Exhibit 4.7
CONEXANT SYSTEMS, INC.
HOURLY EMPLOYEES' SAVINGS PLAN,
AS AMENDED
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CONEXANT SYSTEMS, INC.
HOURLY EMPLOYEES' SAVINGS PLAN,
AS AMENDED
ARTICLE I DEFINITIONS
1.010 Accounts means a Participant's Pre-Tax Account, Post-Tax Account and
Company Contribution Account.
1.020 Actual Contribution Percentage shall mean, for each of the Highly
Compensated Employee Group and the Non-Highly Compensated Employee Group, the
average for each such Group of the percentages, calculated separately for each
Participant in such Group, which are obtained by dividing the amount of Post-Tax
Contributions each Participant has elected for a Plan Year pursuant to Sections
2.020(b) and 2.030(b) by the Participant's Compensation for that Plan Year.
1.030 Actual Deferral Percentage shall mean, for each of the Highly Compensated
Employee Group and the Non-Highly Compensated Employee Group, the average for
each such Group of the percentages, calculated separately for each Participant
in such Group, which are obtained by dividing the amount of Pre-Tax
Contributions each Participant has elected for a Plan Year pursuant to Sections
2.020(b) and 2.030(b) by the Participant's Compensation for that Plan Year.
1.040 Administrative Committee means the committee appointed by the Plan
Committee and assigned responsibility under Section 6.030.
1.050 Affiliated Company means Conexant Systems, Inc. and:
(a) any corporation incorporated under the laws of one of the United States
of America of which Conexant owns, directly or indirectly, eighty percent
(80%) or more of the combined voting power of all classes of stock or
eighty percent (80%) or more of the total value of the shares of all
classes of stock (all within the meaning of Section 1563 of the Code);
(b) any partnership or other business entity organized under such laws, of
which Conexant owns, directly or indirectly, eighty percent (80%) or more
of the voting power or eighty percent (80%) or more of the total value
(all within the meaning of Section 414(c) of the Code); and
(c) any other company deemed to be an Affiliated Company by Conexant's Board
of Directors.
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1.060 Base Compensation means a Participant's compensation, not in excess of One
Hundred and Sixty Thousand Dollars ($160,000) or such larger sum as may be
established pursuant to section 401(a)(17) of the Code, in any calendar year,
including regular, straight-time base pay, gainsharing payments, any annual lump
sum payments which have been negotiated with a collective bargaining unit, lump
sum payments for unused vacation and any amount which would be paid to the
Participant absent an election under Section 2.020(a). Base Compensation shall
not include compensation for overtime, extended workweek compensation, night
work or other premium pay, bonuses, any form of extra, contingent or
supplementary compensation or compensation on the salaried payroll.
1.070 Basic Post-Tax Contribution means an amount contributed by a Participant
to the Plan through payroll deductions pursuant to the Participant's elections
under Sections 2.020(b) and 2.030(b).
1.175 Conexant Stock Fund B means an Investment Fund established by the Trustee
and described in Appendix B.
1.080 Basic Pre-Tax Contribution means an amount contributed to the Plan on
behalf of a Participant pursuant to the Participant's elections under Sections
2.020(a) and 2.030(a).
1.090 Beneficiary means the one or more persons or trusts designated by a
Participant pursuant to Article VII; provided, however, that, in the case of a
Participant who has been married for a one (1) year period and who dies prior to
complete distribution of his Accounts, the Beneficiary shall be deemed to be the
Participant's spouse regardless of any contrary designation, unless the
Participant has filed with the Plan Administrator a written designation of a
person or persons other than such spouse as Beneficiary or Beneficiaries. Such
written designation must be accompanied by a written consent of the
Participant's spouse or it is established to the satisfaction of the Plan
Administrator that such consent cannot be obtained because there is no spouse or
the spouse cannot be located or because of other circumstances permitted under
Section 417(a)(2) of the Code. Such written consent (which must be witnessed by
a notary public who is not an Employee) shall be on a form furnished to the
Participant by the Plan Administrator and shall acknowledge the effect of such
consent. In the event the Participant has a new spouse to whom he has been
married for a one (1) year period, the designation of the prior spouse shall be
void and the new spouse shall be deemed to be the Participant's Beneficiary,
unless the Participant makes a written designation of a person or persons other
than the new spouse.
1.100 Board of Directors means the Board of Directors of Conexant; provided,
however, that any action or determination under Sections 1.040, 1.110, 1.190,
2.060, 11.010 and 11.060 may be taken by any officer of the Company who is
authorized to do so by the Board of Directors.
1.110 Code means the Internal Revenue Code of 1986, as from time to time
amended.
1.120 Company means Conexant Systems, Inc., a Delaware corporation, and any
other entity to which the Board of Directors has extended this Plan.
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1.130 Company Contribution Account means a Plan Account with respect to a
Participant which is comprised of his Company Matching Contributions, as
adjusted for gains or losses related thereto.
1.140 Company Matching Contributions means the contributions made to the Trust
Fund by Conexant or an Affiliated Company pursuant to the provision of Section
2.060.
1.150 Compensation means the compensation of a Participant as is defined
in Section 414(s) of the Code.
1.160 Conexant means Conexant Systems, Inc., a Delaware corporation.
1.170 Conexant Stock Fund A means the fund established by the Trustee for
receipt and holding of Company Matching Contributions.
1.180 Effective Date means January 1, 1999.
1.190 Eligible Employee means any Employee who is a member of International
Brotherhood of Electrical Workers, Local Union No. 2295 - Newport Beach,
California.
1.200 Eligible Retirement Plan means:
(a) an individual retirement account described in Section 408(a) of the Code,
(b) an individual retirement annuity described in Section 408(b) of the Code,
(c) an annuity plan described in Section 403(a) of the Code, or
(d) a qualified plan (which is a defined contribution plan) described in
Section 401(a) of the Code,
which accepts an individual's eligible rollover distributions; provided,
however, that in the case of an eligible rollover distribution to a
Participant's surviving Spouse, only an individual retirement account or
individual retirement annuity described in (a) and (b) above shall be deemed to
be an Eligible Retirement Plan.
1.210 Employee means any person who is employed by the Company or by an
Affiliated Company, including an Eligible Employee. "Employee" shall, to the
extent permitted by Section 406 of the Code, be deemed to include any United
States citizen regularly employed by a foreign subsidiary or affiliate of the
Company.
1.220 ERISA means the Employee Retirement Income Security Act of 1974, as it may
be amended from time to time.
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1.230 Hardship means an immediate and heavy financial need of the Employee for
which the amount required is not reasonably available to the Employee from other
sources and which arises for one of the following reasons:
(a) the purchase (excluding mortgage payments) or construction of a principal
residence for the Employee, or to prevent eviction from, or foreclosure
on the mortgage on, the Employee's principal residence;
(b) the incurring of obligations for
(1) tuition, related educational fees and room and board expenses for
post-secondary education for the Employee, his spouse or one or more of
his children or other dependents (as defined in Section 152 of the
Code) to be incurred during the twelve (12) month period immediately
following the date of his request for distribution; or
(2) expenses not covered by insurance which either have been previously
incurred by the Employee for, or are necessary in order for the
Employee to obtain, medical care (as described in Section 213(d) of the
Code) for himself, his spouse or one or more of his dependents (as
defined in Section 152 of the Code);
(c) any other reason which is permitted under Section 401(k)(2)(B)(i)(IV) of
the Code and is approved by the Administrative Committee.
1.260 Highly Compensated Employee Group means those individuals who are "highly
compensated employees" within the meaning of Section 414(q) of the Code. The
Plan Administrator may determine which Employees are "highly compensated
employees" for purposes of this Section in any manner permitted by the said Code
provision.
1.270 Hour of Service has the meaning set forth in Article IA of this Plan.
1.280 Investment Fund(s) means one or more of the investment vehicles available
to Participants as such investment vehicles are described in Appendix B to this
Plan.
1.290 Layoff means an involuntary severance of employment, other than a
discharge for cause.
1.300 Maternity or Paternity Leave means any period of absence by reason of the
pregnancy of the Participant, the birth of a child of the Participant, the
placement of a child with the Participant in connection with the adoption of
such child by the Participant, or the caring for such child for a period
beginning immediately following such birth or placement; provided, however, that
the Participant shall have complied with the Company's request to furnish the
Plan Administrator such timely information as may be reasonably required to
establish that the absence is for such reason and the number of days for which
there was such an absence.
1.310 Named Fiduciary means the Plan Committee, the Plan Administrator, the
Administrative Committee and the Trustee.
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1.320 Non-Highly Compensated Employee Group means Employees who are not in the
Highly Compensated Employee Group, as determined by the Plan Administrator.
1.330 Participant means a person who has elected to participate in the Plan in
accordance with Article II; provided, however, that such term shall include a
person who no longer has an effective election under Article II only so long as
he retains an Account under the Plan.
1.340 Participant Contributions means a Participant's Basic Pre-Tax and Basic
Post-Tax Contributions and his Supplemental Pre-Tax and Supplemental Post-Tax
Contributions.
1.350 Plan means this Conexant Systems, Inc. Hourly Employees' Savings Plan, as
from time to time amended.
1.360 Plan Administrator means the person from time to time so designated by
name or corporate office by the Board of Directors.
1.370 Plan Committee means the Conexant Employee Benefit Plan Committee.
1.380 Plan Year means each twelve-month period ending on the last day of
September.
1.390 Post-Tax Contribution Account means a Plan Account with respect to a
Participant which is comprised of his Basic and Supplemental Post-Tax
Contributions, as adjusted for gains or losses related thereto.
1.400 Post-Tax Contribution Percentage Limit means the maximum contribution
percentage in each Plan Year for the group of Highly Compensated Employee Group
Participants and shall be that percentage amount which does not exceed the
greater of:
(a) the Actual Contribution Percentage for the Non-Highly Compensated
Employee Group, multiplied by one and twenty-five hundredths (1.25); or
(b) the lesser of
(1) an amount which does not exceed the Actual Contribution Percentage
for the Non-Highly Compensated Employee Group by more than two (2)
percentage points, or
(2) the Actual Contribution Percentage for the Non-Highly Compensated
Employee Group, multiplied by two (2).
If a Participant who is a member of the Highly Compensated Employee Group is a
participant in any other plan established or maintained by an Affiliated Company
pursuant to which elective deferrals under a cash or deferred arrangement or
matching contributions, both as defined in Section 401(m)(4) of the Code, or
employee contributions, are made, such other plan shall be deemed to
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be a part of this Plan for the purpose of determining the Post-Tax Contribution
Percentage Limit with respect to that Participant.
1.410 Pre-Tax Contribution Account means a Plan Account with respect to a
Participant which is comprised of Basic and Supplemental Pre-Tax Contributions,
as adjusted for gains or losses related thereto.
