SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COMPAQ COMPUTER CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 76-0011617
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
20555 S.H. 249
Houston, Texas 77070
(Address of Principal Executive Offices) (Zip Code)
Digital Equipment Corporation Savings and Investment Plan
Compaq Computer Corporation Investment Plan
(Full Title of the Plans)
Thomas C. Siekman
Senior Vice President, General Counsel & Secretary
Compaq Computer Corporation
20555 S.H. 249
Houston, Texas 77070
(Name and Address of Agent for Service)
(281) 370-0670
(Telephone Number, Including Area Code, of Agent for Service)
CALCULATION OF REGISTRATION FEE
Title of Proposed Proposed
Securities Amount Maximum Maximum
To be to be Offering Price Aggregate Amount of
Registered (1) Registered Per Share Offering Price Registration Fee
-------------- ---------- -------------- --------------- ----------------
Compaq Common 7,260,000 100% $238,445,625.00 $70,505.00
Stock shares
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 based upon the average of the high and low prices of the
Common Stock reported in the New York Stock Exchange consolidated reporting
system on September 24, 1998.
<PAGE>
Part II
Information Required in the Registration Statement
Item 3. Incorporation of Documents By Reference
The following documents have been previously filed with the SEC and are
incorporated by reference into this Registration Statement:
1. Compaq's Annual Report on Form 10-K for the year ended December 31, 1997;
2. Compaq's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998 and June 30, 1998;
3. Compaq's Current Reports on Form 8-K dated January 21, 1998, January 25,
1998, March 6, 1998, April 15, 1998, May 6, 1998; June 3, 1998, June 11,
1998, July 15, 1998, August 14, 1998 and August 21, 1998; and
4. The description of Compaq's common stock contained in Compaq's
Registration Statement on Form 8-A.
Compaq is also incorporating by reference additional documents that we
may file with the SEC between the date of the Prospectus to which this
Registration Statement relates and the date of the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold.
Copies of the documents incorporated by reference above may be obtained
from Compaq without charge, except the exhibits (unless we have specifically
incorporated by reference an exhibit in this Prospectus), by writing to:
Compaq Computer Corporation
20555 SH 249
Houston, Texas 77070
Telephone: (800) 433-2391
Outside the Continental U.S. and Canada: (281) 514-9549
Attention: Investor Relations
Item 4. Description of Securities
The securities registered hereby shares of common stock, par value $0.01
per share, of Compaq Computer Corporation.
<PAGE>
Item 5. Interests of Named Experts and Counsel.
The legality of the common stock offered by this Prospectus has been
passed upon for Compaq by Linda S. Auwers, Vice President and Associate
General Counsel of Compaq. Ms. Auwers has options to purchase Compaq common
stock, owns shares of Compaq common stock as a participant in an employee
benefit plan, and is eligible to participate in Compaq's Deferred Compensation
and Supplemental Savings Plan.
Item 6. Indemnification of Directors and Officers.
Exculpation. Section 102(b)(7) of the Delaware General Corporation Law
(the "DGCL") permits a corporation to include in its certificate of
incorporation a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such provision may not
eliminate or limit the liability of a director for any breach of the
director's duty of loyalty to the corporation or its stockholders, for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, for any unlawful payment of dividends, or unlawful
stock purchase or redemption, or for any transaction from which the director
derived an improper personal benefit.
Compaq's Restated Certificate of Incorporation limits the personal
liability of a director to Compaq and its stockholders for monetary damages
for a breach of fiduciary duty as a director to the fullest extent permitted
by the DGCL.
Indemnification. Section 145 of the DGCL permits a corporation to
indemnify any of its directors or officers who was or is a party or is
threatened to be made a party to any third party proceeding by reason of the
fact that such person is or was a director or officer of the corporation,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe that such person's
conduct was unlawful. In a derivative action, i.e., one by or in the right of
a corporation, the corporation is permitted to indemnify any of its directors
or officers against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or
settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and
only to the extent that the court in which such action or suit was brought
shall determine upon application that such person is fairly and reasonably
entitled to indemnity for such expenses despite such adjudication of
liability.
Compaq's Bylaws provide for indemnification of directors and officers of
Compaq against liability they may incur in their capacities as such to the
fullest extent permitted by the DGCL.
Insurance. Compaq has in effect directors' and officers' liability
insurance with a limit of $100 million and fiduciary liability insurance with
a limit of $25 million. The fiduciary liability insurance covers actions of
directors and officers as well as other employees with fiduciary
responsibilities under ERISA.
Item 8. Exhibits
Exhibit No.
- -----------
4.1 Digital Equipment Corporation Savings and Investment Plan
4.2 Compaq Computer Corporation Investment Plan
5.1 Opinion of Linda S. Auwers, Vice President and Associate General
Counsel of the Company, as to the legality of the securities
being registered.
23.1 Consent of Linda S. Auwers, Vice President and Associate General
Counsel of the Company, is included in the opinion filed as
Exhibit 5.1 to this Registration Statement.
23.2 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
24.1 Powers of Attorney are included on the signature page of this
Registration Statement.
Item 9. Undertakings.
Compaq hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement 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; and
(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.
Compaq hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of it annual report pursuant
to Section 13(a) or 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.
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 described in Item 15 above, 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 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
Registrant of 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 Act
and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, and the State of Texas, on
this 30th day of September, 1998.
COMPAQ COMPUTER CORPORATION
By: /s/ Linda S. Auwers
-------------------------
Linda S. Auwers
Vice President and
Associate General Counsel
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
We, the undersigned officers and directors of Compaq Computer
Corporation, do hereby constitute and appoint Eckhard Pfeiffer, Earl L. Mason
and Thomas C. Siekman, or any one of them, our true and lawful attorneys and
agents, to do any and all acts and things in our name and on our behalf in our
capacities as directors and officers, and to execute any and all instruments
for us and in our names in the capacities indicated below, which said
attorneys and agents, or either one of them, may deem necessary or advisable
to enable said corporation to comply with the Securities Act of 1933, as
amended, and any rules, regulations, and requirements of the Securities and
Exchange Commission, in connection with the Company's registration statements
on Form S-8 regarding Digital Equipment Corporation's Savings and Investment
Plan, including specifically, but without limitation, power and authority to
sign for us or any of us, in our names in the capacities indicated below, such
registration statement on Form S-8 and any and all amendments thereto; and we
do each hereby ratify and confirm all that the said attorneys and agents, or
either of them, shall do or cause to be done by virtue hereof. The following
persons executed this power of attorney in the capacities and on the dates
indicated below.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated below.
Signature Title Date
- --------- ----- ----
/s/ Eckhard Pfeiffer President, Chief Executive September 30, 1998
- -------------------- Officer and Director (principal
(Eckhard Pfeiffer) executive officer)
/s/ Earl L. Mason Senior Vice President and September 30, 1998
- ----------------- Chief Financial Officer
(Earl L. Mason) (principal financial and
accounting officer)
/s/ Benjamin M. Rosen Chairman of the Board of September 30, 1998
- --------------------- Directors
(Benjamin M. Rosen)
/s/ Lawrence T. Babbio Director September 30, 1998
- ----------------------
(Lawrence T. Babbio)
/s/ Frank P. Doyle Director September 30, 1998
- ------------------
(Frank P. Doyle)
/s/ Robert Ted Enloe III Director September 30, 1998
- ------------------------
(Robert Ted Enloe, III)
/s/ George H. Heilmeier Director September 30, 1998
- -----------------------
(George H. Heilmeier)
/s/ Peter N. Larson Director September 30, 1998
- -------------------
(Peter N. Larson)
/s/ Kenneth L. Lay Director September 30, 1998
- ------------------
(Kenneth L. Lay)
/s/ Thomas J. Perkins Director September 30, 1998
- ---------------------
(Thomas J. Perkins)
/s/ Kenneth Roman Director September 30, 1998
- -----------------
(Kenneth Roman)
/s/ Lucille S. Salhany Director September 30, 1998
- ----------------------
(Lucille S. Salhany)
<PAGE>
EXHIBIT INDEX
Exhibit
- -------
4.1 Digital Equipment Corporation Savings and Investment Plan.
4.2 Compaq Computer Corporation Investment Plan.
5.1 Opinion of Linda S. Auwers, Vice President and Associate
General Counsel of the Company, as to the legality of the
securities being registered.
23.1 Consent of Linda S. Auwers, Vice President and Associate
General Counsel of the Company, is included in the opinion
filed as Exhibit 5.1 to this Registration Statement.
23.2 Consent of PricewaterhouseCoopers LLP, Independent Accountants.
24.1 Powers of Attorney are included on the signature page of this
Registration Statement.
Exhibit 4.1
DIGITAL EQUIPMENT CORPORATION
SAVINGS AND INVESTMENT PLAN
(July 2, 1989 Restatement)
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 1. INTRODUCTION . . . . . . . . . . . . . . . . . . 1
1.1. In General . . . . . . . . . . . . . . . . . . . . . 1
1.2. Defined Terms. . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2. PARTICIPATION. . . . . . . . . . . . . . . . . . 2
2.1. Date of Participation. . . . . . . . . . . . . . . . 2
2.2. Duration of Participation. . . . . . . . . . . . . . 2
ARTICLE 3. CONTRIBUTIONS. . . . . . . . . . . . . . . . . . 3
3.1. Elective Contributions . . . . . . . . . . . . . . . 3
3.2. Form and Manner of Elections . . . . . . . . . . . . 3
3.3. Company Contributions. . . . . . . . . . . . . . . . 3
3.4. Rollover Contributions . . . . . . . . . . . . . . . 4
3.5. Crediting of Contributions . . . . . . . . . . . . . 4
3.6. Time for Making Contributions. . . . . . . . . . . . 4
3.7. Certain Limits Apply . . . . . . . . . . . . . . . . 4
3.8. Return of Contributions. . . . . . . . . . . . . . . 5
3.9. Establishment of Trust . . . . . . . . . . . . . . . 5
ARTICLE 4 PARTICIPANT ACCOUNTS. . . . . . . . . . . . . . . 6
4.1. Accounts . . . . . . . . . . . . . . . . . . . . . . 6
4.2. Adjustment of Accounts . . . . . . . . . . . . . . . 6
4.3. Investment of Accounts . . . . . . . . . . . . . . . 6
4.4. Appointment of Investment Manager or Named Fiduciary 7
ARTICLE 5. VESTING OF ACCOUNTS. . . . . . . . . . . . . . . 8
5.1. Immediate Vesting of All Accounts. . . . . . . . . . 8
5.2. Changing in Vesting Schedule . . . . . . . . . . . . 8
ARTICLE 6 WITHDRAWALS PRIOR TO SEPARATION FROM SERVICE. . . 9
6.1. Hardship Withdrawals . . . . . . . . . . . . . . . . 9
6.2. Withdrawals After Age 59 1/2 . . . . . . . . . . . . 11
6.3. Withdrawals on Account of Disability . . . . . . . . 11
6.4. Priority of Accounts and Investment Funds. . . . . . 11
6.5. Restrictions on Certain Distributions. . . . . . . . 11
6.6. Limitation of Withdrawable Amount. . . . . . . . . . 12
6.7. Distributions Required by a Qualified Domestic
Relations Order. . . . . . . . . . . . . . . . . . . 12
6.8. Certain Dispositions . . . . . . . . . . . . . . . . 12
6.9. Direct Transfer. . . . . . . . . . . . . . . . . . . 13
ARTICLE 7. LOANS TO PARTICIPANTS. . . . . . . . . . . . . . 14
7.1. In General . . . . . . . . . . . . . . . . . . . . . 14
7.2. Rules and Procedures . . . . . . . . . . . . . . . . 14
7.3. Maximum Amount of Loan . . . . . . . . . . . . . . . 14
7.4. Minimum Amount and Number of Loans; Fee. . . . . . . 14
7.5. Note; Security; Interest . . . . . . . . . . . . . . 15
<PAGE>
7.6. Repayment. . . . . . . . . . . . . . . . . . . . . . 15
7.7. Repayment Upon Distribution. . . . . . . . . . . . . 15
7.8. Default. . . . . . . . . . . . . . . . . . . . . . . 16
7.9. Note as Trust Asset. . . . . . . . . . . . . . . . . 16
7.10. Nondiscrimination . . . . . . . . . . . . . . . . . 16
7.11. Designation of Investment Funds . . . . . . . . . . 16
ARTICLE 8 BENEFITS UPON DEATH OR SEPARATION FROM SERVICE. . 17
8.1. Separation from Service for Reasons Other Than Death 17
8.2. Minimum Required Distributions . . . . . . . . . . . 18
8.3. Certain Distribution Options Protected . . . . . . . 19
8.4. Distributions After A Participant's Death. . . . . . 19
8.5 Designation of Beneficiary . . . . . . . . . . . . . 20
8.6. Direct Transfers . . . . . . . . . . . . . . . . . . 21
ARTICLE 9. ADMINISTRATION . . . . . . . . . . . . . . . . . 22
9.1. Administration of the Plan . . . . . . . . . . . . . 22
9.2. Meetings . . . . . . . . . . . . . . . . . . . . . . 22
9.3. Expenses . . . . . . . . . . . . . . . . . . . . . . 22
9.4. Powers and Duties. . . . . . . . . . . . . . . . . . 22
9.5. Benefit Claims Procedures. . . . . . . . . . . . . . 24
9.6. Liability of Committee Members . . . . . . . . . . . 24
9.7. Reliance on Reports and Certificates . . . . . . . . 24
9.8. Indemnification. . . . . . . . . . . . . . . . . . . 24
9.9. Discretionary Action . . . . . . . . . . . . . . . . 25
ARTICLE 10. AMENDMENT AND TERMINATION . . . . . . . . . . . 26
10.1. Amendment . . . . . . . . . . . . . . . . . . . . . 26
10.2. Termination . . . . . . . . . . . . . . . . . . . . 26
10.3. Distributions upon Termination of the Plan. . . . . 27
10.4. Merger or Consolidation of Plan; Transfer of Plan
Assets. . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 11. LIMITS ON CONTRIBUTIONS . . . . . . . . . . . . 28
11.1. Code Section 404 Limits . . . . . . . . . . . . . . 28
11.2. Code Section 415 Limits . . . . . . . . . . . . . . 28
11.3. Code Section 402(g) Limits. . . . . . . . . . . . . 29
11.4. Code Section 401(k)(3) Limits . . . . . . . . . . . 31
11.5. Code Section 401(m) Limits. . . . . . . . . . . . . 35
ARTICLE 12. SPECIAL TOP-HEAVY PROVISIONS. . . . . . . . . . 41
12.1. Provisions to apply . . . . . . . . . . . . . . . . 41
12.2. Minimum Contribution. . . . . . . . . . . . . . . . 41
12.3. Adjustment to Limitation on Benefits. . . . . . . . 42
12.4. Definitions . . . . . . . . . . . . . . . . . . . . 42
<PAGE>
ARTICLE 13. MISCELLANEOUS . . . . . . . . . . . . . . . . . 46
13.1. Exclusive Benefit Rule. . . . . . . . . . . . . . . 46
13.2. Limitation of Rights. . . . . . . . . . . . . . . . 46
13.3. Nonalienability of Benefits . . . . . . . . . . . . 46
13.4. Governing law . . . . . . . . . . . . . . . . . . . 46
13.5. Appointment of Person to Receive Payment. . . . . . 46
13.6. Action by Plan Sponsor. . . . . . . . . . . . . . . 47
13.7. Impossibility of Performance. . . . . . . . . . . . 47
13.8. Electronic Notice . . . . . . . . . . . . . . . . . 47
13.9. Incompetent Participants. . . . . . . . . . . . . . 47
ARTICLE 14 DEFINITIONS. . . . . . . . . . . . . . . . . . . 48
14.1. "Accounts". . . . . . . . . . . . . . . . . . . . . 48
14.2. "Administrator" . . . . . . . . . . . . . . . . . . 48
14.3. "Affiliated Company". . . . . . . . . . . . . . . . 48
14.4. "Beneficiary" . . . . . . . . . . . . . . . . . . . 48
14.5. "Board of Directors". . . . . . . . . . . . . . . . 48
14.6. "Claims Committee". . . . . . . . . . . . . . . . . 48
14.7. "Code". . . . . . . . . . . . . . . . . . . . . . . 49
14.8. "Company Contribution". . . . . . . . . . . . . . . 49
14.9. "Compensation". . . . . . . . . . . . . . . . . . . 49
14.10. "Contribution Agreement" . . . . . . . . . . . . . 50
14.11. "Date of Employment" . . . . . . . . . . . . . . . 50
14.12. "Direct Transfer". . . . . . . . . . . . . . . . . 50
14.13. "Early Retirement Date". . . . . . . . . . . . . . 50
14.14. "Elective Contribution". . . . . . . . . . . . . . 50
14.15. "Eligible Employee". . . . . . . . . . . . . . . . 50
14.16. "Employee" . . . . . . . . . . . . . . . . . . . . 51
14.17. "Eligible Rollover Distribution" . . . . . . . . . 51
14.18. "Eligible Retirement Plan" . . . . . . . . . . . . 51
14.19. "Entry Date" . . . . . . . . . . . . . . . . . . . 51
14.20. "ERISA". . . . . . . . . . . . . . . . . . . . . . 51
14.21. "Highly Compensated Employee". . . . . . . . . . . 52
14.22. "Investment Committee" . . . . . . . . . . . . . . 53
14.23. "Matching Contribution". . . . . . . . . . . . . . 53
14.24. "Normal Retirement Age". . . . . . . . . . . . . . 53
14.25. "Participant". . . . . . . . . . . . . . . . . . . 53
14.26. "Participating Company". . . . . . . . . . . . . . 54
14.27. "Period of Service". . . . . . . . . . . . . . . . 54
14.28. "Plan" . . . . . . . . . . . . . . . . . . . . . . 54
14.29. "Plan Sponsor" . . . . . . . . . . . . . . . . . . 54
14.30. "Plan Year". . . . . . . . . . . . . . . . . . . . 54
14.31. "Qualified Domestic Relations Order" . . . . . . . 55
14.32. "Regulation" . . . . . . . . . . . . . . . . . . . 55
14.33. "Required Beginning Date". . . . . . . . . . . . . 55
14.34. "Rollover Contribution". . . . . . . . . . . . . . 55
14.35. "Section". . . . . . . . . . . . . . . . . . . . . 55
14.36. "Trust". . . . . . . . . . . . . . . . . . . . . . 55
14.37. "Trustee". . . . . . . . . . . . . . . . . . . . . 55
14.38. "Valuation Date" . . . . . . . . . . . . . . . . . 55
</TABLE>
<PAGE>
ARTICLE 1. INTRODUCTION.
l.l. In General. This document restates and continues the Digital
------------
Equipment Corporation Savings and Investment Plan on the terms and conditions
hereinafter set forth. The effective date of this restatement is generally July
2, 1989, except that in the case of any provision of the restatement which
related to a "Tax Reform requirement" (as defined by Rev. Proc. 89-65) whose
effective date is other than the first day of the 1989 plan year, the effective
date of such provision shall be the effective date of the related Tax Reform
requirement. The original effective date of the Plan is January 1, 1985.
The Plan and its related Trust are intended to qualify as a profit-sharing plan
and trust under Code sections 401(a) and 501(a), and the cash or deferred
arrangement forming part of the Plan is intended to qualify under Code section
401 (k) . The provisions of the Plan and Trust shall be construed and applied
accordingly. The purpose of the Plan is to provide benefits to Participants in a
manner consistent and in compliance with such Code sections and Title I of
ERISA.
1.2. DEFINED TERMS. All capitalized terms used in the following
--------------
provisions of the Plan have the meanings given them under the Article entitled
"Definitions" unless the context clearly indicates otherwise.
-1-
<PAGE>
ARTICLE 2. PARTICIPATION.
2.1. DATE OF PARTICIPATION. Each person who is a Participant of the
------------------------
Plan (as in effect prior to this restatement), on the effective date of this
restatement shall remain a Participant, subject to Section 2-2, below. Each
other Eligible Employee shall become a Participant as of the Entry Date
coinciding with or next following his or her Date of Employment, provided that
he or she is an Eligible Employee on such Entry Date.
2.2. DURATION OF PARTICIPATION. An individual who has become a
----------------------------
Participant under the Plan will remain a Participant for as long as an Account
is maintained under the Plan for his or her benefit, or until his or her death,
if earlier. Notwithstanding the preceding sentence, contributions shall be made
only with respect to those Participants who are Eligible Employees. In the event
a Participant ceases to be an Eligible Employee, he or she will again become a
Participant described in the preceding sentence upon again becoming an Eligible
Employee.
-2-
<PAGE>
ARTICLE 3. CONTRIBUTIONS.
3.1. ELECTIVE CONTRIBUTIONS. Each Participant may enter into a
------------------------
Contribution Agreement with his or her Participating Company specifying Elective
Contributions in an amount designated in the Agreement. By agreeing to Elective
Contributions, the Participant agrees to a reduction in pay in the amount
designated and the Participating Company agrees to contribute an equivalent
amount to the Trust.
Contributions for any pay period may be designated in the following percentages
of Compensation:
2% - 8% for Elective Contributions, in increments of 1%.
Notwithstanding the foregoing, effective April 2, 1995, Contributions for any
pay period may be designated in the following percentages of Compensation:
1% - 8% for Elective Contributions, in increments of 1%, with respect to
Participants who earned Compensation in the prior Plan Year which equaled
or exceeded such dollar limit as may be determined by the Plan
Administrator from time to time; and
1% - 12% for Elective Contributions, in increments of 1%, with respect to
all other Participants.
3.2. FORM AND MANNER OF ELECTIONS. Each Contribution Agreement shall be
-----------------------------
in a form prescribed or approved by the Administrator, and may be entered into,
changed or revoked by the Participant, with such prior notice (whether written
or otherwise) as the Administrator may prescribe, as of any Entry Date.
A Contribution Agreement shall be effective prospectively with respect to
Compensation payable on and after the Entry Date specified in the Agreement.
A Participant who revokes a Contribution Agreement may not enter into a new
Agreement effective prior to the first Entry Date following the revocation.
3.3. COMPANY CONTRIBUTIONS. Beginning with respect to Elective
-----------------------
Contributions which relate to Compensation paid as of July 6, 1995, each
Participating Company shall make a Company Contribution to the Trust for the
benefit of each Participant on whose benefit it made Elective Contributions for
each Plan Year in the amount as determined under (A) and (B), below:
-3-
<PAGE>
(A) a Matching Contribution for each pay period equal to the lesser of (i)
33 1/3% of such Participant's Elective Contributions for that pay period,
and (ii) 2% of such Participant's Compensation in such pay period.
(B) In addition, for Plan Years beginning on and after January 1, 1996, the
Company shall contribute an additional amount, on behalf of each
Participant who is an Employee on the last day of such Plan Year (or whose
death or termination from employment with all Affiliated Companies on or
after the Employee's Early Retirement Date occurs prior to such day), which
when added to the Matching Contribution made pursuant to (A) for such Plan
Year, equals the lesser of (i) 33 1/3% of a Participant's Elective
Contributions for the Plan Year, and (ii) 2% of such Participant's
Compensation for the Plan Year.
3.4. ROLLOVER CONTRIBUTIONS. An Eligible Employee may make a Rollover
------------------------
Contribution to the Plan upon demonstration to the Administrator that the
contribution is eligible for transfer to the Plan pursuant to the rollover
provisions of the Code.
3.5. CREDITING OF CONTRIBUTIONS. Each type of contribution for a Plan
----------------------------
Year shall be allocated among and credited to the Accounts of Participants
eligible to share in the contribution as of the earlier of the Valuation Date
coinciding with or next following the date the contributions are received by the
Trustee and the Valuation Date of such Plan Year.
3.6. TIME FOR MAKING CONTRIBUTIONS. Elective Contributions will be paid
------------------------------
in cash to the Trust as soon as such contributions can reasonably be segregated
from the general assets of the Participating Employer, but in any event within
90 days after the date on which the Compensation to which such contributions
relate is paid. Any Company Contributions for a Plan Year will be contributed in
cash to the Trust at such time as the Plan Sponsor determines, but in any event
no later than the earlier of (i) the time prescribed by law (including
extensions) for filing the Participating Employer's federal income tax return
for its taxable year in or with which the Plan Year ends, or (ii) the last day
of the 12-month period immediately following the Plan Year.
3.7. CERTAIN LIMITS APPLY. All contributions to the Plan are subject
---------------------
to the applicable limits set forth under Code sections 401(k), 401(m), 402(g),
404, and 415, as further described elsewhere in the Plan. In addition,
-4-
<PAGE>
certain minimum allocations may be required under Code section 416, as also
further described elsewhere in the Plan.
3.8. Return of Contributions. If any contribution by a Participating
------------------------
Company to the Trust is
(a) made by reason of a good faith mistake of fact, or
(b) believed by the Participating Company in good faith to be
deductible under Code section 404, but the deduction is disallowed.
The Trustee shall, upon request by the Participating Employer, return to the
Participating Company the excess of the amount contributed over the amount, if
any, that would have been contributed had there not occurred a mistake of fact
or a mistake in determining the deduction. Such excess shall be reduced by the
losses of the Trust attributable thereto, if and to the extent such losses
exceed the gains and income attributable thereto. In no event shall the return
of a contribution hereunder cause any Participant's Accounts to be reduced to
less than they would have been had the mistaken or nondeductible amount not been
contributed. No return of a contribution hereunder shall be made more than one
year after the mistaken payment of the contribution, or disallowance of the
deduction, as the case may be.
3.9. ESTABLISHMENT OF TRUST. The Plan Sponsor will establish a Trust to
-----------------------
accept and hold contributions made under the Plan. The Trust shall be governed
by an agreement between the Plan Sponsor and the Trustee, the terms of which
shall be consistent with the Plan provisions and intended qualification under
Code sections 401(a) and 501(a).
-5-
<PAGE>
ARTICLE 4. PARTICIPANT ACCOUNTS.
4.1. ACCOUNTS. The Administrator will establish and maintain (or cause
---------
the Trustee to establish and maintain) for each Participant, such Accounts as
are necessary to carry out the purposes of this Plan.
4.2. ADJUSTMENT OF ACCOUNTS. As of each Valuation Date, each Account
-------------------------
will be adjusted to reflect the fair market value of the assets allocated to the
Account. In this connection,
(a) each Account balance will be increased by the amount of
contributions actually received by the Trustee, income and gain
allocable to such Account since the prior Valuation Date; and
(b) each Account balance will be decreased by the amount of
distributions from the Account and expenses and losses allocable to
the Account since the prior Valuation Date.
Income, expense, gain and loss which are generated by a particular investment
fund within the Trust shall be allocated to each Account participating in such
investment fund in the ratio in which the portion of the Account which is
invested in the fund bears to the entire amount of Trust assets invested in the
fund. Any expenses relating to a specific Account or Accounts, except expenses
incurred with respect to a Qualified Domestic Relations Order, may be charged
solely to the particular Account or Accounts.
4.3. INVESTMENT OF ACCOUNTS. A Participant's Elective Contribution
-------------------------
Account, Company Contribution Account, and Rollover Contribution Account shall
be invested by the Trustee as the Participant directs from among such investment
options as the Investment Committee may make available from time to time. The
Administrator shall prescribe the form and manner in which such directions shall
be made, as well as the frequency with which such directions may be made or
changed and the amount of such allocation or re-allocation, the dates as of
which they shall be effective, and the allocation of Accounts with respect to
which no directions are submitted. Any other assets of the Trust shall be
invested by the Trustee in the sole discretion of the Trustee and in accordance
with its fiduciary duties under ERISA; provided,that if an investment manager or
other named fiduciary has been appointed with respect to all or a portion of
such assets, the Trustee shall invest such portion as the investment manager or
other named fiduciary directs. The investment options available to Participants
under the Plan may include investment companies registered under the
-6-
<PAGE>
Investment Company Act of 1940; certificates of deposit, savings accounts and
other instruments issued by a bank or similar institution; investment contracts
and other instruments issued by an insurance company or bank; and
publicly-offered securities registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934 selected by the Investment Committee.
4.4. APPOINTMENT OF INVESTMENT MANAGER OR NAMED FIDUCIARY.The Investment
-----------------------------------------------------
Committee may appoint in writing one or more investment managers or other "named
fiduciaries" (within the meaning of ERISA section 402(a)(2)) to manage the
investment of all or designated portions of the assets held in the Trust. The
appointment shall be effective upon acknowledgement in writing by the investment
manager or other named fiduciary that it is a fiduciary with respect to the
Plan. An investment manager must be (a) registered as an investment adviser
under the investment advisers Act of 1940, (b) a bank as defined in that Act, or
(c) an insurance company qualified under the laws of more than one state to
manage, acquire or dispose of any assets of the Plan.
-7-
<PAGE>
ARTICLE 5. VESTING OF ACCOUNTS.
5.1. IMMEDIATE VESTING OF ALL ACCOUNTS. A Participant will at all times
----------------------------------
be 100% vested in each of the Accounts maintained for him or her under the Plan.
5.2. CHANGES IN VESTING SCHEDULE. If the Plan's vesting schedule is
-------------------------------
amended, or the Plan is amended in any way that directly or indirectly affects
the computation of a Participant's vested percentage, each Participant who has
completed a Period of Service of at least three years may elect, within the
period described below, to have his or her vested percentage determined without
regard to such amendment or change. The period referred to in the preceding
sentence will begin on the date the amendment of the vesting schedule is adopted
and will end 60 days thereafter, or, if later, 60 days after the later of
(a) the date on which such amendment becomes effective; and
(b) the date on which the Participant is issued written notice of such
amendment by the Administrator.
-8-
<PAGE>
ARTICLE 6. WITHDRAWALS PRIOR TO SEPARATION FROM SERVICE.
6.1. HARDSHIP WITHDRAWALS.
----------------------
(a) Immediate and heavy financial need. A Participant may make a
withdrawal from his or her Accounts in the event of an immediate and heavy
financial need arising from:
(i) expenses for medical care described in Code section 213(d)
previously incurred by the Participant, his or her spouse or any of
his or her dependents (as defined in Code section 152) or necessary
for these persons to obtain such medical care;
(ii) costs directly related to the purchase (or on or after April
2, 1995, the construction of) of a principal residence of the
Participant (excluding mortgage payments);
(iii) the payment of tuition and related educational fees and
room and board expenses for the next 12 months of post-secondary
education for the Participant, his or her spouse, children or
dependents (as defined in Code section 152); or
(iv) payments necessary to prevent the eviction of the
Participant from his or her principal residence or foreclosure on the
mortgage on that principal residence.
The Administrator's determination of whether there is an immediate and heavy
financial need as defined above shall be made solely on the basis of written
evidence furnished by the Participant. Such evidence must also indicate the
amount of such need.
(b)(i) Periods prior to April 2, 1995. The rules of this paragraph (i)
------------------------------
shall apply in the case of hardship withdrawals occurring prior to April 2,
1995. As soon as practicable after the Administrator's determination that
an immediate and heavy financial need exists with respect to the
Participants and that amount is not reasonably available from other
resources of the Participant, the Administrator will direct the Trustee to
pay to the Participant the amount necessary to meet the need created by the
hardship (but not in excess of the value of the Participant's Accounts,
determined as of the Valuation Date which is at least-15 days next
following the Administrator's determination).
-9-
<PAGE>
The amount necessary to meet the need may include any amounts necessary to
pay any federal, state, or local income taxes or penalties reasonably
anticipated to result from the distribution. No portion of an Elective
Contribution Account attributable to income earned after December 31, 1988,
may be distributed due to a financial hardship.
(ii) Periods commencing on or after April 2, 1995. The rules of
---------------------------------------------
this paragraph (ii) shall apply in case of hardship withdrawals
occurring on or after April 3, 1995. As soon as practicable after the
Administrator's determination that an immediate and heavy financial
need exists with respect to the Participant and that the Participant
has obtained all other distributions (other than hardship
distributions) and all nontaxable loans currently available under the
Plan and all other plans maintained by the Affiliated Companies, the
Administrator will direct the Trustee to pay to the Participant the
amount necessary to meet the need created by the hardship (but not in
excess of the value of the Participant's Accounts, determined as of
the Valuation Date next following the Administrator's determination).
The amount necessary to meet the need may include any amounts
necessary to pay any federal, state, or local income taxes or
penalties reasonably anticipated to result from the distribution. No
portion of an Elective Contribution Account attributable to income
earned after December 31, 1988, may be distributed due to a financial
hardship.
(c) Effect of hardship distribution. Effective April 2, 1995, if a
--------------------------------
Participant receives a hardship distribution from his or her Accounts, then
the Participant shall suspend any Elective Contribution election or any
other cash-or-deferred or employee contribution election in effect with
respect to him or her under the Plan or any other plan (other than a health
or other welfare plan (including a cafeteria plan)) maintained by an
Affiliated Company for the 12-month period beginning with the date the
Participant receives the distribution, and the amount of Elective
Contributions made for the benefit of the Participant, together with any
elective deferrals made on behalf of the Participant under any other plan
maintained by the Affiliated Companies for the calendar year immediately
following the calendar year of the hardship distribution must not exceed
the applicable limit under Code section 402(g) for such next calendar year,
less the amount of
-10-
<PAGE>
such contributions made on behalf of the Participant for the calendar year of
the hardship distribution.
6.2. WITHDRAWALS AFTER AGE 59 1/2. A Participant who is an Employee and
-----------------------------
has attained age 59 1/2 may make a withdrawal from any one or more of his or her
Accounts for any reason, but with such prior notice as the Administrator may
prescribe. Any withdrawal made pursuant to this Section 6.2 shall be in the
amount specified by the Participant of at least $1,000.00, but not more than the
value of the Participant's Accounts determined as of the Valuation Date, next
following the Administrator's receipt of notice of the withdrawal. Payment to
the Participant shall be made as soon as practicable after such Valuation Date.
