<PAGE>
As filed with the Securities and Exchange Commission on February 18, 2000
Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________
JOHN HANCOCK FINANCIAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3483032
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
JOHN HANCOCK PLACE
BOSTON, MASSACHUSETTS 02117
(Address of Principal Executive Offices
including Zip Code)
THE INVESTMENT-INCENTIVE PLAN FOR JOHN HANCOCK EMPLOYEES
AND THE JOHN HANCOCK SAVINGS AND INVESTMENT PLAN
(Full title of the Plans)
THOMAS E. MOLONEY
CHIEF FINANCIAL OFFICER
JOHN HANCOCK FINANCIAL SERVICES, INC.
JOHN HANCOCK PLACE
BOSTON, MASSACHUSETTS 02117
(617) 572-6000
(Name, address and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Proposed maximum Proposed
securities to be Amount to be offering price maximum aggregate Amount of
registered registered per unit offering price registration fee
---------------- ------------ ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Common Stock,
par value $.01 per share 10,000,000(1) $14.625(2) $146,250,000(2) $38,610.00
================================================================================================================
</TABLE>
_______________________
(1) The number of shares of Company Common Stock to be offered pursuant to The
Investment-Incentive Plan for John Hancock Employees and the John Hancock
Savings and Investment Plan (the "Plans") (10,000,000 shares). In
addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the Plans.
(2) Computed pursuant to Rule 457(h) solely for the purpose of determining the
registration fee, and based on the average of the high and low prices per
share of the Common Stock as reported on the New York Stock Exchange for
February 16, 2000.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Incorporated by reference in this Registration Statement are the following
documents heretofore filed by John Hancock Financial Services, Inc. (the
"Company") with the Securities and Exchange Commission (the "Commission")
pursuant to the Securities Act of 1933 and the Securities Exchange Act of 1934,
as amended (the "Exchange Act"):
(a) The Company's Form S-1, effective January 26, 2000, Registration No.
333-87271.
(b) All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since the end of the fiscal year covered by
the Registration Statement referred to in (a) above; and
(c) The description of the Company's Common Stock, par value $.01 per
share (the "Common Stock"), contained in a registration statement
filed under the Exchange Act, and any amendment or report filed for
the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the filing of a post-
effective amendment that indicates that all securities offered hereby have been
sold or that deregisters all such securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
part hereof from the dates of filing of such documents.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
The validity of the Common Stock will be passed upon for the Company by
Philip Clarkson, Vice President and Counsel for the Company.
<PAGE>
Item 6. Indemnification of Directors and Officers
The Delaware General Corporation Law (the "Delaware Law") permits a
Delaware corporation to include a provision in its Certificate of Incorporation,
and the Company's Restated Certificate of Incorporation so provides, 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 (i) for any such of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware Law which makes directors personally liable for
unlawful dividends or unlawful stock repurchases or redemptions. Under Delaware
law, directors and officers may be indemnified against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement in connection
with any threatened, pending or completed action, suit or proceeding whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation (a "derivative action")) if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interest of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful. In
derivative actions, indemnification extends only to expenses (including
attorneys' fees) incurred in connection with defense or settlement of such an
action and, in the event such person shall have been adjudged to be liable to
the corporation, only to the extent that a proper court shall have determined
that such person is fairly and reasonably entitled to indemnity for such
expenses.
The Company's Bylaws provide that directors and officers shall be, and at
the discretion of the Board of Directors, nonofficer employees may be,
indemnified by the Company to the fullest extent authorized by Delaware law, as
it now exists or may in the future be amended, against all expenses and
liabilities reasonably incurred in connection with service for or on behalf of
the Company and further permits the advancing of expenses incurred in defending
claims. The Bylaws also provide that the right of directors and officers to
indemnification shall be a contract right and shall not be exclusive of any
other right now possessed or hereafter acquired under any Bylaw, agreement, vote
of stockholders or otherwise. The Company's Certificate of Incorporation
contains a provision permitted by Delaware law that generally eliminates the
personal liability of directors for monetary damages for breaches of their
fiduciary duty, including breaches involving negligence or gross negligence in
business combinations, unless the director has breached his duty of loyalty,
failed to act in good faith, engaged in intentional misconduct or a knowing
violation of law, paid a dividend or approved a stock repurchase in violation of
the Delaware General Corporation Law or obtained an improper personal benefit.
This provision does not alter a director's liability under the Federal
securities laws. In addition, this provision does not affect the
2
<PAGE>
availability of equitable remedies, such as an injunction or rescission, for
breach of fiduciary duty.
The Company maintains directors' and officers' reimbursement and liability
insurance pursuant to standard form policies. The risks covered by such
policies include certain liabilities under the securities law.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
The Exhibit Index immediately preceding the exhibits is incorporated
herein by reference. Additionally, the Company hereby undertakes to (i) submit
The Investment-Incentive Plan for John Hancock Employees and the John Hancock
Savings and Investment Plan (the "Plans") and any amendment thereto to the
Internal Revenue Service (the "IRS") in a timely manner and (ii) make all
changes required by the IRS in order to qualify the Plan under Section 401(a) of
the Internal Revenue Code of 1986, as amended.
Item 9. Undertakings
(a) Rule 415 Offering. The undersigned Company hereby undertakes:
-----------------
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i) include any Prospectus required by Section 10(a)(3) of the
Securities Act of 1933, unless the information is contained in periodic
reports filed by the Company pursuant to section 13 or section 15(d) of
the Exchange Act that are incorporated by reference in the Registration
Statement ;
(ii) reflect in the Prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement, unless the information is contained in periodic
reports filed by the Company pursuant to Section 13 or Section 15(d) of
the Exchange Act that are incorporated by reference in the Registration
Statement;
3
<PAGE>
(iii) include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To file a post-effective amendment to remove from registration any of
the securities being registered which remain unsold at the termination of the
offering.
(b) Subsequent Exchange Act Documents. The undersigned Company hereby
---------------------------------
undertakes that, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Company's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Indemnification. Insofar as indemnification for liabilities arising
---------------
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company 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 the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company 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.
4
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the Company
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 Boston, Commonwealth of Massachusetts, on the 18th
day of February, 2000.
JOHN HANCOCK FINANCIAL SERVICES, INC.
By: /s/ Stephen L. Brown
---------------------------------
Stephen L. Brown
Chairman and Chief Executive Officer
Each person whose signature appears below does hereby make, constitute and
appoint THOMAS E. MOLONEY and PHILIP CLARKSON and each of them with full power
without the other to act as his or her true and lawful attorney-in-fact and
agent, in his or her name, place and stead to execute on his or her behalf, as
an officer and/or director of John Hancock Financial Services, Inc. (the
"Company"), the Registration Statement of the Company on Form S-8 (the
"Registration Statement") for the registration of 10,000,000 shares of the
Company's common stock, par value $0.01 ("Common Stock"), in connection with The
Investment-Incentive Plan for John Hancock Employees and the John Hancock
Savings and Investment Plan and any and all amendments (including post-effective
amendments) to the Registration Statement, and file the same with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Act of 1933 (the
"Act"), and any and all other instruments which either of said attorneys-in-fact
and agents deems necessary or advisable to enable the Company to comply with the
Act, the rules, regulations and requirements of the SEC in respect thereof, and
the securities or Blue Sky laws of any State or other governmental subdivision,
giving and granting to each of said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing whatsoever necessary or
appropriate to be done in and about the premises as fully to all intents as he
or she might or could do if personally present at the doing thereof, with full
power of substitution and resubstitution, hereby ratifying and confirming all
that his or her said attorneys-in-fact and agents or substitutes may or shall
lawfully do or cause to be done by virtue hereof.
5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Stephen L. Brown Chairman and Chief Executive February 14, 2000
____________________________ Officer
Stephen L. Brown
/s/ David F. D'Alessandro President, Chief Operations February 14, 2000
____________________________ Officer and Director
David F. D'Alessandro
/s/ Foster L. Aborn Vice Chairman, Chief Investment February 14, 2000
____________________________ Officer and Director
Foster L. Aborn
/s/ Samuel W. Bodman
____________________________ Director February 14, 2000
Samuel W. Bodman
/s/ I. MacAllister Booth
____________________________ Director February 14, 2000
I. MacAllister Booth
/s/ Wayne A. Budd
____________________________ Director February 14, 2000
Wayne A. Budd
/s/ John M. Connors, Jr.
____________________________ Director February 14, 2000
John M. Connors, Jr.
/s/ Robert E. Fast
____________________________ Director February 14, 2000
Robert E. Fast
/s/ Kathleen Foley Feldstein
____________________________ Director February 14, 2000
Kathleen Foley Feldstein
/s/ Nelson F. Gifford
____________________________ Director February 14, 2000
Nelson F. Gifford
/s/ Michael C. Hawley
____________________________ Director February 14, 2000
Michael C. Hawley
/s/ Edward H. Linde
____________________________ Director February 14, 2000
Edward H. Linde
____________________________ Director February , 2000
Judith A. McHale
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C>
Director February 14, 2000
/s/ Richard F. Syron
- ------------------------
Richard F. Syron
Director February 14, 2000
/s/ Robert J. Tarr, Jr.
- ------------------------
Robert J. Tarr, Jr.
</TABLE>
The Plans. Pursuant to the requirements of the Securities Act of 1933,
---------
the named fiduciary of The Investment-Incentive Plan for John Hancock Employees
and the John Hancock Savings and Investment Plan has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Boston, Commonwealth of Massachusetts, on the
18th day of February, 2000.
THE INVESTMENT-INCENTIVE PLAN
FOR JOHN HANCOCK EMPLOYEES
By: /s/ A. Page Palmer
---------------------------------------------
A. Page Palmer,
Senior Vice President, Human Resources
at John Hancock Financial Services, Inc.
(the Named Fiduciary)
JOHN HANCOCK SAVINGS AND INVESTMENT PLAN
By: /s/ A. Page Palmer
---------------------------------------------
A. Page Palmer,
Senior Vice President, Human Resources
at John Hancock Financial Services, Inc.
(the Named Fiduciary)
7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
5 Opinion of Philip Clarkson, John Hancock Financial
Services, Inc. Vice President and Counsel (filed
herewith)
23.1 Consent of Ernst & Young LLP (filed herewith)
23.2 Consent of Philip Clarkson, John Hancock Financial
Services, Inc. Vice President and Counsel (included
in Exhibit 5)
24 Powers of Attorney (filed herewith - see pages 5-6
of the Registration Statement)
99(i) The Investment-Incentive Plan for John Hancock
Employees (as effective November 1, 1999) (filed
herewith)
99(ii) John Hancock Savings and Investment Plan (as
effective November 1, 1999) (filed herewith)
</TABLE>
<PAGE>
Exhibit No. 5
February 18, 2000
John Hancock Financial Services, Inc.
John Hancock Place
Boston, Massachusetts 02117
Dear Sirs:
I have acted as counsel to John Hancock Financial Services, Inc, a Delaware
corporation (the "Company"), and I have participated in the preparation of the
Registration Statement on Form S-8 (the "Registration Statement") to be filed
under the Securities Act of 1933 (the "Act") relating to 10,000,000 shares of
the Company's common stock, par value $.01 per share (the "Common Stock"), to be
issued pursuant to The Investment-Incentive Plan for John Hancock Employees and
the John Hancock Savings and Investment Plan (the "Plans").
I am familiar with the written documents which comprise the Plans, and in
rendering the opinion expressed below, I have examined and are relying on
originals, or copies certified or otherwise identified to my satisfaction, of
such other corporate records, documents, certificates or other instruments, as
in my judgment are necessary or appropriate as a basis for such opinion. In
rendering such opinion, I have noted that the purchase price of the Common Stock
under the Plans with employee's elective deferrals will not be less than the
fair market value of said shares as of the date of purchase by the respective
Plan's trustee.
Based on the foregoing, I am of the opinion that authorized but previously
unissued shares of Common Stock which may be issued by the Company pursuant to
the Plans have been duly authorized and when purchased in accordance with the
terms of the Plans will be validly issued, fully paid and non-assessable.
<PAGE>
2
I hereby consent to the filing of this opinion as an exhibit to the Company's
Registration Statement. In giving such consent, I do not hereby admit that I am
within the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Philip Clarkson
Philip Clarkson
Vice President and Counsel
<PAGE>
Exhibit 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to The Investment-Incentive Plan for John Hancock Employees and
the John Hancock Savings and Investment Plan of John Hancock Financial Services,
Inc. of our report dated April 26, 1999, with respect to the consolidated
financial statements of John Hancock Mutual Life Insurance Company and
subsidiaries included in its Registration Statement (Form S-1 No. 333-87271) and
related Prospectus filed with the Securities and Exchange Commission.
Our audit also included the financial statement schedules of John Hancock Mutual
Life Insurance Company and subsidiaries listed in Item 16(b) of its Registration
Statement (Form S-1 No. 333-87271). These schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, the financial statement schedules referred to
above, when considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
/S/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Boston, Massachusetts
February 14, 2000
<PAGE>
EXHIBIT 99(i)
JOHN HANCOCK
SAVINGS AND INVESTMENT PLAN
Amended and Restated, effective November 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1 General 1
ARTICLE 2 Definitions 2
ARTICLE 3 Eligibility to Participate 7
ARTICLE 4 Contributions 8
ARTICLE 5 Withdrawals 15
ARTICLE 6 Loans 18
ARTICLE 7 Investment Funds 21
ARTICLE 8 Vesting 25
ARTICLE 9 Distribution of Participant's Share 26
ARTICLE 10 Administrative and Fiduciary Powers 33
ARTICLE 11 Amendment and Termination 37
ARTICLE 12 Top-Heavy Plan Requirements 38
</TABLE>
<PAGE>
JOHN HANCOCK
SAVINGS AND INVESTMENT PLAN
ARTICLE 1. GENERAL
- --------- -------
1.01 Title
-----
The Company has established the "John Hancock Savings and Investment Plan",
hereinafter called the "Plan".
1.02 Discretionary Powers
--------------------
The provisions of this Plan shall be interpreted and the Plan shall be
administered only in a manner consistent with the requirements of the
Employee Retirement Income Security Act of 1974 ("ERISA") and the United
States Internal Revenue Code ("Code") relating to qualified profit-sharing
plans, as each may be amended from time to time.
1.03 Effective Date
--------------
The effective date of the Plan is January 1, 1982.
1.04 Applicable Law
--------------
The provisions of this Plan shall be governed by the laws of the
Commonwealth of Massachusetts, except as otherwise provided by ERISA.
1
<PAGE>
ARTICLE 2. DEFINITIONS
- --------- -----------
2.01 Where the context requires, single nouns shall include the plural, and the
masculine gender shall include the feminine.
2.02 "Employer" shall mean the Company or, on and after November 1, 1999, a
General Agent who is, or who becomes, a party to the Plan, or the Company
and all such General Agents, as the context requires; except that, prior to
January 1, 2000, the term "Employer" shall include only such General Agents
who, as of October 31, 1999, were Agency Managers of one of the Company's
Managerial Agencies.
2.03 "Company" shall mean the John Hancock Mutual Life Insurance Company.
Effective as of the initial public offering of John Hancock Financial
Services, Inc. ("JHFS"), the Company shall mean John Hancock Financial
Services, Inc.
2.04 "Insurer" shall mean, until the initial public offering of JHFS, the John
Hancock Mutual Life Insurance Company, and thereafter, John Hancock Life
Insurance Company, in its capacity as an insurance company incorporated
under the laws of the Commonwealth of Massachusetts.
2.05 "Employee" shall mean an Agency Manager, Sales Manager, or Marketing
Representative of the Company or a participating subsidiary and, effective
November 1, 1999, a General Agent, Sales Supervisor, Agent or Clerk of an
Employer; except that Clerks who, as of October 31, 1999, were employed by
the Company in its Managerial Agencies shall not be an Employee under the
Plan until the first payroll period commencing after April 21, 2000. A
General Agent is a self-employed individual within the meaning of Code
section 401(c) and is considered an Employee only for purposes of this
Plan.
2.06 "Participant" shall mean an Employee who is, or is under contract with, or
is employed by, an Employer, who is eligible to make contributions to the
Plan in accordance with Article 4; the term Participant shall not include a
retired Employee, except as otherwise provided in the Plan.
2.07 "Transferred Participant" shall mean a Participant who ceases to be an
Employee, who continues in Service with an Employer.
2.08 "Beneficiary" shall mean the person designated as provided in Section 9.06
hereof to receive benefits under this Plan after the death of the
Participant.
2.09 "Service" shall mean all periods of employment or service, whether or not
such employment is continuous, as an Employee or a salaried employee of the
Company or any of the Company's subsidiaries or affiliates, and all service
with a predecessor employer to the extent required by law.
2.10 Prior to January 1, 2000, "Compensation" shall mean the amount paid by the
Company or by the John Hancock Variable Life Insurance Company, to an
Employee on account of his service in such capacity including pay for
overtime, Basic Pre-tax and Supplemental Pre-tax Contributions to the
2
<PAGE>
Plan on his behalf but exclusive of any amount paid as 1) Salary
Continuance at a rate less than full pay, 2) Accident & Sickness benefits,
3) Long Term Disability benefits, 4) accrued vacation pay which is paid to
the Participant in a lump sum following the date of the Participant's
termination of service with the Company, 5) commissions on casualty or
mutual fund products, or 6) a discretionary award or other incentive
payment (unless the document under which the payment is provided
specifically states that such payment is to be included as Compensation for
the purposes of the Plan).
On and after January 1, 2000, Compensation shall mean the amount paid by
the Employer for services rendered, as determined by the Company, including
base salaries and commissions on John Hancock products. For a General
Agent, Compensation shall mean earned income of the General Agent derived
from his trade or business as a General Agent of the Company, as determined
by the Company. In all cases, Compensation shall include Basic Pre-tax
and Supplemental Pre-tax Contributions to the Plan on his behalf but shall
not include any amount paid as 1) Salary Continuance at a rate less than
full pay, 2) Accident and Sickness benefits, 3) Long-Term Disability
benefits, 4) accrued vacation pay which is paid to the Participant in a
lump sum following the date of the Participant's termination of service
with the Company, 5) commissions on casualty or mutual fund products, or
6) a discretionary award or other incentive payment (unless the document
under which the payment is provided specifically states that such payment
is to be included as Compensation for the purposes of the Plan).
For Plan Years beginning on or after January 1, 1989, and before January 1,
1994, the annual Compensation of each Participant taken into account for
determining all benefits provided under the Plan for any Plan Year shall
not exceed $200,000. This limitation shall be adjusted by the Secretary of
the Treasury at the same time and in the same manner as under section
415(d) of the Code, except that the dollar increase in effect on January 1
of any calendar year is effective for Plan Years beginning in such calendar
year and the first adjustment to the $200,000 limitation is effective on
January 1, 1990.
For Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Participant taken into account for determining all
benefits provided under the Plan for any Plan Year shall not exceed
$150,000, as adjusted for increases in the cost-of-living in accordance
with section 401(a)(17)(B) of the Code.
In determining the Compensation of a Participant for purposes of this
limitation the rules of section 414(q)(6) of the Code 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 year. If, as a result of the
application of such rules the adjusted annual Compensation 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.
3
<PAGE>
If Compensation for any prior Plan Year is taken into account in
determining a Participant's allocations for the current Plan Year, the
Compensation for such prior Plan Year is subject to the applicable annual
compensation limit in effect for that prior period. For this purpose, in
determining allocations in Plan Years beginning on or after January 1,
1989, the annual Compensation limit in effect for Plan Years beginning
before that date is $200,000. In addition, in determining allocations in
Plan Years beginning on or after January 1, 1997, the annual Compensation
limit in effect for Plan Years beginning before that date is $150,000.
For purposes of the Code section 415 limitation described in Section 4.11,
the Code section 416 minimum contribution provision in Section 12.03A, the
limitation on Basic Pre-tax Contributions and Supplemental Pre-tax
Contributions under Code section 401(k) and the limitations on Matching
Contributions and Post-tax Contributions under Code section 401(m),
"Compensation" shall include any discretionary award paid in a calendar
year which would otherwise be excluded under the first paragraph of this
Section.
2.11 "Retirement" shall mean actual retirement under a retirement plan of the
Company.
2.12 "Normal Retirement Date" shall mean the first day of the month in which
a Participant attains age sixty-five (65), or the first day of the month
following the Participant's completion of five (5) Years of Service,
whichever is later.
