<PAGE> 1
As filed with the Securities and Exchange Commission on August 26, 1997
Registration Statement No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-3630868
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10260 CAMPUS POINT DRIVE
SAN DIEGO, CALIFORNIA 92121
(619) 546-6000
(Address, including zip code, and telephone number,
including area code of registrant's principal executive offices)
BELL COMMUNICATIONS RESEARCH SAVINGS AND SECURITY PLAN
BELL COMMUNICATIONS RESEARCH SAVINGS PLAN FOR SALARIED EMPLOYEES
(Full title of the plans)
COPY TO:
DOUGLAS E. SCOTT, ESQ.
Senior Vice President and General Counsel
Science Applications International Corporation
10260 Campus Point Drive
San Diego, California 92121
(619) 546-6000
(name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
Amount Proposed Maximum Proposed Maximum Amount of
Title of Securities to be Offering Price Aggregate Offering Registration
to be Registered Registered(1) Per Share(2) Price Fee
------------------- ------------- ---------------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Class A Common Stock,
par value $.01 per share................ 6,000,000 shs. $30.01 $180,060,000 $54,564
</TABLE>
================================================================================
(1) A maximum of 150,000 shares of Class A Common Stock have been reserved
for issuance and delivery to a trustee for the benefit of employees under
the Bell Communications Research Savings and Security Plan (the "Savings
and Security Plan") and a maximum of 5,850,000 shares of Class A Common
Stock have been reserved for issuance and delivery to a trustee for the
benefit of employees under the Bell Communications Savings Plan for
Salaried Employees (the "Salaried Employees Plan"). All shares reserved
for issuance under the Savings and Security Plan and the Salaried
Employees Plan are being registered hereunder. In addition, pursuant to
Rule 416(c) under the Securities Act of 1933, this registration statement
also covers an indeterminate amount of plan interests to be offered or
sold pursuant to the employee benefit plans described herein.
(2) This estimate is made pursuant to Rule 457(h) solely for purposes of
calculating the registration fee and is determined using the Formula
Price (as defined in the Prospectus which is a part of this Registration
Statement) of the SAIC Class A Common Stock on the date hereof.
- --------------------------------------------------------------------------------
<PAGE> 2
PART I
ITEM 1. PLAN INFORMATION
Not required to be filed with this Registration Statement.
ITEM 2. REGISTRATION INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
Not required to be filed with this Registration Statement.
PART II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange Commission
(the "Commission") by Science Applications International Corporation, a Delaware
corporation (the "Company"), are hereby incorporated by reference in this
Registration Statement:
(a) The Company's Annual Report on Form 10-K/A for the fiscal year
ended January 31, 1997.
(b) The Company's Prospectus dated July 3, 1997, pursuant to
Registration Statement on Form S-3/A filed with the Commission on
July 3, 1997.
(c) Annual Report of the Bell Communications Research Savings and
Security Plan on Form 11-K for the plan year ended December 31,
1996.
(d) Annual Report of the Bell Communications Research Savings Plan for
Salaried Employees on Form 11-K for the plan year ended December
31, 1996.
(e) All other reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), since the end of the Company's fiscal year ended
January 31, 1997.
(f) The description of the Company's Class A Common Stock, par value
$.01 per share, contained in the Company's registration statement
on Form 8-A, including any amendment or report filed for the
purpose of updating such description.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date this Registration Statement
is filed with the Commission and prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference in this Registration Statement and to be a part of it
from the respective dates of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any other
subsequently filed document which also is, or is deemed to be, incorporated by
reference herein modifies or supersedes any such statement. Any such statement
so modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The legality of the Class A Common Stock offered hereby has been passed
upon for the Company by Douglas E. Scott, Esquire, Senior Vice President and
General Counsel of the Company. As of July 31, 1997, Mr. Scott owned of record
15,548 shares of Class A Common Stock, had the right to acquire an additional
4,900 shares pursuant to previously granted stock options and beneficially owned
a total of 4,381 shares through certain retirement and stock plans of the
Company.
Bell Communications Research, Inc. ("Bellcore") and the Company have
received an opinion from Judith S. Musicant, Senior Counsel - Benefits for
Bellcore, that the Bell Communications Research Savings and Security Plan and
the Bell Communications Research
2
<PAGE> 3
Savings Plan for Salaried Employees (collectively, the "Plans") have been duly
authorized for participation by eligible employees of Bellcore, the interests in
the Plans will be fully paid upon receipt of employee contributions and no
employee will be obligated to make further contributions. As of July 31, 1997,
Ms. Musicant was an active participant in the Bell Communications Research
Savings Plan for Salaried Employees and therefore will be eligible to transfer
up to 50% of her existing account balances into the SAIC Stock Fund during a
limited period following the closing of SAIC's acquisition of Bellcore as set
forth herein. The number of shares of SAIC Class A Common Stock which Ms.
Musicant would have the right to beneficially acquire if she elects to make such
transfer into the SAIC Stock Fund is not determinable as of the date of this
Prospectus but the value of such shares may exceed $50,000.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware grants each
corporation organized thereunder, such as the Registrant, the power to indemnify
its directors and officers against certain circumstances. Article FIFTEENTH of
the Registrant's Restated Certificate of Incorporation provides for
indemnification of directors and officers to the fullest extent permitted by
law. The Company also has directors and officers liability insurance, with
policy limits of $50 million, under which directors and officers of the Company
are insured against certain liabilities which they may incur in such capacities.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
See Exhibit Index on page 9 hereof.
ITEM 9. UNDERTAKINGS
(a) Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to the Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
Registration Statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth
in the Registration Statement, excluding
information contained in periodic reports filed
with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the
Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the Registration Statement.
(2) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of
Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
3
<PAGE> 4
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of Registrant pursuant to the provisions
of Section 145 of the General Corporation Law of Delaware and
Article FIFTEENTH of Registrant's Certificate of Incorporation,
or otherwise, Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by Registrant of the expenses incurred or paid by a director,
officer or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
4
<PAGE> 5
SIGNATURES
THE REGISTRANT
Pursuant to the requirements of the Securities Act of 1933, Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of McLean, Commonwealth of Virginia on July 11, 1997.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By /s/ J.R. BEYSTER
---------------------------
J.R. Beyster
Chairman of the Board
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints J.D. Heipt and D.E. Scott, or any
one of them jointly and severally, such person's attorneys-in-fact, each with
the power of substitution, for such person in any and all capacities, to execute
any and all amendments (including post-effective amendments) to this
Registration Statement on Form S-8 and to file the same, with all exhibits
thereto, and any other documents in connection therewith, with the Securities
and Exchange Commission under the Securities Act of 1933, and hereby ratifies
and confirms all that each of said attorneys-in-fact, or each of their
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ J.R. BEYSTER Chairman of the Board and Chief July 11, 1997
- ------------------------
J.R. Beyster Executive Officer
/s/ W.A. ROPER, JR. Principal Financial Officer July 11, 1997
- ------------------------
W.A. Roper, Jr.
/s/ P.N. PAVLICS Principal Accounting Officer July 11, 1997
- ------------------------
P.N. Pavlics
/s/ D.P. ANDREWS Director July 11, 1997
- ------------------------
D.P. Andrews
/s/ V.N. COOK Director July 11, 1997
- ------------------------
V.N. Cook
/s/ C.K. DAVIS Director July 11, 1997
- ------------------------
C.K. Davis
5
<PAGE> 6
SIGNATURE TITLE DATE
--------- ----- ----
/s/ W.H. DEMISCH Director July 11, 1997
- ------------------------
W.H. Demisch
/s/ W.A. DOWNING Director July 11, 1997
- ------------------------
W.A. Downing
Director
- ------------------------
E.A. Frieman
/s/ J.E. GLANCY Director July 11, 1997
- ------------------------
J.E. Glancy
/s/ B.R. INMAN Director July 11, 1997
- ------------------------
B.R. Inman
/s/ H.M. KRAEMER, JR. Director July 11, 1997
- ------------------------
H.M. Kraemer, Jr.
/s/ W.M. LAYSON Director July 11, 1997
- ------------------------
W.M. Layson
/s/ C.B. MALONE Director July 11, 1997
- ------------------------
C.B. Malone
/s/ J.W. MCRARY Director July 11, 1997
- ------------------------
J.W. McRary
/s/ W.A. OWENS Director July 11, 1997
- ------------------------
W.A. Owens
/s/ S.D. ROCKWOOD Director July 11, 1997
- ------------------------
S.D. Rockwood
/s/ E.A. STRAKER Director July 11, 1997
- ------------------------
E.A. Straker
/s/ M.E. TROUT Director July 11, 1997
- ------------------------
M.E. Trout
/s/ J.P. WALKUSH Director July 11, 1997
- ------------------------
J.P. Walkush
/s/ J.H. WARNER, JR. Director July 11, 1997
- ------------------------
J.H. Warner, Jr.
6
<PAGE> 7
SIGNATURE TITLE DATE
--------- ----- ----
/s/ J.A. WELCH Director July 11, 1997
- ------------------------
J.A. Welch
/s/ J.B. WIESLER Director July 11, 1997
- ------------------------
J.B. Wiesler
/s/ A.T. YOUNG Director July 11, 1997
- ------------------------
A.T. Young
7
<PAGE> 8
THE PLAN
Pursuant to the requirements of the Securities Act of 1933, the Savings
Plan Administrators have duly caused this Registration Statement to be signed on
behalf of the Bell Communications Research Savings and Security Plan by the
undersigned, thereunto duly authorized, in the City of Piscataway, State of New
Jersey on August 25, 1997.
BELL COMMUNICATIONS RESEARCH
SAVINGS AND SECURITY PLAN
By /s/ RICHARD G. SCHOOLEY
---------------------------------
Richard G. Schooley
Savings Plan Administrator
By /s/ BRUCE R. LASKO
---------------------------------
Bruce R. Lasko
Savings Plan Administrator
Pursuant to the requirements of the Securities Act of 1933,the Savings
Plan Administrators have duly caused this Registration Statement to be signed on
behalf of the Bell Communications Research Savings Plan for Salaried Employees
by the undersigned, thereunto duly authorized, in the City of Piscataway, State
of New Jersey on August 25, 1997.
BELL COMMUNICATIONS RESEARCH
SAVINGS PLAN FOR SALARIED EMPLOYEES
By /s/ RICHARD G. SCHOOLEY
---------------------------------
Richard G. Schooley
Savings Plan Administrator
By /s/ BRUCE R. LASKO
---------------------------------
Bruce R. Lasko
Savings Plan Administrator
8
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBITS
------- -----------------------
<S> <C>
4(a) Bell Communications Research Savings and Security Plan
4(b) Bell Communications Research Savings Plan for Salaried Employees
5(a) Opinion of Douglas E. Scott, Esquire
5(b) Opinion of Judith S. Musicant, Esquire
5(c) Opinion of Herold and Haines
23(a) Consent of Douglas E. Scott, Esquire (contained in Exhibit 5(a) hereto)
23(b) Consent of Judith S. Musicant, Esquire (contained in Exhibit 5(b) hereto)
23(c) Consent of Herold and Haines (contained in Exhibit 5(c) hereto)
23(d) Consent of Coopers & Lybrand L.L.P.
23(e) Consent of Price Waterhouse LLP
23(f) Consent of Beard & Company, Inc.
24(a) Power of Attorney (included on the signature page of Part II of this Registration
Statement)
</TABLE>
9
<PAGE> 1
EXHIBIT 4(a)
BELL COMMUNICATIONS RESEARCH
SAVINGS AND SECURITY PLAN
(restated effective July 1, 1997
with amendments effective
August 1, 1997)
HEROLD AND HAINES, ESQS.
Warren, New Jersey
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 1. PLAN IDENTITY.....................................................3
1.1 Name.................................................................3
1.2 Purpose. ............................................................3
1.3 Effective Date. .....................................................3
1.4 Single Plan for All Employers. ......................................3
1.5 Interpretation of Provisions. .......................................3
1.6 Relationship to Other Plans. ........................................4
Section 2. DEFINITIONS. .....................................................4
Section 3. ELIGIBILITY FOR PARTICIPATION....................................15
3.1 Initial Eligibility................................................ 15
3.2 Prior Plan Participants; Terminated or Part-Time Employees. ........16
3.3 Certain Employees Ineligible........................................16
3.4 Waiver of Participation............................................ 16
3.5 Participation and Reparticipation. .................................17
Section 4. EMPLOYER CONTRIBUTIONS AND CREDITS...............................17
4.1 Basic Contributions. ...............................................17
4.2 Salary Reduction Contributions. ....................................17
4.3 Regular Contributions. .............................................18
4.4 Matching Contributions..............................................19
4.5 Definitions Related to Contributions............................... 19
4.6 Conditions as to Contributions......................................20
Section 5. TRANSFERS AND EMPLOYEE ROLLOVERS. ...............................21
5.1 Transfers from Related Plans. ......................................21
5.2 Rollovers. .........................................................21
Section 6. LIMITATIONS ON CONTRIBUTIONS FOR PARTICIPANTS....................22
6.1 Limitation on Annual Additions. ....................................22
6.2 Coordinated Limitation With Other Plans............................ 23
6.3 Limitations to Avoid Discrimination................................ 25
6.4 Compliance With Limitations. .......................................27
Section 7. TRUST FUND AND ITS INVESTMENT. ..................................31
7.1 Creation of Trust Fund. ............................................31
7.2 Responsibility for Investments. ....................................31
7.3 Investment Direction by Participants. ..............................32
Section 8. USE OF ACCOUNTS DURING SERVICE...................................32
8.1 Hardship Withdrawals from Salary Reduction Accounts................ 32
8.2 Other Withdrawals from Regular, Salary Reduction, Rollover and
Matching Accounts. .............................................34
8.3 Loans to Participants. .............................................35
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 9. ADJUSTMENTS TO ACCOUNTS..........................................37
9.1 Adjustments for Transactions. ......................................37
9.2 Adjustments for Investment Experience.............................. 37
Section 10. VESTING OF PARTICIPANTS' INTERESTS..............................37
10.1 Immediately Vested Accounts. .......................................37
10.2 Deferred Vesting in Accounts. ......................................37
10.3 Computation of Vesting Years. ......................................38
10.4 Full Vesting Upon Certain Events................................... 39
10.5 Full Vesting Upon Plan Termination. ................................39
10.6 Forfeitures, Repayment, and Restoral. ..............................39
10.7 Accounting for Forfeitures. ........................................40
10.8 Vesting and Nonforfeitability. .....................................40
Section 11. PAYMENT OF BENEFITS.............................................41
11.1 Benefits for Participants. .........................................41
11.2. Benefit Amounts and Forms for Participants. ........................41
11.3 Benefits on a Participant's Death. .................................43
11.4 Election Formalities. ..............................................43
11.5 Marital Status. ....................................................44
11.6 Proof of Ages. .....................................................44
11.7 Delay in Benefit Determination. ....................................44
11.8 Payments in Cash; Direct Transfers. ................................44
11.9 Transfers to Interchange Companies. ................................45
11.10 Transfer to Other Employer's Plan...................................45
Section 12. RULES GOVERNING BENEFIT CLAIMS AND REVIEW
OF APPEALS. ...............................................46
12.1 Claim for Benefits. ................................................46
12.2 Notification by Administrator. .....................................46
12.3 Claims Review Procedure. ...........................................46
Section 13. THE ADMINISTRATOR AND THE COMMITTEE AND THEIR
FUNCTIONS. ................................................47
13.1 Authority of Administrator. ........................................47
13.2 Identity of Committee.............................................. 47
13.3 Duties of Administrator. ...........................................48
13.4 Compliance with ERISA. .............................................48
13.5 Action by Administrator. ...........................................48
13.6 Execution of Documents..............................................48
13.7 Adoption of Rules. .................................................48
13.8 Responsibilities to Participants. ..................................48
13.9 Alternative Payees in Event of Incapacity. .........................49
13.10 Indemnification by Employers. ......................................49
13.11 Nonparticipation by Interested Member. .............................50
</TABLE>
2
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 14. ADOPTION, AMENDMENT, OR TERMINATION OF THE PLAN.................50
14.1 Adoption of Plan by Other Employers. ...............................50
14.2 Adoption of Plan by Successor. .....................................50
14.3 Plan Restatement Subject to Qualification. .........................51
14.4 Right to Amend or Terminate. .......................................51
14.5 Right to Implement or Suspend Provisions. ..........................52
Section 15. MISCELLANEOUS PROVISIONS........................................52
15.1 Plan Creates No Employment Rights. .................................52
15.2 Non-assignability of Benefits...................................... 53
15.3 Limit of Employer Liability. .......................................53
15.4 Treatment of Expenses.............................................. 53
15.5 Number and Gender. .................................................53
15.6 Nondiversion of Assets. ............................................54
15.7 Separability of Provisions. ........................................54
15.8 Service of Process. ................................................54
15.9 Governing State Law. ...............................................54
15.10 Effect of Military Service..........................................54
Section 16. TOP-HEAVY PROVISIONS............................................54
16.1 Determination of Top-Heavy Status. .................................54
16.2 Minimum Contributions. .............................................57
16.3 Minimum Vesting. ...................................................57
16.4 Maximum Compensation. ..............................................57
</TABLE>
3
<PAGE> 5
BELL COMMUNICATIONS RESEARCH
SAVINGS AND SECURITY PLAN
This Savings and Security Plan, executed on August 4, 1997 by Bell
Communications Research, Inc., a corporation of the State of Delaware (the
"Company"),
W I T N E S S E T H T H A T:
WHEREAS, effective January 1, 1984, the Company adopted the Bell
Communications Research Savings and Security Plan (the "Plan"), and the Plan has
subsequently been amended from time to time; and
WHEREAS, the Company reserved the right to amend the Plan at any time
and for any reason by resolution of its directors, or by action of the
Departmental Benefits Committee, or the Company chief executive officer if the
amendment is required by law, provided the amendment does not adversely affect
any accrued right of a Participant or Beneficiary, and the Company has resolved
to amend the Plan by restating it in order to comply with the most recent laws
and regulations applicable to employee retirement plans and in order to make
certain plan design changes;
NOW, THEREFORE, the Plan is hereby amended by restating it effective
July 1, 1997.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by
its duly authorized officers as of the above date.
ATTEST: BELL COMMUNICATIONS RESEARCH, INC.
/s/ BRENDA F. WOODS By: /s/ GEORGE H. HEILMEIER
- ---------------------------- ------------------------------------
Chairman and Chief Executive Officer
BELL COMMUNICATIONS RESEARCH, INC.
By: /s/ BRUCE LASKO
----------------------------------
Departmental Benefits Committee
2
<PAGE> 6
SECTION 1. PLAN IDENTITY.
1.1 Name.
The name of the Plan is "Bell Communications Research Savings and
Security Plan".
1.2 Purpose.
The purpose of the Plan is to describe the terms and conditions under
which contributions made pursuant to the Plan will be allocated among the
Participants, adjusted for investment experience and transactions, and
distributed as benefits to Participants and their Beneficiaries.
1.3 Effective Date.
The Effective Date of the Plan is January 1, 1984. Except as otherwise
specified, the provisions of this restated Plan shall generally become effective
July 1, 1997, and shall apply only to individuals who have Service with an
Employer on or after that date. However, the provisions in Section 8.2
concerning withdrawals of matching and basic contributions are effective August
1, 1997.
1.4 Single Plan for All Employers.
The Plan shall be treated as a single plan with respect to all
participating Employers for the purpose of crediting contributions and
forfeitures and distributing benefits, determining whether there has been any
termination of Service, and applying the limitations set forth in section 6.
1.5 Interpretation of Provisions.
The Employers intend the Plan and the Trust to be a qualified profit
sharing plan under section 401(a) of the Code with a qualified cash or deferred
arrangement under section 401(k) of the Code, and to satisfy any applicable
requirement under ERISA. Accordingly, the Plan and Trust Agreement shall be
interpreted and applied in a manner consistent with this intent and shall be
administered at all times and in all respects in a nondiscriminatory manner.
3
<PAGE> 7
1.6 Relationship to Other Plans.
This Plan is a successor plan to the Prior Plan with respect to those
Employees covered under the Prior Plan until their employment was transferred to
the Company as of January 1, 1984, in connection with a divestiture by American
Telephone and Telegraph Company of various business units and their employees.
This Plan is also subject to certain Interchange Agreements governing the
portability of credits for Service and the transfer of benefits on behalf of
Employees who during their careers work both for an Employer and for an
Interchange Company.
SECTION 2. DEFINITIONS.
The following capitalized words and phrases shall have the meanings
specified when used in this Plan and in the Trust Agreement, unless the context
clearly indicates otherwise:
"Account" means a Participant's interest in the assets accumulated
under the Plan as expressed in terms of a separate account balance which is
periodically adjusted to reflect his Employer's contributions, his own
contributions and rollovers or direct transfers, the Plan's investment
experience, and distributions and forfeitures. A Participant's Account shall
consist of subaccounts called his Regular, Basic, Salary Reduction, Matching,
and Rollover Accounts, as described herein.
"Active Participant" means any Employee who has satisfied the
eligibility requirements of section 3 and who qualifies as an Active Participant
for a particular Plan Year under section 4.
"Administrator" means the Company.
"Affiliate" means (a) any of the Company's corporate shareholders
(NYNEX Corporation, Bell Atlantic Corporation, BellSouth Corporation, American
Information Technologies Corporation, Southwestern Bell Corporation, U S WEST,
Inc., and Pacific Telesis Group, Inc.), (b) Advanced Mobile Phone Service, Inc.,
(c) AT&T, and (c) prior to January 1, 1985, either of The Southern New England
Telephone Company and Cincinnati Bell, as well as a subsidiary corporation of
which an Affiliate (excluding Advanced Mobile Phone Service, Inc.)
directly or indirectly owns more than 50 percent of the voting stock.
4
<PAGE> 8
"Basic Account" means that portion of a Participant's Account to which
Employer contributions are credited pursuant to section 4.1.
"Beneficiary" means the person or persons who are designated by a
Participant (within the meaning of section 401(a)(9) of the Code) to receive
benefits payable under the Plan on the Participant's death. In the absence of
any designation, or if all the designated Beneficiaries shall die before the
Participant dies or shall die before all benefits have been paid, the
Participant's Beneficiary shall be his surviving Spouse, if any, or his estate
if he is not survived by a Spouse. The Administrator may rely upon the advice of
the Participant's executor or administrator as to the identity of the
Participant's Spouse.
"Break in Service" means any 12-month period beginning on an Employee's
Severance Date or any anniversary thereof in which he has no Service. No such
period beginning after 1984 shall constitute a Break in Service unless it is one
of at least five consecutive such periods. Further, any period of part-time,
temporary, or interrupted employment prior to January 1, 1985 shall be treated
as a Break in Service to the extent that it is consistent with the Plan as in
effect prior to that date.
Solely for this purpose, an Employee shall be considered employed for
his normal hours of paid employment during a Recognized Absence or on a leave
under the Family and Medical Leave Act, 29 U.S.C. 2601 et. seq., unless he does
not resume his Service at the end of the Recognized Absence. Further, any
Employee who has a Parental Absence beginning on or after January 1, 1985, shall
be credited with the Hours of Service which would normally have been credited
but for such absence, up to a maximum of 501 Hours of Service, in the first
12-month period which would otherwise be counted toward a Break in Service.
"Cash Compensation" means an Active Participant's compensation which is
recognized for purposes of determining and allocating contributions and
forfeitures, as defined in section 4.5.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Savings Plan Committee composed of the person or
persons responsible for the administration of the Plan in accordance with
section 13.
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<PAGE> 9
"Company" means Bell Communications Research, Inc., and any entity
which succeeds to the business of Bell Communications Research, Inc. and adopts
the Plan as its own pursuant to section 14.2.
"Disability" during (i) the first 12-month period immediately following
the termination of the Participant's benefits under the Company's Sickness and
Accident Disability Benefit Plan means a bodily or mental disease or injury,
which renders the Participant unable to perform the duties of his or her
occupation or employment for an Employer, and (ii) thereafter, means such
disease or injury as a result of which the Participant is unable to perform any
duties for an Employer for which he is qualified, or may reasonably be
qualified, based on training, education or experience, other than an occupation
whose rate of pay is less than 50% of the Participant's Compensation as defined
is section 4.5 at the time the disability began. However, this term shall not
include any disability directly or indirectly resulting from or related to an
accidental injury arising out of and in the course of Service with an Employer,
habitual drunkenness or addiction to narcotics, a criminal act or attempt,
service in the armed forces of any country, an act of war, declared or
undeclared, any injury or disease occurring while compensation to the
Participant is suspended, or any injury which is intentionally self-inflicted.
Further, this term shall apply only if the Participant's disability is certified
by a physician selected by the Administrator. The Administrator may require the
Participant to be appropriately examined from time to time by one or more
physicians chosen by the Administrator, and no Participant who refuses to be
examined shall be treated as having a Disability.
"Effective Date" means January 1, 1984.
"Employee" means any individual who is or has been employed or
self-employed by an Employer. For this purpose, an individual is self-employed
by an Employer if he has "earned income" from the Employer within the meaning of
section 401(c) of the Code, or would have "earned income" if the Employer had
any net profits. "Employee" also means an individual who is or has been employed
by a leasing organization and who, pursuant to an agreement between an Employer
and the leasing organization, has performed services for the Employer on a
substantially full-time basis for at least one year, if such services are of a
type historically performed by employees in the Employer's business field.
Solely for this purpose, the "Employer" shall include
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<PAGE> 10
any related persons within the meaning of section 414(n)(6) of the Code.
However, such a "leased employee" shall not be considered an Employee if (a) he
participates in a money purchase pension plan sponsored by the leasing
organization which provides for immediate participation, immediate full vesting,
and an annual contribution of at least 10 percent of the employee's Limit
Compensation, and (b) leased employees do not constitute more than 20 percent of
the Employer's total workforce (including leased employees, but excluding Highly
Paid Employees and any other employees who have not performed services for the
Employer on a substantially full-time basis for at least one year). Solely for
this purpose, an employee's Limit Compensation shall include any salary
reduction amounts excluded from the employee's gross taxable income pursuant to
any of sections 125, 402(e)(3), 402(h)(1)(B), and 403(b) of the Code.
"Employer" means the Company, any other corporation, partnership, or
proprietorship which adopts the Plan with the Company's consent pursuant to
section 14.1, and any entity which succeeds to the business of any Employer and
adopts the Plan pursuant to section 14.2. As of January 1, 1994 there are no
Employers other than the Company.
"ERISA" means the Employee Retirement Income Security Act of 1974 (P.L.
93-406, as amended).
"Five-Percent Owner" means an Employee who owns more than five percent
of the outstanding equity interest or the outstanding voting interest in any
Employer.
"Highly Paid Employee" for any Plan Year means an Employee who, during
the immediately preceding 12 months, (i) was at any time a Five-Percent Owner,
(ii) had Limit Compensation exceeding five-sixths of the Current Limit (e.g.,
$99,000 for 1994), (iii) had Limit Compensation exceeding five-ninths of the
Current Limit (e.g., $66,000 for 1994) and was among the most highly compensated
one-fifth of all Employees, or (iv) was at any time an officer, partner, or sole
proprietor of an Employer and had Limit Compensation exceeding one-half of the
Current Limit (e.g., $59,400 for 1994). An Employee shall also be a "Highly Paid
Employee" if, substituting the current Plan Year for the preceding 12 months in
the preceding sentence, either (1) he would be described in clause (i), or (2)
he would be described in any of clauses (ii), (iii), and (iv) and he is among
the 100 highest-paid Employees of the Employer for the current Plan Year. For
this purpose:
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<PAGE> 11
a. "Limit Compensation" shall include any amount which is excludable
from the Employee's gross income for tax purposes pursuant to
section 125, 402(e)(3), 402(h)(1)(B), or 403(b) of the Code.
b. "Current Limit" means the currently applicable dollar limit under
section 415(b)(1)(A) of the Code.
c. The number of Employees in "the most highly compensated one-fifth
of all Employees" shall be determined by taking into account all
individuals working for all related employer entities described in
the definition of "Service", but excluding any individual who has
not completed six months of Service, who normally works fewer than
17-1/2 hours per week or in fewer than six months per year, who
has not reached age 21, whose employment is covered by a
collective bargaining agreement, or who is a nonresident alien who
receives no earned income from United States sources.
d. The number of individuals counted as "officers" shall not be more
than the lesser of (i) 50 individuals and (ii) the greater of
three individuals or 10 percent of the total number of Employees.
If no officer earns more than one-half of the Current Limit, then
the highest paid officer shall be a Highly Paid Employee.
e. A former Employee shall be counted as a Highly Paid Employee if he
was a Highly Paid Employee during either the Plan Year in which
his Service ended or any Plan Year ending after his 55th birthday.
f. If an Employee, during either of the current and preceding Plan
Years, is a family member of either (i) a Five-Percent Owner or
(ii) a Highly Paid Employee who is among the Employer's 10 most
highly compensated Employees, then the Employee and such family
member shall be aggregated, and the compensation paid to and plan
contributions and benefits provided for such individuals shall be
treated as paid to and provided for a single Employee. A "family
member" shall include an Employee's spouse, the Employee's lineal
ancestors and descendants, and the ancestors' and descendants'
spouses.
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<PAGE> 12
g. In all respects, the determination of who are Highly Paid
Employees shall be made in accordance with section 414(q) of the
Code and the Treasury Regulations thereunder.
"Hours of Service" means hours to be credited to an Employee under the
following rules:
a. Each hour for which an Employee is paid or is entitled to be paid
for services to an Employer is an Hour of Service.
b. Each hour for which an Employee is directly or indirectly paid or
is entitled to be paid by an Employer for a period of vacation,
holidays, illness, incapacity (including disability), lay-off,
jury duty, temporary military duty, or leave of absence is an Hour
of Service. However, except as otherwise specifically provided, no
more than 501 Hours of Service shall be credited for any single
continuous period during which an Employee performs no duties.
Further, no Hours of Service shall be credited on account of
payments made solely under a plan maintained to comply with
worker's compensation, unemployment compensation, or disability
insurance laws, or to reimburse an Employee for medical expenses.
c. Each hour for which back pay (ignoring any mitigation of damages)
is either awarded or agreed to by an Employer is an Hour of
Service. However, no more than 501 Hours of Service shall be
credited for any single continuous period during which an Employee
would not have performed any duties.
d. Hours of Service shall be credited in any one period only under
one of the foregoing paragraphs (a), (b), and (c); an Employee may
not get double credit for the same period.
e. If an Employer finds it impractical to count the actual Hours of
Service for any class or group of non-hourly Employees, each
Employee in that class or group shall be credited with 45 Hours of
Service for each weekly pay period in which he has at least one
Hour of Service. However, an Employee shall be credited only for
his normal working hours during a paid absence.
f. Hours of Service to be credited on account of a payment to an
Employee, including an award of back pay, shall be credited in the
computation period in which the Service was rendered or to which
the award relates. If the period overlaps two or more Plan Years,
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<PAGE> 13
the Hours of Service credit shall be allocated in proportion to
the respective portions of the period included in the several Plan
Years. However, in the case of periods of 31 days or less, the
Administrator may apply a uniform policy of crediting the Hours of
Service to either the first Plan Year or the second.
g. In all respects an Employee's Hours of Service shall be counted as
required by section 2530.200b-2(b) and (c) of the Department of
Labor's regulations under Title I of ERISA.
"Interchange Agreement" means an agreement between the Company and one
or more Interchange Company(ies) governing the portability of credits for
Service and the transfer of benefits on behalf of Employees who during their
careers work both for an Employer and for an Interchange Company.
"Interchange Company" means any Company during that period of time for
which it maintains or participates in an Interchange Company Plan subject to an
Interchange Agreement.
"Interchange Company Savings Plan" means an Interchange Company's
qualified defined contribution plan with a cash or deferred arrangement
described in section 401(k) of the Code which is comparable to this or any other
qualified 401(k) plan sponsored by the Company.
