<PAGE>
As filed with the Securities and Exchange Commission on December 30, 1998
Registration No.333-________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
WADDELL & REED FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 51-0261715
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6300 Lamar Avenue
Shawnee Mission, Kansas 66202
(913) 236-2000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
WADDELL & REED FINANCIAL, 401(K) AND THRIFT PLAN
(Full title of the plan)
Daniel C. Schulte
Assistant Secretary
Waddell & Reed Financial, Inc.
6300 Lamar Avenue
Shawnee Mission, Kansas 66202
(913) 236-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Duncan B. Blair
Lange, Simpson, Robinson & Somerville LLP
417 North 20th Street, Suite 1700
Birmingham, Al 35203
(205) 250-5000
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
CALCULATION OF REGISTRATION FEE
======================================================================================
Proposed Proposed
Title of each class of Amount Maximum Maximum Amount of
securities to be to be Offering Price Aggregate Registration
registered Registered Per Share/1/ Offering Price Fee
- --------------------------------------------------------------------------------------
Waddell & Reed 1,000,000
Financial, Inc. Class B shares 23 1/4 $23,250,000 $6,463.50
Common Stock
======================================================================================
In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the employee benefit plan described herein.
- -----------
/1/ Calculated pursuant to Rule 457(c) and (h)(1) based upon the average of the
high and low prices reported for Waddell & Reed Financial, Inc. Class B
common stock in the consolidated reporting system on December 28, 1998.
</TABLE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Waddell & Reed Financial, Inc. (the "Registrant" or the "Company") and the
Waddell & Reed Financial, Inc. 401(k) and Thrift Plan (the "Plan") hereby
incorporate by reference into this Registration Statement the following
documents:
(a) The Plan's latest annual report on Form 11-K filed pursuant to
Section 15(d) of the Securities Exchange Act of 1934 for the most recent fiscal
year.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 since the end of the fiscal year covered by the
document referenced in (a) above
(c) The description of Registrant's Class A and Class B common stock
contained in the Form 8-A Registration Statements filed under the Securities and
Exchange Act of 1934 on February 27, 1998, and on October 1, 1998 respectively,
including any amendment or report filed for the purpose of updating such
description.
(d) All reports filed by the Registrant pursuant to Sections 13(a) or 15(d)
of the Securities Exchange Act of 1934, since the filing of the Form 8-A.
(e) The Registrant's Rule 424(b) Prospectus, as filed under the Securities
Act of 1933, as amended, Registration Statement No. 333-43687.
All documents subsequently filed by the Registrant or the Plan pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
after the date of the filing of the Initial Registration Statement and any
amendments thereto and prior to the filing of a post-effective amendment to this
Registration Statement which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in the Registration Statement and to be a part
thereof from the date of filing of such documents (such documents, and the
documents enumerated above, being hereafter referred to as "Incorporated
Documents").
Any statement contained in an Incorporated Document shall be deemed to be
modified, replaced or superceded for purposes of this Registration Statement to
the extent that a statement contained herein or in any other subsequently filed
Incorporated Document modifies, replaces or supercedes such statement. Any
statement so modified, replaced or superceded shall not be deemed, except as so
modified, replaced or superceded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Class B common stock of the Registrant, the class of securities to be
offered, is registered under Section 12 of the Securities Exchange Act of 1934.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Certificate of Incorporation provides that each person who
was or is threatened to be made a party to or is involved in any action, suit or
proceeding by reason of the fact that he or she, or a person of whom he or she
is the legal representative, is or was a director or officer of the Registrant
or is or was serving at the request of the Registrant as a director or officer
of another company, partnership, joint venture, trust or other enterprise, will
be indemnified and held harmless by the Registrant to the fullest extent
authorized by the Delaware General Corporation Law as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Registrant to provide broader indemnification
rights than said law permitted the Registrant to provide prior to such
amendment), against all expense, liability and loss reasonably incurred 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 his or her heirs, executors and administrators.
The Delaware General Corporation Law permits Delaware corporations to
include in their certificates of incorporation a provision eliminating or
limiting director liability for monetary damages arising from breaches of their
fiduciary duty. The only limitations imposed under the statute are that the
provision may not eliminate or limit a director's liability (i) for breaches of
the director's duty of loyalty to the corporation or its stockholders; (ii) for
acts or omissions not in good faith or involving intentional misconduct or known
violations of law; (iii) for the payment of unlawful dividends or unlawful stock
purchases or redemptions; or (iv) for transactions in which the director
received an improper personal benefit. In addition, directors and officers are
insured, at the Registrant's expense, against certain liabilities which might
arise out of their employment.
Under Section 145 of the Delaware General Corporation Law, a corporation
may indemnify a director, officer, employee or agent of the corporation against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her if he or she acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. In the case of an action brought by or in the right of a corporation,
the corporation may indemnify a director, officer, employee or agent of the
corporation against expenses (including attorneys' fees) actually and reasonably
incurred by him or her if he or she acted in good faith and in a manner he or
she reasonably believed to be in the best interests of the corporation, except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the corporation
unless a court finds that, in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as the
court shall deem proper.
II-1
<PAGE>
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
(4)(a) Waddell & Reed Financial, Inc. 401(k) and Thrift Plan
(23) Consent of KPMG Peat Marwick LLP
(24) Powers of attorney
The Registrant will submit the Plan and any amendments thereto to the
Internal Revenue Service ("IRS") in a timely manner and has made or will make
all changes required by the IRS in order to qualify the Plan.
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 of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
- -------- -------
information required to be included in a post-effective amendment by these
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(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;
(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 which 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 section 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 the
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 the time shall be deemed to be the initial bona fide offering thereof.
(e) The undersigned registrant hereby undertakes to deliver or cause to
be delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
II-2
<PAGE>
(h) 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 Act 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 Act and will
be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Overland Park, State of Kansas, on December 30, 1998.
WADDELL & REED FINANCIAL, INC.
By: /s/ Keith A. Tucker
--------------------------------------------------
Keith A. Tucker
Chairman of the Board
and Chief Executive Officer
(Principal Financial Officer)
/s/ Henry J. Herrmann
--------------------------------------------------
Henry J. Herrmann
President, Chief Investment Officer,
Treasurer and Director
/s/ Michael D. Strohm
--------------------------------------------------
Michael D. Strohm
Principal Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
* *
- ------------------------------------- --------------------------------------
David L. Boren, Director Joseph M. Farley, Director
* /s/ Robert L. Hechler
- ------------------------------------- --------------------------------------
Louis T. Hagopian, Director Robert L. Hechler, Director
/s/ Keith A. Tucker /s/ Henry J. Herrmann
- ------------------------------------- --------------------------------------
Keith A. Tucker, Director Henry J. Herrmann, Director
II-3
<PAGE>
* *
- ------------------------------------- --------------------------------------
Joseph L. Lanier, Jr. Harold T. McCormick, Director
* *
- ------------------------------------- --------------------------------------
George J. Records, Director R. K. Richey, Director
* *
- ------------------------------------- --------------------------------------
William L. Rogers, Director James M. Raines, Director
By: /s/ Daniel C. Schulte Date: December 30, 1998
---------------------------
* Daniel C. Schulte
Attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, the trustee has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Overland Park, State of
Kansas, on December 30, 1998.
WADDELL & REED FINANCIAL, INC. 401(K) AND THRIFT PLAN
By: FIDUCIARY TRUST COMPANY OF NEW HAMPSHIRE, as Trustee
By: /s/ Michael D. Strohm
----------------------------
Its: Vice President, Trust Officer and Director
II-4
<PAGE>
EXHIBIT (4)(a)
THE
WADDELL & REED FINANCIAL, INC.
401(K) AND THRIFT PLAN
(AMENDED AND RESTATED AS OF JANUARY 1, 1999)
<PAGE>
BACKGROUND
----------
Effective as of January 1, 1980, Torchmark Financial Services, Inc., which
was a predecessor of United Investors Management Company, established a defined
contribution profit sharing plan (the "Plan"), which is intended to be qualified
pursuant to the provisions of the Internal Revenue Code of 1986, as amended. The
Plan is intended to provide eligible employees of the Company, and those of any
affiliate which adopts the Plan, with a supplemental source of retirement
income.
Effective as of January 1, 1989, the Plan was amended and restated to
comply with the Tax Reform Act of 1986. The Plan was further amended effective
January 1, 1993.
Effective as of March 1, 1998, WADDELL & REED FINANCIAL, INC. (the
"Company") and its affiliates assumed sole sponsorship of the Plan and made
certain amendments to the Plan as set forth herein.
Effective as of October 1, 1998, the Company adopted Amendment One to the
Plan.
Effective as of January 1, 1999, the Company amended and restated the Plan
to incorporate a safe harbor qualified cash or deferred feature under (S)
401(k)(12) of the Code, and to provide for unitization of Investments under the
Plan.
The benefit under the Plan of any participant who terminates employment
shall be determined in accordance with the provisions of the Plan as in effect
on the date of such termination of employment.
i
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
BACKGROUND........................................................... i
TABLE OF CONTENTS.................................................... ii
ARTICLE I - DEFINITIONS.............................................. I-1
Account.................................................... I-1
Account Balance............................................ I-1
ACP Compensation........................................... I-1
Adjustment Factor.......................................... I-2
Administrative Committee................................... I-2
Administrator.............................................. I-2
Affiliate.................................................. I-2
After-Tax Contribution..................................... I-2
Annual Addition............................................ I-2
Annuity Contract........................................... I-3
Average Contribution Percentage............................ I-3
Basic Participant Contributions............................ I-3
Beneficiary................................................ I-3
Benefit Commencement Date.................................. I-3
Board of Directors......................................... I-3
Code....................................................... I-4
Company.................................................... I-4
Company Shares or Company Stock............................ I-4
Company Stock Account(s)................................... I-4
Compensation............................................... I-4
Contribution Percentage.................................... I-5
ii
<PAGE>
Defined Benefit Plan....................................... I-5
Defined Contribution Plan.................................. I-6
Disability................................................. I-6
Effective Date............................................. I-6
Eligible Employee.......................................... I-6
Eligible Participant....................................... I-6
Employee................................................... I-6
Employer................................................... I-6
Employer Contributions..................................... I-7
Employer Contributions Subaccount.......................... I-7
Employment................................................. I-7
Entry Date................................................. I-7
ERISA...................................................... I-7
Excess Aggregate Contributions............................. I-7
Five-percent Owner......................................... I-7
401(m) Contributions....................................... I-7
Fully Vested Separation.................................... I-7
HCE Compensation........................................... I-8
Highly Compensated Employee................................ I-8
Hour of Service............................................ I-8
Investment................................................. I-10
Investment Company......................................... I-10
Investment Company Shares.................................. I-10
Limitation Year............................................ I-10
Matching Contribution...................................... I-11
Net Profits................................................ I-11
Non-Highly Compensated Employee............................ I-11
Non-Vested Separation...................................... I-11
Normal Retirement Age...................................... I-11
One Year Break in Service.................................. I-11
Partially Vested Separation................................ I-12
iii
<PAGE>
Participant................................................ I-12
Participant Contributions.................................. I-12
Participant Contributions Subaccount....................... I-12
Participating Affiliate.................................... I-12
Plan....................................................... I-12
Plan Year.................................................. I-12
Qualified Joint and Survivor Annuity....................... I-12
Qualified Plan............................................. I-13
Rollover Contribution...................................... I-13
Salary Deferral Contributions.............................. I-13
Spousal Consent............................................ I-13
Spouse..................................................... I-13
Supplementary Participant Contributions.................... I-13
Surviving Spouse........................................... I-14
Torchmark Shares or Torchmark Stock........................ I-14
Torchmark Stock Account.................................... I-14
Trust or Trust Fund........................................ I-14
Trust Agreement............................................ I-14
Trustee.................................................... I-14
Vesting Service............................................ I-14
Years of Service........................................... I-15
ARTICLE II - PARTICIPATION........................................... II-1
2.1 Admission as a Participant........................... II-1
2.2 Crediting of Service for Eligibility Purposes........ II-2
2.3 Termination of Participation......................... II-2
2.4 Rollover Membership.................................. II-2
ARTICLE III - CONTRIBUTIONS AND ACCOUNT ALLOCATIONS.. III-1
3.1 Matching Contributions............................... III-1
3.2 Salary Deferral Contributions........................ III-1
iv
<PAGE>
3.3 Limits on 401(m) Contributions-ACP Test.............. III-4
3.4 Distribution of Excess Aggregate Contributions....... III-5
3.5 Rollover Contributions and Trust to Trust Transfers.. III-6
3.6 Establishing of Accounts............................. III-7
3.7 Allocation of Contributions and Forfeitures.......... III-8
3.8 Limitation on Allocations............................ III-8
3.9 Return of Employer Contributions under Special
Circumstances...................................... III-9
3.10 USERRA Provisions.................................... III-10
ARTICLE IV - VESTING................................................. IV-1
4.1 Determination of Vesting............................. IV-1
4.2 Rules for Crediting Vesting Service.................. IV-1
4.3 Account Forfeitures.................................. IV-2
ARTICLE V - AMOUNT AND PAYMENT OF BENEFITS TO
PARTICIPANTS........................................... V-1
5.1 Fully Vested Separation.............................. V-1
5.2 Partially Vested Separation.......................... V-1
5.3 Non-Vested Separation................................ V-1
5.4 [Reserved]........................................... V-1
5.5 Benefit Commencement Date............................ V-1
5.6 In-Service Withdrawals............................... V-3
ARTICLE VI - FORMS OF PAYMENT OF ACCOUNTS............................ VI-1
6.1 Methods of Distribution.............................. VI-1
6.2 Election of Optional Forms........................... VI-3
6.3 Change in Form or Timing of Benefit Payments......... VI-4
6.4 Direct Rollovers..................................... VI-4
ARTICLE VII - DEATH BENEFITS......................................... VII-1
v
<PAGE>
7.1 Payment of Account Balances.......................... VII-1
7.2 Beneficiaries........................................ VII-2
ARTICLE VIII - FIDUCIARIES........................................... VIII-1
8.1 Named Fiduciaries.................................... VIII-1
8.2 Employment of Advisers............................... VIII-1
8.3 Multiple Fiduciary Capacities........................ VIII-1
8.4 Reliance............................................. VIII-2
8.5 Scope of Authority and Responsibility................ VIII-2
ARTICLE IX - TRUSTEE................................................. IX-1
9.1 Trust Agreement...................................... IX-1
9.2 Assets in Trust...................................... IX-1
ARTICLE X - ADMINISTRATIVE COMMITTEE................................. X-1
10.1 Appointment and Removal of Administrative Committee.. X-1
10.2 Officers of Administrative Committee................. X-1
10.3 Action by Administrative Committee................... X-1
10.4 Rules and Regulations................................ X-1
10.5 Powers............................................... X-2
10.6 Information from Participants........................ X-2
10.7 Reports.............................................. X-3
10.8 Authority to Act..................................... X-3
10.9 Liability for Acts................................... X-3
10.10 Compensation and Expenses............................ X-3
10.11 Indemnity............................................ X-3
10.12 Denied Claims........................................ X-4
ARTICLE XI - INVESTMENT OF CONTRIBUTIONS; MANAGEMENT
OF ACCOUNTS........................................... XI-1
11.1 Initial Investment Election.......................... XI-1
vi
<PAGE>
11.2 Change in Investment Election for Contributions...... XI-1
11.3 Transfer of Investment Accounts...................... XI-2
11.4 Reinvestment......................................... XI-2
11.5 Voting of Shares of Investments...................... XI-3
11.6 Valuation of Accounts................................ XI-3
11.7 Distributions or Withdrawals......................... XI-4
11.8 Black Out Period..................................... XI-4
ARTICLE XII - PLAN AMENDMENT OR TERMINATION.......................... XII-1
12.1 Plan Amendment or Termination........................ XII-1
12.2 Limitations on Plan Amendment........................ XII-1
12.3 Right of Company to Terminate Plan or
Discontinue Contributions.......................... XII-2
12.4 Effect of Partial or Complete Termination or Complete
Discontinuance of Contributions.................... XII-2
ARTICLE XIII - MISCELLANEOUS PROVISIONS.............................. XIII-1
13.1 Exclusive Benefit of Participants.................... XIII-1
13.2 Plan Not a Contract of Employment.................... XIII-1
13.3 Source of Benefits................................... XIII-1
13.4 Benefits Not Assignable.............................. XIII-1
13.5 Domestic Relations Orders............................ XIII-2
13.6 Benefits Payable to Minors, Incompetents and Others.. XIII-2
13.7 Merger or Transfer of Assets......................... XIII-2
13.8 Participation in the Plan by an Affiliate............ XIII-3
13.9 Action by Employer................................... XIII-3
13.10 Provision of Information............................. XIII-3
13.11 Controlling Law...................................... XIII-3
13.12 Conditional Restatement.............................. XIII-4
13.13 Rules of Construction................................ XIII-4
APPENDIX A - TOP-HEAVY PROVISIONS.................................... Appendix-1
vii
<PAGE>
ARTICLE I - DEFINITIONS
Each of the following terms shall have the meaning set forth in this
Article I for purposes of this Plan and any amendments thereto:
ACCOUNT: A separate account for each Participant consisting of a
Salary Deferral Contributions Subaccount (effective as of January 1, 1999), a
Matching Contributions Subaccount (effective as of January 1, 1999), an Employer
Contributions Subaccount, an After-Tax Contributions Subaccount (which is
effective as of January 1, 1999, and which is a continuation of the pre-1999
Participant Contributions Subaccount), and a Rollover Contributions Subaccount,
as the case may be.
