_________________________________________________________________
REGISTRATION NO.
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ORION CAPITAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 95-6069054
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification Number)
9 Farm Springs Road, Farmington, Connecticut 06032-2504
(Address of Principal Executive Offices) (Zip Code)
Orion Capital Corporation
Retirement Savings Plan for Employees of
Guaranty National Insurance Company
(Full Title of Plan)
John J. McCann
Executive Vice President, Chief Legal Officer and
Secretary
Orion Capital Corporation
9 Farm Springs Road
Farmington, Connecticut 06032
(Name and Address of Agent for Service)
(860) 674-6600
(Telephone Number, Including Area Code, of Agent of Service)
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CALCULATION OF REGISTRATION FEE
- --------------- ----------- -------------- -------------- ----------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount to Offering Price Aggregate Amount of
to be be Per Share (2) Offering Price Registration Fee
Registered Registered
(1)
- --------------- ----------- -------------- -------------- ----------------
Common Stock, 250,000 $36.6875 $9,171,875 $2,705.70
$1.00 par value
per share
- -------------------- ------ -------------- -------------- ----------------
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(1) The 250,000 shares of Common Stock being registered hereby will be issuable
from time to time by Orion Capital Corporation (the "Company") to employees
participating in the Company's Retirement Savings Plan for Employees of Guaranty
National Insurance Company. In addition to the 250,000 shares of Common Stock
indicated above, pursuant to Rule 416 under the Securities Act of 1933, as
amended (the "Securities Act"), this Registration Statement also covers an
indeterminate number of shares of Common Stock which may be issuable as a result
of anti-dilution adjustments made under the Retirement Savings Plan for
Employees of Guaranty National Insurance Company and pursuant to the Company's
stockholder rights plan.
(2) The maximum offering price per share used to calculate the registration fee
with respect to the 250,000 shares of Common Stock issuable under the Retirement
Savings Plan for Employees of Guaranty National Insurance Company was estimated
pursuant to Rule 457(h) under the Securities Act using the average of the high
and low prices per share of the Common Stock reported on the New York Stock
Exchange on September 3, 1998.
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PART I INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
Pursuant to Rule 428(b)(1) under the Securities Act, the documents
containing the information specified in Part I of Form S-8 will be sent or given
to each participant in the Orion Capital Corporation Retirement Savings Plan for
Employees of Guaranty National Insurance Company (the "Plan"). These documents
and the documents incorporated by reference in this Registration Statement
pursuant to Item 3 of Part II hereof, taken together, constitute the Section
10(a) Prospectus.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The documents listed below are incorporated by reference herein, and all
documents subsequently filed by Orion Capital Corporation ("Registrant")
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference shall be deemed
to be modified or superseded to the extent that a statement contained in this
Registration Statement or in any other subsequently filed document which also is
incorporated or deemed to be incorporated by reference modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
o Registrant's Annual Report on Form 10-K for the year ended December 31,
1997.
o Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998.
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o Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
1998.
o The description of Registrant's Common Stock and its preferred stock
purchase rights associated with the Common Stock, contained in its
registration statement filed pursuant to Section 12 of the Exchange Act
and any amendment or report filed for the purpose of updating those
descriptions.
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The consolidated financial statements and schedules of the Registrant
included in the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997 have been audited by Deloitte & Touche LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference.
Item 5. Interests of Named Experts and Counsel
The validity of the securities have been passed upon by John J. McCann,
Esq., Executive Vice President, Chief Legal Officer and Secretary for the
Registrant. Mr. McCann beneficially owns Common Stock and options to purchase
Common Stock.
Item 6. Indemnification of Directors and Officers
Article IX of Registrant's By-Laws requires indemnification of Registrant's
directors and officers to the full extent permitted by the Delaware General
Corporation Law (the "Law") and provides for the advancement of defense expenses
provided the director or officer agrees to repay the advance if it is ultimately
determined that he is not entitled to indemnification. Article IX also provides
that the indemnification provided by the By-Laws is not exclusive. Section
145(a) of the Law provides in general that a corporation may indemnify anyone
who is or may be a party to a legal proceeding by reason of his service as a
director or officer against expenses, adjustments, fines and settlement payments
actually and reasonably incurred if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and, as to any criminal proceeding, had no reasonable cause to
believe his conduct was unlawful. Section 145(b) of the Law provides similarly
where the proceeding is by or in the right of the corporation to procure a
judgment in its favor. Section 145(g) of the Law allows a corporation to
maintain insurance on behalf of any officer or director against any liability
incurred by him in such capacity, whether or not the corporation would have the
power to indemnify him against such liability under the Law. Registrant
maintains such directors and officers liability insurance coverage.
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Each of Registrant's directors has entered into an indemnity agreement
with Registrant which (i) confirms the indemnity set forth in the By-laws and
gives assurances that such indemnity will continue to be provided despite any
By-law changes and (ii) provides, subject to certain conditions, that the
director shall be indemnified to the fullest possible extent permitted by law
against all expenses, judgments, fines and settlement amounts incurred or paid
by him in any proceeding.
As permitted by Section 102(b)(7) of the Law, Article VII of
Registrant's Certificate of Incorporation eliminates personal liability of any
director to Registrant and its stockholders for breach of the director's
fiduciary duty of care, except where the director has breached his duty of
loyalty, acted in bad faith, engaged in intentional or knowing misconduct,
negligently or willfully declared an improper dividend or effected an unlawful
stock repurchase or redemption, or obtained an improper personal benefit.
Item 8. Exhibits
4.0 Orion Capital Corporation Retirement Savings Plan for Employees of
Guaranty National Insurance Company 5.0 Opinion of John J. McCann, Esq.
15.0 Letter in Lieu of Consent of Deloitte & Touche LLP
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of John J. McCann, Esq. (incorporated in Exhibit 5)
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
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(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(ii) do not
apply if the Registration Statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) 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) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in such
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the Town of Farmington, State of Connecticut, on this 28th day of
May, 1998.
ORION CAPITAL CORPORATION
By: /S/W. Marston Becker
W. Marston Becker
Chairman of the Board and
Chief Executive Officer of the
Company
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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 date or dates indicated:
Signature Title Date
/S/ W. Marston Becker
----------------------
W. Marston Becker Chairman of the Board May 28, 1998
and Chief Executive
Officer of the Company
/S/ Donald W. Ebbert, Jr.