Prior to April 2, 1995, no more than two such requests shall be permitted in any
one Plan Year. Effective April 2, 1995, withdrawals made pursuant to this
Section 6_2 may be made in the form of annual, quarterly, or monthly
installments.
6.3. WITHDRAWALS ON ACCOUNT OF DISABILITY. Effective April 2, 1995, a
--------------------------------------
Participant who remains disabled for more than 26 consecutive weeks under his or
her Participating Employer's long-term disability plan but who has not otherwise
separated from service from the Affiliated Companies may make a withdrawal from
any one or more of his or her Accounts for any reason, but with such prior
notice as the Administrator may prescribe. Any such withdrawal shall be in the
amount specified by the Participant, up to the value of the Participant's
Accounts determined as of the Valuation Date next following the Administrator's
receipt of notice of the withdrawal. Payment to the Participant shall be made as
soon as practicable after such Valuation Date.
6.4. PRIORITY OF ACCOUNTS AND INVESTMENT FUNDS. All withdrawals made
--------------------------------------------
pursuant to this Article 6 shall be made ratably among the Accounts. Beginning
April 2, 1995, withdrawals made pursuant to this Article 6 shall be made from
the Participant's Accounts in the following order of priority: (1) Rollover
Account, (ii) Elective Contribution Account, and (iii) Company Contribution
Account. Amounts shall be withdrawn proportionately among the investment funds
to which the Accounts are allocated.
6.5. RESTRICTIONS ON CERTAIN DISTRIBUTIONS. In the case of a
-----------------------------------------
Participant whose Accounts are valued in excess of $3,500 and who has not yet
attained the Normal Retirement Age, no distribution may be made to the
Participant under this Article unless
(a) between the 30th and 90th day prior to the date distribution is to
be made, the Administrator notifies the Participant in writing that he or
she may defer
-11-
<PAGE>
distribution until the Normal Retirement Age and provides the Participant with a
written description of the material features and (if applicable) the relative
values of the forms of distribution available under the Plan; and
(b) the Participant consents to the distribution in writing after the
information described above has been provided to him or her.
Notwithstanding the foregoing, a Participant may waive such notice and consent
to a distribution at any time upon notice to the Administrator. For purposes of
this Section, a Participant's Accounts will be considered to be valued in excess
of $3,500 if the value of his or her Accounts exceeds such amount at the time of
the distribution in question or exceeded such amount at the time of any prior
distribution.
6.6. LIMITATION ON WITHDRAWABLE AMOUNT. In the event that there is
-------------------------------------
allocated to a Participant's Account a promissory note with respect to a loan
made from the Plan, the maximum amount of cash that may be withdrawn from the
Account prior to the Participant's separation from service shall be determined
without regard to the value of such note.
6.7. DISTRIBUTIONS REQUIRED BY A QUALIFIED DOMESTIC RELATIONS ORDER.To
---------------------------------------------------------------
the extent required by a Qualified Domestic Relations Order, the Administrator
shall make distributions from a Participant's Accounts to alternate payees named
in such order in a manner consistent with the distribution options otherwise
available under the Plan. Effective April 2, 1995, an alternate payee shall have
the right to request a distribution in a single sum of his or her Accounts
established pursuant to a Qualified Domestic Relations Order to be made to him
or her at any time regardless of whether the Participant has reached the
earliest retirement age (as defined in Code section 414(p)(3)(B)).
6.8. CERTAIN DISPOSITIONS. Effective June 17, 1993, in connection with
---------------------
the disposition by a Participating Company of at least 85 percent of the assets
used by the Participating Company in a trade or business to an unrelated
corporation, or the disposition of a Participating Employer's interest in a
subsidiary to an unrelated entity, distribution of the entire Account balance of
an Employee who continues employment with the acquirer shall be made to the
Employee in a single sum, but only if the balance of the Accounts of such
Participant is not transferred to a successor plan of the acquirer and only if
such distribution is otherwise made in accordance with Code section 401(k)(10).
-12-
<PAGE>
6.9. DIRECT TRANSFER. All distributions shall be made in cash, shall
-----------------
be made as of a Valuation Date and shall be made as soon as feasible after such
Valuation Date. Effective for all distributions made on or after January 1,
1993, and notwithstanding any provision of the Plan to the contrary that would
otherwise limit an election under this Section, a Participant may elect, at the
time and in the manner prescribed by the Administrator, to have any portion of
any Eligible Rollover Distribution paid directly to any Eligible Retirement Plan
specified by the Participant in a Direct Transfer.
-13-
<PAGE>
ARTICLE 7. LOANS TO PARTICIPANTS.
7.1. IN GENERAL. Upon the written request of an Eligible Borrower on a
------------
form acceptable to the Administrator, and subject to the conditions of this
Article, the Administrator shall direct the Trustee to make a loan from the
Trust to the Eligible Borrower. For purposes of this Article, an "Eligible
Borrower" is
(a) a Participant who is an Employee or is otherwise a "party in
interest" within the meaning of ERISA section 3(14); or
(b) a deceased Participant's Beneficiary who has not yet received the
entire vested portion of the Participant's Accounts and who is a "party in
interest" as described above.
7.2. RULES AND PROCEDURES. The Administrator shall promulgate such
-----------------------
rules and procedures, not inconsistent with the express provisions of this
Article, as it deems necessary to carry out the purposes of this Article. All
such rules and procedures shall be deemed a part of the Plan for purposes of the
Department of Labor regulation section 2550.408b-l(d). Loans shall not be made
available to Eligible Borrowers who are Highly Compensated Employees in an
amount (determined under Department of Labor regulation section 2550.408b-l(b))
greater than the amount made available to other Eligible Borrowers.
7.3. MAXIMUM AMOUNT OF LOAN. The following limitations shall apply in
------------------------
determining the amount of any loan to an Eligible Borrower hereunder:
(a) The amount of the loan, together with any other outstanding
indebtedness of the Eligible Borrower under the Plan or any other qualified
retirement plans of the Affiliated Companies, shall not exceed $50,000
reduced by the excess of (i) the highest outstanding loan balance of the
Eligible Borrower from such plans during the one-year period ending on the
day prior to the date on which the loan is made, over (ii) the Eligible
Borrower's outstanding loan balance from such plans immediately prior to
the loan.
(b) The amount of the loan shall not exceed 50% of the Eligible
Borrower's interest in his or her Accounts, determined as of the Valuation
Date immediately preceding the date of the loan.
7.4. MINIMUM AMOUNT AND NUMBER OF LOANS; FEE. The Administrator may
-------------------------------------------
establish a minimum amount, not to exceed
-14-
<PAGE>
$1,000, for any single loan under the Plan and a maximum number of loans that
may be outstanding at any one time. Effective April 2, 1995, the Administrator
may also assess a fee to cover the administrative costs of processing loans,
which shall be charged to the Account of the Eligible Borrower requesting a
loan.
7.5. NOTE; SECURITY; INTEREST. Each loan shall be evidenced by a note
--------------------------
signed by the Eligible Borrower and shall be secured by 50% of the Eligible
Borrower's vested interest in his or her Accounts, including in such security
the note evidencing the loan. The loan shall bear interest at a reasonable
annual percentage interest rate to be determined by the Administrator. In
determining the interest rate, the Administrator shall take into consideration
interest rates currently being charged by persons in the business of lending
money with respect to loans made in similar circumstances. The Administrator
shall make such determination through consultation with one or more lending
institutions, as the Administrator deems appropriate.
7.6. REPAYMENT. Each loan made to an Eligible Borrower who is receiving
----------
regular payments of compensation from a Participating Company shall be repayable
by payroll deduction. Loans made to other Eligible Borrowers (and, in all
events, where payroll deduction is no longer practicable) shall be repayable in
such manner as the Administrator may from time to time determine. The documents
evidencing a loan shall provide that payments shall be made not less frequently
than quarterly and over a specified term as determined by the Administrator (but
not to exceed five years unless the loan is being applied toward the purchase of
a principal residence for the Eligible Borrower). Such documents shall also
require that the loan be amortized with substantially level payments of
principal and interest.
7.7. REPAYMENT UPON DISTRIBUTION. If, at the time benefits are to be
------------------------------
distributed (or to commence being distributed) to an Eligible Borrower (other
than in a hardship withdrawal prior to separation from service, but including a
Direct Transfer), with respect to a separation from service, there remains any
unpaid balance of a loan hereunder, such unpaid balance shall, to the extent
consistent with Department of Labor regulations, become immediately due and
payable in full. Such unpaid balance, together with any accrued but unpaid
interest on the loan, shall be deducted from the Eligible Borrower's Accounts,
subject to the default provisions below, before any such distribution of
benefits is made. Except as may be required in order to comply (in a manner
consistent with continued qualification of the Plan under Code section 401(a))
with Department of Labor regulations, no loan shall be made to a
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<PAGE>
Participant under this Article after the time any such distribution to the
Participant is to be paid or commence.
7.8. DEFAULT. In the event of a default in making any payment of
--------
principal or interest when due under the note evidencing any loan under this
Article, if such default continues for more than 90 days after written notice by
the Trustee (effective on and after July 1, 1994, the Plan Administrator) to the
Eligible Borrower, the unpaid principal balance of the note shall immediately
become due and payable in full. Such unpaid principal, together with any accrued
but unpaid interest, shall thereupon be deducted from the Eligible Borrower's
Accounts, subject to the further provisions of this Section. The amount so
deducted shall be treated as distributed to the Eligible Borrower and applied by
the Eligible Borrower as a payment of the unpaid interest and principal (in that
order) under the note evidencing such loan. In no event shall the Administrator
apply the Eligible Borrower's Accounts to satisfy the Eligible Borrower's
repayment obligation, whether or not he or she is in default, unless the amount
so applied otherwise could be distributed at that time without jeopardizing the
qualification of the Plan under Code section 401(a) or the qualification of the
cash or deferred arrangement under Code section 401(k).
7.9. NOTE AS TRUST ASSET. The note evidencing a loan to an Eligible
-----------------------
Borrower under this Article shall be an asset of the Trust which is allocated to
the Account of such Eligible Borrower, and shall for purposes of the Plan deemed
to have a value at any given time equal to the unpaid principal balance of the
note plus the amount of any accrued but unpaid interest.
7.10. NONDISCRIMINATION. Loans shall be made available under this
------------------
Article to all Eligible Borrowers on a reasonably equivalent basis, except that
the Administrator may make reasonable distinctions based on creditworthiness.
7.11. DESIGNATION OF INVESTMENT FUNDS. The loan shall be made
-----------------------------------
proportionately from all investment funds to which the Eligible Borrower's
Accounts are allocated and from the Eligible Borrower's Account in the following
order of priority: (i) Rollover Account, (ii) Elective Contributions Account,
and (iii) Company Contribution Account.
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<PAGE>
ARTICLE 8. BENEFITS UPON DEATH OR SEPARATION FROM SERVICE
AND CERTAIN MINIMUM DISTRIBUTIONS
8.1. SEPARATION FROM SERVICE FOR REASONS OTHER THAN DEATH. Following a
------------------------------------------------------
Participant's separation from the service of the Affiliated Companies for any
reason other than death, the Participant will receive the value of his or her
Accounts in cash in a single sum. The amount of the distribution shall be
determined as of the Valuation Date that immediately precedes or coincides with
the date distribution is to be made as described below.
(a) Accounts not in excess of $3,500. In the case of a Participant
---------------------------------
whose Accounts have a value not in excess of $3,500, distribution shall be
made to the Participant in cash in a single sum as soon as practicable
following the Participant's separation from service (but in no event later
than the 60th day following the close of the Plan Year in which such
separation occurs). The amount of such distribution shall be determined as
of the Valuation Date immediately preceding or coinciding with the date
distribution is to be made. A Participant's Accounts will be considered not
to be valued in excess of $3,500 if the value of those Accounts does not
exceed such amount at the time of the distribution in question or at the
time of any prior distribution to the Participant under the Plan.
(b) Accounts in excess of $3,500. A Participant's Accounts which have
----------------------------
a value in excess of $3,500 may direct the Administrator, on a form
approved by the Administrator, to distribute all or part of the
Participant's Accounts as a single sum, in cash. Effective April 2, 1995,
each Participant whose separation from service occurs (or has occurred) on
or after his or her Early Retirement Date or Normal Retirement Age may
elect, in lieu of a single sum, to receive his or her Accounts in
installments payable either annually, quarterly, or monthly over a period
of up to 10 years. In all cases, distribution will be made or will commence
as soon as practicable following the Administrator's receipt of the
Participant's direction, with each payment determined as of the Valuation
Date immediately preceding or coinciding with the date distribution is to
be made. Notwithstanding the foregoing, no distributions under this
subsection (b) shall be made (or if payable in installments, shall
commence) prior to the date the Participant attains the Normal Retirement
Age unless
(i) between the 30th and 90th day prior to the date distribution
is to begin, the Administrator
-17-
<PAGE>
notifies the Participant in writing that he or she may defer
distribution until the Normal Retirement Age and provides the
Participant with a written description of the material features and
(if applicable) the relative values of the forms of distribution
available under the Plan; and
(ii) the Participant consents to the distribution in writing
after the information described above has been provided to him or her,
and files such consent with the Administrator.
Notwithstanding the foregoing, a Participant may waive such notice and consent
to a distribution at any time upon notice to the Administrator. The
Participant's Accounts will be considered to be valued in excess of $3,500 if
the value of such portion exceeds such amount at the time of the distribution in
question or exceeded such amount at the time of any prior distribution to the
Participant under the Plan.
8.2. MINIMUM REQUIRED DISTRIBUTIONS. Notwithstanding any provision of
---------------------------------
the Plan to the contrary, in the case of an individual described in Articles 6
or 8 who remains a Participant on or after his or her Required Beginning Date,
the Participant's entire Account will be distributed, beginning on such date and
in accordance with Regulation sections 1.401(a)(9)-l and 1.401(a)(9)-2, over a
period not extending beyond the life expectancy of the Participant or the joint
life expectancy of the Participant and his or her designated beneficiary (within
the meaning of Code section 401(a)(9)(E)).
(i) In general, for any calendar year (a "distribution year")
beginning with the year prior to a Participant's Required Beginning
Date, the minimum required distribution shall be the quotient obtained
by dividing the Participant's vested Account balances by the
applicable life expectancy for the distribution year determined by use
of the expected return multiples in Tables V and VI of Regulation
section 1.72-9. The minimum distribution for the first distribution
year shall be made not later than the Required Beginning Date. The
distribution for each subsequent distribution year shall be made no
later than the December 31st of that year.
(ii) The Account balances to be used for determining the minimum
distribution for a distribution year are the balances as of the last
Valuation Date in the calendar year prior to the
-18-
<PAGE>
distribution year, increased by any contributions allocated to the
Account and decreased by any distributions made from the Account as of
dates in such prior calendar 'year after the last Valuation Date. In
determining the Account balances for purposes of the second
distribution year, the balances will be further decreased by any
distribution from the Account made in the second distribution year and
before the Required Beginning Date which is not in excess of the
amount required for the first distribution year.
(iii) For purposes of determining the applicable life expectancy
for any distribution year, life expectancies will not be recalculated
annually pursuant to Code section 401 (a) (9) . Effective April 2,
1995, life expectancies of the Participant and the Participant's
spouse, if any (but not of any nonspouse Beneficiary), will be
recalculated annually pursuant to Code section 401(a)(9). To the
extent a Participant changes or revokes a Beneficiary designation
after his or her Required Beginning Date, life expectancies will be
decreased (but not extended) by the measuring life of the substitute
designated beneficiary.
(iv) Consistent with Code section 401 (a) (14) , Participant
described in this paragraph who intends to defer the commencement of
distributions beyond the 60th day after the close of the Plan Year in
which occurs the latest of (i) the Participant's attainment of the
Normal Retirement Age, (ii) the Participant's separation from service,
or (iii) the 10th anniversary of the date the Participant first became
a Participant, must file a revocable election with the Administrator
setting forth the date on which distribution shall commence.
8.3. CERTAIN DISTRIBUTION OPTIONS PROTECTED. Notwithstanding any
------------------------------------------
provision to the contrary, from time to time, certain benefits may need to be
protected upon the merger of the Plan with another plan.
8.4. DISTRIBUTIONS AFTER A PARTICIPANT'S DEATH.
---------------------------------------------
(a) Death Prior to Required Beginning Date. If a Participant dies
----------------------------------------
prior to his or her Required Beginning Date, the Participant's Beneficiary
will receive the value of the Participant's Accounts in cash in a single
sum as soon as practicable following the Participant's death and in all
events within five years of the end of the calendar year in which such
death occurs.
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<PAGE>
(b) Death After Required Beginning Date. If a Participant dies after
------------------------------------
his or her Required Beginning Date but before the distribution of his-or
her Accounts has been completed, the Participant's Beneficiary will receive
the undistributed portion of the Participant's Accounts. Distribution will
be made in cash in a single sum as soon as practicable following the
Participant's death; provided, however, effective April 2, 1995, that if
distribution to the Participant had begun following his or her Required
Beginning Date in a form elected by the Participant, distribution will
continue to be made to the Beneficiary in such form unless the Beneficiary
elects to receive distribution in cash in a single sum as soon as
practicable following the Participant's death. Any such election must be
made on a form approved by the Administrator and must be received by the
Administrator within such period following the Participant's death as the
Administrator may prescribe.
Any distribution to a Beneficiary under this Section in the form of a single sum
shall be determined as of the Valuation Date immediately preceding or coinciding
with the date distribution is to be made.
8.5. DESIGNATION OF BENEFICIARY. Subject to the provisions of this
----------------------------
Section, a Participant's Beneficiary shall be the person or persons and entity
or entities, if any, designated by the Participant from time to time on a form
approved by the Administrator. (Until April 2, 1995, the Administrator may
determine that for all Participants, the Beneficiary designation hereunder shall
be the same as for the Plan Sponsor's group life insurance plan or any other
plan of the Plan Sponsor, unless the Participant elects otherwise.) In the
absence of an effective beneficiary designation, a Participant's Beneficiary
shall be all members of the first class in which there are living members on the
date of the Participant's death in the following order of priority: spouse,
children, parents, estate. A nonspouse Beneficiary designation by a Participant
who is married at the time of his or her death shall not be effective unless,
(a) prior to the Participant's death, the Participant's surviving
spouse consented to and acknowledged the effect of the Participant's
designation of a specific non-spouse Beneficiary (including any class of
Beneficiaries or any contingent Beneficiaries) on a written form approved
by the Administrator and witnessed by a notary public; or
(b) it is established to the satisfaction of the Administrator that
spousal consent may not be obtained because there is no spouse, because the
spouse has died (evidenced by a certificate of death), because the
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<PAGE>
spouse cannot be located, or because of such other circumstances as the
Secretary of the Treasury may prescribe.
In the event a spouse is legally incompetent to give consent, the spouse's legal
guardian, even if the guardian is the Participant, may give consent on behalf of
the spouse. Any consent and acknowledgement by (or on behalf of) a spouse, or
the establishment that the consent and acknowledgment cannot be obtained, shall
be effective only with respect to such spouse, but shall be irrevocable once
made.
8.6. DIRECT TRANSFERS. All distributions shall be made in cash.
-----------------
Effective for all distributions made on or after January 1, 1993, and
notwithstanding any provision of the Plan to the contrary that would otherwise
limit an election under this section, a Participant may elect, at the time and
in the manner prescribed by the Administrator, to have any portion of any
Eligible Rollover Distribution paid directly to an Eligible Retirement Plan
specified by the Participant in a Direct Transfer.
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<PAGE>
ARTICLE 9. ADMINISTRATION.
9.1. ADMINISTRATION OF THE PLAN. The Plan shall be managed and
-----------------------------
administered by the Administrator, the Investment Committee (to the extent
applicable), and the Claims Committee, each Committee consisting of not less
than three persons who shall be appointed from time to time by the Plan Sponsor
(or its delegate) and who shall serve at the pleasure of the Plan Sponsor.
Members of each Committee shall jointly share the responsibility for the
functions of that Committee. Each Committee shall elect from among its members,
a chairman and a secretary who may, but need not be, a member of the Committee.
The Administrator and each member of the Investment Committee or the Claims
Committee who is a full-time employee of the Plan Sponsor shall not receive any
compensation from the Plan for his or her services as such, but may be
reimbursed for reasonable expenses actually incurred in the administration of
the Plan.
9.2. MEETINGS. The Investment Committee and the Claims Committee shall
--------
each hold meetings upon such notice, and at such place or places, and at such
intervals as they may from time to time determine. A majority of all members of
each Committee shall have the power to act, and the concurrence or dissent of
any member may be by telephone, electronic means, or letter. Each Committee
shall keep such written records as it deems necessary or proper.
9.3. EXPENSES. The reasonable expenses incident to the management and
--------
operation of the Plan, including the compensation of the actuary, attorney,
accountant, claims administrator, investment managers, if any, and such other
technical and clerical assistance as may be required, shall be payable out of
the Trust, if any; provided, however, the Company may elect at any time to pay
part or all thereof directly, and any such election shall not bind the Plan
Sponsor as to its right to elect with respect to the same or other expenses at
any other time to have such expenses paid from any Trust.
9.4. POWERS and DUTIES. In addition to any implied powers and duties
------------------
which may be necessary or desirable to carry out the provisions of the Plan or
to carry out the functions described below:
(a) The Administrator shall have the following specific powers and
duties:
(i) To make and enforce such rules and regulations as it shall
deem necessary or proper for the efficient administration of the Plan;
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<PAGE>
(ii) To interpret and construe the terms of the Plan, to decide
any and all matters arising thereunder, including the right to remedy
possible ambiguities, inconsistencies, or omissions and to make
factual findings; provided, however, that all such interpretations and
decisions shall be applied in a uniform manner to all Participants
similarly situated;
(iii) To determine eligibility for and to compute the amount of
benefits which shall be payable to any Participant in accordance with
the provisions of the Plan;
(iv) To appoint or employ individuals or firms to assist in the
administration of the Plan and any other agents it deems advisable,
including legal counsel;
(v) To establish an administrative claims appeal process; and
(vi) To perform any and all duties required of the "plan
administrator" of a Plan under ERISA and the Code.
(b) The Investment Committee shall have the following specific powers
and duties:
(i) To review the management of all assets of the Plan, including
the selection of investment funds, the appointment, removal, and
supervision of investment managers pursuant to Section 4.4; and
(ii) To appoint and remove one or more Trustees and to review
their performance periodically.
(c) The Claims Committee shall have the following specific powers and
duties.
(i) To render the final review under the Plan of all decisions
made by the Administrator which are requested by a Participant to be
reviewed pursuant to the claims appeal procedure; and
(ii) To appoint or employ persons or firms to assist in its
decision making process.
(d) The Administrator, the Investment Committee, and the Claims
Committee shall each have the power to allocate fiduciary and other
responsibilities (other than trustee
-23-
<PAGE>
responsibilities) among themselves or among persons (including entities)
named by them in accordance with the following provisions:
(i) Fiduciary responsibilities may be allocated by either
Committee or the Administrator by naming in writing the fiduciary to
whom the responsibility is allocated, with a description of the
responsibility and an outline of the duties involved; and
(ii) The fiduciary so named shall indicate his or her acceptance
of the responsibility by executing the written instrument naming the
fiduciary and a copy of the executed document shall be maintained in
the records of the Plan.
For the purpose of this subsection, a trustee responsibility is a
responsibility to manage or control the assets of the Plan, other than
the power to appoint investment managers as provided for in Section
9.4(b).
9.5. BENEFIT CLAIMS PROCEDURES. The Administrator shall establish a
---------------------------
reasonable claims appeal procedure.
9.6. LIABILITY OF COMMITTEE MEMBERS. The Administrator and the Claims
-------------------------------
Committee shall have no authority or discretion to manage and control the assets
of the Plan, and shall have no obligation or liability in respect thereof.
9.7. RELIANCE ON REPORTS AND CERTIFICATES. The Administrator,
----------------------------------------
Investment Committee, and the Claims Committee shall be entitled to rely
conclusively upon all tables, valuations, certificates, opinions, and reports
which are furnished by any actuary, accountant, counsel, consultants, or other
person who is employed or engaged for such purposes.
9.8. INDEMNIFICATION. The Plan Sponsor agrees to indemnify each member
---------------
of the Investment Committee, the Claims Committee, and the Administrator,
against any and all claims, loss, damage, expense, and liability from any act or
failure to act unless the same is judicially determined to be the result of such
member's gross negligence or willful misconduct. The Plan Sponsor may purchase
and maintain liability insurance (which insurance shall not permit recourse
against the insured parties) with scope of coverage and limits of liability
sufficient to protect the members of each Committee and the Administrator and
other fiduciaries who are, were, or may be employees of the Plan Sponsor from
monetary liability for any breach of their fiduciary responsibilities not
resulting from their own gross negligence or willful misconduct.
-24-
<PAGE>
9.9. DISCRETIONARY ACTION. Each Plan fiduciary having authority under
---------------------
the Plan to make factual findings, to determine eligibility for benefits, and/or
interpret the terms of the Plan shall have discretionary authority to make such
findings, determinations, and interpretations within the sole discretion of the
fiduciary, and all such findings, determinations, and interpretations by the
fiduciary shall be conclusive and binding on all parties, including the Plan
Sponsor, the Plan and the Participants, unless a court of competent jurisdiction
finds such finding, determination, or interpretation to be arbitrary and
capricious and/or an abuse of discretion. For purposes of this paragraph,
arbitrary and capricious shall mean "having no foundation."
-25-
<PAGE>
ARTICLE 10. AMENDMENT AND TERMINATION.
10.1. AMENDMENT. The Plan Sponsor reserves the power and right at any
---------
time or times to amend the provisions of the Plan and Trust to any extent and in
any manner that it may deem advisable by a written instrument signed by the Plan
Sponsor providing for such amendment, and effective as of August 25, 1994, as
provided for in the vote of the Board of Directors on August 25, 1994. However,
the Plan Sponsor will not have the power:
(a) to amend the Plan or Trust in such manner as would cause or permit
any part of the assets of the Trust to be diverted to purposes other than
for the exclusive benefit of Participants and their Beneficiaries (except
as permitted or required by the Plan with respect to Qualified Domestic
Relations Orders or the return of contributions upon nondeductibility,
mistake of fact, or the failure to qualify initially), unless such
amendment is required or permitted by law, governmental regulation or
ruling; or
(b) to amend the Plan or Trust retroactively in such a manner as would
reduce the accrued benefit of a Participant, except as otherwise permitted
or required by law. For purposes of this paragraph, an amendment which has
the effect of decreasing a Participant's Account balance or eliminating an
optional form of benefit, with respect to benefits attributable to service
before the amendment, shall be treated as reducing an accrued benefit.
Furthermore, if the vesting schedule of the Plan is amended, in the case of
an Employee who is a Participant as of the later of the date such amendment
is adopted or the date it becomes effective, the nonforfeitable percentage
(determined as of such date) of such Employee's Account balance will not be
less than the percentage computed under the Plan without regard to such
amendment.
10.2. TERMINATION. The Plan Sponsor has established the Plan and
-----------
authorized the establishment of the Trust with the bona fide intention and
expectation that contributions will be continued indefinitely, but may
discontinue contributions under the Plan or terminate the Plan at any time by
written notice delivered to the Trustee without liability whatsoever for any
such discontinuance or termination. In addition, the Participating Companies
will have no obligation or liability whatsoever to maintain the Plan for any
given length of time and may cease to be Participating Companies in a manner
acceptable to the Plan Sponsor. Notwithstanding the foregoing, the termination
of a Participating Company shall not result in a plan termination
-26-
<PAGE>
with respect to its Eligible Employees except to the extent to which such
withdrawal shall constitute a partial termination.
10.3. DISTRIBUTIONS UPON TERMINATION OF THE PLAN.
------------------------------------------------
Upon termination of the Plan by the Plan Sponsor, the Trustee will distribute to
each Participant (or other person entitled to distribution) the value of the
Participant's Accounts in a single sum as soon as practicable following such
termination. The amount of such distribution shall be determined as of the
Valuation Date immediately preceding or coinciding with the date distribution is
to be made. Notwithstanding the preceding sentence, if any Affiliated Company
maintains or establishes a defined contribution plan (other than an ESOP or a
SEP) that benefits at least 2 percent of the employees in the terminated Plan,
Accounts shall be distributed to Participants and their Beneficiaries only in a
manner consistent with Code sections 401(k)(2)(B)(i)(I), (III) and (IV), and
401(k)(10)(A)(ii) and (iii). In such case, a Participant's Accounts will be
transferred, without the Participant's consent, to the other plan pending
distribution.
10.4. MERGER ORCONSOLIDATION OF PLAN; TRANSFER OF PLAN ASSETS. In case
-------------------------------------------------------
of any merger or consolidation of the Plan with, or transfer of assets and
liabilities of the Plan to, any other plan, provision must be made so that each
Participant would, if the Plan then terminated, receive a benefit immediately
after the merger, consolidation or transfer which is equal to or greater than
the benefit he or she would have been entitled to receive immediately before the
merger, consolidation or transfer if the Plan had then terminated.
-27-
<PAGE>
ARTICLE 11. LIMITS ON CONTRIBUTIONS.
------------------------------------
11.1. CODE SECTION 404 LIMITS. The sum of the contributions made by
--------------------------
each Participating Company under the Plan for any Plan Year shall not exceed the
maximum amount deductible under the applicable provisions of the Code. All
contributions under the Plan made by a Participating Company are expressly
conditioned on their deductibility under Code section 404 for the taxable year
when paid (or treated as paid under Code section 404(a)(6)).
11.2. CODE SECTION 415 LIMITS.
-------------------------
(a) Incorporation by reference. Code section 415 is hereby
------------------------------
incorporated by reference into the Plan.
(b) Annual addition. The Administrator shall determine an "annual
----------------
addition" for each Participant for each limitation year, which shall
consist of the following amounts allocated to the Participant's Accounts
for the year:
(i) Elective Contributions,
(ii) Company Contributions,
(iii) Amounts allocated to an individual medical account (as
defined in Code section 415(l)(2)) which is part of a pension or
annuity plan maintained by an Affiliated Company; and
(iv) Amounts derived from contributions paid or accrued which are
attributable to post-retirement medical benefits allocated to the
separate account of a key employee (as defined in Code section
419A(d)(3)) under a welfare benefit fund (as defined in Code section
419(e)) maintained by an Affiliated Company.
(c) General limitation on annual additions. The annual addition to a
---------------------------------------
Participant's Accounts under the Plan for any limitation year, when added
to the annual additions to his or her accounts for such Year under all
other defined contribution plans maintained by the Affiliated Companies,
shall not exceed the lesser of (i) $30,000 (or, if greater, one-fourth of
the limitation in effect for the limitation year under Code section
415(b)(1)(A)), or (ii) 25% of the Participant's Compensation for such
limitation year.
(d) Combined limitations. In the case of a Participant who also
---------------------
participates in a defined benefit
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<PAGE>
plan maintained by an Affiliated Company, the Annual Addition for a
limitation year will, if necessary, be further limited as provided for in
Code section 415(e) taking into account all applicable transition rules.
(e) Limitation Year. For purposes of determining the Code section 415
----------------
limits under the Plan, the "limitation year" shall be the Plan Year.
(f) To the extent necessary to satisfy the limitations of Code section
415 for any Participant, the annual addition which would otherwise be made
on behalf of the Participant under the Plan shall be reduced after the
Participant's benefit is reduced under any and all defined benefit plans,
and after the Participant's annual addition is reduced under any other
defined contribution plan.
(g) If, as a result of the allocation of forfeitures, a reasonable
error in estimating a Participant's compensation for a Plan Year or
limitation year, a reasonable error in determining the amount of elective
deferrals (within the meaning of Code section 402(g)(3)) that may be made
with respect to any individual under the limits of Code section 415, or
under such other facts and circumstances as may be permitted under
regulation or by the Internal Revenue Service, the annual addition under
the Plan for a Participant would cause the Code section 415 limitations for
a limitation year to be exceeded, any Elective Contributions made pursuant
to a Contribution Agreement together with earnings thereon) made by or on
behalf of the Participant for the Limitation Year, to the extent necessary,
will be returned to the Participant as provided for in Regulation section
1.415-6(b)(6)(iv).
11.3. CODE SECTION 402(G) LIMITS.
------------------------------
(a) In General. The maximum amount of Elective Contributions made on
----------
behalf of any Participant for any calendar year, when added to the amount
of elective deferrals (as defined in Regulation section 1.402(g) -l(b))
under all other plans, contracts and arrangements of an Affiliated Company
with respect to the Participant for the calendar year), shall in no event
exceed the maximum applicable limit in effect for the calendar year under
Regulation section 1.402(g)-l(d).
