<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 2, 1998.
REGISTRATION NO. 333-43687
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
PRE-EFFECTIVE AMENDMENT NO. 5
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
WADDELL & REED FINANCIAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 6211 51-0261715
(PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER)
(I.R.S. EMPLOYER
(STATE OR OTHER IDENTIFICATION NO.)
JURISDICTION OF
INCORPORATION OR
ORGANIZATION)
6300 LAMAR AVENUE
OVERLAND PARK, KANSAS 66202
(913) 236-2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
KEITH A. TUCKER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
WADDELL & REED FINANCIAL, INC.
6300 LAMAR AVENUE
OVERLAND PARK, KANSAS 66202
(913) 236-2000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------
COPIES TO:
ALAN J. BOGDANOW MATTHEW J. MALLOW
HUGHES & LUCE, L.L.P. SKADDEN, ARPS, SLATE, MEAGHER & FLOM
1717 MAIN STREET, SUITE 2800 LLP
DALLAS, TEXAS 75201 919 THIRD AVENUE
(214) 939-5500 NEW YORK, NEW YORK 10022
(212) 735-3000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
---------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to 462(b) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
The Prospectus relating to the shares of Class A Common Stock to be used in
connection with a United States and Canadian offering (the "U.S. Prospectus")
is set forth following this page. The Prospectus to be used in a concurrent
international offering (the "International Prospectus") will consist of the
alternate page set forth following the U.S. Prospectus and the balance of the
pages included in the U.S. Prospectus for which no alternate is provided. The
U.S. Prospectus and the International Prospectus are identical except that
they contain different front cover pages.
<PAGE>
PART II
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table indicates the estimated expenses to be incurred in
connection with the Offering, all of which will be paid by the Company.
<TABLE>
<S> <C>
SEC registration fee.............................................. $ 177,728
NASD fee.......................................................... 30,500
NYSE listing fee.................................................. 210,600
Accounting fees and expenses...................................... *
Legal fees and expenses........................................... *
Printing and engraving............................................ *
Transfer Agent's fees............................................. *
Blue Sky fees and expenses (including counsel fees)............... *
Miscellaneous expenses............................................ *
---------
Total........................................................... $ *
=========
</TABLE>
- --------
* To be supplied by amendment
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation provides that no director of the
Company will be personally liable to the Company or any of its stockholders for
monetary damages arising from the director's breach of fiduciary duty as a
director, with certain limited expectations. See "Description of Capital
Stock--Certificate of Incorporation and Bylaw Provisions--Liability of
Directors; Indemnification" in the Prospectus.
Pursuant to the provisions of (S) 145 of the Delaware General Corporation
Law, every Delaware corporation has the power to indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit, or proceeding (other than an action by or in the right
of the corporation) by reason of the fact that such person is or was a
director, officer, employee, or agent of any corporation, partnership, joint
venture, trust, or other enterprise, against any and all expenses, judgments,
fines, and amounts paid in settlement and reasonably incurred in connection
with such action, suit, or proceeding. The power to indemnify applies only if
such person acted in good faith and in a manner such person reasonably believed
to be in the best interest, or not opposed to the best interest, of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
The power to indemnify applies to actions brought by or in the right of the
corporation as well, but only to the extent of defense and settlement expenses
and not to any satisfaction of a judgment or settlement of the claim itself,
and with the further limitation that in such actions no indemnification will be
made in the event of any adjudication of negligence or misconduct unless the
court, in its discretion, believes that in light of all the circumstances
indemnification should apply.
To the extent any of the persons referred to in the two immediately preceding
paragraphs is successful in the defense of such actions, such person is
entitled, pursuant to Section 145, to indemnification as described above.
The Company's Certificate of Incorporation and Bylaws provide for
indemnification to officers and directors of the Company to the fullest extent
permitted by the Delaware General Corporation Law. See "Description of Capital
Stock--Certificate of Incorporation and Bylaw Provisions--Liability of
Directors; Indemnification" in the Prospectus.
II-1
<PAGE>
The form of Underwriting Agreement filed as Exhibit 1.1 contains agreements
of indemnity between the Company and the Underwriters and controlling persons
against certain civil liabilities, including liabilities under the Securities
Act, or will contribute to payments which the Underwriters or any such
controlling persons may be required to make in respect thereof.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
None.
ITEMS 16. EXHIBITS
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1.1+ --Form of Underwriting Agreement
3.1+ --Certificate of Incorporation of the Company
3.2+ --Bylaws of the Company
4.1+ --Specimen of Common Stock Certificate
4.2+ --Promissory Note of United Investors Management Company, payable to
Torchmark Corporation,
dated November 25, 1997
4.3+ --Promissory Note of United Investors Management Company, payable to
Liberty National Life
Insurance Company, dated November 25, 1997
4.4+ --Promissory Note of Waddell & Reed Financial Services, Inc., payable
to United Investors Management Company, dated December 23, 1996
4.5+ --Assignment by United Investors Management Company to Liberty
National Life Insurance Company, dated December 23, 1996
--Form of Opinion of Hughes & Luce, L.L.P. regarding legality of
5.1* securities being registered
10.1+ --Form of Public Offering and Separation Agreement between Torchmark
Corporation and Waddell
& Reed Financial, Inc.
10.2+ --Form of Tax Disaffiliation Agreement between Torchmark Corporation
and Waddell & Reed
Financial, Inc.
10.3+ --Form of Investment Services Agreement between Waddell & Reed
Investment
Management Company and Waddell & Reed Asset Management Company.
10.4+ --General Agent Contract, dated January 1, 1985, between United
Investors Life Insurance Company
and W&R Insurance Agency, Inc.
10.5+ --Form of Amendment Extending General Agent Contract between United
Investors Life Insurance
Company and W & R Insurance Agency, Inc.
10.6+ --Independent Agent Contract, dated June 25, 1997, between United
American Insurance Company,
W & R Insurance Agency, Inc., and affiliates identified therein.
10.7+ --Form of Amendment Extending Independent Agent Contract between
United American Insurance
Company, W & R Insurance Agency, Inc., and affiliates identified
therein.
10.8+ --Form of The 1998 Stock Incentive Plan.
10.9+ --Form of The 1998 Non-Employee Director Stock Option Plan.
10.10+ --Form of The 1998 Executive Deferred Compensation Stock Option Plan.
10.11** --Form of Waddell & Reed Financial, Inc. Savings and Investment Plan.
10.12** --Form of Waddell & Reed Financial, Inc. Retirement Income Plan.
10.13** --Form of Waddell & Reed, Inc. Career Field Retirement Plan.
10.14** --Form of Administration Contract between United Investors Park
Owners' Association and Waddell & Reed Property Management Division.
10.15+ --Form of Agreement Amending Distribution Contract between United
Investors Life Insurance Company and TMK/United Funds, Inc.
10.16+ --Distribution Contract, dated April 4, 1997, between United Investors
Life Insurance Company and TMK/United Funds, Inc.
10.17+ --Form of Agreement Amending Principal Underwriting Agreement between
United Investors Life Insurance Company and Waddell & Reed, Inc.
10.18+ --Principal Underwriting Agreement, dated May 1, 1990, between United
Investors Life Insurance Company and Waddell & Reed, Inc.
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
10.19+ --Form of Services Agreement between Waddell & Reed Investment
Management Company and Waddell & Reed Asset Management Company.
10.20+ --Form of Reciprocity Agreement between Torchmark Corporation and
Waddell & Reed Financial, Inc.
10.21+ --Form of Administrative Services Agreement between Torchmark
Corporation and Waddell & Reed Financial, Inc.
21.1+ --Subsidiaries of the Registrant
23.1* --Consent of Hughes & Luce, L.L.P. (included in Exhibit 5.1)
23.2** --Consent of KPMG Peat Marwick LLP
24.1+ --Powers of Attorney (appearing on Signature Page of Registration
Statement on Form S-1 filed
January 2, 1998, Registration No. 333-43687).
27.1+ --Financial Data Schedule
</TABLE>
- --------
*To be filed by amendment.
**Filed herewith.
+Previously filed.
(b) Financial Statement Schedules:
Financial statement schedules are omitted as not required or not applicable
or because the information is included in the Financial Statements or notes
thereto.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the underwriting agreements, the
Company's Certificate of Incorporation, Bylaws, Delaware law or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus 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.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT 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 MARCH 2, 1998.
Waddell & Reed Financial, Inc.
/s/ Ronald K. Richey
By: __________________________________
RONALD K. RICHEY
CHAIRMAN OF THE BOARD
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION
STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND
ON THE DATES INDICATED.
SIGNATURE TITLE DATE
* Chairman of the
- ------------------------------------ Board March 2, 1998
RONALD K. RICHEY
/s/ Keith A. Tucker
President, Chief
- ------------------------------------ Executive Officer, March 2, 1998
KEITH A. TUCKER and Director
*ATTORNEY-IN-FACT (Principal
Financial Officer)
* Vice-President,
- ------------------------------------ Secretary, and March 2, 1998
FRANCIS B. JACOBS, II Director
* Principal
- ------------------------------------ Accounting Officer March 2, 1998
MICHAEL D. STROHM
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
1.1+ --Form of Underwriting Agreement
3.1+ --Certificate of Incorporation of the Company
3.2+ --Bylaws of the Company
4.1+ --Specimen of Common Stock Certificate
4.2+ --Promissory Note of United Investors Management Company, payable to
Torchmark Corporation, dated November 25, 1997
4.3+ --Promissory Note of United Investors Management Company, payable to
Liberty National Life Insurance Company, dated November 25, 1997
4.4+ --Promissory Note of Waddell & Reed Financial Services, Inc., payable
to United Investors Management Company, dated December 23, 1996
4.5+ --Assignment by United Investor Management Company to Liberty National
Life Insurance Company, dated December 23, 1996
5.1* --Form of Opinion of Hughes & Luce, L.L.P. regarding legality of
securities being registered
10.1+ --Form of Public Offering and Separation Agreement between Torchmark
Corporation and Waddell & Reed Financial, Inc.
10.2+ --Form of Tax Disaffiliation Agreement between Torchmark Corporation
and Waddell & Reed Financial, Inc.
10.3+ --Form of Investment Services Agreement between Waddell & Reed
Investment Management Company and Waddell & Reed Asset Management
Company.
10.4+ --General Agent Contract, dated January 1, 1985, between United
Investors Life Insurance Company and W&R Insurance Agency, Inc.
10.5+ --Form of Amendment Extending General Agent Contract between United
Investors Life Insurance Company and W & R Insurance Agency, Inc.
10.6+ --Independent Agent Contract, dated June 25, 1997, between United
American Insurance Company, W & R Insurance Agency, Inc., and
affiliates identified therein.
10.7+ --Form of Amendment Extending Independent Agent Contract between
United American Insurance Company, W & R Insurance Agency, Inc., and
affiliates identified therein.
10.8+ --Form of The 1998 Stock Incentive Plan.
10.9+ --Form of The 1998 Non-Employee Director Stock Option Plan.
10.10+ --Form of The 1998 Executive Deferred Compensation Stock Option Plan.
10.11** --Form of Waddell & Reed Financial, Inc. Savings and Investment Plan.
10.12** --Form of Waddell & Reed Financial, Inc. Retirement Income Plan.
10.13** --Form of Waddell & Reed, Inc. Career Field Retirement Plan.
10.14** --Form of Administration Contract between United Investors Park
Owners' Association and Waddell & Reed Property Management Division.
10.15+ --Form of Agreement Amending Distribution Contract between United
Investors Life Insurance Company and TMK/United Funds, Inc.
10.16+ --Distribution Contract, dated April 4, 1997, between United Investors
Life Insurance Company and TMK/United Funds, Inc.
10.17+ --Form of Agreement Amending Principal Underwriting Agreement between
United Investors Life Insurance Company and Waddell & Reed, Inc.
10.18+ --Principal Underwriting Agreement, dated May 1, 1990, between United
Investors Life Insurance Company and Waddell & Reed, Inc.
10.19+ --Form of Services Agreement between Waddell & Reed Investment
Management Company and Waddell & Reed Asset Management Company.
10.20+ --Form of Reciprocity Agreement between Torchmark Corporation and
Waddell & Reed Financial, Inc.
10.21+ --Form of Administrative Services Agreement between Torchmark
Corporation and Waddell & Reed Financial, Inc.
21.1+ --Subsidiaries of the Registrant
23.1* --Consent of Hughes & Luce, L.L.P. (included in Exhibit 5.1)
23.2** --Consent of KPMG Peat Marwick LLP
24.1+ --Powers of Attorney (appearing on Signature Page of Registration
Statement on Form S-1 filed January 2, 1998, Registration No. 333-
43687).
27.1+ --Financial Data Schedule
</TABLE>
- --------
*To be filed by amendment.
**Filed herewith.
+Previously filed.
<PAGE>
EXHIBIT 10.11
THE
WADDELL & REED FINANCIAL, INC.
SAVINGS AND INVESTMENT PLAN
(AMENDED AND RESTATED AS OF MARCH 1, 1998)
<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.
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-1
Administrative Committee.................................... I-1
Administrator............................................... I-2
Affiliate................................................... I-2
Annual Addition............................................. I-2
Annuity Contract............................................ I-2
Average Contribution Percentage............................. I-2
Basic Participant Contributions............................. I-3
Beneficiary................................................. I-3
Benefit Commencement Date................................... I-3
Board of Directors.......................................... I-3
Code........................................................ I-3
Company..................................................... I-3
Company Shares or Company Stock............................. I-3
Company Stock Account....................................... I-3
Compensation................................................ I-4
Contribution Percentage..................................... I-4
Defined Benefit Plan........................................ I-4
ii
<PAGE>
Defined Contribution Plan..................................... I-5
Disability.................................................... I-5
Effective Date................................................ I-5
Eligible Employee............................................. I-5
Eligible Participant.......................................... I-5
Employee...................................................... I-5
Employer...................................................... I-5
Employer Contributions........................................ I-6
Employer Contributions Subaccount............................. I-6
Employment.................................................... I-6
Entry Date.................................................... I-6
ERISA......................................................... I-6
Excess Aggregate Contributions................................ I-6
Five-percent Owner............................................ I-6
401(m) Contributions.......................................... I-6
Fully Vested Separation....................................... I-6
HCE Compensation.............................................. I-7
Highly Compensated Employee................................... I-7
Hour of Service............................................... I-7
Investment.................................................... I-9
Investment Company............................................ I-9
Investment Company Shares..................................... I-9
Limitation Year............................................... I-9
Net Profits................................................... I-9
Non-Highly Compensated Employee............................... I-9
Non-Vested Separation......................................... I-10
Normal Retirement Age......................................... I-10
One Year Break in Service..................................... I-10
Partially Vested Separation................................... I-10
Participant................................................... I-10
Participant Contributions..................................... I-10
iii
<PAGE>
Participant Contributions Subaccount....................... I-10
Participating Affiliate.................................... I-11
Plan....................................................... I-11
Plan Year.................................................. I-11
Qualified Joint and Survivor Annuity....................... I-11
Qualified Plan............................................. I-11
Rollover Contribution...................................... I-11
Spousal Consent............................................ I-11
Spouse..................................................... I-12
Supplementary Participant Contributions.................... I-12
Surviving Spouse........................................... I-12
Torchmark Shares or Torchmark Stock........................ I-12
Torchmark Stock Account.................................... I-12
Trust or Trust Fund........................................ I-12
Trust Agreement............................................ I-12
Trustee.................................................... I-12
Valuation Date............................................. I-13
Valuation Period........................................... I-13
Vesting Service............................................ I-13
Years of Service........................................... I-13
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 Employer Contributions................................. III-1
3.2 Participant Contributions.............................. III-1
3.3 Limits on 401(m) Contributions-ACP Test................ III-2
iv
<PAGE>
3.4 Distribution of Excess Aggregate Contributions........... III-4
3.5 Rollover Contributions and Trust to Trust Transfers...... III-5
3.6 Establishing of Accounts................................. III-6
3.7 Allocation of Contributions and Forfeitures.............. III-6
3.8 Limitation on Allocations................................ III-7
3.9 Return of Employer Contributions under Special
Circumstances............................................ III-7
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 Participants Who Have Received Prior Distributions....... V-1
5.5 Benefit Commencement Date................................ V-2
5.6 Participant Account 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
7.1 Payment of Account Balances.............................. VII-1
7.2 Beneficiaries............................................ VII-2
v
<PAGE>
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
11.2 Change in Investment Election for Contributions......... XI-2
11.3 Transfer of Investment Accounts......................... XI-2
11.4 Reinvestment............................................ XI-3
vi
<PAGE>
11.5 Voting of Shares of Investments......................... XI-4
11.6 Valuation of Accounts................................... XI-4
11.7 Distributions or Withdrawals............................ XI-5
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
<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 an
Employer Contributions Subaccount and a Participant Contributions Subaccount, as
the case may be.
ACCOUNT BALANCE: The value of an Account or Subaccount determined as
of the applicable Valuation Date.
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),
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.
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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).
ANNUAL ADDITION: For each Participant, the sum of the following
amounts credited to the Participant's Account for the Limitation Year:
(i) Company or Affiliate contributions;
(ii) Employee 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
<PAGE>
Participants whose Contribution Percentage is zero.
BASIC PARTICIPANT CONTRIBUTIONS: The contributions made to the Plan
by a Participant pursuant to Section 3.2.1.
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.
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 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.
COMPANY 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 Company Stock.
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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, 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 March 1, 1998. 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 pursuant to Section 3.1.
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 Participant Contributions and any Employer 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 Account or the Torchmark Stock Account.
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.
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.
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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
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.
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PARTICIPANT CONTRIBUTIONS SUBACCOUNT: The subaccount established for
a Participant pursuant to Section 3.6.2.
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 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
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"employee" under Code (S) 401(c)(1).
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 contributions made to
the Plan by a Participant pursuant to Section 3.2.2.
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.
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TRUSTEE: The person appointed as trustee pursuant to Article IX, and
any successor trustee.
VALUATION DATE: The semi-monthly date as of which all Plan Accounts
are valued. Such dates shall be determined each month by the Administrator.
The first Valuation Date in any month shall be within the first 10 business days
of the month and the second Valuation Date shall be within the first 10 business
days following the fifteenth day of the month.
VALUATION PERIOD: The twenty-four semi-monthly periods commencing on
the first day and ending on the fifteenth day of each month and commencing on
the sixteenth day and ending on the last day of each month; provided that if a
commencement date for any Valuation Period falls on a Saturday, Sunday or
holiday, the commencement date for that Valuation Period shall be the
immediately following business day and the immediately preceding Valuation
Period shall end on the day before such day.
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.
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 Basic Participant Contributions as
provided in Section 3.2.1;
(b) Shall authorize the Employer to make deductions from his pay
of his Basic Participant Contributions;
(c) Shall make investment elections as provided in Section 11.1;
(d) Shall designate a Beneficiary as provided in Section 7.2.1;
and
(e) If eligible in accordance with Section 3.2.2, may elect a
rate of Supplementary Participant Contributions.
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 EMPLOYER CONTRIBUTIONS
Subject to the provisions set forth in this Article III, for each Plan Year
the Employer will contribute semi-monthly to the Trust Fund on behalf of each
Participant who makes Participant Contributions, an amount of its Net Profits
for such Plan Year, or its accumulated earnings and profits, equal to 50% (or
such other percentage as the Board of Directors may from time to time designate)
of the Basic Participant Contributions made by each such Participant for that
semi-monthly period.
If for any Plan Year the contributions required to be made by an Employer
are reduced or omitted because of insufficient Net Profits or accumulated
earnings and profits, the other Employers who file a consolidated return with
such Employer will increase their total payments by an equivalent amount.
Notwithstanding anything contained herein to the contrary, the aggregate
Employer 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 PARTICIPANT CONTRIBUTIONS
3.2.1 Basic Participant Contributions. Subject to the provisions set
-------------------------------
forth in this Article III, each Participant may elect to make Basic
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 6% of his Compensation.
3.2.2 Supplementary Participant Contributions. Subject to the provisions
---------------------------------------
set forth in this Article III, for each Plan Year, each Participant who has
elected to make Basic Participant Contributions at the maximum permissible rate
under Section 3.2.1 may elect to make Supplementary Participant Contributions
while he is an Eligible Employee in an amount which does not cause the total
amount of his Supplementary Participant Contributions made during the then
current Plan Year and all prior years under this Plan and all other Qualified
Plans maintained
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by the Employer or an Affiliate to exceed 10% of the Participant's aggregate
Compensation for such Plan Year and prior years during which he has either been
a Participant or participating in any such other Qualified Plan. Supplementary
Participant Contributions shall be made in accordance with rules and procedures
adopted by the Administrator either through regular payroll deductions
authorized by the Participant or through lump sum payments by the Participant.
Only one lump sum payment may be made by a Participant in any calendar quarter.
3.2.3 Change in Rate of Participant Contributions. A Participant may
-------------------------------------------
elect to change his rate of Participant 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 3.2.1
or 3.2.2, as the case may be. A Participant who is making Supplementary
Participant Contributions under 3.2.2, however, may not elect to decrease his
rate of Basic Participant Contributions unless he simultaneously revokes his
election to make Supplementary Participant Contributions. The Participant's
election to change his rate of Participant 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.
3.2.4 Suspension of Participant Contributions. A Participant may elect to
---------------------------------------
suspend all his Participant 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 Participant 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 Participant 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 Participant Contributions (including suspension of contributions)
as it shall determine.
3.3 LIMITS ON 401(m) CONTRIBUTIONS-ACP TEST
(a) Average Contribution Percentage Test. The 401(m)
------------------------------------
Contributions for each Plan Year must satisfy one of the following tests:
(i) The Average Contribution Percentage for Eligible
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Participants who are Highly Compensated Employees for the Plan Year
shall not exceed the prior Plan Year's Average Contribution Percentage
for Eligible Participants who as of such prior Plan Year were 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 prior Plan Year's Average Contribution Percentage
for Eligible Participants who as of such prior Plan Year were 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 prior Plan Year's
Average Contribution Percentage for Eligible Participants who as of
such prior Plan Year were 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 current Plan Year's data for the prior Plan
Year's data, as permitted -- for example -- in Internal Revenue Service
Notice 97-2.
(b) For purposes of determining the Contribution Percentage of an
Eligible Participant for a Plan Year, the Eligible Participant's Employer
Contributions shall be taken into account only if such Employer
Contributions (i) are based on the Eligible Participant's Participant
Contribution for such Plan Year, (ii) are attributed to the Eligible
Participant's Account as of a date within such Plan Year, and (iii) are
paid to the Trust by the end of the twelfth month following the close of
such Plan Year. Any Employer Contribution that fails to satisfy the
foregoing requirements shall be treated as a contribution which is not
subject to Code (S) 401(m).
