EXHIBIT 4.1
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EMPLOYEE SAVINGS PLAN
(Restated Effective January 1, 1997)
TABLE OF CONTENTS
PAGE
ARTICLE I. PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 THE PLAN . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 APPLICABILITY OF THE PLAN . . . . . . . . . . . . . . . 1
1.4 RIGHTS AGAINST THE EMPLOYERS . . . . . . . . . . . . . 1
ARTICLE II. DEFINITIONS AND CONSTRUCTION . . . . . . . . . . . . 1
2.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
2.2 GENDER AND NUMBER . . . . . . . . . . . . . . . . . . . 10
2.3 APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . 11
2.4 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . 11
2.5 HEADINGS . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III. ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . 11
3.1 PARTICIPATION . . . . . . . . . . . . . . . . . . . . . 11
3.2 ELIGIBILITY SERVICE. . . . . . . . . . . . . . . . . . 11
3.3 DURATION . . . . . . . . . . . . . . . . . . . . . . . 12
3.4 ADOPTION OF PLAN BY AFFILIATED COMPANIES . . . . . . . 12
ARTICLE IV. CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . 12
4.1 REGULAR DEPOSITS . . . . . . . . . . . . . . . . . . . 12
4.2 OTHER EMPLOYEE DEPOSITS . . . . . . . . . . . . . . . . 13
4.3 MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . . 14
4.4 SECTION 402 LIMIT ON PAY REDUCTION CONTRIBUTIONS . . . 15
4.5 SECTION 401(K) LIMIT ON TAX-DEFERRED DEPOSITS . . . . . 16
4.6 SECTION 401(M) LIMIT ON TAXED DEPOSITS AND MATCHING
EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . 20
4.7 LIMITATIONS ON ANNUAL ACCOUNT ADDITIONS . . . . . . . . 26
4.8 FULL VESTING . . . . . . . . . . . . . . . . . . . . . 29
4.9 EFFECT OF MISTAKE . . . . . . . . . . . . . . . . . . . 29
4.10 REHIRE AFTER MILITARY SERVICE . . . . . . . . . . . . . 29
ARTICLE V. DISTRIBUTIONS AND WITHDRAWALS . . . . . . . . . . . . 29
5.1 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT OR AT AGE
70 1/2 . . . . . . . . . . . . . . . . . . . . . . . . 29
5.2 DISTRIBUTION UPON DEATH . . . . . . . . . . . . . . . . 31
5.3 IN-SERVICE WITHDRAWALS . . . . . . . . . . . . . . . . 31
5.4 TIME FOR DISTRIBUTION . . . . . . . . . . . . . . . . . 33
5.5 WITHHOLDING ON DISTRIBUTIONS . . . . . . . . . . . . . 34
5.6 ELIGIBLE ROLLOVER DISTRIBUTIONS; DIRECT ROLLOVER . . . 34
5.7 NONALIENATION . . . . . . . . . . . . . . . . . . . . . 35
5.8 INCOMPETENCY . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VI. INVESTMENTS AND ACCOUNTS . . . . . . . . . . . . . . 35
6.1 FUNDS AND ACCOUNTS . . . . . . . . . . . . . . . . . . 35
6.2 ADJUSTMENTS TO REFLECT NET WORTH OF THE TRUST FUND . . 38
6.3 VOTING AND TENDER OFFER DECISIONS . . . . . . . . . . . 38
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ARTICLE VII. ADMINISTRATION AND TRUST . . . . . . . . . . . . . . 39
7.1 APPOINTMENT, RESIGNATION, AND REPLACEMENT . . . . . . . 39
7.2 NOTICE TO THE TRUSTEE . . . . . . . . . . . . . . . . . 39
7.3 RESPONSIBILITIES AND RIGHTS . . . . . . . . . . . . . . 39
7.4 RULES OF PROCEDURE . . . . . . . . . . . . . . . . . . 41
7.5 STATUS . . . . . . . . . . . . . . . . . . . . . . . . 41
7.6 APPOINTMENT OF ADVISORS . . . . . . . . . . . . . . . . 41
7.7 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 41
7.8 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . 41
7.9 APPEALS FROM DENIAL OF CLAIMS . . . . . . . . . . . . . 41
7.10 TRUST . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.11 LITIGATION . . . . . . . . . . . . . . . . . . . . . . 42
7.12 MULTIPLE EMPLOYER PLAN . . . . . . . . . . . . . . . . 42
ARTICLE VIII. CHANGES IN THE PLAN . . . . . . . . . . . . . . . . 43
8.1 AMENDMENT OR TERMINATION OF THE PLAN . . . . . . . . . 43
8.2 MERGER, CONSOLIDATION, OR TRANSFER . . . . . . . . . . 43
8.3 NONREVERSION . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE IX. TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . 44
9.1 EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . 44
9.2 DETERMINATION OF TOP-HEAVY . . . . . . . . . . . . . . 44
9.3 CONTINGENT PROVISIONS . . . . . . . . . . . . . . . . . 44
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EMPLOYEE SAVINGS PLAN
(Restated Effective January 1, 1997)
ARTICLE I. PREAMBLE
1.1 THE PLAN. Effective January 1, 1991, Arvin Industries, Inc.,
an Indiana corporation with principal offices located at Columbus,
Indiana, adopted the Employee Savings Plan for the benefit of its
eligible employees.
Effective August 1, 1996, Arvin Industries, Inc. amended and
restated the Plan in its entirety to reflect the change to daily
valuation and other administrative changes.
Effective January 1, 1997, the Plan is amended and restated to
provide, in its entirety, as follows:
1.2 PURPOSE. It is intended that this Plan, together with the
Trust Agreement, meet all the requirements of the Employee Retirement
Income Security Act of 1974 and section 401(k) of the Internal Revenue
Code and the Plan shall be interpreted, wherever possible, to comply
with the terms of the Act and section 401(k) and all formal
regulations and rulings issued under such Act and section 401(k).
1.3 APPLICABILITY OF THE PLAN. Except as otherwise provided in
this Plan or as provided by statute or regulation, the provisions of
this Plan are applicable to Employees who are credited with an Hour of
Service on or after August 1, 1996. The rights and benefits, if any,
of persons who terminated, retired, or died before that date shall be
determined under prior statements of the Plan, except as provided
elsewhere in this Plan or as provided by statute or regulation.
1.4 RIGHTS AGAINST THE EMPLOYERS. Neither the establishment of
the Plan, nor of the Trust, nor any modification thereof, nor any
distributions shall be construed as giving to any Member or any person
whomsoever any legal or equitable rights against the Administrative
Committee, any Employer, or the officers, directors, or shareholders
as such of any Employer, or as giving any Employee or Member the right
to be retained in the employ of the Employers. All benefits payable
under the Plan shall be paid or provided for solely from the Trust
Fund, and the Employers shall have no liability or responsibility for
benefit distributions other than to make contributions to the Trust
Fund as herein provided.
ARTICLE II. DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS. Whenever used in the Plan, the following terms
shall have the respective meanings set forth below unless otherwise
expressly provided.
(a) "ACCOUNT" means a Member's Matching Contributions
Account, Tax-Deferred Deposits Account, Taxed Deposits
Account and Rollover Deposits Account, collectively or
individually as the context indicates.
(b) "ACTIVE PARTICIPANT" means an Employee who is making
Regular or Optional Deposits under the Plan.
(c) "ADMINISTRATIVE COMMITTEE" means the individuals
serving under the Plan from time to time pursuant to
appointment by the Chief Executive Officer of the
Company in accordance with the provisions of the Plan,
which Administrative Committee shall be responsible for
the general administration of the Plan set forth in the
provisions of the Plan on behalf of the Company and any
Participating Subsidiaries.
(d) "CODE" means the Internal Revenue Code of 1986, as now
in effect or as amended from time to time.
(e) "COMPANY" means Arvin Industries, Inc.
(f) "COMPENSATION" means--
(1) amounts actually paid during the Plan Year which
are the Participant's wages, salary, fees for
personal services actually rendered in the course
of reemployment with the Employer or a Subsidiary,
including amounts described in Treasury regulation
1.415-2(d)(1) but excluding contributions to a
plan of deferred compensation to the extent they
are not includible in the Participant's gross
income for the taxable year in which contributed,
and other amounts which receive special tax
benefits such as premiums for group-term life
insurance (to the extent not includible in gross
income), and
(2) if elected by the Employer, amounts contributed by
the Employer pursuant to a pay reduction agreement
pursuant to Code section 125 or 402(a)(8).
(3) For the period before January 1, 1994, no more
than $200,000 of Compensation or Pay shall be
taken into account under this Plan for each Plan
Year (as adjusted by the Secretary of the Treasury
under Code section 415(d)). In addition to other
applicable limitations set forth in this Plan and
notwithstanding any other provision of this Plan
to the contrary, for Plan Years beginning on or
after January 1, 1994, the Compensation of each
Employee taken into account under this Plan in any
Plan Year shall not exceed the OBRA 93 Annual
Compensation Limit. The OBRA '93 Annual
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Compensation Limit is one hundred and fifty
thousand dollars ($150,000), as adjusted by the
Commissioner for increases in the cost of living
in accordance with Section 401(a)(17)(B) of the
Code. The cost-of-living adjustment in effect for
a Plan Year applies to any period, not exceeding
twelve (12) months, over which Compensation is
determined (determination period) beginning in
such calendar year. If a determination period
consists of fewer than twelve (12) months, the
OBRA '93 Annual Compensation Limit will be
multiplied by a fraction, the numerator of which
is the number of months in the determination
period, and the denominator of which is twelve
(12). For Plan Years beginning on or after
January 1, 1994, any reference in this Plan to the
limitation under Section 401(a)(17) of the Code
shall mean the OBRA '93 Annual Compensation Limit
set forth in this provision.
(4) The Employer may elect an alternative method of
determining Compensation pursuant to regulations
issued by the Internal Revenue Service.
(5) For purposes of Section 4.7, Compensation shall
include in any Plan Year beginning after December
31, 1997 amounts not included in income by reason
of Code sections 125 and 401(k).
(g) "ELIGIBLE EMPLOYEE" means a regular Employee employed
by an Employer on an hourly basis, except that an
Employee shall not be an Eligible Employee if he is (1)
covered under a collective bargaining agreement where
retirement benefits were the subject of good faith
bargaining, unless the agreement provides for
participation in this Plan, or (2) a Leased Employee.
(h) "EMPLOYEE" means (1) a common-law employee of an
Employer or an Affiliate or (2) a Leased Employee of an
Employer or an Affiliate to the extent required by Code
section 414(n).
(i) "EMPLOYER" means Maremont Corporation and its wholly
owned subsidiaries. It also means an Affiliate which
is participating in the Plan pursuant to section 3.4.
(j) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(k) "FIVE-PERCENT OWNER" means a "5-percent owner" within
the meaning of Code section 416(i)(1)(B).
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(l) "FUND" means the Funds described in section 6.1,
collectively or individually as the context indicates.
(m) "FUND A" means that portion of the Trust Fund described
in section 6.1(b) which is comprised of investment
funds to which a Member may direct contributions.
(n) "FUND B" means that portion of the Trust Fund which is
not held under Fund A.
(o) "HIGHLY COMPENSATED EMPLOYEE" means for each Plan Year
beginning on or after January 1, 1997 and shall include
any Employee described in Section 414(q) of the Code
who:
(1) is a five percent (5%) or more owner (as then
defined in Section 416(i)(1) of the Code) of an
Employer or Subsidiary at any time during that
Plan Year or the immediately preceding Plan Year;
or
(2) received more than eighty thousand dollars
($80,000), as automatically adjusted pursuant to
sections 414(q)(1) and 415(d) of the Code without
the necessity of any amendment to the Plan, of
Compensation from the Employers and Subsidiaries
in the immediately preceding Plan Year and was in
the Top Paid Group for that immediately preceding
Plan Year.
