator's sole discretion, be made from Company Contributions, forfeitures
or Trust earnings, and shall b treated as a special allocation that supersedes
the normal allocation rules.
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30
(c) If the Administrator has not, after due diligence, located a
Participant or Beneficiary who is entitled to payment within three (3) years
after the Participant's Severance from Service, then, at the discretion of the
Administrator, such person may be presumed deceased for purposes of this Plan.
Any such presumption of death shall be final, conclusive and binding on all
parties.
6.16 Determination of Amount of Withdrawal or Distribution. In
determining the amount of any withdrawal or distribution hereunder, the
Participant's Account shall be valued as of the close of business on the
Business Day on which telephone notice is received; provided, however, that in
any case where the telephone notice is received after 4:00 p.m. Eastern Time
(daylight or standard, whichever is in effect on the date of the call), the
Account shall be valued as of the close of business on the next Business Day.
6.17 Offsets. Any transfers or payments made from a Participant's
Account to a person other than the Participant pursuant to the provisions of
this Plan shall reduce the Participant's Account and offset any amounts
otherwise due to such Participant. Such transfers or payments shall not be
considered a forfeiture for purposes of the Plan.
ARTICLE VII
Loans
7.1 Availability of Loans. Participants may borrow against all or a
portion of the Nonforfeitable balance in the Participant's Account, subject to
the limitations set forth in this ARTICLE. Participants who have incurred a
Severance from Service will not be eligible for a Plan loan. The Vice President,
Human Resources, is authorized to administer this loan program.
7.2 Minimum Amount of Loan. No loan of less than five hundred dollars
($500) will be permitted.
7.3 Maximum Amount of Loan. No loan in excess of fifty percent (50%)
of the Participant's Nonforfeitable Account balance will be permitted. In
addition, limits imposed by the Internal Revenue Code and any other requirements
of applicable statute or regulation will be applied. Under the current
requirements of the Internal Revenue Code, if the value of a Participant's
Nonforfeitable Account balance exceeds twenty thousand dollars ($20,000), the
loan cannot exceed the lesser of one-half (1/2) of the value of the
Participant's Nonforfeitable Account balance or fifty thousand dollars ($50,000)
reduced by the excess of (a) the highest outstanding balance of loans from the
Plan during the one-year period ending on the day before the date on which such
loan was made over (b) the outstanding balance of loans from the Plan on the
date on which such loan was made.
7.4 Effective Date of Loans. Loans will be effective as specified in
the Administrator's rules then in effect.
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31
7.5 Repayment Schedule. The Participant may select a repayment
schedule of one, two, three, four or five (1, 2, 3, 4 or 5) years. If the loan
is used to acquire any dwelling which, within a reasonable time is to be used
(determined at the time the loan is made) as the principal residence of the
Participant, the repayment period may be extended up to fifteen (15) years at
the election of the Participant. All repayments will be made through payroll
deductions in accordance with the loan agreement executed at the time the loan
is made, except that, in the event of the sale of all or a portion of the
business of the Employer or one of the Adopting Employers, or other unusual
circumstances, the Administrator, through uniform and equitable rules, may
establish other means of repayment. The loan agreement will permit repayment of
the entire outstanding balance in one lump-sum. The minimum repayment amount per
pay period is ten dollars ($10) for Participants paid weekly and fifty dollars
($50) for Participants paid monthly. The repayment schedule shall provide for
substantially level amortization of the loan. Loan repayments will be suspended
under this Plan as permitted under section 414(u) of the Code.
7.6 Limit on Number of Loans. No more than two (2) loans may be
outstanding at any time.
7.7 Interest Rate. The interest rate for a loan pursuant to this
ARTICLE will be equal to the prime rate published in The Wall Street Journal on
the first business day in June and December of each year. The rate published on
the first business day in June will apply to loans which are effective at any
time during the period July 1 through December 31 thereafter; the rate published
on the first business day of December will apply to loans which are effective at
any time during the period January 1 through June 30 thereafter.
7.8 Effect Upon Participant's Elective Deferral Account. Upon the
granting of a loan to a Participant by the Administrator, the allocations in the
Participant's Account to the respective investment funds will be reduced on a
pro rata basis and replaced by the loan balance which will be designated as an
asset in the Account. Such reduction shall be effected by reducing the
Participant's Account in the following sequence, with no reduction of the
succeeding Accounts until prior Accounts have been exhausted by the loan:
Matching Contribution Account; Elective Deferral Account; Rollover Contribution
Account; and Employee After-Tax Contribution Account. Upon repayment of the
principal and interest, the loan balance will be reduced, the Participant
Accounts will be increased in the reverse order in which they were exhausted by
the loan, and the loan payments will be allocated to the respective investment
funds in accordance with the investment election then in effect.
7.9 Effect of Severance From Service and Nonpayment. In the event that
a loan remains outstanding upon the Severance from Service of a Participant, the
Participant will be given the option of continuing to repay the outstanding
loan. In any case where payments on the outstanding loan are not made within
ninety (90) days of the Participant's Severance from Service Date, the amount of
any unpaid principal will be deducted from the Participant's account and
reported as a distribution. If, as a result of Layoff or Authorized Leave of
Absence, a Participant, although still in a Period of Service, is not being
compensated through the Employer's payroll system, loan payments will be
suspended until the earliest of the first pay date after the Participant returns
to active employment with the Employer, the Participant's Severance from Service
Date, or the expiration of twelve (12) months from the date of the suspension.
In the event the Participant does not return to active employment with the
Employer, the Participant will be given the option of continuing to repay the
outstanding loan. If the Participant fails to resume payments on the loan, the
outstanding loan will be reported as a taxable distribution. In no event,
however, shall the loan be deducted from the Participant's Account earlier than
the date on which the Participant (i) incurs a Severance from Service, or, (ii)
attains age fifty-nine and one-half (59-1/2).
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32
ARTICLE VIII
Contribution and Benefit Limitations
8.1 Contribution Limits.
(a) The Annual Additions that may be allocated to a Participant's
Account for any Limitation Year shall not exceed the lesser of:
(1) thirty thousand dollars ($30,000); or
(2) twenty-five percent (25%) of the Participant's Compensation for that
Limitation Year.
(b) If the Employer maintains any other Defined Contribution Plans
then the limitations in subsection (a) shall be computed with reference to the
aggregate Annual Additions for each Participant from all such Defined
Contribution Plans.
(c) If the Annual Additions for a Participant would exceed the limits
specified in this section, then the Annual Additions under this Plan for that
Participant shall be reduced to the extent necessary to prevent such limits from
being exceeded. Such reduction shall be made in accordance with section 8.4.
8.2 Overall Limits.
(a) If a Participant is participating in both a Defined Contribution
Plan and a Defined Benefit Plan of the Employer, then the sum of the Defined
Contribution Fraction and the Defined Benefit Fraction for any Limitation Year
shall not exceed 1.0.
(b) If the sum of the Defined Contribution Fraction and the Defined
Benefit Fraction would exceed 1.0, then the annual benefits under the Defined
Benefit Plan shall be reduced to the extent necessary so that the sum of such
fractions does not exceed 1.0.
8.3 Annual Adjustments to Limits. The dollar limits for Annual
Additions and the dollar limits in the Defined Benefit Fraction and Defined
Contribution Fraction shall be adjusted for cost-of-living to the extent
permitted under section 415 of the Code.
8.4 Excess Amounts.
(a) The foregoing limits shall be limits on the allocation that may be
made to a Participant's Account in any Limitation Year. If an excess Annual
Addition would otherwise result from allocation of forfeitures, reasonable
errors in determining Compensation or other comparable reasons, then the
Administrator may take any (or all) of the following steps to prevent the excess
Annual Additions from being allocated:
(1) return any contributions from the Participant, as long as such return is
nondiscriminatory;
<PAGE>
33
(2) hold the excess amounts unallocated in a suspense account and apply the
balance of the suspense account against Matching Contributions for that
Participant made in succeeding years;
(3) hold the excess amounts unallocated in a suspense account and apply the
balance of the suspense account against succeeding year Matching Contributions;
(4) reallocate the excess amounts to other Participants.
(b) Any suspense account established under this section shall not be
credited with income or loss unless otherwise directed by the Administrator. If
a suspense account under this section is to be applied in a subsequent
Limitation Year, then the amounts in the suspense account shall be applied
before any Annual Additions (other than forfeitures) are made for such
Limitation Year.
8.5 Definitions.
(a) The following terms shall have the meanings specified:
(1) Annual Addition. The sum for any Limitation Year of additions (not
including Rollover Contributions) to a Participant's Account as a result of:
(A) Employer contributions (including Matching Contributions, Qualified
Nonelective Contributions and Elective Deferrals);
(B) Employee contributions;
(C) forfeitures; and
(D) amounts described in Code sections 415(l)(1) and 419A(d)(2).
(2) Defined Benefit Fraction. A fraction, the numerator of which is
the Projected Annual Benefit of the Participant under all Defined Benefit Plans
of the Employer (determined as of the close of the Limitation Year) and the
denominator of which is the Projected Annual Benefit the Participant would have
under such plans (determined as of the close of the Limitation Year) if such
plans provided an annual benefit equal to the lesser of:
(A) the product of 1.25 multiplied by ninety thousand dollars ($90,000); or
(B) the product of 1.4 multiplied by one hundred percent (100%) of the
Participant's average Compensation for the Participant's three (3) consecutive
Years of Service that produce the highest average Compensation.
For purposes of determining the Defined Benefit Fraction of a
Participant who was employed by an Adopting Employer on December 18, 1997 or who
transferred to an Adopting Company from General Motors Corporation or one of its
affiliates after such date and before December 1, 1998, service for and
Compensation received from General Motors Corporation and its affiliates, if
any, shall be taken into account, and the Projected Annual Benefit under any
Defined Benefit Plan of the Employer shall not be reduced as a result of the
transfer of any assets or liabilities from a Defined Benefit Plan maintained by
General Motors Corporation and its affiliates.
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34
(3) Defined Benefit Plan. Any plan qualified under section 401(a) of
the Code that is not a Defined Contribution Plan.
(4) Defined Contribution Fraction. A fraction, the numerator of which
is the sum of the Annual Additions to the Participant's Accounts as of the close
of the Limitation Year, and the denominator of which is equal to the sum of the
lesser of the following amounts determined for such Limitation Year and for each
prior year of service with the Employer:
(A) the product of 1.25 multiplied by thirty thousand dollars ($30,000); or
(B) the product of 1.4 multiplied by twenty-five percent (25%) of the
Participant's Compensation.
For purposes of determining the Defined Contribution Fraction of a
Participant, services performed for, Compensation paid by and Annual Additions
made by General Motors Corporation or any of its affiliates shall not be taken
into account.
(5) Defined Contribution Plan. A plan qualified under section 401(a)
of the Code that provides an individual account for each Participant and
benefits based solely on the amount contributed to the Participant's Account,
plus any income, expenses, gains and losses, and forfeitures of other
Participants which may be allocated to such Participant's account.
(6) Limitation Year. The Plan Year, until the Employer adopts a
different Limitation Year.
(7) Projected Annual Benefit. The annual benefit to which a
Participant would be entitled, assuming:
(A) the Participant continues in employment until Normal Retirement Age under
the Plan;
(B) the Participant's Compensation for the Limitation Year remains the same
until such Normal Retirement Age; and
(C) all other relevant factors under the Plan for the Limitation Year will
remain constant.
(b) For purposes of this ARTICLE, the term "Compensation" shall mean
all amounts paid to an Employee for personal services actually rendered to the
Employer, including, but not limited to, wages, salary, commissions, bonuses,
overtime and other premium pay as specified in Reg. 1.415-2(d)(2), but excluding
deferred compensation, stock options, and other distributions that receive
special tax treatment as specified in Reg. 1.415-2(d)(3). For Plan Years
beginning after 1997, Compensation for this purpose shall include salary
reduction amounts under section 125 cafeteria plans and section 401(k), 403(b)
and 457 plans. This definition shall be interpreted in a manner consistent with
the requirements of section 415 of the Code.
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35
ARTICLE IX
Top-Heavy Rules
9.1 General. This ARTICLE shall only be applicable if the Plan becomes
a Top-Heavy Plan under section 416 of the Code. If the Plan does not become a
Top-Heavy Plan, then none of the provisions of this ARTICLE shall be operative.
The provisions of this ARTICLE shall be interpreted and applied in a manner
consistent with the requirements of section 416 of the Code and the regulations
thereunder.
9.2 Vesting.
(a) If the Plan becomes a Top-Heavy Plan, then amounts in a
Participant's Account attributable to Matching Contributions shall be vested in
accordance with this section, in lieu of ARTICLE V, to the extent this section
produces a greater degree of vesting. This section shall only apply to
Participants who have at least an Hour of Service after the Plan becomes a
Top-Heavy Plan.
(b) If applicable, amounts in a Participant's Account attributable to
Matching Contributions shall vest as follows:
Years of
Top Heavy Service Vested Percentage
Fewer than 3 0%
3 or more 100%
(c) If the Plan ceases to be a Top-Heavy Plan then subsection (b)
shall no longer be applicable; provided, however, that in no event shall the
vested percentage of any Participant be reduced by reason of the Plan ceasing to
be a Top-Heavy Plan. Subsection (b) shall nevertheless continue to apply for any
Participant who was previously covered by it and who has at least three (3)
Years of Top-Heavy Service.
9.3 Minimum Contribution.
(a) For each Plan Year that the Plan is a Top-Heavy Plan, the Adopting
Employers shall make a contribution to be allocated directly to the Account of
each Non-Key Employee.
(b) The amount of the contribution (and forfeitures) required to be
contributed and allocated for a Plan Year by this section is three percent (3%)
of the Top-Heavy Compensation for that Plan Year of each Non-Key Employee who is
both a Participant and an Employee on the last day of the Plan Year for which
the contribution is made, with adjustments as provided herein. If the
contribution allocated to the Accounts of each Key Employee for a Plan Year is
less than three percent (3%) of his/her Top-Heavy Compensation, then the
contribution required by the preceding sentence shall be reduced for that Plan
Year to the same percentage of Top-Heavy Compensation that was allocated to the
Account of the Key Employee whose Account received the greatest allocation of
contributions for that Plan Year, when computed as a percentage of Top-Heavy
Compensation.
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36
(c) The contribution required by this section shall be reduced for a
Plan Year to the extent of any contributions made and allocated under this Plan
or any other contributions from the Adopting Employers made and allocated under
this or any other Aggregated Plans. Elective Deferrals shall be treated as if
they were contributions for purposes of determining any minimum contributions
required under subsection (b).
9.4 Definitions.
(a) The following terms shall have the meanings specified herein:
(1) Aggregated Plans.
(A) The Plan, any plan that is part of a "required aggregation group" and any
plan that is part of a "permissive aggregation group" that the Adopting
Employers treat as an Aggregated Plan.
(B) The "required aggregation group" consists of each plan of the Adopting
Employers in which a Key Employee participates (in the Plan Year containing the
Determination Date or any of the four (4) preceding Plan Years) and each other
plan of the Adopting Employers which enables any plan of the Adopting Employers
in which a Key Employee participates to meet the requirements of section
401(a)(4) or section 410(b) of the Code. Also included in the required
aggregation group shall be any terminated plan that covered a Key Employee and
was maintained within the five (5) year period ending on the Determination Date.
(C) The "permissive aggregation group" consists of any plan not included in the
"required aggregation group" if the Aggregated Plan described in subparagraph
(A) above would continue to meet the requirements of section 401(a)(4) and 410
of the Code with such additional plan being taken into account.
(2) Determination Date. The last day of the preceding Plan Year, or,
in the case of the first plan year of any plan, the last day of such plan year.
The computations made on the Determination Date shall utilize information from
the immediately preceding Valuation Date.
(3) Key Employee.
(A) An Employee (or former Employee) who, at any time during the Plan Year
containing the Determination Date or any of the four (4) preceding Plan Years,
is:
(i) An officer of one of the Adopting Employers with annual Top-Heavy
Compensation for the Plan Year greater than fifty percent (50%) of the amount in
effect under section 415(c)(1)(A) of the Code for the calendar year in which
that Plan Year ends;
(ii) one of the ten (10) Employees owning (or considered as owning
under section 318 of the Code) the largest interest in one of the Adopting
Employers, who has more than one-half of one percent (.5%) interest in such
Adopting Employer, and who has annual Top-Heavy Compensation for the Plan Year
at least equal to the maximum dollar limitation under section 415(c)(1)(A) of
the Code for the calendar year in which that Plan Year ends;
<PAGE>
37
(iii) a five percent (5%) or greater shareholder in one of the
Adopting Employers; or
(iv) a one percent (1%) shareholder in one of the Adopting Employers
with annual Top-Heavy Compensation from the Adopting Employer of more than one
hundred fifty thousand dollars ($150,000).
(B) For purposes of paragraphs (3)(A)(iii) and (3)(A)(iv), the rules of section
414(b), (c) and (m) of the Code shall not apply. Beneficiaries of an Employee
shall acquire the character of such Employee and inherited benefits will retain
the character of the benefits of the Employee who performed services.
(4) Non-Key Employee. Any Employee who is not a Key Employee.
(5) Super Top-Heavy Plan. A Top-Heavy Plan in which the sum of the
present value of the cumulative accrued benefits and accounts for Key Employees
exceeds ninety percent (90%) of the comparable sum determined for all Employees.
The foregoing determination shall be made in the same manner as the
determination of a Top-Heavy Plan under this section.
(6) Top-Heavy Compensation. The term Top-Heavy Compensation shall have
the same meaning as the term Compensation has under section 8.5(b).
(7) Top-Heavy Plan. The Plan is a Top-Heavy Plan for a Plan Year if,
as of the Determination Date for that Plan Year, the sum of (i) the present
value of the cumulative accrued benefits for Key Employees under all Defined
Benefit Plans that are Aggregated Plans and (ii) the aggregate of the accounts
of Key Employees under all Defined Contribution Plans that are Aggregated Plans
exceeds sixty percent (60%) of the comparable sum determined for all Employees.
(8) Years of Top-Heavy Service. The number of Years of Service with
the Adopting Employers that might be counted under section 411(a) of the Code,
disregarding all service that may be disregarded under section 411(a)(4) of the
Code.
(b) The definitions in this section and the provisions of this ARTICLE shall be
interpreted in a manner consistent with section 416 of the Code.
9.5 Special Rules.
(a) For purposes of determining the present value of the cumulative
accrued benefit for any Participant or the amount of the Account of any
Participant, such present value or amount shall be increased by the aggregate
distributions made with respect to such Participant under the Plan during the
Plan Year that includes the Determination Date and the four (4) preceding Plan
Years (if such amounts would otherwise have been omitted).
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38
(b) (1) In the case of unrelated rollovers and transfers, (i) the plan
making the distribution or transfer is to count the distribution as a
distribution under section 416(g)(3) of the Code, and (ii) the plan accepting
the rollover or transfer is not to consider the rollover or transfer as part of
the accrued benefit if such rollover or transfer was accepted after December 31,
1983, but is to consider it as part of the accrued benefit if such rollover or
transfer was accepted before January 1, 1984. For this purpose, rollovers and
transfers are to be considered unrelated if they are both initiated by the
Employee and made from a plan maintained by one employer to a plan maintained by
another employer.
(2) In the case of related rollovers and transfers, the plan making the
distribution or transfer is not to count the distribution or transfer under
section 416(g)(3) of the Code, and the plan accepting the rollover or transfer
counts the rollover or transfer in the present value of the accrued benefits.
For this purpose, rollovers and transfers are to be considered related if they
are not unrelated under subsection (b)(1).
(c) If any individual is a Non-Key Employee with respect to any plan
for any Plan Year, but such individual was a Key Employee with respect to such
plan for any prior Plan Year, any accrued benefit for such Employee (and the
account of such Employee) shall not be taken into account.
(d) Beneficiaries of Key Employees and former Key Employees are
considered to be Key Employees and Beneficiaries of Non-Key Employees and former
Non-Key Employees are considered to be Non-Key Employees.
(e) The accrued benefit of an Employee who has not performed any
service for the Adopting Employer maintaining the Plan at any time during the
five (5) year period ending on the Determination Date is excluded from the
calculation to determine top-heaviness. However, if an Employee performs no
services, such Employee's total accrued benefit is included in the calculation
for top-heaviness.
9.6 Adjustment of Limitations.
(a) If this section is applicable, then the contribution and benefit
limitations in section 8.5 shall be reduced. Such reduction shall be made by
modifying section 8.5(a)(2)(A) of the definition of Defined Benefit Fraction to
instead be "(i) the product of 1.0 multiplied by ninety thousand dollars
($90,000), or" and by modifying section 8.5(a)(4)(A) of the definition of
Defined Contribution Fraction to instead be "(i) the product of 1.0 multiplied
by thirty thousand dollars ($30,000), or
(b) This section shall be applicable for any Plan Year in which
either:
(1) the Plan is a Super Top-Heavy Plan, or
(2) the Plan both is a Top-Heavy Plan (but not a Super Top-Heavy Plan) and
provides contributions (and forfeitures) to the Account of any Non-Key Employee
in an amount less than four percent (4%) of such Participant's Top-Heavy
Compensation, as determined in accordance with section 9.3(b).
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39
ARTICLE X
The Trust Fund
10.1 Trust. During the period in which this Plan remains in existence,
the Company or any successor thereto shall maintain in effect a Trust with a
corporation and/or individual(s) as Trustee, to hold, invest, and distribute the
Trust Fund in accordance with the terms of such Trust.
10.2 Investment of Accounts. The Trustee shall invest and reinvest the
Participant's accounts in investment options as defined in section 4.1 as
directed by the Administrator or its delegate. The Administrator shall issue
such directions in accordance with the investment options selected by the
Participants which shall remain in force until altered in accordance with
sections 4.2 and 4.3.
10.3 Expenses. Expenses of the Plan and Trust shall be paid from the
Trust.
ARTICLE XI
Administration of The Plan
11.1 General Administration. The general administration of the Plan
shall be the responsibility of the Company (or any successor thereto) which
shall be the Administrator and named Fiduciary for purposes of ERISA. The
Company shall have the authority, in its sole discretion, to construe the terms
of the Plan and to make determinations as to eligibility for benefits and as to
other issues within the "Responsibilities of the Administrator" described in
this ARTICLE. All such determinations of the Company shall be conclusive and
binding on all persons.
11.2 Responsibilities of the Administrator. Except as otherwise
provided in ERISA, the Administrator (and any other named Fiduciaries) may
allocate any duties and responsibilities under the Plan and Trust among
themselves in any mutually agreed upon manner. Such allocation shall be in a
written document signed by the Administrator (and any other named Fiduciaries)
and shall specifically set forth this allocation of duties and responsibilities,
which may include the following:
(a) Determination of all questions which may arise under the Plan with
respect to questions of fact and law and eligibility for participation and
administration of Accounts, including without limitation questions with respect
to membership, vesting, loans, withdrawals, accounting, status of Accounts,
stock ownership and voting rights, and any other issue requiring interpretation
or application of the Plan.
(b) Reference of appropriate issues to the Offices of the Executive
Vice President - Chief Financial Officer, the Senior Vice President Treasurer,
the Director of Tax Affairs, the Vice President General Counsel, and the Vice
President - Human Resources, respectively, for advice and counsel.
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40
(c) Establishment of procedures required by the Plan, such as
notification to Employees as to joining the Plan, selecting and changing
investment options, suspending deferrals, exercising voting rights in stock,
withdrawing and borrowing Account balances, designation of Beneficiaries,
election of method of distribution, and any other matters requiring a uniform
procedure.
(d) Submission of necessary amendments to supplement omissions from
the Plan or reconcile any inconsistency therein.
(e) Filing appropriate reports with the government as required by law.
(f) Appointment of a Trustee or Trustees, Recordkeepers, and
investment managers.
(g) Review at appropriate intervals of the performance of the Trustee
and such investment managers as may have been designated.
(h) Appointment of such additional Fiduciaries as deemed necessary for
the effective administration of the Plan, such appointments to be by written
instrument.
11.3 Liability for Acts of Other Fiduciaries. Each Fiduciary shall be
responsible only for the duties allocated or delegated to said Fiduciary, and
other Fiduciaries shall not be liable for any breach of fiduciary responsibility
with respect to any act or omission of any other Fiduciary unless:
(a) The Fiduciary knowingly participates in or knowingly attempts to
conceal the act or omission of such other Fiduciary and knows that such act or
omission constitutes a breach of fiduciary responsibility by the other
Fiduciary;
(b) The Fiduciary has knowledge of a breach of fiduciary
responsibility by the other Fiduciary and has not made reasonable efforts under
the circumstances to remedy the breach; or
(c) The Fiduciary's own breach of his or her specific fiduciary
responsibilities has enabled another Fiduciary to commit a breach. No Fiduciary
shall be liable for any acts or omissions which occur prior to his or her
assumption of Fiduciary status or after his or her termination from such status.
11.4 Employment by Fiduciaries. Any Fiduciary hereunder may employ,
with the written approval of the Administrator, one or more persons to render
service with regard to any responsibility which has been assigned to such
Fiduciary under the terms of the Plan including legal, tax, or investment
counsel and may delegate to one or more persons any administrative duties
(clerical or otherwise) hereunder.
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41
11.5 Recordkeeping. The Administrator shall keep or cause to be kept
any necessary data required for determining the Account status of each
Participant. In compiling such information, the Administrator may rely upon its
employment records, including representations made by the Participant in the
employment application and subsequent documents submitted by the Participant to
the Employer. The Trustee shall be entitled to rely upon such information when
furnished by the Administrator or its delegate. Each Employee shall be required
to furnish the Administrator upon request and in such form as prescribed by the
Administrator, such personal information, affidavits and authorizations to
obtain information as the Administrator may deem appropriate for the proper
administration of the Plan, including but not limited to proof of the Employee's
date of birth and the date of birth of any person designated by a Participant as
a Beneficiary.
11.6 Claims Review Procedure.
(a) The Administrator shall make all determinations as to the right of
any person to Accounts under the Plan. Any such determination by the
Administrator shall be made pursuant to the following procedure:
(1) Step 1. Claims with respect to an Account should be filed by a claimant as
soon as practicable after the claimant knows or should know that a dispute has
arisen with respect to an Account, but at least thirty (30) days prior to the
claimant's actual retirement date or, if applicable, within sixty (60) days
after the death, Disability or Severance from Service of the Participant whose
Account is at issue, by mailing a copy of the claim to the Benefits and Services
Department
Raytheon Company, 141 Spring Street, Lexington, Massachusetts 02173.
(2) Step 2. In the event that a claim with respect to an Account is wholly or
partially denied by the Administrator, the Administrator shall, within ninety
(90) days following receipt of the claim, so advise the claimant in writing
setting forth: the specific reason or reasons for the denial; specific reference
to pertinent Plan provisions on which the denial is based; a description of any
additional material or information necessary for the claimant to perfect the
claim; an explanation as to why such material or information is necessary; and
an explanation of the Plan's claim review procedure.
(3) Step 3. Within sixty (60) days following receipt of the denial of a claim
with respect to an Account, a claimant desiring to have the denial appealed
shall file a request for review with the Administrator by mailing a copy thereof
to the address shown in subsection (a)(1).
(4) Step 4. Within thirty (30) days following receipt of a request for review,
the Administrator shall provide the claimant a further opportunity to present
his or her position. At the Administrator's discretion, such presentation may be
through an oral or written presentation. Prior to such presentation, the
claimant shall be permitted the opportunity to review pertinent documents and to
submit issues and comments in writing. Within a reasonable time following
presentation the claimant's position, which usually should not exceed thirty
(30) days, the Administrator shall inform the claimant in writing of the
decision on review setting forth the reasons for such decision and citing
pertinent provisions in the Plan.
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42
(b) The Administrator is the Fiduciary to whom the Plan grants full
discretion, with the advice of counsel, to interpret the Plan; to determine
whether a claimant is eligible for benefits; to decide the amount, form and
timing of benefits; and to resolve any other matter under the Plan which is
raised by a claimant or identified by the Administrator. All questions arising
from or in connection with the provisions of the Plan and its administration,
not herein provided to be determined the Board of Directors, shall be determined
by the Administrator, and any determination so made shall be conclusive and
binding upon all persons affected thereby.
11.7 Indemnification of Directors and Employees. The Adopting
Employers shall indemnify by insurance or otherwise any Fiduciary who is a
director, officer or Employee of the Employer, his or her heirs and legal
representatives, against all liability and reasonable expense, including counsel
fees, amounts paid in settlement and amounts of judgments, fines or penalties,
incurred or imposed upon him in connection with any claim, action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of acts or omissions in his or her capacity as a Fiduciary hereunder, provided
that such act or omission is not the result of gross negligence or willful
misconduct. The Adopting Employers may indemnify other Fiduciaries, their heirs
and legal representatives, under the circumstances, and subject to the
limitations set forth in the preceding sentence, if such indemnification is
determined by the Board of Directors to be in the best interests of the Adopting
Employers.
11.8 Immunity from Liability. Except to the extent that section 410(a)
of ERISA prohibits the granting of immunity to Fiduciaries from liability for
any responsibility, obligation, or duty imposed under Title I, Subtitle B, Part
4, of said Act, an officer, Employee, member of the Board of Directors of the
Employer or other person assigned responsibility under this Plan shall be immune
from any liability for any action or failure to act except such action or
failure to act which results from said officer's, Employee's, Participant's or
other person's own gross negligence or willful misconduct.
<PAGE>
43
ARTICLE XII
Amendment Or Termination Of Plan
12.1 Right to Amend or Terminate Plan. Each of the Adopting Employers
reserves the right at any time or times, by action of its board of directors, to
modify, amend or terminate the Plan in whole or in part as to its Employees, in
which event a certified copy of the resolution of the board of directors,
authorizing such modification, amendment or termination shall be delivered to
the Trustee and to the other Adopting Employers whose Employees are covered by
this Plan, provided, however, that no amendment to the Plan shall be made which
shall:
(a) reduce any vested right or interest to which any Participant or
Beneficiary is then entitled under this Plan or otherwise reduce the vested
rights of a Participant in violation of section 411(d)(6) of the Code;
(b) vest in the Adopting Employers any interest or control over any
assets of the Trust;
(c) cause any assets of the Trust to be used for, or diverted to,
purposes other than for the exclusive benefit of Participants and their
Beneficiaries; or
(d) change any of the rights, duties or powers of the Trustee without
its written consent.
(e) Notwithstanding the foregoing provisions of this section or any
other provisions of this Plan, any modification or amendment of the Plan may be
made retroactively if necessary or appropriate to conform the Plan with, or to
satisfy the conditions of, ERISA, the Code, or any other law, governmental
regulation or ruling. Any termination, modification or amendment of the Plan
shall be subject to approval by the Board of Directors. In the alternative,
subject to the conditions prescribed in subsections 12.1(a) through (e), the
Plan may be amended by an officer of the Company authorized by the Board of
Directors to amend the Plan, provided, however, that any such amendment does
not, in the view of such officer, materially increase costs of the Plan to the
Company or any Adopting Employer.
12.2 Amendment to Vesting Schedule. Any amendment that modifies the
vesting provisions of ARTICLE IV shall either:
(a) provide for a rate of vesting that is at least as rapid for any
Participant as the vesting schedule previously in effect; or
(b) provide that any adversely affected Participant with a Period of
Service of at least three (3) years may elect, in writing, to remain under the
vesting schedule in effect prior to the amendment. Such election must be made
within sixty (60) days after the later of the:
(1) adoption of the amendment;
(2) effective date of the amendment; or
(3) issuance by the Company of written notice of the amendment.
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44
12.3 Maintenance of Plan. The Company has established the Plan with
the bona fide intention and expectation that it will be able to make its
contributions indefinitely, but the Company is not and shall not be under any
obligation or liability whatsoever to continue its contributions or to maintain
the Plan for any given length of time.
12.4 Termination of Plan and Trust. The Plan and Trust hereby created
shall terminate upon the occurrence of any of the following events:
(a) Delivery to the Trustee of a notice of termination executed by the
Company specifying the date as of which the Plan and Trust shall terminate; or
(b) Adjudication of the Company as bankrupt or general assignment by
the Company to or for the benefit of creditors or dissolution of the Company.
12.5 Distribution on Termination.
(a) (1) If the Plan is terminated, or contributions permanently
discontinued, an Adopting Employer, at its discretion, may (at that time or at
any later time) direct the Trustee to distribute the amounts in a Participant's
Account in accordance with the distribution provisions of the Plan. Such
distribution shall, notwithstanding any prior provisions of the Plan, be made in
a single lump-sum without the Participant's consent as to the timing of such
distribution. If, however, an Adopting Employer (or an Affiliate) maintains
another defined contribution plan (other than an employee stock ownership plan),
then the preceding sentence shall not apply and the Adopting Employer, at its
discretion, may direct such distributions to be made as a direct transfer to
such other plan without the Participant's consent, if the Participant does not
consent to an immediate distribution.
(2) If an Adopting Employer does not direct distribution under
paragraph (1), each Participant's Account shall be maintained until distributed
in accordance with the provisions of the Plan (determined without regard to this
section) as though the Plan had not been terminated or contributions
discontinued.
(b) If the Administrator determines that it is administratively
impracticable to make distributions under this section in cash or that it would
be in the Participant's best interest to make some or all of the distributions
with in-kind property, it shall offer all Participants and Beneficiaries
entitled to a distribution under this section a reasonable opportunity to elect
to receive a distribution of the in-kind property being distributed by the
Trust. Those Participants and Beneficiaries so electing shall receive a
proportionate share of such in-kind property in the form (outright, in trust or
in partnership) that the Administrator determines will provide the most feasible
method of distribution.
(c) (1) Amounts attributable to elective contributions shall only be
distributable by reason of this section if one of the following is applicable:
(A) the Plan is terminated without the establishment of a successor plan;
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45
(B) an Adopting Employer has a sale or other disposition to an unrelated
corporation of substantially all of the assets used by the Adopting Employer in
a trade or business of the Adopting Employer with respect to an Employee who
continues employment with the corporation acquiring such assets; or
(C) an Adopting Employer has a sale or other disposition to an unrelated entity
of the Adopting Employer's interest in a subsidiary with respect to an Employee
who continues employment with such subsidiary.
(2) For purposes of this section, the term "elective contributions" means
employer contributions made to the Plan that were subject to a cash or deferred
election under a cash or deferred arrangement.
(3) Elective contributions are distributable under subsections
(c)(1)(B) and (C) above only if the Adopting Employers continue to maintain the
Plan after the disposition.
ARTICLE XIII
Additional Provisions
13.1 Effect of Merger, Consolidation or Transfer. In the event of any
merger or consolidation with or transfer of assets or liabilities to any other
plan or to this Plan, each Participant of the Plan shall be entitled to a
benefit immediately after the merger, consolidation or transfer, which is equal
to or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation or transfer (if the Plan had been
terminated).
13.2 Necessity of Initial Qualification. This Plan is established with
the intent that it shall qualify under sections 401(a) and 401(k) of the Code as
those sections exist at the time the Plan is established. If the Internal
Revenue Service determines that the Plan initially fails to meet those
requirements, then within thirty (30) days after the date of such determination,
all of the assets of the Trust Fund held for the benefit of Participants and
their Beneficiaries shall be distributed equitably among the contributors to the
Plan in proportion to their contributions, and the Plan shall be considered to
be rescinded and of no force or effect, unless such inadequacy is removed by a
retroactive amendment pursuant to the Code. Any nonvested Matching Contributions
and earnings attributable thereto shall be returned to the Adopting Employers.
13.3 No Assignment.
(a) Except as provided herein, the right of any Participant or
Beneficiary to any benefit or to any payment hereunder shall not be subject to
alienation, assignment, garnishment, attachment, execution or levy of any kind.
(b) Subsection (a) shall not apply to any payment or transfer
permitted by the Internal Revenue Service pursuant to regulations issued under
section 401(a)(13) of the Code.
(c) Subsection (a) shall not apply to any payment or transfer pursuant
to a Qualified Domestic Relations Order.
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46
(d) Subsection (a) shall not apply to any payment or transfer to the
Trust in accordance with section 401(a)(13)(C) of the Code to satisfy the
Participant's liabilities to the Plan or Trust in any one or more of the
following circumstances:
(1) the Participant is convicted of a crime involving the Plan;
(2) a civil judgment (or consent order or decree) in an action is brought
against the Participant in connection with an ERISA fiduciary violation; or
(3) the Participant enters into a settlement agreement with the Department of
Labor or the Pension Benefit Guaranty Corporation over an ERISA fiduciary
violation.
13.4 Limitation of Rights of Employees. This Plan is strictly a
voluntary undertaking on the part of the Adopting Employers and shall not be
deemed to constitute a contract between any of the Adopting Employers and any
Employee, or to be a consideration for, or an inducement to, or a condition of
the employment of any Employee. Nothing contained in the Plan shall be deemed to
give any Employee the right to be retained in the service of any of the Adopting
Employers or shall interfere with the right of any of the Adopting Employers to
discharge or otherwise terminate the employment of any Employee of an Adopting
Employer at any time. No Employee shall be entitled to any right or claim
hereunder except to the extent such right is specifically fixed under the terms
of the Plan.
13.5 Construction. The provisions of this Plan shall be interpreted
and construed in accordance with the requirements of the Code and ERISA. Any
amendment or restatement of the Plan or Trust that would otherwise violate the
requirements of section 411(d)(6) of the Code or otherwise cause the Plan or
Trust to cease to be qualified under section 401(a) of the Code shall be deemed
to be invalid. Capitalized terms shall have meanings as defined herein. Singular
nouns shall be read as plural, masculine pronouns shall be read as feminine and
vice versa, as appropriate. References to "section" or "ARTICLE" shall be read
as references to appropriate provisions of this Plan, unless otherwise
indicated.
13.6 Company Determinations. Any determinations, actions or decisions
of the Company (including but not limited to, Plan amendments and Plan
termination) shall be made by its Board of Directors in accordance with its
established procedures or by such other individuals, groups or organizations
that have been properly delegated by the Board of Directors to make such
determination or decision.
13.7 Governing Law. This Plan shall be governed by, construed and
administered in accordance with ERISA and any other applicable federal law;
provided, however, that to the extent not preempted by federal law, this Plan
shall be governed by, construed and administered under the laws of the
Commonwealth of Massachusetts, other than its laws respecting choice of law.
<PAGE>
47
ARTICLE XIV
Definitions
The following terms have the meaning specified below unless the context
indicates otherwise:
14.1 Account. The entire interest of a Participant in the Trust Fund.
A Participant's Account shall consist of an Elective Deferral Account, an
Employee After-Tax Contribution Account, a Matching Contribution Account and,
where applicable, a Rollover Contribution Account and a Qualified Nonelective
Contribution Account.
14.2 Administrator. The person, persons, corporation, committee, group
or organization designated to be the Administrator of the Plan and to perform
the duties of the Administrator. Until and unless otherwise designated, the
Administrator shall be the Company.
14.3 Adopting Employers. Any corporation that elects through an
authorized officer to participate in the Plan on account of its Employees,
provided that participation in the Plan by such corporation is approved by the
Board of Directors, or an officer to whom authority to approve participation by
a corporation is delegated by the Board of Directors, but shall not include any
division, operation or similar cohesive group of the adopting corporation
excluded by the Board of Directors. The Adopting Employers shall be listed in
Exhibit A attached to this Plan.
14.4 Affiliate. A trade or business that, together with an Adopting
Employer is a member of (i) a controlled group of corporations within the
meaning of section 414(b) of the Code; (ii) a group of trades or businesses
(whether or not incorporated) under common control as defined in section 414(c)
of the Code, or (iii) an affiliated service group as defined in section 414(m)
of the Code, or which is an entity otherwise required to be aggregated with the
Adopting Employer pursuant to section 414(o) of the Code. For purposes of
ARTICLE VIII, the determination of controlled groups of corporations and trades
or businesses under common control shall be made after taking into account the
modification required under section 415(h) of the Code. All such entities,
whether or not incorporated, shall be treated as a single employer to the extent
required by the Code.
14.5 Authorized Leave of Absence. An absence approved by the Adopting
Employers on a uniform and nondiscriminatory basis not exceeding one (1) year
for any of the following reasons: illness of an Employee or a relative, the
death of a relative, education of the Employee, or personal or family business
of an extraordinary nature, provided in each case that the Employee returns to
the service of the Adopting Employers within the time period specified by the
Adopting Employers.
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48
14.6 Beneficiary. The person or persons (including a trust or trusts)
who are entitled to receive benefits from a deceased Participant's Account after
such Participant's death (whether or not such person or persons are expressly so
designated by the Participant). If a married Participant designates a
Beneficiary other than his or her spouse, said designation shall not take effect
unless the spouse consents in writing to such designation and said spousal
consent acknowledges the effect of said designation and is witnessed by a
representative of the Plan or a notary public. Said spousal consent shall be
effective only with respect to the spouse granting such consent, and shall not
be required if the Participant can establish that there is no spouse, that the
spouse cannot be located, or that other conditions exist as may be prescribed by
regulations issued by the Secretary of the Treasury. If there is no Beneficiary
designated by the Participant or surviving at the death of the Participant,
payment of his or her Account shall be made in accordance with section 6.7.
Subject to the foregoing, a Participant may designate a new Beneficiary at any
time by filing with the Administrator a written request for such change on a
form prescribed by the Administrator. Such change shall become effective only
upon receipt of the form by the Administrator, but upon such receipt of the
change shall relate back to and take effect as of the date the Participant
signed such request, whether or not the Participant is living at the time of
such receipt, provided, however, that neither the Trustee nor the Administrator
shall be liable by reason of any payment of the Participant's Account made
before receipt of such form. If a Beneficiary entitled to payment was the spouse
or former spouse of the deceased Participant and payment will otherwise be made
in an Eligible Rollover Distribution, then such spouse or former spouse may
elect that all, or any portion of, such payment shall instead be transferred as
a Direct Rollover. Such Direct Rollover shall be governed by the requirements of
section 6.12.
14.7 Board of Directors. The Board of Directors of Raytheon Company.
14.8 Business Day. Days on which the Recordkeeper is able to make
transfers.
14.9 Code. The Internal Revenue Code of 1986, as amended.
14.10 Common Stock. Raytheon Company Class B common stock.
14.11 Company. Raytheon Company.
14.12 Compensation.
(a) The aggregate amount paid by the Employer to a Participant as
regular base salary, including amounts authorized by the Participant to be
deferred from his Compensation and contributed by the Employer under section
3.3, as well as amounts paid as commissions, military pay differential, and
under the Hughes Annual Incentive Plan, the Hughes Salary Adjustment Plan, the
Hughes Supplemental Compensation Plan, awards under the Hughes Subsidiary
Incentive Plan not in excess of the target award (or any successor plans of the
foregoing), but without inclusion of any overtime compensation, shift
differentials, foreign service premiums (including mobility allowances), per
diem, royalties, payments in lieu of vacation, benefits from the Hughes
Transition Pay Plan, the Hughes Supplemental Employee Retirement Plan, the
Hughes Long-Term Performance Plan, and amounts deferred by a Participant to the
flexible spending account in an Employer cafeteria plan under section 125 of the
Code, or other payments of like nature, subject to the following:
<PAGE>
49
(b) The Compensation of each Participant for any year shall be deemed
to not exceed one hundred fifty thousand dollars ($150,000); provided, however,
that this limit shall be adjusted in the same manner and at the same time as
under section 415(d) of the Code, in accordance with regulations under section
401(a)(17) of the Code. Compensation for Highly-Compensated Employees shall be
determined in accordance with the provisions of section 14.28.
(c) Unless otherwise indicated herein, Compensation shall be
determined only on the basis of amounts paid during the Plan Year, including any
Plan Year with a duration of fewer than twelve (12) months.
(d) The Compensation of a person who becomes a Participant during the
Plan Year shall only include amounts paid after the date on which such person
was admitted as a Participant.
14.13 Current Market Value. The closing price of the Common Stock on
the New York Stock Exchange on the Business Day immediately preceding the
Business Day on which the Common Stock is allocated to the Participants'
Accounts in accordance with the terms of the Plan.
14.14 Disability. Any medically determinable physical disorder that
renders a Participant incapable of engaging in any occupation for compensation
or profit. The determination of Disability shall be made by the Administrator
with the aid of competent medical advice. It shall be based on such evidence as
the Administrator deems necessary to establish Disability or the continuation
thereof.
14.15 Effective Date. December 18, 1997.
14.16 Elective Deferral. A voluntary reduction of a Participant's
Compensation in accordance with section 3.3 hereof that qualifies for treatment
under section 402(e)(3) of the Code. A Participant's election to make Elective
Deferrals may be made only with respect to an amount that the Participant could
otherwise elect to receive in cash and that is not currently available to the
Participant.
14.17 Elective Deferral Account. That portion of a Participant's
Account which is attributable to Elective Deferrals, adjustments for withdrawals
and distributions, and the earnings and losses attributable thereto.
14.18 Eligible Employee. A person who is a salaried Employee of an
Adopting Employer who:
(a) is a United States citizen or resident;
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(b) is not employed in a position or classification within a
bargaining unit which is covered by a collective bargaining agreement with
respect to which retirement benefits were the subject of good faith bargaining
(unless such agreement provides for coverage hereunder of employees of such
unit);
(c) is not assigned on the books and records of the Employer to any
division, operation or similar cohesive group of an Adopting Employer that is
excluded from participation in the Plan by the Board of Directors;
(d) in the case of an Employee of the Company, is assigned on the
books and records of the Company to the HE Holdings payroll (all other Employees
of the Company are not eligible to participate in this Plan); and
(e) is not a Leased Employee or any other person who performs services
for an Adopting Employer other than as an Employee.
14.19 Employee. Except to the extent otherwise provided herein, any
person employed by an Employer who is expressly so designated as an Employee on
the books and records of the Employer and who is treated as such by the Employer
for federal employment tax purposes. Any person who, after the close of a Plan
Year, is retroactively treated by the Employer or any other party as an Employee
for such prior Plan Year shall not, for purposes of the Plan, be considered an
Employee for such prior Plan Year unless expressly so treated as such by the
Employer.
14.20 Employee After-Tax Contributions. Voluntary contributions made
by Participants on an after-tax basis in accordance with section 3.4 of the
Plan.
14.21 Employee After-Tax Contribution Account. That portion of a
Participant's Account which is attributable to Employee After-Tax Contributions,
adjustments for withdrawals and distributions, and the earnings and losses
attributable thereto.
14.22 Employer. An Adopting Employer and any Affiliate thereof
(whether or not such Affiliate has elected to participate in the Plan).
14.23 Employment Commencement Date. The date on which an individual
first performs an Hour of Service with the Employer.
14.24 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
14.25 Fiduciary. Any person who exercises any discretionary authority
or discretionary control over the management of the Plan, or exercises any
authority or control respecting management or disposition of Plan assets; who
renders investment advice for a fee or other compensation, direct or indirect,
as to assets held under the Plan, or has any authority or discretionary
responsibility in the administration of the Plan. This definition shall be
interpreted in accordance with section 3(21) of ERISA.
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51
14.26 Highly Compensated Employee
(a) Any Employee who:
(1) is a five percent (5%) owner at any time during the Plan Year or
the preceding Plan Year; or
(2) for the preceding Plan Year:
(A) received Compensation in excess of the amount specified in section
414(q)(1)(B)(i) of the Code; and
(B) if the Adopting Employers so elect, in accordance with section
414(q)(1)(B)(ii) of the Code, was a member of the Top-Paid Group for such
preceding Plan Year.
(b) A former Employee will be treated as a Highly Compensated Employee if the
former Employee was a Highly Compensated Employee at the time of his or her
separation from service or the former Employee was a Highly Compensated Employee
at any time after attaining age fifty-five (55).
(c) The term "Top-Paid Group" for any year includes Employees in the group of
Employees specified in section 414(q)(5) of the Code, which consists of the top
twenty percent (20%) of Employees when ranked on the basis of Compensation paid
during such year.
(d) In determining the number of Employees in the Top-Paid Group taken into
account under subsection (c) of this section, nonresident aliens with no earned
income from the Adopting Employers that constitutes income from sources within
the United States shall not be treated as Employees and (unless the Adopting
Employers elect otherwise) the following Employees shall be excluded:
(1) Employees with fewer than six (6) months of service;
(2) Employees who normally work fewer than seventeen and one-half
(171/2) hours per week;
(3) Employees who normally work during not more than six (6) months
during the year;
(4) Employees who have not attained age twenty-one (21); and
(5) (except to the extent permitted by regulation) Employees who are
included in a unit of Employees covered by a collective bargaining agreement
with one of the Adopting Employers.
(e) The dollar amounts incorporated under subsection (a)(2)(A) shall be adjusted
as provided in section 414(q)(1) of the Code.
(f) For purposes of this section, the term "Compensation" means compensation as
defined under section 414(q)(4) of the Code.
<PAGE>
52
(g) This section shall be interpreted in a manner consistent with section 414(q)
of the Code and the regulations thereunder and shall be interpreted to permit
any elections permitted by such regulations to be made.
14.27 Hour of Service.
(a) Any hour for which any person is directly or indirectly paid (or
entitled to payment) by the Employer for the performance of duties as an
Employee, as determined from the appropriate records of the Employer.
(b) In computing Hours of Service, a person shall also be credited with Hours of
Service based on the person's previous customary service with the Employer (not
exceeding either eight (8) hours per day or forty (40) hours per week), for the
following periods:
(1) periods (limited to a maximum of five hundred one (501) hours for
any single, continuous period) for which the person is directly or indirectly
paid for reasons other than the performance of duties, such as vacation,
holiday, sickness, disability, layoff, jury duty or military duty;
(2) periods for which any federal law requires that credit for service
be given; and
(3) periods for which back pay (irrespective of mitigation of damages)
is either awarded or agreed to by the Employer.
(c) Hours of Service shall also include each hour for which an Employee is
entitled to credit under subsection (a) as a result of employment with:
(1) a predecessor company substantially all the assets of which have
been acquired by the Company, provided that where only a portion of the
operations of a company has been acquired, only service with said acquired
portion prior to the acquisition will be included and that the Employee was
employed by said predecessor company at the time of acquisition; or
(2) a division, operation or similar cohesive group of the Employer
excluded from participation in the Plan.
(d) The provisions of subsection (b) shall be further limited to prevent
duplication by only permitting a person to receive credit for one (1) Hour of
Service for any given hour.
(e) Hours of Service shall be computed and credited in accordance with the
Department of Labor regulations under section 2530.200b.
14.28 Layoff. An involuntary interruption of service due to reduction
of work force with or without the possibility of recall to employment when
conditions warrant.
<PAGE>
53
14.29 Leased Employee. Any person (other than an Employee) who,
pursuant to an agreement between the Employer and any other person, has
performed services for the Employer (or any related person as provided in
section 414(n)(6) of the Code) on a substantially full-time basis for a period
of at least one (1) year and such services are performed under primary direction
or control of the Employer. Leased Employees are not eligible to participate in
the Plan.
14.30 Matching Contribution. Contribution made to the Trust in
accordance with section 3.1 hereof.
14.31 Matching Contribution Account. That portion of Participant's
Account which is attributable to Matching Contributions by the Adopting
Employers, adjustments for withdrawals and distributions, and the earnings and
losses attributable thereto.
14.32 Net Annual Profits. The current earnings of the Adopting
Employers for the Plan Year determined in accordance with generally accepted
accounting principles before federal and local income taxes and before
contributions to this Plan or any other qualified plan.
14.33 Net Profits. The accumulated earnings of the Adopting Employers
at the end of the Plan Year determined in accordance with generally accepted
accounting principles. For the purposes hereof "accumulated earnings at the end
of the Plan Year" shall include Net Annual Profits for such Plan Year calculated
before any deduction is taken for depreciation, if any.
14.34 Nonforfeitable. An unconditional right to an Account balance or
portion thereof determined as of the applicable date of determination under this
Plan.
14.35 Non-Highly Compensated Work Force. The aggregate number of
individuals (other than Highly Compensated Employees) who are:
(a) Employees of the Employer (other than Leased Employees) who have performed
services for the Employer on a substantially full-time basis for a period of at
least one (1) year; and
(b) Leased Employees.
14.36 Normal Retirement Age. The Participant's sixty-fifth (65th)
birthday.
14.37 Participant. An individual who is enrolled in the Plan pursuant
to ARTICLE II and has not received a distribution of all of the funds credited
to his or her Account (or had such funds fully forfeited). In the case of an
Eligible Employee who makes a Rollover Contribution to the Plan under section
3.7(a)(6) prior to enrollment under ARTICLE II, such Eligible Employee shall,
until he or she enrolls under ARTICLE II, be considered a Participant for the
limited purposes of maintaining and receiving his or her Rollover Contribution
Account under the terms of the Plan.
14.38 Pay Period. A scheduled period for payment of wages or salaries.
<PAGE>
54
14.39 Period of Participation. That portion of a Period of Service
during which the Eligible Employee was a Participant, and had an Elective
Deferral Account in the Plan. For the purpose of determining a Period of
Participation, former employees of Hughes Electronics Corporation and its
subsidiaries who were participants in the Hughes Salaried Employees' Thrift and
Savings Plan immediately before the Effective Date or the date transferred to an
Adopting Employer from General Motors Corporation or one of its affiliates
(other than a joint venture that has adopted the Plan) after the Effective Date
and before December 1, 1998, and who become Participants as of the Effective
Date or the date of transfer, as applicable, shall be credited with their
participation in such plan.
14.40 Period of Service. The period of time beginning on the
Employee's Employment Commencement Date or Reemployment Commencement Date,
whichever is applicable, and ending on the Employee's Severance from Service
Date. For the purpose of determining a Period of Service, former employees of
Hughes Electronics Corporation and its subsidiaries who were participants in the
Hughes Salaried Employees' Thrift and Savings Plan immediately before the
Effective Date or the date transferred to an Adopting Employer from General
Motors Corporation or one of its affiliates (other than a joint venture that has
adopted this Plan) after the Effective Date and before December 1, 1998, and who
become Participants as of the Effective Date or the date of transfer, as
applicable, shall be credited with their years of service credited under such
plan.
14.41 Period of Severance. The period of time beginning on the
Employee's Severance from Service Date and ending on the Employee's Reemployment
Commencement Date.
14.42 Plan. The Raytheon Salaried Savings and Investment Plan (10011)
as amended from time to time.
14.43 Plan Year. The first Plan Year shall begin on the Effective Date
and end December 31, 1997. Thereafter, the Plan Year shall be the annual twelve-
(12) month period beginning on January 1 of each year and ending on December 31
of each year.
14.44 Qualified Military Service. Any period of duty on a voluntary or
involuntary basis in the United States Armed Forces, the Army National Guard and
the Air National Guard when engaged in active duty for training, inactive duty
for training or full-time National Guard duty, the commissioned corps of the
Public Health Service and any other category of persons designated by the
President of the United States in time of war or emergency. Such periods of duty
shall include active duty, active duty for training, initial active duty for
training, inactive duty training, full-time National Guard duty and absence from
employment for an examination to determine fitness for such duty.
14.45 Qualified Nonelective Contributions. Any contribution by the
Adopting Employers to the Trust pursuant to section 3.2. Qualified Nonelective
Contributions are one hundred percent (100%) vested when made and are
distributable as provided herein, but in no event before the earlier of:
(a) the Participant's Severance from Service, death or Disability;
<PAGE>
55
(b) the Participant's attainment of age fifty-nine and one-half (591/2);
(c) the termination of the Plan without establishment or maintenance of another
defined contribution plan (other than an employee stock ownership plan);
(d) the disposition of substantially all of the assets used by the Adopting
Employers in a trade or business of the Adopting Employers but only with respect
to an Employee who continues employment with the entity acquiring such assets;
or
(e) the disposition of the Adopting Employers' interest in a subsidiary, but
only with respect to an Employee who continues employment with such subsidiary.
14.46 Qualified Nonelective Contribution Account. That portion of a
Participant's Account which is attributable to Qualified Nonelective
Contributions received pursuant to section 3.2, adjusted for withdrawals and
distributions, and the earnings and losses attributable thereto.
14.47 Recordkeeper. The organization designated by the Administrator
to be the recordkeeper for the Plan. Until and unless otherwise designated, the
Recordkeeper shall be Fidelity Investments.
14.48 Reemployment Commencement Date. The first date on which the
Employee performs an Hour of Service following a Period of Severance which is
excluded under section 5.3 in determining whether a Participant has a
Nonforfeitable right to his or her Matching Contribution Account.
14.49 Retirement. A Severance from Service when the Participant has
either attained age 55 and completed a Period of Service of at least ten (10)
years or has attained Normal Retirement Age.
14.50 Rollover Contributions. A transfer that qualifies under either
section 402(c) or 403(a)(4) of the Code.
14.51 Rollover Contribution Account. That portion of a Participant's
Account which is attributable to Rollover Contributions received pursuant to
section 3.7, adjustments for withdrawals and distributions, and the earnings and
losses attributable thereto.
14.52 Severance from Service. The termination of employment by reason
of quit, Retirement, discharge, death or failure to return from Layoff,
Authorized Leave of Absence, Qualified Military Service or Disability.
14.53 Severance from Service Date. The earliest of:
(a) the date on which an Employee resigns, retires, is discharged, or dies; or
(b) except as provided in paragraphs (c), (d), (e) and (f) hereof, the first
anniversary of the first date of a period during which an Employee is absent for
any reason other than resignation, retirement, discharge or death, provided
that, on an equitable and uniform basis, the Administrator may determine that,
in the case of a Layoff as the result of a permanent plant closing, the
Administrator may designate the date of Layoff or other appropriate date prior
to the first anniversary of first date of absence as the Severance from Service
Date; or
(c) in the case of a Qualified Military Service leave of absence from which the
Employee does not return prior to expiration of recall rights, Severance from
Service Date means the first day of absence because of the leave; or
<PAGE>
56
(d) in the case of an absence due to Disability, Severance from Service Date
means the earlier of the first anniversary of the first day of absence because
of the Disability or the date of termination of the Disability; or
(e) in the case of an Employee who is discharged or resigns (i) by reason of the
pregnancy of the Employee, (ii) by reason of the birth of a child to the
Employee, (iii) by reason of the placement of a child with the Employee in
connection with the adoption of such child by the Employee or (iv) for purposes
of caring for such child for a period beginning immediately following such birth
or placement, "Severance from Service Date, for the sole purpose of determining
the length of a Perio Service, shall mean the first anniversary of the
resignation or discharge; or
(f) in the case of an Employee who is absent from service beyond the first
anniversary of the first day of absence (i) by reason of the pregnancy of the
Employee, (ii) by reason of the birth of a child to the Employee, (iii) by
reason of the placement of a child with the Employee in connection with the
adoption of such child by the Employee or (iv) for purposes of caring for such
child for a period beginning immediately following such birth or placement, the
Severance from Service Date shall be the second anniversary of the first day of
such absence. The period between the first and second anniversaries of the first
day of absence is neither a Period of Service nor a Period of Severance.
14.54 Surviving Spouse. A lawful spouse surviving the Participant as
of the date of the Participant's death.
14.55 Trust. The Raytheon Company Master Trust for Defined
Contribution Plans and any successor agreement made and entered into for the
establishment of a trust fund of all contributions which may be made to the
Trustee under the Plan.
14.56 Trustee. The Trustee and any successor trustees under the Trust.
14.57 Trust Fund. The cash, securities, and other property held by the
Trustee for the purposes of the Plan.