2.13 "Plan Year" shall mean the calendar year.
2.14 "Disability" shall mean an Employee's permanent physical or mental
incapacity to perform the duties of his own occupation due to illness or
disease and which qualifies an individual for wage replacement benefits
under the Company's Salary Continuance Plan, Accident & Sickness Insurance,
or the Long Term Disability coverage of the John Hancock Mutual Life
Insurance Company Employee Welfare Plan or under coverage providing
disability income benefits under the John Hancock General Agents'
Association Group Insurance Plan. In the case of individuals not covered
under either of these Plans, Disability shall be determined by the Company.
2.17 "Total Accumulation" shall mean the sum of a Participant's Basic Pre-tax
Contributions, Supplemental Pre-tax Contributions, Post-tax Contributions,
Matching Contributions, Rollover Contributions and Company Contributions,
as described in Article 4, including any earnings, gain or loss thereon.
For the purpose of the loan provisions as described in Article 6, Total
Accumulation shall not include Post-tax Contributions and any earnings,
gain or loss thereon.
2.18 "Foreign Subsidiary" shall mean a corporation or similar entity which
constitutes a foreign affiliate of the Company within the meaning of
Section 3121(1) of the Code and in respect of which the Company entered
into an agreement under Section 3121(1) of the Code; provided, the Company
has approved the treatment of United States citizens employed by such
affiliate as employees hereunder upon such conditions as to
4
<PAGE>
action by the foreign affiliate with respect to such treatment as the
Company may require.
2.19 "General Agent" shall mean any person who is under a contract with the
Company or its subsidiary, Signator Insurance Agency, Inc., as a General
Agent, and who is a member of the General Agents' Association, excluding
any General Agent whose General Agent's contract is written on an
Affiliated General Agent form.
2.20 "Sales Supervisor" shall mean any person employed by a General Agent in a
General Agency whose major portion of business time is devoted to sales
supervision.
2.21 "Agent" shall mean a full-time life insurance salesman who is under a
whole-time contract with a General Agent and who is considered a statutory
employee under the Federal Insurance Contributions Act.
2.22 "Clerk" shall mean a full-time field clerical or administrative employee of
a General Agent, provided the clerical or administrative employee's name
has been filed with the Company and his or her status has been verified.
2.23 A "Change of Control" shall be deemed to have occurred if:
(i) any Person (as defined below) has acquired "beneficial ownership"
(within the meaning of Rule 13d-3, as promulgated under Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
securities of the Company representing 30% or more of the combined Voting
Power (as defined below) of the Company's securities;
(ii) as a result of a solicitation subject to Rule 14a-11 under the
Exchange Act (or any successor rule thereto), the persons who were
directors of the Company immediately before such solicitation shall cease
to constitute at least a majority of the Board or the Board of Directors of
any successor to the Company; or
(iii) the stockholders of the Company approve a merger, consolidation,
share exchange, division, sale or other disposition of substantially all of
the assets of the Company (a "Corporate Event"), as a result of which the
shareholders of the Company immediately prior to such Corporate Event (the
"Company Shareholders") shall not hold, directly or indirectly, immediately
following such Corporate Event a majority of the Voting Power of (x) in the
case of a merger or consolidation, the surviving or resulting corporation,
(y) in the case of a share exchange, the acquiring corporation or (z) in
the case of a division or a sale or other disposition of substantially all
of the Company's assets, each surviving, resulting or acquiring
corporation.
A specified percentage of "Voting Power" of a company shall mean such
number of the Voting Securities as shall enable the holders thereof to cast
5
<PAGE>
such percentage of all the votes which could be cast in an annual election
of directors and "Voting Securities" shall mean all securities of a company
entitling the holders thereof to vote in an annual election of directors.
2.24 "TIP" shall mean The Investment-Incentive Plan for John Hancock Employees.
6
<PAGE>
ARTICLE 3. ELIGIBILITY TO PARTICIPATE
- --------- --------------------------
3.01 Pre-tax, Post-tax and Company Contributions
--------------------------------------------
Prior to January 1, 2000, an Employee shall become a Participant eligible
to make Post-tax Contributions by payroll deduction and eligible to have
Basic Pre-tax and Supplemental Pre-tax Contributions made on his behalf in
accordance with Article 4, commencing on the first day of the first payroll
period following the completion of one (1) year of Service.
On or after January 1, 2000, an Employee shall become a Participant
eligible to have Basic Pre-tax and Supplemental Pre-tax Contributions made
on his behalf in accordance with Article 4, commencing on the first day of
the first payroll period following the completion of one (1) year of
Service, except for a Clerk who was hired prior to January 1, 2000, and who
was eligible to contribute to TIP prior to April 21, 2000, six (6) months
of Service.
On or after January 1, 2000, no Employee shall be eligible to make any
Post-tax Contributions to the Plan.
An individual who becomes an Employee (whether by reason of a change in job
status or a transfer of employment) after completion of the requisite
Service shall become eligible immediately upon attaining Employee status
provided that he would have been eligible at an earlier date if he had been
an Employee at that time.
Prior to January 1, 1997, each Agency Manager and Sales Manager shall be
eligible for a Company Contribution on the first day of the first biweekly
payroll period following the completion of two (2) Years of Service, based
on his Compensation received from the first day he is so eligible, through
the end of that calendar year, provided he remains in Service on December
31st of that calendar year, or retires or dies during the calendar year.
On and after January 1, 1997, no Employee shall be eligible for a Company
Contribution based on his Compensation received on and after January 1,
1997.
3.02 Rollover Contributions
----------------------
Each Employee shall become eligible to participate commencing the first day
of employment, solely for the purpose of contributing to the Plan amounts
qualifying as Tax Exempt Rollover Contributions in accordance with Section
402(a)(5), 403(a)(4) or 408(d)(3) of the Code. Such amounts shall be
credited to the individual's account, shall be entitled to immediate full
vesting, but shall not entitle such individual to be treated as a
Participant for purposes of Article 4 until the requirements of Section
3.01 are met. Neither an Employee nor a Participant shall be eligible to
participate for the purpose of contributing Tax Exempt Rollover
Contributions after termination of his Service.
7
<PAGE>
ARTICLE 4. CONTRIBUTIONS
- --------- -------------
4.01 Basic Pre-tax Contributions
---------------------------
With respect to Plan years commencing prior to January 1, 2000, subject to
Sections 4.03, 4.05 and 4.11, a Participant may elect to have the Company
reduce the amount of future Compensation otherwise payable to him in cash
by one (1) percent, two (2) percent, or three (3) percent. With respect to
Plan years commencing on or after January 1, 2000, subject to Sections
4.03, 4.05 and 4.11, a Participant may elect to have the Employer reduce
the amount of future Compensation otherwise payable to him in cash by one
(1) percent, two (2) percent, three (3) percent, or four (4) percent. The
Employer shall contribute an amount equal to the reduction in Compensation
("Basic Pre-tax Contributions") to the Plan on behalf of the Participant.
4.02 Supplemental Pre-tax Contributions
----------------------------------
Subject to Sections 4.03, 4.05, 4.08 and 4.11, a Participant who (a) with
respect to Plan years commencing prior to January 1, 2000, is having Basic
Pre-tax Contributions of three (3) percent made on his behalf or (b) with
respect to Plan years commencing on or after January 1, 2000, is having
Basic Pre-tax Contributions of four (4) percent made on his behalf, may
elect to have the Employer reduce further the amount of future Compensation
otherwise payable to him in cash. The Employer shall make additional
contributions ("Supplemental Pre-tax Contributions") to the Plan on his
behalf equal to the amount of the reduction. The Participant's election
shall specify, in whole number multiples of one (1) percent, not to exceed
ten (10) percent prior to January 1, 2000, and eleven (11) percent on or
after January 1, 2000, the percentage by which his Compensation is to be
further reduced. The percentage rate may be increased or decreased by the
Participant in whole number multiples of one (1) percent.
4.03 Limits on Basic Pre-tax and Supplemental Pre-tax Contributions
--------------------------------------------------------------
A. Notwithstanding any other provision of the Plan, a Participant's Pre-
tax Contributions for a calendar year may not exceed $7,000 (or such
larger amount as is determined by the Secretary of the Treasury for
the calendar year). Excess Deferrals for a calendar year, plus any
earnings, gain or loss thereon, shall be distributed no later than the
following April 15, to Participants to whose accounts such Excess
Deferrals were allocated for the calendar year and who claim Excess
Deferrals for such year. For purposes of this Section, "Excess
Deferrals" shall mean the amount of Pre-tax Contributions for the
calendar year in excess of the dollar limit imposed under Code section
402(g).
The Participant's claim of Excess Deferrals shall (i) be made in
writing, (ii) be submitted to the Company not later than March of the
following calendar year, (iii) specify the amount of the Participant's
Excess Deferrals for the preceding calendar year, and (iv) be
accompanied by the Participant's written statement that if such
amounts are not distributed, such Excess Deferrals, when added to
amounts deferred under other plans or arrangements described in
sections 401(k), 408(k) or 403(b) of the Code, will exceed the limit
8
<PAGE>
imposed on the Participant by Section 402(g) of the Code for the year
in which the Excess Deferrals occurred.
Prior to January 1, 2000, and notwithstanding the above, if agreed to
by the Participant, Excess Deferrals may be recharacterized as Post-
tax contributions in accordance with regulations prescribed by the
Secretary of the Treasury or his delegate.
B. In order to ensure compliance with Code section 401(k)(3) and
regulations issued thereunder, in any year for which the Plan does not
meet the safe harbor requirements of sections 401(k)(11) or 401(k)(12)
of the Code, each Employer may from time to time limit the amount of
the reduction in Compensation of a Participant who is a highly
compensated employee . The Basic Pre-tax and Supplemental Pre- tax
Contributions to the Plan on behalf of any Participant shall not
exceed the amount by which his Compensation has been reduced in
accordance with this paragraph.
As defined in Code section 414(q), the term "highly compensated
employee" shall mean any employee (including a former employee) who,
(A) during the year or the preceding year was at any time a five (5)
percent owner, or (B) during the preceding year received compensation
from the employer in excess of $80,000 (multiplied by the cost of
living factor provided by the Secretary of Treasury or his delegate
under Code section 414(q)(1)) and, if the Company elects, was in the
top-paid group of employees for such year.
Notwithstanding any other provision of the Plan, Excess Contributions
and earnings, gain or loss thereon, shall be distributed no later than
the last day of each Plan Year, to Participants on whose behalf such
Excess Contributions were made for the preceding Plan Year. For
purposes of this Section, "Excess Contributions" shall mean the amount
of Basic Pre-tax and Supplemental Pre-tax Contributions (after
application of Section 4.03(A)) made on behalf of a highly compensated
employee in excess of the restrictions imposed under Code section
401(k). Excess Contributions shall be treated as Annual Additions
under the Plan.
The earnings, gain or loss allocable to Excess Contributions shall be
determined by multiplying earnings, gain or loss allocable to the
Participant's Basic Pre-tax and Supplemental Pre-tax Contributions for
the Plan Year by a fraction, the numerator of which is the Excess
Contribution on behalf of the Participant for the Plan Year and the
denominator of which is the Participant's account balance attributable
to Basic Pre-tax and Supplemental Pre-tax Contributions on the last
day of the preceding Plan Year.
The Excess Contributions which would otherwise be distributed to the
Participant shall be adjusted for earnings, gain or loss thereon;
shall be reduced, in accordance with regulations, by the amount of
Excess Deferrals distributed to the Participant or recharacterized as
Post-tax Contributions under Section 4.03(A); shall, if there is a
loss
9
<PAGE>
allocable to the Excess Contributions, in no event be less than the
lesser of the Participant's account under the Plan or the
Participant's Contributions for the Plan Year.
Prior to January 1, 2000, and notwithstanding the above, if agreed to
by the Participant, Excess Contributions may be recharacterized as
Post-tax Contributions in accordance with regulations prescribed by
the Secretary of the Treasury or his delegate.
4.04 Post-tax Contributions
----------------------
Prior to January 1, 2000, subject to Sections 4.05, 4.07, 4.08, and 4.11, a
Participant may elect to make contributions ("Post-tax Contributions") by
payroll deduction and may contribute in whole number multiples of one (1)
percent, not to exceed ten (10) percent of his Compensation. The
percentage rate of contribution may be increased or decreased by the
Participant in whole number multiples of one (1) percent. On or after
January 1, 2000, Post-tax Contributions will no longer be allowed under the
Plan.
4.05 Contribution Elections
----------------------
A Participant's election to have contributions made on his behalf in
accordance with Sections 4.0l or 4.02 shall be made by filing with the
Company a salary reduction election in such form as it may prescribe. A
Participant's election to make contributions in accordance with Section
4.04 shall be made by filing with the Company, in such form as it may
prescribe, a payroll deduction authorization.
Basic Pre-tax Contributions and Supplemental Pre-tax Contributions may be
stopped at any time, effective with the next following payroll period for
which the Company can reasonably process the revocation of the
Participant's salary reduction election. The Participant's salary
reduction election shall be deemed to be limited to the extent necessary to
comply with the provisions of this Article 4.
4.06 Matching Company Contributions
------------------------------
A. The Employer shall contribute at the end of each payroll period an
additional amount ("Matching Company Contributions") equal to the sum
of the Basic Pre-tax Contributions made in that period for all
Participants, except General Agents, who on the last day of such
period, or at the time of their deaths or retirements during such
period, were Employees.
B. The Matching Company Contribution for each payroll period shall be
allocated among Participants, except General Agents, who on the last
day of such period, or at the time of their deaths or retirements
during such period, were Employees, based on the amount of Basic Pre-
tax Contributions credited to the Participant's account for such
period.
A Participant shall not be entitled to any Matching Company
Contribution after his Retirement; provided, that an allocation will
be made to his account for the payroll period in which he attains his
Retirement, based on the amount of his Basic Pre-tax Contributions for
such period.
10
<PAGE>
C. With respect to contributions made on or after March 1, 2000, the
Matching Company Contributions shall consist of a restricted portion
("Restricted Matching Company Contributions") and an unrestricted
portion ("Unrestricted Matching Company Contributions"). The
Restricted Matching Company Contributions shall be equal to the first
two percent (2%) of the Matching Company Contributions and the
Unrestricted Matching Company Contributions shall be equal to the
remainder of the Matching Company Contributions.
D. For Plan Years 1999 and prior, an additional contribution shall be
made on behalf of each Participant, except for a General Agent, who is
an Employee on the last day of the Plan Year and whose total Basic and
Supplemental Pre-tax Contributions for that Plan Year equal or exceed,
during the calendar years preceding 2000, three (3) percent of the
Participant's Compensation for the year (excluding Compensation
received while the Participant is subject to the twenty-six (26) week
restriction of Section 5.02); said additional contribution shall be
equal to the amount, if any, by which three (3) percent of the
Participant's Compensation, exceeds the Matching Company Contribution
allocated to the Participant's account for that Plan Year.
For Plan Years 2000 and later, an additional contribution shall be
made on behalf of each Participant, except for a General Agent, who is
an Employee, on the last day of the Plan Year and whose total Basic
and Supplemental Pre-tax Contributions for that Plan Year equal or
exceed four (4) percent of the Participant's Compensation for the year
(excluding Compensation received while the Participant is subject to
the twenty-six (26) week restriction of Section 5.02); said additional
contribution shall be equal to the amount, if any, by which four (4)
percent of the Participant's Compensation exceeds the Matching Company
Contribution allocated to the Participant's account for that Plan
Year. For the Plan Year beginning on January 1, 2000, this extra
Matching Company Contribution made on behalf of Clerks who were
formerly employed by the Company in its Managerial Agencies shall
apply to all Compensation paid to the Clerks during the year and all
Basic and Supplemental Pre-tax Contributions made to TIP and to this
Plan.
Such contribution shall be allocated to the Participant's account on
the same basis as Matching Company Contributions under (A) above, and
shall be considered as a Matching Company Contribution for all other
purposes of the Plan. Beginning on March 1, 2000, such contribution
will be allocated 50% to Restricted Matching Company Contributions and
50% to Unrestricted Matching Company Contributions.
4.07 Limits on Post-tax and Matching Employer Contributions
------------------------------------------------------
Notwithstanding any other provision of this Plan, in any year for which the
Plan does not meet the safe harbor requirements of section 401(k)(11) or
401(k)(12) of the Code, Excess Aggregate Contributions, plus any earnings,
gain or loss thereon, shall be distributed no later than the last day of
each calendar year to Participants to whose accounts Excess Aggregate
Contributions were allocated for the preceding calendar year. For purposes
of this Section, "Excess Aggregate Contributions" shall
11
<PAGE>
mean the amount of Matching Company Contributions and Post-tax
Contributions for the year (after application of Sections 4.03(A) and
4.03(B)) made on behalf of a highly compensated employee in excess of the
restrictions imposed under Code section 401(m). With respect to the ten
(10) highly compensated employees who had the highest compensation during
the year, the amount of the Matching Company Contributions or Post-tax
Contributions made on behalf of any of their family members shall be
treated as if such amount were contributed on behalf of such highly
compensated employee.
The earnings, gain or loss allocable to Excess Aggregate Contributions
shall be determined by multiplying the earnings, gain or loss allocable to
the Participant's Post-tax Contributions and Matching Company Contributions
for the Plan Year by a fraction, the numerator of which is the Excess
Aggregate Contributions on behalf of the Participant for the Plan Year and
the denominator of which is the sum of the Participant's accounts
attributable to Post-tax Contributions and Matching Company Contributions
on the last day of the Plan Year.
Excess Aggregate Contributions shall be distributed from the Participant's
Post-tax Contributions account and from the Participant's Matching Company
Contributions account in proportion to the Participant's Post-tax
Contributions and Matching Company Contributions for the calendar year.
The determination of the Excess Aggregate Contributions shall be made after
first determining the Excess Deferral under Section 4.03(A) and then
determining the Excess Contributions under Section 4.03(B).
4.08 Maximum Contribution Percentage
-------------------------------
Notwithstanding the other provisions of this Article, the maximum aggregate
percentage of Compensation allowed under the Plan as Basic Pre-tax,
Supplemental Pre-tax and Post-tax Contributions shall not exceed, for years
beginning before 2000, thirteen (13) percent, or, for years beginning on or
after January 1, 2000, fifteen (15) percent.
4.09 Company Contributions
---------------------
The Company shall contribute for each calendar year prior to January 1,
1997 that percentage of the Compensation of eligible Agency Managers and
Sales Managers as shall be determined by its Board of Directors. Such
contribution shall be made as soon as practicable after the close of the
calendar year, and in any event on or before the last day specified by the
Code for making deductible contributions for such year. In no event shall
the amount contributed by the Company exceed the lesser of one (1) percent
or the percentage of the company contribution made for that plan year on
behalf of participants in TIP. For each calendar year beginning after 1996
the Company shall make no Company Contribution on behalf of any Employee.
4.10 Allocation of Company Contributions
-----------------------------------
Subject to Section 4.11, the Company's contribution for each year shall be
allocated among the Participants who on the last day of such year, or at
12
<PAGE>
the time of their deaths or retirements during such year, were eligible
Participants, the account of each such participant being credited with an
amount which shall bear the same ratio to the total amount of the
contribution as the Compensation received by the Participant during the
calendar year bears to the aggregate Compensation received by all eligible
Participants during such calendar year; provided, that the allocation made
to a Participant shall be determined by reference to the Compensation paid
him after the date he attained such status.
A Participant shall not be entitled to any Company Contribution after his
Retirement; provided, that an allocation will be made to him for the year
in which he attains his Retirement as determined by reference to the
Compensation paid him during that year prior to the date of such
Retirement.
4.11 Limitation on Contributions
---------------------------
The annual addition to a Participant's account in any year under this and
other defined contribution plans of the Company may in no event exceed the
limitation for a defined contribution plan as described in section 415 of
the Code. For the purposes of this Plan, the term "annual addition"
includes the sum for any year of
A. Company Contributions (if applicable),
B. Matching Company Contributions,
C. Basic Pre-tax Contributions,
D. Supplemental Pre-tax Contributions, and
E. Post-tax Contributions.
This limit, which is subject to the various technical rules of and which
may be adjusted in accordance with regulations prescribed by the Secretary
of the Treasury or his delegate, is generally stated as the lesser of
F. Twenty-five (25) percent of the Participant's Compensation, or
G. $30,000 or, if greater, one-quarter (1/4) of the defined benefit
dollar limitation in effect.