1.420 Pre-Tax Contribution Percentage Limit means the maximum contribution
percentage in each Plan Year for the Highly Compensated Employee Group and shall
be that percentage amount which does not exceed the greater of:
(a) the Actual Deferral Percentage for the Non-Highly Compensated Employee
Group, multiplied by one and twenty-five hundredths (1.25); or
(b) the lesser of
(1) an amount which does not exceed the Actual Deferral Percentage for
the Non-Highly Compensated Employee Group by more than two (2)
percentage points, or
(2) the Actual Contribution Percentage for the Non-Highly Compensated
Employee Group, multiplied by two (2).
If a Participant who is a member of the Highly Compensated Employee Group is a
participant in any other plan established or maintained by an Affiliated Company
pursuant to which elective deferrals under a cash or deferred arrangement or
matching contributions, both as defined in Section 401(m)(4) of the Code, or
employee contributions, are made, such other plan shall be deemed to be a part
of this Plan for the purpose of determining the Pre-Tax Contribution Percentage
Limit with respect to that Participant.
1.430 Rollover Contributions mean the amounts described in Section 2.050 which
are transferred to a Participant's Account pursuant to the terms of subsection
(b) of the said Section.
1.440 Transfer Contributions means the amounts described in Section 2.050 which
are transferred to a Participant's Account pursuant to the terms of subsection
(a) of the said Section.
1.450 Trust Agreement means the trust agreement entered into pursuant to Article
VIII of this Plan.
1.460 Trust Fund means the fund, including the earnings thereon, held by the
Trustee for all contributions made under this Plan by Participants and the
Company.
1.470 Trustee means the trustee or trustees of the trust described in Article IX
of this Plan.
1.480 Valuation Date means the any New York Stock Exchange trading day.
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1.490 Vesting Service means a Plan Year in which a Participant completes one
thousand (1,000) Hours of Service. In addition, for each such Plan Year in which
the Participant completes less than one thousand (1,000) but more than five
hundred (500) Hours of Service he shall accrue one-twelfth (1/12) of a year of
Vesting Service for each eighty (80) of such Hours of Service, computed to the
nearest one-twelfth (1/12); provided, however, that no Participant who completes
five hundred (500) or fewer such Hours of Service during any such calendar year
shall accrue any Vesting Service with respect to such year.
ARTICLE IA HOURS OF SERVICE
1A.010 General. An Eligible Employee shall be credited with an Hour of Service
for each hour for which he is directly paid for all purposes by the Company for
the performance of duties. Hours worked at a premium rate shall be credited as
straight-time hours.
1A.020 Periods of Absence
(a) If at the time of commencement of any of the following absences the
Participant is an Eligible Employee, he shall be credited for all
purposes with Hours of Service in accordance with subsection (b):
(1) absence from work, up to a maximum of two (2) years, because of
injury or disease sustained in the course of employment with the
Company and with respect to which he receives workmen's
compensation benefits and during which he would normally have been
scheduled to work for the Company as an Eligible Employee;
(2) absence from work pursuant to an authorized sick leave;
(3) absence from work for paid vacation or paid holiday(s) not worked;
(4) absence from work for a period during which he is serving as a
juror;
(5) absence from work for a period for which he is on an authorized
leave of absence for union business;
(6) absence from work for a period during which he is required by the
Armed Forces of the United States for military training or
emergency duty;
(7) absence from work for a paid funeral or bereavement leave;
(8) absence from work for a period during which he is on authorized
personal leave;
(9) absence from work for a period during which he is on layoff
status; and
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(10) absence from work for a period during which he is on an authorized
educational leave.
(b) An Eligible Employee shall be deemed to have completed an Hour of Service
for each hour for which back pay has been awarded or agreed to by the
Company or Affiliated Company for any period off work.
(c) Any absence from work by an Eligible Employee who may be elected or
appointed to governmental office requiring him to absent himself from
duty with the Company; provided, however, that a written opinion of
counsel is obtained in advance that granting of such credit in a specific
circumstance, and its acceptance by the Participant, does not violate any
federal, state or local law.
(d) Any absence, other than those described in subsection (a), for which the
Eligible Employee is paid his regular hourly rate of compensation by the
Company (including any such vacation or holiday not worked) provided that
such credit shall be given only for the first five hundred and one (501)
credited hours of any single such period.
(e) For purposes of determining the number of Hours of Service to which an
Eligible Employee may be entitled pursuant to the provisions of
subsection (a) with respect of any period of approved absence or layoff
for which the Eligible Employee is not paid his regular hourly rate of
compensation by the Company, such Eligible Employee shall receive 174
Hours of Service for each full month of such service, prorated on a daily
basis at the rate of eight (8) Hours per day, not to exceed forty (40)
hours per week; and with respect to any period of absence for which the
Eligible Employee is paid his regular hourly rate of compensation by the
Company, the Eligible Employee's Hours of Service shall be determined by
dividing the payments received by or due to such Eligible Employee with
respect to the applicable period by the Eligible Employee's regular
hourly rate of compensation.
1A.030 Hours Other than as an Eligible Employee. A Participant who has completed
or completes Hours of Service with the Company or an Affiliated Company but not
as an Eligible Employee shall, upon becoming a Participant, be credited with
such Hours of Service only for purposes of determining Vesting Service.
1A.040 Maternity or Paternity Leave. The Plan shall treat the following as Hours
of Service solely for the purpose of determining Vesting Service:
(a) Hours of Service which otherwise would normally have been credited to a
Participant but for a Maternity or Paternity Leave, or
(b) if the normal Hours of Service cannot be determined, eight (8) Hours of
Service for each day of such absence
provided, however, that the total number of such Hours of Service shall not
exceed five hundred one (501); and provided further that such Hours of Service
shall be credited to the Participant in
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the Plan Year in which the Maternity or Paternity Leave begins, if such
Participant would otherwise incur a Break in Service in such Plan Year, or
otherwise in the immediately following year.
ARTICLE II PARTICIPATION AND CONTRIBUTIONS
2.010 Participation. An Employee who is an Eligible Employee on the Effective
Date may elect at any time to participate in the Plan. An Employee who becomes
an Eligible Employee after the Effective Date may elect to participate in the
Plan at the time he attains the status of Eligible Employee. Such an election to
participate shall be made with at least fifteen (15) days notice to the Company
and shall become effective on the first payroll payment date following the
expiration of the notice period.
2.020 Contribution Election or Authorization.
(a) An Eligible Employee who has notified the Company of his election to
become a Participant shall also:
(1) elect to defer receipt of an amount equal to 1% through 15% of his
Compensation, which amount shall be contributed as a Pre-Tax
Contribution to his Pre-Tax Contribution Account;
(2) authorize to be deducted from his Base Compensation, as paid, an
amount equal to 1% through 15% of his Base Compensation, which
amount shall be contributed as a Post-Tax Contribution to his
Post-Tax Contribution Account;
provided, however, that the percentages elected to be deferred or deducted and
then made as a Pre-Tax or Post-Tax contribution shall together not exceed 15% of
a Participant's Base Compensation.
(b) No contributions shall be made by, or with respect to, any Participant
after any of the following events until such Participant again makes an
election under subsection (a):
(1) the Participant ceases to be an Employee;
(2) the Participant receives a distribution under Section 5.020, 5.030
or 5.050; or
(3) the Participant voluntarily elects to have contributions suspended
under Section 8.010.
(c) No contributions shall be made by, or with respect to, any Participant
during any period of suspension of contributions described in Section
8.010 or Section 8.020.
(d) Pre-Tax and Post-Tax Contributions made with respect to or by a
Participant under this Section shall be made only by payroll deductions
unless, under exceptional circumstances, another method of contributions
is approved by the Plan Committee.
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2.030 Changes in Rate of Employee Contributions. A Participant may from time to
time change the rate of his Participant Contribution. Such change shall be
effective as soon as is reasonably possible after his election, but, in general,
no later than the first payroll payment date following the expiration of fifteen
(15) days subsequent to his election.
2.040 Changes Between Pre-Tax and Post-Tax Contributions. A Participant shall be
permitted to elect to increase or decrease at any time (and as often as he
wishes) the rate of his Pre-Tax and Post-Tax Contributions. Any such increase or
decrease of the rate of the Participant's Pre-Tax and Post-tax Contributions
shall be effective as soon as is reasonably possible after receipt of the Plan
Administrator of the Participant's election.
2.050 Transfer and Rollover Contributions. Transfers to this Plan of a
Participant's interest in another individual account plan shall be permitted in
the situations and pursuant to the requirements set forth below:
(a) A Participant who is presently an Eligible Employee but who formerly
though an Employee was not an Eligible Employee may cause his account
balances in any other individual account of the Company to be transferred
to this Plan. Such transferred account balances (which shall be entirely
in cash or, if such balances consist in whole or in part of participant
loans from the transferring plan, in cash and in kind) shall constitute
Transfer Contributions.
(b) A Participant who is an Eligible Employee may elect (by providing the
Plan Administrator with notice thereof) to have the entire amount
credited to his account in a qualified individual account plan of a
former employer transferred from such plan to this as a Rollover
Contribution, subject to the following:
(1) Such Rollover Contributions are eligible for receipt hereunder
only if they are derived entirely from employer contributions (and
earnings thereon) to a qualified profit sharing plan which were
contributed either pursuant to a qualified cash or deferred
arrangement under Code Section 401(k) or as amounts in which the
Participant had a nonforfeitable interest and which were based
upon the amount of contributions in a qualified cash or deferred
arrangement.
(2) No portion of such Rollover Contributions may be derived from a
transfer from a qualified plan which at any time had permitted
benefit payments in the form of a life annuity.
(c) Transfer and Rollover Contributions shall be credited to the
Participant's Account as follows:
(1) that portion of such balance attributable to employer
contributions made pursuant to deferral elections under Section
401(k) of the Code shall be credited to the Participant's Pre-Tax
Contribution Account;
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(2) that portion of such balance attributable to employer
contributions other than those described in paragraph (1) above
shall be credited to the Participant's Pre-Tax Contribution
Account, but the Participant's tax basis under the Code in such
contributions shall be the same as his tax basis under the prior
individual account plan; and
(3) that portion of such balance attributable to employee
contributions made on an after-tax basis, shall be credited to the
Participant's Post-Tax Contribution Account.
(d) No Company Matching Contributions will be made under Section 2.060 with
respect to the Transfer Contributions and Rollover Contributions
described in this Section.
2.060 Matching Amounts.
(a) The Company shall contribute to the Trust Fund (any such contribution to
be referred to herein as a Company Matching Contribution) on behalf of
each Participant amounts equal to the applicable percentage shown below
of the Participant's Pre-Tax Contributions or Post-Tax Contributions;
provided, however, that such a Company Matching Contribution shall be
made on a Participant's behalf only after he has completed at least
fifty-two (52) weeks of employment with the Company or an Affiliated
Company and such Company Matching
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Contributions for each Plan Year on behalf of each Participant shall be
limited to the amounts set forth below, as applicable:
Calendar Year Matching Percentage Maximum Amount
------------- ------------------- --------------
1999 70% $350.00
2000 60% $450.00
2001 55% $550.00
2002 52% $650.00
2003 50% $750.00
(b) Contributions by the Company shall be in the form of Conexant common
stock, but may, at the option of the Board of Directors, be in any
combination of cash and Conexant common stock. The Conexant common stock
contributed shall be valued at the Nasdaq closing on the Valuation Date
immediately preceding the date on which the Company Matching Contribution
is made.