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<PAGE>
(c) 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 receive Employer
contributions or 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.
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 to the extent vested, or forfeited to the
extent not vested, from the Employer Contributions Subaccounts 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
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<PAGE>
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.
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
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<PAGE>
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.
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.
3.6.2 A Participant Contributions Subaccount shall be established for each
Participant who contributes to the Plan pursuant to Section 3.2, or who makes a
Rollover Contribution to the Plan, or on whose behalf a trust to trust transfer
is made, pursuant to Section 3.5, to which the Administrator shall credit, or
cause to be credited, such contributions made by the Participant pursuant to
Section 3.2, or amounts attributable to such Rollover Contribution or trust to
trust transfer, as the case may be, plus 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 contributions made by each Participant pursuant to Section 3.2
will be invested and credited to his Participant Contributions Subaccount in
accordance with the provisions of Section 11.1. Employer Contributions will be
credited on the same date to the Employer Contributions Subaccounts of those
Participants for whose benefit such contributions are made as provided in
Section 3.1.
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.
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<PAGE>
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
contributions under any defined contribution plan; (iii) matched employee
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
III-7
<PAGE>
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-8
<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 Participant 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 considered a Break in Service and shall be
counted as Vesting Service upon his return to active
IV-1
<PAGE>
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 received a distribution of
the vested portion of his Employer Contributions Subaccount as of his
IV-2
<PAGE>
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.
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<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 on the fourth Valuation Date following
the Participant's termination of Employment (or such other Valuation Date as may
apply pursuant to Section 11.7).
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 on the
fourth Valuation Date following the date the Participant terminates Employment
(or such other Valuation Date as may apply pursuant to Section 11.7), multiplied
by his vested percentage, determined pursuant to Section 4.1.3, plus (b) the
Account Balance of his Participant Contributions Subaccount as of the Valuation
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 Participant Contributions Subaccount determined on the
fourth Valuation Date following the date he terminates Employment (or such other
Valuation Date as may apply pursuant to Section 11.7).
5.4 PARTICIPANTS WHO HAVE RECEIVED PRIOR DISTRIBUTIONS
If a distribution of a Participant's Employer Contributions Subaccount has
been made under Section 5.2 to a Participant at a time when he has a
nonforfeitable right to less than 100 percent of his Employer Contributions
Subaccount, his nonforfeitable interest in his Employer Contributions Subaccount
at any time thereafter will be equal to P (AB + D) - D, where P is the
nonforfeitable percentage at the relevant time determined under Section 4.1.3;
AB is the balance of his Employer Contributions Subaccount at the relevant time;
and D is the amount of the distribution. However, if any part of his Employer
Contributions Subaccount is forfeited under Section 4.3, the Participant's
interest in the remaining balance, if any, of his Employer Contributions
Subaccount will thereafter be fully vested and nonforfeitable (subject to
adjustments
V-1
<PAGE>
in the value of his account). If, after such a forfeiture under Section 4.3,
the Participant resumes participation in the Plan, a separate, new Employer
Contributions Subaccount will be established for him under Section 3.6.1 and all
subsequent contributions will be credited to such new Subaccount. The vesting
schedule in Section 4.1.3. will thereafter apply only to such new Subaccount;
his interest in the original Subaccount will remain fully vested and
nonforfeitable.
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 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
V-2
<PAGE>
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 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 PARTICIPANT ACCOUNT WITHDRAWALS
5.6.1 Participant Contributions Subaccount Withdrawals. In accordance
------------------------------------------------
with such rules and procedures as the Administrator may prescribe, a Participant
may withdraw his Participant Contributions, in the order set forth in paragraphs
(a), (b) and (c) below 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 Participant Contributions without obtaining the Spousal Consent of his
Spouse within the 90 day period ending on the date the withdrawal is made.
(a) Withdrawal of Pre-1987 Participant Contributions. A
------------------------------------------------
Participant may withdraw from his Participant Contributions Subaccount
under this paragraph (a) an
V-3
<PAGE>
amount up to the total amount of his Supplementary Participant
Contributions and Basic Participant Contributions made prior to January 1,
1987 less any previous withdrawals; provided, however, the amount of such
withdrawal under this paragraph (a) cannot be less than $200 (or, if less,
the amount of his pre-1987 Supplementary Participant Contributions and
Basic Participant Contributions);
(b) Withdrawal of Post-1986 Supplementary Participant
-------------------------------------------------
Contributions. A Participant who is withdrawing the maximum amount
-------------
permitted under (a) above may also withdraw from his Participant
Contributions Subaccount under this paragraph (b) an amount up to the total
amount of his post-1986 Supplementary Participant Contributions plus
earnings on his Supplementary Participant Contributions less any previous
withdrawals; provided, however, the amount of such withdrawal under this
paragraph (b) cannot be less than $200 (or, if less, the amount of his
post-1986 Supplementary Participant Contributions and earnings on his
Supplementary Participant Contributions);
(c) Withdrawal of Post-1986 Basic Participant Contributions. A
-------------------------------------------------------
Participant who is withdrawing the maximum amount permitted under (b) above
may also withdraw from his Participant Contributions Subaccount an amount
up to the total amount of his post-1986 Basic Participant Contributions
plus earnings on his Basic Participant Contributions less any previous
withdrawals; provided, however, the amount of such withdrawal under this
paragraph (c) cannot be less than $200 (or, if less, the amount of his
post-1986 Basic Participant Contributions and earnings on his Basic
Participant Contributions). A Participant may not make more than two
withdrawals under paragraphs (a), (b) and (c) in any one calendar year. If
at any time a Participant withdraws on a cumulative basis more than 80
percent of the total amount of his Basic Participant Contributions, his
right to make further Participant Contributions under the Plan will be
suspended for a period of six months from the date of his last withdrawal.
5.6.2 Employer Contributions Subaccount Withdrawal. A Participant who (i)
--------------------------------------------
is 100% vested in his Employer Contributions Subaccount and (ii) is withdrawing
the entire balance of his Participant Contributions Subaccount in accordance
with Section 5.6.1 may, at the same time as the withdrawal under Section 5.6.1,
withdraw an amount which is no greater than 50% of the value of his Employer
Contributions Subaccount by giving prior written notice to the Administrator of
intention to so withdraw on a form prescribed or approved by the Administrator.
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<PAGE>
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. The right of a
Participant withdrawing Employer Contributions under this Section 5.6.2 to make
further Participant Contributions under the Plan will be suspended for a period
of twelve 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.
5.6.3 Resumption of Participation after a Withdrawal. A Participant who
----------------------------------------------
makes a withdrawal in accordance with Sections 5.6.1(c) or 5.6.2 may elect to
resume making Participant Contributions as of the first day of the payroll
period following the last day of the applicable suspension period. Such
election must be made in writing and filed with the Administrator prior to the
first day of the payroll period in which the Participant wishes the resumption
to be made effective. Amounts withdrawn by a Participant may not be returned to
the Plan.
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<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,
VI-2
<PAGE>
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.
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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
attained age 70 1/2. If the Surviving Spouse dies before payments to such
Spouse begin,
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subsequent distributions shall be made as if the Surviving Spouse had been
the Participant.
7.1.3 The Valuation Date for purposes of determining the benefits payable
to the Beneficiary of a Participant shall be as of the fourth Valuation Date
following the Participant's death (or such other Valuation Date as may apply
pursuant to Section 11.7).
7.1.4 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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<PAGE>
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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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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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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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 a prospectus 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
Participant Contributions and Employer Contributions made with respect to him.
Separate investment elections with respect to his Participant Contributions and
Employer Contributions may not be made. A Participant's initial investment
election will be made in accordance with Section 2.1.3 and will be limited to
the following:
(a) Option One:
(1) 100% in a single Investment,
(2) 75% in one Investment and 25% in another, or
(3) 50% in each of two Investments.
Within Option One, all Participant and Employer Contributions
will be directed in the percentage(s) chosen.
(b) Option Two: 100% of Basic Participant Contributions and Employer
Contributions in one Investment, and 100% of Supplementary Participant
Contributions in another Investment.
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 Accounts of a Participant on the Valuation Date
that falls within the next Valuation Period commencing after the date on which
the contributions are made, at the closing price for such Shares determined in
accordance with the current prospectus of the Investment Company. Contributions
to be invested in Company Stock or Torchmark Stock will be so invested during
the next Valuation Period commencing after the date on which the contributions
XI-1
<PAGE>
are made, and credited to the accounts of a Participant on the Valuation Date
that falls within the Valuation Period following the Valuation Period during
which purchases are made, at the average price per share paid or received by the
Trustee for shares purchased or sold during such Valuation Period, including the
cost of brokerage commissions, transfer taxes and any other transaction costs.
11.2 CHANGE IN INVESTMENT ELECTION FOR CONTRIBUTIONS
A Participant may elect to change his investment election with respect to
investment of Participant Contributions and Employer Contributions to be made
during any Valuation Period and thereafter by giving notice in writing to the
Administrator before the first day of the Valuation Period for which the
Participant wishes such change to be made. Only one such change may be made in
a single Valuation Period; such change may not be made more frequently than
eight times in a calendar year (or such other limits as may be established from
time to time by the Company), except as otherwise provided in this section.
Such change will be limited to the investment choices described in Section 11.1.
In addition, the total number of Investments selected by a Participant under the
Plan at any time cannot exceed four, or such other number as determined from
time to time by the Administrator and communicated to Participants. Separate
changes of investment elections with respect to Participant Contributions and
Employer Contributions may not be made. Such change will become effective for
the Valuation Period commencing on or after the date of receipt of the election.
11.3 TRANSFER OF INVESTMENT ACCOUNTS
A Participant may, not more than eight times in a calendar year (or such
other limits as may be established from time to time by the Company), elect to
transfer any whole percentage of the value of an investment in his Participant
Contributions Subaccount and Employer Contributions Subaccount from one
Investment to one other Investment. Only one such change may be made in any
Valuation Period. Separate elections to transfer amounts in the Participant
Contributions Subaccount and Employer Contributions Subaccount may not be made.
In addition, the total number of Investments selected by the Participant under
the Plan at any time cannot exceed four (or such other limits as may be
established from time to time by the Company). The Participant's election to
transfer must be made in writing to the Administrator.
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<PAGE>
If the Administrator receives an election to transfer an Investment out of
Investment Company Shares, or from Shares of one Investment Company to shares of
another Investment Company, the transfer will be effected by redeeming, or
redeeming and purchasing, the requested amount from the Investment Company on
the Valuation Date that falls within the next Valuation Period commencing after
the date of receipt of the election.
If the Administrator receives an election to transfer an Investment out of
or into the Company Stock Account or out of the Torchmark Stock Account the
transfer will be effected by selling or purchasing the required number of shares
of Company Stock or Torchmark Stock (or netting sales or purchases against other
required purchases or sales) during the first Valuation Period commencing after
the date of receipt of the election. All transfers out of or into the Company
Stock Account or out of the Torchmark Stock Account will be settled on the
Valuation Date that falls within the Valuation Period following the Valuation
Period during which the shares are sold, purchased, or netted, using the average
price paid or received by the Trustee in purchases or sales of Company Stock or
Torchmark Stock during the Valuation Period in which the shares are sold,
purchased, or netted.
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 Account 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 Account.
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
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Stock Account held for each Participant's Account will (unless received in
additional Torchmark Shares or in the shares of an Affiliate) be reinvested in
full and fractional Investment Company Shares according to the Participant's
current investment election.
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 or Employer
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
A Participant's Accounts shall be revalued at fair market value on the last
business day of each Plan Year and at such other times as the Administrator
determines. On such date, the Administrator will determine the current value of
the Investments held for each Participant's
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Employer Contributions Subaccount and Participant Contributions Subaccount and
report the same in writing to the Participant.
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 on the Valuation Date that falls within the next
Valuation Period commencing after 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 Account, the withdrawal or distribution
will be effected by selling, or transferring if a withdrawal or distribution in
kind is requested, the required number of shares of Company Stock (or netting
sales against other required purchases) during the next Valuation Period
commencing after the date of receipt of the request. All withdrawals or
distributions out of the Company Stock Account will be settled on the Valuation
Date that falls within the Valuation Period following the Valuation Period
during which the shares are sold, netted or transferred, using the average price
paid or received by the Trustee in purchases or sales or Company Stock during
the Valuation Period in which the shares are sold, netted, or transferred.
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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.
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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.
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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 benefit he would have been
entitled to receive immediately before the merger, consolidation or
XIII-2
<PAGE>
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, 1989.
WADDELL & REED FINANCIAL, INC.
By:
--------------------------------
ATTEST:
- ---------------------------
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-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.
(j) Super Top-Heavy Plan means, for any Plan Year beginning after
--------------------
December
Appendix-2
<PAGE>
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 Defined Contribution Plans (including any "simplified employee
pension" within the
Appendix-3
<PAGE>
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 (within the meaning of Code (S) 416(g)) such
determination shall be made under (A) the
Appendix-4
<PAGE>
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 (S) 416(h)(2)(B) and the Administrator
increases the minimum rate of benefit accrual provided in
Appendix-5
<PAGE>
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-6
<PAGE>
EXHIBIT 10.12
THE
WADDELL & REED FINANCIAL, INC.
RETIREMENT INCOME PLAN
(AMENDED AND RESTATED AS OF MARCH 1, 1998)
<PAGE>
BACKGROUND
----------
Effective as of January 1, 1973, Continental Investment Corporation, a
predecessor of United Investors Management Company, established a defined
benefit pension plan ("Plan") which is intended to be qualified pursuant to the
provisions of the Internal Revenue Code of 1986, as amended. Subsequently, the
Plan has been known as the Liberty Financial Services, Inc. Retirement Income
Plan, the Torchmark Financial Services, Inc. Retirement Income Plan and the
TMK/United, Inc. Retirement Income Plan. Effective January 1, 1989, the Plan
was renamed the United Investors Management Company Retirement Income Plan. 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, l989, the Plan was amended and restated to
comply with the Tax Reform Act of l986. 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.
The benefit under the Plan of any participant who terminates
employment or becomes disabled shall be determined in accordance with the
provisions of the Plan as in effect on the date of such termination of
employment or disability.
i
<PAGE>
TABLE OF CONTENTS
Page
BACKGROUND ............................................................. i
TABLE OF CONTENTS ...................................................... ii
ARTICLE 1 - DEFINITIONS ................................................ 1-1
"Accrued Retirement Benefit" ............................... 1-1
"Actuarial Equivalent" ..................................... 1-1
"Administrative Committee" ................................. 1-1
"Administrator" ............................................ 1-1
"Affiliate" ................................................ 1-1
"Beneficiary" .............................................. 1-2
"Benefit Commencement Date" ................................ 1-2
"Board of Directors or Board" .............................. 1-2
"Code" ..................................................... 1-2
"Company" .................................................. 1-2
"Comparable Plan" .......................................... 1-2
"Compensation" ............................................. 1-2
"Covered Compensation" ..................................... 1-3
"Credited Service" ......................................... 1-4
"Deferred Retirement" ...................................... 1-4
"Defined Benefit Plan" ..................................... 1-4
"Defined Contribution Plan" ................................ 1-4
"Disability" ............................................... 1-4
"Early Retirement" ......................................... 1-4
"Effective Date" ........................................... 1-4
"Eligible Employee" ........................................ 1-4
"Employee" ................................................. 1-5
"Employer" ................................................. 1-5
"Employment" ............................................... 1-5
"Entry Date" ............................................... 1-5
"ERISA" .................................................... 1-5
"Final Average Compensation" ............................... 1-5
"Hour of Service" .......................................... 1-6
"Investment Manager" ....................................... 1-7
"Non-Vested Separation" .................................... 1-7
"Normal Retirement" ........................................ 1-7
"Normal Retirement Age" .................................... 1-7
"Normal Retirement Date" ................................... 1-7
"One Year Break in Service" ................................ 1-8
"Participant" .............................................. 1-8
"Participating Affiliates" ................................. 1-8
"Plan" ..................................................... 1-8
"Plan Year" ................................................ 1-8
"Profit Sharing and Retirement Plan Annuity" ............... 1-8
"Qualified Joint and Survivor Annuity" ..................... 1-9
"Qualified Plan" ........................................... 1-9
"Qualified Pre-Retirement Survivor Annuity" ................ 1-9
"Retirement Benefit" ....................................... 1-9
"Social Security Offset Percentage" ....................... 1-10
"Social Security Retirement Age" .......................... 1-10
"Special Average Earnings" ................................ 1-11
"Spouse" .................................................. 1-11
"Surviving Spouse" ........................................ 1-11
"Trust or Trust Fund" ..................................... 1-11
"Trust Agreement" ......................................... 1-11
"Trustee" ................................................. 1-12
"Vested Separation" ....................................... 1-12
"Vesting Service" ......................................... 1-12
"Year of Service" ......................................... 1-12
ii
<PAGE>
ARTICLE 2 - PARTICIPATION .............................................. 2-1
2.1 Admission as a Participan .................................. 2-1
2.2 Re-employment .............................................. 2-1
2.3 Termination of Participatio ................................ 2-1
ARTICLE 3 - RETIREMENT BENEFIT ......................................... 3-1
3.1 Retirement Benefit Formula ................................. 3-1
3.2 Rules for Determining Years of Credited Servic ............. 3-3
3.3 Limitation on Benefits ..................................... 3-5
3.4 Special Retirement Benefit Rules for Certain Former
Torchmark Employees ........................................ 3-5
ARTICLE 4 - VESTING PROVISIONS ......................................... 4-1
4.1 Determination of Vesting ................................... 4-1
4.2 Rules for Crediting Vesting Service ........................ 4-1
4.3 Retirement Benefit Forfeitures ............................. 4-2
ARTICLE 5 - AMOUNT AND COMMENCEMENT OF RETIREMENT
BENEFITS ................................................... 5-1
5.1 Determination of Amount of Retirement Benefits ............. 5-1
5.2 Suspension of Payments on Resumption of Employment ......... 5-3
5.3 Limitation on Commencement of Benefits ..................... 5-4
ARTICLE 6 - FORMS OF PAYMENT OF RETIREMENT BENEFIT ..................... 6-1
6.1 Methods of Distribution .................................... 6-1
6.2 Election of Optional Forms ................................. 6-2
6.3 Direct Rollovers ........................................... 6-3
ARTICLE 7 - DEATH BENEFITS.............................................. 7-1
7.1 Eligibility for Pre-Retirement Death Benefit ............... 7-1
7.2 Form of Pre-Retirement Death Benefit ....................... 7-2
7.3 Election to Waive .......................................... 7-3
iii
<PAGE>
7.4 Beneficiaries............................................... 7-3
7.5 After-Death Distribution Rules.............................. 7-4
ARTICLE 8 - CONTRIBUTIONS AND FORFEITURES............................... 8-1
8.1 Contribution by the Company................................. 8-1
8.2 Contributions by Employees.................................. 8-1
8.3 Forfeitures................................................. 8-1
8.4 Return of Employer Contributions under Special
Circumstances............................................... 8-1
ARTICLE 9 - FIDUCIARIES................................................. 9-1
9.1 Named Fiduciaries........................................... 9-1
9.2 Employment of Advisers...................................... 9-1
9.3 Multiple Fiduciary Capacities............................... 9-1
9.4 Reliance.................................................... 9-2
9.5 Scope of Authority and Responsibility....................... 9-2
ARTICLE 10 - TRUSTEE................................................... 10-1
10.1 Trust Agreement............................................ 10-1
10.2 Assets in Trust............................................ 10-1
ARTICLE 11 - ADMINISTRATIVE COMMITTEE.................................. 11-1
11.1 Appointment and Removal of Administrative Committee........ 11-1
11.2 Officers of Administrative Committee....................... 11-1
11.3 Action by Administrative Committee......................... 11-1
11.4 Rules and Regulations...................................... 11-2
11.5 Powers..................................................... 11-2
11.6 Information from Participants.............................. 11-3
11.7 Reports.................................................... 11-3
11.8 Authority to Act........................................... 11-3
11.9 Liability for Acts......................................... 11-3
11.10 Compensation and Expenses.................................. 11-3
11.11 Indemnity.................................................. 11-4
iv
<PAGE>
11.12 Denied Claims.............................................. 11-4
ARTICLE 12 - PLAN AMENDMENT OR TERMINATION............................. 12-1
12.1 Plan Amendment............................................. 12-1
12.2 Limitations on Plan Amendment.............................. 12-1
12.3 Right of the Company to Terminate Plan..................... 12-2
12.4 Effect of Partial or Complete Termination.................. 12-2
12.5 Allocation of Assets....................................... 12-3
12.6 Residual Assets............................................ 12-3
12.7 Limitations Applicable to Certain Highly Paid
Participants............................................... 12-3
ARTICLE 13 - MISCELLANEOUS PROVISIONS.................................. 13-1
13.1 Exclusive Benefit of Participants.......................... 13-1
13.2 Plan Not a Contract of Employment.......................... 13-1
13.3 Source of Benefits......................................... 13-1
13.4 Benefits Not Assignable.................................... 13-1
13.5 Domestic Relations Orders.................................. 13-2
13.6 Benefits Payable to Minors, Incompetents and Others........ 13-2
13.7 Merger or Transfer of Assets............................... 13-2
13.8 Participation in the Plan by an Affiliate.................. 13-3
13.9 Action by Employer......................................... 13-3
13.10 Provision of Information................................... 13-3
13.11 Controlling Law............................................ 13-4
13.12 Conditional Restatement.................................... 13-4
13.13 Rules of Construction...................................... 13-4
APPENDIX A - TOP-HEAVY PROVISIONS...................................Appendix-1
v
<PAGE>
ARTICLE 1 - DEFINITIONS
Each of the following terms shall have the meaning set forth in this
Article 1 for purposes of this Plan:
"Accrued Retirement Benefit" - As of any date, the Retirement Benefit
of a Participant calculated pursuant to the provisions of Article 3 as if the
Participant's Employment terminated on such date, but in no event less than the
Accrued Retirement Benefit to which the Participant would have been entitled had
he terminated employment on December 31, 1988 under the provisions of the Plan
as then in effect.
"Actuarial Equivalent" - An amount or a benefit of equivalent current
value to the Retirement Benefit which would otherwise be provided a Participant,
determined on the basis of the following actuarial assumptions:
(a) Mortality - for both sexes, the male 1971 Individual Annuity
Mortality Table, with an age set back of one year.
(b) Interest - (i) the applicable interest rate utilized by the
Pension Benefit Guaranty Corporation to value immediate and deferred
annuities, whichever is applicable, at the time the payment of such benefit
commences or such amount is distributed, or (ii) such other rate as
otherwise required by law.
"Administrative Committee": The committee appointed by the Board
pursuant to, and having the responsibilities specified in, Article 11 of the
Plan.