For the purpose of the Code section 415 limitation described in this
Section, all defined contribution plans (including voluntary employee
contribution accounts in a defined benefit plan and key employee accounts
under a welfare benefit plan described in section 419, as well as employer
contributions allocated to an IRA) of the employer, whether or not
terminated, will be treated as one (1) defined contribution plan. In
addition, all employers related to an Employer (as defined in Code section
414) and described in Section 2.08 shall be treated as one (1) Employer for
purposes of the limitation provided under this Section.
13
<PAGE>
4.12 Construction
------------
Contributions made in accordance with this Article shall be treated as
employer contributions deductible under Code section 404(a), excluding
Post-tax Contributions made under Section 4.04.
4.13 Accounts Transferred from Other Plans
-------------------------------------
Effective April 1, 1989, Participants who have an account balance under
another individual account plan sponsored by an Employer or one of its
subsidiaries or affiliates, shall be eligible to have such account balance
transferred to this Plan provided that the other plan authorizes the direct
transfer. In the event the amount transferred includes any Restricted
Company Matching Contributions, as defined under the terms of the
transferring plan, then such amount shall be treated as Restricted Company
Matching Contributions under the terms of this Plan.
14
<PAGE>
ARTICLE 5. WITHDRAWALS
- --------- -----------
5.01 Withdrawal of Contributions due to Hardship
-------------------------------------------
A. Upon a showing of hardship by a Participant, the Company may approve
the Participant's withdrawal of such portion of his Basic Pre-tax,
Supplemental Pre-tax, Matching Company, Rollover and Company
Contributions accounts as the Company shall deem necessary to
alleviate such hardship.
No such withdrawal shall be approved until all of the Participant's
Post-tax Contributions, including any earnings or gain thereon, have
been withdrawn.
B. Funds shall be withdrawn in the following order from the various
categories of contributions as necessary to alleviate the hardship:
(1) Supplemental Pre-tax Contributions,
(2) Rollover Contributions and earnings, gain or loss thereon,
(3) Company Contributions and earnings, gain or loss thereon,
(4) Basic Pre-tax Contributions,
(5) Unrestricted Matching Company Contributions and earnings, gain or
loss thereon,
(6) Restricted Matching Company Contributions and earnings, gain or
loss thereon.
The balance remaining in each of the above categories of contributions
must be exhausted before funds may be withdrawn from the next
following category of contributions. In the event that the
Participant has monies invested in more than one fund in any given
category, the withdrawal will be taken from each fund on a pro-rata
basis relative to the amount in each fund prior to the withdrawal.
C. Notwithstanding (A) and (B) above, a hardship withdrawal in a Plan
Year beginning after December 31, 1988, shall not be permitted to
include (1) earnings or gain attributable to Supplemental Pre-tax and
Basic Pre-tax Contributions, or (2) Matching Company Contributions,
Rollover Contributions or Company Contributions (including the
earnings, gain or loss thereon) to the extent that any such
Contributions are used to meet the requirements of Section 401(k) of
the Code for the Plan Year.
D. For the purposes of this Section, "hardship" shall refer to medical
expenses (as defined in Code section 213(d)) incurred by the
Participant or his spouse or dependents, the purchase of a principal
residence of the Participant, the payment of the tuition and related
15
<PAGE>
educational expenses for the next 12 months of post-secondary
education for the Participant, or his spouse or his dependents, the
need to prevent eviction of the Participant, from his principal
residence or foreclosure on a mortgage on the Participant's, principal
residence, or such other immediate and heavy financial need of the
Participant, as determined by the Company on a uniform and
nondiscriminatory basis. The Company shall consider each case of
hardship on an individual basis, and its determinations in this
respect shall be final.
5.02 Restrictions on Hardship Withdrawals
------------------------------------
A. A Participant may withdraw funds in accordance with Section 5.0l only
if (i) the distribution does not exceed the amount needed on account
of hardship as described in Section 5.01(D), and (ii) the Participant
complies with the requirements of Subsection (B) of this Section 5.02.
B. The Participant must represent to the Company (and the Company must
determine that it can reasonably rely on such representation) that the
need cannot be relieved by:
(1) the liquidation of other reasonably available assets;
(2) borrowing from the Plan or from a commercial source;
(3) ceasing to make Pre-Tax or Post-Tax Contributions; or
(4) insurance or other forms of reimbursement.
Each such representation shall be considered by the Company and the Company
shall determine whether it can reasonably rely on such representation. If
the Company determines that it cannot reasonably rely on such
representation, the Participant will not be eligible for a hardship
distribution under this Article 5. This determination by the Company will
be done on a uniform and nondiscriminatory basis and its decision shall be
final.
A Participant who withdraws any Basic Pre-tax, Matching or Company
Contributions in accordance with this Subsection will not be permitted to
have any Basic Pre-tax, Supplemental Pre-tax, Matching Company or Post-tax
Contributions made on his behalf for twenty-six (26) weeks from the date of
such withdrawal. At the expiration of any such period, contributions will
automatically resume in accordance with the Participant's salary reduction
and/or payroll deduction election then in effect under Article 4.
5.03 Withdrawal of Post-tax Contributions
------------------------------------
A Participant may at any time make a withdrawal from his Post-tax
Contribution account.
The Company shall maintain a separate account for each Participant with
respect to his Post-tax Contributions made after December 31, 1986,
16
<PAGE>
including earnings, gain, or loss thereon. Withdrawals shall be made first
from the Participant's Post-tax Contributions remaining in the Plan on
December 31, 1986, and then, to the extent such withdrawals exceed that
amount, from the Participant's account for Post-tax Contributions made
after December 31, 1986, including earnings, gain, or loss thereon.
5.04 Withdrawals after Retirement
----------------------------
A retired Employee may at any time make a withdrawal of all or a portion of
his remaining account balance.
5.05 Withdrawal Requests
-------------------
All requests for withdrawals, including hardship withdrawals, shall be made
in the manner prescribed by the Company.
17
<PAGE>
ARTICLE 6. LOANS
- --------- -----
6.01 Application for Loan
--------------------
A Participant may apply to the Plan for a secured loan equal to a portion
of such Participant's Total Accumulation as defined by Section 2.16. Such
loan request must be made in accordance with the procedures prescribed by
the Company. Each such loan request shall be considered by the Company and
may be granted at the Company's sole discretion subject to the conditions
specified below. The Company's determination regarding granting the loan
shall be final. This provision shall not be used as a means of
distributing benefits before they otherwise become payable.
The Company may refuse to grant a loan to any Participant who is currently
ineligible for loan repayment by payroll deduction or who is reasonably
anticipated to become ineligible for loan repayment by payroll deduction in
the near future.
6.02 Maximum and Minimum Loans
-------------------------
A. The maximum amount available for a loan, when added to the outstanding
balance of all loans to the Participant from the Plan, shall be fifty
(50) percent of the Total Accumulation amount, but no more than
$50,000, reduced by the excess (if any) of the highest outstanding
balance during the prior twelve (12) month period over the outstanding
balance on the date on which the new loan is made.
The maximum number of loans outstanding with respect to a Participant
at any time prior to January 18, 2000, shall be four (4), and on or
after January 18, 2000, shall be two (2).
B. In no event shall the amount of any loan be less than $500.
C. The loan shall be secured by an equal amount of the Participant's
Total Accumulation. No other types of collateral will be permitted to
secure the loan.
D. In its discretion, the Company may impose an administrative fee for
processing loans under the Plan.
6.03 Allocation of Loans
--------------------
A loan to a Participant shall be allocated to the Participant's accounts.
The loan shall be withdrawn in the following order from the various
categories of contributions:
A. Unrestricted Matching Company Contributions and earnings, gain or loss
thereon,
B. Basic Pre-tax Contributions and earnings, gain or loss thereon,
C. Company Contributions and earnings, gain or loss thereon,
18
<PAGE>
D. Rollover Contributions and earnings, gain or loss thereon,
E. Supplemental Pre-tax Contributions and earnings, gain or loss thereon.
Restricted Matching Company Contributions, and earnings, gain or loss,
thereon, are not available for loans.
The balance remaining in each of the above categories of contributions must
be exhausted before funds may be withdrawn from the next following category
of contributions. In the event that the Participant has monies invested in
more than one fund in any given category, the loan will be withdrawn from
each fund on a pro-rata basis relative to the amount in each fund prior to
the withdrawal.
6.04 Repayment of Loans
------------------
A. Loans made under this Article shall be repaid by payroll deduction (or
by personal check in the case of a Transferred Participant) in equal
installments commencing in the payroll period following the payroll
period in which the loan is made. In addition to making such payments
a Participant may also make a lump sum payment equal to the
outstanding loan balance.
B. The maximum period over which a loan may be repaid is five (5) years
for any loan other than one for the purchase or construction of the
primary residence of a Participant, which shall be fifteen (15) years.
C. All loans shall bear a reasonable rate of interest, as determined by
the Company, for that type of loan. The Company's determination with
respect to any rate of interest shall be final. The rate shall be
established and monitored on a monthly basis to ensure that it
provides the Plan with a return commensurate with the prevailing
interest rate charged by persons in the business of lending money for
loans which would be made under similar circumstances.
D. Installment payments, including both principal and interest, shall be
credited to the Participant's accounts and allocated to the respective
investment funds in the same proportion as the Participant's then
current election for Pre-tax Contributions. In the event that the
Participant is not making basic Pre-tax Contributions, such individual
shall make a written election as to which investment fund(s) shall be
credited with loan repayments. In the absence of any written
election, loan repayments shall be credited to the Fixed Income Fund.
6.05 Notice of Delinquent Payment and Foreclosure
--------------------------------------------
If a Participant becomes ineligible to make further repayment by payroll
deduction while he has a Plan loan outstanding, the Participant shall be
permitted to continue repayment by means of direct payment on a monthly
19
<PAGE>
basis. Such a Participant shall retain the right to make a lump sum
repayment in accordance with Subsection 6.04(A).
If an installment payment is not made within fifteen (l5) days of its due
date, the Company shall give the Participant at his last known address
written notice of such payment delinquency. If such installment payment is
not made within sixty (60) days thereafter, the Company shall take
appropriate action in order to collect the remaining balance due on the
loan. In the event of a default, foreclosure on the note and attachment of
security shall not occur until a distributable event (as described in
Article 9) occurs under the Plan.
6.06 Termination of Service Prior to Repayment
-----------------------------------------
If a Participant dies or otherwise terminates Service prior to the date
that his loan is repaid in full, the Company shall deduct the unpaid loan
balance from such Participant's Total Accumulation before distributing the
remaining balance to the Participant or his Beneficiary.
6.07 Loan Administration
-------------------
The Participant loan program under this Plan shall be administered by the
Director of HR Services.
20
<PAGE>
ARTICLE 7. INVESTMENT FUNDS
- --------- ----------------
7.01 Fund Management
---------------
All contributions to the Plan made by the Participants and the Company and
any earnings, gain or loss thereon, shall be held in trust by a Trustee
appointed by the Company, or held under a Group Annuity contract issued by
the Company. Such trust shall in all respects meet the requirements of the
Code with respect to a qualified trust forming part of an employer's
profit-sharing plan. The Trustee shall maintain distinct and separate
investment funds, as described in Section 7.02.
7.02 Investment Funds and Investment Policy
--------------------------------------
A. There shall be nine (9) investment funds under the Plan as follows:
(1) The Fixed Income Fund shall have as its objective the safety
of capital and the attainment of reasonable current income.
(2) The Large Cap Growth Equity Fund shall have as its primary
objective the attaining of capital appreciation with current
income as an incidental objective only. Investments will be
primarily equity securities of domestic and foreign companies
with market capitalizations generally considered large
capitalization which have prospects for better than average
earnings growth potential than the overall market.
(3) The Large Cap Value Equity Fund shall have as its primary
objective the attaining of capital appreciation with current
income as an incidental objective only. Investment will be
primarily in equity securities of domestic and foreign companies
with market capitalizations generally considered large
capitalization which are under-priced relative to earnings
prospects, growth rate, cash flow and dividend paying ability.
(4) The Indexed Equity Fund is a passively managed stock fund
indexed to the S&P 500. The objective is to replicate the S&P
500 Index in terms of individual security selection and market
weight, resulting in performance equivalent to the domestic
market performance.
(5) The Mid Cap Blend Equity Fund shall have as its primary objective
long-term capital appreciation. Investments will represent
interests primarily in equity securities of domestic and foreign
companies with market capitalizations generally considered medium
capitalization which are believed to exhibit growth
opportunities.
(6) The Small Cap Equity Fund shall have as its objective to maximize
capital appreciation by investing primarily in equity securities
of domestic and foreign companies with market capitalizations
generally considered small capitalization.
21
<PAGE>
The fund seeks to invest in undervalued stocks with strong
fundamentals and positive business momentum.
(7) The International Equity Fund shall have as its objective to
maximize total return, consisting of both capital appreciation
and current income, through investment in a diversified portfolio
of non-U.S. equity securities. The fund seeks to achieve this
objective by investing in (1) non-U.S. markets that have the best
long-term performance potential and (2) stocks of non-U.S.
companies that can be purchased at a fair or an attractive price.
The fund is diversified by country, industry and issue.
(8) The Global Balanced Fund shall have as its objective to maximize
total return, consisting of both capital appreciation and current
income. The fund is a global balanced portfolio designed to
diversify investments across U.S. and non-U.S. stocks and bonds.
The fund seeks to achieve this objective by pursuing active asset
allocation strategies across global equity and fixed income
markets and active security selection within each market. Asset
allocation decisions are made within specific ranges which define
the minimum and maximum percentage allocation to each asset class
(stocks, bonds and cash).
(9) The John Hancock Stock Fund ("JH Stock Fund") shall have as its
objective to maximize total return through long-term capital
appreciation and to encourage ownership in the Company by
Participants, through investment in common stock of John Hancock
Financial Services, Inc.
The JH Stock Fund shall become effective as of March 1, 2000, or such
other date following the initial public offering of John Hancock
Financial Services, Inc. as shall be determined by the Company.
B. Each Participant shall make an election of the percentage of
contributions he desires to have placed in each Fund. Such elections
shall be made in accordance with procedures established by the Company
and shall be in multiples of one (1) percent. Percentages elected by
a Participant shall apply to all Contributions. Percentages elected
by a Participant shall apply to all Contributions except the
Restricted Matching Company Contributions, which shall be placed in
the JH Stock Fund. Any contributions credited to the account of a
Participant who has failed to make the election described in this
paragraph within the time prescribed will be placed in the Fixed
Income Fund.
C. A Participant (including a retired or terminated Participant who has
any account balance remaining in the Plan) may change at any time his
investment election with respect to contributions made after the
effective date of the change exclusive of the Restricted Matching
Company Contributions and earnings thereon. Such
22
<PAGE>
change shall be made for the next payroll period as is
administratively feasible after such election.
D. Notwithstanding the above, in order to comply with applicable
securities laws, the Company may restrict any Participant who is
designated by the Company as an "Insider" from either changing his
investment elections going into the JH Stock Fund, or transferring
amounts in or out of the JH Stock Fund, during certain blackout
periods established by the Company.
7.03 Transfer Between Investment Funds
---------------------------------
Except with respect to the Restricted Matching Company Contributions and
earnings thereon, each Participant may elect to transfer from one
investment fund to another investment fund part or all of his Total
Accumulation, exclusive of amounts allocated to a Participant loan;
provided that the number of such transfers effective in any calendar
quarter beginning on or after July 1, 1999, or in the period from May 1,
1999, through June 30, 1999, may not exceed three. For the purposes of the
foregoing proviso, all transfer elections effective on any single day shall
count as one transfer. The Restricted Matching Company Contributions must
remain in the JH Stock Fund only until distributed (i) upon a Participant's
Retirement, Death, or termination of Service, (ii) as required under the
terms of a Qualified Domestic Relations Order under Section 9.14, below, or
(iii) under Section 9.05, but only if the Participant is receiving Long-
Term Disability benefits under a Company-Sponsored employee welfare plan.
Any transfer of amounts in the Restricted Matching Company Contributions
shall be subject to all other terms and conditions of this Section 7.03.
The Company shall establish administrative rules for determining the
effective date of any such transfer. The value of the account transferred
shall be based on the next valuation on or immediately following the date
of the Participant's election. Notwithstanding the above, in order to
comply with applicable securities laws, the Company may restrict any
Participant who is designated by the Company as an "Insider" from
transferring amounts in or out of the JH Stock Fund, during certain
blackout periods established by the Company.
7.04 Valuation of Funds
------------------
The value of each investment fund shall be determined at least daily. Such
values shall be determined in accordance with generally accepted standards
and reported to the Company. For purposes of this Section, "value" shall
refer to the fair market value of the Large Cap Growth Equity Fund, the
Large Cap Value Equity Fund, the Indexed Equity Fund, the Mid Cap Blend
Equity Fund, the Small Cap Equity Fund, the International Equity Fund, the
Global Balanced Fund and the JH Stock Fund.
7.05 Allocation to Participant's Accounts
------------------------------------
At least once each week contributions to the Plan and any adjustment
resulting from a change in value of the contributions after the date of
transfer shall be allocated to each Participant's accounts. At least once
each month there shall be allocated to each Participant's accounts the
proportion of the net increase or decrease in the value of each investment
23
<PAGE>
fund since the previous valuation date which the value of each such account
on the current valuation date (exclusive of any part of such increase or
decrease) bears to the aggregate value of all accounts in each investment
fund on that date (exclusive of any part of such increase or decrease).
24
<PAGE>
ARTICLE 8. VESTING
- --------- -------
8.01 Each Participant shall be entitled to immediate full vesting of all
contributions made on his behalf to the Plan.
25
<PAGE>
ARTICLE 9. DISTRIBUTION OF PARTICIPANT'S SHARE
- --------- -----------------------------------
9.01 Events of Distribution
----------------------
Each Participant shall be entitled to the distribution of his Total
Accumulation in the amount and in the manner described herein upon his
death, attainment of age fifty-nine and one-half (59-l/2), Disability,
Retirement, or other termination of Service, and in the event of
termination of the Plan as described in Article 11; provided that any
distribution upon the Participant's attainment of age fifty-nine and one-
half (59-1/2) shall be subject to the limitations of section 9.04. All
distributions shall be made in cash, except that part of the Total
Accumulation maintained in the JH Stock Fund will be distributed, at the
Participant's request either in cash or in shares of John Hancock Financial
Services, Inc. stock.
9.02 Determination of Amount
-----------------------
The amount to be distributed will be based on the valuation, coincident
with or next preceding the date of distribution, of the Participant's Basic
Pre-tax, Supplemental Pre-tax, Post-tax, Matching Company, Rollover and
Company Contributions account balances. For the purpose of this Section
the date of distribution shall be the first date that a payment in any
amount is made under this Article.
9.03 Retirement
----------
Prior to his Retirement each Participant shall elect payment of the amount
to be distributed in an optional mode then authorized by the Company. If
no such election is made, the Company shall direct distribution in such
mode as it, in its sole discretion, deems appropriate. Such modes of
payment shall not include interest only, but otherwise may include the
following:
A. To receive the full amount of his Total Accumulation as a single sum
in the month following the month of his Retirement.
B. To leave the full amount of his Total Accumulation in the Investment
Funds and receive installment payments commencing at any time
following his Retirement but no later than the calendar year in which
he attains age seventy and one-half (70-1/2), provided, that any
amount remaining in the Funds pursuant to this election shall share in
the investment experience of the Funds. The amount of the installment
payments shall be as elected by the Participant, provided that the
total amount to be distributed each year to the Participant shall be
no less than the amount calculated in accordance with the following
paragraph.
If the Participant's interest is to be distributed in accordance with
Subsection (B) and the Participant elects monthly installments, then the
amount to be distributed in monthly installments prior to the calendar year
in which he attains seventy and one-half (70-1/2), must be at least $100.
The amount to be distributed each year beginning with the calendar year
26
<PAGE>
in which he attains seventy and one-half (70-1/2) must be at least an
amount equal to the quotient obtained by dividing the Participant's
remaining Total Accumulation by the life expectancy of the Participant or
joint and last survivor expectancy of the Participant and his Beneficiary.
Life expectancy and joint and last survivor expectancy are computed by the
use of the return multiples contained in section 1.72-9 of the Income Tax
Regulations. For purposes of this computation, the life expectancy of a
Participant and of his spouse (if any) may be recalculated no more
frequently than annually; however, the life expectancy of a non spouse
Beneficiary may not be recalculated each year. If the Participant's spouse
is not the Beneficiary, the method of distribution selected must assure
that at least fifty (50) percent of the present value of the amount
available for distribution is paid within the life expectancy of the
Participant.