(c) The Company shall notify the Plan Administrator no later than fifteen
(15) days in advance, if the form of contributions to be made for any
month will be changed from that of the immediately preceding month.
2.070 Application of Forfeitures. Amounts which have been forfeited in
accordance with the provisions of Article V and VI of this Plan shall be applied
to reduce subsequent Company Matching Contributions required hereunder. If the
Plan should be terminated, any amount not previously so applied shall be
credited ratably to the Accounts of all Participants in proportion to the
amounts of Company Matching Contributions credited to their respective Accounts
during the most recent Plan Year.
ARTICLE III: CONTRIBUTION LIMITATIONS
3.010 Limitations on Employee Contributions.
(a) The aggregate amount in any calendar year of all of a Participant's:
(1) Pre-Tax Contributions to this Plan;
(2) elective deferrals under any other cash or deferred arrangement
(as defined in Section 402(g) of the Code); and
(3) elective employer contributions to any simplified employee pension
(as defined in and pursuant to Sections 408(k)(1) and (6),
respectively, of the Code)
may not exceed Ten Thousand Dollars ($10,000), or such larger sum as may be
in effect under Section 402(g)(5) of the Code.
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(b) Prior to the beginning of, and periodically during, each Plan Year, the
Plan Administrator shall cause a test to be conducted of Pre-Tax
Contribution elections under Section 2.020(a)(1), in order to determine
whether the Average Deferral Percentage for the Highly Compensated
Employee Group exceeds the Pre-Tax Contribution Percentage Limit. If it
is determined that the Pre-Tax Contributions made for any Plan Year by
the Highly Compensated Employee Group would (if not reduced) cause the
Average Deferral Percentage of that Group to exceed the Pre-Tax
Contribution Percentage Limit, the Plan Administrator shall reduce any
Pre-Tax Contributions elected by Participants in the Highly Compensated
Employee Group, so that the Pre-Tax Contribution Percentage Limit will
not be exceeded for the Plan Year. Such reduction shall be effective as
of the first payroll payment date in the month following such
determination and shall be made as set forth below:
(1) Participants in the Highly Compensated Employee Group who have
elected Pre-Tax Contributions in an amount equal to 15% of Base
Compensation shall have their elections reduced to 14%. If,
following the said reductions, the Pre-Tax Contribution Percentage
Limit is still exceeded, Participants in the Highly Compensated
Employee Group who have elected Pre-Tax Contributions in an amount
equal to 14% of Base Compensation (including any Participants in
the Highly Compensated Employee Group whose elections were reduced
under the terms of the preceding sentence) shall have their
elections reduced to 13%.
(2) If, following the reductions described in paragraph (1), the
Pre-Tax Contribution Percentage Limit is still exceeded,
Participants in the Highly Compensated Employee Group who have
elected Pre-Tax Contributions in an amount equal to 13% of Base
Compensation shall have their elections reduced to 12%. If,
following the reductions described in the preceding sentence, the
Pre-Tax Contribution Percentage Limit is still exceeded,
Participants in the Highly Compensated Employee Group who have
elected Pre-Tax Contributions in an amount equal to 12% of Base
Compensation (including any Participants in the Highly Compensated
Employee Group whose elections were reduced under the terms of the
preceding sentence) shall have their elections reduced to 11%.
(3) The process set forth in this subsection shall continue until the
Average Deferral Percentage for the Highly Compensated Employee
Group does not exceed the Pre-Tax Contribution Percentage Limit.
Reductions in Pre-Tax Contributions pursuant to this subsection shall
remain in effect for the remainder of the Plan Year, unless the Plan
Administrator determines that changed circumstances permit an increase of
such Contributions, in which case the Plan Administrator shall determine
the amount by which such Contributions may be increased for the balance of
the Plan Year.
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(c) Prior to the beginning of, and periodically during, each Plan Year, the
Plan Administrator shall cause a test to be conducted of Post-Tax
Contribution elections under Section 2.020(a)(2), as well as of Company
Matching Contributions under Section 2.060, in order to determine whether
the Average Contribution Percentage for the Highly Compensated Employee
Group exceeds the Post-Tax Contribution Percentage Limit. If it is
determined that the Post-Tax Contributions made for any Plan Year by the
Highly Compensated Employee Group would (if not reduced) cause the
Average Contribution Percentage of that Group to exceed the Post-Tax
Contribution Percentage Limit, the Plan Administrator shall reduce any
Post-Tax Contributions elected by Participants in the Highly Compensated
Employee Group, so that the Post-Tax Contribution Percentage Limit will
not be exceeded for the Plan Year. Such reduction shall be effective as
of the first payroll payment date in the month following such
determination and shall be made as set forth below:
(1) Participants in the Highly Compensated Employee Group who have
elected Post-Tax Contributions in an amount equal to 15% of Base
Compensation shall have their elections reduced to 14%. If,
following the said reductions, the Post-Tax Contribution
Percentage Limit is still exceeded, Participants in the Highly
Compensated Employee Group who have elected Post-Tax Contributions
in an amount equal to 14% of Base Compensation (including any
Participants in the Highly Compensated Employee Group whose
elections were reduced under the terms of the preceding sentence)
shall have their elections reduced to 13%.
(2) If, following the reductions described in paragraph (1), the
Post-Tax Contribution Percentage Limit is still exceeded,
Participants in the Highly Compensated Employee Group who have
elected Post-Tax Contributions in an amount equal to 13% of Base
Compensation shall have their elections reduced to 12%. If,
following the reductions described in the preceding sentence, the
Post-Tax Contribution Percentage Limit is still exceeded,
Participants in the Highly Compensated Employee Group who have
elected Post-Tax Contributions in an amount equal to 12% of Base
Compensation (including any Participants in the Highly Compensated
Employee Group whose elections were reduced under the terms of the
preceding sentence) shall have their elections reduced to 11%.
(3) The process set forth in this subsection shall continue until the
Average Contribution Percentage for the Highly Compensated
Employee Group does not exceed the Post-Tax Contribution
Percentage Limit.
Reductions in Post-Tax Contributions pursuant to this subsection shall
remain in effect for the remainder of the Plan Year, unless the Plan
Administrator determines that changed circumstances permit an increase of
such Contributions, in which case the Plan Administrator shall determine
the amount by which such Contributions may be increased for the balance
of the Plan Year.
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(d) If it shall be determined as a result of tests of contribution elections
pursuant to subsection (c) that there shall be `excess aggregate
contributions' (as defined in and determined pursuant to Section
401(m)(6) of the Code) in any Plan Year, such excess aggregate
contributions and all income allocable thereto shall be distributed, or,
if forfeitable, forfeited, in the manner and within the time required by
the said Section 401(m)(6).
ARTICLE IV: PLAN INVESTMENTS
4.010 Investment Elections. In addition to the elections and authorizations set
forth in Article II, a Participant shall elect in which Investment Funds his
Participant Contributions, Rollover Contributions and Transfer Contributions are
to be invested; provided, however, that the Participant shall not be permitted
to have any of the said Contributions invested in Conexant Stock Fund A. Such
investments shall be elected by the Participant among the Investment Funds in
increments of five percent (5%), with the total of the elected percentage
increments equaling one hundred percent (100%). The Participant shall be
permitted to change on a daily basis any previous Investment Fund election or
elections he has made with regard to his Participant Contributions pursuant to
Section 4.010, except that he shall not be permitted to elect to have investment
of his Participant Contributions changed to Conexant Stock Fund A. The elections
and changes to such elections which a Participant makes pursuant to this Section
shall be made by means of any method (including whatever telephonic or
electronic means are available and acceptable to the Plan Administrator at the
time the election or change is made by the Participant), may be made at any time
and shall be effective as of the New York Stock Exchange closing immediately
following the making of that election or change.
4.020 Fund Transfers - Participant Contributions. A Participant shall be
permitted to have the whole or portions of the value of his interest in the
Plan's Investment Funds which are attributable to his own Participant
Contributions transferred into one or more of the other Investment Funds.
(a) Such transfers shall be effected in dollars or in increments of 1% of the
value of the Participant's interest in a transferring Fund, but in no
event shall such transfers be in amounts less than Two Hundred and Fifty
Dollars ($250.00), except as follows:
(1) If the balance of a Participant's interest in an Investment Fund
is in an amount which is less than Two Hundred and Fifty Dollars
($250), the Participant may elect to have the entire balance of
his interest in the Fund transferred.
(2) The general percentage and dollar limitations set forth in this
Section which would be otherwise applicable shall not be
applicable if the transfer elected by the Participant is comprised
of all or a portion of his interest in Conexant Stock Fund B.
(b) Any transfer described in this Section shall be effective as of the New
York Stock Exchange closing immediately following the Participant's
election to make such transfer.
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(c) All elections under this Section shall be irrevocable and shall not
affect the Participant's right to exercise any other election provided by
the Plan.
(d) Upon making a transfer election under this Section, the Participant shall
also either confirm or change his election under Section 4.010 with
respect to future Pre-Tax and Post-Tax Contributions.
4.030 Fund Transfers - Company Matching Contributions. A Participant who has
attained age fifty-nine and one-half (59-1/2) whether or not the Participant has
retired from his employment with the Company, shall be permitted to elect at any
time to have the total value or a portion (in dollar amount or in 1% increments)
of the total value of his interest in Conexant Stock Fund A transferred to any
one or more of the other Investment Funds. If a participant who is still an
Employee has made the election described in this Section and, as a result of
that election, one hundred percent (100%) of the Participant's interest in
Conexant Stock Fund A has been transferred to one or more of the Investment
Funds, all subsequent Company Matching Contributions, if any, made on the
Participant's behalf after the effective date of such election shall be made in
cash and shall be invested in the same manner as his Participant Contributions
are invested under Section 4.010 above.