"Administrator" - The Company or Committee appointed by the Board of
Directors pursuant to, and having the responsibilities specified in, Article 11
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
1-1
<PAGE>
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) 4l4(o).
"Beneficiary" - A person other than a Participant entitled to receive
any payment of benefits pursuant to the terms of this Plan.
"Benefit Commencement Date" - The date, determined under Article 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 or Board" - The Board of Directors of the Company.
"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.
"Comparable Plan" - A plan of the same type as described in Treasury
Regulation (S) 1.381(c)(11)-1(d)(4).
"Compensation" - The total cash compensation paid to an Employee
during a calendar year by his Employer, including salary, wages, any amounts not
paid directly and currently in cash to an Employee but paid for the benefit of
an Employee through a "salary
1-2
<PAGE>
reduction" agreement in conjunction with one or more welfare plans of the
Employer and the total amount deferred pursuant to an Employee's election under
a "cash or deferred arrangement" in conjunction with one or more qualified
retirement plans of the Employer, but excluding:
1) any reimbursement of or allowances for expenses and travel;
2) payments made to any Employee after such Employee's separation
from service, in the form of severance benefits;
3) Employer contributions to the Plan or any other public or private
employee benefit plan or deferred compensation arrangement;
4) payments, contributions, or benefits under such other plans,
programs or forms of compensation as the Board of Directors may exclude under
this definition;
5) annual or periodic performance bonus payments and commissions for
all Employees other than Regional Vice Presidents, Division Managers and
District Managers to the extent such exclusion from earnings does not reduce the
Accrued Retirement Benefit of any such Employee under the Plan as of December
27, 1984;
6) effective July 1, 1987, compensation derived from commissions
paid on the sales of personal production of Regional Vice Presidents, Division
Managers and District Managers to the extent such exclusion from earnings does
not reduce the Accrued Retirement Benefit of any such Employee under the Plan as
of July 1, 1987;
7) director's fees;
8) annual service awards and other non-cash prizes and awards; and
9) deferred compensation accrued under any deferred compensation
agreement or contract or any amendment or replacement thereof.
The determination of Compensation will be in accordance with records
maintained by the Employer and shall be conclusive. Anything in this definition
to the contrary notwithstanding, the Compensation taken into account for a
Participant for Plan purposes 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)).
"Covered Compensation" - The average of the annual contribution and
benefits base under Section 230 of the Social Security Act for each year for the
thirty-five year period
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ending in the year the Participant reaches Social Security Retirement Age
(SSRA), except for a Participant who separates before attainment of SSRA the
base for the year of separation will be assumed to be the base for all future
years to SSRA without increases or adjustments.
"Credited Service" - The Years of Service for computation of the
amount of a Participant's Retirement Benefit as defined in Article 3.
"Deferred Retirement" - Termination of Employment of a Participant
after his Normal Retirement Date.
"Defined Benefit Plan" - A plan of the type defined in Code (S) 414(j)
maintained by the Company or an Affiliate, as applicable.
"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.
"Early Retirement" - Termination of Employment, other than by reason
of Disability or death, of a Participant prior to Normal Retirement Age who has
completed at least 10 full years of Vesting Service and has attained the age of
55.
"Effective Date" - The Effective Date of this Amended and Restated
Plan shall be March 1, 1998. The original effective date of the Plan was
January 1, 1973.
"Eligible Employee" - An Employee of an Employer other than (a) an
Employee 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
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<PAGE>
in the Plan; and (b) a leased employee within the meaning of Code (S) 414(n)(2).
"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" does not include leased employees within the meaning of Code (S)
414(n)(2). In addition, no person shall be considered an "Employee" hereunder
by reason of being a sales representative for the Company or an Affiliate.
"Employer" - The Company and each Affiliate participating in the Plan
pursuant to Section 13.8.
"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 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.
"Final Average Compensation" - The highest average of the
Participant's annual Compensation for any five consecutive full calendar years
of Employment during the 10 consecutive calendar years of Employment immediately
preceding the Participant's termination of Employment, provided that any service
credited for a period of Disability shall be disregarded in determining such 10
consecutive years. In the event the Participant does not have at least five
full calendar years of Employment, Final Average Compensation shall mean the
average annual Compensation for the Participant's total number of full years of
Employment. A Participant's annual Compensation, without annualization, during
the part of the calendar year immediately
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<PAGE>
preceding his termination of Employment will be treated as his annual
Compensation for a full calendar year for the purpose of this Section if that
produces a higher average. If a Participant is rehired and is entitled to the
reinstatement of prior Credited Service and Vesting Service and does not have at
least five full consecutive years of annual Compensation after he is rehired,
then his Final Average Compensation shall mean the average of the annual
Compensation for the Participant's last five complete calendar years of
Employment.
"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 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
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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
this Plan he would be credited with at least one Hour of Service during the
week.
(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.
"Investment Manager" - Any person appointed pursuant to Section 9.1
having the power to direct the investment of assets in accordance with that
Section.
"Non-Vested Separation" - Termination of Employment of a Participant
whose vested percentage in his Retirement Benefit is zero percent.
"Normal Retirement" - Termination of Employment of a Participant at
Normal Retirement Age.
"Normal Retirement Age" - Age sixty-five.
"Normal Retirement Date" - The last day of the payroll period of the
Employer
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<PAGE>
coinciding with or next following the date on which the Participant attains 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 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
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.
"Participant" - An Employee who has commenced, but not terminated,
participation in the Plan as provided in Article 2.
"Participating Affiliates" - 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. Retirement Income Plan.
"Plan Year" - Each twelve consecutive month period ending on December
31, during any part of which the Plan is in effect.
"Profit Sharing and Retirement Plan Annuity" - The annual single life
annuity, without death benefit, which can be provided by that portion of the
Participant's account, if any, under the Liberty National Life Insurance Company
Profit Sharing and Retirement Plan
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<PAGE>
attributable to employer contributions and earnings thereon. In determining the
amount attributable to employer contributions and earnings thereon for this
purpose no deduction shall be made for the amount of any loans outstanding.
There shall be added to the amount attributable to employer contributions and
earnings thereon:
(1) the amount of any withdrawal(s) by, and prior distribution(s) to,
the Participant to the extent such withdrawals and prior distributions
exceed the amount of the Participant's contributions and earnings thereon
and
(2) the amount of the earnings of the Plan which would have been
allocated to the amount(s) described in the preceding paragraph from the
date of such withdrawals or distributions.
A Participant's Profit Sharing and Retirement Plan Annuity shall be calculated
as of his termination of Employment, based upon the Participant's attained age
and the employer's rate basis for annuities purchasable under the Profit Sharing
and Retirement Plan on such date. A Participant's Profit Sharing and Retirement
Plan Annuity may be calculated on either an immediate or deferred basis as
indicated in the context of this Plan, but, in any case, one shall be the
Actuarial Equivalent of the other.
"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 Spouse for the Surviving Spouse's life in an
amount which is equal to fifty percent of the amount payable during the joint
lives of the Participant and such Surviving Spouse and which is the Actuarial
Equivalent of the Participant's Retirement Benefit.
"Qualified Plan" - A Defined Contribution Plan or a Defined Benefit
Plan which is qualified under Code (S) 401(a).
"Qualified Pre-Retirement Survivor Annuity" - The pre-retirement death
benefit provided for in Section 7.1.1(2).
"Retirement Benefit" - The retirement benefit of a Participant
calculated under
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<PAGE>
Article 3 in the form of a single life annuity payable monthly commencing on
Normal Retirement Date for the life of the Participant.
"Social Security Offset Percentage" - The percentage factor utilized
in determining the social security offset for a Participant. This offset
percentage is based on the Participant's Social Security Retirement Age and the
age at which the Participant's benefits commence. The appropriate offset
percentages are as follows:
Benefit Social Security Retirement Age
Commencement ------------------------------
Age Age 65 Age 66 Age 67
-------------- ------ ------ ------
(Interpolate for months)
55 0.750% 0.688% 0.632%
56 0.750% 0.703% 0.645%
57 0.750% 0.706% 0.662%
58 0.750% 0.708% 0.667%
59 0.750% 0.711% 0.671%
60 0.750% 0.712% 0.675%
61 0.750% 0.682% 0.648%
62 0.750% 0.688% 0.625%
63 0.750% 0.692% 0.635%
64 0.750% 0.696% 0.643%
65 0.750% 0.700% 0.650%
66 0.750% 0.750% 0.700%
67 0.750% 0.750% 0.750%
"Social Security Retirement Age" - The earliest age at which a
Participant is entitled to receive his full benefit under the Social Security
Act. The appropriate Social Security Retirement Ages are as follows:
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<PAGE>
Calendar Year Age of Social Security
of Birth Retirement Age
--------------- ----------------------
1937 and Before Age 65
1938 to 1954 Age 66
1955 and after Age 67
"Special Average Earnings" - The average of the Participant's annual
Compensation for the three completed consecutive calendar year periods during
his last five complete consecutive calendar years of Employment which yields the
highest average, or if employed less than three complete consecutive calendar
years the amount obtained by converting his compensation for the most recent
periods of Employment to an annual rate, where compensation considered for any
year cannot exceed the Social Security contribution and benefits base under
Section 230 of the Social Security Act for that year. Notwithstanding the
above, Special Average Earnings will not exceed the Participant's Covered
Compensation.
"Spouse" - The person lawfully married to a Participant.
"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.
"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 fund.
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<PAGE>
"Trustee" - The trustee appointed pursuant to Article 10, and any
successor trustee.
"Vested Separation" - Termination of Employment of a Participant for
any reason other than Disability before he is eligible for Early Retirement,
with a vested percentage in his Retirement Benefit.
"Vesting Service" - The Years of Service credited to a Participant
under Section 4.2 for purposes of determining the Participant's vested
percentage in his Retirement Benefit.
"Year of Service":
(a) For purposes of determining eligibility to participate under
Article 2 and for purposes of determining Vesting Service, for Employment,
or return to Employment after a One Year Break in 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).
(b) For purposes of determining Credited Service, for Employment, or
return to Employment after a One Year Break in 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 2000 Hours of Service
for an Employer in Employment covered by the Plan (or for an Affiliate in
employment covered by such Affiliate's Comparable Plan in the case of an
Employee who has transferred his Employment to the Employer from such
Affiliate). An Employee who completes at least 1,000 Hours of Service but
less than 2,000 Hours of Service in a computation period shall be credited
with a fraction of a Year of Service for such period, determined by
dividing his Hours of Service in such period by 2,000.
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<PAGE>
ARTICLE 2 - PARTICIPATION
2.1 ADMISSION AS A PARTICIPANT
2.1.1 An Eligible Employee shall become a Participant on the first day of
the payroll period next following the later of his completion of one Year of
Service or his attainment of age 21. 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 An Employee who did not become a Participant on the Entry Date next
following the date on which he met the eligibility requirements of Section 2.1.1
because he was not then an Eligible Employee shall become a Participant as of
the first day on which he becomes an Eligible Employee.
2.1.3 If an Employee has not completed 1,000 Hours of Service for the
Employer by the anniversary of his Employment, the next twelve-month period for
determining a Year of Service shall begin on the January 1 next following his
date of Employment and thereafter any subsequent twelve-month period shall begin
on the anniversary of his Employment.
2.2 RE-EMPLOYMENT
An individual who has ceased to be a Participant and who again becomes an
Eligible Employee shall become a Participant as of the first date on which he
again becomes an Eligible Employee, unless he has had a One Year Break in
Service. If an individual again becomes an Eligible Employee after a One Year
Break in Service, he shall become a Participant upon completion of one Year of
Service retroactive to a date which is not later than the date he again became
an Eligible 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 benefit
accrual;
(b) upon his Non-Vested Separation;
(c) upon his death; or
(d) upon the transfer of his Accrued Benefit to another Qualified
Plan.
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ARTICLE 3 - RETIREMENT BENEFIT
3.1 RETIREMENT BENEFIT FORMULA
3.1.1 A Participant's monthly Retirement Benefit shall be an amount equal
to 1/12 of the excess of (a) over the sum of (b), (c) and (d) below, where:
(a) is 2% of the Participant's Final Average Compensation for each
year of Credited Service up to 30 years plus 1% of the Participant's Final
Average Compensation for each year of Credited Service in excess of 30 years
(not exceeding 10%);
(b) is the social security offset which is equal to the smaller of:
(1) 50% of the basic benefit calculated above in Section
3.1.1(a), but substituting Special Average Earnings for Final Average
Compensation in the formula;
or
(2) the Social Security Offset Percentage times the
Participant's Special Average Earnings times each year of Credited Service
not to exceed 35 years;
(c) is the Participant's Profit Sharing and Retirement Plan Annuity,
if any; and
(d) is the Participant's annual retirement income (expressed in the
form of a single life annuity commencing at Normal Retirement Date) under (i)
the Comparable Plan or Plans of the Company or any affiliate of the Company or
any other corporation merged into the Company, or whose assets were acquired by
the Company, or (ii) the Comparable Plan or Plans of Torchmark Corporation or
any affiliate of the Torchmark Corporation or any other corporation merged into
the Torchmark Corporation or whose assets were acquired by Torchmark
Corporation.
3.1.2 In no case shall the monthly Retirement Benefit for any Participant
who was a Participant in the Plan prior to December 27, 1984 be less than the
monthly normal retirement income which had accrued under the Plan to such
Participant on December 27, 1984.
3.1.3 Notwithstanding Section 3.1.1, for Participants who were
participating in the Liberty National Life Insurance Company Pension Plan on
April 5, 1982, the monthly Retirement Benefit of any such Participant retiring
after April 5, 1982, shall not be less than 1/12 of (a) or (b) below, whichever
is greater, where:
(a) is (i) plus (ii) less (iii), where:
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(i) applies only to Participants with less than 30 years of
Credited Service on the anniversary of employment preceding April 5, 1982,
and is 1/12 of 2% times the Final Average Compensation times the number of
complete months of service for benefit accrual purposes from March 6, 1982,
through the earlier of the 30th year of Credited Service or the date of
termination of Employment; and,
(ii) is 1/12 of 1% times the Final Average Compensation times
the number of complete months of service for benefit accrual purposes from
March 6, 1982, or from the 30th year of Credited Service, if later, through
the earlier of the date of termination of Employment or the 40th year of
Credited Service for benefit accrual purposes; and
(iii) applies only to Participants with less than 35 years of
Credited Service on the anniversary of employment immediately preceding
April 5, 1982, and is the lesser of (x) 1/12 of the Social Security Offset
Percentage times the Participant's Special Average Earnings times the
number of complete months of service for benefit accrual purposes from
March 6, 1982, through the earlier of the 35th year of Credited Service for
benefit accrual purposes, or the date of termination of Employment or (y)
50% of the sum of the amounts in (a)(i) plus (a)(ii) but substituting
Special Average Earnings for Final Average Compensation in those formulas.
(b) is (i) plus (ii) less (iii), where:
(i) is 1/12 of 2% times the Final Average Compensation times
the number of complete months of service for benefit accrual purposes from
April 5, 1982, through the earlier of April 4, 1987 or the date of
termination of Employment; and
(ii) is 1/12 of 1.5% times the Final Average Compensation times
the number of complete months of service for benefit accrual purposes from
April 5, 1987, through the earlier of April 4, 1992 or the date of
termination of Employment; and
(iii) is the amount calculated in Section 3.1.3(a)(iii), above.
Any benefit provided under this Section shall be based solely on Credited
Service for benefit accrual purposes for an Employer participating in this Plan.
3.1.4 The amount of Retirement Benefit calculated under this section shall
be subject to actuarial adjustment if it is payable in any other form of payment
authorized by this Plan.
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<PAGE>
3.1.5 The Retirement Benefit of a Participant who terminated Employment or
incurred a Disability prior to the Effective Date shall be determined in
accordance with the provisions of the Plan as in effect on the date of
termination of Employment or Disability.
3.1.6 The Retirement Benefit of a Participant who had a Vested Termination
and received a distribution of his Accrued Retirement Benefit at the time of
termination shall be reduced by the Actuarial Equivalent of such prior
distribution.
3.2 RULES FOR DETERMINING YEARS OF CREDITED SERVICE
3.2.1 Credited Service shall mean the sum of (i) a Participant's years of
Accrual Service prior to the Effective Date under the terms of the Plan as in
effect on December 31, 1988, expressed in full years and fractions thereof; plus
(ii) subject to Sections 3.2.2 through 3.2.7 below, a Participant's Years of
Service after the Effective Date, expressed in full years and fractions thereof,
except for the following:
(a) Any period of Employment prior to the Participant's attainment
of age 21; and
(b) Any period of Employment in a classification in which the
Participant does not qualify as an Eligible Employee.
3.2.2 If an Employee is on an authorized unpaid leave of absence granted
by his Employer, his period of absence shall be counted as Credited Service upon
his return to active Employment only if his Employer determines in writing, in
accordance with standard personnel policies applied in a non-discriminatory
manner to all Employees similarly situated, that such absence furthers the
interest of the Employer.
3.2.3 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 be counted as Credited Service upon his return to active
Employment.
3.2.4 If an Employee is on an authorized leave of absence on account of
Disability, he shall continue to receive Credited Service from the date of
Disability until the earlier of: (i) his Early Retirement Date; (ii) his Normal
Retirement Date; or (iii) his recovery from Disability.
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<PAGE>
3.2.5 An Employee who terminates Employment with no vested percentage in
his Retirement Benefit shall, if he returns to Employment, have no credit for
Credited Service prior to such termination of Employment if the total of his
consecutive One Year Breaks in Service immediately preceding his reemployment
exceed the greater of five years or his aggregate years of Vesting Service
(whether or not consecutive, but excluding Vesting Service previously
disregarded under Section 4.2.4) prior to the termination. A Participant who
had a Vested Termination and returns to Employment will retain credit for his
prior years of Credited Service; provided, however, that if such Participant
received a distribution of his Accrued Retirement Benefit at the time of such
Vested Termination, any subsequent Retirement Benefit paid to the Participant
shall be reduced or offset by the Actuarial Equivalent of the Accrued Retirement
Benefit paid to such Participant at the time of his earlier Vested Termination.
3.2.6 No Participant shall receive Credited Service during a period when
such Participant is accruing, or has accrued, benefits under another defined
benefit plan of (i) the Employer or an Affiliate, or (ii), Torchmark Corporation
or an affiliate of Torchmark Corporation unless the Retirement Benefit under
this Plan is reduced or offset by the full amount of benefits accrued by such
Participant under such other defined benefit plan.
3.2.7 By appropriate corporate action exercised in a uniform and
nondiscriminatory manner and, where applicable consented to by the Company, each
Employer may grant Credited Service for any Employment with such Employer prior
to the time it became an Employer.
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<PAGE>
3.3 LIMITATION ON BENEFITS
Notwithstanding any other provisions of the Plan, a Participant's Accrued
Retirement Benefit 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 contributions under any defined contribution plan; (iii) matched
employee contributions under any defined contribution plan; (iv) matching
Employer contributions under any defined contribution plan; and (v) Employer
contributions to the Profit-Sharing and Retirement Plan of Liberty National Life
Insurance Company.
3.4 SPECIAL RETIREMENT BENEFIT RULES FOR CERTAIN FORMER TORCHMARK EMPLOYEES
3.4.1 Notwithstanding any other provision of the Plan to the contrary,
with respect to any Participant described in Section 3.4.2, the amount of such
Participant's monthly Retirement Benefit shall be equal to 1/12 of the sum of
(a) plus (b) below, where
(a) is the monthly accrued benefit the Participant had earned under
the Torchmark Corporation Pension Plan as of the date such Participant ceased to
be an employee of Torchmark and became an Employee of the Company, and
(b) is the monthly Accrued Benefit that the Participant has earned
under this Plan, excluding from Credited Service any period of service counted
as credited service under the Torchmark Corporation Pension Plan.
3.4.2 A Participant is described in this Section 3.4.2 if the assets and
liabilities with respect to such Participant have been transferred to the Plan
from the Torchmark Corporation Pension Plan.
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ARTICLE 4 - VESTING PROVISIONS
4.1 DETERMINATION OF VESTING
In the case of a Participant who performs at least one Hour of Service on
or after January 1, 1989, he shall have a vested percentage of 100% in his
Retirement Benefit upon: (i) termination of Employment due to death or
Disability or upon or after attaining Normal Retirement Age; or (ii) completion
of five years of Vesting Service.
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 4.2.4 below, a Participant's Years of Service after the
Effective Date, except for Years of Service before the Participant attained age
18.
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 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
his Retirement Benefit 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
exceed the greater of five years or his aggregate years of Vesting Service
(whether or not consecutive, but excluding Vesting Service previously
disregarded under this rule) prior to the termination. A Participant who had a
Vested Separation and returns to Employment will retain credit for his prior
years of Vesting Service.
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<PAGE>
4.3 RETIREMENT BENEFIT FORFEITURES
The unvested portion of the Retirement Benefit of a Participant who has
terminated Employment shall be forfeited as of the earliest date on which such
Participant's Vesting Service may be disregarded pursuant to Section 4.2.4. Any
forfeitures shall be applied to reduce the Employer actuarial liability under
the Plan.
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ARTICLE 5 - AMOUNT AND COMMENCEMENT OF RETIREMENT BENEFITS
5.1 DETERMINATION OF AMOUNT OF RETIREMENT BENEFITS
5.1.1 Normal Retirement Benefits. A Participant's benefits upon Normal
--------------------------
Retirement shall be equal to his Retirement Benefit as of his Normal Retirement
Date. The Participant's Benefit Commencement Date shall be the last day of the
payroll period coincident with or next following his termination of Employment.
The Participant shall not be entitled to any benefits under this Paragraph
unless he shall survive until his Benefit Commencement Date.
5.1.2 Deferred Retirement Benefits. A Participant's benefits upon
----------------------------
Deferred Retirement shall be equal to his Retirement Benefit determined as of
his Deferred Retirement Date (without actuarial increase for deferred
commencement). The Participant's Benefit Commencement Date shall be the last
day of the payroll period coincident with or next following his termination of
Employment. The Participant shall not be entitled to any benefits under this
Paragraph unless he shall survive until his Benefit Commencement Date.
5.1.3 Early Retirement Benefits. A Participant's benefits upon Early
-------------------------
Retirement shall be equal to his Retirement Benefit calculated as of the date of
Early Retirement. The A Participant's benefits Participant's Benefit
Commencement Date shall be his Normal Retirement Date; however if he so elects,
the Benefit Commencement Date shall be the last day of the payroll period
coincident with or next following his Early Retirement, or the last day of any
payroll period thereafter which is prior to his Normal Retirement Date. If the
Participant elects a Benefit Commencement Date preceding his Normal Retirement
Date, his benefit shall equal the excess of (i) over (ii) below, where:
(i) is his Retirement Benefit, without reduction for his Profit
Sharing and Retirement Plan Annuity, if any, multiplied by the early retirement
factor shown below:
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Years by Which the
Date of the Participant's Early Retirement
First Benefit Payment Factor to Be Applied
Precedes His Normal to Accrued Retirement
Retirement Date Benefit
---------------------------- ---------------------
(Interpolate for Months)
10 .500
9 .533
8 .567
7 .600
6 .633
5 .667
4 .733
3 .800
2 .867
1 .933
0 1.000
and
(ii) is his Profit Sharing and Retirement Plan Annuity, if any.