"Leave of Absence" means a period for which the Committee formally
grants a leave, which absence shall not cause a Break in Service but, except for
the first 30 days of sick leave, shall not be counted in the Employee's Term of
Employment.
"Limit Compensation" means a Participant's wages, salary, overtime,
bonuses, commissions, and any other amounts received (whether or not in cash)
for personal services rendered while in Service from any Employer or an
affiliate (within the purview of sections 414(b), (c), (m), and (o) of the
Code). A self-employed Participant's Limit Compensation is his earned income
from any Employer within the meaning of section 401(c)(2) of the Code, excluding
income from an Employer for which the Participant's personal services are not a
material income-producing factor. A self-employed Participant's earned income
shall exclude any qualified plan contributions on his behalf which are
deductible under section 404 of the Code, and, for
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<PAGE> 14
taxable years beginning after 1989, shall take into account the Employer's
deduction under section 164(f) of the Code.
A Participant's Limit Compensation shall include (i) amounts excludable
from gross income under section 911 of the Code, (ii) amounts described in
sections 104(a)(3), 105(a), and 105(h) of the Code to the extent includable in
gross income, (iii) amounts received from an Employer for moving expenses which
are not deductible under section 217 of the Code, and (iv) amounts includable in
gross income in the year of, and on account of, the grant of a nonqualified
stock option, or under an unfunded nonqualified plan of deferred compensation,
or otherwise includable pursuant to section 83(b) of the Code.
A Participant's Limit Compensation shall exclude (i) Employer
contributions to or amounts received from a funded or qualified plan of deferred
compensation, (ii) Employer contributions to a simplified employee pension
account to the extent deductible under section 219 of the Code, (iii) Employer
contributions to a section 403(b) annuity contract (whether or not excludable
from gross income), (iv) amounts includable in gross income pursuant to section
83(a) of the Code, (v) amounts includable in gross income upon the exercise of
nonqualified stock option or upon the disposition of stock acquired under any
stock option, and (vi) any other amounts expended by the Employer on the
Participant's behalf which are excludable from his income or which receive
special tax benefits.
"Mandatory Portability Agreement" means the agreement dated and
effective January 1, 1985, as amended, between the Company and certain
Affiliates designed to implement section 559 of the Deficit Reduction Act of
1984 governing the portability of crediting Service for eligibility, vesting and
Accrued Benefits for employees covered under that agreement.
"Matching Account" means that portion of a Participant's Account to
which Employer contributions made to match contributions funded by the
Participant's salary reduction elections or regular contributions are credited
pursuant to sections 4.2 and 4.3.
"Mandatory Portability Agreement" means the agreement dated and
effective January 1, 1985, as amended, between the Company and certain
Affiliates designed to implement section 559 of the Deficit Reduction Act of
1984 governing the portability of crediting Service for eligibility, vesting and
the transfer of benefits for employees covered under that agreement.
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<PAGE> 15
"Normal Retirement Date" means the later of (a) a Participant's 65th
birthday and (b) the fifth anniversary of the Participant's initial
participation in the Plan. However, a Participant's Normal Retirement Date shall
in no event be later than the last day of the Plan Year in which he reaches age
70-1/2.
"Parental Absence" means an Employee's absence (i) by reason of the
Employee's pregnancy, (ii) by reason of the birth of the Employee's child, (iii)
by reason of the placement of a child with the Employee in connection with the
Employee's adoption of the child, or (iv) for purposes of caring for such child
for a period beginning immediately after such birth or placement.
"Participant" means any Employee who is participating in the Plan, or
who has previously participated in the Plan and still has a balance credited to
his Account.
"Plan Year" means each period of 12 consecutive months beginning on
January 1 of 1984 and each succeeding year.
"Prior Plan" means the Bell System Savings and Security Plan, as in
effect on December 31, 1983.
"Recognized Absence" means a period for which --
a. the Employees' Benefit Committee grants an Employee an absence
with recognized service credit for a limited period, but only if
such leaves are granted on a nondiscriminatory basis; or
b. an Employee is absent on account of a Disability for periods
covered under the Company's Sickness and Accident Disability
Benefit Plan; or
c. an Employee is on active military duty, but only to the extent
that his employment rights are protected by the Military Selective
Service Act of 1967 (38 U.S.C. sec. 2021); or
d. an Employer grants a departmental leave of absence of no more than
30 days without the Employees' Benefit Committee's approval; or
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<PAGE> 16
e. is the first 30 days of a Leave of Absence.
An Employee shall receive credit for any Recognized Absence for
eligibility and vesting.
"Regular Account" means that portion of a Participant's Account to
which his voluntary after-tax contributions are credited pursuant to section
4.3.
"Rollover Account" means that portion of a Participant's Account to
which his interest under another qualified retirement plan, or his interest in
an individual retirement account or annuity to which his interest under a
qualified retirement plan has previously been rolled over, may be transferred
and credited pursuant to section 5.2.
"Rotational Assignment" means an employee's temporary assignment from
the Company to an Interchange Company, or from an Interchange Company to the
Company, where the employee has an option to be rehired by his original
employer.
"Salary Reduction Account" means that portion of a Participant's
Account to which Employer contributions funded pursuant to the Participant's
compensation deferral election are credited pursuant to section 4.2.
"Service" means an Employee's period(s) of employment or
self-employment with an Employer, excluding for initial eligibility purposes any
period in which the individual was a nonresident alien and did not receive from
an Employer any earned income which constituted income from sources within the
United States. An Employee's Service shall include (a) any service with an
Interchange Company to the extent provided in an Interchange Agreement, (b) any
period of continuous service with an Affiliate through December 31, 1983, if the
Employee's employment was transferred from the Affiliate to an Employer as of
January 1, 1984, and (c) any other service which constitutes service with a
predecessor employer within the meaning of section 414(a) of the Code, including
service with any employer which previously maintained this Plan. An Employee's
Service shall also include any service with an entity which is not an Employer,
but only (i) for a period after 1975 in which the other entity is a member of a
controlled group of corporations or is under common control with other trades
and businesses within the meaning of section 414(b) or 414(c) of the Code, and a
member of the controlled group or one of the trades and businesses is an
Employer, (ii) for a period after 1979 in which the other entity is a member of
an affiliated service
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<PAGE> 17
group within the meaning of section 414(m) of the Code, and a member of the
affiliated service group is an Employer, or (iii) for a period after 1983 in
which the other entity is a member of a group of businesses, or is part of an
arrangement, such that the entity is to be treated as an Employer under Treasury
Regulations promulgated pursuant to section 414(o) of the Code.
"Severance Date" means the earlier of:
(a) the date on which an Employee quits, retires, is discharged, or
dies, or
(b) the first anniversary of the first day of an Employee's continuous
absence from Service with an Employer on account of disability, lay-off, or
leave of absence, or for any other reason except quit, retirement, discharge, or
death.
However, in the case of an Employee who has a Parental Absence, his
Severance Date shall not be earlier than the second anniversary of the first day
of such absence, although he shall not be treated as rendering any Service to an
Employer between the first and second anniversaries.
"Spouse" means the individual, if any, to whom a Participant is
lawfully married on the date benefit payments to the Participant are to begin,
or on the date of the Participant's death, if earlier. However, a Participant's
former spouse shall be treated as his Spouse in lieu of his current spouse to
the extent required under any judgment, decree, or order which is determined by
the Administrator in accordance with its policies and procedures to be a
qualified domestic relations order within the meaning of section 414(p) of the
Code.
"Salaried Plan" means the Bell Communications Research Savings Plan for
Salaried Employees, as in effect from time to time.
"Telephone Equity Fund" means a fund invested exclusively in the common
stock of NYNEX Corporation, Bell Atlantic Corporation, BellSouth Corporation,
American Information Technologies Corporation, Southwestern Bell Corporation, U
S West, Inc., and Pacific Telesis Group.
"Trust" or "Trust Fund" means the trust fund held by the Trustee
pursuant to the Plan.
"Trust Agreement" means the agreement between the Company and the
Trustee concerning the Trust Fund. If any assets of the Trust Fund are held in a
commingled trust fund with assets of
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<PAGE> 18
other qualified retirement plans, "Trust Agreement" shall be deemed to include
the trust agreement governing that commingled trust fund. With respect to the
allocation of investment responsibility for the assets of the Trust Fund, the
provisions of section 2.2 of the Trust Agreement are incorporated herein by
reference.
"Trustee" means one or more corporate persons and individuals selected
from time to time by the Company to serve as trustee or co-trustees of the Trust
Fund.
"Valuation Date" means the last day of the Plan Year, and each other
date selected by the Administrator in its sole discretion, as of which the
Administrator shall determine the investment experience of the Trust Fund and
adjust the Participants' Accounts accordingly, except to the extent
Participants' Accounts are separately stated pursuant to an investment
arrangement described in section 7.3, in which case "Valuation Date" means each
day on which Account values are available under such arrangement.
"Valuation Period" means the period following a Valuation Date and
ending with the next Valuation Date.
"Vesting Year" means a unit of Service credited to a Participant
pursuant to section 10.3 for purposes of determining his vested interest in his
Matching Account.
SECTION 3. ELIGIBILITY FOR PARTICIPATION.
3.1 Initial Eligibility.
An Employee in classifications A or B shall enter the Plan as of the
first day of the month coinciding with or next following the date the Employee
completes twelve months of Service. However, for purposes of making salary
reduction contributions under section 4.2 or regular contributions under section
4.3, if the Employee has not entered the Plan before January 1, 1996, then he
shall enter the Plan on the later of January 1, 1996 or the first day of the
month coinciding with or next following the first day on which the Employee has
an Hour of Service. However, if an Employee is not in active Service with an
Employer on the date he would otherwise first enter the Plan, his entry shall be
deferred until the next day he is in Service.
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<PAGE> 19
For this purpose, an Employee's separate periods of Service shall be
added together, with each period of Service counted as months, including any
month in which he has an Hour of Service from the first day of his Service in
that period to the following Severance Date. If an Employee quits, retires, or
is discharged, or he is continuously absent for any other reason and the
Employee then has any Service within 12 months after the first day of absence,
his Service shall include the period from the first day of his absence through
his return to Service unless otherwise specifically excluded.
3.2 Prior Plan Participants; Terminated or Part-Time Employees.
Each Employee whose employment was transferred to the Company from AT&T
or another Affiliate as of January 1, 1984, and who was in active Service and
participating in the Prior Plan through December 31, 1983, shall enter the Plan
on the Effective Date.
3.3 Certain Employees Ineligible.
No Employee shall participate in the Plan while his Service is covered
by a collective bargaining agreement between an Employer and the Employee's
collective bargaining representative if (i) retirement benefits have been the
subject of good faith bargaining between the Employer and the representative and
(ii) the collective bargaining agreement does not provide for the Employee's
participation in the Plan. An Employee shall not participate in this Plan while
he is classified other than QA through QD or SI for years prior to 1995, or
other than A or B for years beginning after 1994. No Employee shall participate
in the Plan while he is actually employed by a leasing organization rather than
an Employer, or during any period in which an Employer considers him to be
performing services as an independent contractor, regardless of any subsequent
or retroactive reclassification of his employment status. No Employee shall
participate in the Plan while he is a non-resident alien, even if he had
previously satisfied the original eligibility requirements under Section 3.1
3.4 Waiver of Participation.
No Employee who is otherwise eligible shall be permitted to waive his
right to participate in the Plan.
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<PAGE> 20
3.5 Participation and Reparticipation.
An Employee shall participate in the Plan during each period of his
Service in which he satisfies the foregoing requirements. An Employee who leaves
and returns to Service and who previously satisfied the initial eligibility
requirements shall re-enter the Plan as of the date of his return.
SECTION 4. EMPLOYER CONTRIBUTIONS AND CREDITS.
4.1 Basic Contributions.
Each Employer shall contribute, with respect to a Plan Year, such
amounts as it may determine from time to time. An Employer shall have no
obligation to contribute any amount under this Plan except as so determined in
its sole discretion. The Employers' contributions for a Plan Year, and any
available forfeitures not applied under section 4.4, shall be credited as of the
last day of the year to the Basic Accounts of the Active Participants in
proportion to the amounts of their Cash Compensation, excluding Cash
Compensation in excess of $100,000, except as otherwise provided in section
6.4-2(c) in the case of any special contribution allocable only to Active
Participants who are not Highly Paid Employees.
4.2 Salary Reduction Contributions.
For each payroll period after December 31, 1992, the Employers shall
contribute amounts equal to the amounts by which the Participants have elected
to reduce their compensation (their "salary reduction contributions"). An
Employee shall elect by signing a written form provided by the Committee and
deliver it to the Benefit Office on or before the 15th day of the month
preceding the first date he is eligible to participate or any month thereafter
in which he will be a Participant. A Participant's election shall be a whole
number percentage between one percent and 16 percent of his Cash Compensation
which would normally be paid to him shall instead be contributed by his Employer
to the Plan to be credited to his Salary Reduction Account.
A Participant may change his elective deferral percentage at any time
as permitted under rules established by the Administrator by giving notice by
the 25th day of the preceding month; such election shall be effective with the
first payroll period of the following month.
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In no event may a Participant fund salary reduction contributions of
more than the currently applicable limit under section 402(g) of the Code (e.g.,
$9,240 for 1994) in any of his taxable years after 1986. If a Participant elects
to withdraw any amount from his Salary Reduction Account pursuant to section 8.1
and is suspended from making salary reduction contributions for the following 12
months, the currently applicable limit for the taxable year in which he may
resume deferrals shall be reduced by the amount of his deferrals during the
taxable year in which he made the withdrawal.
The Employers shall keep the Administrator informed on a regular basis
of the salary reduction contributions expected to be contributed under this
section 4.2 in order to permit the Administrator to assure the Plan's compliance
with the foregoing limitations and those set forth in section 6. Any
contribution funded by a deferral election under this section 4.2 shall be paid
by the Employer to the Trustee no later than the last day of the month in which
the salary reductions were made.
4.3 Regular Contributions.
For each payroll period, the Employers shall contribute for credit to
Participants' Regular Accounts amounts equal to the amounts by which the
Participants have elected to reduce their compensation on an after-tax basis. An
Employee shall elect by signing a form provided by the Committee and deliver it
to the Benefit Office on or before the 15th day of the month preceding the first
date he is eligible to participate or any month thereafter in which he will be a
Participant. A Participant's election shall be for a whole number percentage
between one percent and a maximum of 16 percent (reduced by the percentage of
salary reduction contribution he has elected under section 4.2) of his Cash
Compensation which would normally be paid to him and instead be contributed by
his Employer to the Plan to be credited to his Regular Account.
A Participant may change his after-tax contribution percentage at such
time as permitted under rules established by the Administrator by giving notice
by the 25th day of the preceding month; such election shall be effective with
the first payroll period of the following month.
The Employers shall keep the Administrator informed on a regular basis
of the amounts expected to be contributed under this section 4.3 to permit the
Administrator to assure the Plan's compliance with the limitations set forth in
section 6.
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<PAGE> 22
4.4 Matching Contributions.
Effective January 1, 1993, for each month, there shall be credited to
each Participant's Matching Account an amount equal to 70% of the total of his
salary reduction contributions and after-tax contributions provided that the
total matching contribution for a Participant shall not exceed 4.2 percent of
the Participant's Cash Compensation for that payroll period. Such credits shall
be funded first by any available forfeitures for that year not applied under
section 10.6, and then to the extent necessary by contributions from the
Participant's Employer.
Notwithstanding the foregoing, no matching contributions will be made
to the Participant's Account for the three months following the Participant's
withdrawal from his Regular Account of contributions that were matched made in
the previous 24 months.
4.5 Definitions Related to Contributions.
For the purposes of the Plan, the following terms have the meanings
specified:
"Active Participant" means a Participant who has satisfied the
eligibility requirements under section 3 and who is in active Service with an
Employer as of the last day of the Plan Year.
"Cash Compensation" means a Participant's basic salary from his
Employer with respect to that portion of a Plan Year in which he is a
Participant, except that (a) any lump sum merit awards and incentive
compensation, any compensation reduction amount which is excludable from the
Employee's gross income for tax purposes pursuant to section 125, 402(e)(3), or
402(h)(1)(B) of the Code shall be included, and (b) any overtime or shift
differential premiums, awards under long and short term incentive programs for
senior managers and other special awards, any compensation income realized under
a stock option or restricted property arrangement, amounts paid by or received
from an Employer to cover travel, entertainment, moving or similar expenses,
amounts includable in gross income in the year of, and on account of, the grant
of a nonqualified stock option, or under an unfunded nonqualified plan of
deferred compensation, or otherwise includable pursuant to section 83(b) of the
Code, and the taxable value of any fringe benefits or welfare benefits shall be
excluded.
A Participant's compensation shall include payments received under the
Company's Sickness and Accident Disability Benefit Plan.
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<PAGE> 23
A Participant's Cash Compensation shall exclude any compensation in any
Plan Year beginning after 1988 in excess of the limit currently in effect under
section 401(a)(17) of the Code (e.g., $150,000 for 1994); provided, however,
that such limit shall be proportionately reduced in the case of any Plan Year
containing fewer than 12 months. If, during any Plan Year beginning after 1986,
any of the Participant, the Participant's spouse, or a lineal descendant of the
Participant who has not reached age 19 by the end of the year, is either (i) a
Five-Percent Owner or (ii) a Highly Paid Employee who is among the Employer's 10
most highly compensated Employees, then the foregoing limitation shall be
allocated among such individuals in proportion to their actual compensation in
accordance with section 414(q)(6) of the Code and applicable Treasury
Regulations. The foregoing limitation shall also apply in determining a
Participant's "Limit Compensation" solely for purposes of the definition of
"Employee" in section 2 and the top-heavy minimum allocations under section
16.2.
4.6 Conditions as to Contributions.
Employers' contributions shall in all events be subject to the
limitations set forth in section 6. Contributions may be made in the form of
cash, or securities and other property to the extent permissible under ERISA,
including securities of the Employer or an affiliate, and shall be held by the
Trustee in accordance with the Trust Agreement.
Any amount contributed to the Trust Fund by an Employer due to a good
faith mistake of fact shall be returned to the Employer within one year after
the contribution was originally made. No Employer shall make any contribution to
the Trust Fund which is not currently deductible under section 404(a) of the
Code (taking into account the aggregate limitation under section 404(a)(7) where
the Employer also maintains a defined benefit plan), and any nondeductible
contribution shall be returned to the Employer within one year after its
nondeductibility has been finally determined. However, the amount to be returned
shall not include any investment earnings, and shall be reduced to take account
of any adverse investment experience within the Trust Fund in order that the
balance credited to each Participant's Account is not less than it would have
been if the contribution had never been made. Any such returned amount
attributable to a Participant's salary reduction election shall be paid to the
Participant as additional compensation as soon as it is received by his
Employer.
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SECTION 5. TRANSFERS AND EMPLOYEE ROLLOVERS.
5.1 Transfers from Related Plans.
5.1-1 Transfers from Interchange Company Savings Plans. If a
Participant transfers from an Interchange Company and is not scheduled to return
to the Interchange Company after a specified period of time, until March 31,
1996, he may elect to have his account balance under the Interchange Company
Savings Plan transferred to this Plan.
5.1-2 Transfers from Prior Plan. If a Participant was employed with
American Telephone and Telegraph Company on December 31, 1983 and was
transferred to the Company as a result of the divestiture, his account balance
under the Prior Plan shall be transferred to this Plan.
5.1-3 Transfers from Salaried Employees Plan.
Effective January 1, 1993, if a Participant transfers from the Salaried
Employees Plan, his account balance under that Plan shall be transferred to this
Plan. Any such transfer shall be made as of the last day of the month in which
the transfer is made.
The Participants' accounts under those plans representing pre-tax
salary reduction amounts shall be credited to their Salary Reduction Accounts
under this Plan, their accounts representing after-tax employee contributions
shall be credited to their Regular Accounts under this Plan, their accounts
representing employer matching contributions shall be credited to their Matching
Accounts under this Plan, and their accounts representing rolled over or
directly transferred amounts from other plans shall be credited to their
Rollover Accounts under this Plan.
5.2 Rollovers.
Effective January 1, 1993 and subject to section 14.5, any Employee who
is, or is expected to become, a Participant in the Plan and who has received a
distribution of his interest under another qualified retirement plan may, within
60 days after receiving the distribution, deliver it to the Trustee to be held
in the Participant's Rollover Account, provided the distribution qualifies to be
rolled over under section 402(c) of the Code.
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If authorized by the Employee in accordance with the other plan, the
Trustee shall accept a direct transfer of the Employee's interest from that plan
for credit to the Employee's Rollover Account. The Trustee may also accept a
direct transfer from another plan which is not authorized by the Employee,
provided that the transferor plan has never been subject to the requirements of
section 401(a)(11) of the Code, and provided further that none of the amounts
transferred represent salary reduction contributions by the Employee under a
cash or deferred arrangement within the meaning of section 401(k) of the Code
unless the transfer is made on account of the Employee's termination from a
prior employer's service.
All such transfers of interests from other retirement plans or
individual retirement accounts or annuities shall be subject to any reasonable,
nondiscriminatory rules and limitations established from time to time by the
Administrator.
SECTION 6. LIMITATIONS ON CONTRIBUTIONS FOR PARTICIPANTS.
6.1 Limitation on Annual Additions.
Notwithstanding the provisions of sections 4 and 5, the annual addition
to a Participant's accounts under this Plan and under any other qualified
retirement plans and simplified employee pensions maintained by the Employers or
an affiliate (within the purview of sections 414(b), (c), (m), and (o) and
section 415(h) of the Code, which affiliate shall be deemed an Employer for this
purpose) shall not exceed for any limitation year an amount equal to the lesser
of (i) the dollar limitation currently in effect under section 415(c) of the
Code (e.g., $30,000 for 1994); or (ii) 25 percent of the Participant's Limit
Compensation for such limitation year.
For purposes of this section 6, the "annual addition" to a
Participant's accounts means the sum of (i) the Employer contributions and
forfeitures allocated to his accounts (including, solely for purposes of the
dollar limitation, contributions to any individual medical benefits account
described in section 415(l)(2) or for key employees under section 419A(d)(2) of
the Code), plus (ii) for any limitation year beginning before 1987, the lesser
of one-half of the Participant's after-tax contributions credited within the
limitation year, or the excess of his after-tax contributions over six percent
of his Limit Compensation for that year, and (iii) for any limitation year
beginning after 1986, the Participant's total after-tax contributions for that
year. The annual
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addition for a Participant shall include any excess contributions subsequently
returned to the Participant by the Trustee pursuant to section 6.4, provided
however, that (i) it shall not include any excess contributions attributable to
a reasonable error which are returned, reallocated, or credited to a suspense
account pursuant to section 6.4-1, and (ii) it shall not include any salary
reduction contributions in excess of the dollar limit applicable under section
4.2 which are returned to the Participant in accordance with section 6.4-3.
The $30,000 and $90,000 dollar limitations referred to in this section
6 shall, for each limitation year ending after 1987, be automatically adjusted
to the new dollar limitations determined by the Commissioner of Internal Revenue
for the calendar year beginning in that limitation year. A "limitation year"
means each 12 consecutive month period beginning January 1.
6.2 Coordinated Limitation With Other Plans.
Aside from the limitation prescribed by section 6.1 for any single
limitation year, if a Participant has ever participated in one or more defined
benefit plans maintained by an Employer or an affiliate, and if the
Participant's benefits under any such plan have not been limited so that his
defined benefit fraction does not exceed one minus his defined contribution
fraction, then the annual additions to his accounts shall be limited on a
cumulative basis so that the sum of his defined contribution plan fraction and
his defined benefit plan fraction does not exceed one. For this purpose:
6.2-1 A Participant's "defined contribution plan fraction" with respect
to a limitation year shall be a fraction, (i) the numerator of which is the sum
of the annual additions to his accounts through the end of the current
limitation year under all qualified retirement plans and simplified employee
pensions ever maintained by an Employer (whether or not terminated), and (ii)
the denominator of which is the sum of the lesser of the following amounts -A-
and -B- determined for the current limitation year and each prior limitation
year of the Participant's Service with an Employer: -A- is 1.25 times the
defined contribution dollar limitation for that year (e.g., $30,000 for 1994),
and -B- is 35 percent of the Participant's Limit Compensation for such year.
However, the denominator of the defined contribution plan fraction shall be
determined instead pursuant to the special transition rule set forth in section
415(e)(6) of the Code if the Administrator so elects.
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If the Participant participated in any related defined contribution
plan in any years beginning before 1976, any excess of the sum of the actual
annual additions to the Participant's accounts for those years over the maximum
annual additions which could have been made in accordance with section 6.1 shall
be ignored, and after-tax voluntary contributions by the Participant during
those years shall be taken into account as to each such year only to the extent
that his average annual after-tax voluntary contribution in those years exceeded
10 percent of his average annual Limit Compensation in those years.
In the case of any Participant covered by one or more defined
contribution plans established by May 6, 1986, for whom the sum of his defined
contribution plan fraction and defined benefit plan fraction on December 31,
1986, did not exceed one under the rules of section 415(e) of the Code in effect
on that date but did exceed one under the rules becoming effective on January 1,
1987, his defined contribution plan fraction shall be permanently reduced by
subtracting from the numerator an amount equal to the product of (a) the excess
of the sum of such fractions on January 1, 1987, over one, multiplied by (b) the
denominator of the defined contribution plan fraction on that date. No changes
in the terms of any plan after May 5, 1986, shall be taken into account in
making such an adjustment.
6.2-2 A Participant's "defined benefit plan fraction" with respect to a
limitation year shall be a fraction, (i) the numerator of which is his projected
annual benefit payable under all defined benefit plans ever maintained by an
Employer (whether or not terminated), and (ii) the denominator of which is the
lesser of (a) 1.25 times the defined benefit dollar limitation for the current
limitation year (e.g., $118,800 for 1994), and (b) 1.4 times the Participant's
average Limit Compensation during his highest-paid three consecutive limitation
years.
For this purpose, a Participant's "projected annual benefit" under each
defined benefit plan means the annual normal retirement benefit (adjusted to an
actuarially equivalent single life annuity in the case of any plan under which
the normal form is other than a single life annuity or qualified joint and
survivor annuity) which the Participant will receive, assuming his Service with
the Employer will continue until his normal retirement date under the plan (or
until the present, if later), and assuming that his compensation and all other
factors used to determine his benefits will remain constant through such date. A
Participant's benefits for this purpose shall not include any
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benefits attributable to his rollover or voluntary contributions, any benefits
transferred from another plan not maintained by an Employer, or any
pre-retirement death benefits, post-retirement medical benefits, or
post-retirement cost-of-living adjustments.
In the case of any Participant covered on or before December 31, 1986,
by one or more defined benefit plans established by May 6, 1986, which satisfied
the requirements of section 415 for all years beginning before 1987, the
denominator of his benefit plan fraction shall in no event be less than 125
percent of the sum of the annual benefits which he had accrued as of December
31, 1986, disregarding any changes in the terms of any plan after May 5, 1986.
6.2-3 The 1.25 multiplier in each of the foregoing sections 6.2-1(ii)
and 6.2-2(ii) shall be reduced to 1.0 for any limitation year in which either
(a) this Plan is super top-heavy (as defined in section 16), or (b) any Non-key
Employee does not receive either the minimum annual contribution or the minimum
benefit accrual under this or another plan within the plan aggregation group in
accordance with section 416(h)(2)(A) of the Code.
6.3 Limitations to Avoid Discrimination.
The contributions credited under sections 4.2, 4.3, and 4.4 to the
Accounts of Participants who are Highly Paid Employees shall be limited as
follows:
6.3-1 For this purpose, with respect to any Plan Year, "Participants"
shall include each individual who was eligible for any Employer contribution
(including salary reduction contributions under section 4.2) or to make any
Employee after-tax contribution in that year, whether or not any contribution
was made. Any Participant who is a member of the family (as defined in section
414(q) of the Code) of a Highly Paid Employee who either (i) owns more than five
percent of the outstanding equity interest or voting interest in any Employer,
or (ii) is one of the 10 most highly compensated Highly Paid Employees for the
Plan Year, shall not be counted as a separate Participant, but his compensation
and any contributions on his behalf shall be treated as compensation to and
contributions on behalf of that Highly Paid Employee.
Further, the "deferral percentage" for each Participant shall be equal
to the ratio of (i) the Employer contributions, if any, credited to his Account
under section 4.2 for the Plan Year, to (ii) his compensation for that year. The
"contribution percentage" for each Participant shall be equal
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to the ratio of (i) the Employer and Employee contributions, if any, credited to
his Account under sections 4.3 and 4.4 for the Plan Year, to (ii) his
compensation for that year. A Participant's deferral and contribution
percentages shall be computed without regard to any contributions which exceed
the limit described in section 6.1, are attributable to a reasonable error, and
are returned pursuant to section 6.4-1. Employee contributions shall not be
counted in computing the contribution percentage for a Plan Year if they are
made after the end of the year; Employer contributions shall not be counted in
computing the deferral and contribution percentages for a Plan Year if the
contributions are made more than 12 months after the end of the year. A
Participant's "compensation" for this purpose shall be determined by the
Administrator in a manner consistent with section 414(s) of the Code, provided
the same definition is applied to all Participants in any Plan Year.
In the case of any Highly Paid Employee who is eligible to make salary
reduction contributions or after-tax contributions or to receive Employer
matching contributions under any other qualified retirement plan maintained by
an Employer, his deferral percentage and contribution percentage for this and
each other such plan shall be determined as if such contributions under all such
plans were made under each plan. If any other such plan has a different plan
year from this Plan, the contributions for plan years ending within the same
calendar year shall be aggregated.
If this Plan satisfies the requirements of section 401(a)(4), 401(m),
or 410(b) of the Code only if aggregated with one or more other plans, or if one
or more other plans satisfy any of such requirements only if aggregated with
this Plan, then the deferral percentage and the contribution percentage of each
participant in such plans shall be determined as if they were a single plan.
6.3-2 The contributions credited for Highly Paid Employees shall be
limited so that each of the following conditions which is applicable is
satisfied:
a. For each Plan Year, either (i) the average deferral percentage
among the Highly Paid Employees is not more than 1.25 times the
average deferral percentage among all other Participants, or (ii)
the average deferral percentage among the Highly Paid Employees is
not more than 2 times the average deferral percentage among all
other Participants,
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and the former percentage is not more than 2 percentage points
above the latter percentage.
b. For each Plan Year, either (i) the average contribution percentage
among the Highly Paid Employees is not more than 1.25 times the
average contribution percentage among all other Participants, or
(ii) the average contribution percentage among the Highly Paid
Employees is not more than 2 times the average contribution
percentage among all other Participants, and the former percentage
is not more than 2 percentage points above the latter percentage.
c. For Plan Years beginning after 1988, the sum of the average
deferral percentage plus the average contribution percentage of
the Participants who are Highly Paid Employees (such percentages
being determined after taking into account any corrective
distributions, reallocations, or contributions pursuant to section
6.4) is not more than the greater of:
(i) the sum of (A) 1.25 times the lesser of the average deferral
percentage and the average contribution percentage for the other Participants
plus (B) the lesser of (1) the greater of those two percentages for the other
Participants increased by 2 percentage points and (2) the greater of those two
percentages multiplied by 2; and
(ii) the sum of (A) 1.25 times the greater of the average deferral
percentage and the average contribution percentage for the other Participants
plus (B) the lesser of (1) the lesser of those two percentages for the other
Participants increased by 2 percentage points and (2) the lesser of those two
percentages multiplied by 2.
6.4 Compliance With Limitations.
The Administrator and Employers shall take such action as may be
necessary from time to time to assure compliance with the limitations set forth
in sections 6.1, 6.2, 6.3, and 4.2. Specifically:
6.4-1 The Administrator shall use its best efforts to see that the
Employers and Participants restrict their contributions for any Plan Year to an
amount which, taking into account the amount
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of available forfeitures, may be completely credited to the Participants
consistent with the limitations set forth in sections 6.1 and 6.2.