(b) Distribution of excess deferrals. In the event that an amount is
---------------------------------
included in a Participant's gross income for a taxable year as a result of
an excess
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<PAGE>
deferral under Code section 402(g), and the Participant notifies the
Administrator on or before the March 1 following the taxable year that all
or a specified part of an Elective Contribution made for his or her benefit
represents an excess deferral, the Administrator shall make every
reasonable effort to cause such excess deferral, adjusted for allocable
income, to be distributed to the Participant no later than the April 15
following the calendar year in which such excess deferral was made. The
income allocable to excess deferrals is equal to the allocable gain or loss
for the taxable year of the individual, but not the allocable gain or loss
for the period between the end of the taxable year and the date of
distribution (the "gap period"). Income allocable to excess deferrals for
the taxable year shall be determined by multiplying the gain or loss
attributable to the Participant's Elective Contribution Account for the
taxable year by a fraction, the numerator of which is the Participant's
excess deferrals attributable to such Account for the taxable year, and the
denominator of which is the sum of the Participant's Elective Contribution
Account balance as of the beginning of the taxable year plus the
Participant's Elective Contributions for the taxable year. No distribution
of an excess deferral shall be made during the taxable year of a
Participant in which the excess deferral was made unless the correcting
distribution is made after the date on which the Plan received the excess
deferral and both the Participant and the Plan designates the distribution
as a distribution of an excess deferral. The amount of any excess deferrals
that may be distributed to a Participant for a taxable year shall be
reduced by the amount of Elective Contributions that were excess
contributions and were previously distributed to the Participant for the
Plan Year beginning with or within such taxable year.
(c) Treatment of excess deferrals. For other purposes of the Code,
------------------------------
including Code sections 401(a)(4), 401(k)(3), 404, 409, 411, 412, and 416,
excess deferrals must be treated as employer contributions even if they are
distributed in accordance with paragraph (b) above. However, excess
deferrals of a non-Highly Compensated Employee are not to be taken into
account for purposes of Code section 401(k)(3) (the actual deferral
percentage test) to the extent the excess deferrals are prohibited under
Code section 401(a)(30). Excess deferrals are also to be treated as
employer contributions for purposes of Code section 415 unless distributed
under paragraph (b) above.
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<PAGE>
11.4. CODE SECTION 401(K)(3) LIMITS.
------------------------------
(a) In General. Elective Contributions made under the Plan are subject
----------
to the limits of Code section 401(k) (3), as more fully described below.
The Plan provisions relating to the 401(k) (3) limits are to be interpreted
and applied in accordance with Code sections 401(k)(3) and 401(a)(4), which
are hereby incorporated by reference, and in such manner as to satisfy such
other requirements relating to Code section 401(k) as may be prescribed by
the Secretary of the Treasury from time to time.
(b) Actual deferral ratios. For each Plan Year, the Administrator will
----------------------
determine the "actual deferral ratio" for each Participant who is eligible
for Elective Contributions. The actual deferral ratio shall be the ratio,
calculated to the nearest one-hundredth of one percent, of the Elective
Contributions made on behalf of the Participant for the Plan Year to the
Participant's Compensation for the applicable period. For purposes of
determining a Participant's actual deferral ratio,
(i) Elective Contributions will be taken into account only if
each of the following requirements are satisfied:
(A) the Elective Contribution is allocated to the Participant's
Elective Contribution Account as of a date within the Plan Year, is not
contingent upon participation in the Plan or performance of services on any
date subsequent to that date, and is actually paid to the Trust no later
than the end of the 12-month period immediately following the Plan Year to
which the contribution relates; and
(B) the Elective Contribution relates to Compensation that either
would have been received by the Participant ~n the Plan Year but for the
Participant's election to defer under the Plan or is attributable for
services performed in the Plan Year and, but for the Participant's election
to defer, would have been received by the Participant within 2 1/2 months
after the close of the Plan Year. To the extent Elective Contributions
which meet the requirements of (A) and (B) above constitute excess
deferrals, they will be taken into account for each Highly Compensated
Employee, but will not be taken into account for any non-Highly Compensated
Employee.
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<PAGE>
(ii) in the case of a Participant who is a Highly Compensated
Employee for the Plan Year and is eligible to have -elective deferrals
(and qualified matching contributions, to the extent treated as
elective deferrals) allocated to his or her accounts under two or more
cash or deferred arrangements described in Code section 401(k)
maintained by an Affiliated Company, the Participant's actual deferral
ratio shall be determined as if such elective deferrals (as well as
qualified nonelective or qualified matching contributions) are made
under a single arrangement, and if two or more of the cash or deferred
arrangements have different Plan Years, all cash or deferred
arrangements ending with or within the same calendar year shall be
treated as a single arrangement;
(iii) for purposes of determining the actual deferral ratio of a
Participant who is a 5 percent owner or one of the 10 most highly paid
Highly Compensated Employees, the Elective Contributions and
Compensation of such Participant shall include the Elective
Contributions and Compensation for the Plan Year of the Participant's
family members (as defined in Code section 414(q)(6)), such family
members shall be disregarded as separate employees for purposes of
determining the actual deferral ratio of both Highly Compensated
Employees and non-Highly Compensated Employees, and in the event that
there are excess contributions with respect to such family members,
the excess shall be allocated among such family members in proportion
to their Elective Contributions;
(iv) the applicable period for determining Compensation for each
Participant for a Plan Year shall be the 12-month period ending on the
last day of such Plan Year; provided, that to the extent permitted
under Regulations, the Administrator may choose, on a uniform basis,
to treat as the applicable period only that portion of the Plan Year
during which the individual was a Participant.
(v) in the event that the Plan satisfies the requirements of Code
sections 401(k), 410(a)(4), or 410(b) only if aggregated with one or
more other plans with the same Plan Year, or if one or more other
plans with the same Plan Year satisfy such Code sections only if
aggregated with this Plan, then this section shall be applied by
determining
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<PAGE>
the actual deferral ratios as if all such plans were a single plan;
(vi) an Employee who would be a Participant but for the failure
to make Elective Contributions shall be treated as a Participant on
whose behalf no Elective Contributions are made; and
(vii) Elective Contributions which are made on behalf of
non-Highly Compensated Employees which could be used to satisfy the
Code section 401(k)(3) limits but are not necessary to be taken into
account in order to satisfy such limits, may instead be taken into
account for purposes of the Code section 401(m) limits to the extent
permitted by Regulation section 1.401(m) - 1(b)(5).
(c) Actual deferral percentages. The actual deferral ratios for all
-----------------------------
Highly Compensated Employees who are eligible for Elective Contributions
for a Plan Year shall be averaged to determine the actual deferral
percentage for the highly compensated group for the Plan Year, and the
actual deferral ratios for all Employees who are not Highly Compensated
Employees but are eligible for Elective Contributions for the Plan Year
shall be averaged to determine the actual deferral percentage for the
non-highly compensated group for the Plan Year. The actual deferral
percentages for any Plan Year must satisfy at least one of the following
tests:
(i) the actual deferral percentage for the highly compensated
group does not exceed 125% of the actual deferral percentage for the
non-highly compensated group; or
(ii) the excess of the actual deferral percentage for the highly
compensated group over the actual deferral percentage for the
nonhighly compensated group does not exceed two percentage points, and
the actual deferral percentage for the highly compensated group does
not exceed twice the actual deferral percentage of the nonhighly
compensated group.
(d) Adjustments by Administrator. If, prior to the time all Elective
-----------------------------
Contributions for a Plan Year have been contributed to the Trust, the
Administrator determines that Elective Contributions are being made at a
rate which will cause the Code section 401(k)(3) limits to be exceeded for
the Plan Year, the Administrator may, in its sole discretion, limit the
amount of Elective Contributions to be made with respect
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<PAGE>
to one or more Highly Compensated Employees for the balance of the Plan
Year by suspending or reducing Elective Contribution elections to the
extent the Administrator deems appropriate. Any Elective Contributions
which would otherwise be made to the Trust shall instead be paid to the
affected Participant in cash.
(e) Excess contributions. If the Code section 401(k)(3) limits have
---------------------
not been met for a Plan Year after all contributions for the Plan Year have
been made, the Administrator will determine the amount of excess
contributions with respect to Participants who are Highly Compensated
Employees. To do so, the Administrator will reduce the actual deferral
ratio of the Highly Compensated Employee with the highest actual deferral
ratio to the extent necessary to (i) enable the Plan to satisfy the
401(k)(3) limits or (ii) cause such employee's actual deferral ratio to
equal the actual deferral ratio of the Highly Compensated Employee with the
next highest actual deferral ratio, and will repeat this process until the
Plan satisfies the Code section 401(k)(3) limits. The amount of excess
contributions for each Highly Compensated Employee for the Plan Year shall
equal the amount of Elective Contributions actually made to the Trust for
the Plan Year, less the product of the (i) the Highly Compensated
Employee's reduced actual deferral ratio as determined under the preceding
sentence, and (ii) his or her Compensation. Any excess contributions will
be distributed as provided below. In no event will excess contributions
remain unallocated or be allocated to a suspense account for allocation in
a future Plan Year.
(f) Distribution of excess contributions. A Participant's excess
--------------------------------------
contributions, adjusted for income, will be designated by the Participating
Company as a distribution of excess contributions and distributed to the
Participant. The income allocable to excess contributions is equal to the
allocable gain or loss for the Plan Year, but not the allocable gain or
loss for the period between the end of the Plan Year and the date of
distribution (the "gap period"). Income allocable to excess contributions
for the Plan Year shall be determined by multiplying the gain or loss
attributable to the Participant's Elective Contribution Account balance by
a fraction, the numerator of which is the excess contributions for the
Participant for the Plan Year, and the denominator of which is the
Participant's Elective Contribution Account balance as of the beginning of
the Plan Year plus the Participant's Elective Contributions for the Plan
Year. Distribution
-34-
<PAGE>
of excess contributions will be made after the close of the Plan Year to
which the contributions relate, but within 12 months after the close of
such Plan Year. Excess contributions shall be treated as annual additions
under the Plan, even if distributed under this paragraph.
(g) Special rules. For purposes of distributing excess contributions,
--------------
(i) the amount of excess contributions that may be distributed
with respect to a Highly Compensated Employee for a Plan Year shall be
reduced by the amount of excess deferrals previously distributed to
the Highly Compensated Employee for his or her taxable year ending
with or within such Plan Year.
(ii) The determination and correction of excess contributions
with respect to a Highly Compensated Employee whose actual deferral
ratio is determined pursuant to the family aggregation rules will be
accomplished by reducing the actual deferral ratio as required above
and allocating the excess contributions for the family group among
family members in proportion to the Elective Contribution of each
family member that is combined to determine the actual deferral ratio.
(h) Recordkeeping requirement. The Administrator, on behalf of the
--------------------------
Participating Companies, shall maintain such records as are necessary to
demonstrate compliance with the Code section 401(k)(3) limits.
(i) Effect on Matching Contributions. A Participant's Elective
---------------------------------
Contributions which are returned as a result of the Code section
401(k)(3) limits for a Plan Year shall not be taken into account in
determining the amount of Matching Contributions to be made for the
Participant's benefit for the Year. To the extent Matching
Contributions have already been made with respect to the Elective
Contributions at the time Elective Contributions are determined to be
excess contributions, such Matching Contributions shall be distributed
to the Participant the same time as the Elective Contributions are
returned.
(j) Qualified Nonelective Contributions. Effective July 1, 1994, with
-----------------------------------
the approval of the Plan Sponsor, any Participating Company may, in its
discretion, make qualified nonelective contributions ("QNECs") to the Plan.
QNECs that are made for a Participant for a Plan Year shall be treated as
Elective Contributions for
-35-
<PAGE>
purposes of determining such Participant's actual deferral ratio for such
Plan Year. For purposes of this Plan, the term "QNEC" means a contribution
made to the Plan by a Participating Company (other than an Elective
Contribution or a Matching Contribution) which a Participant may not elect
to have paid to him or her in cash or other benefits instead of being
contributed to the Plan, and which constitute "qualified nonelective
contributions" within the meaning of Treasury Regulation Section
1.401(k)-l(g)(13). If a Participating Company makes QNECs for a Plan Year,
such contributions will be allocated to the accounts of Participants in
accordance with a schedule adopted by the Plan Sponsor as a part of the
Plan prior to the date such contribution is made. The amount of QNECs made
for any Plan Year must satisfy the requirements of Section 401(a)(4) of the
Code. QNECs made on behalf of a Participant shall be allocated to his or
her Elective Contribution Account, shall be at all times 100% vested, and
shall be subject to withdrawal or distribution under the Plan to the same
extent, and under the same circumstances, as Elective Contributions (except
that QNECs, and the earnings thereon, may not be withdrawn pursuant to
Section 6.1). A QNEC made on behalf of a Participant for a Plan Year shall
be treated as an Elective Contribution in determining that Participant's
actual deferral ratio (as defined in the second sentence of Section 11.4(b)
of this Plan) for such Plan Year. A QNEC shall be treated as made for a
Plan Year if it is allocated to the Participant's Elective Contribution
Account under the Plan as of a date within that Plan Year, it is not
contingent upon the Participant's participation in the Plan or performance
of services on any date subsequent to that date, and it is actually paid to
the Trust no later than the end of the twelve month period immediately
following such Plan Year.
11.5 CODE SECTION 401(M) LIMITS.
-----------------------------
(a) In General. Matching Contributions made under the Plan are subject
----------
to the limits of Code section 401(m), as more fully described below. The
Plan provisions relating to the 401(m) limits are to be interpreted and
applied in accordance with Code sections 401(m) and 401(a)(4), which are
hereby incorporated by reference, and in such manner as to satisfy such
other requirements relating to Code section 401(m) as may be prescribed by
the Secretary of the Treasury from time to time.
(b) Actual contribution ratios. For each
--------------------------
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<PAGE>
Plan Year, the Administrator will determine the "actual contribution ratio"
for each Participant who is eligible for Matching Contributions. The actual
contribution ratio shall be the ratio, calculated to the nearest one
hundredth of one percent, of the Matching Contributions which are not
treated as Elective contributions made on behalf of the Participant for the
Plan Year, to the Participant's Compensation for the Plan Year.
For purposes of determining a Participant's actual contribution ratio,
(i) A Matching Contribution will be taken into account only if
the Contribution is allocated to a Participant's Account as of a date
within the Plan Year, is actually paid to the Trust no later than 12
months after the close of the Plan Year, and is made on behalf of a
Participant on account of the Participant's Elective Contributions for
the Plan Year.
(ii) for purposes of determining the actual contribution ratio of
a Participant who is a 5 percent owner or one of the 10 most highly
paid Highly Compensated Employees, the Matching Contributions and
Compensation of such Participant shall include the Matching
Contributions, and Compensation for the Plan Year of the Participant's
family members (as defined in Code section 414(q)(6)), and such family
members shall be disregarded as separate employees for purposes of
determining the actual contribution ratio of both Highly Compensated
Employees and non-Highly Compensated Employees;
(iii) in the case of a Participant who is a Highly Compensated
Employee for the Plan Year and is eligible to have matching
contributions allocated to his or her accounts under two or more plans
maintained by an Affiliated Company which may be aggregated for
purposes of Code sections 410(b) and 401(a)(4), the Participant's
actual contribution ratio shall be determined as if such contributions
are made under a single plan, and if two or more of the plans have
different Plan Years, all plans ending with or within the same
calendar year shall be treated as a single plan;
(iv) the applicable period for determining Compensation for each
Participant for a Plan Year shall be the 12-month period ending on the
last day of such Plan Year; provided, that to the extent
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<PAGE>
permitted under Regulations, the Administrator may choose, on a
uniform basis, to treat as the applicable period only that portion of
the Plan Year during which the individual was a Participant;
(v) Elective Contributions not applied to satisfy the Code
section 401(k)(3) limits may be treated as Matching Contributions to
the extent permitted by Regulation section 1.401(m) - l(b)(5); and
(vi) in the event that the Plan satisfies the requirements of
Code sections 401(k), 410(a)(4), or 410(b) only if aggregated with one
or more other plans with the same plan year, or if one or more other
plans with the same Plan Year satisfy such Code sections only if
aggregated with this Plan, then this section shall be applied by
determining the actual deferral ratios as if all such plans were a
single plan.
(c) Actual contribution percentages. The actual contribution ratios
---------------------------------
for all Highly Compensated Employees who are eligible for Matching
Contributions for a Plan Year shall be averaged to determine the actual
contribution percentage for the highly compensated group for the Plan Year,
and the actual contribution ratios for all Employees who are not Highly
Compensated Employees but are eligible for Matching Contributions for the
Plan Year shall be averaged to determine the actual contribution percentage
for the nonhighly compensated group for the Plan Year. The actual
contribution percentages for any Plan Year must satisfy at least one of the
following tests:
(i) The actual contribution percentage for the highly compensated
group does not exceed 125% of the actual contribution percentage for
the nonhighly compensated group; or
(ii) The excess of the actual contribution percentage for the
highly compensated group over the actual contribution percentage for
the nonhighly compensated group does not exceed two percentage points,
and the actual contribution percentage for the highly compensated
group does not exceed twice the actual contribution percentage of the
nonhighly compensated group.
(d) Multiple use test. In the event that (i) the actual deferral
------------------
percentage and actual contribution percentage for the highly compensated
group each exceed
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<PAGE>
125% of the respective actual deferral and actual contribution percentages for
the nonhighly compensated group, and (ii) the sum of the actual deferral
percentage and the actual-'contribution percentage for the highly compensated
group exceeds the "aggregate limit" within the meaning of Regulation section
1.401(m) -2(b)(3), the Administrator shall reduce the actual contribution ratios
of Highly Compensated Employees who had both an actual deferral ratio and an
actual contribution ratio for the Plan Year to the extent required by such
section and in the same manner as described in paragraph (f) below.
(e) Adjustments by Administrator. If, prior to the time all Matching
-----------------------------
Contributions for a Plan Year have been contributed to the Trust, the
Administrator determines that such Contributions are being made at a rate
which will cause the Code section 401(m) limits to be exceeded for the Plan
Year, the Administrator may, in its sole discretion, limit the amount of
such Contributions to be made with respect to one or more Highly
Compensated Employees for the balance of the Plan Year by limiting the
amount of such Contributions to the extent the Administrator deems
appropriate.
(f) Excess aggregate contributions. If the Code section 401(m) limits
------------------------------
have not been satisfied for a Plan Year after all contributions for the
Plan Year have been made, the excess of the aggregate amount of the
Matching Contributions actually made on behalf of Highly Compensated
Employees for the Plan Year over the maximum amount of such contributions
permitted under Code section 401(m)(2)(A) shall be considered to be "excess
aggregate contributions." The Administrator shall determine the amount of
excess aggregate contributions made with respect to each Participant who is
a Highly Compensated Employee. To do so, the Administrator will reduce the
actual contribution ratio of the Highly Compensated Employee with the
highest actual contribution ratio to the extent necessary to (i) enable the
Plan to satisfy the section 401(m) limits or (ii) cause such employee's
actual contribution ratio to equal the actual contribution ratio of the
Highly Compensated Employee with the next highest actual contribution
ratio, and will repeat this process until the Plan satisfies the Code
section 401(m) limits. The amount of excess aggregate contributions for
each Highly Compensated Employee for the Plan Year shall equal the amount
of Matching Contributions (plus Elective Contributions which are treated as
Matching Contributions for purposes of the Code section 401(m) limits)
actually made to the Trust for the Plan Year,
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<PAGE>
less the product of the (i) the Highly Compensated Employee's reduced actual
contribution ratio as determined under the preceding sentence, and (ii) his or
her Compensation. Any excess aggregate contributions will be distributed as
provided below to the Highly Compensated Employee to which they are
attributable. In no event will excess aggregate contributions remain unallocated
or be allocated to a suspense account for allocation in a future Plan Year.
(g) Distribution of excess aggregate contributions. A Participant's
-----------------------------------------------
excess aggregate contributions, adjusted for income, will be designated by
the Participating Company as a distribution of excess aggregate
contributions, and distributed to the Participant. The income allocable to
excess aggregate contributions is equal to the allocable gain or loss for
the taxable year of the individual, but not the allocable gain or loss for
the period between the end of the taxable year and the date of distribution
(the "gap period"). Income allocable to excess aggregate contributions for
the taxable year shall be determined by multiplying the gain or loss
attributable to the Participant's Matching Contribution Account balance by
a fraction, the numerator of which is the excess aggregate contributions
for the Participant for the Plan Year, and the denominator of which is the
sum of the Participant's Matching Contribution Account balance as of the
beginning of the Plan Year plus the Participant's Matching Contributions
for the Plan Year. Distribution of excess aggregate contributions will be
made after the close of the Plan Year to which the contributions relate,
but within 12 months after the close of such Plan Year. Excess aggregate
contributions shall be treated as employer contributions for purposes of
Code sections 401(a)(4), 404, and 415 even if distributed from the Plan.
(h) Special Rules. For purposes of distributing excess aggregate
--------------
contributions,
(i) the determination and distribution of excess aggregate
contributions with respect to a Highly Compensated Employee whose
actual contribution ratio is determined pursuant to the family
aggregation rules will be accomplished by reducing the actual
contribution ratio as required above and allocating the excess
aggregate contributions for the family group among family members in
proportion to the Matching Contributions of each family member that is
combined to determine the actual contribution ratio.
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<PAGE>
(i) Recordkeeping requirement. The Administrator, on behalf of
--------------------------
the Participating Companies, shall maintain such records as are
necessary to demonstrate compliance with the Code section 401(m)
limits, including the extent to which Elective Contributions are taken
into account in determining the actual contribution ratios.
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<PAGE>
ARTICLE 12. SPECIAL TOP-HEAVY PROVISIONS.
12.1. PROVISIONS TO APPLY. The provisions of this Article shall apply
---------------------
for any top-heavy Plan Year notwithstanding anything to the contrary in the
Plan.
12.2. MINIMUM CONTRIBUTION. For any Plan Year which is a top-heavy plan
---------------------
year, the Participating Companies shall contribute to the Trust a minimum
contribution on behalf of each Participant who is not a key employee for such
year and who has not separated from service from the Affiliated Companies by the
end of the Plan Year, regardless of whether or not the Participant has elected
to make Elective Contributions for the Year. The minimum contribution shall, in
general, equal 3% of each such Participant's Compensation, but shall be subject
to the following special rules:
(a) if the largest contribution on behalf of a key employee for such
year, expressed as a percentage of such key employee's Compensation and
taking into account only Elective Contributions and Company Contributions,
is less than 3% of the key employee's Compensation, such lesser percentage
shall be the minimum contribution percentage for Participants who are not
key employees. This special rule shall not apply, however, if the Plan is
required to be included in an aggregation group and enables a defined
benefit plan to meet the requirements of Code section 410(a)(4) or 410.
(b) No minimum contribution will be required with respect to a
Participant who is also covered by another top-heavy defined contribution
plan of an Affiliated Company which meets the vesting requirements of Code
section 416(b) and under which the Participant receives the top-heavy
minimum contribution.
(c) If a Participant is also covered by a top heavy defined benefit
plan of an Affiliated -Company, "5%" shall be substituted for "3%" above in
determining the minimum contribution.
(d) The minimum contribution with respect to a Participant who is not
a key employee for the particular year shall be offset by any Company
Contributions, if any, made on behalf of the Participant for such Year, but
shall not be offset by any Elective Contributions or Matching
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<PAGE>
Contributions made on behalf of the Participant for such year.
(e) If additional minimum contributions are required under this
Section, the Administrator will establish (or cause the Trustee to
establish) a special Account to which such contributions will be allocated.
Distributions from such Account will be made in accordance with the rules
applicable to Elective Contribution Accounts.
12.3. ADJUSTMENT TO LIMITATION ON BENEFITS. For purposes of the Code
---------------------------------------
section 415 limits, the definitions of "defined contribution plan fraction" and
"defined benefit plan fraction" contained therein shall be modified, for any
Plan Year which is a top-heavy Plan Year, by substituting "1.0" for "1.25" in
Code sections 415(e)(2)(B) and 415(e)(3)(B).
12.4. DEFINITIONS. For purposes of these top heavy provisions, the
------------
following terms have the following meanings:
(a) "key employee" means a key employee described in Code section
416(i)(1), and "non-key employee" means any employee who is not a key
employee (including employees who are former key employees);
(b) "top-heavy plan year" means a Plan Year if any of the following
conditions exist:
(i) the top-heavy ratio for the Plan exceeds 60 percent and the
Plan is not part of any required aggregation group or permissive
aggregation group of plans;
(ii) this Plan is a part of a required aggregation group of plans
but not part of a permissive aggregation group and the top-heavy ratio
for the group of plans exceeds 60 percent; or
(iii) the Plan is Part of a required aggregation group and part
of a permissive aggregation group of plans and the top-heavy ratio for
the permissive aggregation group exceeds 60 percent.
(c) "top-heavy ratio"
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<PAGE>
(i) if employer maintains one or more defined contribution plans
(including any Simplified Employee Pension 1.0lan) and the employers
has not maintained any defined benefit plan which during the 5-year
period ending on the determination date(s) has or has had accrued
benefits, the top-heavy ratio for the Plan alone or for the required
or permissive aggregation group as appropriate is a fraction, the
numerator of which is the sum of the account balances of all key
employees on the determination date(s) (including any part of any
account balance distributed in the 5-year period ending on the
determination date(s)), and the denominator of which is the sum of all
account balances (including any part of an account balance distributed
in the 5-year period ending on the determination date(s), both
computed in accordance with Code section 416. Both the numerator and
the denominator of the top-heavy ratio are increased to reflect any
contribution not actually made as of the determination date, but which
is required to be taken into account on that date Under Code section
416.
(ii) If the employer maintains one or more defined contribution
plans (including any Simplified Employee Pension Plan) and the
employer maintains or has maintained one or more defined benefit plans
which during the 5-year period ending on the determination date(s) has
or has had any accrued benefits, the top-heavy ratio for any required
or permissive aggregation group as appropriate is a fraction, the
numerator of which is the 8um. of the account balances under the
aggregated defined contribution plan or plans for all key employees ,
determined in accordance with (i) above, and the present value of
accrued benefits under the aggregated defined benefit plan or plans
for all key employees as of the determination date(s), and the
denominator of which is the sum of the account balances under the
aggregated defined contribution plan or plans for all participants,
determined in accordance with (i) above, and the present value of all
accrued benefits under the defined benefit plan or plans for all
participants as-of the determination date(s), all determined in
accordance with Code section' 416. The accrued benefits under a
defined benefit plan in both the numerator and denominator of the
top-heavy ratio are increased
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<PAGE>
for any distribution of an accrued benefit made in the 5-year period
ending on the determination date.
(iii) For purposes of (i) and (ii) above the value of account
balances and the present value of accrued benefits will be determined
as of the most recent valuation date that falls within or ends with
the 12-month period ending on the determination date, except as
provided in Code section 416 for the first and second plan years of a
defined benefit plan. The account balances and accrued benefits of a
participant (A) who is not a key employee but who was a key employee
in a prior year, or (B) who has not been credited with at least one
hour of service with any employer maintaining the plan at any time
during the 5-year period ending on the determination date will be
disregarded. The calculation of the top-heavy ratio, and the extent to
which distributions, rollovers, and transfers are taken into account
will be made in accordance with Code section 416. Deductible employee
contributions will not be taken into account for purposes of computing
the top-heavy ratio. When aggregating plans the value of account
balances and accrued benefits will be calculated with reference to the
determination dates that fall within the same calendar year.
(iv) The accrued benefit of a participant other than a key
employee shall be determined under (A) the method, if any, that
uniformly applies for accrual purposes under all defined benefit plans
maintained by the employer, or (B) if there is no such method, as if
such benefit accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule of Code section 411 (b) (1) (C) .
(d) The "permissive aggregation group" is the required aggregation
group of plans plus any other plan or plan of the employer which, when
considered as a group with the required aggregation group, would continue
to satisfy the requirements of Code sections 401(a)(4) and 410.
(e) The "required aggregation group" is (i) each qualified plan of the
employer in which at least one key employee participates or participated at
any time during the determination period (regardless of whether the plan
has terminated),
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<PAGE>
and (ii) any other qualified plan of the employer which enables a plan
described in (i) to meet the requirements of Code-sections 401(a)(4) and
410(b)
(f) For purposes of computing the top-heavy ratio, the valuation date
shall be the last day of the applicable plan year.
(g) the term "determination date" means, with respect to the initial
plan year of a plan, the last day of such plan year and, with respect to
any other plan year of a plan, the last day of the preceding plan year of
such plan. The term "applicable determination date" means, with respect to
the Plan, the determination date for the Plan Year of reference and, with
respect to any other plan, the determination date for any plan year of such
plan which falls within the same calendar year as the applicable
determination date of the Plan.
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<PAGE>
ARTICLE 13. MISCELLANEOUS.
13.1. EXCLUSIVE BENEFIT RULE. No part of the corpus or income of the
----------------------
Trust forming part of the Plan will be used for or diverted to purposes other
than for the exclusive benefit of each Participant and Beneficiary, except as
otherwise provided under the provisions of the Plan relating to Qualified
Domestic Relations Orders, the payment of reasonable expenses of administering
the Plan, the return of contributions upon nondeductibility or mistake of fact,
or the failure of the Plan to qualify initially.
13.2. LIMITATION OF RIGHTS. Neither the establishment of the Plan or
----------------------
the Trust, nor any amendment thereof, nor the creation of any fund or account,
nor the payment of any benefits, will be construed as giving to any Participant
or other person any legal or equitable right against any Participating Company
or Administrator or Trustee, except as provided herein, and in no event will the
terms of employment or service of any Participant be modified or in any way be
affected hereby. It is a condition of the Plan, and each Participant expressly
agrees by his or her participation herein, that each Participant will look
solely to the assets held in the Trust for the payment of any benefit to which
he or she is entitled under the Plan.
13.3. NONALIENABILITY OF BENEFITS. The benefits provided hereunder
-----------------------------
will not be subject to the voluntary or involuntary alienation, assignment,
garnishment, attachment, execution or levy of any kind, and any attempt to cause
such benefits to be so subjected will not be recognized, except to such extent
as may be required by law and except that if the Administrator receives any
Qualified Domestic Relations Order that requires the payment of benefits
hereunder or the segregation of any Account, such benefits shall be paid, and
such Account segregated, in accordance with the applicable requirements of such
Order. In addition, an Account balance may be pledged as security for a loan
from the Plan in accordance with the Plan's loan procedures.
13.4. GOVERNING LAW. The Plan and Trust will be construed,
- --------------
administered and enforced according to the laws of the Commonwealth of
Massachusetts to the extent such laws are not preempted by ERISA.
13.5. APPOINTMENT OF PERSON TO RECEIVE PAYMENT.
----------------------------------------------
In the event any amount shall become distributable
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<PAGE>
hereunder to any person and if after written notice from the Trustee or the
Plan Sponsor or the Administrator mailed to such person's last known address as
shown on the Plan Sponsor's record's such person or his or her personal
representative shall not have presented himself or herself to the Administrator
or notified the Administrator in writing of his or her address within one year
after the mailing of such notice, then the Administrator may in its discretion
appoint one or more of the spouse and blood relatives of such person to receive
such distribution, including any amount thereafter becoming due to such person
(or his or her estate), in the proportions determined by it, and if the
Administrator shall be unwilling to appoint any such person or persons, it shall
retain the said amount in the Trust fund in a special account for said person.
Any action of the Administrator hereunder shall be conclusive upon all persons.
13.6. ACTION BY PLAN SPONSOR. Whenever the Plan Sponsor under the terms
----------------------
of the Plan is permitted or required to do or perform any act or manner of
thing, it shall be done and performed by any officer who has authority to so act
(or his or her delegate) or by the Administrator (or its delegate) if a matter
of plan administration.
13.7. IMPOSSIBILITY OF PERFORMANCE. In case it becomes impossible or
-----------------------------
illegal for the Plan Sponsor or the Trustee or the Administrator to perform any
act under the Plan and Trust, that legal and possible act shall be performed
which in the judgment of the Plan Sponsor will most nearly carry out the intent
and purpose of the Plan. Any person interested in the Plan shall be bound by the
acts performed under such conditions.
13.8. ELECTRONIC NOTICE. The Administrator may determine those
------------------
situations where electronic means may be substituted for written notice,
elections, etc., required hereunder by Participants to the Administrator.
Beneficiary designations shall however remain in written form.
13.9. INCOMPETENT PARTICIPANTS. If the Administrator receives evidence
------------------------
satisfactory to it-that a Participant is incompetent by reason of a physical or
mental impairment to exercise his or her rights hereunder with respect to the
Participant's Account, the Administrator may act at the direction of a guardian,
committee, or other representative of such person duly appointed by a court of
competent jurisdiction or such
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<PAGE>
other person who has been so designated to act on his or her behalf by the
Participant. Any action taken by the Administrator pursuant to such power shall,
as to such action, operate as a complete discharge of the Trust, the Trustee,
the Plan Sponsor, and the Administrator.
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<PAGE>
ARTICLE 14. DEFINITIONS.
Wherever used in the Plan, the following terms have the following meanings:
14.1. "ACCOUNTS" mean, for any Participant, the accounts established
under the Plan to which contributions made for the Participant's benefit, and
any allocable income, expense, gain and loss, are allocated. References to a
Participant's Elective Contribution Account, Company Contribution Account, and
Rollover Account, respectively, refer to those Accounts established for a
Participant to which the respective contributions are allocated.
14.2. "ADMINISTRATOR" means the entity or persons appointed to
administer the Plan pursuant to its provisions.
14.3. "AFFILIATED COMPANY" means (a) the Plan Sponsor, (b) any
corporation that is a member of a controlled group of corporations (as defined
in Code section 414(b)) of which the Plan Sponsor is also a member, (c) any
trade or business, whether or not incorporated, that is under common control (as
defined in Code section 414(c)) with the Plan Sponsor, (d) any trade or business
that is a member of an affiliated service group (as defined in Code section
414(m)) of which the Plan Sponsor is also a member, or (e) to the extent
required by Regulations issued under Code section 414(o), any other
organization; provided, that the term "Affiliated Company" shall not include any
corporation or unincorporated trade or business prior to the date on which such
corporation, trade or business satisfies the affiliation or control tests of
(b), (c) (d) or (e) above. In identifying any "Affiliated Companies" for
purposes of the Code section 415 limits, the definitions in Code sections 414(b)
and (c) shall be modified as provided in Code section 415(h).