14.58 Valuation Date. The last day of each Plan Year. The
Administrator may, in is sole discretion, establish additional Valuation Dates,
up to and including daily valuations.
<PAGE>
57
Exhibit A
ADOPTING EMPLOYERS PARTICIPATING IN RAYTHEON
SALARIED SAVINGS AND INVESTMENT PLAN (10011)
As of December 18, 1997
(Unless Indicated Otherwise)
HE Holdings, Inc.
HE Microwave LLC
Hughes Aircraft Systems International
Hughes Defense Communications (formerly Magnavox Company)
Hughes International Corporation
Hughes Nadge Corporation
Hughes Systems Management International
Raytheon Company d/b/a Raytheon Systems Company **
Raytheon Data Systems
Raytheon Electronic Technologies, Inc.
Raytheon Information Systems Company
Raytheon Missile Systems Company
Raytheon Optical Systems, Inc.
Raytheon Training, Inc. (excludes Employees covered by the Service Contract Act)
Raytheon Technical Services Company (limited to selected groups of Employees)
Santa Barbara Research Center
** But only with respect to Employees who either (1) were covered as
of December 17, 1997, by one or more defined contribution plans sponsored by
Hughes Aircraft Company or an affiliate and have been Employees since December
18, 1997; or (2) have been hired by Raytheon Company on or after December 18,
1997, into a position in a business operated by Hughes Aircraft Company or an
affiliate prior to that date.
<PAGE>
58
Exhibit B
Special Withdrawal and Distribution Provisions
This Exhibit B describes special withdrawal and distribution
provisions that apply with respect to certain assets transferred directly from
other retirement plans to the Plan in accordance with section 3.7(b) of the
Plan. Except as otherwise provided herein, the special withdrawal and
distribution provisions apply only with respect to the assets, together with
earnings thereon, transferred from the other plans (hereinafter referred to as
the "Transferred Account Balances").
As of December 18, 1997, this Exhibit B includes special withdrawal
and distribution provisions applicable to the Transferred Account Balances from
the following retirement plans:
A. Hughes Section 401(k) Savings Plan
B. Hughes STX Corporation 401(k) Retirement Plan
C. The 401(k) Plan for Employees of MESC Electronic Systems, Inc.
D. The 401(k) Plan for Bargaining Unit Employees of MESC Electronic
Systems, Inc.
A. This paragraph A describes special withdrawal and distribution provisions
applicable to Participants with Transferred Account Balances from the Hughes
Section 401(k) Savings Plan:
(1) Directed Transfer to Account Plan: Notwithstanding section 6.7(d) of the
Plan, a Participant who meets all of the requirements listed below may elect in
writing on a form provided by the Administrator for this purpose to have his
Transferred Account Balance transferred to the Hughes Personal Retirement
Account Plan ("Account Plan") and applied to the purchase of an immediate
annuity, in accordance with the applicable annuity factors and other provisions
of the Account Plan. The requirements that must be met are:
(a) the Participant has had a Severance from Service;
(b) the Participant, as of the Severance from Service Date, was a participant in
the Account Plan;
(c) the Participant is entitled to an immediate distribution of his or her
accrued benefits under the Account Plan in the form of an annuity or a lump sum;
(d) the Participant has irrevocably elected to receive his accrued benefit under
the Account Plan in the form of an immediate annuity; and
(e) the Participant was not, immediately prior to such Severance from Service -
(i) a union employee whose terms of employment were the subject of a
collective bargaining agreement or the subject of negotiation by a labor union
or other labor organization, or (ii) an employee of CAE Vanguard Inc. or CAE
ScreenPlates, Inc. or any subsidiary thereof.
<PAGE>
59
(2) Special Distribution Rules for March 31, 1990 Account Balances:
This subsection applies to Participants who had an account in the Hughes Section
401(k) Savings Plan on March 31, 1990 (a "3/31/90 Member"). In addition, the
special distribution rules available to 3/31/90 Members apply solely with
respect to the value of such account on the March 31, 1990 valuation date under
the plan (the "3/31/90 Balance").
(a) Additional Methods of Distribution: Notwithstanding section 6.7(d) of the
Plan, a 3/31/90 Member shall have the following additional forms of distribution
elections available with respect to his 3/31/90 Balance:
(i) withdrawal in a single lump sum distribution of the amount
credited to the Participant's 3/31/90 Balance attributable to voluntary
after-tax contributions with or without the deferral of the receipt in a single
lump sum distribution of the Participant's 3/31/90 Balance attributable to
pre-tax contributions and rollover contributions to a date no later than the
April first (1st) following the calendar year during which the Participant
attains age seventy and one-half (70-1/2); or
(ii) purchase of an annuity contract from a life insurance company
under tables based on unisex mortality assumptions with all or any portion of
the Participant's 3/31/90 Balance and taking a single lump sum distribution with
respect to any portion of such 3/31/90 Balance not applied to the purchase of
the annuity.
(b) Special Informational Requirement: Information showing the Participant the
financial effects of the various distribution options available with respect to
the 3/31/90 Balance shall be provided to the Participant at least ninety (90)
days prior to the date the Participant becomes eligible for a benefit under the
Plan.
(c) Special Annuity Contract Requirements: The following rules shall apply with
respect to any 3/31/90 Member who elects the annuity contract option:
(i) The annuity contract shall provide for periodic annuity payments
for the life of the 3/31/90 Member and the continuation of fifty percent (50%)
of the amount of the periodic annuity payments the 3/31/90 Member was receiving
(or was entitled to receive at his date of death) to the 3/31/90 Member's spouse
on the date the annuity payments to the 3/31/90 Member commenced (or, if
earlier, on the date of the 3/31/90 Member's death). The 3/31/90 Member may
revoke such election and elect any other form of benefit; provided, however,
that the 3/31/90 Member may not re-elect the forms of distribution specified
above for a reasonable period of time before the purchase of the annuity
contract, as determined by the Administrator. Such annuity contract may not
contain an "interest only option" form of distribution. The revocation of an
election to have benefits paid in the form of an annuity must be made in the
form and manner prescribed by the Administrator and after the Participant shall
have been furnished with a written explanation of (A) the terms and conditions
of the annuity benefit, (B) the Participant's right to revoke an election of an
annuity benefit, (C) the general financial effect of such an election to revoke,
(D) the requirement that the consent of the Participant's spouse, if any, is
required to make a revocation and (E) the rights of the Participant's spouse, if
any. A Participant's election to revoke the annuity benefit shall be effective
only if it is accompanied by the written notarized consent of the Participant's
spouse, if any, and shall specify the other form of benefit and identify the
beneficiary, if any, and shall acknowledge the effect of the election.
<PAGE>
60
(ii) The annuity contract must provide that benefits will commence no
later than the April first (1st) following the calendar year during which the
Participant attains age seventy and one-half (70-1/2) and, if the spouse of the
3/31/90 Member is not the Participant's Beneficiary, payments under any periodic
payment option offered under the annuity contract to such 3/31/90 Member and his
Beneficiary must be completed during a period not exceeding the life expectancy
of the 3/31/90 Member, or the joint life expectancy of such Participant and his
Beneficiary or, if the Beneficiary is not treated as a natural person, five (5)
years. The forms of distribution offered under the annuity contract must
otherwise satisfy the minimum distribution requirements under the Code.
(iii) An annuity contract that does not provide for immediate payment
of benefits must provide for all other forms of distribution then available to
the 3/31/90 Member under the Plan at all times prior to the commencement of
benefit payments under such contract.
(iv) The annuity contract option shall be available to any 3/31/90
Member with respect to any portion of his 3/31/90 Balance that he has elected to
defer.
(v) Any 3/31/90 Member who elects the annuity contract option shall
have the annuity contract distributed to him in lieu of cash or other property
for the portion of his 3/31/90 Balance that was applied to the purchase of the
annuity contract.
(3) Defer Distributions to Age 70-1/2: Notwithstanding sections 6.7(c) and
6.9(b) of the Plan, if the vested amount in a Participant's Account (including
the Transferred Account Balance) exceeds or ever exceeded three thousand five
hundred dollars ($3,500), then payment to the Participant of his or her
Transferred Account Balance shall not commence before such Participant has
attained age seventy and one-half (70-1/2), unless the Participant requests an
earlier distribution. Such request must be made not more than ninety (90) days
before the commencement of the distribution.
(4) In-Service Distributions of Matching Contributions After Age 70-1/2:
Notwithstanding section 6.1 of the Plan, with respect to Participants who attain
age seventy and one-half (70-1/2) prior to January 1, 1999, such Participants
may withdraw, after attaining age seventy and one-half and subject to a minimum
withdrawal amount of two hundred fifty dollars ($250), all or a part of the
Participants' Transferred Account Balances attributable to Matching
Contributions, regardless of whether the Participants have completed a Period of
Participation of five (5) years.
B. This paragraph B describes special withdrawal and distribution
provisions applicable to Participants with Transferred Account Balances from the
Hughes STX Corporation 401(k) Retirement Plan:
(1) Five (5)-Year Installment Distribution Option: Notwithstanding section
6.7(d) of the Plan, Participants can elect to receive their Transferred Account
Balances in accordance with one of the following distribution options:
(a) Payment in a single sum; or
(b) Payment in substantially equal annual installments over a period
not to exceed five (5) years.
<PAGE>
61
(2) In-Service Distributions of Matching Contributions After Age 70-1/2:
Notwithstanding section 6.1 of the Plan, with respect to Participants who attain
age seventy and one-half (70-1/2) prior to January 1, 1999, such Participants
may withdraw, after attaining age seventy and one-half and subject to a minimum
withdrawal amount of two hundred fifty dollars ($250), all or a part of the
Participants' Transferred Account Balances attributable to Matching
Contributions, regardless of whether the Participants have completed a Period of
Participation of five (5) years.
C. This paragraph C describes special withdrawal and distribution
provisions applicable to Participants with Transferred Account Balances from The
401(k) Plan for Employees of MESC Electronic Systems, Inc. or The 401(k) Plan
for Bargaining Unit Employees of MESC Electronic Systems, Inc.:
(1) Special Distribution Provisions for Philips Participants: This paragraph
describes special withdrawal and recordkeeping requirements applicable to
Participants whose Transferred Account Balances include assets transferred from
the North American Philips Corporation Employee Savings Plan effective as of
October 23, 1993 (hereinafter referred to as "Philips Participants" and "Philips
Assets").
(a) Notwithstanding section 6.1 of the Plan to the contrary, with
respect to Matching Contributions attributable to Philips Assets, Philips
Participants may withdraw, subject to a minimum withdrawal amount of two hundred
fifty dollars ($250), all or a portion of such Matching Contributions,
regardless of whether the Participants have completed a Period of Participation
of five (5) years.
(b) The portion of a Philips Participant's Transferred Account Balance
attributable to after-tax contributions under the Philips Plan shall be
maintained in two separate sub-accounts under the Plan - (i) one sub-account for
after-tax contributions made prior to January 1, 1987, together with earnings
thereon, and (ii) a second sub-account for after-tax contributions made after
December 31, 1986, together with earnings thereon.
(2) Defer Distributions to Age 70-1/2: Notwithstanding sections 6.7(c) and
6.9(b) of the Plan, if the vested amount in a Participant's Account (including
the Transferred Account Balance) exceeds or ever exceeded three thousand five
hundred dollars ($3,500), then payment to the Participant of his or her
Transferred Account Balance shall not commence before such Participant has
attained age seventy and one-half (70-1/2), unless the Participant requests an
earlier distribution. Such request must be made not more than ninety (90) days
before the commencement of the distribution.
(3) In-Service Distributions of Matching Contributions After Age 70-1/2:
Notwithstanding section 6.1 of the Plan, with respect to Participants who attain
age seventy and one-half (70-1/2) prior to January 1, 1999, such Participants
may withdraw, after attaining age seventy and one-half and subject to a minimum
withdrawal amount of two hundred fifty dollars ($250), all or a part of the
Participants' Transferred Account Balances attributable to Matching
Contributions, regardless of whether the Participants have completed a Period of
Participation of five (5) years.
<PAGE>
1
EXHIBIT 4.10
RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN (10012)
Effective December 18, 1997
ARTICLE I
Establishment of the Plan
1.1 Establishment of the Plan. The Raytheon California Hourly
Savings and Investment Plan (the "Plan"), which is effective December 18,
1997, provides Participants with a tax-effective means of allocating a
portion of their salary to be invested in one or more investment
opportunities specified in the Plan and set aside for the short-term and
long-term needs of the Participants. The Plan also provides retirement
benefits for Participants or their Beneficiaries in the event a Participant
becomes disabled or dies before retirement. It is intended that the Plan
will comply with all of the requirements for a qualified profit sharing plan
under sections 401(a) and 401(k) of the Code and will be amended from time to
time to maintain compliance with these requirements. The terms used in the
Plan have the meanings specified in ARTICLE XIV unless the context indicates
otherwise. The Plan is intended to constitute a plan described in section
404(c) of ERISA and Title 29 of the Code of Federal Regulations,
Section 2550.404(c)-1. Participants in the Plan are responsible for selecting
their own investment opportunities from the options available under the Plan
and the Plan Fiduciaries are relieved of any liability for any losses which
are a direct and necessary result of investment instructions given by a
Participant or Beneficiary.
1.2 Trust. The Trust shall be the sole source of benefits under the
Plan and the Adopting Employers or any Affiliate shall not have any liability
for the adequacy of the benefits provided under the Plan.
1.3 Effective Date. The Plan shall be effective as of December 18,
1997, or such other dates as may be specifically provided herein or as
otherwise required by law for the Plan to satisfy the requirements of section
401(a) of the Code.
1.4 Adoption of Plan. With the prior approval of the Board of
Directors or an officer of the Company authorized by the Board of Directors
to give such approval, the Plan and Trust may be adopted by any corporation
(hereinafter referred to as an Adopting Employer). Such adoption shall be
made by the Adopting Employer filing with the Administrator and Trustee a
certified copy of a board of directors (or equivalent) resolution adopting
the Plan and Trust without modification. The Administrator may require the
Adopting Employer to take such further actions as it deems appropriate to the
proper adoption and operation of the Plan and Trust. In the event of the
adoption of the Plan and Trust by an Adopting Employer, the Plan and Trust
shall be interpreted in a manner consistent with such adoption.
1.5 Withdrawal of Adopting Employer.
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(a) An Adopting Employer's adoption of this Plan may be
terminated, voluntarily or involuntarily, at any time, as provided in this
section.
(b) An Adopting Employer shall withdraw from the Plan and
Trust if the Plan and Trust, with respect to that Adopting Employer, fail to
qualify under sections 401(a) and 501(a) of the Code (or, in the opinion of
the Administrator, they may fail to so qualify) and the continued sponsorship
of that Adopting Employer may jeopardize the status with respect to the
Company or the remaining Adopting Employers, of the Plan and Trust under
sections 401(a) and 501(a) of the Code. The Adopting Employer shall receive
at least thirty (30) days prior written notice of a withdrawal under this
subsection, unless a shorter period is agreed to.
(c) An Adopting Employer may voluntarily withdraw from the
Plan and Trust for any reason. Such withdrawal requires at least thirty (30)
days written notice to the Administrator and the Trustee, unless a shorter
period is agreed to.
(d) Upon withdrawal, the Trustee shall segregate the assets
attributable to Employees of the withdrawn Adopting Employer, the amount
thereof to be determined by the Administrator and the Trustee. The
segregated assets shall be held, paid to another trust, distributed or
otherwise disposed of as is appropriate under the circumstances; provided,
however, that any transfer shall be for the exclusive benefit of Participants
and their Beneficiaries. A withdrawal of an Adopting Employer from the Plan
is not necessarily a termination under ARTICLE XII. If the withdrawal is a
termination, then the provisions of ARTICLE XII shall also be applicable.
ARTICLE II
Eligibility
2.1 Eligibility Requirements. Each Employee who is an Eligible
Employee on the Effective Date shall begin participation in this Plan on the
Effective Date. Each Eligible Employee who transfers to an Adopting Employer
from General Motors Corporation or one of its affiliates after the Effective
Date and before December 1, 1998, and who immediately prior to such transfer
was a participant in the Hughes California Hourly Employees' Thrift and
Savings Plan, shall begin participation in this Plan on the date of such
transfer. Each other Eligible Employee and any person who subsequently
becomes an Eligible Employee may join the Plan as of the first Pay Period
coincident with or next following completion of a Period of Service of three
(3) consecutive months commencing on his or her Employment Commencement Date.
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2.2 Procedure for Joining the Plan. Each Eligible Employee who meets
the requirements of section 2.1 may join the Plan by communicating with the
Recordkeeper in accordance with instructions in an enrollment kit which will
be made available to each Eligible Employee. An enrollment in the Plan shall
not be deemed to have been completed until the Eligible Employee has
designated: a percentage by which his or her Compensation shall be reduced
as an Elective Deferral in accordance with the requirements of section 3.3,
subject to the nondiscrimination test described in section 3.10; election of
investment funds as described in ARTICLE IV; one or more Beneficiaries; and
such other information as specified by the Recordkeeper. Enrollment will be
effective as of the first administratively feasible Pay Period following
completion of enrollment. The Administrator, in its discretion, may from
time to time make exceptions and adjustments in the foregoing procedure on a
uniform and nondiscriminatory basis.
2.3 Transfer Between Adopting Employers to Position Covered by Plan.
A Participant who is transferred to a position with another Adopting Employer
in which the Participant remains an Eligible Employee will continue as an
active Participant of the Plan.
2.4 Transfer to Position Not Covered by Plan. If a Participant is
transferred to a position with an Employer in which the Participant is no
longer an Eligible Employee, the Participant will remain a Participant of the
Plan with respect to Elective Deferrals previously made but shall no longer
be eligible to have Elective Deferrals made to the Plan on his or her behalf
until he or she again becomes an Eligible Employee. In the event the
Participant is subsequently transferred to a position in which he or she
again becomes an Eligible Employee, the Participant may renew Elective
Deferrals by communicating with the Recordkeeper and providing all of the
information requested by the Recordkeeper. The renewal of Elective Deferrals
will be effective as of the first administratively feasible Pay Period
following receipt by the Recordkeeper of the requested information.
2.5 Transfer to Position Covered by Plan. If an Employee who is not
eligible to participate in the Plan by reason of his or her position with an
Employer is transferred to a position that is eligible to participate in the
Plan, all service performed as an Employee in such noneligible position shall
be treated as a Period of Service for purposes of this ARTICLE.
2.6 Treatment of Qualified Military Service. Notwithstanding any
provision of this Plan to the contrary, contributions, benefits and service
credit with respect to Qualified Military Service will be provided in
accordance with section 414(u) of the Code.
ARTICLE III
Contributions
3.1 Matching Contributions. (a)(1) Each Adopting Employer shall,
in its discretion, make Matching Contributions with regard to Elective
Deferrals and Employee After-Tax Contributions made by its Employees during a
Plan Year. Each Adopting Employer shall, in its discretion, determine both
the percentage rate of the Elective Deferrals and Employee After-Tax
Contributions that will be matched and any limits on the maximum Matching
Contributions that will be made for any Participant. Matching Contributions
will be made in such form as is specified in subsection (b).
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(2) Unless otherwise specified by an Adopting Employer,
each Adopting Employer shall make Matching Contributions equal in value to
one hundred percent (100%) of the total Elective Deferrals and Employee
After-Tax Contributions made during that Plan Year by each Participant who is
an Employee of that Adopting Employer, but the total of such Matching
Contributions for any Participant shall not exceed four percent (4%) of a
Participant's Compensation from that Adopting Employer for that Plan Year.
(b) The Matching Contribution under subsection (a) shall be
made in either Common Stock or cash that is invested in Common Stock. The
number of shares of Common Stock contributed by the Adopting Employer or
acquired with Matching Contributions under subsection (a) shall be allocated
to the Participant's Account by the Trustee and such allocation shall equal
the number of shares of Common Stock which the Trustee could have purchased
for the Participant at the Current Market Value. Such Matching Contribution
shall remain invested in Common Stock until the end of two (2) full Plan
Years following the Plan Year for which such contributions or deferrals are
made.
3.2 Qualified Nonelective Contributions. Each Plan Year the Adopting
Employers may contribute to the Trust such amounts as determined by the Board
of Directors in its sole discretion. Any amounts contributed under this
subsection are to be designated by the Adopting Employers as Qualified
Nonelective Contributions.
3.3 Elective Deferrals. (a) A Participant may authorize the
Adopting Employer to reduce his or her Compensation on a pre-tax basis and to
correspondingly contribute to the Plan an amount equal to any whole
percentage of Compensation that does not exceed twelve percent (12%) of his
or her Compensation for that Plan Year.
(b) A Participant shall not be permitted to defer his or her
Compensation under subsection (a) during any calendar year in excess of nine
thousand five hundred dollars ($9,500) (or such amount as may be permitted in
accordance with regulations issued under section 415(d)(1) of the Code).
(c) A Union Officer shall contribute or defer in cash for each
Pay Period for which he or she receives pay as a Union Officer the amount
selected within the limits of and in accordance with the provisions of
section 3.3. Such contribution shall be made, on a periodic basis as
specified from time to time by the Administrator, to the last Adopting
Employer by which such Participant was employed. For purposes of this
section, the term "Union Officer" shall mean a Participant who accepts a
leave of absence from the Adopting Employers to assume a paid full-time
position as an elective officer of a union which is the collective bargaining
representative for a collective bargaining unit consisting of or including
Employees, so long as he or she holds such a position if he or she is
entitled, pursuant to a collective bargaining agreement with one of the
Adopting Employers to be a Participant while on such leave of absence and has
not waived such right.
3.4 Employee After-Tax Contributions. (a) A Participant may authorize
the Adopting Employer to reduce his or her Compensation on an after-tax basis
and to correspondingly contribute to the Plan an amount equal to any whole
percentage of Compensation that does not exceed twelve percent (12%) of his or
her Compensation for that Plan Year.
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(b) A Union Officer shall contribute or defer in cash for each
Pay Period for which he or she receives pay as a Union Officer the amount
selected within the limits of and in accordance with the provisions of
section 3.4. Such contribution shall be made, on a periodic basis as
specified from time to time by the Administrator, to the last Company by
which such Participant was employed. For purposes of this section, the term
"Union Officer" shall mean a Participant who accepts a leave of absence from
the Adopting Employers to assume a paid full-time position as an elective
officer of a union which is the collective bargaining representative for a
collective bargaining unit consisting of or including Employees, so long as
he or she holds such a position if he or she is entitled, pursuant to a
collective bargaining agreement with one of the Adopting Employers to be a
Participant while on such leave of absence and has not waived such right.
3.5 Change in Elective Deferrals. Except as provided in section
3.10, any Participant may change his or her Elective Deferral or Employee
After-Tax Contribution percentage to increase or decrease said percentage by
notifying the Recordkeeper, such change to take effect as of the next
administratively feasible Pay Period.
3.6 Forfeitures.
(a) In the event that a Participant incurs a Severance from
Service before attaining a Nonforfeitable right to his or her Matching
Contributions, the Matching Contribution Account will be forfeited as of the
first day of the month immediately following the earliest of: (i) the date on
which the Participant incurs a Period of Severance of five (5) consecutive
years; (ii) death; or (iii) the date on which the Participant's Elective
Deferral Account is distributed in accordance with ARTICLE VI. Forfeitures
of Matching Contributions will be used to reduce future contributions of the
Adopting Employers to the Plan.
(b) If, in connection with his or her Severance from Service, a
Participant received a distribution of his or her Elective Deferral Account
when he or she did not have a Nonforfeitable right to his or her Matching
Contribution Account, the Matching Contributions that were forfeited,
unadjusted by any subsequent gains or losses, shall be restored if he or she
again becomes an Employee before incurring a Period of Severance of five (5)
consecutive years, performs an Hour of Service, and repays the full value of
his or her prior distributions, unadjusted for subsequent gains and losses,
before the first to occur of (i) the end of the five- (5) year period
beginning with the date he or she again becomes an Employee or (ii) the date
on which he or she incurs a Period of Severance of five (5) consecutive
years.
3.7 Rollover Contributions and Transfers.
(a) Participants may transfer into the Plan qualifying rollover
amounts (as defined in section 402 of the Code) received from other qualified
plans (provided that no federal income tax has been required to have been
paid previously on such amounts); or rollover contributions from an
individual retirement account described in section 408(d)(3)(A)(ii) of the
Code (referred to herein as a "conduit IRA"), subject to the following
conditions:
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(1) the transferred funds are received by the Trustee no
later than sixty (60) days from receipt by the Employee of a distribution
from another qualified plan or, in the event that the funds are transferred
from a conduit IRA, no later than sixty (60) days from the date that the
Participant receives such funds from the individual retirement account;
(2) the amount of such Rollover Contributions shall not
exceed the limitations set forth in section 402 of the Code;
(3) the Rollover Contributions shall be taken into
account by the Administrator in determining the Participant's eligibility for
a loan pursuant to ARTICLE VII;
(4) the Rollover Contributions may be distributed at the
request of the Participant, subject to the same administrative procedures as
apply to other distributions;
(5) the Rollover Contributions transferred pursuant to
this section 3.7(a) shall be credited to the Participant's Rollover
Contribution Account and invested upon receipt by the Trustee;
(6) a Rollover Contribution will not be accepted unless
(A) the Employee on whose behalf the Rollover Contribution will be made is
either a Participant or an Eligible Employee who has notified the
Administrator that he or she intends to become a Participant on the first
date on which he or she is eligible therefor, and (B) all required
information, including selection of specific investment accounts, is provided
to the Recordkeeper - when the Rollover Contribution has been deposited, any
further change in investment allocation of future deferrals or transfer of
account balances between investment funds will be effected through the
procedures set forth in sections 4.2 and 4.3; and
(7) under no circumstances shall the Administrator
accept as a Rollover Contribution amounts which have previously been subject to
federal income tax.
(b)(1) The Plan shall accept a transfer of assets, including
elective transfers in accordance with Treas. Regs. section 1.411(d)-4 Q&A-
3(b), directly from another plan qualified under section 401(a) of the Code
only if the Administrator, in its sole discretion, agrees to accept such a
transfer. In determining whether to accept such a transfer, the
Administrator shall consider the administrative inconvenience engendered by
such a transfer and any risks to the continued qualification of the Plan
under section 401(a) of the Code. Acceptance of any such transfer shall not
preclude the Administrator from refusing any such subsequent transfers.
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(2) Any transfer of assets accepted under this subsection
shall be separately accounted for at all times and shall remain subject to
the provisions of the transferor plan (as it existed at the time of such
transfer) to the extent required by section 411(d)(6) of the Code (including,
but not limited to, any rights to qualified joint and survivor annuities and
qualified preretirement survivor annuities) as if such provisions were part
of the Plan. In all other respects, however, such transferred assets will be
subject to the provisions of the Plan. The Administrator may, but is not
required to, describe in an Exhibit to this Plan the special provisions that
must be preserved under section 411(d)(6) of the Code, if any, following the
transfer of assets from another plan in accordance with this subsection.
(3) Assets accepted under this section shall be fully
vested and nonforfeitable.
(4) Eligible Employees who were active participants in
the Hughes California Hourly Employees' Thrift and Savings Plan immediately
prior to the Effective Date may elect to transfer their entire vested account
balances in such plan, including after-tax contributions, to the Plan in
accordance with this section 3.7(b).
3.8 Refund of Contributions to the Adopting Employers.
Notwithstanding the provisions of ARTICLE XII, if, or to the extent that, any
Adopting Employers' deductions for contributions made to the Plan are
disallowed, such Adopting Employer will have the right to obtain the return
of any such contributions for a period of one (1) year from the date of
disallowance. For this purpose, all contributions are made subject to the
condition that they are deductible under the Code for the taxable year of the
Adopting Employers for which the contributions are made. Furthermore, any
contribution made on the basis of a mistake in fact may be returned to the
Adopting Employers within one (1) year from the date such contribution was
made.
3.9 Payment. The Adopting Employers shall pay to the Trustee in U.S.
currency, or by other property acceptable to the Trustee, all contributions
for each Plan Year within the time prescribed by law, including extensions
granted by the Internal Revenue Service for filing the federal income tax
return of the Company for its taxable year in which such Plan Year ends.
Unless designated by the Adopting Employers as nondeductible, all
contributions made, other than Employee After-Tax Contributions, shall be
deemed to be conditioned on their current deductibility under section 404 of
the Code.
3.10 Limits for Highly Compensated.
(a) Elective Deferrals, Employee After-Tax Contributions, Matching
Contributions and Qualified Nonelective Contributions allocable to the
Accounts of Highly Compensated Employees shall not in any Plan Year exceed
the limits specified in this section. The Administrator may make the
adjustments authorized in this section to ensure that the limits of
subsection (b) (or any other applicable limits) are not exceeded, regardless
of whether such adjustments affect some Participants more than others. This
section shall be administered and interpreted in accordance with sections
401(k) and 401(m) of the Code.
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(b) (1) The Actual Deferral Percentage of the Highly Compensated
Employees shall not exceed, in any Plan Year, the greater of:
(A) one hundred twenty-five percent (125%) of the Actual Deferral
Percentage for all other Eligible Participants; or
(B) the lesser of two hundred percent (200%) of the Actual Deferral
Percentage for all other Eligible Participants or the Actual Deferral
Percentage for the other Eligible Participants plus two (2) percentage
points.
(2) The Actual Contribution Percentage of the Highly Compensated Employees
shall not exceed, in any Plan Year, the greater of:
(A) one hundred twenty five percent (125%) of the Actual Contribution
Percentage for all other Eligible Participants; or
(B) the lesser of two hundred percent (200%) of the Actual Contribution
Percentage for all other Eligible Participants or the Actual Contribution
Percentage for the other Eligible Participants plus two (2) percentage
points.
(3) The sum of the Actual Deferral Percentage and the Actual Contribution
Percentage for the Highly Compensated Employees shall not exceed, in any Plan
Year, the sum of:
(A) one hundred twenty-five percent (125%) of the greater of:
(i) the Actual Deferral Percentage of the other Eligible Participants; or
(ii) the Actual Contribution Percentage of the other Eligible Participants;
and
(B) two plus the lesser of:
(i) the amount in paragraph (3)(A)(i); or
(ii) the amount in paragraph (3)(A)(ii); provided that the amount in this
paragraph (3)(B) shall not exceed two hundred percent (200%) of the lesser of
the amount in paragraph (3)(A)(i) or the amount in paragraph (3)(A)(ii).
(4) The limitations under section 3.10(b)(3) shall be modified to reflect
any higher limitations provided by the Internal Revenue Service under
regulations, notices or other official statements.
(c) The following terms shall have the meanings specified:
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9
(1) Actual Contribution Percentage. The average of the ratios for a
designated group of Employees (calculated separately for each Eligible
Participant in the group) of the sum of the Matching Contributions, Employee
After-Tax Contributions, Qualified Nonelective Contributions (other than
those treated as part of the Actual Deferral Percentage), and Elective
Deferrals (other than those treated as part of the Actual Deferral
Percentage) allocated for the applicable year on behalf of the Participant,
divided by the Participant's Compensation for such applicable year. The
"applicable year" for determining the Actual Contribution Percentage for the
group of Highly Compensated Employees shall be the current Plan Year. For
all other Eligible Participants, the "applicable year" for determining the
Actual Contribution Percentage shall be the immediately preceding Plan Year,
unless in accordance with the procedures prescribed by the Internal Revenue
Service, the Administrator elects to use the current Plan Year.
(2) Actual Deferral Percentage. The average of the ratios for a designated
group of Eligible Participants (calculated separately for each Eligible
Participant in the group) of the sum of the Elective Deferrals and Qualified
Nonelective Contributions (other than those treated as part of the Actual
Contribution Percentage) allocated for the applicable year on behalf of a
Participant, divided by the Participant's Compensation for such applicable
year. The "applicable year" for determining the Actual Deferral Percentage
for the group of Highly Compensated Employees shall be the current Plan Year.
For all other Eligible Participants, the "applicable year" for determining
the Actual Deferral Percentage shall be the immediately preceding Plan Year,
unless in accordance with the procedures prescribed by the Internal Revenue
Service, the Administrator elects to use the current Plan Year.
(3) Compensation. The Employee's wages that are required to be reported on
IRS Form W-2, increased by any Elective Deferrals made by the Employer on
behalf of the Employee under this Plan or any other plan of the Employer with
a qualified cash or deferred arrangement under section 401(k) of the Code and
any pre-tax elective contributions made by the Employer that are excludible
from the Employee's income under section 125 of the Code.
(4) Eligible Participant. Any Employee of an Adopting Employer who is
authorized under the terms of the Plan to make Elective Deferrals or have
Qualified Nonelective Contributions allocated to his or her Account for the
Plan Year.
(d) For purposes of determining whether a plan satisfies the Actual
Contribution Percentage test of section 401(m), all employee and matching
contributions that are made under two (2) or more plans that are aggregated
for purposes of sections 401(a)(4) and 410(b) (other than section
410(b)(2)(A)(ii)) are to be treated as made under a single plan and that if
two (2) or more plans are permissively aggregated for purposes of section
401(m), the aggregated plans must also satisfy sections 401(a)(4) and 410(b)
as though they were a single plan.
(e) In calculating the Actual Contribution Percentage for purposes of
section 401(m), the actual contribution ratio of a Highly Compensated
Employee will be determined by treating all plans subject to section 401(m)
under which the Highly Compensated Employee is eligible (other than those
that may not be permissively aggregated) as a single plan.
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(f) For purposes of determining whether a plan satisfies the Actual
Deferral Percentage test of section 401(k), all elective contributions that
are made under two (2) or more plans that are aggregated for purposes of
section 401(a)(4) or 410(b) (other than section 410(b)(2)(A)(ii)) are to be
treated as made under a single plan and that if two (2) or more plans are
permissively aggregated for purposes of section 401(k), the aggregated plans
must also satisfy sections 401(a)(4) and 410(b) as though they were a single
plan.
(g) In calculating the Actual Deferral Percentage for purposes of section
401(k), the actual deferral ratio of a Highly Compensated Employee will be
determined by treating all cash or deferred arrangements under which the
Highly Compensated Employee is eligible (other than those that may not be
permissively aggregated) as a single arrangement.
(h) An elective contribution will be taken into account under the Actual
Deferral Percentage test of section 401(k)(3)(A) of the Code for a Plan Year
only if it is allocated to the Employee as of a date within that Plan Year.
For this purpose, an elective contribution is considered allocated as of a
date within a Plan Year if the allocation is not contingent on participation
or performance of services after such date and the elective contribution is
actually paid to the Trust no later than twelve (12) months after the Plan
Year to which the contribution relates.
3.11 Correction of Excess Contributions.
(a) Excess Contributions shall be corrected as provided in this section.
The Administrator may also prevent anticipated Excess Contributions as
provided in this section. The Administrator may use any method of correction
or prevention provided in this section or any combination thereof, as it
determines in its sole discretion. This section shall be administered and
interpreted in accordance with sections 401(k) and 401(m) of the Code.
(b) The Administrator may refuse to accept any or all prospective Elective
Deferrals to be contributed by a Participant.
(c) (1) An Adopting Employer may, in its sole discretion, elect to
contribute, as provided in section 3.2, a Qualified Nonelective Contribution
in an amount necessary to satisfy any or all of the requirements of section
3.10.
(2) Qualified Nonelective Contributions for a Plan Year shall only be
allocated to the Accounts of Participants who are not Highly Compensated
Employees. Qualified Nonelective Contributions shall be allocated first to
the Participant with the lowest Compensation for that Plan Year and any
remaining Qualified Nonelective Contributions thereafter shall be allocated
to the Participant with the next lowest Compensation for that Plan Year.
This allocation method shall continue in ascending order of Compensation
until all such Qualified Nonelective Contributions are allocated. The
allocation to any Participant shall not exceed the limits under section 415
of the Code. If two or more Participants have identical Compensation, the
allocations to them shall be proportional.
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(3) Qualified Nonelective Contributions for a Plan Year shall be
contributed to the Trust within twelve (12) months after the close of such
Plan Year.
(4) Qualified Nonelective Contributions shall only be allocated to
Participants who receive Compensation during the Plan Year for which such
contribution is made.
(d) The Administrator may, during a Plan Year, distribute to a Participant
(or such Participant's Beneficiary if the Participant is deceased), any or
all Excess Contributions or Excess Deferrals (whether Elective Deferrals or
Qualified Nonelective Contributions) allocable to that Participant's Account
for that Plan Year, notwithstanding any contrary provision of the Plan. Such
distribution may include earnings or losses (if any) attributable to such
amounts, as determined by the Administrator.
(e) (1) The Administrator may recharacterize any or all Excess
Contributions for a Plan Year as Employee After-Tax Contributions in
accordance with the provisions of this subsection. Any Excess Contributions
that are so recharacterized shall be treated as if the Participant had
elected to instead receive cash Compensation on the earliest date that any
Elective Deferral made on behalf of the Participant during the Plan Year
would have been received had the Participant originally elected to receive
such amount in cash and then contributed such amount as an Employee After-Tax
Contribution. To the extent required by the Internal Revenue Service,
however, such recharacterized Excess Contributions shall continue to be
treated as if such amounts were not recharacterized.
(2) The Administrator shall report any recharacterized Excess Contributions
as Employee After-Tax Contributions to the Internal Revenue Service and to
the affected Participants at such times and in accordance with such
procedures as are required by the Internal Revenue Service. The
Administrator shall take such other actions regarding the amounts so
recharacterized as may be required by the Internal Revenue Service.
(3) Excess Contributions may not be recharacterized under this subsection
more than two and one-half (21/2) months after the close of the Plan Year to
which the recharacterization relates. Recharacterization is deemed to occur
when the Participant is so notified (as required by the Internal Revenue
Service).
(4) The amount of Excess Contributions to be distributed or recharacterized
shall be reduced by Excess Deferrals previously distributed for the taxable
year ending in the same Plan Year and Excess Deferrals to be distributed for
a taxable year will be reduced by Excess Contributions previously distributed
or recharacterized for the Plan beginning in such taxable year.
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(f) (1) The Administrator may distribute any or all Excess Contributions
for a Plan Year in accordance with the provisions of this subsection. Such
distribution may only occur after the close of such Plan Year and within
twelve (12) months of the close of such Plan Year. In the event of the
termination of the Plan, such distribution shall be made within twelve (12)
months after such termination. Such distribution shall include the income
allocable to the amounts so distributed, as determined under this subsection.
The Administrator may make any special allocations of earnings or losses
necessary to carry out the provisions of this subsection. A distribution of
an Excess Contribution under this subsection may be made without regard to
any notice or consent otherwise required pursuant to sections 411(a)(11) and
417 of the Code.
(2) (A) The income allocable to Excess Contributions distributed under
this subsection shall equal the allocable gain or loss for the Plan Year.
Income includes all earnings and appreciation, including such items as
interest, dividends, rent, royalties, gains from the sale of property,
appreciation in the value of stock, bonds, annuity and life insurance
contracts, and other property, without regard to whether such appreciation
has been realized.
(B) The allocable gain or loss for the Plan Year may be determined under
any reasonable method consistently applied by the Administrator.
Alternatively, the Administrator may, in its discretion, determine such
allocable gain or loss for the Plan Year under the method set forth in
subparagraph (C).
(C) Under this method, the allocable gain or loss for the Plan Year is
determined by multiplying the income for the Plan Year allocable to Elective
Deferrals (and amounts treated as Elective Deferrals) by a fraction, the
numerator of which is the Excess Contributions by the Participant for the
Plan Year and the denominator of which is the total Account balance of the
Participant attributable to Elective Deferrals (and amounts treated as
Elective Deferrals) as of the beginning of the Plan Year, increased by any
Elective Deferrals (and amounts treated as Elective Deferrals) by the
Participant for the Plan Year.
(3) Amounts distributed under this subsection (or other provisions of this
section) shall first be treated as distributions from the Participant's
subaccounts in the following order:
(A) from the Participant's Elective Deferral Account (if such Excess
Contribution is attributable to Elective Deferrals); and
(B) from the Participant's Qualified Nonelective Contribution account (if
such Excess Contribution is attributable to Qualified Nonelective
Contributions).
(g) (1) The term "Excess Contributions" shall mean, with respect to a
Plan Year, the excess of the Elective Deferrals (including any Qualified
Nonelective Contributions and Matching Contributions that are treated as
Elective Deferrals under sections 401(k)(2) and 401(k)(3) of the Code) on
behalf of eligible Highly Compensated Employees for the Plan Year over the
maximum amount of such contributions permitted under sections 401(k)(2) and
401(k)(3) of the Code. For this purpose, the maximum amount of contributions
permitted under sections 401(k)(2) and 401(k)(3) of the Code shall be
determined in accordance with the leveling method prescribed in Treas. Regs.
section 1.401(k)-1(f)(2), or such other method as promulgated thereafter.
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13
(2) Any distribution or recharacterization of Excess Contributions for a
Plan Year, as determined under subsection (1) above, shall be made to the
Highly Compensated Employees on the basis of the amount of contributions by,
or on behalf of, each such Highly Compensated Employee in accordance with the
procedure described herein. The Highly Compensated Employees with the
highest amount of contributions shall have their contributions distributed or
recharacterized to the extent required to eliminate the Excess Contributions
or, if it results in a lower distribution or recharacterization, to the
extent required to cause such Highly Compensated Employees' contributions to
equal the amount of contributions of the Highly Compensated Employees with
the next highest level of contributions. This procedure shall be repeated
until the Excess Contributions are completely distributed or recharacterized.
(3) The amount of Excess Contributions to be distributed or recharacterized
shall be reduced by Excess Deferrals previously distributed for the taxable
year ending in the same Plan Year and Excess Deferrals to be distributed for
a taxable year will be reduced by Excess Contributions previously distributed
or recharacterized for the Plan beginning in such taxable year.
3.12 Correction of Excess Deferrals.
(a) Excess Deferrals shall be corrected as provided in this section. The
Administrator may also prevent anticipated Excess Deferrals as provided in
this section. The Administrator may use any method of correction or
prevention provided in this section or any combination thereof, as it
determines in its sole discretion. A distribution of an Excess Deferral
under this section may be made without regard to any notice or consent
otherwise required pursuant to sections 411(a)(11) and 417 of the Code. This
section shall be administered and interpreted in accordance with sections
401(k) and 402(g) of the Code.
(b) The Administrator may refuse to accept any or all prospective Elective
Deferrals to be contributed by a Participant.
(c) (1) The Administrator may distribute any or all Excess Deferrals to
the Participant on whose behalf such Excess Deferrals were made before the
close of the Applicable Taxable Year. Distributions under this subsection
include income allocable to the Excess Distribution so distributed, as
determined under this subsection.
(2) Distribution under this subsection shall only be made if all the
following conditions are satisfied:
(A) the Participant seeking the distribution designates the distribution as
an Excess Deferral;
(B) the distribution is made after the date the Excess Deferral is received
by the Plan; and
(C) the Plan designates the distribution as a distribution of an Excess
Deferral.
(3) The income allocable to the Excess Deferral distributed under this
subsection shall be determined in the same manner as under subsection (d)(3),
except that income shall only be determined for the period from the beginning
of the Applicable Taxable Year to the date on which the distribution is made.
<PAGE>
14
(d) (1) The Administrator may distribute any or all Excess Deferrals to
the Participant on whose behalf such Excess Deferrals were made after the
close of the Applicable Taxable Year. Distribution under this subsection
shall only be made if the Participant timely provides the notice required
under subsection (d)(2) and such distribution is made after the Applicable
Taxable Year and before the first April 15 following the close of the
Applicable Taxable Year. Distributions under this subsection shall include
income allocable to the Excess Deferrals so distributed, as determined under
this subsection.
(2) Any Participant seeking a distribution of an Excess Deferral in
accordance with this subsection must notify the Administrator of such request
no later than the first March 15 following the close of the Applicable
Taxable Year. The Administrator may agree to accept notification received
after such date (but before the first April 15 following the close of the
Applicable Taxable Year) if it determines that it would still be
administratively practicable to make such distribution in view of the delayed
notification. The notification required by this subsection shall be deemed
made if a Participant's Elective Deferrals to the Plan in any Plan Year
create an Excess Deferral.
(3) The income allocable to the Excess Deferral distributed under this
subsection shall be determined in the same manner as under section
3.11(f)(2), except that the term "Excess Deferrals" shall be substituted for
"Excess Contributions" and the term "Applicable Taxable Year" shall be
substituted for "Plan Year." The Administrator may make any special
allocations of earnings or losses necessary to carry out the provisions of
this subsection.
(e) The following terms shall have the meanings specified:
(1) Applicable Taxable Year. The taxable year (for federal income tax
purposes) of the Participant in which an Excess Deferral must be included in
gross income (when made) in accordance with section 402(g) of the Code.
(2) Excess Deferral. A Participant's Elective Deferrals (and other
contributions limited by section 402(g) of the Code), for an Applicable
Taxable Year that are in excess of the limits imposed by section 402(g) of
the Code for such Applicable Taxable Year.
3.13 Correction of Excess Aggregate Contributions.
(a) Excess Aggregate Contributions shall be corrected as provided in this
section. The Administrator may use any method of correction or prevention
provided in this section or any combination thereof, as it determines in its
sole discretion. This section shall be administered and interpreted in
accordance with sections 401(k) and 401(m) of the Code.
(b) The Administrator may refuse to accept any or all prospective Elective
Deferrals to be contributed to a Participant.
(c) (1) The Company may, in its sole discretion, elect to contribute, as
provided in section 3.2, a Qualified Nonelective Contribution in an amount
necessary to satisfy any or all of the requirements of section 3.10.
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15
(2) Qualified Nonelective Contributions for a Plan Year shall only be
allocated to the Accounts of Participants who are not Highly Compensated
Employees. Qualified Nonelective Contributions shall be allocated first to
the Participant with the lowest Compensation for that Plan Year and any
remaining Qualified Nonelective Contributions thereafter shall be allocated
to the Participant with the next lowest compensation for that Plan Year.
This allocation method shall continue in ascending order of Compensation
until all such Qualified Nonelective Contributions are allocated. The
allocation to any Participant shall not exceed the limits under section 415
of the Code. If two or more Participants have identical Compensation, the
allocations to them shall be proportional.
(3) Qualified Nonelective Contributions for a Plan Year shall be
contributed to the Trust within twelve (12) months after the close of such
Plan Year.
(4) Qualified Nonelective Contributions shall only be allocated to
Participants who receive Compensation during the Plan Year for which such
contribution is made.
(d) The Administrator may, during a Plan Year, distribute to a Participant
(or such Participant's Beneficiary if the Participant is deceased), any or
all Excess Aggregate Contributions allocable to that Participant's Account
for that Plan Year, notwithstanding any contrary provision of the Plan. Such
distribution may include earnings or losses (if any) attributable to such
amounts, as determined by the Administrator.
(e) (1) The Administrator may forfeit any or all Excess Aggregate
Contributions for a Plan Year in accordance with the provisions of this
subsection. The amounts so forfeited shall not include any amounts that are
nonforfeitable under ARTICLE V.
(2) Any forfeitures under this subsection shall be made in accordance with
the procedures for distributions under subsection (f) except that such
amounts shall be forfeited instead of being distributed.
(f) (1) The Administrator may distribute any or all Excess Aggregate
Contributions for a Plan Year in accordance with the provisions of this
subsection. Such distribution may only occur after the close of such Plan
Year and within twelve (12) months of the close of such Plan Year. Such
distributions shall be specifically designated by the Administrator as a
distribution of Excess Aggregate Contributions. In the event of the complete
termination of the Plan, such distribution shall be made within twelve (12)
months after such termination. Such distribution shall include the income
allocable to the amounts so distributed, as determined under this subsection.
The Administrator may make any special allocations of earnings or losses
necessary to carry out the provisions of this subsection. A distribution of
an Excess Aggregate Contribution under this subsection may be made without
regard to any notice or consent otherwise required pursuant to sections
411(a)(11) and 417 of the Code.
<PAGE>
16
(2) (A) The income allocable to Excess Aggregate Contributions
distributed under this subsection shall equal the allocable gain or loss for
the Plan Year. Income includes all earnings and appreciation, including such
items as interest, dividends, rent, royalties, gains from the sale of
property, appreciation in the value of stock, bonds, annuity and life
insurance contracts, and other property, without regard to whether such
appreciation has been realized.
(B) The allocable gain or loss for the Plan Year may be determined under
any reasonable method consistently applied by the Administrator.
Alternatively, the Administrator may, in its discretion, determine such
allocable gain or loss for the Plan Year under the method set forth in
subparagraph (C).
(C) Under this method, the allocable gain or loss for the Plan Year is
determined by multiplying the income for the Plan Year allocable to employee
contributions, matching contributions and amounts treated as matching
contributions by a fraction, the numerator of which is the Excess Aggregate
Contributions for the Participant for the Plan Year and the denominator of
which is the total Account balance of the Participant attributable to
employee contributions, matching contributions and amounts treated as
matching contributions as of the beginning of the Plan Year, increased by the
employee contributions, matching contributions and amounts treated as
matching contributions for the Participant for the Plan Year.
(3) Amounts distributed under this subsection (or other provisions of this
section) shall first be treated as distributions from the Participant's
Account in the following order:
(A) from the Participant's Qualified Nonelective Contribution Account (if
such Excess Aggregate Contribution is attributable to Qualified Nonelective
Contributions);
(B) from the Participant's Employee After-Tax Contribution Account (if such
Excess Aggregate Contribution is attributable to Employee After-Tax
Contributions); and
(C) from the Participant's Matching Contribution Account (if such Excess
Aggregate Contribution is attributable to Matching Contributions).
(g) (1) The term "Excess Aggregate Contributions" shall mean, with
respect to a Plan Year, the excess of the aggregate amount of the matching
contributions and employee contributions (including any Qualified Nonelective
Contributions or elective deferrals taken into account in computing the
Actual Contribution Percentage) actually made on behalf of eligible Highly
Compensated Employees for the Plan Year over the maximum amount of such
contributions permitted under section 401(m)(2)(A) of the Code. For this
purpose, the maximum amount of contributions permitted under section
401(m)(2)(A) of the Code shall be determined in accordance with the leveling
method described in section 3.11(g)(1) of the Plan.
<PAGE>
17
(2) Any distribution of Excess Aggregate Contributions for a Plan Year, as
determined under subsection (1) above, shall be made to the Highly
Compensated Employees on the basis of the amount of contributions by, or on
behalf of, each such Highly Compensated Employee in accordance with the
procedure described herein. The Highly Compensated Employees with the
highest amount of contributions shall have their contributions distributed to
the extent required to eliminate the Excess Aggregate Contributions or, if it
results in a lower distribution, to the extent required to cause such Highly
Compensated Employees' contributions to equal the amount of contributions of
the Highly Compensated Employees with the next highest level of
contributions. This procedure shall be repeated until the Excess Aggregate
Contributions are completely distributed.
(3) The terms "employee contributions" and "matching contributions" shall,
for purposes of this section, have the meanings set forth in Treas. Reg.
1.401(m)-1(f).
3.14 Correction of Multiple Use.
(a) If the limitations of Treas. Reg. 1.401(m)-2 are exceeded for any Plan
Year, then correction shall be made in accordance with the provisions of this
section. This section shall be administered and interpreted in accordance
with sections 401(k) and 401(m) of the Code.
(b) Any correction required by this section shall be calculated and
administered in accordance with the provisions for correcting Excess
Contributions (in section 3.11), Excess Aggregate Contributions (in section
3.13) or both, as the Administrator determines in its sole discretion. Any
correction required by this section, to the extent possible, shall be made
only with respect to those Highly Compensated Employees who are eligible in
both the arrangement subject to section 401(k) of the Code and the Plan, as
subject to section 401(m) of the Code.
ARTICLE IV
Investment of Accounts
4.1 Election of Investment Funds.
(a) Except as otherwise prescribed in subsections (b) and (c)
below, upon enrollment in the Plan, each Participant shall direct that the
funds in the Participant's Account be invested in increments of one percent
(1%) in one or more of the following investment funds:
(1) Fund A. An equity fund designated by the
Administrator;
(2) Fund B. A fixed income fund designated by the
Administrator;
(3) Fund C. Common Stock fund;
(4) Fund D. A stock index fund designated by the
Administrator;
(5) Fund E. A balanced fund designated by the
Administrator;
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18
(6) Fund F. A growth fund designated by the
Administrator, investing primarily in equities of companies of all types and
sizes;
(7) Fund G. A growth fund designated by the
Administrator, investing primarily in equities of well-known and established
companies;
(8) Fund H. General Motors Class H stock fund;
(9) Fund I. Raytheon Company Class A stock fund.
(b) Amounts contributed to a Participant's Matching
Contribution Account must be invested in Fund C (Common Stock fund) until the
end of two (2) full Plan Years following the Plan Year for which such
contributions are made. Thereafter, a Participant may designate the
investment of the Matching Contribution funds in accordance with the
provisions of subsection (a) above.
(c) The only assets that may be invested in Fund H or Fund I
are the General Motors Class H stock and cash directly transferred from the
Hughes California Hourly Employees' Thrift and Savings Plan pursuant to
section 3.7(b)(4). A Participant may not direct that any other funds in the
Participant's Account be invested in Fund H or Fund I. Notwithstanding
subsection (d) below, the Administrator shall maintain Fund H and Fund I as
investment options under the Plan, subject to the limitations prescribed in
this subsection (c), for five (5) complete Plan Years following the Effective
Date; provided, however, that if at any time prior to the expiration of such
five (5) year period, the aggregate fair market value of the assets invested
in either Fund H or Fund I falls below five percent (5%) of the highest fair
market value of the assets invested in Fund H or Fund I, respectively, the
Administrator may, with six (6) months written notice to affected
Participants, eliminate Fund H or Fund I, as applicable, as investment
options under the Plan. Notwithstanding the foregoing, the Administrator may
eliminate one or both funds at any time if the Administrator determines in
good faith that such elimination is necessary under applicable law (including
without limitation the prudence requirements of ERISA). When Fund H and Fund
I are eliminated in accordance with this section 4.1(c), Participants with
assets invested in Fund H or Fund I, as applicable, shall direct the transfer
of such assets to other funds available under the Plan or, if no such
election is made, the Administrator shall transfer such assets to Fund B or a
similar low risk fixed income fund as determined by the Administrator in its
discretion.
(d) In its discretion, the Administrator may from time to time
designate new funds and, where appropriate, preclude investment in existing
funds and provide for the transfer of Accounts invested in those funds to
other funds selected by the Participant or, if no such election is made, to
Fund B or similar low risk fixed income fund as determined by the
Administrator in its discretion.
(e) Except as otherwise prescribed in subsections (b) and (c)
above, a Participant's investment election will apply to the entire Account
of the Participant.
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19
(f) In establishing rules and procedures under section 4.1, the
following shall apply:
(1) Each Participant, Beneficiary or Alternate Payee
shall affirmatively elect to self-direct the investment of assets in his or
her Account, but such election may provide for default investments in the
absence of specific directions from such Participant, Beneficiary or
Alternate Payee.
(2) The investment directions of a Participant shall
continue to apply after that Participant's death or incompetence until the
Beneficiary (or, if there is more than one Beneficiary for that Account, all
of the Beneficiaries), guardian or other representatives provide contrary
direction.
(3) The Administrator may decline to implement investment
designations if such investment, in the Administrator's judgment:
(A) would result in a prohibited transaction under
section 4975 of the Code;
(B) would generate income taxable to the Trust
Fund;
(C) would not be in accordance with the Plan and
Trust;
(D) would cause a Fiduciary to maintain the indicia
of ownership of any assets of the Trust Fund outside the jurisdiction of the
district courts of the United States other than as permitted by section
404(b) of ERISA and Labor Reg. 2550.404(b)-1;
(E) would jeopardize the Plan's tax qualified
status under the Code;
(F) could result in a loss in excess of the amount
credited to the Account; or
(G) would violate any other requirements of the
Code or ERISA.
(4) Except as otherwise prescribed in subsections (b) and
(c) above, the Administrator may establish reasonable restrictions on the
frequency with which investment directions may be given, consistent with
section 404(c) of ERISA.
(5) The Administrator may establish limits on the use of
brokers, investment counsel or other advisors that may be utilized, including
specifying that all investments must be made through a designated broker or
brokers.
(6) The Administrator may establish limits on the types
of investments that are permitted.
<PAGE>
20
(g) Except as otherwise prescribed in subsections (b) and (c)
above, the Administrator shall establish such rules and procedures as may be
advisable or necessary to carry out the provisions of this section, with such
rules and procedures being consistent with section 404(c) of ERISA.
(h) The Administrator shall establish such rules and procedures
as may be advisable or necessary to reasonably ensure that all transactions
involving the investment funds comply with all applicable laws, including the
securities laws.
4.2 Change in Investment Allocation of Future Deferrals. Except as
otherwise prescribed in sections 4.1(b) and (c), each Participant may elect
to change the investment allocation of future contributions effective as of
the first administratively feasible Business Day subsequent to telephone
notice to the Recordkeeper. Any changes must be made either in increments of
one percent (1%) of the Participant's Account or in a specified whole dollar
amount and must result in a total investment of one hundred percent (100%) of
the Participant's Account.
4.3 Transfer of Account Balances Between Investment Funds. Except as
otherwise prescribed in sections 4.1(b) and (c), each Participant may elect
to transfer all or a portion of the amount in his or her Account between
investment funds effective as of the first administratively feasible Business
Day following telephone notice to the Recordkeeper. In determining the
amount of the transfer, the Participant's Account shall be valued as of the
close of business on the Business Day on which telephone notice is received;
provided, however, that in any case where the telephone notice is received
after 4:00 p.m. Eastern Time (daylight or standard, whichever is in effect on
the date of the call), the Account shall be valued as of the close of
business on the next Business Day. Such transfers must be made in either one
percent (1%) increments of the entire Account or in a specified amount in
whole dollars and, as of the completion of the transfer, must result in
investment of one hundred percent (100%) of the Account. Transfers shall be
effected by telephone notice to the Recordkeeper.
4.4 Ownership Status of Funds. The Trustee shall be the owner of
record of the assets in the funds specified as Funds A, B, C, D, E, F, G, H
and I and such other funds as may be established by the Administrator. The
Administrator shall have records maintained as of the Valuation Date for each
fund allocating a portion of the fund to each Participant who has elected
that his or her Account be invested in such fund. The records shall reflect
each Participant's portion of Funds A, B, D, E, F and G and such other funds
as may be established by the Administrator, in a cash amount and shall
reflect each Participant's portion of Funds C, H and I in cash and unitized
shares of stock.
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21
4.5 Voting Rights. Participants whose Account has shares of
participation in Funds C or I on the last business day of the second month
preceding the record date (the "Voting Eligibility Date") for any meeting of
stockholders have the right to instruct the Trustee as to voting at such
meeting. The number of votes is determined by dividing the value of the
shares in the Participant's Account in Funds C or I, as applicable, by the
closing price of the respective classes of stock on the Voting Eligibility
Date. If the Trustee has not received instructions from a Participant as to
voting of shares within a specified time, then the Trustee shall not vote
those shares. If a Participant furnishes the Trustee with a signed vote
direction card without indicating a voting choice thereon, the Trustee shall
vote the Participant's shares as recommended by management. In addition,
each Participant shall have the right to accept or reject any tender or
exchange offer for shares of the respective classes of stock. The Trustee
shall vote (or tender or exchange) all combined fractional shares of the
respective classes of stock to the extent possible in the same proportion as
the shares which have been voted (or tendered or exchanged) by each
Participant. Any instructions as to voting (or tender or exchange) received
from an individual Participant shall be held in confidence by the Trustee and
shall not be divulged to the Adopting Employers or to any officer or employee
thereof or to any other person.