For purposes of determining whether an Employee is a
Highly Compensated Employee and notwithstanding
anything else contained in this Section, the following
rules shall apply:
(3) A former Employee shall be treated as a Highly
Compensated Employee if he was a Highly
Compensated Employee in the Plan Year during which
his employment with the Employer and Subsidiaries
terminated or in any Plan Year during which occurs
or commencing after his fifty-fifth (55th)
birthday.
(4) An Employee shall only be deemed to be a Highly
Compensated Employee to the extent then required
by the Code.
(p) "HOURS OF SERVICE" means the hours for which an
Employee shall receive credit for purposes of the Plan,
as follows:
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(1) For each hour for which he is directly or
indirectly paid, or entitled to payment, by the
Company or Subsidiary for the performance of
duties during the applicable computation period,
he shall be credited with one hour. These hours
shall be credited to the Employee for the
computation period or periods in which the duties
were performed and shall include hours for which
back pay, irrespective of mitigation of damages,
has been either awarded or agreed to by the
Company or Subsidiary, with no duplication of
credit for hours.
(2) For each hour, in addition to the hours in
paragraph (1) above, for which he is directly or
indirectly paid, or entitled to payment, by the
Company or Subsidiary, for reasons other than for
the performance of duties during the applicable
computation period, he shall be credited with one
hour. These hours shall be counted in the
computation period in which either payment is
actually made or amounts payable to the Employee
come due.
(3) For each week during which an Employee is absent
from work because of occupational injury or
disease incurred in the course of his employment
by the Company or Subsidiary, provided he would
otherwise have been scheduled to work, he shall be
credited, at the rate of 40 hours for each such
week; provided, however, that no such credit shall
be given for hours for a number of weeks in excess
of the number of weeks for which he actually
receives Workmen's Compensation or Occupational
Disease benefits plus the one-week statutory
waiting period if it is incurred.
(4) For the period or periods of service in the Armed
Forces of the United States for which the Company
or Subsidiary, at the time the Employee is
reemployed by the Company or Subsidiary, is
required by law to give an employee credit for
seniority and status purposes, he shall be
credited at the rate of 170 hours for each 36 days
of such military leave. If the Employee fails to
return to the Company's or Subsidiary's employ
under circumstances which entitle him as a matter
of law to reemployment with full accumulated
rights he shall not receive credit for Hours of
Service for such military leave.
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(5) For the period or periods of continuous absence
from work because of layoff or leave of absence
for which the Employee was not compensated by the
Company or Subsidiary, he shall be credited at the
rate of 40 hours for each such week, but the
amount of each such absence prior to the Effective
Date in excess of three months shall not be
counted, and the amount of each such absence on
and after the Effective Date in excess of two
months shall not be counted.
There shall be no duplication of Hours of Service
under paragraphs (1) through (5) above.
When no time records are available, the Employee
shall be given credit for Hours of Service based
upon the number of normally scheduled work hours
for each week he is on the Company's or
Subsidiary's payroll, as determined in accordance
with reasonable standards and policies from time
to time adopted by the Administrative Committee
under the Act prescribed by the Secretary of
Labor.
(q) "LEASED EMPLOYEE" means a person who is not a common
law employee of an Employer or a Subsidiary but who
provides services to an Employer or a Subsidiary
(recipient organization) and-
(1) such services are provided pursuant to an
agreement (written or oral) between the recipient
organization and any other person ("leasing
organization"),
(2) such person has performed such services for the
recipient organization on a substantially full-
time basis for a period of at least one year, and
(3) such services are performed under the primary
direction or control of the recipient organization
by Employees.
A person shall not be deemed a Leased Employee if such
person is covered by a plan maintained by a leasing
organization if, with respect to such person, such plan
is a money purchase plan with a nonintegrated employer
contribution rate of at least 10 percent, and provides
for immediate participation and for full and immediate
vesting. The preceding sentence shall not be
applicable if Leased Employees constitute more than 20
percent of the recipient organization's nonhighly
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compensated work force (as defined in Code section
414(n)(5)).
(r) "MATCHING CONTRIBUTIONS ACCOUNT" means that portion of
the Member's Account which evidences the value of the
Matching Contributions which have been credited to a
Member's Account under the Plan and including the net
worth of the Trust Fund attributable thereto.
(s) "MATCHING CONTRIBUTIONS" means the contributions
described in section 4.3.
(t) "MEMBER" means a person with an amount credited to his
Account.
(u) "NON-HIGHLY COMPENSATED EMPLOYEE" means an Employee who
is not a Highly Compensated Employee.
(v) "NORMAL RETIREMENT AGE" means an Employee's sixty-fifth
birthday.
(w) "OPTIONAL DEPOSITS" means the unmatched contributions
described in section 4.2.
(x) "PAY" means an Employee's regular base compensation
from his Employer without regard to any Tax Deferred
Deposits, including overtime pay, bonuses, Compensation
reductions to a Code Section 125 plan and other special
cash compensation. For the period before January 1,
1994, no more than $200,000 (as adjusted for increases
in the cost of living pursuant to rules of the Internal
Revenue Service) of Pay shall be taken into account.
In addition to other applicable limitations set forth
in this Plan and notwithstanding any other provision of
this Plan to the contrary, for Plan Years beginning on
or after January 1, 1994, the Pay of each Employee
taken into account under this Plan in any Plan Year
shall not exceed the OBRA '93 Annual Compensation
Limit. The OBRA '93 Annual Compensation Limit is one
hundred and fifty thousand dollars ($150,000), as
adjusted by the Commissioner for increases in the cost
of living in accordance with Section 401(a)(17)(B) of
the Code. The cost-of-living adjustment in effect for
a Plan Year applies to any period, not exceeding twelve
(12) months, over which Pay is determined (determina-
tion period) beginning in such calendar year. If a
determination period consists of fewer than twelve
(12) months, the OBRA '93 Annual Compensation Limit
will be multiplied by a fraction, the numerator of
which is the number of months in the determination
period, and the denominator of which is twelve (12).
For Plan Years beginning on or after January 1, 1994,
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any reference in this Plan to the limitation under
Section 401(a)(17) of the Code shall mean the OBRA '93
Annual Compensation Limit set forth in this provision.
(y) "PLAN" means the Employee Savings Plan.
(z) "PLAN YEAR" means the calendar year.
(aa) "PRIOR YEAR'S NON-HIGHLY COMPENSATED EMPLOYEE" means,
with respect to any Plan Year beginning on or after
January 1, 1997, each individual who was in the
immediately preceding Plan Year:
(1) an Employee eligible to participate in this Plan;
and
(2) not a Highly Compensated Employee, as determined
in accordance with the definition of "Highly
Compensated Employee" in effect with respect to
such immediately preceding Plan Year.
An individual may be a Prior Year's Non-Highly
Compensated Employee even though he is not an Employee
or Participant in the current Plan Year or even though
he would be treated as a Highly Compensated Employee
based on the individual's circumstances and the
definition of "Highly Compensated Employee" in the
current Plan Year.
(bb) "REGULAR DEPOSITS" means the matched contributions
described in 4.1.
(cc) "REQUIRED BEGINNING DATE" means the date described in
section 5.1(b)(3).
(dd) "ROLLOVER DEPOSITS" means the contributions made
pursuant to section 4.2(c).
(ee) "ROLLOVER DEPOSITS ACCOUNT" means that portion of a
Member's Account which evidences the value of the
Rollover Deposits made by a Participant including the
net worth of the Trust Fund attributable thereto.
(ff) "SUBSIDIARY" means
(1) a corporation which is a member of the same
controlled group of corporations as an Employer as
determined under Code sections 414(b) and section
1563(a), but determined without regard to section
1563(a)(4) and (e)(3)(C);
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(2) a trade or business (whether or not incorporated)
which is under common control with an Employer as
determined under Code section 414(c); and
(3) to the extent required by law-
(A) an organization which is a member of the same
affiliated service group as an Employer as
determined under Code section 414(m), and
(B) an organization which is required to be
treated as a Subsidiary pursuant to Code
section 414(o).
For the purposes of section 4.7 (relating to limitation on
annual additions), paragraph (1) shall be applied by
replacing the phrase "at least 80 percent" in Code section
1563(a)(1) with the phrase "more than 50 percent" each place
it appears.
Except as otherwise provided, provisions of the Plan shall
be applied separately with respect to each group of
Employers and Subsidiaries which are related within the
meaning of paragraphs (1), (2), and (3).
(gg) "TAX-DEFERRED DEPOSITS" means the Regular or Optional
Deposits that are made on a before-tax basis pursuant
to section 4.1 or section 4.2.
(hh) "TAX-DEFERRED DEPOSITS ACCOUNT" means that portion of
the Member's Account which evidences the value of the
Tax-Deferred Deposits made by the Employer for the
Member under the Plan including the net worth of the
Trust Fund attributable thereto. Tax-Deferred Deposits
shall comply with Code section 401(k).
(ii) "TAXED DEPOSITS" means the Regular or Optional Deposits
that are made on an after-tax basis pursuant to section
4.1 or section 4.2.
(jj) "TAXED DEPOSITS ACCOUNT" means that portion of the
Member's Account which evidences the value of a
Participant's Taxed Deposits under the Plan including
the net worth of the Trust Fund attributable thereto.
(kk) "TERMINATION OF SERVICE" means the termination of an
Employee's employment, with all Employers and all
Subsidiaries. A transfer of employment from one
Employer to another Employer or Subsidiary, shall not
constitute a Termination of Service for purposes of
this Plan. A sale of a subsidiary or a trade or
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business of an Employer shall not constitute a
Termination of Service except where expressly stated.
(ll) "TOP PAID GROUP" means in a Plan Year the Employees who
are in the top twenty percent (20%) of the Employees of
the Employers and Subsidiaries in terms of Compensation
for such Plan Year; PROVIDED, HOWEVER, that for
purposes of determining the number of Employees to be
included in the Top Paid Group, the following Employees
shall be excluded to the extent permitted by section
414(q)(4) of the Code:
(1) Employees who have not completed six (6) months of
service;
(2) Employees who normally work less than seventeen
and one-half (17 1/2) hours per week or less than
six (6) months during a Plan Year;
(3) Employees who have not attained age twenty-one
(21);
(4) except as provided by regulations promulgated
under the Code, Employees who are covered by a
collectively bargained agreement; and
(5) Employees who are non-resident aliens and who
receive no earned income (within the meaning of
Section 911(d)(2) of the Code) from the Employers
and Subsidiaries which constitutes income from
sources in the United States (within the meaning
of section 861(a)(3) of the Code).
(mm) "TRUST" means the agreement establishing a trust,
which forms part of the Plan, to receive, hold,
invest, and dispose of the Trust Fund.
(nn) "TRUSTEE" means the corporate trustee selected by
the Company to hold and administer the Trust Fund,
or any successor thereto or co-Trustee selected by
the Administrative Committee.
(oo) "TRUST FUND" means the assets held under the Trust
Agreement by the Trustee.
(pp) "VALUATION DATE" means each business day.
2.2 GENDER AND NUMBER. Except when otherwise indicated by the
context, any masculine terminology shall also include the feminine,
and the definition of any term in the singular shall also include the
plural.
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2.3 APPLICABLE LAW. To the extent not preempted by the laws of
the United States, the laws of the State of Indiana shall be the
controlling law in all matters relating to the Plan.