14.4. "BENEFICIARY" means any person entitled to receive benefits
under the Plan upon the death of a Participant.
14.5. "BOARD OF DIRECTORS" means the Board of Directors of the Plan
Sponsor. With the exception of its authority to terminate this Plan, the Board
of Directors may delegate all authority given to it hereunder to perform such
other acts and exercise such other authority over the Plan as it may elect to
do, and to the extent that is does so, the term "Board of
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<PAGE>
Directors" as used in this Plan document shall mean the person or person to whom
it delegates its powers.
14.6. "CLAIMS COMMITTEE" means the U.S. Employee Benefits Claim
Appeal Committee, as described in Article 9, which shall consist of at least
three members appointed by that person or persons delegated to do so by the
Board of Directors, or in the absence thereof, the Board of Directors.
14.7. "CODE" means the Internal Revenue Code of 1986, as amended from
time to time. Reference to any section or subsection of the Code includes
reference to any comparable or succeeding provisions of any legislation which
amends, supplements or replaces such section or subsection, and also includes
reference to any Regulation issued pursuant to or with respect to such section
or subsection.
14.8. "COMPANY CONTRIBUTION" means a contribution made by a
Participating Company on behalf of a Participant pursuant to Section 3.3 and
includes a Matching Contribution.
14.9. "COMPENSATION" means,
(a) for purposes of determining the Code section 415 limits and the
amount of any minimum contribution under the special top-heavy provisions,
the Participant's wages within the meaning of Code section 3401(a) from an
Affiliated Company and all other payments of compensation to an employee by
his or her Affiliated Company (in the course of the Affiliated Company's
trade or business) for which the Affiliated Company or another party is
required to furnish the employee a written statement (IRS Form W2) under
Code sections 6041(d), 6051(a)(3), and 6052, but without regard to any
rules under Code section 3401(a) that limit the remuneration included in
wages based on the nature or location of the employment or the services
performed;
(b) for purposes of determining the status of an individual as a
Highly Compensated Employee or a key employee, the same as described in (a)
above, but increased by any such amounts that would have been received by
the individual from the Affiliated Company but for an election under Code
sections 125 or 401(k); and
(c) for all other purposes under the Plan, the same as in (a) above,
but, provided the
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nondiscrimination requirement of Regulation section 1.414(s)-l(d)(3) is
met, reduced by reimbursements or other expense allowances,-fringe benefits
(cash and noncash) including, effective July 1, 1994, income resulting from
the exercise of stock options or stock purchased pursuant to plans of the
Plan Sponsor or a related employer or from the disposition of any shares
acquired pursuant to such exercises or purchases, moving expenses, welfare
benefits, and effective August 1, 1994, all forms of direct remuneration
payable as severance pay, pay-in-lieu of notice, or any other form of
remuneration payable in account of a Participant's separation from service
with an Affiliated Company (but not accrued vacation), provided, however,
that "Compensation" for purposes of this paragraph (c) shall be determined
without regard to reductions in gross income attributable to elective
deferrals under Code sections 125 or 401(k).
(d) Compensation shall include only that Compensation which is
actually paid to the Participant during the applicable Plan Year. For
purposes other than subsection (a) above, Compensation for any individual
shall be limited for any Plan Year to $200,000 (as adjusted pursuant to
section 401W(17) of the Code), except that for Plan Years commencing on or
after January 1, 1994, the dollar limit shall be $150,000 (as adjusted
pursuant to section 401(a)(17) of the Code). Subject to Ann. 92-29, the
dollar limitation applicable for a calendar year shall be treated as
applicable to the Plan Year commencing in such calendar year. In
determining the Compensation of a Participant for purposes of these
limitations, the rules of Code section 414(q)(6) shall apply, except in
applying such rules, the term "family" shall include only the spouse of the
Participant and any lineal descendants of the Participant who have not
attained age 19 before the close of the Plan Year. If, as a result of the
application of such family aggregation rules the adjusted limitation is
exceeded, then the limitation shall be prorated among the affected
individuals in proportion to each such individual's Compensation-as
determined under this Section prior to the application of this limitation.
14.10. "Contribution Agreement" means an agreement (either in writing
or through telephone or electronic means) entered into between a Participant and
his or her Participating Company pursuant to which Elective Contributions shall
be made for the Participant's benefit.
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<PAGE>
14.11. "Date of Employment" means the Employee's first day of
employment or re-employment. The first day of employment or re-employment is the
first day the Employee performs an hour of service, and an "hour of service" for
this purpose is an hour for which the Employee is paid or entitled to payment
for the performance of duties for an Affiliated Company.
14.12. "Direct Transfer" means a payment of an Eligible Rollover
Distribution by the Plan to the Eligible Retirement Plan specified by the
Participant.
14.13. "Early Retirement Date" means the date on or after which the
Participant reaches age 55 and has completed a Period of Service of 10 years or
more.
14.14. "Elective Contribution" means a contribution made to the Plan
for the benefit of a Participant pursuant to a Contribution Agreement.
14.15. "Eligible Employee" means any regular Employee who is employed
by a Participating Company, except for an Employee who is hired on a temporary
basis, or who is included in the class of Employees whose status is "co-op
student" until July 1, 1995. In no event shall a "leased employee" within the
meaning of Code section 414(n) become an Eligible Employee until he or she
becomes a common law employee of a Participating Company. Notwithstanding the
foregoing, no Employee who is on a temporary assignment to the Plan Sponsor or
other Participating Company from a non-U.S. Affiliated Company, shall not be an
"Eligible Employee" during such temporary assignment. Furthermore, an Employee
of the Plan Sponsor or other Participating Company who is on a temporary
assignment to a non-U.S. Affiliated Company shall remain an Eligible Employee
during such temporary assignment.
14.16. "Employee, means any individual employed by an Affiliated
Company, including any leased employee and any other individual required to be
treated as an employee pursuant to Code sections 414(n) and 414(o).
14.17. "Eligible Rollover Distribution" means any distribution of all
or any portion of the balance of the Account of a Participant, except that it
does not include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for the life
(or life expectancy) of the Participant and the Participant's Beneficiary, or
for a specified period of 10 years or more; any distribution to the extent such
distribution
-53-
<PAGE>
is required under section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to employer
securities).
14.18. "Eligible Retirement Plan" means an individual retirement
account described in section 408(a) of the Code, an individual retirement
annuity described in section 408(b) of the Code, an annuity plan described in
section 403 (a) of the Code, or a qualified trust described in section 401(a) of
the Code, that accepts the Participant'-s Eligible Rollover Distribution.
However, in the case of an Eligible Rollover Distribution to a Participant's
surviving spouse, an Eligible Retirement Plan is an individual retirement
account or individual retirement annuity.
14.19. "Entry Date" means the first day of the first, fourth, seventh
and tenth month of the calendar year. Effective April 2, 1995, "Entry Date"
means the first day of each pay period during the Plan Year.
14.20. "ERISA" means the Employee Retirement Income Security Act of
1974, as from time to time amended, and any successor statute or statutes of
similar import.
14.21. "Highly Compensated Employee" means an Employee - of an
Affiliated Company who is a "highly compensated employee" within the meaning of
Code section 414(q). The term Highly Compensated Employee includes highly
compensated active Employees and highly compensated former Employees.
(a) A highly compensated active Employee includes any Employee who
performs service for an Affiliated Company during the determination year
and who, during the look-back year: (i) received Compensation from the
Affiliated Companies in excess of $75,000 (as adjusted pursuant to Code
section 415(d)); (ii) received Compensation from the Affiliated Company in
excess of $50,000 (as adjusted pursuant to Code section 415(d)) and was a
member of the top-paid group for such year; or (iii) was an officer of the
Affiliated Company and received Compensation during such year that is
greater than 50 percent of the dollar limitation in effect under Code
section 415(b)(1)(A).
(b) The term Highly Compensated Employee also includes: (i) any
employee who would be described
-54-
<PAGE>
in paragraph (a) if the term "determination year" were substituted for the
term "look-back year" and who is one of the 100 Employees who received the
most Compensation from the Employers during the determination year; and
(ii) Employees who are a 5 percent owners at any time during the look-back
year or determination year. If no officer has satisfied the compensation
requirement of (a)(iii) above during either a determination year or look
back year, the highest paid officer for such year shall be treated as a
Highly Compensated Employee. For this purpose, the determination year shall
be the Plan Year. The look-back year shall be the 12-month period
immediately preceding the determination year.
(c) A highly compensated former Employee includes any Employee who
separated from service (or was deemed to have separated from service) prior
to the determination year, performs no service for the Affiliated Companies
during the determination year, and was a highly compensated active Employee
for either the separation year or any determination year ending on or after
the Employee's 55th birthday.
(d) If an Employee is, during a determination year or look-back year,
a family member of either a 5 percent owner who is an active or former
Employee or a Highly Compensated Employee who is one of the 10 most Highly
Compensated Employees ranked on the basis of Compensation paid by the
Affiliated Companies during such year, then the family member and the 5
percent owner or top 10 Highly Compensated Employee shall be aggregated. In
such case, the family member and 5 percent owner or top 10 Highly
Compensated Employee shall be treated as a single Employee receiving
compensation and Plan contributions equal to the sum of such compensation
and contributions of the family member and 5 percent owner or top-ten
Highly Compensated Employee. For purposes of this section, family member
includes the spouse, lineal ascendant and descendants of the employee or
former employee and the spouses of such lineal ascendant and descendants.
(e) The top paid group shall consist of the top 20 percent of active
Employees, ranked on the basis of Compensation received from the Affiliated
Companies during the year. The number of officers shall be limited to the
lesser of (i) 50 Employees
-55-
<PAGE>
or (ii) the greater of 3 Employees or 10 percent of Employees. If there is
not at least one officer whose Compensation is in excess of 50 percent
of the Code section 415(b)(i)(A) limit, then the highest paid officer of
the Affiliated Companies shall be treated as a Highly Compensated Employee.
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of employees in the top-paid
group, the top 100 Employees, the number of employees treated as officers
and the compensation that is considered, will be made in accordance with
Code section 414(q).
14.22. "Investment Committee" means the Digital Equipment Corporation
Savings and Investment Plan Investment Committee, as described in Article 9,
which shall consist of at least three members appointed by the Board of
Directors.
14.23. "Matching Contribution" means a contribution made for the
benefit of a Participant under the Plan on account of an Elective Contribution.
14.24. "Normal Retirement Age" means age 65.
14.25. "Participant" means each Eligible Employee who participates in
the Plan pursuant to its provisions. For purposes of Sections 6.9 and 8.6,
"Participant" may include a Participant's surviving spouse and a Participant's
or former Participant's spouse or former spouse who is an Alternate Payee under
a Qualified Domestic Relations Order, with regard to the interest of the spouse
or former spouse, as the case may be.
14.26. "Participating Company" means the Plan Sponsor and each other
Affiliated Company that adopts the Plan with the consent of the Plan Sponsor.
14.27. "Period Of Service" means, with respect to any Employee, the
aggregate of all time periods, commencing with the Employee's first Date of
Employment and ending on the date a break in service begins. An Employee will
also receive credit for any period of severance of less than 12 consecutive
months. Fractional periods of a year will be expressed in terms of days. In the
case of an individual who is absent from work for maternity or paternity
reasons, the 12-consecutive month period beginning on the first anniversary of
the first day of such absence shall not constitute a break in service. For
purposes of this Section,
-56-
<PAGE>
(a) an absence from work for maternity or paternity reasons means an
absence (i) by reason of the pregnancy of the individual, (ii) by reason of
the birth of a child of the individual, (iii) by reason of the placement of
a child with the individual in connection with the adoption of such child
by such individual, or (iv) for purposes of caring for such child for a
period beginning immediately following such birth or placement;
(b) a break in service is a period of severance of at least 12
consecutive months; and
(c) a period of severance is a continuous period of time during which
the Employee is not employed by an Affiliated Company. Such period begins
on the date the Employee retires, quits or is discharged, or if earlier,
the 12-month anniversary of the date on which the Employee was otherwise
first absent from service.
(d) In the case of a leave of absence for service in the armed forces
of the United States or Family and Medical Leave Act, no period shall be
excluded under this paragraph during which the Employee has reemployment
rights with respect to the Affiliated Companies under federal law.
14.28. "Plan" means the Digital Equipment Corporation Savings and
Investment Plan.
14.29. "Plan Sponsor" means Digital Equipment Corporation, a
Massachusetts corporation, and any successor thereto which adopts the Plan.
14.30. "Plan Year" means through June 30, 1990, the 52/53-week period
beginning on the day next following the Saturday nearest June 30 in one calendar
year and ending on the Saturday nearest June 30 in the next succeeding calendar
year, and thereafter through December 31, 1995, shall be the 12-month period
beginning on each July 1, and thereafter shall be the 12-month period beginning
on each January 1.
14.31. "Qualified Domestic Relations Order" means any judgment, decree
or order (including approval of a property settlement agreement) which
constitutes a "qualified domestic relations order" within the meaning of Code
section 414(p). A judgment, decree or order shall not be considered not to be a
Qualified Domestic Relations order merely because it requires a distribution to
an alternate payee (or the segregation
-57-
<PAGE>
of accounts pending distribution to an alternate payee) before the Participant
is otherwise entitled to a distribution under the Plan.
14.32. "Regulation" means a regulation issued by the Department of
Treasury, including any final regulation, proposed regulation, temporary
regulation, as well as any modification of any such regulation contained in any
notice, revenue procedure, or similar pronouncement issued by the Internal
Revenue Service.
14.33. "Required Beginning Date" for a Participant shall be determined
as follows:
(i) the Required Beginning Date is April 1 following the calendar
year in which the Participant attains age 70 1/2 for all periods prior
to April 3, 1995, and thereafter shall be the December 31 of the
calendar year in which the Participant attains age 70 1/2.
14.34. "Rollover Contribution" means a contribution made by a
Participant which satisfies the requirements for rollover contributions as set
forth in the Plan and the Code.
14.35. "Section" means a section of the Plan.
14.36. "Trust" means the Digital Equipment Corporation Savings and
Investment Trust established in conjunction with the Plan, together with any and
all amendments thereto.
14.37. "Trustee" mean the person or persons who are at any time the
acting Trustee under the Trust.
14.38. "Valuation Date" means the first business day of each calendar
month and such other day or days as specified by the Administrator, and
effective on or after April 3, 1995, includes each business day of the month.
-58-
<PAGE>
IN WITNESS WHEREOF, the Plan Sponsor has caused this instrument to be signed in
its name and on its behalf by its duly authorized officer, this 30th day of
April, 1996.
DIGITAL EQUIPMENT CORPORATION
By: /s/ Kathleen Angel
----------------------
Kathleen Angel
Director, Worldwide Benefits
-59-
<PAGE>
APPENDIX A
TO THE
DIGITAL EQUIPMENT CORPORATION
SAVINGS AND INVESTMENT PLAN
Affiliated Companies
Rocky Mountain Magnetics, Inc.
(Effective August 19, 1992 through October 2, 1994)
-60-
<PAGE>
FIRST AMENDMENT
TO THE
DIGITAL EQUIPMENT CORPORATION
SAVINGS AND INVESTMENT PLAN
(July 2, 1989 Restatement)
Pursuant to written action taken as of August 16, 1996, the Plan, last amended
and restated as of July 2, 1989, is amended as follows:
I. Effective June 30, 1996.
Article 3. By replacing in line 14 of Section 3.1, the percentages of
---------
Elective Contributions of "1% to 8%" with "1% to 9%" and in line 19 of
Section 3.1 the percentages of Elective Contributions of "1% to 12%"
with "1% to 14%."
II. Effective September 1, 1996.
Article 13. By adding to the end thereof a new Section 13.10, as
-----------
follows:
13.10 Lost Participant or Beneficiary. Any benefit payable under
the Plan will be forfeited if the Administrator, after
reasonable effort, is unable to locate the Participant or
Beneficiary to whom payment is due. However, any such
forfeited benefit will be reinstated and become payable
(without interest or other adjustment) if a claim is made by
the Participant or Beneficiary for such forfeited benefit.
The reinstatement of such benefit will be made from
forfeitures or, if necessary, a special contribution by the
Company. The amounts forfeited in accordance with this
Section that are not used for reinstatement of benefits in
accordance with the preceding sentence will be used to pay
for the reasonable administrative expenses of the Plan, or
will be used to reduce the Company Contributions to be made
in accordance with Section 3.3 (and allocated among Accounts
in the same manner as those Company Contributions).
Executed this 21st day of August, 1996.
---- ------
DIGITAL EQUIPMENT CORPORATION
By: /s/ Kathleen O. Angel
---------------------------
Kathleen O. Angel
Director of Worldwide Benefits
<PAGE>
SECOND AMENDMENT
TO THE
DIGITAL EQUIPMENT CORPORATION
SAVINGS AND INVESTMENT PLAN
(JULY 2, 1989 RESTATEMENT)
(PLAN NUMBER 003)
Pursuant to written actions of the Vice President, Human Resources and the
Treasurer dated December 21, 1994, November 11, 1996, and June 3, 1997, the Plan
is amended as follows:
I. Effective December 21, 1994:
Article 13 is amended by adding a new section 13.10 as follows:
"13.10. Erroneous Payment. In the case that a benefit is paid in error
-----------------
of whatever reason, the Administrator or Trustee shall have the right
to seek recoupment by any reasonable means, including reducing payment
of any future benefits, until the amount of the erroneous payment has
been recovered."
II Effective November 11, 1996:
A. Section 14.9 is amended by adding after the words "welfare benefits"
in line 11 of paragraph (c) the following:
"(including, but not limited to, disability income and optional
disability income benefits provided after the 91st consecutive day of
disability, except that such benefit shall be included solely for the
purposes of Section 3.3(B))."
B. Section 14.15 is amended by adding as a final sentence the following:
"A person who is characterized by the Plan Sponsor or an Affiliated
Company as an independent contractor, consultant, or Leased employee'
(or other similar category) is not eligible to participate under the
Plan for any period of time during which he or she is so characterized
even if that characterization is later changed."
1
<PAGE>
IV Effective July 1, 1997:
A. Section 3.1 is amended by replacing in line 14 the percentages of
Elective Contributions of "1% to 9%" with "1% to 10%" and in line 19
the percentages of Elective Contributions of "1% to 14%" with "1% to
15%."
B. Section 8.5 is amended by deleting the third sentence and replacing it
in its entirety with the following:
"In the absence of an effective beneficiary designation, a
Participant's Beneficiary shall be all members of the first class in
which there are living members on the date of the Participant's death
in the following order of priority: his or her spouse, qualified
domestic partner, children, parents, estate. For purposes of the Plan,
"qualified domestic partner" means a person for whom an affidavit
attesting to the existence of a domestic partnership with the
Participant had been received by the Administrator or its designated
agent prior to the Participant's death and which had not been
terminated by the Participant prior to the date of death of the
Participant.
C. Section 14 is amended by adding the term "qualified domestic partner"
as defined in Section 8.5.
Executed this 13th day of January, 1998.
Digital Equipment Corporation
By: /s/ Kathleen O. Angel
-------------------------------
Kathleen O. Angel
Vice President, Worldwide Benefits and
Work/Life Solutions
2
<PAGE>
THIRD AMENDMENT
TO THE
DIGITAL EQUIPMENT CORPORATION
SAVINGS AND INVESTMENT
(JULY 2, 1989 RESTATEMENT)
(PLAN NUMBER 003)
Pursuant to written actions of the Vice President, Human Resources and the
Treasurer dated December 15, 1997, the Plan is amended as follows:
I. Effective January 15, 1998:
Article 3. By replacing in line 14 of Section 3.1, the percentages of
---------
Elective Contributions of "1% to 10%" with "1% to 13%" and in line 19 of
Section 3.1 the percentages of Elective Contributions of "1% to 15%" to "1
to 18%."
II Effective January 1, 1998:
Article 8. By replacing the dollar amount of "$3,500" cited in Section 8.1
---------
with the dollar amount of "$5,000."
Executed this 5th day of March, 1998.
Digital Equipment Corporation
By: /s/ Kathleen O. Angel
-------------------------------
Kathleen O. Angel
Vice President, Worldwide Benefits and
Work/Life Solutions
1
<PAGE>
FOURTH AMENDMENT
TO THE
DIGITAL EQUIPMENT CORPORATION
SAVINGS AND INVESTMENT PLAN
(JULY 2, 1989 RESTATEMENT)
(PLAN NUMBER 003)
Pursuant to written actions of the Vice President, Human Resources and the
Treasurer dated May 11, 1998, effective May 13, 1998, the Plan as previously
amended is hereby further amended as follows:
I. Section 7.7 is amended by adding the following at the end of the Section,
immediately after the final sentence in the Section:
"Notwithstanding any provisions of the Plan to the contrary,
Participants whose account balances are transferred in accordance with
Appendix B and who have outstanding loans in their Plan Accounts as of
the date of such Transfer shall have their outstanding loan balance
transferred along with and as part of their Account and shall be
permitted to repay their loans in accordance with the provisions of
Appendix B. In no event shall such Transfer be construed to create an
incident of default or be considered a distributor for purposes of
this Article7."
II The following new Appendix B is added immediately following Appendix A:
"APPENDIX B
TO THE
DIGITAL EQUIPMENT CORPORATION
SAVINGS AND INVESTMENT PLAN
B-1. Introduction. Pursuant to the Human Resources Agreement ( Agreement') by
------------
and between Digital Equipment Corporation ( Digital') and Intel Corporation
( Intel') executed as of the date recited therein, certain United States
Semiconductor employees of Digital accepting Intel's offer of employment
shall transfer their employment to Intel as of the Country Closing Date (as
such term is defined in the Agreement) (such employees who are also Plan
Participants are Transferred Participants'). Each Transferred Participant
shall cease participation in the Plan in accordance with paragraph B-2
below. Further, each Transferred Participant, and all other transferring
employees, shall be eligible to participate in the Intel Corporation Profit
Sharing Retirement Plan ( Intel Profit Sharing Plan') in accordance with
the terms of the Intel Profit Sharing Plan and the Agreement. Pursuant to
the Agreement, the Account balances of Transferred Participants shall be
transferred to the Intel Profit Sharing Plan in accordance with paragraph
B-3 below.
B-2. Cessation of Participation. As of the Country Closing Date or, if later, as
--------------------------
of the day following the Leave Expiration Date (as defined in the
Agreement) of a Transferred Participant (in either case such date to be
referred to as the Cessation Date'), each Transferred Participant shall
cease participating in the Plan and no further contributions shall be made
to the Accounts on behalf of any such Transferred Participant, nor shall
any such Transferred Participant be eligible for Plan loans or hardship
withdrawals.
B-3. Transfer of Account Balances. As soon as reasonably practicable following
----------------------------
each Participant's Cessation Date, the sum of his Account Balance, valued
as of the most recent Valuation Date preceding the date of such transfer (
Transfer Valuation Date'), shall be transferred to Intel's Profit Sharing
Plan (the Transfer'). From the Cessation Date to the Transfer Valuation
Date the Accounts of each Transferred Participant shall continue to accrue
interest and earnings at the rate of return of the investment option(s)
selected by such Transferred Participant in accordance with Section 4.3 of
the Plan.
B-4. Transfer of Loan Amounts. The Transfer shall include the transfer of
-------------------------
outstanding loans, if any, of any Transferred Participant. Loans shall be
repaid in the Intel Profit Sharing Plan on identical terms, conditions and
at the same interest rate as was in place under the Plan.
B-5. Transfer in Compliance. This account transfer shall be accomplished in full
----------------------
compliance with all applicable law and, specifically, in accordance with
Code Section 411(d)(6)."
Executed this 12th day of May, 1998.
Digital Equipment Corporation
By: /s/ Kathleen O. Angel
-----------------------------------
Kathleen O. Angel, Vice President
Worldwide Benefits and Work/Life Solutions
2
<PAGE>
DIGITAL EQUIPMENT CORPORATION
SAVINGS AND INVESTMENT PLAN
Fifth Amendment to July 2, 1989 Restatement
-------------------------------------------
A. The Digital Equipment Corporation Savings and Investment Plan (the
"Plan"), as restated by a document entitled "July 2, 1989 Restatement," and as
subsequently amended, is hereby further amended as follows:
1. Section 4.3 is amended, effective October 1, 1998, by deleting
the fourth sentence of said section and substituting in lieu thereof the
following:
"The Plan is intended to constitute a Section 404(c) Plan' within the
meaning of Department of Labor Regulation 2550.404c-1, and shall be
applied and administered in a manner consistent with that intent. The
investment options available to Participants under the Plan may
include investment companies registered under the Investment Company
Act of 1940; certificates of deposit, savings accounts, and other
instruments issued by a bank or similar institution; investment
contracts and other instruments issued by an insurance company or
bank; publicly-offered securities registered under Section 12(b) or
12(g) of the Securities Exchange Act of 1934; or any other investment
alternative which the Investment Committee, in its discretion, decides
to make available. Effective October 1, 1998, one of the available
investment alternatives shall permit the Participants to direct that
their Accounts acquire, hold, and sell Compaq Stock. On and after such
date, the Plan shall constitute an eligible individual account plan,'
within the meaning of Section 407(d)(3) of ERISA, with the intent that
the plan may acquire and hold qualifying employer securities' as
defined in Section 407(d)(5) of ERISA.
Each Participant shall have the right and shall be afforded the
opportunity to direct the manner in which the shares of Compaq Stock
allocated to his or her Accounts shall be voted at all stockholders'
meetings. The Trustee shall exercise the voting rights with respect to
such stock in accordance with such Participant directions as are
received on a timely basis. Any Compaq Stock allocated to the Accounts
of Participants for which no direction is timely received from the
Participant shall not be voted by the Trustee. In the event of a
tender offer or exchange offer by any person (including Compaq
Computer Corporation) for any or all shares of Compaq Stock held in
the Trust, each Participant shall have the right and shall be afforded
the opportunity to direct whether the shares of Compaq Stock allocated
to such Participant's Accounts shall be tendered or exchanged in
response to such offer. The Trustee shall respond to such tender or
exchange offer with respect to such Compaq Stock in accordance with
such Participant directions as are received on a timely basis. Any
such Compaq Stock with respect to which directions have not been
timely
2
<PAGE>
received by the Trustee shall not be tendered or exchanged. Any rights
with respect to Compaq Stock, similar to voting or tender rights,
shall be passed through to Participants with Accounts holding such
Compaq Stock.
To facilitate the foregoing rights of Participants to direct the
acquisition, holding, voting, sale, tender, exchange, or exercise of
similar rights with respect to Compaq Stock allocated to their
Accounts, the Administrator shall establish such procedures as it
deems appropriate, regarding (without limitation) the timing and form
of the directions to be provided. Under such procedures, the
Administrator shall use its best efforts to cause information provided
to the shareholders of Compaq Stock to be provided to Participants
with Accounts holding Compaq Stock. Under such procedures, information
relating to the purchase, holding, and sale of securities and the
exercise of voting, tender, and similar rights with regard to such
securities by Participants, shall be maintained in a manner that
safeguards confidentiality (except to the extent necessary to comply
with Federal laws or state laws not preempted by ERISA). In connection
with such procedures, the Administrator or Trustee may, among other
things, retain an independent outside tabulator, recordkeeper,
auditor, or other person; or may designate an independent fiduciary to
administer such procedures where it is determined that the relevant
situation involves a potential for undue employer influence with
regard to the Participant's exercise of rights to provide directions
as set forth above.
Notwithstanding the foregoing, Participants do not acquire
ownership of Compaq Stock unless and until such stock is transferred
to the Participant in connection with a withdrawal or distribution
from the Plan.
If, for any reason, it is determined that Section 404(c) of ERISA
does not apply to any decision taken with respect to the investment of
a Participant's Account in accordance with procedures set forth in, or
referred to in, this Section, such Participant shall, with respect to
such action, be a named fiduciary' within the meaning of Section 402
of ERISA.
All references to Participant' (or Participants') above shall be
deemed to include a Beneficiary (or Beneficiaries) with respect to
which Accounts are maintained after the death of a Participant."
2. Article 8 is amended, effective October 1, 1998, by adding to the
end of said article the following new Section 87:
"8.7. Distribution of Compaq Stock. Notwithstanding any other
-----------------------------
provision of the Plan, if at the time that distribution is to be
made to or in respect of a Participant under the Plan, such
Participant's Accounts hold shares of Compaq Stock, such
distribution may, at the election of the Participant or Beneficiary,
be made by the Trust's transfer to the Participant or Beneficiary
(or the relevant Eligible Retirement Plan, in the case of a direct
transfer under Section 8.6) of shares of Compaq Stock held by such
Account. The Administrator may in its discretion establish such
rules and procedures as it may deem necessary or appropriate in
connection with such distributions, including procedures relating to
Participant elections."
3. Article 14 is amended by adding the following definition to said
article, in the correct alphabetical order and sequence indicated by the
applicable numbering:
"14.8.1. Compaq Stock. means the common stock of Compaq Computer
--------------
Corporation, the parent of Digital."
B. This Amendment is adopted pursuant to the authority granted by the
applicable Board of Directors vote dated August 16, 1994.
EXECUTED this 30th day of September, 1998.