4.6 Allocation of Earnings.
(a) (1) The Administrator, as of each Valuation Date, shall
adjust the amounts credited to the Accounts (including Accounts for persons
who are no longer Employees) so that the total of such Account balances
equals the fair market value of the Trust Fund assets as of such Valuation
Date. Except as otherwise provided herein, any changes in the fair market
value of the Trust Fund assets since the preceding Valuation Date shall be
charged or credited to each Account in the ratio that the balance in each
such Account as of the preceding Valuation Date bears to the balances in all
Accounts as of that Valuation Date with appropriate adjustments to reflect
any distributions, allocations or similar adjustments to such Account or
Accounts since that Valuation Date.
(2) To the extent that separate investment funds are
established (as provided in section 4.1), the adjustments required by
subsection (a)(1) shall be made by applying subsection (a)(1) separately for
each such investment fund so that any changes in the net worth of each such
investment fund are charged or credited to the portion of each Account
invested in such investment fund in the ratio that the portion of each such
Account invested in such investment fund as of the preceding Valuation Date
(reduced by any distributions made from that portion of such Account since
that Valuation Date) bears to the total amount credited to such investment
funds as of that Valuation Date (reduced by distributions made from such
investment fund since that Valuation Date).
(3) Interim valuations, in accordance with the foregoing
procedure, may be made at such time or times as the Administrator directs.
(b) The Administrator may, in its sole discretion, direct the
Trustee to segregate and separately invest any Trust Fund assets. If any
assets are segregated in this fashion, the earnings or losses on such assets
shall be determined apart from other Trust assets and shall be adjusted on
each Valuation Date, or at such other times as the Administrator deems
necessary, in accordance with this section.
<PAGE>
22
ARTICLE V
Vesting
5.1 Elective Deferral, Employee After-Tax Contributions, Rollover
Contribution and Qualified Nonelective Contribution Accounts. Each
Participant shall have a Nonforfeitable right to any amounts in the
Participant's Elective Deferral, Employee After-Tax Contribution, Rollover
Contribution and Qualified Nonelective Contribution Accounts.
5.2 Matching Contribution Account.
(a) Each Participant shall have a Nonforfeitable right to his or her
Matching Contribution Account upon the earliest of:
(1) the Participant's completion of a Period of Service of five (5) years;
(2) the Participant's completion of a Period of Participation of three (3)
years;
(3) the Participant's Retirement, death while an Employee, Disability or
attainment of Normal Retirement Age; or
(4) the Participant's Layoff or Severance from Service due to Qualified
Military Service.
5.3 Break in Service Rules
(a) Periods of Service. In determining the length of a Period
of Service, the Administrator shall include all Periods of Service, except
the following Periods of Service shall not be taken into account:
(1) in the case of a Participant who has not made
Elective Deferrals to the Plan, the Period of Service before any Period of
Severance which equals or exceeds five (5) consecutive years; and
(2) in the case of a Participant who has made Elective
Deferrals to the Plan and who has incurred a Period of Severance which equals
or exceeds five (5) years, the Period of Service after such Period of
Severance shall not be taken into account for purposes of determining the
nonforfeitable interest of such Participant in the Matching Contributions
allocated to his or her Account before such Period of Severance.
(b) Periods of Severance. In determining the length of a
Period of Service for purposes of section 14.40, the Administrator shall
include any period of time beginning on an Employee's Severance from Service
Date and ending on the date on which he or she is next credited with an Hour
of Service, provided that such Hour of Service is credited within the twelve-
(12) consecutive month period following such Severance from Service Date.
<PAGE>
23
(c) Other Periods. In making the determinations described in
subsections (a) and (b) of this section, the second, third, and fourth
consecutive years of a Layoff (from the first anniversary of the last day
paid to the fourth anniversary of the last day paid) and any period in excess
of one (1) year of an Authorized Leave of Absence shall be regarded as
neither a Period of Service nor a Period of Severance.
ARTICLE VI
Withdrawals and Distribution of Benefits
6.1 In-Service Withdrawals - Matching Contributions. Upon completion
of a Period of Participation of five (5) years, a Participant may withdraw,
subject to a minimum withdrawal amount of two hundred fifty dollars ($250),
all or part of the Participant's Matching Contribution Account. Withdrawals
will be based upon the value of the Account as determined under section 6.16.
Withdrawals from Funds A, B, D, E, F and G, and such other funds as may be
established by the Administrator will be made in cash; withdrawals from Funds
C, H and I will be made in cash or stock (with cash for fractional or
uninvested shares) as directed by the Participant. Funds for the withdrawal
will be taken on a pro rata basis against the Participant's investment fund
balances in the Participant's Matching Contribution Account.
6.2 In-Service Withdrawals -- Elective Deferral and Qualified
Nonelective Contribution Accounts. While an Employee, a Participant may
withdraw all or a portion of his or her Elective Deferral Account and
Qualified Nonelective Contribution Account on or after attainment of age
fifty-nine and one-half (591/2).
6.3 In-Service Withdrawal -- Hardship.
(a) A Participant who has experienced a hardship, as described
in this section, may withdraw from his or her Elective Deferral Account
amounts attributable to Elective Deferrals (adjusted for net losses, if any).
Whether a Participant is entitled to a withdrawal under this section is to be
determined by the Administrator in accordance with nondiscriminatory and
objective standards. In order to be entitled to a hardship withdrawal under
this section, a Participant must satisfy the requirements of both subsection
(b) and subsection (c).
(b) A Participant will be deemed to have experienced an
immediate and heavy financial need necessary to satisfy the requirements of
this subsection if the withdrawal is on account of:
(1) medical expenses described in section 213(d) of
the Code incurred by the Participant, the Participant's spouse or any
dependents of the Participant;
(2) the purchase (excluding mortgage payments) of a
principal resident of the Participant;
(3) payment of tuition for the next twelve (12)
months of post-secondary education for the Participant or his or her spouse,
children or dependents; or
<PAGE>
24
(4) the need to prevent the eviction of the
Participant from his or her principal residence or the foreclosure on the
mortgage of the Participant's principal residence.
(c)(1) A withdrawal under this subsection will be deemed
necessary to satisfy an immediate and heavy financial need of the Participant
if it satisfies the requirements of this subsection. To the extent the
amount of the withdrawal would be in excess of the amount required to relieve
the financial need of the Participant or to the extent such need may be
satisfied from other resources that are reasonably available to the
Participant, such withdrawal shall not satisfy the requirements of this
subsection. For purposes of this subsection, a Participant's resources shall
be deemed to include those assets of his or her spouse or minor children that
are reasonably available to the Participant.
(2) A withdrawal may be treated as necessary to satisfy a
financial need if the Administrator reasonably relies upon the Participant's
representation that the need cannot be relieved:
(A) through reimbursement or compensation by
insurance or otherwise;
(B) by reasonable liquidation of the Participant's
assets to the extent such liquidation would not itself cause an immediate and
heavy financial need;
(C) by cessation of Elective Deferrals under the
Plan for at least twelve (12) months after receipt of the hardship
withdrawal;
(D) by other distributions or nontaxable (at the
time of the loan) loans from plans maintained by the Adopting Employers or by
any other employer or by borrowing from commercial sources on reasonable
commercial terms.
(d) If a Participant receives a withdrawal for reasons of financial
hardship, the Participant's Elective Deferrals shall be reduced to four percent
(4%) (or such lower percentage as the Participant shall thereafter designate),
if in excess thereof as of the date of the distribution, and shall not be
increased during the twelve (12) months immediately subsequent to the date of
distribution.
(e) Withdrawals of less than two hundred fifty dollars ($250) will not
be permitted.
(f) Withdrawals will be based upon the value of the Account as
determined under section 6.16.
(g) Payment of the amount withdrawn will be made as soon as reasonably
practicable after the effective date of the withdrawal.
<PAGE>
25
(h) Withdrawals from Funds A, B, D, E, F and G, and such other funds
as may be established by the Administrator, will be made in cash. Withdrawals
from Funds C, H and I will be made in cash or stock (with cash for fractional or
unissued shares) as elected by the Participant.
(i) Funds for the withdrawal will be taken on a pro rata basis against
the Participant's investment fund balances in the Participant's Elective
Deferral Account.
6.4 In-Service Withdrawal -- Rollover Contribution Account. A
Participant may withdraw all or a portion of his or her Rollover Contribution
Account. Withdrawals will be based upon the value of the Account as
determined under section 6.16. Payment of the amount withdrawn will be made
as soon as reasonably practicable after the effective date of the withdrawal.
Withdrawals from Funds A, B, D, E, F and G will be made in cash. Withdrawals
from Funds C, H and I will be made in cash or stock (with cash for fractional
or unissued shares) as elected by the Participant. Withdrawals of less than
two hundred fifty dollars ($250) will not be permitted.
6.5 In-Service Withdrawals -- Employee After-Tax Contributions. A
Participant may withdraw all or a portion of his or her Employee After-Tax
Contributions. Withdrawals will be based upon the value of the Account as
determined under section 6.16. Payment of the amount withdrawn will be made
as soon as reasonably practicable after the effective date of the withdrawal.
Withdrawals from Funds A, B, D, E, F and G will be made in cash. Withdrawals
from Funds C, H and I will be made in cash or stock (with cash for fractional
or unissued shares) as elected by the Participant.
6.6 Redeposits Prohibited. No amount withdrawn pursuant to sections
6.1, 6.2, 6.3, 6.4 or 6.5 may be redeposited in the Plan.
6.7 Distribution of Benefits.
(a) All benefits payable under this Plan shall be paid in the
manner and at the times specified in this ARTICLE. Any payments to
Participants or Beneficiaries shall be made in cash (or cash equivalents)
except as otherwise provided herein. Distributions may be made wholly or
partly by an in-kind distribution of assets held by the Trust Fund if the
distributee consents to such an in-kind distribution and the Administrator
determines that such an in-kind distribution is not administratively
burdensome.
(b) All payment methods and distributions shall comply with the
requirements of sections 401(a)(4) and 401(a)(9) of the Code and the
regulations thereunder and, if necessary, shall be interpreted to so comply.
The provisions of this ARTICLE apply to all amounts credited to an Account,
regardless of the source of such amounts. All distributions shall comply
with the incidental death benefit requirement of section 401(a)(9)(G) of the
Code. Distributions shall comply with the regulations under section
401(a)(9) of the Code, including Treas. Reg. 1.401(a)(9)-2. The provisions
of the Plan reflecting section 401(a)(9) of the Code override any
distribution provisions in the Plan inconsistent with section 401(a)(9).
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26
(c) Distribution of the Participant's Account (to which the
Participant has a Nonforfeitable right) will be made at the direction of the
Participant (or his or her legal representative or Beneficiary in the case of
his or her Disability or death) upon the Retirement, Disability, death or
Severance from Service of the Participant. In the event the Participant dies
or his or her Severance from Service occurs after his or her Normal
Retirement Age, or if the value of the Nonforfeitable portion of the
Participant's Account as of the Valuation Date which coincides with or
immediately precedes the date of distribution is not in excess of three
thousand five hundred dollars ($3,500), the Administrator shall cause the
distribution to automatically be made.
(d) Payment will be made in the form of a lump-sum distribution of the
entire amount in the Participant's Account (to which the Participant has a
Nonforfeitable right), which will be paid as soon as practicable following
notification to the Benefits and Services Department, Raytheon Company,
Lexington, Massachusetts, of the Retirement, death, Disability or Severance from
Service and a telephone request by the Participant to the Recordkeeper for the
distribution. Distributions will be based upon the value of the Account as
determined under section 6.16. Distribution of the amounts in said accounts in
the funds designated in Funds A, B, D, E, F and G, and such other funds as may
be established by the Administrator, will be made in cash. Distribution of the
amounts in Funds C, H and I (if any) will be made in either cash or stock, at
the election of the Participant or, in the case of death, the Participant's
Beneficiary. Partial deferrals will not be permitted. If there is no Beneficiary
surviving a deceased Participant at the time payment of his or her Account is to
be made, such payment shall be made in a lump-sum to the person or persons in
the first following class of successive Beneficiaries surviving, any
testamentary devise or bequest to the contrary notwithstanding: the
Participant's (1) spouse, (2) children and issue of deceased children by right
of representation, (3) parents, (4) brothers and sisters and issue of deceased
brothers and sisters by right of representation, or (5) executors or
administrators. If no Beneficiary can be located during a period of seven (7)
years from the date of death, the amount of the distribution shall revert to the
Trust and be treated in the same manner as a forfeiture under section 3.6.
(e) If the Participant dies before the time when distribution is
considered to have commenced in accordance with applicable regulations, then any
remaining portion of the Participant's interest will be distributed within five
(5) years after the Participant's death. If a distribution is considered to have
commenced in accordance with the applicable regulations before the Participant's
death, the remaining interest will be distributed at least as rapidly as under
the method of distribution being used as of the date of the Participant's death.
(f) Except as provided by section 401(a)(9) of the Code as set forth
in this section, benefits in the Plan will be distributed to each Participant
not later than the sixtieth (60th) day after the close of the Plan Year in which
the latest of the following events occurs:
(1) attainment by the Participant of Normal Retirement Age;
(2) the tenth (10th) anniversary of the date on which
Participant commenced participation in the Plan; or
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27
(3) Participant's Severance from Service.
6.8 Mandatory Distributions.
A Participant who has attained age seventy and one-half (701/2) and
is subject to the mandatory distribution requirements of section 401(a)(9)
shall receive a lump sum distribution of the Participant's Account (to which
the Participant has a nonforfeitable right) at the time distributions must
commence in order to comply with such requirements. If additional amounts
are allocated to the Participant's Account following such lump sum
distribution, additional lump sum distributions of the Participant's Account
(to which the Participant has a nonforefeitable right) shall be made at such
times any mandatory distributions are required to comply with section
401(a)(9). Such payments shall be made notwithstanding any contrary
provisions of the Plan or election made by such Participant.
6.9 Commencement of Benefits.
(a) Except as otherwise provided in this ARTICLE, distribution
to a Participant (or Beneficiary) shall commence within a reasonable period
of time following the Participant's Retirement, Disability, death or
Severance from Service.
(b) If the vested amount in the Participant's Account exceeds
or ever exceeded three thousand five hundred dollars ($3, 500), then payment
to the Participant shall not commence before such Participant has attained
age sixty-five (65), unless the Participant requests an earlier distribution.
Such request must be made not more than ninety (90) days before the
commencement of the distribution.
6.10 Payments to Incompetents. If a Participant or Beneficiary
entitled to receive any benefits hereunder is adjudicated to be legally
incapable of giving valid receipt and discharge for such benefits, the
benefits may be paid to the duly authorized personal representative of such
Participant or Beneficiary.
6.11 Income Tax Withholding. To the extent required by section 3405
of the Code, distributions and withdrawals from the Plan shall be subject to
federal income tax withholding.
6.12 Direct Rollovers.
(a) A Participant may elect that all or any portion of a
distribution that would otherwise be paid as an Eligible Rollover
Distribution shall instead be transferred as a Direct Rollover.
(b)(1) The Administrator shall determine and apply rules and
procedures as it deems reasonable with respect to Direct Rollovers in
addition to, or in lieu of, those set forth in subsection (b)(2). The
Administrator may change such rules and procedures from time to time and
shall not be bound by any previous rules and procedures it has applied.
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28
(2) Unless otherwise determined by the Administrator, the
following rules and procedures shall apply to this section:
(A) A Direct Rollover shall not be permitted to
more than one Eligible Retirement Plan.
(B) A Direct Rollover shall not be permitted if it
constitutes less than the full amount of the Eligible Rollover Distribution.
(c) The following terms shall have the meanings specified:
(1) Direct Rollover. An available distribution that is
paid directly to an Eligible Retirement Plan for the benefit of the
distributee.
(2) Distributee. A Participant or former Participant.
In addition, the Participant's or former Participant's Surviving Spouse or
former spouse who is the Alternate Payee under a Qualified Domestic Relations
Order, as defined in section 414(p) of the Code, are Distributees with regard
to the interest of the spouse or former spouse.
(3) Eligible Retirement Plan. An individual retirement
account described in section 408(a) of the Code, an individual retirement
annuity (other than an endowment contract) described in section 408(b) of the
Code, a qualified trust described in section 401(a) of the Code if such
qualified trust is part of a plan that permits acceptance of Direct Rollovers
or an annuity plan described in section 403(a) of the Code. In the case of a
Direct Rollover for the benefit of the spouse or former spouse of a
Participant, the term "Eligible Retirement Plan" shall only include an
individual retirement account described in section 408(a) of the Code and an
individual retirement annuity (other than an endowment contract) described in
section 408(b) of the Code.
(1) Eligible Rollover Distribution. Any distribution
under the Plan to a Participant, a Participant's spouse or a Participant's
former spouse, except for the following:
(A) Any distribution to the extent the distribution
is required under section 401(a)(9) of the Code.
(B) The portion of any distribution that is not
includable in gross income (determined without regard to the exclusion for
net unrealized appreciation described in section 402(e)(4) of the Code).
(C) Returns of elective deferrals described in
Treas. Reg. 1.415-6(b)(6)(iv) that are returned as a result of the
limitations under section 415 of the Code.
(D) Corrective distributions of excess
contributions and excess deferrals under qualified cash or deferred
arrangements as described in Treas. Reg. 1.401(k)-1(f)(4) and
1.402(g)-1(e)(3), respectively, and corrective distributions of excess
aggregate contributions as described in Treas. Reg. 1.401(m)-1(e)(3),
together with the income allocable to these corrective distributions.
<PAGE>
29
(E) Loans treated as distributions under section
72(p) of the Code and not excepted by section 72(p)(2) of the Code.
(F) Loans in default that are deemed distributions.
(G) Dividends paid on employer securities as
described in section 404(k) of the Code.
(H) The costs of life insurance coverage.
(I) Similar items designated by the Internal
Revenue Service in revenue rulings, notices, and other guidance of general
applicability.
6.13 Notice and Payment Elections.
(a) The Administrator shall provide Participants or other
Distributees of Eligible Rollover Distributions with a written notice
designed to comply with the requirements of section 402(f) of the Code. Such
notice shall be provided within a reasonable period of time before making an
Eligible Rollover Distribution.
(b) Any elections concerning the payment of benefits under
section 6.7 shall be made on a form prescribed by the Administrator. The
Participant or other Distributee shall submit a completed form to the
Administrator at least thirty (30) days before payment is scheduled to
commence, unless the Administrator agrees to a shorter time period. Any
election made under this section shall be revocable until thirty (30) days
before payment is scheduled to commence.
(c) An election to have payment made in a Direct Rollover shall
only be valid if the Participant or other Distributee provides adequate
information to the Administrator for the implementation of such Direct
Rollover and such reasonable verification as the Administrator may require
that the transferee is an Eligible Retirement Plan.
6.14 Qualified Domestic Relations Orders.
(a) Notwithstanding any contrary provision of the Plan,
payments shall be made in accordance with any judgment, decree or order
determined to be a Qualified Domestic Relations Order.
(b)(1) If the Plan receives a Domestic Relations Order, the
Administrator shall promptly notify the Participant and each Alternate Payee
of the receipt of such order and of the Plan's procedures for determining
whether such order is a Qualified Domestic Relations Order. The
Administrator shall, within a reasonable period after receipt of such order,
determine whether it is a Qualified Domestic Relations Order and notify the
Participant and each Alternate Payee of that determination.
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30
(2) During any period in which the issue of whether a
Domestic Relations Order is a Qualified Domestic Relations Order is being
determined, the Administrator shall separately account for the amounts that
would have been payable to the Alternate Payee during such period if the
order had been determined to be a Qualified Domestic Relations Order.
(c)(1) A Domestic Relations Order meets the requirements of
this subsection only if such order clearly specifies the following:
(A) the name and last known mailing address (if
any) of the Participant and the name and mailing address of each Alternate
Payee covered by the order;
(B) the amount or the percentage of the
Participant's benefits to be paid by the Plan to each such Alternate Payee or
the manner in which such amount or percentage is to be determined;
(C) the number of payments or period to which such
order applies; and
(D) each plan to which such order applies.
(2) A Domestic Relations Order meets the requirements of
this subsection only if such order does not:
(A) require the Plan to provide any type or form of
benefit or any option not otherwise provided under the Plan;
(B) require the Plan to provide increased benefits
(determined on the basis of actuarial value); and
(C) does not require the payment of benefits to an
Alternate Payee that are required to be paid to another Alternate Payee under
another order previously determined to be a Qualified Domestic Relations
Order.
(d) A domestic relations order shall not be treated as failing to meet
the requirements of section 6.14(c)(2)(A) solely because such order requires
that payment of benefits be made to an Alternate Payee:
(1) in the case of any payment before a Participant has
separated from service, on or after the date on which the Participant attains
(or would have attained) the Earliest Retirement Date;
(2) as if the Participant had retired on the date on
which such payment is to begin under such order (but taking into account only
the present value of the benefits actually accrued and not taking into
account the present value of any employer subsidy for early retirement); and
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31
(3) in any form in which such benefits may be paid under
the Plan to the Participant (other than in the form of a qualified joint and
survivor annuity with respect to the Alternate Payee and his or her
subsequent spouse).
(e) A domestic relations order shall not be treated as failing to meet
the requirements of section 6.14(c)(2)(A) solely because such order requires
that payment of benefits be made to an Alternate Payee at a date before the
Participant is entitled to receive a distribution. Such distribution shall be
made to such Alternate Payee notwithstanding any contrary provision of the Plan.
(f) The following terms shall have the meanings specified:
(1) Alternate Payee. Any spouse, former spouse, child or
other dependent of a Participant who is recognized by a Domestic Relations
Order as having a right to benefits under the Plan with respect to such
Participant.
(2) Domestic Relations Order. A judgment, decree or
order relating to child support, alimony or marital property rights, as
defined in section 414(p)(1)(B) of the Code.
(3) Earliest Retirement Date. The earlier of:
(A) the date on which the Participant is entitled
to a distribution under the Plan; or
(B) the later of:
(i) the date the Participant attains age
fifty (50); or
(ii) the earliest date on which the
Participant could begin receiving benefits under the Plan if the Participant
separated from service.
(4) Qualified Domestic Relations Order. A Domestic
Relations Order that satisfies the requirements of subsection (c) and section
414(p)(1)(A) of the Code.
(g) If an Alternate Payee entitled to payment under this section is
the spouse or former spouse of a Participant and payment will otherwise be made
in an Eligible Rollover Distribution, then such spouse or former spouse may
elect that all, or any portion, of such payment shall instead be transferred as
a Direct Rollover. Such Direct Rollover shall be governed by the requirements of
section 6.12.
(h) If a Domestic Relations Order directs that payment be made to an
Alternate Payee before the Participant's Earliest Retirement Date and such
Domestic Relations Order otherwise qualifies as a Qualified Domestic Relations
Order, then the Domestic Relations Order shall be treated as a Qualified
Domestic Relations Order and such payment shall be made to the Alternate Payee,
even though the Participant is not entitled to receive a distribution under the
Plan because he or she continues to be an Employee of one of the Adopting
Employers.
(i) This section shall be interpreted and administered in
accordance with section 414(p) of the Code.
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32
6.15 Lost Beneficiaries.
(a) All Participants and Beneficiaries shall have the
obligation to keep the Administrator informed of their current address until
such time as all benefits due have been paid.
(b) If any amount is payable to a Participant or Beneficiary
who cannot be located to receive such payment, such amount may, at the
discretion of the Administrator, be forfeited; provided, however, that if
such Participant or Beneficiary subsequently claims the forfeited amount, it
shall be reinstated and paid to such Participant or Beneficiary. Such
reinstatement may, in the Administrator's sole discretion, be made from
Company Contributions, forfeitures or Trust earnings, and shall be treated as
a special allocation that supersedes the normal allocation rules.
(c) If the Administrator has not, after due diligence, located
a Participant or Beneficiary who is entitled to payment within three (3)
years after the Participant's Severance from Service, then, at the discretion
of the Administrator, such person may be presumed deceased for purposes of
this Plan. Any such presumption of death shall be final, conclusive and
binding on all parties.
6.16 Determination of Amount of Withdrawal or Distribution. In
determining the amount of any withdrawal or distribution hereunder, the
Participant's Account shall be valued as of the close of business on the
Business Day on which telephone notice is received; provided, however, that
in any case where the telephone notice is received after 4:00 p.m. Eastern
Time (daylight or standard, whichever is in effect on the date of the call),
the Account shall be valued as of the close of business on the next Business
Day.
6.17 Offsets. Any transfers or payments made from a Participant's
Account to a person other than the Participant pursuant to the provisions of
this Plan shall reduce the Participant's Account and offset any amounts
otherwise due to such Participant. Such transfers or payments shall not be
considered a forfeiture for purposes of the Plan.
ARTICLE VII
Loans
7.1 Availability of Loans. Participants may borrow against all or a
portion of the balance in the Participant's Elective Deferral Account,
Employee After-Tax Contribution Account and Rollover Contribution Account,
and the Matching Contribution Account if the Participant has a Nonforfeitable
right thereto pursuant to section 5.2, subject to the limitations set forth
in this ARTICLE. Participants who have incurred a Severance from Service
will not be eligible for a Plan loan. The Vice President, Human Resources,
is authorized to administer this loan program.
7.2 Minimum Amount of Loan. No loan of less than five hundred
dollars ($500) will be permitted.
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33
7.3 Maximum Amount of Loan. No loan in excess of fifty percent (50%)
of the Participant's Nonforfeitable Account balance will be permitted. In
addition, limits imposed by the Code and any other requirements of applicable
statute or regulation will be applied. Under the current requirements of the
Code, if the aggregate value of a Participant's Nonforfeitable Account
balance exceeds twenty thousand dollars ($20,000), the loan cannot exceed the
lesser of one-half (1/2) the Participant's Nonforfeitable Account balance or
fifty thousand dollars ($50,000) reduced by the excess of (a) the highest
outstanding balance of loans from the Plan during the one-year period ending
on the day before the date on which such loan was made over (b) the
outstanding balance of loans from the Plan on the date on which such loan was
made.
7.4 Effective Date of Loans. Loans will be effective as specified in
the Administrator's rules then in effect.
7.5 Repayment Schedule. The Participant may select a repayment
schedule of one, two, three, four or five (1, 2, 3, 4 or 5) years. If the
loan is used to acquire any dwelling which, within a reasonable time is to be
used (determined at the time the loan is made) as the principal residence of
the Participant, the repayment period may be extended up to fifteen (15)
years at the election of the Participant. All repayments will be made
through payroll deductions in accordance with the loan agreement executed at
the time the loan is made, except that, in the event of the sale of all or a
portion of the business of the Employer or one of the Adopting Employers, or
other unusual circumstances, the Administrator, through uniform and equitable
rules, may establish other means of repayment. The loan agreement will
permit repayment of the entire outstanding balance in one lump-sum. The
minimum repayment amount per pay period is ten dollars ($10) for Participants
paid weekly and fifty dollars ($50) for Participants paid monthly. The
repayment schedule shall provide for substantially level amortization of the
loan. Loan repayments will be suspended under this Plan as permitted under
section 414(u) of the Code.
7.6 Limit on Number of Loans. No more than two (2) loans may be
outstanding at any time.
7.7 Interest Rate. The interest rate for a loan pursuant to this
ARTICLE will be equal to the prime rate published in The Wall Street Journal
on the first business day in June and December of each year. The rate
published on the first business day in June will apply to loans which are
effective at any time during the period July 1 through December 31
thereafter; the rate published on the first business day of December will
apply to loans which are effective at any time during the period January 1
through June 30 thereafter.
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34
7.8 Effect Upon Participant's Elective Deferral Account. Upon the
granting of a loan to a Participant by the Administrator, the allocations in
the Participant's Account to the respective investment funds will be reduced
on a pro rata basis and replaced by the loan balance which will be designated
as an asset in the Account. Such reduction shall be effected by reducing the
Participant's Accounts in the following sequence, with no reduction of the
succeeding Accounts until prior Accounts have been exhausted by the loan:
Matching Contribution Account; Elective Deferral Account; Rollover
Contribution Account; and Employee After-Tax Contribution Account. Upon
repayment of the principal and interest, the loan balance will be reduced,
the Participant Accounts will be increased in the reverse order in which they
were exhausted by the loan, and the loan payments will be allocated to the
respective investment funds in accordance with the investment election then
in effect.
7.9 Effect of Severance From Service and Nonpayment. In the event
that a loan remains outstanding upon the Severance from Service of a
Participant, the Participant will be given the option of continuing to repay
the outstanding loan. In any case where payments on the outstanding loan are
not made within ninety (90) days of the Participant's Severance from Service
Date, the amount of any unpaid principal will be deducted from the
Participant's account and reported as a distribution. If, as a result of
Layoff or Authorized Leave of Absence, a Participant, although still in a
Period of Service, is not being compensated through the Employer's payroll
system, loan payments will be suspended until the earliest of the first pay
date after the Participant returns to active employment with the Employer,
the Participant's Severance from Service Date, or the expiration of twelve
(12) months from the date of the suspension. In the event the Participant
does not return to active employment with the Employer, the Participant will
be given the option of continuing to repay the outstanding loan. If the
Participant fails to resume payments on the loan, the outstanding loan will
be reported as a taxable distribution. In no event, however, shall the loan
be deducted from the Participant's Account earlier than the date on which the
Participant (i) incurs a Severance from Service, or, (ii) attains age fifty-
nine and one-half (59-1/2).
ARTICLE VIII
Contribution and Benefit Limitations
8.1 Contribution Limits.
(a) The Annual Additions that may be allocated to a
Participant's Account for any Limitation Year shall not exceed the lesser of:
(1) thirty thousand dollars ($30,000); or
(2) twenty-five percent (25%) of the Participant's
Compensation for that Limitation Year.
(b) If the Employer maintains any other Defined Contribution
Plans then the limitations in subsection (a) shall be computed with reference
to the aggregate Annual Additions for each Participant from all such Defined
Contribution Plans.
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35
(c) If the Annual Additions for a Participant would exceed the
limits specified in this section, then the Annual Additions under this Plan
for that Participant shall be reduced to the extent necessary to prevent such
limits from being exceeded. Such reduction shall be made in accordance with
section 8.4.
8.2 Overall Limits.
(a) If a Participant is participating in both a Defined
Contribution Plan and a Defined Benefit Plan of the Employer, then the sum of
the Defined Contribution Fraction and the Defined Benefit Fraction for any
Limitation Year shall not exceed 1.0.
(b) If the sum of the Defined Contribution Fraction and the
Defined Benefit Fraction would exceed 1.0, then the annual benefits under the
Defined Benefit Plan shall be reduced to the extent necessary so that the sum
of such fractions does not exceed 1.0.
8.3 Annual Adjustments to Limits. The dollar limits for Annual
Additions and the dollar limits in the Defined Benefit Fraction and Defined
Contribution Fraction shall be adjusted for cost-of-living to the extent
permitted under section 415 of the Code.
8.4 Excess Amounts.
(a) The foregoing limits shall be limits on the allocation that
may be made to a Participant's Account in any Limitation Year. If an excess
Annual Addition would otherwise result from allocation of forfeitures,
reasonable errors in determining Compensation or other comparable reasons,
then the Administrator may take any (or all) of the following steps to
prevent the excess Annual Additions from being allocated:
(1) return any contributions from the Participant, as
long as such return is nondiscriminatory;
(2) hold the excess amounts unallocated in a suspense
account and apply the balance of the suspense account against Matching
Contributions for that Participant made in succeeding years;
(3) hold the excess amounts unallocated in a suspense
account and apply the balance of the suspense account against succeeding year
Matching Contributions;
(4) reallocate the excess amounts to other Participants.
(b) Any suspense account established under this section shall
not be credited with income or loss unless otherwise directed by the
Administrator. If a suspense account under this section is to be applied in
a subsequent Limitation Year, then the amounts in the suspense account shall
be applied before any Annual Additions (other than forfeitures) are made for
such Limitation Year.
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36
8.5 Definitions.
(a) The following terms shall have the meanings specified:
(1) Annual Addition. The sum for any Limitation Year of
additions (not including Rollover Contributions) to a Participant's Account
as a result of:
(A) Employer contributions (including Matching
Contributions, Qualified Nonelective Contributions and Elective Deferrals);
(B) Employee contributions;
(C) forfeitures; and
(D) amounts described in Code sections 415(l)(1)
and 419A(d)(2).
(2) Defined Benefit Fraction. A fraction, the numerator
of which is the Projected Annual Benefit of the Participant under all Defined
Benefit Plans of the Employer (determined as of the close of the Limitation
Year) and the denominator of which is the Projected Annual Benefit the
Participant would have under such plans (determined as of the close of the
Limitation Year) if such plans provided an annual benefit equal to the lesser
of:
(A) the product of 1.25 multiplied by ninety
thousand dollars ($90,000); or
(B) the product of 1.4 multiplied by one hundred
percent (100%) of the Participant's average Compensation for the
Participant's three (3) consecutive Years of Service that produce the highest
average Compensation.
For purposes of determining the Defined Benefit Fraction of
a Participant who was employed by an Adopting Employer on December 18, 1997
or who transferred to an Adopting Company from General Motors Corporation or
one of its affiliates after such date and before December 1, 1998, service
for and Compensation received from General Motors Corporation and its
affiliates, if any, shall be taken into account, and the Projected Annual
Benefit under any Defined Benefit Plan of the Employer shall not be reduced
as a result of the transfer of any assets or liabilities from a Defined
Benefit Plan maintained by General Motors Corporation and its affiliates.
<PAGE>
37
(3) Defined Benefit Plan. Any plan qualified under
section 401(a) of the Code that is not a Defined Contribution Plan.
(4) Defined Contribution Fraction. A fraction, the
numerator of which is the sum of the Annual Additions to the Participant's
Accounts as of the close of the Limitation Year, and the denominator of which
is equal to the sum of the lesser of the following amounts determined for
such Limitation Year and for each prior year of service with the Employer:
(A) the product of 1.25 multiplied by thirty
thousand dollars ($30,000); or
(B) the product of 1.4 multiplied by twenty-five
percent (25%) of the Participant's Compensation.
For purposes of determining the Defined Contribution Fraction of a
Participant, services performed for, Compensation paid by and Annual Additions
made by General Motors Corporation or any of its affiliates shall not be taken
into account.
(5) Defined Contribution Plan. A plan qualified under
section 401(a) of the Code that provides an individual account for each
Participant and benefits based solely on the amount contributed to the
Participant's Account, plus any income, expenses, gains and losses, and
forfeitures of other Participants which may be allocated to such
Participant's account.
(6) Limitation Year. The Plan Year, until the Employer
adopts a different Limitation Year.
(7) Projected Annual Benefit. The annual benefit to
which a Participant would be entitled, assuming:
(A) the Participant continues in employment until
Normal Retirement Age under the Plan;
(B) the Participant's Compensation for the
Limitation Year remains the same until such Normal Retirement Age; and
(C) all other relevant factors under the Plan for
the Limitation Year will remain constant.
(b) For purposes of this ARTICLE, the term "Compensation" shall
mean all amounts paid to an Employee for personal service actually rendered
to the Employer, including, but not limited to, wages, salary, commissions,
bonuses, overtime and other premium pay as specified in Treas. Reg. 1.415-
2(d)(2), but excluding deferred compensation, stock options, and other
distributions that receive special tax treatment as specified in Treas. Reg.
1.415-2(d)(3). For Plan Years beginning after 1997, Compensation for this
purpose will include salary reduction amounts under section 125 cafeteria plans
and section 401(k), 403(b) and 457 plans. This definition shall be
interpreted in a manner consistent with the requirements of section 415 of
the Code.
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38
ARTICLE IX
Top-Heavy Rules
9.1 General. This ARTICLE shall only be applicable if the Plan
becomes a Top-Heavy Plan under section 416 of the Code. If the Plan does not
become a Top-Heavy Plan, then none of the provisions of this ARTICLE shall be
operative. The provisions of this ARTICLE shall be interpreted and applied
in a manner consistent with the requirements of section 416 of the Code and
the regulations thereunder.
9.2 Vesting.
(a) If the Plan becomes a Top-Heavy Plan, then amounts in a
Participant's Account attributable to Matching Contributions shall be vested
in accordance with this section, in lieu of ARTICLE V, to the extent this
section produces a greater degree of vesting. This section shall only apply
to Participants who have at least an Hour of Service after the Plan becomes a
Top-Heavy Plan.
(b) If applicable, amounts in a Participant's Account
attributable to Matching Contributions shall vest as follows:
Years of
Top Heavy Service Vested Percentage
Fewer than 3 0%
3 or more 100%
(c) If the Plan ceases to be a Top-Heavy Plan then subsection
(b) shall no longer be applicable; provided, however, that in no event shall
the vested percentage of any Participant be reduced by reason of the Plan
ceasing to be a Top-Heavy Plan. Subsection (b) shall nevertheless continue
to apply for any Participant who was previously covered by it and who has at
least three (3) Years of Top-Heavy Service.
9.3 Minimum Contribution.
(a) For each Plan Year that the Plan is a Top-Heavy Plan, the
Adopting Employers shall make a contribution to be allocated directly to the
Account of each Non-Key Employee.
(b) The amount of the contribution (and forfeitures) required
to be contributed and allocated for a Plan Year by this section is three
percent (3%) of the Top-Heavy Compensation for that Plan Year of each Non-Key
Employee who is both a Participant and an Employee on the last day of the
Plan Year for which the contribution is made, with adjustments as provided
herein. If the contribution allocated to the Accounts of each Key Employee
for a Plan Year is less than three percent (3%) of his or her Top-Heavy
Compensation, then the contribution required by the preceding sentence shall
be reduced for that Plan Year to the same percentage of Top-Heavy
Compensation that was allocated to the Account of the Key Employee whose
Account received the greatest allocation of contributions for that Plan Year,
when computed as a percentage of Top-Heavy Compensation.
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39
(c) The contribution required by this section shall be reduced
for a Plan Year to the extent of any Company Contributions made and allocated
under this Plan or any other contributions from the Adopting Employers made
and allocated under this or any other Aggregated Plans. Elective Deferrals
shall be treated as if they were Company Contributions for purposes of
determining any minimum contributions required under subsection (b).
9.4 Definitions.
(a) The following terms shall have the meanings specified
herein:
(1) Aggregated Plans.
(A) The Plan, any plan that is part of a "required
aggregation group" and any plan that is part of a "permissive aggregation
group" that the Adopting Employers treat as an Aggregated Plan.
(B) The "required aggregation group" consists of
each plan of the Adopting Employers in which a Key Employee participates (in
the Plan Year containing the Determination Date or any of the four (4)
preceding Plan Years) and each other plan of the Adopting Employers which
enables any plan of the Adopting Employers in which a Key Employee
participates to meet the requirements of section 401(a)(4) or section 410(b)
of the Code. Also included in the required aggregation group shall be any
terminated plan that covered a Key Employee and was maintained within the
five (5) year period ending on the Determination Date.
(C) The "permissive aggregation group" consists of
any plan not included in the "required aggregation group" if the Aggregated
Plan described in subparagraph (A) above would continue to meet the
requirements of section 401(a)(4) and 410 of the Code with such additional
plan being taken into account.
(2) Determination Date. The last day of the preceding
Plan Year, or, in the case of the first plan year of any plan, the last day
of such plan year. The computations made on the Determination Date shall
utilize information from the immediately preceding Valuation Date.
(3) Key Employee.
(A) An Employee (or former Employee) who, at any
time during the Plan Year containing the Determination Date or any of the
four (4) preceding Plan Years, is:
(i) An officer of one of the Adopting
Employers with annual Top-Heavy Compensation for the Plan Year greater than
fifty percent (50%) of the amount in effect under section 415(c)(1)(A) of the
Code for the calendar year in which that Plan Year ends;
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40
(ii) one of the ten (10) Employees owning (or
considered as owning under section 318 of the Code) the largest interest in
one of the Adopting Employers, who has more than one-half of one percent
(.5%) interest in such Adopting Employer, and who has annual Top-Heavy
Compensation for the Plan Year at least equal to the maximum dollar
limitation under section 415(c)(1)(A) of the Code for the calendar year in
which that Plan Year ends;
(iii) a five percent (5%) or greater
shareholder in one of the Adopting Employers; or
(iv) a one percent (1%) shareholder in one of
the Adopting Employers with annual Top-Heavy Compensation from the Adopting
Employer of more than one hundred fifty thousand dollars ($150,000).
(B) For purposes of paragraphs (3)(A)(iii) and
(3)(A)(iv), the rules of section 414(b), (c) and (m) of the Code shall not
apply. Beneficiaries of an Employee shall acquire the character of such
Employee and inherited benefits will retain the character of the benefits of
the Employee who performed services.
(4) Non-Key Employee. Any Employee who is not a Key
Employee.
(5) Super Top-Heavy Plan. A Top-Heavy Plan in which the
sum of the present value of the cumulative accrued benefits and accounts for
Key Employees exceeds ninety percent (90%) of the comparable sum determined
for all Employees. The foregoing determination shall be made in the same
manner as the determination of a Top-Heavy Plan under this section.
(6) Top-Heavy Compensation. The term Top-Heavy
Compensation shall have the same meaning as the term Compensation has under
section 8.5(b).
(7) Top-Heavy Plan. The Plan is a Top-Heavy Plan for a
Plan Year if, as of the Determination Date for that Plan Year, the sum of
(i) the present value of the cumulative accrued benefits for Key Employees
under all Defined Benefit Plans that are Aggregated Plans and (ii) the
aggregate of the accounts of Key Employees under all Defined Contribution
Plans that are Aggregated Plans exceeds sixty percent (60%) of the comparable
sum determined for all Employees.
(8) Years of Top-Heavy Service. The number of Years of
Service with the Adopting Employers that might be counted under section
411(a) of the Code, disregarding all service that may be disregarded under
section 411(a)(4) of the Code.
(b) The definitions in this section and the provisions of this
ARTICLE shall be interpreted in a manner consistent with section 416 of the
Code.
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41
9.5 Special Rules.
(a) For purposes of determining the present value of the
cumulative accrued benefit for any Participant or the amount of the Account
of any Participant, such present value or amount shall be increased by the
aggregate distributions made with respect to such Participant under the Plan
during the Plan Year that includes the Determination Date and the four (4)
preceding Plan Years (if such amounts would otherwise have been omitted).
(b) (1) In the case of unrelated rollovers and transfers,
(i) the plan making the distribution or transfer is to count the distribution
as a distribution under section 416(g)(3) of the Code, and (ii) the plan
accepting the rollover or transfer is not to consider the rollover or
transfer as part of the accrued benefit if such rollover or transfer was
accepted after December 31, 1983, but is to consider it as part of the
accrued benefit if such rollover or transfer was accepted before January 1,
1984. For this purpose, rollovers and transfers are to be considered
unrelated if they are both initiated by the Employee and made from a plan
maintained by one employer to a plan maintained by another employer.
(2) In the case of related rollovers and transfers, the
plan making the distribution or transfer is not to count the distribution or
transfer under section 416(g)(3) of the Code, and the plan accepting the
rollover or transfer counts the rollover or transfer in the present value of
the accrued benefits. For this purpose, rollovers and transfers are to be
considered related if they are not unrelated under subsection (b)(1).
(c) If any individual is a Non-Key Employee with respect to any
plan for any Plan Year, but such individual was a Key Employee with respect
to such plan for any prior Plan Year, any accrued benefit for such Employee
(and the account of such Employee) shall not be taken into account.
(d) Beneficiaries of Key Employees and former Key Employees are
considered to be Key Employees and Beneficiaries of Non-Key Employees and
former Non-Key Employees are considered to be Non-Key Employees.
(e) The accrued benefit of an Employee who has not performed
any service for the Adopting Employer maintaining the Plan at any time during
the five (5) year period ending on the Determination Date is excluded from
the calculation to determine top-heaviness. However, if an Employee performs
no services, such Employee's total accrued benefit is included in the
calculation for top-heaviness.
9.6 Adjustment of Limitations.
(a) If this section is applicable, then the contribution and
benefit limitations in section 8.5 shall be reduced. Such reduction shall be
made by modifying section 8.5(a)(2)(A) of the definition of Defined Benefit
Fraction to instead be "(i) the product of 1.0 multiplied by ninety thousand
dollars ($90,000), or" and by modifying section 8.5(a)(4)(A) of the
definition of Defined Contribution Fraction to instead be "(i) the product of
1.0 multiplied by thirty thousand dollars ($30,000), or".
<PAGE>
42
(b) This section shall be applicable for any Plan Year in which
either:
(1) the Plan is a Super Top-Heavy Plan, or
(2) the Plan both is a Top-Heavy Plan (but not a Super
Top-Heavy Plan) and provides contributions (and forfeitures) to the Account
of any Non-Key Employee in an amount less than four percent (4%) of such
Participant's Top-Heavy Compensation, as determined in accordance with
section 9.3(b).
ARTICLE X
The Trust Fund
10.1 Trust. During the period in which this Plan remains in
existence, the Company or any successor thereto shall maintain in effect a
Trust with a corporation and/or individual(s) as Trustee, to hold, invest,
and distribute the Trust Fund in accordance with the terms of such Trust.
10.2 Investment of Accounts. The Trustee shall invest and reinvest
the Participant's accounts in investment options as defined in section 4.1 as
directed by the Administrator or its delegate. The Administrator shall issue
such directions in accordance with the investment options selected by the
Participants which shall remain in force until altered in accordance with
sections 4.2 and 4.3.
10.3 Expenses. Expenses of the Plan and Trust shall be paid from the
Trust.
ARTICLE XI
Administration of The Plan
11.1 General Administration. The general administration of the Plan
shall be the responsibility of the Company (or any successor thereto) which
shall be the Administrator and named Fiduciary for purposes of ERISA. The
Company shall have the authority, in its sole discretion, to construe the
terms of the Plan and to make determinations as to eligibility for benefits
and as to other issues within the "Responsibilities of the Administrator"
described in this ARTICLE. All such determinations of the Company shall be
conclusive and binding on all persons.
11.2 Responsibilities of the Administrator. Except as otherwise
provided in ERISA, the Administrator (and any other named Fiduciaries) may
allocate any duties and responsibilities under the Plan and Trust among
themselves in any mutually agreed upon manner. Such allocation shall be in a
written document signed by the Administrator (and any other named
Fiduciaries) and shall specifically set forth this allocation of duties and
responsibilities, which may include the following:
(a) Determination of all questions which may arise under the
Plan with respect to questions of fact and law and eligibility for
participation and administration of Accounts, including without limitation
questions with respect to membership, vesting, loans, withdrawals,
accounting, status of Accounts, stock ownership and voting rights, and any
other issue requiring interpretation or application of the Plan.
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43
(b) Reference of appropriate issues to the Offices of the
Executive Vice President - Chief Financial Officer, the Senior Vice President
Treasurer, the Director of Tax Affairs, the Vice President General Counsel,
and the Vice President - Human Resources, respectively, for advice and
counsel.
(c) Establishment of procedures required by the Plan, such as
notification to Employees as to joining the Plan, selecting and changing
investment options, suspending deferrals, exercising voting rights in stock,
withdrawing and borrowing Account balances, designation of Beneficiaries,
election of method of distribution, and any other matters requiring a uniform
procedure.
(d) Submission of necessary amendments to supplement omissions
from the Plan or reconcile any inconsistency therein.
(e) Filing appropriate reports with the government as required
by law.
(f) Appointment of a Trustee or Trustees, Recordkeepers, and
investment managers.
(g) Review at appropriate intervals of the performance of the
Trustee and such investment managers as may have been designated.
(h) Appointment of such additional Fiduciaries as deemed
necessary for the effective administration of the Plan, such appointments to
be by written instrument.
11.3 Liability for Acts of Other Fiduciaries. Each Fiduciary shall be
responsible only for the duties allocated or delegated to said Fiduciary, and
other Fiduciaries shall not be liable for any breach of fiduciary
responsibility with respect to any act or omission of any other Fiduciary
unless:
(a) The Fiduciary knowingly participates in or knowingly
attempts to conceal the act or omission of such other Fiduciary and knows
that such act or omission constitutes a breach of fiduciary responsibility by
the other Fiduciary;
(b) The Fiduciary has knowledge of a breach of fiduciary
responsibility by the other Fiduciary and has not made reasonable efforts
under the circumstances to remedy the breach; or
(c) The Fiduciary's own breach of his or her specific fiduciary
responsibilities has enabled another Fiduciary to commit a breach. No
Fiduciary shall be liable for any acts or omissions which occur prior to his
or her assumption of Fiduciary status or after his or her termination from
such status.
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44
11.4 Employment by Fiduciaries. Any Fiduciary hereunder may employ,
with the written approval of the Administrator, one or more persons to render
service with regard to any responsibility which has been assigned to such
Fiduciary under the terms of the Plan including legal, tax, or investment
counsel and may delegate to one or more persons any administrative duties
(clerical or otherwise) hereunder.
11.5 Recordkeeping. The Administrator shall keep or cause to be kept
any necessary data required for determining the Account status of each
Participant. In compiling such information, the Administrator may rely upon
its employment records, including representations made by the Participant in
the employment application and subsequent documents submitted by the
Participant to the Employer. The Trustee shall be entitled to rely upon such
information when furnished by the Administrator or its delegate. Each
Employee shall be required to furnish the Administrator upon request and in
such form as prescribed by the Administrator, such personal information,
affidavits and authorizations to obtain information as the Administrator may
deem appropriate for the proper administration of the Plan, including but not
limited to proof of the Employee's date of birth and the date of birth of any
person designated by a Participant as a Beneficiary.
11.6 Claims Review Procedure.
(a) The Administrator shall make all determinations as to the right of any
person to Accounts under the Plan. Any such determination by the
Administrator shall be made pursuant to the following procedure:
(1) Step 1. Claims with respect to an Account should be filed by a
claimant as soon as practicable after the claimant knows or should know that a
dispute has arisen with respect to an Account, but at least thirty (30) days
prior to the claimant's actual retirement date or, if applicable, within sixty
(60) days after the death, Disability or Severance from Service of the
Participant whose Account is at issue, by mailing a copy of the claim to the
Benefits and Services Department, Raytheon-Hughes, Inc., 141 Spring Street,
Lexington, Massachusetts 02173.
(2) Step 2. In the event that a claim with respect to an Account is
wholly or partially denied by the Administrator, the Administrator shall, within
ninety (90) days following receipt of the claim, so advise the claimant in
writing setting forth: the specific reason or reasons for the denial; specific
reference to pertinent Plan provisions on which the denial is based; a
description of any additional material or information necessary for the claimant
to perfect the claim; an explanation as to why such material or information is
necessary; and an explanation of the Plan's claim review procedure.
(3) Step 3. Within sixty (60) days following receipt of the denial of
a claim with respect to an Account, a claimant desiring to have the denial
appealed shall file a request for review with the Administrator by mailing a
copy thereof to the address shown in subsection (a)(1).
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45
(4) Step 4. Within thirty (30) days following receipt of a request for
review, the Administrator shall provide the claimant a further opportunity to
present his or her position. At the Administrator's discretion, such
presentation may be through an oral or written presentation. Prior to such
presentation, the claimant shall be permitted the opportunity to review
pertinent documents and to submit issues and comments in writing. Within a
reasonable time following presentation of the claimant's position, which usually
should not exceed thirty (30) days, the Administrator shall inform the claimant
in writing of the decision on review setting forth the reasons for such decision
and citing pertinent provisions in the Plan.
(b) The Administrator is the Fiduciary to whom the Plan grants
full discretion, with the advice of counsel, to interpret the Plan; to
determine whether a claimant is eligible for benefits; to decide the amount,
form and timing of benefits; and to resolve any other matter under the Plan
which is raised by a claimant or identified by the Administrator. All
questions arising from or in connection with the provisions of the Plan and
its administration, not herein provided to be determined by the Board of
Directors, shall be determined by the Administrator, and any determination so
made shall be conclusive and binding upon all persons affected thereby.
11.7 Indemnification of Directors and Employees. The Adopting
Employers shall indemnify by insurance or otherwise any Fiduciary who is a
director, officer or Employee of the Employer, his or her heirs and legal
representatives, against all liability and reasonable expense, including
counsel fees, amounts paid in settlement and amounts of judgments, fines or
penalties, incurred or imposed upon him in connection with any claim, action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of acts or omissions in his or her capacity as a Fiduciary
hereunder, provided that such act or omission is not the result of gross
negligence or willful misconduct. The Adopting Employers may indemnify other
Fiduciaries, their heirs and legal representatives, under the circumstances,
and subject to the limitations set forth in the preceding sentence, if such
indemnification is determined by the Board of Directors to be in the best
interests of the Adopting Employers.
11.8 Immunity from Liability. Except to the extent that section
410(a) of ERISA prohibits the granting of immunity to Fiduciaries from
liability for any responsibility, obligation, or duty imposed under Title I,
Subtitle B, Part 4, of said Act, an officer, Employee, member of the Board of
Directors of the Employer or other person assigned responsibility under this
Plan shall be immune from any liability for any action or failure to act
except such action or failure to act which results from said officer's,
Employee's, Participant's or other person's own gross negligence or willful
misconduct.
ARTICLE XII
Amendment Or Termination Of Plan
12.1 Right to Amend or Terminate Plan. Each of the Adopting
Employers reserves the right at any time or times, by action of its board of
directors to modify, amend or terminate the Plan in whole or in part as to its
Employees, in which event a certified copy of the resolution of the board of
directors, authorizing such modification, amendment or termination shall be
delivered to the Trustee and to the other Adopting Employers whose Employees
are covered by this Plan, provided, however, that no amendment to the Plan
shall be made which shall:
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46
(a) reduce any vested right or interest to which any Participant or Beneficiary
is then entitled under this Plan or otherwise reduce the vested rights of a
Participant in violation of section 411(d)(6) of the Code;
(b) vest in the Adopting Employers any interest or control over any assets of
the Trust;
(c) cause any assets of the Trust to be used for, or diverted to, purposes other
than for the exclusive benefit of Participants and their Beneficiaries; or
(d) change any of the rights, duties or powers of the Trustee without its
written consent.
(e) Notwithstanding the foregoing provisions of this section or any other
provisions of this Plan, any modification or amendment of the Plan may be made
retroactively if necessary or appropriate to conform the Plan with, or to
satisfy the conditions of, ERISA, the Code, or any other law, governmental
regulation or ruling. Any termination, modification or amendment of the Plan
shall be subject to approval by the Board of Directors. In the alternative,
subject to the conditions prescribed in subsections 12.1(a) through (e), the
Plan may be amended by an officer of the Company authorized by the Board of
Directors to amend the Plan, provided, however, that any such amendment does
not, in the view of such officer, materially increase costs of the Plan to the
Company or any Adopting Employer.
12.2 Amendment to Vesting Schedule. Any amendment that modifies the
vesting provisions of ARTICLE IV shall either:
(a) provide for a rate of vesting that is at least as rapid for any
Participant as the vesting schedule previously in effect; or
(b) provide that any adversely affected Participant with a Period of
Service of at least three (3) years may elect, in writing, to remain under
the vesting schedule in effect prior to the amendment. Such election must be
made within sixty (60) days after the later of the:
(1) adoption of the amendment;
(2) effective date of the amendment; or
(3) issuance by the Company of written notice of the amendment.
12.3 Maintenance of Plan. The Company has established the Plan with
the bona fide intention and expectation that it will be able to make its
contributions indefinitely, but the Company is not and shall not be under any
obligation or liability whatsoever to continue its contributions or to
maintain the Plan for any given length of time.
12.4 Termination of Plan and Trust. The Plan and Trust hereby created
shall terminate upon the occurrence of any of the following events:
(a) Delivery to the Trustee of a notice of termination executed
by the Company specifying the date as of which the Plan and Trust shall
terminate; or
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47
(b) Adjudication of the Company as bankrupt or general
assignment by the Company to or for the benefit of creditors or dissolution
of the Company.
12.5 Distribution on Termination.
(a) (1) If the Plan is terminated, or contributions permanently
discontinued, an Adopting Employer, at its discretion, may (at that time or
at any later time) direct the Trustee to distribute the amounts in a
Participant's Account in accordance with the distribution provisions of the
Plan. Such distribution shall, notwithstanding any prior provisions of the
Plan, be made in a single lump-sum without the Participant's consent as to
the timing of such distribution. If, however, an Adopting Employer (or an
Affiliate) maintains another defined contribution plan (other than an
employee stock ownership plan), then the preceding sentence shall not apply
and the Adopting Employer, at its discretion, may direct such distributions
to be made as a direct transfer to such other plan without the Participant's
consent, if the Participant does not consent to an immediate distribution.
(2) If an Adopting Employer does not direct distribution under
paragraph (1), each Participant's Account shall be maintained until distributed
in accordance with the provisions of the Plan (determined without regard to this
section) as though the Plan had not been terminated or contributions
discontinued.
(b) If the Administrator determines that it is administratively
impracticable to make distributions under this section in cash or that it
would be in the Participant's best interest to make some or all of the
distributions with in-kind property, it shall offer all Participants and
Beneficiaries entitled to a distribution under this section a reasonable
opportunity to elect to receive a distribution of the in-kind property being
distributed by the Trust. Those Participants and Beneficiaries so electing
shall receive a proportionate share of such in-kind property in the form
(outright, in trust or in partnership) that the Administrator determines will
provide the most feasible method of distribution.
(c) (1) Amounts attributable to elective contributions shall only be
distributable by reason of this section if one of the following is
applicable:
(A) the Plan is terminated without the establishment of a successor plan;
(B) an Adopting Employer has a sale or other disposition to an unrelated
corporation of substantially all of the assets used by the Adopting Employer
in a trade or business of the Adopting Employer with respect to an Employee
who continues employment with the corporation acquiring such assets; or
(C) an Adopting Employer has a sale or other disposition to an unrelated
entity of the Adopting Employer's interest in a subsidiary with respect to an
Employee who continues employment with such subsidiary.
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48
(2) For purposes of this section, the term "elective contributions" means
employer contributions made to the Plan that were subject to a cash or
deferred election under a cash or deferred arrangement.
(3) Elective contributions are distributable under subsections
(c)(1)(B) and (C) above only if the Adopting Employers continue to maintain the
Plan after the disposition.
ARTICLE XIII
Additional Provisions
13.1 Effect of Merger, Consolidation or Transfer. In the event of any
merger or consolidation with or transfer of assets or liabilities to any
other plan or to this Plan, each Participant of the Plan shall be entitled to
a benefit immediately after the merger, consolidation or transfer, which is
equal to or greater than the benefit he or she would have been entitled to
receive immediately before the merger, consolidation or transfer (if the Plan
had been terminated).
13.2 Necessity of Initial Qualification. This Plan is established
with the intent that it shall qualify under sections 401(a) and 401(k) of
the Code as those sections exist at the time the Plan is established. If the
Internal Revenue Service determines that the Plan initially fails to meet
those requirements, then within thirty (30) days after the date of such
determination, all of the assets of the Trust Fund held for the benefit of
Participants and their Beneficiaries shall be distributed equitably among the
contributors to the Plan in proportion to their contributions, and the Plan
shall be considered to be rescinded and of no force or effect, unless such
inadequacy is removed by a retroactive amendment pursuant to the Code. Any
nonvested Matching Contributions and earnings attributable thereto shall be
returned to the Adopting Employers.