Where those limitations would otherwise be exceeded with respect to any
Participant in a limitation year, the Administrator shall first cause the
Trustee to return the Participant's after-tax voluntary contributions which were
not eligible for matching Employer contributions, if any, then to return the
Participant's salary reduction contributions which were not eligible for
matching Employer contributions, to the extent necessary to satisfy the
limitations. If the limitations cannot be satisfied by returning all of the
Participant's after-tax contributions and salary reduction contributions not
eligible for Employer matching contributions, the Administrator shall cause the
Trustee to return the Employer contributions otherwise allocable to the
Participant (as nondeductible contributions described in section 4.6) to the
extent necessary to satisfy the limitations; in such event, the Administrator
shall require first the return of the Participant's after-tax contributions and
salary reduction contributions, and the associated Employer matching
contributions in the same proportion in which they were made, and finally the
return of other Employer contributions. All contributions returned shall include
any investment gains.
Where the limitations cannot be satisfied by returning Employer
contributions (such as where the contributions may no longer be returned
pursuant to section 4.6, or where the limitations are being exceeded on account
of other Participants' forfeitures rather than Employer contributions), the
excess amount shall be held in a suspense account to be allocated in lieu of any
Employer contributions in future years until it is eliminated, and to be
returned to the Employer if it cannot be credited consistent with these
limitations before the termination of the Plan.
In the case of a Participant who also participates in the Bell
Communications Research Support Staff Pension Plan, the Administrator shall
cause benefit accruals under that Plan to be reduced first before contributions
under this Plan are reduced.
6.4-2 In the case of a potential failure to satisfy any
anti-discrimination limitation in section 6.4-2:
a. With respect to the separate limitations in sections 6.3-2(a) and
(b), the Administrator shall first reduce the deferral or
contribution percentage of those Highly Paid Employees having the
highest
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percentage to the level of those having the next highest
percentage, and then, if necessary, reduce the deferral or
contribution percentage of all Highly Paid Employees at that level
to the level of those having the next highest percentage, and so
on until the limitation is satisfied for the Plan Year. With
respect to any Highly Paid Employee, his contribution percentage
shall first be reduced by returning any unmatched after-tax
contributions before any other after-tax contributions and any
vested matching contributions are distributed and any nonvested
matching contributions are forfeited.
With respect to the combined limitation in section 6.3-2(c), the
Administrator shall first reduce the contribution percentages of
the Highly Paid Employees by causing the Trustee to return all or
a portion of their unmatched after-tax contributions, if any. If
the limitation remains unsatisfied after all such Employees'
after-tax contributions are returned, the Administrator shall in
turn cause the Trustee (i) to return the Highly Paid Employees'
salary reduction contributions not eligible for matching Employer
contributions pursuant to section 4.4, then (ii) to return the
Employees' salary reduction and after-tax contributions and to
distribute, to the extent vested, and to forfeit, to the extent
not vested, the associated Employer matching contributions in the
same proportion in which they were made. Such reductions shall be
made in each category starting with those Highly Paid Employees
having the highest percentage in that category, in the same manner
prescribed by the preceding paragraph.
b. To the extent possible, the Administrator shall reduce a Highly
Paid Employee's deferral or contribution percentage by modifying
his elections and curtailing further contributions under sections
4.2, 4.3, and 4.4 on his behalf for the Plan Year.
However, if this is insufficient with respect to the Employee's
deferral percentage for a Plan Year, the Administrator shall cause
a portion of the Employee's salary reduction contributions already
made under section 4.2 to be recharacterized as after-tax
contributions to the extent the Employee could have made such
after-tax contributions without exceeding any limitation under the
Plan, provided (i) such amounts are treated as additional taxable
income to the Employee for the taxable year in which the deferrals
were made, (ii) the amounts involved are determined and all
affected Employees are
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notified no later than 2-1/2 months after the end of the Plan
Year, and (iii) the Employer has not suspended the after-tax
contribution feature for that year pursuant to section 14.5. Any
such recharacterized contributions shall remain credited to the
Employee's Salary Reduction Account and subject to the
restrictions on distributions under this Plan applicable to the
Employee's salary reduction contributions.
Where a Highly Paid Employee's deferral or contribution percentage
cannot be adequately reduced by curtailing further contributions
during the Plan Year or by recharacterizing salary reduction
contributions as after-tax contributions, the Administrator shall
cause the Trustee to return to the Employee a portion of the
contributions credited to his Salary Reduction or Regular Account,
as adjusted for the investment gains or losses attributable to
such excess contributions, and to reallocate to other Participants
any Employer contributions previously credited to the Employee's
Matching Account on the basis of such salary reduction
contributions as are returned to the Employee.
Any such distributions to correct excessive contributions in a
Plan Year shall be made as soon as practicable, but in no event
later than the end of the following Plan Year, and shall be
adjusted for the investment gains or losses attributable to such
excess contributions up to the last day of the Plan Year preceding
the date of distribution.
c. In lieu of the Administrator's causing the limitations under
section 6.3 to be satisfied for a Plan Year by recharacterization
of excess salary reduction contributions as employee contributions
or by return of excess salary reduction contributions or employee
contributions and reallocation of matching contributions with
respect to one or more Highly Paid Employees, the Employers may
elect to make an additional, special contribution under section
4.1 on behalf of one or more Active Participants who are
designated by the Employers and who are not Highly Paid Employees,
such contribution to be credited to their Salary Reduction
Accounts in proportion to their Cash Compensation.
6.4-3 In the case of a Participant who notifies the Administrator in
writing that his salary reduction contributions under section 4.2 during his
current or preceding taxable year have caused
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him to exceed the applicable limitation under section 402(g) of the Code, the
Administrator shall cause the Trustee to return to the Participant a portion of
the deferrals credited to his Salary Reduction Account during that year, as
adjusted for the investment gains or losses attributable to such excess
deferrals. (A Participant shall be deemed to have given such notice if the
Administrator determines that excess deferrals have occurred under this Plan and
any other cash or deferred arrangement maintained by Employers, without regard
to the Participant's salary reduction contributions under any other employers'
plans.) However, such a distribution may be made only if such notice is given
and the payment to the Participant by the Trustee is effected no later than the
April 15th immediately following the Participant's taxable year in which the
limitation has been exceeded.
6.4-4 To the extent an Employee's salary reduction contributions are
returned pursuant to sections 6.4-2(a), 6.4-2(b) or 6.4-3, any associated
Employer matching contributions shall be forfeited.
SECTION 7. TRUST FUND AND ITS INVESTMENT.
7.1 Creation of Trust Fund.
The Company shall select the Trustee to whom the Employers and
Participants may from time to time make the contributions described in this
Plan. The Trustee shall hold the Employers' and Participants' contributions,
together with all amounts received from other qualified plans and investments,
as the Trust Fund under the terms of this Plan and the Trust Agreement. In all
events, the benefits described in the Plan shall be payable only from the assets
of the Trust Fund, and none of the Company, any other Employer, its board of
directors or trustees, its stockholders, its officers, its partners, its
employees, its proprietor, the Administrator, and the Trustee shall be liable
for payment of any benefit under the Plan except from the Trust Fund.
7.2 Responsibility for Investments.
The Trustee shall have full responsibility for the investment of the
Trust Fund, except to the extent (i) investment responsibility may be assigned
in writing by the Company to another fiduciary or delegated from time to time to
one or more investment managers pursuant to section
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2.2 of the Trust Agreement, or (ii) Participants exercise investment control
over their Accounts pursuant to section 7.3, or 11.9 of the Plan.
7.3 Investment Direction by Participants.
Each Participant's Account shall be invested as one or more separate
accounts with such mutual funds, insurance contracts, brokerage firm accounts,
bank instruments, and other investment choices as may be offered under the Plan.
A Participant shall indicate how his Account is to be allocated among such
investment choices in accordance with the rules and procedures applicable to
such choices or otherwise established by the Administrator from time to time.
During any period in which a Participant fails to direct the investment of his
Account, the Administrator shall allocate it to one or more money market mutual
funds or similar investments with minimal principal risk as the Administrator
may select in its sole discretion.
Further, for Plan Years beginning before 1994, the Administrator shall
allocate a Participant's Basic Account to the Interest Income Fund or similar
investment with minimal principal risk as the Administrator selected in its sole
discretion.
The Administrator shall select the investment choices to be offered in
its sole discretion, and shall have the right, exercisable upon reasonable
notice to the Participants, to add or eliminate any investment choice, to change
any of the terms or conditions or the rules and procedures established in
connection with the various investment choices, and to terminate entirely the
offering of such choices and the Participants' right to direct the investment of
their Accounts. Further, the Administrator may impose appropriate additional
limitations on the choices available to Participants who are no longer in active
Service with an Employer.
SECTION 8. USE OF ACCOUNTS DURING SERVICE.
8.1 Hardship Withdrawals from Salary Reduction Accounts.
Subject to section 14.5, any Participant in active Service with an
Employer, on a Leave of Absence, or on a Rotational Assignment may request to
withdraw an amount from his Salary Reduction Account on the following terms and
conditions:
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8.1-1 Any request to withdraw shall be made by written application to
the Administrator. A Participant shall be suspended from making any further
contributions under section 4.2 or 4.3 (and under any other qualified or
nonqualified plan of deferred compensation maintained by the Employers) from the
date of withdrawal until the first Entry Date which is more than 12 months after
the withdrawal.
8.1-2 The amount withdrawn from the Participant's Salary Reduction
Account in any Plan Year beginning after 1988 shall not exceed the cumulative
contributions credited to that Account, plus any investment earnings credited
through December 31, 1988, but ignoring any investment earnings credited after
that date, and shall not include any special contributions made by his Employer
pursuant to section 6.4-2(c).
8.1-3 A Participant may only request a withdrawal to meet an immediate
and heavy financial need arising on account of: (i) an injury, illness, or death
within his family, including any medical expenses (within the meaning of section
213(d) of the Code) which have been or need to be incurred for the Participant,
his Spouse, or any of his dependents (within the meaning of section 152 of the
Code); (ii) a casualty loss or a legal judgment or liability which the
Participant, as a legal or practical matter, has no choice but to cover or pay;
(iii) the purchase of a principal residence for the Participant (excluding the
cost of furnishings and normal mortgage and other periodic payments falling due
after the purchase); (v) a delinquency in mortgage or rental payments for the
Participant's principal residence which must be cured promptly to avoid
foreclosure or eviction; or (vi) tuition expenses and related educational fees
for the next 12 months of post-secondary school education for the Participant,
his Spouse, or one of his children or other dependents. In addition, a
withdrawal for any such purpose shall not exceed that portion of the total
amount actually required to cover the Participant's financial need which the
Participant is unable to satisfy from other resources that are reasonably
available to him. For this purpose, there shall be taken into account the
Participant's additional tax liabilities due to the withdrawal.
8.1-4 A Participant's request for a withdrawal shall be approved only
if the Participant withdraws all other amounts and loans permitted under this
and any other qualified plan in which he has an account balance. A Participant
requesting a withdrawal shall submit whatever information the Administrator may
ask for regarding the circumstances of his request.
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8.1-6 In approving or denying requests for withdrawals, the
Administrator shall treat all Participants in a uniform and nondiscriminatory
manner.
8.2 Other Withdrawals from Regular, Salary Reduction, Rollover, Basic and
Matching Accounts.
Any Participant in active Service with an Employer, on a Leave of
Absence, or on a Rotational Assignment may withdraw an amount from his Regular,
Salary Reduction, Rollover, Basic and Matching Accounts on the following terms
and conditions:
8.2-1 A Participant may request a withdrawal only twice in any Plan
Year. Any request to withdraw shall be made by written application to the
Trustee under rules prescribed by the Administrator.
8.2-2 Participants may withdraw at least $1000, up to the maximum of
the total current value of the following:
(i) the balance in the Participant's Regular and Rollover
Accounts;
(ii) the vested balance in the Participant's Matching and
Basic Accounts if the Participant has participated in the Plan
for at least 5 Plan Years, excluding any contributions made
during the preceding 24 months; and
(iii) if the Participant is over 59-1/2, the balance in the
Participant's Salary Reduction Account (optional).
8.2-3 To the extent that contributions to the Participant's Regular
Account made prior to January 1, 1987, and any earnings thereon, are separately
accounted for, withdrawals shall be treated first as distributions of the
Participant's pre-1987 voluntary contributions, with any excess of withdrawals
over such contributions treated as pro-rata distribution of post-1986
contributions and investment earnings.
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8.3 Loans to Participants.
Subject to section 14.5, any Participant in active service with an
Employer or on a Rotational Assignment (other than an "owner-employee" within
the meaning of section 401(c)(3) of the Code or a "shareholder-employee" within
the meaning of section 1379(d) prior to the Subchapter S Revision Act of 1982)
may borrow from his Salary Reduction, Regular, Matching, Basic or Rollover
Account on the following terms and conditions:
8.3-1 Any request to borrow shall be made by written application to the
Administrator in accordance with such policies and procedures as the
Administrator may publish from time to time. A Participant may only have two
loans outstanding at any time.
8.3-2 No loan shall be for an amount less than $1,000. Further, the
outstanding loans to a Participant under this Plan and the plans of any other
employers which are deemed commonly controlled or affiliated within the meaning
of sections 414(b), (c), (m), and (o) of the Code shall not exceed the lesser of
(i) $50,000 reduced by the highest outstanding loan balance during the preceding
12 months and (ii) 50 percent of his vested interest in the sum of the
balance(s) credited to his account(s) under all defined contribution plans as
determined on the most recent valuation date preceding the most recent loan.
The loans to a Participant shall not exceed an amount which he
demonstrates to the Administrator's satisfaction that he will be able to repay
at his current level of compensation.
8.3-3 Any loan shall be automatically secured by the Participant's
interest in his Account to the extent of the outstanding principal and accrued
interest on the loan, and the existence of that security interest shall not be
deemed prohibited by the provisions of section 15.2. Further, the Administrator
may require the Participant to pledge other tangible or intangible property as
security for a loan to the extent the Administrator deems it prudent and
appropriate. The Administrator may require that the loan amount paid be net of
any origination fees or provide that a Participant's account balance will be
reduced by any maintenance fees.
8.3-4 Any loan shall bear a reasonable rate of interest to be set by
the Savings Plan Committee from time to time based upon prevailing commercial
rates. A loan shall be repayable by regular payroll deductions, or in monthly or
quarter-annual installments if the Participant goes
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on a Rotational Assignment to an Interchange Company or on a Leave of Absence,
over a period not exceeding five years or the period remaining to the
Participant's Normal Retirement Date, whichever is shorter. Further, if a
Participant goes on an unpaid Leave of Absence, the Administrator may consent to
the suspension of loan payments for up to one year, and the loan payment amount
may be recalculated upon resumption of payments, but the term of the loan may
not be extended. However, the term of a loan shall not be less than one year and
shall not exceed the period of assignment at the Company if the Participant is
on a Rotational Assignment at the Company.
8.3-5 Any loan shall be charged directly to the Participant's Account;
the Participant's payments of principal and interest shall be credited directly
to his Account, and shall not be treated as income of the general Trust Fund. A
loan shall be charged first to his Salary Reduction Account not in excess of his
salary reduction contributions over six percent of Compensation, then to the
remainder of his Salary Reduction Account, then to his Matching, Basic and
Rollover Accounts, to the extent vested, and then to his Regular Account. A loan
shall be taken prorata from the investments in which the Participant's Account
balances are held.
Payments of principal on the loan shall be made into the Participant's
Account in the reverse sequence as said Accounts were initially charged under
this section 8.3-5. A loan may be pre-paid after six months of its original
date. A Participant who has separated from service may prepay the outstanding
balance of a loan within three months following the date of such separation from
service even if that is sooner than six months of the loan's original date.
There shall be no penalty associated with any such pre-payment. Loan repayments
will be suspended under this plan as permitted under Sec. 414(u) (4) of the
Internal Revenue Code.
8.3-6 In all events, a loan shall become immediately due and payable
upon (i) the Participant's termination of Service with the Employers, or (ii)
the termination of the Plan. Any loan not repaid in accordance with its terms
shall be treated as in default.
8.3-7 In exercising its responsibilities under this section, the
Administrator shall assure that loans are made available to all Participants on
a reasonably equivalent basis and in amounts which do not discriminate in favor
of Highly Paid Employees.
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SECTION 9. ADJUSTMENTS TO ACCOUNTS.
9.1 Adjustments for Transactions.
Each Participant's Account shall be timely adjusted for Employer
contributions and other Participants' forfeitures under section 4, Employee
contributions and transfers under section 5, withdrawals and loans under section
8, forfeitures and restorals under section 10, and benefit payments under
section 11.
9.2 Adjustments for Investment Experience.
Each Participant's Account shall be deemed adjusted as of each
Valuation Date to be equal to the fair market value of the assets in which the
Account is invested pursuant to the Participant's elections under section 7.3.
SECTION 10. VESTING OF PARTICIPANTS' INTERESTS.
10.1 Immediately Vested Accounts.
A Participant's interest in his Salary Reduction, Basic, Regular and
Rollover Accounts shall always be fully vested and nonforfeitable for any
reason.
10.2 Deferred Vesting in Accounts.
A Participant shall have no vested interest in his Matching Account
until he has completed five Vesting Years, at which time the Participant's
interest in his Account shall become 100 percent vested.
If the applicable vesting schedule under the Plan for any Plan Year is
less favorable to a Participant than the applicable vesting schedule for any
previous Plan Year (whether on account of an amendment of the Plan or the Plan's
change in status from top-heavy to not top-heavy as defined in section 16), the
Participant's vested interest shall be no less than (i) his vested interest as
of the last day of such previous Plan Year, if he had fewer than three Vesting
Years at that date, or (ii) his vested interest determined under the applicable
schedule for the previous Plan Year, if he had three or more Vesting Years at
that date.
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However, any Participant who was a participant in the Plan on or before
December 31, 1988 shall continue to vest under the prior vesting schedule until
they have completed five Vesting Years, at which time the Participant's interest
in his Account shall become 100 percent vested.
10.3 Computation of Vesting Years.
For purposes of this Plan, effective July 1, 1997, a "Vesting Year"
means each 12-months of an Employee's Service with an Employer, beginning with
his initial Service with any Employer, and including certain Service with other
employers as provided in the definition of "Service". In general, an Employee's
separate periods of Service shall be added together, with each period of Service
counted as the number of days from the first day of his Service in that period
to the following Severance Date. However, a Participant's Vesting Years shall be
computed only on the basis of completed years, assuming that 12 months equal one
year, and any remaining partial year shall be disregarded. Further, a
Participant's Vesting Years shall be computed subject to Service with any
Employer, and including certain Service with other employers as provided in the
definition of "Service." However, a Participant's Vesting Years shall be
computed subject to the following conditions and qualifications:
a. A Participant's vested interest in his Matching Account
accumulated before a Break in Service shall be determined without
regard to any Service after the Break. Further, if a Participant
has a Break in Service before his interest has become vested to
some extent, he shall lose credit for any Vesting Year before the
Break.
b. A Participant's Vesting Years shall include any period of service
with an Interchange Company to the extent provided in an
Interchange Company Agreement.
c. Unless otherwise specifically excluded, a Participant's Vesting
Years shall include any period of active military duty to the
extent required by the Military Selective Service Act of 1967 (38
U.S.C. section 2021).
d. A Participant's Vesting Years shall include any period of leave to
the extent required by the Family and Medical Leave Act of 1993
(29 U.S.C. section 2601 et. seq.).
e. If a Participant quits, retires, or is discharged, or he is
continuously absent for any other reason and he subsequently
quits, retires, or is discharged, and the Participant then has
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any Service within 12 months after the first day of absence, his
Vesting Years shall include the period from the first day of his
absence through his return to Service unless otherwise
specifically excluded.
f. If a Participant's Service ends before December 31, 1998, the
total number of his Vesting Years shall in no event be less than
it would be if the provisions of the Plan as in effect through
June 30, 1997, had remained in effect through his termination.
10.4 Full Vesting Upon Certain Events.
Notwithstanding section 10.2, a Participant's interest in his Matching
Account shall fully vest on the Participant's Normal Retirement Date, provided
the Participant is in Service on or after that date. The Participant's interest
shall also fully vest in the event that his Service is terminated by Disability
or by death or at the request of the Company because of a surplus condition.
10.5 Full Vesting Upon Plan Termination.
Notwithstanding section 10.2, a Participant's interest in his Matching
Account shall fully vest upon termination of the Plan or upon the permanent and
complete discontinuance of contributions by his Employer. In the event of a
partial termination, the interest of each Participant shall fully vest with
respect to that part of the Plan which is terminated.
10.6 Forfeitures, Repayment, and Restoral.
If a Participant's Service terminates before his interest in his
Matching Account is fully vested, that portion which has not vested shall be
forfeited if he either (i) receives a distribution of his entire vested interest
pursuant to section 11.1, or (ii) has a Break in Service. For this purpose, a
Participant who has terminated with no vested interest in his Account shall be
deemed to have received a distribution of his entire vested interest on the date
of his termination.
Notwithstanding the foregoing, the account balance of a Participant who
transfers to an Interchange Company or changes employment pursuant to the
Mandatory Portability Agreement within 30 days of his termination of employment
from the Company shall not be forfeited as a result of such transfer or change.
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If a Participant who has received his entire vested interest returns to
Service before he has a Break in Service, he may repay to the Trustee an amount
equal to the distribution, disregarding any portion of the distribution from his
Rollover Account. The Participant may repay such amount at any time within five
years after he has returned to Service. The amount shall be credited to his
Account as of the last day of the Plan Year in which it is repaid; an additional
amount equal to the portion of his Matching Account which was previously
forfeited shall be restored to that Account at the same time from other
Employees' forfeitures and, if such forfeitures are insufficient, from a special
contribution by his Employer for that year. For this purpose, a Participant who
terminated with no vested interest in his Account shall be deemed to have repaid
his entire vested interest on the date of his return to Service.
10.7 Accounting for Forfeitures.
A forfeiture shall be charged to the Participant's Matching Account as
of the first day of the first Valuation Period in which the forfeiture becomes
certain pursuant to section 10.6. A forfeiture shall first offset the
contributions of the terminated Participant's Employer which are required
pursuant to section 4.4, with any unused balance added to the Employer's basic
contributions under section 4.1, in the Plan Year in which the forfeiture
becomes certain. Notwithstanding the foregoing, if in any Plan Year any
terminated Participant is treated as an Active Participant pursuant to section
4.5 in order to permit the Plan to satisfy the requirements of section
401(a)(26) or 410(b) of the Code, a forfeiture of his nonvested interest shall
not be charged to his Account or added to his Employer's contribution until the
first Plan Year following his termination in which he has 500 or fewer Hours of
Service.
10.8 Vesting and Nonforfeitability.
A Participant's interest in his Matching Account which has become
vested shall be nonforfeitable for any reason.
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SECTION 11. PAYMENT OF BENEFITS.
11.1 Benefits for Participants.
A Participant whose Service ends for any reason shall receive the
vested portion of his Account balance as provided in section 11.2 as soon as
practical following the later of the date (i) his Service ends and (ii) the
Benefits Office receives his election for benefits.
Notwithstanding the foregoing, a Participant whose Account exceeds
$3,500 (or at the time of any prior distribution exceeded $3,500) may elect to
defer receipt of his benefits until he reaches age 70-1/2. A terminated
Participant who does not elect to receive his benefits immediately may make such
an election subsequently at any time, in which event his benefits shall be paid
as soon as practical following receipt of his election.
All or a portion of a Participant's vested Account balance shall be
paid in a single lump sum to any alternate payee to the extent provided in any
court order determined by the Administrator to be a qualified domestic relations
order within the meaning of section 414(p) of the Code. Any such payment shall
be made as soon as practical following the Administrator's determination.
In all events, if a Participant's Service continues to the calendar
year in which he reaches age 70-1/2, his Account balance or the first periodic
payment of such balance, as he may elect pursuant to section 11.2, shall be paid
to him no later than the April 1st of the following calendar year, regardless of
his continued Service, unless he reached such age before 1988 and has never been
a Five-Percent Owner, in which case his Account balance shall be distributed in
accordance with section 11.2 when his Service terminates.
11.2. Benefit Amounts and Forms for Participants.
A Participant's benefits shall be equal to his vested Account balance
as of the most recent Valuation Date before the date of payment.
A Participant's benefits will normally be payable in a single lump sum,
unless his Account balance exceeds $3,500, and he elects in lieu of a lump sum
to receive his benefits in installments. Any such installments (except possibly
the last) must equal at least $1,000 on an annual basis, and shall be payable
for a period not exceeding the Participant's life expectancy or his and his
Spouse's
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joint and last survivor life expectancy. Any life expectancy shall be based on
the expected return multiples in Tables V and VI of Treasury Income Tax
Regulation section 1.72-9. A Participant's life expectancy, or his and his
Spouse's joint and last survivor life expectancy is to be computed only once
when benefits commence. Each installment shall be equal to (i) the vested
balance credited to the Participant's Account, divided by (ii) the number of
annual installments which remain to be paid (including the current payment being
computed).
A Participant's election shall be filed with the Administrator during
an election period beginning 90 days before the date on which benefit payments
are to begin. The Administrator shall furnish to the Participant, at least 30
and not more than 90 days before the benefit commencement date, a written
explanation in nontechnical language of the benefit forms provided under this
section 11.2, the Participant's right to elect a form and revoke an election,
and the relative effect of the different forms on the amounts to be received by
the Participant and any Beneficiary.
If a Participant requests any additional information regarding the
election of a benefit form within 60 days after receiving the Administrator's
initial written explanation, the Participant's benefit commencement date shall
be changed, if necessary, to be at least 60 days after he receives the
additional information. If a Participant has elected installment benefits, he
may at any time, whether before or after the end of the election period, change
the designated Beneficiary of any installments which may remain payable upon his
death.
However, a Participant who elects to receive his benefits in
installments may elect at any time to receive the remainder of his benefits in a
single lump sum.
11.3 Benefits on a Participant's Death.
If a Participant dies after his benefits have begun to be paid in
installments pursuant to section 11.2, or if a Participant dies before his
benefits have been paid or have begun to be paid, the balance credited to his
Account shall be paid to his Beneficiary in a single lump sum, or if his vested
benefits exceed $3,500 and he had elected, in two annual installments.
The benefits shall be calculated on the basis of the most recent
Valuation Date before the date of payment.
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Notwithstanding the foregoing, benefits may not be paid for a period
longer than the Beneficiary's life expectancy as of the Participant's death.
If a Participant is married when he dies, then unless he has elected
otherwise the Administrator shall cause the balance in his Account to be paid in
a single lump sum to his Spouse. Any such election must be accompanied by the
Spouse's written consent, which (i) must acknowledge the effect of the election,
(ii) must explicitly provide either that the designated Beneficiary and payment
form may not subsequently be changed by the Participant without the Spouse's
further consent, or that it may be changed without such consent, and (iii) must
be witnessed by the Administrator, its representative, or a notary public. (This
requirement shall not apply if the Participant establishes to the
Administrator's satisfaction that the Spouse may not be located.)
Within a reasonable time after the Participant's initial entry into the
Plan, and, if he enters prior to the first day of the Plan Year in which he
reaches age 32, then again within a reasonable time after the earlier of that
date and the termination of his Service, the Administrator shall furnish to the
Participant a written explanation in nontechnical language of the death benefit
provided under this section 11.3 and the Participant's right to designate a
Beneficiary and a payment form and to revoke a designation. If the Participant
is married, the Administrator's written explanation shall describe the need for
the Spouse to consent to the election of any death benefit.
A lump sum benefit shall be paid as soon as practicable, and in no
event more than 60 days, after the Participant's death; an installment form of
benefit shall commence by that date.
11.4 Election Formalities.
Any election or revocation of a benefit form shall be in writing,
signed by the Participant or, if applicable, by the Beneficiary, and delivered
personally or by mail to the Administrator. The Administrator shall provide
appropriate forms for benefits elections, but an election shall be valid whether
or not it is made on the official form.
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11.5 Marital Status.
The Administrator shall from time to time take whatever steps it deems
appropriate to keep informed of each Participant's marital status. Each Employer
shall provide the Administrator with the most reliable information in the
Employer's possession regarding its Participants' marital status, and the
Administrator may, in its discretion, require a notarized affidavit from any
Participant as to his marital status. The Administrator, the Plan, the Trustee,
and the Employers shall be fully protected and discharged from any liability to
the extent of any benefit payments made as a result of the Administrator's good
faith and reasonable reliance upon information obtained from a Participant and
his Employer as to his marital status.
11.6 Proof of Ages.
Each Participant desiring to elect a benefit form other than a lump sum
shall furnish satisfactory proof of his age to the Administrator at least 30
days before the end of the election period described in section 11.2. Further,
any Participant who is to receive his benefits in a form related to the
life-span of another individual shall furnish satisfactory proof of the
individual's age to the Administrator by the same date.
11.7 Delay in Benefit Determination.
If the Administrator is unable to determine the benefits payable to a
Participant or Beneficiary on or before the latest date prescribed for payment
pursuant to section 11.1 or 11.3, the benefits shall in any event be paid within
60 days after they can first be determined, with whatever makeup payments may be
appropriate in view of the delay.
11.8 Payments in Cash; Direct Transfers.
All benefits shall be paid in cash except in the case of assets held in
a Participant's Diversified Telephone Portfolio Account, which may be paid in
stock or cash at the Participant's election, except that fractional shares shall
be paid in cash, or as otherwise agreed upon by the Administrator and the person
entitled to the benefits. A Participant or Spouse or former Spouse may elect to
have any eligible rollover distribution made after 1992 that exceeds $200 paid
directly to an individual retirement account or annuity or for the Participant,
to another qualified retirement plan or qualified annuity plan that accepts such
distributions. An eligible rollover distribution is a
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distribution of all or any portion of a Participant's account excluding
distributions (a) required under section 401(a)(9) of the Code, (b) of after-tax
contributions, and (c) which are part of a series of payments made over at least
10 years or over the life or life expectancy of the Participant and/or his
Beneficiary.
11.9 Transfers to Interchange Companies.
If a Participant transfers to an Interchange Company, he may elect on
or before March 31, 1996, to have his account balance under this Plan
transferred to the Interchange Company Savings Plan, in which case, no
forfeiture as otherwise provided for in section 10 shall occur.
However, if a Participant transfers to an Interchange Company on a
Rotational Assignment, he may only elect to receive a distribution or defer
receipt of his benefits.
11.10 Transfer to Other Employer's Plan
If an Employee no longer works for any Employer, but the Employee is
transferred to another entity, and that entity maintains a qualified defined
contribution retirement plan (the "other plan"), the Employer may transfer the
Employee's Account to the other plan, provided (a) the Plan Administrator has
determined that such transfers will involve no undue burden and will be
consistent with the purposes of this Plan, and (b) the other plan: (i) provides
for such transfers, (ii) will provide service credit for the Participant's
Service, (iii) will preserve all of the Employee's accrued rights with respect
to his Account in accordance with section 411(d)(6) of the Code, and (iv) will
restrict distributions from the Participant's Salary Reduction Account as
required under section 401(k) of the Code. For purposes of this paragraph, a
transfer of employment is defined as an agreement between an Employer and
another entity concerning the change in employment from the Employer to the
other entity.
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SECTION 12. RULES GOVERNING BENEFIT CLAIMS AND REVIEW OF APPEALS.
12.1 Claim for Benefits.
Any Participant or Beneficiary who qualifies for the payment of
benefits may file a claim for his benefits with the Administrator on a form
provided by the Benefits Office. Any election of an alternative benefit form
shall be filed with the Benefits Office at least 30 days before the date on
which the Participant or Beneficiary has been notified by the Administrator that
the benefits are to begin. If a Participant or Beneficiary does not file a claim
by such date, he shall be deemed to have filed a claim for payment of benefits
in the standard form prescribed by section 11.2 or 11.3.