2.4 SEVERABILITY. If a provision of this Plan shall be held
illegal or invalid, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included
in this Plan.
2.5 HEADINGS. The headings of this Plan are inserted for
convenience or reference only and are not to be considered in the
construction or the interpretation of the Plan.
ARTICLE III. ELIGIBILITY AND PARTICIPATION
3.1 PARTICIPATION. Each person who is an Eligible Employee or
who becomes an Eligible Employee shall become an Active Participant on
the first payday of the calendar quarter following the latest to occur
of the following:
(a) the date he becomes an Eligible Employee,
(b) the date he is credited with one year of Eligibility
Service,
(c) the Effective Date, and
(d) he is not a Leased Employee;
provided, however, that to the extent provided by a collective
bargaining agreement covering the employment of an Eligible
Employee, such otherwise Eligible Employee may only become an
Active Participant if such Eligible Employee elects to
participate in the Choice Benefits Plan for Employees of Arvin
Industries, Inc.
3.2 ELIGIBILITY SERVICE.
(a) DEFINITION. An Employee shall be credited with one
year of Eligibility Service on each anniversary of the
date he becomes an Eligible Employee, provided he is
still an Eligible Employee on such anniversary date.
Eligibility Service shall include an Employee's
employment with KYB Industries, Inc. and WorldSource
Coil Coating, Inc.
(b) CANCELLATION OF ELIGIBILITY SERVICE. If an Employee
who has incurred a one-year break in service returns to
employment with an Employer or a Subsidiary, he shall
be recredited with his prior Eligibility Service
effective as of his reemployment date unless (1) at the
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time he terminated employment he did not have an
Account in this Plan and (2) the number of his one-year
breaks in service equals or exceeds the greater of five
or the number of his years of credited Eligibility
Service at his termination of employment.
3.3 DURATION. A Participant shall cease to be an Active
Participant if he is no longer an Eligible Employee, fails to meet the
other requirements described in Section 3.1 or if he ceases to make
Taxed Deposits or Taxed Deferred Deposits.
3.4 ADOPTION OF PLAN BY AFFILIATED COMPANIES. The Chief
Executive Officer of the Company shall have the right to certify to
the Trustee that a Subsidiary shall participate under the terms of
this Plan as an Employer. An Employer is deemed to have designated
the Company as its agent with respect to the Plan. An Employee of an
Affiliate shall not be eligible to become an Active Participant
pursuant to section 3.1 prior to the date the Affiliate becomes an
Employer.
ARTICLE IV. CONTRIBUTIONS
4.1 REGULAR DEPOSITS.
(a) IN GENERAL. An Active Participant may elect to deposit
under the Plan by payroll deduction 1 percent of his
Pay on each pay day or any greater whole percentage not
in excess of 6 percent ("Regular Deposits").
The Regular Deposits for the Active Participant shall
be deducted from his Pay each pay day. Regular
Deposits for each Active Participant shall be paid over
to the Trustee for deposit in Fund A of the Trust Fund
as soon as administratively practicable but not later
than the end of the month following the month in which
the deduction from the Active Participant's Pay was
made. An Active Participant may elect to have his
Regular Deposits credited as a Tax-Deferred Deposit or
a Taxed Deposit. Crediting of Regular Deposits shall
be made at such times as the Administrative Committee
shall deem advisable or necessary; provided, however,
as of each Valuation Date a Member's Employee Taxed and
Tax-Deferred Deposits Accounts shall reflect all
Regular Deposits theretofore deducted from his Pay.
(b) CHANGES IN DEDUCTIONS.
(1) An Active Participant may adjust or stop his
Regular Deposits effective as of the first day of
the payroll period that begins after the
Participant has notified the Administrative
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Committee in the manner and within the time
prescribed by the Administrative Committee.
(2) An Active Participant shall have his Regular
Deposits completely discontinued as of the date he
ceases to be an Eligible Employee.
4.2 OTHER EMPLOYEE DEPOSITS.
(a) OPTIONAL DEPOSITS.
(1) An Active Participant who is making Regular
Deposits equal to 6 percent of his Pay may elect
to deposit under the Plan each pay day by payroll
deduction 1 percent of his Pay on each pay day or
any greater whole percentage not in excess of 10
percent of his Pay. Optional Deposits for each
Participant shall be paid over to the Trustee for
deposit in Fund A of the Trust Fund as soon as
administratively practicable but not later than
the end of the month following the month in which
the deduction from the Active Participant's pay
was made. Subject to rules established by the
Administrative Committee from time to time and
applicable anti-discrimination tests, an Active
Participant may elect to have his Optional
Deposits contributed as a Tax-Deferred Deposit or
a Taxed Deposit or a combination of the two.
Optional Deposits shall be credited to an Active
Participant's Accounts in the Plan at such times
as the Administrative Committee shall deem
advisable or necessary; provided, however, as of
each Valuation Date, a Member's accounts shall
reflect all Optional Deposits theretofore deducted
from his Pay.
(2) An Active Participant may elect to make additional
Optional Deposits under the Plan once each
calendar year by a single Taxed Deposit to the
Trustee, in accordance with uniform rules adopted
therefor by the Administrative Committee, so that
the aggregate Optional Deposits under this section
4.2 do not exceed 10 percent of his aggregate Pay
after the date he became an Active Participant.
(b) CHANGE IN OPTIONAL CONTRIBUTIONS.
(1) An Active Participant may adjust or stop his
Optional Deposits effective as of the first day of
the payroll period that begins after the
Participant has notified the Administrative
Committee in the manner and within the time
prescribed by the Administrative Committee.
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(2) An Active Participant shall have his Optional
Deposits completely discontinued as of the date he
ceases to be an Eligible Employee.
(c) ROLLOVER DEPOSIT. A Participant may make a Rollover
Deposit of--
(1) a distribution after December 31, 1992, which is
an eligible rollover distribution within the
meaning of Code section 402 or 403(a) or an amount
distributed from an individual retirement plan
described in Code section 408(d)(3)(A)(ii), or
(2) an amount directly transferred after December 31,
1992 from another qualified plan pursuant to the
Participant's election under the provisions of
Code section 401(a)(31).
A Rollover Deposit shall be credited to the Rollover
Deposits Account. The Administrative Committee may
adopt rules concerning such deposits as it deems
advisable.
The Administrative Committee may adopt rules concerning
such deposits as it deems advisable.
4.3 MATCHING CONTRIBUTIONS.
(a) CONTRIBUTION MATCH. Subject to the limitations of this
Article, the Employer shall contribute an amount on
behalf of each Active Participant:
(i) who is an Employee of the Employer or a Subsidiary
on the last day of the calendar quarter,
(ii) who Terminates Service during the calendar quarter
after the attainment of the Retirement Age or on
account of a Disability, or
(iii)who died during the calendar quarter
equal to one-quarter of the Regular Deposits made by,
or on behalf of, the Participant.
Payment of the regular Matching Contribution for each
calendar quarter shall be paid to the Trustee for
deposit in Fund B of the Trust Fund at such time as may
be convenient to the Employer, but in no event later
than 30 days after the last day of that calendar
quarter.
Matching Contributions shall be credited to the
Participant's Matching Contribution Account as of the
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Valuation Date that the Matching Contributions relate.
The Matching Contribution Account shall be invested in
the Arvin Stock Fund and shall reflect its allocable
share of investment earnings, gains, and losses
(realized and unrealized).
(b) FORM OF MATCHING CONTRIBUTIONS. Matching Contributions
to the Trust under the Plan shall be made either in
Common Shares, par value $2.50 per share, of the
Company ("Shares"), or in cash, as the Company, in its
sole discretion, shall determine. In the event that
Matching Contributions shall comprise Shares, then for
purposes of determining the amount to be contributed
pursuant to this Article IV, the fair market value of
the Shares shall be an amount equal to the average of
the high and low prices as compiled by the Consolidated
Tape Association of the New York Stock Exchange for the
most recent trading day preceding the day on which the
Matching Contribution is made.
4.4 SECTION 402 LIMIT ON PAY REDUCTION CONTRIBUTIONS.
(a) IN GENERAL. Notwithstanding section 4.1 or 4.2, an
Employer may not make Tax Deferred Deposits for any
calendar year on behalf of a Participant in excess of
$9,500 (as adjusted by the Secretary of the Treasury to
reflect increases in the cost of living). This limit
shall be applied by aggregating all plans and
arrangements maintained by the Employer and
Subsidiaries that provide for elective deferrals as
defined in Code section 402(g).
(b) CORRECTION OF EXCESS. Amounts in excess of the
limitation of subsection (a) (adjusted for gains and
losses as provided by regulations) shall be paid to the
Member not later than April 15 of the taxable year
which follows the taxable year in which the excess
amount arises. The amount to be distributed shall be
reduced by any amounts previously distributed to the
Member under section 4.7 (relating to limitation on
annual additions) with respect to the Plan Year which
begins with or within the taxable year in which the
excess arose. Matching Contributions related to
amounts which are repaid to a Member shall be forfeited
and used as a Matching Employer Contribution in the
Plan Year in which the repayment is made.
Tax-Deferred Deposits which are repaid under this
section shall not be treated as Annual Additions for
the purpose of section 4.7. Tax-Deferred Deposits
which are repaid under this section shall be taken into
account for the purpose of section 4.5 if they are
repaid to a Highly Compensated Employee.
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4.5 SECTION 401(K) LIMIT ON TAX-DEFERRED DEPOSITS.
(a) IN GENERAL. For Plan Years beginning on or after
January 1, 1997 and unless the Administrative Committee
properly elects at such time and in such manner as
prescribed by the Secretary of the Treasury to apply
the Current Year ADP Method (as defined in Subsection
(b) of this Section) instead, if after making the
adjustments required by Section 4.4 the average of the
Actual Deferral Percentages for the group of Highly
Compensated Employees who are eligible to be
Participants in a Plan Year would be more than the
greater of:
(1) the average of the immediately preceding Plan
Year's Actual Deferral Percentages of all Prior
Year's Non-Highly Compensated Employees multiplied
by one and one-fourth (1-1/4th), or
(2) the lesser of:
(A) two percent (2%) plus the immediately
preceding Plan Year's Actual Deferral
Percentage of all Prior Year's Non-Highly
Compensated Employees, or
(B) the immediately preceding Plan Year's Actual
Deferral Percentage of all Prior Year's Non-
Highly Compensated Employees multiplied by
two (2),
the Tax-Deferred Deposits of the Highly Compensated
Employees shall be reduced to the extent necessary so
that the Actual Deferral Percentage for the group of
Highly Compensated Employees is not more than the
greater of Subsection (1) or (2) above.
Reduction of Tax-Deferred Deposits shall be
accomplished first by determining the maximum deferral
for the group of Highly Compensated Employees permitted
by Subsection (1) or (2) above and then reducing the
Tax-Deferred Deposits of the Highly Compensated
Employees with the highest Actual Deferral Percentages
to lower percentages in one-tenth percent (0.1%)
increments until the limitations in this Section are
not exceeded; PROVIDED, HOWEVER, that a lesser than
one-tenth percent (0.1%) reduction shall be made if
such lesser reduction causes the limitations in this
Section not to be exceeded.