A retired Employee, who has elected installment payments in accordance with
Subsection (B) may at any time make a withdrawal of all or a portion of his
remaining Total Accumulation.
Notwithstanding the above, a Participant who is actively employed need not
begin to receive his Total Accumulation until the month following the month
in which he retires.
9.04 Attainment of Age 59-l/2
------------------------
A Participant who has attained age fifty-nine and one-half (59-1/2) may
elect to receive a payment equal to all or a portion of his Basic Pre-tax,
Supplemental Pre-tax, Unrestricted Matching Company, Rollover and Company
Contributions including any earnings, gain or loss thereon. Should such
Participant withdraw all or a portion of his Basic Pre-Tax, Unrestricted
Matching Company or Company Contributions, he shall not be permitted to
have any Basic Pre-tax, Supplemental Pre-tax, Matching Company or Post-tax
Contributions made on his behalf for twenty-six (26) weeks from the date of
such withdrawal. At the expiration of any such period, contributions will
automatically resume in accordance with the Participant's salary reduction
and/or payroll deduction election then in effect under Article 4.
9.05 Disability
----------
The Company shall determine for the purposes of this Plan whether a
Participant has incurred a Disability. Such Participant may elect to
receive his entire vested interest in the Plan in one of the optional modes
of payment then authorized under Section 9.03. If no such election is
made, the Company shall direct distribution in such mode as it, in its sole
discretion, deems appropriate. Such determinations by the Company shall be
final and binding upon all persons who have any interest in this Plan.
9.06 Death
-----
A. Designation and changes in designation of a Beneficiary may be made
during the lifetime of a Participant (including a retired or
terminated Participant) in writing signed by him and received by the
Company. A new designation will take effect as of the time the
27
<PAGE>
written notice is executed if it has been received by the Company,
whether or not a Participant is alive at the time of such receipt, but
will be subject to any payment directed or other action taken by the
Company prior to the receipt of such designation. Receipt shall be
considered to have taken place as of the time the written notice is
signed by the Secretary or other authorized agent of the Company.
The designation of a non spouse Beneficiary by a married Participant
must be consented to in writing by the Participant's spouse. The
spouse's consent to a designation must be witnessed by a notary
public. This consent requirement shall be waived if the Participant
establishes to the satisfaction of a Plan representative that such
written consent may not be obtained because there is no spouse or the
spouse cannot be located. Any consent necessary under this provision
will be valid only with respect to the spouse who signs the consent.
In the absence of such written spousal consent, a Participant who is
married at the time of death shall be deemed to have designated his
spouse as the Beneficiary.
B. If a Participant dies after distribution of his interest in the Plan
has commenced, the remaining portion of such interest will continue to
be distributed to the Beneficiary at least as rapidly as under the
method of distribution being used prior to the Participant's death.
If a Participant dies before distribution of his interest commences,
the Participant's entire interest will be distributed not later than
five (5) years after the Participant's death except to the extent that
an election is made to receive distributions in accordance with (1) or
(2) below:
(1) if any portion of the Participant's interest is payable to a
Beneficiary, distributions may be made in substantially equal
installments over the life or life expectancy of the Beneficiary
commencing no later than one (1) year after the Participant's
death;
(2) if the Beneficiary is the Participant's surviving spouse, the
date distributions are required to begin in accordance with (1)
above shall be no later than the date the Participant would have
attained age seventy and one-half (70 1/2); and, if the spouse
dies before payments begin, subsequent distributions shall be
made as if the spouse had been the Participant.
For purposes of the preceding paragraph, payments will be calculated
by use of the return multiples specified in section 1.72-9 of the
Income Tax Regulations. Life expectancy of a surviving spouse may be
recalculated annually; however, in the case of any other Beneficiary,
such life expectancy will be calculated at the time payment first
commences without further recalculation.
A Participant's interest in the Plan shall be distributed in
accordance with a written election made by (1) the Participant, or, in
the absence of such an election by the Participant, (2) by the
28
<PAGE>
Beneficiary of one of the optional modes of payment then authorized by
the Company. In the event no such election is made, or if the
Beneficiary is designated by the Company in accordance with the
following paragraph, the Company shall direct the manner of
distribution.
If no Beneficiary designation is then in effect, or there is no
designated Beneficiary then living, the Beneficiary shall be the
Participant's surviving spouse or, if none, the Participant's estate.
If a designated Beneficiary has failed to submit a written election
within six (6) months of a Participant's death, the Company may in its
sole discretion pay a portion of such benefit, not to exceed $5,000,
to the Participant's spouse, or if such spouse shall not be living, an
individual who was a dependent of the Participant, or anyone who can
prove to the Company that he is equitably entitled to payment for
expenses incurred for the Participant's maintenance, illness or
burial. Where no written election has been submitted within six (6)
months of a Participant's death, the Company shall transfer the
balance of any benefit payable under this Plan to the Fixed Income
Fund described in Section 7.02.
If a designated Beneficiary fails to submit a written election within
one (1) year of the death of the Participant who designated him, his
interest in such benefit shall terminate. The Company shall
thereafter direct the payment of such benefit to the secondary
Beneficiary, if any, designated by the Participant, and if there is no
secondary Beneficiary the Company shall direct the payment of such
benefit in a single sum to the legal representative of the
Participant's estate.
C. If any payments are contingent upon the prior death of any Beneficiary
or other payee, the surviving Beneficiary or other payee entitled to
receive such payments shall furnish due written proof of such death to
the Company. The Company shall not in any case be liable for any
payment it may direct in regular course prior to the receipt of such
proof. The Company shall not be bound by any trust, deed or
partnership agreement and shall not be liable for the application of
the monies by a trustee Beneficiary or any other person.
D. The exercise by a Participant of any rights and privileges under the
Plan shall not require notice to, nor the knowledge or consent of, any
non spouse Beneficiary.
9.07 Termination of Service
----------------------
Upon termination of his Service for reasons other than those described in
Sections 9.03, 9.05 and 9.06, a Participant shall receive payment of his
total interest in the Plan in a single sum as soon as possible after the
date of his termination if his total account balance under the Plan
(including any outstanding Participant loan amount) does not exceed $5,000.
If the terminating Participant's account balance exceeds $5,000, a single
lump sum payment shall be made as soon as possible after the date of his
termination only upon the election of the Participant.
29
<PAGE>
If a terminating Participant does not receive his account balance upon
termination, the terminated Participant may elect at any time thereafter to
make a withdrawal of all or a portion of his remaining account balance.
In no event may a terminated Participant defer distribution in a manner
which would violate the distribution restrictions for retiring Participants
imposed under Section 9.03.
9.08 Eligible Rollover Distributions
-------------------------------
A. This Section applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this Section, a
distributee may elect, at the time and in the manner prescribed by the
Company, to have any portion of an eligible rollover distribution that
is equal to at least $500 paid directly to a single eligible
retirement plan specified by the distributee in a direct rollover.
B. Definitions:
(i) Eligible rollover distribution: An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period
of ten years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the Code;
and the portion of any distribution that is not includible in
gross income.
(ii) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in section 408(a) of the
Code, an individual retirement annuity described in section
408(b) of the Code, an annuity plan described in section 403(a)
of the Code, or a qualified trust described in section 401(a) of
the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual
retirement annuity.
(iii) Distributee: A distributee includes an Employee or former
Employee. In addition, (a) the surviving spouse of a present or
former Employee, and (b) the spouse or former spouse of a
present or former Employee, who is the alternate payee under a
qualified domestic relations order, as defined in section 414(p)
of the Code, are distributees with regard to the interest of the
spouse or former spouse.
30
<PAGE>
(iv) Direct rollover: A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.
9.09 Disappearance After Payments Commence
-------------------------------------
If any payment under this Plan cannot be made to any Participant or
Beneficiary because his whereabouts are unknown to the Company, the Company
shall transfer that payment and any balance of the benefit payable under
this Plan to the Fixed Income Fund as described in Section 7.02 until such
time as payment of the benefit can be made.
If such payments cannot be resumed within three (3) years of the date of
the last payment tendered to him, the interest of such Participant or
Beneficiary shall terminate. The Company shall thereafter direct a payment
of the remaining total benefit in a single sum to the Beneficiary
designated by such Participant, if any, otherwise such payment shall be
directed, at the Company's sole discretion, to the spouse of such
Participant or Beneficiary, or if none, any individual related to the
Participant or Beneficiary.
9.10 Return to Service
-----------------
If a Participant who is receiving payments under the terms of Section 9.03
subsequently becomes an Employee, General Agent, Sales Supervisor, Agent or
Clerk eligible for contributions under the Plan, he shall not be entitled
to receive any further payments during such eligibility except as provided
by Section 9.04. When such eligibility terminates, distributions shall be
made in accordance with the terms of this Article.
9.11 Commencement of Benefits
------------------------
Payment of benefits to a Participant shall, unless he otherwise elects in
writing, begin no later than the sixtieth (60th) day after the latest of
the close of the calendar year in which:
A. the Participant attains his Normal Retirement Date;
B. the Participant terminates his Service; or
C. occurs the tenth (10th) anniversary of the year in which the
Participant commenced participation in the Plan.
9.12 Election of Immediate Distribution
----------------------------------
If a distribution is one to which sections 401(a)(11) and 417 of the
Internal Revenue Code do not apply, such distribution may commence less
than 30 days after the notice required under section 1.411(a)-11(c) of the
Income Tax Regulations is given, provided that:
(1) the plan administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 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
31
<PAGE>
(2) the Participant, after receiving the notice, affirmatively elects
a distribution.
9.13 Distribution to Alternate Payee
-------------------------------
Distributions may be made to an Alternate Payee under a Qualified Domestic
Relations Order (QDRO) as defined in section 414(p) of the Internal Revenue
Code prior to the commencement of distributions to the Participant who is
party to the QDRO provided:
(1) the Participant has attained Earliest Retirement Age as defined in
section 414(p)(4)(B);
(2) the distributions to the Alternate Payee are computed as if the
Participant retired on the date distributions commenced; and
(3) the distributions are in a form permitted under the Plan.
Notwithstanding the foregoing, Distributions may be made to an Alternate
Payee pursuant to the terms of a QDRO prior to the Participant's Earliest
Retirement Date.
9.14 Transferred Participants
------------------------
With respect to a Transferred Participant who becomes eligible to
participate in TIP, his account balance shall be transferred to TIP as soon
as administratively possible after he becomes eligible to participate.
A Transferred Participant who becomes an employee of a Company subsidiary
or affiliated corporation which sponsors an individual account plan shall
be eligible to have his account balance under this Plan transferred to such
plan provided that such other plan accepts the direct transfer of the
account balance.
32
<PAGE>
ARTICLE l0. ADMINISTRATIVE AND FIDUCIARY PROVISIONS
- ---------- ---------------------------------------
10.01 Named Fiduciary
---------------
The Company shall be the named fiduciary and the administrator of the Plan
for purposes of ERISA and shall have the authority to control and manage
the operation and administration of the Plan. The Company shall have the
power to adopt such rules and regulations as it may deem necessary or
appropriate for the efficient operation and administration of the Plan.
Such rules and regulations shall be in writing and shall be consistent with
the terms of the Plan and the requirements of ERISA. The Company shall
interpret the Plan and determine all questions arising under it. Any such
determination by the Company shall be binding on all persons affected
thereby.
10.02 Delegation
----------
In carrying out its fiduciary and administrative responsibilities under the
Plan, the Company may, through its Board of Directors:
A. designate other persons as named fiduciaries with respect to
particular matters of administration or operation of the Plan;
B. enter into agreements with any or all of such named fiduciaries or
authorize them among themselves to enter into agreements for the
allocation of fiduciary responsibilities among some or all of the
named fiduciaries;
C. allocate such of its responsibilities as it deems appropriate to any
person or persons;
D. designate any person or persons to carry out such responsibilities
whether or not fiduciary in nature;
E. appoint one or more investment managers to manage any assets of the
Plan; and
F. employ one or more persons to render advice with regard to such
responsibilities.
The Company or any such person may serve in more than one fiduciary
capacity.
10.03 Investment Policy
-----------------
The Company shall determine an investment policy appropriate to the
objectives of each of the Funds as described in Section 7.02 and shall,
consistent with such policy and without restriction as to the class of
securities or other property, select the specific investments to be made or
disposed of under the Fixed Income Fund, and shall direct the Trustee in
writing to make or dispose of such investments.
33
<PAGE>
10.04 Investment Manager
------------------
The Company shall appoint one or more Investment Manager(s) who shall
select the specific investments to be made or disposed of under the Large
Cap Growth Equity Fund, the Large Cap Value Equity Fund, the Indexed Equity
Fund, the Mid Cap Blend Equity Fund, the Small Cap Equity Fund, the
International Equity Fund and the Global Balanced Fund. Such investments
shall be consistent with the investment policy established by the Company
for such funds but without restriction as to class of securities or other
property. In those cases where such investments are to be held directly by
the Trustee, the Investment Manager(s) for the applicable funds shall
direct the Trustee in writing to make or dispose of such investments and
shall report in writing to the Company after the consummation thereof the
amount purchased and the amount sold or otherwise disposed of in each
transaction. The Investment Manager(s) shall periodically submit a report
in scope and detail satisfactory to the Company, of the securities or
properties held in such funds and a summary of all securities or properties
purchased or disposed of since the last such summary.
10.05 Investment Review
-----------------
The Company shall periodically, but not less than annually, review all
completed investment transactions, the portfolio appraisal, and the
investment performance of the Funds. The Company shall monitor the
performance and services of the Investment Manager(s), but in no event
shall the Company direct, approve or ratify specific investment
transactions made by the Investment Manager(s).
10.06 Claims
------
A claim or request for a Plan benefit must be filed with the Company in a
manner prescribed by the Company. If a claim is denied, in whole or in
part, the Company shall notify the claimant in writing of the reasons for
the denial. Such notice shall refer to the pertinent Plan provisions on
which the denial is based; describe and explain the need for any additional
material or information necessary to perfect the claim; and call attention
to or explain the Plan's claim review procedure.
10.07 Claims Appeal
-------------
A claimant, or his duly authorized representative, may appeal the denial of
a claim by submitting a written request for a review to the Company within
120 days after the notice of denial has been received by the claimant.
In the course of such a review, the claimant, or his representative, may
review pertinent documents and may submit issues and comments in writing to
the Company.
10.08 Decision on Appeal
------------------
The Company shall notify the claimant of its decision within sixty (60)
days after the Company's receipt of the request for review. The decision
shall be in writing and shall include specific reasons for the decision and
specific references to the provisions of the Plan on which the decision is
34
<PAGE>
based. The time for a decision may be extended to 120 days in special
circumstances.
10.09 Elections
---------
All claims, elections and designations that Participants are required or
permitted to make under the Plan shall be made in the manner prescribed by
the Company.
10.10 Necessary Acts
--------------
All parties to this Plan and all persons claiming any interest whatsoever
hereunder agree to perform any and all acts and execute any and all
documents and papers which may be necessary or desirable for the carrying
out of this Plan or any of its provisions.
10.11 Binding on Heirs
----------------
This Plan's provisions shall be binding upon the heirs, executors,
administrators, successors and assigns of any and all parties hereto
present and future.
10.12 Plan Does Not Create or Modify Employment Relationship
------------------------------------------------------
The establishment and maintenance of this Plan shall not be construed as
creating or modifying any contract between an Employer and any of its
Employees.
10.13 No Alienation or Assignment
---------------------------
No Participant or Beneficiary shall have the right to alienate or assign
his interest under this Plan other than as provided in Article 6. No such
interest shall otherwise be subject to attachment, execution, garnishment,
or other equitable or legal process. The Company shall take whatever
action may be necessary to preserve such interest for the benefit of such
Participant or Beneficiary.
This Section shall not preclude the Company from complying with a court
order requiring deduction from the benefits of a Participant in pay status
for alimony or support payments.
This Section shall not preclude the Company from complying with a qualified
domestic relations order (as defined in section 414(p) of the Code)
relating to the creation, assignment, or recognition of a right to any
benefit payable to a Participant, or with any domestic relations order
entered before January 1, 1985, if the payment of benefits pursuant to the
order has commenced as of such date.
10.14 Employer Not Responsible for Benefits
-------------------------------------
All benefits payable under this Plan shall be provided solely from the
trust described in Article 7, and the Employer assumes no liability or
responsibility for the adequacy of the trust funds. In the event that it
becomes impossible for the Company to perform any act under this Plan,
35
<PAGE>
that act shall be performed which in the judgment of the Company will most
nearly carry out the intent and purpose of this Plan.
10.15 Exclusive Benefit and Return of Contributions
---------------------------------------------
In no event shall contributions made under the Plan or any part of the Plan
assets be paid or revert to the Company or be used for or directed to any
purpose other than the exclusive benefit of Participants and Beneficiaries,
except as provided in the following paragraph.
All Company Contributions shall be returned to the Company in the event
that the Plan initially fails to meet the qualification requirements of the
Code. In the case of a Company contribution which is made by mistake of
fact, such contribution, to the extent of the mistake, may be returned to
the Company within one (1) year after its payment. If a contribution is
disallowed as a deduction under section 404 of the Internal Revenue Code,
such contribution, to the extent disallowed, may be returned to the Company
within one (1) year after its disallowance.
10.16 Administrative Costs
--------------------
All reasonable and proper costs of administering the Plan including, but
not limited to, counsel fees and the fees of any trustee or fiduciary may
be paid from assets of the Plan, but such costs shall be paid by the
Company if the same cannot be paid from assets of the Plan. Each
Participating Subsidiary or Affiliated Corporation may be required to share
in such cost as determined by the Company.
36
<PAGE>
ARTICLE ll. AMENDMENT AND TERMINATION
- ---------- -------------------------
11.01 Right to Amend Plan
-------------------
The Board of Directors of the Company, or a duly delegated Committee, at
a regularly constituted Board or Committee meeting in accordance with the
Board's or Committee's customary procedures for conducting business, may
elect to amend the Plan at any time; provided, that no such amendment shall
be inconsistent with the requirements of ERISA or the Code relating to
qualified profit-sharing plans, or shall cause any reduction in the amounts
theretofore credited to any Participant.
Notwithstanding the generality of the foregoing, for the two-year period
following the date a Change of Control occurs, no such amendment shall
serve (a) to reduce the maximum percentage of Basic Pre-Tax Contributions
permitted under Article 4, Section 4.01, below the amount in effect on the
day immediately preceding the date the Change of Control occurred, (b) to
reduce the Company's obligation to make Matching Company Contributions
under Article 4, Section 4.06, below the level in effect on the day
immediately preceding the date the Change of Control occurred, or (c) to
impose a vesting period for Matching Company Contributions.
11.02 Right to Suspend or Discontinue Contributions or Terminate Plan
---------------------------------------------------------------
The Company reserves the right at any time, subject to the terms of any
collective bargaining agreement, to terminate the Plan as well as to
suspend contributions hereunder or discontinue them altogether, except that
no such termination or suspension shall first be effective within two years
after the date a Change of Control occurs. In the event of such a
termination or discontinuance or of a partial termination, the Funds shall
be valued, and each Participant shall receive distribution of his interest
in the Plan in such manner as the Company shall deem appropriate.
11.03 Merger, Consolidation or Transfer
---------------------------------
This Plan shall not be merged or consolidated with, nor its assets or
liabilities transferred to, any other plan unless each Participant (if the
Plan then terminated) is entitled to receive a benefit immediately after
the merger, consolidation or transfer which is equal to or greater than the
benefit he would have been entitled to receive immediately before such
event (if the Plan had then terminated).
37
<PAGE>
ARTICLE 12. TOP-HEAVY PLAN REQUIREMENTS
- ---------- ---------------------------
12.01 Superseding Article
-------------------
If the Plan is or becomes Top-Heavy in any Plan Year, the provisions of
this Article will supersede any conflicting provision in the Plan for such
Plan Year.
12.02 Minimum Contributions
---------------------
The following requirement shall apply for any Plan Year in which the Plan
is Top-Heavy:
A. Except as otherwise provided in (B) below, Company Contributions
allocated under this and any other defined contribution plan of the
Company on behalf of any Participant who is not a Key Employee shall
not be less than three (3) percent of such Participant's Compensation
or, if a lesser amount, the largest percentage of Company
contributions, as a percentage of the first $200,000 of the Key
Employee's Compensation, allocated on behalf of any Key Employee for
that year.