A Participant shall not be entitled to any benefits under this Paragraph unless
he shall survive until his Benefit Commencement Date.
5.1.4 Vested Separation Benefits. A Participant's benefits upon Vested
--------------------------
Separation shall be equal to his Retirement Benefit calculated as of the date of
Vested Separation multiplied by his vesting percentage. The Participant's
Benefit Commencement Date shall be his Normal Retirement Date; provided,
however, that, such a Participant may elect to commence receiving his benefits
on or after the earliest date that he could have been eligible for Early
Retirement. If the Participant elects a Benefit Commencement Date preceding his
Normal Retirement Date, his benefit shall be equal to (a) times (b) minus (c),
where:
(a) is the Retirement Benefit which would have been payable to him
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commencing on his Normal Retirement Date determined without reduction for his
Profit Sharing and Retirement Plan Annuity, if any;
(b) is the appropriate early retirement factor shown in section
5.1.3; and
(c) is his Profit Sharing and Retirement Plan Annuity, if any.
A Participant shall not be entitled to any benefits under this Paragraph unless
he shall survive until his Benefit Commencement Date.
5.1.5 Non-Vested Separation. A Participant shall not be entitled to any
---------------------
Retirement Benefit upon his Non-Vested Separation. In addition, if a
Participant who is zero percent vested in his Accrued Retirement Benefit
terminates Employment, he shall be deemed to have received a distribution of his
Accrued Retirement Benefit.
5.2 SUSPENSION OF PAYMENTS ON RESUMPTION OF EMPLOYMENT
5.2.1 If an Employee continues in Employment after his Normal Retirement
Date or if a former Employee is receiving monthly payment of his Retirement
Benefit, payment of his Retirement Benefit shall be suspended for each calendar
month during which such Employee or former Employee continues in (or resumes)
Employment and performs more than 40 Hours of Service per calendar month
considered as service under ERISA (S) 203(a)(3)(B).
5.2.2 No payment shall be withheld by the Plan pursuant to this Section
unless the Plan notifies the Employee by personal delivery or first class mail
during the first calendar month or payroll period in which the Plan withholds
payments that his benefits are suspended. Such notifications shall contain a
description of the specific reasons why benefit payments are being suspended, a
description of the Plan provision relating to the suspension of payments, a copy
of such provisions, and a statement to the effect that applicable Department of
Labor regulations may be found in Title 29 of the Code of Federal Regulations
(S) 2530.203-3. In addition, the notice shall inform the Employee of the Plan's
procedures for affording a review of the suspension of benefits. Requests for
such reviews shall be considered in accordance with the claims procedure adopted
by the Administrator.
5.2.3 If benefit payments have been suspended, payments shall resume no
later than the first day of the third calendar month after the calendar month in
which the Employee ceases to be employed in ERISA (S) 203(a)(3)(B) service. The
initial payment upon resumption shall
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include the payment scheduled to occur in the calendar month when payments
resume and any amounts withheld during the period between the cessation of ERISA
(S) 203(a)(3)(B) service and the resumption of payments.
5.2.4 The Retirement Benefit payable upon resumption of benefit payment
shall be equal to the Participant's Retirement Benefit as of the date of his
subsequent termination of Employment reduced by the Actuarial Equivalent of
payments previously made to him; provided, however, that such Retirement Benefit
may not be less than the Retirement Benefit previously payable.
5.3 LIMITATION ON COMMENCEMENT OF BENEFITS
5.3.1 Unless otherwise elected by a Participant, the Participant's Benefit
Commencement Date shall in no event be later than the 60th day after the close
of the Plan Year in which the latest of the following events occurs:
(a) the attainment by the Participant of his Normal Retirement Age;
(b) the tenth anniversary of the year in which the Participant
commenced participation in the Plan; or
(c) the Participant's termination of Employment.
5.3.2 If the amount of benefits payable cannot be determined within such
60-day period, or if it is not possible to pay such benefits within such period
because the Administrator has been unable to locate the Participant after making
reasonable efforts to do so, then a payment, retroactive to such 60th day, shall
be made no later than 60 days after the earliest date on which the amount of
such benefits can be determined or the Participant can be located, as the case
may be.
5.3.3 Any other provision of this Article 5 to the contrary
notwithstanding, the Benefit Commencement Date of a Participant must be no later
than the first day of April following the calendar year in which the Participant
attains age 70-1/2 even if he continues in Employment after that date.
Notwithstanding the foregoing, if a Participant who is not a "5 percent owner"
(as defined in Code (S) 401(a)(9)) attained age 70-1/2 before January 1, 1988,
the Benefit Commencement Date must be no later than the first day of April
following the calendar year in which the Participant terminates Employment.
Effective as of January 1, 1997, in the case of a
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Participant who is not a 5 percent owner (as defined above) with respect to the
Plan Year ending in the calendar year in which the Participant attains age 70-
1/2, the Benefit Commencement Date must be no later than 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.
5.3.4 If the Actuarial Equivalent value of a Participant's Retirement
Benefit exceeds $3,500 (or, for distributions after January 1, 1998, $5,000),
the Participant (and, if applicable, his Spouse) must consent, in writing filed
with the Administrator, to any distribution from the Plan before the
Participant's attainment of Normal Retirement Age.
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ARTICLE 6 - FORMS OF PAYMENT OF RETIREMENT BENEFIT
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 if the Participant is married on his
Benefit Commencement Date and in the normal form of an annuity for the life of
the Participant with Actuarially Equivalent payments guaranteed for 120 months
if the Participant is not married on that date, provided that, and subject to
Sections 6.1.2, 6.1.3 and 6.1.4, a Participant may within the 90-day period
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:
(a) A Single Life Annuity, under which monthly payments calculated
---------------------
in accordance with Section 3.1.1 are made to the Participant during his lifetime
with no further payments from the Plan on his behalf after his death.
(b) A Joint and 50%, 66-2/3%, or 100% Survivor Annuity, under which
--------------------------------------------------
Actuarially Equivalent monthly payments are made to the Participant for the
joint lives of the Participant and his Beneficiary with payments continuing for
the life of the survivor in an amount equal to 50%, 66-2/3% or 100% of the joint
life payments (whichever is elected by the Participant). A Participant may
elect to add a period certain of 10 years in which event no reduction in
payments will be made for the longer of the 10 year period or the period during
which both the Participant and Beneficiary remain alive.
(c) A 120 Months Certain and Life Income Annuity, an optional form
--------------------------------------------
of payment for a married Participant, under which reduced Actuarially Equivalent
payments are made to the Participant during the Participant's lifetime, with the
provision that if the Participant's death occurs before he had received 120
monthly payments the value of the remaining number of such payments shall be
paid to his Beneficiary.
(d) Lump Sum, under which the Actuarially Equivalent value of the
--------
Participant's Retirement Benefit is paid in one sum.
6.1.2 Anything in Section 6.1.1 to the contrary notwithstanding, if the
Actuarial Equivalent value of a Participant's Retirement Benefit is $3,500 or
less ($5,000 for distributions on or after January 1, 1998), his benefit shall
be paid in the form of a lump sum distribution and
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<PAGE>
no optional form of benefit payment shall be available.
6.1.3 Payment in any form may only be made over one of the following
periods (or a combination thereof):
(a) the life of the Participant,
(b) the life of the Participant and a designated Beneficiary,
(c) a period certain not extending beyond the life expectancy of the
Participant, or
(d) a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated Beneficiary.
6.1.4 If the Participant's Spouse is not his designated Beneficiary, the
method of distribution must assure that at least fifty percent of the present
value of the Participant's Retirement Benefit is paid within the life expectancy
of the Participant.
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
and subject to the spousal consent rules as set forth in Section 6.2.4, 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 30 days
before nor earlier than 90 days before a Participant's Benefit Commencement
Date, the Administrator shall provide to each 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,
6-2
<PAGE>
information or election periods or take such other action as the Administrator
considers necessary or appropriate in order 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 at any time prior to the Participant's Benefit Commencement Date,
without the consent of his Spouse.
6.2.4 The election of an optional form of benefit by a married Participant
must be in the form of a waiver of a Qualified Joint and Survivor Annuity. The
election must be in writing and consented to by the Participant's Spouse. The
Spouse's consent to the waiver must specify the form of benefit being elected
and the non-Spouse Beneficiary, if any, and must be witnessed by a Plan
representative or a notary public. Notwithstanding this consent requirement, if
the Participant establishes to the satisfaction of the Administrator that such
written consent may not be obtained because there is no Spouse or the Spouse
cannot be located, the Participant's election will be deemed effective. Any
consent necessary under this provision will be valid only with respect to the
Spouse who signs the consent, or in the event of a deemed effective election,
the designated 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 Benefit Commencement Date.
6.3 DIRECT ROLLOVERS
6.3.1 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 6.3.2 below) transferred directly to an "eligible
retirement plan" (as defined in Section 6.3.2 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).
6.3.2 For purposes of this Section and Section 7.2.4:
(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
6-3
<PAGE>
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.
(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.
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<PAGE>
ARTICLE 7 - DEATH BENEFITS
7.1 ELIGIBILITY FOR PRE-RETIREMENT DEATH BENEFIT
7.1.1 A pre-retirement death benefit shall be payable under the Plan in
the event of the death of a Participant prior to his Benefit Commencement Date
who, on the date of death, was either:
(a) actively employed by the Employer;
(b) Disabled; or
(c) terminated but eligible for Early Retirement.
The death benefit payable under this Section 7.1.1 shall be the larger of:
(1) the lump sum Actuarial Equivalent, as of the day before the
death of the Participant, of the Accrued Retirement Benefit that would have been
payable upon Normal Retirement of the Participant; or
(2) the lump sum Actuarial Equivalent, as of the day before the
Participant's death, of the monthly benefit which would have been payable to the
Participant's Spouse in the form of an immediate Qualified Joint and Survivor
Annuity under the Plan if (i) in the case of a Participant who dies after having
attained the earliest retirement age under the Plan, the Participant had retired
on the day before his death, and (ii) in the case of a Participant who dies
before having attained the earliest retirement age under the Plan, the
Participant had separated from service as of his date of death, survived until
his earliest retirement age under the Plan, retired on the day after attainment
of his earliest retirement age under the Plan, and died immediately thereafter.
7.1.2 A pre-retirement death benefit shall also be payable under the Plan
in the event of the death of a married Participant prior to his or her Benefit
Commencement Date who had a Vested Separation prior to eligibility for Early
Retirement. The death benefit payable under this Section 7.1.2 shall be equal
to the benefit calculated under paragraph (2) of Section 7.1.1.
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<PAGE>
7.2 FORM OF PRE-RETIREMENT DEATH BENEFIT
7.2.1 The pre-retirement death benefit payable under Section 7.1.1 shall
be payable to the Surviving Spouse of such Participant in the form of an
Actuarially Equivalent single life annuity commencing on the date of death
unless the Participant has no Surviving Spouse or the Participant has made an
election under Section 7.3, with the Spouse's consent, not to have the benefit
paid in such form. If the Participant has no Surviving Spouse or has made an
effective election under Section 7.3, such benefit shall be paid to the
Participant's Beneficiary in the Actuarially Equivalent form elected by the
Participant commencing on the date elected, or if there is no designated
Beneficiary, to the Participant's estate in a single lump sum. The Surviving
Spouse or other Beneficiary may elect any other Actuarially Equivalent form of
payment permitted under Section 6.1.1, by an instrument in writing filed with
the Administrator within 60 days after the Participant's death.
7.2.2 The pre-retirement death benefit payable under Section 7.1.2 shall
be payable to the Surviving Spouse of such Participant in the form of an
Actuarially Equivalent single life annuity commencing on the date the
Participant would have attained earliest retirement age, unless the Surviving
Spouse shall elect another Actuarially Equivalent form of payment permitted by
Section 6.1.1, by an instrument in writing filed with the Administrator within
60 days after the Participant's death. No benefit shall be payable under
Section 7.1.2 unless the Spouse is alive on such Benefit Commencement Date.
7.2.3 Notwithstanding the provisions of Sections 7.2.1 and 7.2.2, if the
present value of the pre-retirement death benefit payable under Section 7.1.1 or
7.1.2 is $3,500 or less ($5,000 or less for distributions on or after January 1,
1998), such benefit shall be distributed in a single lump sum as soon as
practicable following the death of the Participant.
7.2.4 Any lump sum payment payable to a Spouse pursuant to this Section
7.2 shall be eligible for a direct rollover in accordance with Section 6.3.
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<PAGE>
7.3 ELECTION TO WAIVE
7.3.1 An election by a married Participant under Section 7.2.1 must be in
the form of an election to waive the Qualified Pre-Retirement Survivor Annuity.
In order for any waiver pursuant to this Section 7.3.1 to be effective, the
Participant's Spouse must consent in writing to such election, and such consent
must acknowledge the effect of the election and must be witnessed by a Plan
representative or a notary public. Such spousal consent shall be effective only
with respect to the Spouse giving this consent and, once given, such consent
shall be irrevocable. The Participant shall have the right to revoke his waiver
at any time prior to the earlier of the Participant's Benefit Commencement Date
or death.
7.4 BENEFICIARIES
7.4.1 With respect to any death benefit payable pursuant to Section 7.1.1,
a Participant's Beneficiary shall be his Surviving Spouse or, subject to the
Spousal consent rules in Section 7.3, other Beneficiary or Beneficiaries
designated by the Participant in accordance with rules established by the
Administrator. With respect to any death benefit payable pursuant to Section
7.1.2, a Participant's Beneficiary shall be his Surviving Spouse.
7.4.2 With respect to any form of payment of a Retirement Benefit pursuant
to Article 6 providing for payments after the death of the Participant, a
Participant shall designate, in accordance with the election procedure under
Article 6, one or more Beneficiaries to whom amounts due after his death shall
be paid, and the rights of such Beneficiary shall be governed by the terms of
the form of payment so elected.
7.4.3 No Spouse or other Beneficiary shall have any right to benefits
under the Plan unless he shall survive the Participant. 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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<PAGE>
7.5 AFTER-DEATH DISTRIBUTION RULES
7.5.1 Notwithstanding any Plan provision to the contrary, if a Participant
dies after distribution of his benefits has commenced, the remaining portion of
such benefits will continue to be distributed at least as rapidly as under the
method of distribution being used prior to the Participant's death.
7.5.2 Notwithstanding any Plan provision to the contrary, if a Participant
dies before distribution of his benefits has commenced, the Participant's entire
interest will be distributed no later than 5 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 attained age 70 1/2. If the Spouse dies before
payments to such Spouse begin, subsequent distributions shall be made as if the
Spouse had been the Participant.
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<PAGE>
ARTICLE 8 - CONTRIBUTIONS AND FORFEITURES
8.1 CONTRIBUTION BY THE COMPANY
The Company and each Participating Affiliate will make contributions to the
Trust at such times and in such amounts as the Company may determine.
8.2 CONTRIBUTIONS BY EMPLOYEES
Employees are not required or permitted to make contributions under the
Plan.
8.3 FORFEITURES
Forfeitures under the Plan will be applied to reduce the Company's
contributions and will not be applied to increase the benefits of any person
hereunder prior to the termination of the Plan or complete discontinuance of
contributions by the Company.
8.4 RETURN OF EMPLOYER CONTRIBUTIONS UNDER SPECIAL CIRCUMSTANCES
Notwithstanding any provision of this Plan to the contrary, upon timely
written demand by an Employer to the Trustee:
(a) Any contribution made by the Employer to the Plan under a mistake
of fact shall be returned to the Employer by the Trustee within one year after
the payment of the contribution;
(b) Any contribution made by the Employer incident to the
determination by the Commissioner of Internal Revenue that the Plan is initially
a Qualified Plan shall be returned to the 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 the Employer conditioned upon the
deductibility of the contribution under Code (S) 404 shall be returned to the
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.
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ARTICLE 9 - FIDUCIARIES
9.1 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) establish a funding policy relating to, and the
method for achieving the objectives of, the Plan; and (iii) amend or terminate
the Plan;
(b) the Administrative Committee, which shall have the authority and
duties specified in Article 11 hereof;
(c) the Trustee, which shall have the authority and duties specified
in Article 10 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.
9.2 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.
9.3 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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9.4 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.
9.5 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 10 - TRUSTEE
10.1 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.
10.2 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 11 - ADMINISTRATIVE COMMITTEE
11.1 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.
11.2 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.
11.3 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.
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11.4 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.
11.5 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, Credited Service,
Compensation, Retirement 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.
11-2
<PAGE>
11.6 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.
11.7 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.
11.8 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.
11.9 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 willful misconduct.
11.10 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.
11-3
<PAGE>
11.11 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.
11.12 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 11.12 prior to seeking any
other form of relief.
11-4
<PAGE>
ARTICLE 12 - PLAN AMENDMENT OR TERMINATION
12.1 PLAN AMENDMENT
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 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.
12-1
<PAGE>
12.3 RIGHT OF THE COMPANY TO TERMINATE PLAN
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 which termination 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
12.4.1 Determination of Date of Complete or Partial Termination. The
--------------------------------------------------------
date of complete or partial termination shall be established by the
Administrator in accordance with the directions of the Company in accordance
with applicable law.
12.4.2 Effect of Termination.
---------------------
(a) As of the date of a partial termination of the Plan:
(i) the accrued benefit of each affected Participant who is
then an Employee, to the extent funded, shall become nonforfeitable;
(ii) no affected Participant shall be granted Credited
Service based on Years of Service after such date; and
(iii) Compensation paid to affected Participants after such
date shall not be taken into account.
(b) As of the date of the complete termination of the Plan:
(i) the accrued benefit of each Participant who is then an
Employee, to the extent funded, shall become non-forfeitable;
(ii) no Participant shall be granted Credited Service based
on Years of Service after such date;
(iii) Compensation paid after such date shall not be taken
into account;
(iv) no Eligible Employee shall become a Participant after
such date; and
(v) except as may otherwise be required by applicable law,
all Employer obligations to fund the Plan shall terminate.
12-2
<PAGE>
12.5 ALLOCATION OF ASSETS
At any time as the Company determines to distribute the Trust, the Trust
shall be applied to the payment of or provision for benefits in accordance with
the priority classes established by ERISA (S) 4044. The respective amounts
allocated to such priority classes shall be distributed to or set aside for the
benefit of the persons entitled thereto in such manner as is determined by the
Administrator.
12.6 RESIDUAL ASSETS
Any amounts remaining in the Trust after the satisfaction of all
liabilities of the Trust with respect to all Participants and their
Beneficiaries shall revert to the Employer.
12.7 LIMITATIONS APPLICABLE TO CERTAIN HIGHLY PAID PARTICIPANTS
Notwithstanding any provision in the Plan to the contrary, in any Plan
Year the annual payments to a Participant who is among the 25 "highly
compensated employees" (as defined in Code Section 414(q)) with the greatest
Compensation for the Plan Year shall not exceed the amount which would be
payable to such Participant in the form of a single life annuity which is the
actuarial equivalent of the sum of the Participant's Accrued Benefit and other
Plan benefits, unless:
(a) after payment of all Plan benefits to such Participant, the value of
the Plan's assets equals or exceeds 110 percent of the value of the
Plan's "current liabilities" (as defined in Code Section 412(l)(7)),
or
(b) the value of such Participant's Plan benefits is less than 1 percent
of the value of the Plan's current liabilities.
12-3
<PAGE>
ARTICLE 13 - MISCELLANEOUS PROVISIONS
13.1 EXCLUSIVE BENEFIT OF PARTICIPANTS
The Trust 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 (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.
13-1
<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
13-2
<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
Retirement Benefit 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.
13-3
<PAGE>
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.
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 __________, 1998.
WADDELL & REED FINANCIAL , INC.
By: _________________________________
Its:____________________________
13-4
<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),
Appendix-1
<PAGE>
105(a) and 105(h) to the extent includable in the Employee's gross income;
amounts described 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)
Appendix-2
<PAGE>
and 410.
(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 5-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 5-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 5-year period ending on the Determination Date)
determined in accordance with Code (S) 416.
Appendix-3
<PAGE>
(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 Defined Contribution Plans (including any "simplified employee
pension" within the meaning of Code (S) 408(k)) which during the 5-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 5-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 5-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
Appendix-4
<PAGE>
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 (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) 4ll(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. Even if, as of a subsequent Determination Date, the
Plan is determined to no longer be a Top-Heavy Plan or a Super Top-Heavy Plan,
the rules set forth in these Sections will continue to apply.
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 subparagraphs (b) and (c) below, for any
Plan Year in or after which the Plan is a Top-Heavy Plan, each Participant who
is a Non-Key Employee and has completed one Year of Service will accrue a
Retirement Benefit (to be provided solely by Employer contributions) and
expressed as a single life annuity commencing at normal retirement age (within
the meaning of Code (S) 411(a)(8)) of not less than 2% of his or her average
Limitation Compensation for the 5 consecutive years for which the Participant
had the highest Limitation Compensation. The aggregate Limitation Compensation
for the years during such five-year period in which the Participant was credited
with one Year of Service will be divided by the number of such years in order to
determine average Limitation Compensation. The minimum accrual is determined
without regard to any Social Security contribution. The minimum accrual applies
even though under other Plan provisions the Participant would not
Appendix-5
<PAGE>
otherwise be entitled to receive an accrual, or would have received a lesser
accrual for the Plan Year. The suspension of benefits provisions of this Plan
shall not apply to the minimum benefits hereunder.
(b) No additional benefit accruals shall be provided pursuant to (a)
above to the extent that the total accruals on behalf of the Participant
attributable to Employer contributions will provide a Retirement Benefit
expressed as a single life annuity commencing at normal retirement age (within
the meaning of Code (S) 411(a)(8)) that equals or exceeds 20% of the
Participant's highest average Limitation Compensation for the 5 consecutive
years for which the Participant had the highest Limitation Compensation. All
accruals of Employer derived benefits, whether or not attributable to years for
which the Plan is a Top-Heavy Plan, may be used in computing whether the minimum
accrual requirement of the preceding sentence is satisfied.
(c) The provision in (a) above shall not apply to any Participant to
the extent that the Participant is covered under any other plan or plans of an
Employer and the Employer has provided in that plan that the minimum allocation
or benefit requirement applicable to this Top-Heavy Plan will be met in the
other plan or plans.