For Plan Years beginning on or after January 1, 1997,
correction of excess Tax-Deferred Deposits shall be
accomplished as follows. First, the Administrative
-16-
Committee shall calculate the total dollar amount of
the Tax-Deferred Deposits of Highly Compensated
Employees that would otherwise be reduced as the result
of the reduction of the Tax-Deferred Deposit on the
basis of percentages(the "Total Excess Contributions")
without attributing any such dollar reduction to a
particular Highly Compensated Employee. The Tax-
Deferred Deposits of the Highly Compensated Employee
with the highest dollar amount of Tax-Deferred Deposits
shall then be reduced by the amount required to cause
that Highly Compensated Employee's Tax-Deferred
Deposits to equal the dollar amount of the Tax-Deferred
Deposits of the Highly Compensated Employee with the
next highest dollar amount of Tax-Deferred Deposits.
If the total amount of the reductions of Tax-Deferred
Deposits in the preceding sentence is less than the
Total Excess Contributions, the process in the
preceding sentence shall be repeated. In no event
shall the reductions required under the preceding two
sentences exceed the Total Excess Contributions. The
amount by which each Highly Compensated Employee's Tax-
Deferred Deposit is reduced, plus any income allocated
to such reduced Tax-Deferred Deposit and attributable
to the Plan Year to which such reduction relates, shall
be returned to that Participant no later than the end
of the Plan Year immediately following the Plan Year
for which the excess Tax-Deferred Deposits were made.
Except as otherwise provided below, the remainder of
this Subsection (a) of this Section shall apply to Plan
Years beginning both before and on or after January 1,
1997. The amount of excess Tax-Deferred Deposits to be
refunded shall be reduced by any excess Tax-Deferred
Deposits previously refunded with respect to that Plan
Year. The refund of excess Tax-Deferred Deposits shall
in all cases include the income allocable thereto. The
income allocable to excess Tax-Deferred Deposits shall
include only income for the Plan Year for which the
excess Tax-Deferred Deposits were made.
Any Matching Contributions attributable to excess Tax-
Deferred Deposits shall be treated as a mistaken
contribution, shall be credited to and held in a
suspense account and shall be applied to reduce the
amount of Matching Contributions otherwise required of
the Employer for the next following Plan Year(s) until
exhausted. The income attributable to excess Matching
Contributions shall include only income for the Plan
Year for which the Matching Contributions were made.
Tax-Deferred Deposits shall be taken into account in
determining an Employee's Actual Deferral Percentage
for a Plan Year only if they relate to Compensation
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that either would have been received by the Employee in
that Plan Year (but for his election to make Tax-
Deferred Deposits) or are attributable to services
performed by the Employee in that Plan Year and would
have been received by the Employee within two and one-
half (2 1/2) months after the close of that Plan Year
(but for his election to make Tax-Deferred Deposits).
Tax-Deferred Deposits shall be taken into account in
determining an Employee's Actual Deferral Percentage
for a Plan Year only if they are allocated to the
Employee as of a date within that Plan Year. For this
purpose, Tax-Deferred Deposits shall be considered
allocated as of a date within a Plan Year only if the
allocation is not contingent on participation or
performance of services after that date and the Tax-
Deferred Deposits are actually paid to the Trust Fund
no later than twelve (12) months after the Plan Year to
which the Tax-Deferred Deposits relate.
To the extent permitted by the Code, the Committee
shall have the authority to apply this Section by
aggregating this Plan with any other tax-qualified
retirement plan sponsored and maintained by the
Employers and Subsidiaries.
For Plan Years beginning on or after January 1, 1997,
to the extent this Plan satisfies the minimum coverage
requirements of Section 410(b) of the Code separately
with respect to those Employees who are less than
twenty-one (21) years of age or who have less than one
(1) year of service, the Administrative Committee may
elect to apply this Section 4.5 by excluding from
consideration those Employees (other than Highly
Compensated Employees) who have not yet reached age
twenty-one (21) or who have less than one (1) year of
service by July 1 of the Plan Year in question. Any
election by the Administrative Committee under the
preceding sentence shall be made in accordance with the
Code and any applicable rulings promulgated by the
Internal Revenue Service.
This section shall be applied separately with respect
to those Tax-Deferred Deposits which are treated as a
separate plan pursuant to the mandatory disaggregation
rules of the Internal Revenue Service.
(b) DEFINITIONS.
(1) ACTUAL DEFERRAL PERCENTAGE. The Actual Deferral
Percentage for a specified group of Employees for a
Plan Year shall be the average of the ratios
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(calculated separately for each Employee in such group)
of--
(A) the amount of the Tax-Deferred Deposits actually
paid over to the Trust on behalf of each such
Employee for such Plan Year, to
(B) the Employee's Compensation for such Plan Year.
Such ratios and the Actual Deferral Percentage shall be
calculated to the nearest one-hundredth of 1 percent of
an Eligible Employee's Compensation.
(2) CURRENT YEAR ADP METHOD. The term Current Year ADP
Method shall mean, with respect to a Plan Year, the
calculation of the Actual Deferral Percentage for all
Employees who are eligible to be Participants in that
Plan Year, other than Highly Compensated Employees,
based on the Tax-Deferred Deposits of and the
Compensation earned by each such Employee during the
Plan Year to which such calculation relates.
(3) PRIOR YEAR ADP METHOD. The term Prior year ADP Method
shall mean, with respect to a Plan Year, the
calculation of the Actual Deferral Percentage for all
Prior Year's Non-Highly Compensated Employees, based on
the Tax-Deferred Deposits of and the Compensation
earned by each Prior Year's Non-Highly Compensated
Employees during the immediately preceding Plan Year.
(c) MISCELLANEOUS. To the extent allowed by Treasury
regulations, the Company may elect to calculate the Actual
Deferral Percentages by taking into account Matching
Contributions.
If this Plan is combined with another plan which contains a
cash or deferred arrangement within the meaning of Code
section 401(k) for the purposes of Code section 401(a)(4) or
410(b), the elective contributions under both plans shall be
combined for the purposes of this subsection.
If a Highly Compensated Employee is a participant in two or
more plans maintained by an Employer and its Subsidiaries
containing a cash or deferred arrangement within the meaning
of Code section 401(k), for purposes of determining the
deferral percentage with respect to such Employee, all such
cash or deferred arrangements shall be treated as one cash
or deferred arrangement.
(d) REDUCTIONS DURING PLAN YEAR. If the Company determines
prior to the end of a Plan Year that the limitation of
subsection (a) might not be satisfied, the Company may
reduce the future Tax-Deferred Deposits of the Highly
-19-
Compensated Employees (and the amount of the Pay reductions)
in order to comply with these Code requirements.
(e) ADDITIONAL CONTRIBUTION. If the Company determines that the
limitation of subsection (a) has been or may be exceeded and
to the extent permitted by regulations of the Internal
Revenue Service, the Employer may make an additional
contribution on behalf of Non-Highly Compensated Employees
to satisfy the limitation of subsection (a). Such
contribution shall be fully and immediately nonforfeitable
and may not be withdrawn pursuant to section 5.3 (relating
to in-service withdrawals).
4.6 SECTION 401(M) LIMIT ON TAXED DEPOSITS AND MATCHING EMPLOYER
CONTRIBUTIONS.
(a) IN GENERAL. For Plan Years beginning on or after January 1,
1997 and unless the Administrative Committee properly elects
at such time and in such manner as prescribed by the
Secretary of the Treasury to apply the Current Year ACP
Method (as defined in Subsection (b) of this Section)
instead, if after making the adjustments required by Section
4.5 the Actual Contribution Percentages for the group of
Highly Compensated Employees in a Plan Year would be more
than the greater of:
(1) the product of 1.25 and the preceding Plan Year's
Actual Contribution Percentage for the Prior Year's
Non-Highly Compensated Employees who are Eligible
Employees, or
(2) the lesser of-
(A) the product of two and the preceding Plan Year's
Actual Contribution Percentage for the Prior
Year's Non-Highly Compensated Employees who are
Eligible Employees, or
(B) the preceding Plan Year's Actual Contribution
Percentage for the Prior Year's Non-Highly
Compensated Employees who are Eligible Employees
plus two percentage points,
the Matching Contributions of the Highly Compensated
Employees shall be reduced to the extent necessary so
that the Actual Contribution Percentage for the group
of Highly Compensated Employees is not more than the
greater of Subsection (1) or (2) above. If this Plan
is combined with another plan for the purposes of Code
section 410(b), both plans shall be combined for the
purposes of this subsection.
-20-
This section shall be applied separately with respect
to Taxed Deposits and Matching Contributions which are
treated as a separate plan pursuant to the mandatory
disaggregation rules of the Internal Revenue Service.
Reduction of excess Matching Contributions shall be accomplished
first by determining the maximum average percentage for the group
of Highly Compensated Employees permitted by Subsection (1) or
(2) above and then reducing the Matching Contributions of the
Highly Compensated Employees with the highest Actual Contribution
Percentage so that their Actual Contribution Percentage is
reduced by one-tenth of one percent (0.1%). If after making the
above reduction the limitations are still exceeded, the Actual
Contribution Percentages of the Highly Compensated Employees
shall be further reduced in one-tenth of one percent (0.1%)
increments until the limitations are not exceeded. If a lesser
than one-tenth percent (0.1%) reduction would cause the
limitations of this Section not to be exceeded, such lesser
reduction shall be made.
For Plan Years beginning on or after January 1, 1997, the amount
of excess Matching Contributions to be corrected with respect to
a Highly Compensated Employee shall be determined as follows.
First, the Administrative Committee shall calculate the total
dollar amount of the Matching Contributions of Highly Compensated
Employees that would otherwise be reduced as the result of the
reduction of Actual Contribution Percentages in accordance with
this Section (the "Total Excess Aggregate Contributions") without
attributing any such dollar reduction to a particular Highly
Compensated Employee. The Matching Contributions of the Highly
Compensated Employee with the highest dollar amount of Matching
Contributions shall then be reduced by the amount required to
cause that Highly Compensated Employee's Matching Contributions
to equal the dollar amount of the Matching Contributions of the
Highly Compensated Employee with the next highest dollar amount
of Matching Contributions. If the total amount of the reductions
of Matching Contributions in the preceding sentence is less than
the Total Excess Aggregate Contributions, the process in the
preceding sentence shall be repeated. In no event shall the
reductions required under the preceding two sentences exceed the
Total Excess Aggregate Contributions.
For Plan Years beginning both before and on or after January 1,
1997, any Matching Contributions which may not be allocated to
the Matching Contribution Account of a Participant because of
limitations imposed by this Section plus any earnings (or, if
applicable, less any losses) allocated to such amounts shall be
credited to and held in a suspense account and shall be applied
to reduce the amount of Matching Contributions otherwise required
of the Company for the next following Plan Year(s) until
exhausted. The income attributable to excess Matching
Contributions shall include only income for the Plan Year for
which the Matching Contributions were made.