The minimum allocation is determined without regard to any Social
Security contribution. This minimum allocation shall be made even
though, under other Plan provisions, the Participant would not
otherwise be entitled to receive an allocation, or would have received
a lesser allocation for the year because of the Participant's failure
to provide for Basic Pre-tax Contributions to the Plan.
B. The provision in (A) above shall not apply to any Participant who was
not employed by the Company on the last day of the Plan Year.
12.03 Definitions
-----------
For purposes of this Article, the following terms shall have the meaning as
described below:
A. Key Employee - any employee or former employee who at any time
------------
during the Plan Year containing the Determination Date, or the four
(4) preceding Plan Years, is or was (1) an officer of the employer
having annual compensation for such Plan Year which is in excess of
150 percent of the dollar limit in effect under Code section 415(c)
for the calendar year in which such Plan Year ends; (2) an owner (or
considered as owning within the meaning of section 318) both more than
one-half (1/2) percent interest as well as one of the ten (10) largest
interests in the employer and having annual compensation greater than
the dollar limit in effect under Code section 415(c)(1)(A) for the
year; (3) a five (5) percent owner of the employer; or (4) a one (1)
percent owner of the employer who has annual compensation of more than
$150,000. For purpose of determining the five (5) percent and one (1)
percent
38
<PAGE>
owners, neither the aggregation rules nor the rules of subsection (b),
(c) and (m) of Code section 414 apply. Beneficiaries of an Employee
acquire the character of the Employee who performed service for the
employer. Also, inherited benefits will retain the character of the
benefits of the Employee who performed services for the employer.
B. Top-Heavy Plan: For any Plan Year, this plan is Top-Heavy if any of
---------------
the following conditions exists:
(1) If the Top-Heavy Ratio for this Plan exceeds sixty (60) percent
and this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group of plans.
(2) If 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 sixty (60) percent.
(3) If this Plan is a part of a Required Aggregation Group and part
of a Permissive Aggregation Group of plans and the Top-Heavy
Ratio for the Permissive Aggregation Group exceeds sixty (60)
percent.
C. Top-Heavy Ratio:
----------------
(1) The Top-Heavy Ratio is a fraction, the numerator of which is the
sum of account balances under the defined contribution plans for
all Key Employees and the Present Value of accrued benefits under
the defined benefit plans for all Key Employees, and the
denominator of which is the sum of the account balances under the
defined contribution plans for all Participants and the Present
Value of accrued benefits under the defined benefit plans for all
Participants. Both the numerator and the denominator of the Top-
Heavy Ratio are adjusted for any distribution of an account
balance or an accrued benefit made in the five (5) year period
ending on the Determination Date and any contribution due but
unpaid as of the Determination Date.
(2) For purposes of (1) 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
twelve (12) month period ending on the Determination Date. The
account balances and accrued benefits of a Participant who is not
a Key Employee but who was a Key Employee in a prior year 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 section 416 of the
Code and the regulation thereunder. Deductible employee
contributions will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating plans,
39
<PAGE>
the value of account balances and accrued benefits will be
calculated with reference to the Determination Dates that fall
within the same calendar year.
D. Permissive Aggregation Group: The Required Aggregation Group of plans
plus any other plan or plans of the Company or its subsidiaries or
affiliates which, when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements of
sections 401(a)(4) and 410 of the Code.
E. Required Aggregation Group:
---------------------------
(1) Each qualified plan of the Company or its subsidiaries or
affiliates in which at least one Key Employee participates, and
(2) any other qualified plan of the Company or its subsidiaries or
affiliates which enables a plan described (1) to meet the
requirements of sections 401(a)(4) or 410 of the Code,
(3) for purposes of (1) and (2) above, the Company or its subsidiaries
shall include all employers aggregated under Code sections 414(b),
(c), or (m).
F. Determination Date: For any Plan Year subsequent to the first Plan
------------------
Year, the last day of the preceding Plan Year. For the first Plan
Year of the Plan, the last day of that year.
G. Valuation Date: The last day of the Plan Year.
---------------
H. Present Value: Present Value of benefits accrued under a defined
-------------
benefit plan shall be based on the interest and mortality rates
specified in the defined benefit plan document.
I. Non-Key Employee: any Employee who is not a Key Employee. Non-Key
----------------
Employees include Employees who are former Key Employees.
12.04 Top-Heavy Contributions
-----------------------
If the Plan is or becomes Top-Heavy in any plan year, in the case of
Participants who are also participants in any defined benefit plan of the
Company or its subsidiaries which also is or becomes top-heavy, such
Participants shall accrue the minimum accrued benefit under any such
defined benefit plan in lieu of any Minimum Contribution under Section
12.02.
40
<PAGE>
EXHIBIT 99(ii)
THE INVESTMENT-INCENTIVE PLAN
For John Hancock Employees
Amended and Restated, Effective November 1, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 1 General 1
ARTICLE 2 Definitions 2
ARTICLE 3 Eligibility to Participate 7
ARTICLE 4 Contributions 9
ARTICLE 5 Withdrawals 16
ARTICLE 6 Loans 19
ARTICLE 7 Investment Funds 22
ARTICLE 8 Vesting 25
ARTICLE 9 Distribution of Participant's Share 26
ARTICLE 10 Administrative and Fiduciary Provisions 33
ARTICLE 11 Amendment and Termination 37
ARTICLE 12 Top-Heavy Plan Requirements 38
</TABLE>
<PAGE>
THE INVESTMENT-INCENTIVE PLAN
For John Hancock Employees
ARTICLE 1. GENERAL
- --------- -------
1.01 Title
-----
The Company has established "The Investment-Incentive Plan for John Hancock
Employees", hereinafter called the "Plan".
1.02 Discretionary Powers
--------------------
The provisions of this Plan shall be interpreted and the Plan shall be
administered only in a manner consistent with the requirements of the
Employee Retirement Income Security Act of 1974 ("ERISA") and the United
States Internal Revenue Code ("Code") relating to qualified profit-sharing
plans, as each may be amended from time to time.
1.03 Effective Date
--------------
The effective date of the Plan is September 9, 1968.
1.04 Applicable Law
--------------
The provisions of this Plan shall be governed by the laws of the
Commonwealth of Massachusetts, except as otherwise provided by ERISA.
1
<PAGE>
ARTICLE 2. DEFINITIONS
- --------- -----------
2.01 Where the context requires, single nouns shall include the plural, and
the masculine gender shall include the feminine.
2.02 "Company" shall mean the John Hancock Mutual Life Insurance Company.
Effective as of the initial public offering of John Hancock Financial
Services, Inc. ("JHFS"), the Company shall mean John Hancock Financial
Services, Inc.
2.03 "Insurer" shall mean, until the initial public offering of JHFS, the
John Hancock Mutual Life Insurance Company, and thereafter, John Hancock
Life Insurance Company, in its capacity as an insurance company
incorporated under the laws of the Commonwealth of Massachusetts.
2.04 "Employee" shall mean a salaried employee of the Company or a United
States Citizen so employed by a Participating Subsidiary or Affiliated
Corporation, and effective December 31, 1995, shall include a Ford Group
Office Clerical Employee, but shall exclude an Agency Manager, a Sales
Manager, a Marketing Representative, a General Agent or an employee of or
in the office of a General Agent, and shall include retired Employees;
except that until the payroll period beginning after April 21, 2000, Clerks
of a General Agent who were previously employed by the Company in its
Managerial Agencies, shall continue to be considered Employees under the
Plan.
2.05 "Participant" shall mean an Employee who is eligible to have
contributions made on his behalf to the Plan in accordance with Article 4,
but shall not include a retired Employee except as otherwise provided in
the Plan.
2.06 "Transferred Participant" shall mean a Participant who ceases to be an
Employee but who continues in Service.
2.07 "Beneficiary" shall mean the person designated as provided in Section
9.06 hereof to receive benefits under this Plan after the death of the
Participant.
2.08 "Service" shall mean all periods of employment, whether or not such
employment is continuous, as an employee of the Company or any of the
Company's subsidiaries or affiliates, all service as a General Agent, a
full-time life insurance salesman or employee of or in the office of a
General Agent, and all service with a predecessor employer to the extent
required by law.
2.09 "Year of Service" shall mean a twelve (12) month period beginning with
the Employee's employment commencement date or a subsequent anniversary
thereof during which the Employee has not less than 1,000 Hours of Service,
whether or not continuous. For purposes of this section, an Employee who
would be credited with at least one (1) Hour of Service during a week in
accordance with Section 2.10 will be credited with forty-five (45) Hours of
Service for that week.
2.10 "Hours of Service" shall mean:
(1) Each hour for which an employee is paid, or entitled to payment, for
the performance of duties for the employer. These hours shall be
2
<PAGE>
credited to the employee for the calendar year in which the duties are
performed; and
(2) Each hour for which an employee is paid, or entitled to payment, by
the employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence.
The Company may determine on a non-discriminatory basis that no more
than 501 Hours of Service shall be credited under this paragraph for
any single year (whether or not such period occurs in a single year).
Hours under this paragraph shall be calculated and credited pursuant
to section 2530.200b-2 of the Department of Labor Regulations which
are incorporated herein by this reference; and
(3) Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the employer. The same Hours of
Service shall not be credited both under paragraph (1) or paragraph
(2), as the case may be, and under this paragraph (3). These hours
shall be credited to the Employee for the year or years to which the
award or agreement pertains rather than the year in which the award,
agreement or payment is made.
2.11 "Compensation" shall mean the amount paid in any calendar year by the
Company to an Employee on account of his service in such capacity including
pay for overtime, Basic Pre-tax and Supplemental Pre-tax Contributions to
the Plan on his behalf but exclusive of any amount paid as 1) Salary
Continuance at a rate less than full pay, 2) Accident & Sickness benefits,
3) Long Term Disability benefits or 4) accrued vacation pay which is paid
to the Participant in a lump sum following the date of the Participant's
termination of service with the Company, or 5) a discretionary award or
other incentive payment (unless the document under which the payment is
provided specifically states that such payment is to be included as
Compensation for the purposes of the Plan).
For Plan Years beginning on or after January 1, 1989, and before January 1,
1994, the annual Compensation of each Participant taken into account for
determining all benefits provided under the Plan for any Plan Year shall
not exceed $200,000. This limitation shall be adjusted by the Secretary of
the Treasury at the same time and in the same manner as under section
415(d) of the Code, except that the dollar increase in effect on January 1
of any calendar year is effective for Plan Years beginning in such calendar
year and the first adjustment to the $200,000 limitation is effective on
January 1, 1990.
For Plan Years beginning on or after January 1, 1994, the annual
Compensation of each Participant taken into account for determining all
benefits provided under the Plan for any Plan Year shall not exceed
$150,000, as adjusted for increases in the cost-of-living in accordance
with section 401(a)(17)(B) of the Code.
In determining the Compensation of a Participant for purposes of this
limitation, the rules of section 414(q)(6) of the Code 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 year. If, as a result of the
3
<PAGE>
application of such rules the adjusted annual Compensation 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.
If Compensation for any prior Plan Year is taken into account in
determining a Participant's allocations for the current Plan Year, the
Compensation for such prior Plan Year is subject to the applicable annual
compensation limit in effect for that prior period. For this purpose, in
determining allocations in Plan Years beginning on or after January 1,
1989, the annual Compensation limit in effect for Plan Years beginning
before that date is $200,000. In addition, in determining allocations in
Plan Years beginning on or after January 1, 1994, the annual Compensation
limit in effect for Plan Years beginning before that date is $150,000.
For purposes of the Code section 415 limitation described in Section 4.11,
the Code section 416 minimum contribution provision in Section 12.02A, the
limitation on Basic Pre-tax Contributions and Supplemental Pre-tax
Contributions under Code section 401(k) and the limitations on Matching
Company Contributions and Post-tax Contributions under Code section 401(m),
"Compensation" shall include any discretionary award paid in a calendar
year which would otherwise be excluded under the first paragraph of this
Section.
2.12 "Retirement" shall mean actual retirement under a retirement plan of the
Company.
2.13 "Normal Retirement Date" shall mean the first day of the month in which
a Participant attains age sixty-five (65), or the first day of the month
following the Participant's completion of five (5) Years of Service,
whichever is later.
2.14 "Plan Year" shall mean the calendar year.
2.15 "Disability" shall mean an Employee's permanent physical or mental
incapacity to perform the duties of his own occupation due to illness or
disease and which qualifies an individual for wage replacement benefits
under the Company's Salary Continuance Plan or Accident and Sickness
Insurance or benefits under the Long Term Disability coverage of a Company-
sponsored employee welfare plan.
2.16 "Total Accumulation" shall mean the sum of a Participant's Basic Pre-
tax Contributions, Supplemental Pre-tax Contributions, Post-tax
Contributions, Matching Company Contributions, Rollover Contributions, and
Profit Sharing Contributions, as described in Article 4, including any
earnings, gain or loss thereon. For the purpose of the loan provisions as
described in Article 6, Total Accumulation shall not include Post-tax
Contributions and any earnings, gain or loss thereon.
2.17 "Foreign Subsidiary or Affiliated Corporation" shall mean a corporation
or similar entity which constitutes a foreign affiliate of the Company
within the meaning of Section 3121(1) of the Code and in respect of which
the Company entered into an agreement under Section 3121(1) of the Code;
provided, the Company has approved the treatment of United States citizens
employed by such subsidiary as employees hereunder upon such
4
<PAGE>
conditions as to action by the foreign subsidiary with respect to such
treatment as the Company may require.
2.18 "Domestic Subsidiary or Affiliated Corporation" shall mean a corporation
which is a subsidiary or affiliated corporation of the Company created or
organized in the United States or under the law of the United States or of
any state, including the District of Columbia.
2.19 "Participating Subsidiary or Affiliated Corporation" shall mean a Domestic
Subsidiary or Affiliated Corporation or a Foreign Subsidiary or Affiliated
Corporation, the inclusion of which in the Plan has been approved by the
Company upon such conditions with respect to adoption of the Plan or
contributions to its cost by the subsidiary or affiliate as the Company may
require.
2.20 "Ford Group Office Clerical Employee" shall mean a Participant who is an
office clerical employee, including stock boys and janitorial employees,
employed by the Company at its facility at 3200 Greenfield, Dearborn,
Michigan, but excluding all technical employees, managerial employees,
professional employees, confidential employees, outside investigators,
guards and supervisors as defined in the National Labor Relations Act.
2.21 "General Agent" shall mean any person who is under a contract with the
Company or its subsidiary Signator Insurance Agency, Inc., as a General
Agent, and who is a member of the General Agents' Association, excluding
any General Agent whose General Agent's contract is written on an
Affiliated General Agent form.
2.22 A "Change of Control" shall be deemed to have occurred if:
(i) any Person (as defined below) has acquired "beneficial ownership"
(within the meaning of Rule 13d-3, as promulgated under Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
securities of the Company representing 30% or more of the combined Voting
Power (as defined below) of the Company's securities;
(ii) as a result of a solicitation subject to Rule 14a-11 under the
Exchange Act (or any successor rule thereto), the persons who were
directors of the Company immediately before such solicitation shall cease
to constitute at least a majority of the Board or the Board of Directors of
any successor to the Company; or
(iii) the stockholders of the Company approve a merger, consolidation,
share exchange, division, sale or other disposition of substantially all of
the assets of the Company (a "Corporate Event"), as a result of which the
shareholders of the Company immediately prior to such Corporate Event (the
"Company Shareholders") shall not hold, directly or indirectly, immediately
following such Corporate Event a majority of the Voting Power of (x) in the
case of a merger or consolidation, the surviving or resulting corporation,
(y) in the case of a share exchange, the acquiring corporation or (z) in
the case of a division or a sale or other disposition of substantially all
of the Company's assets, each surviving, resulting or acquiring
corporation.
5
<PAGE>
A specified percentage of "Voting Power" of a company shall mean such
number of the Voting Securities as shall enable the holders thereof to cast
such percentage of all the votes which could be cast in an annual election
of directors and "Voting Securities" shall mean all securities of a company
entitling the holders thereof to vote in an annual election of directors.
6
<PAGE>
ARTICLE 3. ELIGIBILITY TO PARTICIPATE
- --------- --------------------------
3.01 Post-tax Contributions and Profit Sharing Contributions
-------------------------------------------------------
Each Employee shall become a Participant for the purpose of making Post-tax
Contributions by payroll deduction on the first day of the first payroll
period following the completion of six (6) months of Service.
Prior to January 1, 1997, each such Employee shall be eligible for a Profit
Sharing Contribution on the first day of the first biweekly payroll period
following the completion of two (2) Years of Service, based on his
Compensation received from the first date he is so eligible, through the
end of that calendar year, provided he remains in Service on December 31st
of that calendar year, or retires or dies during the calendar year. On and
after January 1, 1997, an Employee other than a Ford Group Office Clerical
Employee shall no longer be eligible for a Profit Sharing Contribution
based on his compensation received on and after January 1, 1997. For the
1996 Plan Year an Employee of HealthPlan Management Services, Inc. who has
completed at least two (2) Years of Service shall be eligible for a Profit
Sharing Contribution based on his Compensation received from January 1,
1996 or the first date he is so eligible, whichever is later, through the
date of sale of HealthPlan Management Services, Inc., or December 31, 1996,
whichever is earlier, provided such Employee remains in Service on the date
of sale of HealthPlan Management Services, Inc., or December 31, 1996,
whichever is earlier.
Beginning January 1, 2000, Clerks of a General Agent who were previously
employed by the Company under its Managerial Agencies, shall not be
eligible to make post-tax contributions to the Plan.
An individual who becomes an Employee (whether by reason of a change in job
status or a transfer of employment) after completion of the requisite
amount of Service shall become eligible immediately upon attaining Employee
status provided that he would have been eligible at an earlier date if he
had been an Employee at that time.
3.02 Basic Pre-tax Contributions and Supplemental Pre-tax Contributions
------------------------------------------------------------------
Each Employee shall become eligible to have Basic Pre-tax and Supplemental
Pre-tax Contributions made on his behalf in accordance with Article 4
commencing with the first day of the first biweekly payroll period
following the completion of six (6) months of Service.
An individual who becomes an Employee (whether by reason of a change in job
status or a transfer of employment) after the completion of six (6) months
of Service shall become eligible immediately upon attaining Employee status
provided that he would have been eligible at an earlier date if he had been
an Employee at that time.
3.03 Rollover Contributions
----------------------
Each Employee shall become eligible to participate commencing the first day
of employment, solely for the purpose of contributing to the Plan amounts
qualifying as Tax Exempt Rollover Contributions in accordance with Section
402(a)(5), 403(a)(4) or 408(d)(3) of the Code. Such amounts shall be
credited to the Employee's account, shall be entitled to immediate
7
<PAGE>
full vesting, but shall not entitle such Employee to be treated as a
Participant for purposes of Article 4 until the requirements of Sections
3.01 and 3.02 are met. Neither an Employee nor a Participant shall be
eligible to participate for the purpose of contributing Tax Exempt Rollover
Contributions after termination of his Service.
3.04 Waiver of Participation
-----------------------
An Employee who is eligible to participate in the Plan under the provisions
of this Article 3 may elect to waive his participation in the Plan by
filing a written letter to the Company. An Employee who has previously
elected to waive participation in the Plan may terminate this waiver
election by filing a written letter to the Company and will become eligible
to participate in the Plan as of the beginning of the Plan Year immediately
following the termination of his waiver.
8
<PAGE>
ARTICLE 4. CONTRIBUTIONS
- --------- -------------
4.01 Basic Pre-tax Contributions
---------------------------
Subject to Sections 4.03 and 4.11, an eligible Employee may participate in
the Plan by electing to have the Company reduce the amount of future
Compensation otherwise payable to him in cash by one (1), two (2), three
(3), or four (4) percent. The Company shall contribute an amount equal to
the reduction in Compensation ("Basic Pre-tax Contributions") to the Plan
on behalf of the Participant.
4.02 Supplemental Pre-tax Contributions
----------------------------------
Subject to Sections 4.03 and 4.11, a Participant who is having Basic Pre-
tax Contributions of four (4) percent made on his behalf may elect to have
the Company reduce further the amount of future Compensation otherwise
payable to him in cash. The Company shall make additional contributions
("Supplemental Pre-tax Contributions") to the Plan on his behalf equal to
the amount of the reduction. The Participant's election shall specify, in
whole number multiples of one (l) percent, not to exceed eleven (11)
percent, the percentage by which his Compensation is to be further reduced.