ACCOUNT BALANCE: The value of an Account or Subaccount determined as
of the date on which funds are liquidated or transferred. A Participant's
Account Balance shall consist of shares or units in one or more Investments. As
the value of the shares or units credited to a Participant's Account rises or
falls, the Participant's Account Balance shall rise and fall to the same extent.
All withdrawals, distributions, or Investment transfers under the Plan shall be
based upon the amount realized from the liquidation of shares or units credited
to the Participant's Account.
ACP COMPENSATION: All remuneration paid by an Employer to an Eligible
Participant during the Plan Year, which is required to be reported as wages on
such Eligible Participant's Form W-2, including amounts which were previously
deferred pursuant to an unfunded non-qualified plan and which are currently
includable in the Employee's gross income; or such other compensation as
determined by the Administrator in accordance with applicable law. For each
Plan Year the Administrator shall determine whether or not ACP Compensation
shall include amounts which are not currently includable in the Eligible
Participant's gross income by reason of the application of Code (S) 125, 401(k),
402(h)(1)(B), or 403(b). Notwithstanding any other provision of this
definition, the ACP Compensation of an Eligible Participant for any Plan Year
beginning after December 31, 1988 shall not exceed $200,000 multiplied by the
Adjustment Factor in effect for the Plan Year pursuant to Code (S) 401(a)(17),
I-1
<PAGE>
or such other limit as may be established from time to time pursuant to the
provisions of Code (S) 401(a)(17).
ADJUSTMENT FACTOR: The cost of living adjustment factor prescribed by
the Secretary of the Treasury under Code (S) 415(d) for years beginning after
December 31, 1987, as applied to such items and in such manner as the Secretary
shall provide.
ADMINISTRATIVE COMMITTEE: The committee appointed by the Board
pursuant to, and having the responsibilities specified in, Article X of the
Plan.
ADMINISTRATOR: The Company or committee appointed by the Board of
Directors pursuant to, and having the responsibilities specified in, Article X
of the Plan.
AFFILIATE: Any corporation or unincorporated trade or business (other
than the Company) while it is:
(a) a member of a "controlled group of corporations" (within the
meaning of Code (S) 414(b)) of which the Company is a member;
(b) a trade or business under "common control" (within the meaning of
Code (S) 414(c)) with the Company;
(c) a member of an "affiliated service group" (within the meaning of
Code (S) 414(m)) which includes the Company; or
(d) any other entity required to be aggregated with the Company under
Code (S) 414(o).
AFTER-TAX CONTRIBUTION: A contribution made by a Participant pursuant
to Section 3.2.4. Participants may begin making After-Tax Contributions to the
Plan effective as of January 1, 1999. No matching contributions are made by the
Employer with respect to After-Tax Contributions.
ANNUAL ADDITION: For each Participant, the sum of the following
amounts credited to the Participant's Account for the Limitation Year:
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<PAGE>
(i) Company or Affiliate contributions;
(ii) Employee contributions (including salary deferral contributions);
(iii) forfeitures; and
(iv) amounts described in Code (S) 415(l)(1) and 419A(d)(2).
Notwithstanding the foregoing, Annual Addition shall not include amounts
attributable to Rollover Contributions or trust to trust transfers.
ANNUITY CONTRACT: An individual or group annuity contract, issued by
an insurance company, providing periodic benefits, whether fixed, variable or
both, the benefits or value of which a Participant or Beneficiary cannot
transfer, sell, assign, discount, or pledge as collateral for a loan or as
security for the performance of an obligation, or for any other purpose to any
person other than the issuer thereof.
AVERAGE CONTRIBUTION PERCENTAGE: The average (expressed as a
percentage) of the Contribution Percentages of the Eligible Participants in a
group, including those Eligible Participants whose Contribution Percentage is
zero.
BASIC PARTICIPANT CONTRIBUTIONS: The basic contributions made to the
Plan by a Participant on account of service rendered before January 1, 1999.
Effective as of January 1, 1999, no further Basic Participant Contributions
shall be permitted to be made to the Plan.
BENEFICIARY: A person other than a Participant entitled to receive
any payment of benefits pursuant to Article VII.
BENEFIT COMMENCEMENT DATE: The date, determined under Section 5.5, as
of which a Participant or a Beneficiary receives or begins to receive, as the
case may be, payment of his benefits under the Plan.
BOARD OF DIRECTORS: The Board of Directors of the Company.
I-3
<PAGE>
CODE: The Internal Revenue Code of 1986, as now in effect or as
amended from time to time. A reference to a specific provision of the Code
shall include such provision and any applicable regulation pertaining thereto.
COMPANY: Waddell & Reed Financial, Inc., or any successor thereto by
consolidation, merger, transfer of assets or otherwise.
COMPANY SHARES OR COMPANY STOCK: Effective as of the date of
conclusion of the initial public offering for shares of Class A common stock of
Waddell & Reed Financial, Inc., the phrases "Company Shares" or "Company Stock"
shall mean the Class A common stock of Waddell & Reed Financial, Inc. Prior to
this date, the phrases "Company Shares" or "Company Stock" shall mean shares of
common stock of Torchmark Corporation. Effective as of January 1, 1999, or as
soon thereafter as is practicable, the phrases "Company Shares" or "Company
Stock" shall refer, collectively, to the Class A common stock and Class B common
stock of Waddell & Reed Financial, Inc.
COMPANY STOCK ACCOUNT(S): An account or accounts maintained by the
Trustee with respect to a part of the Trust Fund consisting of amounts which
Participants have elected to be invested in Company Stock. Effective as of
January 1, 1999, there shall be two Company Stock Accounts: the Company Class A
Stock Account and the Company Class B Stock Account. The Company Class A Stock
Account shall consist predominately of shares of Class A common stock of Waddell
& Reed Financial, Inc. in addition to such cash or cash equivalents as are
necessary to provide for sufficient liquidity in such account, as determined by
the Trustee pursuant to guidelines established by the Administrator. The
Company Class B Stock Account shall consist predominately of shares of Class B
common stock of Waddell & Reed Financial, Inc. in addition to such cash or cash
equivalents as are necessary to provide for sufficient liquidity in such
account, as determined by the Trustee pursuant to guidelines established by the
Administrator.
COMPENSATION: The total compensation to be reported on Form W-2 and
paid with respect to a Participant by his Employer during a calendar year,
including salary, wages,
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overtime payments, holiday and shift differential, bonuses and commission
payments, and any amounts not paid directly and currently in cash to a
Participant but paid for the benefit of a Participant through a "salary
reduction" agreement in conjunction with one or more welfare plans of a
participating company, the total amount deferred pursuant to a Participant's
election under a "cash or deferred arrangement" in conjunction with one or more
qualified retirement plans of a participating company, but excluding the
following items:
(a) Annual service awards and other non-cash prizes and awards;
(b) Deferred compensation accrued under any deferred compensation
agreement or contract or any amendment or replacement thereof;
(c) Director's fees;
(d) Employer contributions to the Plan or any other public or private
employee benefit plan or deferred compensation arrangement;
(e) Any reimbursement of or allowances for expenses; and
(f) Payments, contributions, or benefits under such other plans,
programs or forms of compensation as the Board of Directors may exclude
under this definition.
Notwithstanding any other provision of this definition, the Annual
Compensation of a Participant (or, with respect to a Participant who is a
Primary Family member of the Participant, his or her Spouse, and his or her
lineal descendants under age 19) for any Plan Year beginning after December 31,
1993 shall not exceed $150,000 (or such adjusted amount as may be prescribed for
such Plan Year pursuant to Code (S) 401(a)(17)).
The determination of Compensation will be in accordance with records
maintained by the Employer and shall be conclusive.
CONTRIBUTION PERCENTAGE: The ratio (expressed as a percentage) of the
401(m) Contributions (including 401(m) Contributions distributed or forfeited)
on behalf of an Eligible Participant for the Plan Year to such Eligible
Participant's ACP Compensation for the Plan Year.
DEFINED BENEFIT PLAN: A plan of the type defined in Code (S) 414(j)
maintained by the Company or an Affiliate, as applicable.
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DEFINED CONTRIBUTION PLAN: A plan of the type defined in Code (S)
414(i) maintained by the Company or an Affiliate, as applicable.
DISABILITY: Total and permanent disability for a period of at least
six months as defined by the group disability benefit plan maintained by the
Participant's Employer.
EFFECTIVE DATE: The effective date of this amended and restated Plan
which shall be January 1, 1999. The original effective date of the Plan was
January 1, 1980.
ELIGIBLE EMPLOYEE: All Employees of an Employer other than:
(a) Employees included in a unit of employees covered by a collective
bargaining agreement between the Employer and the employee representatives
in the negotiation of which retirement benefits were the subject of good
faith bargaining, unless such bargaining agreement provides for
participation in the Plan; and
(b) leased employees within the meaning of Code (S) 414(n)(2).
ELIGIBLE PARTICIPANT: Any Eligible Employee who has met the service
requirements of Section 2.1.
EMPLOYEE: Any individual who is classified by the Company as an
employee of the Company or an Affiliate (regardless of whether such individual
is classified as an employee according to the usual common law or employment tax
rules applicable in determining the employer-employee relationship). The term
"Employee" shall also include leased employees within the meaning of Code (S)
414(n)(2). Notwithstanding the foregoing, if such leased employees do not
constitute more than twenty percent of the Employer's non-highly compensated
work force within the meaning of Code (S) 414(n)(5)(C)(ii), the term "Employee"
shall not include those leased employees covered by a plan described in Code (S)
414(n)(5), unless otherwise provided by the terms of this Plan.
EMPLOYER: The Company and each Affiliate participating in the Plan
pursuant to Section 13.8.
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EMPLOYER CONTRIBUTIONS: The contributions made to the Plan by the
Company or Participating Affiliate on account of service rendered before January
1, 1999. Effective as of January 1, 1999, no further Employer Contributions
shall be made to the Plan.
EMPLOYER CONTRIBUTIONS SUBACCOUNT: The subaccount established for a
Participant pursuant to Section 3.6.1.
EMPLOYMENT: An Employee's employment with the Company or an Affiliate
or, to the extent determined by the Administrator, any predecessor of any of
them.
ENTRY DATE: The first day of the payroll period coinciding with or
next following the date the Eligible Employee has satisfied the requirements of
Section 2.1.1
ERISA: The Employee Retirement Income Security Act of 1974, as
amended from time to time. Reference to a specific provision of ERISA shall
include such provision and any applicable regulation pertaining thereto.
EXCESS AGGREGATE CONTRIBUTIONS: With respect to any Plan Year, the
aggregate amount of 401(m) Contributions actually paid over to the Trustee for
the Plan Year on behalf of Highly Compensated Employees over the maximum amount
of such contributions permitted under the ACP test set forth in Section 3.3.
FIVE-PERCENT OWNER: Any person who owns (or is considered as owning
within the meaning of Code (S) 318) more than 5% of the outstanding stock of the
Employer, or stock possessing more than 5% of the total voting power of the
Employer.
401(m) CONTRIBUTIONS: With respect to any Participant for any Plan
Year, the After-Tax Contributions made on behalf of such Participant.
FULLY VESTED SEPARATION: Termination of Employment of a Participant
whose vested percentage in his Account is 100%.
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HCE COMPENSATION: An Employee's compensation, from an Employer,
within the meaning of Code (S) 415(c)(3), but including amounts which were
previously deferred pursuant to an unfunded non-qualified plan and which are
currently includable in the Employee's gross income.
HIGHLY COMPENSATED EMPLOYEE:
An Employee who:
(1) during the preceding Plan Year:
(i) was at any time a Five-percent Owner; or
(ii) received HCE Compensation in excess of $80,000 (multiplied by the
applicable Adjustment Factor) and, if the Employer so elects, was
in the group consisting of the top 20% of all Employees when
ranked by HCE Compensation; or who
(2) during the current Plan Year:
(i) was at any time a Five-percent Owner.
Notwithstanding the forgoing, the Employer may elect, without further
need of amending this section of the Plan, to use any simplified or alternative
definition of Highly Compensated Employee permitted by the Internal Revenue
Service. By way of illustration, and not limitation, the Plan permits the
Employer to make any or all of the elections permitted under Internal Revenue
Service Notice 97-45.
HOUR OF SERVICE:
(a) Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for an Employer (or an Affiliate in the case
of an Employee who has transferred his Employment to the Employer from such
Affiliate) during the applicable computation period.
(b) Each hour for which an Employee is paid, or entitled to payment,
by an Employer (or an Affiliate in the case of an Employee who has
transferred his Employment to the Employer from such Affiliate) on account
of a period of time during which no duties are performed (irrespective of
whether the employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including Disability), lay-off, jury
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duty, military duty or leave of absence. An hour for which an Employee is
directly or indirectly paid or entitled to payment on account of a period
during which no duties are performed is not credited to the Employee if
such payment is made or due under a plan maintained solely for the purpose
of providing severance benefits or complying with the applicable
unemployment compensation laws. Hours of Service are not credited for a
payment which solely reimburses an Employee for medical or medically
related expenses incurred by the Employee.
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an Employer (or an Affiliate in
the case of an Employee who has transferred his Employment to the Employer
from such Affiliate). The same Hours of Service shall not be credited both
under paragraph (a) or paragraph (b), as the case may be, and under this
paragraph (c).
(d) If, in accordance with standard personnel policies applied in a
non-discriminatory manner to all Employees similarly situated, an Employer
determines in writing that an Employee's approved, unpaid leave of absence
furthers the interest of the Employer, each hour for which the Employee on
the approved unpaid leave of absence would normally have received credit
under this Plan if he had been working in his regular employment for the
Employer (or an Affiliate in the case of an Employee who has transferred
his Employment to the Employer from such Affiliate).
(e) An Employee of the Employer (or an Affiliate in the case of an
Employee who has transferred his Employment to the Employer from such
Affiliate) who is regularly employed by such Employer (or Affiliate) for at
least 37 1/2 hours a week shall be credited with forty-five Hours of
Service if under this Plan he would be credited with at least one Hour of
Service during the week.
(f) An Employee of the Employer (or an Affiliate in the case of an
Employee who has transferred his Employment to the Employer from such
Affiliate) who is not regularly employed by such Employer (or Affiliate)
for at least 37 1/2 hours a week shall be credited with forty-five Hours of
Service if under the Plan he will be credited with at least one Hour of
Service during the week.
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(g) Hours of Service shall be calculated and credited pursuant to
section 2530-200b-2 of the Department of Labor Regulations which are
incorporated herein by this reference.
(h) In the case of an Employee who is paid on a commission basis, he
will be deemed to perform his first Hour of Service on the date on which he
is first designated an Employee by the Employer.