13.3 No Assignment.
(a) Except as provided herein, the right of any Participant or Beneficiary
to any benefit or to any payment hereunder shall not be subject to
alienation, assignment, garnishment, attachment, execution or levy of any
kind.
(b) Subsection (a) shall not apply to any payment or transfer permitted by
the Internal Revenue Service pursuant to regulations issued under section
401(a)(13) of the Code.
(c) Subsection (a) shall not apply to any payment or transfer pursuant to a
Qualified Domestic Relations Order.
(d) Subsection (a) shall not apply to any payment or transfer to the Trust
in accordance with section 401(a)(13)(C) of the Code to satisfy the
Participant's liabilities to the Plan or Trust in any one or more of the
following circumstances:
(1) the Participant is convicted of a crime involving the Plan;
<PAGE>
49
(2) a civil judgment (or consent order or decree) in an action is brought
against the Participant in connection with an ERISA fiduciary violation; or
(3) the Participant enters into a settlement agreement with the Department
of Labor or the Pension Benefit Guaranty Corporation over an ERISA fiduciary
violation.
13.4 Limitation of Rights of Employees. This Plan is strictly a
voluntary undertaking on the part of the Adopting Employers and shall not be
deemed to constitute a contract between any of the Adopting Employers and any
Employee, or to be a consideration for, or an inducement to, or a condition
of the employment of any Employee. Nothing contained in the Plan shall be
deemed to give any Employee the right to be retained in the service of any of
the Adopting Employers or shall interfere with the right of any of the
Adopting Employers to discharge or otherwise terminate the employment of any
Employee of an Adopting Employer at any time. No Employee shall be entitled
to any right or claim hereunder except to the extent such right is
specifically fixed under the terms of the Plan.
13.5 Construction. The provisions of this Plan shall be interpreted
and construed in accordance with the requirements of the Code and ERISA. Any
amendment or restatement of the Plan or Trust that would otherwise violate
the requirements of section 411(d)(6) of the Code or otherwise cause the Plan
or Trust to cease to be qualified under section 401(a) of the Code shall be
deemed to be invalid. Capitalized terms shall have meanings as defined
herein. Singular nouns shall be read as plural, masculine pronouns shall be
read as feminine and vice versa, as appropriate. References to "section" or
"ARTICLE" shall be read as references to appropriate provisions of this Plan,
unless otherwise indicated.
13.6 Company Determinations. Any determinations, actions or decisions
of the Company (including but not limited to, Plan amendments and Plan
termination) shall be made by its Board of Directors in accordance with its
established procedures or by such other individuals, groups or organizations
that have been properly delegated by the Board of Directors to make such
determination or decision.
13.7 Governing Law. This Plan shall be governed by, construed and
administered in accordance with ERISA and any other applicable federal law;
provided, however, that to the extent not preempted by federal law, this Plan
shall be governed by, construed and administered under the laws of the
Commonwealth of Massachusetts, other than its laws respecting choice of law.
ARTICLE XIV
Definitions
The following terms have the meaning specified below unless the context
indicates otherwise:
14.1 Account. The entire interest of a Participant in the Trust Fund.
A Participant's Account shall consist of an Elective Deferral Account, an
Employee After-Tax Contribution Account, a Matching Contribution Account and,
where applicable, a Rollover Contribution Account and a Qualified Nonelective
Contribution Account.
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50
14.2 Administrator. The person, persons, corporation, committee,
group or organization designated to be the Administrator of the Plan and to
perform the duties of the Administrator. Until and unless otherwise
designated, the Administrator shall be the Company.
14.3 Adopting Employers. Any corporation that elects through an
authorized officer to participate in the Plan on account of its Employees,
provided that participation in the Plan by such corporation is approved by
the Board of Directors, or an officer to whom authority to approve
participation by a corporation is delegated by the Board of Directors, but
shall not include any division, operation or similar cohesive group of the
adopting corporation excluded by the Board of Directors. The Adopting
Employers shall be listed on Exhibit A attached to this Plan.
14.4 Affiliate. A trade or business that, together with and Adopting
Employer, is a member of (i) a controlled group of corporations within the
meaning of section 414(b) of the Code; (ii) a group of trades or businesses
(whether or not incorporated) under common control as defined in section
414(c) of the Code, or (iii) an affiliated service group as defined in
section 414(m) of the Code, or which is an entity otherwise required to be
aggregated with the Adopting Employer pursuant to section 414(o) of the Code.
For purposes of ARTICLE VIII, the determination of controlled groups of
corporations and trades or businesses under common control shall be made
after taking into account the modification required under section 415(h) of
the Code. All such entities, whether or not incorporated, shall be treated
as a single employer to the extent required by the Code.
14.5 Authorized Leave of Absence. An absence approved by the Adopting
Employers on a uniform and nondiscriminatory basis not exceeding one (1) year
for any of the following reasons: illness of an Employee or a relative, the
death of a relative, education of the Employee, or personal or family
business of an extraordinary nature, provided in each case that the Employee
returns to the service of the Adopting Employers within the time period
specified by the Adopting Employers.
14.6 Beneficiary. The person or persons (including a trust or trusts)
who are entitled to receive benefits from a deceased Participant's Account
after such Participant's death (whether or not such person or persons are
expressly so designated by the Participant). If a married Participant
designates a Beneficiary other than his or her spouse, said designation shall
not take effect unless the spouse consents in writing to such designation and
said spousal consent acknowledges the effect of said designation and is
witnessed by a representative of the Plan or a notary public. Said spousal
consent shall be effective only with respect to the spouse granting such
consent, and shall not be required if the Participant can establish that
there is no spouse, that the spouse cannot be located, or that other
conditions exist as may be prescribed by regulations issued by the Secretary
of the Treasury. If there is no Beneficiary designated by the Participant or
surviving at the death of the Participant, payment of his or her Account
shall be made in accordance with section 6.7. Subject to the foregoing, a
Participant may designate a new Beneficiary at any time by filing with the
Administrator a written request for such change on a form prescribed by the
Administrator. Such change shall become effective only upon receipt of the
<PAGE>
51
form by the Administrator, but upon such receipt of the change shall relate
back to and take effect as of the date the Participant signed such request,
whether or not the Participant is living at the time of such receipt,
provided, however, that neither the Trustee nor the Administrator shall be
liable by reason of any payment of the Participant's Account made before
receipt of such form. If a Beneficiary entitled to payment was the spouse or
former spouse of the deceased Participant and payment will otherwise be made
in an Eligible Rollover Distribution, then such spouse or former spouse may
elect that all, or any portion of, such payment shall instead be transferred
as a Direct Rollover. Such Direct Rollover shall be governed by the
requirements of section 6.12.
14.7 Board of Directors. The Board of Directors of Raytheon Company.
14.8 Business Day. Days on which the Recordkeeper is able to make
transfers.
14.9 Code. The Internal Revenue Code of 1986, as amended.
14.10 Common Stock. Raytheon Company Class B common stock.
14.11 Company. Raytheon Company.
14.12 Compensation.
(a) The aggregate amount paid by the Employer to a Participant as regular
base salary, including amounts authorized by the Participant to be deferred
from his Compensation and contributed by the Employer under section 3.3, as
well as amounts paid as commissions, military pay differential, and under the
Hughes Annual Incentive Plan, the Hughes Salary Adjustment Plan, the Hughes
Supplemental Compensation Plan, awards under the Hughes Subsidiary Incentive
Plan not in excess of the target award (or any successor plans of the
foregoing), but without inclusion of any overtime compensation, shift
differentials, foreign service premiums (including mobility allowances), per
diem, royalties, payments in lieu of vacation, benefits from the Hughes
Transition Pay Plan, the Hughes Supplemental Employee Retirement Plan, the
Hughes Long-Term Performance Plan, and amounts deferred by a Participant to
the flexible spending account in an Employer cafeteria plan under section 125
of the Code, or other payments of like nature, subject to the following:
(b) The Compensation of each Employee for any year shall be deemed to not
exceed one hundred fifty thousand dollars ($150,000); provided, however, that
this limit shall be adjusted in the same manner and at the same time as under
section 415(d) of the Code, in accordance with regulations under section
401(a)(17) of the Code. Compensation for Highly-Compensated Employees shall
be determined in accordance with the provisions of section 14.28.
(c) Unless otherwise indicated herein, Compensation shall be determined
only on the basis of amounts paid during the Plan Year, including any Plan
Year with a duration of fewer than twelve (12) months.
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52
(d) The Compensation of a person who becomes a Participant during the Plan Year
shall only include amounts paid after the date on which such person was admitted
as a Participant.
14.13 Current Market Value. The closing price of the Common Stock on
the New York Stock Exchange on the Business Day immediately preceding the
Business Day on which the Common Stock is allocated to the Participants'
Accounts in accordance with the terms of the Plan.
14.14 Disability. Any medically determinable physical disorder that
renders a Participant incapable of engaging in any occupation for
compensation or profit. The determination of Disability shall be made by the
Administrator with the aid of competent medical advice. It shall be based on
such evidence as the Administrator deems necessary to establish Disability or
the continuation thereof.
14.15 Effective Date. December 18, 1997.
14.16 Elective Deferral. A voluntary reduction of a Participant's
Compensation in accordance with section 3.3 hereof that qualifies for
treatment under section 402(e)(3) of the Code. A Participant's election to
make Elective Deferrals may be made only with respect to an amount that the
Participant could otherwise elect to receive in cash and that is not
currently available to the Participant.
14.17 Elective Deferral Account. That portion of a Participant's
Account which is attributable to Elective Deferrals, adjustments for
withdrawals and distributions, and the earnings and losses attributable
thereto.
14.18 Eligible Employee. A person who is an hourly Employee of an Adopting
Employer who:
(a) is a United States citizen or resident;
(b) is not employed in a position or classification within a bargaining
unit which is covered by a collective bargaining agreement with respect to
which retirement benefits were the subject of good faith bargaining (unless
such agreement provides for coverage hereunder of employees of such units);
(c) is not assigned on the books and records of the Employer to any
division, operation or similar cohesive group of an Adopting Employer that is
excluded from participation in the Plan by the Board of Directors; and
(d) is not a Leased Employee or any other person who performs
services for an Adopting Employer other than as an Employee.
14.19 Employee. Except to the extent otherwise provided herein, any
person employed by the Employer who is expressly so designated as an Employee
on the books and records of the Employer and who is treated as such by the
Employer for federal employment tax purposes. Any person who, after the
close of a Plan Year, is retroactively treated by the Employer or any other
party as an Employee for such prior Plan Year shall not, for purposes of the
Plan, be considered an Employee for such prior Plan Year unless expressly so
treated as such by the Employer.
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53
14.20 Employee After-Tax Contributions. Voluntary contributions made
by Participants on an after-tax basis in accordance with section 3.4 of the
Plan.
14.21 Employee After-Tax Contribution Account. That portion of a
Participant's Account which is attributable to Employee After-Tax
Contributions, adjustments for withdrawals and distributions, and the
earnings and losses attributable thereto.
14.22 Employer. An Adopting Employer and any Affiliate thereof
(whether or not such Affiliate has elected to participate in the Plan).
14.23 Employment Commencement Date. The date on which an individual
first performs an Hour of Service with the Employer.
14.24 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
14.25 Fiduciary. Any person who exercises any discretionary authority
or discretionary control over the management of the Plan, or exercises any
authority or control respecting management or disposition of Plan assets; who
renders investment advice for a fee or other compensation, direct or
indirect, as to assets held under the Plan, or has any authority or
discretionary responsibility in the administration of the Plan. This
definition shall be interpreted in accordance with section 3(21) of ERISA.
14.26 Highly Compensated Employee
(a) Any Employee who:
(1) is a five percent (5%) owner at any time during the Plan Year or the
preceding Plan Year; or
(2) for the preceding Plan Year:
(A) received Compensation in excess of the amount specified in section
414(q)(1)(B)(i) of the Code; and
(B) if the Adopting Employers so elect, in accordance with section
414(q)(1)(B)(ii) of the Code, was a member of the Top-Paid Group for such
preceding Plan Year.
(b) A former Employee will be treated as a Highly Compensated Employee if
the former Employee was a Highly Compensated Employee at the time of his or
her separation from service or the former Employee was a Highly Compensated
Employee at any time after attaining age fifty-five (55).
(c) The term "Top-Paid Group" for any year includes Employees in the group
of Employees specified in section 414(q)(5) of the Code, which consists of
the top twenty percent (20%) of Employees when ranked on the basis of
Compensation paid during such year.
<PAGE>
54
(d) In determining the number of Employees in the Top-Paid Group taken into
account under subsection (c) of this section, nonresident aliens with no
earned income from the Adopting Employers that constitutes income from
sources within the United States shall not be treated as Employees and
(unless the Adopting Employers elect otherwise) the following Employees shall
be excluded:
(1) Employees with fewer than six (6) months of service;
(2) Employees who normally work fewer than seventeen and one-half (171/2)
hours per week;
(3) Employees who normally work during not more than six (6) months during
the year;
(4) Employees who have not attained age twenty-one (21); and
(5) (except to the extent permitted by regulation) Employees who are
included in a unit of Employees covered by a collective bargaining agreement
with one of the Adopting Employers.
(e) The dollar amounts incorporated under subsection (a)(2)(A) shall be
adjusted as provided in section 414(q)(1) of the Code.
(f) For purposes of this section, the term "Compensation" means
compensation as defined under section 414(q)(4) of the Code.
(g) This section shall be interpreted in a manner consistent with section
414(q) of the Code and the regulations thereunder and shall be interpreted to
permit any elections permitted by such regulations to be made.
14.27 Hour of Service.
(a) Any hour for which any person is directly or indirectly
paid (or entitled to payment) by the Employer for the performance of duties
as an Employee, as determined from the appropriate records of the Employer.
(b) In computing Hours of Service, a person shall also be
credited with Hours of Service based on the person's previous customary
service with the Employer (not exceeding either eight (8) hours per day or
forty (40) hours per week), for the following periods:
(1) periods (limited to a maximum of five hundred one
(501) hours for any single, continuous period) for which the person is
directly or indirectly paid for reasons other than the performance of duties,
such as vacation, holiday, sickness, disability, layoff, jury duty or
military duty;
(2) periods for which any federal law requires that
credit for service be given; and
(3) periods for which back pay (irrespective of
mitigation of damages) is either awarded or agreed to by the Employer.
<PAGE>
55
(c) Hours of Service shall also include each hour for which an
Employee is entitled to credit under subsection (a) as a result of employment
with:
(1) a predecessor company substantially all the assets of
which have been acquired by the Company, provided that where only a portion
of the operations of a company has been acquired, only service with said
acquired portion prior to the acquisition will be included and that the
Employee was employed by said predecessor company at the time of acquisition;
or
(2) a division, operation or similar cohesive group of
the Employer excluded from participation in the Plan.
(d) The provisions of subsection (b) shall be further limited
to prevent duplication by only permitting a person to receive credit for one
(1) Hour of Service for any given hour.
(e) Hours of Service shall be computed and credited in
accordance with the Department of Labor regulations under section 2530.200b.
14.28 Layoff. An involuntary interruption of service due to reduction
of work force with or without the possibility of recall to employment when
conditions warrant.
14.29 Leased Employee. Any person (other than an Employee) who,
pursuant to an agreement between the Employer and any other person, has
performed services for the Employer (or any related person as provided in
section 414(n)(6) of the Code) on a substantially full-time basis for a
period of at least one (1) year and such services are performed under primary
direction or control of the Employer. Leased Employees are not eligible to
participate in the Plan.
14.30 Matching Contribution. Contribution made to the Trust in
accordance with section 3.1 hereof.
14.31 Matching Contribution Account. That portion of Participant's
Account which is attributable to Matching Contributions by the Adopting
Employers, adjustments for withdrawals and distributions, and the earnings
and losses attributable thereto.
14.32 Net Annual Profits. The current earnings of the Adopting
Employers for the Plan Year determined in accordance with generally accepted
accounting principles before federal and local income taxes and before
contributions to this Plan or any other qualified plan.
14.33 Net Profits. The accumulated earnings of the Adopting Employers
at the end of the Plan Year determined in accordance with generally accepted
accounting principles. For the purposes hereof "accumulated earnings at the
end of the Plan Year" shall include Net Annual Profits for such Plan Year
calculated before any deduction is taken for depreciation, if any.
14.34 Nonforfeitable. An unconditional right to an Account balance or
portion thereof determined as of the applicable date of determination under
this Plan.
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56
14.35 Non-Highly Compensated Work Force. The aggregate number of
individuals (other than Highly Compensated Employees) who are:
(a) Employees of the Employer (other than Leased Employees) who
have performed services for the Employer on a substantially full-time basis
for a period of at least one (1) year; and
(b) Leased Employees.
14.36 Normal Retirement Age. The Participant's sixty-fifth (65th)
birthday.
14.37 Participant. An individual who is enrolled in the Plan pursuant
to ARTICLE II and has not received a distribution of all of the funds
credited to his or her Account (or had such funds fully forfeited). In the
case of an Eligible Employee who makes a Rollover Contribution to the Plan
under section 3.7(a)(6) prior to enrollment under ARTICLE II, such Eligible
Employee shall, until he or she enrolls under ARTICLE II, be considered a
Participant for the limited purposes of maintaining and receiving his or her
Rollover Contribution Account under the terms of the Plan.
14.38 Pay Period. A scheduled period for payment of wages or salaries.
14.39 Period of Participation. That portion of a Period of Service
during which the Eligible Employee was a Participant, and had an Elective
Deferral Account in the Plan. For the purpose of determining a Period of
Participation, former employees of Hughes Electronics Corporation and its
subsidiaries who were participants in the Hughes California Hourly Employees'
Thrift and Savings Plan immediately before the Effective Date or the date
transferred to an Adopting Employer from General Motors Corporation or one of
its affiliates (other than a joint venture that has adopted this Plan) after
the Effective Date and before December 1, 1998, and who become Participants
as of the Effective Date or date of transfer, as applicable, shall be
credited with their participation in such plan.
14.40 Period of Service. The period of time beginning on the
Employee's Employment Commencement Date or Reemployment Commencement Date,
whichever is applicable, and ending on the Employee's Severance from Service
Date. For the purpose of determining a Period of Service, former employees
of Hughes Electronics Corporation and its subsidiaries who were participants
in the Hughes California Hourly Employees' Thrift and Savings Plan
immediately before the Effective Date or the date transferred to an Adopting
Employer from General Motors Corporation or one o its affiliates (other than
a joint venture that has adopted this Plan) after the Effective Date and
before December 1, 1998, and who become Participants as of the Effective Date
or date of transfer, as applicable, shall be credited with their years of
service credited under such plan.
14.41 Period of Severance. The period of time beginning on the
Employee's Severance from Service Date and ending on the Employee's
Reemployment Commencement Date.
14.42 Plan. The Raytheon California Hourly Savings and Investment Plan
(10012) as amended from time to time.
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57
14.43 Plan Year. The first Plan Year shall begin on the Effective Date
and end December 31, 1997. Thereafter, the Plan Year shall be the annual
twelve- (12) month period beginning on January 1 of each year and ending on
December 31 of each year.
14.44 Qualified Military Service. Any period of duty on a voluntary or
involuntary basis in the United States Armed Forces, the Army National Guard and
the Air National Guard when engaged in active duty for training, inactive duty
for training or full-time National Guard duty, the commissioned corps of the
Public Health Service and any other category of persons designated by the
President of the United States in time of war or emergency. Such periods of duty
shall include active duty, active duty for training, initial active duty for
training, inactive duty training, full-time National Guard duty and absence from
employment for an examination to determine fitness for such duty.
14.45 Qualified Nonelective Contributions. Any contribution by the
Adopting Employers to the Trust pursuant to section 3.2. Qualified Nonelective
Contributions are one hundred percent (100%) vested when made and are
distributable as provided herein, but in no event before the earlier of:
(a) the Participant's Severance from Service, death or
Disability;
(b) the Participant's attainment of age fifty-nine and one-half
(59-1/2);
(c) the termination of the Plan without establishment or
maintenance of another defined contribution plan (other than an employee
stock ownership plan);
(d) the disposition of substantially all of the assets used by
the Adopting Employers in a trade or business of the Adopting Employers but
only with respect to an Employee who continues employment with the entity
acquiring such assets; or
(e) the disposition of the Adopting Employers' interest in a
subsidiary, but only with respect to an Employee who continues employment
with such subsidiary.
14.46 Qualified Nonelective Contribution Account. That portion of a
Participant's Account which is attributable to Qualified Nonelective
Contributions received pursuant to section 3.2, adjusted for withdrawals and
distributions, and the earnings and losses attributable thereto.
14.47 Recordkeeper. The organization designated by the Administrator
to be the recordkeeper for the Plan. Until and unless otherwise designated,
the Recordkeeper shall be Fidelity Investments.
14.48 Reemployment Commencement Date. The first date on which the
Employee performs an Hour of Service following a Period of Severance which is
excluded under section 5.3 in determining whether a Participant has a
Nonforfeitable right to his or her Matching Contribution Account.
<PAGE>
58
14.49 Retirement. A Severance from Service when the Participant has
either attained age 55 and completed a Period of Service of at least ten (10)
years or has attained Normal Retirement Age.
14.50 Rollover Contributions. A transfer that qualifies under either
section 402(c) or 403(a)(4) of the Code.
14.51 Rollover Contribution Account. That portion of a Participant's
Account which is attributable to Rollover Contributions received pursuant to
section 3.7, adjustments for withdrawals and distributions, and the earnings
and losses attributable thereto.
14.52 Severance from Service. The termination of employment by reason
of quit, Retirement, discharge, death or failure to return from Layoff,
Authorized Leave of Absence, Qualified Military Service or Disability.
14.53 Severance from Service Date. The earliest of:
(a) the date on which an Employee resigns, retires, is
discharged, or dies; or
(b) except as provided in paragraphs (c), (d), (e) and (f)
hereof, the first anniversary of the first date of a period during which an
Employee is absent for any reason other than resignation, retirement,
discharge or death, provided that, on an equitable and uniform basis, the
Administrator may determine that, in the case of a Layoff as the result of a
permanent plant closing, the Administrator may designate the date of Layoff
or other appropriate date prior to the first anniversary of the first date of
absence as the Severance from Service Date; or
(c) in the case of a Qualified Military Service leave of
absence from which the Employee does not return prior to expiration of recall
rights, Severance from Service Date means the first day of absence because of
the leave; or
(d) in the case of an absence due to Disability, Severance from
Service Date means the earlier of the first anniversary of the first day of
absence because of the Disability or the date of termination of the
Disability; or
(e) in the case of an Employee who is discharged or resigns
(i) by reason of the pregnancy of the Employee, (ii) by reason of the birth
of a child to the Employee, (iii) by reason of the placement of a child with
the Employee in connection with the adoption of such child by the Employee or
(iv) for purposes of caring for such child for a period beginning immediately
following such birth or placement, "Severance from Service Date, for the sole
purpose of determining the length of a Period of Service, shall mean the
first anniversary of the resignation or discharge; or
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59
(f) in the case of an Employee who is absent from service
beyond the first anniversary of the first day of absence (i) by reason of the
pregnancy of the Employee, (ii) by reason of the birth of a child to the
Employee, (iii) by reason of the placement of a child with the Employee in
connection with the adoption of such child by the Employee or (iv) for
purposes of caring for such child for a period beginning immediately
following such birth or placement, the Severance from Service Date shall be
the second anniversary of the first day of such absence. The period between
the first and second anniversaries of the first day of absence is neither a
Period of Service nor a Period of Severance.
14.54 Surviving Spouse. A lawful spouse surviving the Participant as
of the date of the Participant's death.
14.55 Trust. The Raytheon Company Master Trust for Defined
Contribution Plans and any successor agreement made and entered into for the
establishment of a trust fund of all contributions which may be made to the
Trustee under the Plan.
14.56 Trustee. The Trustee and any successor trustees under the Trust.
14.57 Trust Fund. The cash, securities, and other property held by the
Trustee for the purposes of the Plan.
14.58 Valuation Date. The last day of each Plan Year. The
Administrator may, in is sole discretion, establish additional Valuation
Dates, up to and including daily valuations.
<PAGE>
60
EXHIBIT A
ADOPTING EMPLOYERS PARTICIPATING IN RAYTHEON CALIFORNIA HOURLY
SAVINGS AND INVESTMENT PLAN (10012)
As of December 18, 1997
(Unless Indicated Otherwise)
HE Holdings, Inc.
HE Microwave LLC
Hughes Defense Communications (formerly Magnavox Company)
Raytheon Company d/b/a Raytheon Systems Company **
Raytheon Data Systems
Raytheon Information Technology Corporation
Raytheon Missile Systems Company
Raytheon Technical Services Company
** But only with respect to Employees who either (1) were covered as
of December 17, 1997, by one or more defined contribution plans sponsored by
Hughes Aircraft Company or an affiliate and have been Employees since December
18, 1997; or (2) have been hired by Raytheon Company on or after December 18,
1997, into a position in a business operated by Hughes Aircraft Company or an
affiliate prior to that date.
<PAGE>
61
EXHIBIT B
RAYTHEON CALIFORNIA HOURLY SAVINGS AND INVESTMENT PLAN (10012)
As the Plan applies to the Employees of the Raytheon Missile Systems Company
who transferred from General Dynamic Corporation ("GD") on August 22, 1992,
("GD Participants"), the Plan shall be modified as follows:
1. As the Plan applies to GD Participants who are non-represented
hourly Employees, the Plan shall be modified as follows:
a. Elective Deferrals on a pre-tax basis under section 3.3 are
not available, but Employee After-Tax Contributions under section 3.4 may be
authorized as a deduction from Compensation paid each week in an amount equal
to 1% to 10% (in whole percentages) of his or her Compensation up to $12.01
per hour.
b. If the Employee authorizes his or her Employee After-Tax
Contribution under section 3.4 to be invested in Common Stock:
(i) in an amount equal to 100%, then the Adopting
Employer shall, in lieu of the provisions contained in section 3.1(a),
contribute in its discretion such amounts that they deem necessary to permit
an allocation of Common Stock to a Participant's Account in accordance with
section 3.1(b) equal in value to 100% of the total Employee After-Tax
Contributions made by Participants under section 3.4; and
(ii)in an amount less than 100%, then the Adopting
Employer shall, in lieu of the provisions contained in section 3.1(a),
contribute in its discretion such amounts that they deem necessary to permit
an allocation of cash to a Participant's Account equal to 50% of the total
Employee After-Tax Contributions made by Participants under section 3.4.
c. The last sentence of section 3.1(b) shall be deleted in its
entirety and the following substituted in its place:
"Such Matching Contributions shall remain invested in Common Stock until the
end of five (5) full Plan Years following the Plan Year of contribution."
The vesting provisions under section 5.2 are not applicable.
\\Gold\users\sml\plan\hughes 401(k) california.doc
58
3
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EXHIBIT 4.11
RAYTHEON TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN (10013)
ARTICLE I
Establishment of the Plan
1.1 Establishment of the Plan. The Raytheon Tucson Bargaining
Savings and Investment Plan (10013) (the "Plan"), which is effective
December 18, 1997, provides Participants with a tax-effective means of
allocating a portion of their salary to be invested in one or more investment
opportunities specified in the Plan and set aside for the short-term and
long-term needs of the Participants. The Plan also provides retirement
benefits for Participants or their Beneficiaries in the event a Participant
becomes disabled or dies before retirement. It is intended that the Plan
will comply with all of the requirements for a qualified profit sharing plan
under sections 401(a) and 401(k) of the Code and will be amended from time to
time to maintain compliance with these requirements. The terms used in the
Plan have the meanings specified in ARTICLE XIV unless the context indicates
otherwise. The Plan is intended to constitute a plan described in section
404(c) of ERISA and Title 29 of the Code of Federal Regulations, Section
2550.404(c)-1. Participants in the Plan are responsible for selecting
their own investment opportunities from the options available under the Plan
and the Plan Fiduciaries are relieved of any liability for any losses which
are a direct and necessary result of investment instructions given by a
Participant or Beneficiary.
1.2 Trust. The Trust shall be the sole source of benefits under the
Plan and the Adopting Employers or any Affiliate shall not have any liability
for the adequacy of the benefits provided under the Plan.
1.3 Effective Date. The Plan shall be effective as of December 18,
1997, or such other dates as may be specifically provided herein or as
otherwise required by law for the Plan to satisfy the requirements of section
401(a) of the Code.
1.4 Adoption of Plan. With the prior approval of the Board of
Directors or an officer of the Company authorized by the Board of Directors
to give such approval, the Plan and Trust may be adopted by any Corporation
(hereinafter referred to as an Adopting Employer). Such adoption shall be
made by the Adopting Employer filing with the Administrator and Trustee a
certified copy of a board of directors (or equivalent) resolution adopting
the Plan and Trust without modification. The Administrator may require the
Adopting Employer to take such further actions as it deems appropriate to the
proper adoption and operation of the Plan and Trust. In the event of the
adoption of the Plan and Trust by an Adopting Employer, the Plan and Trust
shall be interpreted in a manner consistent with such adoption.
1.5 Withdrawal of Adopting Employer.
(a) An Adopting Employer's adoption of this Plan may be
terminated, voluntarily or involuntarily, at any time, as provided in this
section.
<PAGE>
2
(b) An Adopting Employer shall withdraw from the Plan and Trust
if the Plan and Trust, with respect to that Adopting Employer, fail to
qualify under sections 401(a) and 501(a) of the Code (or, in the opinion of
the Administrator, they may fail to so qualify) and the continued sponsorship
of that Adopting Employer may jeopardize the status with respect to the
Company or the remaining Adopting Employers, of the Plan and Trust under
sections 401(a) and 501(a) of the Code. The Adopting Employer shall receive
at least thirty (30) days prior written notice of a withdrawal under this
subsection, unless a shorter period is agreed to.
(c) An Adopting Employer may voluntarily withdraw from the Plan
and Trust for any reason. Such withdrawal requires at least thirty (30) days
written notice to the Administrator and the Trustee, unless a shorter period
is agreed to.
(d) Upon withdrawal, the Trustee shall segregate the assets
attributable to Employees of the withdrawn Adopting Employer, the amount
thereof to be determined by the Administrator and the Trustee. The
segregated assets shall be held, paid to another trust, distributed or
otherwise disposed of as is appropriate under the circumstances; provided,
however, that any transfer shall be for the exclusive benefit of Participants
and their Beneficiaries. A withdrawal of an Adopting Employer from the Plan
is not necessarily a termination under ARTICLE XII. If the withdrawal is a
termination, then the provisions of ARTICLE XII shall also be applicable.
ARTICLE II
Eligibility
2.1 Eligibility Requirements. Each Employee who is an Eligible
Employee on the Effective Date shall begin participation in this Plan on the
Effective Date. Each Eligible Employee who transfers to an Adopting Employer
from General Motors Corporation or one of its affiliates after the Effective
Date and before December 1, 1998, and who immediately prior to such transfer
was a participant in the Hughes Tucson Bargaining Employees Thrift and
Savings Plan, shall begin participation in this Plan on the date of such
transfer. Each other Eligible Employee and any person who subsequently
becomes an Eligible Employee may join the Plan as of the first Pay Period
coincident with or next following completion of a Period of Service of three
(3) consecutive months commencing on his or her Employment Commencement Date.
2.2 Procedure for Joining the Plan. Each Eligible Employee who meets
the requirements of section 2.1 may join the Plan by communicating with the
Recordkeeper in accordance with instructions in an enrollment kit which will
be made available to each Eligible Employee. An enrollment in the Plan shall
not be deemed to have been completed until the Eligible Employee has
designated: a percentage by which his or her Compensation shall be reduced
as an Elective Deferral in accordance with the requirements of section 3.3,
subject to the nondiscrimination test described in section 3.10; election of
investment funds as described in ARTICLE IV; one or more Beneficiaries; and
such other information as specified by the Recordkeeper. Enrollment will be
effective as of the first administratively feasible Pay Period following
completion of enrollment. The Administrator, in its discretion, may from
time to time make exceptions and adjustments in the foregoing procedure on a
uniform and nondiscriminatory basis.
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3
2.3 Transfer Between Adopting Employers to Position Covered by Plan.
A Participant who is transferred to a position with another Adopting Employer
in which the Participant remains an Eligible Employee will continue as an
active Participant of the Plan.
2.4 Transfer to Position Not Covered by Plan. If a Participant is
transferred to a position with an Employer in which the Participant is no
longer an Eligible Employee, the Participant will remain a Participant of the
Plan with respect to Elective Deferrals previously made but shall no longer
be eligible to have Elective Deferrals made to the Plan on his or her behalf
until he or she again becomes an Eligible Employee. In the event the
Participant is subsequently transferred to a position in which he or she
again becomes an Eligible Employee, the Participant may renew Elective
Deferrals by communicating with the Recordkeeper and providing all of the
information requested by the Recordkeeper. The renewal of Elective Deferrals
will be effective as of the first administratively feasible Pay Period
following receipt by the Recordkeeper of the requested information.
2.5 Transfer to Position Covered by Plan. If an Employee who is not
eligible to participate in the Plan by reason of his or her position with an
Employer is transferred to a position that is eligible to participate in the
Plan, all service performed as an Employee in such noneligible position shall
be treated as a Period of Service for purposes of this ARTICLE.
2.6 Treatment of Qualified Military Service. Notwithstanding any
provision of this Plan to the contrary, contributions, benefits and service
credit with respect to Qualified Military Service will be provided in
accordance with section 414(u) of the Code.
ARTICLE III
Contributions
3.1 Matching Contributions. (a) (1) Each Adopting Employer shall,
in its discretion, make Matching Contributions with regard to Elective
Deferrals and Employee After-Tax Contributions made by its Employees during a
Plan Year. Each Adopting Employer shall, in its discretion, determine both
the percentage rate of the Elective Deferrals and Employee After-Tax
Contributions that will be matched and any limits on the maximum Matching
Contributions that will be made for any Participant. Matching Contributions
will be made in such form as is specified in subsection (b).
(2) Unless otherwise specified by an Adopting Employer,
each Adopting Employer shall make Matching Contributions equal in value to
one hundred percent (100%) of the total Elective Deferrals and Employee
After-Tax Contributions made during that Plan Year by each Participant who is
an Employee of that Adopting Employer, but the total of such Matching
Contributions for any Participant shall not exceed four percent (4%) of a
Participant's Compensation from that Adopting Employer for that Plan Year.
(b) The Matching Contribution under subsection (a) shall be
made in either Common Stock or cash that is invested in Common Stock. The
number of shares of Common Stock contributed by the Adopting Employer or
acquired with Matching Contributions under subsection (a) shall be allocated
to the Participant's Account by the Trustee and such allocation shall equal
the number of shares of Common Stock which the Trustee could have purchased
for the Participant at the Current Market Value. Such Matching Contribution
shall remain invested in Common Stock until the end of two (2) full Plan
Years following the Plan Year for which such contributions or deferrals are
made.
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4
3.2 Qualified Nonelective Contributions. Each Plan Year the Adopting
Employers may contribute to the Trust such amounts as determined by the Board of
Directors in its sole discretion. Any amounts contributed under this subsection
are to be designated by the Adopting Employers as Qualified Nonelective
Contributions.
3.3 Elective Deferrals. (a) A Participant may authorize the Adopting
Employer to reduce his or her Compensation on a pre-tax basis and to
correspondingly contribute to the Plan an amount equal to any whole percentage
of Compensation that does not exceed twelve percent (12%) of his or her
Compensation for that Plan Year.
(b) A Participant shall not be permitted to defer his or her
Compensation under subsection (a) during any calendar year in excess of nine
thousand five hundred dollars ($9,500) (or such amount as may be permitted in
accordance with regulations issued under section 415(d)(1) of the Code).
3.4 Employee After-Tax Contributions. (a) A Participant may authorize
the Adopting Employer to reduce his or her Compensation on an after-tax basis
and to correspondingly contribute to the Plan an amount equal to any whole
percentage of Compensation that does not exceed twelve percent (12%) of his or
her Compensation for that Plan Year.
3.5 Change in Elective Deferrals. Except as provided in section 3.10,
any Participant may change his or her Elective Deferral or Employee After-Tax
Contribution percentage to increase or decrease said percentage by notifying the
Recordkeeper, such change to take effect as of the next administratively
feasible Pay Period.
3.6 Forfeitures.
(a) In the event that a Participant incurs a Severance from
Service before attaining a Nonforfeitable right to his or her Matching
Contributions, the Matching Contribution Account will be forfeited as of the
first day of the month immediately following the earliest of: (i) the date on
which the Participant incurs a Period of Severance of five (5) consecutive
years; (ii) death; or (iii) the date on which the Participant's Elective
Deferral Account is distributed in accordance with ARTICLE VI. Forfeitures
of Matching Contributions will be used to reduce future contributions of the
Adopting Employers to the Plan.
(b) If, in connection with his or her Severance from Service, a
Participant received a distribution of his or her Elective Deferral Account
when he or she did not have a Nonforfeitable right to his or her Matching
Contribution Account, the Matching Contributions that were forfeited,
unadjusted by any subsequent gains or losses, shall be restored if he or she
again becomes an Employee before incurring a Period of Severance of five (5)
consecutive years, performs an Hour of Service, and repays the full value of
his or her prior distributions, unadjusted for subsequent gains and losses,
before the first to occur of (i) the end of the five- (5) year period
beginning with the date he or she again becomes an Employee or (ii) the date
on which he or she incurs a Period of Severance of five (5) consecutive
years.
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5
3.7 Rollover Contributions and Transfers.
(a) Participants may transfer into the Plan qualifying rollover
amounts (as defined in section 402 of the Code) received from other qualified
plans (provided that no federal income tax has been required to have been
paid previously on such amounts); or rollover contributions from an
individual retirement account described in section 408(d)(3)(A)(ii) of the
Code (referred to herein as a "conduit IRA"), subject to the following
conditions:
(1) the transferred funds are received by the Trustee no
later than sixty (60) days from receipt by the Employee of a distribution
from another qualified plan or, in the event that the funds are transferred
from a conduit IRA, no later than sixty (60) days from the date that the
Participant receives such funds from the individual retirement account;
(2) the amount of such Rollover Contributions shall not
exceed the limitations set forth in section 402 of the Code;
(3) the Rollover Contributions shall be taken into
account by the Administrator in determining the Participant's eligibility for
a loan pursuant to ARTICLE VII;
(4) the Rollover Contributions may be distributed at the
request of the Participant, subject to the same administrative procedures as
apply to other distributions;
(5) the Rollover Contributions transferred pursuant to
this section 3.7(a) shall be credited to the Participant's Rollover
Contribution Account and invested upon receipt by the Trustee;
(6) a Rollover Contribution will not be accepted unless
(A) the Employee on whose behalf the Rollover Contribution will be made is
either a Participant or an Eligible Employee who has notified the
Administrator that he or she intends to become a Participant on the first
date on which he or she is eligible therefor, and (B) all required
information, including selection of specific investment accounts, is provided
to the Recordkeeper - when the Rollover Contribution has been deposited, any
further change in investment allocation of future deferrals or transfer of
account balances between investment funds will be effected through the
procedures set forth in sections 4.2 and 4.3; and
(7) under no circumstances shall the Administrator
accept as a Rollover Contribution amounts which have previously been subject to
federal income tax.
(b)(1) The Plan shall accept a transfer of assets, including
elective transfers in accordance with Treas. Regs. section 1.411(d)-4 Q&A-
3(b), directly from another plan qualified under section 401(a) of the Code
only if the Administrator, in its sole discretion, agrees to accept such a
transfer. In determining whether to accept such a transfer, the
Administrator shall consider the administrative inconvenience engendered by
such a transfer and any risks to the continued qualification of the Plan
under section 401(a) of the Code. Acceptance of any such transfer shall not
preclude the Administrator from refusing any such subsequent transfers.
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6
(2) Any transfer of assets accepted under this subsection
shall be separately accounted for at all times and shall remain subject to
the provisions of the transferor plan (as it existed at the time of such
transfer) to the extent required by section 411(d)(6) of the Code (including,
but not limited to, any rights to qualified joint and survivor annuities and
qualified preretirement survivor annuities) as if such provisions were part
of the Plan. In all other respects, however, such transferred assets will be
subject to the provisions of the Plan. The Administrator may, but is not
required to, describe in an Exhibit to this Plan the special provisions that
must be preserved under section 411(d)(6) of the Code, if any, following the
transfer of assets from another plan in accordance with this subsection.
(3) Assets accepted under this section shall be fully
vested and nonforfeitable.
(4) Eligible Employees who were active participants in
the Hughes Tucson Bargaining Employees Thrift and Savings Plan immediately
prior to the Effective Date may elect to transfer their entire vested account
balances in such plan, including after-tax contributions, to the Plan in
accordance with this section 3.7(b).
3.8 Refund of Contributions to the Adopting Employers.
Notwithstanding the provisions of ARTICLE XII, if, or to the extent
that, any Adopting Employers' deductions for contributions made to the Plan are
disallowed, such Adopting Employer will have the right to obtain the return of
any such contributions for a period of one (1) year from the date of
disallowance. For this purpose, all contributions are made subject to the
condition that they are deductible under the Code for the taxable year of the
Adopting Employers for which the contributions are made. Furthermore, any
contribution made on the basis of a mistake in fact may be returned to the
Adopting Employers within one (1) year from the date such contribution was made.
3.9 Payment. The Adopting Employers shall pay to the Trustee in U.S.
currency, or by other property acceptable to the Trustee, all contributions
for each Plan Year within the time prescribed by law, including extensions
granted by the Internal Revenue Service for filing the federal income tax
return of the Company for its taxable year in which such Plan Year ends.
Unless designated by the Adopting Employers as nondeductible, all
contributions made, other than Employee After-Tax Contributions, shall be
deemed to be conditioned on their current deductibility under section 404 of
the Code.
3.10 Limits for Highly Compensated.
(a) Elective Deferrals, Employee After-Tax Contributions, Matching
Contributions and Qualified Nonelective Contributions allocable to the
Accounts of Highly Compensated Employees shall not in any Plan Year exceed
the limits specified in this section. The Administrator may make the
adjustments authorized in this section to ensure that the limits of
subsection (b) (or any other applicable limits) are not exceeded, regardless
of whether such adjustments affect some Participants more than others. This
section shall be administered and interpreted in accordance with sections
401(k) and 401(m) of the Code.
<PAGE>
7
(b) (1) The Actual Deferral Percentage of the Highly Compensated
Employees shall not exceed, in any Plan Year, the greater of:
(A) one hundred twenty-five percent (125%) of the Actual Deferral
Percentage for all other Eligible Participants; or
(B) the lesser of two hundred percent (200%) of the Actual Deferral
Percentage for all other Eligible Participants or the Actual Deferral Percentage
for the other Eligible Participants plus two (2) percentage points.
(2) The Actual Contribution Percentage of the Highly Compensated
Employees shall not exceed, in any Plan Year, the greater of:
(A) one hundred twenty five percent (125%) of the Actual Contribution
Percentage for all other Eligible Participants; or
(B) the lesser of two hundred percent (200%) of the Actual
Contribution Percentage for all other Eligible Participants or the Actual
Contribution Percentage for the other Eligible Participants plus two (2)
percentage points.
(3) The sum of the Actual Deferral Percentage and the Actual Contribution
Percentage for the Highly Compensated Employees shall not exceed, in any Plan
Year, the sum of:
(A) one hundred twenty-five percent (125%) of the greater of:
(i) the Actual Deferral Percentage of the other Eligible Participants; or
(ii) the Actual Contribution Percentage of the other Eligible Participants;
and
(B) two plus the lesser of:
(i) the amount in paragraph (3)(A)(i); or
(ii) the amount in paragraph (3)(A)(ii); provided that the amount in this
paragraph (3)(B) shall not exceed two hundred percent (200%) of the lesser of
the amount in paragraph (3)(A)(i) or the amount in paragraph (3)(A)(ii).
(4) The limitations under section 3.10(b)(3) shall be modified to reflect
any higher limitations provided by the Internal Revenue Service under
regulations, notices or other official statements.
(c) The following terms shall have the meanings specified:
<PAGE>
8
(1) Actual Contribution Percentage. The average of the ratios for a
designated group of Employees (calculated separately for each Eligible
Participant in the group) of the sum of the Matching Contributions, Employee
After-Tax Contributions, Qualified Nonelective Contributions (other than
those treated as part of the Actual Defferral Percentage), and Elective
Deferrals (other than those treated as part of the Actual Deferral
Percentage) allocated for the applicable year on behalf of the Participant,
divided by the Participant's Compensation for such applicable year. The
"applicable year" for determining the Actual Contribution Percentage for the
group of Highly Compensated Employees shall be the current Plan Year. For
all other Eligible Participants, the "applicable year" for determining the
Actual Contribution Percentage shall be the immediately preceding Plan Year,
unless in accordance with the procedures prescribed by the Internal Revenue
Service, the Administrator elects to use the current Plan Year.
(2) Actual Deferral Percentage. The average of the ratios for a designated
group of Eligible Participants (calculated separately for each Eligible
Participant in the group) of the sum of the Elective Deferrals and Qualified
Nonelective Contributions (other than those treated as part of the Actual
Contribution Percentage) allocated for the applicable year on behalf of a
Participant, divided by the Participant's Compensation for such applicable
year. The "applicable year" for determining the Actual Deferral Percentage
for the group of Highly Compensated Employees shall be the current Plan Year.
For all other Eligible Participants, the "applicable year" for determining
the Actual Deferral Percentage shall be the immediately preceding Plan Year,
unless in accordance with the procedures prescribed by the Internal Revenue
Service, the Administrator elects to use the current Plan Year.
(3) Compensation. The Employees wages that are required to be reported on
IRS Form W-2, increased by any Elective Deferrals made by the Employer on
behalf of the Employee under the Plan or any other plan of the Employer with
a qualified cash or deferred arrangement under section 401(k) of the Code and
any pre-tax elective contributions made by the Employer that are excludible
from the Employees income under section 125 of the Code.
(4) Eligible Participant. Any Employee of an Adopting Employer who is
authorized under the terms of the Plan to make Elective Deferrals or have
Qualified Nonelective Contributions allocated to his or her Account for the
Plan Year.
(d) For purposes of determining whether a plan satisfies the Actual
Contribution Percentage test of section 401(m), all employee and matching
contributions that are made under two (2) or more plans that are aggregated
for purposes of sections 401(a)(4) and 410(b) (other than section
410(b)(2)(A)(ii)) are to be treated as made under a single plan and that if
two (2) or more plans are permissively aggregated for purposes of section
401(m), the aggregated plans must also satisfy sections 401(a)(4) and 410(b)
as though they were a single plan.
(e) In calculating the Actual Contribution Percentage for purposes of
section 401(m), the actual contribution ratio of a Highly Compensated
Employee will be determined by treating all plans subject to section 401(m)
under which the Highly Compensated Employee is eligible (other than those
that may not be permissively aggregated) as a single plan.
<PAGE>
9
(f) For purposes of determining whether a plan satisfies the Actual
Deferral Percentage test of section 401(k), all elective contributions that
are made under two (2) or more plans that are aggregated for purposes of
section 401(a)(4) or 410(b) (other than section 410(b)(2)(A)(ii)) are to be
treated as made under a single plan and that if two (2) or more plans are
permissively aggregated for purposes of section 401(k), the aggregated plans
must also satisfy sections 401(a)(4) and 410(b) as though they were a single
plan.
(g) In calculating the Actual Deferral Percentage for purposes of section
401(k), the actual deferral ratio of a Highly Compensated Employee will be
determined by treating all cash or deferred arrangements under which the
Highly Compensated Employee is eligible (other than those that may not be
permissively aggregated) as a single arrangement.
(h) An elective contribution will be taken into account under the Actual
Deferral Percentage test of section 401(k)(3)(A) of the Code for a Plan Year
only if it is allocated to the Employee as of a date within that Plan Year.
For this purpose, an elective contribution is considered allocated as of a
date within a Plan Year if the allocation is not contingent on participation
or performance of services after such date and the elective contribution is
actually paid to the Trust no later than twelve (12) months after the Plan
Year to which the contribution relates.
3.11 Correction of Excess Contributions.
(a) Excess Contributions shall be corrected as provided in this section.
The Administrator may also prevent anticipated Excess Contributions as
provided in this section. The Administrator may use any method of correction
or prevention provided in this section or any combination thereof, as it
determines in its sole discretion. This section shall be administered and
interpreted in accordance with sections 401(k) and 401(m) of the Code.
(b) The Administrator may refuse to accept any or all prospective Elective
Deferrals to be contributed by a Participant.
(c) (1) An Adopting Employer may, in its sole discretion, elect to
contribute, as provided in section 3.2, a Qualified Nonelective Contribution
in an amount necessary to satisfy any or all of the requirements of section
3.10.
(2) Qualified Nonelective Contributions for a Plan Year shall only be
allocated to the Accounts of Participants who are not Highly Compensated
Employees. Qualified Nonelective Contributions shall be allocated first to
the Participant with the lowest Compensation for that Plan Year and any
remaining Qualified Nonelective Contributions thereafter shall be allocated
to the Participant with the next lowest Compensation for that Plan Year.
This allocation method shall continue in ascending order of Compensation
until all such Qualified Nonelective Contributions are allocated. The
allocation to any Participant shall not exceed the limits under section 415
of the Code. If two or more Participants have identical Compensation, the
allocations to them shall be proportional.
<PAGE>
10
(3) Qualified Nonelective Contributions for a Plan Year shall be
contributed to the Trust within twelve (12) months after the close of such
Plan Year.
(4) Qualified Nonelective Contributions shall only be allocated to
Participants who receive Compensation during the Plan Year for which such
contribution is made.
(d) The Administrator may, during a Plan Year, distribute to a Participant
(or such Participant's Beneficiary if the Participant is deceased), any or
all Excess Contributions or Excess Deferrals (whether Elective Deferrals or
Qualified Nonelective Contributions) allocable to that Participant's Account
for that Plan Year, notwithstanding any contrary provision of the Plan. Such
distribution may include earnings or losses (if any) attributable to such
amounts, as determined by the Administrator.
(e) (1) The Administrator may recharacterize any or all Excess
Contributions for a Plan Year as Employee After-Tax Contributions in
accordance with the provisions of this subsection. Any Excess Contributions
that are so recharacterized shall be treated as if the Participant had
elected to instead receive cash Compensation on the earliest date that any
Elective Deferral made on behalf of the Participant during the Plan Year
would have been received had the Participant originally elected to receive
such amount in cash and then contributed such amount as an Employee After-Tax
Contribution. To the extent required by the Internal Revenue Service,
however, such recharacterized Excess Contributions shall continue to be
treated as if such amounts were not recharacterized.
(2) The Administrator shall report any recharacterized Excess Contributions
as Employee After-Tax Contributions to the Internal Revenue Service and to
the affected Participants at such times and in accordance with such
procedures as are required by the Internal Revenue Service. The
Administrator shall take such other actions regarding the amounts so
recharacterized as may be required by the Internal Revenue Service.
(3) Excess Contributions may not be recharacterized under this subsection
more than two and one-half (2) months after the close of the Plan Year to
which the recharacterization relates. Recharacterization is deemed to occur
when the Participant is so notified (as required by the Internal Revenue
Service).
(4) The amount of Excess Contributions to be distributed or recharacterized
shall be reduced by Excess Deferrals previously distributed for the taxable
year ending in the same Plan Year and Excess Deferrals to be distributed for
a taxable year will be reduced by Excess Contributions previously distributed
or recharacterized for the Plan beginning in such taxable year.
(f) (1) The Administrator may distribute any or all Excess Contributions
for a Plan Year in accordance with the provisions of this subsection. Such
distribution may only occur after the close of such Plan Year and within
twelve (12) months of the close of such Plan Year. In the event of the
termination of the Plan, such distribution shall be made within twelve (12)
months after such termination. Such distribution shall include the income
<PAGE>
11
allocable to the amounts so distributed, as determined under this subsection.
The Administrator may make any special allocations of earnings or losses
necessary to carry out the provisions of this subsection. A distribution of
an Excess Contribution under this subsection may be made without regard to
any notice or consent otherwise required pursuant to sections 411(a)(11) and
417 of the Code.
(2) (A) The income allocable to Excess Contributions distributed under
this subsection shall equal the allocable gain or loss for the Plan Year.
Income includes all earnings and appreciation, including such items as
interest, dividends, rent, royalties, gains from the sale of property,
appreciation in the value of stock, bonds, annuity and life insurance
contracts, and other property, without regard to whether such appreciation
has been realized.
(B) The allocable gain or loss for the Plan Year may be determined under
any reasonable method consistently applied by the Administrator.
Alternatively, the Administrator may, in its discretion, determine such
allocable gain or loss for the Plan Year under the method set forth in
subparagraph (C).
(C) Under this method, the allocable gain or loss for the Plan Year is
determined by multiplying the income for the Plan Year allocable to Elective
Deferrals (and amounts treated as Elective Deferrals) by a fraction, the
numerator of which is the Excess Contributions by the Participant for the
Plan Year and the denominator of which is the total Account balance of the
Participant attributable to Elective Deferrals (and amounts treated as
Elective Deferrals) as of the beginning of the Plan Year, increased by any
Elective Deferrals (and amounts treated as Elective Deferrals) by the
Participant for the Plan Year.
(3) Amounts distributed under this subsection (or other provisions of this
section) shall first be treated as distributions from the Participant's
subaccounts in the following order:
(A) from the Participant's Elective Deferral Account (if such Excess
Contribution is attributable to Elective Deferrals); and
(B) from the Participant's Qualified Nonelective Contribution account (if
such Excess Contribution is attributable to Qualified Nonelective
Contributions).
<PAGE>
12
(g) (1) The term "Excess Contributions" shall mean, with respect to a
Plan Year, the excess of the Elective Deferrals (including any Qualified
Nonelective Contributions and Matching Contributions that are treated as
Elective Deferrals under sections 401(k)(2) and 401(k)(3) of the Code) on
behalf of eligible Highly Compensated Employees for the Plan Year over the
maximum amount of such contributions permitted under sections 401(k)(2) and
401(k)(3) of the Code. For this purpose, the maximum amount of contributions
permitted under sections 401(k)(2) and 401(k)(3) of the Code shall be
determined in accordance with the leveling method prescribed in Treas. Regs.
section 1.401(k)-1(f)(2), or such other method as promulgated thereafter.
(2) Any distribution or recharacterization of Excess Contributions for a
Plan Year, as determined under subsection (1) above, shall be made to the
Highly Compensated Employees on the basis of the amount of contributions by,
or on behalf of, each such Highly Compensated Employee in accordance with the
procedure described herein. The Highly Compensated Employees with the
highest amount of contributions shall have their contributions distributed or
recharacterized to the extent required to eliminate the Excess Contributions
or, if it results in a lower distribution or recharacterization, to the
extent required to cause such Highly Compensated Employees contributions to
equal the amount of contributions of the Highly Compensated Employees with
the next highest level of contributions. This procedure shall be repeated
until the Excess Contributions are completely distributed or recharacterized.
(3) The amount of Excess Contributions to be distributed or recharacterized
shall be reduced by Excess Deferrals previously distributed for the taxable
year ending in the same Plan Year and Excess Deferrals to be distributed for
a taxable year will be reduced by Excess Contributions previously distributed
or recharacterized for the Plan beginning in such taxable year.
3.12 Correction of Excess Deferrals.
(a) Excess Deferrals shall be corrected as provided in this section. The
Administrator may also prevent anticipated Excess Deferrals as provided in
this section. The Administrator may use any method of correction or
prevention provided in this section or any combination thereof, as it
determines in its sole discretion. A distribution of an Excess Deferral
under this section may be made without regard to any notice or consent
otherwise required pursuant to sections 411(a)(11) and 417 of the Code. This
section shall be administered and interpreted in accordance with sections
401(k) and 402(g) of the Code.
(b) The Administrator may refuse to accept any or all prospective Elective
Deferrals to be contributed by a Participant.
(c) (1) The Administrator may distribute any or all Excess Deferrals to
the Participant on whose behalf such Excess Deferrals were made before the
close of the Applicable Taxable Year. Distributions under this subsection
include income allocable to the Excess Distribution so distributed, as
determined under this subsection.
(2) Distribution under this subsection shall only be made if all the
following conditions are satisfied:
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13
(A) the Participant seeking the distribution designates the distribution as
an Excess Deferral;
(B) the distribution is made after the date the Excess Deferral is received
by the Plan; and
(C) the Plan designates the distribution as a distribution of an Excess
Deferral.
(3) The income allocable to the Excess Deferral distributed under this
subsection shall be determined in the same manner as under subsection (d)(3),
except that income shall only be determined for the period from the beginning
of the Applicable Taxable Year to the date on which the distribution is made.
(d) (1) The Administrator may distribute any or all Excess Deferrals to
the Participant on whose behalf such Excess Deferrals were made after the
close of the Applicable Taxable Year. Distribution under this subsection
shall only be made if the Participant timely provides the notice required
under subsection (d)(2) and such distribution is made after the Applicable
Taxable Year and before the first April 15 following the close of the
Applicable Taxable Year. Distributions under this subsection shall include
income allocable to the Excess Deferrals so distributed, as determined under
this subsection.
(2) Any Participant seeking a distribution of an Excess Deferral in
accordance with this subsection must notify the Administrator of such request
no later than the first March 15 following the close of the Applicable
Taxable Year. The Administrator may agree to accept notification received
after such date (but before the first April 15 following the close of the
Applicable Taxable Year) if it determines that it would still be
administratively practicable to make such distribution in view of the delayed
notification. The notification required by this subsection shall be deemed
made if a Participant's Elective Deferrals to the Plan in any Plan Year
create an Excess Deferral.
(3) The income allocable to the Excess Deferral distributed under this
subsection shall be determined in the same manner as under section
3.11(f)(2), except that the term "Excess Deferrals" shall be substituted for
"Excess Contributions" and the term "Applicable Taxable Year" shall be
substituted for "Plan Year." The Administrator may make any special
allocations of earnings or losses necessary to carry out the provisions of
this subsection.
(e) The following terms shall have the meanings specified:
(1) Applicable Taxable Year. The taxable year (for federal income tax
purposes) of the Participant in which an Excess Deferral must be included in
gross income (when made) in accordance with section 402(g) of the Code.
(2) Excess Deferral. A Participant's Elective Deferrals (and other
contributions limited by section 402(g) of the Code), for an Applicable
Taxable Year that are in excess of the limits imposed by section 402(g) of
the Code for such Applicable Taxable Year.
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14
3.13 Correction of Excess Aggregate Contributions.
(a) Excess Aggregate Contributions shall be corrected as provided in this
section. The Administrator may use any method of correction or prevention
provided in this section or any combination thereof, as it determines in its
sole discretion. This section shall be administered and interpreted in
accordance with sections 401(k) and 401(m) of the Code.
(b) The Administrator may refuse to accept any or all prospective Elective
Deferrals to be contributed to a Participant.
(c) (1) The Company may, in its sole discretion, elect to contribute, as
provided in section 3.2, a Qualified Nonelective Contribution in an amount
necessary to satisfy any or all of the requirements of section 3.10.
(2) Qualified Nonelective Contributions for a Plan Year shall only be
allocated to the Accounts of Participants who are not Highly Compensated
Employees. Qualified Nonelective Contributions shall be allocated first to
the Participant with the lowest Compensation for that Plan Year and any
remaining Qualified Nonelective Contributions thereafter shall be allocated
to the Participant with the next lowest compensation for that Plan Year.