The percentage rate may be increased or decreased by the Participant in
whole number multiples of one (l) percent at any time.
4.03 Limits on Basic Pre-tax and Supplemental Pre-tax Contributions
--------------------------------------------------------------
A. Notwithstanding any other provision of the Plan, a Participant's Pre-
tax Contributions for a calendar year may not exceed $7,000 (or such
larger amount as is determined by the Secretary of the Treasury for the
calendar year). Excess Deferrals for a calendar year, plus any
earnings, gain or loss thereon, shall be distributed no later than the
following April 15, to Participants to whose accounts such Excess
Deferrals were allocated for the calendar year and who claim Excess
Deferrals for such year. For purposes of this Section, "Excess
Deferrals" shall mean the amount of Pre-tax Contributions for the
calendar year in excess of the dollar limit imposed under Code section
402(g).
The Participant's claim of Excess Deferrals shall (i) be made in
writing, (ii) be submitted to the Company not later than March of the
following calendar year, (iii) specify the amount of the Participant's
Excess Deferrals for the preceding calendar year, and (iv) be
accompanied by the Participant's written statement that if such amounts
are not distributed, such Excess Deferrals, when added to amounts
deferred under other plans or arrangements described in sections
401(k), 408(k) or 403(b) of the Code, will exceed the limit imposed on
the Participant by Section 402(g) of the Code for the year in which the
Excess Deferrals occurred.
Notwithstanding the above, if agreed to by the Participant, Excess
Deferrals may be recharacterized as Post-tax contributions in
accordance with regulations prescribed by the Secretary of the Treasury
or his delegate.
B. In order to ensure compliance with Code section 401(k)(3) and
regulations issued thereunder, in any year for which the Plan does
9
<PAGE>
not meet the safe harbor requirements of sections 401(k)(11) or
401(k)(12) of the Code, each Employer may from time to time limit the
amount of the reduction in Compensation of a Participant who is a
highly compensated employee . The Basic Pre-tax and Supplemental Pre-
tax Contributions to the Plan on behalf of any Participant shall not
exceed the amount by which his Compensation has been reduced in
accordance with this paragraph.
As defined in Code section 414(q), the term "highly compensated
employee " shall mean any employee (including a former employee) who,
(A) during the year or the preceding year was at any time a five (5)
percent owner, or (B) during the preceding year received compensation
from the employer in excess of $80,000 (multiplied by the cost of
living factor provided by the Secretary of Treasury or his delegate
under Code section 414(q)(1)) and, if the Company elects, was in the
top-paid group of employees for such year.
Notwithstanding any other provision of the Plan, Excess Contributions
and earnings, gain or loss thereon, shall be distributed no later than
the last day of each Plan Year, to Participants on whose behalf such
Excess Contributions were made for the preceding Plan Year. For
purposes of this Section, "Excess Contributions" shall mean the amount
of Basic Pre-tax and Supplemental Pre-tax Contributions (after
application of Section 4.03(A)) made on behalf of a highly compensated
employee in excess of the restrictions imposed under Code section
401(k). Excess Contributions shall be treated as Annual Additions
under the Plan.
The earnings, gain or loss allocable to Excess Contributions shall be
determined by multiplying earnings, gain or loss allocable to the
Participant's Basic Pre-tax and Supplemental Pre-tax Contributions for
the Plan Year by a fraction, the numerator of which is the Excess
Contribution on behalf of the Participant for the Plan Year and the
denominator of which is the Participant's account balance attributable
to Basic Pre-tax and Supplemental Pre-tax Contributions on the last
day of the preceding Plan Year.
The Excess Contributions which would otherwise be distributed to the
Participant shall be adjusted for earnings, gain or loss thereon;
shall be reduced, in accordance with regulations, by the amount of
Excess Deferrals distributed to the Participant or recharacterized as
Post-tax Contributions under Section 4.03(A); shall, if there is a
loss allocable to the Excess Contributions, in no event be less than
the lesser of the Participant's account under the Plan or the
Participant's Contributions for the Plan Year.
Notwithstanding the above, if agreed to by the Participant, Excess
Contributions may be recharacterized as Post-tax Contributions in
accordance with regulations prescribed by the Secretary of the
Treasury or his delegate.
4.04 Post-tax Contributions
----------------------
Subject to Sections 4.07 and 4.11, an eligible Employee may participate in
the Plan by electing to make Post-tax Contributions by payroll deduction
10
<PAGE>
and may contribute in whole number multiples of one (1) percent, not to
exceed ten (10) percent of his Compensation. The percentage rate of
contribution may be increased or decreased by the Participant in whole
number multiples of one (1) percent at any time.
4.05 Contribution Elections
----------------------
An Employee's election to have contributions made on his behalf in
accordance with Sections 4.0l or 4.02 shall be made by filing with the
Company a salary reduction election in such form as it may prescribe. An
Employee electing to make contributions in accordance with Section 4.04
shall file with the Company, in such form as it may prescribe, election to
participate.
Basic Pre-tax Contributions and Supplemental Pre-tax Contributions may be
stopped at any time, effective with the next following payroll period for
which the Company can reasonably process the revocation of the
Participant's salary reduction election. The Employee's salary reduction
election shall be deemed to be limited to the extent necessary to comply
with this paragraph.
4.06 Matching Company Contributions
------------------------------
A. The Company shall contribute at the end of each week an additional
amount ("Matching Company Contributions") equal to the sum of the
Basic Pre-tax Contributions made in that week for all Participants who
on the last day of such week, or at the time of their deaths or
retirements during such week, were Employees other than Ford Group
Office Clerical Employees.
B. The Matching Company Contribution for each week shall be allocated
among Participants who on the last day of such week, or at the time of
their deaths or retirements during such week, were Employees other
than Ford Group Office Clerical Employees, the account of each such
Participant being credited with an amount equal to his Basic Pre-tax
Contributions for such week.
A Participant shall not be entitled to any Matching Company
Contribution after his Retirement; provided, that an allocation will
be made to his account for the week in which he attains his Retirement
as determined by his Basic Pre-tax Contributions for such week.
C. With respect to contributions made on or after March 1, 2000, the
Matching Company Contributions shall consist of a restricted portion
("Restricted Matching Company Contributions") and an unrestricted
portion ("Unrestricted Matching Company Contributions"). The
Restricted Matching Company Contributions shall be equal to the first
two percent (2%) of the Matching Company Contributions and the
Unrestricted Matching Company Contributions shall be equal to the
remainder of the Matching Company Contributions.
D. An additional contribution shall be made on behalf of each Participant
who is an Employee other than a Ford Group Office Clerical Employee on
the last day of the Plan Year and whose total Basic and Supplemental
Pre-tax Contributions for that Plan Year equal or exceed four (4)
percent of the Participant's Compensation
11
<PAGE>
for the year (excluding Compensation received while the Participant is
subject to the twenty-six (26) week restriction of Section 5.02),
equal to the amount, if any, by which four (4) percent of the
Participant's Compensation exceeds the Matching Company Contribution
allocated to the Participant's account for that Plan Year.
Such contribution shall be allocated to the Participant's account on
the same basis as Matching Company Contributions under (A) above, and
shall be considered as a Matching Company Contribution for all other
purposes of the Plan. Beginning on March 1, 2000, such contribution
will be allocated 50% to Restricted Matching Company Contributions and
50% to Unrestricted Matching Company Contributions.
4.07 Limits on Post-tax and Matching Company Contributions
-----------------------------------------------------
Notwithstanding any other provision of this Plan, in any year for which the
Plan does not meet the safe harbor requirements of section 401(k)(11) or
401(k)(12) of the Code, Excess Aggregate Contributions, plus any earnings,
gain or loss thereon, shall be distributed no later than the last day of
each Plan Year, to Participants to whose accounts Excess Aggregate
Contributions were allocated for the preceding Plan Year. For purposes of
this Section, "Excess Aggregate Contributions" shall mean the amount of
Matching Company Contributions and Post-tax Contributions (after
application of Sections 4.03(A) and 4.03(B)) made on behalf of a highly
compensated employee in excess of the restrictions imposed under Code
section 401(m). Excess Aggregate Contributions shall be treated as Annual
Additions under the Plan. With respect to the ten (10) highly compensated
employees who had the highest compensation during the year, the amount of
the Matching Company Contributions or Post-tax Contributions made on behalf
of any of their family members shall be treated as if such amount were
contributed on behalf of such highly compensated employee.
The earnings, gain or loss allocable to Excess Aggregate Contributions
shall be determined by multiplying the earnings, gain or loss allocable to
the Participant's Post-tax Contributions and Matching Company Contributions
for the Plan Year by a fraction, the numerator of which is the Excess
Aggregate Contributions on behalf of the Participant for the Plan Year and
the denominator of which is the sum of the Participant's accounts
attributable to Post-tax Contributions and Matching Company Contributions
on the last day of the Plan Year.
Excess Aggregate Contributions shall be distributed from the Participant's
Post-tax Contributions and from the Participant's Matching Company
Contributions in proportion to the Participant's Post-tax Contributions and
Matching Company Contributions for the Plan Year.
The determination of the Excess Aggregate Contributions shall be made after
first determining the Excess Deferral under Section 4.03(A) and then
determining the Excess Contributions under Section 4.03(B).
The provisions described in this Section 4.07 do not apply to Ford Group
Office Clerical Employees.
12
<PAGE>
4.08 Profit Sharing Contributions
----------------------------
For all employees other than Ford Group Office Clerical Employees the
Company shall contribute for each calendar year prior to January 1, 1997
that percentage of the Compensation of eligible Employees as shall be
determined by its Board of Directors. Such contribution shall be made as
soon as practicable after the close of the calendar year, and in any event
on or before the last day specified by the Code for making deductible
contributions for such year. In no event shall the amount contributed by
the Company exceed an amount equal to fifteen (15) percent of the
Compensation and other payments for services otherwise paid or accrued to
all Participants during such year. For each calendar year beginning after
1996 the Company shall make no Profit Sharing Contribution on behalf of
Employees other than Ford Group Office Clerical Employees.
For Ford Group Office Clerical Employees, the Company shall contribute in
March of 1996, 1997, and 1998 an amount equal to four (4) percent of an
eligible Employee's Compensation.
4.09 Allocation of Profit Sharing Contributions
------------------------------------------
Subject to Section 4.11, for all Employees other than Ford Group Office
Clerical Employees, the Company's Profit Sharing Contribution for each year
shall be allocated among the Participants who on the last day of such year,
or at the time of their deaths or retirements during such year, were
eligible Participants, the account of each such Participant being credited
with an amount which shall bear the same ratio to the total amount of the
contribution as the Compensation received by the Participant during the
calendar year bears to the aggregate Compensation received by all
Participants during such calendar year; provided, that the allocation made
to a Participant for the year in which he first becomes an eligible
Participant shall be determined by reference to the Compensation paid him
after the date he attained such status.
Subject to Section 4.11, for Ford Group Office Clerical Employees the
Company's Profit Sharing Contribution to be made in March of 1996, 1997 and
1998 shall be allocated among the Participants who on the last day of the
preceding year or at the time of their deaths or retirements during the
preceding year were eligible Participants, the account of each such
Participant being credited with four (4) percent of Compensation received
by the Participant during the calendar year for which the Profit Sharing
Contribution is being made, provided that the allocation made to a
Participant for the year in which he first becomes an eligible Participant
shall be determined by reference to the Compensation paid him after he
attained such status.
In the event that an Employee who is eligible for a Profit Sharing
Contribution as of December 31 has a portion of such Service during the
calendar year as a Ford Group Office Clerical Employee and a portion as an
Employee other than a Ford Group Office Clerical Employee, then the Profit
Sharing Contribution for such Employee for that calendar year shall be
calculated as the sum of 1) and 2) below:
1) for Profit Sharing Contributions made in 1996, 1997 and 1998, an
amount equal to 4% of the Compensation received during the calendar
year as a Ford Group Office Clerical Employee; and
13
<PAGE>
2) an amount equal to the percentage of Compensation approved by the
Board of Directors for that calendar year, based upon the Compensation
received during the calendar year as an Employee other than a Ford
Group Office Clerical Employee.
A Participant shall not be entitled to any Profit Sharing Contribution
after his Retirement; provided, that an allocation will be made to him for
the year in which he attains his Retirement as determined by reference to
the Compensation paid him during that year prior to the date of such
Retirement.
4.10 Maximum Contributions
---------------------
Notwithstanding the other provisions of this Article, the maximum
percentage of Compensation allowed under the Plan as Basic Pre-tax,
Supplemental Pre-tax and Post-tax Contributions shall not exceed fifteen
(15) percent.
4.11 Limitation on Contributions
---------------------------
The annual addition to a Participant's account in any year under this and
other defined contribution plans of the Company may in no event exceed the
limitation for a defined contribution plan as described in Section 415 of
the Code. For the purposes of this Plan, the term "annual addition"
includes the sum for any year of:
A. Profit Sharing Contributions,
B. Matching Company Contributions,
C. Basic Pre-tax Contributions,
D. Supplemental Pre-tax Contributions, and
E. Post-tax Contributions.
This limit, which is subject to the various technical rules of and which
may be adjusted in accordance with regulations prescribed by the Secretary
of the Treasury or his delegate, is generally stated as the lesser of:
F. Twenty-five (25) percent of the Participant's Compensation, or
G. $30,000, or if greater, one-quarter (1/4) of the defined benefit
dollar limitation in effect.
For the purpose of the Code Section 415 limitation described in this
Section, all defined contribution plans (including voluntary employee
contribution accounts in a defined benefit plan and key employee accounts
under a welfare benefit plan described in Section 419, as well as employer
contributions allocated to an IRA) of the employer, whether or not
terminated, will be treated as one defined contribution plan. In addition,
all employers related to the Company (as defined in Code Section 414) and
described in Section 2.08 shall be treated as one Employer for purposes of
the limitation provided under this Section.
14
<PAGE>
4.12 Construction
------------
Contributions made in accordance with this Article shall be treated as
employer contributions deductible under Code Section 404(a), excluding
Post-tax Contributions made under Section 4.04.
4.13 Accounts Transferred from Other Plans
-------------------------------------
Participant account balances, transferred from the terminated John Hancock
Deferred Salary Plan to this Plan, shall be included in the Total
Accumulation of each such Participant under this Plan and allocated among
the Investment Funds as elected by Participant.
With respect to each Employee who is a Participant and has an account
balance under the John Hancock Savings and Investment Plan ("SIP"), his
account balance under SIP may be transferred to this Plan as soon as
administratively possible after the commencement or resumption of
participation. The transferred monies shall be included in the
Participant's Total Accumulation and allocated among the Investment Funds
as elected by the Participant. In the absence of an investment election,
all transferred monies shall be allocated to the Fixed Income Fund.
Notwithstanding the foregoing, in the event the amount transferred includes
any Restricted Company Matching Contributions, as defined under the terms
of SIP, then such amount shall be treated as Restricted Company Matching
Contributions under the terms of this Plan.
Participants who have an account balance under another individual account
plan sponsored by the Company or one of its subsidiaries or affiliates,
shall be eligible to have such account balance transferred to this Plan
provided that the other plan authorizes the direct transfer. In the event
the amount transferred includes any Restricted Company Matching
Contributions, as defined under the terms of the transferring plan, then
such amount shall be treated as Restricted Company Matching Contributions
under the terms of this Plan.
In accordance with the above paragraph, upon the effective date of the
merger of the Employee Savings Plan for Employees of John Hancock Property
& Casualty Insurance Companies (P&C Plan) into this Plan, the accounts
under section 4.08 of the P&C Plan on behalf of persons who shall become
Participants in this Plan as a result of said merger shall be transferred
to this Plan. Any Contributions pursuant to Section 4.08 of the P&C Plan
shall be contributed directly into the accounts in this Plan.
15
<PAGE>
ARTICLE 5. WITHDRAWALS
- --------- -----------
5.01 Withdrawal of Contributions due to Hardship
-------------------------------------------
A. Upon a showing of hardship by a Participant, the Company may approve
the Participant's withdrawal of such portion of his Basic Pre-tax,
Supplemental Pre-tax, Matching, Rollover and Profit Sharing
Contributions accounts as the Company shall deem necessary to
alleviate such hardship. A hardship withdrawal shall not be approved
unless all of the Participant's Post-tax Contributions have been
withdrawn from the Plan.
B. Funds shall be withdrawn in the following order from the various
categories of contributions as necessary to alleviate the hardship:
(1) Supplemental Pre-tax Contributions,
(2) Rollover Contributions and earnings, gain or loss thereon,
(3) Profit Sharing Contributions and earnings, gain or loss thereon,
(4) Basic Pre-tax Contributions,
(5) Unrestricted Matching Company Contributions and earnings, gain or
loss thereon.
(6) Restricted Matching Company Contributions and earnings, gain or
loss thereon.
The balance remaining in each of the above categories of contributions
must be exhausted before funds may be withdrawn from the next
following category of contributions.
In the event that the Participant has monies invested in more than one
fund in any given category, the withdrawal will be made from each fund
on a pro-rata basis relative to the amount in each fund prior to the
withdrawal.
C. Notwithstanding the above, a hardship withdrawal shall not be
permitted to include (1) earnings or gain attributable to Supplemental
Pre-tax and Basic Pre-tax Contributions, or (2) Matching Company
Contributions, Rollover Contributions or Profit Sharing Contributions
(including the earnings, gain or loss thereon) to the extent that any
such Contributions are used to meet the requirements of Section 401(k)
of the Code for the Plan Year.
D. For the purposes of this Section, "hardship" shall refer to medical
expenses (as defined in Code section 213(d)) incurred by the
Participant or his spouse or dependents, the purchase of a principal
residence of the Participant, the payment of tuition and related
educational fees for the next 12 months of post-secondary education
for the Participant or his spouse or his dependents, the need to
prevent eviction of the Participant from his principal residence or
foreclosure on a mortgage on the Participant's principal residence,
or such other immediate and heavy financial
16
<PAGE>
need of the Participant as determined by the Company on a uniform and
non-discriminatory basis. The Company shall consider each case of
hardship on an individual basis, and its determinations in this
respect shall be final.
5.02 Restrictions on Hardship Withdrawals
------------------------------------
A. Except as provided in Subsection (B), a Participant may withdraw funds
in accordance with Section 5.01 only if (i) the distribution does not
exceed the amount needed on account of hardship as described in
Section 5.01(D), (ii) the Participant has obtained all distributions
and loans currently available under all qualified plans maintained by
the employer, (iii) the Participant shall be suspended from making any
Pre-tax or Post-tax Contributions for 12 months following the receipt
of the hardship distribution, and (iv) the Participant's Pre-tax
Contributions for his taxable year immediately following the date of
distribution shall not exceed the dollar limit described in Section
4.05 reduced by any Pre-tax Contributions made for the year of the
hardship distribution.
B. Instead of imposing the conditions described in Subsection (A)(ii),
(iii), and (iv), the Company may reasonably rely upon the
Participant's representation that the need cannot be relieved by:
(1) the liquidation of other reasonably available assets,
(2) borrowing from the Plan or from a commercial source,
(3) ceasing to make Pre-Tax or Post-Tax Contributions, or
(4) insurance or other form of reimbursement.
The Company shall consider each such representation and determine, on
a uniform and non-discriminatory basis, whether it can rely on the
representation. The Company's decision shall be final. If the
Company determines that it cannot reasonably rely on a representation,
the Participant will not be eligible for a hardship under this
Subsection (B) of Section 5.02.
A Participant who withdraws any Basic Pre-tax, Matching or Profit
Sharing Contributions in accordance with this Subsection will not be
permitted to have any Basic Pre-tax, Supplemental Pre-tax, Matching or
Post-tax Contributions made on his behalf for twenty- six (26) weeks
from the date of such withdrawal. At the expiration of any such
period, contributions will automatically resume in accordance with the
Participant's salary reduction and/or payroll deduction election then
in effect under Article 4.
5.03 Withdrawal of Post-tax Contributions
------------------------------------
A Participant may at any time make a withdrawal of his Post-tax
Contributions.
5.04 Retired Employee Withdrawals
----------------------------
A retired Employee may at any time make a withdrawal of all or a portion of
his remaining account balance.