INVESTMENT: Investment Company Shares or, if designated by the
Company for investment of contributions under the Plan, an interest in the
Company Stock Accounts or the Torchmark Stock Account. In addition, for
purposes of Section 11.5, the term Investment shall include shares of Torchmark
Corporation common stock and shares of Class A or Class B common stock of
Waddell & Reed Financial, Inc. credited to a Participant's Torchmark Stock
Account or Company Stock Accounts. Effective as of January 1, 1999, all
Investments under the Plan shall be unitized based upon generally accepted
common trust fund valuation methods. The Company Stock Accounts and the
Torchmark Stock Account shall consist predominately of shares of the applicable
common stock in addition to such cash or cash equivalents as are necessary to
provide for sufficient liquidity in the accounts, as determined by the Trustee
pursuant to guidelines established by the Administrator.
INVESTMENT COMPANY: An investment company or companies for which the
Company is the principal underwriter or investment advisor and designated by the
Company for investment of contributions under the Plan. In the case of an
Investment Company which has more than one class of shares, each class of shares
will be considered a separate Investment Company for the purposes of this Plan.
INVESTMENT COMPANY SHARES: Shares issued by an Investment Company.
LIMITATION YEAR: Each twelve consecutive month period ending on the
same last day as the Plan Year.
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MATCHING CONTRIBUTION: A contribution made to the Plan by the Company
or a Participating Affiliate pursuant to Section 3.1. Effective as of January
1, 1999, the Employer began making Matching Contributions under the Plan.
NET PROFITS: The profits of the Company or a Participating Affiliate,
as the case may be, for any Plan Year after all expenses or charges other than
(i) the contributions to the Plan, and (ii) federal and state taxes based on or
measured by income as shown on the books of the Company or Participating
Affiliate and computed in accordance with generally accepted accounting
practice. When the amount of Net Profits for any Plan Year has been determined
by the Company or Participating Affiliate, such amount will be final for
purposes of the Plan and will not be subject to change by reason of any
adjustments in income required by the Internal Revenue Service or otherwise.
NON-HIGHLY COMPENSATED EMPLOYEE: An Employee of the Employer who is
not a Highly Compensated Employee.
NON-VESTED SEPARATION: Termination of Employment of a Participant
whose vested percentage in his Employer Contributions Subaccount is zero
percent.
NORMAL RETIREMENT AGE: Age 65.
ONE YEAR BREAK IN SERVICE: Any period of twelve consecutive months,
beginning with the date of an Employee's Employment or any anniversary of the
date of such Employment, during which the Employee has not completed more than
500 Hours of Service; except that a Participant who is absent from work due to
such Participant's pregnancy, the birth of the Participant's child or by reason
of the adoption of a minor child by the Participant for the purpose of caring
for such child immediately following its birth or adoption and who provides
timely information establishing to the satisfaction of the Administrator the
reasons for the absence and the number of days of such absence will be treated
as performing a normal schedule (or eight hours per day) up to a maximum of 501
Hours of Service in either the year in which the absence begins or the year
immediately following the year in which the absence begins as necessary to
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prevent such Participant from incurring a One Year Break in Service in either
(but not both) the year in which the absence begins or the year immediately
following the year in which the absence begins.
PARTIALLY VESTED SEPARATION: Termination of Employment of a
Participant whose vested percentage in his Employer Contributions Subaccount is
less than 100% but greater than zero percent.
PARTICIPANT: An Employee who has commenced, but not terminated,
participation in the Plan as provided in Article II.
PARTICIPANT CONTRIBUTIONS: The Participant's Basic Participant
Contributions and Supplementary Participant Contributions. Effective as of
January 1, 1999, no further Participant Contributions shall be permitted to be
made to the Plan.
PARTICIPANT CONTRIBUTIONS SUBACCOUNT: The subaccount established for
a Participant to hold Participant Contributions made to the Plan before January
1, 1999. Effective as of January 1, 1999, the Participant Contributions
Subaccount is renamed the After-Tax Contributions Subaccount.
PARTICIPATING AFFILIATE: Any Affiliate which in accordance with
Section 13.8, by duly authorized action has adopted the Plan and not withdrawn
therefrom.
PLAN: The Waddell & Reed Financial, Inc. Savings and Investment Plan.
The Plan is an eligible individual account plan within the meaning of ERISA
Section 407(d)(3).
PLAN YEAR: Each twelve consecutive month period ending on December
31, during any part of which the Plan is in effect.
QUALIFIED JOINT AND SURVIVOR ANNUITY: An annuity for the life of the
Participant with a survivor annuity continuing after the Participant's death to
the Participant's Surviving
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Spouse for the Surviving Spouse's life in an amount equal to fifty percent of
the amount payable during the joint lives of the Participant and such Surviving
Spouse.
QUALIFIED PLAN: A Defined Contribution Plan or a Defined Benefit Plan
which is qualified under Code (S) 401(a).
ROLLOVER CONTRIBUTION: A contribution attributable to:
(a) a "qualified total distribution" (as defined in Code (S)
402(a)(5)), made to an Eligible Employee from a Qualified Plan or made to
the Eligible Employee under Code (S) 403(a)(4) from an "employee annuity"
as referred to in that section, or
(b) a payout or distribution to an Eligible Employee referred to in
Code (S) 408(d)(3) from an "individual retirement account" or an
"individual retirement annuity" described, respectively, in Code (S) 408(a)
or (S) 408(b) consisting exclusively of amounts attributable to "qualifying
rollover distributions" (as defined in Code (S) 402(a)(5)) from a Qualified
Plan. Notwithstanding the foregoing, a Rollover Contribution shall in no
event include amounts attributable to a distribution from a Qualified Plan
under which the Eligible Employee was at any time a self-employed
individual deemed to be an "employee" under Code (S) 401(c)(1).
SALARY DEFERRAL CONTRIBUTIONS: The contributions made to the Plan by
the Participant pursuant to Section 3.2. Effective as of January 1, 1999,
Participants may begin making Salary Deferral Contributions to the Plan.
SPOUSAL CONSENT: Written consent by a Participant's Spouse waiving
the benefit otherwise payable to the Spouse, where such waiver is witnessed by a
Plan representative or a notary public and includes acknowledgment by the Spouse
of the effect of such waiver.
SPOUSE: The person lawfully married to a Participant.
SUPPLEMENTARY PARTICIPANT CONTRIBUTIONS: The supplementary
contributions made to the Plan by a Participant on account of service rendered
before January 1, 1999.
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Effective as of January 1, 1999, Supplementary Participant Contributions shall
no longer be permitted to be made to the Plan.
SURVIVING SPOUSE: The Spouse of a Participant on the earlier of:
(a) the date of the Participant's death; or
(b) the Participant's Benefit Commencement Date.
TORCHMARK SHARES OR TORCHMARK STOCK: Effective as of the date of
conclusion of the initial public offering for shares of Class A common stock of
Waddell & Reed Financial, Inc., the phrases "Torchmark Shares" and "Torchmark
Stock" shall mean the common stock of Torchmark Corporation. Prior to this
date, shares of common stock of Torchmark Corporation were considered Company
Shares or Company Stock under the Plan.
TORCHMARK STOCK ACCOUNT: An account maintained by the Trustee with
respect to a part of the Trust Fund consisting of amounts which Participants
have elected to be invested in Torchmark Stock. This definition will take
effect as of the date of conclusion of the initial public offering of the Class
A common stock of Waddell & Reed Financial, Inc.
TRUST OR TRUST FUND: The trust established under the Plan in which
Plan assets are held.
TRUST AGREEMENT: The agreement between the Company and the Trustee
with respect to the Trust.
TRUSTEE: The person appointed as trustee pursuant to Article IX, and
any successor trustee.
VESTING SERVICE: The Years of Service credited to a Participant under
Section 4.2 for purposes of determining the Participant's vested percentage in
the Account Balance of the Employer Contributions Subaccount established for the
Participant.
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YEARS OF SERVICE: For purposes of determining eligibility to
participate under Article II and for purposes of determining Vesting Service, a
period of twelve consecutive months beginning with the date of Employment or
return to Employment during which an Employee has not less than 1000 Hours of
Service for an Employer (or an Affiliate in the case of an Employee who has
transferred his Employment to the Employer from such Affiliate).
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ARTICLE II - PARTICIPATION
2.1 ADMISSION AS A PARTICIPANT
2.1.1 An Eligible Employee shall become a Participant on the Entry Date
coincident with or next following the date on which he completes one Year of
Service and timely files an application form with the Administrator. Anything
in this Section 2.1.1 to the contrary notwithstanding, any Eligible Employee who
was a Participant on the Effective Date shall remain a Participant as of that
date.
2.1.2 At least 30 days prior to the date on which an Eligible Employee is
first eligible to become a Participant under Section 2.1.1, the Administrator
will notify each Eligible Employee of his eligibility to participate.
2.1.3 To become a Participant, an Eligible Employee who is eligible to
participate under Section 2.1.1 or who is eligible to resume participation under
Section 2.1.4 must execute and file with the Administrator, on a form prescribed
or approved by the Administrator, a written application for participation prior
to the first day of the payroll period in which he wishes to become a
Participant. On such application form, the Participant:
(a) Shall elect a rate of Salary Deferral Contributions and
After-Tax Contributions, if applicable, as provided in Sections 3.2.1 and
3.2.4;
(b) Shall authorize the Employer to make deductions from his pay
of his Salary Deferral Contributions and After-Tax Contributions, if
applicable;
(c) Shall make investment elections as provided in Section 11.1;
and,
(d) Shall designate a Beneficiary as provided in Section 7.2.1.
2.1.4 An individual who has ceased to be a Participant, or met the
requirements of Section 2.1.1 but did not become a Participant, and who again
becomes an Eligible Employee with credit for at least one Year of Service shall
become a Participant as of the first date on which he again becomes an Eligible
Employee and timely files an application form with the Administrator.
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2.2 CREDITING OF SERVICE FOR ELIGIBILITY PURPOSES
2.2.1 An Employee who terminates Employment without any vested rights to a
benefit under the Plan derived from contributions by the Employer shall lose
credit for his Years of Service prior to such termination of Employment if: (a)
for years prior to January 1, 1985, the total of his consecutive One Year Breaks
in Service immediately preceding his reemployment equals or exceeds his Years of
Service prior to such termination (whether or not consecutive but excluding any
Years of Service previously disregarded under this rule); or (b) for years on or
after January 1, 1985, the total of his consecutive One Year Breaks in Service
immediately preceding his reemployment equals or exceeds the greater of five
years or his Years of Service prior to such termination (whether or not
consecutive but excluding any Years of Service previously disregarded under this
rule).
2.2.2 A former Employee who was not a Participant and who again becomes an
Employee with no Years of Service to his credit shall be treated as a new
Employee.
2.3 TERMINATION OF PARTICIPATION
A Participant shall cease to be such:
(a) upon the payment to him of all nonforfeitable benefits due to
him under the Plan at a time when he is no longer eligible for any future
contributions;
(b) upon his Non-Vested Separation;
(c) upon his death; or
(d) upon the transfer of his Accounts to another Qualified Plan.
2.4 ROLLOVER MEMBERSHIP
An Eligible Employee who makes a Rollover Contribution shall become a
Participant as of the date of such contribution even if he has not previously
become a Participant. Such an Eligible Employee shall be a Participant only
with respect to his Rollover Contributions.
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ARTICLE III - CONTRIBUTIONS AND ACCOUNT ALLOCATIONS
3.1 MATCHING CONTRIBUTIONS
Subject to the provisions set forth in this Article III, for each Plan Year
the Employer will contribute to the Trust Fund on behalf of each Participant who
makes Salary Deferral Contributions, an amount equal to the following:
(a) An amount equal to 100% of the Salary Deferral Contributions
of the Participant to the extent that such Salary Deferral Contributions do
not exceed 3% of the Participant's Compensation for the Plan Year; and
(b) Fifty percent of the Salary Deferral Contributions of the
Participant to the extent that such Salary Deferral Contributions exceed 3%
but do not exceed 5% of the Participant's Compensation for the Plan Year.
Notwithstanding anything contained herein to the contrary, the aggregate
Matching and Salary Deferral Contributions to the Plan and any other profit
sharing or stock bonus plans maintained by an Employer with respect to a taxable
year of the Employer shall not exceed fifteen percent (15%) of the compensation
(as defined in Code (S) 404(a)(3)) paid or accrued to all participants of such
plans who are Employees of any Employer in respect of said taxable year plus
allowable credit and contribution carryovers, as provided in Code (S)
404(a)(3)(A).
3.2 SALARY DEFERRAL CONTRIBUTIONS
3.2.1 Salary Deferral Contributions. Subject to the provisions set forth
-----------------------------
in this Article III, each Participant may elect to make Salary Deferral
Contributions hereunder while he is an Eligible Employee through regular payroll
deductions authorized by him in a whole percentage of not less than 1% and not
more than 15% of his Compensation.
3.2.2 Change in Rate of Salary Deferral Contributions. A Participant may
-----------------------------------------------
elect to change his rate of Salary Deferral Contributions while he is an
Eligible Employee as of the first day of any payroll period but not more
frequently than eight times in any Plan Year (or such other limit as established
by the Company from time to time). The change will be limited to the rates
described in Section 3.2.1. The Participant's election to change his rate of
Salary Deferral Contributions must be made in writing to the Administrator prior
to the first day of the payroll period in which the Participant wishes the
change to be made effective.
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3.2.3 Suspension of Salary Deferral Contributions. A Participant may
-------------------------------------------
elect to suspend all his Salary Deferral Contributions by means of written
notice to the Administrator made prior to the first day of the payroll period in
which the Participant wishes the suspension to be made effective. The
Participant may elect to resume Salary Deferral Contributions as of the first
day of any payroll period which succeeds the date of the suspension by at least
one pay period. Such election to resume Salary Deferral Contributions must be
made in writing to the Administrator prior to the first day of the payroll
period in which the Participant wishes the resumption to be made effective. The
Administrator may establish such rules and procedures with respect to the
making, changing and resumption of Salary Deferral Contributions (including
suspension of contributions) as it shall determine.
3.2.4 After-Tax Contributions. Subject to the provision set forth in this
-----------------------
Article III, for each Plan Year, a Participant may elect through regular payroll
deductions to make After-Tax Contributions in whole percentages of not less than
1% and not more than 6% of his Compensation. There shall be no Employer
matching contributions made with respect to After-Tax Contributions.
3.2A CODE (S) 402(G) LIMITATIONS ON SALARY DEFERRAL CONTRIBUTIONS
(a) In the event that the dollar limit under Code Section 402(g) is
exceeded when one takes into account only contributions to the Plan and/or any
other plan, contract, or arrangement of the Employer that is subject to Section
402(g) of the Code, (i) the Participant is deemed to notify the Administrator of
such excess deferral, and (ii) the Administrator shall direct the Trustee of the
Plan to distribute such excess amount, and any income or loss allocable to such
amount, to the Participant no later than the first April 15th following the
close of the Participant's taxable year. Any Matching Contributions
attributable to such excess deferral shall be forfeited and applied like other
forfeitures.
(b) In the event a Participant is also a participant in one or more of the
following types of arrangements sponsored by another employer:
(i) another qualified cash or deferred arrangement (as defined in
Code Section 401(k)),
(ii) a simplified employee pension (as defined in Code Section
408(k)),
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(iii) a salary reduction arrangement (as defined in Code Section
3121(a)(5)(D)), or
(iv) a 403(b) annuity contract or custodial account, and the elective
deferrals (as defined in Code Section 402(g)(3)) made under such other ar
rangement(s) and his or her salary or wage deferrals made under this Plan
cumulatively exceed the Code Section 402(g) limitation for such
Participant's taxable year, the Participant may, not later than March 1st
following the close of such Participant's taxable year, notify the
Administrator in writing of such excess and request that his or her salary
or wage deferrals made under this Plan be reduced by an amount specified by
the Participant. Such amount, and any income or loss allocable to such
amount, shall then be distributed at the same time and in the same manner
as provided in paragraph 3.2A(a) above.