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 (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:
Appendix-6
<PAGE>
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-7
<PAGE>
EXHIBIT 10.13
WADDELL & REED, INC.
CAREER FIELD RETIREMENT PLAN
(AS AMENDED AND RESTATED EFFECTIVE
AS OF JANUARY 1, 1989)
<PAGE>
Waddell & Reed, Inc.
Career Field Retirement Plan
TABLE OF CONTENTS
-----------------
ARTICLE PAGE
- ------- ----
I INTRODUCTION
------------
1.01. Amendment of Prior Plan 1-1
1.02. Plan and Trust intended to qualify 1-1
1.03. Return of contribution 1-1
II DEFINITIONS
-----------
2.01. "Absence from Service" 2-1
2.02. "Administrator" 2-1
2.03. "Affiliated Company" 2-1
2.04. "Annual Addition" 2-1
2.05. "Basic Earnings" 2-1 - 2-2
2.06. "Beneficiary" 2-2
2.07. "Board of Directors" 2-2
2.08. "Code" 2-2
2.09. "Company" 2-2
2.10. "Effective Date" 2-2
2.11. "Eligible Employee" 2-2
2.12. "Employee" 2-3
2.13. "Employee Credits" 2-3
2.14. "Employer" 2-3
2.15. "Employment Commencement Date" 2-3
2.16. "ERISA" 2-3
2.17. "Hour of Service" 2-3
2.18. "Installment Account" 2-3
2.19. "Leave of Absence" 2-3
2.20. "Limitation Year" 2-3
2.21. "Net Profits" 2-3 - 2-4
2.22. "One Year Period of Severance" 2-4
2.23. "Participant" 2-4
2.24. "Participating Employer" 2-4
2.25. "Participating Employer Credits" 2-4
2.26. "Period of Service" 2-4
2.27. "Period of Severance" 2-4
2.28. "Plan" 2-4
2.29. "Plan Year" 2-5
2.30. "Prior Plan" 2-5
2.31. "Reemployment Commencement Date" 2-5
2.32. "Severance from Service Date" 2-5
2.33. "Share of the Trust Fund" 2-5
2.34. "Substantial Period of Severance" 2-5
2.35. "Trust" 2-5
-i-
<PAGE>
ARTICLE PAGE
- ------- ----
II DEFINITIONS (Cont'd.)
---------------------
2.36. "Trust Fund" 2-5
2.37. "Trustee" 2-6
2.38. "Valuation Date" 2-6
2.39. "Vesting Service" 2-6
2.40. "Qualified Joint and Survivor Annuity" 2-6
2.41. "Spouse" 2-6
2.42. Qualified Domestic Relations Order 2-6 - 2-7
2.43. Qualified Pre-retirement Survivor Annuity 2-7 - 2-8
III ADMINISTRATION
--------------
3.01. Administrator 3-1
3.02. Powers of Administrator 3-1 - 3-2
3.03. Examination of records 3-2
3.04. Nondiscriminatory exercise of authority 3-2
3.05. Reliance on tables, etc. 3-2
3.06. Named fiduciary 3-2
3.07. Claims and review procedure 3-2 - 3-3
3.08. Notice to interested parties 3-3
3.09. Indemnification of Administrator 3-4
IV PARTICIPATION
-------------
4.01. Date of participation 4-1
4.02. Cessation of participation 4-1
4.03. Reemployment of a Participant 4-1
V PARTICIPATING EMPLOYER CONTRIBUTIONS
------------------------------------
5.01. Amount of Participating Employer
contributions 5-1
5.02. Eligible Employees sharing in
Participating Employer contributions 5-1
5.03. Time of making Participating
Employer contributions 5-1
5.04. Advice to Trustee if contributions
not to be made 5-2
VI CONTRIBUTIONS BY PARTICIPANTS
-----------------------------
6.01. Amount of Participant Contributions 6-1
6.02. Method of Making participant
contributions 6-1
6.03. Withdrawal of participant contributions 6-1 - 6-2
VII PARTICIPANTS ACCOUNTS
---------------------
7.01. Individual accounts 7-1
7.02. Order of adjustments to accounts 7-1
-ii-
<PAGE>
ARTICLE PAGE
- ------- ----
VII PARTICIPANTS' ACCOUNTS (Cont'd.)
--------------------------------
7.03. Adjustment for income, expenses
gain or loss 7-1 - 7-2
7.04. Crediting of Participating Employer
contributions 7-2
7.05. Crediting of Participant contributions 7-2
7.06. Limitations 7-2
7.07. Report to Participants 7-2
VIII RIGHTS TO BENEFITS
------------------
8.01. Normal retirement 8-1
8.02. Disability retirement 8-1 - 8-2
8.03. Death 8-2 - 8-3 - 8-4 - 8-5
8.04. Other termination of employment 8-5 - 8-6 - 8-7 - 8-8
8.05. Forfeitures 8-8
8.06. Separate account 8-8
8.07. Treatment of certain participants 8-9
IX DISTRIBUTION OF BENEFITS
------------------------
9.01. Methods of making distributions 9-1 - 9-2 - 9-3
9.02. Notice to Trustee 9-3 - 9-4
9.03. Distributions in installments 9-4
9.04. Direct rollovers 9-4 - 9-5
X FUNDING OF THE PLAN
-------------------
10.01. Maintenance of the Trust Fund 10-1
10.02. Investment of Trust Fund 10-1
XI AMENDMENT AND TERMINATION
-------------------------
11.01. Amendment 11-1
11.02. Termination 11-1
11.03. Distributions upon termination of the Plan 11-2
11.04. Merger of consolidation of Plan;
transfer of Plan assets 11-2
XII MISCELLANEOUS
-------------
12.01. Limitation of rights 12-1
12.02. Nonalienability of benefits 12-1
12.03. Governing law 12-1
-iii-
<PAGE>
Article 1. Introduction.
------------
1.01. Amendment of Prior Plan. Pursuant to the provisions of Article IX
-----------------------
of the Waddell & Reed, Inc. Profit-Sharing Plan, Waddell & Reed, Inc. amended,
restated and continued said Plan, effective January 1, 1978, by striking out the
provisions thereof and by substituting therefor the provisions of the Waddell &
Reed, Inc. Career Field Retirement Plan. Effective January 1, 1989, Waddell &
Reed, Inc. hereby amends and restates the Waddell & Reed, Inc. Career Field
Retirement Plan as hereinafter set forth.
1.02. Plan and Trust intended to qualify. This Plan and the Trust forming
----------------------------------
a part hereof are intended to qualify under section 401 (a) of the Code.
1.03. Return of contribution. If a contribution by a Participating
----------------------
Employer to the Trust is (i) made by reason of a good faith mistake of fact, or
(ii) believed by the Participating Employer in good faith to be deductible under
section 404 of the Code, but the deduction is disallowed, the Trustee will, upon
request by the Participating Employer making such contribution, return to such
Participating Employer the excess of the amount contributed over the amount, if
any, that would have been contributed had there not occurred a mistake of fact
or a mistake in determining the deduction. Such excess will be reduced by
amounts attributable thereto which have been credited to the accounts of
Participants who have since received distributions from the Trust, except to the
extent such amounts continue to be credited to such Participants' accounts at
the time the excess is returned to the Participating Employer. Such excess will
also be reduced by the losses of the Trust attributable thereto, if and to the
extent such losses exceed the gains and income attributable thereto. In no
event will the return of a contribution hereunder cause the balance of the
individual account of any participant to be reduced to less than the balance
which would have been credited to the account had the mistaken or nondeductible
amount not been contributed. No return of a contribution hereunder may be made
more than one year after the mistaken payment of the contribution, or
disallowance of the deduction, as the case may be.
1-1
<PAGE>
Article II. Definitions.
-----------
Wherever used herein, the following terms have the following meanings
unless a different meaning is clearly required by context:
2.01. "Absence from Service" means, in the case of each Employee, a period
of absence from service with the Employer for any reason other than a quit,
discharge, retirement or death, such as vacation, holiday, layoff, disability or
leave of absence.
2.02. "Administrator" means the Company or other person (including a
committee) appointed to administer the Plan in accordance with Article III.
2.03. "Affiliated Company" means which is a member of a controlled group
of corporations (as defined in section 414(b) of the (i) any corporation (other
Code) with the Company; (ii) any trade or business (other than the Company),
whether or not than the Company) incorporated, which is under common control (as
defined in section 414(c) of the Code) with the Company, (iii) a member of an
"affiliated service group" (as defined in section 414(m) of the Code) which
includes the Company; or (iv) any other entity required to be aggregated with
the Company under section 414(o) of the Code.
2.04. "Annual Addition" means, following amounts allocated to the account
of the Participant for the Limitation Year: (a) in the case of any Company or
Affiliated Company contributions; (b) Participant contributions; (c)
forfeitures; and Participant, the sum of the (d) amounts described in section
415(l)(1) and 419A(d)(2) of the Code. Notwithstanding the foregoing, Annual
Addition shall not include amounts attributable to rollover contributions or
trust to trust transfers.
2.05. "Basic Earnings" means the commissions (including guaranteed
commissions) and bonuses received by an Eligible Employee from a Participating
Employer during the Plan Year of reference, for services rendered while a
Participant, but only to the extent that such commissions and bonuses are in
excess of the minimum Basic Earnings and not in excess of the maximum Basic
Earnings, as set forth in the following schedule:
2-1
<PAGE>
Calendar Year Minimum Basic Earnings Maximum Basic Earnings
------------- ---------------------- ----------------------
1978 6,000 52,000
1979 7,000 54,000
1980 8,000 56,000
1981 9,000 58,000
1982 and thereafter 10,000 60,000
Notwithstanding any Plan provision to the contrary, the Basic Earnings taken
into account for Plan purposes 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 Section 401(a)(17)).
2.06. "Beneficiary" means the person or persons entitled under Section
8.04 to receive benefits under the Plan upon the death of the Participant.
2.07. "Board of Directors" means the Board of Directors of the Company.
The Board of Directors may designate a person or persons (including a committee)
to carry out any fiduciary responsibilities of the Company or the Board under
the Plan, any such designation to be made in accordance with Section 405 of
ERISA.
2.08. "Code" means the Internal Revenue Code of 1986, as amended from time
to time. Reference to any section or subsection of the Code includes reference
to any comparable or succeeding provisions of any legislation which amends,
supplements or replaces such section or subsection.
2.09. "Company" means Waddell & Reed, Inc., a Massachusetts corporation,
and any successor to all or a major portion of its assets or business which
assumes the obligations of the Company.
2.10. "Effective Date" means August 31, 1951.
2.11. "Eligible Employee" means any Employee employed by a Participating
Employer as a division sales manager or an associate division sales manager
other than a leased employee within the meaning of section 414(n)(2) of the
Code.
2-2
<PAGE>
2.12. "Employee" means any individual employed by an Employer, including
employees within the meaning of section 414(n)(2) of the Code.
2.13. "Employee Credits" means that portion of a Participant's Share of
the Trust Fund which is attributable to his own contributions and earnings
thereon.
2.14. "Employer" means the Company and all Affiliated Companies.
2.15. "Employment Commencement Date" means, in the case of each Employee,
the date on which he first performs an Hour of Service, or, in the case of an
Employee who has a Substantial Period of Severance, the date on which he first
performs an Hour of Service after such Period of Severance.
2.16. "ERISA" means the Employee Retirement Income Security Act of 1974,
as from time to time amended, and any successor statute or statutes of similar
import.
2.17. "Hour of Service" means an hour for which an Employee is paid, or
entitled to payment, for the performance of duties for the Employer, such hour
to be credited for the period in which the duties were performed. Hours of
Service under this Section shall be calculated and credited pursuant to section
2530-200b-2 of the Department of Labor Regulations which are incorporated herein
by this reference.
2.18. "Installment Account" means the account provided for in Section 9.03
in which are held certain amounts distributable in installments to a Participant
or his Beneficiary.
2.19. "Leave of Absence" means, in the case of any Employee or
Participant, a period of absence on leave from active employment with an
Employer granted by the Employer for illness, accident, pregnancy or other
reason (including service in the armed forces of the United States). Any leave
of absence will be granted under uniform rules administered in a
nondiscriminatory manner so that Employees who are similarly situated will be
similarly treated.
2.20. "Limitation Year' means the Plan Year.
2.21. "Net Profits" means the profits of a Participating Employer for any
Plan Year after all expenses and charges other than (i) the contributions to the
Trust and (ii) federal and
2-3
<PAGE>
state taxes based on or measured by income, as shown on the books of the
Participating Employer and computed in accordance with regularly accepted
accounting practice. When the amount of Net Profits for any Plan Year has been
determined by the Participating Employer, 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.
2.22. "One Year Period of Severance" means, in the case of any Employee, a
Period of Severance of 12 consecutive months beginning on his Severance from
Service Date.
2.23. "Participant" means each person who participates in the Plan in
accordance with Article IV hereof.
2.24. "Participating Employer" means (i) the Company and (ii) any
Affiliated Company which has adopted the Plan with the approval of the Company.
2.25. "Participating Employer Credits" means that portion of a
Participant's Share of the Trust Fund which is attributable to contributions by
any Participating Employer and earnings thereon.
2.26. "Period of Service" means, in the case of each Employee, (a) the
period of time, expressed in days, commencing on his Employment Commencement
Date or Reemployment Commencement Date, whichever is applicable, and ending on
his Severance from Service Date and (b) any Period of Severance which ends
within 12 months after (1) in the case in which the Period of Severance began
prior to an Absence from Service, the Severance from Service Date and (2) in the
case in which the Period of Severance began during or following an Absence from
Service, the date on which such Absence began.
2.27. "Period of Severance" means, in the case of each Employee, a 12
consecutive month period commencing on his Severance from Service Date and
during which the Employee does not perform an Hour of Service for the Employer.
2.28. "Plan" means the Waddell & Reed, Inc. Career Field Retirement Plan
as set forth herein, together with any and all amendments and supplements
hereto.
2-4
<PAGE>
2.29. "Plan Year" means the Company's taxable year for federal income tax
purposes.
2.30. "Prior Plan" means the Waddell & Reed, Inc. Profit-Sharing Plan, as
from time to time in effect prior to the Effective Date.
2.31. "Reemployment Commencement Date" means, in the case of each
Employee, the date on which he first performs an Hour of Service following any
Period of Severance which is not included in a Period of Service.
2.32. "Severance from Service Date" means, in the case of each Employee,
the earlier of:
(i) the date on which he quits, retires, is discharged, or dies, or
(ii) the date, determined by the Administrator in accordance with
uniformly applied rules established by the Employer, which is at least 12 months
after the date on which an Absence from Service began.
2.33. "Share of the Trust Fund" means, in the case of each Participant,
that portion of the Trust's assets which is allocated to the account of the
Participant in accordance with Article VII of the Plan.
2.34. "Substantial Period of Severance" means, in the case of any Employee
or Participant who has no vested right in any portion of his Participating
Employer Credits, a Period of Severance of at least 12 consecutive months which
equals or exceeds his Vesting Service prior to such Substantial Period of
Severance. Such Vesting Service prior to such Substantial Period of Severance
will be deemed not to include any such Service disregarded under the preceding
sentence by reason of any prior Substantial Period of Severance.
2.35. "Trust" means the trust or trusts forming part of the Plan and
established under an agreement or agreements between the Company and such bank
or banks as shall be selected by the Company from time to time.
2.36. "Trust Fund" means the property held in trust by the Trustee for the
accounts of Participants and their beneficiaries.
2-5
<PAGE>
2.37. "Trustee" means the period or persons named as Trustee in the Trust,
any successor trustee or trustees, and any additional trustee or trustees.
2.38. "Valuation Date" means the last business day of each calendar month.
2.39. "Vesting Service" means, with respect to any Employee, the sum of
his Periods of Service, excluding from such sum:
(a) any Periods of Service which would have been disregarded under
the rules of the Prior Plan relating to breaks in service, as such rules were in
effect from time to time prior to January 1, 1976;
(b) any Periods of Service prior to a Substantial Period of
Severance; and
(c) in the case of a Participant who has a One Year Period of
Severance and who later returns to the employ of an Employer, for purposes of
determining the nonforfeitable percentage of his Participating Employer Credits
as of his Severance from Service Date relating to such period of Severance, any
Periods of Service after such One Year Period of Severance.
A pronoun in the masculine gender includes the feminine gender unless the
context clearly indicates otherwise.
2.40. "Qualified Joint and Survivor Annuity" shall mean an annuity for the
life of the Participant with a survivor annuity for the life of the spouse of
the Participant which is one-half of the amount of the annuity payable during
the life of the Participant.
2.41. "Spouse" shall mean the person married to the Participant on the
date on which the Participant retires, dies before retiring, or begins to
receive retirement benefits after becoming permanently disabled as defined in
section 8.02 of this Plan.
2.42. "Qualified Domestic Relations Order" shall mean any judgment, decree
or order relating to the provision of child support, alimony payments or marital
property rights to a former spouse, child or other dependent of a Participant
and is made pursuant to a state domestic relations law and which the Plan
Administrator determines creates or recognizes the existence of an alternate
payee's right to, or assigns to an alternate payee the right to receive
2-6
<PAGE>
all or a portion of the benefits payable with respect to a Participant under the
Plan. Such Qualified Domestic Relations Order also must clearly specify the name
and current or last known mailing address of the Participant and each alternate
payee covered by the Order, the amount or percentage of the Participant's
benefits to be paid by the Plan to each such alternate payee, or the manner in
which such amount is to be determined, the number of payments or period to which
such order applies and any other information which may be required by law or the
Plan Administrator. An order shall not be determined by the Plan Administrator
to be a Qualified Domestic Relations Order if it required a plan to provide any
type or form of benefit, or any option, not otherwise provided under the Plan
(other than an order which requires that payment of benefits be made to an
alternate payee on or after the date the Participant would have attained the
earliest retirement age under the Plan as if the Participant had retired on the
date such payment is to begin under the order and in any form in which such
benefits may be paid under the Plan to the Participant), requires the Plan to
increase benefits and requires the payment of benefits to an alternate payee
which is required to be paid to another alternate payee under another order
previously determined by the Plan Administrator to be a Qualified Domestic
Relations Order.
2.43. "Qualified Pre-retirement Survivor Annuity" shall mean a survivor
annuity for the life of the surviving spouse of the Participant if the payments
to the surviving spouse under such annuity are no less than the actuarial
equivalent of the amounts which would be payable as a survivor annuity under the
qualified joint and 50% survivor annuity provided under the Plan, if:
(a) In the case of a Participant who dies after the date on which he
would have attained the earliest retirement age, such Participant had retired
with an immediate qualified joint and 50% survivor annuity on the day before his
date of death, or
(b) In the case of a Participant who dies on or before the date on
which he would have attained the earliest retirement age under the Plan, such
Participant had
2-7
<PAGE>
(i) separated from service on the date of death,
(ii) survived to the earliest retirement age,
(iii) retired with an immediate qualified joint and survivor annuity
at the earliest retirement age and
(iv) died on the day after the day on which such Participant would
have attained the earliest retirement age under the Plan.
2-8
<PAGE>
Article III. Administration.
--------------
3.01. Administrator. The Plan will be administered by the Company or by
-------------
any person, including a committee consisting of at least three individuals, but
not more than five, appointed from time to time by the Board of Directors to
serve at its pleasure. Participants may be appointed to serve as Administrator
in the discretion of the Board of Directors. Except as may be directed by the
Company, no person serving as Administrator will receive any compensation for
his services as Administrator.
If a committee is appointed to serve as Administrator, it will act by
majority vote. If at any time a majority of the individuals serving on such
committee and eligible to vote are unable to agree, or it there is only one such
individual, any action required of the committee will be taken by the Board of
Directors and its decision will be final. An individual serving on such
committee who is a Participant will not vote or act on any matter relating
solely to himself.
3.02. Powers of Administration. The Administrator will have full power to
------------------------
administer the Plan in all of its details, subject, however, to the requirements
of ERISA. For this purpose the Administrator's power will include, but will not
be limited to, the following authority:
(a) to make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the Plan;
(b) to interpret the Plan, in its discretion, its interpretation
thereof in good faith to be final and conclusive on all Employees, former
Employees, Participants, former Participants and Beneficiaries;
(c) to decide all questions concerning the Plan and the eligibility
of any person to participate in the Plan;
(d) to compute the amount of benefits which will be payable to any
Participant, former Participant, or Beneficiary in accordance with the
provisions of the Plan, and to determine the person or persons to whom such
benefits will be paid;
(e) to authorize the payment of benefits;
3-1
<PAGE>
(f) to appoint such agents, counsel, accountants, and consultants as
may be required to assist in administering the Plan: and
(g) by written instrument, to allocate and delegate its fiduciary
responsibilities in accordance with Section 405 of ERISA.
3.03. Examination of records. The Administrator will make available to
----------------------
each Participant such of its records as pertain to him, for examination at
reasonable times during normal business hours.
3.04. Nondiscriminatory exercise of authority. Whenever, in the
---------------------------------------
administration of the Plan, any discretionary action by the Administrator is
required, the Administrator shall exercise his authority in a nondiscriminatory
manner so that all persons similarly situated will receive substantially the
same treatment.
3.05. Reliance on tables, etc. In administering the Plan, the
-----------------------
Administrator will be entitled, to the extent permitted by law, to rely
conclusively on all tables, valuations, certificates, opinions and reports which
are furnished by any accountant, trustee, counsel or other expert who is
employed or engaged by the Administrator.
3.06. Named fiduciary. The Administrator will be a "named fiduciary" for
---------------
purposes of Section 402(a)(1) of ERISA with authority to control and manage the
operation and administration of the Plan, and will be responsible for complying
with all of the reporting and disclosure requirements of Part 1 of Subtitle B of
Title I of ERISA.
3.07. Claims and review procedures.
----------------------------
(a) Claims procedures. If any person believes he is being denied
-----------------
any rights or benefits under the Plan, such person may file a claim in writing
with the Administrator. If any such claim is wholly or partially denied, the
Administrator will notify such person of its decision in writing. Such
notification will contain (i) specific reasons for the denial, (ii) specific
reference to pertinent plan provisions, (iii) a description of any additional
material or information necessary for such person to perfect such claim and an
explanation of why such material or
3-2
<PAGE>
information is necessary and (iv) information as to the steps to be taken if the
person wishes to submit a request for review. Such notification will be given
within 90 days after the claim is received by the Administrator (or within 180
days, if special circumstances require an extension of time for processing the
claim, and if written notice of such extension and circumstances is given to
such person within the initial 90 day period). If such notification is not given
within such period, the claim will be considered denied as of the last day of
such period and such person may request a review of his claim.