4.040 Participant's Accounts. Separate Participant Contribution and Company
Contribution Accounts shall be established and maintained by the Trustee to
represent all amounts, adjusted for gains or losses thereon, which have been
contributed by or on behalf of a Participant as Participant Contributions and
Company Matching Contributions. Such separate Accounts shall contain sufficient
information to permit a determination of the dollar balance of such
Participant's accounts at any time and to permit, with respect to Conexant Stock
Funds A and B, a determination of the number of equivalent shares of Conexant
common stock held on the Participant's behalf. Each contribution on behalf of a
Participant to an Investment Fund and each payment made to a Participant from an
Investment Fund shall result in a credit or charge to the Account representing
the Participant's interest in such Fund. In addition, dividend proceeds on
Conexant common stock held in Conexant Stock Funds A and B shall be used for the
purchase, when possible, of additional shares of Conexant common stock for the
two Funds and, therefore, shall result in appropriate adjustments to the
balances in the said Funds and to the value of the Participant's interest in the
said Funds. Each contribution on behalf of a Participant to an Investment Fund
and each payment made to a Participant from an Investment Fund shall result in a
credit or charge to the Account representing the Participant's interest in such
Fund. In addition, dividend proceeds on Conexant common stock held in Conexant
Stock Fund A shall be used for the purchase, when possible, of additional shares
of Conexant common stock for the Fund and, therefore, shall result in
appropriate adjustments to the balances in the said Fund and to the value of the
Participant's interest in the Fund.
4.050 Valuation and Participant Statements. As of each Valuation Date, an amount
equal to the fair market value of the Funds (other than dividends received which
are attributable to whole shares of Conexant common stock which were or are to
be transferred to Participant Accounts subsequent to the record date for such
dividend) shall be determined by the Trustee in such
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manner and on such basis as it shall deem appropriate. After the end of each
calendar year or more frequently as the Plan Administrator shall determine, the
Trustee shall forward by mail to each Participant a statement, in such form as
the Plan Administrator deems appropriate, setting forth pertinent information
relative to each Participant's Accounts. Such statement shall, for all purposes,
be deemed to have been accepted as correct unless the Plan Administrator (or the
Trustee, as the case may be) is notified to the contrary by mail within sixty
(60) days of the mailing thereof to the Participant.
ARTICLE V BENEFITS PAYABLE UPON TERMINATING EMPLOYMENT
5.010 Vesting.
(a) Each Participant shall at all times be fully vested in his Pre-Tax
Contribution Account and his Post-Tax Contribution Account. Each
Participant who is an Employee and has at least five (5) years of Vesting
Service shall be fully vested in his Company Contribution Account.
(b) Subject to the forfeiture provisions of Articles V and VI, all of a
Participant's Vesting Service shall be considered in determining whether
he has a vested right under Section 5.010(a)(1) to that portion of his
Company Contributions Account.
(c) If a Participant who is an Employee attains age sixty-five (65), all of
the Units in his Accounts which are attributable to Company Contributions
shall be fully vested.
5.020 Retirement, Death, Layoff, Etc. Subject to the provisions of Section
5.050, as soon as practicable after the occurrence of a Participant's
retirement, death, layoff, disability of a least six (6) months duration or
termination of employment, but not later than sixty (60) days after the end of
the Plan Year in which the event shall have occurred, a Participant or his
Beneficiary (in the case of the Participant's death) shall receive: all amounts
described in subsection (a) and (b): In the case, however, of Retirement, a
Participant who would otherwise receive a distribution pursuant to the preceding
sentence may nevertheless elect at any time prior to the effective date of the
Retirement to remain in the Plan without any further contributions and may elect
to defer the Retirement distribution to a later date, which date shall not be
later than April 1 of the calendar year following the calendar year in which the
Participant attains age seventy and one-half (70-1/2). Distributions to such
Participants shall be made pursuant to the terms of Section 5.030 of this
Article.
With respect to Investment Funds other than the Conexant Stock Funds A and B
(which shall be subject to the Participant election set forth in subsection
(b)), the Participant shall receive the full dollar balance of his Accounts in
such funds. Such balance shall be determined in the manner provided in Section
5.030, by reference to the value of such Participant's interest on the date of
the Participant's retirement, layoff or termination of employment, or, in the
case of a Participant's death or disability, on the date all documentation
necessary to effect distribution has been received by the Plan Administrator or
his delegate.
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(b) With respect to Conexant Stock Funds A and B, the Participant shall, if
he should so elect, receive the full dollar balance of his Accounts in
such Funds in the manner described in the preceding subsection or in
shares of Conexant common stock equal in number to the maximum number of
whole shares of common stock which could be purchased at the NASDAQ
closing price of that common stock on that date (or, in the event such
date falls on a day on which for any reason there are no trades of such
stock reflected on such listing, the last trading day preceding that
date). In addition, the Participant shall be paid in cash the value of
any partial shares of the said common stock and the amount of any cash
dividends received since that date which is attributable to the number of
whole shares of common stock distributed to him.
5.030 Form of Distributions to Retiring Participants. Any Participant who is
eligible for and wishes to receive a distribution under Section 5.020 on account
of his retirement shall make an election concerning the form of distribution and
shall provide such election to the Plan Administrator or the Plan
Administrator's delegate prior to Retirement. The form of distributions such a
Participant may elect shall be in the form of either:
(a) a lump sum payment, or
(b) ten (10) or fewer annual installment payments, such installment payments
to be equal to the value of the Participant's Accounts as of the
Valuation Date immediately preceding distribution, divided by the number
of installments remaining at the time of each payment. The initial
installment payment shall be made as soon as is practicable after the
effective date of the Participant's election, with subsequent payments
during the elected installment payment period to be made as of the annual
anniversary date of the initial installment payment.
If a Participant who had previously retired and commenced receipt of installment
payments pursuant to subsection (b) returns to employment with the Company or an
Affiliated Company, such installment payments shall be suspended until the
Participant's subsequent retirement, at which time he would be permitted again
to make the election described therein. In the event that no election concerning
the form of Retirement distribution has been made by a retired Participant by
the end of the calendar year in which he has attained age seventy and one-half
(70-1/2), the distribution shall be made in a lump sum.
5.040 Termination of Employment for Other Reasons. Subject to Section 5.050,
distributions from this Plan to Participants for reasons other than the
Participant's retirement or, in the case of a Participant's death, distributions
to the Participant's Beneficiary, shall in all cases be made in lump sum and
shall be paid as soon as is practicable. If the Participant is reemployed as an
Employee, the Participant shall not have any further right to receive a
distribution of benefits as a result of his prior termination of employment.
5.050 Participant's Consent to Distribution of Benefits. Notwithstanding any
other provisions of the Plan to the contrary, if the aggregate vested value of
the Accounts of a Participant who is no longer an Employee is in excess of Five
Thousand Dollars ($5,000.00) and the Participant has not
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attained age seventy and one-half (70-1/2) at the time distribution of benefits
under the Plan would otherwise be made, no distribution of benefits under the
Plan shall be made, unless the Plan Administrator or his delegate shall first
have obtained the Participant's consent thereto. In the event such consent is
not so obtained, the Participant's Accounts shall be retained by the Plan and
shall be maintained and valued in accordance with Article IV. Distribution of
the Participant's Accounts pursuant to this Section shall be made following the
date on which the Participant's consent to such distribution is obtained or, if
earlier, the date on which the Participant attains age seventy and one-half
(70-1/2) or dies, in the same manner as if the Participant had terminated
employment on such date.
5.060 Transfer of Distribution Directly to Eligible Retirement Plan. If a
Participant, a Participant's spouse entitled to distribution as his Beneficiary
pursuant to Article VIII or a former spouse entitled to distribution pursuant to
Section 9.120(b) shall so request in writing, the Plan Administrator shall cause
all or a portion of the amounts (including shares of Conexant common stock) with
respect to which the Participant would be taxed under Section 402 of the Code to
be transferred from the Trustee directly to the custodian of an Eligible
Retirement Plan specified by the Participant. Such request shall be made, in the
case of a Participant, at the time his consent to such distribution shall be
given to the Plan Administrator pursuant to Section 5.050, or at such later date
as the Plan Administrator shall permit, or, in the case of the Participant's
spouse or former spouse, at such time as the Plan Administrator shall determine.
Prior to effecting such a transfer the Plan Administrator shall have the
authority to require evidence reasonably satisfactory to him that the entity to
which such transfer is to be made is in fact an Eligible Retirement Plan and
that such Eligible Retirement Plan may receive the distribution in the forms
required under this Article.
ARTICLE VI: WITHDRAWALS AND LOANS
6.010 Withdrawals from Accounts by Participants under Age 59-1/2.
(a) Subject to Section 6.030, a Participant who has not yet attained age
fifty-nine and one-half (59-1/2) may elect while still employed to
withdraw certain amounts from his Accounts. As soon as practicable after
the Company's receipt of such an election, there shall be paid or
transferred to such Participant cash and, if applicable, stock from his
Accounts in the following order:
(1) first, from his Post-Tax Contributions Account;
(2) second, from those portions of his Post-Tax Contribution and
Pre-Tax Contribution Accounts which are attributable to any
Rollover or Transfer Contributions made by the Participant;
(3) third, from that portion of his Company Contributions Account
which is attributable to his Post-Tax Contributions;
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(4) fourth, from that portion of his Company Contributions Account
which is attributable to his Pre-Tax Contributions; and
(5) fifth, from his Pre-Tax Contribution Account.
(b) Withdrawals pursuant to subsection (a) may be made by a Participant at
any time and with no minimum amount required, but shall be limited to one
withdrawal every six (6) months.
(c) Withdrawals pursuant to paragraph (6) of subsection (a) shall be
permitted only if the Participant has provided adequate evidence of a
hardship, as provided in Section 6.030 and such a hardship withdrawal
shall be governed by the provisions of that Section.
6.020 Withdrawal from Accounts by Participants Over Age 59-1/2.
(a) A Participant who has attained age fifty-nine and one-half (59-1/2) while
still employed by the Company may elect to withdraw any or all of the
amounts in his Accounts. A Participant making such an election shall
receive the amount of cash or, if applicable, stock to be withdrawn from
his Accounts in the following order:
(1) first, from his Post-Tax Contribution Account;
(2) second, from those portions of his Post-Tax Contribution and
Pre-Tax Contribution Accounts which are attributable to any
Rollover or Transfer Contributions made by the Participant;
(3) third, from his Pre-Tax Contribution Account;
(4) fourth, from that portion of his Company Contributions Account
which is attributable to his Post-Tax Contributions; and
(5) fifth, from that portion of his Company Contributions Account,
which is attributable to his Pre-Tax Contributions.
(b) Withdrawals pursuant to subsection (a) may be made by a Participant at
any time and with no minimum amount required, but shall be limited to one
withdrawal every three (3) months.
6.030 Hardship Withdrawals from Pre-Tax. Subject to any restrictions the Plan
Administrator may establish pursuant to Section 6.050, a the following
provisions may apply, in the event of the occurrence of a Hardship.
(a) An Employee who has not attained age fifty-nine and one-half (59-1/2) may
request approval of the Administrative Committee to withdraw some or all
of the balance of his Pre-Tax Contribution Account, if the Employee
demonstrates that the withdrawal is required as
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a result of a Hardship (including payment of any federal, state or local
income taxes and penalties reasonably anticipated to result from such
Hardship withdrawal).