This allocation method shall continue in ascending order of Compensation
until all such Qualified Nonelective Contributions are allocated. The
allocation to any Participant shall not exceed the limits under section 415
of the Code. If two or more Participants have identical Compensation, the
allocations to them shall be proportional.
(3) Qualified Nonelective Contributions for a Plan Year shall be
contributed to the Trust within twelve (12) months after the close of such
Plan Year.
(4) Qualified Nonelective Contributions shall only be allocated to
Participants who receive Compensation during the Plan Year for which such
contribution is made.
(d) The Administrator may, during a Plan Year, distribute to a Participant
(or such Participant's Beneficiary if the Participant is deceased), any or
all Excess Aggregate Contributions allocable to that Participant's Account
for that Plan Year, notwithstanding any contrary provision of the Plan. Such
distribution may include earnings or losses (if any) attributable to such
amounts, as determined by the Administrator.
(e) (1) The Administrator may forfeit any or all Excess Aggregate
Contributions for a Plan Year in accordance with the provisions of this
subsection. The amounts so forfeited shall not include any amounts that are
nonforfeitable under ARTICLE V.
(2) Any forfeitures under this subsection shall be made in accordance with
the procedures for distributions under subsection (f) except that such
amounts shall be forfeited instead of being distributed.
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15
(f) (1) The Administrator may distribute any or all Excess Aggregate
Contributions for a Plan Year in accordance with the provisions of this
subsection. Such distribution may only occur after the close of such Plan
Year and within twelve (12) months of the close of such Plan Year. Such
distributions shall be specifically designated by the Administrator as a
distribution of Excess Aggregate Contributions. In the event of the complete
termination of the Plan, such distribution shall be made within twelve (12)
months after such termination. Such distribution shall include the income
allocable to the amounts so distributed, as determined under this subsection.
The Administrator may make any special allocations of earnings or losses
necessary to carry out the provisions of this subsection. A distribution of
an Excess Aggregate Contribution under this subsection may be made without
regard to any notice or consent otherwise required pursuant to sections
411(a)(11) and 417 of the Code.
(2) (A) The income allocable to Excess Aggregate Contributions
distributed under this subsection shall equal the allocable gain or loss for
the Plan Year. Income includes all earnings and appreciation, including such
items as interest, dividends, rent, royalties, gains from the sale of
property, appreciation in the value of stock, bonds, annuity and life
insurance contracts, and other property, without regard to whether such
appreciation has been realized.
(B) The allocable gain or loss for the Plan Year may be determined under
any reasonable method consistently applied by the Administrator.
Alternatively, the Administrator may, in its discretion, determine such
allocable gain or loss for the Plan Year under the method set forth in
subparagraph (C).
(C) Under this method, the allocable gain or loss for the Plan Year is
determined by multiplying the income for the Plan Year allocable to employee
contributions, matching contributions and amounts treated as matching
contributions by a fraction, the numerator of which is the Excess Aggregate
Contributions for the Participant for the Plan Year and the denominator of
which is the total Account balance of the Participant attributable to
employee contributions, matching contributions and amounts treated as
matching contributions as of the beginning of the Plan Year, increased by the
employee contributions, matching contributions and amounts treated as
matching contributions for the Participant for the Plan Year.
(3) Amounts distributed under this subsection (or other provisions of this
section) shall first be treated as distributions from the Participant's
Account in the following order:
(A) from the Participant's Qualified Nonelective Contribution Account (if
such Excess Aggregate Contribution is attributable to Qualified Nonelective
Contributions);
(B) from the Participants Employee After-Tax Contribution Account (if such
Excess Aggregate Contribution is attributable to Employee After-Tax
Contributions); and
(C) from the Participant's Matching Contribution Account (if such Excess
Aggregate Contribution is attributable to Matching Contributions).
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16
(g) (1) The term "Excess Aggregate Contributions" shall mean, with
respect to a Plan Year, the excess of the aggregate amount of the matching
contributions and employee contributions (including any Qualified Nonelective
Contributions or elective deferrals taken into account in computing the
Actual Contribution Percentage) actually made on behalf of eligible Highly
Compensated Employees for the Plan Year over the maximum amount of such
contributions permitted under section 401(m)(2)(A) of the Code. For this
purpose, the maximum amount of contributions permitted under section
401(m)(2)(A) of the Code shall be determined in accordance with the leveling
method described in section 3.11(g)(1) of the Plan.
(2) Any distribution of Excess Aggregate Contributions for a Plan Year, as
determined under subsection (1) above, shall be made to the Highly
Compensated Employees on the basis of the amount of contributions by, or on
behalf of, each such Highly Compensated Employee in accordance with the
procedure described herein. The Highly Compensated Employees with the
highest amount of contributions shall have their contributions distributed to
the extent required to eliminate the Excess Aggregate Contributions or, if it
results in a lower distribution, to the extent required to cause such Highly
Compensated Employees contributions to equal the amount of contributions of
the Highly Compensated Employees with the next highest level of
contributions. This procedure shall be repeated until the Excess Aggregate
Contributions are completely distributed.
(3) The terms "employee contributions" and "matching contributions" shall,
for purposes of this section, have the meanings set forth in Treas. Reg.
1.401(m)-1(f).
3.14 Correction of Multiple Use.
(a) If the limitations of Treas. Reg. 1.401(m)-2 are exceeded for any Plan
Year, then correction shall be made in accordance with the provisions of this
section. This section shall be administered and interpreted in accordance
with sections 401(k) and 401(m) of the Code.
(b) Any correction required by this section shall be calculated and
administered in accordance with the provisions for correcting Excess
Contributions (in section 3.11), Excess Aggregate Contributions (in section
3.13) or both, as the Administrator determines in its sole discretion. Any
correction required by this section, to the extent possible, shall be made
only with respect to those Highly Compensated Employees who are eligible in
both the arrangement subject to section 401(k) of the Code and the Plan, as
subject to section 401(m) of the Code.
ARTICLE IV
Investment of Accounts
4.1 Election of Investment Funds.
(a) Except as otherwise prescribed in subsections (b) and (c)
below, upon enrollment in the Plan, each Participant shall direct that the
funds in the Participant's Account be invested in increments of one percent
(1%) in one or more of the following investment funds:
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17
(1) Fund A. An equity fund designated by the
Administrator;
(2) Fund B. A fixed income fund designated by the
Administrator;
(3) Fund C. Common Stock fund;
(4) Fund D. A stock index fund designated by the
Administrator;
(5) Fund E. A balanced fund designated by the
Administrator;
(6) Fund F. A growth fund designated by the
Administrator, investing primarily in equities of companies of all types and
sizes;
(7) Fund G. A growth fund designated by the
Administrator, investing primarily in equities of well-known and established
companies;
(8) Fund H. General Motors Class H stock fund;
(9) Fund I. Raytheon Company Class A stock fund.
(b) Amounts contributed to a Participant's Matching
Contribution Account must be invested in Fund C (Common Stock fund) until the
end of two (2) full Plan Years following the Plan Year for which such
contributions are made. Thereafter, a Participant may designate the
investment of the Matching Contribution funds in accordance with the
provisions of subsection (a) above.
(c) The only assets that may be invested in Fund H or Fund I
are the General Motors Class H stock and cash directly transferred from the
Hughes Tucson Bargaining Employees Thrift and Savings Plan pursuant to
section 3.7(b)(4). A Participant may not direct that any other funds in the
Participants Account be invested in Fund H or Fund I. Notwithstanding
subsection (d) below, the Administrator shall maintain Fund H and Fund I as
investment options under the Plan, subject to the limitations prescribed in
this subsection (c), for five (5) complete Plan Years following the Effective
Date; provided, however, that if at any time prior to the expiration of such
five (5) year period, the aggregate fair market value of the assets invested
in either Fund H or Fund I falls below five percent (5%) of the highest fair
market value of the assets invested in Fund H or Fund I, respectively, the
Administrator may, with six (6) months written notice to affected
Participants, eliminate Fund H or Fund I, as applicable, as investment
options under the Plan. Notwithstanding the foregoing, the Administrator may
eliminate one or both funds at any time if the Administrator determines in
good faith that such elimination is necessary under applicable law (including
without limitation the prudence requirements of ERISA). When Fund H and Fund
I are eliminated in accordance with this section 4.1(c), Participants with
assets invested in Fund H or Fund I, as applicable, shall direct the transfer
of such assets to other funds available under the Plan or, if no such
election is made, the Administrator shall transfer such assets to Fund B or a
similar low risk fixed income fund as determined by the Administrator in its
discretion.
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18
(d) In its discretion, the Administrator may from time to time
designate new funds and, where appropriate, preclude investment in existing
funds and provide for the transfer of Accounts invested in those funds to
other funds selected by the Participant or, if no such election is made, to
Fund B or similar low risk fixed income fund as determined by the
Administrator in its discretion.
(e) Except as otherwise prescribed in subsections (b) and (c)
above, a Participant's investment election will apply to the entire Account
of the Participant.
(f) In establishing rules and procedures under section 4.1, the
following shall apply:
(1) Each Participant, Beneficiary or Alternate Payee
shall affirmatively elect to self-direct the investment of assets in his or
her Account, but such election may provide for default investments in the
absence of specific directions from such Participant, Beneficiary or
Alternate Payee.
(2) The investment directions of a Participant shall
continue to apply after that Participant's death or incompetence until the
Beneficiary (or, if there is more than one Beneficiary for that Account, all
of the Beneficiaries), guardian or other representatives provide contrary
direction.
(3) The Administrator may decline to implement investment
designations if such investment, in the Administrator's judgment:
(A) would result in a prohibited transaction under
section 4975 of the Code;
(B) would generate income taxable to the Trust
Fund;
(C) would not be in accordance with the Plan and
Trust;
(D) would cause a Fiduciary to maintain the indicia
of ownership of any assets of the Trust Fund outside the jurisdiction of the
district courts of the United States other than as permitted by section
404(b) of ERISA and Labor Reg. 2550.404(b)-1;
(E) would jeopardize the Plan's tax qualified
status under the Code;
(F) could result in a loss in excess of the amount
credited to the Account; or
(G) would violate any other requirements of the
Code or ERISA.
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19
(4) Except as otherwise prescribed in subsections (b) and
(c) above, the Administrator may establish reasonable restrictions on the
frequency with which investment directions may be given, consistent with
section 404(c) of ERISA.
(5) The Administrator may establish limits on the use of
brokers, investment counsel or other advisors that may be utilized, including
specifying that all investments must be made through a designated broker or
brokers.
(6) The Administrator may establish limits on the types
of investments that are permitted.
(g) Except as otherwise prescribed in subsections (b) and (c) above,
the Administrator shall establish such rules and procedures as may be advisable
or necessary to carry out the provisions of this section, with such rules and
procedures being consistent with section 404(c) of ERISA.
(h) The Administrator shall establish such rules and procedures as may
be advisable or necessary to reasonably ensure that all transactions involving
the investment funds comply with all applicable laws, including the securities
laws.
4.2 Change in Investment Allocation of Future Deferrals. Except as
otherwise prescribed in sections 4.1(b) and (c), each Participant may elect
to change the investment allocation of future contributions effective as of
the first administratively feasible Business Day subsequent to telephone
notice to the Recordkeeper. Any changes must be made either in increments of
one percent (1%) of the Participant's Account or in a specified whole dollar
amount and must result in a total investment of one hundred percent (100%) of
the Participant's Account.
4.3 Transfer of Account Balances Between Investment Funds. Except as
otherwise prescribed in sections 4.1(b) and (c), each Participant may elect
to transfer all or a portion of the amount in his or her Account between
investment funds effective as of the first administratively feasible Business
Day following telephone notice to the Recordkeeper. In determining the
amount of the transfer, the Participant's Account shall be valued as of the
close of business on the Business Day on which telephone notice is received;
provided, however, that in any case where the telephone notice is received
after 4:00 p.m. Eastern Time (daylight or standard, whichever is in effect on
the date of the call), the Account shall be valued as of the close of
business on the next Business Day. Such transfers must be made in either one
percent (1%) increments of the entire Account or in a specified amount in
whole dollars and, as of the completion of the transfer, must result in
investment of one hundred percent (100%) of the Account. Transfers shall be
effected by telephone notice to the Recordkeeper.
4.4 Ownership Status of Funds. The Trustee shall be the owner of
record of the assets in the funds specified as Funds A, B, C, D, E, F, G, H
and I and such other funds as may be established by the Administrator. The
Administrator shall have records maintained as of the Valuation Date for each
fund allocating a portion of the fund to each Participant who has elected
that his or her Account be invested in such fund. The records shall reflect
each Participant's portion of Funds A, B, D, E, F and G and such other funds
as may be established by the Administrator, in a cash amount and shall
reflect each Participant's portion of Funds C, H and I in cash and unitized
shares of stock.
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20
4.5 Voting Rights. Participants whose Account has shares of
participation in Funds C or I on the last business day of the second month
preceding the record date (the "Voting Eligibility Date") for any meeting of
stockholders have the right to instruct the Trustee as to voting at such
meeting. The number of votes is determined by dividing the value of the
shares in the Participant's Account in Funds C and I, as applicable, by the
closing price of the respective classes of stock on the Voting Eligibility
Date. If the Trustee has not received instructions from a Participant as to
voting of shares within a specified time, then the Trustee shall not vote
those shares. If a Participant furnishes the Trustee with a signed vote
direction card without indicating a voting choice thereon, the Trustee shall
vote the Participant's shares as recommended by management. In addition,
each Participant shall have the right to accept or reject any tender or
exchange offer for shares of the respective classes of stock. The Trustee
shall vote (or tender or exchange) all combined fractional shares of the
respective classes of stock to the extent possible in the same proportion as
the shares which have been voted (or tendered or exchanged) by each
Participant. Any instructions as to voting (or tender or exchange) received
from an individual Participant shall be held in confidence by the Trustee and
shall not be divulged to the Adopting Employers or to any officer or employee
thereof or to any other person.
4.6 Allocation of Earnings.
(a) (1) The Administrator, as of each Valuation Date, shall
adjust the amounts credited to the Accounts (including Accounts for persons
who are no longer Employees) so that the total of such Account balances
equals the fair market value of the Trust Fund assets as of such Valuation
Date. Except as otherwise provided herein, any changes in the fair market
value of the Trust Fund assets since the preceding Valuation Date shall be
charged or credited to each Account in the ratio that the balance in each
such Account as of the preceding Valuation Date bears to the balances in all
Accounts as of that Valuation Date with appropriate adjustments to reflect
any distributions, allocations or similar adjustments to such Account or
Accounts since that Valuation Date.
(2) To the extent that separate investment funds are
established (as provided in section 4.1), the adjustments required by
subsection (a)(1) shall be made by applying subsection (a)(1) separately for
each such investment fund so that any changes in the net worth of each such
investment fund are charged or credited to the portion of each Account
invested in such investment fund in the ratio that the portion of each such
Account invested in such investment fund as of the preceding Valuation Date
(reduced by any distributions made from that portion of such Account since
that Valuation Date) bears to the total amount credited to such investment
funds as of that Valuation Date (reduced by distributions made from such
investment fund since that Valuation Date).
(3) Interim valuations, in accordance with the foregoing
procedure, may be made at such time or times as the Administrator directs.
(b) The Administrator may, in its sole discretion, direct
the Trustee to segregate and separately invest any Trust Fund assets. If any
assets are segregated in this fashion, the earnings or losses on such assets
shall be determined apart from other Trust assets and shall be adjusted on
each Valuation Date, or at such other times as the Administrator deems
necessary, in accordance with this section.
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21
ARTICLE V
Vesting
5.1 Elective Deferral, Employee After-Tax Contribution, Rollover
Contribution and Qualified Nonelective Contribution Accounts. Each
Participant shall have a Nonforfeitable right to any amounts in the
Participant's Elective Deferral, Employee After-Tax Contribution, Rollover
Contribution and Qualified Nonelective Contribution Accounts.
5.2 Matching Contribution Account.
(a) Each Participant shall have a Nonforfeitable right to his or her
Matching Contribution Account upon the earliest of:
(1) the Participant's completion of a Period of Service of five (5) years;
(2) the Participant's completion of a Period of Participation of three (3)
years;
(3) the Participant's Retirement, death while an Employee, Disability or
attainment of Normal Retirement Age; or
(4) the Participant's Layoff or Severance from Service due to Qualified Military
Service.
5.3 Break in Service Rules
(a) Periods of Service. In determining the length of a Period
of Service, the Administrator shall include all Periods of Service, except
the following Periods of Service shall not be taken into account:
(1) in the case of a Participant who has not made
Elective Deferrals to the Plan, the Period of Service before any Period of
Severance which equals or exceeds five (5) consecutive years; and
(2) in the case of a Participant who has made Elective
Deferrals to the Plan and who has incurred a Period of Severance which equals
or exceeds five (5) years, the Period of Service after such Period of
Severance shall not be taken into account for purposes of determining the
nonforfeitable interest of such Participant in the Matching Contributions
allocated to his or her Account before such Period of Severance.
(b) Periods of Severance. In determining the length of a
Period of Service for purposes of section 14.40, the Administrator shall
include any period of time beginning on an Employee's Severance from Service
Date and ending on the date on which he or she is next credited with an Hour
of Service, provided that such Hour of Service is credited within the twelve-
(12) consecutive month period following such Severance from Service Date.
(c) Other Periods. In making the determinations described in
subsections (a) and (b) of this section, the second, third, and fourth
consecutive years of a Layoff (from the first anniversary of the last day
paid to the fourth anniversary of the last day paid) and any period in excess
of one (1) year of an Authorized Leave of Absence shall be regarded as
neither a Period of Service nor a Period of Severance.
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22
ARTICLE VI
Withdrawals and Distribution of Benefits
6.1 In-Service Withdrawals - Matching Contributions. Upon completion
of a Period of Participation of five (5) years, a Participant may withdraw,
subject to a minimum withdrawal amount of two hundred fifty dollars ($250),
all or part of the Participant's Matching Contribution Account. Withdrawals
will be based upon the value of the Account as determined under section 6.16.
Withdrawals from Funds A, B, D, E, F and G, and such other funds as may be
established by the Administrator will be made in cash; withdrawals from Funds
C, H and I will be made in cash or stock (with cash for fractional or
uninvested shares) as directed by the Participant. Funds for the withdrawal
will be taken on a pro rata basis against the Participant's investment fund
balances in the Participant's Matching Contribution Account.
6.2 In-Service Withdrawals -- Elective Deferral and Qualified
Nonelective Contribution Accounts. While an Employee, a Participant may
withdraw all or a portion of his or her Elective Deferral Account and
Qualified Nonelective Contribution Account on or after attainment of age
fifty-nine and one-half (59).
6.3 In-Service Withdrawals -- Hardship.
(a) A Participant who has experienced a hardship, as described
in this section, may withdraw from his or her Elective Deferral Account
amounts attributable to Elective Deferrals (adjusted for net losses, if any).
Whether a Participant is entitled to a withdrawal under this section is to be
determined by the Administrator in accordance with nondiscriminatory and
objective standards. In order to be entitled to a hardship withdrawal under
this section, a Participant must satisfy the requirements of both subsection
(b) and subsection (c).
(b) A Participant will be deemed to have experienced an
immediate and heavy financial need necessary to satisfy the requirements of
this subsection if the withdrawal is on account of:
(1) medical expenses described in section 213(d) of
the Code incurred by the Participant, the Participant's spouse or any
dependents of the Participant;
(2) the purchase (excluding mortgage payments) of a
principal resident of the Participant;
(3) payment of tuition for the next twelve (12)
months of post-secondary education for the Participant or his or her spouse,
children or dependents; or
(4) the need to prevent the eviction of the
Participant from his or her principal residence or the foreclosure on the
mortgage of the Participant's principal residence.
(c) (1) A withdrawal under this subsection will be deemed
necessary to satisfy an immediate and heavy financial need of the Participant
if it satisfies the requirements of this subsection. To the extent the
amount of the withdrawal would be in excess of the amount required to relieve
the financial need of the Participant or to the extent such need may be
satisfied from other resources that are reasonably available to the
Participant, such withdrawal shall not satisfy the requirements of this
subsection. For purposes of this subsection, a Participant's resources shall
be deemed to include those assets of his or her spouse or minor children that
are reasonably available to the Participant.
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23
(2) A withdrawal may be treated as necessary to satisfy a
financial need if the Administrator reasonably relies upon the Participant's
representation that the need cannot be relieved:
(A) through reimbursement or compensation by insurance or otherwise;
(B) by reasonable liquidation of the Participant's assets to the extent such
liquidation would not itself cause an immediate and heavy financial need;
(C) by cessation of Elective Deferrals under the Plan for at least twelve (12)
months after receipt of the hardship withdrawal;
(D) by other distributions or nontaxable (at the time of the loan) loans from
plans maintained by the Adopting Employers or by any other employer or by
borrowing from commercial sources on reasonable commercial terms.
(d) If a Participant receives a withdrawal for reasons of financial
hardship, the Participants Elective Deferrals shall be reduced to four percent
(4%) (or such lower percentage as the Participant shall thereafter designate),
if in excess thereof as of the date of the distribution, and shall not be
increased during the twelve (12) months immediately subsequent to the date of
distribution.
(e) Withdrawals of less than two hundred fifty dollars ($250) will not
be permitted.
(f) Withdrawals will be based upon the value of the Account as
determined under section 6.16.
(g) payment of the amount withdrawn will be made as soon as reasonably
practicable after the effective date of the withdrawal.
(h) Withdrawals from Funds A, B, D, E, F and G, and such other funds
as may be established by the Administrator, will be made in cash. Withdrawals
from Funds C, H and I will be made in cash or stock (with cash for fractional or
unissued shares) as elected by the Participant.
(i) Funds for the withdrawal will be taken on a pro rata basis against the
Participant's investment fund balances in the Participant's Elective Deferral
Account.
6.4 In-Service Withdrawals -- Rollover Contribution Account. A
Participant may withdraw all or a portion of his or her Rollover Contribution
Account. Withdrawals will be based upon the value of the Account as
determined under section 6.16. Payment of the amount withdrawn will be made
as soon as reasonably practicable after the effective date of the withdrawal.
Withdrawals from Funds A, B, D, E, F and G will be made in cash. Withdrawals
from Funds C, H and I will be made in cash or stock (with cash for fractional
or unissued shares) as elected by the Participant. Withdrawals of less than
two hundred fifty dollars ($250) will not be permitted.
<PAGE>
24
6.5 In-Service Withdrawals -- Employee After-Tax Contributions. A
Participant may withdraw all or a portion of his or her Employee After-Tax
Contributions. Withdrawals will be based upon the value of the Account as
determined under section 6.16. Payment of the amount withdrawn will be made
as soon as reasonably practicable after the effective date of the withdrawal.
Withdrawals from Funds A, B, D, E, F and G will be made in cash. Withdrawals
from Funds C, H and I will be made in cash or stock (with cash for fractional
or unissued shares) as elected by the Participant.
6.6 Redeposits Prohibited. No amount withdrawn pursuant to sections
6.1, 6.2, 6.3, 6.4 or 6.5 may be redeposited in the Plan.
6.7 Distribution of Benefits.
(a) All benefits payable under this Plan shall be paid in the
manner and at the times specified in this ARTICLE. Any payments to
Participants or Beneficiaries shall be made in cash (or cash equivalents)
except as otherwise provided herein. Distributions may be made wholly or
partly by an in-kind distribution of assets held by the Trust Fund if the
distributee consents to such an in-kind distribution and the Administrator
determines that such an in-kind distribution is not administratively
burdensome.
(b) All payment methods and distributions shall comply with the
requirements of sections 401(a)(4) and 401(a)(9) of the Code and the
regulations thereunder and, if necessary, shall be interpreted to so comply.
The provisions of this ARTICLE apply to all amounts credited to an Account,
regardless of the source of such amounts. All distributions shall comply
with the incidental death benefit requirement of section 401(a)(9)(G) of the
Code. Distributions shall comply with the regulations under section
401(a)(9) of the Code, including Treas. Reg. 1.401(a)(9)-2. The provisions
of the Plan reflecting section 401(a)(9) of the Code override any
distribution provisions in the Plan inconsistent with section 401(a)(9).
(c) Distribution of the Participant's Account (to which the
Participant has a Nonforfeitable right) will be made at the direction of the
Participant (or his or her legal representative or Beneficiary in the case of
his or her Disability or death) upon the Retirement, Disability, death or
Severance from Service of the Participant. In the event the Participant dies
or his or her Severance from Service occurs after his or her Normal
Retirement Age, or if the value of the Nonforfeitable portion of the
Participant's Account as of the Valuation Date which coincides with or
immediately precedes the date of distribution is not in excess of three
thousand five hundred dollars ($3,500), the Administrator shall cause the
distribution to automatically be made.
(d) Payment will be made in the form of a lump-sum distribution of the
entire amount in the Participant's Account (to which the Participant has a
Nonforfeitable right), which will be paid as soon as practicable following
notification to the Benefits and Services Department, Raytheon Company,
Lexington, Massachusetts, of the Retirement, death, Disability or Severance from
Service and a telephone request by the Participant to the Recordkeeper for the
distribution. Distributions will be based upon the value of the Account as
determined under section 6.16. Distribution of the amounts in said accounts in
the funds designated in Funds A, B, D, E, F and G, and such other funds as may
be established by the Administrator, will be made in cash. Distribution of the
amounts in Funds C, H and I (if any) will be made in either cash or stock, at
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25
the election of the Participant or, in the case of death, the Participants
Beneficiary. Partial deferrals will not be permitted. If there is no Beneficiary
surviving a deceased Participant at the time payment of his or her Account is to
be made, such payment shall be made in a lump-sum to the person or persons in
the first following class of successive Beneficiaries surviving, any
testamentary devise or bequest to the contrary notwithstanding: the
Participant's (1) spouse, (2) children and issue of deceased children by right
of representation, (3) parents, (4) brothers and sisters and issue of deceased
brothers and sisters by right of representation, or (5) executors or
administrators. If no Beneficiary can be located during a period of seven (7)
years from the date of death, the amount of the distribution shall revert to the
Trust and be treated in the same manner as a forfeiture under section 3.6.
(e) If the Participant dies before the time when distribution is
considered to have commenced in accordance with applicable regulations, then any
remaining portion of the Participant's interest will be distributed within five
(5) years after the Participant's death. If a distribution is considered to have
commenced in accordance with the applicable regulations before the Participant's
death, the remaining interest will be distributed at least as rapidly as under
the method of distribution being used as of the date of the Participant's death.
(f) Except as provided by section 401(a)(9) of the Code as set forth
in this section, benefits in the Plan will be distributed to each Participant
not later than the sixtieth (60th) day after the close of the Plan Year in which
the latest of the following events occurs:
(1) attainment by the Participant of Normal Retirement
Age;
(2) the tenth (10th) anniversary of the date on which
Participant commenced participation in the Plan; or
(3) Participant's Severance from Service.
6.8 Mandatory Distributions.
A Participant who has attained age seventy and one-half (70-1/2) and
is subject to the mandatory distribution requirements of section 401(a)(9) shall
receive a lump sum distribution of the Participants Account (to which the
Participant has a nonforfeitable right) at the time distributions must commence
in order to comply with such requirements. If additional amounts are allocated
to the Participants Account following such lump sum distribution, additional
lump sum distributions of the Participants Account (to which the Participant has
a nonforefeitable right) shall be made at such times any mandatory distributions
are required to comply with section 401(a)(9). Such payments shall be made
notwithstanding any contrary provisions of the Plan or election made by such
Participant.
6.9 Commencement of Benefits.
(a) Except as otherwise provided in this ARTICLE, distribution
to a Participant (or Beneficiary) shall commence within a reasonable period
of time following the Participant's Retirement, Disability, death or
Severance from Service.
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26
(b) If the vested amount in the Participant's Account exceeds
or ever exceeded three thousand five hundred dollars ($3, 500), then payment
to the Participant shall not commence before such Participant has attained
age sixty-five (65), unless the Participant requests an earlier distribution.
Such request must be made not more than ninety (90) days before the
commencement of the distribution.
6.10 Payments to Incompetents. If a Participant or Beneficiary
entitled to receive any benefits hereunder is adjudicated to be legally
incapable of giving valid receipt and discharge for such benefits, the
benefits may be paid to the duly authorized personal representative of such
Participant or Beneficiary.
6.11 Income Tax Withholding. To the extent required by section 3405
of the Code, distributions and withdrawals from the Plan shall be subject to
federal income tax withholding.
6.12 Direct Rollovers.
(a) A Participant may elect that all or any portion of a
distribution that would otherwise be paid as an Eligible Rollover
Distribution shall instead be transferred as a Direct Rollover.
(b) (1) The Administrator shall determine and apply rules and
procedures as it deems reasonable with respect to Direct Rollovers in
addition to, or in lieu of, those set forth in subsection (b)(2). The
Administrator may change such rules and procedures from time to time and
shall not be bound by any previous rules and procedures it has applied.
(2) Unless otherwise determined by the Administrator, the
following rules and procedures shall apply to this section:
(A) A Direct Rollover shall not be permitted to more than one Eligible
Retirement Plan.
(B) A Direct Rollover shall not be permitted if it constitutes less than the
full amount of the Eligible Rollover Distribution.
(c) The following terms shall have the meanings specified:
(1) Direct Rollover. An available distribution that is
paid directly to an Eligible Retirement Plan for the benefit of the
distributee.
(2) Distributee. A Participant or former Participant.
In addition, the Participant's or former Participant's Surviving Spouse or
former spouse who is the Alternate Payee under a Qualified Domestic Relations
Order, as defined in section 414(p) of the Code, are Distributees with regard
to the interest of the spouse or former spouse.
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27
(3) Eligible Retirement Plan. An individual retirement
account described in section 408(a) of the Code, an individual retirement
annuity (other than an endowment contract) described in section 408(b) of the
Code, a qualified trust described in section 401(a) of the Code if such
qualified trust is part of a plan that permits acceptance of Direct Rollovers
or an annuity plan described in section 403(a) of the Code. In the case of a
Direct Rollover for the benefit of the spouse or former spouse of a
Participant, the term "Eligible Retirement Plan" shall only include an
individual retirement account described in section 408(a) of the Code and an
individual retirement annuity (other than an endowment contract) described in
section 408(b) of the Code.
(1) Eligible Rollover Distribution. Any distribution
under the Plan to a Participant, a Participants spouse or a Participants
former spouse, except for the following:
(A) Any distribution to the extent the distribution is required under
section 401(a)(9) of the Code.
(B) The portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net unrealized
appreciation described in section 402(e)(4) of the Code).
(C) Returns of elective deferrals described in Treas. Reg.
1.415-6(b)(6)(iv) that are returned as a result of the limitations under section
415 of the Code.
(D) Corrective distributions of excess contributions and excess
deferrals under qualified cash or deferred arrangements as described in Treas.
Reg. 1.401(k)-1(f)(4) and 1.402(g)-1(e)(3), respectively, and corrective
distributions of excess aggregate contributions as described in Treas. Reg.
1.401(m)-1(e)(3), together with the income allocable to these corrective
distributions.
(E) Loans treated as distributions under section 72(p) of the Code and
not excepted by section 72(p)(2) of the Code.
(F) Loans in default that are deemed distributions.
(G) Dividends paid on employer securities as described in section
404(k) of the Code.
(H) The costs of life insurance coverage.
(I) Similar items designated by the Internal Revenue Service in
revenue rulings, notices, and other guidance of general applicability.
6.13 Notice and Payment Elections.
(a) The Administrator shall provide Participants or other
Distributees of Eligible Rollover Distributions with a written notice
designed to comply with the requirements of section 402(f) of the Code. Such
notice shall be provided within a reasonable period of time before making an
Eligible Rollover Distribution.
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28
(b) Any elections concerning the payment of benefits under
section 6.7 shall be made on a form prescribed by the Administrator. The
Participant or other Distributee shall submit a completed form to the
Administrator at least thirty (30) days before payment is scheduled to
commence, unless the Administrator agrees to a shorter time period. Any
election made under this section shall be revocable until thirty (30) days
before payment is scheduled to commence.
(c) An election to have payment made in a Direct Rollover
shall only be valid if the Participant or other Distributee provides adequate
information to the Administrator for the implementation of such Direct
Rollover and such reasonable verification as the Administrator may require
that the transferee is an Eligible Retirement Plan.
6.14 Qualified Domestic Relations Orders.
(a) Notwithstanding any contrary provision of the Plan,
payments shall be made in accordance with any judgment, decree or order
determined to be a Qualified Domestic Relations Order.
(b)(1) If the Plan receives a Domestic Relations Order, the
Administrator shall promptly notify the Participant and each Alternate Payee
of the receipt of such order and of the Plan's procedures for determining
whether such order is a Qualified Domestic Relations Order. The
Administrator shall, within a reasonable period after receipt of such order,
determine whether it is a Qualified Domestic Relations Order and notify the
Participant and each Alternate Payee of that determination.
(2) During any period in which the issue of whether a
Domestic Relations Order is a Qualified Domestic Relations Order is being
determined, the Administrator shall separately account for the amounts that
would have been payable to the Alternate Payee during such period if the
order had been determined to be a Qualified Domestic Relations Order.
(c)(1) A Domestic Relations Order meets the requirements of
this subsection only if such order clearly specifies the following:
(A) the name and last known mailing address (if any) of the
Participant and the name and mailing address of each Alternate Payee covered by
the order;
(B) the amount or the percentage of the Participant's benefits to be
paid by the Plan to each such Alternate Payee or the manner in which such amount
or percentage is to be determined;
(C) the number of payments or period to which such order applies; and
(D) each plan to which such order applies.
(2) A Domestic Relations Order meets the requirements of
this subsection only if such order does not:
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29
(A) require the Plan to provide any type or form of benefit or any
option not otherwise provided under the Plan;
(B) require the Plan to provide increased benefits (determined on the
basis of actuarial value); and
(C) does not require the payment of benefits to an Alternate Payee
that are required to be paid to another Alternate Payee under another order
previously determined to be a Qualified Domestic Relations Order.
(d) A domestic relations order shall not be treated as failing
to meet the requirements of section 6.14(c)(2)(A) solely because such order
requires that payment of benefits be made to an Alternate Payee:
(1) in the case of any payment before a Participant has
separated from service, on or after the date on which the Participant attains
(or would have attained) the Earliest Retirement Date;
(2) as if the Participant had retired on the date on
which such payment is to begin under such order (but taking into account only
the present value of the benefits actually accrued and not taking into
account the present value of any employer subsidy for early retirement); and
(3) in any form in which such benefits may be paid under
the Plan to the Participant (other than in the form of a qualified joint and
survivor annuity with respect to the Alternate Payee and his or her
subsequent spouse).
(e) A domestic relations order shall not be treated as failing
to meet the requirements of section 6.14(c)(2)(A) solely because such order
requires that payment of benefits be made to an Alternate Payee at a date
before the Participant is entitled to receive a distribution. Such
distribution shall be made to such Alternate Payee notwithstanding any
contrary provision of the Plan.
(f) The following terms shall have the meanings specified:
(1) Alternate Payee. Any spouse, former spouse, child or
other dependent of a Participant who is recognized by a Domestic Relations
Order as having a right to benefits under the Plan with respect to such
Participant.
(2) Domestic Relations Order. A judgment, decree or
order relating to child support, alimony or marital property rights, as
defined in section 414(p)(1)(B) of the Code.
(3) Earliest Retirement Date. The earlier of:
(A) the date on which the Participant is entitled to a distribution
under the Plan; or
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30
(B) the later of:
(i) the date the Participant attains age fifty (50); or
(ii) the earliest date on which the Participant could begin
receiving benefits under the Plan if the Participant separated from service.
(4) Qualified Domestic Relations Order. A Domestic
Relations Order that satisfies the requirements of subsection (c) and section
414(p)(1)(A) of the Code.
(g) If an Alternate Payee entitled to payment under this section is
the spouse or former spouse of a Participant and payment will otherwise be made
in an Eligible Rollover Distribution, then such spouse or former spouse may
elect that all, or any portion, of such payment shall instead be transferred as
a Direct Rollover. Such Direct Rollover shall be governed by the requirements of
section 6.12.
(h) If a Domestic Relations Order directs that payment be made to an
Alternate Payee before the Participant's Earliest Retirement Date and such
Domestic Relations Order otherwise qualifies as a Qualified Domestic Relations
Order, then the Domestic Relations Order shall be treated as a Qualified
Domestic Relations Order and such payment shall be made to the Alternate Payee,
even though the Participant is not entitled to receive a distribution under the
Plan because he or she continues to be an Employee of one of the Adopting
Employers.
(i) This section shall be interpreted and administered in
accordance with section 414(p) of the Code.
6.15 Lost Beneficiary.
(a) All Participants and Beneficiaries shall have the
obligation to keep the Administrator informed of their current address until
such time as all benefits due have been paid.
(b) If any amount is payable to a Participant or Beneficiary
who cannot be located to receive such payment, such amount may, at the
discretion of the Administrator, be forfeited; provided, however, that if
such Participant or Beneficiary subsequently claims the forfeited amount, it
shall be reinstated and paid to such Participant or Beneficiary. Such
reinstatement may, in the Administrator's sole discretion, be made from
Company Contributions, forfeitures or Trust earnings, and shall be treated as
a special allocation that supersedes the normal allocation rules.
(c) If the Administrator has not, after due diligence, located
a Participant or Beneficiary who is entitled to payment within three (3)
years after the Participant's Severance from Service, then, at the discretion
of the Administrator, such person may be presumed deceased for purposes of
this Plan. Any such presumption of death shall be final, conclusive and
binding on all parties.
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31
6.16 Determination of Amount of Withdrawal or Distribution. In
determining the amount of any withdrawal or distribution hereunder, the
Participant's Account shall be valued as of the close of business on the
Business Day on which telephone notice is received; provided, however, that
in any case where the telephone notice is received after 4:00 p.m. Eastern
Time (daylight or standard, whichever is in effect on the date of the call),
the Account shall be valued as of the close of business on the next Business
Day.
6.17 Offsets. Any transfers or payments made from a Participant's
Account to a person other than the Participant pursuant to the provisions of
this Plan shall reduce the Participant's Account and offset any amounts
otherwise due to such Participant. Such transfers or payments shall not be
considered a forfeiture for purposes of the Plan.
ARTICLE VII
Loans
7.1 Availability of Loans. Participants may borrow against all or a
portion of the balance in the Participant's Elective Deferral Account,
Employee After-Tax Contribution Account and Rollover Contribution Account,
and the Matching Contribution Account if the Participant has a Nonforfeitable
right thereto pursuant to section 5.2, subject to the limitations set forth
in this ARTICLE. Participants who have incurred a Severance from Service
will not be eligible for a Plan loan. The Vice President, Human Resources,
is authorized to administer this loan program.
7.2 Minimum Amount of Loan. No loan of less than five hundred
dollars ($500) will be permitted.
7.3 Maximum Amount of Loan. No loan in excess of fifty percent (50%)
of the Participant's Nonforfeitable Account balance will be permitted. In
addition, limits imposed by the Code and any other requirements of applicable
statute or regulation will be applied. Under the current requirements of the
Code, if the aggregate value of a Participant's Nonforfeitable Account
balance exceeds twenty thousand dollars ($20,000), the loan cannot exceed the
lesser of one-half () the Participants Nonforfeitable Account balance or
fifty thousand dollars ($50,000) reduced by the excess of (a) the highest
outstanding balance of loans from the Plan during the one-year period ending
on the day before the date on which such loan was made over (b) the
outstanding balance of loans from the Plan on the date on which such loan was
made.
7.4 Effective Date of Loans. Loans will be effective as specified in
the Administrator's rules then in effect.
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32
7.5 Repayment Schedule. The Participant may select a repayment
schedule of one, two, three, four or five (1, 2, 3, 4 or 5) years. If the
loan is used to acquire any dwelling which, within a reasonable time is to be
used (determined at the time the loan is made) as the principal residence of
the Participant, the repayment period may be extended up to fifteen (15)
years at the election of the Participant. All repayments will be made
through payroll deductions in accordance with the loan agreement executed at
the time the loan is made, except that, in the event of the sale of all or a
portion of the business of the Employer or one of the Adopting Employers, or
other unusual circumstances, the Administrator, through uniform and equitable
rules, may establish other means of repayment. The loan agreement will
permit repayment of the entire outstanding balance in one lump-sum. The
minimum repayment amount per pay period is ten dollars ($10) for Participants
paid weekly and fifty dollars ($50) for Participants paid monthly. The
repayment schedule shall provide for substantially level amortization of the
loan. Loan repayments will be suspended under this Plan as permitted under
section 414(u) of the Code.
7.6 Limit on Number of Loans. No more than two (2) loans may be
outstanding at any time.
7.7 Interest Rate. The interest rate for a loan pursuant to this
ARTICLE will be equal to the prime rate published in The Wall Street Journal
on the first business day in June and December of each year. The rate
published on the first business day in June will apply to loans which are
effective at any time during the period July 1 through December 31
thereafter; the rate published on the first business day of December will
apply to loans which are effective at any time during the period January 1
through June 30 thereafter.
7.8 Effect Upon Participant's Elective Deferral Account. Upon the
granting of a loan to a Participant by the Administrator, the allocations in
the Participant's Account to the respective investment funds will be reduced
on a pro rata basis and replaced by the loan balance which will be designated
as an asset in the Account. Such reduction shall be effected by reducing the
Participant's Accounts in the following sequence, with no reduction of the
succeeding Accounts until prior Accounts have been exhausted by the loan:
Matching Contribution Account; Elective Deferral Account; Rollover
Contribution Account; and Employee After-Tax Contribution Account. Upon
repayment of the principal and interest, the loan balance will be reduced,
the Participant Accounts will be increased in the reverse order in which they
were exhausted by the loan, and the loan payments will be allocated to the
respective investment funds in accordance with the investment election then
in effect.
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33
7.9 Effect of Severance From Service and Nonpayment. In the event
that a loan remains outstanding upon the Severance from Service of a
Participant, the Participant will be given the option of continuing to repay
the outstanding loan. In any case where payments on the outstanding loan are
not made within ninety (90) days of the Participant's Severance from Service
Date, the amount of any unpaid principal will be deducted from the
Participant's account and reported as a distribution. If, as a result of
Layoff or Authorized Leave of Absence, a Participant, although still in a
Period of Service, is not being compensated through the Employer's payroll
system, loan payments will be suspended until the earliest of the first pay
date after the Participant returns to active employment with the Employer,
the Participant's Severance from Service Date, or the expiration of twelve
(12) months from the date of the suspension. In the event the Participant
does not return to active employment with the Employer, the Participant will
be given the option of continuing to repay the outstanding loan. If the
Participant fails to resume payments on the loan, the outstanding loan will
be reported as a taxable distribution. In no event, however, shall the loan
be deducted from the Participant's Account earlier than the date on which the
Participant (i) incurs a Severance from Service, or, (ii) attains age fifty-
nine and one-half (59).
ARTICLE VIII
Contribution and Benefit Limitations
8.1 Contribution Limits.
(a) The Annual Additions that may be allocated to a
Participant's Account for any Limitation Year shall not exceed the lesser of:
(1) thirty thousand dollars ($30,000); or
(2) twenty-five percent (25%) of the Participant's
Compensation for that Limitation Year.
(b) If the Employer maintains any other Defined Contribution
Plans then the limitations in subsection (a) shall be computed with reference
to the aggregate Annual Additions for each Participant from all such Defined
Contribution Plans.
(c) If the Annual Additions for a Participant would exceed the
limits specified in this section, then the Annual Additions under this Plan
for that Participant shall be reduced to the extent necessary to prevent such
limits from being exceeded. Such reduction shall be made in accordance with
section 8.4.
8.2 Overall Limits.
(a) If a Participant is participating in both a Defined
Contribution Plan and a Defined Benefit Plan of the Employer, then the sum of
the Defined Contribution Fraction and the Defined Benefit Fraction for any
Limitation Year shall not exceed 1.0.
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34
(b) If the sum of the Defined Contribution Fraction and the
Defined Benefit Fraction would exceed 1.0, then the annual benefits under the
Defined Benefit Plan shall be reduced to the extent necessary so that the sum
of such fractions does not exceed 1.0.
8.3 Annual Adjustments to Limits. The dollar limits for Annual
Additions and the dollar limits in the Defined Benefit Fraction and Defined
Contribution Fraction shall be adjusted for cost-of-living to the extent
permitted under section 415 of the Code.
8.4 Excess Amounts.
(a) The foregoing limits shall be limits on the allocation that
may be made to a Participant's Account in any Limitation Year. If an excess
Annual Addition would otherwise result from allocation of forfeitures,
reasonable errors in determining Compensation or other comparable reasons,
then the Administrator may take any (or all) of the following steps to
prevent the excess Annual Additions from being allocated:
(1) return any contributions from the Participant, as
long as such return is nondiscriminatory;
(2) hold the excess amounts unallocated in a suspense
account and apply the balance of the suspense account against Matching
Contributions for that Participant made in succeeding years;
(3) hold the excess amounts unallocated in a suspense
account and apply the balance of the suspense account against succeeding year
Matching Contributions;
(4) reallocate the excess amounts to other Participants.
(b) Any suspense account established under this section shall
not be credited with income or loss unless otherwise directed by the
Administrator. If a suspense account under this section is to be applied in
a subsequent Limitation Year, then the amounts in the suspense account shall
be applied before any Annual Additions (other than forfeitures) are made for
such Limitation Year.
8.5 Definitions.
(a) The following terms shall have the meanings specified:
(1) Annual Addition. The sum for any Limitation Year of
additions (not including Rollover Contributions) to a Participant's Account
as a result of:
(A) Employer contributions (including Matching Contributions,
Qualified Nonelective Contributions and Elective Deferrals);
(B) Employee contributions;
(C) forfeitures; and
(D) amounts described in Code sections 415(l)(1) and 419A(d)(2).
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35
(2) Defined Benefit Fraction. A fraction, the numerator
of which is the Projected Annual Benefit of the Participant under all Defined
Benefit Plans of the Employer (determined as of the close of the Limitation
Year) and the denominator of which is the Projected Annual Benefit the
Participant would have under such plans (determined as of the close of the
Limitation Year) if such plans provided an annual benefit equal to the lesser
of:
(A) the product of 1.25 multiplied by ninety thousand dollars
($90,000); or
(B) the product of 1.4 multiplied by one hundred percent (100%) of the
Participant's average Compensation for the Participant's three (3) consecutive
Years of Service that produce the highest average Compensation.
For purposes of determining the Defined Benefit Fraction of a
Participant who was employed by an Adopting Employer on December 18, 1997 or who
transferred to an Adopting Company from General Motors Corporation or one of its
affiliates after such date and before December 1, 1998, service for and
Compensation received from General Motors Corporation and its affiliates, if
any, shall be taken into account, and the Projected Annual Benefit under any
Defined Benefit Plan of the Employer shall not be reduced as a result of the
transfer of any assets or liabilities from a Defined Benefit Plan maintained by
General Motors Corporation and its affiliates.
(3) Defined Benefit Plan. Any plan qualified under
section 401(a) of the Code that is not a Defined Contribution Plan.
(4) Defined Contribution Fraction. A fraction, the
numerator of which is the sum of the Annual Additions to the Participant's
Accounts as of the close of the Limitation Year, and the denominator of which
is equal to the sum of the lesser of the following amounts determined for
such Limitation Year and for each prior year of service with the Employer:
(A) the product of 1.25 multiplied by thirty thousand dollars
($30,000); or
(B) the product of 1.4 multiplied by twenty-five percent (25%) of the
Participant's Compensation.
For purposes of determining the Defined Contribution Fraction of a
Participant, services performed for, Compensation paid by and Annual Additions
made by General Motors Corporation or any of its affiliates shall not be taken
into account.
(5) Defined Contribution Plan. A plan qualified under
section 401(a) of the Code that provides an individual account for each
Participant and benefits based solely on the amount contributed to the
Participant's Account, plus any income, expenses, gains and losses, and
forfeitures of other Participants which may be allocated to such
Participant's account.
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36
(6) Limitation Year. The Plan Year, until the Employer
adopts a different Limitation Year.
(7) Projected Annual Benefit. The annual benefit to
which a Participant would be entitled, assuming:
(A) the Participant continues in employment until Normal Retirement
Age under the Plan;
(B) the Participant's Compensation for the Limitation Year remains the
same until such Normal Retirement Age; and
(C) all other relevant factors under the Plan for the Limitation Year
will remain constant.
(b) For purposes of this ARTICLE, the term "Compensation" shall
mean all amounts paid to an Employee for personal service actually rendered
to the Employer, including, but not limited to, wages, salary, commissions,
bonuses, overtime and other premium pay as specified in Treas. Reg. 1.415-
2(d)(2), but excluding deferred compensation, stock options, and other
distributions that receive special tax treatment as specified in Treas. Reg.
1.415-2(d)(3). For Plan Years beginning after 1997, Compensation for this
purpose will include salary reduction amounts under section 125 cafeteria plans
and section 401(k), 403(b) and 457 plans. This definition shall be
interpreted in a manner consistent with the requirements of section 415 of
the Code.
ARTICLE IX
Top-Heavy Rules
9.1 General. This ARTICLE shall only be applicable if the Plan
becomes a Top-Heavy Plan under section 416 of the Code. If the Plan does not
become a Top-Heavy Plan, then none of the provisions of this ARTICLE shall be
operative. The provisions of this ARTICLE shall be interpreted and applied
in a manner consistent with the requirements of section 416 of the Code and
the regulations thereunder.
9.2 Vesting.
(a) If the Plan becomes a Top-Heavy Plan, then amounts in a
Participant's Account attributable to Matching Contributions shall be vested
in accordance with this section, in lieu of ARTICLE V, to the extent this
section produces a greater degree of vesting. This section shall only apply
to Participants who have at least an Hour of Service after the Plan becomes a
Top-Heavy Plan.
(b) If applicable, amounts in a Participant's Account
attributable to Matching Contributions shall vest as follows:
Years of
Top Heavy Service Vested Percentage
Fewer than 3 0%
3 or more 100%
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37
(c) If the Plan ceases to be a Top-Heavy Plan then subsection
(b) shall no longer be applicable; provided, however, that in no event shall
the vested percentage of any Participant be reduced by reason of the Plan
ceasing to be a Top-Heavy Plan. Subsection (b) shall nevertheless continue
to apply for any Participant who was previously covered by it and who has at
least three (3) Years of Top-Heavy Service.
9.3 Minimum Contribution.
(a) For each Plan Year that the Plan is a Top-Heavy Plan, the
Adopting Employers shall make a contribution to be allocated directly to the
Account of each Non-Key Employee.
(b) The amount of the contribution (and forfeitures) required
to be contributed and allocated for a Plan Year by this section is three
percent (3%) of the Top-Heavy Compensation for that Plan Year of each Non-Key
Employee who is both a Participant and an Employee on the last day of the
Plan Year for which the contribution is made, with adjustments as provided
herein. If the contribution allocated to the Accounts of each Key Employee
for a Plan Year is less than three percent (3%) of his or her Top-Heavy
Compensation, then the contribution required by the preceding sentence shall
be reduced for that Plan Year to the same percentage of Top-Heavy
Compensation that was allocated to the Account of the Key Employee whose
Account received the greatest allocation of contributions for that Plan Year,
when computed as a percentage of Top-Heavy Compensation.
(c) The contribution required by this section shall be reduced
for a Plan Year to the extent of any Company Contributions made and allocated
under this Plan or any other contributions from the Adopting Employers made
and allocated under this or any other Aggregated Plans. Elective Deferrals
shall be treated as if they were Company Contributions for purposes of
determining any minimum contributions required under subsection (b).
9.4 Definitions.
(a) The following terms shall have the meanings specified herein:
(1) Aggregated Plans.
(A) The Plan, any plan that is part of a "required aggregation group"
and any plan that is part of a "permissive aggregation group" that the Adopting
Employers treat as an Aggregated Plan.
(B) The "required aggregation group" consists of each plan of the
Adopting Employers in which a Key Employee participates (in the Plan Year
containing the Determination Date or any of the four (4) preceding Plan Years)
and each other plan of the Adopting Employers which enables any plan of the
Adopting Employers in which a Key Employee participates to meet the requirements
of section 401(a)(4) or section 410(b) of the Code. Also included in the
required aggregation group shall be any terminated plan that covered a Key
Employee and was maintained within the five (5) year period ending on the
Determination Date.
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(C) The "permissive aggregation group" consists of any plan not
included in the "required aggregation group" if the Aggregated Plan described in
subparagraph (A) above would continue to meet the requirements of section
401(a)(4) and 410 of the Code with such additional plan being taken into
account.
(2) Determination Date. The last day of the preceding
Plan Year, or, in the case of the first plan year of any plan, the last day
of such plan year. The computations made on the Determination Date shall
utilize information from the immediately preceding Valuation Date.
(3) Key Employee.
(A) An Employee (or former Employee) who, at any time during the Plan
Year containing the Determination Date or any of the four (4) preceding Plan
Years, is:
(i) An officer of one of the Adopting Employers with
annual Top-Heavy Compensation for the Plan Year greater than fifty percent (50%)
of the amount in effect under section 415(c)(1)(A) of the Code for the calendar
year in which that Plan Year ends;
(ii) one of the ten (10) Employees owning (or considered
as owning under section 318 of the Code) the largest interest in one of the
Adopting Employers, who has more than one-half of one percent (.5%) interest in
such Adopting Employer, and who has annual Top-Heavy Compensation for the Plan
Year at least equal to the maximum dollar limitation under section 415(c)(1)(A)
of the Code for the calendar year in which that Plan Year ends;
(iii) a five percent (5%) or greater shareholder in
one of the Adopting Employers; or
(iv) a one percent (1%) shareholder in one of
the Adopting Employers with annual Top-Heavy Compensation from the Adopting
Employer of more than one hundred fifty thousand dollars ($150,000).
(B) For purposes of paragraphs (3)(A)(iii) and (3)(A)(iv), the rules
of section 414(b), (c) and (m) of the Code shall not apply. Beneficiaries of an
Employee shall acquire the character of such Employee and inherited benefits
will retain the character of the benefits of the Employee who performed
services.
(4) Non-Key Employee. Any Employee who is not a Key
Employee.
(5) Super Top-Heavy Plan. A Top-Heavy Plan in which the
sum of the present value of the cumulative accrued benefits and accounts for
Key Employees exceeds ninety percent (90%) of the comparable sum determined
for all Employees. The foregoing determination shall be made in the same
manner as the determination of a Top-Heavy Plan under this section.
(6) Top-Heavy Compensation. The term Top-Heavy
Compensation shall have the same meaning as the term Compensation has under
section 8.5(b).
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39
(7) Top-Heavy Plan. The Plan is a Top-Heavy Plan for a
Plan Year if, as of the Determination Date for that Plan Year, the sum of
(i) the present value of the cumulative accrued benefits for Key Employees
under all Defined Benefit Plans that are Aggregated Plans and (ii) the
aggregate of the accounts of Key Employees under all Defined Contribution
Plans that are Aggregated Plans exceeds sixty percent (60%) of the comparable
sum determined for all Employees.
(8) Years of Top-Heavy Service. The number of Years of
Service with the Adopting Employers that might be counted under section
411(a) of the Code, disregarding all service that may be disregarded under
section 411(a)(4) of the Code.
(b) The definitions in this section and the provisions of this
ARTICLE shall be interpreted in a manner consistent with section 416 of the
Code.
9.5 Special Rules.
(a) For purposes of determining the present value of the
cumulative accrued benefit for any Participant or the amount of the Account
of any Participant, such present value or amount shall be increased by the
aggregate distributions made with respect to such Participant under the Plan
during the Plan Year that includes the Determination Date and the four (4)
preceding Plan Years (if such amounts would otherwise have been omitted).
(b) (1) In the case of unrelated rollovers and transfers,
(i) the plan making the distribution or transfer is to count the distribution
as a distribution under section 416(g)(3) of the Code, and (ii) the plan
accepting the rollover or transfer is not to consider the rollover or
transfer as part of the accrued benefit if such rollover or transfer was
accepted after December 31, 1983, but is to consider it as part of the
accrued benefit if such rollover or transfer was accepted before January 1,
1984. For this purpose, rollovers and transfers are to be considered
unrelated if they are both initiated by the Employee and made from a plan
maintained by one employer to a plan maintained by another employer.
(2) In the case of related rollovers and transfers, the
plan making the distribution or transfer is not to count the distribution or
transfer under section 416(g)(3) of the Code, and the plan accepting the
rollover or transfer counts the rollover or transfer in the present value of
the accrued benefits. For this purpose, rollovers and transfers are to be
considered related if they are not unrelated under subsection (b)(1).
(c) If any individual is a Non-Key Employee with respect to any
plan for any Plan Year, but such individual was a Key Employee with respect
to such plan for any prior Plan Year, any accrued benefit for such Employee
(and the account of such Employee) shall not be taken into account.
(d) Beneficiaries of Key Employees and former Key Employees are
considered to be Key Employees and Beneficiaries of Non-Key Employees and
former Non-Key Employees are considered to be Non-Key Employees.
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(e) The accrued benefit of an Employee who has not performed
any service for the Adopting Employer maintaining the Plan at any time during
the five (5) year period ending on the Determination Date is excluded from
the calculation to determine top-heaviness. However, if an Employee performs
no services, such Employee's total accrued benefit is included in the
calculation for top-heaviness.
9.6 Adjustment of Limitations.
(a) If this section is applicable, then the contribution and
benefit limitations in section 8.5 shall be reduced. Such reduction shall be
made by modifying section 8.5(a)(2)(A) of the definition of Defined Benefit
Fraction to instead be "(i) the product of 1.0 multiplied by ninety thousand
dollars ($90,000), or" and by modifying section 8.5(a)(4)(A) of the
definition of Defined Contribution Fraction to instead be "(i) the product of
1.0 multiplied by thirty thousand dollars ($30,000), or".
(b) This section shall be applicable for any Plan Year in which
either:
(1) the Plan is a Super Top-Heavy Plan, or
(2) the Plan both is a Top-Heavy Plan (but not a Super
Top-Heavy Plan) and provides contributions (and forfeitures) to the Account
of any Non-Key Employee in an amount less than four percent (4%) of such
Participant's Top-Heavy Compensation, as determined in accordance with
section 9.3(b).
ARTICLE X
The Trust Fund
10.1 Trust. During the period in which this Plan remains in
existence, the Company or any successor thereto shall maintain in effect a
Trust with a corporation and/or individual(s) as Trustee, to hold, invest,
and distribute the Trust Fund in accordance with the terms of such Trust.
10.2 Investment of Accounts. The Trustee shall invest and reinvest
the Participant's accounts in investment options as defined in section 4.1 as
directed by the Administrator or its delegate. The Administrator shall issue
such directions in accordance with the investment options selected by the
Participants which shall remain in force until altered in accordance with
sections 4.2 and 4.3.
10.3 Expenses. Expenses of the Plan and Trust shall be paid from the
Trust.
ARTICLE XI
Administration of The Plan
11.1 General Administration. The general administration of the Plan
shall be the responsibility of the Company (or any successor thereto) which
shall be the Administrator and named Fiduciary for purposes of ERISA. The
Company shall have the authority, in its sole discretion, to construe the
terms of the Plan and to make determinations as to eligibility for benefits
and as to other issues within the "Responsibilities of the Administrator"
described in this ARTICLE. All such determinations of the Company shall be
conclusive and binding on all persons.