12.2 Notification by Administrator.
Within 90 days after receiving a claim for benefits (or within 180
days, if special circumstances require a extension of time and written notice of
the extension is given to the Participant or Beneficiary within 90 days after
receiving the claim for benefits), the Administrator shall notify the
Participant or Beneficiary whether the claim has been approved or denied. If the
Administrator denies a claim in any respect, the Administrator shall set forth
in a written notice to the Participant or Beneficiary: (i) each specific reason
for the denial; (ii) specific references to the pertinent Plan provisions on
which the denial is based; (iii) a description of any additional material or
information which could be submitted by the Participant or Beneficiary to
support his claim, with an explanation of the relevance of such information; and
(iv) an explanation of the claims review procedure set forth in section 12.3.
12.3 Claims Review Procedure.
Within 60 days after a Participant or Beneficiary receives notice from
the Administrator that his claim for benefits has been denied in any respect, he
may file with the Committee a written notice of appeal setting forth his reasons
for disputing the Administrator's determination. In connection with his appeal
the Participant or Beneficiary or his representative may inspect or purchase
copies of pertinent documents and records to the extent not inconsistent with
other Participants' and Beneficiaries' rights of privacy. Within 60 days after
receiving a notice of appeal from a prior determination (or within 120 days, if
special circumstances require an extension of time and written notice of the
extension is given to the Participant or Beneficiary and his
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<PAGE> 50
representative within 60 days after receiving the notice of appeal), the
Committee shall furnish to the Participant or Beneficiary and his
representative, if any, a written statement of the Committee's final decision
with respect to his claim, including the reasons for such decision and the
particular Plan provisions upon which it is based.
SECTION 13. THE ADMINISTRATOR AND THE COMMITTEE AND THEIR FUNCTIONS.
13.1 Authority of Administrator.
The Company shall be the "Plan Administrator" within the meaning of
ERISA. The Company shall appoint a Savings Plan Committee, which shall have
exclusive responsibility and authority to control and manage the operation and
administration of the Plan, including full discretion to interpret and apply its
provisions, except to the extent such responsibility and authority are otherwise
specifically (i) allocated to the Company, the Employers, or the Trustee under
the Plan and Trust Agreement, (ii) delegated in writing to other persons by the
Company, the Employers, the Committee, the Administrator, or the Trustee, or
(iii) allocated to other parties by operation of law. The Administrator shall
have no investment responsibilities, however, except to the extent, if any,
specifically provided in the Trust Agreement. In the discharge of its duties,
the Administrator may employ accountants, actuaries, legal counsel, consultants,
recordkeepers, and other agents (who also may be employed by an Employer or the
Trustee in the same or some other capacity) and may pay their reasonable
expenses and compensation from the assets of the Trust Fund.
13.2 Identity of Committee.
The Committee shall be one or more individuals, partnerships, and
corporations (including an Employer) who shall be selected by the Company. Any
individual, including a director, trustee, shareholder, officer, partner,
proprietor, or employee of an Employer, shall be eligible to serve on the
Committee or as part of the Committee. The Company shall have the power to
remove any person serving on the Committee at any time without cause upon 10
days written notice, and any persons may resign from the Committee at any time
upon 10 days written notice to the Company. The Company shall notify the Trustee
of any change in the identity of the Committee.
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13.3 Duties of Administrator
The Administrator shall keep whatever records may be necessary to
implement the Plan and shall furnish whatever reports may be required from time
to time by the Company. The Administrator shall furnish to the Trustee whatever
information may be necessary to properly administer the Trust. The Administrator
shall see to the filing with the appropriate government agencies of all reports
and returns required of the plan administrator under ERISA and other laws.
13.4 Compliance with ERISA.
The Administrator shall perform all acts necessary to comply with
ERISA. Each individual member or employee of the Administrator shall discharge
his duties in good faith and in accordance with the applicable requirements of
ERISA.
13.5 Action by Administrator.
If the Administrator consists at any time of a committee of three or
more individuals, all actions of the Administrator shall be governed by the
affirmative vote of a number of members which is a majority of the total number
of members currently appointed, including vacancies. The members of the
committee may meet informally and may take any action without meeting as a
group.
13.6 Execution of Documents.
Any instrument executed by the Administrator shall be signed by any
member or employee of the Administrator.
13.7 Adoption of Rules.
The Administrator shall adopt such rules and regulations of uniform
applicability as it deems necessary or appropriate for the proper administration
and interpretation of the Plan.
13.8 Responsibilities to Participants.
The Administrator shall determine which Employees have satisfied the
eligibility requirements to enter the Plan. The Administrator shall furnish to
each eligible Employee whatever summary plan descriptions, summary annual
reports, and other notices and information may be required under ERISA. The
Administrator also shall determine when a Participant or his
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Beneficiary has satisfied the requirements to receive benefits under the Plan,
and shall have complete discretion to interpret and apply whatever Plan
provisions may be relevant to a Participant's claim for benefits. The
Administrator shall furnish to each such Participant or Beneficiary whatever
information is required under ERISA (or is otherwise appropriate) to enable the
Participant or Beneficiary to make whatever elections may be available pursuant
to sections 7, 8, and 11, and the Administrator shall arrange for the payment of
benefits in the proper form and amount from the assets of the Trust Fund.
13.9 Alternative Payees in Event of Incapacity.
If the Administrator finds at any time that an individual qualifying
for benefits under the Plan is a minor or is incompetent, the Administrator may
direct the benefits to be paid, in the case of a minor, to his parents, his
legal guardian, a custodian for him under the Uniform Transfers to Minors Act,
or the person having actual custody of him, or, in the case of an incompetent,
to his spouse, his legal guardian, or the person having actual custody of him,
the payments to be used for the individual's benefit. To the extent that the
Plan's obligation to the individual has been discharged by the purchase and
distribution of any annuity contract from an insurer, the insurer shall assume
the Administrator's authority and responsibility with respect to the benefits.
The Administrator, the Trustee, and any insurer shall not be obligated to
inquire as to the actual use of the funds by the person receiving them under
this section 13.9, and any such payment shall completely discharge the
obligations of the Plan, the Trustee, the Administrator, the Company, the
Employers, and the insurer to the extent of the payment.
13.10 Indemnification by Employers.
Except as separately agreed in writing, the Administrator, the
Committee and any member or employee of the Administrator or the Committee,
shall be indemnified and held harmless by the Employers, jointly and severally,
to the fullest extent permitted by law against any and all costs, damages,
expenses, and liabilities (including legal fees) incurred by or imposed upon it
or him in connection with any claim made against it or him or in which it or he
may be involved by reason of its or his being, or having been, the
Administrator, or a member or employee of the Administrator, to the extent such
amounts are not paid by insurance.
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13.11 Nonparticipation by Interested Member.
Any member of the Administrator who also is a Participant in the Plan
shall take no part in any determination specifically relating to his own
participation or benefits, unless his abstention would leave the Administrator
incapable of acting on the matter.
SECTION 14. ADOPTION, AMENDMENT, OR TERMINATION OF THE PLAN.
14.1 Adoption of Plan by Other Employers.
With the consent of the Company, any entity may become a participating
Employer under the Plan by (i) taking such action as shall be necessary to adopt
the Plan, (ii) becoming a party to the Trust Agreement establishing the Trust
Fund, and (iii) executing and delivering such instruments and taking such other
action as may be necessary or desirable to put the Plan into effect with respect
to the entity's Employees.
14.2 Adoption of Plan by Successor.
In the event that any Employer shall be reorganized by way of merger,
consolidation, transfer of assets or otherwise, so that an entity other than an
Employer shall succeed to all or substantially all of the Employer's business,
the successor entity may be substituted for the Employer under the Plan by
adopting the Plan and becoming a party to the Trust Agreement. Contributions by
the Employer shall be automatically suspended from the effective date of any
such reorganization until the date upon which the substitution of the successor
entity for the Employer under the Plan becomes effective. If, within 90 days
following the effective date of any such reorganization, the successor entity
shall not have elected to become a party to the Plan, or if the Employer shall
adopt a plan of complete liquidation other than in connection with a
reorganization, the Plan shall be automatically terminated with respect to
Employees of the Employer as of the close of business on the 90th day following
the effective date of the reorganization, or as of the close of business on the
date of adoption of a plan of complete liquidation, as the case may be.
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14.3 Plan Restatement Subject to Qualification.
In the event that this restated Plan is held by the Internal Revenue
Service not to qualify under section 401(a) of the Code, the Plan may be amended
retroactively to the earliest date permitted by Treasury Regulations in order to
secure a favorable determination on the Plan's qualification under section
401(a). In the event that this restated Plan is later amended after securing a
favorable determination and the Plan as amended is held by the Internal Revenue
Service not to qualify under section 401(a), the amendment may be modified
retroactively to the earliest date permitted by Treasury Regulations in order to
secure approval of the amendment under section 401(a).
14.4 Right to Amend or Terminate.
The Company intends to continue the Plan as a permanent program.
However, each participating Employer separately reserves the right to suspend,
supersede, or terminate the Plan at any time and for any reason, as it applies
to that Employer's Employees, and the Company reserves the right to amend,
suspend, supersede, merge, consolidate, or terminate the Plan at any time and
for any reason, as it applies to the Employees of all Employers. Each Employer
shall act by resolution of its board of directors. Notwithstanding the
foregoing, the Company may delegate its authority to make amendments to the
Committee or the Departmental Benefits Committee. No amendment, other than one
of a minor nature, may become effective prior to the announcement of the
amendment's effect, unless, in the opinion of the Company or the Committee, (i)
such amendment is necessary or advisable in order to comply with the provisions
of the Code or ERISA (including any regulations or rulings thereunder) relating
to the qualification of retirement plans or relating to the exemption of a trust
established pursuant thereto, or (ii) such amendment would not adversely affect
the rights of Participants. The Trustee shall be given notice of any amendments
promptly.
No amendment, suspension, supersession, merger, consolidation, or
termination of the Plan shall reduce any Participant's or Beneficiary's
proportionate interest in the Trust Fund, or reduce a Participant's vested
interest in his Account. Further, no such action shall divert any portion
51
<PAGE> 55
of the Trust Fund to purposes other than the exclusive benefit of the
Participants and their Beneficiaries prior to the satisfaction of all
liabilities under the Plan.
Moreover, there shall not be any transfer of assets to a successor plan
or merger or consolidation with another plan unless, in the event of the
termination of the successor plan or the surviving plan immediately following
such transfer, merger, or consolidation, each participant or beneficiary would
be entitled to a benefit equal to or greater than the benefit he would have been
entitled to if the plan in which he was previously a participant or beneficiary
had terminated immediately prior to such transfer, merger, or consolidation.
Following a termination of the Plan by the Company, the Trustee shall
continue to administer the Trust and pay benefits in accordance with the Plan as
amended from time to time and the Company's and Administrator's instructions. No
distributions of Participants' benefits attributable to their salary reduction
contributions shall be made except in accordance with sections 401(k)(2) and
(10) of the Code.
14.5 Right to Implement or Suspend Provisions.
Notwithstanding sections 5.2, 7.3, 8.1, 8.2, and 8.3, the Company and,
in the absence of Company action, the Administrator, shall have the right to
implement or suspend entirely the provisions of any such section, taking into
account the best interests of the Participants and the administrative burdens
involved. The Administrator may, upon reasonable notice to the Participants,
establish or modify rules and procedures applicable to any such provisions to
avoid administrative burdens and to assure compliance with the purposes of the
Plan and requirements under ERISA and the Code.
SECTION 15. MISCELLANEOUS PROVISIONS.
15.1 Plan Creates No Employment Rights.
Nothing in the Plan shall be interpreted as giving any Employee the
right to be retained as an Employee by an Employer, or as limiting or affecting
the rights of an Employer to control its Employees or to terminate the Service
of any Employee at any time and for any reason, subject to any applicable
employment or collective bargaining agreements.
52
<PAGE> 56
15.2 Non-assignability of Benefits.
Except as provided in section 8.3 with respect to certain loans to
Participants, no assignment, pledge, or other anticipation of benefits from the
Plan will be permitted or recognized by the Employers, the Administrator, or the
Trustee. Moreover, benefits from the Plan shall not be subject to attachment,
garnishment, or other legal process for debts or liabilities of any Participant
or Beneficiary, to the extent permitted by law.
This prohibition on assignment or alienation shall apply to any
judgment, decree, or order (including approval of a property settlement
agreement) which relates to the provision of child support, alimony, or property
rights to a present or former spouse, child or other dependent of a Participant
pursuant to a State domestic relations or community property law, unless the
judgment, decree, or order is determined by the Administrator in accordance with
its policies and procedures to be a qualified domestic relations order within
the meaning of section 414(p) of the Code.
15.3 Limit of Employer Liability.
The liability of the Employers with respect to Participants under the
Plan shall be limited to making contributions to the Trust from time to time, in
accordance with section 4.
15.4 Treatment of Expenses.
All expenses incurred by the Administrator and the Trustee in
connection with administering the Plan and the Trust Fund shall be paid as
follows: brokerage fees, mutual fund loads, mutual fund management fees, trustee
administrative fees, transfer taxes, other expenses incident to the purchase or
sale of securities, and administrative expenses that have not been paid or
assumed by the Employers shall be paid from the Trust. Taxes, if any, on any
assets held or income received by the Trustee shall be charged appropriately
against the accounts of Participants as the Committee shall determine.
15.5 Number and Gender.
Any use of the singular shall be interpreted to include the plural, and
the plural the singular. Any use of the masculine, feminine, or neuter shall be
interpreted to include the masculine, feminine, or neuter, as the context shall
require.
53
<PAGE> 57
15.6 Nondiversion of Assets.
Except as provided in section 6.4, under no circumstances shall any
portion of the Trust Fund be diverted to or used for any purpose other than the
exclusive benefit of the Participants and their Beneficiaries prior to the
satisfaction of all liabilities under the Plan.
15.7 Separability of Provisions.
If any provision of the Plan is held to be invalid or unenforceable,
the other provisions of the Plan shall not be affected but shall be applied as
if the invalid or unenforceable provision had not been included in the Plan.
15.8 Service of Process.
The agent for the service of process upon the Plan shall be the
president of the Company, or such other person as may be designated from time to
time by the Company.
15.9 Governing State Law.
The Plan shall be interpreted in accordance with the laws of the State
of New Jersey to the extent those laws are applicable under the provisions of
ERISA.
15.10 Effect of Military Service
Notwithstanding any provision of this plan to the contrary,
contributions, benefits and service credit with respect to qualified military
service will be provided in accordance with Sec. 414(u) of the Internal Revenue
Code.
SECTION 16. TOP-HEAVY PROVISIONS.
16.1 Determination of Top-Heavy Status.
The Administrator shall determine on a regular basis whether each Plan
Year is or is not a "Top-Heavy Year" for purposes of implementing the provisions
of sections 16.2, 16.3, and 16.4, which apply only to the extent the Plan is
top-heavy within the meaning of section 416 and the Treasury Regulations
promulgated thereunder. In making this determination, the Administrator shall
use the following definitions and principles:
54
<PAGE> 58
16.1-1 The "Employer" includes all business entities which are
considered commonly controlled or affiliated within the meaning of sections
414(b), (c), (m), and (o) of the Code.
16.1-2 The "plan aggregation group" includes each qualified retirement
plan or simplified employee pension (as defined in section 408(k) of the Code)
which is or has been maintained by the Employer (i) in which a Key Employee is
or has been a Participant during the Plan Year, or (ii) which enables or has
enabled any plan described in clause (i) to satisfy the requirements of section
401(a)(4) or 410 of the Code, or (iii) which provides contributions or benefits
comparable to those of the plans described in clauses (i) and (ii) and which is
designated by the Administrator as part of the plan aggregation group.
16.1-3 The "determination date", with respect to the first Plan Year of
any plan, means the last day of that Plan Year, and with respect to each
subsequent Plan Year, means the last day of the preceding Plan Year. If any
other plan has a determination date which differs from this Plan's determination
date, the top-heaviness of this Plan shall be determined on the basis of the
other plan's determination date falling within the same calendar year as this
Plan's determination date.
16.1-4 "Key Employee" means an Employee who at any time during the five
years ending on the top-heavy determination date for the Plan Year has performed
any services for an Employer and has been (i) an officer of the Employer having
Limit Compensation greater than one-half of the limit then in effect under
section 415(b)(1)(A) of the Code, (ii) one of the 10 Employees owning (or
considered as owning under section 318 of the Code) the largest interests in the
Employer (ignoring any Employee who does not own more than a one-half percent
interest) and having Limit Compensation greater than the limit then in effect
under section 415(c)(1)(A), (iii) a Five-Percent Owner, or (iv) an owner of more
than one percent of the outstanding equity interest or the outstanding voting
interest in any Employer whose Limit Compensation exceeds $150,000. For this
purpose, an Employee's "Limit Compensation" shall include any amount which is
excludable from the Employee's gross income for tax purposes pursuant to section
125, 402(e)(3), 402(h)(1)(B), or 403(b) of the Code. In determining which
individuals are Key Employees, the rules of section 416(i) of the Code and
Treasury Regulations promulgated thereunder shall apply. The Beneficiary of a
Key Employee shall also be considered a Key Employee.
55
<PAGE> 59
16.1-5 A "Non-key Employee" means an Employee who at any time during
the five years ending on the top-heavy determination date for the Plan Year has
performed any services for an Employer and who has never been a Key Employees,
and the Beneficiary of any such Employee.
16.1-6 The "aggregated benefits" for any Plan Year means (i) the
adjusted account balances in defined contribution plans and simplified employee
pensions on the determination date, plus (ii) the adjusted value of accrued
benefits in defined benefit plans (calculated as of the annual valuation date
coinciding with or next preceding the determination date), with respect to Key
Employees and Non-key Employees under all plans within the plan aggregation
group which includes this Plan. For this purpose, the accrued benefit of any
Non-key Employee shall be determined (i) under the accrual method, if any, which
is uniformly applicable under all defined benefit plans within the plan
aggregation group, or (ii) if there is no such uniform method, as if the benefit
accrued under the slowest accrual rate permitted under the fractional rule of
section 411(b)(1)(c) of the Code. Further, "adjusted account balance" and the
"adjusted value of accrued benefit" for any Employee shall be increased by all
plan distributions made with respect to the Employee during the five years
ending on the determination date from any plan within the plan aggregation group
and from any terminated plan which during those five years was within the plan
aggregation group. In addition, the adjusted account balance under a plan shall
not include any amount attributable to a rollover contribution or similar
transfer to the plan initiated by an Employee and made after 1983, unless both
plans involved are maintained by the Employer, in which event the transferred
amount shall be counted in the transferee plan and ignored for all purposes in
the transferor plan. Finally, the adjusted value of accrued benefits under any
defined benefit plan shall be determined by assuming whichever actuarial
assumptions were applied by the Pension Benefit Guaranty Corporation to
determine the sufficiency of plan assets for plans terminating on the applicable
valuation date.
16.1-7 The Plan shall be "top-heavy" for any Plan Year in which the
aggregated benefits of the Key Employees exceed 60 percent of the total
aggregated benefits for both Key Employees and Non-key Employees.
16.1-8 A "Top-Heavy Year" means a Plan Year in which the Plan is
top-heavy.
56
<PAGE> 60
16.2 Minimum Contributions.
For any Top-Heavy Year, each Employer shall make a special contribution
on behalf of each Participant to the extent that the total allocation to his
Account pursuant to section 4 (excluding any contributions for Plan Years
beginning after 1988 funded by the Participant's compensation deferral elections
under section 4.2 or by Employer matching contributions under section 4.4) is
less than the lesser of (i) three percent of his Limit Compensation for that
year, or (ii) the highest ratio of such allocation to Limit Compensation
(including for this purpose any compensation deferral contribution under section
4.2) received by any Key Employee for that year. Such a special contribution
shall be made on behalf of each Participant who is employed by an Employer on
the last day of the Plan Year, regardless of his Hours of Service, and shall be
allocated to his Matching Account. However, no such contribution shall be made
on behalf of any Employee who is an active Participant in the Bell
Communications Research Management Pension Plan for that year.
16.3 Minimum Vesting.
If a Participant's vested interest in his Matching Account is to be
determined in a Top-Heavy Year, it shall be based on the following "top-heavy
table":
<TABLE>
<CAPTION>
Vesting Percentage of
Years Interest Vested
<S> <C>
fewer than 3 0
3 or more 100
</TABLE>
16.4 Maximum Compensation.
For any Top-Heavy Year beginning before 1989, a Participant's "Cash
Compensation" as defined in section 4.5, and his "Limit Compensation" for
purposes of section 16.2, shall not exceed $200,000.
57
<PAGE> 61
AMENDMENT TO
BELL COMMUNICATIONS RESEARCH
SAVINGS AND SECURITY PLAN
JULY 1997
<PAGE> 62
AMENDMENT
TO
BELL COMMUNICATIONS RESEARCH
SAVINGS AND SECURITY PLAN
The Bell Communications Research Savings and Security Plan is hereby
amended, effective as of the Closing Date of the sale of Bellcore to Science
Applications International Corporation, as follows::
1. A new Section 3.7 is hereby added to read as follows:
"Transfers from Science Applications International Corporation.
Any Employee commencing employment with an Employer in an
eligible classification (as described in section 3.1) on or after
the date this amendment is effective who was an employee of
Science Applications International Corporation immediately prior
to becoming an Employee of an Employer and eligible to
participate in the Science Applications International Corporation
Cash or Deferred Arrangement shall become a Participant on the
first day of the month coinciding with or next following the
commencement of employment with an Employer, assuming he or she
is still an eligible Employee on such date."
2. A new Section 7.4 is added to read as follows:
"7.4 Investment in Company Stock.
7.4-1 Company Stock as an Investment Alternative. The
Administrator may direct or permit investment of
amounts in "Company Stock," which for purposes of this
Plan is Class A Common Stock, par value $.01 per share
of Science Applications International Corporation
("SAIC"), in which case a Company Stock fund shall be
established within the Trust pursuant to procedures
established by the Administrator. Notwithstanding
section 7.3, the Administrator may restrict or
prohibit transfers into or out of Company Stock as an
investment option.
The Board of Directors of SAIC may determine that, in
the event the Board of Directors makes such a
determination, in accordance with SAIC's philosophy of
remaining, to the maximum extent feasible, an
employee-owned company and of restricting stock
ownership (both direct and indirect through SAIC's
various benefit
<PAGE> 63
plans) to Employees and designated consultants to SAIC
Company Stock, or a fund within the Trust which holds
Company Stock, shall not be an available investment
option for any former Employee who, pursuant to
section 11.1, 11.2 or 11.3, has deferred payment of
his benefits. In the event the Board of Directors of
SAIC makes such a determination, the SAIC Retirement
Plans Committee shall establish procedures to
implement the foregoing restriction on investment in
Company Stock or Company Stock Fund, including the
timing and procedures for any fund-to-fund transfers,
appropriate default options, if considered
appropriate, and any transition rules and such
procedures shall be implemented by the Administrator.
7.4-2 Company Stock Transactions with Disqualified Persons.
Acquisition or sale by the Plan of Company Stock or
other qualifying employer securities (as defined in
section 407(a)(5) of ERISA) from or to a "disqualified
person", as defined in Code section 4975(e)(2), shall
be at a price which represents "adequate
consideration", as defined in section 3(18) of ERISA
or, in the event such Company Stock or other
qualifying employer security is a marketable
obligation, as defined in section 407(e) of ERISA, at
a price not less favorable to the Plan than the price
determined under section 407(e)(1) of ERISA. No
commission shall be charged to the Plan in connection
with any such sale or acquisition. The determination
as to whether or not such a sale or acquisition
satisfies the requirements of this section 7.4-2 shall
be made by the SAIC Retirement Plans Committee.
7.4-3 Valuation of Company Stock. Company Stock allocated
and credited to an account or to a separate fund
within the Trust in which Participants' Accounts are
invested as provided in section 7.4-1 as well as
Company Stock held on an unallocated basis in the
Trust, shall be valued as of the applicable Valuation
Date, according to the following rules:
(a) Company Stock acquired by the Trust with cash
shall initially be valued at the purchase price
paid for such Stock. On any subsequent Valuation
Date, such Company Stock, as well as all other
Company Stock held in, or contributed to, the
Trust, shall be valued in accordance with
sections 7.4-3(b) or 7.4-3(c) below, as
applicable.
(b) If any Company Stock does not consist of
securities listed on a national securities
exchange, or traded on a regular basis, as
2
<PAGE> 64
determined by SAIC, in the over-the-counter
market, the fair market value of such Stock
shall be determined using the Formula Price for
such Stock, as described in the August 24, 1987
Prospectus for Science Applications
International Corporation (or the most recent
prospectus that supersedes that prospectus), on
the applicable Valuation Date. SAIC may at any
time, and from time to time, change the method
of determining the fair market value of Company
Stock, provided that the replacement method is
consistent with applicable provisions of ERISA
and the Code. A Participant, Beneficiary or
alternate payee (as defined in section 414(q) of
the Code) shall have no right to have a
particular valuation method applied (or continue
to be applied) to his or her Account(s).
(c) If any Company Stock consists of securities
listed on a national securities exchange, fair
market value of such Company Stock shall be
considered to be equal to the closing price of
such Company Stock (as reported in the
consolidated transaction reporting system, or if
not so reported, as reported on the principal
exchange market for such Company Stock by such
exchange or on any system sponsored by such
exchange) on the trading day immediately
preceding the applicable Valuation Date. If any
Company Stock consists of securities traded on a
regular basis, as determined by SAIC, in the
over-the-counter market, the fair market value
of such Company Stock shall be considered to be
equal to the average between the high bid price
and the low asked price quoted by the automatic
quotation system of a securities association
registered under the federal securities laws for
the trading day immediately preceding the
applicable Valuation Date.
7.4-4 Allocation of Company Stock Received Pursuant to Stock
Dividends, Splits, Recapitalizations, Etc. Any Company
Stock received by the Trustee as a stock split,
dividend, or as a result of a reorganization or other
recapitalization of SAIC shall be allocated as of the
day on which the stock is received by the Trustee in
the same manner as the Company Stock to which it is
attributable is then allocated.
7.4-5 Allocation of Stock Rights, Warrants or Options.
(a) In the event any rights, warrants or options are
issued on Company Stock held in the Trust, the
Trustee shall exercise
3
<PAGE> 65
them for the acquisition of additional Company
Stock as directed by the Administrator and to
the extent that cash is then available in the
Trust.
(b) Any Company Stock acquired in this fashion shall
be treated as Company Stock purchased by the
Trustee for the net price paid and shall be
allocated in the same manner as the funds used
to purchase the Company Stock were or would be
allocated under the provisions of this Plan,
pursuant to directions of the Administrator.
(c) Any rights, warrants, or options on Company
Stock which cannot be exercised for lack of cash
may, as directed by the Administrator, be sold
by the Trustee and the proceeds allocated in
accordance with the source of the Company Stock
with respect to which the rights, warrants or
options were issued.
7.4-6 Allocation of Cash Dividends and Other Distributions
Received in the Trust Fund.
(a) All cash dividends paid to the Trustee with
respect to Company Stock that has been allocated
to an Account (if any) as of the date the
dividend is received by the Trustee shall be
allocated to such Account. If the Company Stock
in the Trust is held in a Company Stock fund as
an investment alternative pursuant to this
section 7.4, such that Participants have an
interest in such Company Stock only indirectly
through an interest in such fund held in a
subaccount, the cash dividends shall be
allocated to such fund and shall thereafter be
invested in accordance with the investment
practices of such fund, and shall not be
allocated directly to a Participant's Account or
subaccount.
(b) All cash dividends paid to the Trustee with
respect to unallocated Company Stock shall be
allocated as provided in section 9.2.
7.4-7 Voting and Other Rights of Company Stock.
(a) All voting rights of Company Stock held in the
Trust shall be exercised in accordance with the
following provisions:
4
<PAGE> 66
(i) Each Participant (which term shall
include, for purposes of this section
7.4-7, Beneficiaries and alternate payees
having an interest in an Account or fund
holding Company Stock) shall be given the
opportunity to instruct the Trustee
confidentially on a form prescribed and
provided by SAIC as to how to vote those
shares (including fractional shares) of
Company Stock allocated to his or her
Account(s) under the Plan (directly or
indirectly through an interest in a
Company Stock fund) on the date
immediately preceding the record date for
the meeting of shareholders of SAIC. The
Trustee shall not divulge to SAIC the
instructions of any Participant. SAIC may
require verification of the Trustee's
compliance with such confidential voting
instructions by an independent auditor
elected by SAIC.
(ii) All Participants entitled to direct such
voting shall be notified by SAIC pursuant
to its normal communications with
shareholders of each occasion for the
exercise of these voting rights within a
reasonable time (but not less than the
time period that may be required by any
applicable state or federal law) before
these rights are to be exercised. The
notification shall include all information
distributed by SAIC to other shareholders
regarding the exercise of such rights.
(iii) The Participants shall be so entitled to
direct the voting of fractional shares (or
fractional rights to shares). However, the
SAIC Retirement Plans Committee may, to
the extent possible, direct the Trustee to
vote the combined fractional shares (or
fractional rights to shares) so as to
reflect the aggregate direction of all
Participants giving directions with
respect to fractional shares (or
fractional rights to shares).
(iv) In the event that a Participant shall fail
to direct the Trustee, in whole or in
part, as to the exercise of voting rights
arising under any Company Stock allocated
to his or her Account(s), then these
voting rights, together with voting rights
as to shares of
5
<PAGE> 67
Company Stock which have not been
allocated, shall be exercised by the
Trustee in the same proportion as the
number of Shares of Company Stock for
which the Trustee has received direction
in such matter (e.g., to vote for, against
or abstain from voting on a proposal, or
to grant or withhold authority to vote for
a director or directors), and the Trustee
shall have no discretion in such matter
except as may be required by applicable
law.
(v) Except as provided in paragraph (b) below,
all rights (other than voting rights) of
Company Stock held in the Trust shall be
exercised in the same manner and to the
same extent as provided above with respect
to the voting rights of the Company Stock,
subject to the rules prescribed by the
SAIC Retirement Plans Committee, which
rules, among other matters, may prescribe
that no action shall be taken with respect
to shares as to which no direction is
received from Participants. The Trustee
shall have no discretion with respect to
the exercise of any such rights except as
may be required by applicable law.
(vi) Neither SAIC, the SAIC Retirement Plans
Committee, the Committee, the
Administrator nor the Trustee shall make
any recommendation to any Participant
regarding the exercise of the
Participant's voting rights or any other
rights under the provisions of this
section 7.4-7, nor shall SAIC, the SAIC
Retirement Plans Committee, the Committee,
the Administrator or the Trustee make any
recommendation as to whether any such
rights should or should not be exercised
by the Participant.
6
<PAGE> 68
(b) All responses to tender and exchange for Company
Stock offers shall be made in accordance with
the following provisions:
(i) Each Participant shall be given the
opportunity, to the extent that shares of
Company Stock are allocated to his or her
Account(s), to direct the Trustee in
writing as to the manner in which to
respond to a tender or exchange offer with
respect to Company Stock, and the Trustee
shall respond in accordance with the
instructions so received. The Trustee
shall not divulge to SAIC the instructions
of any Participant. The Administrator
shall utilize its best efforts to timely
distribute or cause to be distributed to
each Participant such information as will
be distributed to shareholders of SAIC in
connection with any such tender or
exchange offer, together with a form
addressed to the Trustee requesting
confidential instructions on whether or
not such shares will be tendered or
exchanged. If the Trustee shall not
receive timely direction from a
Participant as to the manner in which to
respond to such a tender or exchange
offer, the Trustee shall not tender or
exchange any shares of Company Stock with
respect to which such Participant has the
right of direction, and the Trustee shall
have no discretion in such matter except
as may be required by applicable law.
(ii) Unallocated shares of Company Stock and
shares of Company Stock held by the
Trustee pending allocation to
Participants' Accounts shall be tendered
or exchanged (or not tendered or
exchanged) by the Trustee in the same
proportion as shares with respect to which
Participants have been given the
opportunity to direct the Trustee pursuant
to paragraph (i) above are tendered or
exchanged, and the Trustee shall have no
discretion in such matter except as may be
required by applicable law.