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Donald W. Ebbert, Jr. Executive Vice President May 28, 1998
and Chief Financial
Officer
/S/ Gordon F. Cheesbrough
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Gordon F. Cheesbrough Director May 28, 1998
/S/ John C. Colman
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John C. Colman Director May 28, 1998
/S/ David H. Elliott
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David H. Elliott Director May 28, 1998
/S/ Victoria R. Fash
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Victoria R. Fash Director May 28, 1998
/S/ Robert H. Jeffrey
----------------------
Robert H. Jeffrey Director May 28, 1998
/S/ Gordon W. Kreh
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Gordon W. Kreh Director May 28, 1998
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Warren R. Lyons Director
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James K. McWilliams Director
/S/ Ronald W. Moore
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Ronald W. Moore Director May 28, 1998
/S/ William W. Weaver
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William W. Weaver Director May 28, 1998
<PAGE>
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ORION CAPITAL CORPORATION RETIREMENT SAVINGS PLAN
FOR THE EMPLOYEES OF
GUARANTY NATIONAL INSURANCE COMPANY
ARTICLE 1 - PURPOSE
The purpose of the Orion Capital Corporation Retirement Savings Plan for the
Employees of Guaranty National Insurance Company is to provide Employees of the
Company who perform services for its subsidiary Guaranty National Insurance
Company an opportunity to acquire a proprietary interest in the common stock of
Orion Capital Corporation (the "Company"), as well to provide Employees an
opportunity to make regular savings and investments on a pre-tax or after-tax
basis. The Plan constitutes a profit-sharing plan, the contributions to which
are not limited to the profits of the Company.
The Plan, originally sponsored by Guaranty National Insurance Company, was
initially effective on June 1, 1971. The Plan is amended and restated to provide
these opportunities effective July 1, 1998.
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ARTICLE 2 - DEFINITIONS
As used in the Plan:
2.1 "Account" means the aggregate of all of each Participant's accounts under
the Plan, including but not limited to his After-Tax Contribution Account,
Matching Contribution Account, Profit Sharing Contribution Account, Qualified
Non-Elective Contribution Account, Retirement Contribution Account, Rollover
Contribution Account, Savings Contribution Account, and Voluntary Deductible
Contribution Account and IRP Account, if any. ------------------
2.2 "After-Tax Contributions" means the contributions made by a Participant to
the Plan pursuant to Section 5.3. -----------------------------------
2.3 "After-Tax Contribution Account" means the bookkeeping account maintained
under the Plan for a Participant to record his After-Tax Contributions, as
increased by investment earnings and reduced by investment losses thereon.
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2.4 "Annual Earnings" of a Participant means only that portion of his "total
compensation" during a calendar year which represents the aggregate amount
reflected in the Company's monthly Hours and Earnings Reports, including
overtime, any bonus paid to a Participant pursuant to the Company's regular
incentive plan or a "sign-on bonus" paid to a Participant as an incentive to
join the Company, but excluding all other extraordinary or supplementary
compensation reflected on such Reports. Annual Earnings also include any amount
which is contributed by the Participating Company under a salary reduction
agreement and which is not includable in the Participant's gross income under
Section 125, 402(e)(3), 402(h) or 403(b) of the Code and any amount contributed
by such Company under a nonqualified plan of deferred compensation. Annual
Earnings include solely amounts actually paid to the Participant during the
calendar year and do not include any amounts paid to a Participant in the nature
of severance or termination pay. A Participant's Annual Earnings do not include
any amounts in excess of $200,000, as adjusted for cost-of-living increases in
effect for the calendar year under Section 401(a)(17) of the Code (or in excess
of $150,000 for Plan Years beginning after 1993, as so adjusted). The
cost-of-living adjustment in effect for a calendar year applies to any period,
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not exceeding 12 months, for which Annual Earnings are determined
("determination period") beginning in such calendar year. If a determination
period consists of fewer than 12 months, the $200,000 or $150,000 limitation on
Annual Earnings, as applicable and as adjusted for cost-of-living increases,
shall be multiplied by a fraction, the numerator of which shall be the number of
months in the determination period and the denominator of which shall be 12. For
Plan Years beginning prior to January 1, 1997, in calculating this Annual
Earnings limit, the rules for treating certain family members as one person
under Section 414(q)(6) of the Code shall apply, except that the term "family"
shall include solely the spouse of the Participant and any lineal descendants of
the Participant who do not attain age 19 before the end of the year. If the
adjusted $200,000 (or, after 1993, $150,000) limit is exceeded, then (except for
determining the portion of a Participant's Annual Earnings which do not exceed
the integration level under Section 4.2), the limit shall be apportioned among
the affected individuals in proportion to their Annual Earnings, determined
under this Section 2.4 prior to application of this limitation.
For purposes ofthis Section 2.4, the term "total compensation" means the total
compensation paid to a Participant for services performed for a Participating
Company, which is the sum of: (i) compensation includable in gross income for
federal income tax purposes, (ii) Salary Reduction Contributions, and (iii)
pretax salary reduction contributions made pursuant to a plan described in
Section 125 of the Code, as conclusively stated in the Participating Company's
payroll records.
2.5"Annuity Starting Date" means (a) the first day of the first period for which
an amount is payable from the Plan in the form of an annuity or (b) in the case
of a Plan benefit which is not payable in the form of an annuity, the first day
as of which all events have occurred which entitle the Participant to such
benefit.
2.6 "Basic Compensation" means that part of a Participant's Annual Earnings
which excludes all bonuses, commissions, allowances, overtime pay or other
extraordinary or supplemental compensation of any type, but includes any amount
contributed by the Company under a nonqualified plan of deferred compensation.
2.7 "Beneficiary" means (a) in the case of a Participant who has a surviving
Spouse as of the date of his death, his surviving Spouse (unless the Participant
elects otherwise as provided below), or (b) in the case of a Participant who
does not have a surviving Spouse as of the date of his death, the person or
entity designated by the Participant as his Beneficiary on a form supplied by,
and filed with, the Plan Administrator, which person or entity shall receive any
benefits payable under the Plan on account of the death of the Participant. A
Participant who has a Spouse may elect to have someone other than his Spouse as
his Beneficiary if (i) the Spouse of the Participant consents in writing to such
election, (ii) the election designates a specific Beneficiary, including any
class of beneficiaries or contingent beneficiaries, which designation may not be
changed without the consent of the Participant's Spouse (unless as part of the
designation the Spouse expressly permits the Participant to make Beneficiary
changes without the need for any further consent by the Participant's Spouse),
(iii) the Spouse's consent acknowledges the effect of such election, and (iv)
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the consent is witnessed by a Plan representative or a notary public. If no
Beneficiary designation is in effect as of the date of the death of the
Participant, or if no designated (or deemed designated) Beneficiary shall
survive the Participant, the Participant's Beneficiary shall be the
Participant's estate.
2.8 "Board of Directors" means the Board of Directors of Orion Capital
Corporation.
2.9 "Code" means the Internal Revenue Code of 1986, as amended and the Treasury
Regulations promulgated and the rulings issued thereunder.
2.10 "Committee" means the Committee appointed by the Board of Directors
pursuant to the Plan as it may be constituted from time to time.
2.11 "Company"means (a) Orion Capital Corporation; (b) all corporations which
are members of a controlled group of corporations, within the meaning of Section
1563(a) of the Code (determined without regard to Section 1563(a)(4) and
(e)(3)(C)), of which Orion Capital Corporation is the parent; and (c) any trade
or business, whether or not incorporated, which, at the time of reference (i) is
under common control with Orion Capital Corporation, within the meaning of
Section 414(c) of the Code, (ii) effective January 1, 1981, is a member of the
same affiliated service group as Orion Capital Corporation, within the meaning
of Section 414(m) of the Code, or (iii) is required to be aggregated with Orion
Capital Corporation under Section 414(o) of the Code. In addition, "Company"
includes any business acquired by Orion Capital Corporation (x) if Orion Capital
Corporation continues the plan of the acquired business, or (y) to the extent
required by Treasury Regulations promulgated under Section 414(a)(2) of the
Code.