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41
11.2 Responsibilities of the Administrator. Except as otherwise
provided in ERISA, the Administrator (and any other named Fiduciaries) may
allocate any duties and responsibilities under the Plan and Trust among
themselves in any mutually agreed upon manner. Such allocation shall be in a
written document signed by the Administrator (and any other named
Fiduciaries) and shall specifically set forth this allocation of duties and
responsibilities, which may include the following:
(a) Determination of all questions which may arise under the
Plan with respect to questions of fact and law and eligibility for
participation and administration of Accounts, including without limitation
questions with respect to membership, vesting, loans, withdrawals,
accounting, status of Accounts, stock ownership and voting rights, and any
other issue requiring interpretation or application of the Plan.
(b) Reference of appropriate issues to the Offices of the
Executive Vice President - Chief Financial Officer, the Senior Vice President
Treasurer, the Director of Tax Affairs, the Vice President General Counsel,
and the Vice President - Human Resources, respectively, for advice and
counsel.
(c) Establishment of procedures required by the Plan, such as
notification to Employees as to joining the Plan, selecting and changing
investment options, suspending deferrals, exercising voting rights in stock,
withdrawing and borrowing Account balances, designation of Beneficiaries,
election of method of distribution, and any other matters requiring a uniform
procedure.
(d) Submission of necessary amendments to supplement omissions
from the Plan or reconcile any inconsistency therein.
(e) Filing appropriate reports with the government as required
by law.
(f) Appointment of a Trustee or Trustees, Recordkeepers, and
investment managers.
(g) Review at appropriate intervals of the performance of the
Trustee and such investment managers as may have been designated.
(h) Appointment of such additional Fiduciaries as deemed
necessary for the effective administration of the Plan, such appointments to
be by written instrument.
11.3 Liability for Acts of Other Fiduciaries. Each Fiduciary shall be
responsible only for the duties allocated or delegated to said Fiduciary, and
other Fiduciaries shall not be liable for any breach of fiduciary
responsibility with respect to any act or omission of any other Fiduciary
unless:
(a) The Fiduciary knowingly participates in or knowingly
attempts to conceal the act or omission of such other Fiduciary and knows
that such act or omission constitutes a breach of fiduciary responsibility by
the other Fiduciary;
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42
(b) The Fiduciary has knowledge of a breach of fiduciary
responsibility by the other Fiduciary and has not made reasonable efforts
under the circumstances to remedy the breach; or
(c) The Fiduciary's own breach of his or her specific fiduciary
responsibilities has enabled another Fiduciary to commit a breach. No
Fiduciary shall be liable for any acts or omissions which occur prior to his
or her assumption of Fiduciary status or after his or her termination from
such status.
11.4 Employment by Fiduciaries. Any Fiduciary hereunder may employ,
with the written approval of the Administrator, one or more persons to render
service with regard to any responsibility which has been assigned to such
Fiduciary under the terms of the Plan including legal, tax, or investment
counsel and may delegate to one or more persons any administrative duties
(clerical or otherwise) hereunder.
11.5 Recordkeeping. The Administrator shall keep or cause to be kept
any necessary data required for determining the Account status of each
Participant. In compiling such information, the Administrator may rely upon
its employment records, including representations made by the Participant in
the employment application and subsequent documents submitted by the
Participant to the Employer. The Trustee shall be entitled to rely upon such
information when furnished by the Administrator or its delegate. Each
Employee shall be required to furnish the Administrator upon request and in
such form as prescribed by the Administrator, such personal information,
affidavits and authorizations to obtain information as the Administrator may
deem appropriate for the proper administration of the Plan, including but not
limited to proof of the Employee's date of birth and the date of birth of any
person designated by a Participant as a Beneficiary.
11.6 Claims Review Procedure.
(a) The Administrator shall make all determinations as to the right of any
person to Accounts under the Plan. Any such determination by the
Administrator shall be made pursuant to the following procedure:
(1) Step 1. Claims with respect to an Account should be
filed by a claimant as soon as practicable after the claimant knows or should
know that a dispute has arisen with respect to an Account, but at least
thirty (30) days prior to the claimant's actual retirement date or, if
applicable, within sixty (60) days after the death, Disability or Severance
from Service of the Participant whose Account is at issue, by mailing a copy
of the claim to the Benefits and Services Department, Raytheon Company, 141
Spring Street, Lexington, Massachusetts 02173.
(2)Step 2. In the event that a claim with respect to an
Account is wholly or partially denied by the Administrator, the Administrator
shall, within ninety (90) days following receipt of the claim, so advise the
claimant in writing setting forth: the specific reason or reasons for the
denial; specific reference to pertinent Plan provisions on which the denial
is based; a description of any additional material or information necessary
for the claimant to perfect the claim; an explanation as to why such material
or information is necessary; and an explanation of the Plan's claim review
procedure.
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43
(3) Step 3. Within sixty (60) days following receipt of
the denial of a claim with respect to an Account, a claimant desiring to have
the denial appealed shall file a request for review with the Administrator by
mailing a copy thereof to the address shown in subsection (a)(1).
(4) Step 4. Within thirty (30) days following receipt of
a request for review, the Administrator shall provide the claimant a further
opportunity to present his or her position. At the Administrator's
discretion, such presentation may be through an oral or written presentation.
Prior to such presentation, the claimant shall be permitted the opportunity
to review pertinent documents and to submit issues and comments in writing.
Within a reasonable time following presentation of the claimant's position,
which usually should not exceed thirty (30) days, the Administrator shall
inform the claimant in writing of the decision on review setting forth the
reasons for such decision and citing pertinent provisions in the Plan.
(b) The Administrator is the Fiduciary to whom the Plan grants
full discretion, with the advice of counsel, to interpret the Plan; to
determine whether a claimant is eligible for benefits; to decide the amount,
form and timing of benefits; and to resolve any other matter under the Plan
which is raised by a claimant or identified by the Administrator. All
questions arising from or in connection with the provisions of the Plan and
its administration, not herein provided to be determined by the Board of
Directors, shall be determined by the Administrator, and any determination so
made shall be conclusive and binding upon all persons affected thereby.
11.7 Indemnification of Directors and Employees. The Adopting
Employers shall indemnify by insurance or otherwise any Fiduciary who is a
director, officer or Employee of the Employer, his or her heirs and legal
representatives, against all liability and reasonable expense, including
counsel fees, amounts paid in settlement and amounts of judgments, fines or
penalties, incurred or imposed upon him in connection with any claim, action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of acts or omissions in his or her capacity as a Fiduciary
hereunder, provided that such act or omission is not the result of gross
negligence or willful misconduct. The Adopting Employers may indemnify other
Fiduciaries, their heirs and legal representatives, under the circumstances,
and subject to the limitations set forth in the preceding sentence, if such
indemnification is determined by the Board of Directors to be in the best
interests of the Adopting Employers.
11.8 Immunity from Liability. Except to the extent that section
410(a) of ERISA prohibits the granting of immunity to Fiduciaries from
liability for any responsibility, obligation, or duty imposed under Title I,
Subtitle B, Part 4, of said Act, an officer, Employee, member of the Board of
Directors of the Employer or other person assigned responsibility under this
Plan shall be immune from any liability for any action or failure to act
except such action or failure to act which results from said officer's,
Employee's, Participant's or other person's own gross negligence or willful
misconduct.
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44
ARTICLE XII
Amendment Or Termination Of Plan
12.1 Right to Amend or Terminate Plan. Each of the Adopting Employers
reserves the right at any time or times, by action of its board of directors,
to modify, amend or terminate the Plan in whole or in part as to its
Employees, in which event a certified copy of the resolution of the board of
directors, authorizing such modification, amendment or termination shall be
delivered to the Trustee and to the other Adopting Employers whose Employees
are covered by this Plan, provided, however, that no amendment to the Plan
shall be made which shall:
(a) reduce any vested right or interest to which any Participant or
Beneficiary is then entitled under this Plan or otherwise reduce the vested
rights of a Participant in violation of section 411(d)(6) of the Code;
(b) vest in the Adopting Employers any interest or control over any
assets of the Trust;
(c) cause any assets of the Trust to be used for, or diverted to,
purposes other than for the exclusive benefit of Participants and their
Beneficiaries; or
(d) change any of the rights, duties or powers of the Trustee without
its written consent.
(e) Notwithstanding the foregoing provisions of this section or any
other provisions of this Plan, any modification or amendment of the Plan may be
made retroactively if necessary or appropriate to conform the Plan with, or to
satisfy the conditions of, ERISA, the Code, or any other law, governmental
regulation or ruling. Any termination, modification or amendment of the Plan
shall be subject to approval by the Board of Directors. In the alternative,
subject to the conditions prescribed in subsections 12.1(a) through (e), the
Plan may be amended by an officer of the Company authorized by the Board of
Directors to amend the Plan, provided, however, that any such amendment does
not, in the view of such officer, materially increase costs of the Plan to the
Company or any Adopting Employer.
12.2 Amendment to Vesting Schedule. Any amendment that modifies the
vesting provisions of ARTICLE IV shall either:
(a) provide for a rate of vesting that is at least as rapid for any
Participant as the vesting schedule previously in effect; or
(b) provide that any adversely affected Participant with a Period of
Service of at least three (3) years may elect, in writing, to remain under the
vesting schedule in effect prior to the amendment. Such election must be made
within sixty (60) days after the later of the:
(1) adoption of the amendment;
(2) effective date of the amendment; or
(3) issuance by the Company of written notice of the amendment.
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45
12.3 Maintenance of Plan. The Company has established the Plan with
the bona fide intention and expectation that it will be able to make its
contributions indefinitely, but the Company is not and shall not be under any
obligation or liability whatsoever to continue its contributions or to
maintain the Plan for any given length of time.
12.4 Termination of Plan and Trust. The Plan and Trust hereby created
shall terminate upon the occurrence of any of the following events:
(a) Delivery to the Trustee of a notice of termination executed by the
Company specifying the date as of which the Plan and Trust shall terminate; or
(b) Adjudication of the Company as bankrupt or general assignment by
the Company to or for the benefit of creditors or dissolution of the Company.
12.5 Distribution on Termination.
(a) (1) If the Plan is terminated, or contributions permanently
discontinued, an Adopting Employer, at its discretion, may (at that time or at
any later time) direct the Trustee to distribute the amounts in a Participant's
Account in accordance with the distribution provisions of the Plan. Such
distribution shall, notwithstanding any prior provisions of the Plan, be made in
a single lump-sum without the Participant's consent as to the timing of such
distribution. If, however, an Adopting Employer (or an Affiliate) maintains
another defined contribution plan (other than an employee stock ownership plan),
then the preceding sentence shall not apply and the Adopting Employer, at its
discretion, may direct such distributions to be made as a direct transfer to
such other plan without the Participant's consent, if the Participant does not
consent to an immediate distribution.
(2) If an Adopting Employer does not direct distribution under
paragraph (1), each Participant's Account shall be maintained until distributed
in accordance with the provisions of the Plan (determined without regard to this
section) as though the Plan had not been terminated or contributions
discontinued.
(b) If the Administrator determines that it is administratively
impracticable to make distributions under this section in cash or that it would
be in the Participant's best interest to make some or all of the distributions
with in-kind property, it shall offer all Participants and Beneficiaries
entitled to a distribution under this section a reasonable opportunity to elect
to receive a distribution of the in-kind property being distributed by the
Trust. Those Participants and Beneficiaries so electing shall receive a
proportionate share of such in-kind property in the form (outright, in trust or
in partnership) that the Administrator determines will provide the most feasible
method of distribution.
(c) (1) Amounts attributable to elective contributions shall only be
distributable by reason of this section if one of the following is applicable:
(A) the Plan is terminated without the establishment of a successor plan;
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46
(B) an Adopting Employer has a sale or other disposition to an unrelated
corporation of substantially all of the assets used by the Adopting Employer in
a trade or business of the Adopting Employer with respect to an Employee who
continues employment with the corporation acquiring such assets; or
(C) an Adopting Employer has a sale or other disposition to an unrelated entity
of the Adopting Employer's interest in a subsidiary with respect to an Employee
who continues employment with such subsidiary.
(2) For purposes of this section, the term "elective contributions"
means employer contributions made to the Plan that were subject to a cash or
deferred election under a cash or deferred arrangement.
(3) Elective contributions are distributable under subsections
(c)(1)(B) and (C) above only if the Adopting Employers continue to maintain the
Plan after the disposition.
ARTICLE XIII
Additional Provisions
13.1 Effect of Merger, Consolidation or Transfer. In the event of any
merger or consolidation with or transfer of assets or liabilities to any
other plan or to this Plan, each Participant of the Plan shall be entitled to
a benefit immediately after the merger, consolidation or transfer, which is
equal to or greater than the benefit he or she would have been entitled to
receive immediately before the merger, consolidation or transfer (if the Plan
had been terminated).
13.2 Necessity of Initial Qualification. This Plan is established
with the intent that it shall qualify under sections 401(a) and 401(k) of
the Code as those sections exist at the time the Plan is established. If the
Internal Revenue Service determines that the Plan initially fails to meet
those requirements, then within thirty (30) days after the date of such
determination, all of the assets of the Trust Fund held for the benefit of
Participants and their Beneficiaries shall be distributed equitably among the
contributors to the Plan in proportion to their contributions, and the Plan
shall be considered to be rescinded and of no force or effect, unless such
inadequacy is removed by a retroactive amendment pursuant to the Code. Any
nonvested Matching Contributions and earnings attributable thereto shall be
returned to the Adopting Employers.
13.3 No Assignment.
(a) Except as provided herein, the right of any Participant or Beneficiary
to any benefit or to any payment hereunder shall not be subject to
alienation, assignment, garnishment, attachment, execution or levy of any
kind.
(b) Subsection (a) shall not apply to any payment or transfer permitted by
the Internal Revenue Service pursuant to regulations issued under section
401(a)(13) of the Code.
(c) Subsection (a) shall not apply to any payment or transfer pursuant to a
Qualified Domestic Relations Order.
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(d) Subsection (a) shall not apply to any payment or transfer to the Trust
in accordance with section 401(a)(13)(C) of the Code to satisfy the
Participant's liabilities to the Plan or Trust in any one or more of the
following circumstances:
(1) the Participant is convicted of a crime involving the Plan;
(2) a civil judgment (or consent order or decree) in an action is
brought against the Participant in connection with an ERISA fiduciary violation;
or
(3) the Participant enters into a settlement agreement with the
Department of Labor or the Pension Benefit Guaranty Corporation over an ERISA
fiduciary violation.
13.4 Limitation of Rights of Employees. This Plan is strictly a
voluntary undertaking on the part of the Adopting Employers and shall not be
deemed to constitute a contract between any of the Adopting Employers and any
Employee, or to be a consideration for, or an inducement to, or a condition
of the employment of any Employee. Nothing contained in the Plan shall be
deemed to give any Employee the right to be retained in the service of any of
the Adopting Employers or shall interfere with the right of any of the
Adopting Employers to discharge or otherwise terminate the employment of any
Employee of an Adopting Employer at any time. No Employee shall be entitled
to any right or claim hereunder except to the extent such right is
specifically fixed under the terms of the Plan.
13.5 Construction. The provisions of this Plan shall be interpreted
and construed in accordance with the requirements of the Code and ERISA. Any
amendment or restatement of the Plan or Trust that would otherwise violate
the requirements of section 411(d)(6) of the Code or otherwise cause the Plan
or Trust to cease to be qualified under section 401(a) of the Code shall be
deemed to be invalid. Capitalized terms shall have meanings as defined
herein. Singular nouns shall be read as plural, masculine pronouns shall be
read as feminine and vice versa, as appropriate. References to "section" or
"ARTICLE" shall be read as references to appropriate provisions of this Plan,
unless otherwise indicated.
13.6 Company Determinations. Any determinations, actions or decisions
of the Company (including but not limited to, Plan amendments and Plan
termination) shall be made by its Board of Directors in accordance with its
established procedures or by such other individuals, groups or organizations
that have been properly delegated by the Board of Directors to make such
determination or decision.
13.7 Governing Law. This Plan shall be governed by, construed and
administered in accordance with ERISA and any other applicable federal law;
provided, however, that to the extent not preempted by federal law, this Plan
shall be governed by, construed and administered under the laws of the
Commonwealth of Massachusetts, other than its laws respecting choice of law.
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48
ARTICLE XIV
Definitions
The following terms have the meaning specified below unless the context
indicates otherwise:
14.1 Account. The entire interest of a Participant in the Trust Fund.
A Participant's Account shall consist of an Elective Deferral Account, an
Employee After-Tax Contribution Account, a Matching Contribution Account and,
where applicable, a Rollover Contribution Account and a Qualified Nonelective
Contribution Account.
14.2 Administrator. The person, persons, corporation, committee,
group or organization designated to be the Administrator of the Plan and to
perform the duties of the Administrator. Until and unless otherwise
designated, the Administrator shall be the Company.
14.3 Adopting Employers. Any corporation that elects through an
authorized officer to participate in the Plan on account of its Employees,
provided that participation in the Plan by such corporation is approved by
the Board of Directors, or an officer to whom authority to approve
participation by a corporation is delegated by the Board of Directors, but
shall not include any division, operation or similar cohesive group of the
adopting corporation excluded by the Board of Directors. The Adopting
Employers shall be listed in Exhibit A attached to this Plan.
14.4 Affiliate. A trade or business that, together with and Adopting
Employer, is a member of (i) a controlled group of corporations within the
meaning of section 414(b) of the Code; (ii) a group of trades or businesses
(whether or not incorporated) under common control as defined in section
414(c) of the Code, or (iii) an affiliated service group as defined in
section 414(m) of the Code, or which is an entity otherwise required to be
aggregated with the Adopting Employer pursuant to section 414(o) of the Code.
For purposes of ARTICLE VIII, the determination of controlled groups of
corporations and trades or businesses under common control shall be made
after taking into account the modification required under section 415(h) of
the Code. All such entities, whether or not incorporated, shall be treated
as a single employer to the extent required by the Code.
14.5 Authorized Leave of Absence. An absence approved by the Adopting
Employers on a uniform and nondiscriminatory basis not exceeding one (1) year
for any of the following reasons: illness of an Employee or a relative, the
death of a relative, education of the Employee, or personal or family
business of an extraordinary nature, provided in each case that the Employee
returns to the service of the Adopting Employers within the time period
specified by the Adopting Employers.
14.6 Beneficiary. The person or persons (including a trust or trusts)
who are entitled to receive benefits from a deceased Participant's Account
after such Participant's death (whether or not such person or persons are
expressly so designated by the Participant). If a married Participant
designates a Beneficiary other than his or her spouse, said designation shall
not take effect unless the spouse consents in writing to such designation and
said spousal consent acknowledges the effect of said designation and is
witnessed by a representative of the Plan or a notary public. Said spousal
<PAGE>
49
consent shall be effective only with respect to the spouse granting such
consent, and shall not be required if the Participant can establish that
there is no spouse, that the spouse cannot be located, or that other
conditions exist as may be prescribed by regulations issued by the Secretary
of the Treasury. If there is no Beneficiary designated by the Participant or
surviving at the death of the Participant, payment of his or her Account
shall be made in accordance with section 6.7. Subject to the foregoing, a
Participant may designate a new Beneficiary at any time by filing with the
Administrator a written request for such change on a form prescribed by the
Administrator. Such change shall become effective only upon receipt of the
form by the Administrator, but upon such receipt of the change shall relate
back to and take effect as of the date the Participant signed such request,
whether or not the Participant is living at the time of such receipt,
provided, however, that neither the Trustee nor the Administrator shall be
liable by reason of any payment of the Participant's Account made before
receipt of such form. If a Beneficiary entitled to payment was the spouse or
former spouse of the deceased Participant and payment will otherwise be made
in an Eligible Rollover Distribution, then such spouse or former spouse may
elect that all, or any portion of, such payment shall instead be transferred
as a Direct Rollover. Such Direct Rollover shall be governed by the
requirements of section 6.12.
14.7 Board of Directors. The Board of Directors of Raytheon Company.
14.8 Business Day. Days on which the Recordkeeper is able to make
transfers.
14.9 Code. The Internal Revenue Code of 1986, as amended.
14.10 Common Stock. Raytheon Company Class B common stock.
14.11 Company. Raytheon Company.
14.12 Compensation.
(a) The aggregate amount paid by the Employer to a Participant as regular
base salary, including amounts authorized by the Participant to be deferred
from his Compensation and contributed by the Employer under section 3.3, as
well as amounts paid as commissions, military pay differential, and under the
Hughes Annual Incentive Plan, the Hughes Salary Adjustment Plan, the Hughes
Supplemental Compensation Plan, awards under the Hughes Subsidiary Incentive
Plan not in excess of the target award (or any successor plans of the
foregoing), but without inclusion of any overtime compensation, shift
differentials, foreign service premiums (including mobility allowances), per
diem, royalties, payments in lieu of vacation, benefits from the Hughes
Transition Pay Plan, the Hughes Supplemental Employee Retirement Plan, the
Hughes Long-Term Performance Plan, and amounts deferred by a Participant to
the flexible spending account in an Employer cafeteria plan under section 125
of the Code, or other payments of like nature, subject to the following:
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50
(b) The Compensation of each Employee for any year shall be deemed to not
exceed one hundred fifty thousand dollars ($150,000); provided, however, that
this limit shall be adjusted in the same manner and at the same time as under
section 415(d) of the Code, in accordance with regulations under section
401(a)(17) of the Code. Compensation for Highly-Compensated Employees shall
be determined in accordance with the provisions of section 14.28.
(c) Unless otherwise indicated herein, Compensation shall be determined
only on the basis of amounts paid during the Plan Year, including any Plan
Year with a duration of fewer than twelve (12) months.
(d) The Compensation of a person who becomes a Participant during the Plan
Year shall only include amounts paid after the date on which such person was
admitted as a Participant.
14.13 Current Market Value. The closing price of the Common Stock on
the New York Stock Exchange on the Business Day immediately preceding the
Business Day on which the Common Stock is allocated to the Participants
Accounts in accordance with the terms of the Plan.
14.14 Disability. Any medically determinable physical disorder that
renders a Participant incapable of engaging in any occupation for
compensation or profit. The determination of Disability shall be made by the
Administrator with the aid of competent medical advice. It shall be based on
such evidence as the Administrator deems necessary to establish Disability or
the continuation thereof.
14.15 Effective Date. December 18, 1997.
14.16 Elective Deferral. A voluntary reduction of a Participant's
Compensation in accordance with section 3.3 hereof that qualifies for
treatment under section 402(e)(3) of the Code. A Participant's election to
make Elective Deferrals may be made only with respect to an amount that the
Participant could otherwise elect to receive in cash and that is not
currently available to the Participant.
14.17 Elective Deferral Account. That portion of a Participant's
Account which is attributable to Elective Deferrals, adjustments for
withdrawals and distributions, and the earnings and losses attributable
thereto.
14.18 Eligible Employee. A person who is an hourly Employee of an
Adopting Employer who:
(a) is a United States Citizen or resident;
(b) is not employed in a position or classification within a bargaining
unit which is covered by a collective bargaining agreement with respect to
which retirement benefits were the subject of good faith bargaining (unless
such agreement provides for coverage hereunder of employees of such unit);
(c) is not assigned on the books and records of the Employer to any
division, operation or similar cohesive group of an Adopting Employer that is
excluded from participation in the Plan by the Board of Directors;
(d) is employed in a position or classification within a Tucson bargaining
unit covered by a collective bargaining agreement which provides for coverage
hereunder; and
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51
(e) is not a Leased Employee or any other person who performs services for an
Adopting Employer other than as an Employee.
14.19 Employee. Except to the extent otherwise provided herein, any
person employed by the Employer who is expressly so designated as an Employee
on the books and records of the Employer and who is treated as such by the
Employer for federal employment tax purposes. Any person who, after the
close of a Plan Year, is retroactively treated by the Employer or any other
party as an Employee for such prior Plan Year shall not, for purposes of the
Plan, be considered an Employee for such prior Plan Year unless expressly so
treated as such by the Employer.
14.20 Employee After-Tax Contributions. Voluntary contributions made
by Participants on an after-tax basis in accordance with section 3.4 of the
Plan.
14.21 Employee After-Tax Contribution Account. That portion of a
Participant's Account which is attributable to Employee After-Tax
Contributions, adjustments for withdrawals and distributions, and the
earnings and losses attributable thereto.
14.22 Employer. An Adopting Employer and any Affiliate thereof (whether
or not such Affiliate has elected to participate in the Plan).
14.23 Employment Commencement Date. The date on which an individual
first performs an Hour of Service with the Employer.
14.24 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
14.25 Fiduciary. Any person who exercises any discretionary authority
or discretionary control over the management of the Plan, or exercises any
authority or control respecting management or disposition of Plan assets; who
renders investment advice for a fee or other compensation, direct or
indirect, as to assets held under the Plan, or has any authority or
discretionary responsibility in the administration of the Plan. This
definition shall be interpreted in accordance with section 3(21) of ERISA.
14.26 Highly Compensated Employee
(a) Any Employee who:
(1) is a five percent (5%) owner at any time during the Plan Year or the
preceding Plan Year; or
(2) for the preceding Plan Year:
(A) received Compensation in excess of the amount specified in section
414(q)(1)(B)(i) of the Code; and
(B) if the Adopting Employers so elect, in accordance with section
414(q)(1)(B)(ii) of the Code, was a member of the Top-Paid Group for such
preceding Plan Year.
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52
(b) A former Employee will be treated as a Highly Compensated Employee
if the former Employee was a Highly Compensated Employee at the time of his or
her separation from service or the former Employee was a Highly Compensated
Employee at any time after attaining age fifty-five (55).
(c) The term "Top-Paid Group" for any year includes Employees in the
group of Employees specified in section 414(q)(5) of the Code, which consists of
the top twenty percent (20%) of Employees when ranked on the basis of
Compensation paid during such year.
(d) In determining the number of Employees in the Top-Paid Group taken
into account under subsection (c) of this section, nonresident aliens with no
earned income from the Adopting Employers that constitutes income from sources
within the United States shall not be treated as Employees and (unless the
Adopting Employers elect otherwise) the following Employees shall be excluded:
(1) Employees with fewer than six (6) months of service;
(2) Employees who normally work fewer than seventeen and one-half (17)
hours per week;
(3) Employees who normally work during not more than six (6) months during
the year;
(4) Employees who have not attained age twenty-one (21); and
(5) (except to the extent permitted by regulation) Employees who are
included in a unit of Employees covered by a collective bargaining agreement
with one of the Adopting Employers.
(e) The dollar amounts incorporated under subsection (a)(2)(A) shall
be adjusted as provided in section 414(q)(1) of the Code.
(f) For purposes of this section, the term "Compensation" means
compensation as defined under section 414(q)(4) of the Code.
(g) This section shall be interpreted in a manner consistent with
section 414(q) of the Code and the regulations thereunder and shall be
interpreted to permit any elections permitted by such regulations to be made.
14.27 Hour of Service.
(a) Any hour for which any person is directly or indirectly
paid (or entitled to payment) by the Employer for the performance of duties
as an Employee, as determined from the appropriate records of the Employer.
(b) In computing Hours of Service, a person shall also be
credited with Hours of Service based on the person's previous customary
service with the Employer (not exceeding either eight (8) hours per day or
forty (40) hours per week), for the following periods:
(1) periods (limited to a maximum of five hundred one
(501) hours for any single, continuous period) for which the person is
directly or indirectly paid for reasons other than the performance of duties,
such as vacation, holiday, sickness, disability, layoff, jury duty or
military duty;
<PAGE>
53
(2) periods for which any federal law requires that
credit for service be given; and
(3) periods for which back pay (irrespective of
mitigation of damages) is either awarded or agreed to by the Employer.
(c) Hours of Service shall also include each hour for which an
Employee is entitled to credit under subsection (a) as a result of employment
with:
(1) a predecessor company substantially all the assets of
which have been acquired by the Company, provided that where only a portion
of the operations of a company has been acquired, only service with said
acquired portion prior to the acquisition will be included and that the
Employee was employed by said predecessor company at the time of acquisition;
or
(2) a division, operation or similar cohesive group of
the Employer excluded from participation in the Plan.
(d) The provisions of subsection (b) shall be further limited
to prevent duplication by only permitting a person to receive credit for one
(1) Hour of Service for any given hour.
(e) Hours of Service shall be computed and credited in
accordance with the Department of Labor regulations under section 2530.200b.
14.28 Layoff. An involuntary interruption of service due to reduction
of work force with or without the possibility of recall to employment when
conditions warrant.
14.29 Leased Employee. Any person (other than an Employee) who,
pursuant to an agreement between the Employer and any other person, has
performed services for the Employer (or any related person as provided in
section 414(n)(6) of the Code) on a substantially full-time basis for a
period of at least one (1) year and such services are performed under primary
direction or control of the Employer. Leased Employees are not eligible to
participate in the Plan.
14.30 Matching Contribution. Contribution made to the Trust in
accordance with section 3.1 hereof.
14.31 Matching Contribution Account. That portion of Participant's
Account which is attributable to Matching Contributions by the Adopting
Employers, adjustments for withdrawals and distributions, and the earnings
and losses attributable thereto.
14.32 Net Annual Profits. The current earnings of the Adopting
Employers for the Plan Year determined in accordance with generally accepted
accounting principles before federal and local income taxes and before
contributions to this Plan or any other qualified plan.
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54
14.33 Net Profits. The accumulated earnings of the Adopting Employers
at the end of the Plan Year determined in accordance with generally accepted
accounting principles. For the purposes hereof "accumulated earnings at the
end of the Plan Year" shall include Net Annual Profits for such Plan Year
calculated before any deduction is taken for depreciation, if any.
14.34 Nonforfeitable. An unconditional right to an Account balance or
portion thereof determined as of the applicable date of determination under
this Plan.
14.35 Non-Highly Compensated Work Force. The aggregate number of
individuals (other than Highly Compensated Employees) who are:
(a) Employees of the Employer (other than Leased Employees) who
have performed services for the Employer on a substantially full-time basis
for a period of at least one (1) year; and
(b) Leased Employees.
14.36 Normal Retirement Age. The Participant's sixty-fifth (65th)
birthday.
14.37 Participant. An individual who is enrolled in the Plan pursuant
to ARTICLE II and has not received a distribution of all of the funds
credited to his or her Account (or had such funds fully forfeited). In the
case of an Eligible Employee who makes a Rollover Contribution to the Plan
under section 3.7(a)(6) prior to enrollment under ARTICLE II, such Eligible
Employee shall, until he or she enrolls under ARTICLE II, be considered a
Participant for the limited purposes of maintaining and receiving his or her
Rollover Contribution Account under the terms of the Plan.
14.38 Pay Period. A scheduled period for payment of wages or
salaries.
14.39 Period of Participation. That portion of a Period of Service
during which the Eligible Employee was a Participant, and had an Elective
Deferral Account in the Plan. For the purpose of determining a Period of
Participation, former employees of Hughes Electronics Corporation and its
subsidiaries who were participants in the Hughes Tucson Bargaining Employees'
Thrift and Savings Plan immediately before the Effective Date or the date
transferred to an Adopting Employer from General Motors Corporation or one of
its affiliates (other than a joint venture that has adopted this Plan) after
the Effective Date and before December 1, 1998 and who become Participants as
of the Effective Date or the date of transfer, as applicable, shall be
credited with their participation in such plan.
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55
14.40 Period of Service. The period of time beginning on the
Employee's Employment Commencement Date or Reemployment Commencement Date,
whichever is applicable, and ending on the Employee's Severance from Service
Date. For the purpose of determining a Period of Service, former employees
of Hughes Electronics Corporation and its subsidiaries who were participants
in the Hughes Tucson Bargaining Employees' Thrift and Savings Plan
immediately before the Effective Date or the date transferred to an Adopting
Employer from General Motors Corporation or one of its affiliates (other than
a Joint venture that has adopted this Plan) after the Effective Date and
before December 1, 1998, and who become Participants as of the Effective Date
or the date of transfer, as applicable, shall be credited with their years of
service credited under such plan.
14.41 Period of Severance. The period of time beginning on the
Employee's Severance from Service Date and ending on the Employee's
Reemployment Commencement Date.
14.42 Plan. The Raytheon Tucson Bargaining Employees Savings and
Investment Plan (10013) as amended from time to time.
14.43 Plan Year. The first Plan Year shall begin on the Effective Date
and end December 31, 1997. Thereafter, the Plan Year shall be the annual twelve-
(12) month period beginning on January 1 of each year and ending on December 31
of each year.
14.44 Qualified Military Service. Any period of duty on a voluntary or
involuntary basis in the United States Armed Forces, the Army National Guard and
the Air National Guard when engaged in active duty for training, inactive duty
for training or full-time National Guard duty, the commissioned corps of the
Public Health Service and any other category of persons designated by the
President of the United States in time of war or emergency. Such periods of duty
shall include active duty, active duty for training, initial active duty for
training, inactive duty training, full-time National Guard duty and absence from
employment for an examination to determine fitness for such duty.
14.45 Qualified Nonelective Contributions. Any contribution by the
Adopting Employers to the Trust pursuant to section 3.2. Qualified Nonelective
Contributions are one hundred percent (100%) vested when made and are
distributable as provided herein, but in no event before the earlier of:
(a) the Participant's Severance from Service, death or
Disability;
(b) the Participant's attainment of age fifty-nine and one-half
(59-1/2);
(c) the termination of the Plan without establishment or
maintenance of another defined contribution plan (other than an employee
stock ownership plan);
(d) the disposition of substantially all of the assets used by
the Adopting Employers in a trade or business of the Adopting Employers but
only with respect to an Employee who continues employment with the entity
acquiring such assets; or
<PAGE>
56
(e) the disposition of the Adopting Employers' interest in a
subsidiary, but only with respect to an Employee who continues employment
with such subsidiary.
14.46 Qualified Nonelective Contribution Account. That portion of a
Participants Account which is attributable to Qualified Nonelective
Contributions received pursuant to section 3.2, adjusted for withdrawals and
distributions, and the earnings and losses attributable thereto.
14.47 Recordkeeper. The organization designated by the Administrator
to be the recordkeeper for the Plan. Until and unless otherwise designated,
the Recordkeeper shall be Fidelity Investments.
14.48 Reemployment Commencement Date. The first date on which the
Employee performs an Hour of Service following a Period of Severance which is
excluded under section 5.3 in determining whether a Participant has a
Nonforfeitable right to his or her Matching Contribution Account.
14.49 Retirement. A Severance from Service when the Participant has
either attained age 55 and completed a Period of Service of at least ten (10)
years or has attained Normal Retirement Age.
14.50 Rollover Contributions. A transfer that qualifies under either
section 402(c) or 403(a)(4) of the Code.
14.51 Rollover Contribution Account. That portion of a Participant's
Account which is attributable to Rollover Contributions received pursuant to
section 3.7, adjustments for withdrawals and distributions, and the earnings
and losses attributable thereto.
14.52 Severance from Service. The termination of employment by reason
of quit, Retirement, discharge, death or failure to return from Layoff,
Authorized Leave of Absence, Qualified Military Service or Disability.
14.53 Severance from Service Date. The earliest of:
(a) the date on which an Employee resigns, retires, is
discharged, or dies; or
(b) except as provided in paragraphs (c), (d), (e) and (f)
hereof, the first anniversary of the first date of a period during which an
Employee is absent for any reason other than resignation, retirement,
discharge or death, provided that, on an equitable and uniform basis, the
Administrator may determine that, in the case of a Layoff as the result of a
permanent plant closing, the Administrator may designate the date of Layoff
or other appropriate date prior to the first anniversary of the first date of
absence as the Severance from Service Date; or
(c) in the case of a Qualified Military Service leave of
absence from which the Employee does not return prior to expiration of recall
rights, Severance from Service Date means the first day of absence because of
the leave; or
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57
(d) in the case of an absence due to Disability, Severance from
Service Date means the earlier of the first anniversary of the first day of
absence because of the Disability or the date of termination of the
Disability; or
(e) in the case of an Employee who is discharged or resigns
(i) by reason of the pregnancy of the Employee, (ii) by reason of the birth
of a child to the Employee, (iii) by reason of the placement of a child with
the Employee in connection with the adoption of such child by the Employee or
(iv) for purposes of caring for such child for a period beginning immediately
following such birth or placement, "Severance from Service Date, for the sole
purpose of determining the length of a Period of Service, shall mean the
first anniversary of the resignation or discharge; or
(f) in the case of an Employee who is absent from service
beyond the first anniversary of the first day of absence (i) by reason of the
pregnancy of the Employee, (ii) by reason of the birth of a child to the
Employee, (iii) by reason of the placement of a child with the Employee in
connection with the adoption of such child by the Employee or (iv) for
purposes of caring for such child for a period beginning immediately
following such birth or placement, the Severance from Service Date shall be
the second anniversary of the first day of such absence. The period between
the first and second anniversaries of the first day of absence is neither a
Period of Service nor a Period of Severance.
14.54 Surviving Spouse. A lawful spouse surviving the Participant as
of the date of the Participant's death.
14.55 Trust. The Raytheon Company Master Trust for Defined
Contribution Plans and any successor agreement made and entered into for the
establishment of a trust fund of all contributions which may be made to the
Trustee under the Plan.
14.56 Trustee. The Trustee and any successor trustees under the Trust.
14.57 Trust Fund. The cash, securities, and other property held by the
Trustee for the purposes of the Plan.
14.58 Valuation Date. The last day of each Plan Year. The
Administrator may, in is sole discretion, establish additional Valuation
Dates, up to and including daily valuations.
<PAGE>
58
EXHIBIT A
ADOPTING EMPLOYERS PARTICIPATING IN RAYTHEON
TUCSON BARGAINING SAVINGS AND INVESTMENT PLAN (10013)
As of December 18, 1997
(Unless Indicated Otherwise)
Raytheon Company d/b/a Raytheon Systems Company **
H E Microwave LLC
Raytheon Missile Systems Company
** But only with respect to Employees who either (1) were covered as
of December 17, 1997, by one or more defined contribution plans sponsored by
Hughes Aircraft Company or an affiliate and have been Employees since December
18, 1997; or (2) have been hired by Raytheon Company on or after December 18,
1997, into a position in a business operated by Hughes Aircraft Company or an
affiliate prior to that date.
<PAGE>
1
EXHIBIT 4.12
RAYTHEON SAVINGS AND INVESTMENT PLAN (10014)
Effective December 18, 1997
ARTICLE I
Establishment of the Plan
1.1 Establishment of the Plan. The Raytheon Savings and Investment Plan
(10014) (the "Plan"), which is effective December 18, 1997, provides
Participants with a tax-effective means of allocating a portion of their salary
to be invested in one or more investment opportunities specified in the Plan and
set aside for the short-term and long-term needs of the Participants. The Plan
also provides retirement benefits for Participants or their Beneficiaries in the
event a Participant becomes disabled or dies before retirement. It is intended
that the Plan will comply with all of the requirements for a qualified profit
sharing plan under sections 401(a) and 401(k) of the Code and will be amended
from time to time to maintain compliance with these requirements. The terms used
in the Plan have the meanings specified in ARTICLE XIV unless the context
indicates otherwise. The Plan is intended to constitute a plan described in
section 404(c) of ERISA and Title 29 of the Code of Federal Regulations, ss.
2550.404(c)-1. Participants in the Plan are responsible for selecting their own
investment opportunities from the options available under the Plan and the Plan
Fiduciaries are relieved of any liability for any losses which are a direct and
necessary result of investment instructions given by a Participant or
Beneficiary.
1.2 Trust. The Trust shall be the sole source of benefits under the
Plan and the Adopting Employers or any Affiliate shall not have any liability
for the adequacy of the benefits provided under the Plan.
1.3 Effective Date. The Plan shall be effective as of December 18,
1997, or such other dates as may be specifically provided herein or as otherwise
required by law for the Plan to satisfy the requirements of section 401(a) of
the Code.
1.4 Adoption of Plan. With the prior approval of the Board of Directors
or an officer of the Company authorized by the Board of Directors to give such
approval, the Plan and Trust may be adopted by any Corporation (hereinafter
referred to as an Adopting Employer). Such adoption shall be made by the
Adopting Employer filing with the Administrator and Trustee a certified copy of
a board of directors (or equivalent) resolution adopting the Plan and Trust
without modification. The Administrator may require the Adopting Employer to
take such further actions as it deems appropriate to the proper adoption and
operation of the Plan and Trust. In the event of the adoption of the Plan and
Trust by an Adopting Employer, the Plan and Trust shall be interpreted in a
manner consistent with such adoption.
1.5 Withdrawal of Adopting Employer.
(a) An Adopting Employer's adoption of this Plan may be
terminated, voluntarily or involuntarily, at any time, as provided in this
section.
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2
(b) An Adopting Employer shall withdraw from the Plan and
Trust if the Plan and Trust, with respect to that Adopting Employer, fail to
qualify under sections 401(a) and 501(a) of the Code (or, in the opinion of the
Administrator, they may fail to so qualify) and the continued sponsorship of
that Adopting Employer may jeopardize the status with respect to the Company or
the remaining Adopting Employers, of the Plan and Trust under sections 401(a)
and 501(a) of the Code. The Adopting Employer shall receive at least thirty (30)
days prior written notice of a withdrawal under this subsection, unless a
shorter period is agreed to.
(c) An Adopting Employer may voluntarily withdraw from the
Plan and Trust for any reason. Such withdrawal requires at least thirty (30)
days written notice to the Administrator and the Trustee, unless a shorter
period is agreed to.
(d) Upon withdrawal, the Trustee shall segregate the assets
attributable to Employees of the withdrawn Adopting Employer, the amount thereof
to be determined by the Administrator and the Trustee. The segregated assets
shall be held, paid to another trust, distributed or otherwise disposed of as is
appropriate under the circumstances; provided, however, that any transfer shall
be for the exclusive benefit of Participants and their Beneficiaries. A
withdrawal of an Adopting Employer from the Plan is not necessarily a
termination under ARTICLE XII. If the withdrawal is a termination, then the
provisions of ARTICLE XII shall also be applicable.
ARTICLE II
Eligibility
2.1 Eligibility Requirements. Each Employee who is an Eligible Employee
on the Effective Date shall begin participation in this Plan on the Effective
Date. Each Eligible Employee who transfers to an Adopting Employer from General
Motors Corporation or one of its affiliates after the Effective Date and before
December 1, 1998, and who immediately prior to such transfer was a participant
in the Hughes Thrift and Savings Plan, shall begin participation in this Plan on
the date of such transfer. Each other Eligible Employee and any person who
subsequently becomes an Eligible Employee may join the Plan as of the first Pay
Period coincident with or next following completion of a Period of Service of
three (3) consecutive months commencing on his or her Employment Commencement
Date.
<PAGE>
3
2.2 Procedure for Joining the Plan. Each Eligible Employee who meets
the requirements of section 2.1 may join the Plan by communicating with the
Recordkeeper in accordance with instructions in an enrollment kit which will be
made available to each Eligible Employee. An enrollment in the Plan shall not be
deemed to have been completed until the Eligible Employee has designated: a
percentage by which his or her Compensation shall be reduced as an Elective
Deferral in accordance with the requirements of section 3.3, subject to the
nondiscrimination test described in section 3.10; election of investment funds
as described in ARTICLE IV; one or more Beneficiaries; and such other
information as specified by the Recordkeeper. Enrollment will be effective as of
the first administratively feasible Pay Period following completion of
enrollment. The Administrator, in its discretion, may from time to time make
exceptions and adjustments in the foregoing procedure on a uniform and
nondiscriminatory basis.
2.3 Transfer Between Adopting Employers to Position Covered by Plan. A
Participant who is transferred to a position with another Adopting Employer in
which the Participant remains an Eligible Employee will continue as an active
Participant of the Plan.
2.4 Transfer to Position Not Covered by Plan. If a Participant is
transferred to a position with an Employer in which the Participant is no longer
an Eligible Employee, the Participant will remain a Participant of the Plan with
respect to Elective Deferrals previously made but shall no longer be eligible to
have Elective Deferrals made to the Plan on his or her behalf until he or she
again becomes an Eligible Employee. In the event the Participant is subsequently
transferred to a position in which he or she again becomes an Eligible Employee,
the Participant may renew Elective Deferrals by communicating with the
Recordkeeper and providing all of the information requested by the Recordkeeper.
The renewal of Elective Deferrals will be effective as of the first
administratively feasible Pay Period following receipt by the Recordkeeper of
the requested information.
2.5 Transfer to Position Covered by Plan. If an Employee who is not
eligible to participate in the Plan by reason of his or her position with an
Employer is transferred to a position that is eligible to participate in the
Plan, all service performed as an Employee in such noneligible position shall be
treated as a Period of Service for purposes of this ARTICLE.
2.6 Treatment of Qualified Military Service.
Notwithstanding any provision of this Plan to the contrary,
contributions, benefits and service credit with respect to Qualified Military
Service will be provided in accordance with section 414(u) of the Code.
ARTICLE III
Contributions
3.1 Matching Contributions.
(a) (1) Each Adopting Employer shall, in its discretion, make
Matching Contributions with regard to Elective Deferrals made by its Employees
during a Plan Year. Each Adopting Employer shall, in its discretion, determine
both the percentage rate of the Elective Deferrals that will be matched and any
limits on the maximum Matching Contributions that will be made for any
Participant. Matching Contributions will be made in such form as is specified in
subsection (b).
(2) Unless otherwise specified by an Adopting Employer,
each Adopting Employer shall make Matching Contributions equal in value to fifty
percent (50%) of the total Elective Deferrals made during that Plan Year by each
Participant who is an Employee of that Adopting Employer, but the total of such
Matching Contributions for any Participant shall not exceed three percent (3%)
of a Participant's Compensation from that Adopting Employer for that Plan Year.
<PAGE>
4
(b) The Matching Contribution under subsection (a) shall be
made in either Common Stock or cash that is invested in Common Stock. The number
of shares of Common Stock contributed by the Adopting Employer or acquired with
Matching Contributions under subsection (a) shall be allocated to the
Participant's Account by the Trustee and such allocation shall equal the number
of shares of Common Stock which the Trustee could have purchased for the
Participant at the Current Market Value. Such Matching Contribution shall remain
invested in Common Stock until the end of two (2) full Plan Years following the
Plan Year for which such contributions or deferrals are made.
3.2 Qualified Nonelective Contributions. Each Plan Year the Adopting
Employers may contribute to the Trust such amounts as determined by the Board of
Directors in its sole discretion. Any amounts contributed under this subsection
are to be designated by the Adopting Employers as Qualified Nonelective
Contributions.
3.3 Elective Deferrals.
(a) A Participant may authorize the Adopting Employer to reduce his or
her Compensation on a pre-tax basis and to correspondingly contribute to the
Plan an amount equal to any whole percentage of Compensation that is at least
one percent (1%) and does not exceed ten percent (10%) of his or her
Compensation for that Plan Year.
(b) A Participant shall not be permitted to defer his or her
Compensation under subsection (a) during any calendar year in excess of nine
thousand five hundred dollars ($9,500) (or such amount as may be permitted in
accordance with regulations issued under section 415(d)(1) of the Code).
3.4 No Employee After-Tax Contributions Permitted. No Employee
After-Tax Contributions are permitted under the Plan.
3.5 Change in Elective Deferrals. Except as provided in section 3.10,
any Participant may change his or her Elective Deferral percentage to increase
or decrease said percentage by notifying the Recordkeeper, such change to take
effect as of the next administratively feasible Pay Period.
3.6 Forfeitures.
(a) In the event that a Participant incurs a Severance from
Service before attaining a Nonforfeitable right to his or her Matching
Contributions, the Matching Contribution Account will be forfeited as of the
first day of the month immediately following the earliest of: (i) the date on
which the Participant incurs a Period of Severance of five (5) consecutive
years; (ii) death; or (iii) the date on which the Participant's Elective
Deferral Account is distributed in accordance with ARTICLE VI. Forfeitures of
Matching Contributions will be used to reduce future contributions of the
Adopting Employers to the Plan.
<PAGE>
5
(b) If, in connection with his or her Severance from Service,
a Participant received a distribution of his or her Elective Deferral Account
when he or she did not have a Nonforfeitable right to his or her Matching
Contribution Account, the Matching Contributions that were forfeited, unadjusted
by any subsequent gains or losses, shall be restored if he or she again becomes
an Employee before incurring a Period of Severance of five (5) consecutive
years, performs an Hour of Service, and repays the full value of his or her
prior distributions, unadjusted for subsequent gains and losses, before the
first to occur of (i) the end of the five- (5) year period beginning with the
date he or she again becomes an Employee or (ii) the date on which he or she
incurs a Period of Severance of five (5) consecutive years.
3.7 Rollover Contributions and Transfers.
(a) Participants may transfer into the Plan qualifying
rollover amounts (as defined in section 402 of the Code) received from other
qualified plans (provided that no federal income tax has been required to have
been paid previously on such amounts); or rollover contributions from an
individual retirement account described in section 408(d)(3)(A)(ii) of the Code
(referred to herein as a "conduit IRA"), subject to the following conditions:
(1) the transferred funds are received by the Trustee no
later than sixty (60) days from receipt by the Employee of a distribution from
another qualified plan or, in the event that the funds are transferred from a
conduit IRA, no later than sixty (60) days from the date that the Participant
receives such funds from the individual retirement account;
(2) the amount of such Rollover Contributions shall not
exceed the limitations set forth in section 402 of the Code;
(3) the Rollover Contributions shall be taken into
account by the Administrator in determining the Participant's eligibility for a
loan pursuant to ARTICLE VII;
(4) the Rollover Contributions may be distributed at
the request of the Participant, subject to the same administrative procedures a
apply to other distributions;
(5) the Rollover Contributions transferred pursuant to
this section 3.7(a) shall be credited to the Participant's Rollover Contribution
Account and invested upon receipt by the Trustee;
(6) a Rollover Contribution will not be accepted
unless (A) the Employee on whose behalf the Rollover Contribution will be made
is either a Participant or an Eligible Employee who has notified the
Administrator that he or she intends to become a Participant on the first date
on which he or she is eligible therefor, and (B) all required information,
including selection of specific investment accounts, is provided to the
Recordkeeper - when the Rollover Contribution has been deposited, any further
change in investment allocation of future deferrals or transfer of account
balances between investment funds will be effected through the procedures set
forth in sections 4.2 and 4.3; and
(7) under no circumstances shall the Administrator
accept as a Rollover Contribution amounts which have previously been subject to
federal income tax.
<PAGE>
6
(b) (1) The Plan shall accept a transfer of assets, including
elective transfers in accordance with Treas. Regs. section 1.411(d)-4 Q&A-3(b),
directly from another plan qualified under section 401(a) of the Code only if
the Administrator, in its sole discretion, agrees to accept such a transfer. In
determining whether to accept such a transfer, the Administrator shall consider
the administrative inconvenience engendered by such a transfer and any risks to
the continued qualification of the Plan under section 401(a) of the Code.
Acceptance of any such transfer shall not preclude the Administrator from
refusing any such subsequent transfers.
(2) Any transfer of assets accepted under this subsection
shall be separately accounted for at all times and shall remain subject to the
provisions of the transferor plan (as it existed at the time of such transfer)
to the extent required by section 411(d)(6) of the Code (including, but not
limited to, any rights to qualified joint and survivor annuities and qualified
preretirement survivor annuities) as if such provisions were part of the Plan.
In all other respects, however, such transferred assets will be subject to the
provisions of the Plan. The Administrator may, but is not required to, describe
in an Exhibit to this Plan the special provisions that must be preserved under
section 411(d)(6) of the Code, if any, following the transfer of assets from
another plan in accordance with this subsection.
(3) Assets accepted under this section shall be fully
vested and nonforfeitable.
(4) Eligible Employees who were active participants in the
Hughes Thrift and Savings Plan immediately prior to the Effective Date may elect
to transfer their entire vested account balances in such plan to the Plan in
accordance with this section 3.7(b).
3.8 Refund of Contributions to the Adopting Employers. Notwithstanding
the provisions of ARTICLE XII, if, or to the extent that, any Adopting
Employers' deductions for contributions made to the Plan are disallowed, such
Adopting Employer will have the right to obtain the return of any such
contributions for a period of one (1) year from the date of disallowance. For
this purpose, all contributions are made subject to the condition that they are
deductible under the Code for the taxable year of the Adopting Employers for
which the contributions are made. Furthermore, any contribution made on the
basis of a mistake in fact may be returned to the Adopting Employers within one
(1) year from the date such contribution was made.
3.9 Payment. The Adopting Employers shall pay to the Trustee in U.S.
currency, or by other property acceptable to the Trustee, all contributions for
each Plan Year within the time prescribed by law, including extensions granted
by the Internal Revenue Service for filing the federal income tax return of the
Company for its taxable year in which such Plan Year ends. Unless designated by
the Adopting Employers as nondeductible, all contributions made shall be deemed
to be conditioned on their current deductibility under section 404 of the Code.
3.10 Limits for Highly Compensated.
(a) Elective Deferrals, Matching Contributions and Qualified Nonelective
Contributions allocable to the Accounts of Highly Compensated Employees shall
not in any Plan Year exceed the limits specified in this section. The
Administrator may make the adjustments authorized in this section to ensure that
the limits of subsection (b) (or any other applicable limits) are not exceeded,
regardless of whether such adjustments affect some Participants more than
others. This section shall be administered and interpreted in accordance with
sections 401(k) and 401(m) of the Code.
<PAGE>
7
(b) (1) The Actual Deferral Percentage of the Highly Compensated Employees shall
not exceed, in any Plan Year, the greater of:
(A) one hundred twenty-five percent (125%) of the Actual Deferral Percentage for
all other Eligible Participants; or
(B) the lesser of two hundred percent (200%) of the Actual Deferral Percentage
for all other Eligible Participants or the Actual Deferral Percentage for the
other Eligible Participants plus two (2) percentage points.
(2) The Actual Contribution Percentage of the Highly Compensated Employees shall
not exceed, in any Plan Year, the greater of:
(A) one hundred twenty five percent (125%) of the Actual Contribution Percentage
for all other Eligible Participants; or
(B) the lesser of two hundred percent (200%) of the Actual Contribution
Percentage for all other Eligible Participants or the Actual Contribution
Percentage for the other Eligible Participants plus two (2) percentage points.
(3) The sum of the Actual Deferral Percentage and the Actual Contribution
Percentage for the Highly Compensated Employees shall not exceed, in any Plan
Year, the sum of:
(A) one hundred twenty-five percent (125%) of the greater of:
(i) the Actual Deferral Percentage of the other Eligible Participants; or
(ii) the Actual Contribution Percentage of the other Eligible Participants; and
(B) two plus the lesser of:
(i) the amount in paragraph (3)(A)(i); or
(ii) the amount in paragraph (3)(A)(ii); provided that the amount in this
paragraph (3)(B) shall not exceed two hundred percent (200%) of the lesser of
the amount in paragraph (3)(A)(i) or the amount in paragraph (3)(A)(ii).
(4) The limitations under section 3.10(b)(3) shall be modified to reflect any
higher limitations provided by the Internal Revenue Service under regulations,
notices or other official statements.
(c) The following terms shall have the meanings specified:
(1) Actual Contribution Percentage. The average of the ratios for a designated
group of Employees (calculated separately for each Eligible Participant in the
group) of the sum of the Matching Contributions, Qualified Nonelective
Contributions (other than those treated as part of the Actual Deferral
Percentage), and Elective Deferrals (other than those treated as part of the
Actual Deferral Percentage) allocated for the applicable year on behalf of the
Participant, divided by the Participant's Compensation for such applicable year.
The "applicable year" for determining the Actual Contribution Percentage for the
group of Highly Compensated Employees shall be the current Plan Year. For all
other Eligible Participants, the "applicable year" for determining the Actual
Contribution Percentage shall be the immediately preceding Plan Year, unless in
accordance with the procedures prescribed by the Internal Revenue Service, the
Administrator elects to use the current Plan Year.
<PAGE>
8
(2) Actual Deferral Percentage. The average of the ratios for a designated group
of Eligible Participants (calculated separately for each Eligible Participant in
the group) of the sum of the Elective Deferrals and Qualified Nonelective
Contributions (other than those treated as part of the Actual Contribution
Percentage) allocated for the applicable year on behalf of a Participant,
divided by the Participant's Compensation for such applicable year. The
"applicable year" for determining the Actual Deferral Percentage for the group
of Highly Compensated Employees shall be the current Plan Year. For all other
Eligible Participants, the "applicable year" for determining the Actual Deferral
Percentage shall be the immediately preceding Plan Year, unless in accordance
with the procedures prescribed by the Internal Revenue Service, the
Administrator elects to use the current Plan Year.
(3) Compensation. The Employee's wages that are required to be reported on IRS
Form W-2, increased by any Elective Deferrals made by the Employer on behalf of
the Employee under this Plan or any other plan of the Employer with a qualified
cash or deferred arrangement under section 401(k) of the Code and any pre-tax
elective contributions made by the Employer that are excludible from the
Employee's income under section 125 of the Code.
(4) Eligible Participant. Any Employee of an Adopting Employer who is authorized
under the terms of the Plan to make Elective Deferrals or have Qualified
Nonelective Contributions allocated to his or her Account for the Plan Year.
(d) For purposes of determining whether a plan satisfies the Actual Contribution
Percentage test of section 401(m), all employee and matching contributions that
are made under two (2) or more plans that are aggregated for purposes of
sections 401(a)(4) and 410(b) (other than section 410(b)(2)(A)(ii)) are to be
treated as made under a single plan and that if two (2) or more plans are
permissively aggregated for purposes of section 401(m), the aggregated plans
must also satisfy sections 401(a)(4) and 410(b) as though they were a single
plan.
(e) In calculating the Actual Contribution Percentage for purposes of section
401(m), the actual contribution ratio of a Highly Compensated Employee will be
determined by treating all plans subject to section 401(m) under which the
Highly Compensated Employee is eligible (other than those that may not be
permissively aggregated) as a single plan.
(f) For purposes of determining whether a plan satisfies the Actual Deferral
Percentage test of section 401(k), all elective contributions that are made
under two (2) or more plans that are aggregated for purposes of section
401(a)(4) or 410(b) (other than section 410(b)(2)(A)(ii)) are to be treated as
made under a single plan and that if two (2) or more plans are permissively
aggregated for purposes of section 401(k), the aggregated plans must also
satisfy sections 401(a)(4) and 410(b) as though they were a single plan.
(g) In calculating the Actual Deferral Percentage for purposes of section
401(k), the actual deferral ratio of a Highly Compensated Employee will be
determined by treating all cash or deferred arrangements under which the Highly
Compensated Employee is eligible (other than those that may not be permissively
aggregated) as a single arrangement.
<PAGE>
9
(h) An elective contribution will be taken into account under the Actual
Deferral Percentage test of section 401(k)(3)(A) of the Code for a Plan Year
only if it is allocated to the Employee as of a date within that Plan Year. For
this purpose, an elective contribution is considered allocated as of a date
within a Plan Year if the allocation is not contingent on participation or
performance of services after such date and the elective contribution is
actually paid to the Trust no later than twelve (12) months after the Plan Year
to which the contribution relates.
<PAGE>
10
3.11 Correction of Excess Contributions.
(a) Excess Contributions shall be corrected as provided in this section. The
Administrator may also prevent anticipated Excess Contributions as provided in
this section. The Administrator may use any method of correction or prevention
provided in this section or any combination thereof, as it determines in its
sole discretion. This section shall be administered and interpreted in
accordance with sections 401(k) and 401(m) of the Code.
(b) The Administrator may refuse to accept any or all prospective Elective
Deferrals to be contributed by a Participant.