17
<PAGE>
5.05 Withdrawal Requests
-------------------
All requests for withdrawals, including hardship withdrawals shall be made
in the manner prescribed by the Company.
18
<PAGE>
ARTICLE 6. LOANS
- --------- -----
6.01 Application for Loan
--------------------
A Participant may apply to the Plan for a secured loan equal to a portion
of such Participant's Total Accumulation as defined by Section 2.16. Such
loan request must be made in the manner prescribed by the Company. Each
such loan request shall be considered by the Company and may be granted at
the Company's sole discretion subject to the conditions specified below.
The Company's determination regarding granting the loan shall be final.
This provision shall not be used as a means of distributing benefits before
they otherwise become payable.
The Company may refuse to grant a loan to any Participant who is currently
ineligible for loan repayment by payroll deduction or who is reasonably
anticipated to become ineligible for loan repayment by payroll deduction in
the near future.
6.02 Maximum and Minimum Loans
-------------------------
A. The maximum amount available for a loan, when added to the outstanding
balance of all loans to the Participant from the Plan, shall be fifty
(50) percent of the Total Accumulation amount, but no more than
$50,000, reduced by the excess (if any) of the highest outstanding
balance during the prior twelve (12) month period over the outstanding
balance on the date on which the new loan is made.
The maximum number of loans outstanding with respect to a Participant
at any time prior to January 18, 2000 shall be four (4), and on or
after January 18, 2000, shall be two (2).
B. In no event shall the amount of any loan be less than $500.
C. The loan shall be secured by an equal amount of the Participant's
Total Accumulation. No other types of collateral will be permitted to
secure the loan.
D. In its discretion, the Company may impose an administrative fee for
processing loans under the Plan.
6.03 Allocation of Loans
-------------------
A loan to a Participant shall be allocated to the Participant's accounts.
The loan shall be withdrawn in the following order from the various
categories of contributions:
A. Unrestricted Matching Company Contributions and earnings, gain or loss
thereon,
B. Basic Pre-tax Contributions and earnings, gain or loss thereon,
C. Profit Sharing Contributions and earnings, gain or loss thereon,
D. Rollover Contributions and earnings, gain or loss thereon,
19
<PAGE>
E. Supplemental Pre-tax Contributions and earnings, gain or loss thereon.
Restricted Matching Company Contributions, and earnings, gain or loss,
thereon, are not available for loans.
The balance remaining in each of the above categories of contributions must
be exhausted before funds may be withdrawn from the next following category
of contributions. In the event that the Participant has monies invested in
more than one fund in any given category, the loan will be withdrawn from
each fund on a pro-rata basis relative to the amount in each fund prior to
the withdrawal.
6.04 Repayment of Loans
------------------
A. Loans made under this Article shall be repaid by payroll deduction (or
by personal check in the case of a Transferred Participant) in equal
installments commencing in the payroll period following the payroll
period in which the loan is made. In addition to making such payments
a Participant may also make a lump sum payment equal to the
outstanding loan balance.
B. The maximum period over which a loan may be repaid is five (5) years
for any loan other than one for the purchase or construction of the
primary residence of a Participant, which shall be fifteen (15) years.
C. All loans shall bear a reasonable rate of interest, as determined by
the Company, for that type of loan. The rate shall be established and
monitored on a monthly basis to ensure that it provides the Plan with
a return commensurate with the prevailing interest rate charged by
persons in the business of lending money for loans which would be made
under similar circumstances. The Company's determination with respect
to any rate of interest shall be final.
D. Installment payments, including both principal and interest, shall be
credited to the Participant's accounts and allocated to the respective
investment funds in the same proportion as the Participant's then
current election for Pre-tax Contributions. In the event that the
Participant is not making basic Pre-tax Contributions, such individual
shall make a written election as to which investment fund(s) shall be
credited with loan repayments. In the absence of any written
election, loan repayments shall be credited to the Fixed Income Fund.
6.05 Notice of Delinquent Payment and Foreclosure
--------------------------------------------
If a Participant becomes ineligible to make further repayment by payroll
deduction while he has a Plan loan outstanding, the Participant shall be
permitted to continue repayment by means of direct payment on a monthly
basis. Such a Participant shall retain the right to make a lump sum
repayment in accordance with Subsection 6.04(A).
If an installment payment is not made within fifteen (l5) days of its due
date, the Company shall give the Participant at his last known address
written notice of such payment delinquency. If such installment payment
20
<PAGE>
is not made within sixty (60) days thereafter, the Company shall take
appropriate action in order to collect the remaining balance due on the
loan. In the event of a default, foreclosure on the note and attachment of
security shall not occur until a distributable event (as described in
Article 9) occurs under the Plan.
6.06 Termination of Service Prior to Repayment
-----------------------------------------
If a Participant dies or otherwise terminates Service prior to the date
that his loan is repaid in full, the Company shall deduct the unpaid loan
balance from such Participant's Total Accumulation before distributing the
remaining balance to the Participant or his Beneficiary.
6.07 Loan Administration
-------------------
The Participant loan program under this Plan shall be administered by the
Director of HR Services.
21
<PAGE>
ARTICLE 7. INVESTMENT FUNDS
- --------- ----------------
7.01 Fund Management
---------------
All contributions to the Plan made by Participants and the Company and any
earnings, gain or loss thereon, shall be held in trust by a Trustee
appointed by the Company, or held under a Group Annuity contract issued by
the Company. Such trust shall in all respects meet the requirements of the
Code with respect to a qualified trust forming part of an employer's
profit-sharing plan. The Trustee shall maintain distinct and separate
investment funds, as described in Section 7.02.
7.02 Investment Funds and Investment Policy
--------------------------------------
A. There shall be nine (9) investment funds under the Plan as follows:
(1) The Fixed Income Fund shall have as its objective the safety
of capital and the attainment of reasonable current income.
(2) The Large Cap Growth Equity Fund shall have as its primary
objective the attaining of capital appreciation with current
income as an incidental objective only. Investments will be
primarily equity securities of domestic and foreign companies
with market capitalizations generally considered large
capitalization which have prospects for better than average
earnings growth potential than the overall market.
(3) The Large Cap Value Equity Fund shall have as its primary
objective the attaining of capital appreciation with current
income as an incidental objective only. Investment will be
primarily in equity securities of domestic and foreign companies
with market capitalizations generally considered large
capitalization which are under-priced relative to earnings
prospects, growth rate, cash flow and dividend paying ability.
(4) The Indexed Equity Fund is a passively managed stock fund
indexed to the S&P 500. The objective is to replicate the S&P
500 Index in terms of individual security selection and market
weight, resulting in performance equivalent to the domestic
market performance.
(5) The Mid Cap Blend Equity Fund shall have as its primary objective
long-term capital appreciation. Investments will represent
interests primarily in equity securities of domestic and foreign
companies with market capitalizations generally considered medium
capitalization which are believed to exhibit growth
opportunities.
(6) The Small Cap Equity Fund shall have as its objective to maximize
capital appreciation by investing primarily in equity securities
of domestic and foreign companies with market capitalizations
generally considered small capitalization. The fund seeks to
invest in undervalued stocks with strong fundamentals and
positive business momentum.
22
<PAGE>
(7) The International Equity Fund shall have as its objective to
maximize total return, consisting of both capital appreciation
and current income, through investment in a diversified portfolio
of non-U.S. equity securities. The fund seeks to achieve this
objective by investing in (1) non-U.S. markets that have the best
long-term performance potential and (2) stocks of non-U.S.
companies that can be purchased at a fair or an attractive price.
The fund is diversified by country, industry and issue.
(8) The Global Balanced Fund shall have as its objective to maximize
total return, consisting of both capital appreciation and current
income. The fund is a global balanced portfolio designed to
diversify investments across U.S. and non-U.S. stocks and bonds.
The fund seeks to achieve this objective by pursuing active asset
allocation strategies across global equity and fixed income
markets and active security selection within each market. Asset
allocation decisions are made within specific ranges which define
the minimum and maximum percentage allocation to each asset class
(stocks, bonds and cash).
(9) The John Hancock Stock Fund ("JH Stock Fund") shall have as its
objective to maximize total return through long-term capital
appreciation and to encourage ownership in the Company by
Participants, through investment in common stock of John Hancock
Financial Services, Inc.
The JH Stock Fund shall become effective as of March 1, 2000, or such
other date following the initial public offering of John Hancock
Financial Services, Inc. as shall be determined by the Company.
B. The Company has designated the Director of HR Services as the
individual responsible for directing Participants on how to obtain
information on such investment funds.
C. Each Participant shall make an election of the percentage of
contributions he desires to have placed in each Fund. Such elections
shall be made in accordance with procedures established by the Company
and shall be in even multiples of one (1) percent. Percentages
elected by a Participant shall apply to all Contributions, except the
Restricted Matching Company Contributions, which shall be placed in
the JH Stock Fund. Any contributions credited to the account of a
Participant who has failed to make the election described in this
paragraph within the time prescribed will be placed in the Fixed
Income Fund.
D. A Participant (including a retired or terminated Participant who has
any account balance remaining in the Plan) may change at any time his
investment election with respect to contributions made after the
effective date of the change exclusive of the Restricted Matching
Company Contributions and earnings thereon. Such change shall be made
for the next payroll period as is administratively feasible after such
election.
E. Notwithstanding the above, in order to comply with applicable
securities laws, the Company may restrict any Participant who is
23
<PAGE>
designated by the Company as an "Insider" from either changing his
investment elections going into the JH Stock Fund, or transferring
amounts in or out of the JH Stock Fund, during certain blackout
periods established by the Company.
7.03 Transfer Between Investment Funds
---------------------------------
Except with respect to the Restricted Matching Company Contributions and
earnings thereon, each Participant may elect to transfer from one
investment fund to another investment fund part or all of his Total
Accumulation, exclusive of amounts allocated to a Participant loan;
provided that the number of such transfers effective in any calendar
quarter beginning on or after July 1, 1999, or in the period from May 1,
1999, through June 30, 1999, may not exceed three. For the purposes of the
foregoing proviso, all transfer elections effective on any single day shall
count as one transfer. The Restricted Matching Company Contributions must
remain in the JH Stock Fund only until distributed (i) upon a Participant's
Retirement, Death, or termination of Service, (ii) as required under the
terms of a Qualified Domestic Relations Order under Section 9.15, below, or
(iii) under Section 9.05, but only if the Participant is receiving Long-
Term Disability benefits under a Company-Sponsored employee welfare plan.
Any transfer of amounts in the Restricted Matching Company Contributions
shall be subject to all other terms and conditions of this Section 7.03.
The Company shall establish administrative rules for determining the
effective date of any such transfer. The value of the account transferred
shall be based on the next valuation on or immediately following the date
of the Participant's election. Notwithstanding the above, in order to
comply with applicable securities laws, the Company may restrict any
Participant who is designated by the Company as an "Insider" from
transferring amounts in or out of the JH Stock Fund, during certain
blackout periods established by the Company.
7.04 Valuation of Funds
------------------
The value of each investment fund shall be determined at least daily.
Such values shall be determined in accordance with generally accepted
standards and reported to the Company. For purposes of this Section,
"value" shall refer to the fair market value of the Large Cap Growth Equity
Fund, the Large Cap Value Equity Fund, the Indexed Equity Fund, the Mid Cap
Blend Equity Fund, the Small Cap Equity Fund, the International Equity
Fund, the Global Balanced Fund and the JH Stock Fund.
7.05 Allocation to Participant's Accounts
------------------------------------
At least once each week contributions to the Plan and any adjustment
resulting from a change in value of the contributions after the date of
transfer shall be allocated to each Participant's accounts. At least once
each week there shall be allocated to each Participant's accounts the
proportion of the net increase or decrease in the value of each investment
fund since the previous valuation date which the value of each such account
on the current valuation date (exclusive of any part of such increase or
decrease) bears to the aggregate value of all accounts in each investment
fund on that date (exclusive of any part of such increase or decrease).
24
<PAGE>
ARTICLE 8. VESTING
- --------- -------
8.01 Each Participant shall be entitled to immediate full vesting of all
contributions made on his behalf to the Plan.
25
<PAGE>
ARTICLE 9. DISTRIBUTION OF PARTICIPANT'S SHARE
- --------- -----------------------------------
9.01 Events of Distribution
----------------------
Each Participant shall be entitled to the distribution of his Total
Accumulation in the amount and in the manner described herein upon his
death, attainment of age fifty-nine and one-half (59-l/2), Disability,
Retirement, or other termination of Service, and in the event of
termination of the Plan as described in Article 11; provided that any
distribution upon the Participant's attainment of age fifty-nine and one-
half (59-1/2) shall be subject to the limitations of Section 9.04.
All distributions shall be made in cash, except that part of the Total
Accumulation maintained in the JH Stock Fund will be distributed, at the
Participant's request either in cash or in shares of John Hancock Financial
Services, Inc., stock.
9.02 Determination of Amount
-----------------------
The amount to be distributed will be based on the valuation, coincident
with the date of distribution, of the Participant's Basic Pre-tax,
Supplemental Pre-tax, Post-tax, Matching, Rollover, and Profit Sharing
Contributions account balances. For the purpose of this Section the date
of distribution shall be the first date that a payment in any amount is
made under this Article.
9.03 Retirement
----------
Prior to his Retirement each Participant shall elect payment of the amount
to be distributed in an optional mode then authorized by the Company.
If no such election is made, the Company shall direct distribution in such
mode as it, in its sole discretion, deems appropriate. Such modes of
payment shall not include interest only, but otherwise may include the
following:
A. To receive the full amount of his Total Accumulation as a single sum
in the month following the month of his Retirement.
B. To leave the full amount of his Total Accumulation in the Investment
Funds and receive installment payments commencing at any time
following his Retirement but no later than the calendar year in which
he attains age seventy and one-half (70-1/2), provided, that any
amount remaining in the Funds pursuant to this election shall share in
the investment experience of the Funds. The amount of the installment
payments shall be as elected by the Participant, provided that the
total amount to be distributed each year to the Participant shall be
no less than the amount calculated in accordance with the following
paragraph.
If the Participant's interest is to be distributed in accordance with
Subsection (B) and the Participant elects monthly installments, then the
amount to be distributed in monthly installments prior to the calendar year
in which he attains age seventy and one-half (70-1/2), must be at least
$100 (except for the Participants whose installment payments began prior to
January 1, 1988). The amount to be distributed each year beginning with
the calendar year in which he attains seventy and one-half (70-1/2) must be
at least an amount equal to the quotient obtained by dividing the
26
<PAGE>
Participant's remaining Total Accumulation by the life expectancy of the
Participant or joint and last survivor expectancy of the Participant and
his Beneficiary. Life expectancy and joint and last survivor expectancy are
computed by the use of the return multiples contained in section 1.72-9 of
the Income Tax Regulations. For purposes of this computation, the life
expectancy of a Participant and of his spouse (if any) will be recalculated
no more frequently than annually; however, the life expectancy of a non-
spouse Beneficiary may not be recalculated each year. If the Participant's
spouse is not the Beneficiary, the method of distribution selected must
assure that at least fifty (50) percent of the present value of the amount
available for distribution is paid within the life expectancy of the
Participant. A retired Employee who has elected installment payments in
accordance with Subsection (B) may at any time make a withdrawal of all or
a portion of his remaining Total Accumulation.
Notwithstanding the above, a Participant who is actively employed need not
begin to receive his Total Accumulation until the month following the month
in which he retires.
9.04 Attainment of Age 59-l/2
------------------------
A Participant who has attained age fifty-nine and one-half (59 l/2) may
elect to receive a payment equal to all or a portion of his Basic Pre-tax,
Supplemental Pre-tax, Unrestricted Matching Company Contributions, Rollover
and Profit Sharing Contributions including any earnings, gain or loss
thereon. Should such Participant withdraw all or a portion of his Basic
Pre-tax, Unrestricted Matching Company Contributions or Profit Sharing
Contributions, he shall not be permitted to have any Basic Pre-tax,
Supplemental Pre-tax, Matching Company Contributions, or Post-tax
Contributions made on his behalf for twenty-six (26) weeks from the date of
such withdrawal. At the expiration of any such period, contributions will
automatically resume in accordance with the Participant's salary reduction
and/or payroll deduction election then in effect under Article 4.
9.05 Disability
----------
The Company shall determine for the purposes of this Plan whether a
Participant has incurred a Disability. Such Participant may elect to
receive his entire vested interest in the Plan in one of the optional modes
of payment then authorized under Section 9.03. If no such election is
made, the Company shall direct distribution in such mode as it, in its sole
discretion, deems appropriate. Such determinations by the Company shall be
final and binding upon all persons who have any interest in this Plan.
9.06 Death
-----
A. Designation and changes in designation of a Beneficiary may be made
during the lifetime of a Participant (including a retired or
terminated Participant) in writing signed by him and received by the
Company. A new designation will take effect as of the time the
written notice is executed if it has been received by the Company,
whether or not a Participant is alive at the time of such receipt, but
will be subject to any payment directed or other action taken by the
Company prior to the receipt of such designation. Receipt shall be
considered to have taken place as of the time the written notice is
signed by the Secretary or other authorized agent of the Company.
27
<PAGE>
The designation of a non-spouse Beneficiary by a married Participant
must be consented to in writing by the Participant's spouse. The
spouse's consent to a designation must be witnessed by a notary
public. This consent requirement shall be waived if the Participant
establishes to the satisfaction of a Plan representative that such
written consent may not be obtained because there is no spouse or the
spouse cannot be located. Any consent necessary under this provision
will be valid only with respect to the spouse who signs the consent.
In the absence of such written spousal consent, a Participant who is
married at the time of death shall be deemed to have designated his
spouse as the Beneficiary.
B. If a Participant dies after distribution of his interest in the Plan
has commenced or has deemed to commence in accordance with regulations
issued by the Secretary of the Treasury or his delegate, the remaining
portion of such interest will continue to be distributed to the
Beneficiary at least as rapidly as under the method of distribution
being used prior to the Participant's death.
If a Participant dies before distribution of his interest commences or
has deemed to commence in accordance with regulations issued by the
Secretary of the Treasury or his delegate, the Participant's entire
interest will be distributed not later than five (5) years after the
Participant's death except to the extent that an election is made to
receive distributions in accordance with (1) or (2) below:
(1) if any portion of the Participant's interest is payable to a
Beneficiary, distributions may be made in substantially equal
installments over the life or life expectancy of the Beneficiary
commencing no later than one (1) year after the Participant's
death;
(2) if the Beneficiary is the Participant's surviving spouse, the
date distributions are required to begin in accordance with (1)
above shall be no later than the date the Participant would have
attained age seventy and one-half (70 1/2); and, if the spouse
dies before payments begin, subsequent distributions shall be
made as if the spouse had been the Participant.
For purposes of the preceding paragraph, payments will be calculated
by use of the return multiples specified in section 1.72-9 of the
Income Tax Regulations. Life expectancy of a surviving spouse may be
recalculated annually; however, in the case of any other Beneficiary,
such life expectancy will be calculated at the time payment first
commences without further recalculation.
A Participant's interest in the Plan shall be distributed in
accordance with a written election made by (1) the Participant, or, in
the absence of such an election by the Participant, (2) by the
Beneficiary of one of the optional modes of payment then authorized by
the Company. In the event no such election is made, or if the
Beneficiary is designated by the Company in accordance with the
following paragraph, the Company shall direct the manner of
distribution.
28
<PAGE>
If no Beneficiary designation is then in effect, or there is no
designated Beneficiary then living, the Beneficiary shall be the
Participant's surviving spouse or, if none, the Participant's estate.
If a designated Beneficiary has failed to submit a written election
within six (6) months of a Participant's death, the Company may in its
sole discretion pay a portion of such benefit, not to exceed $5,000,
to the Participant's spouse, or if such spouse shall not be living, an
individual who was a dependent of the Participant, or anyone who can
prove to the Company that he is equitably entitled to payment for
expenses incurred for the Participant's maintenance, illness or
burial. Where no written election has been submitted within six (6)
months of a Participant's death, the Company shall transfer the
balance of any benefit payable under this Plan to the Fixed Income
Fund described in Section 7.02.
If a designated Beneficiary fails to submit a written election within
one (1) year of the death of the Participant who designated him, his
interest in such benefit shall terminate. The Company shall
thereafter direct the payment of such benefit to the secondary
Beneficiary, if any, designated by the Participant, and if there is no
secondary Beneficiary the Company shall direct the payment of such
benefit in a single sum to the legal representative of the
Participant's estate.