(b) Review procedure. Within 60 days after the date on which a person
----------------
receives a written notice of a denied claim (or if applicable, within 60 days
after the date on which such denial is considered to have occurred) such person
(or his duly authorized representative) may (i) file a written request with the
Administrator for a review of his denied claim and of pertinent documents and
(ii) submit written issues and comments to the Administrator. The Administrator
will notify such person of its decision in writing. Such notification will be
written in a manner calculated to be understood by such person and will contain
specific reasons for the decision as well as specific references to pertinent
plan provisions. The decision on review will be made 60 days after the request
for review is received by the Administrator (or within 120 days, if special
circumstances require an extension of time for processing the request, such as
an election by the Administrator to hold a hearing, and if written notice of
such extension and circumstances is given to such person within the initial 60
day period). If the decision on review is not made within such period, the claim
will be considered denied.
3.08. Notice to interested parties. If a request is made for a
----------------------------
determination by the Internal Revenue Service that the Plan or Trust qualifies
under Section 401 or 501 of the Code, the Administrator will give notice of such
request. at the time and in the manner required by Treasury Regulations, to each
Employee who qualifies under such regulations as an interested Party with
respect to such request.
3-3
<PAGE>
3.09. Indemnification of Administrator. The Company agrees to indemnify
--------------------------------
and defend to the fullest extent of the law any Employee or former Employee who
in good faith serves or has served in the capacity of Administrator against any
liabilities, damages, costs and expenses occasioned by his having occupied a
fiduciary position in connection with the Plan.
3-4
<PAGE>
Article IV. Participation.
-------------
4.01. Date of participation. Any Employee who was a participant in the
---------------------
Prior Plan on the Effective Date and who had a Share of the Trust Fund on the
Effective Date subject to Section 4.02, continued to be a Participant. Any
other individual became a Participant on the later of (i) the Effective Date and
(ii) the date on which he became an Eligible Employee. Notwithstanding the
foregoing provisions of this Section 4.01, no individual became or may become a
Participant after December 31, 1979.
4.02. Cessation of participation. A participant will cease to be a
--------------------------
participant as of the later of (i) the date on which he ceases to be an Eligible
Employee and (ii) the date on which he ceases to have a Share of the Trust Fund.
4.03. Reemployment of a Participant. If a Participant has a Severance from
-----------------------------
Service Date and he thereafter returns to the employ of a Participating Employer
as an Eligible Employee, no distributions will be made to him while he continues
to be an Employee. Prior to December 31, 1979, such Participant again became a
Participant on his Reemployment Commencement Date.
4-1
<PAGE>
Article V. Participating Employer Contribution.
-----------------------------------
5.01. Amount of Participating Employer contributions. Prior to December
----------------------------------------------
31, 1979, each Participating Employer contributed to the Trust for each Plan
Year that amount of its Net Profits for such Plan Year, or its accumulated
earnings and profits, as designated by its board of directors; provided,
however, in no event did a Participating Employer's contribution for any Plan
Year exceed 7 percent of the aggregate Basic Earnings for such Year of the
Eligible Employees employed by it who were entitled to share in such
contribution pursuant to Section 5.02. Furthermore, a Participating Employer
contribution could not be in an amount which would cause the Annual Addition for
any Participant to exceed the amount permitted under Section 7.06.
Notwithstanding the foregoing provisions of this Section 5.01, no Participating
Employer contributions, other than amounts which are treated as Participating
Employer contributions under Section 8.05, will be made to the Trust for any
Plan Year beginning after December 31, 1979.
5.02. Eligible Employees sharing in Participating Employer contributions.
------------------------------------------------------------------
Prior to December 31, 1979, an Eligible Employee was entitled to share in the
contribution of his Participating Employer for a Plan Year if (a) he was a
Participant and an Eligible Employee on the last business day of such Plan Year
and (b) he had Basic Earnings for such Year; provided, however, no such
contribution was allocated to any Participant for a Plan Year if he had attained
age 65 prior to the last day of the Plan Year.
5.03. Time of making Participating Employer contributions. Each
---------------------------------------------------
Participating Employer was to pay its contribution for each Plan Year directly
to the Trustee not later than the time prescribed by law (including extensions
thereof) for filing its federal income tax return for its taxable year ending
with such Plan Year. The amount of each Participating Employer's contribution
was to be based on the best information available at the time the contribution
was made and any contribution so made was to be final, except as hereinafter
provided.
5-1
<PAGE>
5.04. Advice to Trustee if contribution not to made. Each Participating
---------------------------------------------
Employer was to promptly advise the Trustee if no contribution was to be made
for any Plan Year. The Trustee was to have no authority or responsibility to
inquire into the correctness of the amounts contributed and paid over to the
Trustee, or to determine whether any contribution was payable under this Article
V.
5-2
<PAGE>
Article VI. Contributions by Participants.
-----------------------------
6.01. Amount of Participant contributions. No contributions were or are
-----------------------------------
required of Participants. However, prior to December 31, 1979, any Participant
who was an Eligible Employee and who had not attained age 65, and whose account
had been credited with at least one Participating Employer contribution could,
at his option, subject to the provisions of Section 7.06, make cash
contributions to the Trust in any Plan Year. However, the amount of such cash
contributions in any Plan Year could not exceed the excess of (a) ten percent of
his total remuneration from Participating Employers for all Plan Years since he
became a Participant over (b) the aggregate amount of contributions made by the
Participant in prior Plan Years. A Participant's interest in his Employee
Credits was and is fully vested and nonforfeitable. Notwithstanding the
foregoing provisions of this Section 6.01, no Participant is permitted to make
contributions under the Plan after December 31, 1979.
6.02. Method of making Participant contributions. Contributions by
------------------------------------------
Participants described in Section 6.01 were to be made at any time and in any
manner authorized by the Administrator. Such contributions were to be paid
promptly to the Trustee by the Company. The Administrator was to give the
Trustee written instructions at the time of each payment to the Trustee (whether
the payment was of Participating Employer contributions or Participant
contributions or both), specifying the Participants to whose accounts such
payment were to be credited and the amounts contributed by the Participating
Employer and by each Participant.
6.03. Withdrawal of Participant contributions. Any Participant will be
---------------------------------------
entitled to withdraw from his Share of the Trust Fund at any time and from time
to time a sum not in excess of the aggregate amount of his contributions under
Section 6.01 (reduced by the amount of prior withdrawals) or the value of his
Employee Credits (so reduced) at the date of withdrawal, whichever is less, by
giving written notice to the Administrator of his intention so to withdraw. The
Administrator will deliver such notice to the Trustee, and upon receipt thereof,
the Trustee will, as soon as reasonably practicable, convert to cash such
property held
6-1
<PAGE>
for the benefit of the Participant as he deems necessary in order
to effect the withdrawal requested (but only to the extent such withdrawal is
permitted under this Section 6.03) and will distribute the appropriate amount to
the Participant. Notwithstanding the foregoing, effective August 19, 1985, no
Married Participant shall withdraw any amount from his Share of the Trust Fund
without the written, notarized consent of his Spouse.
6-2
<PAGE>
Article VII. Participants' Accounts.
----------------------
7.01. Individual accounts.
-------------------
(a) Establishing accounts. The Administrator will establish and
---------------------
maintain or cause the Trustee to establish and maintain an account for each
Participant which will reflect (a) the Participant's own contributions, (b) his
share of the Participating Employer contributions and (c) his share of the
income, expenses, and gain or loss (realized or unrealized) of the Trust Fund.
Such account will show separately the Participant's (i) Employee Credits, (ii)
Participating Employer Credits and (iii) the number of his units of
participation in the Trust Fund as determined under paragraph (b) below. The
Administrator and the Trustee may establish and maintain such other accounts and
records as they decide, in their discretion, to be reasonably required in order
to discharge their duties under the Plan.
(b) Units of participation. Each Participant's Share of the Trust
----------------------
Fund will be represented for accounting purposes by units of participation.
Each such unit will be given an initial value by the Administrator.
Subsequently, as of each Valuation Date, the Administrator will redetermine the
value of a unit by dividing the fair market value of the Trust Fund by the total
number of units credited to all Participants' accounts as of such date.
7.02. Order of adjustments to accounts. As of each Valuation Date the
--------------------------------
Administrator will:
(a) first, credit individual accounts of Participants with any
Participant contributions which are to be credited as of that date in accordance
with Section 7.05.
(b) second, adjust the balances in the individual accounts of
Participants to reflect the current value of the assets of the Trust Fund as
provided in Section 7.03; and
(c) third, credit Participating Employer contributions which are to
be credited as of such Valuation Date in accordance with Section 7.04.
7.03. Adjustment for income, expenses, gain or loss. In adjusting the
---------------------------------------------
individual accounts (other than an account whose balance is held in the
Installment Account) under
7-1
<PAGE>
Section 7.02(b) to reflect the current value of the assets of the Trust Fund,
the Administrator will allocate to such accounts, in proportion to the balances
therein immediately prior to such adjustment, an amount equal to the income and
expenses of the Trust and of the gain and loss (realized and unrealized) on the
assets credited to all such accounts, valued at their fair market value. The
balance in each individual account for which amounts are held in the Installment
Account will be similarly adjusted to reflect its proper share of the income
realized on the assets held in the Installment Account and its proper share of
any expenses of the Trust.
7.04. Crediting of Participating Employer contributions. As of the last
-------------------------------------------------
business day of each Plan Year, each Participating Employer contribution for
such Year will be allocated among and credited to the accounts of the Eligible
Employees entitled to share in the Participating Employer contribution (as
provided in Section 5.02) in proportion to their respective amounts of Basic
Earnings for such Plan Year.
7.05. Crediting of Participant contributions. Contributions by
--------------------------------------
Participants will be credited to their accounts as of the date on which such
contributions were made.
7.06. Limitations. Notwithstanding any other provisions of the Plan, a
-----------
Participant's Annual Addition shall not exceed the limitations of section 415 of
the Code which are hereby incorporated by reference. In the event that the
limitations of section 415(e) of the Code would otherwise be violated, a
Participant's benefits and/or annual additions under plans of the Company
or an Affiliated Company 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 contributions under any defined
contribution plan: and (iii) matched employee contributions under any defined
contribution plan.
7.07. Report to Participants. The Administrator, at least annually, will
----------------------
determine each Participant's Share of the Trust Fund, and will furnish a copy of
such report to the Participant concerned.
7-2
<PAGE>
Article VIII. Rights to Benefits.
------------------
8.01 Normal retirement. Upon attainment of the normal retirement age
-----------------
(65), each Participant will have a fully vested and nonforfeitable interest in
his Share of the Trust Fund. Such Participant's Share of the Trust Fund,
determined as of the Valuation Date immediately preceding his 65th birthday,
plus any amounts thereafter credited to his account attributable to
contributions for the Plan Year in which he attains age 65 will be distributed
to him as soon as reasonably practicable following his 65th birthday (and in no
event later than such Participant's attainment of age 70 1/2 whether or not such
Participant retires from the service of his Participating Employer, in
accordance with subsections (a) and (b) and Article IX below.
(a) Normal Form of Payment. The entire amount credited to a
----------------------
Participant's account shall be paid in one of the normal forms as follows, with
the benefit in (i) being the actuarial equivalent of the benefit described in
(ii): (i) If a Participant has a Spouse on the date on which the Participant
retires, the normal form of payment shall be a Qualified Joint and Survivor
Annuity as defined in section 2.41 with the Participant's Surviving Spouse
entitled to receive a monthly payment of 50% of the monthly payment received by
the Participant; (ii) if a Participant does not have a Spouse on the date on
which the Participant retires, the normal form of payment for distributions made
on or after January 1, 1985 shall be a life annuity with payments guaranteed for
120 months.
(b) Election of Optional Form of Payment. A Participant shall be
------------------------------------
entitled to elect irrevocably an optional form of payment to the amount credited
to his account in accordance with Article IX. The Participant's election must
be filed in writing with the Administrator within the 90-day period prior to the
benefit commencement date.
8.02. Disability retirement. A Participant may, with the consent of his
---------------------
Participating Employer, retire prior to the attainment of age 65 if, because of
a medically determinable physical or mental impairment likely to result in death
or to be of long-continued and indefinite duration, he cannot engage in any
substantially gainful activity and terminates his employment
8-1
<PAGE>
with his Participating Employer. Such retirement is referred to as a disability
retirement. In the event of a disability retirement, the Participant will have a
fully vested and nonforfeitable interest in, and will be entitled to receive,
his Share of the Trust Fund determined as of the Valuation Date immediately
preceding the date of such retirement, plus any amounts thereafter credited to
his account attributable to contributions for the Plan Year in which he retires.
Distribution will be made to him in accordance with Article IX below. Whether or
not a Participant is disabled will be determined by the Administrator on the
basis of medical evidence satisfactory to the Administrator.
8.03. Death Benefit. In the event of the death of a Participant who either
-------------
is actively employed by a Participating Employer, is disabled or has terminated
his employment with a vested interest under the Plan but has not received all of
his account to which he is entitled and who is not receiving retirement benefits
under the Plan, a benefit shall be paid under this Plan. Such benefit shall be
the amount or remaining amount of the Participant's Share of the Trust Fund
(determined as of the Valuation Date immediately preceding the date of the
Participant's death), plus any amount thereafter credited to his account
attributable to contributions for the Plan Year in which his death occurs.
(a) For Participants dying on or after August 23, 1984, the pre-
retirement death benefit described under Section 2.43 and payable under the Plan
on account of the death of a married Participant shall be payable to the
surviving spouse of such Participant in the form of a single life annuity unless
the Participant has made an election not to have the preretirement death
benefits paid in such form. Further, if such Participant elects to have such
pre-retirement death benefits paid in a form other than a survivor annuity for
the life of his surviving spouse which is the actuarial equivalent of the
Qualified Pre-retirement Survivor Annuity (as defined in Section 2.43 above) and
such Participant's surviving spouse has consented in writing to such
Participant's election, such consent acknowledges the effect of such election
and is witnessed by a notary public, such benefit shall be paid to the
beneficiary
8-2
<PAGE>
and in the form elected by the Participant unless such designated beneficiary
elects another form of payment by an instrument in writing filed with the
Administrator within 60 days after the Participant's death. A spouse's consent
to a Member's waiver of the Qualified Preretirement Survivor Annuity (or the
actuarial equivalent thereof) once given, shall be irrevocable.
(b) If such Participant has not elected to waive the Qualified Pre-
retirement Survivor Annuity as defined in Section 2.43 above, the surviving
spouse may elect another form of payment, approved by the Administrator, by an
instrument in writing filed with the Administrator within 60 days after the
Participant's death.
Participants who: (1) had at least one Hour of Service on or after
January 1, 1976, but not after August 22, 1984; (2) as of their date of
separation (from the service of the Employer) had at least 10 years of credited
service under the Plan, and (3) as of August 23, 1984, were alive and whose
annuity starting date had not occurred as of August 23, 1984 may elect to be
subject to the requirements of the Qualified Pre-retirement Survivor Annuity as
set forth above.
Notwithstanding the foregoing, if the present value of the
Qualified Preretirement Survivor Annuity, determined as of the date of
distribution, is $3,500 or less, such pre-retirement death benefit may be
distributed in a lump sum without the consent of the Participant's surviving
spouse.
Effective August 23, 1984 and beginning on the January 1
coinciding with or preceding the earlier of the Participant's age 35 or
separation from service date (for vested amounts allocated to the Participant's
account prior to such separation date), married Participants may elect to waive
the Qualified Pre-retirement Survivor Annuity until the earlier of the
Participant's annuity starting date or death if such Participant's spouse
consents in writing to such election, such consent acknowledges the effect of
such election and is witnessed by a notary public. Such Spousal consent, once
given, shall be irrevocable.
8-3
<PAGE>
(c) For Participants dying prior to August 23, 1984 and for
Participants who do not have a surviving Spouse, the entire amount credited to
such Participant's account shall be paid in a lump sum to the Participant's
designated Beneficiary unless the Participant or the Beneficiary elects another
form of payment pursuant to subsection (d) below.
(d) A Participant may elect another form of payment of the pre-
retirement death benefit payable under subsection (c) by a notice in writing
filed with the Administrator. Within 30 days after the Participant's death the
Beneficiary may, however, elect a different form of payment from that payable
under subsection (a), (b) or (c), by a notice in writing filed with the
Administrator.
(e) Effective January 1, 1985 any election of a form of benefit
payable by reason of the death of a Participant before such Participant's
interest had begun to be distributed to him must result in the distribution of
the Participant's entire interest within five years of such Participant's death
unless:
(i) the distribution is made to the Participant's designated
beneficiary for such designated beneficiary's life or life expectancy and such
distribution to such designated beneficiary begins within one year of the
Participant's death;
(ii) the distribution is made to the Participant's surviving
spouse for the surviving spouse's life or life expectancy and such distribution
begins on the later of the date the Participant would have attained age 70 1/2
or the date which is one year following the Participant's death; or
(iii) in the event the Participant's surviving spouse dies before
the distribution to such surviving spouse (of the Participant's interest) had
begun, the distribution is made to such surviving spouse's designated
beneficiary for the life or life expectancy of such designated beneficiary and
such distribution begins within one year of the death of the Participant's
surviving spouse.
8-4
<PAGE>
Notwithstanding the foregoing, if the Participant
dies after the distribution (of his interest under the Plan) had begun but
before the entire interest was distributed, such distribution (to any
beneficiary) must continue to be made at least as rapidly as it was made during
the Participant's life.
(f) Each Participant shall designate his Beneficiary with his
application for Participation in the Plan. The designation may be changed from
time to time by filing a new designation on a form provided by the
Administrator. 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. If no designated beneficiary survives the Participant, or if no
beneficiary is designated, the interest of the Participant in the Plan shall
pass to the estate of the Participant unless otherwise agreed in writing between
the Administrator and the Participant.
(g) Any lump sum payment payable to a Spouse pursuant to this
Section 8.03 shall be eligible for a direct rollover in accordance with Section
9.04.
8.04. Other termination of employment.
-------------------------------
(a) Participants with 5 or more years of Vesting Service on June 16,
----------------------------------------------------------------
1978 and Participant's who ceased to he Eligible Employees on January 1, 1974.
- -----------------------------------------------------------------------------
A Participant who either (i) completed 5 or more years of Vesting Service on
June 16, 1978 or (ii) ceased to be an Eligible Employee but not an Employee on
January 1, 1974, and who has a Severance from Service Date for any reason other
than death or normal or disability retirement, will be entitled under this
Section 8.04 to a termination benefit equal to the sum of
(1) the value of his Employee Credits determined as of the
Valuation Date immediately preceding his Severance from Service Date, and
8-5
<PAGE>
(2) a percentage, determined in accordance with the following
vesting schedule, of the value of his Participating Employer Credits, which
value will be determined as of the Valuation Date immediately preceding his
Severance from Service Date:
Vesting Schedule
----------------
Years of Vesting Service completed
after the end of first Plan Year
in which he became a Participant Applicable Nonforfeitable 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%
provided, however, the applicable nonforfeitable percentage in
the case of a Participant who ceased to be an Eligible Employee but not an
Employee on January 1, 1974, is 100 percent.
The distribution described under this paragraph (a) will be made in accordance
with Article IX as soon as reasonably practicable following the Participant's
Severance from Service Date.
(b) Other Participants. A participant other than a Participant
------------------
described in paragraph (a) above who has a Severance from Service Date for any
reason other than death or normal or disability retirement, will be entitled
under this Section 8.04 to a termination benefit equal to the sum of:
(1) the value of his Employee Credits determined as of the
Valuation Date immediately preceding his distribution date, and
(2) a percentage, determined in accordance with the following
vesting schedule, of the value of his Participating Employer Credits, which
value will be determined as of the Valuation Date immediately preceding his
distribution date:
8-6
<PAGE>
Vesting Schedule
----------------
Years of Vesting Service Applicable Nonforfeitable Percentage
------------------------ ------------------------------------
less than 4 0
4 but less than 5 40%
5 but less than 6 50%
6 but less than 7 60%
7 but less than 8 70%
8 but less than 9 80%
9 but less than 10 90%
10 or more 100%
provided, however, in no event will a Participant's nonforfeited
percentage under this paragraph (b) be less than the nonforfeitable percentage
determined as of June 16, 1978 in accordance with the vesting schedule set forth
in paragraph (a) above.
For purposes of this paragraph (b), a Participant's distribution date
is the later of (i) his Severance from Service Date or (ii) the date on which he
attains age 62, provided, however, that if the value of a Participant's
Participating Employer Credits, determined as of the Valuation Date immediately
preceding his Severance from Service Date, is less than $1,000, such
Participant's distribution date is his Severance from Service Date. The
distribution described under this paragraph (b) will be made in accordance with
Article IX as soon as reasonably practicable following the Participant's
distribution date.
Notwithstanding the foregoing provisions of this Section 8.04, the
applicable nonforfeitable percentage in the case of a Participant who has a
Severance from Service Date for any reason on or after December 31, 1979 is 100
percent, regardless of his years of Vesting Service. In addition, and
notwithstanding the foregoing provisions of this Section 8.04, any Employee or
former Employee who is a Participant on December 31, 1979 and who is entitled
to a termination benefit under this Section 8.04, will receive a distribution of
such benefit in accordance with the provisions of Article IX as soon as
reasonably practicable following the later of (i) December 31, 1979 or (ii) his
Severance from Service Date.
8-7
<PAGE>
(c) If the value of a Participant's account exceeds $3,500 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 retirement age (65).
8.05. Forfeitures. If a Participant described in Section 8.04 has a
-----------
Severance from Service Date, any portion of his Participating Employer Credits
not payable to him under Section 8.04 will remain credited to his account until
such time as he has a One Year Period of Severance, and such portion will then
be forfeited by him. Such forfeitures after adjustment pursuant to Section
7.02(b) will be applied to and treated as part of the contribution of his
Participating Employer for the Plan Year in which such forfeiture occurs.
8.06. Separate account. If a distribution has been made to a Participant
----------------
at a time when he has a nonforfeitable right to less than 100 percent of his
Participating Employer Credits, the vesting schedule in Section 8.04(a) or (b),
whichever is applicable, will thereafter apply only to his Participating
Employer Credits attributable to Participating Employer contributions and
forfeitures allocated after such distribution. The Participating Employer
Credits in his account immediately after such distribution will be transferred
to a separate account which will be maintained for the purpose of determining
his interest therein at any later time. At any relevant time his nonforfeitable
interest in the portion of his Participating Employer Credits held in such
separate account will be equal to P(AB+D)-D, where P is the nonforfeitable
percentage at the relevant time determined under Section 8.04(a) or (b),
whichever is applicable; AB is the account balance of the separate account at
the relevant time; and D is the amount of the distribution. However, if any
portion of such separate account is forfeited under Section 8.05, the
Participant's interest in the remaining balance in such separate account will
thereafter be fully vested and nonforfeitable.