2.12 "Company Stock" means the Common Stock, par value $1 per share, of Orion
Capital Corporation.
2.13 "Disability" means a medically determinable physical or mental impairment
which can be expected (a) to result in death or (b) to be of continued and
indefinite duration if it causes the Participant to be unable to engage in any
gainful activity for which he is reasonably suited by his training, education or
experience.
2.14 "Employee" means each person who is regularly employed at a stated salary
or at an hourly rate by Guaranty National Insurance Company or by the Company at
its Englewood, Colorado location, including any person employed by the Company
as a "leased employee" as defined in Section 414(n)(2) of the Code, but
excluding (a) any individual who is primarily employed by the Company outside
the United States and (b) any individual employed by the Company solely to staff
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temporary work assignments who works fewer than 1,000 Hours of Service in any
Plan Year.
Leased employees shall not be eligible to participate in the Plan unless they
otherwise meet the definition of "Employee" and become eligible to participate
under Article 3, notwithstanding amendments to the Code effective for 1984 and
thereafter requiring that such person may have to be counted as an employee of
the Company in order to perform certain plan qualification tests required under
the Code.
2.15 "Employment Commencement Date" means the date on which an Employee first
performs an Hour of Service, or, if such Employee has had a One-Year
Break-in-Service, the date on which the Employee first performs an Hour of
Service following such One-Year Period of Severance.
2.16 "ERISA" means theEmployee Retirement Income Security Act of 1974, as
amended and the Department of Labor Regulations promulgated and the rulings
issued thereunder.
2.17 "Five Percent Owner" means any person who owns (or is considered as owning
within the meaning of Section 318 of the Code) more than 5% of the outstanding
stock of the Company or stock possessing more than 5% of the total combined
voting power of all of the stock of the Company.
2.18 "Highly CompensatedEmployee" means either a "Highly Compensated Active
Employee" or, for Plan Years beginning prior to January 1, 1997, a "Highly
Compensated Former Employee."
2.19 "HighlyCompensated Active Employee" means, for Plan Years beginning prior
to January 1, 1997, any Employee who performs service for the Company during the
Plan Year and who, during the 12 consecutive-month period immediately preceding
the Plan Year (a) received compensation (within the meaning of Section 414(q)(7)
of the Code) from the Company in excess of $75,000 (as adjusted for
cost-of-living increases under Section 415(d) of the Code); or (b) received
compensation (within the meaning of Section 414(q)(7) of the Code) from the
Company in excess of $50,000 (as adjusted for cost-of-living increases under
Section 415(d) of the Code) and was a member of the top-paid 20% of Employees
that year; or (c) was an officer of the Company and received compensation
(within the meaning of Section 414(q)(7) of the Code) from the Company greater
than 50% of the applicable dollar limit for that year under Section 415(b)(1)(A)
of the Code. The term Highly Compensated Employee also includes (i) Employees
described in any of clauses (a), (b) or (c) of this paragraph during the current
Plan Year, rather than the 12 consecutive-month period immediately preceding the
current Plan Year, but only if they are among the 100 Employees with the highest
"compensation" (within the meaning of Section 414(q)(7) of the Code) from the
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Company for that Plan Year and (ii) Employees who are Five Percent Owners at any
time during the Plan Year or the 12 consecutive-month period immediately
preceding the Plan Year. If no officer meets the compensation requirement of
clause (c) in the immediately preceding paragraph during the Plan Year or the 12
consecutive-month period immediately preceding the Plan Year, the highest-paid
officer for that consecutive 12-month period will be a Highly Compensated
Employee. For Plan Years beginning on and after January 1, 1997, "Highly
Compensated Employee" means any Employee who (a) received compensation (within
the meaning of Section 414(q)(7) of the Code) from the Company in excess of
$80,000 (as adjusted for cost-of-living increases under Section 415(d) of the
Code) for the preceding Plan Year and was a member of the top-paid 20% of
Employees that year; or (b) was a Five Percent Owner at any time during the Plan
Year or the preceding Plan Year.
2.20 "Highly Compensated Former Employee"means, for Plan Years beginning before
January 1, 1997, any former Employee who separated from service (or was treated
as if he had separated from service) before the Plan Year, performed no service
for the Company during the Plan Year and was a Highly Compensated Active
Employee either in his separation year or in any Plan Year ending on or after
his 55th birthday.
For Plan Years beginning before January 1, 1997, if an Employee is, during the
Plan Year or the 12 consecutive-month period immediately preceding the Plan
Year, a family member of either (i) a Five Percent Owner who is an active or
former Employee or (ii) a Highly Compensated Employee who is one of the 10 most
Highly Compensated Employees (on the basis of "compensation" (within the meaning
of Section 414(q)(7) of the Code) from the Company paid that year), then the
family member and the Five Percent Owner or top 10 Highly Compensated Employee
are treated as if they were a single Employee receiving Compensation. For this
purpose, family members are the spouse, lineal ascendants and descendants of the
Employee or former Employee and the spouses of those ascendants and descendants.
The determination of who is a Highly Compensated Employee, including the
determinations of the number and identity of Employees in the top-paid 20% of
Employees, the top 100 Employees, the number of Employees treated as officers
and the "compensation" (within the meaning of Section 414(q)(7) of the Code)
that is considered, is made in accordance with Section 414(q) of the Code and
applicable Treasury Regulations.
The Plan Administrator may elect, in lieu of the foregoing procedure, to make
the previous year calculation for a Plan Year on the basis of the calendar year
ending with or within the applicable Plan Year (or, for a Plan Year that is
shorter than 12 months, the calendar year ending with or within the 12-month
period ending with the applicable Plan Year). This determination is to be made
in accordance with the procedure outlined in Treasury Regulation Section
1.414(q)-1T, Q&A-14(b). If this method is used and the Plan Year is the calendar
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year, then a separate calculation for the previous consecutive 12-month period
is not required. If this option is elected for any plan of the Company, it must
apply to all of the Company's plans.
2.21 "Hour of Service" means:
(a) Each hour for which an Employee is directly or indirectly paid, or
entitled to payment, by the Company for the performance of duties;
(b) Each hour for which back pay, irrespective of mitigation of damages,
has been awarded or agreed to be paid to an Employee by the Company; and/or
(c) Each hour for which an Employee is directly or indirectly paid, or
entitled to payment, during which no duties are performed (regardless of whether
his employment with the Company terminated) due to vacation, holiday, illness,
incapacity (including Disability), layoff, jury duty, military duty or leave of
absence. Hours under this paragraph shall be calculated and credited as required
under Department of Labor Regulation Section 2530.200b-2, which is hereby
incorporated by reference. Hours of Service shall be credited whether occurring
before or after the effective date of the Plan or any amendment or restatement
thereof.