(b) Any determination of the existence of Hardship, the reasonable
availability to the Employee of funds from other sources and the amount
necessary to be withdrawn on account of such Hardship shall be made by
the Administrative Committee on the basis of all relevant facts and
circumstances and in accordance with the provisions of this Section and
Section 1.230, as applied in a uniform and nondiscriminatory manner. In
making such determination, the Administrative Committee may, if it is
reasonable to do so in the light of all relevant and known facts and
circumstances, rely on the Employee's representation that the Hardship
cannot be relieved:
(1) through reimbursement or compensation by insurance or otherwise;
(2) by reasonable liquidation of the Employee's assets, to the extent
that such liquidation would not itself cause an immediate and
heavy financial need;
(3) by suspension of Participant Contributions to the Plan; or
(4) by other distributions (other than Hardship distributions) or
loans (which meet the requirements of Section 72(p) of the Code)
from the Plan and any other plan maintained by an Affiliated
Company or by any former employer or by borrowing from commercial
sources at reasonable commercial rates.
6.040 Allocation of Withdrawals Among Investment Funds. Withdrawals pursuant to
the three preceding Sections shall be taken from the Employee's Accounts in the
Investment Funds in a pro rata fashion, based upon the relative size of such
Accounts; provided, however, that a Participant shall be permitted, if he so
desires, to designate the Investment Funds from which such withdrawals will be
taken.
6.050 Loans. The Plan Administrator shall establish, and may from time to time
modify, procedures pursuant to which any Employee or other "party in interest"
(as defined in ERISA Section 3(14)) may apply for and receive a loan from the
Plan, in an amount not exceeding the least of (a), (b), (c) or (d):
(a) the aggregate of the balances (including amounts attributable to Rollover
and Transfer Contributions) in the borrower's Pre-Tax and Post-Tax
Contribution Accounts;
(b) an amount which, when combined with all outstanding loans to the borrower
from all other plans of all Affiliated Companies, equals Fifty Thousand
Dollars ($50,000), reduced by the excess, if any, of
(1) the highest outstanding and unpaid balances of all prior loans to
the borrower from the Plan and such other plans during the twelve
(12) month period immediately preceding the date on which such
loan is made, over
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(2) the outstanding balance of any loan to the borrower from the Plan
or such other plans on the date on which the loan is made;
(c) one-half (1/2) of the aggregate of the balances of the borrower's
Accounts; or
(d) such amount, not exceeding the amounts described in (a) through (c)
above, as the Plan Administrator shall determine.
All such loans shall be made available to all eligible Employees and other
parties in interest on a reasonably equivalent and non-discriminatory basis and
shall be governed by the provisions of Appendix A, as such Appendix is from time
to time constituted, pursuant to determination of the Plan Administrator.
6.060 Transfers to Certain Affiliated Company Plans. A Participant who though
remaining an Employee is no longer an Eligible Employee may elect, if his
continuing employment is with an Affiliated Company to have the entire amount
credited to his Accounts in this Plan transferred to any qualified individual
account plan of the said Affiliated Company; provided, however, that such
transferred amount shall consist of and be limited to:
(a) cash, in the case of amounts attributable to the Participant's interest
in Investment Funds other than Conexant Stock Fund B;
(b) Conexant common stock, in the case of amounts attributable to the
Participant's interest, if any, in Conexant Stock Funds A and B; and
(c) in the case of a Participant to whom a loan has been made pursuant to
Section 6.050, the Participant's loan.
6.070 Transfer of Distribution or Withdrawal to Eligible Retirement Plan. If a
Participant entitled to a distribution under Article V or an in-service
withdrawal under this Article VI, shall so request in writing at the time his
election to receive such distribution or withdrawal is made or at such later
date as the Plan Administrator may permit, the Plan Administrator shall cause
all or a portion of the amounts (including shares of Common Stock) with respect
to which the Participant would be taxable under Section 402 of the Code to be
transferred from the Trustee directly to the custodian of an Eligible Retirement
Plan specified by the Participant. Prior to effecting such transfer the Plan
Administrator shall require evidence reasonably satisfactory to him that the
entity to which such transfer is to be made is in fact an Eligible Retirement
Plan and that such Eligible Retirement Plan may receive the distribution in the
forms required under this Article VI.
ARTICLE VIA SUSPENSION OF SAVINGS AND CONTRIBUTIONS
6A.010 Voluntary Suspension.
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(a) A Participant may at any time elect to have contributions suspended until
further notice. Suspension shall become effective not later than the
first payroll payment date following the expiration of the fifteen (15)
days period thereafter.
(b) Subject to Section 2.010, a Participant who has elected to have
contributions suspended, may elect to have contributions resumed,
effective no later than the first payroll payment date following the
expiration of the fifteen (15) days period thereafter.
6A.020 Involuntary Suspension. A Participant's Pre-Tax and Post-Tax
Contributions shall be involuntarily suspended whenever:
(a) no payment of Base Compensation is made by the Company to the Participant
or, in the case of a Post-Tax Contribution, the amount payable after all
applicable withholdings and deductions required by law or the Company is
less than the applicable Post-Tax Contribution;
(b) payroll deduction for Post-Tax Deduction Contributions under the Plan
would be contrary to law;
(c) the Participant is not an Eligible Employee of an Affiliated Company or
of a component of the Company to which the benefits of the Plan have been
extended; or
(d) the Participant receives a distribution under from his Company
Contribution Account, which is attributable to his Post-Tax
Contributions; provided, however, that the previously suspended
Contributions shall resume following the completion of the twenty-six
(26) week period beginning on the date of such distribution and upon the
occurrence of an affirmative election by the Participant for such
resumption.
6A.030 General Provisions Applicable to Suspensions. Suspensions of Participant
Contributions, whether voluntary or involuntary, shall not affect his benefit
and withdrawal rights under Articles V and VI of the Plan, but Company Marching
Contributions on his behalf shall be similarly suspended. A Participant may not
make up suspended Participant Contributions.
ARTICLE VII: DEATH BENEFITS
7.010 Designation of a Beneficiary. Subject to the provisions of Section 1.090:
(a) If a Participant dies, payment of the benefits provided under this Plan
shall be made to such person or persons as he has designated as his
Beneficiary to receive such benefits in the event of his death.
(b) A Participant may change his designation of Beneficiary at any time by
filing with the Plan Administrator (or such other person as is designated
by the Plan Administrator) a request for such change. Such change shall
become effective only upon receipt of the request by the
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Plan Administrator (or the Plan Administrator's delegate), but upon such
receipt, the change shall relate back to and be effective as of the date
the Participant signed such request; provided, however, that the Plan
Administrator, the other named fiduciaries and the Trust Fund shall be
not be liable in any way or to any degree for any payment made to the
Beneficiary designated before receipt of such request.
(c) If no designation is effective pursuant to this Article or if the Plan
Administrator or Trustee shall have any doubt as to the right of any
Beneficiary or if the Beneficiary shall predecease the Participant, the
amount of such benefits may be paid to the estate of the Participant, in
which event the Plan Administrator, such other named fiduciaries and the
Trust Fund shall be liable in any manner and to any degree with respect
to such payment.
7.020 Payment to a Beneficiary. Upon receipt by the Plan Administrator (or
another person designated by him) of evidence satisfactory to such person of the
death of a Participant and of the identity and existence at the time of such
death of the Beneficiary, the Plan Administrator shall direct the Trustee to pay
the Participant's Accounts to such Beneficiary.
ARTICLE VIII: TRUST AGREEMENT
8.010 Establishment of Trust Fund. The property resulting from contributions
made on behalf of all Participants, including contributions made by the Company,
shall be held in a Trust Fund by a Trustee selected by the Plan Committee
pursuant to a Trust Agreement entered into between such Trustee and the Plan
Committee.
8.020 Investment Funds of the Trust. The Trustee shall establish and maintain as
parts of the Trust Fund individual Investment Funds (which may be mutual funds
or collective funds, accounts or other similar investment vehicles), each of
which shall consist of and be identical to the individual Plan Investment Funds
described in Appendix B, as the said Appendix shall be from time to time
constituted. The said Investment Fund, as from time to time established and
maintained (including the investment objectives and general descriptions of the
forms of securities or other property held in such Funds shall be as set forth
in the said Appendix B.
8.030 Trustee's Powers and Authority. Subject to the provisions of Section 9.050
concerning certain power and authority connected with the common stock of
Conexant, which shall be held in Conexant Stock Funds A and B, the Trustee shall
have full authority and discretion with respect to management of the assets of
the Trust Fund, including management of the assets of the individual Investment
Funds held thereunder.
8.040 Statutory Limits. In making all investments pursuant to this Plan, the
Trustee shall:
(a) be subject to applicable provisions of ERISA governing the exercise of
its fiduciary responsibilities on behalf of the Trust Fund and this Plan,
as well as to all applicable securities laws governing the investments of
the Trust Fund (including any investment companies or mutual funds
therein), but shall not be bound by any law or any court doctrine
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of any state or jurisdiction limiting trust investments, except as
otherwise provided or permitted by ERISA;
(b) at all times give consideration to the cash requirements of the Plan; and
(c) not cause the Plan to engage in any transaction constituting a prohibited
transaction under Section 406 of ERISA.
8.050 Duty of Trustee as to Common Stock in Conexant Stock Fund. Except as is
otherwise provided in this Section:
(a) the duty with respect to the voting, retention, and tendering of Conexant
common stock held in Conexant Stock Funds A and B shall be solely that of
the Trustee, to be exercised solely in the Trustee's discretion;
(b) with respect to any matter as to which a vote of the outstanding shares
of Conexant common stock is solicited:
(1) The Trustee shall solicit the direction in writing of each
Participant, as to the manner in which voting rights of a Conexant
common stock held in or credited to Conexant Stock Funds A and B
with respect to such Participant as of the record date fixed for
determining the holders entitled to vote on such matter are to be
exercised, and the Trustee shall exercise the voting rights of
such shares with respect to such matter in accordance with
last-dated timely written instruction, if any, of such
Participant.
(2) the Trustee, in its sole discretion, shall exercise voting rights
of shares of Conexant common stock held in Conexant Stock Funds A
and B as to which no timely direction has been received pursuant
to paragraph (1).
(c) In the event of a tender offer involving the common stock of the Company:
(1) The Trustee shall solicit in writing of each Participant, as to
the tendering or depositing of any shares of Conexant common stock
held in Conexant Stock Funds A and B with respect to such
Participant and, except as limited by subsection (d) hereof, shall
tender or deposit such shares pursuant to any such tender offer in
accordance with the last dated timely written direction, if any,
of such Participant; and
(2) the Trustee, in its sole discretion, shall have the duty, except
as limited by subsection (d) hereof, with respect to the
retention, tendering or depositing of shares of Conexant common
stock held in Conexant Stock Funds A or B as to which no timely
direction has been received pursuant to paragraph (1).
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(d) Shares of Conexant common stock held in Conexant Stock Funds A and B
shall not be tendered or deposited by the Trustee pursuant to any such
until the earlier of:
(1) immediately preceding the scheduled expiration of the tender offer
pursuant to which such shares are to be tendered and deposited; or
(2) immediately preceding the expiration of the period during which
such shares of Conexant common stock will be taken up and paid for
on a pro rata basis pursuant to such tender offer; or
(3) the expiration of thirty (30) days from the date of the Trustee's
solicitation of Participants' written direction pursuant to
(c)(1).