8-8
<PAGE>
8.07. Treatment of certain Participants. Notwithstanding any provision
---------------------------------
contained herein to the contrary, any Employee or former Employee described in
this Section who is a Participant on December 15, 1979 will be treated as
follows:
(a) he will cease to be a Participant as of such date;
(b) he will be entitled to share in the contribution of his
Participating Employer for the 1979 Plan Year based on the amount of his Basic
Earnings for 1979 earned on or before December 15, 1979 and received by December
31, 1979, if he satisfies the requirements of Section 5.02 other than the
requirement that he be a Participant and an Eligible Employee on the last
business day of such Plan Year;
(c) if he is an Employee on December 15, 1979, his interest in his
Share of the Trust Fund will become fully vested and nonforfeitable as of such
date, regardless of his years of Vesting Service; and
(d) distribution of his Share of the Trust Fund, determined as of
December 31, 1979, will be made in accordance with Article IX as soon as
reasonably practicable following such date. An Employee or former Employee is
described in this Section if he is, or at the time he ceased to be an Employee
he was, employed by a Participating Employer in any capacity other than as a
division sales manager, an associate division sales manager or home office
personnel.
8-9
<PAGE>
Article IX. Distribution of Benefits.
------------------------
9.01. Methods of making distributions. Whenever any payment is to be made
-------------------------------
from the Fund to a Participant or to his beneficiary or estate, all or part of
the amount payable may be paid in kind or in cash in any one or more of ways
listed below as the Administrator may direct the Trustee in writing. The
Administrator in his sole discretion shall determine the manner in which payment
is to be made, but he shall make such determination in accordance with the
following provisions:
(a) Within a reasonable period, but in no event later than 30 days
before nor earlier than 90 days before a married Participant's benefit
commencement date, the Administrator shall provide to each married Participant a
written explanation of: (i) the terms and conditions of the Participant's normal
form of benefit payment; (ii) the Participant's right to make, and the effect
of, an election to waive the normal form of benefit payment; (iii) the rights of
the Participant's Spouse under Section 9.01 (d); and (iv) the right to make, and
the effect of, a revocation of a previous election to waive the normal form of
benefit payment.
(b) A Participant may revoke an election, or change it by written
notice to the Administrator at any time until benefits are paid under this Plan
by reason of the Participant's retirement, termination, disability or death.
(c) Subject to Section 9.01(d), a Participant may within the 90-day
period prior to the benefit commencement date, elect any of the following
optional forms of benefit payment instead of the usual form:
(i) As a single life annuity, under which equal or
substantially equal monthly installments are paid to the Participate during his
lifetime, with no further payments to anyone after his death.
(ii) As an annuity under which equal or substantially equal
monthly installments are paid to the Participant during his lifetime, with
payment of monthly
9-1
<PAGE>
installments guaranteed for a period selected by the Participant. Subject to the
limitation in subsection (d), the period may be either 60, 120, 180, 240 or 300
months.
(iii) As an annuity under which, subject to the limitations in
subsection (d), 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.
(iv) As an annuity under which, subject to the limitations in
subsection (d), 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.
(v) As an annuity under which, subject to the limitations in
subsection (d), equal or substantially equal monthly installments are paid to
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 or her lifetime.
(vi) As an annuity under which, subject to the limitations in
subsection (d), 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 or her lifetime.
(vii) In a lump sum.
9-2
<PAGE>
(d) Effective January 1, 1 985, a married Participant may not elect
to waive his normal form of payment described in Section 2.40 if the
Participant's annuity starting date had not occurred and the vested portion of
the Participant's interest under the Plan is greater than $3,500, unless the
Spouse of the Participant desiring to make such election is named as survivor
annuitant under another joint and survivor payment form allowed under the Plan
which is the actuarial equivalent of the joint and 50% survivor annuity provided
under the Plan or consents in writing to such election (on forms satisfactory to
the Administrator) and such consent acknowledges the effect of such election and
is witnessed by a notary public. Such Spousal consent, once given, shall be
irrevocable. Concurrently with such waiver such Participant must elect an
optional form of payment from those provided for in (c) above.
(e) Notwithstanding the consent requirement, if the Participant
established to the satisfaction of the Administrator 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.
Effective January 1, 1985, any form of payment elected under the
Plan must result in the commencement of the Participant's benefit beginning no
later than the April 1 of the year following the year in which the Participant
attains age 70 1/2, and extending over a period not extending beyond either the
life of such Participant or the lives of such Participant and his designated
beneficiary, or the life expectancy of such Participant or the life expectancies
of such Participant and his designated beneficiary.
9.02. Notice to Trustee. The Administrator will notify the Trustee
-----------------
whenever any Participant or Beneficiary is. entitled to receive benefits under
Article VIII. In giving such notice, the Administrator will indicate the form
of the benefits and the name of any designated Beneficiary when appropriate.
Upon receipt of a written notice from the Administrator certifying that an
amount is payable to a Participant or other person from the Trust, the Trustee
9-3
<PAGE>
will, as soon as reasonably practicable, distribute such amount (or commence
distribution thereof if distribution is to be made in installments) in
accordance with the instructions of the Administrator. In no case, however,
will the payment of benefits to any Participant commence later than the 60th day
after the latest of the following:
(a) the close of the Plan Year in which occurs the date on which the
Participant attains the normal retirement age (65);
(b) the close of the Plan Year in which occurs the 10th anniversary
of the year in which the Participant commenced participation in the Plan (but no
later than the close of the Plan Year in which a Participant attains age 70 1/2;
or
(c) the close of the Plan Year in which the Participant ceases to be
an Employee.
9.03. Distributions in installments. If a distribution is to be made in
-----------------------------
installments, the Administrator may direct the Trustee to segregate such
benefits in the Installment Account and to make payments from such Account in
accordance with the instructions of the Administrator. The Trustee will invest
the Installment Account in savings accounts in one or more savings banks or
other financial institutions (including the Trustee). The Trustee may keep a
reasonable portion of the assets held in the Installment Account uninvested for
the purpose of meeting current installment payments.
9.04. Direct rollovers. 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 below) transferred directly to an "eligible
retirement plan" (as defined 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 section 401(a)(31). For purposes of this
Section and Section 14(c), "eligible rollover distribution" shall mean any
distribution of all or any portion of the balance to
9-4
<PAGE>
the credit of the distributes 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 distributes or the joint
lives (or joint life expectancies) of the distributes 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 section 401(a)(9); or (4) the portion of any distribution that is not
includable in gross income. "Eligible retirement plan" shall mean, with respect
to a Participant, an individual retirement account or annuity described in Code
section 408(a) or 408(b) ("IRA'); an annuity plan described in Code section
403(a); or a qualified plan described in Code section 401(a), that accepts the
distributee's eligible rollover distribution and, with respect to a Spouse,
shall mean an IRA.
9-5
<PAGE>
Article X. Funding of the Plan.
-------------------
10.01. Maintenance of the Trust Fund. The Trust Fund will be established
-----------------------------
and maintained by the Company for the exclusive benefit of all persons entitled
to benefits under the Plan, and will be used to pay benefits to such persons,
and to pay expenses of administration of the Plan and the Fund to the extent not
paid by a Participating Employer. Except as otherwise provided in Sections 1.02
and 7.06, no part of the corpus or income of the Trust will be used for or
diverted to purposes other than for the exclusive benefit of each Participant
and his Beneficiary.
10.02. Investment of Trust Fund. The Trustee will accept and hold in the
------------------------
Trust Fund contributions made under the Plan by or on behalf of Participants.
The Trust Fund will be invested by the Trustee in accordance with the provisions
of the agreement or agreements creating the Trust and with the provisions of the
Plan.
10-1
<PAGE>
Article XI. Amendment and Termination.
-------------------------
11.01. Amendment. The Company reserves the right to amend the Plan in
---------
any respect and at any time and from time to time by a written instrument signed
by any officer of the Company authorized to sign by vote of the Board of
Directors providing for such amendment (any such amendment to take effect
retroactively if the Company so provides); provided, however, that the Company
will not have power:
(a) to amend the Plan in such manner as would cause or permit any
part of the assets of the Trust to be diverted to purposes other than for the
exclusive benefit of each Participant and his Beneficiary; or
(b) to amend the Plan retroactively in such a manner as would
deprive any Participant of any benefit to which he was entitled under the Plan
by reason of contributions made by a Participating Employer or the Participant
prior to the amendment, unless such amendment is necessary to conform the Plan
or Trust to, or satisfy the conditions of, any law, governmental regulation or
ruling, or to permit the Plan and the Trust to meet the requirements of sections
401(a) and 501(a) of the Code;
11.02. Termination. The Company has established the Plan and the Trust
-----------
with the bona fide intention and expectation that contributions will be
continued indefinitely, but the Company will have no obligation or liability
whatsoever to maintain the Plan for any given length of time and may discontinue
contributions under the Plan or terminate the Plan as to Participants employed
by a Participating Employer at any time by written notice delivered to the
Trustee without any liability whatsoever for any such discontinuance or
termination. The Plan will be deemed terminated (a) if and when the Company is
judicially declared bankrupt, (b) if and when the Company is a party to a merger
in which it is not the surviving corporation or sells all or substantially all
of its assets, unless the surviving corporation or the purchaser adopts the Plan
by an instrument in writing delivered to the Trustee within 60 days after the
merger or sale, or (c) upon dissolution of the Company.
11-1
<PAGE>
11.03. Distributions upon termination of the Plan. Upon termination or
------------------------------------------
partial termination of the Plan or complete discontinuance of contributions
thereunder as to Participants employed by any Participating Employer, each
affected Participant will have a fully vested and nonforfeitable interest in his
Share of the Trust Fund. In the event of the termination of the Plan, the
Trustee will make distributions to such Participants or other persons entitled
to distributions in accordance with the instructions of the Administrator or, in
the absence of such instructions, as the Trustee in its discretion deems
advisable. Such distributions will be made in such manner as the Administrator
directs pursuant to Article IX or, in the absence of such instructions, as the
Trustee in its discretion deems advisable.
11.04. Merger or consolidation of Plan: transfer of Plan assets. In case of
--------------------------------------------------------
any merger or consolidation of the Plan with. or transfer of assets and
liabilities of the Plan to, any other plan, provision must be made so that 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 benefit he would have been entitled to receive immediately before the
merger, consolidation or transfer if the Plan had then terminated.
11-2
<PAGE>
Article XII. Miscellaneous.
-------------
12.01. Limitation of rights. Neither the establishment of the Plan and
--------------------
the Trust, nor any amendment thereof, nor the creation of any fund or account,
nor the payment of any benefits, will be construed as giving to any Participant
or other person any legal or equitable right against any Participating Employer,
the Administrator or the Trustee, except as provided herein, and in no event
will the terms of employment or service of any Participant be modified or in any
way be affected hereby. It is a condition of the Plan, and each Participant
expressly agrees by his participation herein, that each Participant will look
solely to the assets held in the Trust for the payment of any benefit to which
he is entitled under the Plan.
12.02. Nonalienability of benefits. The benefits provided hereunder
---------------------------
will not be subject to alienation, assignment, garnishment, attachment,
execution or levy of any kind, and any attempt to cause such benefits to be so
subjected will not be recognized, except to such extent as may be required by a
-
Qualified Domestic Relations Order as defined in Section 2.42.
- -------------------------------------------------------------
12.03. Governing law. The Plan will be construed, administered and
-------------
enforced according to the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, said Company has caused this Plan to be executed in
its behalf by its officers thereunto duly authorized as of January 1, 1989.
WADDELL & REED, INC.
By /s/ WILLIAM HOWEY
-----------------------------------
12-1
<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(i) 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 ton 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
A-1
<PAGE>
(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 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 includable 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 nonqualified 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
A-2
<PAGE>
(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.
(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.
A-3
<PAGE>
(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 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,
A-4
<PAGE>
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 Members 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 Member (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
A-5
<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)(1)(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 Member, for any Plan Year in which the Plan is a Top-Heavy Plan,
Employer contributions and forfeitures allocated to the account of any Member
who is not a Key Employee, whether or not such Member has completed 1,000 Hours
of Service in that Plan Year and whether or not such Member 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 Member's Limitation Compensation, or
(ii) the largest percentage of Employer contributions and
forfeitures, as a percentage of the Key Employee's Limitation Compensation,
allocated in the aggregate to the account of any Key Employee for that
year.
A-6
<PAGE>
(b) The provision in (a) above shall not apply to any Member who was
not employed by the Employer or an Affiliate on the fast 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)(8), unless the
Plan meets the requirements of Code (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.
A-7
<PAGE>
EXHIBIT 10.14
ADMINISTRATION CONTRACT
------------------------
between
UNITED INVESTORS PARK OWNERS' ASSOCIATION,
a Kansas not-for-profit corporation
and
WADDELL & REED PROPERTY MANAGEMENT DIVISION,
a division of Waddell & Reed Financial, Inc.,
a Delaware corporation
March 1, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
1. Engagement of Manager ................................. 1
---------------------
2. Term .................................................. 1
----
2.1 Automatic Extension............................. 1
-------------------
2.2 Termination For Cause........................... 2
---------------------
2.3 Termination Without Cause....................... 2
-------------------------
2.4 Procedure on Termination........................ 2
------------------------
2.4.1........................................... 3
2.4.2........................................... 3
2.4.3........................................... 3
2.4.4........................................... 3
2.5 Termination Rights.............................. 3
------------------
3. Manager's Duties....................................... 4
----------------
3.1 Annual Budget................................... 4
-------------
3.3 Personnel Employment............................ 4
--------------------
3.4 Service Contracts............................... 4
-----------------
3.5 Purchases....................................... 5
---------
3.6 Maintenance..................................... 5
-----------
3.6.1........................................... 5
3.6.1.1......................................... 5
3.6.1.3......................................... 5
3.6.1.4......................................... 5
3.6.1.5......................................... 6
3.6.1.6......................................... 6
3.6.1.7......................................... 6
3.6.1.8......................................... 6
3.6.1.9......................................... 6
3.6.1.10........................................ 6
3.6.1.11........................................ 6
3.6.1.12........................................ 6
3.6.1.13........................................ 6
3.7 Owner's Right to Terminate/Appoint Manager...... 6
------------------------------------------
3.7.1........................................... 6
3.7.2........................................... 7
3.8 Legal Compliance................................ 7
----------------
3.9 Bank Account.................................... 7
------------
3.10 Collections..................................... 7
-----------
3.11 Compliance with Contracts....................... 7
-------------------------
i
<PAGE>
4. Accounting and Distribution of Moneys.................. 8
-------------------------------------
4.1 Monthly Statements.............................. 8
------------------
4.2 Annual Statements............................... 8
-----------------
4.3 Other Reports................................... 8
-------------
4.4 Payment of Funds to Owner....................... 8
-------------------------
5. Compensation of Manager................................ 8
-----------------------
5.1 Management Fee.................................. 9
--------------
6. Insurance.............................................. 9
---------
6.1 Fidelity Coverage............................... 10
-----------------
7. Owner's Right to Inspect............................... 10
------------------------
8. Indemnification........................................ 10
---------------
9. Miscellaneous.......................................... 10
-------------
9.1 Notices......................................... 10
-------
9.2 Assignment...................................... 11
----------
9.3 Construction.................................... 11
------------
9.4 Entire Agreement................................ 11
----------------
9.5 Binding Effect.................................. 12
--------------
9.6 Governing Law................................... 12
-------------
EXECUTION BY OWNER.......................................... 12
EXECUTION BY MANAGER........................................ 12
Exhibit "A" Property
Exhibit "B" Personnel and Salaries
Exhibit "C" Voluntary Encumbrances
Exhibit "D" Management Fees
Exhibit "E" Affiliate
Exhibit "F" Grounds
ii
<PAGE>
CONTRACT
--------
THIS AGREEMENT is made effective the 1st day of March, 1998, between
United Investors Park Owners Association, Inc., a Kansas not-for-profit
corporation (the "Owner") and Waddell & Reed Property Management Division, a
division of Waddell & Reed Financial, Inc., a Delaware corporation (the
"Manager").
W I T N E S S E T H :
WHEREAS, the Owner is an association whose members consist solely of
owners of property located in United Investors Park (the "Members"), all as more
particularly described on Exhibit "A" attached hereto (the "Property");
WHEREAS, the Manager is experienced in the operation, management and
supervision of office buildings and other commercial real estate; and
WHEREAS, the Owner desires to obtain the services of the Manager and
the Manager desires to make its services available to the Owner to manage the
Common Areas of the Property on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the Owner and the Manager agree as follows:
1. Engagement of Manager. The Owner hereby engages the Manager and the
Manager hereby accepts such engagement as the sole and exclusive manager of the
Common Areas of the Property. Subject to the terms of this Agreement, the
Manager will have control over the management, maintenance, and operation of the
Common Areas of the Property, including but not limited to the Grounds, which
shall be defined herein as that portion of the Property consisting of the Common
Areas and Common Facilities, as more specifically set forth and defined in
Exhibit F attached hereto and incorporated by reference herein. Anything herein
to the contrary notwithstanding, the Manager for all purposes will be deemed an
independent contractor within the meaning of the Internal Revenue Code of 1986,
as amended (the "Code"), and will not be deemed the servant, agent or employee
of the Owner.
2. Term. Unless extended or sooner terminated as herein provided, the
original term of this Agreement will be for thirty-six (36) months, commencing
March 1, 1998 (the "Commencement Date") and ending April 30, 2001 (the
"Expiration Date").
2.1 Automatic Extension. The term of this Agreement will be automatically
extended for successive periods of twelve (12) months each, unless
either party hereto notifies the other, in writing, at least ninety
(90) days prior to the scheduled expiration of the initial term or any
successive term, of its election to terminate this Agreement. If
extended, all terms and conditions set forth herein shall apply for
such extended term.
<PAGE>
2.2 Termination For Cause. This Agreement may be terminated, as to all
Property or any specific Property, on the occurrence of any of the
following events: (a) the transfer of ownership of such Property by
the Owner; (b) the taking of all or a substantial portion of such
Property through condemnation proceedings by any governmental
authority; (c) the substantial damage or destruction of such Property
by fire or other casualty and the election by the Owner not to rebuild
or restore such Property; (d) the default by the Manager in the
performance of the Manager's obligations hereunder; or (e) the default
by the Owner in the performance of the Owner's obligations hereunder.
On the occurrence of the events described at subparagraphs (a) through
(c) above, the Owner and the Manager will have the mutual option to
terminate this Agreement by delivery of written notice stating an
effective date of termination of not less than ten (10) and no more
than sixty (60) days from the date of delivery of such notice. On the
occurrence of the events described at subparagraph (d) or (e) above,
the nondefaulting party will serve written notice of default to the
party claimed to be in default. If such default continues for ten (10)
days after delivery of written notice specifying such default, then
this Agreement, at the option of the nondefaulting party, may be
terminated effective on the date of delivery of written notice at any
time thereafter; provided, however, that if such default is cured
within said ten (10) day period or if such default cannot be cured
within said ten (10) days but the defaulting party has commenced and
is diligently prosecuting the action necessary to cure such default,
then this Agreement will continue as if such default had not occurred.
Notwithstanding any termination of this Agreement resulting from the
occurrence of the events described at subparagraphs (d) and (e) above,
the respective rights granted to the Owner and Manager hereunder are
cumulative of every other right or remedy which the Owner and Manager
respectively might otherwise have at law or in equity and the exercise
of any right or remedy will not prejudice the concurrent or subsequent
exercise of other rights or remedies.
2.3 Termination Without Cause. The Owner may, at any time during the
term of this Agreement, terminate this Agreement without cause, as to
all the Property or as to any specific Property, by giving written
notice to the Manager stating an effective date of termination of not
less than sixty (60) days from the date of delivery of such notice.
Within ten (10) days after the effective date of termination of all or
and portion of this Agreement, the Owner will pay to the Manager a
cancellation fee in an amount equal to twenty-five percent (25%) of
the Management Fee (as hereafter defined) payable under Paragraph 5.1
of this Agreement with respect to each such terminated Property, which
would have otherwise been payable for the period between the effective
date of such termination and the scheduled expiration date of the
initial term or of any last occurring scheduled expiration date of any
successive term of this Agreement, which has extended pursuant to
Paragraph 2.1.
2.4 Procedure on Termination. Within ten (10) days after the effective
date of termination of all or any portion of this Agreement, the
Manager will:
2
<PAGE>
2.4.1 Deliver to the Owner all records and files in the possession of
the Manager pertaining to the management, maintenance,
operation, leasing, marketing and use of each of the Property
included in the termination notice, together with any other
personal property of the Owner in the possession of the Manager;
2.4.2 Render final statements to the Owner for all collections and
expenses resulting from the management and operation of each of
the Property included in the termination notice since the last
monthly financial statements, prepared in accordance with this
Agreement;
2.4.3 Deliver to the Owner for each parcel of the Property included in
the termination notice: (a) a complete inventory of all
tangible personal property on site at each such Property on the
termination date; (b) a schedule of all contracts, conditional
sale contracts, other agreements (the "Property Contracts") and
any other intangible personal property rights used in, or
affecting, the operation, management or maintenance of such
Property (collectively the "Intangible Property"); and (c) a
schedule, which includes an explanation in reasonable detail,
that identifies: (i) any deficiencies in the Intangible
Property; and (ii) any liability or obligation that will affect
such Property after the termination date and that the Manager
requests that the Owner specifically assume; and
2.4.4 With respect to each of the Property included in the termination
notice: (a) deliver to the Owner the original of all Property
Contracts and any other license, permit, authorization or
certificate existing in connection with such Property (the
"Permits"); and (b) on request of the Owner, and to the extent
assignable, assign all Property Contracts, the Permits, and any
other Intangible Property relating to the operation,
maintenance, leasing and marketing of such Property, to those
parties as the Owner directs in writing.
2.5 Termination Rights. Except as provided in Paragraphs 2.3 and 2.4
hereof, on the effective date of termination of all or any portion of
this Agreement, the Owner and the Manager will be released from
further performance hereunder with respect to each of the Property
included in the termination notice, except that the Owner will
continue to be obligated to pay to the Manager those commissions
previously earned by the Manager pursuant to Paragraph 5, at the times
set forth therein.