Hours of Service prior to the effective date of the Plan shall be determined by
the Plan Administrator from reasonably accessible records, or in the absence of
such records shall be reasonably estimated by the Plan Administrator. Hours of
Service after the effective date shall be determined pursuant to rules of the
Plan Administrator which are consistent with ERISA. Hours of Service shall be
determined by crediting Employees who are not hourly-paid with 10 Hours of
Service for each day for which such Employees would be credited with Hours of
Service if such Employees were paid on an hourly basis. Solely for purposes of
determining whether a One-Year Break-in-Service has occurred, an Employee shall
be credited with 1 Hour of Service for each hour which such Employee would
normally have been expected to work during a period not exceeding 2 years while
on leave of absence approved by the Company, provided that such Employee
promptly returns to employment with the Company following termination of such
leave.
Hours of Service shall be credited for employment with other members of an
affiliated service group (as determined under Section 414(m) of the Code), a
"controlled group of corporations" (as determined under Section 414(b) of the
Code) or a group of trades or businesses under common control (as determined
under Section 414(c) of the Code), of which the Company is a member, and any
other entity required to be aggregated with the Company under Section 414(o) of
the Code.
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2.22 "Investment Funds" means the investment funds selected from time to time by
the Committee for the investment of the assets of the Trust Fund, as identified
on Exhibit A to the Plan.
2.23 "IRP Plan" means the Individual Retirement Plan of Viking Insurance Company
of Wisconsin formerly sponsored by Viking Insurance Company of Wisconsin.
2.24 "IRP Plan Account" means a Participant's account in the Plan that was
transferred from the IRP Plan as a result of the merger between the IRP Plan and
the Plan.
2.25 "Matching Contributions" means the contributions made by the Company to the
Plan pursuant to Section 4.1.
2.26 "Matching Contribution Account" means the bookkeeping account maintained
under the Plan for a Participant to record any Matching Contributions made to
the Plan on his behalf, as increased by investment earnings and reduced by
investment losses thereon.
2.27 "One-Year Break-in-Service" means a 12 consecutive-month period beginning
on an Employee's Severance Date during which he fails to complete an Hour of
Service.
With respect to Plan Years beginning after 1984, for purposes of determining
whether a One-Year Break-in-Service has occurred, an Employee upon providing a
certification satisfactory to the Plan Administrator setting forth the reasons
for the leave, will receive credit for Hours of Service for periods the Employee
is absent from work (a) by reason of the pregnancy of the Employee, (b) by
reason of the birth of a child of the Employee, (c) by reason of the placement
of a child with the Employee in connection with the Employee's adoption of such
child, or (d) for purposes of caring for such child during the period
immediately following the child's birth or placement for adoption
("Maternity/Paternity Leave of Absence"). During the period of such
Maternity/Paternity Leave of Absence, the Employee will receive credit for (x)
the number of Hours of Service that would normally have been credited but for
the absence or (y) if the normal number of hours cannot be determined, 8 Hours
of Service for each normal workday during the leave. The total number of Hours
of Service required to be credited for any such period shall not exceed 501.
2.28 "Orion Common Stock Fund" means the Investment Fund which shall be invested
and reinvested solely in Company Stock. The Fund may maintain a cash position to
facilitate certain Plan transactions.
2.29 "Participant" means an Employee who has satisfied the requirements of
Article 3 to participate in the Plan, a former Employee for whom an Account
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balance exists under the Plan, any alternate payee pursuant to an applicable
qualified domestic relations order and any beneficiary of any of the foregoing.
2.30 "Participant Contributions" means the Savings Contributions described in
Section 5.2, the After-Tax Contributions described in Section 5.3, the Voluntary
Deductible Contributions (for Plan Years beginning prior to January 1, 1987)
described in Section 2.53 and the Rollover Contributions described in Section
5.4, made by a Participant.
2.31 "Pay Period" means the period in respect of which each installment of Basic
Compensation is paid, such as a week, two weeks, half a month, a month or some
other period of time.
2.32 "Period of Severance" means a period beginning on an Employee's Severance
Date and ending on the date he thereafter completes an Hour of Service.
2.33 "Plan" means the Orion Capital Corporation Retirement Savings Plan for
Employees of Guaranty National Insurance Company, as from time to time in
effect.
2.34 "Plan Administrator" means the Company.
2.35 "Plan Year" means the calendar year, January 1 through December 31 each
year.
2.36 "Profit Sharing Contributions" means the contributions made by the Company
to the Plan pursuant to Section 4.1.
2.37 "Profit Sharing Account" means the bookkeeping account maintained under the
Plan for a Participant to record any Profit Sharing Contributions made to the
Plan on his behalf, as increased by investment earnings and reduced by
investment earnings thereon.
2.38 "Qualified Non-Elective Contributions" means the contributions made by the
Company to the Plan pursuant to Section 4.1(b).
2.39 "Qualified Non-Elective Contribution Account" means the bookkeeping account
maintained under the Plan for a Participant to record any Qualified Non-Elective
Contributions made to the Plan on his behalf, as increased by investment
earnings and reduced by investment losses thereon.
2.40 "Retirement" means termination of employment with the Company after the
Participant has (a) attained age 65 or (b) attained age 55 and completed 10
Years of Service. Notwithstanding the foregoing, for Participants who were
formerly participants in the Unisun Plan, "retirement" means termination of
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employment with the Company after the Participant has attained age 55 and
completed 5 Years of Service.
2.41 "Rollover Contributions" means the contributions made by a Participant to
the Plan pursuant to Section 5.4.
2.42 "Rollover Contribution Account" means the bookkeeping account maintained
under the Plan for a Participant to record his Rollover Contributions, as
increased by investment earnings and reduced by investment losses thereon.
2.43 "Savings Contributions" means the contributions made by the Company to the
Plan pursuant to Section 5.2 as elected by Participants under salary reduction
agreements with the Company.
2.44 "Savings Contribution Account" means the bookkeeping account maintained
under the Plan for a Participant to record the Savings Contributions made to the
Plan on his behalf, as increased by investment earnings and reduced by
investment losses thereon.
2.45 "Service" means a period (whether before or after the effective date of the
Plan) commencing on an Employee's Employment Commencement Date and ending on his
Severance Date which commenced a One-Year Break-in-Service. An Employee's
Service shall not be considered broken by reason of a Period of Severance if the
Employee performs or is otherwise credited with an Hour of Service before the
1-year anniversary of such Severance Date. Except as otherwise specifically
provided in the Plan, no period of employment with any corporation prior to the
date of its acquisition by the Company shall be taken into account in
determining an Employee's Service. Periods of employment with Viking Insurance
Company of Wisconsin, Unisun Insurance Company and Strickland Insurance Group
shall be taken into account in determining an Employee's Service.
In determining an Employee's Service all separate periods of Service shall be
taken into account, excluding any period of Service which preceded a One-Year
Break-in-Service if the Employee was not vested as to any portion of his Account
at such time and such Employee's Period of Severance which includes that
One-Year Break-in-Service equals or exceeds the greater of (a) 5 years, or (b)
the length of his Service (whether or not consecutive) completed before such
Period of Severance. In determining the length of an Employee's Service
completed before such Period of Severance, an Employee's Service shall not
include any Service which is not taken into account by reason of any prior
Period of Severance.