The duty with respect to the withdrawal, or other exercise of any right of
withdrawal of shares of Conexant Stock Funds A and B which have been tendered or
deposited pursuant to any tender offer shall be solely that of the Trustee;
provided that the Trustee shall solicit the direction in writing of each
Participant with respect to whom any such shares of common stock have been
tendered or deposited pursuant to any such tender offer as to the withdrawal of,
or other exercise of any right to withdraw, such shares of common stock and, if
such solicitation is made, the Trustee shall act in accordance with the last
dated timely written direction, if any, of the Participant. As used herein, the
term "Tender Date" means the date on which the Trustee tenders or deposits any
shares of the Conexant common stock representing the interest of such
Participant in Conexant Stock Fund A or B.
8.060 Rights in the Trust Fund. Nothing in the Plan or in the Trust Agreement
shall be deemed to confer any legal or equitable right or interest in the Trust
Fund in favor of any Participant, Beneficiary or other person, except to the
extent expressly provided in the Plan.
8.070 Taxes, Fees and Expenses of the Trustee.
(a) Subject to subsection (b), the reasonable fees and expenses of the
Trustee (including the reasonable expenses of the Trustee's counsel)
shall be paid by the Company (unless the Company is specifically so
directed by resolution of the Company's Board of Directors); provided,
however, that in no event shall the Company or the Trust Fund pay any
such fees or expenses:
(1) for preparation or prosecution of any action against the Company,
the Plan, any member of the Plan Committee or the Plan
Administrator, or
(2) for the defense or settlement of, or the satisfaction of a
judgment related to, any proceeding arising either out of any
alleged misfeasance or nonfeasance in any person's performance of
duties with respect to the Plan or out of any alleged wrongful act
against the Plan.
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In addition to the foregoing all of the other costs and expenses incurred
by the Plan Committee, the Administrative Committee and the Plan
Administrator shall be paid by the Company. Neither the Plan Administrator
nor the members of the Plan Committee shall be compensated from the Plan
but may be compensated by the Company for services rendered on behalf of
the Plan.
(b) Brokerage fees, commissions, stock transfer taxes and other charges and
expenses incurred in connection with transactions relating to the
acquisition or disposition of property for or of the Trust Fund, or
distributions therefrom, shall be paid from the Trust Fund. Taxes, if
any, payable by the Trustee on the assets at any time held in the Trust
Fund or on the income thereof shall be paid from the Trust Fund.
ARTICLE IX: ADMINISTRATION
9.010 General Administration. Authority to control and manage the operation and
administration of the Plan shall be vested in the Plan Committee except to the
extent that:
(a) the Plan Administrator or the Administrative Committee is allocated any
such authority under the Plan;
(b) the Trustee may, pursuant to Article VIII, be granted exclusive authority
and discretion to manage and control all or any portion of the assets of
the Plan;
(c) the Plan Committee, the Plan Administrator, the Administrative Committee
and the Trustee shall constitute ERISA named fiduciaries of the Plan.
9.020 Plan Committee. The Board of Directors shall, from time to time, determine
the size of the Plan Committee and appoint its individual members. The Plan
Committee shall act, with or without a meeting, in a manner consistent with the
rules and regulations adopted pursuant to Section 9.060(d).
9.030 Plan Committee Records. The Plan Committee shall keep such records and
data as it shall deem appropriate and it shall from time to time file with the
Board of Directors such reports as the latter may request. It shall be a
function of the Plan Committee to keep records of the assets of the Trust Fund,
based upon reports furnished by the Trustee, and the evaluations placed thereon
by the Committee shall be final and conclusive.
9.040 Funding Policy. The Plan Committee shall be responsible for determining a
funding policy of the Plan and shall from time to time advise the Trustee of
such policy.
9.050 Allocation and Delegation of Duties Under Plan. The Plan Committee, the
Plan Administrator and the Administrative Committee shall each have the
following powers and authorities:
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(a) to designate agents to carry out responsibilities relating to the Plan,
other than fiduciary responsibilities; and
(b) to employ such legal, consultant, medical, accounting, clerical and other
assistance as it may deem appropriate in carrying out the provisions of
this Plan including one or more persons to render advice with regard to
any responsibility any fiduciary may have under the Plan.
9.060 Plan Committee Powers. In addition to any powers and authority conferred
on the Plan Committee elsewhere in the Plan or by law, the Plan Committee shall
have the following powers and authority:
(a) to allocate fiduciary responsibilities, other than trustee
responsibilities (responsibilities under the Trust Agreement to manage or
control the Plan assets) to one or more members of the Plan Committee or
to the Plan Administrator and to designate one or more persons (other
than the Trustee) to carry out such fiduciary responsibilities;
(b) to determine the manner in which the assets of this Plan, or any part
thereof, shall be disbursed by the Trustee, except as relates to the
making and retention of investments; and
(c) to establish rules and regulations from time to time for the conduct of
the Plan Committee's business and for the administration and effectuation
of its responsibilities under the Plan.
9.070 Plan Administrator. In addition to any powers and authority conferred on
the Plan Administrator elsewhere in the Plan, the Plan Administrator shall have
the following powers and authority:
(a) to administer, interpret, construe and apply this Plan and to decide all
questions which may arise or which may be raised by any Employee,
Participant, Beneficiary, or other person whatsoever, and the actions or
decisions of the Plan Administrator in regard thereto, or in regard to
anything or matter otherwise within his discretion, shall be conclusive
and binding on all Employees, Participants, Beneficiaries, and other
persons whatsoever;
(b) to designate one or more persons, other than the Trustee, to carry out
fiduciary responsibilities (other than trustee responsibilities);
(c) to establish rules and regulations from time to time for the
administration and effectuation of his responsibilities under the Plan.
The Plan Administrator shall have such other responsibility as is designated by
ERISA as the responsibility of the administrator of the Plan and shall have such
other power and authority as is necessary to fulfill his responsibilities under
ERISA or under the Plan.
9.080 Reliance Upon Documents and Opinions. The members of the Plan Committee
and the Administrative Committee, the Plan Administrator, the Board of Directors
and the Company shall be entitled to rely upon any tables, valuations,
computations, estimates, certificates and reports
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<PAGE>
furnished by any consultants or consulting firms, opinions furnished by legal
counsel and reports furnished by the Trustee. The members of the Plan Committee,
the Plan Administrator, the Board of Directors and the Company shall be fully
protected and shall not be liable in any manner whatsoever, except as otherwise
specifically provided by law, for anything done or action taken or suffered in
reliance upon any such consultant, Trustee or counsel. Any and all such things
done or such actions taken or suffered by the Plan Committee, the Plan
Administrator, the Board of Directors and the Company shall be conclusive and
binding on all Employees, Participants, Beneficiaries, and other persons
whatsoever except as otherwise specifically provided by law. The Plan Committee
and the Plan Administrator may, but are not required to, rely upon all records
of the Company with respect to any matter or thing whatsoever, and to the extent
they rely thereon, such records shall be conclusive with respect to all
Employees, Participants, and Beneficiaries.
9.090 Requirement of Proof. The Plan Committee, the Plan Administrator, the
Administrative Committee, the Board of Directors or the Company may require
satisfactory proof of any matter under this Plan from or with respect to any
Employee, Participant, or Beneficiary, and no such person shall acquire any
rights or be entitled to receive any benefits under this Plan until such proof
shall be furnished as so required.
9.100 Limitation on Liability and Indemnification. Except as provided in Part 4
of Title 1 of ERISA, no person shall be subject to any liability with respect to
his duties under the Plan, unless he acts fraudulently or in bad faith. No
person shall be liable for any breach of fiduciary responsibility resulting from
the act or omission of any other fiduciary or any person to whom fiduciary
responsibilities have been allocated or delegated, except as provided in ERISA
Section, 405(a) and 405(c)(2)(A) or (B). No action or responsibility shall be
deemed to be a fiduciary action or responsibility except to the extent required
by ERISA. To the extent permitted by law, the Company shall indemnify the Board
of Directors, the Plan Administrator, each member of the Plan Committee, each
member of the Administrative Committee and any other employee of the Company
with duties under the Plan against expenses (including any amount paid in
settlement) reasonably incurred by him in connection with any claims against him
by reason of his conduct (except for his willful misconduct) in the performance
of his duties under the Plan.
9.110 Mailing and Lapse of Payments. All payments under the Plan shall be
delivered in person or mailed to the last address of the Participant (or, in the
case of the death of the Participant, to that of any other person entitled to
such payments under the terms of the Plan) furnished pursuant to Section 9.150
below. If the Plan Administrator cannot, by making a reasonably diligent attempt
by mail, locate either the Participant or his Beneficiary, as the case may be,
for a period of seven years, such Participant or Beneficiary shall be presumed
dead. If payment cannot be made alternately to the estate of either and no
surviving spouse, child, grandchild, parent, brother or sister of the
Participant or his Beneficiary are known to the Plan Administrator or the
Trustee or, if known, cannot with reasonable diligence be located, the amount
payable shall be retained by the Trustee until the amount can be distributed
pursuant to the provisions of this Plan or of applicable law.
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9.120 Non-Alienation. No right or benefit provided for in the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance (including garnishment, attachment, execution or levy of any
kind or charge) and any attempt to anticipate, alienate, sell, transfer, assign,
pledge, encumber or charge the same shall be void; provided, however, that the
foregoing shall not apply to the creation, assignment, or recognition of a right
to any benefit payable with respect to a Participant pursuant to:
(a) a levy for federal income tax issued against the Participant by the
Internal Revenue Service; or
(b) a domestic relations order, which the Plan Administrator determines is a
qualified domestic relations order under Section 414(p) of the Code and
which requires that the order's alternate payee (as defined in the said
Code section) will be paid in a lump sum as soon as is practicable
following the order's issuance.
9.130 Notices and Communications. Each Participant shall be responsible for
furnishing the Plan Administrator with his current address and the correct
current name and address of his Beneficiary. All communications from
Participants shall be in the manner from time to time prescribed by the Plan
Administrator and shall be addressed or communicated (including telephonic
communications) to such entity or Company office as may be designated by the
Plan Administrator, and shall be deemed to have been given to the Company when
received by such entity or Company office. Each communication directed to a
Participant or Beneficiary shall be in writing and may be delivered in person or
by mail, in which latter event it shall be deemed to have been delivered and
received by him when so deposited in the United States Mail with postage prepaid
addressed to the Participant or Beneficiary at his last address of record with
the office designated by the Plan Administrator.
9.140 Company Rights. The Company's rights to discipline or discharge Employees
or to exercise its rights as to incidents and tenure of employment shall not be
affected in any manner by reason of the existence of the Trust Agreement or the
Plan, or any action taken under them.