(c) If the Administrator determines during the course of the Participant's
taxable year that an excess deferral has been made on behalf of a Participant
during such taxable year, the Administrator may direct the Trustee to make a
corrective distribution of such excess deferral before the end of the taxable
year. Such a corrective distribution is permissible only if (i) the Participant
notifies the Administrator of the excess deferral (or, under the circumstances
described in paragraph 3.2A(a) above, the Participant is deemed to have made
such notification), (ii) the corrective distribution is made after the date on
which the Plan receives the excess deferral, and (iii) the distribution is
designated as a distribution of an excess deferral.
(d) The Plan may use any reasonable method for computing the income
allocable to such excess amounts, provided that the method does not violate
Section 401(a)(4) of the Code, is used consistently for all Participants and for
all corrective distributions under the Plan for the Plan Year, and is used by
the Plan for allocating income to Participants' Accounts. In no event, however,
shall a Participant receive from the Plan as a corrective distribution for the
taxable year an amount in excess of the Participant's total salary and wage
deferrals under the Plan for the taxable year.
(e) The Administrator reserves the right to reduce Salary Deferral
Contributions on behalf of Highly Compensated Employees to the extent necessary
to preserve the Plan's qualified status under the Internal Revenue Code.
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3.3 LIMITS ON 401(M) CONTRIBUTIONS-ACP TEST
(a) Average Contribution Percentage Test. The 401(m)
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Contributions for each Plan Year must satisfy one of the following tests:
(i) The Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan Year
shall not exceed the Average Contribution Percentage for Eligible
Participants who are Non-Highly Compensated Employees multiplied by
1.25; or
(ii) The Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees for the Plan Year
shall not exceed the Average Contribution Percentage for Eligible
Participants who are Non-Highly Compensated Employees multiplied by
2.0, provided that the Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees does not exceed the
Average Contribution Percentage for Eligible Participants who are Non-
Highly Compensated Employees by more than two (2) percentage points.
Nothing in this Section 3.3 shall preclude the Employer from
making any and all elections permitted by the Internal Revenue Service with
respect to substitution of the prior Plan Year's data for the current Plan
Year's data, as permitted -- for example -- in Internal Revenue Service
Notice 97-2.
(b) Aggregation of Employer Contributions.
-------------------------------------
(i) For purposes of this Section 3.3, the Contribution
Percentage for any Eligible Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to make Employee after-
tax contributions under one or more other plans described in Code (S)
401(a) that are maintained by the Company or an Affiliate shall be
determined as if all such contributions were made under a single plan.
(ii) If two or more plans are aggregated for purposes of
Code (S) 410(b) or 401(a)(4), such plans shall be aggregated for
purposes of the Average Contribution Percentage test.
III-4
<PAGE>
3.4 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
(a) In General. Notwithstanding any other provision of the Plan,
----------
Excess Aggregate Contributions plus any income or minus any loss allocable
thereto shall be distributed from the After-Tax Contributions Subaccount no
later than the last day of each Plan Year, to Participants on whose behalf
such Excess Aggregate Contributions were made for the preceding Plan Year.
The Excess Aggregate Contributions with respect to a Highly Compensated
Employee shall be determined by reducing 401(m) Contributions made on
behalf of such Highly Compensated Employees in order of the amount of
401(m) Contributions, as provided for in Internal Revenue Service Notice
97-2 or such other guidance published by the Internal Revenue Service
dealing with distributions of Excess Aggregate Contributions after the
effective date of the Small Business Job Protection Act of 1996.
(b) Determination of Income. The Excess Aggregate Contributions
-----------------------
distributed to a Participant for a Plan Year shall be adjusted for income
or loss, including income or loss for the period between the end of the
Plan Year and the date of distribution of the Excess Aggregate
Contributions, as follows. The income attributable to a Participant's
Excess Aggregate Contributions for the Plan Year shall be determined by
multiplying the income attributable to the Participant's Account for the
Plan Year by a fraction, (i) whose numerator is the Participant's Excess
Aggregate Contributions for the Plan Year, and (ii) whose denominator is
the Account Balance of the Participant's Account as of the end of the Plan
Year, reduced by the gain attributable to such Account Balance for the Plan
Year or increased by the loss attributable to such Account Balance for the
Plan Year. The income attributable to a Participant's Excess Aggregate
Contributions for the period from the end of the Plan Year to the date of
distribution shall be determined by multiplying 10% of the income
attributable to the Participant's Account for the Plan Year by the number
of calendar months, if any, which have elapsed since the end of the Plan
Year.
III-5
<PAGE>
3.5 ROLLOVER CONTRIBUTIONS AND TRUST TO TRUST TRANSFERS
3.5.1 With the approval of the Administrator, any Eligible Employee who is
a Participant, or who would be a Participant but for a failure to satisfy the
eligibility requirements of Article II, may make a Rollover Contribution to the
Plan. A Rollover Contribution shall be in cash or in other property acceptable
to the Trustee. The Administrator may condition acceptance of a contribution
intended to be a Rollover Contribution, including receipt of (i) such documents
as it may require to demonstrate that it is a Rollover Contribution and (ii)
assurance and certification that such contribution does not derive from a top
heavy plan under which the Eligible Employee was a key employee, within the
meaning of Code (S) 416, and will not thereby or otherwise affect adversely the
qualification of the Plan under Code (S) 401(a). In the event that an Eligible
Employee makes a contribution pursuant to this Section 3.5.1 intended to be a
Rollover Contribution but which the Administrator later concludes did not
qualify as a Rollover Contribution, the Trustee shall distribute to the Eligible
Employee as soon as practicable after that conclusion is reached the amount of
such contribution together with any earnings thereon.
3.5.2 The Administrator may cause to be transferred to the Plan directly
by the trustees of any qualified plan maintained by an Employer or Affiliate
cash and/or other assets acceptable to the Trustee and allocable to the Employee
under such plan, provided that any such transfer shall not reduce the vested
percentage or the rate of vesting of such transferred assets. Subject to the
approval of the Administrator, an Employee may cause to be transferred directly
by the trustees of any other pension or profit-sharing plan qualified under Code
(S) 401(a) in which such Employee participates to the Trustee of the Plan the
vested interest of the Employee in such other plan in cash and/or other assets
acceptable to the Trustee. The Administrator may establish rules and procedures
governing the transfer of qualified plan assets. Funds directly transferred to
the Plan from any other pension or profit-sharing plan qualified under Code (S)
401(a) shall not be considered either a voluntary contribution or Employer
contribution for purposes of calculating the Annual Additions of such Employee
under Section 3.8.
III-6
<PAGE>
3.6 ESTABLISHING OF ACCOUNTS
3.6.1 An Employer Contributions Subaccount shall be established for each
Participant for whom Employer Contributions are made, and the Administrator
shall credit, or cause to be credited to such account, all amounts allocable to
each such Participant pursuant to such contributions, plus gains or losses
thereon. Effective as of January 1, 1999, the Employer ceased making
contributions to the Employer Contributions Subaccount.
3.6.2 A Participant Contributions Subaccount shall be established for each
Participant who contributes to the Plan before January 1, 1999, to which the
Administrator shall credit, or cause to be credited, such contributions made by
the Participant, plus gains or losses thereon, for periods of time preceding
January 1, 1999. Effective as of January 1, 1999, no further Participant
Contributions were permitted to be made to the Plan, and the Participant
Contributions Subaccount was renamed the After-Tax Contributions Subaccount.
3.6.3 A Salary Deferral Contributions Subaccount shall be established for
each Participant who makes salary deferral contributions pursuant to Section 3.2
of the Plan. Participants were first eligible to begin making Salary Deferral
Contributions as of January 1, 1999. The Administrator shall credit, or cause
to be credited to such Salary Deferral Subaccount, all amounts contributed by
the Participant pursuant to Section 3.2, plus any gains or losses thereon.
3.6.4. A Matching Contributions Subaccount shall be established for each
Participant for whom Matching Contributions are made pursuant to Section 3.1.
The Employer first began making Matching Contributions as of January 1, 1999.
The Administrator shall credit, or cause to be credited to such Matching
Account, all amounts contributed by the Employer pursuant to Section 3.1, plus
any gains or losses thereon.
3.6.5 An After-Tax Contributions Subaccount shall be established for each
Participant who elects to make After-Tax Contributions to the Plan, and the
Administrator shall credit, or cause to be credited to such account, all amounts
contributed by the Participant pursuant to Section 3.2.4, plus any gains or
losses thereon. The After-Tax Contributions Subaccount is a continuation of the
pre-1999 Participant Contributions Subaccount, and holds both pre-1999
Participant Contributions and post-1998 After-Tax Contributions, adjusted for
gains or losses thereon.
III-7
<PAGE>
3.6.6 A Rollover Contributions subaccount shall be established for each
Participant who makes a Rollover Contribution to the Plan pursuant to Section
3.5, or on whose behalf a trust-to-trust transfer is made pursuant to Section
3.5. The Administrator shall credit, or cause to be credited, such Rollover
Contributions made by the Participant or on the Participant's behalf to such
Rollover Contributions Subaccount, plus any gains or losses thereon.
3.7 ALLOCATION OF CONTRIBUTIONS AND FORFEITURES
3.7.1 Allocation of Contributions. Subject to the limitation imposed by
---------------------------
Code (S) 415, the Salary Deferral Contributions made by each Participant will be
credited in shares or units of an Investment to his Salary Deferral
Contributions Subaccount as soon as practicable following or as of the date on
which such contributions are deposited in the Trust Fund pursuant to Section
3.2. Matching Contributions will be credited on the same date to the Matching
Contributions Subaccounts of those Participants for whose benefit such
contributions are made as provided in Section 3.1. After-Tax Contributions made
by each Participant will be credited in shares or units of an Investment to his
After-Tax Contributions Subaccount as soon as practicable following or as of the
date on which such contributions are deposited in the Trust Fund pursuant to
Section 3.2.
3.7.2 Allocation of Forfeitures. Except as otherwise provided in Section
-------------------------
12.4.2, forfeitures in Employer Contributions Subaccounts for a Plan Year shall
be applied to reduce the amount of the Employer Contributions to Employer
Contributions Subaccounts for that Plan Year, with the entire amount of such
contributions and forfeitures allocated in accordance with the preceding Section
3.7.1.
3.8 LIMITATION ON ALLOCATIONS
Notwithstanding any other provisions of the Plan, a Participant's Annual
Addition shall not exceed the limitations of Code (S) 415 which are hereby
incorporated by reference. In the event that the limitations of Code (S) 415(e)
would otherwise be violated, a Participant's benefits and/or annual additions
under plans of the Company or an Affiliate will be reduced as necessary in the
following order: (i) the accrued benefit under any defined benefit plan (pro
rata with respect to two or more such plans); (ii) unmatched employee or 401(k)
salary deferral contributions under any defined contribution plan; (iii) matched
employee or 401(k) salary
III-8
<PAGE>
deferral contributions under any defined contribution plan; and (iv) matching
Employer contributions under any defined contribution plan. If after the
application of (i)-(iv) above an excess amount still exists and the Participant
is covered by the Plan at the end of the Limitation Year, the excess amount in
the Participant's account will be used to reduce Employer Contributions
including any allocation of forfeitures for such Participant in the next
Limitation Year and each succeeding Limitation Year, if necessary. If after the
application of (i)-(iv) above an excess still exists and the Participant is not
covered by the Plan at the end of the Limitation Year, the excess amount will be
held unallocated in a suspense account and the suspense account will be applied
to reduce future Employer Contributions including allocations of any forfeitures
for all remaining Participants in the next Limitation Year and each succeeding
Limitation Year, if necessary. If a suspense account is in existence at any
time during the Limitation Year pursuant to this section, it will not
participate in the allocation of the trust's investment gains and losses.
3.9 RETURN OF EMPLOYER CONTRIBUTIONS UNDER SPECIAL CIRCUMSTANCES
Notwithstanding any provision of this Plan to the contrary, upon timely
written demand by the Employer to the Trustee:
(a) Any contribution by an Employer to the Plan under a mistake
of fact shall be returned to such Employer by the Trustee within one year
after the payment of the contribution;
(b) Any contribution made by an Employer to the Plan conditioned
on the determination by the Commissioner of Internal Revenue that the Plan
is initially a Qualified Plan shall be returned to such Employer by the
Trustee within one year after notification from the Internal Revenue
Service that the Plan is not initially a Qualified Plan; and
(c) Any contribution made by an Employer to the Plan conditioned
upon the deductibility of the contribution under Code (S) 404 shall be
returned to such Employer within one year after a deduction for the
contribution under Code (S) 404 is disallowed by the Internal Revenue
Service, but only to the extent disallowed. Each contribution by an
Employer shall be conditioned upon the deductibility of the contribution
under Code (S) 404 unless the Employer elects otherwise.
III-9
<PAGE>
3.10 USERRA PROVISIONS
Notwithstanding any provisions of the Plan to the contrary, contributions,
benefits, and service credit with respect to qualified military service will be
provided in accordance with (S) 414(u) of the Code.
III-10
<PAGE>
ARTICLE IV - VESTING
4.1 DETERMINATION OF VESTING
4.1.1 A Participant shall at all times have a vested percentage of 100% in
the Account Balance of his After-Tax Contributions Subaccount, his Salary
Deferral Contributions Subaccount, and his Matching Contributions Subaccount.
4.1.2 A Participant whose Employment terminates either because of his
death or Disability or upon or after attaining Normal Retirement Age shall have
a vested percentage of 100% in the Account Balance of his Employer Contributions
Subaccount.
4.1.3 The vested percentage of a Participant in the Account Balance of his
Employer Contributions Subaccount not vested pursuant to Section 4.1.2 shall be
determined in accordance with the following schedule:
Completed Years of Vested
Vesting Service Percentage
--------------------- ----------
less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
4.2 RULES FOR CREDITING VESTING SERVICE
4.2.1 A Participant's Vesting Service shall mean the sum of (i) a
Participant's years of Vesting Service prior to the Effective Date under the
terms of the Plan as in effect on December 31, 1988; plus (ii) subject to
Sections 4.2.2 through 4.2.5 below, a Participant's Years of Service after the
Effective Date.
4.2.2 If an Employee is on an authorized unpaid leave of absence granted
by his Employer in accordance with standard personnel policies of such Employer
applied in a non-discriminatory manner to all Employees similarly situated, his
period of absence shall not be
IV-1
<PAGE>
considered a Break in Service and shall be counted as Vesting Service upon his
return to active Employment.
4.2.3 If an Employee is on an authorized military leave while his
reemployment rights are protected by law and provided that he directly entered
military service from his Employer's service and shall not have voluntarily
reenlisted after the date of first entering active military service, his period
of absence shall not be considered a Break in Service and shall be counted as
Vesting Service upon his return to active Employment.
4.2.4 An Employee who terminates Employment with no vested percentage in
the Account Balance of his Employer Contributions Subaccount shall, if he
returns to Employment, have no credit for Vesting Service prior to such
termination of Employment if the total of his consecutive One Year Breaks in
Service immediately preceding his reemployment exceeds the greater of 5 years or
his aggregate years of Vesting Service prior to such termination (whether or not
consecutive, but excluding Vesting Service previously disregarded under this
rule). A Participant who had a Partially Vested Separation and returns to
Employment will retain credit for his prior years of Vesting Service.
4.2.5 Vesting Service of an Employee reemployed following 5 or more One
Year Breaks in Service (or one or more One Year Breaks in Service for years
prior to January 1, 1985) shall not be counted for the purpose of computing his
vested percentage in his Employer Contributions Subaccount derived from
contributions accrued prior to his termination of Employment. Separate records
shall be maintained reflecting the Participant's vested percentage in such
Subaccount attributable to service prior to terminating Employment and
reflecting the Participant's vested percentage in that Subaccount attributable
to service after reemployment.
4.3 ACCOUNT FORFEITURES
4.3.1 Upon the Non-Vested Separation or Partially Vested Separation of a
Participant the non-vested portion of his Employer Contributions Subaccount will
be treated as a forfeiture as of the earlier of: (i) the date on which the
Participant completes 5 One Year Breaks in Service, (ii) the date of the
Participant's death, or (iii) the date of distribution of the vested portion of
the Participant's Employer Contributions Subaccount. Such forfeitures shall be
applied toward the reduction of the Employer Contributions in accordance with
Section 3.7.2. A Participant who is zero percent vested in his Employer
Contributions Subaccount shall be treated as having
IV-2
<PAGE>
received a distribution of the vested portion of his Employer Contributions
Subaccount as of his date of termination of employment.