2.46 "Severance Date" means the earlier of: (a) the date on which an Employee
quits, retires, is effectively discharged or dies; or (b) the 1-year anniversary
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of the first date of absence for any other reason, such as layoff, leave of
absence or Disability.
For this purpose, an Employee who is on military leave while his employment
rights are protected by law (provided he resumes his employment with the Company
within the period prescribed by applicable law) shall not be deemed to be absent
and such period of military leave shall be treated as Service.
2.47 "Spouse" means the spouse of a Participant who has been legally married to
the Participant under the laws of the State in which the marriage was contracted
for a period of at least 1 year immediately prior to the Participant's date of
death or Annuity Starting Date, as applicable. Notwithstanding the foregoing, a
Participant and his spouse shall be treated as married throughout the 1-year
period ending on the Participant's Annuity Starting Date even though they are
married to each other for less than 1 year before the Annuity Starting Date if
they remain married to each other for at least 1 year. If such Participant and
his spouse do not remain married for at least 1 year, the Participant and his
spouse will be treated as unmarried as of the Annuity Starting Date.
2.48 "Trust Agreement" means the trust agreement entered into between the
Company and the Trustee to carry out the administration of the Trust Fund.
2.49 "Trustee" means the trustee or trustees of the Trust Fund, as appointed by
the Company pursuant to the provisions of Article 14.
2.50 "Trust Fund" means the cash and other properties of the Plan held and
administered by the Trustee in accordance with the provisions of the Trust
Agreement.
2.51 "Unisun Plan" means the Unisun Insurance Company Savings & Security Plan
formerly sponsored by Unisun Insurance Company.
2.52 "Valuation Date" means each day on which the New York Stock Exchange is
open for business.
2.53 "Voluntary Deductible Contribution Account" means the bookkeeping account
maintained under the Plan for a Participant to record his voluntary deductible
contributions (under Section 72(o)(5)(B) of the Code) made by him under the Plan
prior to 1987, as increased by investment earnings and reduced by investment
losses thereon.
2.54 "Year of Service" means each 12 consecutive-month period of an Employee's
employment for the Company (or fraction thereof) during which the Employee does
not have a One-Year Break-in-Service.
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ARTICLE 3 - PARTICIPATION
3.1 PARTICIPATION.
(a) Prior to July 1, 1998, each Employee shall be eligible to be, and shall
become, a Participant in the Plan as of the first day of the first quarter
following the Employee's Employment Commencement Date; provided, however, that
(1) for the period from January 1, 1996 through March 31, 1996 (or, if later,
the date immediately preceding the date on which the IRP Plan is merged into the
Plan), employees who perform services for Viking Insurance Company of Wisconsin
shall not be eligible to be Participants in the Plan, (2) for the period from
October 1, 1997 through September 1, 1998, employees who perform services for
Unisun Insurance Company shall not be eligible to be Participants in the Plan;
and (3) for the period from May 1, 1998 through August 31, 1998, employees who
perform services for the portion of the Company formerly owned by Strickland
Insurance Group shall not be eligible to be Participants in the Plan.
(b) Beginning on and after July 1, 1998, each Employee shall be eligible to
be, and shall become, a Participant in the Plan as of the later of (a) the
Employee's attainment of age 18 or (b) the Employee's completion of 3
consecutive months of Service commencing on his Employment Commencement Date
without an interruption in Service caused by a One-Year Break-in-Service.
3.2 UNION EMPLOYEES.
No Employee covered by a currently effective collective bargaining agreement to
which the Company is a party shall be eligible to participate in the Plan (and
if participating in the Plan his participation shall terminate), unless such
collective bargaining agreement expressly provides for inclusion of Employees
covered by the agreement in the Plan; and provided further, that expiration of a
collective bargaining agreement shall not, by itself, affect eligibility (i.e.,
covered Employees included in the Plan shall remain in the Plan, and non-covered
Employees shall remain ineligible) pending execution of a new collective
bargaining agreement.
3.3 RETURN TO EMPLOYMENT.
A Participant who terminates his employment with the
Company and thereafter returns to employment with the Company, regardless of
whether he incurs any One-Year Breaks-in-Service, shall be eligible to become a
Participant immediately upon his return, provided he is then employed by the
Company (and had previously met the participation requirements under Section
3.1).
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ARTICLE 4 - COMPANY CONTRIBUTIONS
4.1 PROFIT SHARING CONTRIBUTIONS, MATCHING CONTRIBUTIONS AND QUALIFIED
NON-ELECTIVE CONTRIBUTIONS.
a) For each Plan Year, the Company in its discretion may make a Profit
Sharing Contribution to the Plan without regard to the current or accumulated
profits of the Company. Profit Sharing Contributions shall be allocated to
Participants in accordance with Section 6.1 of the Plan.
(b) For each Pay Period, the Company shall make Matching Contributions to
the Plan in an amount equal to 100% of the Savings Contributions and/or
After-Tax Contributions made by Participants for that Pay Period, to an
aggregate amount equal to 6% of the Basic Compensation of each such Participant.
Notwithstanding the foregoing, the Company may, at the end of the Plan Year,
make "true-up" Matching Contributions to the Account of any Participant who
deferred the maximum amount permitted by law into his or her Savings
Contributions Account and/or After-Tax Contributions Account prior to Plan
Year-end and therefore had not received the maximum Matching Contribution to
which the Participant was entitled.
In no event will any Matching Contribution be made in respect of Savings
Contributions and/or After-Tax Contributions in excess of an amount which
exceeds 6% of a Participant's Basic Compensation or in respect of any Voluntary
Deductible Contributions or Rollover Contributions.
The maximum Matching Contribution for any Participant will be an amount equal to
6% of the Basic Compensation paid to such Participant for any Pay Period.
(c) The Company in its discretion may make a Qualified Non-Elective
Contribution to the Plan. Qualified Non-Elective Contributions shall be
allocated to Participants in accordance with Section 6.3 of the Plan.
4.2 ADDITIONAL CONTRIBUTIONS.
Pursuant to Section 10.4, the Company shall make an additional contribution to
the Plan for each Plan Year equal to the amount necessary to restore the Account
balance of any Participant to whom the provisions of Section 10.4 become
applicable during such Plan Year.
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4.3 REDUCTION FOR FORFEITURES.
Pursuant to Section 10.4, the amount of the Matching Contributions and Profit
Sharing Contributions made by the Company each Plan Year shall be reduced by the
amount of forfeitures.
4.4 PAYMENT OF PROFIT SHARING CONTRIBUTIONS AND QUALIFIED NON-ELECTIVE
CONTRIBUTIONS.
Profit Sharing Contributions and Qualified Non-Elective Contributions made by
the Company pursuant to Section 4.1, in each case in respect of any Plan Year,
shall be paid to the Trustee by the date (including extensions) for filing the
Company's Federal income tax return for its taxable year ending with or within
such Plan Year.
4.5 PAYMENT OF SAVINGS CONTRIBUTIONS, MATCHING CONTRIBUTIONS AND AFTER-TAX
CONTRIBUTIONS.