9.150 Payments on Behalf of Incompetent Participants or Beneficiaries. In the
event that the Plan Administrator or his designee shall find that any
Participant or Beneficiary to whom a benefit is payable under the terms of this
Plan is unable to care for his affairs because of illness or accident, is
otherwise mentally or physically incompetent, or unable to give a valid receipt,
the Plan Administrator may cause the payment becoming due to such Participant or
Beneficiary to be paid to another person for his benefit without responsibility
on the part of the Plan Administrator, the Plan Committee, the Administrative
Committee, the Company or the Trustee to follow the application of such payment.
Any such payment shall be a payment for the account of the Participant or
Beneficiary and shall operate as a complete discharge of all liability therefor
under this Plan of the Trustee, the Company, the Plan Administrator, the
Administrative Committee and the Plan Committee.
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ARTICLE X: PARTICIPANT CLAIMS
10.010 Requirement to File Claim. A Participant wishing a distribution or
withdrawal from the Plan must present a claim, in such manner and pursuant to
such procedure established by the Plan Administrator, with the person or entity
designated by the Plan Administrator. A claimant who fails to comply with the
manner and procedure designated by the Plan Administrator shall be deemed not to
have made such claim. The person or entity designated by the Plan Administrator
shall approve or deny in writing within thirty (30) days any claim which has
been so presented.
10.020 Appeal of Denied Claim. A Participant whose claim has been denied as set
forth in Section 11.010 may appeal the denial to the Plan Administrator by
filing a written appeal within sixty (60) days of the date of the denial. The
Participant or his representative shall, for the purpose of preparation of such
appeal, have the right to inspect any document (including computerized records)
relied upon by the Plan Administrator's representative in denying the claim. The
Plan Administrator or his delegate shall make a final, full and fair review of
any such decision which is appealed. A decision which is not appealed within the
time herein provided shall be final and conclusive as to any matter which was
presented to the person making such decision.
ARTICLE XI: AMENDMENT, MERGERS, TERMINATION, ETC.
11.010 Amendment. The Board of Directors may, at any time and from time to time,
amend this Plan in whole or in part. However, except as provided in Section
14.040 below, no amendment shall be made the effect of which would be:
(a) to cause any contributions paid to the Trustee to be used for or diverted
to purposes other than providing benefits to the Participants and their
Beneficiaries, and defraying reasonable expenses of administering the
Plan, prior to satisfaction of all liabilities with respect to
Participants and their Beneficiaries;
(b) to have any retroactive effect so as to deprive any Participant or
Beneficiary of any benefit to which he would be entitled under this Plan
if his employment were terminated immediately before such amendment; or
(c) to increase the responsibilities or liabilities of the Trustee without
its written consent.
11.020 Transfer of Assets and Liabilities. The Plan Committee at any time may,
in its sole discretion without the consent of the Participant or his
representative, cause the Trustee to segregate part of the assets of the Trust
Fund into one or more separate trust funds and designate a group of Participants
whose benefits shall be provided solely from each such segregated fund. The
Board of Directors may, in its sole discretion without the consent of any
Participant or his representative, establish a separate plan to cover any such
group of Participants. The initial terms and conditions of any such plan shall
be identical to the extent such terms and conditions affect
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<PAGE>
the rights of Participants under the Plan. Amendment to the Plan shall not be
necessary to carry out the provisions of this Section.
11.030 Merger Restriction. Notwithstanding any other provision in this Plan, the
Plan shall not in whole or in part merge or consolidate with, or transfer its
assets or liabilities to any other plan unless each affected Participant in this
Plan 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).
11.040 Suspension of Contributions. The Company may, without amendment of the
Plan and without the consent of any Participant or representative of any
Participant, suspend contributions to the Plan as to all or certain Participants
by action of the Board of Directors. In any event, the Company will suspend
contributions at any time when the amount of any contribution by it would be in
excess of the earnings, including retained earnings, of the Company. Upon a
suspension, the Plan Committee may, in its sole discretion permit the Trust Fund
to continue to be held by the Trustee, or may segregate one or more parts of the
Trust Fund, as provided in Section 11.020.
11.050 Discontinuance of Contributions. The Company may, by action of the Board
of Directors, without amendment of the Plan and without the consent of any
Participant or representative of any Participant, discontinue such contributions
to the Plan as to all or certain Participants.
11.060 Termination. The Company may terminate or partially terminate the Plan at
any time. Upon such termination or partial termination of the Plan, or upon a
complete discontinuance of contributions pursuant to Section 11.050, the
Accounts of each affected Participant shall remain fully vested and
nonforfeitable. In the event of termination or partial termination the Plan
Committee may, without the consent of any Participant or other person, permit
the Trustee to retain all or part of the Trust Fund or distribute all or part of
the Trust Fund to the Participants or their spouses or Beneficiaries.
ARTICLE XII: STATUTORY LIMITATIONS
12.010 Annual Limits of Participants' Account Increases. This Article is
intended to conform the Plan to the requirements of Section 415 of the Code, and
the regulations issued thereunder; and shall be administered and interpreted in
accordance with such requirements and regulations; and notwithstanding any
provision of this Plan to the contrary, no amount shall be credited to any
Participant's Account which is in excess of the limitation imposed by said
Section 415, as from time to time amended or replaced. The amount allocated in
each calendar year to any Participant under the combination of defined
contribution plans of all Affiliated Companies cannot exceed the lesser of
$30,000 (or such larger amount as may be established under Section 415(d)(1)(B)
of the Code to reflect an increase in the cost of living) or 25% of the
Participant's total compensation. For purposes of this limitation, the amount
allocated shall be deemed to be comprised of Company Matching Contributions and
the Participant's Pre-Tax and Post-Tax Contributions.
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12.020 Limits as to Combined Plans. In the case of a Participant who also is a
participant in a defined benefit pension plan which is or was maintained by the
Company or an Affiliated Company and to which Section 415 of the Code applies,
the limitation set forth herein shall be further adjusted in compliance with
Section 415(e) of the Code. In making such adjustment, the maximum benefit
allowable shall be paid hereunder before applying the limitations on the defined
benefit plan.
12.030 Combining Similar Plans. For purposes of this Article, all defined
contribution plans which are required to be aggregated under Section 414(b) of
the Code shall be so aggregated and the limitation set forth herein shall be
applied to the total amounts allocated under all such plans.
ARTICLE XIII TOP HEAVY PROVISIONS
13.010 Definitions. For purposes of this Article, the following special
definitions shall apply:
(a) "Top Heavy Plan" shall mean a qualified retirement plan, including this
Plan if applicable, which is included in, or which constitutes, an
Aggregation Group under which, as of the Determination Date, the sum of
the present values of accrued benefits for all Key Employees under all
defined benefit plans in the Aggregation Group and the aggregate of all
accounts of Key Employees under all defined contribution plans in the
Aggregation Group exceeds sixty percent (60%) of the sum of the present
values of accrued benefits under all such defined benefit plans and of
all accounts under all such defined contribution plans for all
participants under such plans.
(b) "Key Employee" shall mean each Employee or former Employee who has, at
any time during the five (5) year period ending on the Determination
Date, performed services for an Affiliated Company and who is, at any
time during the plan year ending on the Determination Date, or was,
during any one of the four plan years preceding the plan year ending on
the Determination Date, any one or more of the following.
(1) An officer of the Company having annual compensation greater than
fifty percent (50%) of the amount in effect under Code Section
415(b)(1)(A) for any plan year;
(2) One of the ten (10) persons having annual compensation from all
Affiliated Companies greater than the limitation in effect under
Code Section 415(c)(1)(A) and owning (or considered as owning
within the meaning of Code Section 318, as modified by Code
Section 416(i)(B)(iii)), the largest interests in the Company;
(3) Any person owning (or considered as owning within the meaning of
Code Section 318, as modified by Code Section 416(i)(B)(iii)),
more than five percent (5%) of the outstanding stock of the
Company (or stock having more than five percent (5%) of
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the total combined voting power of all stock of the Company)
(a "5 Percent Owner"); or
(4) Any person who has annual compensation of more than one hundred
fifty thousand dollars ($150,000) and would be described in
subsection (3) above, if "one percent (1%)" was substituted for
"five percent (5%)".
For purposes of determining whether a person is an officer in paragraph
(1) above, in no event will more than fifty (50) Employees or, if less
than fifty (50) Employees, the greater of three (3) Employees or ten
percent (10%) of all Employees, be considered Key Employees solely by
reason of officer status. In addition, persons who are merely nominal
officers will not be treated as officers solely by reason of their
titles.
(c) "Determination Date" shall mean the last day of the immediately preceding
plan year or, in the case of the first plan year of any plan, the last
day of such plan year.
(d) "Employee" shall mean not only an Employee as defined in Article I, but
shall also include any beneficiary of such Employee.
(e) "Aggregation Group" shall mean a group of plans (including this Plan)
maintained by one or more Affiliated Companies in which a Key Employee is
a participant or which is combined with this Plan in order to meet the
coverage and nondiscrimination requirements of Code Sections 410 and
401(a)(4). The Aggregation Group shall also include those plans other
than this Plan which need not be aggregated with this Plan to meet Code
Requirements, but which are selected by the Company to be part of a
selective Aggregation Group which shall include this Plan if the
Aggregation Group would continue to meet the requirements of Code
Sections 401(a)(4) and 410 with such plans being taken into account.
(f) "Non-Key Employee" shall mean any employee who is not a Key Employee.
Non-Key Employee shall also mean an employee who is a former Key
Employee.
13.020 Application of this Article. In the event that this Plan is or becomes a
Top Heavy Plan, the following special provisions shall become applicable to this
Plan and shall supersede the comparable provisions contained elsewhere in this
Plan.
(a) Minimum Contribution. The Plan, where aggregated with each other defined
contribution plan in the Aggregation Group in which a Key Employee is a
participant, shall provide a minimum allocation to the account of each
Participant who is not a Key Employee for each plan year to which these
rules apply equal to the lesser of:
(1) four percent (4%) of such Participant's compensation (subject to
the provisions of Section 13.030), or
(2) the highest percentage of contribution made for the plan year to a
Participant who is a Key Employee for such plan year.
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(b) Vesting. A Participant's nonforfeitable right to his Company Contribution
Account shall be not less than the amount determined pursuant to the
following schedule:
Years of Service Vested Interest
---------------- ---------------
Less than two 0%
Two but less than three 20%
Three but less than four 40%
Four but less than five 60%
Five or more 100%
If the Plan ceases to be a Top Heavy Plan the vesting schedule set forth
in Section 5.010(a) shall again become applicable; provided that a
Participant's nonforfeitable right to his Company Contribution Account
shall not be less than his nonforfeitable right to the balance of his
Company Contribution Account immediately before the Plan ceased to be a
Top Heavy Plan; and provided further that any Participant who at the time
the Plan ceased to be a Top Heavy Plan had been an Employee on the last
day of at least three (3) plan years following his becoming an Employee
shall be permitted irrevocably to elect to remain under the vesting
schedule set forth in this subsection (b) in lieu of the vesting schedule
set forth in Section 5.010(a).