DIGITAL EQUIPMENT CORPORATION
By: /s/ Linda S. Auwers
-----------------------------
Linda S. Auwers
Vice President and
Assistant Secretary
Exhibit 4.2
COMPAQ COMPUTER CORPORATION
INVESTMENT PLAN
Effective Date: January 1, 1994
<PAGE>
COMPAQ COMPUTER CORPORATION
INVESTMENT PLAN
W I T N E S S E T H :
WHEREAS, COMPAQ COMPUTER CORPORATION, hereinafter referred to as "COMPAQ,"
has heretofore adopted, effective as of April 1, 1985, the Compaq Computer
Corporation Savings Plus Plan, which name was changed, effective as of January
1, 1986, to the COMPAQ COMPUTER CORPORATION INVESTMENT PLAN, hereinafter
referred to as the "PLAN," for the benefit of its employees; and
WHEREAS, the Plan was amended and restated, effective July 1, 1988, was
amended and restated effective January 1, 1989, was amended in part, effective
July 25, 1991 (First Amendment to the Compaq Computer Corporation Investment
Plan), was amended in part, effective July 1, 1992 (Second Amendment to the
Compaq Computer Corporation Investment Plan), was amended in part, effective
September 29, 1992 (Third Amendment to the Compaq Computer Corporation
Investment Plan), and was amended in part, effective June 24, 1993 (Fourth
Amendment to the Compaq Computer Corporation Investment Plan); and
WHEREAS, Compaq desires to restate the Plan and to amend the Plan in
several respects, intending thereby to provide an uninterrupted and continuing
program of benefits;
NOW, THEREFORE, the Plan is hereby restated in its entirety as follows with
no interruption in time, effective as of January 1, 1994, except as otherwise
indicated herein:
(i)
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
PAGE
-------
ARTICLE I DEFINITIONS AND CONSTRUCTION
- ------------------------------------------------------------------------------
<S> <C>
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
(1) Account (s). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
(2) Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
(3) Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
(4) Benefit Payment Date. . . . . . . . . . . . . . . . . . . . . . . . . . I-1
(5) Cash or Deferred Account. . . . . . . . . . . . . . . . . . . . . . . . I-1
(6) Cash or Deferred Contributions. . . . . . . . . . . . . . . . . . . . . I-1
(7) Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
(8) Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
(9) Compaq. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
(10) Compaq Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
(11) Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2
(12) Controlled Entity. . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
(13) Direct Rollover. . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
(14) Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
(15) Distributee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
(16) Early Retirement Date. . . . . . . . . . . . . . . . . . . . . . . . . I-3
(17) Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3
(18) Eligible Employee. . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
(19) Eligible Retirement Plan . . . . . . . . . . . . . . . . . . . . . . . I-4
(20) Eligible Rollover Distribution . . . . . . . . . . . . . . . . . . . . I-4
(21) Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
(22) Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4
(23) Employer Contribution Account. . . . . . . . . . . . . . . . . . . . . I-5
(24) Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . I-5
(25) Employer Matching Contributions. . . . . . . . . . . . . . . . . . . . I-5
(26) Employer Safe Harbor Contributions . . . . . . . . . . . . . . . . . . I-5
(27) Employment Commencement Date . . . . . . . . . . . . . . . . . . . . . I-5
(28) Highly Compensated Employee. . . . . . . . . . . . . . . . . . . . . . I-5
(29) Hour of Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6
(30) Investment Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6
(31) Leased Employee. . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6
(32) Leave of Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
(33) Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
(34) Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . I-7
(35) Participation Service. . . . . . . . . . . . . . . . . . . . . . . . . I-7
(36) Period of Service. . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
(37) Period of Severance. . . . . . . . . . . . . . . . . . . . . . . . . . I-7
(38) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
(39) Plan Entry Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7
(ii)
<PAGE>
(40) Plan Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
(41) Reemployment Commencement Date . . . . . . . . . . . . . . . . . . . . I-8
(42) Rollover Contribution Account. . . . . . . . . . . . . . . . . . . . . I-8
(43) Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . . I-8
(44) Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
(45) Severance from Service Date. . . . . . . . . . . . . . . . . . . . . . I-8
(46) Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
(47) Trust Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
(48) Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
(49) Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
(50) Valuation Dates. . . . . . . . . . . . . . . . . . . . . . . . . . . . I-8
(51) Vested Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
(52) Vesting Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
1.2 Number and Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
1.3 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
1.4 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
ARTICLE II PARTICIPATION
- ------------------------------------------------------------------------------
2.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
2.2 Participation Service . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
2.3 Election to Become a Member . . . . . . . . . . . . . . . . . . . . . . . II-2
ARTICLE III CONTRIBUTIONS
- ------------------------------------------------------------------------------
3.1 Cash or Deferred Contributions. . . . . . . . . . . . . . . . . . . . . . III-1
3.2 Employer Matching Contributions . . . . . . . . . . . . . . . . . . . . . III-2
3.3 Employer Safe Harbor Contributions. . . . . . . . . . . . . . . . . . . . III-3
3.4 Restrictions on Employer Contributions. . . . . . . . . . . . . . . . . . III-3
3.5 Payments to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . III-3
3.6 Return of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . III-3
3.7 Distribution or Forfeiture of Excess Deferrals and Excess Contributions . III-4
3.8 Rollover Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . III-5
ARTICLE IV ALLOCATIONS
- ------------------------------------------------------------------------------
4.1 Suspense Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1
4.2 Allocation of Contributions . . . . . . . . . . . . . . . . . . . . . . . IV-1
4.3 Application of Forfeitures. . . . . . . . . . . . . . . . . . . . . . . . IV-3
4.4 Allocation of Net Income or Loss and Net Increase or Decrease . . . . . . IV-3
4.5 Allocations Attributable to Compaq Stock. . . . . . . . . . . . . . . . . IV-3
4.6 Limitations and Corrections . . . . . . . . . . . . . . . . . . . . . . . IV-4
4.7 Equitable Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . IV-6
ARTICLE V INVESTMENT OF ACCOUNTS
- ------------------------------------------------------------------------------
5.1 Investment of Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . V-1
5.2 Investment Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1
5.3 Change of Investment Designation and Transfer of Accounts . . . . . . . . V-1
5.4 Accounts of Certain Terminated Employees. . . . . . . . . . . . . . . . . V-2
5.5 Restriction of Acquisition of Compaq Stock. . . . . . . . . . . . . . . . V-2
5.6 Pass-Through Voting of Compaq Stock . . . . . . . . . . . . . . . . . . . V-2
5.7 Stock Rights, Stock Splits, and Stock Dividends . . . . . . . . . . . . . V-2
(iii)
<PAGE>
ARTICLE VI RETIREMENT BENEFITS
- ------------------------------------------------------------------------------
6.1 Retirement Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1
ARTICLE VII DISABILITY BENEFITS
- ------------------------------------------------------------------------------
7.1 Disability Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1
7.2 Total and Permanent Disability Determined . . . . . . . . . . . . . . . . VII-1
ARTICLE VIII SEVERANCE BENEFITS AND DETERMINATION OF VESTED INTEREST
- ------------------------------------------------------------------------------
8.1 No Benefits Unless Herein Set Forth . . . . . . . . . . . . . . . . . . . VIII-1
8.2 Severance Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-1
8.3 Determination of Vested Interest. . . . . . . . . . . . . . . . . . . . . VIII-1
8.4 Vesting Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-2
8.5 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII-3
ARTICLE IX DEATH BENEFITS
- ------------------------------------------------------------------------------
9.1 Death Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IX-1
9.2 Designation of Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . IX-1
ARTICLE X TIME AND FORM OF PAYMENT OF BENEFITS
- ------------------------------------------------------------------------------
10.1 Time of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-1
10.2 Cash-Out of Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . X-2
10.3 Form of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-3
10.4 Direct Rollover Election . . . . . . . . . . . . . . . . . . . . . . . . X-3
10.5 Unclaimed Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . X-3
10.6 Claims Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . X-4
ARTICLE XI IN-SERVICE WITHDRAWALS
- ------------------------------------------------------------------------------
11.1 In-Service Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . XI-1
11.2 Restrictions on In-Service Withdrawals . . . . . . . . . . . . . . . . . XI-1
(iv)
<PAGE>
ARTICLE XII LOANS
- ------------------------------------------------------------------------------
12.1 Eligibility For Loan . . . . . . . . . . . . . . . . . . . . . . . . . . XII-1
12.2 Maximum Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XII-1
12.3 Minimum Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XII-2
12.4 Interest and Security. . . . . . . . . . . . . . . . . . . . . . . . . . XII-2
12.5 Repayment Terms of Loan. . . . . . . . . . . . . . . . . . . . . . . . . XII-3
ARTICLE XIII ADMINISTRATION OF THE PLAN
- ------------------------------------------------------------------------------
13.1 Appointment of Committee . . . . . . . . . . . . . . . . . . . . . . . . XIII-1
13.2 Term, Vacancies, Resignation, and Removal. . . . . . . . . . . . . . . . XIII-1
13.3 Officers, Records, and Procedures. . . . . . . . . . . . . . . . . . . . XIII-1
13.4 Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XIII-1
13.5 Self-Interest of Members . . . . . . . . . . . . . . . . . . . . . . . . XIII-1
13.6 Compensation and Bonding . . . . . . . . . . . . . . . . . . . . . . . . XIII-2
13.7 Committee Powers and Duties. . . . . . . . . . . . . . . . . . . . . . . XIII-2
13.8 Employer to Supply Information . . . . . . . . . . . . . . . . . . . . . XIII-3
13.9 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . XIII-3
ARTICLE XIV ADMINISTRATION OF TRUST FUND
- ------------------------------------------------------------------------------
14.1 Appointment of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . XIV-1
14.2 Trust Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . XIV-1
14.3 Payment of Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . XIV-1
14.4 Trust Fund Property. . . . . . . . . . . . . . . . . . . . . . . . . . . XIV-1
14.5 Distributions from Members' Accounts . . . . . . . . . . . . . . . . . . XIV-1
14.6 Payments Solely from Trust Fund. . . . . . . . . . . . . . . . . . . . . XIV-2
14.7 No Benefits to the Employer. . . . . . . . . . . . . . . . . . . . . . . XIV-2
ARTICLE XV FIDUCIARY PROVISIONS
- ------------------------------------------------------------------------------
15.1 Article Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . XV-1
15.2 General Allocation of Fiduciary Duties . . . . . . . . . . . . . . . . . XV-1
15.3 Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XV-1
15.4 Delegation and Allocation of Fiduciary Duties. . . . . . . . . . . . . . XV-2
15.5 Investment Manager as a Fiduciary. . . . . . . . . . . . . . . . . . . . XV-2
ARTICLE XVI AMENDMENTS
- ------------------------------------------------------------------------------
16.1 Right to Amend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XVI-1
16.2 Limitation on Amendments . . . . . . . . . . . . . . . . . . . . . . . . XVI-1
(v)
<PAGE>
ARTICLE XVII DISCONTINUANCE OF CONTRIBUTIONS, TERMINATION,
- ------------------------------------------------------------------------------
PARTIAL TERMINATION, AND MERGER OR CONSOLIDATION
- ------------------------------------------------------------------------------
17.1 Right to Discontinue Contributions, Terminate, or Partially Terminate
the Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XVII-1
17.2 Procedure in the Event of Discontinuance of Contributions, Termination,
or Partial Termination. . . . . . . . . . . . . . . . . . . . . . . . . XVII-1
17.3 Merger, Consolidation, or Transfer . . . . . . . . . . . . . . . . . . . XVII-2
ARTICLE XVIII ADOPTING EMPLOYERS
- ------------------------------------------------------------------------------
18.1 Adoption by Other Employers. . . . . . . . . . . . . . . . . . . . . . . XVIII-1
18.2 Single Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XVIII-1
ARTICLE XIX MISCELLANEOUS PROVISIONS
- ------------------------------------------------------------------------------
19.1 Not Contract of Employment . . . . . . . . . . . . . . . . . . . . . . . XIX-1
19.2 Alienation of Interest Forbidden . . . . . . . . . . . . . . . . . . . . XIX-1
19.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XIX-1
19.4 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XIX-1
19.5 Payments to Minors and Incompetents. . . . . . . . . . . . . . . . . . . XIX-1
19.6 Member's Address . . . . . . . . . . . . . . . . . . . . . . . . . . . . XIX-2
ARTICLE XX TOP-HEAVY STATUS
- ------------------------------------------------------------------------------
20.1 Article Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . XX-1
20.2 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XX-1
20.3 Top-Heavy Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . XX-2
20.4 Termination of Top-Heavy Status. . . . . . . . . . . . . . . . . . . . . XX-4
20.5 Effect of Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . XX-4
</TABLE>
(vi)
<PAGE>
I
DEFINITIONS AND CONSTRUCTION
----------------------------
1.1 DEFINITIONS. Where the following words and phrases appear in the
-----------
Plan, they shall have the respective meanings set forth below, unless their
context clearly indicates to the contrary.
(1) ACCOUNT(S): A Member's Cash or Deferred Account, Employer Contribution
----------
Account, and/or Rollover Contribution Account, including the amounts
credited thereto.
(2) ACT: The Employee Retirement Income Security Act of 1974, as amended.
---
(3) BENEFICIARY: The individual entitled to receive payment of the benefit of a
-----------
deceased Member in accordance with Section 9.2.
(4) BENEFIT PAYMENT DATE: With respect to each Member or Beneficiary, the date
--------------------
such Member's or Beneficiary's benefit is paid to him from the Trust Fund.
(5) CASH OR DEFERRED ACCOUNT: An individual account for each Member, which is
------------------------
credited with the Cash or Deferred Contributions made by the Employer on
such Member's behalf and the Employer Safe Harbor Contributions, if any,
made on such Member's behalf pursuant to Section 3.3 to satisfy the
restrictions set forth in Section 3.1(e) and which is credited with (or
debited for) such account's allocation of net income (or net loss) and
changes in value of the Trust Fund.
(6) CASH OR DEFERRED CONTRIBUTIONS: Contributions made to the Plan by the
--------------------------------
Employer on a Member's behalf in accordance with the Member's elections to
defer Compensation under the Plan's qualified cash or deferred arrangement
as described in Section 3.1.
(7) CODE: The Internal Revenue Code of 1986, as amended.
----
(8) COMMITTEE: The Investment Plan Administrative Committee appointed by the
---------
Directors to administer the Plan.
(9) COMPAQ: Compaq Computer Corporation.
------
(10) COMPAQ STOCK: The common stock of Compaq Computer Corporation and any other
------------
stock into which such common stock may hereafter be changed, whether
directly as a result of a single change or indirectly as a result of more
than one change.
(11) COMPENSATION: The total of all wages, salaries, fees for professional
------------
service, and other amounts received in cash or in kind by a Member for
services actually rendered or labor performed for the Employer while a
Member to the extent such amounts are includable in gross income, subject
to the following adjustments and limitations:
(A) The following shall be excluded:
I-1
<PAGE>
(i) Overtime pay, bonuses, commissions, shift differential, and
incentive or other supplemental pay; provided, however, that
neither "overtime pay" nor "shift differential" shall include any
compensation attributable to hours worked in any workweek in
excess of forty paid to an Employee whose regularly scheduled
work weeks vary in a cycle, but (a) only to the extent that such
compensation is attributable to hours that are regularly
scheduled in such a workweek for such Employee and (b) in the
case of an Employee whose regularly scheduled hours in a cycle
exceed forty multiplied by the number of weeks in such cycle,
only to the extent that the exclusion of such compensation from
"overtime pay" or "shift differential" will not cause such
Employee's Compensation, when calculated without compensation
attributable to hours worked in a workweek over the regularly
scheduled number of hours but not in excess of forty, to be an
amount greater than if such Employee worked a regularly scheduled
forty hours in each workweek in such cycle;
(ii) Amounts realized from the receipt or exercise of a stock option
that is not an incentive stock option within the meaning of
section 422 of the Code;
(iii)Amounts realized at the time property described in section 83 of
the Code is transferable or no longer subject to a substantial
risk of forfeiture;
(iv) Amounts realized as a result of an election described in section
83(b) of the Code;
(v) Any amount realized as a result of a disqualifying disposition
within the meaning of section 421(a) of the Code; and
(vi) Any other amounts that receive special tax benefits under the
Code but are not hereinafter included.
(B) Elective contributions made on a Member's behalf by the Employer that
are not includable in income under section 125 or section 402(e)(3) of
the Code shall be included.
(C) The Compensation of any Member taken into account for purposes of the
Plan shall be limited to $200,000 ($150,000 for Plan Years beginning
after December 31, 1993) for any Plan Year with such limitation to be:
(i) Adjusted automatically to reflect any amendments to section
401(a)(17) of the Code and any cost-of-living increases
authorized by section 401(a)(17) of the Code;
I-2
<PAGE>
(ii) Prorated for a Plan Year of less than twelve months and to the
extent otherwise required by applicable law; and
(iii)In the case of a Member who is either a five-percent owner of
the Employer (within the meaning of section 416(i)(1)(A)(iii) of
the Code) or is one of the ten most Highly Compensated Employees
for the Plan Year and who has a spouse and/or lineal descendants
who are under the age of nineteen as of the end of a Plan Year
who receive Compen-sation during such Plan Year, prorated and
allocated among such Member, his spouse, and/or lineal
descendants under the age of nineteen based on the Compensation
for such Plan Year of each such individual.
(12) CONTROLLED ENTITY: Each corporation that is a member of a controlled group
-----------------
of corporations, within the meaning of section 1563(a) (determined without
regard to sections 1563(a)(4) and 1563(e)(3)(C)) of the Code, of which the
Employer is a member, each trade or business (whether or not incorporated)
with which the Employer is under common control, and each member of an
affiliated service group, within the meaning of section 414(m) of the Code,
of which the Employer is a member.
(13) DIRECT ROLLOVER: A payment by the Plan to an Eligible Retirement Plan
----------------
designated by a Distributee pursuant to Section 10.4.
(14) DIRECTORS: The Board of Directors of Compaq Computer Corporation.
---------
(15) DISTRIBUTEE: Each (A) Member entitled to an Eligible Rollover Distribution,
-----------
(B) Member's surviving spouse with respect to the interest of such
surviving spouse in an Eligible Rollover Distribution, and (C) former
spouse of a Member who is an alternate payee under a qualified domestic
relations order, as defined in section 414(p) of the Code, with regard to
the interest of such former spouse in an Eligible Rollover Distribution.
(16) EARLY RETIREMENT DATE: The date prior to a Member's Normal Retirement Date
---------------------
upon which such Member terminates Service after attaining the age of
fifty-five.
(17) EFFECTIVE DATE: January 1, 1994, as to this restatement of the Plan, except
--------------
(A) as otherwise indicated in specific provisions of the Plan and (B) that
provisions of the Plan required to have an earlier effective date by the
Tax Reform Act of 1986, the Technical and Miscellaneous Revenue Act of
1988, technical corrections to the Retirement Equity Act of 1984, or the
Deficit Reduction Act of 1984, or by regulations issued pursuant to such
Acts, shall be effective as of the required effective date in such Acts
and/or regulations.
(18) ELIGIBLE EMPLOYEE: Each (A) Employee of Compaq, other than (i) an Employee
-----------------
whose terms and conditions of employment are governed by a collective
bargaining agreement unless such agreement provides for his coverage under
the Plan and (ii) a nonresident alien who has no United States source
income and (B) Employee of an Employer other than Compaq who is included in
the class of Employees designated by such Employer as eligible to
participate in the Plan; provided, however, that Eligible Employee shall
not include any Employee who is a Leased Employee. Notwithstanding any
provision of the Plan to the contrary, no individual who is designated,
compensated, or otherwise classified or treated by the Employer as an
independent contractor shall be eligible to become a Member of the Plan.
I-3
<PAGE>
(19) ELIGIBLE RETIREMENT PLAN: (A) With respect to a Distributee other than a
--------------------------
surviving spouse, an individual retirement account described in section
408(a) of the Code, an individual retirement annuity described in section
408(b) of the Code, an annuity plan described in section 403(a) of the
Code, or a qualified plan described in section 401(a) of the Code, which
under its provisions accepts such Distribu-tee's Eligible Rollover
Distribution, and (B) with respect to a Distributee who is a surviving
spouse, an individual retirement account described in section 408(a) of the
Code or an individual retirement annuity described in section 408(b) of the
Code.
(20) ELIGIBLE ROLLOVER DISTRIBUTION: Any distribution of all or any portion of
-------------------------------
the Accounts of a Distributee, other than (A) a distribution that is one of
a series of substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the Distributee or the
joint lives (or joint life expectancies) of the Distributee and the
Distributee's designated Beneficiary or for a specified period of ten years
or more, (B) a distribution to the extent such distribution is required
under section 401(a)(9) of the Code, (C) the portion of a distribution that
is not includable in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities), (D) a loan treated as a distribution under section 72(p) of
the Code and not excepted by section 72(p)(2), (E) a loan in default that
is a deemed distribution, (F) any corrective distribution provided in
Sections 3.7 and 4.6(b), and (G) any other distribution so designated by
the Internal Revenue Service in revenue rulings, notices, and other
guidance of general applicability.
(21) EMPLOYEE: Each (A) individual employed by the Employer and (B) Leased
--------
Employee.
(22) EMPLOYER: Compaq and each entity that has adopted the Plan pursuant to the
--------
provisions of Article XVIII.
(23) EMPLOYER CONTRIBUTION ACCOUNT: An individual account for each Member, which
-----------------------------
is credited with the sum of (A) the Employer Matching Contributions made on
such Member's behalf and (B) the Employer Safe Harbor Contribu-tions, if
any, made on such Member's behalf pursuant to Section 3.3 to satisfy the
restrictions set forth in Section 3.4 and which is credited with (or
debited for) such account's allocation of net income (or net loss) and
changes in value of the Trust Fund.
(24) EMPLOYER CONTRIBUTIONS: The total of Employer Matching Contributions and
-----------------------
Employer Safe Harbor Contributions.
I-4
<PAGE>
(25) EMPLOYER MATCHING CONTRIBUTIONS: Contributions made to the Plan by the
---------------------------------
Employer pursuant to Section 3.2.
(26) EMPLOYER SAFE HARBOR CONTRIBUTIONS: Contributions made to the Plan by the
-----------------------------------
Employer pursuant to Section 3.3.
(27) EMPLOYMENT COMMENCEMENT DATE: The date on which an individual first
------------------------------
performs an Hour of Service.
(28) HIGHLY COMPENSATED EMPLOYEE: Each Employee who performs services during the
---------------------------
Plan Year for which the determination of who is highly compensated is being
made (the "DETERMINATION YEAR") and who:
(A) Is a five-percent owner of the Employer (within the meaning of section
416(i)(1)(A)(iii) of the Code) at any time during the Determination
Year or the twelve-month period immediately preceding the
Determination Year (the "LOOK-BACK YEAR"); or
(B) Receives compensation (within the meaning of section 415(c)(3) of the
Code, including elective or salary reduction contributions to a
cafeteria plan, cash or deferred arrangement, or tax-sheltered
annuity; "compensation" for purposes of this Paragraph) in excess of
$75,000 (with such amount to be adjusted automatically to reflect any
cost-of-living adjustments authorized by section 414(q)(1) of the
Code) during the Look-Back Year; or
(C) Receives compensation in excess of $50,000 (with such amount to be
adjusted automatically to reflect any cost-of-living adjustments
authorized by section 414(q)(1) of the Code) during the Look-Back Year
and is a member of the top 20% of Employees for the Look-Back Year
(other than Employees described in section 414(q)(8) of the Code)
ranked on the basis of compensation received during the year; or
(D) Is an officer (within the meaning of section 416(i) of the Code)
during the Look-Back Year and receives compensation in the Look-Back
Year greater than 50% of the amount in effect under section
415(b)(1)(A) of the Code for the calendar year in which the Look-Back
Year begins; or
(E) Is described in clauses (B), (C), or (D) above (after modifying such
clauses to substitute the Determination Year for the Look-Back Year)
and is one of the 100 Employees who receives the most compensation
from the Employer or a Controlled Entity during the Determination
Year.
I-5
<PAGE>
For purposes of the preceding sentence, (i) no more than 50 Employees (or, if
lesser, the greater of three Employees or 10% of the Employees) shall be treated
as officers, (ii) if no officer has compensation in excess of 50% of the amount
in effect under section 415(b)(1)(A) of the Code, then the highest-paid officer
shall be deemed to be a Highly Compensated Employee, (iii) all employers
aggregated with the Employer under section 414(b), (c), (m), or (o) of the Code
shall be treated as a single employer, (iv) a former Employee who had a
separation year (generally, the Determination Year such Employee separates from
service) prior to the Determination Year and who was an active Highly
Compensated Employee for either such separation year or any Determination Year
ending on or after such Employee's fifty-fifth birthday shall be deemed to be a
Highly Compensated Employee, and (v) the Committee may elect, in accordance with
the provisions of applicable Treasury regulations, rulings and notices, to make
the Look-Back Year calculation for a Determination Year on the basis of the
calendar year ending with or within the applicable Determination Year (or, in
the case of a Determination Year that is shorter than twelve months, the
calendar year ending with or within the twelve-month period ending with the end
of the applicable Determination Year). Further, if any individual is a member
of the family of a five-percent owner or of a Highly Compensated Employee in the
group consisting of the ten Highly Compensated Employees paid the greatest
compensation during the year, then such individual shall not be considered a
separate employee and any compensation paid to such individual (and any
applicable contribution or benefit on behalf of such individual) shall be
treated as if it were paid to (or on behalf of) the five-percent owner or Highly
Compensated Employee. For purposes of the preceding sentence, the term "family"
means, with respect to any active or former Employee, such Employee's spouse and
lineal ascendants and descendants and the spouses of such lineal ascendants and
descendants. To the extent that the provisions of this Paragraph are
inconsistent or conflict with the definition of a "highly compensated employee"
set forth in section 414(q) of the Code and the Treasury regulations thereunder,
the relevant terms and provisions of section 414(q) of the Code and the Treasury
regulations thereunder shall govern and control.
(29) HOUR OF SERVICE: Each hour for which an individual is directly or
----------------
indirectly paid, or entitled to payment, by the Employer or a Controlled
Entity for the performance of duties.
(30) INVESTMENT FUND: A portion of the Trust Fund, which is invested in a
----------------
specified manner as described in Section 5.2.
(31) LEASED EMPLOYEE: Each person who is not an employee of the Employer or a
----------------
Controlled Entity but who performs services for the Employer or a
Controlled Entity pursuant to an agreement (oral or written) between the
Employer or a Controlled Entity and any leasing organization, provided that
such person has performed such services for the Employer or a Controlled
Entity or for related persons (within the meaning of section 144(a)(3) of
the Code) on a substantially full-time basis for a period of at least one
year and such services are of a type historically performed by the
Employer's or Controlled Entity's employees in the Employer's or Controlled
Entity's field of business.
(32) LEAVE OF ABSENCE: A period during which an Employee is granted a temporary
----------------
absence from active employment (with or without pay) by his Employer for a
specified period of time under terms whereby such absence does not
constitute a termination of such Employee's employment and, at the end of
which, such Employee returns to active employment with such Employer.
I-6
<PAGE>
(33) MEMBER: Each individual who (A) has met the eligibility requirements for
------
participa-tion in the Plan and elected to participate in the Plan pursuant
to Article II or (B) has made a Rollover Contribution in accordance with
Section 3.8(b), but only to the extent provided in Section 3.8(b).
(34) NORMAL RETIREMENT DATE: The date a Member attains the age of sixty-five.
----------------------
(35) PARTICIPATION SERVICE: The measure of service used in determining an
----------------------
Employee's eligibility to participate in the Plan as determined pursuant to
Section 2.2.
(36) PERIOD OF SERVICE: Each period of an individual's Service commencing on his
-----------------
Employment Commencement Date or a Reemployment Commencement Date, if
applicable, and ending on a Severance from Service Date. Notwithstanding
the foregoing, a period during which an individual is absent from Service
either by reason of an unpaid Leave of Absence, the individual's pregnancy,
the birth of a child of the individual, the placement of a child with the
individual in connection with the adoption of such child by the individual,
or for the purposes of caring for such child for the period immediately
following such birth or placement shall not constitute a Period of Service
between the first and second anniversary of the first date of such absence.
A Period of Service shall also include any period required to be credited
as a Period of Service by federal law other than the Act or the Code, but
only under the conditions and to the extent so required by such federal
law.
(37) PERIOD OF SEVERANCE: Each period of time commencing on an individual's
--------------------
Severance from Service Date and ending on a Reemployment Commencement Date.
(38) PLAN: The Compaq Computer Corporation Investment Plan, as amended from time
----
to time.
(39) PLAN ENTRY DATE: The first day of each calendar month.
---------------
(40) PLAN YEAR: The twelve-consecutive month period commencing January 1 of each
---------
year.
(41) REEMPLOYMENT COMMENCEMENT DATE: The first date upon which an individual
--------------------------------
performs an Hour of Service following a Severance from Service Date.
(42) ROLLOVER CONTRIBUTION ACCOUNT: An individual account for an Eligible
-------------------------------
Employee, which is credited with the Rollover Contributions of such
Employee and which is credited with (or debited for) such account's
allocation of net income (or net loss) and changes in value of the Trust
Fund.
(43) ROLLOVER CONTRIBUTIONS: Contributions made by an Eligible Employee pursuant
----------------------
to Section 3.8.
(44) SERVICE: The period of an individual's employment with the Employer or a
-------
Controlled Entity.
I-7
<PAGE>
(45) SEVERANCE FROM SERVICE DATE: The earlier of (A) the first date on which an
----------------------------
individual terminates his Service following his Employment Commencement
Date or a Reemployment Commence-ment Date, if applicable, or (B) the first
anniversary of the first date of a period in which an Employee remains
absent from Service (with or without pay) with the Employer for any reason
other than resignation, retirement, discharge, or death, such as vacation,
holiday, Leave of Absence, disability, or layoff that is not classified by
the Employer as a termination of Service. Notwithstanding the foregoing,
the Severance from Service Date of an individual who is absent from Service
by reason of an unpaid Leave of Absence, the individual's pregnancy, the
birth of a child of the individual, the placement of a child with the
individual in connection with the adoption of such child by the individual,
or for purposes of caring for such child for the period immediately
following such birth or placement shall be the second anniversary of the
first date of such absence.
(46) TRUST: The Compaq Computer Corporation Investment Trust established under
-----
the Trust Agreement to hold and invest contributions made under the Plan
and income thereon, and from which the Plan benefits are distributed.
(47) TRUST AGREEMENT: The agreement(s) entered into between Compaq and the
----------------
Trustee establishing the Trust, as such agreement(s) may be amended from
time to time.
(48) TRUST FUND: The funds and properties held pursuant to the provisions of the
----------
Trust Agreement for the use and benefit of the Members, together with all
income, profits, and increments thereto.
(49) TRUSTEE: The trustee or trustees qualified and acting under the Trust
-------
Agreement at any time.
(50) VALUATION DATES: Each and every business day of the Plan Year.
---------------
(51) VESTED INTEREST: The portion of a Member's Accounts which, pursuant to the
---------------
Plan, is nonforfeitable.
(52) VESTING SERVICE: The measure of service used in determining a Member's
----------------
Vested Interest as determined pursuant to Section 8.4.
1.2 NUMBER AND GENDER. Wherever appropriate herein, words used in the
------------------
singular shall be considered to include the plural and words used in the plural
shall be considered to include the singular. The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine gender.
1.3 HEADINGS. The headings of Articles and Sections herein are
--------
included solely for convenience and, if there is any conflict between such
headings and the text of the Plan, the text shall control.
I-8
<PAGE>
1.4 CONSTRUCTION. It is intended that the Plan be qualified within the
------------
meaning of section 401(a) of the Code and that the Trust be tax exempt under
section 501(a) of the Code, and all provisions herein shall be construed in
accordance with such intent.
I-9
<PAGE>
II
PARTICIPATION
-------------
2.1 ELIGIBILITY. Each Eligible Employee shall be eligible to become a
-----------
Member upon the Plan Entry Date coincident with or next following the date on
which such Eligible Employee completes six months of Participation Service.
Notwithstanding the foregoing:
(a) An Eligible Employee who was a Member of the Plan on the day prior
to the Effective Date shall remain a Member of this restatement thereof as
of the Effective Date;
(b) An Eligible Employee who was a Member of the Plan prior to a
termination of employment shall be eligible to remain a Member immediately
upon his reemploy-ment as an Eligible Employee;
(c) An Employee who has completed six months of Participation Service
but who has not become a Member of the Plan because he was not an Eligible
Employee shall be eligible to become a Member of the Plan immediately upon
becoming an Eligible Employee;
(d) An Eligible Employee who had completed six months of Participation
Service but who had not become a Member of the Plan prior to a termination
of his employment shall be eligible to become a Member immediately upon his
reemployment;
(e) A Member who ceases to be an Eligible Employee but remains an
Employee shall continue to be a Member but, on and after the date he ceases
to be an Eligible Employee, he shall no longer be entitled to defer
Compensation hereunder or share in allocations of Employer Contributions
unless and until he shall again become an Eligible Employee.
2.2 PARTICIPATION SERVICE.
----------------------
(a) Subject to the remaining Paragraphs of this Section, an individual
shall be credited with Participation Service in an amount equal to his
aggregate Periods of Service whether or not such Periods of Service are
completed consecutively.
(b) Paragraph (a) above notwithstanding, if an individual terminates
his Service (at a time other than during a Leave of Absence) and
subsequently resumes his Service, if his Reemployment Commencement Date is
within twelve months of his Severance from Service Date, such Period of
Severance shall be treated as a Period of Service for purposes of Paragraph
(a) above.
(c) Paragraph (a) above notwithstanding, if an individual terminates
his Service during a Leave of Absence and subsequently resumes his Service,
if his Reemployment Commencement Date is within twelve months of the
beginning of such Leave of Absence, such Period of Severance shall be
treated as a Period of Service for purposes of Paragraph (a) above.
II-1
<PAGE>
(d) In the case of an individual who terminates employment at a time
when he does not have any Vested Interest in his Employer Contribution
Account but who then incurs a Period of Severance which equals or exceeds
the greater of (1) five years or (2) his Period of Service prior to such
Period of Severance, such individual's Period of Service completed before
such Period of Severance shall be disregarded in determining his
Participation Service.
2.3 ELECTION TO BECOME A MEMBER. Membership in the Plan is voluntary.
----------------------------
Any Eligible Employee may become a Member on any Plan Entry Date coincident with
or next following the date upon which he first becomes eligible pursuant to
Section 2.1 by executing and filing with the Committee, within the time limits
prescribed by the Committee, the Compensation reduction agreement prescribed by
the Committee.
II-2
<PAGE>
III
CONTRIBUTIONS
-------------
3.1 CASH OR DEFERRED CONTRIBUTIONS.
---------------------------------
(a) A Member may elect to defer an integral percentage of from 1% to
14% (or, with respect to a Member who is a Highly Compensated Employee,
such lesser percentage as may be prescribed from time to time by the
Committee) of his Compensa-tion for a Plan Year by having the Employer
contribute the amount so deferred to the Plan. Compensation for a Plan Year
not so deferred by such election shall be received by such Member in cash.
A Member's election to defer an amount of his Compensation pursuant to this
Section shall be made by executing a Compensation reduction agreement
pursuant to which the Member authorizes the Employer to reduce his
Compensation in the elected amount and the Employer, in consideration
thereof, agrees to contribute an equal amount to the Plan. The reduction in
a Member's Compensation for a Plan Year pursuant to his election under a
Compensation reduction agreement shall be effected by Compensation
reductions as of each payroll period within such Plan Year following the
effective date of such agreement. The amount of Compensation elected to be
deferred by a Member for a Plan Year pursuant to this Section shall become
a part of the Employer's Cash or Deferred Contributions for such Plan Year.
(b) A Member's Compensation reduction agreement shall remain in force
and effect for all periods following the date of its execution until
modified or terminated or until such Member terminates his employment. A
Member who has elected to defer a portion of his Compensation may change
his deferral election percentage (within the percentage limits set forth in
Paragraph (a) above), effective as of the first day of any calendar month,
by executing and delivering to the Committee a new Compensation reduction
agreement within the time period prescribed by the Committee.
(c) A Member may cancel his Compensation reduction agreement,
effective as of the first day of any calendar month that the Committee
determines to be administratively convenient, but in no event later than
the second calendar month following the Committee's receipt of such
cancellation agreement, by executing and delivering to the Committee a
Compensation reduction cancellation agreement in the form prescribed by the
Committee within the time period prescribed by the Committee. A Member who
so cancels his Compensation reduction agreement may resume Compensation
deferrals, effective as of the first day of any calendar month following
the calendar month in which such cancellation agreement was effective, by
executing and delivering to the Committee a new Compensation reduction
agreement within the time period prescribed by the Committee.
(d) In restriction of the Members' elections provided in Paragraphs
(a), (b), and (c) above, the Cash or Deferred Contributions and the
elective deferrals (within the meaning of section 402(g)(3) of the Code)
under all other plans, contracts, and arrangements of the Employer on
behalf of any Member for any calendar year shall not exceed $7,000 (with
such amount to be adjusted automatically to reflect any cost-of-living
adjustments authorized by section 402(g)(5) of the Code).
III-1
<PAGE>
(e) In further restriction of the Members' elections provided in
Paragraphs (a), (b), and (c) above, it is specifically provided that one of
the "actual deferral percentage" tests set forth in section 401(k)(3) of
the Code and the Treasury regulations thereunder must be met in each Plan
Year. If multiple use of the alternative limitation (within the meaning of
section 401(m)(9) of the Code and Treasury Regulation 1.401(m)-2(b)) occurs
during a Plan Year, such multiple use shall be corrected in accordance with
the provisions of Treasury Regulation 1.401(m)-2(c); provided, however,
that if such multiple use is not eliminated by making Employer Safe Harbor
Contributions, then the "actual contribution percentages" of all Highly
Compensated Employees participating in the Plan shall be reduced, and the
excess contributions distributed, in accordance with the provisions of
Section 3.7(c) and applicable Treasury regulations so that there is no such
multiple use.