(c) (1) An Adopting Employer may, in its sole discretion, elect to contribute,
as provided in section 3.2, a Qualified Nonelective Contribution in an amount
necessary to satisfy any or all of the requirements of section 3.10.
(2) Qualified Nonelective Contributions for a Plan Year shall only be allocated
to the Accounts of Participants who are not Highly Compensated Employees.
Qualified Nonelective Contributions shall be allocated first to the Participant
with the lowest Compensation for that Plan Year and any remaining Qualified
Nonelective Contributions thereafter shall be allocated to the Participant with
the next lowest Compensation for that Plan Year. This allocation method shall
continue in ascending order of Compensation until all such Qualified Nonelective
Contributions are allocated. The allocation to any Participant shall not exceed
the limits under section 415 of the Code. If two or more Participants have
identical Compensation, the allocations to them shall be proportional.
(3) Qualified Nonelective Contributions for a Plan Year shall be contributed to
the Trust within twelve (12) months after the close of such Plan Year.
(4) Qualified Nonelective Contributions shall only be allocated to Participants
who receive Compensation during the Plan Year for which such contribution is
made.
(d) The Administrator may, during a Plan Year, distribute to a Participant (or
such Participant's Beneficiary if the Participant is deceased), any or all
Excess Contributions or Excess Deferrals (whether Elective Deferrals or
Qualified Nonelective Contributions) allocable to that Participant's Account for
that Plan Year, notwithstanding any contrary provision of the Plan. Such
distribution may include earnings or losses (if any) attributable to such
amounts, as determined by the Administrator.
<PAGE>
11
(e) (1) The Administrator may distribute any or all Excess Contributions for a
Plan Year in accordance with the provisions of this subsection. Such
distribution may only occur after the close of such Plan Year and within twelve
(12) months of the close of such Plan Year. In the event of the termination of
the Plan, such distribution shall be made within twelve (12) months after such
termination. Such distribution shall include the income allocable to the amounts
so distributed, as determined under this subsection. The Administrator may make
any special allocations of earnings or losses necessary to carry out the
provisions of this subsection. A distribution of an Excess Contribution under
this subsection may be made without regard to any notice or consent otherwise
required pursuant to sections 411(a)(11) and 417 of the Code.
(2) (A) The income allocable to Excess Contributions distributed under this
subsection shall equal the allocable gain or loss for the Plan Year. Income
includes all earnings and appreciation, including such items as interest,
dividends, rent, royalties, gains from the sale of property, appreciation in the
value of stock, bonds, annuity and life insurance contracts, and other property,
without regard to whether such appreciation has been realized.
(B) The allocable gain or loss for the Plan Year may be determined under any
reasonable method consistently applied by the Administrator. Alternatively, the
Administrator may, in its discretion, determine such allocable gain or loss for
the Plan Year under the method set forth in subparagraph (C).
(C) Under this method, the allocable gain or loss for the Plan Year is
determined by multiplying the income for the Plan Year allocable to Elective
Deferrals (and amounts treated as Elective Deferrals) by a fraction, the
numerator of which is the Excess Contributions by the Participant for the Plan
Year and the denominator of which is the total Account balance of the
Participant attributable to Elective Deferrals (and amounts treated as Elective
Deferrals) as of the beginning of the Plan Year, increased by any Elective
Deferrals (and amounts treated as Elective Deferrals) by the Participant for the
Plan Year.
(3) Amounts distributed under this subsection (or other provisions of this
section) shall first be treated as distributions from the Participant's
subaccounts in the following order:
(A) from the Participant's Elective Deferral Account (if such Excess
Contribution is attributable to Elective Deferrals); and
(B) from the Participant's Qualified Nonelective Contribution account (if such
Excess Contribution is attributable to Qualified Nonelective Contributions).
(f) (1) The term "Excess Contributions" shall mean, with respect to a Plan Year,
the excess of the Elective Deferrals (including any Qualified Nonelective
Contributions and Matching Contributions that are treated as Elective Deferrals
under sections 401(k)(2) and 401(k)(3) of the Code) on behalf of eligible Highly
Compensated Employees for the Plan Year over the maximum amount of such
contributions permitted under sections 401(k)(2) and 401(k)(3) of the Code. For
this purpose, the maximum amount of contributions permitted under sections
401(k)(2) and 401(k)(3) of the Code shall be determined in accordance with the
leveling method prescribed in Treas. Regs. section 1.401(k)-1(f)(2), or such
other method as promulgated thereafter.
<PAGE>
12
(2) Any distribution or recharacterization of Excess Contributions for a Plan
Year, as determined under subsection (1) above, shall be made to the Highly
Compensated Employees on the basis of the amount of contributions by, or on
behalf of, each such Highly Compensated Employee in accordance with the
procedure described herein. The Highly Compensated Employees with the highest
amount of contributions shall have their contributions distributed or
recharacterized to the extent required to eliminate the Excess Contributions or,
if it results in a lower distribution or recharacterization, to the extent
required to cause such Highly Compensated Employees' contributions to equal the
amount of contributions of the Highly Compensated Employees with the next
highest level of contributions. This procedure shall be repeated until the
Excess Contributions are completely distributed or recharacterized.
(3) The amount of Excess Contributions to be distributed or recharacterized
shall be reduced by Excess Deferrals previously distributed for the taxable year
ending in the same Plan Year and Excess Deferrals to be distributed for a
taxable year will be reduced by Excess Contributions previously distributed or
recharacterized for the Plan beginning in such taxable year.
3.12 Correction of Excess Deferrals.
(a) Excess Deferrals shall be corrected as provided in this section. The
Administrator may also prevent anticipated Excess Deferrals as provided in this
section. The Administrator may use any method of correction or prevention
provided in this section or any combination thereof, as it determines in its
sole discretion. A distribution of an Excess Deferral under this section may be
made without regard to any notice or consent otherwise required pursuant to
sections 411(a)(11) and 417 of the Code. This section shall be administered and
interpreted in accordance with sections 401(k) and 402(g) of the Code.
(b) The Administrator may refuse to accept any or all prospective Elective
Deferrals to be contributed by a Participant.
(c) (1) The Administrator may distribute any or all Excess Deferrals to the
Participant on whose behalf such Excess Deferrals were made before the close of
the Applicable Taxable Year. Distributions under this subsection include income
allocable to the Excess Distribution so distributed, as determined under this
subsection.
(2) Distribution under this subsection shall only be made if all the following
conditions are satisfied:
(A) the Participant seeking the distribution designates the distribution as an
Excess Deferral;
(B) the distribution is made after the date the Excess Deferral is received by
the Plan; and
(C) the Plan designates the distribution as a distribution of an Excess
Deferral.
(3) The income allocable to the Excess Deferral distributed under this
subsection shall be determined in the same manner as under subsection (d)(3),
except that income shall only be determined for the period from the beginning of
the Applicable Taxable Year to the date on which the distribution is made.
<PAGE>
13
(d) (1) The Administrator may distribute any or all Excess Deferrals to the
Participant on whose behalf such Excess Deferrals were made after the close of
the Applicable Taxable Year. Distribution under this subsection shall only be
made if the Participant timely provides the notice required under subsection
(d)(2) and such distribution is made after the Applicable Taxable Year and
before the first April 15 following the close of the Applicable Taxable Year.
Distributions under this subsection shall include income allocable to the Excess
Deferrals so distributed, as determined under this subsection.
(2) Any Participant seeking a distribution of an Excess Deferral in accordance
with this subsection must notify the Administrator of such request no later than
the first March 15 following the close of the Applicable Taxable Year. The
Administrator may agree to accept notification received after such date (but
before the first April 15 following the close of the Applicable Taxable Year) if
it determines that it would still be administratively practicable to make such
distribution in view of the delayed notification. The notification required by
this subsection shall be deemed made if a Participant's Elective Deferrals to
the Plan in any Plan Year create an Excess Deferral.
(3) The income allocable to the Excess Deferral distributed under this
subsection shall be determined in the same manner as under section 3.11(f)(2),
except that the term "Excess Deferrals" shall be substituted for "Excess
Contributions" and the term "Applicable Taxable Year" shall be substituted for
"Plan Year." The Administrator may make any special allocations of earnings or
losses necessary to carry out the provisions of this subsection.
(e) The following terms shall have the meanings specified:
(1) Applicable Taxable Year. The taxable year (for federal income tax purposes)
of the Participant in which an Excess Deferral must be included in gross income
(when made) in accordance with section 402(g) of the Code.
(2) Excess Deferral. A Participant's Elective Deferrals (and other contributions
limited by section 402(g) of the Code), for an Applicable Taxable Year that are
in excess of the limits imposed by section 402(g) of the Code for such
Applicable Taxable Year.
3.13 Correction of Excess Aggregate Contributions.
(a) Excess Aggregate Contributions shall be corrected as provided in this
section. The Administrator may use any method of correction or prevention
provided in this section or any combination thereof, as it determines in its
sole discretion. This section shall be administered and interpreted in
accordance with sections 401(k) and 401(m) of the Code.
(b) The Administrator may refuse to accept any or all prospective Elective
Deferrals to be contributed to a Participant.
(c) (1) The Company may, in its sole discretion, elect to contribute, as
provided in section 3.2, a Qualified Nonelective Contribution in an amount
necessary to satisfy any or all of the requirements of section 3.10.
<PAGE>
14
(2) Qualified Nonelective Contributions for a Plan Year shall only be allocated
to the Accounts of Participants who are not Highly Compensated Employees.
Qualified Nonelective Contributions shall be allocated first to the Participant
with the lowest Compensation for that Plan Year and any remaining Qualified
Nonelective Contributions thereafter shall be allocated to the Participant with
the next lowest compensation for that Plan Year. This allocation method shall
continue in ascending order of Compensation until all such Qualified Nonelective
Contributions are allocated. The allocation to any Participant shall not exceed
the limits under section 415 of the Code. If two or more Participants have
identical Compensation, the allocations to them shall be proportional.
(3) Qualified Nonelective Contributions for a Plan Year shall be contributed to
the Trust within twelve (12) months after the close of such Plan Year.
(4) Qualified Nonelective Contributions shall only be allocated to Participants
who receive Compensation during the Plan Year for which such contribution is
made.
(d) The Administrator may, during a Plan Year, distribute to a Participant (or
such Participant's Beneficiary if the Participant is deceased), any or all
Excess Aggregate Contributions allocable to that Participant's Account for that
Plan Year, notwithstanding any contrary provision of the Plan. Such distribution
may include earnings or losses (if any) attributable to such amounts, as
determined by the Administrator.
(e) (1) The Administrator may forfeit any or all Excess Aggregate Contributions
for a Plan Year in accordance with the provisions of this subsection. The
amounts so forfeited shall not include any amounts that are nonforfeitable under
ARTICLE V.
(2) Any forfeitures under this subsection shall be made in accordance with the
procedures for distributions under subsection (f) except that such amounts shall
be forfeited instead of being distributed.
(f) (1) The Administrator may distribute any or all Excess Aggregate
Contributions for a Plan Year in accordance with the provisions of this
subsection. Such distribution may only occur after the close of such Plan Year
and within twelve (12) months of the close of such Plan Year. Such distributions
shall be specifically designated by the Administrator as a distribution of
Excess Aggregate Contributions. In the event of the complete termination of the
Plan, such distribution shall be made within twelve (12) months after such
termination. Such distribution shall include the income allocable to the amounts
so distributed, as determined under this subsection. The Administrator may make
any special allocations of earnings or losses necessary to carry out the
provisions of this subsection. A distribution of an Excess Aggregate
Contribution under this subsection may be made without regard to any notice or
consent otherwise required pursuant to sections 411(a)(11) and 417 of the Code.
<PAGE>
15
(2) (A) The income allocable to Excess Aggregate Contributions distributed under
this subsection shall equal the allocable gain or loss for the Plan Year. Income
includes all earnings and appreciation, including such items as interest,
dividends, rent, royalties, gains from the sale of property, appreciation in the
value of stock, bonds, annuity and life insurance contracts, and other property,
without regard to whether such appreciation has been realized.
(B) The allocable gain or loss for the Plan Year may be determined under any
reasonable method consistently applied by the Administrator. Alternatively, the
Administrator may, in its discretion, determine such allocable gain or loss for
the Plan Year under the method set forth in subparagraph (C).
(C) Under this method, the allocable gain or loss for the Plan Year is
determined by multiplying the income for the Plan Year allocable to employee
contributions, matching contributions and amounts treated as matching
contributions by a fraction, the numerator of which is the Excess Aggregate
Contributions for the Participant for the Plan Year and the denominator of which
is the total Account balance of the Participant attributable to employee
contributions, matching contributions and amounts treated as matching
contributions as of the beginning of the Plan Year, increased by the employee
contributions, matching contributions and amounts treated as matching
contributions for the Participant for the Plan Year.
(3) Amounts distributed under this subsection (or other provisions of this
section) shall first be treated as distributions from the Participant's Account
in the following order:
(A) from the Participant's Qualified Nonelective Contribution Account (if such
Excess Aggregate Contribution is attributable to Qualified Nonelective
Contributions); and
(B) from the Participant's Matching Contribution Account (if such Excess
Aggregate Contribution is attributable to Matching Contributions).
(g) (1) The term "Excess Aggregate Contributions" shall mean, with respect to a
Plan Year, the excess of the aggregate amount of the matching contributions and
employee contributions (including any Qualified Nonelective Contributions or
elective deferrals taken into account in computing the Actual Contribution
Percentage) actually made on behalf of eligible Highly Compensated Employees for
the Plan Year over the maximum amount of such contributions permitted under
section 401(m)(2)(A) of the Code. For this purpose, the maximum amount of
contributions permitted under section 401(m)(2)(A) of the Code shall be
determined in accordance with the leveling method described in section
3.11(g)(1) of the Plan.
(2) Any distribution of Excess Aggregate Contributions for a Plan Year, as
determined under subsection (1) above, shall be made to the Highly Compensated
Employees on the basis of the amount of contributions by, or on behalf of, each
such Highly Compensated Employee in accordance with the procedure described
herein. The Highly Compensated Employees with the highest amount of
contributions shall have their contributions distributed to the extent required
to eliminate the Excess Aggregate Contributions or, if it results in a lower
distribution, to the extent required to cause such Highly Compensated Employees'
contributions to equal the amount of contributions of the Highly Compensated
Employees with the next highest level of contributions. This procedure shall be
repeated until the Excess Aggregate Contributions are completely distributed.
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16
(3) The terms "employee contributions" and "matching contributions" shall, for
purposes of this section, have the meanings set forth in Treas. Reg.
ss.1.401(m)-1(f).
3.14 Correction of Multiple Use.
(a) If the limitations of Treas. Reg. ss.1.401(m)-2 are exceeded for any Plan
Year, then correction shall be made in accordance with the provisions of this
section. This section shall be administered and interpreted in accordance with
sections 401(k) and 401(m) of the Code.
(b) Any correction required by this section shall be calculated and administered
in accordance with the provisions for correcting Excess Contributions (in
section 3.11), Excess Aggregate Contributions (in section 3.13) or both, as the
Administrator determines in its sole discretion. Any correction required by this
section, to the extent possible, shall be made only with respect to those Highly
Compensated Employees who are eligible in both the arrangement subject to
section 401(k) of the Code and the Plan, as subject to section 401(m) of the
Code.
ARTICLE IV
Investment of Accounts
4.1 Election of Investment Funds.
(a) Except as otherwise prescribed in subsections (b) and (c)
below, upon enrollment in the Plan, each Participant shall direct that the funds
in the Participant's Account be invested in increments of one percent (1%) in
one or more of the following investment funds:
(1) Fund A. An equity fund designated by the Administrator;
(2) Fund B. A fixed income fund designated by the Administrator;
(3) Fund C. Common Stock fund;
(4) Fund D. A stock index fund designated by the Administrator;
(5) Fund E. A balanced fund designated by the Administrator;
(6) Fund F. A growth fund designated by the
Administrator, investing primarily in
equities of companies of all types and sizes;
(7) Fund G. A growth fund designated by the
Administrator, investing primarily in
equities of well-known and established companies;
(8) Fund H. General Motors Class H stock fund;
(9) Fund I. Raytheon Company Class A stock fund.
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17
(b) Amounts contributed to a Participant's Matching
Contribution Account must be invested in Fund C (Common Stock fund) until the
end of two (2) full Plan Years following the Plan Year for which such
contributions are made. Thereafter, a Participant may designate the investment
of the Matching Contribution funds in accordance with the provisions of
subsection (a) above.
(c) The only assets that may be invested in Fund H or Fund I
are the General Motors Class H stock and cash directly transferred from the
Hughes Thrift and Savings Plan pursuant to section 3.7(b)(4). A Participant may
not direct that any other funds in the Participant's Account be invested in Fund
H or Fund I. Notwithstanding subsection (d) below, the Administrator shall
maintain Fund H and Fund I as investment options under the Plan, subject to the
limitations prescribed in this subsection (c), for five (5) complete Plan Years
following the Effective Date; provided, however, that if at any time prior to
the expiration of such five (5) year period, the aggregate fair market value of
the assets invested in either Fund H or Fund I falls below five percent (5%) of
the highest fair market value of the assets invested in Fund H or Fund I,
respectively, the Administrator may, with six (6) months written notice to
affected Participants, eliminate Fund H or Fund I, as applicable, as investment
options under the Plan. Notwithstanding the foregoing, the Administrator may
eliminate one or both funds at any time if the Administrator determines in good
faith that such elimination is necessary under applicable law (including without
limitation the prudence requirements of ERISA). When Fund H and Fund I are
eliminated in accordance with this section 4.1(c), Participants with assets
invested in Fund H or Fund I, as applicable, shall direct the transfer of such
assets to other funds available under the Plan or, if no such election is made,
the Administrator shall transfer such assets to Fund B or a similar low risk
fixed income fund as determined by the Administrator in its discretion.
(d) In its discretion, the Administrator may from time to time
designate new funds and, where appropriate, preclude investment in existing
funds and provide for the transfer of Accounts invested in those funds to other
funds selected by the Participant or, if no such election is made, to Fund B or
similar low risk fixed income fund as determined by the Administrator in its
discretion.
(e) Except as otherwise prescribed in subsections (b) and (c)
above, a Participant's investment election will apply to the entire Account of
the Participant.
(f) In establishing rules and procedures under section 4.1,
the following shall apply:
(1) Each Participant, Beneficiary or Alternate Payee shall affirmatively elect
to self-direct the investment of assets in his or her Account, but such election
may provide for default investments in the absence of specific directions from
such Participant, Beneficiary or Alternate Payee.
(2) The investment directions of a Participant shall continue to apply after
that Participant's death or incompetence until the Beneficiary (or, if there is
more than one Beneficiary for that Account, all of the Beneficiaries), guardian
or other representatives provide contrary direction.
The Administrator may decline to implement investment designations if such
investment, in the Administrator's judgment:
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18
(A) would result in a prohibited transaction under section 4975
of the Code;
(B) would generate income taxable to the Trust Fund;
(C) would not be in accordance with the Plan and Trust;
(D) would cause a Fiduciary to maintain the indicia of ownership
of any assets of the Trust Fund outside the jurisdiction of the district courts
of the United States other than as permitted by section 404(b) of ERISA and
Labor Reg. ss.2550.404(b)-1;
(E) would jeopardize the Plan's tax qualified status under
the Code;
(F) could result in a loss in excess of the
amount credited to the Account; or
(G) would violate any other requirements of the Code or ERISA.
(4) Except as otherwise prescribed in subsections (b) and (c) above, the
Administrator may establish reasonable restrictions on the frequency with which
investment directions may be given, consistent with section 404(c) of ERISA.
(5) The Administrator may establish limits on the use of brokers, investment
counsel or other advisors that may be utilized, including specifying that all
investments must be made through a designated broker or brokers.
(6) The Administrator may establish limits on the types of investments that are
permitted.
(g) Except as otherwise prescribed in subsections (b) and (c)
above, the Administrator shall establish such rules and procedures as may be
advisable or necessary to carry out the provisions of this section, with such
rules and procedures being consistent with section 404(c) of ERISA.
(h) The Administrator shall establish such rules and
procedures as may be advisable or necessary to reasonably ensure that all
transactions involving the investment funds comply with all applicable laws,
including the securities laws.
4.2 Change in Investment Allocation of Future Deferrals. Except as
otherwise prescribed in sections 4.1(b) and (c), each Participant may elect to
change the investment allocation of future contributions effective as of the
first administratively feasible Business Day subsequent to telephone notice to
the Recordkeeper. Any changes must be made either in increments of one percent
(1%) of the Participant's Account or in a specified whole dollar amount and must
result in a total investment of one hundred percent (100%) of the Participant's
Account.
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19
4.3 Transfer of Account Balances Between Investment Funds. Except as
otherwise prescribed in sections 4.1(b) and (c), each Participant may elect to
transfer all or a portion of the amount in his or her Account between investment
funds effective as of the first administratively feasible Business Day following
telephone notice to the Recordkeeper. In determining the amount of the transfer,
the Participant's Account shall be valued as of the close of business on the
Business Day on which telephone notice is received; provided, however, that in
any case where the telephone notice is received after 4:00 p.m. Eastern Time
(daylight or standard, whichever is in effect on the date of the call), the
Account shall be valued as of the close of business on the next Business Day.
Such transfers must be made in either one percent (1%) increments of the entire
Account or in a specified amount in whole dollars and, as of the completion of
the transfer, must result in investment of one hundred percent (100%) of the
Account. Transfers shall be effected by telephone notice to the Recordkeeper.
4.4 Ownership Status of Funds. The Trustee shall be the owner of record
of the assets in the funds specified as Funds A, B, C, D, E, F, G, H and I and
such other funds as may be established by the Administrator. The Administrator
shall have records maintained as of the Valuation Date for each fund allocating
a portion of the fund to each Participant who has elected that his or her
Account be invested in such fund. The records shall reflect each Participant's
portion of Funds A, B, D, E, F and G and such other funds as may be established
by the Administrator, in a cash amount and shall reflect each Participant's
portion of Funds C, H and I in cash and unitized shares of stock.
4.5 Voting Rights. Participants whose Account has shares of
participation in Funds C or I on the last business day of the second month
preceding the record date (the "Voting Eligibility Date") for any meeting of
stockholders have the right to instruct the Trustee as to voting at such
meeting. The number of votes is determined by dividing the value of the shares
in the Participant's Account in Funds C and I, as applicable, by the closing
price of the respective classes of stock on the Voting Eligibility Date. If the
Trustee has not received instructions from a Participant as to voting of shares
within a specified time, then the Trustee shall not vote those shares. If a
Participant furnishes the Trustee with a signed vote direction card without
indicating a voting choice thereon, the Trustee shall vote the Participant's
shares as recommended by management. In addition, each Participant shall have
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20
the right to accept or reject any tender or exchange offer for shares of the
respective classes of stock. The Trustee shall vote (or tender or exchange) all
combined fractional shares of the respective classes of stock to the extent
possible in the same proportion as the shares which have been voted (or tendered
or exchanged) by each Participant. Any instructions as to voting (or tender or
exchange) received from an individual Participant shall be held in confidence by
the Trustee and shall not be divulged to the Adopting Employers or to any
officer or employee thereof or to any other person.
4.6 Allocation of Earnings.
(a) (1) The Administrator, as of each Valuation Date, shall
adjust the amounts credited to the Accounts (including Accounts for persons who
are no longer Employees) so that the total of such Account balances equals the
fair market value of the Trust Fund assets as of such Valuation Date. Except as
otherwise provided herein, any changes in the fair market value of the Trust
Fund assets since the preceding Valuation Date shall be charged or credited to
each Account in the ratio that the balance in each such Account as of the
preceding Valuation Date bears to the balances in all Accounts as of that
Valuation Date with appropriate adjustments to reflect any distributions,
allocations or similar adjustments to such Account or Accounts since that
Valuation Date.
(2) To the extent that separate investment funds are established (as
provided in section 4.1), the adjustments required by subsection (a)(1) shall be
made by applying subsection (a)(1) separately for each such investment fund so
that any changes in the net worth of each such investment fund are charged or
credited to the portion of each Account invested in such investment fund in the
ratio that the portion of each such Account invested in such investment fund as
of the preceding Valuation Date (reduced by any distributions made from that
portion of such Account since that Valuation Date) bears to the total amount
credited to such investment funds as of that Valuation Date (reduced by
distributions made from such investment fund since that Valuation Date).
(3) Interim valuations, in accordance with the foregoing procedure,
may be made at such time or times as the Administrator directs.
(b) The Administrator may, in its sole discretion, direct the
Trustee to segregate and separately invest any Trust Fund assets. If any assets
are segregated in this fashion, the earnings or losses on such assets shall be
determined apart from other Trust assets and shall be adjusted on each Valuation
Date, or at such other times as the Administrator deems necessary, in accordance
with this section.
ARTICLE V
Vesting
5.1 Elective Deferral, Rollover Contribution and Qualified Nonelective
Contribution Accounts. Each Participant shall have a Nonforfeitable right to any
amounts in the Participant's Elective Deferral, Rollover Contribution and
Qualified Nonelective Contribution Accounts.
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21
5.2 Matching Contribution Account.
(a) Each Participant shall have a Nonforfeitable right to his or her Matching
Contribution Account upon the earliest of:
(1) the Participant's completion of a Period of Service of five (5) years;
(2) the Participant's completion of a Period of Participation of three (3)
years;
(3) the Participant's Retirement, death while an Employee, Disability or
attainment of Normal Retirement Age; or
(4) the Participant's Layoff or Severance from Service due to Qualified
Military Service.
5.3 Break in Service Rules
(a) Periods of Service. In determining the length of a Period
of Service, the Administrator shall include all Periods of Service, except the
following Periods of Service shall not be taken into account:
(1) in the case of a Participant who has not made Elective Deferrals
to the Plan, the Period of Service before any Period of Severance which equals
or exceeds five (5) consecutive years; and
(2) in the case of a Participant who has made Elective Deferrals to
the Plan and who has incurred a Period of Severance which equals or exceeds five
(5) years, the Period of Service after such Period of Severance shall not be
taken into account for purposes of determining the nonforfeitable interest of
such Participant in the Matching Contributions allocated to his or her Account
before such Period of Severance.
(b) Periods of Severance. In determining the length of a
Period of Service for purposes of section 14.39, the Administrator shall include
any period of time beginning on an Employee's Severance from Service Date and
ending on the date on which he or she is next credited with an Hour of Service,
provided that such Hour of Service is credited within the twelve (12)
consecutive month period following such Severance from Service Date.
(c) Other Periods. In making the determinations described in
subsections (a) and (b) of this section, the second, third, and fourth
consecutive years of a Layoff (from the first anniversary of the last day paid
to the fourth anniversary of the last day paid) and any period in excess of one
(1) year of an Authorized Leave of Absence shall be regarded as neither a Period
of Service nor a Period of Severance.
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22
ARTICLE VI
Withdrawals and Distribution of Benefits
6.1 In-Service Withdrawals - Matching Contributions. Upon completion of
a Period of Participation of five (5) years, a Participant may withdraw, subject
to a minimum withdrawal amount of two hundred fifty dollars ($250), all or part
of the Participant's Matching Contribution Account. Withdrawals will be based
upon the value of the Account as determined under section 6.15. Withdrawals from
Funds A, B, D, E, F and G, and such other funds as may be established by the
Administrator will be made in cash; withdrawals from Funds C, H and I will be
made in cash or stock (with cash for fractional or uninvested shares) as
directed by the Participant. Funds for the withdrawal will be taken on a pro
rata basis against the Participant's investment fund balances in the
Participant's Matching Contribution Account.
6.2 In-Service Withdrawal -- Elective Deferral and Qualified
Nonelective Contribution Accounts. While an Employee, a Participant may withdraw
all or a portion of his or her Elective Deferral Account and Qualified
Nonelective Contribution Account on or after attainment of age fifty-nine and
one-half (59 1/2).
6.3 In-Service Withdrawal -- Hardship.
(a) A Participant who has experienced a hardship, as described
in this section, may withdraw from his or her Elective Deferral Account amounts
attributable to Elective Deferrals (adjusted for net losses, if any). Whether a
Participant is entitled to a withdrawal under this section is to be determined
by the Administrator in accordance with nondiscriminatory and objective
standards. In order to be entitled to a hardship withdrawal under this section,
a Participant must satisfy the requirements of both subsection (b) and
subsection (c).
(b) A Participant will be deemed to have experienced an
immediate and heavy financial need necessary to satisfy the requirements of this
subsection if the withdrawal is on account of:
(1) medical expenses described in section 213(d) of the Code incurred by the
Participant, the Participant's spouse or any dependents of the Participant;
(2) the purchase (excluding mortgage payments) of a principal resident of the
Participant;
(3) payment of tuition for the next twelve (12) months of post-secondary
education for the Participant or his or her spouse, children or dependents; or
(4) the need to prevent the eviction of the Participant from his or her
principal residence or the foreclosure on the mortgage of the Participant's
principal residence.
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23
(c) (1) A withdrawal under this subsection will be deemed
necessary to satisfy an immediate and heavy financial need of the Participant if
it satisfies the requirements of this subsection. To the extent the amount of
the withdrawal would be in excess of the amount required to relieve the
financial need of the Participant or to the extent such need may be satisfied
from other resources that are reasonably available to the Participant, such
withdrawal shall not satisfy the requirements of this subsection. For purposes
of this subsection, a Participant's resources shall be deemed to include those
assets of his or her spouse or minor children that are reasonably available to
the Participant.
(2) A withdrawal may be treated as necessary to satisfy a
financial need if the Administrator reasonably relies upon the Participant's
representation that the need cannot be relieved:
(A) through reimbursement or compensation by insurance or otherwise;
(B) by reasonable liquidation of the Participant's assets to the extent such
liquidation would not itself cause an immediate and heavy financial need;
(C) by cessation of Elective Deferrals under the Plan for at least twelve (12)
months after receipt of the hardship withdrawal;
(D) by other distributions or nontaxable (at the time of the loan) loans from
plans maintained by the Adopting Employers or by any other employer or by
borrowing from commercial sources on reasonable commercial terms.
(d) If a Participant receives a withdrawal for reasons of
financial hardship, the Participant's Elective Deferrals shall be reduced to six
percent (6%) (or such lower percentage as the Participant shall thereafter
designate), if in excess thereof as of the date of the distribution, and shall
not be increased during the twelve (12) months immediately subsequent to the
date of distribution.
(e) Withdrawals of less than two hundred fifty dollars ($250)
will not be permitted.
(f) Withdrawals will be based upon the value of the Account as determined under
section 6.15.
(g) payment of the amount withdrawn will be made as soon as reasonably
practicable after the effective date of the withdrawal.
(h) Withdrawals from Funds A, B, D, E, F and G, and such other funds as may be
established by the Administrator, will be made in cash. Withdrawals from Funds
C, H and I will be made in cash or stock (with cash for fractional or unissued
shares) as elected by the Participant.
(i) Funds for the withdrawal will be taken on a pro rata basis against the
Participant's investment fund balances in the Participant's Elective Deferral
Account.
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24
6.4 In-Service Withdrawal -- Rollover Contribution Account. A
Participant may withdraw all or a portion of his or her Rollover Contribution
Account. Withdrawals will be based upon the value of the Account as determined
under section 6.15. Payment of the amount withdrawn will be made as soon as
reasonably practicable after the effective date of the withdrawal. Withdrawals
from Funds A, B, D, E, F and G will be made in cash. Withdrawals from Funds C, H
and I will be made in cash or stock (with cash for fractional or unissued
shares) as elected by the Participant. Withdrawals of less than two hundred
fifty dollars ($250) will not be permitted.
6.5 Redeposits Prohibited. No amount withdrawn pursuant to sections
6.1, 6.2, 6.3, or 6.4 may be redeposited in the Plan.
6.6 Distribution of Benefits.
(a) All benefits payable under this Plan shall be paid in the
manner and at the times specified in this ARTICLE. Any payments to Participants
or Beneficiaries shall be made in cash (or cash equivalents) except as otherwise
provided herein. Distributions may be made wholly or partly by an in-kind
distribution of assets held by the Trust Fund if the distributee consents to
such an in-kind distribution and the Administrator determines that such an
in-kind distribution is not administratively burdensome.
(b) All payment methods and distributions shall comply with
the requirements of sections 401(a)(4) and 401(a)(9) of the Code and the
regulations thereunder and, if necessary, shall be interpreted to so comply. The
provisions of this ARTICLE apply to all amounts credited to an Account,
regardless of the source of such amounts. All distributions shall comply with
the incidental death benefit requirement of section 401(a)(9)(G) of the Code.
Distributions shall comply with the regulations under section 401(a)(9) of the
Code, including Treas. Reg. ss.1.401(a)(9)-2. The provisions of the Plan
reflecting section 401(a)(9) of the Code override any distribution provisions in
the Plan inconsistent with section 401(a)(9).
(c) Distribution of the Participant's Account (to which the
Participant has a Nonforfeitable right) will be made at the direction of the
Participant (or his or her legal representative or Beneficiary in the case of
his or her Disability or death) upon the Retirement, Disability, death or
Severance from Service of the Participant. In the event the Participant dies or
his or her Severance from Service occurs after his or her Normal Retirement Age,
or if the value of the Nonforfeitable portion of the Participant's Account as of
the Valuation Date which coincides with or immediately precedes the date of
distribution is not in excess of three thousand five hundred dollars ($3,500),
the Administrator shall cause the distribution to automatically be made.
(d) Payment will be made in the form of a lump-sum distribution of the
entire amount in the Participant's Account (to which the Participant has a
Nonforfeitable right), which will be paid as soon as practicable following
notification to the Benefits and Services Department, Raytheon Company,
Lexington, Massachusetts, of the Retirement, death, Disability or Severance from
Service and a telephone request by the Participant to the Recordkeeper for the
distribution. Distributions will be based upon the value of the Account as
determined under section 6.15. Distribution of the amounts in said accounts in
the funds designated in Funds A, B, D, E, F and G, and such other funds as may
be established by the Administrator, will be made in cash. Distribution of the
amounts in Funds C, H and I (if any) will be made in either cash or stock, at
the election of the Participant or, in the case of death, the Participant's
Beneficiary. Partial deferrals will not be permitted. If there is no Beneficiary
surviving a deceased Participant at the time payment of his or her Account is to
be made, such payment shall be made in a lump-sum to the person or persons in
the first following class of successive Beneficiaries surviving, any
testamentary devise or bequest to the contrary notwithstanding: the
Participant's (1) spouse, (2) children and issue of deceased children by right
of representation, (3) parents, (4) brothers and sisters and issue of deceased
brothers and sisters by right of representation, or (5) executors or
administrators. If no Beneficiary can be located during a period of seven (7)
years from the date of death, the amount of the distribution shall revert to the
Trust and be treated in the same manner as a forfeiture under section 3.6.
(e) If the Participant dies before the time when distribution is
considered to have commenced in accordance with applicable regulations, then any
remaining portion of the Participant's interest will be distributed within five
(5) years after the Participant's death. If a distribution is considered to have
commenced in accordance with the applicable regulations before the Participant's
death, the remaining interest will be distributed at least as rapidly as under
the method of distribution being used as of the date of the Participant's death.
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(f) Except as provided by section 401(a)(9) of the Code as set
forth in this section, benefits in the Plan will be distributed to each
Participant not later than the sixtieth (60th) day after the close of the Plan
Year in which the latest of the following events occurs:
(1) attainment by the Participant of Normal Retirement Age;
(2) the tenth (10th) anniversary of the date on which Participant commenced
participation in the Plan; or
(3) Participant's Severance from Service.
6.7 Mandatory Distributions.
A Participant who has attained age seventy and one-half (70
1/2) and is subject to the mandatory distribution requirements of section
401(a)(9) shall receive a lump sum distribution of the Participant's Account (to
which the Participant has a nonforfeitable right) at the time distributions must
commence in order to comply with such requirements. If additional amounts are
allocated to the Participant's Account following such lump sum distribution,
additional lump sum distributions of the Participant's Account (to which the
Participant has a nonforefeitable right) shall be made at such times any
mandatory distributions are required to comply with section 401(a)(9). Such
payments shall be made notwithstanding any contrary provisions of the Plan or
election made by such Participant.
6.8 Commencement of Benefits.
(a) Except as otherwise provided in this ARTICLE, distribution
to a Participant (or Beneficiary) shall commence within a reasonable period of
time following the Participant's Retirement, Disability, death or Severance from
Service.
(b) If the vested amount in the Participant's Account exceeds
or ever exceeded three thousand five hundred dollars ($3, 500), then payment to
the Participant shall not commence before such Participant has attained age
sixty-five (65), unless the Participant requests an earlier distribution. Such
request must be made not more than ninety (90) days before the commencement of
the distribution.
6.9 Payments to Incompetents. If a Participant or Beneficiary entitled
to receive any benefits hereunder is adjudicated to be legally incapable of
giving valid receipt and discharge for such benefits, the benefits may be paid
to the duly authorized personal representative of such Participant or
Beneficiary.
6.10 Income Tax Withholding. To the extent required by section 3405 of
the Code, distributions and withdrawals from the Plan shall be subject to
federal income tax withholding.
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26
6.11 Direct Rollovers.
(a) A Participant may elect that all or any portion of a
distribution that would otherwise be paid as an Eligible Rollover Distribution
shall instead be transferred as a Direct Rollover.
(b) (1) The Administrator shall determine and apply rules and
procedures as it deems reasonable with respect to Direct Rollovers in addition
to, or in lieu of, those set forth in subsection (b)(2). The Administrator may
change such rules and procedures from time to time and shall not be bound by any
previous rules and procedures it has applied.
(2) Unless otherwise determined by the Administrator, the
following rules and procedures shall apply to this section:
(A) A Direct Rollover shall not be permitted to more than one Eligible
Retirement Plan.
(B) A Direct Rollover shall not be permitted if it constitutes less than
the full amount of the Eligible Rollover Distribution.
(c) The following terms shall have the meanings specified:
(1) Direct Rollover. An available distribution that is paid directly to an
Eligible Retirement Plan for the benefit of the distributee.
(2) Distributee. A Participant or former Participant. In addition, the
Participant's or former Participant's Surviving Spouse or former spouse who is
the Alternate Payee under a Qualified Domestic Relations Order, as defined in
section 414(p) of the Code, are Distributees with regard to the interest of the
spouse or former spouse.
(3) Eligible Retirement Plan. An individual retirement account described in
section 408(a) of the Code, an individual retirement annuity (other than an
endowment contract) described in section 408(b) of the Code, a qualified trust
described in section 401(a) of the Code if such qualified trust is part of a
plan that permits acceptance of Direct Rollovers or an annuity plan described in
section 403(a) of the Code. In the case of a Direct Rollover for the benefit of
the spouse or former spouse of a Participant, the term "Eligible Retirement
Plan" shall only include an individual retirement account described in section
408(a) of the Code and an individual retirement annuity (other than an endowment
contract) described in section 408(b) of the Code.
(1) Eligible Rollover Distribution. Any distribution under the Plan to a
Participant, a Participant's spouse or a Participant's former spouse, except for
the following:
(A) Any distribution to the extent the distribution is required under
section 401(a)(9) of the Code.
<PAGE>
27
(B) The portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net unrealized
appreciation described in section 402(e)(4) of the Code).
(C) Returns of elective deferrals described in Treas. Reg.
ss.1.415-6(b)(6)(iv) that are returned as a result of the limitations unde
section 415 of the Code.
(D) Corrective distributions of excess contributions and excess deferrals
under qualified cash or deferred arrangements as described in Treas. Reg.
ss.1.401(k)-1(f)(4) and ss.1.402(g)-1(e)(3), respectively, and corrective
distributions of excess aggregate contributions as described in Treas. Reg.
ss.1.401(m)-1(e)(3), together with the income allocable to these corrective
distributions.
(E) Loans treated as distributions under section 72(p) of the Code and
not excepted by section 72(p)(2) of the Code.
(F) Loans in default that are deemed distributions.
(G) Dividends paid on employer securities as described in section 404(k)
of the Code.
(H) The costs of life insurance coverage.
(I) Similar items designated by the Internal Revenue Service in revenue
rulings, notices, and other guidance of general applicability.
6.12 Notice and Payment Elections.
(a) The Administrator shall provide Participants or other
Distributees of Eligible Rollover Distributions with a written notice designed
to comply with the requirements of section 402(f) of the Code. Such notice shall
be provided within a reasonable period of time before making an Eligible
Rollover Distribution.
(b) Any elections concerning the payment of benefits under
section 6.6 shall be made on a form prescribed by the Administrator. The
Participant or other Distributee shall submit a completed form to the
Administrator at least thirty (30) days before payment is scheduled to commence,
unless the Administrator agrees to a shorter time period. Any election made
under this section shall be revocable until thirty (30) days before payment is
scheduled to commence.
(c) An election to have payment made in a Direct Rollover
shall only be valid if the Participant or other Distributee provides adequate
information to the Administrator for the implementation of such Direct Rollover
and such reasonable verification as the Administrator may require that the
transferee is an Eligible Retirement Plan.
6.13 Qualified Domestic Relations Orders.
(a) Notwithstanding any contrary provision of the Plan,
payments shall be made in accordance with any judgment, decree or order
determined to be a Qualified Domestic Relations Order.
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28
(b) (1) If the Plan receives a Domestic Relations Order, the
Administrator shall promptly notify the Participant and each Alternate Payee of
the receipt of such order and of the Plan's procedures for determining whether
such order is a Qualified Domestic Relations Order. The Administrator shall,
within a reasonable period after receipt of such order, determine whether it is
a Qualified Domestic Relations Order and notify the Participant and each
Alternate Payee of that determination.
(2) During any period in which the issue of whether a
Domestic Relations Order is a Qualified Domestic Relations Order is being
determined, the Administrator shall separately account for the amounts that
would have been payable to the Alternate Payee during such period if the order
had been determined to be a Qualified Domestic Relations Order.
(c) (1) A Domestic Relations Order meets the requirements of
this subsection only if such order clearly specifies the following:
(A) the name and last known mailing address (if any) of the Participant
and the name and mailing address of each Alternate Payee covered by the order;
(B) the amount or the percentage of the Participant's benefits to be paid
by the Plan to each such Alternate Payee or the manner in which such amount or
percentage is to be determined;
(C) the number of payments or period to which such order applies; and
(D) each plan to which such order applies.
(2) A Domestic Relations Order meets the requirements of
this subsection only if such order does not:
(A) require the Plan to provide any type or form of benefit or any option
not otherwise provided under the Plan;
(B) require the Plan to provide increased benefits (determined on the
basis of actuarial value); and
(C) does not require the payment of benefits to an Alternate Payee that
are required to be paid to another Alternate Payee under another order
previously determined to be a Qualified Domestic Relations Order.
(d) A domestic relations order shall not be treated as failing
to meet the requirements of section 6.13(c)(2)(A) solely because such order
requires that payment of benefits be made to an Alternate Payee:
(1) in the case of any payment before a Participant has separated from service,
on or after the date on which the Participant attains (or would have attained)
the Earliest Retirement Date;
(2) as if the Participant had retired on the date on which such payment is to
begin under such order (but taking into account only the present value of the
benefits actually accrued and not taking into account the present value of any
employer subsidy for early retirement); and
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29
(3) in any form in which such benefits may be paid under the Plan to the
Participant (other than in the form of a qualified joint and survivor annuity
with respect to the Alternate Payee and his or her subsequent spouse).
(e) A domestic relations order shall not be treated as failing
to meet the requirements of section 6.13(c)(2)(A) solely because such order
requires that payment of benefits be made to an Alternate Payee at a date before
the Participant is entitled to receive a distribution. Such distribution shall
be made to such Alternate Payee notwithstanding any contrary provision of the
Plan.
(f) The following terms shall have the meanings specified:
(1) Alternate Payee. Any spouse, former spouse, child or
other dependent of a Participant who is recognized by a Domestic Relations Order
as having a right to benefits under the Plan with respect to such Participant.
(2) Domestic Relations Order. A judgment, decree or order
relating to child support, alimony or marital property rights, as defined in
section 414(p)(1)(B) of the Code.
(3) Earliest Retirement Date. The earlier of:
(A) the date on which the Participant is entitled to a distribution under
the Plan; or
(B) the later of:
(i) the date the Participant attains age fifty (50); or
(ii) the earliest date on which the Participant could begin
receiving benefits under the Plan if the Participant separated from service.
(4) Qualified Domestic Relations Order. A Domestic
Relations Order that satisfies the requirements of subsection (c) and section
414(p)(1)(A) of the Code.
(g) If an Alternate Payee entitled to payment under this section is
the spouse or former spouse of a Participant and payment will otherwise be made
in an Eligible Rollover Distribution, then such spouse or former spouse may
elect that all, or any portion, of such payment shall instead be transferred as
a Direct Rollover. Such Direct Rollover shall be governed by the requirements of
section 6.11.
(h) If a Domestic Relations Order directs that payment be made to an
Alternate Payee before the Participant's Earliest Retirement Date and such
Domestic Relations Order otherwise qualifies as a Qualified Domestic Relations
Order, then the Domestic Relations Order shall be treated as a Qualified
Domestic Relations Order and such payment shall be made to the Alternate Payee,
even though the Participant is not entitled to receive a distribution under the
Plan because he or she continues to be an Employee of one of the Adopting
Employers.
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30
(i) This section shall be interpreted and administered in accordance
with section 414(p) of the Code.
6.14 Lost Beneficiary.
(a) All Participants and Beneficiaries shall have the
obligation to keep the Administrator informed of their current address until
such time as all benefits due have been paid.
(b) If any amount is payable to a Participant or Beneficiary
who cannot be located to receive such payment, such amount may, at the
discretion of the Administrator, be forfeited; provided, however, that if such
Participant or Beneficiary subsequently claims the forfeited amount, it shall be
reinstated and paid to such Participant or Beneficiary. Such reinstatement may,
in the Administrator's sole discretion, be made from Company Contributions,
forfeitures or Trust earnings, and shall be treated as a special allocation that
supersedes the normal allocation rules.
(c) If the Administrator has not, after due diligence, located
a Participant or Beneficiary who is entitled to payment within three (3) years
after the Participant's Severance from Service, then, at the discretion of the
Administrator, such person may be presumed deceased for purposes of this Plan.
Any such presumption of death shall be final, conclusive and binding on all
parties.
6.15 Determination of Amount of Withdrawal or Distribution. In
determining the amount of any withdrawal or distribution hereunder, the
Participant's Account shall be valued as of the close of business on the
Business Day on which telephone notice is received; provided, however, that in
any case where the telephone notice is received after 4:00 p.m. Eastern Time
(daylight or standard, whichever is in effect on the date of the call), the
Account shall be valued as of the close of business on the next Business Day.
6.16 Offsets. Any transfers or payments made from a Participant's
Account to a person other than the Participant pursuant to the provisions of
this Plan shall reduce the Participant's Account and offset any amounts
otherwise due to such Participant. Such transfers or payments shall not be
considered a forfeiture for purposes of the Plan.
ARTICLE VII
Loans
7.1 Availability of Loans. Participants may borrow against all or a
portion of the balance in the Participant's Elective Deferral Account and
Rollover Contribution Account, and the Matching Contribution Account if the
Participant has a Nonforfeitable right thereto pursuant to section 5.2, subject
to the limitations set forth in this ARTICLE. Participants who have incurred a
Severance from Service will not be eligible for a Plan loan. The Vice President,
Human Resources, is authorized to administer this loan program.
7.2 Minimum Amount of Loan. No loan of less than five hundred dollar
($500) will be permitted.
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31
7.3 Maximum Amount of Loan. No loan in excess of fifty percent (50%) of
the Participant's Nonforfeitable Account balance will be permitted. In addition,
limits imposed by the Code and any other requirements of applicable statute or
regulation will be applied. Under the current requirements of the Code, if the
aggregate value of a Participant's Nonforfeitable Account balance exceeds twenty
thousand dollars ($20,000), the loan cannot exceed the lesser of one-half (1/2)
the Participant's Nonforfeitable Account balance or fifty thousand dollars
($50,000) reduced by the excess of (a) the highest outstanding balance of loans
from the Plan during the one-year period ending on the day before the date on
which such loan was made over (b) the outstanding balance of loans from the Plan
on the date on which such loan was made.
7.4 Effective Date of Loans. Loans will be effective as specified
in the Administrator's rules then in effect.
7.5 Repayment Schedule. The Participant may select a repayment schedule
of one, two, three, four or five (1, 2, 3, 4 or 5) years. If the loan is used to
acquire any dwelling which, within a reasonable time is to be used (determined
at the time the loan is made) as the principal residence of the Participant, the
repayment period may be extended up to fifteen (15) years at the election of the
Participant. All repayments will be made through payroll deductions in
accordance with the loan agreement executed at the time the loan is made, except
that, in the event of the sale of all or a portion of the business of the
Employer or one of the Adopting Employers, or other unusual circumstances, the
Administrator, through uniform and equitable rules, may establish other means of
repayment. The loan agreement will permit repayment of the entire outstanding
balance in one lump-sum. The minimum repayment amount per pay period is ten
dollars ($10) for Participants paid weekly and fifty dollars ($50) for
Participants paid monthly. The repayment schedule shall provide for
substantially level amortization of the loan. Loan repayments will be suspended
under this Plan as permitted under section 414(u) of the Code.
7.6 Limit on Number of Loans. No more than two (2) loans may be
outstanding at any time.
7.7 Interest Rate. The interest rate for a loan pursuant to this
ARTICLE will be equal to the prime rate published in The Wall Street Journal on
the first business day in June and December of each year. The rate published on
the first business day in June will apply to loans which are effective at any
time during the period July 1 through December 31 thereafter; the rate published
on the first business day of December will apply to loans which are effective at
any time during the period January 1 through June 30 thereafter.
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34
7.8 Effect Upon Participant's Elective Deferral Account. Upon the
granting of a loan to a Participant by the Administrator, the allocations in the
Participant's Account to the respective investment funds will be reduced on a
pro rata basis and replaced by the loan balance which will be designated as an
asset in the Account. Such reduction shall be effected by reducing the
Participant's Accounts in the following sequence, with no reduction of the
succeeding Accounts until prior Accounts have been exhausted by the loan:
Matching Contribution Account; Elective Deferral Account; and Rollover
Contribution Account. Upon repayment of the principal and interest, the loan
balance will be reduced, the Participant Accounts will be increased in the
reverse order in which they were exhausted by the loan, and the loan payments
will be allocated to the respective investment funds in accordance with the
investment election then in effect.
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32
7.9 Effect of Severance From Service and Nonpayment. In the event that
a loan remains outstanding upon the Severance from Service of a Participant, the
Participant will be given the option of continuing to repay the outstanding
loan. In any case where payments on the outstanding loan are not made within
ninety (90) days of the Participant's Severance from Service Date, the amount of
any unpaid principal will be deducted from the Participant's account and
reported as a distribution. If, as a result of Layoff or Authorized Leave of
Absence, a Participant, although still in a Period of Service, is not being
compensated through the Employer's payroll system, loan payments will be
suspended until the earliest of the first pay date after the Participant returns
to active employment with the Employer, the Participant's Severance from Service
Date, or the expiration of twelve (12) months from the date of the suspension.
In the event the Participant does not return to active employment with the
Employer, the Participant will be given the option of continuing to repay the
outstanding loan. If the Participant fails to resume payments on the loan, the
outstanding loan will be reported as a taxable distribution. In no event,
however, shall the loan be deducted from the Participant's Account earlier than
the date on which the Participant (i) incurs a Severance from Service, or, (ii)
attains age fifty-nine and one-half (59 1/2).
ARTICLE VIII
Contribution and Benefit Limitations
8.1 Contribution Limits.
(a) The Annual Additions that may be allocated to a
Participant's Account for any Limitation Year shall not exceed the lesser of:
(1) thirty thousand dollars ($30,000); or
(2) twenty-five percent (25%) of the Participant's Compensation
for that Limitation Year.
(b) If the Employer maintains any other Defined Contribution
Plans then the limitations in subsection (a) shall be computed with reference to
the aggregate Annual Additions for each Participant from all such Defined
Contribution Plans.
(c) If the Annual Additions for a Participant would exceed the
limits specified in this section, then the Annual Additions under this Plan for
that Participant shall be reduced to the extent necessary to prevent such limits
from being exceeded. Such reduction shall be made in accordance with section
8.4.
8.2 Overall Limits.
(a) If a Participant is participating in both a Defined
Contribution Plan and a Defined Benefit Plan of the Employer, then the sum of
the Defined Contribution Fraction and the Defined Benefit Fraction for any
Limitation Year shall not exceed 1.0.
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33
(b) If the sum of the Defined Contribution Fraction and the
Defined Benefit Fraction would exceed 1.0, then the annual benefits under the
Defined Benefit Plan shall be reduced to the extent necessary so that the sum of
such fractions does not exceed 1.0.
8.3 Annual Adjustments to Limits. The dollar limits for Annual
Additions and the dollar limits in the Defined Benefit Fraction and Defined
Contribution Fraction shall be adjusted for cost-of-living to the extent
permitted under section 415 of the Code.
8.4 Excess Amounts.
(a) The foregoing limits shall be limits on the allocation
that may be made to a Participant's Account in any Limitation Year. If an excess
Annual Addition would otherwise result from allocation of forfeitures,
reasonable errors in determining Compensation or other comparable reasons, then
the Administrator may take any (or all) of the following steps to prevent the
excess Annual Additions from being allocated:
(1) return any contributions from the Participant, as long as such return is
nondiscriminatory;
(2) hold the excess amounts unallocated in a suspense account and apply the
balance of the suspense account against Matching Contributions for that
Participant made in succeeding years;
(3) hold the excess amounts unallocated in a suspense account and apply the
balance of the suspense account against succeeding year Matching Contributions;
(4) reallocate the excess amounts to other Participants.
(b) Any suspense account established under this section shall
not be credited with income or loss unless otherwise directed by the
Administrator. If a suspense account under this section is to be applied in a
subsequent Limitation Year, then the amounts in the suspense account shall be
applied before any Annual Additions (other than forfeitures) are made for such
Limitation Year.
8.5 Definitions.
(a) The following terms shall have the meanings specified:
(1) Annual Addition. The sum for any Limitation Year of
additions (not including Rollover Contributions) to a Participant's Account as
a result of:
(A) Employer contributions (including Matching Contributions, Qualified
Nonelective Contributions and Elective Deferrals);
(B) Employee contributions;
(C) forfeitures; and
(D) amounts described in Code sections 415(l)(1) and 419A(d)(2).
<PAGE>
35
(2) Defined Benefit Fraction. A fraction, the numerator of
which is the Projected Annual Benefit of the Participant under all Defined
Benefit Plans of the Employer (determined as of the close of the Limitation
Year) and the denominator of which is the Projected Annual Benefit the
Participant would have under such plans (determined as of the close of the
Limitation Year) if such plans provided an annual benefit equal to the lesser
of:
(A) the product of 1.25 multiplied by ninety thousand dollars ($90,000);
or
(B) the product of 1.4 multiplied by one hundred percent (100%) of the
Participant's average Compensation for the Participant's three (3) consecutive
Years of Service that produce the highest average Compensation.
For purposes of determining the Defined Benefit Fraction of a Participant who
was employed by an Adopting Employer on December 18, 1997 or who transferred to
an Adopting Company from General Motors Corporation or one of its affiliates
after such date and before December 1, 1998, service for and Compensation
received from General Motors Corporation and its affiliates, if any, shall be
taken into account, and the Projected Annual Benefit under any Defined Benefit
Plan of the Employer shall not be reduced as a result of the transfer of any
assets or liabilities from a Defined Benefit Plan maintained by General Motors
Corporation and its affiliates.
(3) Defined Benefit Plan. Any plan qualified under section 401(a) of
the Code that is not a Defined Contribution Plan.
(4) Defined Contribution Fraction. A fraction, the numerator of which
is the sum of the Annual Additions to the Participant's Accounts as of the close
of the Limitation Year, and the denominator of which is equal to the sum of the
lesser of the following amounts determined for such Limitation Year and for each
prior year of service with the Employer:
(A) the product of 1.25 multiplied by thirty thousand dollars ($30,000);
or
(B) the product of 1.4 multiplied by twenty-five percent (25%) of the
Participant's Compensation.
For purposes of determining the Defined Contribution Fraction of a Participant,
services performed for, Compensation paid by and Annual Additions made by
General Motors Corporation or any of its affiliates shall not be taken into
account.
(5) Defined Contribution Plan. A plan qualified under section 401(a)
of the Code that provides an individual account for each Participant and
benefits based solely on the amount contributed to the Participant's Account,
plus any income, expenses, gains and losses, and forfeitures of other
Participants which may be allocated to such Participant's account.
<PAGE>
36
(6) Limitation Year. The Plan Year, until the Employer adopts a
different Limitation Year.
(7) Projected Annual Benefit. The annual benefit to which a
Participant would be entitled, assuming:
(A) the Participant continues in employment until Normal Retirement Age
under the Plan;
(B) the Participant's Compensation for the Limitation Year remains the
same until such Normal Retirement Age; and
(C) all other relevant factors under the Plan for the Limitation Year
will remain constant.
(b) For purposes of this ARTICLE, the term "Compensation"
shall mean all amounts paid to an Employee for personal service actually
rendered to the Employer, including, but not limited to, wages, salary,
commissions, bonuses, overtime and other premium pay as specified in Reg. ss.
1.415-2(d)(2), but excluding deferred compensation, stock options, and other
distributions that receive special tax treatment as specified in Reg. ss.
1.415-2(d)(3). For Plan Years beginning after 1997, Compensation for this
purpose will include salary reduction amounts under section 125 cafeteria plans
and section 401(k), 403(b) and 457 plans. This definition shall be interpreted
in a manner consistent with the requirements of section 415 of the Code.
ARTICLE IX
Top-Heavy Rules
9.1 General. This ARTICLE shall only be applicable if the Plan becomes
a Top-Heavy Plan under section 416 of the Code. If the Plan does not become a
Top-Heavy Plan, then none of the provisions of this ARTICLE shall be operative.
The provisions of this ARTICLE shall be interpreted and applied in a manner
consistent with the requirements of section 416 of the Code and the regulations
thereunder.
9.2 Vesting.
(a) If the Plan becomes a Top-Heavy Plan, then amounts in a
Participant's Account attributable to Matching Contributions shall be vested in
accordance with this section, in lieu of ARTICLE V, to the extent this section
produces a greater degree of vesting. This section shall only apply to
Participants who have at least an Hour of Service after the Plan becomes a
Top-Heavy Plan.
(b) If applicable, amounts in a Participant's Account
attributable to Matching Contributions shall vest as follows:
Years of
Top Heavy Service Vested Percentage
Fewer than 3 0%
3 or more 100%
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37
(c) If the Plan ceases to be a Top-Heavy Plan then subsection
(b) shall no longer be applicable; provided, however, that in no event shall the
vested percentage of any Participant be reduced by reason of the Plan ceasing to
be a Top-Heavy Plan. Subsection (b) shall nevertheless continue to apply for any
Participant who was previously covered by it and who has at least three (3)
Years of Top-Heavy Service.
9.3 Minimum Contribution.
(a) For each Plan Year that the Plan is a Top-Heavy Plan, the
Adopting Employers shall make a contribution to be allocated directly to the
Account of each Non-Key Employee.