(c) Maximum Compensation. For any plan year in which the Plan is a Top Heavy
Plan, only the first two hundred thousand dollars ($200,000) of each
Participant's annual compensation will be taken into account for purposes
of determining benefits under the Plan, provided that such dollar amount
shall be automatically adjusted as prescribed by the Secretary of the
Treasury.
13.030 Adjustment of Limitation on Annual Benefit. If for any plan year the Plan
becomes "super top heavy" (i.e., by substituting "90%" for "60%" in Section
16.010(a)), the percentage described in Section 18.020(a)(1) shall be changed to
three percent (3%), and Section 13.020 shall be applied in accordance with the
requirements of Code Section 416(h)(1) (i.e., by substituting "90%" for "60%" in
Section 13.010(a)).
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Appendix A
PROCEDURES, TERMS AND CONDITIONS OF LOANS
Eligibility for Loans. The individuals eligible to obtain loans from the Plan
("Borrowers") are limited to:
(1) Employees, and
(2) non-Employees who are "parties in interest" (as defined in
Section 3(14) of ERISA)
who have Plan Account balances. An Employee who wishes to obtain a loan must be
employed on an active payroll of an Affiliated Company at the time of the loan
application. A party in interest who is not an Employee will be eligible to
obtain a loan only if an agreement can be provided by the party's current
employer to deduct and remit the required loan repayments to the Savings Plan.
Limitation on Number and Minimum Amount of Loans. Only one (1) loan to a
Borrower will be permitted to be outstanding from all Company sponsored savings
plans at any one time. Each loan must be for a minimum of $1,000.
Maximum Amount of Loan. The amount which a Borrower will be permitted to borrow
from the Plan is based on the aggregate value of the Borrower's Accounts,
determined in accordance with the Plan, and may not exceed the least of the
amounts described in Section 6.050 of the Plan. The maximum amount of any loan
will be further limited to ensure that, after applying the appropriate interest
rate and taking into account all applicable deductions, the resulting periodic
repayments will not exceed the Borrower's net earnings. The deductions referred
to in the preceding sentence include statutory withholdings, deductions for
employee benefits and all pre-tax contributions to the Plan, but exclude credit
union, savings bond, charitable contribution and other similar deductions.
Loan Applications. Loan applications by prospective Borrowers will be made via
telephone to the Plan Administrator or such third party administrator as may be
designated by the Plan Administrator (either of whom is hereafter referred to as
the "Loan Administrator"). The Loan Administrator will then review the
telephonic application and determine eligibility for the loan. If the loan is
approved, the Loan Administrator will prepare and forward to the Borrower a
letter notifying the Borrower of the approval, together with a Truth in Lending
Statement and a check for the loan amount, all in form approved by the Plan
Administrator. The Borrower's endorsement of the loan check will be considered
to be the Borrower's agreement to the terms of the loan. Failure by the Borrower
to endorse the check within thirty (30) days after the date of the check will be
deemed to be a withdrawal by the Borrower of the loan application.
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Source of Loan Funds. Each loan will be funded by withdrawing the required
amounts from the Plan Account(s) of the Borrower in the following order:
First -- from amounts in the Borrower's Post-Tax Contribution Account
attributable to his Basic Post-Tax Contributions;
Second -- from amounts in the Borrower's Post-Tax Contribution Account
attributable to his Supplemental Post-Tax Contributions;
Third -- from amounts in the Borrower's Contribution Accounts
attributable to his Rollover and Transfer Contributions;
Fourth -- from amounts in the Borrower's Pre-Tax Contribution Account
attributable to his Basic Pre-Tax Contributions;
Fifth -- from amounts in the Borrower's Post-Tax Contribution Account
attributable to his Supplemental Pre-Tax Contributions.
Subject to the provisions of the following paragraph, the loan amount will be
funded by the Borrower's Investment Funds in the applicable Accounts on a pro
rata basis, based upon the relative size of the balance of each such Fund in his
Accounts. Alternatively, a Borrower may elect, if he so desires, to designate
the Investment Funds from which such withdrawals will be taken.
Determination of Loan Interest Rate. The interest rate to be charged for loans
will be one percent (1%) over the prime rate stated by The Wall Street Journal
published on the last business day of each calendar quarter.
Term of Loans. Loans will be permitted for terms of 12, 24, 36, 48 or 60 months
for loans other than those for the purpose of purchasing a primary residence,
which will be permitted for terms up to 120 months.
Repayments. Loan repayments by Employees will be deducted from the Employee's
pay check each pay period. If a pay check is insufficient to cover the full
amount of the loan repayment, no deduction will be made, and the repayment will
be deducted from the Employee's next pay check. Loan repayment schedules for
Borrowers who are not Employees will be developed on an individual basis, but
will parallel as closely as possible the loan repayment schedules for Employees.
Prepayments. The full unpaid balance of a loan may be prepaid at any time by a
Borrower. Partial prepayments in excess of scheduled payroll deductions will not
be accepted
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Missed Payments. If any payment is not made, interest will continue to accrue on
such missed payment and subsequent payments will be applied first to accrued and
unpaid interest on the missed payment and then to principal. A notice will be
mailed to the last known address of the Borrower stating that if three (3)
consecutive months of payments are missed, the loan will be considered to be in
default.
Termination of Employment. If a Borrower who is an Employee terminates
employment or is on an unpaid leave of absence, or if a Borrower who is not an
Employee is no longer able to repay a loan through payroll deductions, the
Borrower may continue to make loan repayments by personal check. Such repayments
to the Plan will be made through the Loan Administrator at an address to be
provided to the Borrower by the Loan Administrator.
Default. A loan will be considered to be in default after three (3) consecutive
months of payments have been missed during the term of the loan or when a
Borrower revokes a payroll deduction authorization. In the event of such a
default, a distribution of the loan amount, including both unpaid principal and
accrued but unpaid interest, will be deemed to have occurred (as described in
Section 1.401(k)-1(d)(6)(ii) of the Treasury Regulations) and an information
return reflecting the tax consequences, if any, to the Borrower will be issued.
Upon the occurrence of an event permitting actual distribution of the Borrower's
Account pursuant to the provisions of Code Section 401(k) (whether distribution
of the Borrower's entire Plan Account will actually be made or will be deferred
pursuant to applicable provisions of the Plan), the unpaid balance of a
defaulted loan will be charged off against the Borrower's Account. If no
distribution event has occurred, which would otherwise permit payment to the
Borrower under Code Section 401(k), the unpaid balance of the loan will be
retained in the Account until such time as payment would be permitted under that
Code section, at which time the unpaid balance of the loan, including any
accrued and unpaid interest, will be charged off against the Borrower's Account.
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Appendix B
INVESTMENT FUNDS
The Investment Funds listed alphabetically below will consist of the types of
assets as are set forth in the description set forth herein and will be more
fully described in the prospectus or Fund description associated with that Fund
(copies of which will at all times be available to Plan Participants):
<TABLE>
<CAPTION>
<S> <C>
o Asset Allocation Fund A (Fidelity 20% in Fidelity stock mutual funds, 40% in
Freedom Income Fund) Fidelity bond mutual funds and 40% in Fidelity
money market mutual funds (percentages are
approximate)
o Asset Allocation Fund B (Fidelity 41% in Fidelity stock mutual funds, 44% in Fidelity
Freedom 2000 Fund) bond mutual funds and 15% in Fidelity money
market mutual funds (percentages are approximate).
Percentage mix will gradually become more
conservative over time.
o Asset Allocation Fund C (Fidelity 65% in Fidelity stock mutual funds, 33% in Fidelity
Freedom 2010 Fund) bond mutual funds and 2% in Fidelity money market
mutual funds (percentages are approximate).
Percentage mix will gradually become more
conservative over time.
o Asset Allocation Fund D (Fidelity 80% in Fidelity stock mutual funds and 20% in
Freedom 2020 Fund) Fidelity bond mutual funds (percentages are
approximate). Percentage mix will gradually
become more conservative over time.
o Asset Allocation Fund E (Fidelity 84% in Fidelity stock mutual funds, and 16% in
Freedom 2030 Fund) Fidelity bond mutual funds (percentages are
approximate). Percentage mix will gradually become
more conservative over time.
o Bond Index Fund (Fidelity U.S. Bond Investment-grade (medium to high quality) or
Index Fund) above with maturities of at least one year, including
U.S. Treasury and U.S. government securities,
corporate bonds, asset-backed and mortgage-backed
securities and U.S. dollar-denominated foreign
securities.
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39
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<S> <C>
o Dividend Growth Fund (Fidelity Dividend Stocks of companies that have potential to increase
Growth Fund) the amount of their dividends or to begin paying
them if none are being paid now.
o Conexant Stock Fund B Conexant Systems, Inc. common stock, cash and the
proceeds and income on such cash and common
stock
o Emerging Markets Fund (Fidelity Primary investment focus is stock of companies in
Emerging Markets Fund) emerging markets, with emphasis on countries with
relatively low GNPs compared to the world's major
economies, but with potential for rapid growth.
o Equity & Income Fund (Fidelity Primary investment focus on income-producing
Equity-Income Fund) stocks, such as common and preferred stocks, with
some limited focus on bonds producing income (in
generally, would avoid securities without proven
earnings or credit).
o Equity Index Fund (Spartan(C) Primary investment focus on the 500 domestic
U.S. Equity Index Fund) companies that make up the S&P 500 and in other
securities that are based on the value of that Index.
o Growth Fund (Fidelity Fund) Invests mainly in common stock. May invest in bonds
including lower quality debt securities.
o Growth Fund (Fidelity Growth Primary investment focus on common stocks of domestic
Company Fund) and foreign issuers with potential for above-average
growth.
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40
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<S> <C>
o International Fund (Fidelity Diversified Primary focus is stocks of larger companies which
International Fund) are located outside the United States and which are
viewed as being undervalued.
o Mid-Cap Stock Fund (Fidelity Primary focus in stocks of mid-size companies with
Mid-Cap Stock Fund) capitalizations within the range of the Standard &
Poors MidCap 400 (approximate capitalization of
$110 million to $5 billion).
o OTC Portfolio Fund (Fidelity Normally invests at least 65% of total assets in
OTC Portfolio Fund) securities traded on the over-the-counter (OTC) market,
which has more small- and medium-size companies than
other markets.
o Small-Cap Growth Fund (Franklin Normally invests at least 65% of its assets in
Small-Cap Growth Fund A) companies with capitalizations similar to those in the
Russell 2000 Index.
o Managed Income Portfolio (a stable value Primarily invests in investment contracts providing
fund - not a mutual fund) a stated rate of interest which are offered by major
insurance companies, with some investment in
certain types of fixed income securities to provide
daily liquidity.
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41