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After application of Section 4.5 and Subsection (a) of this
Section, if the average of the Actual Contribution Percentages
for the group of Highly Compensated Employees who are eligible to
participate in the Plan exceeds the limits prescribed by
Subsection (1) above and the Actual Deferral Percentage for the
group of Highly Compensated Employees who are eligible to
participate in the Plan exceeds the limits prescribed by Section
4.5(a)(1) then the following "Multiple Use Test" shall apply
under which the sum of:
(3) the average of the Actual Contribution Percentages in such
Plan Year for the group of Highly Compensated Employees who
are eligible to participate in the Plan, and
(4) the Actual Deferral Percentage in such Plan Year for the
group of Highly Compensated Employees who are eligible to
participate in the Plan;
shall not exceed the greater of:
(5) the sum of
(A) one hundred and twenty-five percent (125%) of the
greater of
(i) the average of the Actual Contribution Percentages
for such Plan Year determined under the Current
Year ACP Method or for the immediately preceding
Plan Year determined under the Prior Year ACP
Method, whichever is being used for such Plan
Year, or
(ii) the Actual Deferral Percentage for such Plan Year
determined under the Current Year ADP Method or
for the immediately preceding Plan Year determined
under the Prior Year ADP Method, whichever is
being used for such Plan Year,
plus
(B) the sum of two percent (2%) and the lesser of:
(i) the average of the Actual Contribution Percentages
for such Plan Year determined under the Current
Year ACP Method or for the immediately preceding
Plan Year determined under the Prior Year ACP
Method, whichever is being used for such Plan
Year, or
(ii) the Actual Deferral Percentage for such Plan Year
determined under the Current Year ADP Method or
for the immediately preceding Plan Year determined
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under the Prior Year ADP Method, whichever is
being used for such Plan Year,
PROVIDED, HOWEVER, that the amount determined under
this Subsection (5),(B) may not exceed two hundred
percent (200%) of the lesser of (i) or (ii) of this
Subsection (5),(B);
or
(6) the sum of:
(A) one hundred and twenty-five percent (125%) of the
lesser of
(i) the average of the Actual Contribution Percentages
for such Plan Year determined under the Current
Year ACP Method or for the immediately preceding
Plan Year determined under the Prior Year ACP
Method, whichever is being used for such Plan
Year, or
(ii) the Actual Deferral Percentage for such Plan Year
determined under the Current Year ADP Method or
for the immediately preceding Plan Year determined
under the Prior Year ADP Method, whichever is
being used for such Plan Year,
plus
(B) the sum of two percent (2%) and the greater of:
(i) the average of the Actual Contribution Percentages
for such Plan Year determined under the Current
Year ACP Method or for the immediately preceding
Plan Year determined under the Prior Year ACP
Method, whichever is being used for such Plan
Year, or
(ii) the Actual Deferral Percentage for such Plan Year
determined under the Current Year ADP Method or
for the immediately preceding Plan Year determined
under the Prior Year ADP Method, whichever is
being used for such Plan Year,
PROVIDED, HOWEVER, that the amount determined
under this Subsection (6),(B) may not exceed two
hundred percent (200%) of the greater of(i) or
(ii) of this Subsection (6),(B).
For Plan Years beginning on or after January 1, 1997, if there
has been a corrective distribution of excess Tax-Deferred
Deposits for a Plan Year, then, in applying the Multiple Use Test
-23-
for that Plan Year, the average Actual Deferral Percentage for
the Highly Compensated Employees shall equal the maximum amount
permitted under Section 4.5. For Plan Years beginning on or after
January 1, 1997, if there has been a corrective distribution of
excess Matching Contributions for a Plan Year, then, in applying
the Multiple Use Test for that Plan Year, the average Actual
Contribution Percentage for the Highly Compensated Employees
shall equal the maximum amount permitted under Section 4.6(a) and
(b).
If the limits prescribed by the Multiple Use Test are exceeded,
the Administrative Committee, in its sole discretion, may elect
either to reduce the Matching Contributions or the Tax-Deferred
Deposits of the Highly Compensated Employees, or a combination
thereof, to the extent necessary so that the limits are not
exceeded in the same manner as such Matching Contributions or
Tax-Deferred Deposits are reduced under Section 4.5 or
Subsections (a) and (b) of this Section.
In calculating the Actual Contribution Percentage for a Plan
Year, Matching Contributions shall be taken into account only if
they are:
(7) allocated to the Employee's Account during that Plan Year,
and
(8) paid into the Trust by the end of the twelfth (12th) month
following the close of that Plan Year.
For Plan Years beginning on or after January 1, 1997, to the
extent this Plan satisfies the minimum coverage requirements of
Section 410(b) of the Code separately with respect to those
Employees who are less than twenty-one (21) years of age or who
have less than one (1) year of service, the Administrative
Committee may elect to apply this Section 4.6 by excluding from
consideration those Employees (other than Highly Compensated
Emplo
yees) who have not yet reached age twenty-one (21) or who
have less than one (1) year of service by July 1 of the Plan Year
in question. Any election by the Administrative Committee under
the preceding sentence shall be made in accordance with the Code
and any applicable rulings promulgated by the Internal Revenue
Service.
(b) DEFINITIONS.
(1) ACTUAL CONTRIBUTION PERCENTAGE. The Actual
Contribution Percentage for a specified group of
Employees for a Plan Year shall be the average of the
ratios (calculated separately for each Employee in such
group) of--
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(A) the Matching Employer Contributions and the Taxed
Deposits paid on behalf of each such Employee for
such Plan Year, to
(B) the Employee's Compensation for such Plan Year.
(2) CURRENT YEAR ACP METHOD. The term Current Year ACP
Method shall mean, with respect to a Plan Year, the
calculation of the average of the Matching Contribution
Percentages for all Employees who are eligible to be
Participants in that Plan Year, other than Highly
Compensated Employees, based on the Matching
Contributions made on behalf of and the Compensation
earned by each such Employee during the Plan Year to
which such calculation relates.
(3) PRIOR YEAR ACP METHOD. The term Prior Year ACP Method
shall mean, with respect to a Plan Year, the
calculation of the average of the Matching Contribution
Percentages of the Prior Year's Non-Highly Compensated
Employees, based on the Matching Contributions made on
behalf of and the Compensation earned by each Prior
Year's Non-Highly Compensated Employee during the
immediately preceding Plan Year.
(c) MISCELLANEOUS. To the extent permitted by Treasury
regulations, the Company may elect to take into account Tax-
Deferred Deposits in calculating the Actual Contribution
Percentage.
If a Highly Compensated Employee is a participant in two or
more plans containing a cash or deferred arrangement within
the meaning of Code section 401(k), for purposes of
determining the deferral percentage with respect to such
Employee, all cash or deferred arrangements shall be treated
as one cash or deferred arrangement.
(d) REDUCTION OF CONTRIBUTIONS DURING PLAN YEAR. Subject to
Treasury regulations, if the Company determines prior to the
end of a Plan Year that the limitation of subsection (a)
might not be satisfied, the Company may reduce the Matching
Contributions and Taxed Deposits ("Excess Aggregate
Contributions") of the Highly Compensated Employees in
accordance with rules similar to those described in section
4.5(d).
(e) ALTERNATIVE METHODS OF CORRECTION. If the limitation of
subsection (a) has been or may be exceeded, the Company may
elect to recompute the Actual Contribution Percentage by
taking into account Tax-Deferred Deposits to the extent
permitted by regulations. If the Company determines that
the limitation of subsection (a) has been or may be
exceeded, to the extent permitted by regulations of the
-25-
Internal Revenue Service, the Employer may make an
additional contribution on behalf of Non-Highly Compensated
Employees to satisfy the limitation of subsection (a). Such
contribution shall be credited to the Tax-Deferred Deposits
Account.
4.7 LIMITATIONS ON ANNUAL ACCOUNT ADDITIONS.
(a) ANNUAL ACCOUNT ADDITION. "Annual Account Addition" means,
for any Active Participant for any Limitation Year, the sum
of--
(1) the Employer's contribution made for him under any
defined contribution plan,
(2) the Employee's contributions (before-tax and after-tax)
under any defined contribution plan, and
(3) forfeitures allocated to him under any defined
contribution plan for the Limitation Year.
"Any defined contribution plan" means all defined
contribution benefit plans of the Employer considered as one
plan. "Limitation Year" means the calendar year. For
purposes of this section 4.7, "Compensation" means wages,
salaries, elective deferrals under Code section 401(k) for
Plan Years beginning after December 31, 1997 and other
amounts received for personal services actually rendered in
the course of employment with the Employer including but not
limited to commissions paid salesmen, compensation based on
percentage of profits, tips and bonuses, but excluding
elective deferrals under Code section 401(k) for Plan Years
beginning before January 1, 1998.
(b) LIMITATION. Notwithstanding the foregoing provisions of
this Article IV, for any Limitation Year the Annual Account
Addition of an Active Participant shall not exceed the
lesser of-
(1) $30,000 (adjusted for cost-of-living increases pursuant
to Treasury regulations effective January 1 of a
calendar year and applicable to the' Limitation Years
ending within the calendar year), and
(2) 25 percent of the Active Participant's Compensation for
such Limitation Year.
(c) ADDITIONAL LIMITATION. If in any Limitation Year before
January 1, 2000 an Active Participant is a participant in
both a defined contribution plan and a defined benefit plan
of the Employer or a nonparticipating Subsidiary, the sum of
his defined contribution plan fraction and his defined
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benefit plan fraction for the Limitation Year shall not
exceed 1.0.
(1) For this purpose: "Defined Contribution Plan Fraction"
for the Limitation Year is a fraction, the numerator of
which is the sum of the Annual Account Additions
(defined in subsection (a)) to the Active Participant's
account as of the close of the Limitation Year and the
denominator of which is the sum of the lesser of the
following amounts determined for such year and for each
prior year of service with the Employer or Subsidiary:
(A) the product of 1.25, multiplied by the dollar
limitation in effect under subsection (b)(1) of
this section 4.7 for such year (determined without
regard to Code section 415(c)(6)), or
(B) the product of 1.4, multiplied by the amount which
may be taken into account under subsection (b)(2)
with respect to such Participant for such
Limitation Year.
(2) "Defined Benefit Plan Fraction": for any Limitation Year is
a fraction--
(A) the numerator of which is the projected annual benefit
of the Active Participant under the defined benefit
plan of the employer or nonparticipating Subsidiary
determined as of the close of the Limitation Year, and
(B) the denominator of which is the lesser of the product
of 1.25, multiplied by the dollar limitation in effect
under Code section 415(b)(1)(A) for such year, or, the
product of 1.4, multiplied by the amount which may be
taken into account under Code section 415(b)(1)(B) with
respect to such Participant under such plan for such
Limitation Year. If a Participant's accrued benefit as
of October 31, 1987, under the defined benefit plan
exceeds the above limit, then the limitation shall
equal such accrued benefit as of October 31, 1987.
For purposes of calculating the foregoing fractions, all defined
benefit plans of the Employer are to be treated as one defined
benefit plan and all defined contribution plans of the Employer
are to be treated as one defined contribution plan.
At the election of the Administrative Committee, in determining
the denominator of the defined contribution plan fraction with
respect to any Limitation Year ending after December 31, 1982,
the amount taken into account with respect to each participation
for all years ending before January 1, 1983, shall be an amount
equal to the product of--
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(i) the amount determined under Code section 415(e)(3)(B) (as in
effect for the Limitation Year ending in 1982) for the year
ending in 1982, multiplied by
(ii) the transition fraction. The term "transition fraction"
means a fraction-
(I) the numerator of which is the lesser of $51,875 or 1.4,
multiplied by 25 percent of the compensation of the
Participant for the Limitation Year ending in 1981, and
(II) the denominator of which is the lesser of $41,500 or 25
percent of the compensation of the Participant for the
Limitation Year ending in 1981.
(d) REDUCTION IN ANNUAL ACCOUNT ADDITIONS. If in any Limitation
Year a Participant's Annual Account Additions exceed the
applicable limitation determined under subsection (b) above
as a result of the allocation of forfeitures, a reasonable
error in estimating a Participant's annual compensation, a
reasonable error in determining the amount of Tax Deferred
Deposits that may be made under this section, or as allowed
by the Commissioner of the Internal Revenue Service, such
excess (the "Annual Account Excess") shall not be allocated
to his accounts in any defined contribution plan, but any
reduction necessary shall be made as follows:
(1) His Optional Taxed Deposits up to the amount of the
Annual Account Excess plus gains thereon shall be
returned to him.