7.4-8 COMPANY STOCK AS A SOURCE OF LOANS. Although the
portion of a Participant's Accounts represented by
Company Stock (or interest in an investment fund
within the Plan which holds Company Stock) are
included in calculating the maximum loan amount
specified in Section 8.3-1, such portion shall not be
a source of loan amounts, and loans shall be limited
to the balance of the Accounts representing other Plan
investment options."
3. The last sentence of section 8.3-5 is amended to read as follows:
7
<PAGE> 69
"Except as otherwise provided in section 7.4-8, a loan shall be taken pro rata
from the investments in which the Participant's Account balances are held."
BELL COMMUNICATIONS RESEARCH, INC.
By: /s/ R.G. SCHOOLEY
----------------------------------
Chair-Departmental Benefits Committee
Date: JULY 9, 1997
---------------------------------
Attest: /s/ BRENDA F. WOODS
-------------------------------
Secretary
8
<PAGE> 1
EXHIBIT 4(b)
BELL COMMUNICATIONS RESEARCH
SAVINGS PLAN FOR SALARIED EMPLOYEES
(restated effective July 1, 1997
with amendments effective
August 1, 1997)
HEROLD AND HAINES, ESQS.
Warren, New Jersey
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 1. PLAN IDENTITY. ................................................3
1.1 Name. ............................................................3
1.2 Purpose. .........................................................3
1.3 Effective Date. ..................................................3
1.4 Single Plan for All Employers.................................... 3
1.5 Interpretation of Provisions. ....................................3
1.6 Relationship to Other Plans. .....................................4
Section 2. DEFINITIONS....................................................4
Section 3. ELIGIBILITY FOR PARTICIPATION. ...............................15
3.1 Initial Eligibility..............................................15
3.2 Prior Plan Participants; Terminated or Part-Time Employees. .....16
3.3 Certain Employees Ineligible. ...................................16
3.4 Waiver of Participation. ........................................16
3.5 Participation and Reparticipation. ..............................17
Section 4. EMPLOYER CONTRIBUTIONS AND CREDITS............................17
4.1 Basic Contributions. ............................................17
4.2 Salary Reduction Contributions. .................................17
4.3 Regular Contributions. ..........................................18
4.4 Matching Contributions. .........................................19
4.5 Definitions Related to Contributions. ...........................19
4.6 Conditions as to Contributions. .................................20
Section 5. TRANSFERS AND EMPLOYEE ROLLOVERS. ............................21
5.1 Transfers from Related Plans. ...................................21
5.2 Rollovers........................................................21
Section 6. LIMITATIONS ON CONTRIBUTIONS FOR PARTICIPANTS. ...............22
6.1 Limitation on Annual Additions. .................................22
6.2 Coordinated Limitation With Other Plans. ........................23
6.3 Limitations to Avoid Discrimination. ............................25
6.4 Compliance With Limitations. ....................................27
Section 7. TRUST FUND AND ITS INVESTMENT.................................31
7.1 Creation of Trust Fund. .........................................31
7.2 Responsibility for Investments. .................................31
7.3 Investment Direction by Participants. ...........................32
Section 8. USE OF ACCOUNTS DURING SERVICE................................32
8.1 Hardship Withdrawals from Salary Reduction Accounts. ............32
8.2 Other Withdrawals from Regular, Salary Reduction, Rollover and
Matching Accounts. ...........................................34
8.3 Loans to Participants. ..........................................34
</TABLE>
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 9. ADJUSTMENTS TO ACCOUNTS. .....................................36
9.1 Adjustments for Transactions. ...................................37
9.2 Adjustments for Investment Experience. ..........................37
Section 10. VESTING OF PARTICIPANTS' INTERESTS. .........................37
10.1 Immediately Vested Accounts. ....................................37
10.2 Deferred Vesting in Accounts.....................................37
10.3 Computation of Vesting Years. ...................................37
10.4 Full Vesting Upon Certain Events. ...............................39
10.5 Full Vesting Upon Plan Termination. .............................39
10.6 Forfeitures, Repayment, and Restoral. ...........................39
10.7 Accounting for Forfeitures.......................................40
10.8 Vesting and Nonforfeitability. ..................................40
Section 11. PAYMENT OF BENEFITS. ........................................40
11.1 Benefits for Participants. ......................................40
11.2. Benefit Amounts and Forms for Participants. .....................41
11.3 Benefits on a Participant's Death. ..............................42
11.4 Election Formalities. ...........................................43
11.5 Marital Status...................................................43
11.6 Proof of Ages. ..................................................43
11.7 Delay in Benefit Determination. .................................44
11.8 Payments in Cash; Direct Transfers. .............................44
11.9 Transfers to Interchange Companies. .............................44
11.10 Transfer to Other Employer's Plan................................45
Section 12. RULES GOVERNING BENEFIT CLAIMS AND REVIEW OF APPEALS.........45
12.1 Claim for Benefits. .............................................45
12.2 Notification by Administrator. ..................................46
12.3 Claims Review Procedure. ........................................46
Section 13. THE ADMINISTRATOR AND THE COMMITTEE AND
THEIR FUNCTIONS. ................................................47
13.1 Authority of Administrator. .....................................47
13.2 Identity of Committee............................................47
13.3 Duties of Administrator. ........................................48
13.4 Compliance with ERISA. ..........................................48
13.5 Action by Administrator. ........................................48
13.6 Execution of Documents. .........................................48
13.7 Adoption of Rules. ..............................................48
13.8 Responsibilities to Participants. ...............................48
13.9 Alternative Payees in Event of Incapacity. ......................49
13.10 Indemnification by Employers. ...................................49
13.11 Nonparticipation by Interested Member. ..........................49
</TABLE>
2
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 14. ADOPTION, AMENDMENT, OR TERMINATION OF THE PLAN..............50
14.1 Adoption of Plan by Other Employers..............................50
14.2 Adoption of Plan by Successor....................................50
14.3 Plan Restatement Subject to Qualification........................50
14.4 Right to Amend or Terminate. ....................................51
14.5 Right to Implement or Suspend Provisions. .......................52
Section 15. MISCELLANEOUS PROVISIONS. ...................................52
15.1 Plan Creates No Employment Rights................................52
15.2 Non-assignability of Benefits. ..................................52
15.3 Limit of Employer Liability. ....................................53
15.4 Treatment of Expenses. ..........................................53
15.5 Number and Gender. ..............................................53
15.6 Nondiversion of Assets. .........................................53
15.7 Separability of Provisions. .....................................53
15.8 Service of Process. .............................................54
15.9 Governing State Law. ............................................54
15.10 Effect of Military Service.......................................54
Section 16. TOP-HEAVY PROVISIONS. .......................................54
16.1 Determination of Top-Heavy Status. ..............................54
16.2 Minimum Contributions. ..........................................56
16.3 Minimum Vesting. ................................................57
16.4 Maximum Compensation. ...........................................57
</TABLE>
3
<PAGE> 5
BELL COMMUNICATIONS RESEARCH SAVINGS PLAN
FOR SALARIED EMPLOYEES
This Savings Plan for Salaried Employees, executed on August 4, 1997 by Bell
Communications Research, Inc., a corporation of the State of Delaware (the
"Company"),
W I T N E S S E T H T H A T:
WHEREAS, effective January 1, 1984, the Company adopted the Bell
Communications Research Savings Plan for Salaried Employees (the "Plan"), and
the Plan has subsequently been amended from time to time; and
WHEREAS, the Company reserved the right to amend the Plan at any time
and for any reason by resolution of its directors, or by action of the
Departmental Benefits Committee, or the Company chief executive officer if the
amendment is required by law, provided the amendment does not adversely affect
any accrued right of a Participant or Beneficiary, and the Company has resolved
to amend the Plan by restating it in its entirety in order to comply with the
most recent laws and regulations applicable to employee retirement plans and in
order to make certain plan design changes;
NOW, THEREFORE, the Plan is hereby amended by restating effective July
1, 1997.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by
its duly authorized officers as of the above date.
ATTEST: BELL COMMUNICATIONS RESEARCH, INC.
/s/ BRENDA F. WOODS By: /s/ GEORGE H. HEILMEIER
- ------------------------ ----------------------------------
Chairman and Chief Executive Officer
BELL COMMUNICATIONS RESEARCH, INC.
By: /s/ BRUCE LASKO
----------------------------------
Departmental Benefits Committee
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<PAGE> 6
SECTION 1. PLAN IDENTITY.
1.1 Name.
The name of the Plan is "Bell Communications Research Savings Plan for
Salaried Employees".
1.2 Purpose.
The purpose of the Plan is to describe the terms and conditions under
which contributions made pursuant to the Plan will be allocated among the
Participants, adjusted for investment experience and transactions, and
distributed as benefits to Participants and their Beneficiaries.
1.3 Effective Date.
The Effective Date of the Plan is January 1, 1984. The provisions of
this restated Plan shall generally become effective July 1, 1997, and shall
apply only to individuals who have Service with an Employer on or after that
date. However, the provisions in Section 8.2 concerning withdrawals of matching
and basic contributions are effective August 1, 1997.
1.4 Single Plan for All Employers.
The Plan shall be treated as a single plan with respect to all
participating Employers for the purpose of crediting contributions and
forfeitures and distributing benefits, determining whether there has been any
termination of Service, and applying the limitations set forth in section 6.
1.5 Interpretation of Provisions.
The Employers intend the Plan and the Trust to be a qualified profit
sharing plan under section 401(a) of the Code with a qualified cash or deferred
arrangement under section 401(k) of the Code, and to satisfy any applicable
requirement under ERISA. Accordingly, the Plan and Trust Agreement shall be
interpreted and applied in a manner consistent with this intent and shall be
administered at all times and in all respects in a nondiscriminatory manner.
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<PAGE> 7
1.6 Relationship to Other Plans.
This Plan is a successor plan to the Prior Plan with respect to those
Employees covered under the Prior Plan until their employment was transferred to
the Company as of January 1, 1984, in connection with a divestiture by American
Telephone and Telegraph Company of various business units and their employees.
This Plan is also subject to certain Interchange Agreements governing the
portability of credits for Service and the transfer of benefits on behalf of
Employees who during their careers work both for an Employer and for an
Interchange Company.
SECTION 2. DEFINITIONS.
The following capitalized words and phrases shall have the meanings
specified when used in this Plan and in the Trust Agreement, unless the context
clearly indicates otherwise:
"Account" means a Participant's interest in the assets accumulated
under the Plan as expressed in terms of a separate account balance which is
periodically adjusted to reflect his Employer's contributions, his own
contributions and rollovers or direct transfers, the Plan's investment
experience, and distributions and forfeitures. A Participant's Account shall
consist of subaccounts called his Regular, Basic, Salary Reduction, Matching,
and Rollover Accounts, as described herein.
"Active Participant" means any Employee who has satisfied the
eligibility requirements of section 3 and who qualifies as an Active Participant
for a particular Plan Year under section 4.
"Administrator" means the Company.
"Affiliate" means (a) any of the Company's corporate shareholders
(NYNEX Corporation, Bell Atlantic Corporation, BellSouth Corporation, American
Information Technologies Corporation, Southwestern Bell Corporation, U S WEST,
Inc., and Pacific Telesis Group, Inc.), (b) Advanced Mobile Phone Service, Inc.,
(c) AT&T, and (c) prior to January 1, 1985, either of The Southern New England
Telephone Company and Cincinnati Bell, as well as a subsidiary corporation of
which an Affiliate (excluding Advanced Mobile Phone Service, Inc.)
directly or indirectly owns more than 50 percent of the voting stock.
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<PAGE> 8
"Basic Account" means that portion of a Participant's Account to which
Employer contributions are credited pursuant to section 4.1.
"Beneficiary" means the person or persons who are designated by a
Participant (within the meaning of section 401(a)(9) of the Code) to receive
benefits payable under the Plan on the Participant's death. In the absence of
any designation, or if all the designated Beneficiaries shall die before the
Participant dies or shall die before all benefits have been paid, the
Participant's Beneficiary shall be his surviving Spouse, if any, or his estate
if he is not survived by a Spouse. The Administrator may rely upon the advice of
the Participant's executor or administrator as to the identity of the
Participant's Spouse.
"Break in Service" means any 12-month period beginning on an Employee's
Severance Date or any anniversary thereof in which he has no Service. No such
period beginning after 1984 shall constitute a Break in Service unless it is one
of at least five consecutive such periods. Further, any period of part-time,
temporary, or interrupted employment prior to January 1, 1985 shall be treated
as a Break in Service to the extent that it is consistent with the Plan as in
effect prior to that date.
Solely for this purpose, an Employee shall be considered employed for
his normal hours of paid employment during a Recognized Absence or on a leave
under the Family and Medical Leave Act, 29 U.S.C. 2601 et. seq., unless he does
not resume his Service at the end of the Recognized Absence. Further, any
Employee who has a Parental Absence beginning on or after January 1, 1985, shall
be credited with the Hours of Service which would normally have been credited
but for such absence, up to a maximum of 501 Hours of Service, in the first
12-month period which would otherwise be counted toward a Break in Service.
"Cash Compensation" means an Active Participant's compensation which is
recognized for purposes of determining and allocating contributions and
forfeitures, as defined in section 4.5.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Savings Plan Committee composed of the person or
persons responsible for the administration of the Plan in accordance with
section 13.
5
<PAGE> 9
"Company" means Bell Communications Research, Inc., and any entity
which succeeds to the business of Bell Communications Research, Inc. and adopts
the Plan as its own pursuant to section 14.2.
"Disability" during (i) the first 12-month period immediately following
the termination of the Participant's benefits under the Company's Sickness and
Accident Disability Benefit Plan means a bodily or mental disease or injury,
which renders the Participant unable to perform the duties of his or her
occupation or employment for an Employer, and (ii) thereafter, means such
disease or injury as a result of which the Participant is unable to perform any
duties for an Employer for which he is qualified, or may reasonably be
qualified, based on training, education or experience, other than an occupation
whose rate of pay is less than 50% of the Participant's Compensation as defined
is section 4.5 at the time the disability began. However, this term shall not
include any disability directly or indirectly resulting from or related to an
accidental injury arising out of and in the course of Service with an Employer,
habitual drunkenness or addiction to narcotics, a criminal act or attempt,
service in the armed forces of any country, an act of war, declared or
undeclared, any injury or disease occurring while compensation to the
Participant is suspended, or any injury which is intentionally self-inflicted.
Further, this term shall apply only if the Participant's disability is certified
by a physician selected by the Administrator. The Administrator may require the
Participant to be appropriately examined from time to time by one or more
physicians chosen by the Administrator, and no Participant who refuses to be
examined shall be treated as having a Disability.
"Effective Date" means January 1, 1984.
"Employee" means any individual who is or has been employed or
self-employed by an Employer. For this purpose, an individual is self-employed
by an Employer if he has "earned income" from the Employer within the meaning of
section 401(c) of the Code, or would have "earned income" if the Employer had
any net profits. "Employee" also means an individual who is or has been employed
by a leasing organization and who, pursuant to an agreement between an Employer
and the leasing organization, has performed services for the Employer on a
substantially full-time basis for at least one year, if such services are of a
type historically performed by employees in the Employer's business field.
Solely for this purpose, the "Employer" shall include
6
<PAGE> 10
any related persons within the meaning of section 414(n)(6) of the Code.
However, such a "leased employee" shall not be considered an Employee if (a) he
participates in a money purchase pension plan sponsored by the leasing
organization which provides for immediate participation, immediate full vesting,
and an annual contribution of at least 10 percent of the employee's Limit
Compensation, and (b) leased employees do not constitute more than 20 percent of
the Employer's total workforce (including leased employees, but excluding Highly
Paid Employees and any other employees who have not performed services for the
Employer on a substantially full-time basis for at least one year). Solely for
this purpose, an employee's Limit Compensation shall include any salary
reduction amounts excluded from the employee's gross taxable income pursuant to
any of sections 125, 402(e)(3), 402(h)(1)(B), and 403(b) of the Code.
"Employer" means the Company, any other corporation, partnership, or
proprietorship which adopts the Plan with the Company's consent pursuant to
section 14.1, and any entity which succeeds to the business of any Employer and
adopts the Plan pursuant to section 14.2. As of January 1, 1994 there are no
Employers other than the Company.
"ERISA" means the Employee Retirement Income Security Act of 1974 (P.L.
93-406, as amended).
"Five-Percent Owner" means an Employee who owns more than five percent
of the outstanding equity interest or the outstanding voting interest in any
Employer.
"Highly Paid Employee" for any Plan Year means an Employee who, during
the immediately preceding 12 months, (i) was at any time a Five-Percent Owner,
(ii) had Limit Compensation exceeding five-sixths of the Current Limit (e.g.,
$99,000 for 1994), (iii) had Limit Compensation exceeding five-ninths of the
Current Limit (e.g., $66,000 for 1994) and was among the most highly compensated
one-fifth of all Employees, or (iv) was at any time an officer, partner, or sole
proprietor of an Employer and had Limit Compensation exceeding one-half of the
Current Limit (e.g., $59,400 for 1994). An Employee shall also be a "Highly Paid
Employee" if, substituting the current Plan Year for the preceding 12 months in
the preceding sentence, either (1) he would be described in clause (i), or (2)
he would be described in any of clauses (ii), (iii), and (iv) and he is among
the 100 highest-paid Employees of the Employer for the current Plan Year. For
this purpose:
7
<PAGE> 11
a. "Limit Compensation" shall include any amount which is excludable
from the Employee's gross income for tax purposes pursuant to
section 125, 402(e)(3), 402(h)(1)(B), or 403(b) of the Code.
b. "Current Limit" means the currently applicable dollar limit under
section 415(b)(1)(A) of the Code.
c. The number of Employees in "the most highly compensated one-fifth
of all Employees" shall be determined by taking into account all
individuals working for all related employer entities described in
the definition of "Service", but excluding any individual who has
not completed six months of Service, who normally works fewer than
17-1/2 hours per week or in fewer than six months per year, who
has not reached age 21, whose employment is covered by a
collective bargaining agreement, or who is a nonresident alien who
receives no earned income from United States sources.
d. The number of individuals counted as "officers" shall not be more
than the lesser of (i) 50 individuals and (ii) the greater of
three individuals or 10 percent of the total number of Employees.
If no officer earns more than one-half of the Current Limit, then
the highest paid officer shall be a Highly Paid Employee.
e. A former Employee shall be counted as a Highly Paid Employee if he
was a Highly Paid Employee during either the Plan Year in which
his Service ended or any Plan Year ending after his 55th birthday.
f. If an Employee, during either of the current and preceding Plan
Years, is a family member of either (i) a Five-Percent Owner or
(ii) a Highly Paid Employee who is among the Employer's 10 most
highly compensated Employees, then the Employee and such family
member shall be aggregated, and the compensation paid to and plan
contributions and benefits provided for such individuals shall be
treated as paid to and provided for a single Employee. A "family
member" shall include an Employee's spouse, the Employee's lineal
ancestors and descendants, and the ancestors' and descendants'
spouses.
g. In all respects, the determination of who are Highly Paid
Employees shall be made in accordance with section 414(q) of the
Code and the Treasury Regulations thereunder.
8
<PAGE> 12
"Hours of Service" means hours to be credited to an Employee under the
following rules:
a. Each hour for which an Employee is paid or is entitled to be paid
for services to an Employer is an Hour of Service.
b. Each hour for which an Employee is directly or indirectly paid or
is entitled to be paid by an Employer for a period of vacation,
holidays, illness, incapacity (including disability), lay-off,
jury duty, temporary military duty, or leave of absence is an Hour
of Service. However, except as otherwise specifically provided, no
more than 501 Hours of Service shall be credited for any single
continuous period during which an Employee performs no duties.
Further, no Hours of Service shall be credited on account of
payments made solely under a plan maintained to comply with
worker's compensation, unemployment compensation, or disability
insurance laws, or to reimburse an Employee for medical expenses.
c. Each hour for which back pay (ignoring any mitigation of damages)
is either awarded or agreed to by an Employer is an Hour of
Service. However, no more than 501 Hours of Service shall be
credited for any single continuous period during which an Employee
would not have performed any duties.
d. Hours of Service shall be credited in any one period only under
one of the foregoing paragraphs (a), (b), and (c); an Employee may
not get double credit for the same period.
e. If an Employer finds it impractical to count the actual Hours of
Service for any class or group of non-hourly Employees, each
Employee in that class or group shall be credited with 45 Hours of
Service for each weekly pay period in which he has at least one
Hour of Service. However, an Employee shall be credited only for
his normal working hours during a paid absence.
f. Hours of Service to be credited on account of a payment to an
Employee, including an award of back pay, shall be credited in the
computation period in which the Service was rendered or to which
the award relates. If the period overlaps two or more Plan Years,
the Hours of Service credit shall be allocated in proportion to
the respective portions of the period included in the several Plan
Years. However, in the case of periods of 31
9
<PAGE> 13
days or less, the Administrator may apply a uniform policy of
crediting the Hours of Service to either the first Plan Year or
the second.
g. In all respects an Employee's Hours of Service shall be counted as
required by section 2530.200b-2(b) and (c) of the Department of
Labor's regulations under Title I of ERISA.
"Interchange Agreement" means an agreement between the Company and one
or more Interchange Company(ies) governing the portability of credits for
Service and the transfer of benefits on behalf of Employees who during their
careers work both for an Employer and for an Interchange Company.
"Interchange Company" means any Company during that period of time for
which it maintains or participates in an Interchange Company Plan subject to an
Interchange Agreement.
"Interchange Company Savings Plan" means an Interchange Company's
qualified defined contribution plan with a cash or deferred arrangement
described in section 401(k) of the Code which is comparable to this or any other
qualified 401(k) plan sponsored by the Company.
"Leave of Absence" means a period for which the Committee formally
grants a leave, which absence shall not cause a Break in Service but, except for
the first 30 days of sick leave, shall not be counted in the Employee's Term of
Employment.
"Limit Compensation" means a Participant's wages, salary, overtime,
bonuses, commissions, and any other amounts received (whether or not in cash)
for personal services rendered while in Service from any Employer or an
affiliate (within the purview of sections 414(b), (c), (m), and (o) of the
Code). A self-employed Participant's Limit Compensation is his earned income
from any Employer within the meaning of section 401(c)(2) of the Code, excluding
income from an Employer for which the Participant's personal services are not a
material income-producing factor. A self-employed Participant's earned income
shall exclude any qualified plan contributions on his behalf which are
deductible under section 404 of the Code, and, for taxable years beginning after
1989, shall take into account the Employer's deduction under section 164(f) of
the Code.
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<PAGE> 14
A Participant's Limit Compensation shall include (i) amounts excludable
from gross income under section 911 of the Code, (ii) amounts described in
sections 104(a)(3), 105(a), and 105(h) of the Code to the extent includable in
gross income, (iii) amounts received from an Employer for moving expenses which
are not deductible under section 217 of the Code, and (iv) amounts includable in
gross income in the year of, and on account of, the grant of a nonqualified
stock option, or under an unfunded nonqualified plan of deferred compensation,
or otherwise includable pursuant to section 83(b) of the Code.
A Participant's Limit Compensation shall exclude (i) Employer
contributions to or amounts received from a funded or qualified plan of deferred
compensation, (ii) Employer contributions to a simplified employee pension
account to the extent deductible under section 219 of the Code, (iii) Employer
contributions to a section 403(b) annuity contract (whether or not excludable
from gross income), (iv) amounts includable in gross income pursuant to section
83(a) of the Code, (v) amounts includable in gross income upon the exercise of
nonqualified stock option or upon the disposition of stock acquired under any
stock option, and (vi) any other amounts expended by the Employer on the
Participant's behalf which are excludable from his income or which receive
special tax benefits.
"Mandatory Portability Agreement" means the agreement dated and
effective January 1, 1985, as amended, between the Company and certain
Affiliates designed to implement section 559 of the Deficit Reduction Act of
1984 governing the portability of crediting Service for eligibility, vesting and
Accrued Benefits for employees covered under that agreement.
"Matching Account" means that portion of a Participant's Account to
which Employer contributions made to match contributions funded by the
Participant's salary reduction elections or regular contributions are credited
pursuant to sections 4.2 and 4.3.
"Mandatory Portability Agreement" means the agreement dated and
effective January 1, 1985, as amended, between the Company and certain
Affiliates designed to implement section 559 of the Deficit Reduction Act of
1984 governing the portability of crediting Service for eligibility, vesting and
the transfer of benefits for employees covered under that agreement.
"Normal Retirement Date" means the later of (a) a Participant's 65th
birthday and (b) the fifth anniversary of the Participant's initial
participation in the Plan. However, a Participant's
11
<PAGE> 15
Normal Retirement Date shall in no event be later than the last day of the Plan
Year in which he reaches age 70-1/2.
"Parental Absence" means an Employee's absence (i) by reason of the
Employee's pregnancy, (ii) by reason of the birth of the Employee's child, (iii)
by reason of the placement of a child with the Employee in connection with the
Employee's adoption of the child, or (iv) for purposes of caring for such child
for a period beginning immediately after such birth or placement.
"Participant" means any Employee who is participating in the Plan, or
who has previously participated in the Plan and still has a balance credited to
his Account.
"Plan Year" means each period of 12 consecutive months beginning on
January 1 of 1984 and each succeeding year.
"Prior Plan" means the Bell System Savings Plan for Salaried Employees,
as in effect on December 31, 1983.
"Recognized Absence" means a period for which --
a. the Employees' Benefit Committee grants an Employee an absence
with recognized service credit for a limited period, but only if
such leaves are granted on a nondiscriminatory basis; or
b. an Employee is absent on account of a Disability for periods
covered under the Company's Sickness and Accident Disability
Benefit Plan; or
c. an Employee is on active military duty, but only to the extent
that his employment rights are protected by the Military Selective
Service Act of 1967 (38 U.S.C. sec. 2021); or
d. an Employer grants a departmental leave of absence of no more than
30 days without the Employees' Benefit Committee's approval; or
e. is the first 30 days of a Leave of Absence.
An Employee shall receive credit for any Recognized Absence for
eligibility and vesting.
"Regular Account" means that portion of a Participant's Account to
which his voluntary after-tax contributions are credited pursuant to section
4.3.
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<PAGE> 16
"Rollover Account" means that portion of a Participant's Account to
which his interest under another qualified retirement plan, or his interest in
an individual retirement account or annuity to which his interest under a
qualified retirement plan has previously been rolled over, may be transferred
and credited pursuant to section 5.2.
"Rotational Assignment" means an employee's temporary assignment from
the Company to an Interchange Company, or from an Interchange Company to the
Company, where the employee has an option to be rehired by his original
employer.
"Salary Reduction Account" means that portion of a Participant's
Account to which Employer contributions funded pursuant to the Participant's
compensation deferral election are credited pursuant to section 4.2.
"Service" means an Employee's period(s) of employment or
self-employment with an Employer, excluding for initial eligibility purposes any
period in which the individual was a nonresident alien and did not receive from
an Employer any earned income which constituted income from sources within the
United States. An Employee's Service shall include (a) any service with an
Interchange Company to the extent provided in an Interchange Agreement, (b) any
period of continuous service with an Affiliate through December 31, 1983, if the
Employee's employment was transferred from the Affiliate to an Employer as of
January 1, 1984, and (c) any other service which constitutes service with a
predecessor employer within the meaning of section 414(a) of the Code, including
service with any employer which previously maintained this Plan. An Employee's
Service shall also include any service with an entity which is not an Employer,
but only (i) for a period after 1975 in which the other entity is a member of a
controlled group of corporations or is under common control with other trades
and businesses within the meaning of section 414(b) or 414(c) of the Code, and a
member of the controlled group or one of the trades and businesses is an
Employer, (ii) for a period after 1979 in which the other entity is a member of
an affiliated service group within the meaning of section 414(m) of the Code,
and a member of the affiliated service group is an Employer, or (iii) for a
period after 1983 in which the other entity is a member of
13
<PAGE> 17
a group of businesses, or is part of an arrangement, such that the entity is to
be treated as an Employer under Treasury Regulations promulgated pursuant to
section 414(o) of the Code.
"Severance Date" means the earlier of:
(a) the date on which an Employee quits, retires, is discharged, or
dies, or
(b) the first anniversary of the first day of an Employee's continuous
absence from Service with an Employer on account of disability, lay-off, or
leave of absence, or for any other reason except quit, retirement, discharge, or
death.
However, in the case of an Employee who has a Parental Absence, his
Severance Date shall not be earlier than the second anniversary of the first day
of such absence, although he shall not be treated as rendering any Service to an
Employer between the first and second anniversaries.
"Spouse" means the individual, if any, to whom a Participant is
lawfully married on the date benefit payments to the Participant are to begin,
or on the date of the Participant's death, if earlier. However, a Participant's
former spouse shall be treated as his Spouse in lieu of his current spouse to
the extent required under any judgment, decree, or order which is determined by
the Administrator in accordance with its policies and procedures to be a
qualified domestic relations order within the meaning of section 414(p) of the
Code.
"Support Staff Plan" means the Bell Communications Research Savings &
Security Plan, as in effect from time to time.
"Telephone Equity Fund" means a fund invested exclusively in the common
stock of NYNEX Corporation, Bell Atlantic Corporation, BellSouth Corporation,
American Information Technologies Corporation, Southwestern Bell Corporation, U
S West, Inc., and Pacific Telesis Group.
"Trust" or "Trust Fund" means the trust fund held by the Trustee
pursuant to the Plan.
"Trust Agreement" means the agreement between the Company and the
Trustee concerning the Trust Fund. If any assets of the Trust Fund are held in a
commingled trust fund with assets of other qualified retirement plans, "Trust
Agreement" shall be deemed to include the trust agreement governing that
commingled trust fund. With respect to the allocation of investment
responsibility
14
<PAGE> 18
for the assets of the Trust Fund, the provisions of section 2.2 of the Trust
Agreement are incorporated herein by reference.
"Trustee" means one or more corporate persons and individuals selected
from time to time by the Company to serve as trustee or co-trustees of the Trust
Fund.
"Valuation Date" means the last day of the Plan Year, and each other
date selected by the Administrator in its sole discretion, as of which the
Administrator shall determine the investment experience of the Trust Fund and
adjust the Participants' Accounts accordingly, except to the extent
Participants' Accounts are separately stated pursuant to an investment
arrangement described in section 7.3, in which case "Valuation Date" means each
day on which Account values are available under such arrangement.
"Valuation Period" means the period following a Valuation Date and
ending with the next Valuation Date.
"Vesting Year" means a unit of Service credited to a Participant
pursuant to section 10.3 for purposes of determining his vested interest in his
Matching Account.
SECTION 3. ELIGIBILITY FOR PARTICIPATION.
3.1 Initial Eligibility.
An Employee in classifications other than A or B shall enter the Plan
as of the first day of the month coinciding with or next following the date the
Employee completes twelve months of Service. However, for purposes of making
salary reduction contributions under section 4.2 or regular contributions under
Section 4.3, if the Employee has not entered the Plan before January 1, 1996,
then he shall enter the Plan on the later of January 1, 1996 or the first day
of the month coinciding with or next following the first day on which the
Employee has an Hour of Service. However, if an Employee is not in active
Service with an Employer on the date he would otherwise first enter the Plan,
his entry shall be deferred until the next day he is in Service.
For this purpose, an Employee's separate periods of service shall be
added together, with each period of Service counted as months, including any
month in which he has an Hour of Service
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from the first day of his Service in that period to the following Severance
Date. If an Employee quits, retires, or is discharged, or he is continuously
absent for any other reason and the Employee then has any Service within 12
months after the first day of absence, his Service shall include the period from
the first day of his absence through his return to Service unless otherwise
specifically excluded.
3.2 Prior Plan Participants; Terminated or Part-Time Employees.
Each Employee whose employment was transferred to the Company from AT&T
or another Affiliate as of January 1, 1984, and who was in active Service and
participating in the Prior Plan through December 31, 1983, shall enter the Plan
on the Effective Date.