4.3.2 Amounts forfeited pursuant to Section 4.3.1 (unadjusted by any
subsequent gains or losses) shall be restored for a Participant who had a Non-
Vested or Partially Vested Separation, forfeited any portion of his Employer
Contributions Subaccount and then resumes Employment and repays to the Plan the
full amount of his distribution before incurring 5 consecutive One Year Breaks
in Service. The restored amount shall be derived from amounts forfeited and, if
such forfeitures are not sufficient, from a contribution by the Employer, as
appropriate, made as of that date.
IV-3
<PAGE>
ARTICLE V - AMOUNT AND PAYMENT OF BENEFITS TO PARTICIPANTS
5.1 FULLY VESTED SEPARATION
A Participant's benefits upon his Fully Vested Separation shall be the
Account Balance of his Account determined as of the date on which shares or
units of Investments allocated to his Account are sold or liquidated in order to
process the Participant's distribution.
5.2 PARTIALLY VESTED SEPARATION
A Participant's benefits upon his Partially Vested Separation shall be (a)
the Account Balance of his Employer Contributions Subaccount determined as of
the date on which shares or units of Investments allocated to his Account are
sold or liquidated in order to process the Participant's distribution,
multiplied by his vested percentage, determined pursuant to Section 4.1.3, plus
(b) the Account Balance of his Salary Deferral Contributions Subaccount,
Matching Contributions Subaccount, and After-Tax Contributions Subaccount as of
the same date applicable for purposes of clause (a) of this Section 5.2.
5.3 NON-VESTED SEPARATION
A Participant's benefits upon his Non-Vested Separation shall be the
Account Balance of his Salary Deferral Contributions Subaccount, Matching
Contributions Subaccount, and After-Tax Contributions Subaccount determined as
of the date on which shares or units of Investments allocated to such Account
are sold or liquidated in order to process the Participant's distribution.
5.4 [RESERVED]
5.5 BENEFIT COMMENCEMENT DATE
5.5.1 Except as provided in or by operation of this Article V, a
Participant's Benefit Commencement Date shall be as soon as practicable after
the first to occur of:
(a) the date the Participant properly requests such distribution
to commence after termination of the Participant's Employment with the
Employer and all Affiliates provided, however, any such request by a
Participant shall not be valid unless
V-1
<PAGE>
the Participant is furnished with a written explanation of his right to
defer the commencement of the benefit payment; or
(b) the date the Participant properly requests such distribution
to commence following the incurrence of a Disability; or
(c) the 60th day after the close of the Plan Year in which the
Participant attains Normal Retirement Age or, if later, when he terminates
Employment with the Employer and all Affiliates, unless the Participant has
requested to defer the distribution to a later date; or
(d) the April 1 following the calendar year in which the
Participant attains age 70-1/2; provided, however, that:
(i) In the case of a Participant who was born prior to July
1, 1917 and at no time during a Plan Year ending in or after the
calendar year in which he attains age 66-1/2 was a Five-percent Owner
of the Employer within the meaning of Code (S) 416(i)(1), such date
shall be the April 1 following the later of (i) the calendar year
during which he attains age 70-1/2, or (ii) the calendar year in which
the Participant retires; and
(ii) In the case of a Participant who was born prior to July
1, 1917 and at any time during a Plan Year ending in or after the
calendar year in which he attains age 66-1/2, was a Five-percent Owner
of the Employer within the meaning of Code (S) 416, such date shall be
the April 1 following the later of (i) the calendar year during which
he attained age 70-1/2, or (ii) the earlier of (1) the calendar year
ending in the Plan Year during which he first became a Five-percent
Owner, or (2) the calendar year in which the Participant retires; and
(iii) In the case of a Participant who is not a Five-
percent Owner with respect to the Plan Year ending in the calendar
year in which the Participant attains age 70-1/2, such date shall be
April 1 following the later of (i) the calendar year during which the
Participant attained age 70-1/2, or (ii), the calendar year in which
the Participant retired.
5.5.2 If the value of a Participant's Account exceeds $5,000 at the time
of any distribution, the Participant (and, if applicable, his Spouse) must
consent in a written election filed with the Administrator, to any distribution
before the Participant's attainment of Normal
V-2
<PAGE>
Retirement Age. Notwithstanding anything in this Article to the contrary, the
Administrator may direct the Trustee to distribute to the Participant the
distributable balance of the Participant's Account as soon as practicable
without such Participant's written consent if, at the time of distribution, the
value of the Participant's Account does not exceed $5,000.
5.5.3 In no event shall the amount distributable in any year be less than
the amount determined in accordance with the minimum distribution incidental
benefit requirements of Treasury Regulation Section 1.401(a)(9)-2.
5.6 IN-SERVICE WITHDRAWALS
5.6.1 After-Tax Contributions. In accordance with such rules and
-----------------------
procedures as the Administrator may prescribe, a Participant may withdraw his
After-Tax Contributions by giving written notice to the Administrator of
intention to so withdraw on a form prescribed or approved by the Administrator.
All such withdrawals will be made in accordance with Section 11.7.
Notwithstanding the foregoing, a Married Participant shall not withdraw any
amount of After-Tax Contributions without obtaining the Spousal Consent of his
Spouse within the 90 day period ending on the date the withdrawal is made. A
Participant may not make more than two withdrawals under this Section 5.6.1 in
any one calendar year.
5.6.2 Employer Contributions Subaccount Withdrawal. A Participant who (i)
--------------------------------------------
is 100% vested in his Employer Contributions Subaccount may withdraw an amount
which is no greater than 50% of the value of his Employer Contributions
Subaccount as of December 31, 1998, by giving prior written notice to the
Administrator of intention to so withdraw on a form prescribed or approved by
the Administrator. Such written notice will specify the particular portions of
the withdrawal which are to be withdrawn from each investment in which the
Participant's Account is invested. The remaining portion of the Employer
Contributions will not be available for withdrawal until retirement or
termination of employment. The right of a Participant withdrawing Employer
Contributions under this Section 5.6.2 to make further Salary Deferral
Contributions or After-Tax Contributions under the Plan will be suspended for a
period of twelve (12) months from the date of his last withdrawal. All such
withdrawals will be made in accordance with Section 11.7. Notwithstanding the
foregoing, a Married Participant shall not withdraw any amount of Employer
Contributions without obtaining the written, notarized consent of his Spouse
within the 90 day period ending on the date the withdrawal is made.
V-3
<PAGE>
5.6.3 Hardship Withdrawals. Upon the application by any Participant to
--------------------
the Administra tor, the Administrator may at any time permit such Participant to
withdraw all or a portion of the amounts then credited to his or her Salary
Deferral Contributions Account, (not including the earnings thereon attributable
to the year of the withdrawal or any prior year) if the withdrawal is made on
account of financial hardship. A withdrawal is made on account of financial
hardship if the withdrawal both (i) is made on account of an immediate and heavy
financial need of the Participant and (ii) is necessary to satisfy the financial
need. A withdrawal will not be considered made on account of an immediate and
heavy financial need unless it is made for one or more of the following
purposes:
1. costs directly related to the purchase of a principal residence
for the Participant (excluding mortgage payments);
2. payment of tuition and related educational fees for the next 12
months of post-secondary education for the Participant, or for the
Participant's spouse, children, or dependents (as defined in Section 152 of
the Code);
3. payments to prevent eviction of the Participant from the
Participant's principal residence or foreclosure on the mortgage on that
residence; or,
4. payments of unreimbursed medical expenses (as defined by Code (S)
213(d)) incurred by the Participant, the Participant's spouse, or the
Participant's dependents.
A hardship withdrawal will not be considered necessary to satisfy the
financial need unless all of the following requirements are satisfied:
1. The amount of the withdrawal does not exceed the amount of the
need. The amount of the need may include any amounts necessary to pay any
federal, state, or local income taxes or penalties reasonably anticipated
to result from the distribution.
V-4
<PAGE>
2. The Participant has obtained all distributions, other than hardship
distributions, and all nontaxable (at the time of the loan) loans currently
available under all plans maintained by the Employer.
3. The Participant has certified to the Administrator that his
financial need cannot be satisfied by (a) reimbursement or compensation
from insurance or any other source (b) reasonable liquidation of the
Participant's assets to the extent that such liquidation would not itself
cause an immediate and heavy financial need (c) discontinuance of Salary
Deferral Contributions under the Plan, and/or (d), one or more loans from a
commercial source on reasonable commercial terms.
If a Participant's application for a hardship withdrawal is approved, the
Administrator shall then instruct the Trustee to make payment of the approved
amount of the hardship withdrawal to the Participant.
A Participant who makes a hardship withdrawal is prohibited from making
Salary Deferral Contributions or After-Tax Contributions to the Plan or to any
other plan of the Employer for at least 12 months after receipt of the hardship
withdrawal. For this purpose "any other plan of the Employer" includes any
qualified or nonqualified plan of deferred compensation (other than the
Portfolio Manager's Deferred Compensation Plan) maintained by the Employer. The
phrase does not include any health or welfare benefit plan, including one that
is part of a cafeteria plan under Section 125 of the Code.
In the case of a Participant who makes a hardship withdrawal, the
Participant's adjusted Code Section 402(g) maximum deferral limit for the next
year is reduced by his deferrals made in the year of the hardship withdrawal.
5.6.4 Minimums.
--------
The Administrator shall not process any requests for in-service withdrawals
under this Section 5.6 for amounts less than two hundred dollars ($200.00).
V-5
<PAGE>
ARTICLE VI - FORMS OF PAYMENT OF ACCOUNTS
6.1 METHODS OF DISTRIBUTION
6.1.1 A Participant's benefits shall be payable in the normal form of a
Qualified Joint and Survivor Annuity (under an Annuity Contract purchased with
the aggregate Account Balance of the Participant's Account at the Benefit
Commencement Date) if the Participant is married on his Benefit Commencement
Date and in the normal form of a life annuity with payments guaranteed for 120
months (under an Annuity Contract purchased with the aggregate Account Balance
of the Participant's Account at the Benefit Commencement Date) if the
Participant is not married on that date, provided that a Participant may at any
time prior to the Benefit Commencement Date elect, in accordance with Section
6.2, any of the following optional forms of benefit payment instead of the
normal form:
(i) A lump sum in cash or in kind; or
(ii) An annuity (under an Annuity Contract purchased with the
aggregate Account Balance of the Participant's Account at the Benefit
Commencement Date) of the type described in Section 6.1.2.
Anything in this Section 6.1.1 to the contrary notwithstanding, if the
nonforfeitable Account Balance of a terminated Participant shall be equal to or
less than $5,000 when the amount thereof is first determined, the entire amount
shall be distributed in a lump sum as promptly as possible.
6.1.2 For purposes of Section 6.1.1(ii), the optional annuity form may be
any one of the following:
(i) A single life annuity, under which equal or substantially
equal monthly installments are paid to the Participant during his lifetime,
with no further payments to anyone after his death.
(ii) An annuity under which equal or substantially equal monthly
installments are paid to the Participant during his lifetime, with payment
of monthly installments guaranteed for a period selected by the Participant
which may be either 60, 120, 180, 240 or 300 months.
(iii) An annuity under which equal or substantially equal
annual, semi-annual, quarterly or monthly installments are paid in an
amount specified in the election until the net sum payable with interest
thereon at the rate of 3% per annum and such
VI-1
<PAGE>
additional interest, if any, as may be declared under the Annuity Contract
is exhausted. Any balance remaining at the end of twenty-five years shall
be paid in a lump sum.
(iv) An annuity under which equal or substantially equal annual,
semi-annual, quarterly or monthly installments, except for any excess
interest, are paid for a fixed period not exceeding twenty-five years.
Such amounts shall include interest on the unpaid balance at a rate (not
less than 3% per annum) declared annually under the Annuity Contract.
(v) An annuity under which equal or substantially equal monthly
installments are paid to the Participant during his lifetime with such
payments continuing during the lifetime of a contingent annuitant if the
contingent annuitant survives the Participant.
(vi) An annuity under which equal or substantially equal monthly
installments are paid for the longer of the lifetime of the Participant,
the lifetime of a contingent annuitant or a guaranteed period selected by
the Participant. The period may be either 60, 120, 180, 240 or 300 months.
(vii) An annuity under which equal or substantially equal
monthly installments are paid for the Participant so long as both the
Participant and a contingent annuitant shall live. Upon the death of the
first of them to die the amount of each installment shall be reduced to
two-thirds of the amount previously paid, and such reduced installments
shall be paid to the survivor for his lifetime.
(viii) An annuity under which equal or substantially equal
monthly installments are paid for the longer of the period during which
both the Participant and a contingent annuitant shall live or a guaranteed
period selected by the Participant. The guaranteed period may be either
60, 120, 180, 240 or 300 months. Upon the later of (A) the death of the
first to die of the Participant or the contingent annuitant or (B) the
expiration of the guaranteed period, if one of them is then living the
amount of each installment shall be reduced to two-thirds of the amount
previously paid and such reduced installments shall be paid to the survivor
for his lifetime.
6.1.3 Notwithstanding Section 6.1.1, the normal form of benefits of a
Participant shall be a lump sum and Sections 6.2.2 and 6.2.4 shall not apply
unless the Participant (a) is credited with at least one Hour of Service on or
after August 23, 1984, or (b) his interest under this Plan,
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or under a plan of which this Plan is a continuation, had not been distributed,
or distribution thereof had not commenced, prior to August 23, 1984.
6.2 ELECTION OF OPTIONAL FORMS
6.2.1 By notice to the Administrator within the 90-day period prior to a
Participant's Benefit Commencement Date, the Participant may elect, in writing,
not to receive the normal form of benefit payment otherwise applicable and to
receive instead an optional form of benefit payment provided for in Section
6.1.1.
6.2.2 Within a reasonable period, but in no event later than a married
Participant's Benefit Commencement Date, the Administrator shall provide to each
married Participant a written explanation of:
(a) the terms and conditions of the Participant's normal form of
benefit payment;
(b) the Participant's right to make, and the effect of, an
election to waive the normal form of benefit payment;
(c) the rights of the Participant's Spouse under Section 6.2.4;
and
(d) the right to make, and the effect of, a revocation of a
previous election to waive the normal form of benefit payment.
The Administrator may, on a uniform and nondiscriminatory basis, provide for
such other notices, information or election periods or take such other action as
the Administrator considers necessary or appropriate so that this Section 6.2 is
implemented in such a manner as to comply with Code (S)(S) 401(a)(11) and 417.
6.2.3 A Participant may revoke his election to take an optional form of
benefit, and elect a different form of benefit, at any time prior to the
Participant's Benefit Commencement Date.
6.2.4 The election of an optional benefit by a married Participant must
also be a waiver of a Qualified Joint and Survivor Annuity by the Participant.
A waiver of a Qualified Joint and Survivor Annuity shall not be effective
unless: (i) the Participant's Spouse consents in writing; (ii) the Spouse's
consent to the waiver is witnessed by a plan representative or notary public;
and (iii) the Spouse's consent acknowledges the effect of the election.
Additionally, a Participant's waiver of the Qualified Joint and Survivor Annuity
will not be effective unless the election designates a form of benefit payment
which, if the Participant is married, may not be changed
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without spousal consent. Notwithstanding this consent requirement, if the
Participant establishes to the satisfaction of a Plan representative that such
written consent may not be obtained because there is no Spouse or the Spouse
cannot be located, the election will be deemed effective. Any consent necessary
under this provision will not be valid with respect to any other Spouse.
6.2.5 The election of an optional form of benefit which contemplates the
payment of an annuity shall not be given effect if any person who would receive
benefits under the annuity dies before the annuity starting date.
6.3 CHANGE IN FORM OR TIMING OF BENEFIT PAYMENTS
Subject to the Administrator's consent, any former Employee whose payments
are being deferred or who is receiving installment payments may request
acceleration or other modification of the form of benefit distribution, provided
that any necessary consent to such change required pursuant to Section 6.2.4 is
obtained from the former Employee's Spouse.