(f) If the restrictions set forth in Paragraph (d) or (e) above would
not otherwise be met for any Plan Year, the Compensation deferral elections
made pursuant to Paragraphs (a), (b), and (c) above of Members who are
Highly Compensated Employees may be reduced by the Committee on a temporary
and prospective basis in such manner as the Committee shall determine.
(g) As of the last day of each payroll period, the Employer shall
contribute to the Trust, as Cash or Deferred Contributions with respect to
each Member, an amount equal to the amount of Compensation elected to be
deferred, pursuant to Paragraphs (a) and (b) above (as adjusted pursuant to
Paragraph (f) above), by such Member during such payroll period. Such
contributions, as well as the contributions made pursuant to Sections
3.2(a) and 3.3, shall be made without regard to current or accumulated
profits of the Employer. Notwithstanding the foregoing, the Plan is
intended to qualify as a profit sharing plan for purposes of sections
401(a), 402, 412, and 417 of the Code.
3.2 EMPLOYER MATCHING CONTRIBUTIONS.
----------------------------------
(a) For each payroll period, the Employer shall contribute to the
Trust, as Employer Matching Contribu-tions, an amount that equals 100% of
the Cash or Deferred Contributions that were made pursuant to Section 3.1
on behalf of each of the Members during such payroll period and that were
not in excess of 6% of each such Member's Compensation for such payroll
period. In addition to the Employer Matching Contribution made pursuant to
the preceding sentence, for each payroll period, the Employer shall
contribute an amount that equals the difference, if any, between (1) 100%
of the total Cash or Deferred Contributions made pursuant to Section 3.1 by
each Member for the current and all prior payroll periods in the current
Plan Year not in excess of 6% of each such Member's total Compensation for
the current and all prior payroll periods in the current Plan Year and (2)
the total Employer Matching Contributions made on behalf of each such
Member for the current payroll period (pursuant to the preceding sentence)
and all prior payroll periods in the current Plan Year (pursuant to this
Paragraph); provided, however, that the Employer Matching Contribution made
pursuant to this sentence for any payroll period on behalf of any Member,
when combined with the Employer Matching Contribution made pursuant to the
preceding sentence on behalf of such Member for such payroll period, shall
not exceed 6% of such Member's Compensation for such payroll period.
III-2
<PAGE>
(b) For each Plan Year, the Employer may contribute to the Trust out
of its current or accumulated earnings and profits an additional Employer
Matching Contribution in an amount determined in its discretion on behalf
of each of the Members who made Cash or Deferred Contributions during such
Plan Year.
(c) Employer Matching Contributions may be made in cash or Compaq
Stock, as determined by and in the discretion of the Employer.
3.3 EMPLOYER SAFE HARBOR CONTRIBUTIONS. In addition to the Employer
-------------------------------------
Matching Contributions made pursuant to Section 3.2, the Employer, in its
discretion, may contribute for each Plan Year, as a "safe harbor contribution"
for such Plan Year, the amounts necessary to cause the Plan to satisfy the
restrictions set forth in Section 3.1(e) (with respect to certain restrictions
on Cash or Deferred Contributions) and Section 3.4 (with respect to certain
restrictions on Employer Matching Contributions). Amounts contributed in order
to satisfy the restrictions set forth in Section 3.1(e) shall be considered
"qualified matching contributions" (within the meaning of Treasury Regulation
1.401(k)-1(g)(13)) for purposes of such Section, and amounts contributed in
order to satisfy the restrictions set forth in Section 3.4 shall be considered
Employer Matching Contributions for purposes of such Section. Any amounts
contributed pursuant to this Paragraph shall be allocated in accordance with the
provisions of Sections 4.2(d) and (e).
3.4 RESTRICTIONS ON EMPLOYER CONTRIBUTIONS. In restriction of the
-----------------------------------------
Employer Contributions hereunder, it is specifically provided that one of the
"actual contribution percentage" tests set forth in section 401(m) of the Code
and the Treasury regulations thereunder must be met in each Plan Year. The
Committee may elect, in accordance with applicable Treasury regulations, to
treat Cash or Deferred Contributions to the Plan as Employer Matching
Contributions for purposes of meeting this requirement.
3.5 PAYMENTS TO TRUSTEE. Contributions under the Plan shall be paid by
-------------------
the Employer directly to the Trustee as soon as practicable after such
contributions are made. On or about the date of any such payment to the
Trustee, the Committee shall be informed as to the amount of such payment.
3.6 RETURN OF CONTRIBUTIONS. Anything to the contrary herein
-------------------------
notwithstanding, the Employer's contributions to the Plan are contingent upon
the deductibility of such contributions under section 404 of the Code. To the
extent that a deduction for contributions is disallowed, such contributions
shall, upon the written demand of the Employer, be returned to the Employer by
the Trustee within one year after the date of disallowance, reduced by any net
losses of the Trust Fund attributable thereto but not increased by any net
earnings of the Trust Fund attributable thereto. Moreover, if Employer
contributions are made under a mistake of fact, such contributions shall, upon
the written demand of the Employer, be returned to the Employer by the Trustee
within one year after the payment thereof, reduced by any net losses of the
Trust Fund attributable thereto but not increased by any net earnings of the
Trust Fund attributable thereto.
III-3
<PAGE>
3.7 DISTRIBUTION OR FORFEITURE OF EXCESS DEFERRALS AND EXCESS CONTRIBUTIONS.
-----------------------------------------------------------------------
(a) Anything to the contrary herein notwithstanding, any Cash or
Deferred Contributions to the Plan for a calendar year on behalf of a
Member in excess of the limitations set forth in Section 3.1(d) and any
"excess deferrals" from other plans allocated to the Plan by such Member no
later than March 1 of the next following calendar year (within the meaning
of, and pursuant to the provisions of, section 402(g)(2) of the Code) shall
be distributed to such Member not later than April 15 of the next following
calendar year.
(b) Anything to the contrary herein notwithstanding, if, for any Plan
Year, the aggregate Cash or Deferred Contributions made by the Employer on
behalf of Highly Compensated Employees exceeds the maximum amount of Cash
or Deferred Contributions permitted on behalf of such Highly Compensated
Employees pursuant to Section 3.1(e) (determined by reducing Cash or
Deferred Contributions on behalf of Highly Compensated Employees in order
of the "actual deferral percentages" (as that term is defined in section
401(k)(3)(B) of the Code and the Treasury regulations thereunder) beginning
with the highest of such percentages), such excess shall be distributed to
the Highly Compensated Employees on whose behalf such excess was
contributed before the end of the next following Plan Year. For purposes of
this Paragraph, the determination and correction of excess Cash or Deferred
Contributions of a Member whose actual deferral percentage is determined
under the family aggregation rules of sections 401(k) and 414(q) of the
Code shall be made in accordance with the provisions of such sections and
the Treasury regulations thereunder.
(c) Anything to the contrary herein notwithstanding, if, for any Plan
Year, the aggregate Employer Contributions allocated to the Employer
Contribution Accounts of Highly Compensated Employees exceed the maximum
amount of such Employer Contributions permitted on behalf of such Highly
Compensated Employees pursuant to Section 3.4 (determined by reducing
Employer Contributions made on behalf of Highly Compensated Employees in
order of the "contribution percentages" (as that term is defined in section
401(m)(3) of the Code and Treasury regulations thereunder) beginning with
the highest of such percentages), such excess shall be distributed to the
Highly Compensated Employees on whose behalf such excess contributions were
made (or, if such excess contributions are forfeitable, they shall be
forfeited) before the end of the next following Plan Year. For purposes of
this Paragraph, the determination and correction of excess Employer
Contributions allocated to the Employer Contribution Account of a Member
whose contribution percentage is determined under the family aggregation
rules of sections 401(m) and 414(q) of the Code shall be made in accordance
with the provisions of such sections and the Treasury regulations
thereunder. Employer Contributions shall be forfeited pursuant to this
Paragraph only if distribution of all vested Employer Contributions is
insufficient to meet the requirements of this Paragraph. If vested Employer
Contributions are distributed to a Member and nonvested Employer
Contributions remain credited to such Member's Accounts, such nonvested
Employer Contributions shall vest at the same rate as if such distribution
had not been made.
(d) In coordinating the disposition of excess deferrals and excess
contributions pursuant to this Section, such excess deferrals and excess
contributions shall be distributed or forfeited as follows:
III-4
<PAGE>
(1) First, Cash or Deferred Contributions that constitute excess
deferrals described in Paragraph (a) above which are not considered in
determining the amount of Employee Matching Contributions pursuant to
Section 3.2 shall be distributed;
(2) Second, excess Cash or Deferred Contributions that constitute
excess deferrals described in Paragraph (a) above which are considered
in determining the amount of Employer Matching Contributions pursuant
to Section 3.2 shall be distributed, and the Employer Matching
Contributions with respect to such Cash or Deferred Contributions
shall be forfeited;
(3) Third, excess Cash or Deferred Contributions described in
Paragraph (b) above that are not considered in determining the amount
of Employer Matching Contributions pursuant to Section 3.2 shall be
distributed;
(4) Fourth, excess Cash or Deferred Contributions described in
Paragraph (b) above that are considered in determining the amount of
Employer Matching Contributions pursuant to Section 3.2 shall be
distributed, and the Employer Matching Contributions with respect to
such Cash or Deferred Contributions shall be forfeited; and
(5) Fifth, excess Employer Contributions described in Para-graph
(c) above shall be distributed (or, if forfeitable, forfeited).
(e) Any distribution or forfeiture of excess deferrals or excess
contributions pursuant to the provisions of this Section shall be adjusted
for income or loss allocated thereto in accordance with the provisions of
Section 4.4 through the Valuation Date next preceding the date of the
distribution or forfeiture. Any forfeiture pursuant to the provisions of
this Section shall be considered to have occurred on the date which is
2-1/2 months after the end of the Plan Year.
3.8 ROLLOVER CONTRIBUTIONS.
-----------------------
(a) Qualified Rollover Contributions may be made to the Plan by any
Eligible Employee of amounts that are "eligible rollover distributions"
within the meaning of section 402(f)(2)(A) of the Code from an employees'
trust described in section 401(a) of the Code, which is exempt from tax
under section 501(a) of the Code. A Rollover Contribution may be made to
the Plan irrespective of whether such eligible rollover distribution was
paid to the Eligible Employee or paid to the Plan as a "direct" Rollover
Contribution, but only if any such Rollover Contribution is made pursuant
to and in accordance with applicable provisions of the Code and Treasury
regulations promulgated thereunder. A direct Rollover Contribution to the
Plan may be effectuated only by wire transfer directed to the Trustee or by
issuance of a check made payable to the Trustee, which is negotiable only
by the Trustee and which identifies the Eligible Employee for whose benefit
the Rollover Contribution is being made. Any Eligible Employee desiring to
effect a Rollover Contribution to the Plan must execute and file with the
Committee the form prescribed by the Committee for such purpose. The
Committee may require as a condition to accepting any Rollover Contribution
that such Eligible Employee furnish any evidence that the Committee in its
discretion deems satisfactory to establish that the proposed Rollover
Contribution is in fact such an eligible rollover distribution and is made
pursuant to and in accordance with applicable provisions of the Code and
Treasury regulations. All Rollover Contributions to the Plan must be made
in cash. A Rollover Contribution shall be credited to the Rollover
Contribution Account of the Eligible Employee for whose benefit such
Rollover Contribution is being made as of the last day of the month in
which such Rollover Contribution is made.
III-5
<PAGE>
(b) An Eligible Employee who has made a Rollover Contribution in
accordance with this Section, but who has not otherwise become a Member of
the Plan in accordance with Article II, shall become a Member coincident
with such Rollover Contribution; provided, however, that such Member shall
not have a right to defer Compensation or have Employer Contributions made
on his behalf until he has otherwise satisfied the requirements imposed by
Article II.
III-6
<PAGE>
IV
ALLOCATIONS
-----------
4.1 SUSPENSE ACCOUNT. All contributions, forfeitures, and the net
-----------------
income (or net loss) of the Trust Fund shall be held in a suspense account until
allocated to the Accounts of the Members as provided herein.
4.2 ALLOCATION OF CONTRIBUTIONS.
-----------------------------
(a) Cash or Deferred Contributions made by the Employer on a Member's
behalf for each payroll period pursuant to Section 3.1 shall be allocated
to such Member's Cash or Deferred Account as of the last day of such
payroll period.
(b) The Employer Matching Contributions for each payroll period
pursuant to Section 3.2(a) shall be allocated as of the last day of such
payroll period to the Employer Contribution Accounts of the Members for
whom such contributions were made.
(c) The Employer Matching Contributions for each Plan Year pursuant to
Section 3.2(b) shall be allocated as of the last day of such Plan Year to
the Employer Contribution Accounts of the Members for whom such
contributions were made. The allocation to each such eligible Member's
Employer Contribution Account shall be that portion of such Employer
Matching Contributions which is in the same proportion that the total of
the Employer Matching Contributions allocated pursuant to Paragraph (b)
above to such eligible Member's Employer Contribution Account for such Plan
Year bears to the total of all Employer Matching Contributions allocated
pursuant to Paragraph (b) above to all such eligible Members' Employer
Contribution Accounts for such Plan Year.
(d) The Employer Safe Harbor Contribution, if any, made pursuant to
Section 3.3 for a Plan Year in order to satisfy the restrictions set forth
in Section 3.1(e) shall be allocated as of the last day of such Plan Year
to the Cash or Deferred Accounts of Members who (1) received an allocation
of Cash or Deferred Contributions for such Plan Year and (2) were not
Highly Compensated Employees for such Plan Year (each such Member
individually referred to as an "ELIGIBLE MEMBER" for purposes of this
Paragraph) as follows:
(1) First, to the Cash or Deferred Account of the Eligible Member
who received the least amount of Compensation for such Plan Year until
the limitation set forth in Section 4.6 has been reached as to such
Eligible Member;
(2) Next, to the Cash or Deferred Account of the Eligible Member
who received the next smallest amount of Compensation for such Plan
Year until the limitation set forth in Section 4.6 has been reached as
to such Eligible Member; and
(3) Next, continuing in such manner until such Employer Safe
Harbor Contribution has been allocated completely or the limitation
set forth in Section 4.6 has been reached as to all Eligible Members.
IV-1
<PAGE>
The remaining portion, if any, of such Employer Safe Harbor Contribution shall
be allocated among the Cash or Deferred Accounts of all Members who were
Eligible Employees during such Plan Year, with the allocation to each such
Member's Cash or Deferred Account being the portion of such remaining Employer
Safe Harbor Contribution which is in the same proportion that such Member's
Compensation for such Plan Year bears to the total of all such Member's
Compensation for such Plan Year, subject to the limitation set forth in Section
4.6 with respect to each such Member.
(e) The Employer Safe Harbor Contribution, if any, made pursuant to
Section 3.3 for a Plan Year in order to satisfy the restrictions set forth
in Section 3.4 shall be allocated as of the last day of such Plan Year to
the Employer Contribution Accounts of Members who (1) received an
allocation of Employer Matching Contributions for such Plan Year and (2)
were not Highly Compensated Employees for such Plan Year (each such Member
individually referred to as an "ELIGIBLE MEMBER" for purposes of this
Paragraph) as follows:
(1) First, to the Employer Contribution Account of the Eligible
Member who received the least amount of Compensation for such Plan
Year until the limitation set forth in Section 4.6 has been reached as
to such Eligible Member;
(2) Next, to the Employer Contribution Account of the Eligible
Member who received the next smallest amount of Compensation for such
Plan Year until the limitation set forth in Section 4.6 has been
reached as to such Eligible Member; and
(3) Next, continuing in such manner until such Employer Safe
Harbor Contribution has been allocated completely or the limitation
set forth in Section 4.6 has been reached as to all Eligible Members.
The remaining portion, if any, of such Employer Safe Harbor Contribution shall
be allocated among the Employer Contribution Accounts of all Members who were
Eligible Employees during such Plan Year, with the allocation to each such
Member's Employer Contribution Account being the portion of such remaining
Employer Safe Harbor Contribution which is in the same proportion that such
Member's Compensation for such Plan Year bears to the total of all such Member's
Compensation for such Plan Year, subject to the limitation set forth in Section
4.6 with respect to each such Member.
(f) If an Employer Safe Harbor Contribution is made in order to
satisfy the restrictions set forth in both Section 3.1(e) and Section 3.4
for the same Plan Year, the Employer Safe Harbor Contribution made in order
to satisfy the restrictions set forth in Section 3.1(e) shall be allocated
(pursuant to Paragraph (d) above) prior to allocating the Employer Safe
Harbor Contribution made in order to satisfy the restrictions set forth in
Section 3.4 (pursuant to Paragraph (e) above).
4.3 APPLICATION OF FORFEITURES. Any amounts that are forfeited under
----------------------------
any provision of the Plan hereof during a Plan Year shall be applied to reduce
Employer Matching Contributions or Employer Safe Harbor Contributions, if any,
next coming due. For all Valuation Dates prior to such application, forfeited
amounts held in a suspense account shall not receive allocations of net income
(or net loss) pursuant to Section 4.4.
IV-2
<PAGE>
4.4 ALLOCATION OF NET INCOME OR LOSS AND NET INCREASE OR DECREASE.
------------------------------------------------------------------
(a) As of each Valuation Date, the Trustee shall determine the fair
market value of the Trust Fund assets and the net income (or net loss) of
the Trust Fund. The net income (or net loss) of each Investment Fund within
the Trust Fund since the next preceding Valuation Date shall be ascertained
by the Trustee, including any net increase or net decrease in the value of
the assets of each such Investment Fund since the next preceding Valuation
Date. As soon as practicable after the last day of each calendar quarter,
the Trustee shall deliver to the Committee a written statement of such
determinations for each such quarter.
(b) For purposes of allocations of net increase (or net decrease) in
fair market value and net income (or net loss) of the Trust Fund, each
Member's Accounts (or subaccounts) shall be divided into subaccounts to
reflect such Member's investment designation in a particular Investment
Fund or Investment Funds pursuant to Article V. As of each Valuation Date,
the net increase (or net decrease) in fair market value and net income (or
net loss) of each Investment Fund, separately and respectively, shall be
allocated among the corresponding subaccounts of the Members who had such
corresponding subaccounts on the next preceding Valuation Date, and each
such corresponding subaccount shall be credited with (or debited for) that
portion of such net increase (or net decrease) in fair market value and net
income (or net loss) that the value of each such corresponding subaccount
on such next preceding Valuation Date was of the value of all such
corresponding subaccounts on such date; provided, however, that the value
of such subaccounts as of the next preceding Valuation Date shall be
reduced by the amount of any withdrawals or distributions made therefrom
since the next preceding Valuation Date.
(c) Except as provided in Section 5.4, with respect to each Member
whose employment is terminated for any reason, so long as there is any
balance in any of his Accounts (including an Account payable to a
Beneficiary of a Member or an alternate payee under a qualified domestic
relations order, as defined in section 414(p)(8) of the Code), such Account
or Accounts shall continue to receive allocations pursuant to this Section.
4.5 ALLOCATIONS ATTRIBUTABLE TO COMPAQ STOCK. Plan provisions to the
------------------------------------------
contrary notwithstanding, the provisions of this Paragraph shall be applicable
with respect to allocations and accounting for Compaq Stock held by the Plan.
All amounts that are allocated to a Member's Accounts under the Plan and are to
be invested in Compaq Stock shall be used to purchase shares of Compaq Stock as
soon as practicable after such allocation at such times, in such quantities, and
from such sources as determined by the Trustee. Shares of Compaq Stock so
purchased for a Member's Accounts shall be earmarked for the benefit of such
Member. Any cash dividends received by the Trustee with respect to Compaq Stock
earmarked for Members' Accounts shall be invested in additional shares of Compaq
Stock, which shall be earmarked for the benefit of such Member. Any such
additional Compaq Stock, plus any other Compaq Stock received as a result of a
stock split or stock dividend, shall be allocated pro rata to the Members'
Accounts in proportion to the respective balances of Compaq Stock credited to
such Accounts as of the appropriate record date and, following an allocation of
such shares to a Member's Accounts, such shares shall be earmarked for the
benefit of such Member.
IV-3
<PAGE>
4.6 LIMITATIONS AND CORRECTIONS.
-----------------------------
(a) For purposes of this Section, the following terms and phrases
shall have these respective meanings:
(1) "ANNUAL ADDITIONS" of a Member for any Limitation Year shall
mean the total of (A) the Employer Contributions, Cash or Deferred
Contributions, and forfeitures, if any, allocated to such Member's
Accounts for such year, (B) Member's contributions, if any, (excluding
any Rollover Contributions) for such year, and (C) amounts referred to
in sections 415(l)(1) and 419A(d)(2) of the Code.
(2) "LIMITATION YEAR" shall mean the Plan Year.
(3) "MAXIMUM ANNUAL ADDITIONS" of a Member for any Limitation
Year shall mean the lesser of (A) $30,000 (or, if greater, one-fourth
of the defined benefit dollar limitation in effect under section
415(b)(1)(A) of the Code for such Limitation Year) or (B) 25% of such
Member's compensation, within the meaning of section 415(c)(3) of the
Code and applicable Treasury regulations thereunder, during such year
except that the limitation in this Clause (B) shall not apply to any
contribution for medical benefits (within the meaning of section
419A(f)(2) of the Code) after separation from service with the
Employer or a Controlled Entity which is otherwise treated as an
Annual Addition or to any amount otherwise treated as an Annual
Addition under section 415(l)(1) of the Code.
(b) Contrary Plan provisions notwithstanding, in no event shall the
Annual Additions credited to a Member's Accounts for any Limitation Year
exceed the Maximum Annual Additions for such Member for such year. If as a
result of a reasonable error in estimating a Member's compensation or a
reasonable error in determining the amount of elective deferrals (within
the meaning of section 402(g)(3) of the Code) that may be made with respect
to any individual under the limits of section 415 of the Code, or because
of other limited facts and circumstances, the Annual Additions that would
be credited to a Member's Accounts for a Limitation Year would nonetheless
exceed the Maximum Annual Additions for such Member for such year, the
excess Annual Additions which, but for this Section, would have been
allocated to such Member's Accounts shall be disposed of as follows:
(1) First, any such excess Annual Additions in the form of Cash
or Deferred Contributions on behalf of such Member that would not have
been considered in determining the amount of Employer Contributions
allocated to such Member's Accounts pursuant to Section 4.2 shall be
distributed to such Member, adjusted for income or loss allocated
thereto;
(2) Next, any such excess Annual Additions in the form of Cash or
Deferred Contributions on behalf of such Member that would have been
considered in determining the amount of Employer Contributions
allocated to such Member's Accounts pursuant to Section 4.2 shall be
distributed to such Member, adjusted for income or loss allocated
thereto, and the Employer Contributions that would have been allocated
to such Member's Accounts based upon such distributed Cash or Deferred
Contributions shall, to the extent such amounts would have otherwise
been allocated to such Member's Accounts, be allocated to a suspense
account and shall be held there until used to reduce future Employer
Matching Contributions or Employer Safe Harbor Contributions, if any,
in the same manner as a forfeiture.
IV-4
<PAGE>
(c) If a suspense account is in existence at any time during a
Limitation Year pursuant to this Section, it will not participate in
allocations of the net income (or net loss) of the Trust Fund.
(d) For purposes of determining whether the Annual Additions under
this Plan exceed the limitations herein provided, all defined contribution
plans of the Employer are to be treated as one defined contribution plan.
In addition, all defined contribution plans of Controlled Entities shall be
aggregated for this purpose. For purposes of this Section only, a
"CONTROLLED ENTITY" (other than an affiliated service group member within
the meaning of section 414(m) of the Code) shall be determined by
application of a more than 50% control standard in lieu of an 80% control
standard. If the Annual Additions credited to a Member's Accounts for any
Limitation Year under this Plan plus the additions credited on his behalf
under other defined contribution plans required to be aggregated pursuant
to this Paragraph would exceed the Maximum Annual Additions for such Member
for such Limitation Year, the Annual Additions under this Plan and the
additions under such other plans shall be reduced on a pro rata basis and
allocated, reallocated, or returned in accordance with applicable plan
provisions regarding Annual Additions in excess of Maximum Annual
Additions.
(e) In the case of a Member who also participated in a defined benefit
plan of the Employer or a Controlled Entity (as defined in Paragraph (d)
above), the Employer shall reduce the Annual Additions credited to the
Accounts of such Member under this Plan pursuant to the provisions of
Paragraph (b) to the extent necessary to prevent the limitation set forth
in section 415(e) of the Code from being exceeded. Notwithstanding the
foregoing, the provisions of this Paragraph shall apply only if such
defined benefit plan does not provide for a reduction of benefits
thereunder to ensure that the limitation set forth in section 415(e) of the
Code is not exceeded.
(f) If the limitations set forth in this Section would not otherwise
be met for any Limitation Year, the Compensation deferral elections
pursuant to Section 3.1 of affected Members may be reduced by the Committee
on a temporary and prospective basis in such manner as the Committee shall
determine.
IV-5
<PAGE>
4.7 EQUITABLE ALLOCATIONS. If the Committee determines in making any
----------------------
allocation to any Account under the provisions of the Plan that the strict
application of the provisions of this Article will not produce an equitable and
nondiscriminatory allocation among the Accounts of the Members, it may modify
any procedure specified in the Plan for the purpose of achieving an equitable
and nondiscriminatory allocation in accordance with the general concepts of the
Plan; provided, however, that any such modification shall not reduce a Member's
Vested Interest in his Accounts and shall be consistent with the provisions of
section 401(a)(4) of the Code. If the Committee in good faith determines that
certain expenses of administration paid by the Trustee during the Plan Year
under consideration are not general, ordinary, and usual and equitably should
not be borne by all Members, but should be borne only by one or more Members,
for whom or because of whom such specific expenses were incurred, the Committee
shall make suitable adjustments by debiting the particular Account or Accounts
of such one or more Members; provided, however, that any such adjustment shall
be nondiscriminatory and consistent with the provisions of section 401(a) of the
Code.
IV-6
<PAGE>
V
INVESTMENT OF ACCOUNTS
----------------------
5.1 INVESTMENT OF ACCOUNTS. Each Member shall be entitled to direct
------------------------
the investment of amounts in his Accounts in accordance with this Article V.
5.2 INVESTMENT FUNDS. On the form and within the time period
-----------------
prescribed by the Committee, each Member shall designate the Investment Fund or
Investment Funds in which the amounts allocated to his Accounts shall be
invested from among the Investment Funds designated by the Committee from time
to time, including, but not limited to, the following Investment Funds:
INVESTMENT FUND 1 COMPAQ STOCK FUND. An Investment Fund consisting of Compaq
- ------------------ Stock and such amounts of cash as the Trustee in its
discretion considers too small to be invested in such stock.
INVESTMENT FUND 2 EQUITY FUND. An Investment Fund consisting of common stock
- ------------------ and other equity securities held directly or indirectly by a
mutual fund, collective investment trust, or similar
investment vehicle.
INVESTMENT FUND 3 FIXED INCOME FUND. An Investment Fund consisting of interest
- ------------------ bearing accounts, certificates of deposit, or bonds,
debentures, and other debt instruments issued by
governmental units or corporate entities.
A Member may designate one of such Investment Funds for all of the amounts
allocated to his Accounts, or he may split the investment of such amounts among
such Investment Funds in increments of integral percentages, provided that such
percentages total 100%. If a Member fails to make a designation of 100% of the
amounts allocated to his Accounts, such allocations shall be invested in the
Fixed Income Fund.
5.3 CHANGE OF INVESTMENT DESIGNATION AND TRANSFER OF ACCOUNTS.
----------------------------------------------------------------
(a) A Member may change his investment designation for future
allocations as frequently as permitted by the Committee in its discretion
and in the manner, on the form, and within the time period prescribed by
the Committee.
(b) A Member may elect, as frequently as permitted by the Committee in
its discretion and in the manner, on the form, and within the time period
prescribed by the Committee, to transfer all or less than all of the
amounts in his Accounts from one Investment Fund to another of the
Investment Funds permitted by Section 5.2.
V-1
<PAGE>
5.4 ACCOUNTS OF CERTAIN TERMINATED EMPLOYEES. With respect to a Member
----------------------------------------
whose employment is terminated other than by reason of retirement on or after
his Early Retirement Date or Normal Retirement Date, death, or total and
permanent disability as defined in Section 7.2, the Committee in its discretion
may direct that the Accounts of such Member be segregated and placed in a
separate account, which shall be invested by, and in the discretion of, the
Trustee and which shall share only in the income (or loss) of such account and
shall not share in any income (or loss) of the Trust or of any other Investment
Fund.
5.5 RESTRICTION OF ACQUISITION OF COMPAQ STOCK. Notwithstanding any
---------------------------------------------
other provision hereof, it is specifically provided that the Trustee shall not
purchase Compaq Stock or other Compaq securities during any period in which such
purchase is, in the opinion of counsel for Compaq or the Committee, restricted
by any law or regulation applicable thereto. During such period, amounts that
would otherwise be invested in Compaq Stock or other Compaq securities pursuant
to an investment designation shall be invested in such other assets as the
Trustee may in its discretion determine, or the Trustee may hold such amounts
uninvested for a reasonable period pending the purchase of such stock or
securities.
5.6 PASS-THROUGH VOTING OF COMPAQ STOCK. To the extent permitted by
--------------------------------------
section 404(a) of the Act, at each annual meeting and special meeting of the
shareholders of Compaq, a Member or Beneficiary may direct the voting of the
number of whole shares of Compaq Stock attributable to his Accounts as of the
Valuation Date coinciding with or, if none, next preceding the record date for
such meeting. The Committee shall forward or cause to be forwarded to each such
Member or Beneficiary copies of pertinent proxy solicitation material provided
by Compaq together with a request for such Member's or Beneficiary's
confidential instructions as to the manner in which such shares are to be voted.
The Committee shall direct the Trustee to vote such shares in accordance with
such instructions and, to the extent permitted by section 404(a) of the Act,
shall also direct the Trustee as to the manner in which to vote any shares of
Compaq Stock at any such meeting for which the Committee has not received, or is
not subject to receiving, such voting instructions.
5.7 STOCK RIGHTS, STOCK SPLITS, AND STOCK DIVIDENDS. No Member or
----------------------------------------------------
Beneficiary shall have any right to request, direct, or demand that the
Committee or the Trustee exercise in his behalf rights or privileges to acquire,
convert, or exchange Compaq Stock or other securities. The Trustee, in its
discretion, may exercise or sell any such rights or privileges. Compaq Stock
received by the Trustee by reason of a stock split, stock dividend, or
recapitalization shall be appropriately allocated to the Accounts of each
affected Member or Beneficiary in accordance with Section 4.5.
V-2
<PAGE>
VI
RETIREMENT BENEFITS
-------------------
6.1 RETIREMENT BENEFITS. A Member who terminates his employment on or
--------------------
after his Early Retirement Date or Normal Retirement Date shall be entitled to a
retirement benefit, payable at the time and in the form provided in Article X,
equal in value to the sum of:
(a) The amount in his Accounts as of the Valuation Date next preceding
his Benefit Payment Date; and
(b) If the Valuation Date next preceding such Member's Benefit Payment
Date occurs prior to the close of the payroll period during which his
termination of employment occurred, the amount of such Member's allocation
of Cash or Deferred Contributions and Employer Matching Contributions
described in Section 3.2(a) for such payroll period; and
(c) If the Valuation Date next preceding such Member's Benefit Payment
Date occurs prior to the close of the Plan Year during which his
termination of employment occurred, the amount of such Member's allocation
of Employer Matching Contributions described in Section 3.2(b) and Employer
Safe Harbor Contributions, if any, for such Plan Year.
VI-1
<PAGE>
VII
DISABILITY BENEFITS
-------------------
7.1 DISABILITY BENEFITS. In the event a Member's employment is
--------------------
terminated due to total and permanent disability, as of the Committee's
determination thereof as provided in Section 7.2, such Member shall be entitled
to a disability benefit, payable at the time and in the form provided in Article
X, equal in value to the sum of:
(a) The amount in his Accounts as of the Valuation Date next preceding
his Benefit Payment Date; and
(b) If the Valuation Date next preceding such Member's Benefit Payment
Date occurs prior to the close of the payroll period during which such
disability was determined by the Committee, the amount of such Member's
allocation of Cash or Deferred Contributions and Employer Matching
Contributions described in Section 3.2(a) for such payroll period; and
(c) If the Valuation Date next preceding such Member's Benefit Payment
Date occurs prior to the close of the Plan Year during which such
disability was determined by the Committee, the amount of such Member's
allocation of Employer Matching Contributions described in Section 3.2(b)
and Employer Safe Harbor Contributions, if any, for such Plan Year.
7.2 TOTAL AND PERMANENT DISABILITY DETERMINED. The Committee shall
---------------------------------------------
determine whether a Member has become totally and permanently disabled and shall
so notify such Member within sixty days thereafter. A Member shall be
considered totally and permanently disabled if such Member is determined by the
Committee to be totally and permanently disabled within the meaning of the
Compaq Computer Corporation Long-Term Disability Program and is so certified by
the Committee.
VII-1
<PAGE>
VIII
SEVERANCE BENEFITS AND
DETERMINATION OF VESTED INTEREST
--------------------------------
8.1 NO BENEFITS UNLESS HEREIN SET FORTH. Except as set forth in this
-------------------------------------
Article VIII, upon termination of employment of a Member prior to his Early
Retirement Date or Normal Retirement Date for any reason other than total and
permanent disability or death, such Member shall acquire no right to any benefit
from the Plan or the Trust Fund.