(2) If there is any remaining Annual Account Excess after
the application of paragraph (1) above, his share of
Matching Employer Contributions shall be reduced up to
the remaining amount of the Annual Account Excess.
(3) If there is any remaining Annual Account Excess after
the application of paragraphs (1) and (2) above, his
Tax-Deferred Deposits shall be returned to him up to
the remaining amount of the Annual Account Excess plus
gains thereon.
The above reductions shall be applied to this Plan first and
next to any other plan constituting a defined contribution
plan of the Employer.
Any reduction in such Participant's allocation under
paragraph (2) above shall be deemed to be a forfeiture under
the Plan for the Plan Year in which it occurs and shall be
reallocated with gains thereon as determined by the
Administrative Committee for forfeitures for that Plan Year.
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(e) If in any Limitation Year a Participant's Annual Account
Additions exceed the limitation determined under subsection
(c) above, benefits from an Employee's defined benefit plan
shall first be reduced prior to reduction of a benefit plan
under this or any other defined contribution plan of the
Employer. Such reduction shall be equal to the amount of
the Annual Account Excess.
4.8 FULL VESTING. A Participant shall be 100 percent vested in
the entire amount of all his Accounts.
4.9 EFFECT OF MISTAKE. In the event of a mistake or
misstatement as to the age or eligibility or Pay or Hours of Service
or participation of a Member, or the allocations made to the account
of any Member, or the amount of distributions made or to be made to a
Member or other person, the Administrative Committee shall, to the
extent it deems possible, cause to be allocated from future Matching
Contributions, or cause to be withheld or accelerated, or otherwise
make adjustment of, such amounts as will in its judgment accord to
such Member or other person, the credits to the account or
distributions to which he is properly entitled under the Plan.
4.10 REHIRE AFTER MILITARY SERVICE. The provisions relating to
qualified retirement plans which are set forth in the Uniformed
Services Employment and Reemployment Rights Act of 1994 ("USERRA") are
hereby incorporated into, and made a part of, this Plan by reference.
The Administrative Committee shall apply the provisions of the USERRA
with respect to any Participant who is reemployed after completing
covered military service in a manner consistent with the USERRA and
all other applicable law and regulations.
ARTICLE V. DISTRIBUTIONS AND WITHDRAWALS
5.1 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT OR AT AGE 70
1/2.
(a) IN GENERAL. Except as otherwise provided in this section, a
Participant who terminates employment with all Employers and
the Subsidiaries prior to his death shall receive the value
credited to his Account in a lump sum amount as provided in
subsection (d).
For the purposes of this Plan, a transfer of the employment
relationship on account of a sale or other disposition of an
Employer or a Subsidiary shall be considered to be a
termination of employment if the affected Participant ceases
to be employed by an Employer or an entity which is in the
same controlled group of corporations or trades and
businesses under Code Section 414(b) or (c), except where
expressly stated in this Plan.
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(b) COMMENCEMENT OF BENEFIT PAYMENTS.
(1) IN GENERAL. Except as provided in paragraph (2), if a
Participant terminates employment before attaining his
Required Beginning Date, his lump sum payment shall be
made as of his Required Beginning Date, unless an
earlier date is elected pursuant to paragraph (3).
(2) SMALL AMOUNTS. If the value of a Participant's Account
is $3,500 (or, effective January 1, 1998, $5,000) or
less, it shall be paid as soon as administratively
practicable following his termination of employment
whether or not he consents to the distribution.
(3) CONSENT TO DISTRIBUTION BEFORE AGE 70 1/2. If the
value of a Participant's Account exceeds $3,500 (or,
effective January 1, 1998, $5,000), no distribution
shall be made to the Participant before he attains his
Required Beginning Date unless he consents in writing
to the distribution. If a Participant does not consent
to a distribution, it shall be deemed to be an
irrevocable election to receive a cash lump sum
distribution as of his Required Beginning Date with the
value of the distribution determined as of the
Valuation Date for the preceding calendar quarter.
(c) REQUIRED BEGINNING DATE. Notwithstanding the foregoing, a
Participant shall commence benefit payments not later than
his Required Beginning Date. The Required Beginning Date
shall mean the April 1 of the calendar year following the
calendar year in which the Participant attains age 70 1/2
or, effective on and after January 1, 1999 for Participants
who are not a Five-Percent Owner and who reach age 70 1/2 on
or after January 1, 1999, the Required Beginning Date shall
be no earlier than the April 1 of the calendar year
following the calendar year during which the Member has a
Termination of Service.
(d) METHOD OF PAYMENT. Amounts payable under this section shall
be paid in a lump sum amount equal to the value credited to
the Participant's Account as of the most recent Valuation
Date preceding the distribution date for which the amount of
the distribution could be determined. The value credited to
the Arvin Stock Fund shall be distributed in (A) cash or (B)
by the distribution of the number of whole shares of Company
stock and uninvested cash allocated to the Account as of the
Valuation Date, as the Participant may elect, but not a
combination of (A) and (B). Cash shall be distributed in
lieu of fractional shares of stock.
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5.2 DISTRIBUTION UPON DEATH.
(a) If a Participant dies before distribution from his
Account has occurred, his Beneficiary shall receive a
lump sum distribution of the entire value credited to
his Account as of the most recent Valuation Date
preceding the distribution date for which the amount of
the distribution could be determined. The value
credited to the Arvin Stock Fund may be distributed in
(1) cash, or (2) whole shares of Company stock and
uninvested cash, as the Beneficiary elects, but not a
combination of (1) and (2). The date of payment shall
be subject to section 5.4 below.
(b) BENEFICIARY DESIGNATION. A Member's spouse shall be
his designated Beneficiary unless otherwise elected as
set forth below. Each Member may designate, upon such
forms as shall be provided for that purpose by the
Administrative Committee, a Beneficiary (or
Beneficiaries) to receive his interest in the Plan in
the event of his death, but the designation of a
Beneficiary other than a Member's spouse shall not be
effective for any purpose unless and until it has been
filed by the Member with the Committee and has been
signed by the Member's spouse with an acknowledgment of
the effect of such consent and witnessed by a Plan
representative or notary public. A Member may, from
time to time, on a form provided by and filed with the
Administrative Committee, change the Beneficiary in the
manner stated.
In the event that a Member shall not designate a
Beneficiary in the manner heretofore stated, or if for
any reason such designation shall be legally
ineffective, or if such Beneficiary predeceases the
Member or dies simultaneously with him, then, for the
purposes of the Plan, distribution shall be made by the
Trustee as directed by the Administrative Committee to
such Beneficiary or Beneficiaries from among the
natural objects of the Member's bounty, his dependents
or his estate as the Administrative Committee in its
sole discretion shall select.
5.3 IN-SERVICE WITHDRAWALS.
(a) IN GENERAL. Prior to Termination of Service from all
Employers and Subsidiaries, no distribution shall be
made from the Matching Contributions Account. Prior to
Termination of Service from all Employers and
Subsidiaries, no distribution shall be made from any
other Account except as provided in this section. The
total number of all withdrawals that may be made
pursuant to this section in a Plan Year shall not
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exceed two. A withdrawal from an Account which is
invested in two or more Funds shall be considered to
have been drawn from each Fund in proportion to the
amount under such Account that is invested in each such
Fund.
No Matching Contribution shall be made on behalf of a
Participant for the calendar quarter in which he makes
a withdrawal pursuant to this section.
For the purposes of this section, the Administrative
Committee may establish subaccounts within any such
Account as it deems advisable for accounting, tax, or
other purposes.
(b) NONHARDSHIP DISTRIBUTIONS. Amounts may be withdrawn from
first, the Taxed Deposits Account and second, the Rollover
Deposits Account at any time subject to the rules of the
Administrative Committee.
(c) HARDSHIP WITHDRAWALS.
(1) IN GENERAL. Prior to a Termination of Service with all
Employers and Subsidiaries, a Member may make a
withdrawal from his Tax-Deferred Deposits Account if
the distribution is on account of a financial need
constituting a hardship (as described in paragraph (2))
and the distribution is necessary to satisfy the need
(as determined under paragraph (3)). The withdrawal
may be made from the following Accounts and shall be
made in the order specified: the Taxed Deposits
Account, the Rollover Deposits Account, and the Tax-
Deferred Deposits Account.
In no event shall a hardship distribution from the Tax-
Deferred Deposits Account exceed the total Tax-Deferred
Deposits made on behalf of the Member (reduced by prior
distributions) or, if less, the value of the Tax-
Deferred Deposits Account.
(2) FINANCIAL HARDSHIP. A financial hardship shall be
deemed to exist as a result of the following financial
obligations:
(A) medical expenses described in Code section 213(d)
incurred by the Member, the Participant's spouse,
or any dependents of the Participant (as defined
in Code section 152),
(B) the purchase (excluding mortgage payments) of a
principal residence for the Member,
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(C) payment of tuition and related fees for the next
12 months of post-secondary education for the
Member, his spouse, children, or dependents, or
(D) the need to prevent the eviction of the Member
from his principal residence or foreclosure on the
mortgage of the Member's principal residence.
(3) NECESSITY FOR DISTRIBUTION. A distribution shall be
deemed necessary to satisfy a financial need described
in paragraph (2) if the Member represents to the
Company that the need cannot be relieved--
(A) through reimbursement or compensation by insurance
or otherwise,
(B) by reasonable liquidation of the Member's assets
to the extent that such liquidation would not
itself cause an immediate and heavy financial
need,
(C) by cessation of voluntary contributions under the
Plan, or
(D) by other distributions or nontaxable loans from
plans or by borrowing from commercial sources on
reasonable commercial terms.
A Member's resources shall be deemed to include those assets
of his spouse and minor children that are reasonably
available to the Member.
(d) AGE 59 1/2 WITHDRAWAL. Upon attainment of age 59 1/2, a
Participant may withdraw amounts from first, the Taxed
Deposits Account, second, the Rollover Deposits Account, and
third, the Tax-Deferred Deposits Account at any time subject
to the rules of the Administrative Committee.
5.4 TIME FOR DISTRIBUTION. Notwithstanding any other provisions
of this Plan, unless a Member who is entitled to receive any benefit
hereunder otherwise elects, payment of this benefit will begin not
later than the sixtieth day after the close of the Plan Year in which
falls the last to occur of the following dates:
(a) the date on which the Member attains age 65;
(b) the tenth anniversary of the year in which the Member first
became a Member of the Plan; or
(c) the date on which the Member ceased to be employed by the
Employer and its Subsidiaries.
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5.5 WITHHOLDING ON DISTRIBUTIONS. There shall be withheld from
each distribution under this Plan such amount (if any) as is required
to be withheld pursuant to the provisions of the Code and regulations
issued thereunder. The Administrative Committee shall establish the
procedures and forms necessary to carry out the provisions of this
section 5.5.
5.6 ELIGIBLE ROLLOVER DISTRIBUTIONS; DIRECT ROLLOVER. This
Section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Section, a
distributee may elect, at the time and in the manner prescribed by the
Administrative Committee, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by
the distributee in a direct rollover. For purposes of this Section,
the following terms shall have the meanings set forth below:
(a) ELIGIBLE ROLLOVER DISTRIBUTION: An eligible rollover
distribution is any distribution of all or any portion of
the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: (1) any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the distributee
and the distributee's designated beneficiary, or for a
specified period often (10) years or more; (2) any
distribution to the extent such distribution is required
under section 401(a)(9) of the Code; (3) effective on and
after January 1, 1999, a withdrawal made in accordance with
Section 5.3(c) to a Member who has not reached age 59 1/2;
and (4) the portion of any distribution that is not
includible in gross income.