3.3 Certain Employees Ineligible.
No Employee shall participate in the Plan while his Service is covered
by a collective bargaining agreement between an Employer and the Employee's
collective bargaining representative if (i) retirement benefits have been the
subject of good faith bargaining between the Employer and the representative and
(ii) the collective bargaining agreement does not provide for the Employee's
participation in the Plan. An Employee shall not participate in this Plan while
he is classified as QA through QD or SI for years prior to 1995, or classified
as A or B for years beginning after 1994. However, such an Employee who has been
promoted to a higher classification for 30 days or less shall not be eligible to
participate in the Plan. No Employee shall participate in the Plan while he is
actually employed by a leasing organization rather than an Employer, or during
any period in which an Employer considers him to be performing services as an
independent contractor, regardless of any subsequent or retroactive
reclassification of his employment status. No Employee shall participate in the
Plan while he is a non-resident alien, even if he had previously satisfied the
original eligibility requirements under Section 3.1.
3.4 Waiver of Participation.
No Employee who is otherwise eligible shall be permitted to waive his
right to participate in the Plan.
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3.5 Participation and Reparticipation.
An Employee shall participate in the Plan during each period of his
Service in which he satisfies the foregoing requirements. An Employee who leaves
and returns to Service and who previously satisfied the initial eligibility
requirements shall re-enter the Plan as of the date of his return.
SECTION 4. EMPLOYER CONTRIBUTIONS AND CREDITS.
4.1 Basic Contributions.
Each Employer shall contribute, with respect to a Plan Year, such
amounts as it may determine from time to time. An Employer shall have no
obligation to contribute any amount under this Plan except as so determined in
its sole discretion. The Employers' contributions for a Plan Year, and any
available forfeitures not applied under section 4.4, shall be credited as of the
last day of the year to the Basic Accounts of the Active Participants in
proportion to the amounts of their Cash Compensation, excluding Cash
Compensation in excess of $100,000, except as otherwise provided in section
6.4-2(c) in the case of any special contribution allocable only to Active
Participants who are not Highly Paid Employees.
4.2 Salary Reduction Contributions.
For each payroll period, the Employers shall contribute amounts equal
to the amounts by which the Participants have elected to reduce their
compensation (their "salary reduction contributions"). An Employee shall elect
by signing a written form provided by the Committee and deliver it to the
Benefit Office on or before the 15th day of the month preceding the first date
he is eligible to participate or any month thereafter in which he will be a
Participant. A Participant's election shall be a whole number percentage between
one percent and 16 percent of his Cash Compensation which would normally be paid
to him shall instead be contributed by his Employer to the Plan to be credited
to his Salary Reduction Account.
A Participant may change his elective deferral percentage at any time
as permitted under rules established by the Administrator by giving notice by
the 25th day of the preceding month; such election shall be effective with the
first payroll period of the following month.
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In no event may a Participant fund salary reduction contributions of
more than the currently applicable limit under section 402(g) of the Code (e.g.,
$9,240 for 1994) in any of his taxable years after 1986. If a Participant elects
to withdraw any amount from his Salary Reduction Account pursuant to section 8.1
and is suspended from making salary reduction contributions for the following 12
months, the currently applicable limit for the taxable year in which he may
resume deferrals shall be reduced by the amount of his deferrals during the
taxable year in which he made the withdrawal.
The Employers shall keep the Administrator informed on a regular basis
of the salary reduction contributions expected to be contributed under this
section 4.2 in order to permit the Administrator to assure the Plan's compliance
with the foregoing limitations and those set forth in section 6. Any
contribution funded by a deferral election under this section 4.2 shall be paid
by the Employer to the Trustee no later than the last day of the month in which
the salary reductions were made.
4.3 Regular Contributions.
For each payroll period, the Employers shall contribute for credit to
Participants' Regular Accounts amounts equal to the amounts by which the
Participants have elected to reduce their compensation on an after-tax basis. An
Employee shall elect by signing a form provided by the Committee and deliver it
to the Benefit Office on or before the 15th day of the month preceding the first
date he is eligible to participate or any month thereafter in which he will be a
Participant. A Participant's election shall be for a whole number percentage
between one percent and a maximum of 16 percent (reduced by the percentage of
salary reduction contribution he has elected under section 4.2) of his Cash
Compensation which would normally be paid to him and instead be contributed by
his Employer to the Plan to be credited to his Regular Account.
A Participant may change his after-tax contribution percentage at such
time as permitted under rules established by the Administrator by giving notice
by the 25th day of the preceding month; such election shall be effective with
the first payroll period of the following month.
The Employers shall keep the Administrator informed on a regular basis
of the amounts expected to be contributed under this section 4.3 to permit the
Administrator to assure the Plan's compliance with the limitations set forth in
section 6.
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4.4 Matching Contributions.
Effective January 1, 1993, for each month, there shall be credited to
each Participant's Matching Account an amount equal to 70% of the total of his
salary reduction contributions and after-tax contributions provided that the
total matching contribution for a Participant shall not exceed 4.2 percent of
the Participant's Cash Compensation for that payroll period. Such credits shall
be funded first by any available forfeitures for that year not applied under
section 10.6, and then to the extent necessary by contributions from the
Participant's Employer.
4.5 Definitions Related to Contributions.
For the purposes of the Plan, the following terms have the meanings
specified:
"Active Participant" means a Participant who has satisfied the
eligibility requirements under section 3 and who is in active Service with an
Employer as of the last day of the Plan Year.
"Cash Compensation" means a Participant's basic salary from his
Employer with respect to that portion of a Plan Year in which he is a
Participant, except that (a) any lump sum merit awards and incentive
compensation, any compensation reduction amount which is excludable from the
Employee's gross income for tax purposes pursuant to section 125, 402(e)(3), or
402(h)(1)(B) of the Code shall be included, and (b) any overtime or shift
differential premiums, awards under long and short term incentive programs for
senior managers and other special awards, any compensation income realized under
a stock option or restricted property arrangement, amounts paid by or received
from an Employer to cover travel, entertainment, moving or similar expenses,
amounts includable in gross income in the year of, and on account of, the grant
of a nonqualified stock option, or under an unfunded nonqualified plan of
deferred compensation, or otherwise includable pursuant to section 83(b) of the
Code, and the taxable value of any fringe benefits or welfare benefits shall be
excluded.
A Participant's compensation shall include payments received under the
Company's Sickness and Accident Disability Benefit Plan.
A Participant's Cash Compensation shall exclude any compensation in any
Plan Year beginning after 1988 in excess of the limit currently in effect under
section 401(a)(17) of the Code (e.g., $150,000 for 1994); provided, however,
that such limit shall be proportionately reduced in
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the case of any Plan Year containing fewer than 12 months. If, during any Plan
Year beginning after 1986, any of the Participant, the Participant's spouse, or
a lineal descendant of the Participant who has not reached age 19 by the end of
the year, is either (i) a Five-Percent Owner or (ii) a Highly Paid Employee who
is among the Employer's 10 most highly compensated Employees, then the foregoing
limitation shall be allocated among such individuals in proportion to their
actual compensation in accordance with section 414(q)(6) of the Code and
applicable Treasury Regulations. The foregoing limitation shall also apply in
determining a Participant's "Limit Compensation" solely for purposes of the
definition of "Employee" in section 2 and the top-heavy minimum allocations
under section 16.2.
4.6 Conditions as to Contributions.
Employers' contributions shall in all events be subject to the
limitations set forth in section 6. Contributions may be made in the form of
cash, or securities and other property to the extent permissible under ERISA,
including securities of the Employer or an affiliate, and shall be held by the
Trustee in accordance with the Trust Agreement.
Any amount contributed to the Trust Fund by an Employer due to a good
faith mistake of fact shall be returned to the Employer within one year after
the contribution was originally made. No Employer shall make any contribution to
the Trust Fund which is not currently deductible under section 404(a) of the
Code (taking into account the aggregate limitation under section 404(a)(7) where
the Employer also maintains a defined benefit plan), and any nondeductible
contribution shall be returned to the Employer within one year after its
nondeductibility has been finally determined. However, the amount to be returned
shall not include any investment earnings, and shall be reduced to take account
of any adverse investment experience within the Trust Fund in order that the
balance credited to each Participant's Account is not less than it would have
been if the contribution had never been made. Any such returned amount
attributable to a Participant's salary reduction election shall be paid to the
Participant as additional compensation as soon as it is received by his
Employer.
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SECTION 5. TRANSFERS AND EMPLOYEE ROLLOVERS.
5.1 Transfers from Related Plans.
5.1-1 Transfers from Interchange Company Savings Plans. If a
Participant transfers from an Interchange Company and is not scheduled to return
to the Interchange Company after a specified period of time, on or before March
31, l996, he may elect to have his account balance under the Interchange Company
Savings Plan transferred to this Plan.
5.1-2 Transfers from Prior Plan. If a Participant was employed with
American Telephone and Telegraph Company on December 31, 1983 and was
transferred to the Company as a result of the divestiture, his account balance
under the Prior Plan shall be transferred to this Plan.
5.1-3 Transfers from Support Staff Plan. Effective January 1, 1993, if
a Participant transfers from the Support Staff Plan, his account balance under
the Support Staff Plan shall be transferred to this Plan. Any such transfer
shall be made as of the last day of the month in which the transfer is made.
The Participants' accounts under those plans representing pre-tax
salary reduction amounts shall be credited to their Salary Reduction Accounts
under this Plan, their accounts representing after-tax employee contributions
shall be credited to their Regular Accounts under this Plan, their accounts
representing employer matching contributions shall be credited to their Matching
Accounts under this Plan, and their accounts representing rolled over or
directly transferred amounts from other plans shall be credited to their
Rollover Accounts under this Plan.
5.2 Rollovers.
Subject to section 14.5, any Employee who is, or is expected to become,
a Participant in the Plan and who has received a distribution of his interest
under another qualified retirement plan may, within 60 days after receiving the
distribution, deliver it to the Trustee to be held in the Participant's Rollover
Account, provided the distribution qualifies to be rolled over under section
402(c) of the Code.
If authorized by the Employee in accordance with the other plan, the
Trustee shall accept a direct transfer of the Employee's interest from that plan
for credit to the Employee's Rollover Account. The Trustee may also accept a
direct transfer from another plan which is not authorized
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by the Employee, provided that the transferor plan has never been subject to the
requirements of section 401(a)(11) of the Code, and provided further that none
of the amounts transferred represent salary reduction contributions by the
Employee under a cash or deferred arrangement within the meaning of section
401(k) of the Code unless the transfer is made on account of the Employee's
termination from a prior employer's service.
All such transfers of interests from other retirement plans or
individual retirement accounts or annuities shall be subject to any reasonable,
nondiscriminatory rules and limitations established from time to time by the
Administrator.
SECTION 6. LIMITATIONS ON CONTRIBUTIONS FOR PARTICIPANTS.
6.1 Limitation on Annual Additions.
Notwithstanding the provisions of sections 4 and 5, the annual addition
to a Participant's accounts under this Plan and under any other qualified
retirement plans and simplified employee pensions maintained by the Employers or
an affiliate (within the purview of sections 414(b), (c), (m), and (o) and
section 415(h) of the Code, which affiliate shall be deemed an Employer for this
purpose) shall not exceed for any limitation year an amount equal to the lesser
of (i) the dollar limitation currently in effect under section 415(c) of the
Code (e.g., $30,000 for 1994); or (ii) 25 percent of the Participant's Limit
Compensation for such limitation year.
For purposes of this section 6, the "annual addition" to a
Participant's accounts means the sum of (i) the Employer contributions and
forfeitures allocated to his accounts (including, solely for purposes of the
dollar limitation, contributions to any individual medical benefits account
described in section 415(l)(2) or for key employees under section 419A(d)(2) of
the Code), plus (ii) for any limitation year beginning before 1987, the lesser
of one-half of the Participant's after-tax contributions credited within the
limitation year, or the excess of his after-tax contributions over six percent
of his Limit Compensation for that year, and (iii) for any limitation year
beginning after 1986, the Participant's total after-tax contributions for that
year. The annual addition for a Participant shall include any excess
contributions subsequently returned to the Participant by the Trustee pursuant
to section 6.4, provided however, that (i) it shall not include any excess
contributions attributable to a reasonable error which are returned,
reallocated, or
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credited to a suspense account pursuant to section 6.4-1, and (ii) it shall not
include any salary reduction contributions in excess of the dollar limit
applicable under section 4.2 which are returned to the Participant in accordance
with section 6.4-3.
The $30,000 and $90,000 dollar limitations referred to in this section
6 shall, for each limitation year ending after 1987, be automatically adjusted
to the new dollar limitations determined by the Commissioner of Internal Revenue
for the calendar year beginning in that limitation year. A "limitation year"
means each 12 consecutive month period beginning January 1.
6.2 Coordinated Limitation With Other Plans.
Aside from the limitation prescribed by section 6.1 for any single
limitation year, if a Participant has ever participated in one or more defined
benefit plans maintained by an Employer or an affiliate, and if the
Participant's benefits under any such plan have not been limited so that his
defined benefit fraction does not exceed one minus his defined contribution
fraction, then the annual additions to his accounts shall be limited on a
cumulative basis so that the sum of his defined contribution plan fraction and
his defined benefit plan fraction does not exceed one. For this purpose:
6.2-1 A Participant's "defined contribution plan fraction" with respect
to a limitation year shall be a fraction, (i) the numerator of which is the sum
of the annual additions to his accounts through the end of the current
limitation year under all qualified retirement plans and simplified employee
pensions ever maintained by an Employer (whether or not terminated), and (ii)
the denominator of which is the sum of the lesser of the following amounts -A-
and -B- determined for the current limitation year and each prior limitation
year of the Participant's Service with an Employer: -A- is 1.25 times the
defined contribution dollar limitation for that year (e.g., $30,000 for 1994),
and -B- is 35 percent of the Participant's Limit Compensation for such year.
However, the denominator of the defined contribution plan fraction shall be
determined instead pursuant to the special transition rule set forth in section
415(e)(6) of the Code if the Administrator so elects.
If the Participant participated in any related defined contribution
plan in any years beginning before 1976, any excess of the sum of the actual
annual additions to the Participant's accounts for those years over the maximum
annual additions which could have been made in accordance with section 6.1 shall
be ignored, and after-tax voluntary contributions by the
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Participant during those years shall be taken into account as to each such year
only to the extent that his average annual after-tax voluntary contribution in
those years exceeded 10 percent of his average annual Limit Compensation in
those years.
In the case of any Participant covered by one or more defined
contribution plans established by May 6, 1986, for whom the sum of his defined
contribution plan fraction and defined benefit plan fraction on December 31,
1986, did not exceed one under the rules of section 415(e) of the Code in effect
on that date but did exceed one under the rules becoming effective on January 1,
1987, his defined contribution plan fraction shall be permanently reduced by
subtracting from the numerator an amount equal to the product of (a) the excess
of the sum of such fractions on January 1, 1987, over one, multiplied by (b) the
denominator of the defined contribution plan fraction on that date. No changes
in the terms of any plan after May 5, 1986, shall be taken into account in
making such an adjustment.
6.2-2 A Participant's "defined benefit plan fraction" with respect to a
limitation year shall be a fraction, (i) the numerator of which is his projected
annual benefit payable under all defined benefit plans ever maintained by an
Employer (whether or not terminated), and (ii) the denominator of which is the
lesser of (a) 1.25 times the defined benefit dollar limitation for the current
limitation year (e.g., $118,800 for 1994), and (b) 1.4 times the Participant's
average Limit Compensation during his highest-paid three consecutive limitation
years.
For this purpose, a Participant's "projected annual benefit" under each
defined benefit plan means the annual normal retirement benefit (adjusted to an
actuarially equivalent single life annuity in the case of any plan under which
the normal form is other than a single life annuity or qualified joint and
survivor annuity) which the Participant will receive, assuming his Service with
the Employer will continue until his normal retirement date under the plan (or
until the present, if later), and assuming that his compensation and all other
factors used to determine his benefits will remain constant through such date. A
Participant's benefits for this purpose shall not include any benefits
attributable to his rollover or voluntary contributions, any benefits
transferred from another plan not maintained by an Employer, or any
pre-retirement death benefits, post-retirement medical benefits, or
post-retirement cost-of-living adjustments.
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In the case of any Participant covered on or before December 31, 1986,
by one or more defined benefit plans established by May 6, 1986, which satisfied
the requirements of section 415 for all years beginning before 1987, the
denominator of his benefit plan fraction shall in no event be less than 125
percent of the sum of the annual benefits which he had accrued as of December
31, 1986, disregarding any changes in the terms of any plan after May 5, 1986.
6.2-3 The 1.25 multiplier in each of the foregoing sections 6.2-1(ii)
and 6.2-2(ii) shall be reduced to 1.0 for any limitation year in which either
(a) this Plan is super top-heavy (as defined in section 16), or (b) any Non-key
Employee does not receive either the minimum annual contribution or the minimum
benefit accrual under this or another plan within the plan aggregation group in
accordance with section 416(h)(2)(A) of the Code.
6.3 Limitations to Avoid Discrimination.
The contributions credited under sections 4.2, 4.3, and 4.4 to the
Accounts of Participants who are Highly Paid Employees shall be limited as
follows:
6.3-1 For this purpose, with respect to any Plan Year, "Participants"
shall include each individual who was eligible for any Employer contribution
(including salary reduction contributions under section 4.2) or to make any
Employee after-tax contribution in that year, whether or not any contribution
was made. Any Participant who is a member of the family (as defined in section
414(q) of the Code) of a Highly Paid Employee who either (i) owns more than five
percent of the outstanding equity interest or voting interest in any Employer,
or (ii) is one of the 10 most highly compensated Highly Paid Employees for the
Plan Year, shall not be counted as a separate Participant, but his compensation
and any contributions on his behalf shall be treated as compensation to and
contributions on behalf of that Highly Paid Employee.
Further, the "deferral percentage" for each Participant shall be equal
to the ratio of (i) the Employer contributions, if any, credited to his Account
under section 4.2 for the Plan Year, to (ii) his compensation for that year. The
"contribution percentage" for each Participant shall be equal to the ratio of
(i) the Employer and Employee contributions, if any, credited to his Account
under sections 4.3 and 4.4 for the Plan Year, to (ii) his compensation for that
year. A Participant's deferral and contribution percentages shall be computed
without regard to any contributions which exceed
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the limit described in section 6.1, are attributable to a reasonable error, and
are returned pursuant to section 6.4-1. Employee contributions shall not be
counted in computing the contribution percentage for a Plan Year if they are
made after the end of the year; Employer contributions shall not be counted in
computing the deferral and contribution percentages for a Plan Year if the
contributions are made more than 12 months after the end of the year. A
Participant's "compensation" for this purpose shall be determined by the
Administrator in a manner consistent with section 414(s) of the Code, provided
the same definition is applied to all Participants in any Plan Year.
In the case of any Highly Paid Employee who is eligible to make salary
reduction contributions or after-tax contributions or to receive Employer
matching contributions under any other qualified retirement plan maintained by
an Employer, his deferral percentage and contribution percentage for this and
each other such plan shall be determined as if such contributions under all such
plans were made under each plan. If any other such plan has a different plan
year from this Plan, the contributions for plan years ending within the same
calendar year shall be aggregated.
If this Plan satisfies the requirements of section 401(a)(4), 401(m),
or 410(b) of the Code only if aggregated with one or more other plans, or if one
or more other plans satisfy any of such requirements only if aggregated with
this Plan, then the deferral percentage and the contribution percentage of each
participant in such plans shall be determined as if they were a single plan.
6.3-2 The contributions credited for Highly Paid Employees shall be
limited so that each of the following conditions which is applicable is
satisfied:
a. For each Plan Year, either (i) the average deferral percentage
among the Highly Paid Employees is not more than 1.25 times the
average deferral percentage among all other Participants, or (ii)
the average deferral percentage among the Highly Paid Employees is
not more than 2 times the average deferral percentage among all
other Participants, and the former percentage is not more than 2
percentage points above the latter percentage.
b. For each Plan Year, either (i) the average contribution percentage
among the Highly Paid Employees is not more than 1.25 times the
average contribution percentage among
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all other Participants, or (ii) the average contribution
percentage among the Highly Paid Employees is not more than 2
times the average contribution percentage among all other
Participants, and the former percentage is not more than 2
percentage points above the latter percentage.
c. For Plan Years beginning after 1988, the sum of the average
deferral percentage plus the average contribution percentage of
the Participants who are Highly Paid Employees (such percentages
being determined after taking into account any corrective
distributions, reallocations, or contributions pursuant to section
6.4) is not more than the greater of:
(i) the sum of (A) 1.25 times the lesser of the average deferral
percentage and the average contribution percentage for the other Participants
plus (B) the lesser of (1) the greater of those two percentages for the other
Participants increased by 2 percentage points and (2) the greater of those two
percentages multiplied by 2; and
(ii) the sum of (A) 1.25 times the greater of the average deferral
percentage and the average contribution percentage for the other Participants
plus (B) the lesser of (1) the lesser of those two percentages for the other
Participants increased by 2 percentage points and (2) the lesser of those two
percentages multiplied by 2.
6.4 Compliance With Limitations.
The Administrator and Employers shall take such action as may be
necessary from time to time to assure compliance with the limitations set forth
in sections 6.1, 6.2, 6.3, and 4.2. Specifically:
6.4-1 The Administrator shall use its best efforts to see that the
Employers and Participants restrict their contributions for any Plan Year to an
amount which, taking into account the amount of available forfeitures, may be
completely credited to the Participants consistent with the limitations set
forth in sections 6.1 and 6.2.
Where those limitations would otherwise be exceeded with respect to any
Participant in a limitation year, the Administrator shall first cause the
Trustee to return the Participant's after-tax voluntary contributions which were
not eligible for matching Employer contributions, if any, then
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to return the Participant's salary reduction contributions which were not
eligible for matching Employer contributions, to the extent necessary to satisfy
the limitations. If the limitations cannot be satisfied by returning all of the
Participant's after-tax contributions and salary reduction contributions not
eligible for Employer matching contributions, the Administrator shall cause the
Trustee to return the Employer contributions otherwise allocable to the
Participant (as nondeductible contributions described in section 4.6) to the
extent necessary to satisfy the limitations; in such event, the Administrator
shall require first the return of the Participant's after-tax contributions and
salary reduction contributions, and the associated Employer matching
contributions in the same proportion in which they were made, and finally the
return of other Employer contributions. All contributions returned shall include
any investment gains.
Where the limitations cannot be satisfied by returning Employer
contributions (such as where the contributions may no longer be returned
pursuant to section 4.6, or where the limitations are being exceeded on account
of other Participants' forfeitures rather than Employer contributions), the
excess amount shall be held in a suspense account to be allocated in lieu of any
Employer contributions in future years until it is eliminated, and to be
returned to the Employer if it cannot be credited consistent with these
limitations before the termination of the Plan.
In the case of a Participant who also participates in the Bell
Communications Research Management Pension Plan, the Administrator shall cause
benefit accruals under that Plan to be reduced first before contributions under
this Plan are reduced.
6.4-2 In the case of a potential failure to satisfy any
anti-discrimination limitation in section 6.3-2:
a. With respect to the separate limitations in sections 6.3-2(a) and
(b), the Administrator shall first reduce the deferral or
contribution percentage of those Highly Paid Employees having the
highest percentage to the level of those having the next highest
percentage, and then, if necessary, reduce the deferral or
contribution percentage of all Highly Paid Employees at that level
to the level of those having the next highest percentage, and so
on until the limitation is satisfied for the Plan Year. With
respect to any Highly Paid Employee, his contribution percentage
shall first be reduced by returning any unmatched after-tax
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contributions before any other after-tax contributions and any
vested matching contributions are distributed and any nonvested
matching contributions are forfeited.
With respect to the combined limitation in section 6.3-2(c), the
Administrator shall first reduce the contribution percentages of
the Highly Paid Employees by causing the Trustee to return all or
a portion of their unmatched after-tax contributions, if any. If
the limitation remains unsatisfied after all such Employees'
after-tax contributions are returned, the Administrator shall in
turn cause the Trustee (i) to return the Highly Paid Employees'
salary reduction contributions not eligible for matching Employer
contributions pursuant to section 4.4, then (ii) to return the
Employees' salary reduction and after-tax contributions and to
distribute, to the extent vested, and to forfeit, to the extent
not vested, the associated Employer matching contributions in the
same proportion in which they were made. Such reductions shall be
made in each category starting with those Highly Paid Employees
having the highest percentage in that category, in the same manner
prescribed by the preceding paragraph.
b. To the extent possible, the Administrator shall reduce a Highly
Paid Employee's deferral or contribution percentage by modifying
his elections and curtailing further contributions under sections
4.2, 4.3, and 4.4 on his behalf for the Plan Year.
However, if this is insufficient with respect to the Employee's
deferral percentage for a Plan Year, the Administrator shall cause
a portion of the Employee's salary reduction contributions already
made under section 4.2 to be recharacterized as after-tax
contributions to the extent the Employee could have made such
after-tax contributions without exceeding any limitation under the
Plan, provided (i) such amounts are treated as additional taxable
income to the Employee for the taxable year in which the deferrals
were made, (ii) the amounts involved are determined and all
affected Employees are notified no later than 2-1/2 months after
the end of the Plan Year, and (iii) the Employer has not suspended
the after-tax contribution feature for that year pursuant to
section 14.5. Any such recharacterized contributions shall remain
credited to the Employee's Salary Reduction Account and subject to
the restrictions on distributions under this Plan applicable to
the Employee's salary reduction contributions.
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Where a Highly Paid Employee's deferral or contribution percentage
cannot be adequately reduced by curtailing further contributions
during the Plan Year or by recharacterizing salary reduction
contributions as after-tax contributions, the Administrator shall
cause the Trustee to return to the Employee a portion of the
contributions credited to his Salary Reduction or Regular Account,
as adjusted for the investment gains or losses attributable to
such excess contributions, and to reallocate to other Participants
any Employer contributions previously credited to the Employee's
Matching Account on the basis of such salary reduction
contributions as are returned to the Employee.
Any such distributions to correct excessive contributions in a
Plan Year shall be made as soon as practicable, but in no event
later than the end of the following Plan Year, and shall be
adjusted for the investment gains or losses attributable to such
excess contributions up to the last day of the Plan Year preceding
the date of distribution.
c. In lieu of the Administrator's causing the limitations under
section 6.3 to be satisfied for a Plan Year by recharacterization
of excess salary reduction contributions as employee contributions
or by return of excess salary reduction contributions or employee
contributions and reallocation of matching contributions with
respect to one or more Highly Paid Employees, the Employers may
elect to make an additional, special contribution under section
4.1 on behalf of one or more Active Participants who are
designated by the Employers and who are not Highly Paid Employees,
such contribution to be credited to their Salary Reduction
Accounts in proportion to their Cash Compensation.
6.4-3 In the case of a Participant who notifies the Administrator in
writing that his salary reduction contributions under section 4.2 during his
current or preceding taxable year have caused him to exceed the applicable
limitation under section 402(g) of the Code, the Administrator shall cause the
Trustee to return to the Participant a portion of the deferrals credited to his
Salary Reduction Account during that year, as adjusted for the investment gains
or losses attributable to such excess deferrals. (A Participant shall be deemed
to have given such notice if the Administrator determines that excess deferrals
have occurred under this Plan and any other cash or deferred arrangement
maintained by Employers, without regard to the Participant's salary reduction
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contributions under any other employers' plans.) However, such a distribution
may be made only if such notice is given and the payment to the Participant by
the Trustee is effected no later than the April 15th immediately following the
Participant's taxable year in which the limitation has been exceeded.
6.4-4 To the extent an Employee's salary reduction contributions are
returned pursuant to sections 6.4-2(a), 6.4-2(b) or 6.4-3, any associated
Employer matching contributions shall be forfeited.
SECTION 7. TRUST FUND AND ITS INVESTMENT.
7.1 Creation of Trust Fund.
The Company shall select the Trustee to whom the Employers and
Participants may from time to time make the contributions described in this
Plan. The Trustee shall hold the Employers' and Participants' contributions,
together with all amounts received from other qualified plans and investments,
as the Trust Fund under the terms of this Plan and the Trust Agreement. In all
events, the benefits described in the Plan shall be payable only from the assets
of the Trust Fund, and none of the Company, any other Employer, its board of
directors or trustees, its stockholders, its officers, its partners, its
employees, its proprietor, the Administrator, and the Trustee shall be liable
for payment of any benefit under the Plan except from the Trust Fund.
7.2 Responsibility for Investments.
The Trustee shall have full responsibility for the investment of the
Trust Fund, except to the extent (i) investment responsibility may be assigned
in writing by the Company to another fiduciary or delegated from time to time to
one or more investment managers pursuant to section 2.2 of the Trust Agreement,
or (ii) Participants exercise investment control over their Accounts pursuant to
section 7.3, or 11.9 of the Plan.
7.3 Investment Direction by Participants.
Each Participant's Account shall be invested as one or more separate
accounts with such mutual funds, insurance contracts, brokerage firm accounts,
bank instruments, and other investment choices as may be offered under the Plan.
A Participant shall indicate how his Account
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is to be allocated among such investment choices in accordance with the rules
and procedures applicable to such choices or otherwise established by the
Administrator from time to time. During any period in which a Participant fails
to direct the investment of his Account, the Administrator shall allocate it to
one or more money market mutual funds or similar investments with minimal
principal risk as the Administrator may select in its sole discretion.
Further, for Plan Years beginning before 1994, the Administrator shall
allocate a Participant's Basic Account to the Interest Income Fund or similar
investment with minimal principal risk as the Administrator selected in its sole
discretion.
The Administrator shall select the investment choices to be offered in
its sole discretion, and shall have the right, exercisable upon reasonable
notice to the Participants, to add or eliminate any investment choice, to change
any of the terms or conditions or the rules and procedures established in
connection with the various investment choices, and to terminate entirely the
offering of such choices and the Participants' right to direct the investment of
their Accounts. Further, the Administrator may impose appropriate additional
limitations on the choices available to Participants who are no longer in active
Service with an Employer.
SECTION 8. USE OF ACCOUNTS DURING SERVICE.
8.1 Hardship Withdrawals from Salary Reduction Accounts.
Subject to section 14.5, any Participant in active Service with an
Employer, on a Leave of Absence, or on a Rotational Assignment may request to
withdraw an amount from his Salary Reduction Account on the following terms and
conditions:
8.1-1 Any request to withdraw shall be made by written application to
the Administrator. A Participant shall be suspended from making any further
contributions under section 4.2 or 4.3 (and under any other qualified or
nonqualified plan of deferred compensation maintained by the Employers) from the
date of withdrawal until the first Entry Date which is more than 12 months after
the withdrawal.
8.1-2 The amount withdrawn from the Participant's Salary Reduction
Account in any Plan Year beginning after 1988 shall not exceed the cumulative
contributions credited to that Account,
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plus any investment earnings credited through December 31, 1988, but ignoring
any investment earnings credited after that date, and shall not include any
special contributions made by his Employer pursuant to section 6.4-2(c).
8.1-3 A Participant may only request a withdrawal to meet an immediate
and heavy financial need arising on account of: (i) an injury, illness, or death
within his family, including any medical expenses (within the meaning of section
213(d) of the Code) which have been or need to be incurred for the Participant,
his Spouse, or any of his dependents (within the meaning of section 152 of the
Code); (ii) a casualty loss or a legal judgment or liability which the
Participant, as a legal or practical matter, has no choice but to cover or pay;
(iii) the purchase of a principal residence for the Participant (excluding the
cost of furnishings and normal mortgage and other periodic payments falling due
after the purchase); (v) a delinquency in mortgage or rental payments for the
Participant's principal residence which must be cured promptly to avoid
foreclosure or eviction; or (vi) tuition expenses and related educational fees
for the next 12 months of post-secondary school education for the Participant,
his Spouse, or one of his children or other dependents. In addition, a
withdrawal for any such purpose shall not exceed that portion of the total
amount actually required to cover the Participant's financial need which the
Participant is unable to satisfy from other resources that are reasonably
available to him. For this purpose, there shall be taken into account the
Participant's additional tax liabilities due to the withdrawal.