8.2 SEVERANCE BENEFIT. Each Member whose employment is terminated
------------------
prior to his Normal Retirement Date or Early Retirement Date for any reason
other than total and permanent disability or death shall be entitled to a
severance benefit, payable at the time and in the form provided in Article X,
equal in value to the sum of:
(a) His Vested Interest in the amount in his Accounts as of the
Valuation Date next preceding his Benefit Payment Date; and
(b) If the Valuation Date next preceding such Member's Benefit Payment
Date occurs prior to the close of the payroll period during which his
termination of employment occurred, the amount of such Member's Vested
Interest in his allocation of Cash or Deferred Contributions and Employer
Matching Contributions described in Section 3.2(a) for such payroll period;
and
(c) If the Valuation Date next preceding such Member's Benefit Payment
Date occurs prior to the close of the Plan Year during which his
termination of employment occurred, the amount of such Member's Vested
Interest in his allocation of Employer Matching Contributions described in
Section 3.2(b) and Employer Safe Harbor Contributions, if any, for such
Plan Year.
8.3 DETERMINATION OF VESTED INTEREST.
-----------------------------------
(a) A Member shall have a 100% Vested Interest in his Cash or Deferred
Account and Rollover Contribution Account at all times.
(b) Except as provided in the following Paragraphs of this Section, a
Member's Vested Interest in his Employer Contribution Account shall be
determined by such Member's years of Vesting Service in accordance with the
following schedule:
YEARS OF VESTING SERVICE VESTED INTEREST
- ------------------------ ----------------
Less than 5 years 0%
5 years or more 100%
VIII-1
<PAGE>
(c) Prior to a Member's completion of five years of Vesting Service,
such Member's Vested Interest in his Employer Contribution Account shall be
determined separately for each Plan Year's Employer Contributions allocated
to such Account in accordance with the following schedule:
YEARS OF VESTING SERVICE VESTED INTEREST
- ------------------------ ----------------
Less than 1 year 0%
1 year 33-1/3%
2 years 66-2/3%
3 years or more 100%
For purposes of this Paragraph and this Paragraph only, (1) each Member's
Employment Commencement Date or Reemployment Commencement Date, as
applicable, shall be deemed to be January 1 of the Plan Year in which an
Employer Contribution is made and (2) each Member shall be credited with a
year of Vesting Service for each Plan Year in which such Member is an
Eligible Employee on the last day of the Plan Year and shall be credited
with no Vesting Service for any Plan Year in which such Member is not an
Eligible Employee on the last day of the Plan Year; provided, however, that
the provisions of this Paragraph shall apply only to the extent that
application of such provisions produces a greater Vested Interest of a
Member with respect to such Member's allocation of Employer Contributions
for a Plan Year than produced under the terms of the Plan without regard to
this Paragraph.
(d) Paragraphs (a), (b), and (c) above notwithstanding, with respect
to any Member who was a participant in the Plan on the day prior to the
Effective Date, in no event shall such Member's Vested Interest in his
Employer Contribution Account after the Effective Date be less than such
Vested Interest would have been had the Plan provisions prior to such date
been in effect.
(e) Paragraphs (a), (b), and (c) above notwithstanding, a Member shall
have a 100% Vested Interest in his Employer Contribution Account upon (1)
attainment of his Early Retirement Date or Normal Retirement Date, (2)
termination of employment due to the determination of the total and
permanent disability of such Member as provided in Section 7.2, (3)
termination of employment due to the death of such Member, and (4) an event
described in and as provided in Section 17.2.
8.4 VESTING SERVICE.
----------------
(a) For the period preceding the Effective Date, subject to the
provisions of Paragraphs (c) and (d) below, an individual shall be credited
with Vesting Service in an amount equal to all service credited to him for
vesting purposes under the Plan as it existed on the day prior to the
Effective Date.
(b) On and after the Effective Date, subject to the remaining
Paragraphs of this Section, an individual shall be credited with Vesting
Service in an amount equal to his aggregate Periods of Service whether or
not such Periods of Service are completed consecu-tively.
VIII-2
<PAGE>
(c) Paragraph (b) above notwithstanding, if an individual terminates
his Service (at a time other than during a Leave of Absence) and
subsequently resumes his Service, if his Reemployment Commencement Date is
within twelve months of his Severance from Service Date, such Period of
Severance shall be treated as a Period of Service for purposes of Paragraph
(b) above.
(d) Paragraph (b) above notwithstanding, if an individual terminates
his Service during a Leave of Absence and subsequently resumes his Service,
if his Reemployment Commencement Date is within twelve months of the
beginning of such Leave of Absence, such Period of Severance shall be
treated as a Period of Service for purposes of Paragraph (b) above.
(e) In the case of a Member who incurs a Period of Severance of five
consecutive years, such Member's years of Vesting Service completed after
such Period of Severance shall be disregarded in determining such Member's
Vested Interest in any Plan benefits derived from Employer Contributions on
his behalf prior to such Period of Severance.
(f) In the case of an individual who terminates employment at a time
when he does not have any Vested Interest in his Employer Contribution
Account and who then incurs a Period of Severance that equals or exceeds
five years, such individual's Period of Service completed before such
Period of Severance shall be disregarded in determining his years of
Vesting Service.
8.5 FORFEITURES.
-----------
(a) With respect to a Member who terminates employment with the
Employer with a Vested Interest in his Employer Contribution Account that
is less than 100% and either is not entitled to a distribution from the
Plan or receives a distribution from the Plan of the balance of his Vested
Interest in his Accounts in the form of a lump sum distribution by the
close of the second Plan Year following the Plan Year in which his
employment is terminated, the forfeitable amount credited to the terminated
Member's Employer Contribution Account as of the Valuation Date next
preceding his Benefit Payment Date shall become a forfeiture as of his
Benefit Payment Date (or as of his date of termination of employment if no
amount is payable from the Trust Fund on behalf of such Member with such
Member being considered to have received a distribution of zero dollars on
his date of termination of employment).
(b) In the event that an amount credited to a terminated Member's
Employer Contribution Account becomes a forfeiture pursuant to Paragraph
(a) above, the terminated Member shall, upon subsequent reemployment with
the Employer prior to incurring a Period of Severance of five consecutive
years, have the forfeited amount restored to such Member's Employer
Contribution Account, unadjusted by any subsequent gains or losses of the
Trust Fund; provided, however, that such restoration shall be made only if
such Member repays in cash an amount equal to the amount so distributed to
him pursuant to Paragraph (a) above within five years from the date the
Member is reemployed; and provided, further, that such Member's repayment
of amounts distributed to him from his Cash or Deferred Account shall be
limited to the portion thereof that was attributable to contributions with
respect to which the Employer made Employer Matching Contributions. A
reemployed Member who was not entitled to a distribution from the Plan on
his date of termination of employment shall be considered to have repaid a
distribution of zero dollars on the date of his reemploy-ment. Any such
restoration shall be made as of the Valuation Date coincident with or next
succeeding the date of repayment. Notwithstanding anything to the contrary
in the Plan, forfeited amounts to be restored by the Employer pursuant to
this Paragraph shall be charged against and deducted from forfeitures for
the Plan Year in which such amounts are restored that would otherwise be
available to reduce Employer Matching Contribu-tions and Employer Safe
Harbor Contributions. If such forfeitures otherwise available are not
sufficient to provide such restoration, the portion of such restoration not
provided by forfeitures shall be charged against and deducted from Employer
Matching Contributions otherwise available for allocation to other Members
in accordance with Sections 4.2(b) and 4.2(c), and any additional amount
needed to restore such forfeited amounts shall be provided by an additional
Employer Contribution (which shall be made without regard to current or
accumulated earnings and profits).
VIII-3
<PAGE>
(c) With respect to a Member whose Vested Interest in his Employer
Contribution Account is less than 100% and who makes a withdrawal from or
receives a termination distribution from his Employer Contribution Account
other than a lump sum distribution by the close of the second Plan Year
following the Plan Year in which his employment is terminated, any amount
remaining in his Employer Contribution Account shall continue to be
maintained as a separate account. At any relevant time, such Member's
nonforfeitable portion of his separate account shall be determined in
accordance with the following formula:
X=P(AB + (R X D)) - (R X D)
For purposes of applying the formula: X is the nonforfeitable portion of
such separate account at the relevant time; P is the Member's Vested
Interest in his Employer Contribution Account at the relevant time; AB is
the balance of such separate account at the relevant time; R is the ratio
of the balance of such separate account at the relevant time to the balance
of such separate account after the withdrawal or distribution; and D is the
amount of the withdrawal or distribution. For all other purposes of the
Plan, a Member's separate account shall be treated as an Employer
Contribution Account. Upon his incurring a Period of Severance of five
consecutive years, the forfeitable portion of a terminated Member's
separate account and Employer Contribution Account shall be forfeited as of
the end of the Plan Year during which the terminated Member completes such
Period of Severance.
(d) With respect to a Member who terminates employment with the
Employer with a Vested Interest in his Employer Contribution Account
greater than 0% but less than 100% and who is not otherwise subject to the
forfeiture provisions of Paragraph (a) or Paragraph (c) above, the
forfeitable portion of his Employer Contribution Account shall be forfeited
as of the end of the Plan Year during which the terminated Member completes
a Period of Severance of five consecutive years.
VIII-4
<PAGE>
(e) Any forfeitures occurring pursuant to Paragraphs (a), (c), or (d)
above shall be held in a suspense account and shall be applied to reduce
Employer Matching Contributions or Employer Safe Harbor Contributions, if
any, next coming due. For all Valuation Dates prior to such application,
forfeited amounts held in the suspense account shall not receive
allocations of net income (or net loss) pursuant to Section 4.4.
(f) Distributions of benefits described in this Section shall be
subject to the time of payment requirements of Section 10.1.
VIII-5
<PAGE>
IX
DEATH BENEFITS
--------------
9.1 DEATH BENEFITS. Upon the death of a Member while an Employee, the
---------------
Member's designated Beneficiary shall be entitled to a death benefit, payable at
the time and in the form provided in Article X, equal in value to the sum of:
(a) The amount in his Accounts as of the Valuation Date next preceding
his Benefit Payment Date; and
(b) If the Valuation Date next preceding such Member's Benefit Payment
Date occurs prior to the close of the payroll period during which his death
occurred, the amount of such Member's allocation of Cash or Deferred
Contributions and Employer Matching Contributions described in Section
3.2(a) for such payroll period; and
(c) If the Valuation Date next preceding such Member's Benefit Payment
Date occurs prior to the close of the Plan Year during which his death
occurred, the amount of such Member's allocation of Employer Matching
Contributions described in Section 3.2(b) and Employer Safe Harbor
Contributions, if any, for such Plan Year.
9.2 DESIGNATION OF BENEFICIARY.
----------------------------
(a) In the event of the death of a Member, payment of his benefit
described in Section 9.1 shall be paid to his designated Beneficiary as
provided in Paragraphs (b) and (c) below.
(b) Each Member shall have the right to designate the Beneficiary or
Beneficiaries to receive payment of his benefit in the event of his death.
Each such designation shall be made by executing the Beneficiary
designation form prescribed by the Committee and filing such form with the
Committee. Any such designation may be changed at any time by such Member
by execution of a new designation in accordance with this Section.
Notwithstanding the foregoing, if a Member who is married on the date of
his death designates an individual or entity other than his surviving
spouse as his Beneficiary, such designation shall not be effective unless
(1) such spouse has consented thereto in writing and such consent (A)
acknowledges the effect of such specific designation, (B) either consents
to the specific designated Beneficiary (which designation may not
subsequently be changed by the Member without spousal consent) or expressly
permits such designation by the Member without the requirement of further
consent by the spouse, and (C) is witnessed by a Plan representative (other
than the Member) or a notary public or (2) the consent of such spouse
cannot be obtained because such spouse cannot be located or because of
other circumstances described by applicable Treasury regulations. Any such
consent by such surviving spouse shall be irrevocable.
(c) If no designation of a Beneficiary is on file with the Committee
at the time of the death of the Member, or if such designation is not
effective for any reason as determined by the Committee, the designated
Beneficiary or Beneficiaries to receive such death benefit shall be as
follows:
IX-1
<PAGE>
(1) If a Member leaves a surviving spouse, his death benefit
shall be paid to such surviving spouse;
(2) If a Member leaves no surviving spouse, his death benefit
shall be paid to such Member's executor or administrator or to his
heirs at law if there is no administration of such Member's estate.
IX-2
<PAGE>
X
TIME AND FORM OF PAYMENT OF BENEFITS
------------------------------------
10.1 TIME OF PAYMENT.
-----------------
(a) Subject to the provisions of the remaining Paragraphs of this
Section, a Member's Benefit Payment Date shall be the soonest date
administra-tively feasible after the Valuation Date coincident with or next
succeeding the date the Member or his Beneficiary becomes entitled to a
benefit pursuant to Article VI, VII, VIII, or IX.
(b) Unless (1) the Member has attained age sixty-five or died, (2) the
Member consents to a distribution pursuant to Paragraph (a) within the
ninety-day period ending on the date payment of his benefit hereunder is to
commence pursuant to Paragraph (a), or (3) the Member's Vested Interest in
his Accounts is not in excess of $3,500, the Member's Benefit Payment Date
shall be deferred to the date which is as soon as administratively feasible
after the Valuation Date coincident with or next succeeding the earlier of
the date the Member attains age sixty-five or the Member's date of death,
or such earlier Valuation Date as the Member may elect by written notice to
the Committee prior to such Valuation Date. No less than thirty days and no
more than ninety days before his Benefit Payment Date, the Committee shall
give notice to the Member of his right to defer his Benefit Payment Date
and shall describe the Member's Direct Rollover election rights pursuant to
Section 10.4. If a distribution is one to which sections 401(a)(11) and 417
of the Code do not apply, such distribution may be made less than thirty
days after the notice required under section 1.411(a)-11(c) of the Treasury
regulations is given, provided that (i) the Committee informs the Member
that the Member has a right to a period of at least thirty days after
receiving the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution option) and
(ii) the Member, after receiving such notice, affirmatively elects a
distribution.
(c) A Member's Benefit Payment Date shall in no event be later than
the sixtieth day following the close of the Plan Year during which such
Member attains, or would have attained, his Normal Retirement Date or, if
later, terminates his employment with the Employer or a Controlled Entity.
(d) A Member's Benefit Payment Date shall be in compliance with the
provisions of section 401(a)(9) of the Code and applicable Treasury
regulations thereunder and shall in no event be later than:
(1) In the case of a Member who attains the age of seventy and
one-half prior to January 1, 1988 and is not a "five-percent owner"
(within the meaning of section 416(i) of the Code) at any time during
the five Plan Year period ending in the calendar year in which such
Member attains the age of seventy and one-half, April 1 following the
later of (A) the calendar year in which such Member attains the age of
seventy and one-half or (B) the calendar year in which such Member
terminates his employment with the Employer, or if such Member becomes
a "five-percent owner" following the end of such five Plan Year
period, April 1 of the calendar year following the calendar year in
which such Member becomes a "five-percent owner;"
X-1
<PAGE>
(2) In the case of a Member who does not attain the age of
seventy and one-half prior to January 1, 1988 or is a "five-percent
owner" (within the meaning of section 416(i) of the Code) at any time
during the five Plan Year period ending in the calendar year in which
such Member attains the age of seventy and one-half, April 1 of the
calendar year following the calendar year in which such Member attains
the age of seventy and one-half; and
(3) In the case of a benefit payable pursuant to Article IX, the
last day of the five-year period following the death of such Member.
For purposes of Paragraph (d)(2) above, a Member who attains the age of seventy
and one-half in 1988, is not a "five-percent owner" (within the meaning of
section 416(i) of the Code) at any time during the five Plan Year period ending
in 1988 and does not terminate employment with the Employer prior to January 1,
1989, shall be considered to attain the age of seventy and one-half in 1989.
Further, the preceding provisions of this Section notwithstanding, a Member may
not elect to defer the receipt of his benefit hereunder to the extent that such
deferral creates a death benefit that is more than incidental within the meaning
of section 401(a)(9)(G) of the Code and applicable Treasury regulations
thereunder.
(e) Subject to the provisions of Paragraphs (c) and (d) above, a
Member's Benefit Payment Date shall not occur before the expiration of the
latest to end of the following periods:
(1) A period during which the Member is employed by the Employer
or any Controlled Entity; or
(2) A period during which the Member is employed by a purchaser
of less than substantially all of the assets used in a trade or
business of the Employer or a Controlled Entity if such Member
transfers to employment with such purchaser in connection with such
purchase.
10.2 CASH-OUT OF BENEFIT. If a Member terminates his employment with
---------------------
the Employer and his Vested Interest in his Accounts is not in excess of $3,500,
such Member's benefit shall be paid at the time specified in Section 10.1(a)
without regard to the consent restrictions of Section 10.1(b). No less than
thirty days and no more than ninety days prior to such Member's Benefit Payment
Date, the Committee shall give notice to such Member of his Direct Rollover
rights pursuant to Section 10.4. A distribution or Direct Rollover may be made
less than thirty days after such notice is given, provided that (1) the
Committee informs such Member that he has a right to a period of at least thirty
days after receiving such notice to consider whether or not to elect a Direct
Rollover pursuant to Section 10.4 and (2) such Member, after receiving such
notice, affirmatively elects or declines a Direct Rollover in whole or in part.
X-2
<PAGE>
10.3 FORM OF PAYMENT.
-----------------
(a) Subject to the provisions of Paragraph (b) below, a Member's
benefit shall be provided from the balance of such Member's Accounts under
the Plan and shall be paid in one lump sum on the Member's Benefit Payment
Date. The Member's benefit shall be paid to the Member unless the Member
has died prior to his Benefit Payment Date, in which case the Member's
benefit shall be paid to his Beneficiary designated in accordance with the
provisions of Section 9.2.
(b) Benefits shall be paid (or transferred pursuant to Section 10.4)
in cash except that a Member (or his designated Beneficiary or legal
representative in the case of a deceased Member) may elect to have the
portion of his Accounts invested in the Compaq Stock Fund distributed (or
transferred pursuant to Section 10.4) in full shares of Compaq Stock to the
extent of such Member's pro rata portion of the shares of Compaq Stock held
in the Compaq Stock Fund, with any balance of the Member's interest in the
Compaq Stock Fund (including fractional shares) to be paid or transferred
in cash.
10.4 DIRECT ROLLOVER ELECTION. Effective January 1, 1993,
--------------------------
notwithstanding any provision of the Plan to the contrary that would otherwise
limit a Distributee's election under this Section, a Distributee may elect, at
the time and in the manner prescribed by the Committee, to have all or any
portion of an Eligible Rollover Distribution (other than any portion
attributable to the offset of an outstanding loan balance of a Member pursuant
to the Plan's loan procedure) paid directly to an Eligible Retirement Plan
specified by the Distributee in a Direct Rollover. The preceding sentence
notwithstanding, a Distributee may elect a Direct Rollover pursuant to this
Section only if such Distributee's Eligible Rollover Distributions during the
Plan Year are reasonably expected to total $200 or more. Furthermore, if less
than 100% of the Distributee's Eligible Rollover Distribution is to be a Direct
Rollover, both the amount of the Eligible Rollover Distribution and the amount
of the Direct Rollover must be $500 or more. Prior to any Direct Rollover
pursuant to this Section, the Distributee shall furnish the Committee with a
statement from the plan, account, or annuity to which such Eligible Rollover
Distribution is to be transferred verifying that such plan, account, or annuity
is, or is intended to be, an Eligible Retirement Plan.
10.5 UNCLAIMED BENEFITS. In the case of a benefit payable on behalf of
------------------
a Member, if the Committee is unable to locate the Member or Beneficiary to whom
such benefit is payable, upon the Committee's determination thereof, such
benefit shall be forfeited, held in a suspense account, and applied to reduce
Employer Matching Contributions or Employer Safe Harbor Contributions, if any,
next coming due. For all Valuation Dates prior to such application, forfeited
amounts held in the suspense account shall not participate in allocations of the
net income (or net loss) of the Trust Fund. Notwithstanding the foregoing, if
subsequent to any such forfeiture the Member or Beneficiary to whom such benefit
is payable makes a valid claim for such benefit, such forfeited benefit shall be
restored to the Plan in the manner provided in Section 8.5(b).
10.6 CLAIMS REVIEW. In any case in which a claim for Plan benefits of
--------------
a Member or Beneficiary is denied or modified, the Committee shall furnish
written notice to the claimant within ninety days (or within 180 days if
additional information requested by the Committee necessitates an extension of
the ninety-day period), which notice shall:
X-3
<PAGE>
(a) State the specific reason or reasons for the denial or
modification;
(b) Provide specific reference to pertinent Plan provisions on which
the denial or modification is based;
(c) Provide a description of any additional material or information
necessary for the Member, his Beneficiary, or representative to perfect the
claim and an explanation of why such material or information is necessary;
and
(d) Explain the Plan's claims review procedure as contained herein.
In the event a claim for Plan benefits is denied or modified, if the Member, his
Beneficiary, or the representative of such Member or Beneficiary desires to have
such denial or modification reviewed, he must, within sixty days following
receipt of the notice of such denial or modification, submit a written request
for review by the Committee of its initial decision. In connection with such
request, the Member, his Beneficiary, or the representative of such Member or
Beneficiary may review any pertinent documents upon which such denial or
modification was based and may submit issues and comments in writing. Within
sixty days following such request for review the Committee shall, after
providing a full and fair review, render its final decision in writing to the
Member, his Beneficiary, or the representative of such Member or Beneficiary
stating specific reasons for such decision and making specific references to
pertinent Plan provisions on which the decision is based. If special
circumstances require an extension of such sixty-day period, the Committee's
decision shall be rendered as soon as possible, but not later than 120 days
after receipt of the request for review. If such an extension of time for
review is required, written notice of the extension shall be furnished to the
Member, his Beneficiary, or representative of such Member or Beneficiary prior
to the commencement of the extension period.
X-4
<PAGE>
XI
IN-SERVICE WITHDRAWALS
----------------------
11.1 IN-SERVICE WITHDRAWALS.
-----------------------
(a) A Member who has attained age fifty-nine and one-half may withdraw
from his Rollover Contribution Account any or all amounts held in such
Account.
(b) A Member who has attained age fifty-nine and one-half and has
withdrawn all amounts in his Rollover Contribution Account may withdraw
from his Employer Contribution Account an amount not exceeding his Vested
Interest in the then value of such Account.
(c) A Member who has attained age fifty-nine and one-half and has made
all available withdrawals pursuant to Paragraphs (a) and (b) above may
withdraw from his Cash or Deferred Account an amount not exceeding the then
value of such Account. A Member who makes a withdrawal under this Paragraph
may not again make Cash or Deferred Contributions to the Plan for a period
of six months following such withdrawal.
11.2 RESTRICTIONS ON IN-SERVICE WITHDRAWALS.
-----------------------------------------
(a) All withdrawals pursuant to this Article shall be made by
executing and filing with the Committee prior to the proposed date of
withdrawal the form prescribed by the Committee within the time period
prescribed by the Committee. As a condition to such withdrawal, the
Committee may require a Member to furnish any evidence that in the
Committee's discretion it deems satisfactory to verify the age of such
Member.
(b) Notwithstanding the provisions of this Article, no withdrawal
shall be made from an Account to the extent such Account has been pledged
to secure a loan under Article XII. Furthermore, notwithstanding the
provisions of this Article, no withdrawal shall be made from an Account
prior to the earliest time permitted by applicable law.
(c) If a Member's Account from which a withdrawal is made is invested
in more than one Investment Fund, the Member shall designate which
Investment Fund, or combination of Investment Funds, from which the
withdrawal shall be made. In the absence of such designation, the
withdrawal shall be made pro rata from each Investment Fund in which such
Account is invested.
(d) Any withdrawal hereunder shall be subject to the Direct Rollover
election described in Section 10.4.
(e) This Article shall not be applicable to a Member following
termination of employment and the amounts in such Member's Accounts shall
be distributable in accordance with the provisions of Article X.
XI-1
<PAGE>
XII
LOANS
-----
12.1 ELIGIBILITY FOR LOAN.
----------------------
(a) Upon application by (1) any Member who is an Employee or (2) any
Member no longer employed by the Employer, a Beneficiary of a deceased
Member, or an "alternate payee" under a qualified domestic relations order,
as defined in section 414(p)(8) of the Code, who retains an Account balance
under the Plan and who is a party-in-interest, as that term is defined in
section 3(14) of the Act, as to the Plan (an individual who is eligible to
apply for a loan under this Article being hereinafter referred to as a
"MEMBER" for purposes of this Article) and subject to such uniform and
nondiscriminatory rules and regulations as the Committee may establish, the
Committee may in its discretion direct the Trustee to make a loan or loans
to such Member.
(b) No more than two loans shall be made to a Member in any
twelve-month period. If a second loan to a Member in a twelve-month period
is approved by the Committee, such Member's first loan in such period may
be renegotiated to include the amount of the second loan and the amount of
the outstanding balance (including interest) of the first loan; provided,
however, that any such renegotiated loan may not increase the term over
which the Member's first loan must be repaid to a term exceeding five
years. Furthermore, such renegotiated loan must comply with all other
provisions of this Article.
(c) No loan shall be made to a Member who has a Vested Interest in his
Accounts less than $2,000 at the time of such loan.
12.2 MAXIMUM LOAN.
-------------
(a) A loan to a Member may not exceed 50% of the then value of such
Member's Vested Interest in his Accounts.
(b) Paragraph (a) above to the contrary notwithstanding, the amount of
a loan made to a Member under this Article shall not exceed an amount equal
to the difference between:
(1) The lesser of $50,000 (reduced by the excess, if any, of (A)
the highest outstanding balance of loans from the Plan during the
one-year period ending on the day before the date on which the loan is
made over (B) the outstanding balance of loans from the Plan on the
date on which the loan is made) or one-half of the present value of
the Member's total nonforfeitable accrued benefit under all qualified
plans of the Employer or a Controlled Entity; minus
(2) The total outstanding loan balance of the Member under all
other loans from all qualified plans of the Employer or a Controlled
Entity.
XII-1
<PAGE>
12.3 MINIMUM LOAN.
-------------
(a) Except as provided in Paragraph (b) below, a loan to a Member may
not be for an amount less than $1,000.
(b) In the case of a Member who has a "financial hardship" as
determined by the Committee, a loan to such Member may not be for an amount
less than $100. A loan pursuant to this Paragraph shall be permitted only
if such Member has made all available withdrawals pursuant to Article XI
and if such financial hardship is created on account of an immediate and
heavy financial need of such Member for:
(1) Expenses of medical care previously incurred by the Member,
the Member's spouse, or any depen-dents of the Member (as defined in
section 152 of the Code) or necessary for those persons to obtain
medical care that is not reimbursed or reim-bursable by insurance;
(2) Costs directly related to the purchase of a principal
residence of the Member (excluding mortgage payments);
(3) Payment of tuition and related educational fees for the next
quarter or semester of post-secondary education for the Member or the
Member's spouse, children, or dependents (as defined in section 152 of
the Code);
(4) Payments necessary to prevent the eviction of the Member from
his principal residence or foreclosure on the mortgage of the Member's
principal residence;
(5) Payment of expenses incurred as a result of a natural
disaster, including, but not limited to, a hurricane, earthquake, or
flood;
(6) Expenses associated with a funeral for a family member; or
(7) Any other financial need determined by and in the discretion
of the Committee to be a financial hardship.
12.4 INTEREST AND SECURITY.
-----------------------
(a) Any loan made pursuant to this Article shall bear interest at a
rate established by the Committee from time to time and communi-cated to
the Members, which rate shall provide the Plan with a return commensurate
with the interest rates charged by persons in the business of lending money
for loans that would be made under similar circumstances.
(b) Any loan shall be made as an investment of a segregated loan fund
to be established in the Trust Fund for the Member to whom the loan is
made. The Trustee shall fund a Member's segregated loan fund by liquidating
such portion of the assets of the Investment Funds from which the Member's
loan is to be made as is necessary to fund the loan and by transferring the
proceeds to such segregated loan fund. If a Member's Accounts are invested
in more than one Investment Fund, the Member shall designate which
Investment Fund, or combination of Investment Funds, from which such
transfer shall be made, or, if no such designation is made, the transfer
shall be made pro rata from each such Investment Fund. For the period from
January 1, 1994, to August 1, 1994, any loan shall be deemed to come pro
rata from each of the Member's Accounts. Effective August 1, 1994, any loan
shall be considered to come, first, from the Member's Rollover Contribution
Account, second, from the Member's Vested Interest in his Employer
Contribution Account and, third, from the Member's Cash or Deferred
Account. The loan shall be secured by a pledge of the Member's segregated
loan fund.
XII-2
<PAGE>
12.5 REPAYMENT TERMS OF LOAN.
--------------------------
(a) The Member shall be required, as a condition to receiving a loan,
to enter into an irrevocable agreement authorizing the Employer to make
payroll deductions from his Compensation so long as the Member is an
Employee receiving Compensation and to transfer such payroll deduction
amounts to the Trustee in repayment of such loan plus interest. A Member
who terminates employment with the Employer and transfers to employment
with a Controlled Entity (which is not an Employer) or with a purchaser of
less than substantially all of the assets used in a trade or business of
the Employer or a Controlled Entity in connection with such purchase and
may not receive a distribution under the Plan or is otherwise not permitted
to receive a distribution of either his Cash or Deferred Account or his
Employer Contribution Account under applicable law shall be required to
continue to make payments on other than a payroll deduction basis at the
same times and in the same amounts as set forth on the payment schedule of
such Member's loan. A Member who is an Employee on unpaid Leave of Absence
shall be required to continue to make payments on other than a payroll
deduction basis at the same times and in the same amounts as set forth on
the payment schedule of such Member's loan. The preceding sentence
notwithstanding, a Member who is an Employee on unpaid Leave of Absence may
elect to suspend payments on his loan during such Leave of Absence for a
period not to exceed one year from the date of commencement of such Leave
of Absence, and upon such Member's return to active employment with the
Employer at the conclusion of such Leave of Absence or upon the expiration
of such one-year period, if earlier, such Member shall be permitted to
refinance his loan, including all accrued and unpaid interest, over a term
that does not extend beyond the expiration of the original term of the
loan. For purposes of the preceding sentence, a Member who is an Employee
on unpaid Leave of Absence shall be deemed to have elected to suspend
payments on his loan if such Member fails to make timely a scheduled
payment on his loan after commencement of such Leave of Absence, and such
deemed election shall continue in effect until the expiration of the
one-year period ending on the first anniversary of the commencement of such
Leave of Absence.
(b) The repayment terms of the loan shall (1) require level
amortization with payments not less frequently than quarterly, (2) require
that the loan be repaid within five years unless the Member certifies in
writing to the Committee that the loan is to be used to acquire any
dwelling unit which within a reasonable time is to be used (determined at
the time the loan is made) as a principal residence of the Member, (3)
allow prepayment without penalty, provided that any prepayment must be for
the full outstanding loan balance (including interest), and (4) require
that the balance of the loan (including interest) shall become due and
payable (to the extent not otherwise due and payable) within thirty days of
the date the Member, or, if applicable, such Member's Beneficiary, is first
entitled to a distribution pursuant to Article VI, VII, VIII, or IX,
irrespective of whether such Member or Beneficiary elects or consents to
such distribution, and that such Member's outstanding loan balance
(including interest) shall be repaid by offsetting such outstanding loan
balance (including interest) against the amount in the Member's segregated
loan fund pledged as security for the loan. By agreeing to the pledge of
the segregated loan fund as security for the loan, a Member shall be deemed
to have consented to the distribution of such segregated loan fund prior to
the time specified in section 411(a)(11) of the Code and the applicable
Treasury regulations thereunder.
XII-3
<PAGE>
(c) If a Member fails in any way to comply with the repayment terms of
a loan, such loan shall be repaid by offsetting such Member's outstanding
loan balance (including interest) against the amount in such Member's
segregated loan fund pledged as security for the loan. Any such outstanding
loan balance (including interest) shall be so offset and repaid in the
manner prescribed by the Committee as soon as administratively feasible
after such failure to comply, and such repayment shall be prior to any
withdrawal or distribution of benefits from the pledged portion of such
Member's Accounts pursuant to the provisions of the Plan. Notwithstanding
the foregoing, amounts in a Member's Cash or Deferred Account may not be
offset and used to satisfy the payment of such loan (including interest)
prior to the time such amounts are otherwise distributable from the Plan,
and amounts in a Member's Employer Contribution Account may not be offset
and used to satisfy the payment of such loan (including interest) prior to
the earliest time such amounts are otherwise permitted to be distributed
under applicable law.
(d) Amounts tendered to the Trustee by a Member in repayment of a loan
made pursuant to this Article shall (1) initially be credited to such
Member's segregated loan fund, (2) then be transferred as soon as
practicable following receipt thereof to the Account or Accounts from which
such Member's loan was made, and (3) be invested in the Investment Funds in
accordance with such Member's current designation as to the investment of
allocations to such Accounts and, in the absence of any such designation,
invested in the Fixed Income Fund.
XII-4
<PAGE>
XIII
ADMINISTRATION OF THE PLAN
--------------------------
13.1 APPOINTMENT OF COMMITTEE. The general administration of the Plan
-------------------------
shall be vested in the Committee, which shall be appointed by the Directors and
shall consist of one or more persons. Any individual, whether or not an
Employee, is eligible to become a member of the Committee. Each member of the
Committee shall, before entering upon the performance of his duties, qualify by
signing a consent to serve as a member of the Committee under and pursuant to
the Plan and by filing such consent with the records of the Committee. For
purposes of the Act, the Committee shall be the Plan "administrator" and shall
be the "named fiduciary" with respect to the general administration of the Plan
(except as to the investment of the assets of the Trust Fund).