6.4 DIRECT ROLLOVERS
6.4.1 Effective with respect to distributions made on or after January 1,
1993, a Participant or Spouse may elect to have all or a portion of any amount
payable to him or her from the Plan which is an "eligible rollover distribution"
(as defined in Section 6.4.2 below) transferred directly to an "eligible
retirement plan" (as defined in Section 6.4.2 below). Any such election shall
be made in accordance with such uniform rules and procedures as the
Administrative Committee may prescribe from time to time as to the timing and
manner of the election in accordance with Code (S) 401(a)(31).
6.4.2 For purposes of this Section and Section 7.1.4:
(a) "Eligible rollover distribution" shall mean any distribution
of all or any portion of the balance to the credit of the distributee other
than: (1) 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; (2) any distribution for a specified period of ten (10) years
or more; (3) any distribution to the extent such distribution is required
under Code (S) 401(a)(9); or (4) the portion of any distribution that is
not includable in gross income.
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(b) "Eligible retirement plan" shall mean, with respect to a
Participant, an individual retirement account or annuity described in Code
(S) 408(a) or 408(b) ("IRA"); an annuity plan described in Code (S) 403(a);
or a qualified plan described in Code (S) 401(a), that accepts the
distributee's eligible rollover distribution and, with respect to a Spouse,
shall mean an IRA.
(c) Effective as of January 1, 1999, the term "eligible rollover
distribution" shall not include a Participant's hardship withdrawal made
under Section 5.6.3.
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ARTICLE VII - DEATH BENEFITS
7.1 PAYMENT OF ACCOUNT BALANCES
7.1.1 If a Participant dies before distribution of his interest in the
Plan, if any, has commenced, the Participant's non-forfeitable Account Balance
shall, subject to Section 7.1.2 be distributed to the Participant's Beneficiary
in the form, at the time and from among the methods specified in Section 6.1.1
as elected by the Beneficiary within 60 days following the Participant's death.
If an election is not received by the Administrator, the distribution shall be
made, if to a Surviving Spouse, in accordance with Section 7.1.2(a), and, if to
some other Beneficiary, to the Beneficiary in a lump sum. Notwithstanding the
foregoing, if the total amount distributable to the Beneficiary is $5,000 or
less, the distribution shall be made in a lump sum.
7.1.2. Notwithstanding any other provision of the Plan to the contrary:
(a) If the Participant dies leaving a Surviving Spouse before
distribution of his interest in the Plan has commenced, and unless the
Participant's Surviving Spouse has elected, by written notice to the
Administrator within sixty days after the Participant's death, any other
form of benefit payment specified in Section 6.1.1, or the Participant's
Surviving Spouse has already consented in a manner described in Section
6.2.4 to a distribution to some other Beneficiary designated by the
Participant, the Participant's Account Balance shall be distributed to the
Participant's Surviving Spouse in the form of an annuity for the life of
the Surviving Spouse (under an Annuity Contract purchased with the
aggregate Account Balance of the Participant's Account) or in lump sum form
if the total amount distributable is $5,000 or less.
(b) If the Participant dies before distribution of his or her
interest in the Plan has commenced, the Participant's entire interest must
be distributed within five years after the Participant's death; provided,
however, that if any portion of the Participant's interest is payable to
his Beneficiary, distributions may be made in substantially equal
installments over the life or life expectancy of the Beneficiary,
commencing (i) in the case of a Beneficiary other than a Surviving Spouse,
no later than one year after the Participant's death; and (ii) in the case
of a Surviving Spouse, no later than the later of one year after the
Participant's death or the date on which the Participant would have
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attained age 70 1/2. If the Surviving Spouse dies before payments to such
Spouse begin, subsequent distributions shall be made as if the Surviving
Spouse had been the Participant.
7.1.3 Any lump sum payment payable to a Spouse pursuant to this Section
7.1 shall be eligible for a direct rollover in accordance with Section 6.4.
7.2 BENEFICIARIES
7.2.1 Subject to the spousal consent requirements of Section 7.1.2(a), a
Participant may designate a Beneficiary for his Account.
7.2.2 If a Participant who is unmarried as of the date of his death has
designated a Beneficiary and such Beneficiary predeceases the Participant, or if
no Beneficiary has been designated by such Participant, the Participant's
interest remaining in the Plan shall be paid to the estate of the Participant.
If a Participant who is married as of the date of his death designates a
Beneficiary pursuant to Section 7.1.2(a) and such Beneficiary predeceases the
Participant, the Participant's interest remaining in the Plan shall be paid to
the Participant's Surviving Spouse, or to the Participant's estate if such
Spouse is no longer living. If two or more Beneficiaries are named, the
interest of any Beneficiary, who does not survive the Participant, shall pass to
the surviving Beneficiary or Beneficiaries in accordance with their respective
interests unless otherwise agreed in writing between the Administrator and the
Participant.
7.2.3 Subject to the consent requirements applicable with respect to a
Spouse, any designation of a Beneficiary to whom amounts due after the
Participant's death shall be paid must be filed with the Administrator, in a
time and manner designated by the Administrator, in order to be effective. Any
such designation of a Beneficiary may be revoked by filing a later designation
or an instrument of revocation with the Administrator, in a time and manner
designated by the Administrator. If a Beneficiary fails to survive a
Participant for at least 30 days, it shall be presumed that the Participant
survived the Beneficiary.
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ARTICLE VIII - FIDUCIARIES
8.1 NAMED FIDUCIARIES
The Named Fiduciaries, who shall have authority to control and manage the
operation and administration of the Plan, are as follows:
(a) the Company, which shall have the sole right to (i) appoint
and remove from office the members of the Administrative Committee, the
Trustee and any investment manager; (ii) designate the Investment Companies
for investment of contributions under the Plan; and (iii) amend or
terminate the Plan;
(b) the Administrative Committee, which shall have the authority
and duties specified in Article X hereof;
(c) the Trustee, which shall have the authority and duties
specified in Article IX hereof and the Trust Agreement; and, in addition,
the authority and duties of the Administrative Committee in the event that
no such Committee shall be appointed or constituted by the Company; and
(d) any investment manager or managers selected by the Company,
who renders investment advice with respect to Plan assets.
8.2 EMPLOYMENT OF ADVISERS
A "named fiduciary" with respect to the Plan (as defined in ERISA (S)
402(a)(2)) and any "fiduciary" (as defined in ERISA (S) 3(21)) appointed by such
a "named fiduciary", may employ one or more persons to render advice with regard
to any responsibility of such "named fiduciary" or "fiduciary" under the Plan.
8.3 MULTIPLE FIDUCIARY CAPACITIES
Any "named fiduciary" with respect to the Plan (as defined in ERISA (S)
402(a)(2)) and any other "fiduciary" (as defined in ERISA (S) 3(21)) with
respect to the Plan may serve in more than one fiduciary capacity.
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8.4 RELIANCE
Any fiduciary with respect to the Plan may rely upon any direction,
information or action of any other fiduciary, acting within the scope of its
responsibilities under the Plan, as being proper under the Plan.
8.5 SCOPE OF AUTHORITY AND RESPONSIBILITY
The responsibilities of the Administrative Committee and the Trustee for
the operation and administration of the Plan are allocated between them in
accordance with the provisions of the Plan and the Trust Agreement wherein their
respective duties are specified. Each fiduciary shall have only the authority
and duties as are specifically given to it under this Plan, shall be responsible
for the proper exercise of its own authorities and duties, and shall not be
responsible for any act or failure to act of any other fiduciary.
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ARTICLE IX - TRUSTEE
9.1 TRUST AGREEMENT
The Company shall enter into one or more Trust Agreements with the Trustee
or Trustees selected by it in its sole discretion, and the Trustee shall receive
the contributions to the Trust Fund made by the Employer pursuant to the Plan
and shall hold, invest, reinvest, and distribute such fund, as applicable, in
accordance with the terms and provisions of the Trust Agreement. The Company
will determine the form and terms of such Trust Agreement and may modify such
Trust Agreement from time to time to accomplish the purposes of this Plan and
may, in its sole discretion, remove any Trustee and select any successor
Trustee.
9.2 ASSETS IN TRUST
Except as otherwise permitted under the Plan, all assets of the Plan shall
be held in trust by the Trustee who upon acceptance of such office shall have
such authority as is set forth in the Trust Agreement.
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ARTICLE X - ADMINISTRATIVE COMMITTEE
10.1 APPOINTMENT AND REMOVAL OF ADMINISTRATIVE COMMITTEE
The administration of the Plan shall be vested in an Administrative
Committee of at least three (3) persons who shall be appointed by the Board, and
may include persons who are not Participants in the Plan. A person appointed a
member of the Committee shall signify his acceptance in writing. The Board may
remove or replace any member of the Committee at any time in its sole
discretion, and any Committee member may resign by delivering his written
resignation to the Board, which resignation shall become effective upon its
delivery or at any later date specified therein. If at any time there shall be
a vacancy in the membership of the Committee, the remaining member or members of
the Committee shall continue to act until such vacancy is filled by action of
the Board.
10.2 OFFICERS OF ADMINISTRATIVE COMMITTEE
The Committee shall appoint from among its members a chairman, and shall
appoint as secretary a person who may be, but need not be, a member of the
Committee or a Participant in the Plan.
10.3 ACTION BY ADMINISTRATIVE COMMITTEE
The Committee shall hold meetings upon such notice, at such place or
places, and at such times as its members may from time to time determine. A
majority of its members at the time in office shall constitute a quorum for the
transaction of business. All action taken by the Committee at any meeting shall
be by vote of the majority of its members present at such meeting, except that
the Committee also may act without a meeting by a consent signed by a majority
of its members. Any member of the Committee who is a Participant in the Plan
shall not vote on any question relating exclusively to himself.
10.4 RULES AND REGULATIONS
Subject to the terms of the Plan, the Committee may from time to time adopt
such rules and regulations as it shall deem appropriate for the administration
of the Plan and for the conduct and transaction of its business and affairs.
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10.5 POWERS
The Committee shall have such powers as may be necessary to discharge its
duties under the Plan, including the power:
(a) to interpret and construe the Plan in its discretion, to
determine all questions with regard to employment, eligibility, Years of
Service, Compensation, benefits, and such factual matters as date of birth
and marital status, and similarly related matters for the purpose of the
Plan. The Committee's determination of all questions arising under the
Plan shall be conclusive upon all Participants, the Board, the Company,
Employers, the Trustee, and other interested parties;
(b) to prescribe procedures to be followed by Participants and
Beneficiaries filing application for benefits;
(c) to prepare and distribute to Participants information
explaining the Plan;
(d) to appoint or employ individuals to assist in the
administration of the Plan and any other agents it deems advisable,
including legal, accounting and actuarial counsel;
(e) to instruct the Trustee to make benefit payments pursuant to
the Plan;
(f) to appoint an enrolled actuary and to receive and review the
periodic valuation of the Plan made by such actuary;
(g) to receive and review reports of disbursements from the Trust
Fund made by the Trustees; and
(h) to receive and review the periodic audit of the Plan made by
a certified public accountant appointed by the Company.
10.6 INFORMATION FROM PARTICIPANTS
Each Participant shall be required to furnish to the Committee, in the form
prescribed by it, such personal data, affidavits, authorizations to obtain
information, and other information as the Committee may deem appropriate for the
proper administration of the Plan.
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<PAGE>
10.7 REPORTS
The Committee shall prepare, or cause to be prepared, such periodic reports
to the U.S. Labor Department, the Internal Revenue Service and the Pension
Benefit Guaranty Corporation as may be required pursuant to the Code or ERISA.
10.8 AUTHORITY TO ACT
The Committee may authorize one or more of its members, officers, or agents
to sign on its behalf any of its instructions, directions, notifications, or
communications to the Trustee, and the Trustee may conclusively rely thereon and
on the information contained therein.
10.9 LIABILITY FOR ACTS
The members of the Committee shall be entitled to rely upon all valuations,
certificates and reports furnished by the Plan actuary or accountant and upon
all opinions given by any legal counsel selected by the Committee, and the
members of the Committee shall be fully protected with respect to any action
taken or suffered by their having relied in good faith upon such actuary,
accountant or counsel and all action so taken or suffered shall be conclusive
upon each of them and upon all Participants and their Beneficiaries. No member
of the Committee shall incur any liability for anything done or omitted by him
except only liability for his own gross negligence or willful misconduct.
10.10 COMPENSATION AND EXPENSES
Unless authorized by the Board, a member or officer of the Committee shall
not be compensated for his service in such capacity, but shall be reimbursed for
reasonable expenses incident to the performance of such duty.
10.11 INDEMNITY
The Company shall indemnify the members of the Committee and any of their
agents acting in behalf of the Plan against any and all liabilities or expenses,
including all legal fees related thereto, to which they may be subjected as
members of the Committee by reason of any act or failure to act which
constitutes a breach or an alleged breach of fiduciary responsibility under
ERISA or otherwise, except that due to a person's own willful misconduct.
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<PAGE>
10.12 DENIED CLAIMS
If any application for payment of a benefit under the Plan shall be denied,
the Committee shall with the denial write the claimant setting forth the
specific reasons for the denial and explaining the Plan's claim review
procedure. If a claimant whose claim has been denied wishes further
consideration of his claim, he may request the Committee to review his claim in
a written statement of the claimant's position filed with the Committee no later
than 60 days after the claimant receives such denial. The Committee shall make
a full review of the claim and the denial, giving the claimant written notice of
its decision within the next 60 days. Due to special circumstances, if no
decision has been made within the first 60 days and notice of the need for
additional time has been furnished within such period, the decision may be made
within the following 60 days. A claimant shall be required to exhaust the
administrative remedies provided by this Section 10.12 prior to seeking any
other form of relief.
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<PAGE>
ARTICLE XI -
INVESTMENT OF CONTRIBUTIONS; MANAGEMENT OF ACCOUNTS
11.1 INITIAL INVESTMENT ELECTION
Prior to the date an Eligible Employee is first eligible to become a
Participant under Section 2.1.1, the Administrator will inform him of the
Investments available under the Plan for investment of Accounts and will make
available to him information for each Investment. At least ten days prior to
the date an Eligible Employee becomes a Participant hereunder, he must make an
initial investment election which will apply to the investment of his Salary
Deferral Contributions and Matching Contributions made with respect to him.
Investment elections shall be made in whole percentages. The election of
Investments is the sole responsibility of each Participant, and no Employer or
representative of the Employer including the Administrator is authorized to make
any recommendation to the Participant with respect thereto.
Contributions to be invested in Investment Company Shares will be so
invested and credited to the Account of a Participant as soon as is practicable
following the deposit of such contributions in the Trust Fund. Contributions to
be invested in Company Stock will be invested in the Company Stock Accounts, as
applicable, and credited to the Account of a Participant as soon as is
practicable following the deposit of such contributions in the Trust Fund.
Participants may not elect to have any contributions invested in the
Torchmark Stock Account.
11.2 CHANGE IN INVESTMENT ELECTION FOR CONTRIBUTIONS
Pursuant to a nondiscriminatory policy established by the Administrator and
communicated to Participants, a Participant may elect to change his investment
election with respect to the investment of Salary Deferral Contributions,
Matching Contributions, and After-Tax Contributions. Such changes shall be made
in whole percentages, and shall take effect as soon as is practicable following
or as of the date on which such change is made. Such change will be limited to
the Investment choices described in Section 11.1
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11.3 TRANSFER OF INVESTMENT ACCOUNTS
Pursuant to nondiscriminatory guidelines established by the Administrator
and communicated to Participants, a Participant may elect to transfer in any
whole percentage the value of an investment in any of his Subaccounts from one
Investment to another Investment. Such transfers shall take effect as soon as
practicable following or as of the date on which such election is made, and
shall be based upon the value of units or shares of the applicable Investments
of the Participant as of the date on which such units or shares are bought or
sold in order to effectuate the investment transfer.
11.4 REINVESTMENT
11.4.1 All dividends and capital gains or other distributions received on
the Investment Company Shares held for each Participant's Account will (unless
received in additional Investment Company Shares) be reinvested in full and
fractional Shares of the same Investment Company at a price determined in
accordance with the then current prospectus of the Investment Company.