No later than the 15th business day of the month following the month in which a
Pay Period ends, the Company shall transfer to the Trustee an amount equal to
the aggregate Savings Contributions and After-Tax Contributions elected by
Participants to be made for such Pay Period pursuant to Section 5.2 and 5.3 and
the amount of Matching Contributions required to be made by the Company for such
Pay Period pursuant to Section 4.1.
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ARTICLE 5 - PARTICIPANT CONTRIBUTIONS
5.1 ELIGIBILITY TO MAKE PARTICIPANT CONTRIBUTIONS.
Any Participant may elect to make Savings Contributions and/or After-Tax
Contributions as of the first day of any Pay Period which occurs on or after the
date on which he becomes a Participant by delivering to the Plan Administrator
his election in such form as shall be specified by the Plan Administrator or
Plan recordkeeper and such election shall be processed as soon as practicable
and in no event later than 30 days after its receipt and shall become effective
as of the next following Pay Period.
5.2 SAVINGS CONTRIBUTIONS (PRE-TAX).
Each Participant may enter into a salary reduction agreement with the Company
whereby the Company shall agree for any Plan Year to reduce his Annual Earnings
by a whole percentage of from 1% to 12% of his Basic Compensation, which amount,
when deducted, may be rounded down to the nearest whole dollar and contribute
said amount to the Plan on his behalf as a Savings Contribution; provided,
however, that for any calendar year beginning on or after January 1, 1987, the
aggregate of such amounts shall not exceed the maximum amount permissible for
elective deferrals under Section 402(g) of the Code, as adjusted. Savings
Contributions shall become effective no later than 30 days after receipt by the
Plan Administrator of the Participant's election (but not prior to his becoming
a Participant) and shall remain in effect until changed or cancelled. The Plan
Administrator may, on a uniform and nondiscriminatory basis, reduce the rate of
Savings Contributions by Participants who are Highly Compensated Employees to
facilitate the Plan's satisfaction of the actual deferral percentage test under
Section 401(k)(3) of the Code.
5.3 AFTER-TAX CONTRIBUTIONS.
Beginning on and after July 1, 1998, each Participant may elect to make
After-Tax Contributions to the Plan for any Plan Year through payroll deduction
by a whole percentage of from 1% to 10% of Basic Compensation, which amount,
when deducted, may be rounded down to the nearest whole dollar; provided,
however, that the aggregate maximum percentage of Basic Compensation which may
be contributed by a Participant to the Plan for any Plan Year as Savings
Contributions and After-Tax Contributions shall not exceed 12% of such
Participant's Basic Compensation. Elections under this Section 5.3 shall be
processed no later than 30 days after receipt by the Plan Administrator of the
Participant's election (but not prior to his becoming a Participant), shall
become effective as of the following Pay Period and shall remain in effect until
changed or cancelled. The Plan Administrator may, on a uniform and
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nondiscriminatory basis, reduce the rate of After-Tax Contributions made by
Participants who are Highly Compensated Employees to facilitate the Plan's
satisfaction of the actual contribution percentage test under Section 401(m) of
the Code.
5.4 ROLLOVER CONTRIBUTIONS.
Any Participant who the Plan Administrator determines has received a qualifying
distribution under Section 402 and/or 408 of the Code, as applicable, from any
other plan qualified under Section 401(a) of the Code or from an individual
retirement account may have all or part of such distribution transferred as a
Rollover Contribution to a Rollover Contribution Account established in the name
of the Participant for that purpose. Funds may also be directly transferred to
this Plan from another qualified trust; such direct transfers shall also be
treated as Rollover Contributions.
5.5 INCREASES AND DECREASES OF PARTICIPANT CONTRIBUTIONS.
A Participant may change the amount of his Participant Contributions by notice
to the Plan Administrator or Plan recordkeeper. Such notice shall be processed
as soon as practicable and generally not later than 30 days after the Plan
Administrator's receipt thereof. The change shall thereafter be effective as of
the next following Pay Period.
5.6 SUSPENSIONS OF PARTICIPANT CONTRIBUTIONS.
A Participant may suspend Participant Contributions by notice to the Plan
Administrator or Plan recordkeeper. Such notice shall be processed as soon as
practicable and generally not later than 30 days after the Plan Administrator's
receipt thereof. The change shall thereafter be effective as of the next
following Pay Period. Any such suspension shall continue to be effective until
Participant Contributions are again authorized by the Participant.
5.7 PAYMENT OF PARTICIPANT CONTRIBUTIONS.
As soon as practicable following the end of each Pay Period and in all events no
later than the 15th day of the month following the month in which the Pay Period
ends, the Company shall pay to the Trustee the aggregate amount of Participant
Contributions for such Pay Period.
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ARTICLE 6 - ALLOCATION OF CONTRIBUTIONS
6.1 ALLOCATION OF PROFIT SHARING CONTRIBUTIONS.
(a) Each operating company, subsidiary or division within the Company whose
Employees participate in the Plan may establish a different target level of
Profit Sharing Contributions, and Profit Sharing Contributions shall be
allocated to the Profit Sharing Contribution Account of an eligible Participant
in the proportion that the eligible Participant's Annual Earnings bears to the
total Annual Earnings of all eligible Participants who perform services for that
operating company. If the operating companies, subsidiaries or divisions within
the Company do not establish different target levels of Profit Sharing
Contributions, then the Profit Sharing Contribution of the Company shall be
allocated to the Profit Sharing Contribution Account of an eligible Participant
in the proportion that the eligible Participant's Annual Earnings bears to the
total Annual Earnings of all eligible Participants. For purposes of receiving a
Profit Sharing Contribution, a Participant shall be an "eligible Participant"
only if he was (i) an Employee on the last business day of the Company in such
Plan Year or (ii) an Employee whose employment with the Company terminated
during such Plan Year as a result of his Retirement, Disability or death.
6.2 ALLOCATION OF MATCHING CONTRIBUTIONS.
The Matching Contributions made each Plan Year by the Company shall be allocated
to the Matching Contribution Account of each Participant who (a) elected to have
Savings Contributions made to the Plan for such Plan Year on his behalf by the
Company and/or (b) made After-Tax Contributions to the Plan during such Plan
Year.
6.3 ALLOCATION OF QUALIFIED NON-ELECTIVE CONTRIBUTIONS.
The Qualified Non-Elective Contributions made for a Plan Year by the Company
shall be allocated among the Qualified Non-Elective Contribution Accounts of
each eligible Participant in the proportion that the eligible Participant's
Annual Earnings bears to the total Annual Earnings of all eligible Participants.
For this purpose, a Participant shall be an "eligible Participant" only if he
was (a) not a Highly Compensated Employee and (b) an Employee on the last
business day of the Company in such Plan Year or who Retired, became Disabled or
died during such Plan Year. Qualified Non-Elective Contributions shall be
allocated on behalf of eligible Participants without regard to whether they make
Savings or After-Tax contributions for the Plan Year.
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6.4 ALLOCATION OF SAVINGS CONTRIBUTIONS.
The Savings Contributions made each Plan Year by the Company shall be allocated
to the Savings Contribution Account of each Participant who elected to have
Savings Contributions made to the Plan for such Plan Year on his behalf by the
Company.