8.1-4 A Participant's request for a withdrawal shall be approved only
if the Participant withdraws all other amounts and loans permitted under this
and any other qualified plan in which he has an account balance. A Participant
requesting a withdrawal shall submit whatever information the Administrator may
ask for regarding the circumstances of his request.
8.1-6 In approving or denying requests for withdrawals, the
Administrator shall treat all Participants in a uniform and nondiscriminatory
manner.
8.2 Other Withdrawals from Regular, Salary Reduction, Rollover, Basic and
Matching Accounts.
Any Participant in active Service with an Employer, on a Leave of
Absence, or on a Rotational Assignment may withdraw an amount from his Regular,
Salary Reduction, Rollover, Basic and Matching Accounts on the following terms
and conditions:
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8.2-1 A Participant may request a withdrawal only twice in any Plan
Year. Any request to withdraw shall be made by written application to the
Trustee under rules prescribed by the Administrator.
8.2-2 Participants may withdraw at least $1000, up to the maximum of the
total current value of the following:
(i) the balance in the Participant's Regular and Rollover
Accounts;
(ii) the vested balance in the Participant's Matching and Basic
Accounts, if the Participant has participated in the Plan for at
least 5 Plan years excluding any contributions made during the
preceding 24 months; and
(iii) if the Participant is over 59-1/2, the balance in the
Participant's Salary Reduction Account (optional).
8.2-3 To the extent that contributions to the Participant's Regular
Account made prior to January 1, 1987, and any earnings thereon, are separately
accounted for, withdrawals shall be treated first as distributions of the
Participant's pre-1987 voluntary contributions, with any excess of withdrawals
over such contributions treated as pro-rata distribution of post-1986
contributions and investment earnings.
8.3 Loans to Participants.
Subject to section 14.5, any Participant in active service with an
Employer or on a Rotational Assignment (other than an "owner-employee" within
the meaning of section 401(c)(3) of the Code or a "shareholder-employee" within
the meaning of section 1379(d) prior to the Subchapter S Revision Act of 1982)
may borrow from his Salary Reduction, Regular, Matching, Basic or Rollover
Account on the following terms and conditions:
8.3-1 Any request to borrow shall be made by written application to the
Administrator in accordance with such policies and procedures as the
Administrator may publish from time to time. A Participant may only have two
loans outstanding at any time.
8.3-2 No loan shall be for an amount less than $1,000. Further, the
outstanding loans to a Participant under this Plan and the plans of any other
employers which are deemed commonly
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controlled or affiliated within the meaning of sections 414(b), (c), (m), and
(o) of the Code shall not exceed the lesser of (i) $50,000 reduced by the
highest outstanding loan balance during the preceding 12 months and (ii) 50
percent of his vested interest in the sum of the balance(s) credited to his
account(s) under all defined contribution plans as determined on the most recent
valuation date preceding the most recent loan.
The 50 percent limit in the preceding sentence shall be increased to
$10,000 for loans made before October 18, 1989. The loans to a Participant shall
not exceed an amount which he demonstrates to the Administrator's satisfaction
that he will be able to repay at his current level of compensation.
8.3-3 Any loan shall be automatically secured by the Participant's
interest in his Account to the extent of the outstanding principal and accrued
interest on the loan, and the existence of that security interest shall not be
deemed prohibited by the provisions of section 15.2. Further, the Administrator
may require the Participant to pledge other tangible or intangible property as
security for a loan to the extent the Administrator deems it prudent and
appropriate. The Administrator may require that the loan amount paid be net of
any origination fees or provide that a Participant's account balance will be
reduced by any maintenance fees.
8.3-4 Any loan shall bear a reasonable rate of interest to be set by
the Savings Plan Committee from time to time based upon prevailing commercial
rates. A loan shall be repayable by regular payroll deductions, or in monthly or
quarter-annual installments if the Participant goes on a Rotational Assignment
to an Interchange Company or on a Leave of Absence, over a period not exceeding
five years or the period remaining to the Participant's Normal Retirement Date,
whichever is shorter. Further, if a Participant goes on an unpaid Leave of
Absence, the Administrator may consent to the suspension of loan payments for up
to one year, and the loan payment amount may be recalculated upon resumption of
payments, but the term of the loan may not be extended. However, the term of a
loan shall not be less than one year and shall not exceed the period of
assignment at the Company if the Participant is on a Rotational Assignment at
the Company.
8.3-5 Any loan shall be charged directly to the Participant's Account;
the Participant's payments of principal and interest shall be credited directly
to his Account, and shall not be treated as
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income of the general Trust Fund. A loan shall be charged first to his Salary
Reduction Account not in excess of his salary reduction contributions over six
percent of Compensation, then to the remainder of his Salary Reduction Account,
then to his Matching, Basic and Rollover Accounts, to the extent vested, and
then to his Regular Account. A loan shall be taken prorata from the investments
in which the Participant's Account balances are held.
Payments of principal on the loan shall be made into the Participant's
Account in the reverse sequence as said Accounts were initially charged under
this section 8.3-5. A loan may be pre-paid after six months of its original
date. A Participant who has separated from service may prepay the outstanding
balance of a loan within three months following the date of such separation from
service even if that is sooner than six months of the loan's original date.
There shall be no penalty associated with any such pre-payment. Loan repayments
will be suspended under this plan as permitted under Sec. 414(u) (4) of the
Internal Revenue Code.
8.3-6 In all events, a loan shall become immediately due and payable
upon (i) the Participant's termination of Service with the Employers, or (ii)
the termination of the Plan. Any loan not repaid in accordance with its terms
shall be treated as in default.
8.3-7 In exercising its responsibilities under this section, the
Administrator shall assure that loans are made available to all Participants on
a reasonably equivalent basis and in amounts which do not discriminate in favor
of Highly Paid Employees.
SECTION 9. ADJUSTMENTS TO ACCOUNTS.
9.1 Adjustments for Transactions.
Each Participant's Account shall be timely adjusted for Employer
contributions and other Participants' forfeitures under section 4, Employee
contributions and transfers under section 5, withdrawals and loans under section
8, forfeitures and restorals under section 10, and benefit payments under
section 11.
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9.2 Adjustments for Investment Experience.
Each Participant's Account shall be deemed adjusted as of each
Valuation Date to be equal to the fair market value of the assets in which the
Account is invested pursuant to the Participant's elections under section 7.3.
SECTION 10. VESTING OF PARTICIPANTS' INTERESTS.
10.1 Immediately Vested Accounts.
A Participant's interest in his Salary Reduction, Basic, Regular and
Rollover Accounts shall always be fully vested and nonforfeitable for any
reason.
10.2 Deferred Vesting in Accounts.
A Participant shall have no vested interest in his Matching Account
until he has completed five Vesting Years, at which time the Participant's
interest in his Account shall become 100 percent vested.
If the applicable vesting schedule under the Plan for any Plan Year is
less favorable to a Participant than the applicable vesting schedule for any
previous Plan Year (whether on account of an amendment of the Plan or the Plan's
change in status from top-heavy to not top-heavy as defined in section 16), the
Participant's vested interest shall be no less than (i) his vested interest as
of the last day of such previous Plan Year, if he had fewer than three Vesting
Years at that date, or (ii) his vested interest determined under the applicable
schedule for the previous Plan Year, if he had three or more Vesting Years at
that date.
However, any Participant who was a participant in the Plan on or before
December 31, 1988 shall continue to vest under the prior vesting schedule until
they have completed five Vesting Years, at which time the Participant's interest
in his Account shall become 100 percent vested.
10.3 Computation of Vesting Years.
For purposes of this Plan, effective July 1, 1997, a "Vesting Year"
means each 12-months of an Employee's Service with an Employer, beginning with
his initial Service with any Employer,
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and including certain Service with other employers as provided in the definition
of "Service". In general, an Employee's separate periods of Service shall be
added together, with each period of Service counted as the number of days from
the first day of his Service in that period to the following Severance Date.
However, a Participant's Vesting Years shall be computed only on the basis of
completed years, assuming that 12 months equal one year, and any remaining
partial year shall be disregarded. Further, a Participant's Vesting Years shall
be computed subject to Service with any Employer, and including certain Service
with other employers as provided in the definition of "Service." However, a
Participant's Vesting Years shall be computed subject to the following
conditions and qualifications:
a. A Participant's vested interest in his Matching Account
accumulated before a Break in Service shall be determined without
regard to any Service after the Break. Further, if a Participant
has a Break in Service before his interest has become vested to
some extent, he shall lose credit for any Vesting Year before the
Break.
b. A Participant's Vesting Years shall include any period of service
with an Interchange Company to the extent provided in an
Interchange Company Agreement.
c. Unless otherwise specifically excluded, a Participant's Vesting
Years shall include any period of active military duty to the
extent required by the Military Selective Service Act of 1967 (38
U.S.C. section 2021).
d. A Participant's Vesting Years shall include any period of leave to
the extent required by the Family and Medical Leave Act of 1993
(29 U.S.C. section 2601 et. seq.).
e. If a Participant quits, retires, or is discharged, or he is
continuously absent for any other reason and he subsequently
quits, retires, or is discharged, and the Participant then has
any Service within 12 months after the first day of absence, his
Vesting Years shall include the period from the first day of his
absence through his return to Service unless otherwise
specifically excluded.
f. If a Participant's Service ends before December 31, 1998, the
total number of his Vesting Years shall in no event be less than
it would be if the provisions of the Plan as in effect through
June 30, 1997, had remained in effect through his termination.
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10.4 Full Vesting Upon Certain Events.
Notwithstanding section 10.2, a Participant's interest in his Matching
Account shall fully vest on the Participant's Normal Retirement Date, provided
the Participant is in Service on or after that date. The Participant's interest
shall also fully vest in the event that his Service is terminated by Disability
or by death or at the request of the Company because of a surplus condition.
10.5 Full Vesting Upon Plan Termination.
Notwithstanding section 10.2, a Participant's interest in his Matching
Account shall fully vest upon termination of the Plan or upon the permanent and
complete discontinuance of contributions by his Employer. In the event of a
partial termination, the interest of each Participant shall fully vest with
respect to that part of the Plan which is terminated.
10.6 Forfeitures, Repayment, and Restoral.
If a Participant's Service terminates before his interest in his
Matching Account is fully vested, that portion which has not vested shall be
forfeited if he either (i) receives a distribution of his entire vested interest
pursuant to section 11.1, or (ii) has a Break in Service. For this purpose, a
Participant who has terminated with no vested interest in his Account shall be
deemed to have received a distribution of his entire vested interest on the date
of his termination.
Notwithstanding the foregoing, the account balance of a Participant who
transfers to an Interchange Company or changes employment pursuant to the
Mandatory Portability Agreement within 30 days of his termination of employment
from the Company shall not be forfeited as a result of such transfer or change.
If a Participant who has received his entire vested interest returns to
Service before he has a Break in Service, he may repay to the Trustee an amount
equal to the distribution, disregarding any portion of the distribution from his
Rollover Account. The Participant may repay such amount at any time within five
years after he has returned to Service. The amount shall be credited to his
Account as of the last day of the Plan Year in which it is repaid; an additional
amount equal to the portion of his Matching Account which was previously
forfeited shall be restored to that Account at the same time from other
Employees' forfeitures and, if such forfeitures are insufficient, from a special
contribution by his Employer for that year. For this purpose, a Participant who
terminated
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with no vested interest in his Account shall be deemed to have repaid his entire
vested interest on the date of his return to Service.
10.7 Accounting for Forfeitures.
A forfeiture shall be charged to the Participant's Matching Account as
of the first day of the first Valuation Period in which the forfeiture becomes
certain pursuant to section 10.6. A forfeiture shall first offset the
contributions of the terminated Participant's Employer which are required
pursuant to section 4.4, with any unused balance added to the Employer's basic
contributions under section 4.1, in the Plan Year in which the forfeiture
becomes certain. Notwithstanding the foregoing, if in any Plan Year any
terminated Participant is treated as an Active Participant pursuant to section
4.5 in order to permit the Plan to satisfy the requirements of section
401(a)(26) or 410(b) of the Code, a forfeiture of his nonvested interest shall
not be charged to his Account or added to his Employer's contribution until the
first Plan Year following his termination in which he has 500 or fewer Hours of
Service.
10.8 Vesting and Nonforfeitability.
A Participant's interest in his Matching Account which has become
vested shall be nonforfeitable for any reason.
SECTION 11. PAYMENT OF BENEFITS.
11.1 Benefits for Participants.
A Participant whose Service ends for any reason shall receive the
vested portion of his Account balance as provided in section 11.2 as soon as
practical following the later of the date (i) his Service ends and (ii) the
Benefits Office receives his election for benefits.
Notwithstanding the foregoing, a Participant whose Account exceeds
$3,500 (or at the time of any prior distribution exceeded $3,500) may elect to
defer receipt of his benefits until he reaches age 70-1/2. A terminated
Participant who does not elect to receive his benefits immediately may make such
an election subsequently at any time, in which event his benefits shall be paid
as soon as practical following receipt of his election.
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All or a portion of a Participant's vested Account balance shall be
paid in a single lump sum to any alternate payee to the extent provided in any
court order determined by the Administrator to be a qualified domestic relations
order within the meaning of section 414(p) of the Code. Any such payment shall
be made as soon as practical following the Administrator's determination.
In all events, if a Participant's Service continues to the calendar
year in which he reaches age 70-1/2, his Account balance or the first periodic
payment of such balance, as he may elect pursuant to section 11.2, shall be paid
to him no later than the April 1st of the following calendar year, regardless of
his continued Service, unless he reached such age before 1988 and has never been
a Five-Percent Owner, in which case his Account balance shall be distributed in
accordance with section 11.2 when his Service terminates.
11.2. Benefit Amounts and Forms for Participants.
A Participant's benefits shall be equal to his vested Account balance
as of the most recent Valuation Date before the date of payment.
A Participant's benefits will normally be payable in a single lump sum,
unless his Account balance exceeds $3,500, and he elects in lieu of a lump sum
to receive his benefits in installments. Any such installments (except possibly
the last) must equal at least $1,000 on an annual basis, and shall be payable
for a period not exceeding the Participant's life expectancy or his and his
Spouse's joint and last survivor life expectancy. Any life expectancy shall be
based on the expected return multiples in Tables V and VI of Treasury Income Tax
Regulation section 1.72-9. A Participant's life expectancy, or his and his
Spouse's joint and last survivor life expectancy is to be computed only once
when benefits commence. Each installment shall be equal to (i) the vested
balance credited to the Participant's Account, divided by (ii) the number of
annual installments which remain to be paid (including the current payment being
computed).
A Participant's election shall be filed with the Administrator during
an election period beginning 90 days before the date on which benefit payments
are to begin. The Administrator shall furnish to the Participant, at least 30
and not more than 90 days before the benefit commencement date, a written
explanation in nontechnical language of the benefit forms provided under this
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section 11.2, the Participant's right to elect a form and revoke an election,
and the relative effect of the different forms on the amounts to be received by
the Participant and any Beneficiary.
If a Participant requests any additional information regarding the
election of a benefit form within 60 days after receiving the Administrator's
initial written explanation, the Participant's benefit commencement date shall
be changed, if necessary, to be at least 60 days after he receives the
additional information. If a Participant has elected installment benefits, he
may at any time, whether before or after the end of the election period, change
the designated Beneficiary of any installments which may remain payable upon his
death.
However, a Participant who elects to receive his benefits in
installments may elect at any time to receive the remainder of his benefits in a
single lump sum.
11.3 Benefits on a Participant's Death.
If a Participant dies after his benefits have begun to be paid in
installments pursuant to section 11.2, or if a Participant dies before his
benefits have been paid or have begun to be paid, the balance credited to his
Account shall be paid to his Beneficiary in a single lump sum, or if his vested
benefits exceed $3,500 and he had elected, in two annual installments.
The benefits shall be calculated on the basis of the most recent
Valuation Date before the date of payment.
Notwithstanding the foregoing, benefits may not be paid for a period
longer than the Beneficiary's life expectancy as of the Participant's death.
If a Participant is married when he dies, then unless he has elected
otherwise the Administrator shall cause the balance in his Account to be paid in
a single lump sum to his Spouse. Any such election must be accompanied by the
Spouse's written consent, which (i) must acknowledge the effect of the election,
(ii) must explicitly provide either that the designated Beneficiary and payment
form may not subsequently be changed by the Participant without the Spouse's
further consent, or that it may be changed without such consent, and (iii) must
be witnessed by the Administrator, its representative, or a notary public. (This
requirement shall not apply if the Participant establishes to the
Administrator's satisfaction that the Spouse may not be located.)
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Within a reasonable time after the Participant's initial entry into the
Plan, and, if he enters prior to the first day of the Plan Year in which he
reaches age 32, then again within a reasonable time after the earlier of that
date and the termination of his Service, the Administrator shall furnish to the
Participant a written explanation in nontechnical language of the death benefit
provided under this section 11.3 and the Participant's right to designate a
Beneficiary and a payment form and to revoke a designation. If the Participant
is married, the Administrator's written explanation shall describe the need for
the Spouse to consent to the election of any death benefit.
A lump sum benefit shall be paid as soon as practicable, and in no
event more than 60 days, after the Participant's death; an installment form of
benefit shall commence by that date.
11.4 Election Formalities.
Any election or revocation of a benefit form shall be in writing,
signed by the Participant or, if applicable, by the Beneficiary, and delivered
personally or by mail to the Administrator. The Administrator shall provide
appropriate forms for benefits elections, but an election shall be valid whether
or not it is made on the official form.
11.5 Marital Status.
The Administrator shall from time to time take whatever steps it deems
appropriate to keep informed of each Participant's marital status. Each Employer
shall provide the Administrator with the most reliable information in the
Employer's possession regarding its Participants' marital status, and the
Administrator may, in its discretion, require a notarized affidavit from any
Participant as to his marital status. The Administrator, the Plan, the Trustee,
and the Employers shall be fully protected and discharged from any liability to
the extent of any benefit payments made as a result of the Administrator's good
faith and reasonable reliance upon information obtained from a Participant and
his Employer as to his marital status.
11.6 Proof of Ages.
Each Participant desiring to elect a benefit form other than a lump sum
shall furnish satisfactory proof of his age to the Administrator at least 30
days before the end of the election period described in section 11.2. Further,
any Participant who is to receive his benefits in a form
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related to the life-span of another individual shall furnish satisfactory proof
of the individual's age to the Administrator by the same date.
11.7 Delay in Benefit Determination.
If the Administrator is unable to determine the benefits payable to a
Participant or Beneficiary on or before the latest date prescribed for payment
pursuant to section 11.1 or 11.3, the benefits shall in any event be paid within
60 days after they can first be determined, with whatever makeup payments may be
appropriate in view of the delay.
11.8 Payments in Cash; Direct Transfers.
All benefits shall be paid in cash except in the case of assets held in
a Participant's Diversified Telephone Portfolio Account, which may be paid in
stock or cash at the Participant's election, except that fractional shares shall
be paid in cash, or as otherwise agreed upon by the Administrator and the person
entitled to the benefits. A Participant or Spouse or former Spouse may elect to
have any eligible rollover distribution made after 1992 that exceeds $200 paid
directly to an individual retirement account or annuity or for the Participant,
to another qualified retirement plan or qualified annuity plan that accepts such
distributions. An eligible rollover distribution is a distribution of all or any
portion of a Participant's account excluding distributions (a) required under
section 401(a)(9) of the Code, (b) of after-tax contributions, and (c) which are
part of a series of payments made over at least 10 years or over the life or
life expectancy of the Participant and/or his Beneficiary.
11.9 Transfers to Interchange Companies.
If a Participant transfers to an Interchange Company, on or before
March 31, l996, he may elect to have his account balance under this Plan
transferred to the Interchange Company Savings Plan, in which case, no
forfeiture as otherwise provided for in section 10 shall occur.
However, if a Participant transfers to an Interchange Company on a
Rotational Assignment, he may only elect to receive a distribution or defer
receipt of his benefits.
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11.10 Transfer to Other Employer's Plan
If an Employee no longer works for any Employer, but the Employee is
transferred to another entity, and that entity maintains a qualified defined
contribution retirement plan (the "other plan"), the Employer may transfer the
Employee's Account to the other plan, provided (a) the Plan Administrator has
determined that such transfers will involve no undue burden and will be
consistent with the purposes of this Plan, and (b) the other plan: (i) provides
for such transfers, (ii) will provide service credit for the Participant's
Service, (iii) will preserve all of the Employee's accrued rights with respect
to his Account in accordance with section 411(d)(6) of the Code, and (iv) will
restrict distributions from the Participant's Salary Reduction Account as
required under section 401(k) of the Code. For purposes of this paragraph, a
transfer of employment is defined as an agreement between an Employer and
another entity concerning the change in employment from the Employer to the
other entity.
SECTION 12. RULES GOVERNING BENEFIT CLAIMS AND REVIEW OF APPEALS.
12.1 Claim for Benefits.
Any Participant or Beneficiary who qualifies for the payment of
benefits may file a claim for his benefits with the Administrator on a form
provided by the Benefits Office. Any election of an alternative benefit form
shall be filed with the Benefits Office at least 30 days before the date on
which the Participant or Beneficiary has been notified by the Administrator that
the benefits are to begin. If a Participant or Beneficiary does not file a claim
by such date, he shall be deemed to have filed a claim for payment of benefits
in the standard form prescribed by section 11.2 or 11.3.
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<PAGE> 49
12.2 Notification by Administrator.
Within 90 days after receiving a claim for benefits (or within 180
days, if special circumstances require a extension of time and written notice of
the extension is given to the Participant or Beneficiary within 90 days after
receiving the claim for benefits), the Administrator shall notify the
Participant or Beneficiary whether the claim has been approved or denied. If the
Administrator denies a claim in any respect, the Administrator shall set forth
in a written notice to the Participant or Beneficiary: (i) each specific reason
for the denial; (ii) specific references to the pertinent Plan provisions on
which the denial is based; (iii) a description of any additional material or
information which could be submitted by the Participant or Beneficiary to
support his claim, with an explanation of the relevance of such information; and
(iv) an explanation of the claims review procedure set forth in section 12.3.
12.3 Claims Review Procedure.
Within 60 days after a Participant or Beneficiary receives notice from
the Administrator that his claim for benefits has been denied in any respect, he
may file with the Committee a written notice of appeal setting forth his reasons
for disputing the Administrator's determination. In connection with his appeal
the Participant or Beneficiary or his representative may inspect or purchase
copies of pertinent documents and records to the extent not inconsistent with
other Participants' and Beneficiaries' rights of privacy. Within 60 days after
receiving a notice of appeal from a prior determination (or within 120 days, if
special circumstances require an extension of time and written notice of the
extension is given to the Participant or Beneficiary and his representative
within 60 days after receiving the notice of appeal), the Committee shall
furnish to the Participant or Beneficiary and his representative, if any, a
written statement of the Committee's final decision with respect to his claim,
including the reasons for such decision and the particular Plan provisions upon
which it is based.
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<PAGE> 50
SECTION 13. THE ADMINISTRATOR AND THE COMMITTEE AND THEIR FUNCTIONS.
13.1 Authority of Administrator.
The Company shall be the "Plan Administrator" within the meaning of
ERISA. The Company shall appoint a Savings Plan Committee, which shall have
exclusive responsibility and authority to control and manage the operation and
administration of the Plan, including full discretion to interpret and apply its
provisions, except to the extent such responsibility and authority are otherwise
specifically (i) allocated to the Company, the Employers, or the Trustee under
the Plan and Trust Agreement, (ii) delegated in writing to other persons by the
Company, the Employers, the Committee, the Administrator, or the Trustee, or
(iii) allocated to other parties by operation of law. The Administrator shall
have no investment responsibilities, however, except to the extent, if any,
specifically provided in the Trust Agreement. In the discharge of its duties,
the Administrator may employ accountants, actuaries, legal counsel, consultants,
recordkeepers, and other agents (who also may be employed by an Employer or the
Trustee in the same or some other capacity) and may pay their reasonable
expenses and compensation from the assets of the Trust Fund.
13.2 Identity of Committee.
The Committee shall be one or more individuals, partnerships, and
corporations (including an Employer) who shall be selected by the Company. Any
individual, including a director, trustee, shareholder, officer, partner,
proprietor, or employee of an Employer, shall be eligible to serve on the
Committee or as part of the Committee. The Company shall have the power to
remove any person serving on the Committee at any time without cause upon 10
days written notice, and any persons may resign from the Committee at any time
upon 10 days written notice to the Company. The Company shall notify the Trustee
of any change in the identity of the Committee.
13.3 Duties of Administrator.
The Administrator shall keep whatever records may be necessary to
implement the Plan and shall furnish whatever reports may be required from time
to time by the Company. The Administrator shall furnish to the Trustee whatever
information may be necessary to properly
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<PAGE> 51
administer the Trust. The Administrator shall see to the filing with the
appropriate government agencies of all reports and returns required of the plan
administrator under ERISA and other laws.
13.4 Compliance with ERISA.
The Administrator shall perform all acts necessary to comply with
ERISA. Each individual member or employee of the Administrator shall discharge
his duties in good faith and in accordance with the applicable requirements of
ERISA.
13.5 Action by Administrator.
If the Administrator consists at any time of a committee of three or
more individuals, all actions of the Administrator shall be governed by the
affirmative vote of a number of members which is a majority of the total number
of members currently appointed, including vacancies. The members of the
committee may meet informally and may take any action without meeting as a
group.
13.6 Execution of Documents.
Any instrument executed by the Administrator shall be signed by any
member or employee of the Administrator.
13.7 Adoption of Rules.
The Administrator shall adopt such rules and regulations of uniform
applicability as it deems necessary or appropriate for the proper administration
and interpretation of the Plan.
13.8 Responsibilities to Participants.
The Administrator shall determine which Employees have satisfied the
eligibility requirements to enter the Plan. The Administrator shall furnish to
each eligible Employee whatever summary plan descriptions, summary annual
reports, and other notices and information may be required under ERISA. The
Administrator also shall determine when a Participant or his Beneficiary has
satisfied the requirements to receive benefits under the Plan, and shall have
complete discretion to interpret and apply whatever Plan provisions may be
relevant to a Participant's claim for benefits. The Administrator shall furnish
to each such Participant or Beneficiary whatever information is required under
ERISA (or is otherwise appropriate) to enable
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<PAGE> 52
the Participant or Beneficiary to make whatever elections may be available
pursuant to sections 7, 8, and 11, and the Administrator shall arrange for the
payment of benefits in the proper form and amount from the assets of the Trust
Fund.
13.9 Alternative Payees in Event of Incapacity.
If the Administrator finds at any time that an individual qualifying
for benefits under the Plan is a minor or is incompetent, the Administrator may
direct the benefits to be paid, in the case of a minor, to his parents, his
legal guardian, a custodian for him under the Uniform Transfers to Minors Act,
or the person having actual custody of him, or, in the case of an incompetent,
to his spouse, his legal guardian, or the person having actual custody of him,
the payments to be used for the individual's benefit. To the extent that the
Plan's obligation to the individual has been discharged by the purchase and
distribution of any annuity contract from an insurer, the insurer shall assume
the Administrator's authority and responsibility with respect to the benefits.
The Administrator, the Trustee, and any insurer shall not be obligated to
inquire as to the actual use of the funds by the person receiving them under
this section 13.9, and any such payment shall completely discharge the
obligations of the Plan, the Trustee, the Administrator, the Company, the
Employers, and the insurer to the extent of the payment.
13.10 Indemnification by Employers.
Except as separately agreed in writing, the Administrator, the
Committee and any member or employee of the Administrator or the Committee,
shall be indemnified and held harmless by the Employers, jointly and severally,
to the fullest extent permitted by law against any and all costs, damages,
expenses, and liabilities (including legal fees) incurred by or imposed upon it
or him in connection with any claim made against it or him or in which it or he
may be involved by reason of its or his being, or having been, the
Administrator, or a member or employee of the Administrator, to the extent such
amounts are not paid by insurance.
13.11 Nonparticipation by Interested Member.
Any member of the Administrator who also is a Participant in the Plan
shall take no part in any determination specifically relating to his own
participation or benefits, unless his abstention would leave the Administrator
incapable of acting on the matter.
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<PAGE> 53
SECTION 14. ADOPTION, AMENDMENT, OR TERMINATION OF THE PLAN.
14.1 Adoption of Plan by Other Employers.
With the consent of the Company, any entity may become a participating
Employer under the Plan by (i) taking such action as shall be necessary to adopt
the Plan, (ii) becoming a party to the Trust Agreement establishing the Trust
Fund, and (iii) executing and delivering such instruments and taking such other
action as may be necessary or desirable to put the Plan into effect with respect
to the entity's Employees.
14.2 Adoption of Plan by Successor.
In the event that any Employer shall be reorganized by way of merger,
consolidation, transfer of assets or otherwise, so that an entity other than an
Employer shall succeed to all or substantially all of the Employer's business,
the successor entity may be substituted for the Employer under the Plan by
adopting the Plan and becoming a party to the Trust Agreement. Contributions by
the Employer shall be automatically suspended from the effective date of any
such reorganization until the date upon which the substitution of the successor
entity for the Employer under the Plan becomes effective. If, within 90 days
following the effective date of any such reorganization, the successor entity
shall not have elected to become a party to the Plan, or if the Employer shall
adopt a plan of complete liquidation other than in connection with a
reorganization, the Plan shall be automatically terminated with respect to
Employees of the Employer as of the close of business on the 90th day following
the effective date of the reorganization, or as of the close of business on the
date of adoption of a plan of complete liquidation, as the case may be.
14.3 Plan Restatement Subject to Qualification.
In the event that this restated Plan is held by the Internal Revenue
Service not to qualify under section 401(a) of the Code, the Plan may be amended
retroactively to the earliest date permitted by Treasury Regulations in order to
secure a favorable determination on the Plan's qualification under section
401(a). In the event that this restated Plan is later amended after securing a
favorable determination and the Plan as amended is held by the Internal Revenue
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<PAGE> 54
Service not to qualify under section 401(a), the amendment may be modified
retroactively to the earliest date permitted by Treasury Regulations in order to
secure approval of the amendment under section 401(a).
14.4 Right to Amend or Terminate.
The Company intends to continue the Plan as a permanent program.
However, each participating Employer separately reserves the right to suspend,
supersede, or terminate the Plan at any time and for any reason, as it applies
to that Employer's Employees, and the Company reserves the right to amend,
suspend, supersede, merge, consolidate, or terminate the Plan at any time and
for any reason, as it applies to the Employees of all Employers. Each Employer
shall act by resolution of its board of directors. Notwithstanding the
foregoing, the Company may delegate its authority to make amendments to the
Committee or the Departmental Benefits Committee. No amendment, other than one
of a minor nature, may become effective prior to the announcement of the
amendment's effect, unless, in the opinion of the Company or the Committee, (i)
such amendment is necessary or advisable in order to comply with the provisions
of the Code or ERISA (including any regulations or rulings thereunder) relating
to the qualification of retirement plans or relating to the exemption of a trust
established pursuant thereto, or (ii) such amendment would not adversely affect
the rights of Participants. The Trustee shall be given notice of any amendments
promptly.
No amendment, suspension, supersession, merger, consolidation, or
termination of the Plan shall reduce any Participant's or Beneficiary's
proportionate interest in the Trust Fund, or reduce a Participant's vested
interest in his Account. Further, no such action shall divert any portion of the
Trust Fund to purposes other than the exclusive benefit of the Participants and
their Beneficiaries prior to the satisfaction of all liabilities under the Plan.
Moreover, there shall not be any transfer of assets to a successor plan
or merger or consolidation with another plan unless, in the event of the
termination of the successor plan or the surviving plan immediately following
such transfer, merger, or consolidation, each participant or beneficiary would
be entitled to a benefit equal to or greater than the benefit he would have been
entitled to if the plan in which he was previously a participant or beneficiary
had terminated immediately prior to such transfer, merger, or consolidation.