(b) ELIGIBLE RETIREMENT PLAN: An eligible retirement plan is an
individual retirement account described in section 408(a) of
the Code, an individual retirement annuity described in
section 408(b) of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified trust described
in Section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement
annuity.
(c) DISTRIBUTEE: A distributee includes an employee or former
employee. In addition, the employee's or former employee's
surviving spouse and the employee's or former employee's
spouse or former spouse who is an alternate payee under a
qualified domestic relations order, as defined in section
414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
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(d) DIRECT ROLLOVER: A direct rollover is a payment by the plan
to the eligible retirement plan specified by the
distributee.
(e) WITHHOLDING. In the case of an eligible rollover
distribution which is not directly transferred to an
eligible retirement plan pursuant to subsection (a), the
Plan shall reduce the amount of the distribution by the
amount of the tax required to be withheld by law and
regulations.
5.7 NONALIENATION. No interest herein or benefit payable
hereunder shall be subject in any way to alienation, sale, transfer,
assignment, pledge, attachment, garnishment, execution, or encumbrance
of any kind, except for qualified domestic relations orders in
accordance with the Retirement Equity Act of 1984.
5.8 INCOMPETENCY. Every person receiving or claiming benefits
under the Plan shall be conclusively presumed to be mentally competent
until the date on which the Administrative Committee receives a
written notice, in a form and manner acceptable to the Administrative
Committee that such person is incompetent and that a guardian,
conservator, or other person legally vested with the care of his
estate has been appointed for him; provided, however, that if the
Administrative Committee shall find that any person to whom a benefit
is payable under the Plan is unable to care for his affairs because of
incompetency, any payment due (unless a prior claim therefor shall
have been made by a duly appointed legal representative) may be paid
to the spouse, a child, a parent, a brother or sister, or said person,
or to any person or institution deemed by the Administrative Committee
to have incurred expenses for such person otherwise entitled to
payment. In the event a guardian or conservator of the estate of any
person receiving or claiming benefits under the Plan shall be
appointed by a court of competent jurisdiction, payments shall be made
to such guardian or conservator provided that proper proof of
appointment and continuing qualification is furnished in a form and
manner acceptable to the Administrative Committee. Any payment made
in accordance with this section 5.8 shall be a complete discharge of
any liability therefore under the Plan.
ARTICLE VI. INVESTMENTS AND ACCOUNTS
6.1 FUNDS AND ACCOUNTS.
(a) ACCOUNTS.
(1) IN GENERAL. The Accounts and records of the Plan shall
be maintained by the Administrative Committee and shall
accurately disclose the status of the Accounts of each
Member or his Beneficiary in the Plan. Each Member will
be advised from time to time, at least once each Plan
Year, as to the status of his Accounts.
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(2) TYPES OF ACCOUNTS. The following Accounts shall be
established with respect to each Participant:
(A) the Taxed Deposits Account which shall be credited
with a Participant's Taxed Deposits under sections
4.1 (relating to Regular Deposits) and 4.2
(relating to Optional Deposits);
(B) the Taxed-Deferred Deposits Account which shall be
credited with Tax-Deferred Deposits under sections
4.1 and 4.2;
(C) the Matching Contributions Account which shall be
credited with Matching Contributions under section
4.3; and
(D) the Rollover Deposits Account which shall be
credited with Rollover Deposits pursuant to
section 4.2(c).
The Administrative Committee may establish such
additional Accounts or subaccounts as it may consider
necessary or advisable.
Each Account shall be adjusted pursuant to section 6.2
(relating to adjustment to reflect net worth of the
Trust Fund).
(b) FUNDS. The Trust Fund shall be divided into two parts,
designated "Fund A" and "Fund B." Fund A shall consist of
three separate investment Funds consisting of the Equity
Index Fund, Balanced Fund, and the Fixed Interest Fund, and
such other funds as the Administrative Committee may decide
to offer in addition to or in lieu of the foregoing. Fund B
shall be invested as set forth in the Trust. Each Member's
undivided proportionate interest in each Fund shall be
measured by the proportion that his Account or Accounts in
such Funds bears to the total Accounts of all Members in
that Fund as of the date that such interest is being
determined.
(c) INVESTMENT OF CONTRIBUTIONS AND ACCOUNTS. Except as
provided in subsection (d)(2), all amounts credited to the
Matching Contributions Account shall be invested in Fund B.
Except as provided above, a Participant may elect to invest
contributions, other than Matching Contributions, in
increments of 5 percent in any one or all of the Funds,
except Fund B, such that the total equals 100 percent.
Effective on and after July 1, 1997 and in accordance with
procedures established by the Administrative Committee,
Participants shall be permitted to invest their
contributions in Fund B; PROVIDED, HOWEVER, that the
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Administrative Committee shall maintain a separate
accounting of a Participant's Fund B investments
attributable to his contributions because these investments
may be transferred to Fund A. The amounts credited to a
Participant's Account required to be invested in Fund B (the
amounts credited to the Matching Contributions Account) is
hereinafter referred to as Designated Fund B Investments.
Designated Fund B Investments may not be transferred out of
Fund B except as permitted by Section 6.1(d)(2). Each type
of contribution shall be invested in the same proportions.
The Participant's election or any change in a prior election
shall be filed with the Administrative Committee in the
manner prescribed by the Administrative Committee and shall
be effective on the first day of the next payroll period if
timely filed pursuant to the rules of the Administrative
Committee.
(d) TRANSFERS BETWEEN FUNDS.
(1) IN GENERAL. Effective as of any business day, a Member
may elect to transfer amounts from one Fund (other than
the Participant's Designated Fund B Investments) to
another Fund by notifying the Administrative Committee
in the manner and within the time prescribed by the
Administrative Committee. The amount to be transferred
shall be specified as a multiple of 5 percent of the
amount credited to the Fund or specified in dollar
amounts. The transferred amount shall be applicable to
each of the Member's Accounts which are invested in the
specified Fund in proportion to the value of each
Account invested in the Fund.
(2) TRANSFERS AFTER AGE 60. Effective as of the first
business day of any calendar quarter which begins after
a Participant has attained age 60, the Participant may
elect to transfer amounts credited to Fund B as
Designated Fund B Investments to another Fund by
notifying the Administrative Committee in the manner
and within the time prescribed by the Administrative
Committee. The amount which may be transferred from
Fund B shall be limited to the following percentage of
his Designated Fund B Investments:
1st Year 20 percent
2nd Year 25 percent
3rd Year 33 1/3 percent
4th Year 50 percent
5th Year Balance Transferred
An election made under this paragraph shall remain in force
until the Participant notifies the Administrative Committee
to cease the transfer. After a Participant has so notified
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the Administrative Committee, a new election may not be
made.
The Administrative Committee may adopt rules limiting
withdrawals by a Member who is an officer, director, or 10
percent shareholder of the Company within the meaning of
section 16 of the Securities Exchange Act of 1934 as it may
deem advisable to exempt transactions in Company stock from
the provisions of section 16(b) of such Act.
6.2 ADJUSTMENTS TO REFLECT NET WORTH OF THE TRUST FUND. As of
each Valuation Date, the Administrative Committee shall adjust all
Accounts to reflect contributions, withdrawals, distributions, and
payouts which are to be credited or debited as of that date, and shall
adjust the net credit balances in the Account so that the net credit
balances in the Accounts will equal the net worth of the applicable
Funds as of that date, using fair market values as determined by the
Trustee and reported to the Administrative Committee.
All determinations made by the Trustee with respect to fair market
values and net worth shall be made in accordance with generally
accepted principles of trust accounting, and such determinations when
so made by the Trustee and any determinations by the Administrative
Committee based thereon, shall be conclusive and binding upon all
persons having an interest under the Plan.
6.3 VOTING AND TENDER OFFER DECISIONS. Each Member (or, in the
event of the Member's death, the Member's Beneficiary) shall have the
right to direct the Trustee as to the manner in which shares of Arvin
stock allocated to such Member's Account are to be voted on each
matter brought before an annual or special stockholders' meeting of
the Company. Before each such meeting of stockholders, the Trustee
shall cause to be furnished to each Member (or Beneficiary) a copy of
the proxy solicitation material, together with a form requesting
confidential directions on how such shares of Arvin stock allocated to
such Member's Account shall be voted on each such matter. Upon timely
receipt of such directions, the Trustee shall on each such matter vote
as directed the number of shares (including fractional shares) of
Arvin stock allocated to such Member's Equity Account. The
instructions received by the Trustee from Members shall be held by the
Trustee in strict confidence and shall not be divulged or released to
any person, including officers or employees of the Company. All Arvin
stock credited to Member Accounts as to which the Trustee does not
receive voting instructions as specified above, and all unallocated
Arvin stock held by the Trustee, shall be voted by the Trustee
proportionately in the same manner as it votes Arvin stock to which
the Trustee has received voting instructions as specified above. Each
Member (or, in the event of the Member's death, the Member's
Beneficiary) shall have the right, to the extent of the number of
shares of Arvin stock allocated to such Member's Account, to direct
the Trustee in writing as to the manner in which to respond to a
tender or exchange offer with respect to shares of Arvin stock. The
Trustee shall use its best efforts to timely distribute or cause to be
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distributed to each Member (or Beneficiary) such information as will
be distributed to stockholders of the Company in connection with any
such tender or exchange offer. Upon timely receipt of such
instructions, the Trustee shall respond as instructed with respect to
shares of Arvin stock allocated to such Member's Account. If the
Trustee shall not receive timely instruction from a Member (or
Beneficiary) as to the manner in which to respond to such a tender or
exchange offer, with respect to allocated shares of Arvin stock with
respect to which such Member has the right of direction. As to all
unallocated Arvin stock held by the Trustee, the Trustee shall enter
the same proportion thereof as the Arvin stock as to which the Trustee
has received instructions from Members to tender bears to all Arvin
stock allocated to Member Accounts. The instructions received by the
Trustee from Members shall be held by the Trustee in strict confidence
and shall not be divulged or released to any person, including
officers or employees of the Company. All voting and tender rights on
shares of Arvin stock held by the Trustee shall be exercised by the
Trustee only as directed by the Members (or their Beneficiaries)
acting in their capacity as named fiduciaries (within the meaning of
ERISA section 402) with respect to both allocated and unallocated
shares in accordance with the provisions of this section.
ARTICLE VII. ADMINISTRATION AND TRUST
7.1 APPOINTMENT, RESIGNATION, AND REPLACEMENT. The
Administrative Committee shall be composed of not less than three
persons appointed by the Chief Executive Officer of the Company and
serving until death, resignation, or replacement by the President.
The responsibility of the Chief Executive Officer of the Company shall
be limited to the appointment of the Administrative Committee.
7.2 NOTICE TO THE TRUSTEE. Promptly after appointment of a
member of the Administrative Committee and after each change in
membership, the Committee shall give written notice to the Trustee of
the name of such member. The Trustee shall not be deemed to be on
notice of any change in membership of the Administrative Committee
unless so notified.
7.3 RESPONSIBILITIES AND RIGHTS.
(a) IN GENERAL. The Administrative Committee shall have all
rights necessary to carry out the responsibilities conferred
upon it in Article VII or expressly conferred upon it by the
Trust Agreement.
The Administrative Committee shall have no responsibilities
or rights with respect to the management or control of the
Trust Fund and no responsibilities under the Plan or Trust
Agreement except as provided in this Article VII or
expressly provided in the Trust Agreement.