13.2 TERM, VACANCIES, RESIGNATION, AND REMOVAL. Each member of the
---------------------------------------------
Committee shall serve until he resigns, dies, or is removed by the Directors.
At any time during his term of office, a member of the Committee may resign by
giving written notice to the Directors and the Committee, such resignation to
become effective upon the appointment of a substitute member or, if earlier, the
lapse of thirty days after such notice is given as herein provided. At any time
during his term of office, and for any reason, a member of the Committee may be
removed by the Directors with or without cause, and the Directors may in their
discretion fill any vacancy that may result therefrom. Any member of the
Committee who is an Employee shall automatically cease to be a member of the
Committee as of the date he ceases to be employed by the Employer or a
Controlled Entity.
13.3 OFFICERS, RECORDS, AND PROCEDURES. The Committee may select
------------------------------------
officers and may appoint a secretary who need not be a member of the Committee.
The Committee shall keep appropriate records of its proceedings and the
administration of the Plan and shall make available for examination during
business hours to any Member or Beneficiary such records as pertain to that
individual's interest in the Plan. The Committee shall designate the person or
persons who shall be authorized to sign for the Committee and, upon such
designation, the signature of such person or persons shall bind the Committee.
13.4 MEETINGS. The Committee shall hold meetings upon such notice and
--------
at such time and place as it may from time to time determine. Notice to a
member shall not be required if waived in writing by that member. A majority of
the members of the Committee duly appointed shall constitute a quorum for the
transaction of business. All resolutions or other actions taken by the
Committee at any meeting where a quorum is present shall be by vote of a
majority of those present at such meeting and entitled to vote. Resolutions may
be adopted or other action taken without a meeting upon written consent signed
by all of the members of the Committee.
13.5 SELF-INTEREST OF MEMBERS. No member of the Committee shall have
--------------------------
any right to vote or decide upon any matter relating solely to himself under the
Plan or to vote in any case in which his individual right to claim any benefit
under the Plan is particularly involved. In any case in which a Committee
member is so disqualified to act and the remaining members cannot agree, the
Directors shall appoint a temporary substitute member to exercise all the powers
of the disqualified member concerning the matter in which he is disqualified.
XIII-1
<PAGE>
13.6 COMPENSATION AND BONDING. The members of the Committee shall not
-------------------------
receive compensation with respect to their services for the Committee. To the
extent required by the Act or other applicable law, or otherwise required by
Compaq, members of the Committee shall furnish bond or security for the
performance of their duties hereunder.
13.7 COMMITTEE POWERS AND DUTIES. The Committee shall supervise the
------------------------------
administration and enforcement of the Plan according to the terms and provisions
hereof and shall have all powers necessary to accomplish these purposes,
including, but not by way of limitation, the right, power, authority, and duty:
(a) To make rules, regulations, and bylaws for the administration of
the Plan that are not inconsistent with the terms and provisions hereof,
provided such rules, regulations, and bylaws are evidenced in writing and
copies thereof are delivered to the Trustee and to Compaq;
(b) To construe in its discretion all terms, provisions, conditions,
and limitations of the Plan; provided that, in all cases, the construction
necessary for the Plan to qualify under the applicable provisions of the
Code shall control;
(c) To correct any defect or supply any omission or reconcile any
inconsistency that may appear in the Plan in such manner and to such extent
as it shall deem in its discretion expedient to effectuate the purposes of
the Plan;
(d) To employ and compensate such accountants, attorneys, investment
advisors, and other agents, employees, and independent contractors as the
Committee may deem necessary or advisable for the proper and efficient
administration of the Plan;
(e) To appoint an investment manager as provided in Section 15.5;
(f) To determine in its discretion all questions relating to
eligibility;
(g) To prescribe procedures, including, but not limited to, a
"qualified domestic relations order" procedure (within the meaning of
section 206(d)(3)(G)(ii) of the Act and section 414(p)(6)(B) of the Code)
to be followed by distributees in obtaining benefits hereunder;
(h) To prepare, file, and distribute, in such manner as the Committee
determines to be appropriate, such information and material as is required
by the reporting and disclosure requirements of the Act;
(i) To make a determination in its discretion as to the right of any
person to a benefit under the Plan;
XIII-2
<PAGE>
(j) To receive and review reports from the Trustee as to the financial
condition of the Trust Fund, including its receipts and disbursements;
(k) To instruct the Trustee as to the loans to Members pursuant to the
provisions of Article XII;
(l) To instruct the Trustee as to the management, investment, and
reinvest-ment of the Trust Fund;
(m) To establish or designate Investment Funds as investment options
as provided in Article V;
(n) To enforce the terms of the Plan and the rules and regulations
promulgated thereunder by the Committee;
(o) To review periodically the Plan's short-term and long-term
investment needs and goals and to communicate such needs and goals to the
Trustee and any investment manager as frequently as the Committee, in its
discretion, deems necessary for the proper administration of the Plan and
Trust;
(p) To furnish the Employer any information necessary for the
preparation of such Employer's tax return or other information that the
Committee determines in its discretion is necessary for a legitimate
purpose; and
(q) To require and obtain from the Employer and the Members any
information or data that the Committee determines is necessary for the
proper administration of the Plan.
13.8 EMPLOYER TO SUPPLY INFORMATION. The Employer shall supply full
---------------------------------
and timely information to the Committee, including, but not limited to,
information relating to each Member's Compensation, age, retirement, death, or
other cause of termination of employment and such other pertinent facts as the
Committee may require. The Employer shall advise the Trustee of such of the
foregoing facts as are deemed necessary for the Trustee to carry out the
Trustee's duties under the Plan. When making a determination in connection with
the Plan, the Committee shall be entitled to rely upon the aforesaid information
furnished by the Employer.
13.9 INDEMNIFICATION. Compaq shall indemnify and hold harmless each
---------------
member of the Committee against any and all expenses and liabilities arising out
of his administrative functions or fiduciary responsibilities, including any
expenses and liabilities that are caused by or result from an act or omission
constituting the negligence of such member in the performance of such functions
or responsibilities, but excluding expenses and liabilities that are caused by
or result from such member's own gross negligence or willful misconduct.
Expenses against which such member shall be indemnified hereunder shall include,
without limitation, the amounts of any settlement or judgment, costs, counsel
fees, and related charges reasonably incurred in connection with a claim
asserted or a proceeding brought or settlement thereof.
XIII-3
<PAGE>
XIV
ADMINISTRATION OF TRUST FUND
----------------------------
14.1 APPOINTMENT OF TRUSTEE. The Trustee shall be appointed, removed,
-----------------------
and replaced by and in the sole discretion of the Directors. The Trustee shall
be the "named fiduciary" with respect to investment of the Trust Fund's assets.
14.2 TRUST AGREEMENT. The administration of the assets of the Plan and
---------------
the duties, obligations, and responsibilities of the Trustee shall be governed
by the Trust Agreement entered into between Compaq and the Trustee. The Trust
Agreement may be amended, from time to time, as Compaq deems advisable in order
to effectuate the purpose of the Plan. The Trust Agreement is incorporated
herein by reference and thereby made a part of the Plan hereof.
14.3 PAYMENT OF EXPENSES. All expenses incident to the administration
--------------------
of the Plan and Trust, including but not limited to, legal, accounting, Trustee
fees, expenses of the Committee, and the cost of furnishing any bond or security
required of the Committee, shall be paid by the Trustee from the Trust Fund and,
until paid, shall constitute a claim against the Trust Fund which is paramount
to the claims of Members and Beneficiaries; provided, however, that (a) the
obligation of the Trustee to pay such expenses from the Trust Fund shall cease
to exist to the extent such expenses are paid by the Employer and (b) in the
event the Trustee's compensation is to be paid, pursuant to this Section, from
the Trust Fund, any individual serving as Trustee who already receives full-time
pay from an Employer or an association of employers whose Employees are Members
of the Plan, or from an employee organization whose members are Members of the
Plan, shall not receive any additional compensation for serving as Trustee.
This Section shall be deemed to be a part of any contract to provide for
expenses of Plan and Trust administration, whether or not the signatory to such
contract is, as a matter of convenience, the Employer.
14.4 TRUST FUND PROPERTY. All income, profits, recoveries,
---------------------
contributions, forfeitures, and any and all moneys, securities, and properties
of any kind at any time received or held by the Trustee hereunder shall be held
for investment purposes as a commingled Trust Fund. The Committee shall
maintain Accounts in the name of each Member, but the maintenance of an Account
designated as the Account of a Member shall not mean that such Member shall have
a greater or lesser interest than that due him by operation of the Plan and
shall not be considered as segregating any funds or property from any other
funds or property contained in the commingled fund. No Member shall have any
title to any specific asset in the Trust Fund.
14.5 DISTRIBUTIONS FROM MEMBERS' ACCOUNTS. Distributions from a
---------------------------------------
Member's Accounts shall be made by the Trustee only if, when, and in the amount
and form directed in writing by the Committee. Any distribution made to a
Member or for his benefit shall be debited to such Member's Account or Accounts.
All distributions hereunder shall be made in cash except as otherwise
specifically provided herein.
14.6 PAYMENTS SOLELY FROM TRUST FUND. All benefits payable under the
---------------------------------
Plan shall be paid or provided for solely from the Trust Fund, and neither the
Employer nor the Trustee assumes any liability or responsibility for the
adequacy thereof. The Committee or the Trustee may require execution and
delivery of such instruments as are deemed necessary to assure proper payment of
any benefits.
XIV-1
<PAGE>
14.7 NO BENEFITS TO THE EMPLOYER. No part of the corpus or income of
-----------------------------
the Trust Fund shall be used for any purpose other than the exclusive purpose of
providing benefits for the Members and their Beneficiaries and of defraying
reasonable expenses of administering the Plan. Anything to the contrary herein
notwithstanding, the Plan shall not be construed to vest any rights in the
Employer other than those specifically given hereunder.
XIV-2
<PAGE>
XV
FIDUCIARY PROVISIONS
--------------------
15.1 ARTICLE CONTROLS. This Article shall control over any contrary,
-----------------
inconsistent, or ambiguous provisions contained in the Plan.
15.2 GENERAL ALLOCATION OF FIDUCIARY DUTIES. Each fiduciary with
------------------------------------------
respect to the Plan shall have only those specific powers, duties,
responsibilities, and obligations as are specifically given him under the Plan.
The Directors shall have the sole authority to appoint and remove the Trustee
and members of the Committee. Except as otherwise provided herein, the
Committee shall have the sole responsibility for the administration of the Plan,
which responsibility is specifically described herein. Except as otherwise
provided herein, the Trustee shall have the sole responsibility for the
administration, investment, and management of the assets held under the Plan.
However, if the Committee, as a co-fiduciary, shall exercise its power given
hereunder at any time, and from time to time, by written notice to the Trustee,
to direct the Trustee in the management, investment, and reinvestment of the
Trust Fund, then in such event the Trustee shall be subject to all proper
directions of the Committee that are made in accordance with the terms of the
Plan and the Act. It is intended under the Plan that each fiduciary shall be
responsible for the proper exercise of his own powers, duties, responsibilities,
and obligations hereunder and shall not be responsible for any act or failure to
act of another fiduciary except to the extent provided by law or as specifically
provided herein.
15.3 FIDUCIARY DUTY. Each fiduciary under the Plan, including, but not
--------------
limited to, the Committee and the Trustee as "named fiduciaries," shall
discharge his duties and responsibilities with respect to the Plan:
(a) Solely in the interest of the Members and for the exclusive
purpose of providing benefits to Members and their Beneficiaries and of
defraying reasonable expenses of administering the Plan;
(b) With the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a like capacity
and familiar with such matters would use in the conduct of an enterprise of
a like character and with like aims;
(c) By diversifying the investments of the Plan so as to minimize the
risk of large losses, unless under the circumstances it is prudent not to
do so; and
(d) In accordance with the documents and instruments governing the
Plan insofar as such documents and instruments are consistent with
applicable law.
No fiduciary shall cause the Plan or Trust Fund to enter into a "prohibited
transaction" as provided in section 4975 of the Code or section 406 of the Act.
XV-1
<PAGE>
15.4 DELEGATION AND ALLOCATION OF FIDUCIARY DUTIES. The Committee may
----------------------------------------------
appoint subcommittees, individuals, or any other agents as it deems advisable
and may delegate to any of such appointees any or all of the powers and duties
of the Committee. Such appointment and delegation must be in writing,
specifying the powers or duties being delegated, and must be accepted in writing
by the delegatee. Upon such appointment, delegation, and acceptance, the
delegating Committee members shall have no liability for the acts or omissions
of any such delegatee, as long as the delegating Committee members do not
violate any fiduciary responsibility in making or continuing such delegation.
15.5 INVESTMENT MANAGER AS A FIDUCIARY. The Committee may, in its sole
---------------------------------
discretion, appoint an "investment manager," with power to manage, acquire, or
dispose of any asset of the Plan and to direct the Trustee in this regard, so
long as:
(a) The investment manager is (1) registered as an investment adviser
under the Investment Advisers Act of 1940, (2) a bank, as defined in the
Investment Advisers Act of 1940, or (3) an insurance company qualified to
do business under the laws of more than one state; and
(b) Such investment manager acknowledges in writing that he is a
fiduciary with respect to the Plan.
Upon such appointment, the Committee shall not be liable for the acts of the
investment manager, as long as the Committee members do not violate any
fiduciary responsibility in making or continuing such appointment. The Trustee
shall follow the directions of such investment manager and shall not be liable
for the acts or omissions of such investment manager. The investment manager
may be removed by the Committee at any time and within its sole discretion.
XV-2
<PAGE>
XVI
AMENDMENTS
----------
16.1 RIGHT TO AMEND. Subject to Section 16.2 and any other limitations
--------------
contained in the Act or the Code, Compaq may from time to time amend, in whole
or in part, any or all of the provisions of the Plan on behalf of Compaq and all
Employers. Specifically, but not by way of limitation, Compaq may make any
amendment necessary to acquire and maintain a qualified status for the Plan
under the Code, whether or not retroactive. All amendments to the Plan shall be
in writing and shall be executed by the Vice President of Human Resources of
Compaq.
16.2 LIMITATION ON AMENDMENTS. No amendment of the Plan shall be made
-------------------------
that would vest in the Employer, directly or indirectly, any interest in or
control of the Trust Fund. No amendment shall be made that would vary the
Plan's exclusive purpose of providing benefits to Members and their
Beneficiaries and of defraying reasonable expenses of administering the Plan or
that would permit the diversion of any part of the Trust Fund from that
exclusive purpose. No amendment shall be made that would reduce any then
nonforfeitable interest of a Member. No amendment shall increase the duties or
responsibilities of the Trustee unless the Trustee consents thereto in writing.
XVI-1
<PAGE>
XVII
DISCONTINUANCE OF CONTRIBUTIONS, TERMINATION,
PARTIAL TERMINATION, AND MERGER OR CONSOLIDATION
------------------------------------------------
17.1 RIGHT TO DISCONTINUE CONTRIBUTIONS, TERMINATE, OR PARTIALLY
-----------------------------------------------------------------
TERMINATE THE PLAN. The Employer has established the Plan with the bona fide
--------------
intention and expectation that from year to year it will be able to, and will
deem it advisable to, make its contributions as herein provided. However, the
Directors realize that circumstances not now foreseen, or circumstances beyond
its control, may make it either impossible or inadvisable to continue to make
its contributions to the Plan. Therefore, the Directors shall have the power to
discontinue contributions to the Plan, terminate the Plan, or partially
terminate the Plan at any time hereafter. Each member of the Committee and the
Trustee shall be notified of such discontinuance, termination, or partial
termination.
17.2 PROCEDURE IN THE EVENT OF DISCONTINUANCE OF CONTRIBUTIONS,
-----------------------------------------------------------------
TERMINATION, OR PARTIAL TERMINATION.
-------------------------------
(a) If the Plan is amended so as to permanently discontinue Employer
contributions, or if Employer contributions are in fact permanently
discontinued, the Vested Interest of each affected Member shall be 100%,
effective as of the date of discontinuance. In case of such discontinuance,
the Committee shall remain in existence and all other provisions of the
Plan that are necessary, in the opinion of the Committee, for equitable
operation of the Plan shall remain in force.
(b) If the Plan is terminated or partially terminated, the Vested
Interest of each affected Member shall be 100%, effective as of the
termination date or partial termination date, as applicable. Unless the
Plan is otherwise amended prior to dissolution of Compaq, the Plan shall
terminate as of the date of dissolution of Compaq.
(c) Upon discontinuance, termination, or partial termination, any
previously unallocated contributions, forfeitures, and net income (or net
loss) shall be allocated among the Accounts of the Members on such date of
discontinuance, termination, or partial termination in accordance with the
provisions of Article IV, as if such date of discontinuance, termination,
or partial termination were a Valuation Date. Thereafter, the net income
(or net loss) shall continue to be allocated to the Accounts of the Members
until the balances of the Accounts are distributed. In the event of
termination, the date of the final distribution shall be treated as a
Valuation Date.
(d) In the case of a termination or partial termination of the Plan,
and in the absence of a Plan amendment to the contrary, the Trustee shall
pay the balance of the Accounts of a Member for whom the Plan is so
terminated, or who is affected by such partial termination, to such Member,
subject to the time of payment, form of payment, and consent provisions of
Article X, if any.
XVII-1
<PAGE>
17.3 MERGER, CONSOLIDATION, OR TRANSFER. This Plan and Trust Fund may
-----------------------------------
not merge or consolidate with, or transfer its assets or liabilities to, any
other plan, unless immediately thereafter each Member would, in the event such
other plan terminated, be entitled to a benefit which is equal to or greater
than the benefit to which he would have been entitled if the Plan were
terminated immediately before the merger, consolidation, or transfer.
XVII-2
<PAGE>
XVIII
ADOPTING EMPLOYERS
------------------
18.1 ADOPTION BY OTHER EMPLOYERS.
------------------------------
(a) It is contemplated that other corporations, associations,
partnerships, or proprietorships may adopt this Plan and thereby become
Employers. By appropriate action of its Board of Directors or noncorporate
counterpart, any such entity, whether or not presently existing, may become
a party hereto upon approval of the Directors.
(b) The provisions of the Plan shall apply separately and equally to
each Adopting Employer and its Employees in the same manner as is expressly
provided for Compaq and its Employees, except that the power to appoint or
otherwise affect the Committee or the Trustee and the power to amend or
terminate the Plan and Trust Agreement shall be exercised by the Directors
alone. Nevertheless, any Adopting Employer may, with the consent of the
Directors, incorporate in its adoption agreement or in an amendment
document specific provisions relating to the operation of the Plan, and
such provisions shall become a part of the Plan as to such Adopting
Employer only.
(c) Transfer of employment among Employers shall not be considered a
termination of employment hereunder, and Service with one Employer shall be
considered as Service with all others.
(d) Any Adopting Employer may, by appropriate action of its Board of
Directors or noncorporate counterpart, terminate its participation in the
Plan; provided, however, that any such action must be communicated in
writing to the Secretary of Compaq and to the Committee. Moreover, the
Directors may, in their discretion, terminate an Adopting Employer's Plan
participation at any time by written instrument delivered to the Secretary
of Compaq and to the Adopting Employer.
18.2 SINGLE PLAN. For purposes of the Code and the Act, the Plan as
------------
adopted by the Employers shall constitute a single plan rather than a separate
plan of each Employer. All assets in the Trust Fund shall be available to pay
benefits to all Members and their Benefi-ciaries.
XVIII-1
<PAGE>
XIX
MISCELLANEOUS PROVISIONS
------------------------
19.1 NOT CONTRACT OF EMPLOYMENT. The adoption and maintenance of the
----------------------------
Plan shall not be deemed to be a contract between the Employer and any person or
to be consideration for the employment of any person. Nothing herein contained
shall be deemed to give any person the right to be retained in the employ of the
Employer or to restrict the right of the Employer to discharge any person at any
time, nor shall the Plan be deemed to give the Employer the right to require any
person to remain in the employ of the Employer or to restrict any person's right
to terminate his employment at any time.
19.2 ALIENATION OF INTEREST FORBIDDEN. Except as otherwise provided
-----------------------------------
with respect to "qualified domestic relations orders" pursuant to section 206(d)
of the Act and sections 401(a)(13) and 414(p) of the Code and except as
otherwise provided under other applicable law, no right or interest of any kind
in any benefit shall be transferable or assignable by any Member or any
Beneficiary or be subject to anticipation, adjustment, alienation, encumbrance,
garnishment, attachment, execution, or levy of any kind. Plan provisions to the
contrary notwithstanding, the Committee shall comply with the terms and
provisions of any "qualified domestic relations order," including an order that
requires distributions to an alternate payee prior to a Member's "earliest
retirement age," as such term is defined in section 206(d)(3)(E)(ii) of the Act
and section 414(p)(4)(B) of the Code, and shall establish appropriate procedures
to effect the same.
19.3 SEVERABILITY. If any provision of this Plan shall be held
------------
illegal, invalid, or unenforceable for any reason, said illegality, invalidity,
or unenforceability shall not affect the remaining provisions hereof; instead,
each provision shall be fully severable and the Plan shall be construed and
enforced as if said illegal, invalid, or unenforceable provision had never been
included herein.
19.4 JURISDICTION. The situs of the Plan hereby created is Texas. All
------------
provisions of the Plan shall be construed in accordance with the laws of Texas
except to the extent preempted by federal law.
19.5 PAYMENTS TO MINORS AND INCOMPETENTS. If a Member or Beneficiary
-------------------------------------
entitled to receive a benefit under the Plan is a minor or is determined by the
Committee in its discretion to be incompetent or is adjudged by a court of
competent jurisdiction to be legally incapable of giving valid receipt and
discharge for a benefit provided under the Plan, the Committee may pay such
benefit to the duly appointed guardian or conservator of such Member or
Beneficiary or to any third party who is eligible to receive such benefit for
the account of such Member or Beneficiary. Such payment shall operate as a full
discharge of all liabilities and obligations of the Committee, the Trustee, the
Employer, and any fiduciary of the Plan with respect to such benefit.
XIX-1
<PAGE>
19.6 MEMBER'S ADDRESS. It shall be the affirmative duty of each Member
----------------
to inform the Committee of, and to keep on file with the Committee, his current
mailing address and the current mailing address of his designated Beneficiary.
If a Member fails to keep the Committee informed of his current mailing address
and the current mailing address of his designated Beneficiary, neither the
Committee, the Trustee, the Employer, nor any fiduciary under the Plan shall be
responsible for any late or lost payment of a benefit or for failure of any
notice to be provided timely under the terms of the Plan.
XIX-2
<PAGE>
XX
TOP-HEAVY STATUS
----------------
20.1 ARTICLE CONTROLS. Any Plan provisions to the contrary
-----------------
notwithstanding, the provisions of this Article shall control to the extent
required to cause the Plan to comply with the requirements imposed under section
416 of the Code.
20.2 DEFINITIONS. For purposes of this Article, the following terms
-----------
and phrases shall have these respective meanings:
(a) ACCOUNT BALANCE: As of any Valuation Date, the aggregate amount
----------------
credited to an individual's account or accounts under a qualified defined
contribution plan maintained by the Employer or a Controlled Entity
(excluding employee contributions that were deductible within the meaning
of section 219 of the Code and rollover or transfer contributions made
after December 31, 1983, by or on behalf of such individual to such plan
from another qualified plan sponsored by an entity other than the Employer
or a Controlled Entity), increased by (1) the aggregate distributions made
to such individual from such plan during a five-year period ending on the
Determination Date and (2) the amount of any contributions due as of the
Determination Date immediately following such Valuation Date.
(b) ACCRUED BENEFIT: As of any Valuation Date, the present value
----------------
(computed on the basis of the Assumptions) of the cumulative accrued
benefit (excluding the portion thereof that is attributable to employee
contributions which were deductible pursuant to section 219 of the Code, to
rollover or transfer contributions made after December 31, 1983, by or on
behalf of such individual to such plan from another qualified plan
sponsored by an entity other than the Employer or a Controlled Entity, to
proportional subsidies or to ancillary benefits) of an individual under a
qualified defined benefit plan maintained by the Employer or a Controlled
Entity increased by (1) the aggregate distributions made to such individual
from such plan during a five-year period ending on the Determination Date
and (2) the estimated benefit accrued by such individual between such
Valuation Date and the Determination Date immediately following such
Valuation Date. Solely for the purpose of determining top-heavy status, the
Accrued Benefit of an individual shall be determined under (1) the method,
if any, that uniformly applies for accrual purposes under all qualified
defined benefit plans maintained by the Employer and the Controlled
Entities or (2) if there is no such method, as if such benefit accrued not
more rapidly than under the slowest accrual rate permitted under section
411(b)(1)(C) of the Code.
(c) AGGREGATION GROUP: The group of qualified plans maintained by the
------------------
Employer and each Controlled Entity consisting of (1) each plan in which a
Key Employee participates and each other plan that enables a plan in which
a Key Employee participates to meet the requirements of section 401(a)(4)
or section 410 of the Code or (2) each plan in which a Key Employee
participates, each other plan that enables a plan in which a Key Employee
participates to meet the requirements of section 401(a)(4) or section 410
of the Code, and any other plan that the Employer elects to include as a
part of such group; provided, however, that the Employer may elect to
include a plan in such group only if the group will continue to meet the
requirements of sections 401(a)(4) and 410 of the Code with such plan being
taken into account.
XX-1
<PAGE>
(d) ASSUMPTIONS: The interest rate and mortality assumptions specified
-----------
for top-heavy status determination purposes in any defined benefit plan
included in the Aggregation Group, which includes the Plan.
(e) DETERMINATION DATE: For the first Plan Year of any plan, the last
-------------------
day of such Plan Year and for each subsequent Plan Year of such plan, the
last day of the preceding Plan Year.
(f) KEY EMPLOYEE: A "key employee," as defined in section 416(i) of
------------
the Code and the Treasury regulations thereunder.
(g) PLAN YEAR: With respect to any plan, the annual accounting period
---------
used by such plan for annual reporting purposes.
(h) REMUNERATION: Compensation within the meaning of section 415(c)(3)
------------
of the Code, as limited by section 401(a)(17) of the Code.
(i) VALUATION DATE: With respect to any Plan Year of any defined
---------------
contribution plan, the most recent date within the twelve-month period
ending on a Determination Date as of which the trust fund established under
such plan was valued and the net income (or loss) thereof allocated to
participants' accounts. With respect to any Plan Year of any defined
benefit plan, the most recent date within a twelve-month period ending on a
Determination Date as of which the plan assets were valued for purposes of
computing plan costs for purposes of the requirements imposed under section
412 of the Code.
20.3 TOP-HEAVY STATUS.
-----------------
(a) The Plan shall be deemed to be top-heavy for a Plan Year if, as of
the Determination Date for such Plan Year, (1) the sum of Account Balances
of Members who are Key Employees exceeds 60% of the sum of Account Balances
of all Members unless an Aggregation Group including the Plan is not
top-heavy or (2) an Aggregation Group including the Plan is top-heavy. An
Aggregation Group shall be deemed to be top-heavy as of a Determination
Date if the sum (computed in accordance with section 416(g)(2)(B) of the
Code and the Treasury regulations promulgated thereunder) of (1) the
Account Balances of Key Employees under all defined contribution plans
included in the Aggregation Group and (2) the Accrued Benefits of Key
Employees under all defined benefit plans included in the Aggregation Group
exceeds 60% of the sum of the Account Balances and the Accrued Benefits of
all individuals under such plans. Notwithstanding the foregoing, the
Account Balances and Accrued Benefits of individuals who are not Key
Employees in any Plan Year but who were Key Employees in any prior Plan
Year shall not be considered in determining the top-heavy status of the
Plan for such Plan Year. Further, notwithstanding the foregoing, the
Account Balances and Accrued Benefits of individuals who have not performed
services for the Employer or any Controlled Entity at any time during the
five-year period ending on the applicable Determina-tion Date shall not be
considered.
XX-2
<PAGE>
(b) If the Plan is determined to be top-heavy for a Plan Year, except
as provided in Section 8.3(c), the Vested Interest in the Employer
Contribution Account of each Member who is credited with an Hour of Service
during such Plan Year shall be determined in accordance with the following
schedule:
YEARS OF VESTING SERVICE VESTED INTEREST
------------------------ ---------------
Less than 3 years 0%
3 years or more 100%
(c) If the Plan is determined to be top-heavy for a Plan Year, the
Employer shall contribute to the Plan for such Plan Year on behalf of each
Member who is not a Key Employee and who has not terminated his employment
as of the last day of such Plan Year an amount equal to the lesser of (1)
3% of such Member's Remuneration for such Plan Year or (2) a percent of
such Member's Remuneration for such Plan Year equal to the greatest percent
determined by dividing for each Key Employee the amounts allocated to such
Key Employee's Cash or Deferred Account and Employer Contribution Account
for such Plan Year by such Key Employee's Remuneration. The minimum
contribution required to be made for a Plan Year pursuant to this Paragraph
for a Member employed on the last day of such Plan Year shall be made
regardless of whether such Member is otherwise ineligible to receive an
allocation of the Employer's contributions for such Plan Year. The minimum
contribution required to be made pursuant to this Paragraph shall also be
made for an Eligible Employee who is not a Key Employee and who is excluded
from participation in the Plan solely because of a failure to make Cash or
Deferred Contributions. Notwithstanding the foregoing, if the Plan is
deemed to be top-heavy for a Plan Year, the Employer's contribution for
such Plan Year pursuant to this Paragraph shall be increased by
substituting "4%" in lieu of "3%" in Clause (1) hereof to the extent that
the Directors determine to so increase such contribution to comply with the
provisions of section 416(h)(2) of the Code. Notwithstanding the foregoing,
no contribution shall be made pursuant to this Paragraph for a Plan Year
with respect to a Member who is a participant in another defined
contribution plan sponsored by the Employer or a Controlled Entity if such
Member receives under such other defined contribution plan (for the plan
year of such plan ending with or within the Plan Year of the Plan) a
contribution which is equal to or greater than the minimum contribution
required by section 416(c)(2) of the Code. Notwithstanding the foregoing,
no contribution shall be made pursuant to this Paragraph for a Plan Year
with respect to a Member who is a participant in a defined benefit plan
sponsored by the Employer or a Controlled Entity if such Member accrues
under such defined benefit plan (for the plan year of such plan ending with
or within the Plan Year of this Plan) a benefit that is at least equal to
the benefit described in section 416(c)(1) of the Code. If the preceding
sentence is not applicable, the requirements of this Paragraph shall be met
by providing a minimum benefit under such defined benefit plan which, when
considered with the benefit provided under the Plan as an offset, is at
least equal to the benefit described in section 416(c)(1) of the Code.
XX-3
<PAGE>
20.4 TERMINATION OF TOP-HEAVY STATUS. If the Plan has been deemed to
---------------------------------
be top-heavy for one or more Plan Years and thereafter ceases to be top-heavy,
the provisions of this Article shall cease to apply to the Plan effective as of
the Determination Date on which it is determined no longer to be top-heavy.
Notwithstanding the foregoing, the Vested Interest of each Member as of such
Determination Date shall not be reduced and, with respect to each Member who has
five or more years of Vesting Service on such Determination Date (three or more
years of Vesting Service for Determination Dates occurring in Plan Years
beginning after December 31, 1988), the Vested Interest of each such Member
shall continue to be determined in accordance with the schedule set forth in
Section 20.3(b).
20.5 EFFECT OF ARTICLE. Notwithstanding anything contained herein to
-------------------
the contrary, the provisions of this Article shall automatically become
inoperative and of no effect to the extent not required by the Code or the Act.
XX-4
<PAGE>
EXECUTED this 22 day of June, 1994.
COMPAQ COMPUTER CORPORATION
By: /s/ Jerry G. Welch
---------------------------
Jerry G. Welch
Vice President, Human Resources
(vii)
<PAGE>
Exhibit 5.1
September 30, 1998
Compaq Computer Corporation
20555 S.H. 249
Houston, Texas 77070
Ladies and Gentlemen:
I am the Vice President and Associate General Counsel of Compaq Computer
Corporation ("Compaq") and have acted in such capacity in connection with
Compaq's Registration Statement on Form S-8 to register under the Securities
Act of 1933, as amended, the offer and sale of Compaq common stock (the
"Common Stock") pursuant to the Digital Equipment Corporation Savings and
Investment Plan (the "SAVE Plan"). In connection therewith, I (or attorneys
under my supervision) have examined originals or copies, certified or
otherwise identified to my satisfaction, of such documents, corporate records,
certificates of public officials and other instruments as I have deemed
necessary for the purpose of this opinion.
Upon the basis of the foregoing, I am of the opinion that the Common
Stock has been duly authorized and, when and to the extent issued for adequate
consideration therefor in accordance with the SAVE Plan, will be legal, valid
and binding obligations of Compaq.
I consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement.
Very truly yours,
/s/ Linda S. Auwers
Linda S. Auwers
Vice President and
Associate General Counsel
EXHIBIT 23.2
CONSENT OF PRICEWATERHOUSECOOPERS LLP,
INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Compaq Computer Corporation ("Compaq") of our report
dated January 21, 1998, except as to Note 11, which is as of January 26, 1998,
appearing on page 20 of Compaq's Annual Report on Form 10-K for the year ended
December 31, 1997.
/s/ PRICEWATERHOUSECOOPERS LLP
- ------------------------------
PRICEWATERHOUSECOOPERS LLP
Houston, Texas
September 30, 1998