11.4.2 All dividends, interest and other distributions received on assets
of the Company Stock Accounts held for each Participant's Account will (unless
received in additional Company Shares or in the shares of an Affiliate) be
reinvested in full and fractional shares of the same investment in the Company
Stock Accounts, as applicable.
The shares so received or purchased upon such reinvestment will be credited
to such Account. If any dividends or capital gain or other distributions may be
received at the election of the shareholder in additional shares or in cash or
other property, the Trustee will elect to receive such dividends or
distributions in additional shares.
11.4.3 All dividends, interest and other distributions received on assets
of the Torchmark Stock Account held for each Participant's Account will (unless
received before January 1, 1999, in additional Torchmark Shares or in the shares
of an Affiliate) be reinvested in full and fractional shares of Torchmark Stock.
Effective as of the date of conclusion of the initial public offering for
the Class A common stock of Waddell & Reed Financial, Inc., a Participant may
not elect to further invest any portion of his Account in the Torchmark Stock
Account and may not elect to have further Participant Contributions, After-Tax
Contributions, Employer Contributions, Salary Deferral
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<PAGE>
Contributions, or Matching Contributions invested in the Torchmark Stock
Account. Effective as of the date of conclusion of the initial public offering
of Waddell & Reed Financial, Inc. Class A common stock, a Participant may elect
to transfer funds out of the Torchmark Stock Account according to the procedures
set forth in Section 11.2, but may not elect to transfer funds into that
account.
11.5 VOTING OF SHARES OF INVESTMENTS
Subject to any requirements of applicable law, the Administrator will
deliver to each Participant copies of any notices of shareholders' meetings,
proxies and proxy-soliciting materials, prospectuses and the annual and other
reports to shareholders which have been received with respect to Investments
held by the Trustee for the account of the Participant.
Each Participant may direct the Administrator to direct the Trustee to vote
the Investment Company Shares (including fractional shares) held by the Trustee
under the Plan for his Account and the Company Shares or Torchmark Shares held
by the Trustee under the Plan for his Account with respect to matters to be
voted upon by the shareholders of such Investment. The Participant's directions
must be in writing, on a form approved by the Administrator, and delivered to
the Administrator within the time prescribed by it. With respect to Shares of
Investments for which the Administrator receives no written directions from the
Participants, the Administrator will direct the Trustee to vote such Shares in
the same proportion as the shares instructed by the Participants.
11.6 VALUATION OF ACCOUNTS
Effective as of January 1, 1999, all allocations to a Participant's Account
shall be made in shares or units of one or more Investments, and all cash
receipts allocable to the Account of a Participant shall be used to purchase
shares or units of an Investment in accordance with the Participant's current
investment election. The value of units or shares allocated to a Participant's
Account shall be determined by the fair market value of shares or units
allocated to such Participant's Account as of the date on which shares are
purchased or sold to provide for distributions, withdrawals, or transfers
between Investments. All withdrawals and distributions under the Plan shall be
based upon the amount realized from the liquidation of units or shares credited
to the Account of a Participant.
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11.7 DISTRIBUTIONS OR WITHDRAWALS
If the Administrator receives a request for withdrawal or distribution of
an Investment out of Investment Company Shares, the withdrawal or distribution
will be effected by redeeming the requested amount, or transferring the required
number of Investment Company Shares if a distribution in kind is requested, from
the Investment Company as soon as is practicable following or as of the date of
receipt of the request.
If the Administrator receives a request for withdrawal or distribution of
an Investment out of the Company Stock Accounts or out of the Torchmark Stock
Account, the withdrawal or distribution will be effected by redeeming the number
of units the Participant has in the applicable Company Stock Account or the
Torchmark Stock Account for cash or, if a withdrawal or distribution in kind is
requested, by distributing the required number of shares of Class A or Class B
common stock of Waddell & Reed Financial, Inc. (as the case may be) or shares of
common stock of Torchmark Corporation. Such withdrawal or distribution will be
processed as soon as is practicable following or as of the date on which the
Participant's request is received, and shall be based upon the value of the
units in the applicable Company Stock Account or the Torchmark Stock Account (as
the case may be) as of the date on which the request is processed.
11.8. BLACK OUT PERIOD
11.8.1. Effective as of January 1, 1999, there shall be a black out period
during which, notwithstanding anything in the Plan to the contrary, no
Participant in the Plan shall be allowed to transfer assets between Investments
or receive a withdrawal or distribution of benefits, except as otherwise
permitted by the Employer with respect to contributions made to the Plan on or
after January 1, 1999. The black out period shall last as long as necessary to
complete the transfer of record keeping functions from the Plan's current
recordkeeper (as of October 1998) to the Plan's new recordkeeper and the
unitization of all Investments under the Plan. All Participants shall be
notified once the transfer has been completed and transactions shall thereafter
resume according to the Plan.
11.8.2 During a reasonable period of time preceding January 1, 1999, the
Administrator may impose such restrictions and limitations on investment
transfers and withdrawals as are necessary or appropriate to allow the Plan and
Trust Fund to prepare for the conversion to the new recordkeeping system and the
unitization of all Investments under the Plan. By way of
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example, and not limitation, the Administrator may elect to restrict, suspend,
or prohibit transfers in or out of the Company Stock Accounts or the Torchmark
Stock Account during one or more valuation periods preceding January 1, 1998.
11.9 Insider Trading Restrictions.
----------------------------
11.9.1 If a Participant is an officer or director of the Employer within
the scope of Section 16 of the Securities Exchange Act of 1934, any election by
the Participant to engage in a Discretionary Transaction (as defined in Section
11.9.2 below) involving units of the Company Stock Fund shall not become
effective until 180 days following the date of the most recent "opposite way"
Discretionary Transaction of the Participant with respect to any plan of the
Employer. For this purpose, if the Discretionary Transaction involves the
purchase of units of the Company Stock Fund, an opposite way Discretionary
Transaction means a Discretionary Transaction involving the sale of units of the
Company Stock Fund. Similarly, if the Discretionary Transaction involves the
sale of units of the Company Stock Fund, an opposite way Discretionary
Transaction means a Discretionary Transaction involving the purchase of units of
the Company Stock Fund.
11.9.2 For purposes of this Section 11.9, a Discretionary Transaction
shall mean a transaction pursuant to the Plan or any other employee benefit plan
of the Employer that:
(a) is at the volition of the Participant;
(b) is not made in connection with the Participant's death, disability,
retirement, or termination of employment;
(c) is not required to be made available to the Participant pursuant to a
provision of the Code; and,
(d) results in either an intra-Plan transfer involving units of the Company
Stock Fund or a cash distribution funded by the Participant's volitional
disposition of units in the Company Stock Fund.
11.9.3 All investment elections involving Company Stock by Participants
who are subject to this Section 11.9 must be in writing and must be presented to
the Administrator for processing on the Participant's behalf.
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ARTICLE XII - PLAN AMENDMENT OR TERMINATION
12.1 PLAN AMENDMENT OR TERMINATION
The Company shall have the right at any time to amend the Plan, which
amendment shall be evidenced by an instrument in writing signed by an authorized
officer of the Company, effective retroactively or otherwise. No such amendment
shall have any of the effects specified in Section 12.2.
12.2 LIMITATIONS ON PLAN AMENDMENT
No Plan amendment shall:
(a) authorize any part of the Trust Fund to be used for, or
diverted to, purposes other than for the exclusive benefit of Participants
or their Beneficiaries;
(b) decrease the accrued benefits of any Participant or his
Beneficiary under the Plan (except to the extent permitted under Code (S)
412(c)(8)); or
(c) change the vesting schedule, either directly or indirectly,
unless each Participant having not less than three years of Vesting Service
is permitted to elect, within a reasonable period specified by the
Administrator after the adoption of such amendment, to have his vested
percentage computed without regard to such amendment.
The period during which the election may be made shall commence with the date
the amendment is adopted and shall end as the later of:
(i) sixty days after the amendment is adopted;
(ii) sixty days after the amendment becomes effective; or
(iii) sixty days after the Participant is issued written notice
by the Administrator.
XII-1
<PAGE>
12.3 RIGHT OF COMPANY TO TERMINATE PLAN OR DISCONTINUE CONTRIBUTIONS
The Company intends and expects that from year to year it will be able to
and will deem it advisable to continue this Plan in effect and to make
contributions as herein provided. The Company reserves the right, however, to
terminate the Plan at any time or to completely discontinue its contributions
thereto at any time, which termination or discontinuance shall be evidenced by
an instrument in writing signed by an authorized officer of the Company
delivered to the Administrator and the Trustee.
12.4 EFFECT OF PARTIAL OR COMPLETE TERMINATION OR COMPLETE DISCONTINUANCE OF
CONTRIBUTIONS
12.4.1 As of the date of a "partial termination" of the Plan:
(a) if not then fully vested, each affected Participant who is
then an Employee shall become 100% vested in his or her Employer
Contributions Subaccount; and
(b) no further contributions or allocations of forfeitures shall
be made after such date with respect to each affected Participant.
12.4.2 As of the date of the "complete termination" of the Plan, or the
"complete discontinuance of contributions" under the Plan:
(a) if not then fully vested, each affected Participant who is
then an Employee shall become 100% vested in his Employer Contributions
Subaccount;
(b) any forfeitures which may have occurred in accordance with
Section 4.3 prior to the termination of the Plan but which have not been
applied to reduce Employer Contributions under Section 3.7.2 shall be
allocated pro-rata to those Participants who were Eligible Employees on the
effective date of the termination of the Plan;
(c) no further contributions shall be made after such date; and
(d) no Eligible Employee shall become a Participant after such
date.
12.4.3 All other provisions of the Plan shall remain in effect unless
otherwise amended.
XII-2
<PAGE>
ARTICLE XIII - MISCELLANEOUS PROVISIONS
13.1 EXCLUSIVE BENEFIT OF PARTICIPANTS
The Trust Fund shall be held for the benefit of all persons who shall be
entitled to receive payments under the Plan. It shall be prohibited at any time
for any part of the Trust Fund (other than such part as is required to pay
expenses) to be used for, or diverted to, purposes other than for the exclusive
benefit of Participants or their Beneficiaries.
13.2 PLAN NOT A CONTRACT OF EMPLOYMENT
The Plan is not a contract of Employment, and the terms of Employment of
any Employee shall not be affected in any way by the Plan or related instruments
except as specifically provided therein.
13.3 SOURCE OF BENEFITS
Benefits under the Plan shall be paid or provided for solely from the
Trust, and neither the Company, an Employer, the Administrator, Trustee or
Investment Manager shall assume any liability therefor.
13.4 BENEFITS NOT ASSIGNABLE
Benefits provided under the Plan may not be assigned or alienated, either
voluntarily or involuntarily. The preceding sentence shall also apply to the
creation, assignment or recognition of a right to any benefit payable with
respect to a Participant pursuant to a "domestic relations order" (as defined in
Code (S) 414(p)) unless such order is determined by the Administrator to be a
"qualified domestic relations order" (as defined in Code (S) 414(p)) or, in the
case of a "domestic relations order" entered before January 1, 1985, if either
payment of benefits pursuant to the order has commenced as of that date or the
Administrator decides to treat such order as a "qualified domestic relations
order" within the meaning of Code (S) 414(p) even if it does not otherwise
qualify as such.
XIII-1
<PAGE>
13.5 DOMESTIC RELATIONS ORDERS
Any other provision of the Plan to the contrary notwithstanding, the
Administrator shall have all powers necessary with respect to the Plan for the
proper operation of Code (S) 414(p) with respect to "qualified domestic
relations orders" (or "domestic relations orders" treated as such) referred to
in Section 13.4, including, but not limited to, the power to establish all
necessary or appropriate procedures, to authorize the establishment of new
accounts with such assets and subject to such restrictions as the Administrator
may deem appropriate, and the Administrator may decide upon and direct
appropriate distributions therefrom.
13.6 BENEFITS PAYABLE TO MINORS, INCOMPETENTS AND OTHERS
In the event any benefit is payable to a minor or an incompetent or to a
person otherwise under a legal disability, or who, in the sole discretion of the
Administrator, is by reason of advanced age, illness or other physical or mental
incapacity incapable of handling and disposing of his property, or otherwise is
in such position or condition that the Administrator believes that he could not
utilize the benefit for his support or welfare, the Administrator shall have
discretion to apply the whole or any part of such benefit directly to the care,
comfort, maintenance, support, education or use of such person, or pay the whole
or any part of such benefit to the parent of such person, the guardian,
committee, conservator or other legal representative, wherever appointed, of
such person, the person with whom such person is residing, or to any other
person having the care and control of such person. The receipt by any such
person to whom any such payment on behalf of any Participant or Beneficiary is
made shall be a sufficient discharge therefor.
13.7 MERGER OR TRANSFER OF ASSETS
13.7.1 The merger or consolidation of the Company with any other person,
or the transfer of the assets of the Company to any other person, shall not
constitute a termination of the Plan, if provision is made for the continuation
of the Plan.
13.7.2 The Plan may not merge or consolidate with, or transfer any assets
or liabilities to, any other plan, unless each Participant would (if the Plan
then terminated) receive a benefit immediately after the merger, consolidation
or transfer which is equal to or greater than the
XIII-2
<PAGE>
benefit he would have been entitled to receive immediately before the merger,
consolidation or transfer (if the Plan had then terminated).
13.8 PARTICIPATION IN THE PLAN BY AN AFFILIATE
13.8.1 By duly authorized action, an Affiliate may adopt the Plan. Such
Affiliate by duly authorized action also may determine the classes of its
Employees who shall be Eligible Employees. Such Affiliate shall make such
contributions to the Plan on behalf of such Employees as is determined by the
Company. If no such action is taken, the Eligible Employees and the amount of
contribution shall be determined in accordance with the Plan provisions
applicable to an Employer.
13.8.2 By duly authorized action, any other Employer may terminate its
participation in the Plan or withdraw from the Plan and the Trust.
13.8.3 An Employer other than the Company shall have no power with respect
to the Plan except as specifically provided by this Section 13.8.
13.9 ACTION BY EMPLOYER
Any action required to be taken by an Employer pursuant to the terms of the
Plan shall be taken by the board of directors of the Employer or any person or
persons duly empowered to exercise the powers of the Employer with respect to
the Plan.
13.10 PROVISION OF INFORMATION
For purposes of the Plan, each Employee shall execute such forms as may be
reasonably required by the Administrator and the Employee shall make available
to the Administrator and the Trustee any information they may reasonably request
in this regard.
13.11 CONTROLLING LAW
The Plan is intended to qualify under Code (S) 401(a) and to comply with
ERISA, and its terms shall be interpreted accordingly. Otherwise, to the extent
not preempted by ERISA, the laws of the State of Kansas shall control the
interpretation and performance of the terms of the Plan.
XIII-3
<PAGE>
13.12 CONDITIONAL RESTATEMENT
Anything in the foregoing to the contrary notwithstanding, the Plan has
been restated on the express condition that it will be considered by the
Internal Revenue Service as qualifying under the provisions of Code (S) 401(a)
and the Trust qualifying for exemption from taxation under Code (S) 501(a). If
the Internal Revenue Service determines that the Plan or Trust does not so
qualify, the Plan shall be amended or terminated as decided by the Company.
13.13 RULES OF CONSTRUCTION
Masculine pronouns used herein shall refer to men or women or both and
nouns and pronouns when stated in the singular shall include the plural and when
stated in the plural shall include the singular, unless qualified by the
context. Titles of Articles and Sections of the Plan are for convenience of
reference only and are to be disregarded in applying the provisions of the Plan.
Any reference in this Plan to an Article or Section is to the Article or Section
so specified of the Plan.
IN WITNESS WHEREOF, Waddell & Reed Financial, Inc. has caused this Plan to
be restated, effective as of January 1, 1999.
WADDELL & REED FINANCIAL, INC.