6.5 ALLOCATION OF AFTER-TAX CONTRIBUTIONS.
The respective After-Tax Contributions made each Plan Year by Participants shall
be allocated to their respective After-Tax Contribution Accounts.
6.6 MAXIMUM ALLOCATION.
The maximum allocation of Contributions under the Plan (other than Rollover
Contributions) to the Account of any Participant shall not exceed the
limitations under Section 415 of the Code. If such limitation is exceeded for
any of the reasons described under Section 1.415-6(b)(6) of the Treasury
Regulations, such excess shall be treated as forfeitures pursuant to Sections
10.4 and 16.9 of the Plan.
For purposes of this Section 6.6, the following terms are hereby defined:
(a) "Annual Addition" means, with respect to any Defined Contribution Plan,
the aggregate of:
(i) the amount of the participant's contributions (other than rollover
contributions and plan-to-plan transfers); and
(ii) the aggregate employer contributions (including salary deferral
contributions) and forfeitures allocated to the participant's accounts for
the applicable limitation year.
(b) "Limitation Year" means the calendar year.
(c) "Defined Contribution Plan" means any tax-qualified retirement
plan which provides for an individual account for each participant and for
benefits based solely on the amount contributed to such account and any
income, expense, gains and losses, and forfeitures of accounts of other
participants which may be allocated to such account.
In no event may a Participant's Annual Additions under the Plan and all
Defined Contribution Plans required to be aggregated with the Plan pursuant
to Section 415 of the Code, exceed the lesser of (1) $30,000 (or such
greater amount as shall be prescribed by the Secretary of the Treasury as
of the first day of the applicable Limitation Year), or (2) 25% of the
Participant's "compensation" (as defined in Section 415(c)(3) of the Code)
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from the Company and from all affiliated employers described in Section
415(h) of the Code during the Limitation Year.
In any Limitation Year in which a Participant would otherwise exceed the
1.0 limitation described in Section 415(e) of the Code, his benefits shall
be reduced by the Plan Administrator to the extent necessary so that the
sum of his "defined benefit plan fraction" (as defined in Section 415(c)(2)
of the Code) and his "defined contribution plan fraction" (as defined in
Section 415(e)(3) of the Code) will not exceed 1.0, in the following order:
(i) After-Tax Contributions;
(ii) Profit Sharing Contributions;
(iii) Matching Contributions.
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ARTICLE 7 - LIMITATIONS ON CONTRIBUTIONS
7.1 COMPANY CONTRIBUTIONS CONDITIONED ON THEIR DEDUCTIBILITY.
No contribution to be made by the Company under the Plan shall be made for any
Plan Year in excess of the amount which is deductible by the Company under
Section 404 of the Code and all Company contributions are expressly declared to
be conditioned on their deductibility by the Company under Section 404 of the
Code.
7.2 NONDISCRIMINATION REQUIREMENTS FOR SAVINGS CONTRIBUTIONS.
Notwithstanding any other provision of the Plan to the contrary, salary
reduction agreements in effect between the Company and any Participant or
Participants may be limited, revoked or amended by the Plan Administrator as may
be necessary to prevent the Plan from failing to comply with the requirements
under Section 401(k)(3), Section 401(m) or Section 415 of the Code or to ensure
that the Company's Contributions to the Plan will be deductible by the Company
for income tax purposes.
For each Plan Year, Savings Contributions made under the Plan must satisfy one
of the following tests:
(a) The average of the percentages of Annual Earnings reduced pursuant to
salary reduction agreements under the Plan for Employees eligible to participate
in the Plan who are Highly Compensated Employees is not greater than such
average for Employees eligible to participate in the Plan who are not Highly
Compensated Employees, multiplied by 1.25; or
(b) The average of the percentages of Annual Earnings reduced pursuant to
salary reduction agreements under the Plan for Employees eligible to participate
in the Plan who are Highly Compensated Employees is not greater than such
average for all Employees eligible to participate in the Plan who are not Highly
Compensated Employees, multiplied by 2 and is not more than 2 percentage points
greater than such average for all Employees eligible to participate in the Plan
who are not Highly Compensated Employees.
For purposes of the above test, any other tax-qualified plan maintained by the
Company which offers pre-tax salary reduction to Participants therein and which
is aggregated with this Plan to satisfy the nondiscrimination or participation
requirements of Section 401(a)(4) and/or 410(b) of the Code shall be regarded as
part of this Plan and eligible employees under any such plan shall be regarded
as eligible Employees under this Plan.
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For purposes of the above test, for Plan Years beginning prior to January 1,
1997, the family aggregation rules of Section 414(q)(6) of the Code shall apply.
Where the family aggregation rules are applicable, the family group shall be
treated as a single Employee who is a Highly Compensated Employee and the
average of the percentages of Annual Earnings reduced pursuant to salary
reduction agreements under the Plan for the family members shall be the greater
of:
(i) Such averages determined by aggregating the Annual Earnings and
Savings Contributions of all eligible family members who are Highly
Compensated Employees without regard to family aggregation; and
(ii) Such averages determined by aggregating the Annual Earnings and
Savings Contributions of all eligible family members.
7.3 CORRECTION OF EXCESS CONTRIBUTIONS.
Notwithstanding any other provision of the Plan to the contrary, "Excess
Contributions" (as hereinafter defined), reduced by the amount of any "Excess
Savings Contributions" (as defined in Section 7.4) previously distributed
pursuant to Section 7.4 plus any income and less any losses allocable thereto,
shall be distributed no later than the last day of any Plan Year to Participants
to whose Savings Contribution Accounts such Excess Contributions were allocated
for the preceding Plan Year. Such distributions shall be made to Participants
who are Highly Compensated Employees (and their family members, as applicable)
on the basis of the respective portions of the Excess Contributions attributable
to each of such Participants (and their family members, as applicable). Excess
Contributions, including any amounts recharacterized, shall be treated as
"Annual Additions" under the Plan for purposes of Section 6.6(a). Excess
Contributions shall be adjusted for any income or loss to the date of
distribution. The income or loss allocable to Excess Contributions shall be the
sum of (a) income or loss applicable to the Participant's Savings Contribution
Account for the Plan Year multiplied by a fraction, the numerator of which shall
be such Participant's Excess Contributions for the Plan Year and the denominator
of which shall be the Participant's Savings Contribution Account balance
attributable to Savings Contributions without regard to any income or loss
occurring during such Plan Year, and (b) 10% of the amount determined under
clause (a) above, multiplied by the number of whole calendar months between the
end of the Plan Year and the date of distribution, counting the month of
distribution if distribution occurs after the 15th day of such month.