(b) The Administrative Committee shall have the following
responsibilities under the
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Plan:
(1) administration of the Plan in accordance with the terms
of the Plan;
(2) interpretation of the Plan, including the determination
of eligibility for benefits and the status and rights
of Employees, Participants, Inactive Participants,
Former Participants, and others under the Plan and the
deciding of all disputes arising under the Plan;
(3) direction of the Trustee concerning all payments which
should be made out of the Trust Fund pursuant to the
provisions of the Plan Agreement; and
(4) amendment of the Plan and Trust Agreement pursuant to
section 8.1.
(c) TRUST FUND. The Administrative Committee shall have the
following authority, responsibility, and control over the
management and operation of the Trust Fund:
(1) removal of the Trustee and the appointment of successor
Trustees;
(2) appointment of co-Trustees and investment managers (as
defined in ERISA section 3(38)) and allocation of
responsibilities between or among such persons;
(3) analyze projected long- and short-term funding
requirements of the Plan, obtaining advice of
independent experts as may be deemed advisable and
giving due regard to anticipated contributions by the
Employer, benefit provisions, payments and liabilities,
and appropriate investment and actuarial assumptions,
and on the basis of the foregoing establish and revise
funding policies for the Trust;
(4) transfer contributions to the Trust to provide for
funding of the Plan, and allocate such contributions as
well as other funds and property held in the Trust
among Investment Managers and the Trustee selected by
the Administrative Committee;
(5) communicate to the Trustee and the Investment Managers
their respective investment objectives; and
(6) regularly review the accounts submitted by the Trustee
and such Investment Managers, when appropriate enter
objections with respect thereto, monitor their
investment performance and compliance with the terms of
their respective appointments.
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7.4 RULES OF PROCEDURE. The Administrative Committee shall
adopt such rules of procedure for the conduct of its affairs as it
deems appropriate. Any action taken by the Administrative Committee
may be communicated to the Trustee, investment manager, or other
person under the signature of any two members of the Committee and any
document approved or adopted by the Administrative Committee may be
executed on behalf of the Employer by any two members of the
Administrative Committee.
7.5 STATUS. Arvin Industries, Inc. shall be the administrator
of the Plan and named fiduciary under the Plan. Arvin Industries,
Inc. shall exercise all rights and duties under the Plan and Trust
Agreement through the Administrative Committee, which shall also be a
named fiduciary, and which may designate one or more other persons to
aid it in carrying out its responsibilities under the Plan and Trust
Agreement. The Trustee shall be a named fiduciary under the Trust
Agreement.
7.6 APPOINTMENT OF ADVISORS. The Administrative Committee may
appoint such advisors, agents, and representatives as it shall deem
desirable who may but need not be Members.
7.7 INDEMNIFICATION. To the extent permitted by ERISA, the
Employer shall indemnify and save harmless each member of the
Administrative Committee against any and all expenses and liabilities
arising out of his status as such member, except expenses and
liabilities arising out of his own fraud or willful conduct. The fact
that a member of the Administrative Committee is a Member of the Plan
shall not disqualify him from doing any act or thing which the Plan
authorizes or requires him to do as such member or render him
accountable for any allowance, distribution, or other profit or
advantage received by him.
7.8 EXPENSES. The members of the Administrative Committee shall
be entitled to receive their reasonable expenses incurred in
administering the Plan. Any administration expenses including legal
fees and other expenses shall be paid out of the Trust Fund, unless
paid directly by the Employer in the discretion of the Employer.
7.9 APPEALS FROM DENIAL OF CLAIMS. If any claim for benefits
under the Plan is wholly or partially denied, the Beneficiary shall be
given notice in writing of such denial within a reasonable period of
time, setting forth the following information:
(a) the specific reason or reasons for the denial;
(b) specific reference to pertinent Plan provisions on which the
denial is based;
(c) a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material or information is
necessary;
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(d) an explanation that a full and fair review by the
Administrative Committee of the decision denying the claim
may be requested by the claimant or his authorized
representative filing with the Administrative Committee,
within 90 days after such notice has been received, a
written request for such review, and
(e) if such request is so filed, the claimant or his authorized
representative may review pertinent documents and submit
issues and comments in writing within the same 90-day period
specified in subsection (d) above.
The decision of the Administrative Committee shall be made promptly,
and not later than 60 days after the Administrative Committee's
receipt of the request for review, unless special circumstances
require an extension of time for processing, in which case a decision
shall be rendered as soon as possible, but not later than 120 days
after receipt of the request for review. The Member or Beneficiary
shall be given a copy of the decision promptly. The decision shall be
in writing and shall include specific reasons for the decision,
written in a manner calculated to be understood by the claimant, and
specific references to the pertinent Plan provision on which the
decision is based. The decision of the Administrative Committee shall
be binding upon the Member or Beneficiary and shall preclude further
administrative or judicial review of the claim.
7.10 TRUST. The Company will enter into a Trust with the Trustee
to establish the Trust Fund. The Trust shall be deemed to form a part
of the Plan and any and all rights and benefits which may accrue to
any Member or his Beneficiaries under the Plan shall be subject to all
of the terms and provisions of the Trust. The Committee may direct
the Trustee to enter into one or more insurance investment contracts
with an insurance company or companies as or as a part of the
Guaranteed Interest Fund Investment Fund of Fund A.
7.11 LITIGATION. In order to protect the Trust Fund against
depletion as a result of litigation, in the event that any person may
bring any legal or equitable action arising under the Plan against the
Trustee or the Employers, or in the event that the Employers or the
Trustee may find it necessary to bring any legal or equitable action
arising under the Plan against any person, the Employers shall have
the right to join the Trustee as a party defendant or party plaintiff
in any such actions, and all expenses of defending or bringing such
action shall be paid by the Trustee from the Trust Fund I If the
result of any such action shall be adverse to such person, the cost to
the Trustee of defending or bringing such action shall be charged to
such extent as is possible directly to the account of such person, and
the excess, if any, shall be charged against the entire Trust Fund.
7.12 MULTIPLE EMPLOYER PLAN. To the extent this Plan becomes a
multiple-employer plan (within the meaning of Section 413(c) of the
Code), the Trustee shall account for the assets attributable to the
Employees of each participating Employer in the manner directed by the
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Committee, and the Committee shall apply the requirements of Section
4.5 and 4.6 separately to
each such Employer. For purposes of this
Section, the term Employer shall include all entities required to be
aggregated under Section 414 of the Code.
ARTICLE VIII. CHANGES IN THE PLAN
8.1 AMENDMENT OR TERMINATION OF THE PLAN. The Company reserves
the right to terminate the Plan at any time, which includes the right
to vary the amount of, or to terminate, contributions to the Plan.
The Administrative Committee shall have the right, in its sole and
final discretion, to amend the Plan at any time, except that the Board
of Directors of the Company must approve an amendment that results in
an increase in benefits and costs to the Company with a present value
as of the date of the amendment in excess of one million dollars
($1,000,000). No part of the corpus or income of any funds shall at
any time be used for or diverted to purposes other than for the
exclusive benefit of Members or their Beneficiaries, and no amendment
shall divest any Member of his interest therein or an optional form of
benefit with respect to the Account balance immediately before the
amendment, except as may be required by the District Director of
Internal Revenue or other governmental authority, or give any Member
any assignable or exchangeable interest or any right or thing of
exchangeable value in advance of the time distribution is to be made
to such Member. No distribution shall be made on account of a
termination of the Plan except as permitted by Code section
401(k)(10).
8.2 MERGER, CONSOLIDATION, OR TRANSFER. In the case of any
merger or consolidation of the Plan with, or in the case of any
transfer of assets or liabilities of the Plan to or from, any other
Plan, each Participant in the Plan shall (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).
8.3 NONREVERSION. No Employer shall have any right, title, or
interest in the contributions made to the Trust Fund under the Plan
and no part of the Trust Fund shall revert to any Employer, except
that--
(a) If a contribution is made to the Trust Fund by an Employer
by a mistake of fact, then such contribution (adjusted for
losses but not earnings) shall be returned to the Employer
within one year after the payment of the contribution.
(b) If any part or all of a contribution is disallowed as a
deduction under Code section 404, the disallowed amount
(adjusted for losses but not gains) shall be returned to the
Employer within one year after the disallowance pursuant to
the rules of the Internal Revenue Service.
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ARTICLE IX. TOP-HEAVY PROVISIONS
9.1 EFFECTIVE DATE. The following provisions shall become
effective for Plan Years beginning after the 1983 Plan Year.
9.2 DETERMINATION OF TOP-HEAVY.
(a) The Plan will be considered a Top-Heavy Plan for the Plan
Year if as of the last day of the preceding Plan Year, (1)
the aggregate of the accounts (including amounts deferred
under the salary reduction arrangements) of Members who are
Key Employees (as defined in section 416(i) of the Internal
Revenue Code) as amended by the Tax Reform Act of 1984
exceeds 60 percent of the aggregate of the accounts of all
Members (the "60 percent test") or (2) the Plan is a part of
a required aggregation group (i.e., each plan of the company
in which a Key Employee is a member and each other plan
(including plans which have terminated within the past five
(5) years) which enables such plans to meet the requirements
of section 401(a)(4) or 410) and such group is a Top-Heavy
Group, (individuals who did not perform any services for the
Employer or a Subsidiary in the last five years shall not be
included in this calculation). However, and notwithstanding
the results of the 60 percent test, the Plan shall not be
considered a Top-Heavy Plan for any Plan Year in which the
Plan is a part of a required or permissive aggregation group
(i.e., plans which may be included in the group provided the
group continues to comply with section 401(a)(4) and 410)
which is not Top-Heavy).
(b) The term "Top-Heavy Group" means any aggregation group if
the sum (as of the last day of the preceding Plan Year) of--
(1) the present value of the cumulative accrued benefits
(including all distributions made to an Employee during
the preceding five years) for Key Employees under all
defined benefit plans included in such group, and
(2) the aggregate of the accounts of Key Employees under
all defined contribution plans included in such group,
exceeds 60 percent of a similar sum determined for all
members.
9.3 CONTINGENT PROVISIONS. In the event the Plan is determined
to be a Top-Heavy Plan pursuant to this section 9.3, then the
following provisions shall take effect and continue in effect until
the Plan is no longer deemed to be a Top-Heavy Plan:
(a) In section 4.7 "1.0' shall be substituted for "1.25" and
"$51,875" shall become "$41,500" except that for individuals
who would exceed the 1.0 limit, the 1.0 limit shall be
suspended for such individuals so long as there are no
forfeitures, voluntary nondeductible contributions, employer
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contributions, or additional accruals made for such
individuals under the plans in the aggregation group until
the Plan is no longer deemed to be a Top-Heavy Plan or until
the individual would no longer exceed the 1.0 limit.
(b) The "matching" contributions of the Employer under the Plan
for non-Key Employees shall be the lesser of 3 percent or
the highest contribution percentage made for any Key
Employee during the Plan Year in which the Plan is deemed to
be Top-Heavy determined by dividing the Employer
contributions (including Tax Deferred Deposits) by the
amount of the Employees total Compensation not in excess of
$200,000 (as adjusted by the Secretary of the Treasury).
(c) The Employer shall make a minimum contribution of 5 percent
of Compensation for allocation under this Plan to all non-
Key Employees who participate in both a Company defined
benefit plan and this Plan.
IN WITNESS WHEREOF, the Company has caused these presents to be
signed by its duly authorized officers and has caused its corporate
seal to be hereto affixed this 9th day of June 1999, but effective as
of January 1, 1997.
ARVIN INDUSTRIES, INC.
By /s/ Matthew W. Golden
--------------------------
Its:
A Member of the Administrative
Committee
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