C. If any payments are contingent upon the prior death of any Beneficiary
or other payee, the surviving Beneficiary or other payee entitled to
receive such payments shall furnish due written proof of such death to
the Company. The Company shall not in any case be liable for any
payment it may direct in regular course prior to the receipt of such
proof. The Company shall not be bound by any trust, deed or
partnership agreement and shall not be liable for the application of
the monies by a trustee Beneficiary or any other person.
D. The exercise by a Participant of any rights and privileges under the
Plan shall not require notice to, nor the knowledge or consent of, any
non-spouse Beneficiary.
9.07 Termination of Service
----------------------
Upon termination of his Service for reasons other than those described in
Sections 9.03, 9.05 and 9.06, a Participant shall receive payment of his
total interest in the Plan in a single sum as soon as possible after the
date of his termination if his total account balance under the Plan
(including any outstanding Participant loan amount) does not exceed $5,000.
If the terminating Participant's account balance exceeds $5,000, a single
lump sum payment shall be made as soon as possible after the date of his
termination only upon the election of the Participant.
If a terminating Participant does not receive his account balance upon
termination, the terminated Participant may elect at any time thereafter to
make a withdrawal of all or a portion of his remaining account balance.
In no event may a terminated Participant defer distribution in a manner
which would violate the distribution restrictions for retiring Participants
imposed under Section 9.03.
29
<PAGE>
9.08 Eligible Rollover Distributions
-------------------------------
A. This Section applies to distributions made on or after January 1,
1993. Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributees election under this Section, a
distributee may elect, at the time and in the manner prescribed by the
Company, to have any portion of an eligible rollover distribution that
is equal to at least $500 paid directly to a single eligible
retirement plan specified by the distributee in a direct rollover.
B. Definitions.
(i) Eligible rollover distribution: An eligible rollover distribution
is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover
distribution does not include: any distribution that is one of a
series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy)
of the distributee or the joint lives (or joint life expectancies)
of the distributee and the distributee's designated beneficiary,
or for a specified period of ten years or more; any distribution
to the extent such distribution is required under section
401(a)(9) of the Code; and the portion of any distribution that is
not includible in gross income.
(ii) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in section 408(a) of the
Code, an individual retirement annuity described in section 408(b)
of the Code, an annuity plan described in section 403(a) of the
Code, or a qualified trust described in section 401(a) of the
Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan
is an individual retirement account or individual retirement
annuity.
(iii) Distributee: A distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's
surviving spouse and the Employee's or former Employee's spouse or
former spouse who is the alternate payee under a qualified
domestic relations order, as defined in section 414(p) of the
Code, are distributees with regard to the interest of the spouse
or former spouse.
(iv) Direct rollover: A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.
9.09 Disappearance After Payments Commence
-------------------------------------
If any payment under this Plan cannot be made to any Participant or
Beneficiary because his whereabouts are unknown to the Company, the Company
shall transfer that payment and any balance of the benefit payable under
this Plan to the Fixed Income Fund as described in Section 7.02 until such
time as payment of the benefit can be made.
If such payments cannot be resumed within three (3) years of the date of
the last payment tendered to him, the interest of such Participant or
30
<PAGE>
Beneficiary shall terminate. The Company shall thereafter direct a payment
of the remaining total benefit in a single sum to the Beneficiary
designated by such Participant, if any, otherwise such payment shall be
directed, at the Company's sole discretion, to the spouse of such
Participant or Beneficiary, or if none, any individual related to the
Participant or Beneficiary.
9.10 Return to Service
-----------------
If a Participant who is receiving payments under the terms of Section 9.03
subsequently becomes an Employee eligible for contributions under the Plan,
he shall not be entitled to receive any further payments during such
eligibility except as provided by Section 9.03 and 9.04. When such
eligibility terminates, distributions shall be made in accordance with the
terms of this Article.
9.11 Commencement of Benefits
------------------------
Payment of benefits to a Participant shall, unless he otherwise elects in
writing, begin no later than the sixtieth (60th) day after the latest of
the close of the calendar year in which:
A. the Participant attains his Normal Retirement Date;
B. the Participant terminates his Service; or
C. occurs the tenth (10th) anniversary of the year in which the
Participant commenced participation in the Plan.
9.12 Termination of Trust
--------------------
In the event the Plan is terminated or contributions are discontinued in
accordance with Section 11.02, and the Company determines in the best
interests of the Participants that the trust described in Section 7.01
should be terminated, each Participant shall receive distribution of his
interest in the Plan in such manner as the Company shall deem appropriate,
including, but not limited to, the purchase of a deferred annuity contract.
9.13 Election of Immediate Distribution
----------------------------------
If a distribution is one to which sections 401(a)(11) and 417 of the
Internal Revenue Code do not apply, such distribution may commence less
than 30 days after the notice required under section 1.411(a)-11(c) of the
Income Tax Regulations is given, provided that:
(1) the plan administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 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
(2) the Participant, after receiving the notice, affirmatively elects
a distribution.
9.14 Distribution to Alternate Payee
-------------------------------
Distributions may be made to an Alternate Payee under a Qualified Domestic
Relations Order (QDRO) as defined in section 414(p) of the
31
<PAGE>
Internal Revenue Code prior to the commencement of distributions to the
Participant who is party to the QDRO provided:
(1) the Participant has attained Earliest Retirement Age as defined in
section 414(p)(4)(B);
(2) the distributions to the Alternate Payee are computed as if the
Participant retired on the date distributions commenced; and
(3) the distributions are in a form permitted under the Plan.
Notwithstanding the foregoing, Distributions may be made to an Alternate
Payee pursuant to the terms of a QDRO prior to the Participant's Earliest
Retirement Date.
9.15 Transferred Participants
------------------------
With respect to a Transferred Participant who becomes eligible to
participate in SIP, his account balance shall be transferred to SIP as soon
as administratively possible after he becomes eligible to participate.
A Transferred Participant who becomes an employee of a Company subsidiary
or affiliated corporation which sponsors an individual account plan shall
be eligible to have his account balance under this Plan transferred to such
plan provided that such other plan accepts the direct transfer of the
account balance.
32
<PAGE>
ARTICLE l0. ADMINISTRATIVE AND FIDUCIARY PROVISIONS
- ---------- ---------------------------------------
10.01 Named Fiduciary
---------------
The Company shall be the named fiduciary and the administrator of the Plan
for purposes of ERISA and shall have the authority to control and manage
the operation and administration of the Plan. The Company shall have the
power to adopt such rules and regulations as it may deem necessary or
appropriate for the efficient operation and administration of the Plan.
Such rules and regulations shall be in writing and shall be consistent with
the terms of the Plan, the trust described in Article 7 and the
requirements of ERISA. The Company shall interpret the Plan and determine
all questions arising under it. Any such determination by the Company
shall be binding on all persons affected thereby.
10.02 Delegation
----------
In carrying out its fiduciary and administrative responsibilities under the
Plan, the Company may, through its Board of Directors:
A. designate other persons as named fiduciaries with respect to
particular matters of administration or operation of the Plan;
B. enter into agreements with any or all of such named fiduciaries or
authorize them among themselves to enter into agreements for the
allocation of fiduciary responsibilities among some or all of the
named fiduciaries;
C. allocate such of its responsibilities as it deems appropriate to any
person or persons;
D. designate any person or persons to carry out such responsibilities
whether or not fiduciary in nature;
E. appoint one or more investment managers to manage any assets of the
Plan; and
F. employ one or more persons to render advice with regard to such
responsibilities.
The Company or any such person may serve in more than one fiduciary
capacity.
10.03 Investment Policy
-----------------
The Company shall determine an investment policy appropriate to the
objectives of each of the Funds as described in Section 7.02 and shall,
consistent with such policy and without restriction as to the class of
securities or other property, select the specific investments to be made or
disposed of under the Fixed Income Fund, and shall direct the Trustee in
writing to make or dispose of such investments.
10.04 Investment Manager
------------------
The Company shall appoint one or more Investment Manager(s) who shall
select the specific investments to be made or disposed of under the Large
33
<PAGE>
Cap Growth Equity Fund, the Large Cap Value Equity Fund, the Indexed Equity
Fund, the Mid Cap Blend Equity Fund, the Small Cap Equity Fund, the
International Equity Fund and the Global Balanced Fund. Such investments
shall be consistent with the investment policy established by the Company
for such funds but without restriction as to class of securities or other
property. In those cases where such investments are to be held directly by
the Trustee, the Investment Manager(s) for the applicable funds shall
direct the Trustee in writing to make or dispose of such investments and
shall report in writing to the Company after the consummation thereof the
amount purchased and the amount sold or otherwise disposed of in each
transaction. The Investment Manager(s) shall periodically submit a report
in scope and detail satisfactory to the Company, of the securities or
properties held in such funds and a summary of all securities or properties
purchased or disposed of since the last such summary.
10.05 Investment Review
-----------------
The Company shall periodically, but not less than annually, review all
completed investment transactions, the portfolio appraisal, and the
investment performance of the Funds. The Company shall monitor the
performance and services of the Investment Manager(s), but in no event
shall the Company direct, approve or ratify specific investment
transactions made by the Investment Manager(s).
10.06 Claims
------
A claim or request for a Plan benefit must be filed with the Company in a
manner prescribed by the Company. If a claim is denied, in whole or in
part, the Company shall notify the claimant in writing of the reasons for
the denial. Such notice shall refer to the pertinent Plan provisions on
which the denial is based; describe and explain the need for any additional
material or information necessary to perfect the claim; and call attention
to or explain the Plan's claim review procedure.
10.07 Claims Appeal
-------------
A claimant, or his duly authorized representative, may appeal the denial of
a claim by submitting a written request for a review to the Company within
120 days after the notice of denial has been received by the claimant. In
the course of such a review, the claimant, or his representative, may
review pertinent documents and may submit issues and comments in writing to
the Company.
10.08 Decision on Appeal
------------------
The Company shall notify the claimant of its decision within sixty (60)
days after the Company's receipt of the request for review. The decision
shall be in writing and shall include specific reasons for the decision and
specific references to the provisions of the Plan on which the decision is
based. The time for a decision may be extended to 120 days in special
circumstances.
10.09 Elections
---------
All claims, elections and designations that Participants are required or
permitted to make under the Plan shall be made in the manner prescribed by
the Company.
34
<PAGE>
10.10 Necessary Acts
--------------
All parties to this Plan and all persons claiming any interest whatsoever
hereunder agree to perform any and all acts and execute any and all
documents and papers which may be necessary or desirable for the carrying
out of this Plan or any of its provisions.
10.11 Binding on Heirs
----------------
This Plan's provisions shall be binding upon the heirs, executors,
administrators, successors and assigns of any and all parties hereto
present and future.
10.12 Plan Does Not Create or Modify Employment Relationship
------------------------------------------------------
The establishment and maintenance of this Plan shall not be construed as
creating or modifying any contract between the Company and any of its
Employees.
10.13 No Alienation or Assignment
---------------------------
No Participant or Beneficiary shall have the right to alienate or assign
his interest under this Plan other than as provided in Article 6 and
Section 9.15. No such interest shall otherwise be subject to attachment,
execution, garnishment, or other equitable or legal process. The Company
shall take whatever action may be necessary to preserve such interest for
the benefit of such Participant or Beneficiary.
This Section shall not preclude the Company from complying with a court
order requiring deduction from the benefits of a Participant in pay status
for alimony or support payments.
This Section shall not preclude the Company from complying with a qualified
domestic relations order (as defined in section 414(p) of the Code)
relating to the creation, assignment, or recognition of a right to any
benefit payable to a Participant, or with any domestic relations order
entered before January 1, 1985, if the payment of benefits pursuant to the
order has commenced as of such date.
10.14 Company Not Responsible for Benefits
------------------------------------
All benefits payable under this Plan shall be provided solely from the
trust described in Article 7, and the Company assumes no liability or
responsibility for the adequacy of the trust funds. In the event that it
becomes impossible for the Company to perform any act under this Plan, that
act shall be performed which in the judgment of the Company will most
nearly carry out the intent and purpose of this Plan.
10.15 Exclusive Benefit and Return of Contributions
---------------------------------------------
In no event shall contributions made under the Plan or any part of the Plan
assets be paid or revert to the Company or be used for or directed to any
purpose other than the exclusive benefit of Participants and Beneficiaries,
except as provided in the following paragraph.
35
<PAGE>
All Profit Sharing Contributions shall be returned to the Company in the
event that the Plan initially fails to meet the qualification requirements
of the Code. In the case of a Profit Sharing Contribution which is made by
mistake of fact, such contribution, to the extent of the mistake, may be
returned to the Company within one (1) year after its payment. If a
contribution is disallowed as a deduction under Section 404 of the Internal
Revenue Code, such contribution, to the extent disallowed, may be returned
to the Company within one (1) year after its disallowance.
10.16 Administrative Costs
--------------------
All reasonable and proper costs of administering the Plan including, but
not limited to, counsel fees and the fees of any trustee or fiduciary may
be paid from assets of the Plan, but such costs shall be paid by the
Company if the same cannot be paid from assets of the Plan. Each
Participating Subsidiary or Affiliated Corporation may be required to share
in such cost as determined by the Company.
36
<PAGE>
ARTICLE ll. AMENDMENT AND TERMINATION
- ---------- -------------------------
11.01 Right to Amend Plan
-------------------
The Board of Directors of the Company, or a duly delegated Committee, at a
regularly constituted Board or Committee meeting in accordance with the
Board's or Committee's customary procedures for conducting business, may
elect to amend the Plan at any time; provided, that no such amendment shall
be inconsistent with the requirements of ERISA or the Code relating to
qualified profit-sharing plans, or shall cause any reduction in the amounts
theretofore credited to any Participant.
Notwithstanding the generality of the foregoing, for the two-year period
following the date a Change of Control occurs, no such amendment shall
serve (a) to reduce the maximum percentage of Basic Pre-Tax Contributions
permitted under Article 4, Section 4.01, below the amount in effect on the
day immediately preceding the date the Change of Control occurred, (b) to
reduce the Company's obligation to make Matching Company Contributions
under Article 4, Section 4.06, below the level in effect on the day
immediately preceding the date the Change of Control occurred, or (c) to
impose a vesting period for Matching Company Contributions.
11.02 Right to Suspend or Discontinue Contributions or Terminate Plan
---------------------------------------------------------------
The Company reserves the right at any time, subject to the terms of any
collective bargaining agreement, to terminate the Plan as well as to
suspend contributions hereunder or discontinue them altogether, except that
no such termination or suspension shall first be effective within two years
after the date a Change of Control occurs. In the event of such a
termination or discontinuance or of a partial termination, the Funds shall
be valued, and each Participant shall receive distribution of his interest
in the Plan in such manner as the Company shall deem appropriate.
11.03 Merger, Consolidation or Transfer
---------------------------------
This Plan shall not be merged or consolidated with, nor its assets or
liabilities transferred to, any other plan unless each Participant (if the
Plan then terminated) is entitled to receive a benefit immediately after
the merger, consolidation or transfer which is equal to or greater than the
benefit he would have been entitled to receive immediately before such
event (if the Plan had then terminated).
37
<PAGE>
ARTICLE 12. TOP-HEAVY PLAN REQUIREMENTS
- ---------- ---------------------------
12.01 Superseding Article
-------------------
If the Plan is or becomes Top-Heavy in any Plan Year, the provisions of
this Article will supersede any conflicting provision in the Plan for such
Plan Year.
12.02 Minimum Contributions
---------------------
The following requirement shall apply for any Plan Year in which the Plan
is Top-Heavy:
A. Except as otherwise provided in (B) below, Profit Sharing
Contributions allocated under this and any other defined contribution
plan of the Company on behalf of any Participant who is not a Key
Employee shall not be less than three (3) percent of such
Participant's Compensation or, if a lesser amount, the largest
percentage of the sum of Basic Pre-tax, Supplemental Pre-tax, Matching
and Profit Sharing Contributions, as a percentage of the first
$200,000 of the Key Employee's Compensation, allocated on behalf of
any Key Employee for that year.
The minimum allocation is determined without regard to any Social
Security contribution. This minimum allocation shall be made even
though, under other Plan provisions, the Participant would not
otherwise be entitled to receive an allocation, or would have received
a lesser allocation for the year because of the Participant's failure
to provide for Basic Pre-tax Contributions to the Plan.
B. The provision in (A) above shall not apply to any Participant who was
not employed by the Company on the last day of the Plan Year.
12.03 Definitions
-----------
For purposes of this Article, the following terms shall have the meaning as
described below:
A. Key Employee - any employee or former employee who at any time during
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the Plan Year containing the Determination Date, or the four (4)
preceding Plan Years, is or was (1) an officer of the employer having
annual compensation for such Plan Year which is in excess of 150
percent of the dollar limit in effect under Code section 415(c) for
the calendar year in which such Plan Year ends; (2) an owner (or
considered as owning within the meaning of section 318) both more than
one-half (1/2) percent interest as well as one of the ten (10) largest
interests in the employer and having annual compensation greater than
the dollar limit in effect under Code section 415(c)(1)(A) for the
year; (3) a five (5) percent owner of the employer; or (4) a one (1)
percent owner of the employer who has annual compensation of more than
$150,000. For purpose of determining the five (5) percent and one (1)
percent owners, neither the aggregation rules nor the rules of
subsection (b), (c) and (m) of Code section 414 apply. Beneficiaries
of an Employee acquire the character of the Employee who performed
service for the employer.
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Also, inherited benefits will retain the character of the benefits of
the Employee who performed services for the employer.
B. Top-Heavy Plan: For any Plan Year, this plan is Top-Heavy if any of
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the following conditions exists:
(1) If the Top-Heavy Ratio for this Plan exceeds sixty (60) percent
and this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group of plans.
(2) If 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 sixty (60) percent.
(3) If this Plan is a part of a Required Aggregation Group and part
of a Permissive Aggregation Group of plans and the Top-Heavy
Ratio for the Permissive Aggregation Group exceeds sixty (60)
percent.
C. Top-Heavy Ratio:
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(1) The Top-Heavy Ratio is a fraction, the numerator of which is the
sum of account balances under the defined contribution plans for
all Key Employees and the Present Value of accrued benefits under
the defined benefit plans for all Key Employees, and the
denominator of which is the sum of the account balances under the
defined contribution plans for all Participants and the Present
Value of accrued benefits under the defined benefit plans for all
Participants. Both the numerator and the denominator of the Top-
Heavy Ratio are adjusted for any distribution of an account
balance or an accrued benefit made in the five (5) year period
ending on the Determination Date and any contribution due but
unpaid as of the Determination Date.
(2) For purposes of (1) 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
twelve (12) month period ending on the Determination Date.
The account balances and accrued benefits of a Participant who is
not a Key Employee but who was a Key Employee in a prior year
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 section 416 of
the Code and the regulation thereunder. 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.
D. Permissive Aggregation Group: The Required Aggregation Group of plans
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plus any other plan or plans of the Company or its subsidiaries or
affiliates which, when considered as a group with
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the Required Aggregation Group, would continue to satisfy the
requirements of sections 401(a)(4) and 410 of the Code.
E. Required Aggregation Group:
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(1) Each qualified plan of the Company or its subsidiaries or
affiliates in which at least one Key Employee participates, and
(2) any other qualified plan of the Company or its subsidiaries or
affiliates which enables a plan described (1) to meet the
requirements of sections 401(a)(4) or 410 of the Code.
(3) For purposes of (1) and (2) above, the Company or its subsidiaries
shall include all employers aggregated under Code sections 414(b),
(c), or (m).
F. Determination Date: For any Plan Year subsequent to the first Plan
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Year, the last day of the preceding Plan Year. For the first Plan
Year of the Plan, the last day of that year.
G. Valuation Date: The last day of the Plan Year.
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H. Present Value: Present Value of benefits accrued under a defined
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benefit plan shall be based on the interest and mortality rates
specified in the defined benefit plan document.
I. Non-Key Employee: any employee who is not a Key Employee.
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Non- Key Employees include employees who are former Key Employees.
12.04 Top-Heavy Contributions
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If the Plan is or becomes Top-Heavy in any plan year, in the case of
Participants who are also participants in any defined benefit plan of the
Company or its subsidiaries which also is or becomes top-heavy, such
Participants shall accrue the minimum accrued benefit under any such
defined benefit plan in lieu of any Minimum Contribution under Section
12.02.
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