(b) The amount of the contribution (and forfeitures) required
to be contributed and allocated for a Plan Year by this section is three percent
(3%) of the Top-Heavy Compensation for that Plan Year of each Non-Key Employee
who is both a Participant and an Employee on the last day of the Plan Year for
which the contribution is made, with adjustments as provided herein. If the
contribution allocated to the Accounts of each Key Employee for a Plan Year is
less than three percent (3%) of his or her Top-Heavy Compensation, then the
contribution required by the preceding sentence shall be reduced for that Plan
Year to the same percentage of Top-Heavy Compensation that was allocated to the
Account of the Key Employee whose Account received the greatest allocation of
contributions for that Plan Year, when computed as a percentage of Top-Heavy
Compensation.
(c) The contribution required by this section shall be reduced
for a Plan Year to the extent of any Company Contributions made and allocated
under this Plan or any other contributions from the Adopting Employers made and
allocated under this or any other Aggregated Plans. Elective Deferrals shall be
treated as if they were Company Contributions for purposes of determining any
minimum contributions required under subsection (b).
9.4 Definitions.
(a) The following terms shall have the meanings specified herein:
(1) Aggregated Plans.
(A) The Plan, any plan that is part of a "required aggregation group" and any
plan that is part of a "permissive aggregation group" that the Adopting
Employers treat as an Aggregated Plan.
(B) The "required aggregation group" consists of each plan of the Adopting
Employers in which a Key Employee participates (in the Plan Year containing the
Determination Date or any of the four (4) preceding Plan Years) and each other
plan of the Adopting Employers which enables any plan of the Adopting Employers
in which a Key Employee participates to meet the requirements of section
401(a)(4) or section 410(b) of the Code. Also included in the required
aggregation group shall be any terminated plan that covered a Key Employee and
was maintained within the five (5) year period ending on the Determination Date.
<PAGE>
39
(C) The "permissive aggregation group" consists of any plan not included in the
"required aggregation group" if the Aggregated Plan described in subparagraph
(A) above would continue to meet the requirements of section 401(a)(4) and 410
of the Code with such additional plan being taken into account.
(2) Determination Date. The last day of the preceding Plan Year, or,
in the case of the first plan year of any plan, the last day of such plan year.
The computations made on the Determination Date shall utilize information from
the immediately preceding Valuation Date.
(3) Key Employee.
(A) An Employee (or former Employee) who, at any time during the Plan
Year containing the Determination Date or any of the four (4) preceding Plan
Years, is:
(i) An officer of one of the Adopting Employers with annual
Top-Heavy Compensation for the Plan Year greater than fifty percent (50%) of the
amount in effect under section 415(c)(1)(A) of the Code for the calendar year in
which that Plan Year ends;
(ii) one of the ten (10) Employees owning (or considered as
owning under section 318 of the Code) the largest interest in one of the
Adopting Employers, who has more than one-half of one percent (.5%) interest in
such Adopting Employer, and who has annual Top-Heavy Compensation for the Plan
Year at least equal to the maximum dollar limitation under section 415(c)(1)(A)
of the Code for the calendar year in which that Plan Year ends;
(iii) a five percent (5%) or greater shareholder in one of the
Adopting Employers; or
(iv) a one percent (1%) shareholder in one of the Adopting
Employers with annual Top-Heavy Compensation from the Adopting Employer of more
than one hundred fifty thousand dollars ($150,000).
(B) For purposes of paragraphs (3)(A)(iii)
and (3)(A)(iv), the rules of
section 414(b), (c) and (m) of the Code shall not apply. Beneficiaries of an
Employee shall acquire the character of such Employee and inherited benefits
will retain the character of the benefits of the Employee who performed
services.
(4) Non-Key Employee. Any Employee who is not a Key Employee.
(5) Super Top-Heavy Plan. A Top-Heavy Plan in which the sum of
the present value of the cumulative accrued benefits and accounts for Key
Employees exceeds ninety percent (90%) of the comparable sum determined for all
Employees. The foregoing determination shall be made in the same manner as the
determination of a Top-Heavy Plan under this section.
(6) Top-Heavy Compensation. The term Top-Heavy Compensation shal
have the same meaning as the term Compensation has under section 8.5(b).
(7) Top-Heavy Plan. The Plan is a Top-Heavy Plan for a Plan Year
if, as of the Determination Date for that Plan Year, the sum of (i) the present
value of the cumulative accrued benefits for Key Employees under all Defined
Benefit Plans that are Aggregated Plans and (ii) the aggregate of the accounts
of Key Employees under all Defined Contribution Plans that are Aggregated Plans
exceeds sixty percent (60%) of the comparable sum determined for all Employees.
<PAGE>
40
(8) Years of Top-Heavy Service. The number of Years of Service
with the Adopting Employers that might be counted under section 411(a) of the
Code, disregarding all service that may be disregarded under section 411(a)(4)
of the Code.
(b) The definitions in this section and the provisions of this
ARTICLE shall be interpreted in a manner consistent with section 416 of the
Code.
9.5 Special Rules.
(a) For purposes of determining the present value of the
cumulative accrued benefit for any Participant or the amount of the Account of
any Participant, such present value or amount shall be increased by the
aggregate distributions made with respect to such Participant under the Plan
during the Plan Year that includes the Determination Date and the four (4)
preceding Plan Years (if such amounts would otherwise have been omitted).
(b) (1) In the case of unrelated rollovers and transfers, (i)
the plan making the distribution or transfer is to count the distribution as a
distribution under section 416(g)(3) of the Code, and (ii) the plan accepting
the rollover or transfer is not to consider the rollover or transfer as part of
the accrued benefit if such rollover or transfer was accepted after December 31,
1983, but is to consider it as part of the accrued benefit if such rollover or
transfer was accepted before January 1, 1984. For this purpose, rollovers and
transfers are to be considered unrelated if they are both initiated by the
Employee and made from a plan maintained by one employer to a plan maintained by
another employer.
(2) In the case of related rollovers and transfers, the plan making the
distribution or transfer is not to count the distribution or transfer under
section 416(g)(3) of the Code, and the plan accepting the rollover or transfer
counts the rollover or transfer in the present value of the accrued benefits.
For this purpose, rollovers and transfers are to be considered related if they
are not unrelated under subsection (b)(1).
(c) If any individual is a Non-Key Employee with respect to
any plan for any Plan Year, but such individual was a Key Employee with respect
to such plan for any prior Plan Year, any accrued benefit for such Employee (and
the account of such Employee) shall not be taken into account.
(d) Beneficiaries of Key Employees and former Key Employees
are considered to be Key Employees and Beneficiaries of Non-Key Employees and
former Non-Key Employees are considered to be Non-Key Employees.
(e) The accrued benefit of an Employee who has not performed
any service for the Adopting Employer maintaining the Plan at any time during
the five (5) year period ending on the Determination Date is excluded from the
calculation to determine top-heaviness. However, if an Employee performs no
services, such Employee's total accrued benefit is included in the calculation
for top-heaviness.
<PAGE>
41
9.6 Adjustment of Limitations.
(a) If this section is applicable, then the contribution and
benefit limitations in section 8.5 shall be reduced. Such reduction shall be
made by modifying section 8.5(a)(2)(A) of the definition of Defined Benefit
Fraction to instead be "(i) the product of 1.0 multiplied by ninety thousand
dollars ($90,000), or" and by modifying section 8.5(a)(4)(A) of the definition
of Defined Contribution Fraction to instead be "(i) the product of 1.0
multiplied by thirty thousand dollars ($30,000), or".
(b) This section shall be applicable for any Plan Year in
which either:
(1) the Plan is a Super Top-Heavy Plan, or
(2) the Plan both is a Top-Heavy Plan (but not a
Super Top-Heavy Plan) and
provides contributions (and forfeitures) to the Account of any Non-Key Employee
in an amount less than four percent (4%) of such Participant's Top-Heavy
Compensation, as determined in accordance with section 9.3(b).
ARTICLE X
The Trust Fund
10.1 Trust. During the period in which this Plan remains in existence,
the Company or any successor thereto shall maintain in effect a Trust with a
corporation and/or individual(s) as Trustee, to hold, invest, and distribute the
Trust Fund in accordance with the terms of such Trust.
10.2 Investment of Accounts. The Trustee shall invest and reinvest the
Participant's accounts in investment options as defined in section 4.1 as
directed by the Administrator or its delegate. The Administrator shall issue
such directions in accordance with the investment options selected by the
Participants which shall remain in force until altered in accordance with
sections 4.2 and 4.3.
10.3 Expenses. Expenses of the Plan and Trust shall be paid from the
Trust.
ARTICLE XI
Administration of The Plan
11.1 General Administration. The general administration of the Plan
shall be the responsibility of the Company (or any successor thereto) which
shall be the Administrator and named Fiduciary for purposes of ERISA. The
Company shall have the authority, in its sole discretion, to construe the terms
of the Plan and to make determinations as to eligibility for benefits and as to
other issues within the "Responsibilities of the Administrator" described in
this ARTICLE. All such determinations of the Company shall be conclusive and
binding on all persons.
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42
11.2 Responsibilities of the Administrator. Except as otherwise
provided in ERISA, the Administrator (and any other named Fiduciaries) may
allocate any duties and responsibilities under the Plan and Trust among
themselves in any mutually agreed upon manner. Such allocation shall be in a
written document signed by the Administrator (and any other named Fiduciaries)
and shall specifically set forth this allocation of duties and responsibilities,
which may include the following:
(a) Determination of all questions which may arise under the
Plan with respect to questions of fact and law and eligibility for participation
and administration of Accounts, including without limitation questions with
respect to membership, vesting, loans, withdrawals, accounting, status of
Accounts, stock ownership and voting rights, and any other issue requiring
interpretation or application of the Plan.
(b) Reference of appropriate issues to the Offices of the
Executive Vice President - Chief Financial Officer, the Senior Vice President
Treasurer, the Director of Tax Affairs, the Vice President General Counsel, and
the Vice President - Human Resources, respectively, for advice and counsel.
(c) Establishment of procedures required by the Plan, such as
notification to Employees as to joining the Plan, selecting and changing
investment options, suspending deferrals, exercising voting rights in stock,
withdrawing and borrowing Account balances, designation of Beneficiaries,
election of method of distribution, and any other matters requiring a uniform
procedure.
(d) Submission of necessary amendments to supplement omissions
from the Plan or reconcile any inconsistency therein.
(e) Filing appropriate reports with the government as required
by law.
(f) Appointment of a Trustee or Trustees, Recordkeepers, and
investment managers.
(g) Review at appropriate intervals of the performance of the
Trustee and such investment managers as may have been designated.
(h) Appointment of such additional Fiduciaries as deemed
necessary for the effective administration of the Plan, such appointments to be
by written instrument.
11.3 Liability for Acts of Other Fiduciaries. Each Fiduciary shall be
responsible only for the duties allocated or delegated to said Fiduciary, and
other Fiduciaries shall not be liable for any breach of fiduciary responsibility
with respect to any act or omission of any other Fiduciary unless:
(a) The Fiduciary knowingly participates in or knowingly
attempts to conceal the act or omission of such other Fiduciary and knows that
such act or omission constitutes a breach of fiduciary responsibility by the
other Fiduciary;
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43
(b) The Fiduciary has knowledge of a breach of fiduciary
responsibility by the other Fiduciary and has not made reasonable efforts under
the circumstances to remedy the breach; or
(c) The Fiduciary's own breach of his or her specific
fiduciary responsibilities has enabled another Fiduciary to commit a breach. No
Fiduciary shall be liable for any acts or omissions which occur prior to his or
her assumption of Fiduciary status or after his or her termination from such
status.
11.4 Employment by Fiduciaries. Any Fiduciary hereunder may employ,
with the written approval of the Administrator, one or more persons to render
service with regard to any responsibility which has been assigned to such
Fiduciary under the terms of the Plan including legal, tax, or investment
counsel and may delegate to one or more persons any administrative duties
(clerical or otherwise) hereunder.
11.5 Recordkeeping. The Administrator shall keep or cause to be kept
any necessary data required for determining the Account status of each
Participant. In compiling such information, the Administrator may rely upon its
employment records, including representations made by the Participant in the
employment application and subsequent documents submitted by the Participant to
the Employer. The Trustee shall be entitled to rely upon such information when
furnished by the Administrator or its delegate. Each Employee shall be required
to furnish the Administrator upon request and in such form as prescribed by the
Administrator, such personal information, affidavits and authorizations to
obtain information as the Administrator may deem appropriate for the proper
administration of the Plan, including but not limited to proof of the Employee's
date of birth and the date of birth of any person designated by a Participant as
a Beneficiary.
11.6 Claims Review Procedure.
(a) The Administrator shall make all determinations as to the right of any
person to Accounts under the Plan. Any such determination by the Administrator
shall be made pursuant to the following procedure:
(1) Step 1. Claims with respect to an Account should be
filed by a claimant as soon as practicable after the claimant knows or should
know that a dispute has arisen with respect to an Account, but at least thirty
(30) days prior to the claimant's actual retirement date or, if applicable,
within sixty (60) days after the death, Disability or Severance from Service of
the Participant whose Account is at issue, by mailing a copy of the claim to the
Benefits and Services Department, Raytheon Company, 141 Spring Street,
Lexington, Massachusetts 02173.
(2) Step 2. In the event that a claim with respect to an
Account is wholly or partially denied by the Administrator, the Administrator
shall, within ninety (90) days following receipt of the claim, so advise the
claimant in writing setting forth: the specific reason or reasons for the
denial; specific reference to pertinent Plan provisions on which the denial is
based; a description of any additional material or information necessary for the
claimant to perfect the claim; an explanation as to why such material or
information is necessary; and an explanation of the Plan's claim review
procedure.
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44
(3) Step 3. Within sixty (60) days following receipt
of the denial of a claim with respect to an Account, a claimant desiring to have
the denial appealed shall file a request for review with the Administrator by
mailing a copy thereof to the address shown in subsection (a)(1).
(4) Step 4. Within thirty (30) days following receip
of a request for review, the Administrator shall provide the claimant a further
opportunity to present his or her position. At the Administrator's discretion,
such presentation may be through an oral or written presentation. Prior to such
presentation, the claimant shall be permitted the opportunity to review
pertinent documents and to submit issues and comments in writing. Within a
reasonable time following presentation of the claimant's position, which usually
should not exceed thirty (30) days, the Administrator shall inform the claimant
in writing of the decision on review setting forth the reasons for such decision
and citing pertinent provisions in the Plan.
(b) The Administrator is the Fiduciary to whom the Plan grants
full discretion, with the advice of counsel, to interpret the Plan; to determine
whether a claimant is eligible for benefits; to decide the amount, form and
timing of benefits; and to resolve any other matter under the Plan which is
raised by a claimant or identified by the Administrator. All questions arising
from or in connection with the provisions of the Plan and its administration,
not herein provided to be determined by the Board of Directors, shall be
determined by the Administrator, and any determination so made shall be
conclusive and binding upon all persons affected thereby.
11.7 Indemnification of Directors and Employees. The Adopting Employers
shall indemnify by insurance or otherwise any Fiduciary who is a director,
officer or Employee of the Employer, his or her heirs and legal representatives,
against all liability and reasonable expense, including counsel fees, amounts
paid in settlement and amounts of judgments, fines or penalties, incurred or
imposed upon him in connection with any claim, action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of acts or
omissions in his or her capacity as a Fiduciary hereunder, provided that such
act or omission is not the result of gross negligence or willful misconduct. The
Adopting Employers may indemnify other Fiduciaries, their heirs and legal
representatives, under the circumstances, and subject to the limitations set
forth in the preceding sentence, if such indemnification is determined by the
Board of Directors to be in the best interests of the Adopting Employers.
11.8 Immunity from Liability. Except to the extent that section 410(a)
of ERISA prohibits the granting of immunity to Fiduciaries from liability for
any responsibility, obligation, or duty imposed under Title I, Subtitle B, Part
4, of said Act, an officer, Employee, member of the Board of Directors of the
Employer or other person assigned responsibility under this Plan shall be immune
from any liability for any action or failure to act except such action or
failure to act which results from said officer's, Employee's, Participant's or
other person's own gross negligence or willful misconduct.
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45
ARTICLE XII
Amendment Or Termination Of Plan
12.1 Right to Amend or Terminate Plan. Each of the Adopting Employers
reserves the right at any time or times, by action of its board of directors, to
modify, amend or terminate the Plan in whole or in part as to its Employees, in
which event a certified copy of the resolution of the board of directors,
authorizing such modification, amendment or termination shall be delivered to
the Trustee and to the other Adopting Employers whose Employees are covered by
this Plan, provided, however, that no amendment to the Plan shall be made which
shall:
(a) reduce any vested right or interest to which any Participant or Beneficiary
is then entitled under this Plan or otherwise reduce the vested rights of a
Participant in violation of section 411(d)(6) of the Code;
(b) vest in the Adopting Employers any interest or control over any assets of
the Trust;
(c) cause any assets of the Trust to be used for, or diverted to, purposes other
than for the exclusive benefit of Participants and their Beneficiaries; or
(d) change any of the rights, duties or powers of the Trustee without its
written consent.
(e) Notwithstanding the foregoing provisions of this section or any other
provisions of this Plan, any modification or amendment of the Plan may be made
retroactively if necessary or appropriate to conform the Plan with, or to
satisfy the conditions of, ERISA, the Code, or any other law, governmental
regulation or ruling. Any termination, modification or amendment of the Plan
shall be subject to approval by the Board of Directors. In the alternative,
subject to the conditions prescribed in subsections 12.1(a) through (e), the
Plan may be amended by an officer of the Company authorized by the Board of
Directors to amend the Plan, provided, however, that any such amendment does
not, in the view of such officer, materially increase costs of the Plan to the
Company or any Adopting Employer.
12.2 Amendment to Vesting Schedule. Any amendment that modifies the
vesting provisions of ARTICLE IV shall either:
(a) provide for a rate of vesting that is at least as rapid for any Participant
as the vesting schedule previously in effect; or
(b) provide that any adversely affected Participant with a Period of Service of
at least three (3) years may elect, in writing, to remain under the vesting
schedule in effect prior to the amendment. Such election must be made within
sixty (60) days after the later of the:
(1) adoption of the amendment;
(2) effective date of the amendment; or
(3) issuance by the Company of written notice of the amendment.
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46
12.3 Maintenance of Plan. The Company has established the Plan with the
bona fide intention and expectation that it will be able to make its
contributions indefinitely, but the Company is not and shall not be under any
obligation or liability whatsoever to continue its contributions or to maintain
the Plan for any given length of time.
12.4 Termination of Plan and Trust. The Plan and Trust hereby created
shall terminate upon the occurrence of any of the following events:
(a) Delivery to the Trustee of a notice of termination
executed by the Company specifying the date as of which the Plan and Trust shall
terminate; or
(b) Adjudication of the Company as bankrupt or general
assignment by the Company to or for the benefit of creditors or dissolution of
the Company.
12.5 Distribution on Termination.
(a) (1) If the Plan is terminated, or contributions permanently discontinued, an
Adopting Employer, at its discretion, may (at that time or at any later time)
direct the Trustee to distribute the amounts in a Participant's Account in
accordance with the distribution provisions of the Plan. Such distribution
shall, notwithstanding any prior provisions of the Plan, be made in a single
lump-sum without the Participant's consent as to the timing of such
distribution. If, however, an Adopting Employer (or an Affiliate) maintains
another defined contribution plan (other than an employee stock ownership plan),
then the preceding sentence shall not apply and the Adopting Employer, at its
discretion, may direct such distributions to be made as a direct transfer to
such other plan without the Participant's consent, if the Participant does not
consent to an immediate distribution.
(2) If an Adopting Employer does not direct distribution under paragraph (1),
each Participant's Account shall be maintained until distributed in accordance
with the provisions of the Plan (determined without regard to this section) as
though the Plan had not been terminated or contributions discontinued.
(b) If the Administrator determines that it is administratively impracticable to
make distributions under this section in cash or that it would be in the
Participant's best interest to make some or all of the distributions with
in-kind property, it shall offer all Participants and Beneficiaries entitled to
a distribution under this section a reasonable opportunity to elect to receive a
distribution of the in-kind property being distributed by the Trust. Those
Participants and Beneficiaries so electing shall receive a proportionate share
of such in-kind property in the form (outright, in trust or in partnership) that
the Administrator determines will provide the most feasible method of
distribution.
(c) (1) Amounts attributable to elective contributions shall only be
distributable by reason of this section if one of the following is applicable:
(A) the Plan is terminated without the establishment of a successor plan;
(B) an Adopting Employer has a sale or other disposition to an unrelated
corporation of substantially all of the assets used by the Adopting Employer in
a trade or business of the Adopting Employer with respect to an Employee who
continues employment with the corporation acquiring such assets; or
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47
(C) an Adopting Employer has a sale or other disposition to an unrelated entity
of the Adopting Employer's interest in a subsidiary with respect to an Employee
who continues employment with such subsidiary.
(2) For purposes of this section, the term "elective contributions" means
employer contributions made to the Plan that were subject to a cash or deferred
election under a cash or deferred arrangement.
(3) Elective contributions are distributable under subsections (c)(1)(B) and
(C) above only if the Adopting Employers continue to maintain the Plan after the
disposition.
ARTICLE XIII
Additional Provisions
13.1 Effect of Merger, Consolidation or Transfer. In the event of any
merger or consolidation with or transfer of assets or liabilities to any other
plan or to this Plan, each Participant of the Plan shall be entitled to a
benefit immediately after the merger, consolidation or transfer, which is equal
to or greater than the benefit he or she would have been entitled to receive
immediately before the merger, consolidation or transfer (if the Plan had been
terminated).
13.2 Necessity of Initial Qualification. This Plan is established with
the intent that it shall qualify under sections 401(a) and 401(k) of the Code as
those sections exist at the time the Plan is established. If the Internal
Revenue Service determines that the Plan initially fails to meet those
requirements, then within thirty (30) days after the date of such determination,
all of the assets of the Trust Fund held for the benefit of Participants and
their Beneficiaries shall be distributed equitably among the contributors to the
Plan in proportion to their contributions, and the Plan shall be considered to
be rescinded and of no force or effect, unless such inadequacy is removed by a
retroactive amendment pursuant to the Code. Any nonvested Matching Contributions
and earnings attributable thereto shall be returned to the Adopting Employers.
13.3 No Assignment.
(a) Except as provided herein, the right of any Participant or Beneficiary to
any benefit or to any payment hereunder shall not be subject to alienation,
assignment, garnishment, attachment, execution or levy of any kind.
(b) Subsection (a) shall not apply to any payment or transfer permitted by the
Internal Revenue Service pursuant to regulations issued under section 401(a)(13)
of the Code.
(c) Subsection (a) shall not apply to any payment or transfer pursuant to a
Qualified Domestic Relations Order.
(d) Subsection (a) shall not apply to any payment or transfer to the Trust in
accordance with section 401(a)(13)(C) of the Code to satisfy the Participant's
liabilities to the Plan or Trust in any one or more of the following
circumstances:
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(1) the Participant is convicted of a crime involving the Plan;
(2) a civil judgment (or consent order or decree) in an action is brought
against the Participant in connection with an ERISA fiduciary violation; or
(3) the Participant enters into a settlement agreement with the Department of
Labor or the Pension Benefit Guaranty Corporation over an ERISA fiduciary
violation.
13.4 Limitation of Rights of Employees. This Plan is strictly a
voluntary undertaking on the part of the Adopting Employers and shall not be
deemed to constitute a contract between any of the Adopting Employers and any
Employee, or to be a consideration for, or an inducement to, or a condition of
the employment of any Employee. Nothing contained in the Plan shall be deemed to
give any Employee the right to be retained in the service of any of the Adopting
Employers or shall interfere with the right of any of the Adopting Employers to
discharge or otherwise terminate the employment of any Employee of an Adopting
Employer at any time. No Employee shall be entitled to any right or claim
hereunder except to the extent such right is specifically fixed under the terms
of the Plan.
13.5 Construction. The provisions of this Plan shall be interpreted and
construed in accordance with the requirements of the Code and ERISA. Any
amendment or restatement of the Plan or Trust that would otherwise violate the
requirements of section 411(d)(6) of the Code or otherwise cause the Plan or
Trust to cease to be qualified under section 401(a) of the Code shall be deemed
to be invalid. Capitalized terms shall have meanings as defined herein. Singular
nouns shall be read as plural, masculine pronouns shall be read as feminine and
vice versa, as appropriate. References to "section" or "ARTICLE" shall be read
as references to appropriate provisions of this Plan, unless otherwise
indicated.
13.6 Company Determinations. Any determinations, actions or decisions
of the Company (including but not limited to, Plan amendments and Plan
termination) shall be made by its Board of Directors in accordance with its
established procedures or by such other individuals, groups or organizations
that have been properly delegated by the Board of Directors to make such
determination or decision.
13.7 Governing Law. This Plan shall be governed by, construed and
administered in accordance with ERISA and any other applicable federal law;
provided, however, that to the extent not preempted by federal law, this Plan
shall be governed by, construed and administered under the laws of the
Commonwealth of Massachusetts, other than its laws respecting choice of law.
ARTICLE XIV
Definitions
The following terms have the meaning specified below unless the context
indicates otherwise:
14.1 Account. The entire interest of a Participant in the Trust Fund. A
Participant's Account shall consist of an Elective Deferral Account, a Matching
Contribution Account and, where applicable, a Rollover Contribution Account and
a Qualified Nonelective Contribution Account.
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49
14.2 Administrator. The person, persons, corporation, committee, group
or organization designated to be the Administrator of the Plan and to perform
the duties of the Administrator. Until and unless otherwise designated, the
Administrator shall be the Company.
14.3 Adopting Employers. Any corporation that elects through an
authorized officer to participate in the Plan on account of its Employees,
provided that participation in the Plan by such corporation is approved by the
Board of Directors, or an officer to whom authority to approve participation by
a corporation is delegated by the Board of Directors, but shall not include any
division, operation or similar cohesive group of the adopting corporation
excluded by the Board of Directors. The Adopting Employers shall be listed in
Exhibit A attached to this Plan.
14.4 Affiliate. A trade or business that, together with an Adopting
Employer, is a member of (i) a controlled group of corporations within the
meaning of section 414(b) of the Code; (ii) a group of trades or businesses
(whether or not incorporated) under common control as defined in section 414(c)
of the Code, or (iii) an affiliated service group as defined in section 414(m)
of the Code, or which is an entity otherwise required to be aggregated with the
Adopting Employer pursuant to section 414(o) of the Code. For purposes of
ARTICLE VIII, the determination of controlled groups of corporations and trades
or businesses under common control shall be made after taking into account the
modification required under section 415(h) of the Code. All such entities,
whether or not incorporated, shall be treated as a single employer to the extent
required by the Code.
14.5 Authorized Leave of Absence. An absence approved by the Adopting
Employers on a uniform and nondiscriminatory basis not exceeding one (1) year
for any of the following reasons: illness of an Employee or a relative, the
death of a relative, education of the Employee, or personal or family business
of an extraordinary nature, provided in each case that the Employee returns to
the service of the Adopting Employers within the time period specified by the
Adopting Employers.
14.6 Beneficiary. The person or persons (including a trust or trusts)
who are entitled to receive benefits from a deceased Participant's Account after
such Participant's death (whether or not such person or persons are expressly so
designated by the Participant). If a married Participant designates a
Beneficiary other than his or her spouse, said designation shall not take effect
unless the spouse consents in writing to such designation and said spousal
consent acknowledges the effect of said designation and is witnessed by a
representative of the Plan or a notary public. Said spousal consent shall be
effective only with respect to the spouse granting such consent, and shall not
be required if the Participant can establish that there is no spouse, that the
spouse cannot be located, or that other conditions exist as may be prescribed by
regulations issued by the Secretary of the Treasury. If there is no Beneficiary
designated by the Participant or surviving at the death of the Participant,
payment of his or her Account shall be made in accordance with section 6.6.
Subject to the foregoing, a Participant may designate a new Beneficiary at any
time by filing with the Administrator a written request for such change on a
form prescribed by the Administrator. Such change shall become effective only
upon receipt of the form by the Administrator, but upon such receipt of the
change shall relate back to and take effect as of the date the Participant
signed such request, whether or not the Participant is living at the time of
such receipt, provided, however, that neither the Trustee nor the Administrator
shall be liable by reason of any payment of the Participant's Account made
before receipt of such form. If a Beneficiary entitled to payment was the spouse
or former spouse of the deceased Participant and payment will otherwise be made
in an Eligible Rollover Distribution, then such spouse or former spouse may
elect that all, or any portion of, such payment shall instead be transferred as
a Direct Rollover. Such Direct Rollover shall be governed by the requirements of
section 6.11.
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14.7 Board of Directors. The Board of Directors of Raytheon Company.
14.8 Business Day. Days on which the Recordkeeper is able to make transfers.
14.9 Code. The Internal Revenue Code of 1986, as amended.
14.10 Common Stock. Raytheon Company Class B common stock.
14.11 Company. Raytheon Company.
14.12 Compensation.
(a) The aggregate amount paid by the Employer to a Participant as regular base
salary, including amounts authorized by the Participant to be deferred from his
Compensation and contributed by the Employer under section 3.3, as well as
amounts paid as commissions, military pay differential, and under the Hughes
Annual Incentive Plan, the Hughes Salary Adjustment Plan, the Hughes
Supplemental Compensation Plan, awards under the Hughes Subsidiary Incentive
Plan not in excess of the target award (or any successor plans of the
foregoing), but without inclusion of any overtime compensation, shift
differentials, foreign service premiums (including mobility allowances), per
diem, royalties, payments in lieu of vacation, benefits from the Hughes
Transition Pay Plan, the Hughes Supplemental Employee Retirement Plan, the
Hughes Long-Term Performance Plan, and amounts deferred by a Participant to the
flexible spending account in an Employer cafeteria plan under section 125 of the
Code, or other payments of like nature, subject to the following:
(b) The Compensation of each Employee for any year shall be deemed to not exceed
one hundred fifty thousand dollars ($150,000); provided, however, that this
limit shall be adjusted in the same manner and at the same time as under section
415(d) of the Code, in accordance with regulations under section 401(a)(17) of
the Code. Compensation for Highly-Compensated Employees shall be determined in
accordance with the provisions of section 14.25.
(c) Unless otherwise indicated herein, Compensation shall be determined only on
the basis of amounts paid during the Plan Year, including any Plan Year with a
duration of fewer than twelve (12) months.
(d) The Compensation of a person who becomes a Participant
during the Plan Year shall only include amounts paid after the date on which
such person was admitted as a Participant.
14.13 Current Market Value. The closing price of the Common Stock on
the New York Stock Exchange on the Business Day immediately preceding the
Business Day on which the Common Stock is allocated to the Participants'
Accounts in accordance with the terms of the Plan.
14.14 Disability. Any medically determinable physical disorder that
renders a Participant incapable of engaging in any occupation for compensation
or profit. The determination of Disability shall be made by the Administrator
with the aid of competent medical advice. It shall be based on such evidence as
the Administrator deems necessary to establish Disability or the continuation
thereof.
14.15 Effective Date. December 18, 1997.
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14.16 Elective Deferral. A voluntary reduction of a Participant's
Compensation in accordance with section 3.3 hereof that qualifies for treatment
under section 402(e)(3) of the Code. A Participant's election to make Elective
Deferrals may be made only with respect to an amount that the Participant could
otherwise elect to receive in cash and that is not currently available to the
Participant.
14.17 Elective Deferral Account. That portion of a Participant's
Account which is attributable to Elective Deferrals, adjustments for withdrawals
and distributions, and the earnings and losses attributable thereto.
14.18 Eligible Employee. A person who is a Salaried Employee of an
Adopting Employer who:
(a) is a United States Citizen or resident;
(b) is not employed in a position or classification within a bargaining unit
which is covered by a collective bargaining agreement with respect to which
retirement benefits were the subject of good faith bargaining (unless such
agreement provides for coverage hereunder of employees of such unit);
(c) is not assigned on the books and records of the Employer to any division,
operation or similar cohesive group of an Adopting Employer that is excluded
from participation in the Plan by the Board of Directors; and
(d) is not a Leased Employee or any other person who performs
services for an Adopting Employer other than as an Employee.
14.19 Employee. Except to the extent otherwise provided herein, any
person employed by the Employer who is expressly so designated as an Employee on
the books and records of the Employer and who is treated as such by the Employer
for federal employment tax purposes. Any person who, after the close of a Plan
Year, is retroactively treated by the Employer or any other party as an Employee
for such prior Plan Year shall not, for purposes of the Plan, be considered an
Employee for such prior Plan Year unless expressly so treated as such by the
Employer.
14.20 Employee After-Tax Contributions. Voluntary contributions made by
Participants on an after-tax basis. Employee After-Tax Contributions are not
permitted under the Plan.
14.21 Employer. An Adopting Employer and any Affiliate thereof (whether
or not such Affiliate has elected to participate in the Plan).
14.22 Employment Commencement Date. The date on which an individual
first performs an Hour of Service with the Employer.
14.23 ERISA. The Employee Retirement Income Security Act of 1974,
a
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14.24 Fiduciary. Any person who exercises any discretionary authority
or discretionary control over the management of the Plan, or exercises any
authority or control respecting management or disposition of Plan assets; who
renders investment advice for a fee or other compensation, direct or indirect,
as to assets held under the Plan, or has any authority or discretionary
responsibility in the administration of the Plan. This definition shall be
interpreted in accordance with section 3(21) of ERISA.
14.25 Highly Compensated Employee
(a) Any Employee who:
(1) is a five percent (5%) owner at any time during the Plan Year or the
preceding Plan Year; or
(2) for the preceding Plan Year:
(A) received Compensation in excess of the amount specified in section
414(q)(1)(B)(i) of the Code; and
(B) if the Adopting Employers so elect, in accordance with section
414(q)(1)(B)(ii) of the Code, was a member of the Top-Paid Group for such
preceding Plan Year.
(b) A former Employee will be treated as a Highly Compensated Employee if the
former Employee was a Highly Compensated Employee at the time of his or her
separation from service or the former Employee was a Highly Compensated Employee
at any time after attaining age fifty-five (55).
(c) The term "Top-Paid Group" for any year includes Employees in the group of
Employees specified in section 414(q)(5) of the Code, which consists of the top
twenty percent (20%) of Employees when ranked on the basis of Compensation paid
during such year.
(d) In determining the number of Employees in the Top-Paid Group taken into
account under subsection (c) of this section, nonresident aliens with no earned
income from the Adopting Employers that constitutes income from sources within
the United States shall not be treated as Employees and (unless the Adopting
Employers elect otherwise) the following Employees shall be excluded:
(1) Employees with fewer than six (6) months of service;
(2) Employees who normally work fewer than seventeen and one-half (17 1/2) hours
per week;
(3) Employees who normally work during not more than six (6) months during the
year;
(4) Employees who have not attained age twenty-one (21); and
(5) (except to the extent permitted by regulation) Employees who are included in
a unit of Employees covered by a collective bargaining agreement with one of the
Adopting Employers.
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(e) The dollar amounts incorporated under subsection (a)(2)(A) shall be adjusted
as provided in section 414(q)(1) of the Code.
(f) For purposes of this section, the term "Compensation"
means compensation as defined under section 414(q)(4) of the Code.
(g) This section shall be interpreted in a manner consistent
with section 414(q) of the Code and the regulations thereunder and shall be
interpreted to permit any elections permitted by such regulations to be made.
14.26 Hour of Service.
(a) Any hour for which any person is directly or indirectly
paid (or entitled to payment) by the Employer for the performance of duties as
an Employee, as determined from the appropriate records of the Employer.
(b) In computing Hours of Service, a person shall also be
credited with Hours of Service based on the person's previous customary service
with the Employer (not exceeding either eight (8) hours per day or forty (40)
hours per week), for the following periods:
(1) eriods (limited to a maximum of five hundred one (501) hours for any single,
continuous period) for which the person is directly or indirectly paid for
reasons other than the performance of duties, such as vacation, holiday,
sickness, disability, layoff, jury duty or military duty;
(2) periods for which any federal law requires that credit for service be
given; and
(3) periods for which back pay (irrespective of mitigation of damages) is either
awarded or agreed to by the Employer.
(c) Hours of Service shall also include each hour for which an
Employee is entitled to credit under subsection (a) as a result of employment
with:
(1) a predecessor company substantially all the assets of which have been
acquired by the Company, provided that where only a portion of the operations of
a company has been acquired, only service with said acquired portion prior to
the acquisition will be included and that the Employee was employed by said
predecessor company at the time of acquisition; or
(2) a division, operation or similar cohesive group of the Employer excluded
from participation in the Plan.
(d) The provisions of subsection (b) shall be further limited
to prevent duplication by only permitting a person to receive credit for one (1)
Hour of Service for any given hour.
(e) Hours of Service shall be computed and credited in
accordance with the Department of Labor regulations under section 2530.200b.
<PAGE>
54
14.27 Layoff. An involuntary interruption of service due to reduction
of work force with or without the possibility of recall to employment when
conditions warrant.
14.28 Leased Employee. Any person (other than an Employee) who,
pursuant to an agreement between the Employer and any other person, has
performed services for the Employer (or any related person as provided in
section 414(n)(6) of the Code) on a substantially full-time basis for a period
of at least one (1) year and such services are performed under primary direction
or control of the Employer. Leased Employees are not eligible to participate in
the Plan.
14.29 Matching Contribution. Contribution made to the Trust in
accordance with section 3.1 hereof.
14.30 Matching Contribution Account. That portion of Participant's
Account which is attributable to Matching Contributions by the Adopting
Employers, adjustments for withdrawals and distributions, and the earnings and
losses attributable thereto.
14.31 Net Annual Profits. The current earnings of the Adopting
Employers for the Plan Year determined in accordance with generally accepted
accounting principles before federal and local income taxes and before
contributions to this Plan or any other qualified plan.
14.32 Net Profits. The accumulated earnings of the Adopting Employers
at the end of the Plan Year determined in accordance with generally accepted
accounting principles. For the purposes hereof "accumulated earnings at the end
of the Plan Year" shall include Net Annual Profits for such Plan Year calculated
before any deduction is taken for depreciation, if any.
14.33 Nonforfeitable. An unconditional right to an Account balance or
portion thereof determined as of the applicable date of determination under this
Plan.
14.34 Non-Highly Compensated Work Force. The aggregate number of
individuals (other than Highly Compensated Employees) who are:
(a) Employees of the Employer (other than Leased Employees)
who have performed services for the Employer on a substantially full-time basis
for a period of at least one (1) year; and
(b) Leased Employees.
14.35 Normal Retirement Age. The Participant's sixty-fifth (65th)
birthday.
14.36 Participant. An individual who is enrolled in the Plan pursuant
to ARTICLE II and has not received a distribution of all of the funds credited
to his or her Account (or had such funds fully forfeited). In the case of an
Eligible Employee who makes a Rollover Contribution to the Plan under section
3.7(a)(6) prior to enrollment under ARTICLE II, such Eligible Employee shall,
until he or she enrolls under ARTICLE II, be considered a Participant for the
limited purposes of maintaining and receiving his or her Rollover Contribution
Account under the terms of the Plan.
<PAGE>
55
14.37 Pay Period. A scheduled period for payment of wages or salaries.
14.38 Period of Participation. That portion of a Period of Service
during which the Eligible Employee was a Participant, and had an Elective
Deferral Account in the Plan. For the purpose of determining a Period of
Participation, former employees of Hughes Electronics Corporation and its
subsidiaries who were participants in the Hughes Thrift and Savings Plan
immediately before the Effective Date or the date transferred to an Adopting
Employer from General Motors Corporation or one of its affiliates (other than a
joint venture that has adopted this Plan) after the Effective Date and before
December 1, 1998, and who become Participants as of the Effective Date or the
date of transfer, as applicable, shall be credited with their participation in
such plan.
14.39 Period of Service. The period of time beginning on the Employee's
Employment Commencement Date or Reemployment Commencement Date, whichever is
applicable, and ending on the Employee's Severance from Service Date. For the
purpose of determining a Period of Service, former employees of Hughes
Electronics Corporation and its subsidiaries who were participants in the Hughes
Thrift and Savings Plan immediately before the Effective Date or the date
transferred to an Adopting Employer from General Motors Corporation or one of
its affiliates (other than a joint venture that has adopted this Plan) after the
Effective Date and before December 1, 1998, and who become Participants as of
the Effective Date or the date of transfer, as applicable, shall be credited
with their years of service credited under such plan.
14.40 Period of Severance. The period of time beginning on the
Employee's Severance from Service Date and ending on the Employee's Reemployment
Commencement Date.
14.41 Plan. The Raytheon Savings and Investment Plan (10014) as
amended from time to time.
14.42 Plan Year. The first Plan Year shall begin on the Effective Date
and end December 31, 1997. Thereafter, the Plan Year shall be the annual twelve-
(12) month period beginning on January 1 of each year and ending on December 31
of each year.
14.43 Qualified Military Service. Any period of duty on a voluntary or
involuntary basis in the United States Armed Forces, the Army National Guard and
the Air National Guard when engaged in active duty for training, inactive duty
for training or full-time National Guard duty, the commissioned corps of the
Public Health Service and any other category of persons designated by the
President of the United States in time of war or emergency. Such periods of duty
shall include active duty, active duty for training, initial active duty for
training, inactive duty training, full-time National Guard duty and absence from
employment for an examination to determine fitness for such duty.
14.44 Qualified Nonelective Contributions. Any contribution by the Adopting
Employers to the Trust pursuant to section 3.2. Qualified Nonelective
Contributions are one hundred percent (100%) vested when made and are
distributable as provided herein, but in no event before the earlier of:
<PAGE>
56
(a) the Participant's Severance from Service, death or Disability;
(b) the Participant's attainment of age fifty-nine and one-half (59 1/2);
<PAGE>
57
(c) the termination of the Plan without establishment or
maintenance of another defined contribution plan (other than an employee stock
ownership plan);
(d) the disposition of substantially all of the assets used by
the Adopting Employers in a trade or business of the Adopting Employers but only
with respect to an Employee who continues employment with the entity acquiring
such assets; or
(e) the disposition of the Adopting Employers' interest in a
subsidiary, but only with respect to an Employee who continues employment with
such subsidiary.
14.45 Qualified Nonelective Contribution Account. That portion of a
Participant's Account which is attributable to Qualified Nonelective
Contributions received pursuant to section 3.2, adjusted for withdrawals and
distributions, and the earnings and losses attributable thereto.
14.46 Recordkeeper. The organization designated by the Administrator to
be the recordkeeper for the Plan. Until and unless otherwise designated, the
Recordkeeper shall be Fidelity Investments.
14.47 Reemployment Commencement Date. The first date on which the
Employee performs an Hour of Service following a Period of Severance which is
excluded under section 5.3 in determining whether a Participant has a
Nonforfeitable right to his or her Matching Contribution Account.
14.48 Retirement. A Severance from Service when the Participant has
either attained age 55 and completed a Period of Service of at least ten (10)
years or has attained Normal Retirement Age.
14.49 Rollover Contributions. A transfer that qualifies under either
section 402(c) or 403(a)(4) of the Code.
14.50 Rollover Contribution Account. That portion of a Participant's
Account which is attributable to Rollover Contributions received pursuant to
section 3.7, adjustments for withdrawals and distributions, and the earnings and
losses attributable thereto.
14.51 Severance from Service. The termination of employment by reason
of quit, Retirement, discharge, death or failure to return from Layoff,
Authorized Leave of Absence, Qualified Military Service or Disability.
14.52 Severance from Service Date. The earliest of:
(a) the date on which an Employee resigns, retires, is discharged, or dies; or
(b) except as provided in paragraphs (c), (d), (e) and (f) hereof,
the first anniversary of the first date of a period during which an
Employee is absent for any reason other than resignation, retirement, discharge
or death, provided that, on an equitable and uniform basis, the Administrator
may determine that, in the case of a Layoff as the result of a permanent plant
closing, the Administrator may designate the date of Layoff or other appropriate
date prior to the first anniversary of the first date of absence as the
Severance from Service Date; or
<PAGE>
58
(c) in the case of a Qualified Military Service leave of
absence from which the Employee does not return prior to expiration of recall
rights, Severance from Service Date means the first day of absence because of
the leave; or
(d) in the case of an absence due to Disability, Severance
from Service Date means the earlier of the first anniversary of the first day of
absence because of the Disability or the date of termination of the Disability;
or
(e) in the case of an Employee who is discharged or resigns
(i) by reason of the pregnancy of the Employee, (ii) by reason of the birth of a
child to the Employee, (iii) by reason of the placement of a child with the
Employee in connection with the adoption of such child by the Employee or (iv)
for purposes of caring for such child for a period beginning immediately
following such birth or placement, "Severance from Service Date, for the sole
purpose of determining the length of a Period of Service, shall mean the first
anniversary of the resignation or discharge; or
(f) in the case of an Employee who is absent from service
beyond the first anniversary of the first day of absence (i) by reason of the
pregnancy of the Employee, (ii) by reason of the birth of a child to the
Employee, (iii) by reason of the placement of a child with the Employee in
connection with the adoption of such child by the Employee or (iv) for purposes
of caring for such child for a period beginning immediately following such birth
or placement, the Severance from Service Date shall be the second anniversary of
the first day of such absence. The period between the first and second
anniversaries of the first day of absence is neither a Period of Service nor a
Period of Severance.
14.53 Surviving Spouse. A lawful spouse surviving the Participant
as of the date of the Participant's death.
14.54 Trust. The Raytheon Company Master Trust for Defined Contribution
Plans and any successor agreement made and entered into for the establishment of
a trust fund of all contributions which may be made to the Trustee under the
Plan.
14.55 Trustee. The Trustee and any successor trustees under the Trust.
14.56 Trust Fund. The cash, securities, and other property held by
the Trustee for the purposes of the Plan.
14.57 Valuation Date. The last day of each Plan Year. The Administrator
may, in is sole discretion, establish additional Valuation Dates, up to and
including daily valuations.
<PAGE>
59
EXHIBIT A
ADOPTING EMPLOYERS PARTICIPATING IN
RAYTHEON SAVINGS AND INVESTMENT PLAN (10014)
As of December 18, 1997
(Unless Indicated Otherwise)
Raytheon Systems Georgia, Inc.
Raytheon Systems Mississippi, Inc.
Raytheon Systems South Carolina, Inc.
Raytheon Technical Services Company (limited to selected groups
of employees)
<PAGE>
1
EXHIBIT 5.1
Raytheon Company
Executive Offices
141 Spring Street
Lexington, MA 02173
Tel 781.860.2103 RAYTHEON
Fax 781.860.3899
John W. Kapples
Assistant General Counsel
June 5, 1998
Raytheon Company
141 Spring Street
Lexington, MA 02173
Re: Registration Statement on Form S-8 under
the Securities Act of 1933, as amended
Ladies and Gentlemen:
I am Assistant General Counsel to Raytheon Company, a Delaware
corporation (the "Company"), and as such, I, and other attorneys in this office,
have participated with the Company in the preparation for filing with the
Securities and Exchange Commission (the "Commission") of a Registration
Statement on Form S-8 (the "Registration Statement") covering [1,000,000] shares
(the "Shares") of the Company's Class B Common Stock, par value $.01 per share,
as well as an indeterminate amount of related interests (the "Interests") in the
Raytheon Savings and Investment Plan, Raytheon Savings and Investment Plan for
Specified Hourly Payroll Employees, Raytheon Employee Savings and Investment
Plan, Raytheon Savings and Investment Plan for Specified Puerto Rico Employees,
E-Systems Employee Savings Plan, Raytheon TI Systems Savings Plan, Raytheon
Salaried Savings and Investment Plan, Raytheon California Hourly Savings and
Investment Plan, Raytheon Tucson Bargaining Savings and Investment Plan,
Raytheon Savings and Investment Plan (10014) (collectively, the "Plans"), which
Shares and Interests may hereafter be acquired by participants ("Participants")
in the Plans. In connection with filing the Registration Statement, the rules
and regulations of the Commission require my opinion, in my capacity as
Assistant General Counsel of the Company, on the matters set forth below.
In rendering this opinion, I, and other attorneys in this office, have
examined and relied upon originals or copies, certified or otherwise, of all
such corporate records, documents, agreements or other instruments of the
Company, and have made such investigation of law and have discussed with the
officers of the Company such questions of fact as we have deemed necessary or
appropriate. In rendering this opinion, I have relied upon certificates and
statements of officers and directors of the Company as to factual matters, and
have assumed the genuiness of all documents submitted as copies.
Based upon and subject to the foregoing, I am of the opinion that the
Shares will be, upon the issuance thereof pursuant to the terms of the
respective Plans, legally issued, fully paid and non-assessable.
I am also of the opinion that the respective Plans confer valid
Interests upon Participants, to the extent and upon the terms and conditions
described in such Plans.
I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ John W. Kapples
John W. Kapples
JWK/jmh
<PAGE>
1
EXHIBIT 5.2
RAYTHEON COMPANY
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
G.P.O. BOX 1680
BROOKLYN, NY 11202
Employer Identification Number:
Date: July 18, 1995 04-1760395
File Folder Number:
RAYTHEON COMPANY 043001891
C/O STEPHEN PAVLICK, ESQ. Person to Contact:
MCDERMOTT, WILL & EMERY ROSE DESROCHER
1850 K STREET, NW Contact Telephone Number:
WASHINGTON, DC 20006 (203) 258-2024
Plan Name:
RAYTHEON SAVINGS AND INVESTMENT PLAN
Plan Number: 010
Dear Applicant:
We have made a favorable determination on your plan, identified above,
based on the information supplied. Please keep this letter in your permanent
records.
Continued qualification of the plan under its present form will depend
on its effect in operation. (See section 1.401-1(b)(3) of the Income Tax
Regulations.) We will review the status of the plan in operation periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some features that may affect the qualified
status of your employee retirement plan, and provides information on the
reporting requirements for your plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the Internal
Revenue Code. It is not a determination regarding the effect of other federal or
local statutes.
This determination is subject to your adoption of the proposed
amendments submitted in your letter dated December 30, 1994. The proposed
amendments should be adopted on or before the date prescribed by the regulations
under Code Section 401(b).
This determination is also subject to your adoption of the proposed
amendments submitted in your letter(s) dated June 1, 1995. These proposed
amendments should also be adopted on or before the date prescribed by the
regulations under Code Section 401(b).
This plan has been mandatorily disaggregated, permissively aggregated,
or restructured to satisfy the nondiscrimination requirements.
<PAGE>
2
This plan satisfies the nondiscrimination in amount requirement of
section 1.401(a)(4)-1(b)(2) of the regulations on the basis of a design-based
safe harbor described in the regulations.
This letter is issued under Rev. Proc. 93-39 and considers the
amendments required by the Tax Reform Act of 1986 except as otherwise specified
in this letter.
This plan satisfies the nondiscriminatory current availability
requirements of section 1.401(a)(4)-4(b) of the regulations with respect to
those benefits, rights, and features that are currently available to all
employees in the plan's coverage group. For this purpose, the plan's coverage
group consists of those employees treated as currently benefiting for purposes
of demonstrating that the plan satisfies the minimum coverage requirements of
section 410(b) of the Code.
This letter may not be relied upon with respect to whether the plan
satisfies the qualification requirements as amended by the Uruguay Round
Agreements Act: Pub.L. 103-465.
We have sent a copy of this letter to your representative as indicated
in the power of attorney.
If you have questions concerning this matter, please contact the
person whose name and telephone number are shown above.
Sincerely yours,
Herbert J. Huff
District Director
Enclosures:
Publication 794
Reporting & Disclosure Guide
For Employee Benefit Plans
<PAGE>
1
EXHIBIT 5.3
RAYTHEON COMPANY
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
G.P.O. BOX 1680
BROOKLYN, NY 11202
Employer Identification Number:
Date: June 21, 1995 04-1760395
File Folder Number:
RAYTHEON COMPANY 043001891
C/O STEPHEN PAVLICK, ESQ. Person to Contact:
MCDERMOTT, WILL & EMERY ROSE DESROCHER
1850 K STREET, NW Contact Telephone Number:
WASHINGTON, DC 20006 (203) 258-2024
Plan Name:
RAYTHEON SAVINGS AND INVESTMENT
PLAN FOR SPECIFIED HOURLY
PAYROLL EMPLOYEES
Plan Number: 009
Dear Applicant:
We have made a favorable determination on your plan, identified above,
based on the information supplied. Please keep this letter in your permanent
records.
Continued qualification of the plan under its present form will depend
on its effect in operation. (See section 1.401-1(b)(3) of the Income Tax
Regulations.) We will review the status of the plan in operation periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some features that may affect the qualified
status of your employee retirement plan, and provides information on the
reporting requirements for your plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the Internal
Revenue Code. It is not a determination regarding the effect of other federal or
local statutes.
This determination is subject to your adoption of the proposed
amendments submitted in your letter dated December 30, 1994. The proposed
amendments should be adopted on or before the date prescribed by the regulations
under Code Section 401(b).
This determination is also subject to your adoption of the proposed
amendments submitted in your letter(s) dated June 1, 1995. These proposed
amendments should also be adopted on or before the date prescribed by the
regulations under Code Section 401(b).
<PAGE>
2
This plan satisfies the minimum coverage and nondiscrimination
requirements of sections 410(b) and 401(a)(4) of the Code because the plan
benefits only collectively bargained employees or employees treated as
collectively bargained employees.
This letter is issued under Rev. Proc. 93-39 and considers the
amendments required by the Tax Reform Act of 1986 except as otherwise specified
in this letter.
This letter may not be relied upon with respect to whether the plan
satisfies the qualification requirements as amended by the Uruguay Round
Agreements Act: Pub.L. 103-465.
We have sent a copy of this letter to your representative as indicated
in the power of attorney.
If you have questions concerning this matter, please contact the
person whose name and telephone number are shown above.
Sincerely yours,
Herbert J. Huff
District Director
Enclosures:
Publication 794
Reporting & Disclosure Guide
for Employee Benefit Plans
<PAGE>
1
EXHIBIT 5.4
RAYTHEON COMPANY
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
G.P.O. BOX 1680
BROOKLYN, NY 11202
Employer Identification Number:
Date: June 21, 1995 04-1760395
File Folder Number:
RAYTHEON COMPANY 043001891
C/O STEPHEN PAVLICK, ESQ. Person to Contact:
MCDERMOTT, WILL & EMERY ROSE DESROCHER
1850 K STREET, NW Contact Telephone Number:
WASHINGTON, DC 20006 (203) 258-2024
Plan Name:
RAYTHEON EMPLOYEE SAVINGS AND
INVESTMENT PLAN
Plan Number: 013
Dear Applicant:
We have made a favorable determination on your plan, identified above,
based on the information supplied. Please keep this letter in your permanent
records.
Continued qualification of the plan under its present form will depend
on its effect in operation. (See section 1.401-1(b)(3) of the Income Tax
Regulations.) We will review the status of the plan in operation periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some features that may affect the qualified
status of your employee retirement plan, and provides information on the
reporting requirements for your plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the Internal
Revenue Code. It is not a determination regarding the effect of other federal or
local statutes.
This determination is subject to your adoption of the proposed
amendments submitted in your letter dated December 30, 1994. The proposed
amendments should be adopted on or before the date prescribed by the regulations
under Code Section 401(b).
This determination is also subject to your adoption of the proposed
amendments submitted in your letter(s) dated June 1, 1995. These proposed
amendments should also be adopted on or before the date prescribed by the
regulations under Code Section 401(b).
This plan satisfies the nondiscrimination in amount requirement of
section 1.401(a)(4)-1(b)(2) of the regulations on the basis of a design-based
safe harbor described in the regulations.
This letter is issued under Rev. Proc. 93-39 and considers the
amendments required by the Tax Reform Act of 1986 except as otherwise specified
in this letter.
<PAGE>
2
This plan satisfies the nondiscriminatory current availability
requirements of section 1.401(a)(4)-4(b) of the regulations with respect to
those benefits, rights, and features that are currently available to all
employees in the plan's coverage group. For this purpose, the plan's coverage
group consists of those employees treated as currently benefiting for purposes
of demonstrating that the plan satisfies the minimum coverage requirements of
section 410(b) of the Code.
This letter may not be relied upon with respect to whether the plan
satisfies the qualification requirements as amended by the Uruguay Round
Agreements Act: Pub.L. 103-465.
We have sent a copy of this letter to your representative as indicated
in the power of attorney.
If you have questions concerning this matter, please contact the
person whose name and telephone number are shown above.
Sincerely yours,
Herbert J. Huff
District Director
Enclosures:
Publication 794
Reporting & Disclosure Guide
For Employee Benefit Plans
<PAGE>
1
EXHIBIT 5.5
DISTRICT DIRECTOR
P. O. BOX 2506
CINCINNATI, OH 45201
Employer Identification Number:
Date: 75-1183105
DLN:
756285003
RAYTHEON E-SYSTEMS, INC. Person to Contact:
6250 LBJ FREEWAY CINDY PERRY
DALLAS, TX 75240 Contact Telephone Number:
(513) 241-5199
Plan Name:
E-SYSTEMS INC EMPLOYEE
SAVINGS PLAN
Plan Number: 022
Dear Applicant:
We have made a favorable determination on your plan, identified above,
based on the information supplied. Please keep this letter in your permanent
records.
Continued qualification of the plan under its present form will depend
on its effect in operation. (See section 1.401-1(b)(3) of the Income Tax
Regulations.) We will review the status of the plan in operation periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some events that may affect the qualified
status of your employee retirement plan, and provides information on the
reporting requirements for your plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the Internal
Revenue Code. It is not a determination regarding the effect of other federal or
local statutes.
This determination letter is applicable for the amendment(s) adopted
on 12-22-95 & 06-04-96.
This determination letter does not apply to the merger, consolidation,
or transfer of assets or liabilities of a plan described in Code section 6058(a)
to, or with, another plan, or to whether requirements of the income tax
regulations under Code section 414(1) have been met. This is only a
determination as to the qualification of the plan.
This plan has been mandatorily disaggregated, permissively aggregated,
or restructured to satisfy the nondiscrimination requirements.
This plan satisfies the minimum coverage requirements on the basis of
the average benefit test in section 410(b)(2) of the Code.
<PAGE>
2
This plan satisfies the nondiscrimination in amount requirement of
section 1.401(a)(4)-1(b)(2) of the regulations on the basis of the design-based
safe harbor described in the regulations.
This letter is issued under Rev. Proc. 93-39 and considers the
amendments required by the Tax Reform Act of 1986 except as otherwise specified
in this letter.
Except as otherwise specified this letter may not be relied upon with
respect to whether the plan satisfies the qualification requirements as amended
by the Uruguay Round Agreements Act, Pub. L. 103-465 and by the Small Business
Job Protection Act of 1996 (SBJPA), Pub. L. 104-106, other than the requirements
of Code section 401(a)(25).
The information on the enclosed addendum is an integral part of this
determination. Please be sure to read and keep it with this letter.
We have sent a copy of this letter to our representative as indicated
in the power of attorney.
If you have questions concerning this matter, please contact the
person whose name and telephone number are shown above.
Sincerely yours,
District Director
Enclosures:
Publication 794
Reporting & Disclosure Guide
for Employee Benefit Plans
Addendum
<PAGE>
1
EXHIBIT 23.2
<PAGE>
1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement of Raytheon Company and Subsidiaries Consolidated on Form S-8 of our
report dated January 26, 1998, except as to the information presented in note S
for which the date is March 26, 1998, on our audits of the consolidated
financial statements and financial statement schedule of Raytheon Company and
Subsidiaries Consolidated.
/s/ Coopers & Lybrand
Coopers & Lybrand LLP
Boston, Massachusetts
June 5, 1998