By: /s/ Keith A. Tucker
-----------------------------------
Its: Chairman of the Board and Chief Executive
Officer
ATTEST:
By: /s/ Daniel C. Schulte
-----------------------------
Its: Assistant Secretary
XIII-4
<PAGE>
APPENDIX A - TOP-HEAVY PROVISIONS
A. As used in this Appendix A, each of the following terms shall have the
meanings for that term set forth below:
(a) Defined Benefit Plan means, a plan of the type defined in Code (S)
--------------------
414(j) maintained by the Company or an Affiliate, as applicable.
(b) Defined Contribution Plan means, a plan of the type defined in
-------------------------
Code (S) 414(i) maintained by the Company or an Affiliate, as applicable.
(c) Determination Date means, 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, Determination Date means the last day of that year.
(d) Determination Period means the Plan Year containing the
--------------------
Determination Date and the four preceding Plan Years.
(e) Key Employee means any Employee or former Employee (and the
------------
Beneficiaries of such Employee) who at any time during the Determination Period
was:
(i) an officer of an Employer having Limitation Compensation
greater than 50% of the dollar limitation under Code (S) 415(b)(1)(A) for
any Plan Year within the Determination Period,
(ii) an owner (or individual considered an owner under Code (S)
318) of one of the ten largest interests in an Employer if such
individual's Limitation Compensation exceeds 100% of the dollar limitation
in effect under Code (S) 415(c)(1)(A),
(iii) a "5-percent owner" (as defined in Code (S) 416(i)) of an
Employer, or
(iv) a "1-percent owner" (as defined in Code (S) 416(i)) of an
Employer who has Limitation Compensation of more than $150,000.
(f) Limitation Compensation means, for an Employee, the Employee's
-----------------------
earned income, wages, salaries, fees for professional services and other amounts
received for personal services actually rendered in the course of Employment
(including, but not limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses); amounts described in Code (S)(S) 104(a)(3), 105(a)
and 105(h) to the extent includable in the Employee's gross income; amounts
described
Appendix A - 1
<PAGE>
in Code (S) 105(d) whether or not excludable from the Employee's gross income;
reimbursed non-deductible moving expenses; the value of nonqualified stock
options to the extent includable in the Employee's gross income in the year of
grant; the amount includable in the Employee's gross income pursuant to an
election under Code (S) 83(b); distributions from an unfunded, non-qualified
plan of deferred compensation; and excluding the following:
(i) contributions to a plan of deferred compensation which are
not includible in the Employee's gross income for the taxable year in which
contributed, or contributions under a "simplified employee pension" (within
the meaning of Code (S) 408(k)) to the extent such contributions are
deductible by the Employee, or any distributions from a plan of deferred
compensation (other than an unfunded non-qualified plan);
(ii) amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or other property) held by the Employee
either becomes freely "transferable" or is no longer subject to a
"substantial risk of forfeiture" (both quoted terms within the meaning of
Code (S) 83(a));
(iii) amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(iv) other amounts which received special tax benefits, or
contributions made (whether or not under a salary reduction agreement)
towards the purchase of an annuity described in Code (S) 403(b) (whether or
not the amounts are actually excludable from the gross income of the
Employee).
(g) Non-Key Employee means any Employee who is not a Key Employee.
----------------
(h) Permissive Aggregation Group means the Required Aggregation Group
----------------------------
of plans plus any other plan or plans of the Company or an Affiliate which, when
considered as a group with the Required Aggregation Group, would continue to
satisfy the requirements of Code (S)(S) 401(a)(4) and 410.
(i) Required Aggregation Group means (i) each Qualified Plan of an
--------------------------
Employer in which at least one Key Employee participates, and (ii) any other
Qualified Plan of an Employer which enables a plan described in (i) to meet the
requirements of Code (S)(S) 401(a)(4) and 410.
Appendix A - 2
<PAGE>
(j) Super Top-Heavy Plan means, for any Plan Year beginning after
--------------------
December 31, 1983, the Plan if any Top-Heavy Ratio as determined under the
definition of Top-Heavy Plan exceeds 90%.
(k) Top-Heavy Plan means, for any Plan Year beginning after December
--------------
31, 1983, the Plan if any of the following conditions exists:
(i) If the Top-Heavy Ratio for the Plan exceeds sixty percent and
the Plan is not part of any Required Aggregation Group or Permissive
Aggregation Group of plans.
(ii) If the Plan is a part of a Required Aggregation Group of
plans but not part of a Permissive Aggregation Group and the Top-Heavy
Ratio for the Required Aggregation Group of plans exceeds sixty percent.
(iii) If the Plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group of plans and the Top-Heavy Ratio for
the Permissive Aggregation Group exceeds sixty percent.
(l) Top-Heavy Ratio means,
---------------
(i) If the Company or an Affiliate maintains one or more Defined
Benefit Plans and the Company or an Affiliate has never maintained any
Defined Contribution Plan (including any "simplified employee pension"
within the meaning of Code (S) 408(k)) which during the five-year period
ending on the Determination Date has or has had account balances, the Top-
Heavy Ratio for the Plan alone or for the Required or Permissive
Aggregation Group, as appropriate, is a fraction, the numerator of which is
the sum of the present values of accrued benefits under the aggregated
Defined Benefit Plans of all Key Employees as of the respective
Determination Date for each plan (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 the present values of all accrued
benefits under the aggregated Defined Benefit Plans as of the respective
Determination Date for each plan (including any part of any accrued benefit
distributed in the five-year period ending on the Determination Date)
determined in accordance with Code (S) 416.
(ii) If the Company or an Affiliate maintains one or more Defined
Benefit Plans and the Company or an Affiliate maintains or has maintained
one or more
Appendix A - 3
<PAGE>
Defined Contribution Plans (including any "simplified employee pension"
within the meaning of Code (S) 408(k)) which during the five-year period
ending on the Determination Date has or has had any account balances, the
Top-Heavy Ratio for any Required or Permissive Aggregation Group, as
appropriate, is a fraction, the numerator of which is the sum of the
present value of accrued benefits under the aggregated Defined Benefit
Plans for all Key Employees, determined in accordance with (i) above, plus
the sum of account balances under the aggregated Defined Contribution Plans
for all Key Employees as of the respective Determination Date for each
plan, and the denominator of which is the sum of the present value of all
accrued benefits under the aggregated Defined Benefit Plans, determined in
accordance with (i) above, plus the sum of all account balances under the
aggregated Defined Contribution Plans for all Participants as of the
respective Determination Date for each plan, all determined in accordance
with Code (S) 416. The account balances under a Defined Contribution Plan
in both the numerator and denominator of the Top-Heavy Ratio are adjusted
for any distribution of any account balance made in the five-year period
ending on 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, except as provided in Code (S) 416
for the first and second plan year of a Defined Benefit Plan. The account
balances and accrued benefits of a Participant (A) who is a Non-Key
Employee but who was a Key Employee in a prior year, or (B) who has not
been credited with at least one Hour of Service with any Employer at any
time during the five-year period ending on the Determination Date will be
disregarded. The calculation of the Top-Heavy Ratio, and the extent to
which distributions, rollovers, and transfers are taken into account will
be made in accordance with Code (S) 416. 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 respective Determination
Dates for the aggregated plans that fall within the same calendar year.
(iv) Solely for the purpose of determining if the Plan, or any
other plan included in a Required Aggregation Group of which this Plan is a
part, is Top-Heavy
Appendix A - 4
<PAGE>
(within the meaning of Code (S) 416(g)) such determination shall be made
under (A) the method, if any, that uniformly applies for accrual purposes
under all 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 accrual rate of Code (S)
411(b)(l)(C).
(m) Valuation Date means, the date as of which account balances, or
--------------
accrued benefits are valued for purposes of calculating the Top-Heavy Ratio.
B. If the Plan is determined to be a Top-Heavy Plan or a Super Top-Heavy
Plan as of any Determination Date, then it shall be subject to the rules set
forth in this Appendix A, beginning with the first Plan Year commencing after
such Determination Date.
C. For each Plan Year beginning before January 1, 1989 in which the Plan
is a Top-Heavy Plan or Super Top-Heavy Plan, Compensation for the purpose of
this Plan shall be limited to the first $200,000 (or such larger amount as may
be prescribed for the Plan Year involved pursuant to Code (S) 416(d)(2)) of the
amount that would otherwise have been Compensation.
D. (a) Except as provided in subparagraph (b) below and except if any
other Defined Contribution Plan or Defined Benefit Plan provides such minimum
benefit to the Participant, for any Plan Year in which the Plan is a Top-Heavy
Plan, contributions and forfeitures allocated to the Employer Contributions
Account of any Participant who is not a Key Employee, whether or not such
Participant has completed 1,000 Hours of Service in that Plan Year and whether
or not such Participant has elected to participate in the Plan, in respect of
that Plan Year shall not be less than the smaller of:
(i) three percent of such Participant's Limitation Compensation
as defined in this Appendix A or,
(ii) the largest percentage of contributions and forfeitures, as
a percentage of the Key Employee's compensation, allocated in the aggregate
to the Employer Contributions Account of any Key Employee for that year.
(b) The provision in (a) above shall not apply to any Participant who
was not employed by the Employer or an Affiliate on the last day of the Plan
Year.
E. If the Plan is a Top-Heavy Plan for any Plan Year, then the maximum
benefit which can be provided under Code (S) 415 shall be determined by
substituting "1.00" for "1.25" in Code (S) 415(e)(2)(B) and (3)(B), unless the
Plan meets the requirements of Code
Appendix A - 5
<PAGE>
(S) 416(h)(2)(B) and the Administrator increases the minimum rate of benefit
accrual provided in Section D by one percent.
F. Beginning with the Plan Year in which this Plan is Top-Heavy, the
following vesting schedule will apply:
Completed Years of Vested
Vesting Service Percentage
----------------------- ----------
2 20%
3 40%
4 60%
5 100%
G. In the event that any provision of this Appendix A is no longer
required to qualify the Plan under the Code, then such provision shall thereupon
be void without the necessity of further amendment of the Plan.
Appendix A - 6
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Waddell & Reed Financial, Inc.
We consent to the use of our reports incorporated herein by reference.
/s/ KPMG Peat Marwick LLP
Kansas City, Missouri
December 29, 1998
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT:
The undersigned director of Waddell & Reed Financial, Inc. (the "Company")
constitutes and appoints Daniel C. Schulte and William D. Howey, and each of
them severally, his true and lawful attorneys-in-fact for him and in his name,
place and stead, in any and all capacities, to sign the Form S-8 Registration
Statement for the Waddell & Reed Financial, Inc. 401(k) and Thrift Plan and any
and all amendments and post-effective amendments thereto, and to file the same
with all exhibits thereto and other documents required in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all said attorneys-in-fact and agents or any of them or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have signed this Power of Attorney in the capacity and
on the date indicated below.
/s/ David L. Boren
---------------------------
David L. Boren
Director
Date: December 17, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT:
The undersigned director of Waddell & Reed Financial, Inc. (the "Company")
constitutes and appoints Daniel C. Schulte and William D. Howey, and each of
them severally, his true and lawful attorneys-in-fact for him and in his name,
place and stead, in any and all capacities, to sign the Form S-8 Registration
Statement for the Waddell & Reed Financial, Inc. 401(k) and Thrift Plan and any
and all amendments and post-effective amendments thereto, and to file the same
with all exhibits thereto and other documents required in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all said attorneys-in-fact and agents or any of them or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have signed this Power of Attorney in the capacity and
on the date indicated below.
/s/ Joseph M. Farley
---------------------------
Joseph M. Farley
Director
Date: December 14, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT:
The undersigned director of Waddell & Reed Financial, Inc. (the "Company")
constitutes and appoints Daniel C. Schulte and William D. Howey, and each of
them severally, his true and lawful attorneys-in-fact for him and in his name,
place and stead, in any and all capacities, to sign the Form S-8 Registration
Statement for the Waddell & Reed Financial, Inc. 401(k) and Thrift Plan and any
and all amendments and post-effective amendments thereto, and to file the same
with all exhibits thereto and other documents required in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all said attorneys-in-fact and agents or any of them or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have signed this Power of Attorney in the capacity and
on the date indicated below.
/s/ Louis T. Hagopian
---------------------------
Louis T. Hagopian
Director
Date: December 17, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT:
The undersigned director of Waddell & Reed Financial, Inc. (the "Company")
constitutes and appoints Daniel C. Schulte and William D. Howey, and each of
them severally, his true and lawful attorneys-in-fact for him and in his name,
place and stead, in any and all capacities, to sign the Form S-8 Registration
Statement for the Waddell & Reed Financial, Inc. 401(k) and Thrift Plan and any
and all amendments and post-effective amendments thereto, and to file the same
with all exhibits thereto and other documents required in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all said attorneys-in-fact and agents or any of them or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have signed this Power of Attorney in the capacity and
on the date indicated below.
/s/ William L. Rogers
---------------------------
William L. Rogers
Director
Date: December 17, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT:
The undersigned director of Waddell & Reed Financial, Inc. (the "Company")
constitutes and appoints Daniel C. Schulte and William D. Howey, and each of
them severally, his true and lawful attorneys-in-fact for him and in his name,
place and stead, in any and all capacities, to sign the Form S-8 Registration
Statement for the Waddell & Reed Financial, Inc. 401(k) and Thrift Plan and any
and all amendments and post-effective amendments thereto, and to file the same
with all exhibits thereto and other documents required in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all said attorneys-in-fact and agents or any of them or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have signed this Power of Attorney in the capacity and
on the date indicated below.
/s/ James M. Raines
---------------------------
James M. Raines
Director
Date: December 14, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT:
The undersigned director of Waddell & Reed Financial, Inc. (the "Company")
constitutes and appoints Daniel C. Schulte and William D. Howey, and each of
them severally, his true and lawful attorneys-in-fact for him and in his name,
place and stead, in any and all capacities, to sign the Form S-8 Registration
Statement for the Waddell & Reed Financial, Inc. 401(k) and Thrift Plan and any
and all amendments and post-effective amendments thereto, and to file the same
with all exhibits thereto and other documents required in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all said attorneys-in-fact and agents or any of them or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have signed this Power of Attorney in the capacity and
on the date indicated below.
/s/ Joseph L. Lanier, Jr.
---------------------------
Joseph L. Lanier, Jr.
Director
Date: December 15, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT:
The undersigned director of Waddell & Reed Financial, Inc. (the "Company")
constitutes and appoints Daniel C. Schulte and William D. Howey, and each of
them severally, his true and lawful attorneys-in-fact for him and in his name,
place and stead, in any and all capacities, to sign the Form S-8 Registration
Statement for the Waddell & Reed Financial, Inc. 401(k) and Thrift Plan and any
and all amendments and post-effective amendments thereto, and to file the same
with all exhibits thereto and other documents required in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all said attorneys-in-fact and agents or any of them or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have signed this Power of Attorney in the capacity and
on the date indicated below.
/s/ Harold T. McCormick
---------------------------
Harold T. McCormick
Director
Date: December 14, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT:
The undersigned director of Waddell & Reed Financial, Inc. (the "Company")
constitutes and appoints Daniel C. Schulte and William D. Howey, and each of
them severally, his true and lawful attorneys-in-fact for him and in his name,
place and stead, in any and all capacities, to sign the Form S-8 Registration
Statement for the Waddell & Reed Financial, Inc. 401(k) and Thrift Plan and any
and all amendments and post-effective amendments thereto, and to file the same
with all exhibits thereto and other documents required in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all said attorneys-in-fact and agents or any of them or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have signed this Power of Attorney in the capacity and
on the date indicated below.
/s/ George J. Records
---------------------------
George J. Records
Director
Date: December 14, 1998
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT:
The undersigned director of Waddell & Reed Financial, Inc. (the "Company")
constitutes and appoints Daniel C. Schulte and William D. Howey, and each of
them severally, his true and lawful attorneys-in-fact for him and in his name,
place and stead, in any and all capacities, to sign the Form S-8 Registration
Statement for the Waddell & Reed Financial, Inc. 401(k) and Thrift Plan and any
and all amendments and post-effective amendments thereto, and to file the same
with all exhibits thereto and other documents required in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all said attorneys-in-fact and agents or any of them or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have signed this Power of Attorney in the capacity and
on the date indicated below.
/s/ R. K. Richey
---------------------------
R. K. Richey
Director
Date: December 15, 1998