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Following a termination of the Plan by the Company, the Trustee shall
continue to administer the Trust and pay benefits in accordance with the Plan as
amended from time to time and the Company's and Administrator's instructions. No
distributions of Participants' benefits attributable to their salary reduction
contributions shall be made except in accordance with sections 401(k)(2) and
(10) of the Code.
14.5 Right to Implement or Suspend Provisions.
Notwithstanding sections 5.2, 7.3, 8.1, 8.2, and 8.3, the Company and,
in the absence of Company action, the Administrator, shall have the right to
implement or suspend entirely the provisions of any such section, taking into
account the best interests of the Participants and the administrative burdens
involved. The Administrator may, upon reasonable notice to the Participants,
establish or modify rules and procedures applicable to any such provisions to
avoid administrative burdens and to assure compliance with the purposes of the
Plan and requirements under ERISA and the Code.
SECTION 15. MISCELLANEOUS PROVISIONS.
15.1 Plan Creates No Employment Rights.
Nothing in the Plan shall be interpreted as giving any Employee the
right to be retained as an Employee by an Employer, or as limiting or affecting
the rights of an Employer to control its Employees or to terminate the Service
of any Employee at any time and for any reason, subject to any applicable
employment or collective bargaining agreements.
15.2 Non-assignability of Benefits.
Except as provided in section 8.3 with respect to certain loans to
Participants, no assignment, pledge, or other anticipation of benefits from the
Plan will be permitted or recognized by the Employers, the Administrator, or the
Trustee. Moreover, benefits from the Plan shall not be subject to attachment,
garnishment, or other legal process for debts or liabilities of any Participant
or Beneficiary, to the extent permitted by law.
This prohibition on assignment or alienation shall apply to any
judgment, decree, or order (including approval of a property settlement
agreement) which relates to the provision of child
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support, alimony, or property rights to a present or former spouse, child or
other dependent of a Participant pursuant to a State domestic relations or
community property law, unless the judgment, decree, or order is determined by
the Administrator in accordance with its policies and procedures to be a
qualified domestic relations order within the meaning of section 414(p) of the
Code.
15.3 Limit of Employer Liability.
The liability of the Employers with respect to Participants under the
Plan shall be limited to making contributions to the Trust from time to time, in
accordance with section 4.
15.4 Treatment of Expenses.
All expenses incurred by the Administrator and the Trustee in
connection with administering the Plan and the Trust Fund shall be paid as
follows: brokerage fees, mutual fund loads, mutual fund management fees, trustee
administrative fees, transfer taxes, other expenses incident to the purchase or
sale of securities, and administrative expenses that have not been paid or
assumed by the Employers shall be paid from the Trust. Taxes, if any, on any
assets held or income received by the Trustee shall be charged appropriately
against the accounts of Participants as the Committee shall determine.
15.5 Number and Gender.
Any use of the singular shall be interpreted to include the plural, and
the plural the singular. Any use of the masculine, feminine, or neuter shall be
interpreted to include the masculine, feminine, or neuter, as the context shall
require.
15.6 Nondiversion of Assets.
Except as provided in section 6.4, under no circumstances shall any
portion of the Trust Fund be diverted to or used for any purpose other than the
exclusive benefit of the Participants and their Beneficiaries prior to the
satisfaction of all liabilities under the Plan.
15.7 Separability of Provisions.
If any provision of the Plan is held to be invalid or unenforceable,
the other provisions of the Plan shall not be affected but shall be applied as
if the invalid or unenforceable provision had not been included in the Plan.
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<PAGE> 57
15.8 Service of Process.
The agent for the service of process upon the Plan shall be the
president of the Company, or such other person as may be designated from time to
time by the Company.
15.9 Governing State Law.
The Plan shall be interpreted in accordance with the laws of the State
of New Jersey to the extent those laws are applicable under the provisions of
ERISA.
15.10 Effect of Military Service
Notwithstanding any provision of this plan to the contrary,
contributions, benefits and service credit with respect to qualified military
service will be provided in accordance with Sec. 414(u) of the International
Revenue Code.
SECTION 16. TOP-HEAVY PROVISIONS.
16.1 Determination of Top-Heavy Status.
The Administrator shall determine on a regular basis whether each Plan
Year is or is not a "Top-Heavy Year" for purposes of implementing the provisions
of sections 16.2, 16.3, and 16.4, which apply only to the extent the Plan is
top-heavy within the meaning of section 416 and the Treasury Regulations
promulgated thereunder. In making this determination, the Administrator shall
use the following definitions and principles:
16.1-1 The "Employer" includes all business entities which are
considered commonly controlled or affiliated within the meaning of sections
414(b), (c), (m), and (o) of the Code.
16.1-2 The "plan aggregation group" includes each qualified retirement
plan or simplified employee pension (as defined in section 408(k) of the Code)
which is or has been maintained by the Employer (i) in which a Key Employee is
or has been a Participant during the Plan Year, or (ii) which enables or has
enabled any plan described in clause (i) to satisfy the requirements of section
401(a)(4) or 410 of the Code, or (iii) which provides contributions or benefits
comparable to those of the plans described in clauses (i) and (ii) and which is
designated by the Administrator as part of the plan aggregation group.
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16.1-3 The "determination date", with respect to the first Plan Year of
any plan, means the last day of that Plan Year, and with respect to each
subsequent Plan Year, means the last day of the preceding Plan Year. If any
other plan has a determination date which differs from this Plan's determination
date, the top-heaviness of this Plan shall be determined on the basis of the
other plan's determination date falling within the same calendar year as this
Plan's determination date.
16.1-4 "Key Employee" means an Employee who at any time during the five
years ending on the top-heavy determination date for the Plan Year has performed
any services for an Employer and has been (i) an officer of the Employer having
Limit Compensation greater than one-half of the limit then in effect under
section 415(b)(1)(A) of the Code, (ii) one of the 10 Employees owning (or
considered as owning under section 318 of the Code) the largest interests in the
Employer (ignoring any Employee who does not own more than a one-half percent
interest) and having Limit Compensation greater than the limit then in effect
under section 415(c)(1)(A), (iii) a Five-Percent Owner, or (iv) an owner of more
than one percent of the outstanding equity interest or the outstanding voting
interest in any Employer whose Limit Compensation exceeds $150,000. For this
purpose, an Employee's "Limit Compensation" shall include any amount which is
excludable from the Employee's gross income for tax purposes pursuant to section
125, 402(e)(3), 402(h)(1)(B), or 403(b) of the Code. In determining which
individuals are Key Employees, the rules of section 416(i) of the Code and
Treasury Regulations promulgated thereunder shall apply. The Beneficiary of a
Key Employee shall also be considered a Key Employee.
16.1-5 A "Non-key Employee" means an Employee who at any time during
the five years ending on the top-heavy determination date for the Plan Year has
performed any services for an Employer and who has never been a Key Employees,
and the Beneficiary of any such Employee.
16.1-6 The "aggregated benefits" for any Plan Year means (i) the
adjusted account balances in defined contribution plans and simplified employee
pensions on the determination date, plus (ii) the adjusted value of accrued
benefits in defined benefit plans (calculated as of the annual valuation date
coinciding with or next preceding the determination date), with respect to Key
Employees and Non-key Employees under all plans within the plan aggregation
group which includes this Plan. For this purpose, the accrued benefit of any
Non-key Employee shall be determined (i) under the accrual method, if any, which
is uniformly applicable under all defined benefit plans within the plan
aggregation group, or (ii) if there is no such uniform method, as if the
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benefit accrued under the slowest accrual rate permitted under the fractional
rule of section 411(b)(1)(c) of the Code. Further, "adjusted account balance"
and the "adjusted value of accrued benefit" for any Employee shall be increased
by all plan distributions made with respect to the Employee during the five
years ending on the determination date from any plan within the plan aggregation
group and from any terminated plan which during those five years was within the
plan aggregation group. In addition, the adjusted account balance under a plan
shall not include any amount attributable to a rollover contribution or similar
transfer to the plan initiated by an Employee and made after 1983, unless both
plans involved are maintained by the Employer, in which event the transferred
amount shall be counted in the transferee plan and ignored for all purposes in
the transferor plan. Finally, the adjusted value of accrued benefits under any
defined benefit plan shall be determined by assuming whichever actuarial
assumptions were applied by the Pension Benefit Guaranty Corporation to
determine the sufficiency of plan assets for plans terminating on the applicable
valuation date.
16.1-7 The Plan shall be "top-heavy" for any Plan Year in which the
aggregated benefits of the Key Employees exceed 60 percent of the total
aggregated benefits for both Key Employees and Non-key Employees.
16.1-8 A "Top-Heavy Year" means a Plan Year in which the Plan is
top-heavy.
16.2 Minimum Contributions.
For any Top-Heavy Year, each Employer shall make a special contribution
on behalf of each Participant to the extent that the total allocation to his
Account pursuant to section 4 (excluding any contributions for Plan Years
beginning after 1988 funded by the Participant's compensation deferral elections
under section 4.2 or by Employer matching contributions under section 4.4) is
less than the lesser of (i) three percent of his Limit Compensation for that
year, or (ii) the highest ratio of such allocation to Limit Compensation
(including for this purpose any compensation deferral contribution under section
4.2) received by any Key Employee for that year. Such a special contribution
shall be made on behalf of each Participant who is employed by an Employer on
the last day of the Plan Year, regardless of his Hours of Service, and shall be
allocated to his Matching Account. However, no such contribution shall be made
on behalf of any Employee
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who is an active Participant in the Bell Communications Research Management
Pension Plan for that year.
16.3 Minimum Vesting.
If a Participant's vested interest in his Matching Account is to be
determined in a Top-Heavy Year, it shall be based on the following "top-heavy
table":
Vesting Percentage of
Years Interest Vested
fewer than 3 0
3 or more 100
16.4 Maximum Compensation.
For any Top-Heavy Year beginning before 1989, a Participant's "Cash
Compensation" as defined in section 4.5, and his "Limit Compensation" for
purposes of section 16.2, shall not exceed $200,000.
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AMENDMENT TO
BELL COMMUNICATIONS RESEARCH
SAVINGS PLAN FOR SALARIED EMPLOYEES
July 1997
<PAGE> 62
AMENDMENT
TO
BELL COMMUNICATIONS RESEARCH
SAVINGS PLAN FOR SALARIED EMPLOYEES
The Bell Communications Research Savings Plan for Salaried Employees
is hereby amended, effective as of the Closing Date of the sale of Bellcore to
Science Applications International Corporation, in the following particulars as
follows:
1. A new Section 3.7 is hereby added to read as follows:
"Transfers from Science Applications International Corporation.
Any Employee commencing employment with an Employer in an
eligible classification (as described in section 3.1) on or after
the date this amendment is effective who was an employee of
Science Applications International Corporation immediately prior
to becoming an Employee of an Employer and eligible to
participate in the Science Applications International Corporation
Cash or Deferred Arrangement shall become a Participant on the
first day of the month coinciding with or next following the
commencement of employment with an Employer, assuming he or she
is still an eligible Employee on such date."
2. A new Section 7.4 is added to read as follows:
"7.4 Investment in Company Stock.
7.4-1 Company Stock as an Investment Alternative. The
Administrator may direct or permit investment of
amounts in "Company Stock," which for purposes of
this Plan is Class A Common Stock, par value $.01
per share of Science Applications International
Corporation ("SAIC"), in which case a Company
Stock fund shall be established within the Trust
pursuant to procedures established by the
Administrator. Notwithstanding section 7.3, the
Administrator may restrict or prohibit transfers
into or out of Company Stock as an investment
option.
The Board of Directors of SAIC may determine that,
in the event the Board of Directors makes such a
determination, in accordance with SAIC's
philosophy of remaining, to the maximum extent
feasible, an employee-owned company and of
restricting stock
<PAGE> 63
ownership (both direct and indirect through SAIC's various
benefit plans) to Employees and designated consultants to
SAIC's, Company Stock, or a fund within the Trust which
holds Company Stock, shall not be an available investment
option for any former Employee who, pursuant to section
11.1, 11.2 or 11.3, has deferred payment of his benefits. In
the event the Board of Directors of SAIC makes such a
determination, the SAIC Retirement Plans Committee shall
establish procedures to implement the foregoing restriction
on investment in Company Stock or Company Stock Fund,
including the timing and procedures for any fund-to-fund
transfers, appropriate default options, if considered
appropriate, and any transition rules and such procedures
shall be implemented by the Administrator.
7.4-2 Company Stock Transactions with Disqualified Persons.
Acquisition or sale by the Plan of Company Stock or other
qualifying employer securities (as defined in section
407(a)(5) of ERISA) from or to a "disqualified person", as
defined in Code section 4975(e)(2), shall be at a price
which represents "adequate consideration", as defined in
section 3(18) of ERISA or, in the event such Company Stock
or other qualifying employer security is a marketable
obligation, as defined in section 407(e) of ERISA, at a
price not less favorable to the Plan than the price
determined under section 407(e)(1) of ERISA. No commission
shall be charged to the Plan in connection with any such
sale or acquisition. The determination as to whether or not
such a sale or acquisition satisfies the requirements of
this section 7.4-2 shall be made by the SAIC Retirement
Plans Committee.
7.4-3 Valuation of Company Stock. Company Stock allocated and
credited to an account or to a separate fund within the
Trust in which Participants' Accounts are invested as
provided in section 7.4-1 as well as Company Stock held on
an unallocated basis in the Trust, shall be valued as of the
applicable Valuation Date, according to the following rules:
(a) Company Stock acquired by the Trust with cash shall
initially be valued at the purchase price paid for
such Stock. On any subsequent Valuation Date, such
Company Stock, as well as all other Company Stock held
in, or contributed to, the Trust, shall be valued in
accordance with sections 7.4-3(b) or 7.4-3(c) below,
as applicable.
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(b) If any Company Stock does not consist of securities
listed on a national securities exchange, or traded on
a regular basis, as determined by SAIC, in the
over-the-counter market, the fair market value of such
Stock shall be determined using the Formula Price for
such Stock, as described in the August 24, 1987
Prospectus for Science Applications International
Corporation (or the most recent prospectus that
supersedes that prospectus), on the applicable
Valuation Date. SAIC may at any time, and from time to
time, change the method of determining the fair market
value of Company Stock, provided that the replacement
method is consistent with applicable provisions of
ERISA and the Code. A Participant, Beneficiary or
alternate payee (as defined in section 414(q) of the
Code) shall have no right to have a particular
valuation method applied (or continue to be applied)
to his or her Account(s).
(c) If any Company Stock consists of securities listed on
a national securities exchange, fair market value of
such Company Stock shall be considered to be equal to
the closing price of such Company Stock (as reported
in the consolidated transaction reporting system, or
if not so reported, as reported on the principal
exchange market for such Company Stock by such
exchange or on any system sponsored by such exchange)
on the trading day immediately preceding the
applicable Valuation Date. If any Company Stock
consists of securities traded on a regular basis, as
determined by SAIC, in the over-the-counter market,
the fair market value of such Company Stock shall be
considered to be equal to the average between the high
bid price and the low asked price quoted by the
automatic quotation system of a securities association
registered under the federal securities laws for the
trading day immediately preceding the applicable
Valuation Date.
7.4-4 Allocation of Company Stock Received Pursuant to Stock
Dividends, Splits, Recapitalizations, Etc. Any Company Stock
received by the Trustee as a stock split, dividend, or as a
result of a reorganization or other recapitalization of SAIC
shall be allocated as of the day on which the stock is
received by the Trustee in the same manner as the Company
Stock to which it is attributable is then allocated.
7.4-5 Allocation of Stock Rights, Warrants or Options.
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(a) In the event any rights, warrants or options are
issued on Company Stock held in the Trust Fund, the
Trustee shall exercise them for the acquisition of
additional Company Stock as directed by the
Administrator and to the extent that cash is then
available in the Trust.
(b) Any Company Stock acquired in this fashion shall be
treated as Company Stock purchased by the Trustee for
the net price paid and shall be allocated in the same
manner as the funds used to purchase the Company Stock
were or would be allocated under the provisions of
this Plan, pursuant to directions of the
Administrator.
(c) Any rights, warrants, or options on Company Stock
which cannot be exercised for lack of cash may, as
directed by the Administrator, be sold by the Trustee
and the proceeds allocated in accordance with the
source of the Company Stock with respect to which the
rights, warrants or options were issued.
7.4-6 Allocation of Cash Dividends and Other Distributions
Received in the Trust Fund.
(a) All cash dividends paid to the Trustee with respect to
Company Stock that has been allocated to an Account
(if any) as of the date the dividend is received by
the Trustee shall be allocated to such Account. If the
Company Stock in the Trust is held in a Company Stock
fund as an investment alternative pursuant to this
section 7.4, such that Participants have an interest
in such Company Stock only indirectly through an
interest in such fund held in a subaccount, the cash
dividends shall be allocated to such fund and shall
thereafter be invested in accordance with the
investment practices of such fund, and shall not be
allocated directly to a Participant's Account or
subaccount.
(b) All cash dividends paid to the Trustee with respect to
unallocated Company Stock shall be allocated as
provided in section 9.2.
4
<PAGE> 66
7.4-7 Voting and Other Rights of Company Stock.
(a) All voting rights of Company Stock held in the Trust
Fund shall be exercised in accordance with the
following provisions:
(i) Each Participant (which term shall include, for
purposes of this section 7.4-7, Beneficiaries
and alternate payees having an interest in an
Account or fund holding Company Stock) shall be
given the opportunity to instruct the Trustee
confidentially on a form prescribed and provided
by SAIC as to how to vote those shares
(including fractional shares) of Company Stock
allocated to his or her Account(s) under the
Plan (directly or indirectly through an interest
in a Company Stock fund) on the date immediately
preceding the record date for the meeting of
shareholders of SAIC. The Trustee shall not
divulge to SAIC the instructions of any
Participant. SAIC may require verification of
the Trustee's compliance with such confidential
voting instructions by an independent auditor
elected by SAIC.
(ii) All Participants entitled to direct such voting
shall be notified by SAIC pursuant to its normal
communications with shareholders of each
occasion for the exercise of these voting rights
within a reasonable time (but not less than the
time period that may be required by any
applicable state of federal law) before these
rights are to be exercised. The notification
shall include all information distributed by
SAIC to other shareholders regarding the
exercise of such rights.
(iii) The Participants shall be so entitled to direct
the voting of fractional shares (or fractional
rights to shares). However, the SAIC Retirement
Plans Committee may, to the extent possible,
direct the Trustee to vote the combined
fractional shares (or fractional rights to
shares) so as to reflect the aggregate direction
of all Participants giving directions with
respect to fractional shares (or fractional
rights to shares).
5
<PAGE> 67
(iv) In the event that a Participant shall fail to
direct the Trustee, in whole or in part, as to
the exercise of voting rights arising under any
Company Stock allocated to his or her
Account(s), then these voting rights, together
with voting rights as to shares of Company Stock
which have not been allocated, shall be
exercised by the Trustee in the same proportion
as the number of Shares of Company Stock for
which the Trustee has received direction in such
matter (e.g., to vote for, against or abstain
from voting on a proposal, or to grant or
withhold authority to vote for a director or
directors), and the Trustee shall have no
discretion in such matter except as may be
required by applicable law.
(v) Except as provided in paragraph (b) below, all
rights (other than voting rights) of Company
Stock held in the Trust shall be exercised in
the same manner and to the same extent as
provided above with respect to the voting rights
of the Company Stock, subject to the rules
prescribed by the SAIC Retirement Plans
Committee, which rules, among other matters, may
prescribe that no action shall be taken with
respect to shares as to which no direction is
received from Participants. The Trustee shall
have no discretion with respect to the exercise
of any such rights except as may be required by
applicable law.
(vi) Neither SAIC, the SAIC Retirement Plans
Committee, the Committee, the Administrator nor
the Trustee shall make any recommendation to any
Participant regarding the exercise of the
Participant's voting rights or any other rights
under the provisions of this section 7.4-7, nor
shall SAIC, the SAIC Retirement Plans Committee,
the Committee, the Administrator or the Trustee
make any recommendation as to whether any such
rights should or should not be exercised by the
Participant.
6
<PAGE> 68
(b) All responses to tender and exchange for Company Stock
offers shall be made in accordance with the following
provisions:
(i) Each Participant shall be given the opportunity,
to the extent that shares of Company Stock are
allocated to his or her Account(s), to direct
the Trustee in writing as to the manner in which
to respond to a tender or exchange offer with
respect to Company Stock, and the Trustee shall
respond in accordance with the instructions so
received. The Trustee shall not divulge to SAIC
the instructions of any Participant. The
Administrator shall utilize its best efforts to
timely distribute or cause to be distributed to
each Participant such information as will be
distributed to shareholders of SAIC in
connection with any such tender or exchange
offer, together with a form addressed to the
Trustee requesting confidential instructions on
whether or not such shares will be tendered or
exchanged. If the Trustee shall not receive
timely direction from a Participant as to the
manner in which to respond to such a tender or
exchange offer, the Trustee shall not tender or
exchange any shares of Company Stock with
respect to which such Participant has the right
of direction, and the Trustee shall have no
discretion in such matter except as may be
required by applicable law.
(ii) Unallocated shares of Company Stock and shares
of Company Stock held by the Trustee pending
allocation to Participants' Accounts shall be
tendered or exchanged (or not tendered or
exchanged) by the Trustee in the same proportion
as shares with respect to which Participants
have been given the opportunity to direct the
Trustee pursuant to paragraph (i) above are
tendered or exchanged, and the Trustee shall
have no discretion in such matter except as may
be required by applicable law.
7.4-8 Company Stock as a Source of Loans. Although the
portion of a Participant's Accounts represented by
Company Stock (or interest in an investment fund
within the Plan which holds Company Stock) are
included in calculating the maximum loan amount
specified in Section 8.3-1, such portion shall not be
a source of loan amounts, and loans shall be limited
to the balance of the Accounts representing other Plan
investment options."
3. The last sentence of section 8.3-5 is amended to read as follows:
7
<PAGE> 69
"Except as otherwise provided in section 7.4-8, a loan shall be taken pro rata
from the investments in which the Participant's Account balances are held."
BELL COMMUNICATIONS RESEARCH, INC.
By: /s/ R.G. SCHOOLEY
----------------------------------
Chair-Departmental Benefits Committee
Date: JULY 9, 1997
---------------------------------
Attest: /s/ BRENDA F. WOODS
-------------------------------
Secretary
8
<PAGE> 1
Exhibit 5(a)
August 25, 1997
Science Applications
International Corporation
10260 Campus Point Drive
San Diego, CA 92121
Gentlemen:
I am the Senior Vice President and General Counsel of Science
Applications International Corporation (the "Company"). As such, I have acted as
your counsel in connection with the Prospectus of the Company covering the offer
and sale by the Company of up to 6,000,000 shares of its Class A Common Stock,
par value $0.01 per share (the "Class A Common Stock") (the shares of Class A
Common Stock being offered by the Company are hereinafter referred to as the
"Company Shares"), which may be offered and sold directly by the Company to the
trustee for the benefit of employees under the Bell Communications Research
Savings and Security Plan and to the trustee for the benefit of employees under
the Bell Communications Savings Plan for Salaried Employees (hereinafter
referred to as the "Plans"). The Company Shares are being offered pursuant to
prospectuses which constitutes a part of the Registration Statements on Form S-8
(the "Registration Statements") to be filed with the Securities and Exchange
Commission (the "Commission") on August 26, 1997 under the Securities Act of
1933, as amended (the "Securities Act").
I am generally familiar with the affairs of the Company. In addition, I
have examined and am familiar with originals or copies, certified or otherwise
identified to my satisfaction, of (i) the Registration Statements, (ii) the
Restated Certificate of Incorporation and Bylaws of the Company as currently in
effect, (iii) resolutions adopted by the Board of Directors and the Operating
Committee thereof relating to the filing of the Registration Statements and the
issuance of the Company Shares thereunder, (iv) the Plans and (v) such other
documents as I have deemed necessary or appropriate as a basis for the opinions
set forth below. In my examination, I have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to me as originals, the conformity to original documents of
all documents submitted to me as certified or photostatic copies, and the
authenticity of the originals of such copies.
Based upon and subject to the foregoing, I am of the opinion that:
1. The Company Shares that are being issued pursuant to the Plans have
been duly authorized for issuance.
<PAGE> 2
Science Applications
International Corporation
August 25, 1997
Page 2
2. When certificates for the Company Shares to be issued to the Plans
pursuant to the Registration Statements have been duly executed, delivered and
paid for in accordance with the terms of the Plans, the Company Shares will be
legally issued, fully paid and nonassessable.
I hereby consent to the use of my name in the Registration Statements
under the caption "Legal Opinion" and to the filing of this opinion as an
exhibit to the Registration Statements. In giving such consent, I do not thereby
admit that I come within the category of persons whose consent is required under
Section 7 of the Securities Act or the rules and regulations of the Commission
thereunder.
Very truly yours,
/s/ Douglas E. Scott
Douglas E. Scott
Senior Vice President
and General Counsel
<PAGE> 1
Exhibit 5(b)
BELLCORE
Bell Communications Research
MCC 1J-138R
445 South Street
Morristown, NJ 07960-6438
201-829-2391
Fax 201-829-2364
August 25, 1997
Mr. Richard G. Schooley
Savings Plan Administrator
Bell Communications Research, Inc.
6 Corporate Place
Piscataway, New Jersey 08854-4157
Mr. Douglas E. Scott
Senior Vice President and General Counsel
Science Applications International Corporation
10260 Campus Point Drive
San Diego, California 92121
Gentlemen:
As Senior Counsel for Bell Communications Research, Inc. (the "Company"), I am
familiar with the Registration Statement on Form S-8, which will be filed with
the Securities and Exchange Commission on August 26, 1997, covering interests in
the Savings Plan for Salaried Employees and the Savings and Security Plan (the
"Plans") and the corporate proceedings of the Company relating to the
establishment of the Plans. Based upon my review of the relevant documents and
materials and upon my general familiarity with the Plans, it is my opinion that
the Plans described in the Registration Statement have been duly authorized for
participation by eligible employees of the Company in accordance with the terms
of the Plans, that the interests of the Plans will be fully paid upon receipt of
employee contributions, and that no employee will be obligated to make further
contributions.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the use of my name under the caption "Legal Opinions" in the
Prospectus.
Sincerely,
/s/ Judith S. Musicant
Judith S. Musicant
Senior Counsel
Benefits
<PAGE> 1
Exhibit 5c
HEROLD AND HAINES
Professional Association
Attorneys at Law
25 Independence Boulevard
Warren, New Jersey 07069-6747
August 18, 1997
Judith S. Musicant, Esq.
Bell Communications Research, Inc.
445 South Street
Morristown, New Jersey 07960-6438
Bell Communications Research
Savings Plan for Salaried Employees
and
Savings and Security Plan
Dear Ms. Musicant:
You have asked for certain opinions as to the Bell Communications
Research Savings Plan for Salaried Employees and the Bell Communications Savings
and Security Plan (the "Plans"), as they have been restated effective July 1,
1997, and further amended since that date, most recently effective August 1,
1997. Our opinion is based on the copy of the updated Plan documents furnished
by you on August 18, 1997. Based on our review of the Plans, we offer the
following opinions:
First, the Plans are "employee pension benefit plans" within the meaning
of section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and, as such, are subject to the reporting and disclosure,
participation, vesting, fiduciary responsibility, and enforcement provisions of
Parts 1, 2, 4, and 5 of Title I of ERISA.
Second, the Plans are "individual account plans" within the meaning of
section 3(34) of ERISA and, as such, are not subject to the plan termination
provisions of Title IV of ERISA pursuant to section 4021(b)(1).
Third, subject to the following paragraph, the Plans are intended to
comply with the currently applicable requirements for qualified retirement plans
under section 401(a) of the Internal Revenue Code of 1986 (the "Code") and the
requirements for employee pension benefit plans under ERISA.
We note that the Plans, as adopted effective January 1, 1989, were filed
with the Internal Revenue Service for a determination as to the compliance of
each with applicable law and qualification as a matter of form. The Internal
Revenue Service issued a favorable determination by letter dated July 19, 1995
for the Savings and Security Plan, and August 1, 1995 for the Savings Plan for
Salaried Employees. The Company has restated the Plans
<PAGE> 2
Judith S. Musicant, Esq. -2- August 18, 1997
effective July 1, 1997 and will be required to submit the Plans in due course to
the Internal Revenue Service for a redetermination as to their qualification. It
may well be that Internal Revenue Service personnel who review the Plans will
require one or more changes in the terms as a condition for issuing a favorable
determination on each plan's continued qualification. In particular, the
amendment that gives the board of Science Applications International Corporation
(SAIC) the power to eliminate the investment option in SAIC stock or a fund
investing in SAIC stock for terminated participants may not meet with Internal
Revenue Service requirements for permitting elections to defer the receipt of a
participant's benefits. Provided the Plans are timely submitted, and provided
any such changes requested by the Internal Revenue Service are timely made, we
know of no reason why the Internal Revenue Service will not issue favorable
determination letters with respect to the Plans which will bind the Internal
Revenue Service on the issue of their qualifications until such future date as
changes in the applicable laws and regulations require new modifications.
It should be understood that this opinion addresses the Plans'
qualification solely from the perspective of the Plan documents themselves. The
Plans' qualification could be adversely affected by their actual operation,
e.g., if the plan failed to cover a sufficient number of employees (including
"leased employees"), or if it was administered in a manner which was
inconsistent with its terms or which discriminated in favor of highly
compensated employees, or if allocations to participants' accounts were
permitted to exceed the annual limitations under section 415 of the Code. These
and other issues arising out of the management, operation, and administration of
the Plans are obviously beyond the scope of our opinion.
We hereby consent to the use of our name and of this opinion in a
prospectus and registration statement with respect to the Plans to be filed with
the Securities and Exchange Commission and distributed to participants. Further,
although we do not represent SAIC, for purposes of the filing the Form S-8 on
account of the merger of Bell Communications Research into SAIC, SAIC may rely
on this letter.
Sincerely yours,
HEROLD AND HAINES
Professional Association
By: /s/ Joy M. Mercer
----------------------------
Joy M. Mercer
a Member of the Firm
cc: Aloma Avery, Esq.
<PAGE> 1
Exhibit 23(d)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Science Applications International Corporation on Form S-8 of our reports dated
June 19, 1997 on our audits of the financial statements of the Bell
Communications Research Savings and Security Plan and the Bell Communications
Research Savings Plan for Salaried Employees (the "Plans") as of December 31,
1996 and 1995 and for the year then ended December 31, 1996, whose reports are
included in the Plans' Annual Reports on Form 11-K.
COOPERS & LYBRAND L.L.P.
Parsippany, New Jersey
August 25, 1997
<PAGE> 1
Exhibit 23(e)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated April 4, 1997 appearing on page F-1 of
Science Applications International Corporation's Annual Report on Form 10-K/A
for the year ended January 31, 1997. We also consent to the incorporation by
reference in such Registration Statement of our report dated February 25, 1997
appearing on page F-2 of the Annual Report of the Science Applications
International Corporation Employee Stock Purchase Plan for the year ended
January 31, 1997 appearing in the Science Applications International Corporation
Annual Report on Form 10-K/A. In addition, we hereby consent to the
incorporation by reference in such Registration Statement of our report dated
March 21, 1997 appearing on page F-2 of the Annual Report of the Science
Applications International Corporation Cash or Deferred Arrangement for the year
ended December 31, 1996 appearing in the Science Applications International
Corporation Annual Report on Form 10-K/A.
PRICE WATERHOUSE LLP
San Diego, California
August 21, 1997
<PAGE> 1
Exhibit 23(f)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Science Applications International Corporation on Form S-8 of our report dated
June 23, 1997 on our audit of the financial statements of the Transcore
Retirement Savings Plan (the "Plan") as of December 31, 1996 and 1995 and for
the year ended December 31, 1996, which report is included in the Plan's Annual
Report on Form 11-K.
BEARD & COMPANY, INC.
Harrisburg, Pennsylvania
August 25, 1997