3. Manager's Duties. Throughout the term of this Agreement, the Manager will
use the Manager's best efforts and due diligence in managing the Common Areas of
the Property in accordance with the written policies and programs approved from
time to time by the Owner. In pursuance of the foregoing, the Manager will
perform the following services:
3
<PAGE>
3.1 Annual Budget. The Manager will, within one hundred twenty (120)
days after the date hereof and within thirty (30) days prior to the
end of each calendar year thereafter, submit a preliminary budget
which reflects on a monthly basis the estimated receipts,
disbursements, operational expenditures and capital expenditures for
the ensuing calendar year and which will include: (a) a schedule
projecting amounts to be collected as Maintenance Charges from owners
of the Property; (b) a schedule of amounts which the Manager estimates
will be spent for salaries, repairs, maintenance, replacements and
capital improvements; and (c) any other item reasonably requested by
the Owner. The preliminary budget will be submitted in writing to the
Owner for approval and the Owner will have the right to make any
changes thereto and finalize the budget in form satisfactory to the
Owner in the Owner's sole discretion (hereafter the "Annual Budget").
The Owner will inform the Manager of any change to the preliminary
budget submitted by the Manager before commencement of the period
covered by the Annual Budget and the Annual Budget shall constitute
the standard pursuant to which the Manager will operate the Common
Areas of the Property during the ensuing calendar year. The Manager
will thereafter prepare and deliver to the Owner prior to the
beginning of each quarter during the ensuing year any changes in the
information and estimates contained in the Annual Budget necessary to
reflect current conditions. At the sole option of the Owner, the
Annual Budget, as amended, will thereafter constitute the standard
pursuant to which the Manager will operate the Common Areas of the
Property. The Manager will not, without the prior written consent of
the Owner, incur any non-utility expense in the operation, maintenance
and management of the Common Areas of the Property which would, if
annualized, exceed by five percent (5%) or more any single annualized
amount allocated to the particular classification of expense in the
Annual Budget.
3.3 Personnel Employment. On the basis of the schedule of staffing
standards and wage rate projections set forth on Exhibit "B" attached
hereto or, if different, those approved by the Owner in the Annual
Budget, the Manager will hire, pay, supervise and discharge the
personnel necessary to maintain and operate the Property. All such
employees will be employees of the Manager and not the Owner, however,
all salaries, wages and other compensation of personnel so employed by
the Manager, including medical and health insurance, pension plans,
social security, taxes, workmen's compensation insurance and similar
salary and benefit expenses, will be expenses of the Common Areas of
the Property and payable by the Owner. Notwithstanding the preceding,
all salary and benefit expenses of executives or principal officers of
the Manager who are not permanently assigned to the Common Areas of
the Property on a full time basis will not be a cost of the Common
Areas of the Property.
3.4 Service Contracts. Subject to expenditure limitations set forth in
the approved Annual Budget, the Manager will negotiate and enter into
contracts in the name of
4
<PAGE>
and at the expense of the Owner for janitorial, maintenance,
landscaping, security, water, electricity, gas, fuel, oil, telephone,
vermin extermination, trash removal and other services required to
operate, maintain and manage the Common Areas of the Property. Any
proposed service contracts containing a duration in excess of twelve
(12) months must be approved in advance, in writing by Owner.
3.5 Purchases. Subject to the expenditure limitations set forth in the
approved Annual Budget, the Manager will purchase on behalf of and at
the expense of the Owner all necessary supplies, equipment and
materials which may be required from time to time to operate and
maintain the Common Areas of the Property. When issuing purchase
orders, the Manager will at all times act in the best interest of the
Owner and will secure for the benefit of the Owner any discounts,
commissions or rebates obtainable as a result of such purchases.
3.6 Maintenance. Subject to expenditure limitations in the approved
Annual Budget, the Manager will, at the expense of the Owner,
maintain, repair, replace and renew the Common Area and Common
Facilities in a clean, sightly, safe and first-class condition
("Common Area Maintenance"). Maintenance, to the extent not performed
by a governmental authority or Owner, shall, unless Owner directs
otherwise, include, but shall not be limited to: (i) the repair,
replacement, renewal and cleaning of all lighting fixtures, signs,
entrance monuments and markers, traffic control signals and signs;
(ii) the mowing, watering, fertilizing, weeding, replanting and
replacing of landscaping; and (iii) the maintenance of liability and
casualty insurance on and with respect to, and the payment of and
ability to protest ad valorem taxes assessed on, the Common Area and
Common Facilities. Notwithstanding the foregoing, maintenance of the
land within public utility easements shall be for the purpose of
keeping such land in a clean and sightly condition. The Manger, only
at Owner's specific written direction, may repair or reconstruct
public or private streets within the Common Area.
3.6.1 The Manager shall perform the following functions:
3.6.1.1 the Common Area Maintenance;
3.6.1.2 the calculation of the cost of Common Area
Maintenance;
3.6.1.3 the calculation and rendition to the Members of
statements for the appropriate part of the
Common Area Maintenance Obligation;
3.6.1.4 the collection of the Common Area Maintenance
Charges and the disbursement thereof to pay the
cost of Common Area Maintenance, as provided
for in The Declaration of Protective Covenants
and Restrictions of United Investors Park
Owners' Association dated March 6, 1996, as
5
<PAGE>
amended, which is hereby incorporated by
reference as if fully set forth again ;
3.6.1.5 the maintenance of income and expense records;
3.6.1.6 the preparation and submission to Owner of a
recommended budget;
3.6.1.7 the preparation and submission to Owner of
monthly receipt and expenditure records;
3.6.1.8 the selection of personnel to maintain the
Common Areas and Common Facilities;
3.6.1.9 the preparation and filing of governmental
returns and instruments;
3.6.1.10 the negotiation and execution of contracts for
services to the Common Areas and Common
Facilities;
3.6.1.11 the maintenance of appropriate insurance
coverage;
3.6.1.12 the collection and removal of trash and rubbish
for both Owners and Common Area; and
3.6.1.13 all other general duties and responsibilities
fairly related to the foregoing functions and
the duties and responsibilities of the
Association set forth in Articles 10 and 11 of
this Declarations of Protective Covenants and
Restrictions of United Investors Park Owners'
Association, as amended.
3.7 Owner's Right to Terminate/Appoint Manager. If, in the opinion of the
Owner, the Property Manager, or its agent or agents, shall fail to
perform the Maintenance Obligation as aforesaid, the Owner shall give
written notice to the Manager specifying the manner in which the
Manager has failed to so perform. If such failure has not been
corrected within thirty (30) days after such notice, or if such work,
if it cannot be completed within such thirty (30) day period, has not
been commenced within such period and thereafter diligently prosecuted
to completion, the Owner may:
3.7.1 Elect to terminate the employment of the Manger or any
independent contractor engaged by the Manager to perform Common
Area Maintenance as set forth in paragraphs 3.6.1 and 3.6.2
herein, in which Event Owner shall have the right to appoint a
new Manager; or
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<PAGE>
3.7.2 Enter upon the Parcel and perform such Common Area Maintenance
as set forth in paragraphs 3.6.1 and 3.6.2 herein.
3.8 Legal Compliance. The Manager will use its best efforts to take such
action as might be necessary to comply with all statutes, ordinances,
laws, rules, regulations and orders affecting or issued in connection
with the Common Areas of the Property by any governmental authority
having jurisdiction thereof and will secure and maintain any and all
appropriate licenses and permits with respect thereto; such compliance
shall include, without limitation, compliance with all applicable
provisions of The Americans With Disabilities Act of 1990, as amended,
and similar laws.
3.9 Bank Account. The Manager will establish and maintain, on behalf of
the Owner, a separate bank account or bank accounts (the "Bank
Accounts") in such number as may, from time to time, be approved by
the Owner and in a manner to indicate the custodial nature thereof on
deposit with banking institutions approved, from time to time by the
Owner, with withdrawal therefrom to be by signature of either the
Manager or the Owner or such other individual as the Owner might
designate. The Manager will deposit therein all monies furnished by
the Owner as working funds and all monies collected and received from
the operation of the Property, including Maintenance Charge fees
collected from tenants of the Property. The Manager will pay therefrom
all amounts authorized by this Agreement, including the Management Fee
and commissions described in Paragraph 5 hereof, and any other charges
or items of expense which the Owner directs to be paid in writing.
3.10 Collections. The Manager will collect and deposit into the bank
accounts established in accordance with Paragraph 3.8, all Maintenance
Charges paid by tenants and other charges due from tenants of the
Property, arising out of or resulting from the operation of the Common
Areas of the Property. The Manager will maintain businesslike
relations with tenants of the Property and all tenant requests will be
received, logged and resolved in a systematic fashion. Complaints of a
serious nature will, after thorough investigation, be reported to the
Owner with appropriate recommendation. The Manager will institute (in
its own name or in the name of the Owner) any necessary legal actions
or proceedings to collect Maintenance Charges or other income arising
from the operation of the Common Areas of the Property; provided,
however, the Manager will not permit such legal proceedings to
terminate any lease or dispossess the occupancy rights of any tenant
or user of the Property, or any portion thereof, without the prior
written consent of the Owner.
3.11 Compliance with Contracts. The Manager will cause the Common Areas
of the Property to comply with all of the terms, conditions and
obligations contained in any lease or other agreement executed by or
on behalf of the Owner which relates to the Common Areas of the
Property. The Owner will notify the Manager in
7
<PAGE>
writing of the existence of any such lease or other agreement, but the
Manager will be deemed to have notice of any such document prepared or
negotiated by the Manager. Manager and Owner acknowledge that only
those parcels of the Property identified on Exhibit "C" attached
hereto are currently subject to a mortgage lien or similar voluntary
encumbrance (the "Mortgages"), all as more particularly described on
Exhibit "C"; Owner agrees to amend Exhibit "C", from time to time, in
the event any change in the preceding status of the Property occurs.
Owner represents to the Manager that except as specifically described
on Exhibit "C", as amended, none of the Mortgages imposes any
obligation on the Manager beyond the scope of the Manager's duties
under this Agreement.
4. Accounting and Distribution of Monies. The Manager will keep full and
adequate books of account and such other records as might be appropriate to
reflect the results of operation of the Common Areas of the Property. Such books
and records will be organized and will be maintained in a manner reasonably
acceptable to the Owner. The Owner (and any person designated by Owner) will
have access to such records and accounts at all reasonable times. The Manager
will render statements in form and content acceptable to the Owner and will
make payments to the Owner as follows:
4.1 Monthly Statements. The Manager will deliver to the Owner (and any
persons designated by the Owner) within ten (10) days after the end of
each month a detailed balance sheet and a detailed income statement
reflecting receipts and disbursements arising from the operations of
the Common Areas of the Property for the preceding calendar month (the
"Monthly Statements").
4.2 Annual Statements. The Manager will deliver to the Owner (and to any
persons designated by the Owner) within fifteen (15) days after the
end of each calendar year, a detailed statement of Gross Revenues
(hereafter defined), of disbursements arising from the operations of
the Common Areas of the Property for such calendar year and a detailed
statement for such calendar year of all capital expenditures made by
the Manager for the account of the Owner.
4.3 Other Reports. The Manager will deliver to the Owner (and any
persons designated by the Owner) at the Owner's expense, any other
statements or reports reasonably requested by the Owner.
4.4 Payment of Funds to Owner. Upon written request of Owner, Manager
shall pay or disburse to Owner all funds in the Bank Accounts in
excess of those reasonably required to meet all of the current
operations and reserves of the Common Areas of the Property, as
reflected by the approved Annual Budget and the most recent Monthly
Statements.
5. Compensation of Manager. As compensation for all services to be rendered
by the Manager during the term of this Agreement, the Owner will pay the Manager
the following fees:
8
<PAGE>
5.1 Management Fee. For so long as this Agreement remains in effect for
the Common Areas of the Property, the Manager shall, in return for its
services hereunder, receive the management fees in the amounts more
particularly described with respect to the Common Areas of the
Property (such management fees are with respect to the Common Areas of
the Property sometimes herein called a "Management Fee") on Exhibit
"D" attached hereto. Payment of all Management Fees will be made in
arrears, payable on the first business day of each subsequent calendar
month. If all or any portion of the term of this Agreement commences
on other than the first day of any month or calendar year or
terminates on other than the last day of any month or calendar year,
the Management Fee for the year and month in which such date occurs
will be prorated based on a thirty (30) day month and a three hundred
sixty (360) day year.
6. Insurance. The Owner will, at the Owner's expense, obtain and keep in
force adequate insurance against physical damage (e.g. fire and extended
coverage, structures and machinery, etc.) and against liability for loss, damage
or injury to property or persons which might arise out of the occupancy,
management, operation or maintenance of the Common Areas of the Property, all in
such amounts and coverage limits as Owner deems appropriate. The Manager will be
named as an additional insured in all liability insurance maintained with
respect to the Common Areas of the Property, and Owner will provide Manager with
evidence of such insurance upon request. The Owner will save, defend and hold
the Manager harmless from any liability on account of such insured loss, damage
or injury, provided that the Manager: (a) notifies the Owner within twenty-four
(24) hours after the Manager receives notice of any such loss, damage or injury;
(b) takes no action (such as an admission of liability) which might bar the
Owner from obtaining any protection afforded by any policy the Owner may hold or
which might prejudice the Owner in the defense of a claim based on such loss,
damage or injury; and (c) agrees that the Owner will have the exclusive right,
at the Owner's option, to conduct the defense of any claim, demand or suit
within the limitations prescribed by the policy or policies of insurance. The
Manager will furnish such information as might reasonably be requested by the
Owner for the purpose of establishing insurance coverage and will aid and
cooperate in every reasonable way with respect to such insurance and any loss
thereunder. Manager shall secure and maintain with one or more companies,
reasonably satisfactory to Owner, professional liability, worker's compensation
and employer's liability insurance covering all employees of Manager in
accordance with state law. Manager shall provide non-owned or hired automobile
liability insurance with bodily injury limits of not less than Three Million
Dollars ($3,000,000.00) per person and Three Million Dollars ($3,000,000.00) per
accident and property damage limits of not less than Three Million Dollars
($3,000,00.00) per event. Manager shall furnish satisfactory evidence of the
foregoing insurance to Owner within ten (10) days after written request for
same, and any policies maintained by Manager shall name Owner as an additional
insured and provide for thirty (30) days' written notice to Owner prior to any
cancellation of same. The Owner and the Manager hereby waive in favor of the
other any cause of action which either might have against the other on account
of any loss or damage which is insured against, to the extent of such insurance,
under any insurance policy which names either the Manager or the Owner as a
named or additional insured.
9
<PAGE>
6.1 Fidelity Coverage. In addition to the insurance coverage required
under Paragraph 6, the Manager agrees to obtain and maintain a
fidelity bond or employee dishonesty insurance coverage covering all
employees of Manager performing any cash collection, handling or
management functions or other similar duties in connection with this
Agreement, with such coverage to be in an amount of not less than
$2,000,000.00 and from insurance companies approved by Owner. Manager
agrees to provide to Owner upon request, such certificates or other
evidence of existence of such policies during the term of this
Agreement.
7. Owner's Right to Inspect. The Owner and the Owner's accountants,
attorneys and agents will have the right to enter upon any part of the Common
Areas of the Property at any time for the purpose of examining or inspecting the
same or examining or making extracts from books and records of the Common Areas
of the Property or for any purpose which the Owner, in the Owner's discretion,
deems necessary or advisable.
8. Indemnification. The Owner agrees to indemnify the Manager from damages
for injuries to persons or property resulting from or arising out of any action
or inaction of the Manager relating to the operation of the Common Areas of the
Property in accordance with this Agreement and the physical premises thereof,
including, without limitation, claims relating to exposure to any PCB
transformers or other hazardous materials at the Property and, at the Owner's
cost and expense, to defend any action or proceeding against the Manager arising
therefrom, provided that the Manager shall have fully and faithfully performed
all of the Manager's duties hereunder. Notwithstanding the foregoing, the Owner
will not be required to indemnify the Manager against damages suffered as a
result of gross negligence or willful misconduct on the part of the Manager or
the Manager's agents or employees in connection with the operations of the
Common Areas of the Property or the premises thereof, including, without
limitation, any actual violations by the Manager or the Manager's agents or
employees of laws or regulations regarding brokerage disputes (including Real
Estate Commission fines, penalties or other sanctions) fair employment, fair
credit reporting, workplace safety or labor relations. Manager agrees to
indemnify and hold Owner harmless from any loss or actual damages suffered as a
result of any such gross negligence or willful misconduct. The indemnifications
provided under this paragraph shall survive any termination of this Agreement.
9. Miscellaneous. The Owner and the Manager further agree as follows:
9.1 Notices. All notices provided for herein will be in writing and
delivered by hand, by overnight courier, by telecopier or sent by
registered or certified mail, addressed as follows:
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<PAGE>
Owner: United Investors Park Owners' Association
Attention: Marge Bass
6300 Lamar Avenue
Overland Park, Kansas 66202-4247
Telephone: (913) 236-1400
Fax: (913) 236-1909
Manager: Waddell & Reed Property Management Division
Waddell & Reed Financial, Inc.
Attention: Bill Howey
6300 Lamar Avenue
Overland Park, Kansas 66202
Telephone: (913) 236-1902
Fax: (913) 236-1909
or to such other address as is designated from time to time in writing by those
entitled to receive notice. Any notice so addressed or mailed shall be deemed
given five (5) days after deposit in the United States mail, and if telecopied
or delivered by hand, shall be deemed given when delivered, and if delivered by
overnight courier, shall be deemed to be given on the business day immediately
following the day on the day on which it was sent or delivered.
9.2 Assignment. Neither this Agreement nor any of the Manager's rights
or obligations hereunder can be transferred voluntarily, by operation
of law or otherwise, without the prior written consent of the Owner,
which consent will not be unreasonably withheld. It is specifically
understood that the Owner has placed great reliance on the experience,
skill and abilities of the Manager in the execution of this Agreement
and the same is intended to be a contract for the individual services
of the Manager.
9.3 Construction. If any term or provision of this Agreement or the
application thereof to any person or circumstances is determined, to
any extent, to be invalid or unenforceable, the remainder of this
Agreement, or the application of such term or provision to persons or
circumstances other than those as to which the same is held invalid or
unenforceable, will not be affected thereby, and each term and
provision of this Agreement will be valid and enforceable to the
fullest extent permitted by law. This Agreement is intended to be
interpreted, construed and enforced in accordance with the internal
laws of the state in which the Property in question is located. This
Agreement may be executed in any number of counterparts, each of which
will be deemed an original and all of which will constitute one
instrument.
9.4 Entire Agreement. This Agreement constitutes the entire Agreement
between the parties with respect to the subject matter herein
contained and no modification hereof will be effective unless made by
a supplemental written agreement executed
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by all the parties hereto.
9.5 Binding Effect. This Agreement will be binding on the parties and
their respective successors, legal representatives and permitted
assigns.
9.6 Governing Law. This Agreement shall be governed and interpreted
according to the laws of the State of Kansas. The District Court of
Johnson County, Kansas and the United States District Court for the
District of Kansas are appropriate venues.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement effective as of the date first above written.
UNITED INVESTORS PARK
OWNERS' ASSOCIATION,
a Kansas not-for-profit corporation
By:
----------------------------------------------
MARK D. ELGIN
Its: Treasurer
("Owner")
WADDELL & REED
PROPERTY MANAGEMENT DIVISION,
a division of Waddell & Reed Financial, Inc.,
a Delaware corporation
By:
----------------------------------------------
ROBERT L. HECHLER
Its: Executive Vice President and
Chief Operating Officer
("Manager")
12
<PAGE>
EXHIBIT "A"
PROPERTY
--------
================================================================================
<TABLE>
<CAPTION>
LEGAL DESCRIPTION: COMMONLY KNOWN AS: PART/PARCELS:
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. All of Lots 3, 4, 5, 6, and United Investors Park Includes the Common Areas, Common
7, UNITED INVESTORS PARK, Facilities, and Grounds of the Property,
SECOND PLAT, a subdivision of 6300 Lamar Avenue as defined hereinabove and in Exhibit "F".
land now in Overland Park,
Johnson County, Kansas, Overland Park, Kansas 66202
according to the recorded plat
thereof.
</TABLE>
================================================================================
13
<PAGE>
EXHIBIT "B"
PERSONNEL AND SALARIES
----------------------
================================================================================
<TABLE>
<CAPTION>
APPROXIMATE ANNUAL
PROPERTY: PERSONNEL BASE SALARY/BURDEN
================================================================================
<C> <S> <C> <C>
1. The Common Areas and Common Property Manager $12,000.00
Facilities of all of Lots 3, 4, 5,
6, and 7, UNITED INVESTORS PARK,
SECOND PLAT, a subdivision of land
now in Overland Park, Johnson
County, Kansas, according to the
recorded plat thereof.
</TABLE>
================================================================================
14
<PAGE>
EXHIBIT "C"
VOLUNTARY ENCUMBRANCES
----------------------
NONE
15
<PAGE>
EXHIBIT "D"
MANAGEMENT FEES
---------------
================================================================================
<TABLE>
<CAPTION>
PROPERTY MANAGEMENT FEE COMMENT
- --------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
1. The Common Areas and Common $500.00 per month All Management Fees will be paid in
Facilities of All of Lots 2, 3, arrears.
4, 5, 6, and 7, UNITED
INVESTORS PARK, SECOND PLAT, a
subdivision of land now in
Overland Park, Johnson County,
Kansas, according to the
recorded plat thereof.
</TABLE>
================================================================================
16
<PAGE>
EXHIBIT "E"
AFFILIATE
---------
The term "Affiliate" means: (i) any individual, corporation, association,
partnership, joint venture, trust, estate, limited liability company or other
entity (hereafter "Person") who directly or indirectly owns, controls or holds
power to vote 20% or greater of the outstanding voting securities of Owner
("Corporate Parent"); (ii) any Person in whom Owner directly or indirectly owns,
controls or holds the power to vote 20% or greater of that Person's outstanding
voting securities; (iii) any Person in whom a Corporate Parent directly or
indirectly owns, controls or holds the power to vote 20% or greater of that
Person's outstanding voting securities; (iv) any Person who directly or
indirectly owns or controls 20% or greater of the income interests of Owner who
is not a corporation (a "Parent Entity"); (v) any Person who is not a
corporation and in whom (x) Owner directly or indirectly owns or controls 20% or
greater of the income interests of that Person, and (y) that Owner also directly
or indirectly owns, controls or holds not less than 20% of the management
authority over the affairs of that Person; and (vi) any Person who is not a
corporation and in whom (x) a Parent Entity directly or indirectly owns or
controls 20% or greater of the income interests of that Person, and (y) that
Parent Entity also directly or indirectly owns, controls or holds not less than
20% of the management authority over the affairs of that Person. For purposes
of this definition of Affiliate, "Owner" shall mean United Investors Park
Owners' Association, a Kansas not-for-profit corporation, and its successors and
assigns.
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<PAGE>
EXHIBIT "F"
GROUNDS
-------
The Grounds, as used hereinabove, shall consist of the Common Areas and Common
Facilities, as more fully described below.
18
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Waddell & Reed Financial, Inc.
We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
KPMG Peat Marwick LLP
Kansas City, Missouri
March 2, 1998