For purposes of this Section 7.3, the term "Excess Contributions" shall mean,
with respect to any Plan Year, the excess of (i) the aggregate amount of Savings
Contributions for such Plan Year, over (ii) the maximum amount of Savings
Contributions permitted by the test set forth in the second paragraph of
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Section 7.2, determined for Plan Years beginning prior to January 1, 1997 by
reducing Savings Contributions made on behalf of Participants who are Highly
Compensated Employees in the order of whose average percentages of Annual
Earnings so reduced was greatest, and determined for Plan Years beginning on or
after January 1, 1997 by reducing Savings Contributions made on behalf of
Participants who are Highly Compensated Employees in the order of whose Annual
Earnings were highest (without regard to any limitations imposed by Code section
401(a)(17)). In lieu of distributing Excess Contributions, the Plan
Administrator may on a uniform basis permit Participants to elect to treat their
Excess Contributions, reduced by the amount of any Excess Savings Contributions
previously distributed pursuant to Section 7.4, as having been distributed to
them and then recontributed by them to the Plan. Any such recharacterized
amounts shall be nonforfeitable and subject to the same distribution
requirements as Savings Contributions. Any such recharacterization shall occur
no later than 2-1/2 months after the last day of the Plan Year in which such
Excess Contributions arose.
7.4 CORRECTION OF EXCESS SAVINGS CONTRIBUTIONS.
A Participant may assign to the Plan any "Excess Savings Contributions" (as
hereinafter defined) made during a taxable year of the Participant by notifying
the Plan Administrator on or before March 1 of his following taxable year of the
amount of the Excess Savings Contributions to be assigned to the Plan. A
Participant shall be deemed to notify the Plan Administrator of any Excess
Savings Contributions that arise by taking into account solely those Savings
Contributions made to this Plan and to any other plans maintained by the
Company. Notwithstanding any other provision of the Plan, Excess Savings
Contributions, plus any income and less any loss allocable thereto, shall be
distributed no later than April 15 to any Participant to whose Savings
Contribution Account Excess Savings Contributions were assigned for the
preceding taxable year of the Participant and who claims Excess Savings
Contributions for such taxable year. The income or loss allocable to Excess
Savings Contributions is the sum of (i) income or loss allocable to the
Participant's Savings Contribution Account for the taxable year multiplied by a
fraction, the numerator of which shall be such Participant's Excess Savings
Contributions for the taxable year of the Participant and the denominator of
which shall be the Participant's Savings Contribution Account balance
attributable to Savings Contributions without regard to any income or loss
occurring during such taxable year, and (ii) 10% of the amount determined under
clause (i), multiplied by the number of whole calendar months between the end of
the Participant's taxable year and the date of distribution, counting the month
of distribution if distribution occurs after the 15th day of such month.
For purposes of this Section 7.4, the term "Excess Savings Contributions" shall
mean those Savings Contributions that are includible in a Participant's gross
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income under Section 402(g) of the Code to the extent such Participant's Savings
Contributions for a taxable year exceed the dollar limitation in effect under
said Section 402(g). Excess Savings Contributions shall be treated as "Annual
Additions" under the Plan for purposes of Section 6.6(a), unless such amounts
are distributed no later than the first April 15 following the close of the
Participant's taxable year.
7.5 NONDISCRIMINATION REQUIREMENTS FOR MATCHING CONTRIBUTIONS AND AFTER-TAX
CONTRIBUTIONS.
Notwithstanding any other provision of the Plan to the contrary, no After-Tax
Contributions shall be permitted by, nor Matching Contributions shall be
allocated to the Matching Contribution Account of, a Participant who is a Highly
Compensated Employee to the extent such After-Tax Contribution and/or allocation
might cause the Plan to fail to meet the nondiscrimination standards set forth
in Section 401(m) of the Code. For each Plan Year, Matching Contributions and
After-Tax Contributions made under the Plan must satisfy one of the following
tests:
(a) The average of the percentages of After-Tax Contributions made by, and
Matching Contributions allocated to, Employees eligible to participate in the
Plan who are Highly Compensated Employees for such Plan Year is not greater than
such average for Employees eligible to participate in the Plan who are not
Highly Compensated Employees, multiplied by 1.25; or
b) The average of the percentages of After-Tax Contributions made by, and
Matching Contributions allocated to, Employees eligible to participate in the
Plan who are Highly Compensated Employees for such Plan Year is not greater than
such average for all Employees eligible to participate in the Plan who are not
Highly Compensated Employees, multiplied by 2 and is not more than 2 percentage
points greater than such average for all Employees eligible to participate in
the Plan who are not Highly Compensated Employees.
For purposes of the foregoing, any plan of an affiliated company which provides
for company matching contributions, employee contributions or pre-tax salary
reduction contributions and which is used to satisfy the nondiscrimination or
participation requirements of the Code as to the Plan shall be regarded as part
of the Plan and eligible employees under any such plan shall be regarded as
eligible Employees under this Plan.
Notwithstanding any other provision of the Plan, "Excess Aggregate
Contributions" (as hereinafter defined), plus any income and less any losses
allocable thereto, shall be forfeited, if forfeitable, or if not forfeitable,
distributed no later than the last day of any Plan Year to Participants to whose
After-Tax Contribution Accounts and/or Matching Contribution Accounts such
"Excess Aggregate Contributions" were allocated for the preceding Plan Year.
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Such distributions shall be made to, or such forfeitures shall reduce the
After-Tax Contribution Accounts and/or Matching Contribution Accounts of,
Employees eligible to participate in the Plan (and their family members, as
applicable) who are Highly Compensated Employees on the basis of the respective
portions of the "Excess Aggregate Contributions" attributable to each of such
Employees (and their family members, as applicable). "Excess Aggregate
Contributions" shall be adjusted for any income or loss up to the date of
forfeiture or distribution. The income or loss allocable to "Excess Aggregate
Contributions" shall be the sum of: (i) income or loss applicable to the
Participant's After-Tax Contribution Account and Matching Contribution Account
for the Plan Year multiplied by a fraction, the numerator of which shall be such
Participant's "Excess Aggregate Contributions" for the Plan Year and the
denominator of which shall be the Participant's After-Tax Contribution Accounts
and/or Matching Contribution Account balance attributable to After-Tax
Contributions and Matching Contributions without regard to any income or loss
occurring during such Plan Year, and (ii) 10% of the amount determined under
clause (i) multiplied by the number of whole calendar months between the end of
the Plan Year and the date of distribution, counting the month of forfeiture or
distribution if forfeiture or distribution occurs after the fifteenth day of
such month. For purposes of this Section 7.5, the term "Excess Aggregate
Contributions" shall mean, with respect to any Plan Year, the excess of (A) the
aggregate amount of After-Tax Contributions and Matching Contributions for such
Plan Year over (B) the maximum amount of such Contributions and contributions
permitted by the test set forth in the second sentence of this Section 7.5
determined by reducing such Contributions and contributions made by or on behalf
of Participants who are Highly Compensated Employees in the order of whose
average percentages of After-Tax Contributions and Matching Contributions was
greatest.
7.6 AGGREGATE NONDISCRIMINATION REQUIREMENT.
Notwithstanding the provisions of Section 7.2 and Section 7.5, in no event shall
the sum of the percentages computed for the Employees who are Highly Compensated
Employees, pursuant to the second paragraph of Section 7.2 and the second
sentence of Section 7.5, exceed the "aggregate limit" provided in Section
401(m)(9) of the Code and the Treasury Regulations issued thereunder. In the
event such "aggregate limit" is exceeded for any Plan Year, such percentages of
such Participants shall be reduced to the extent necessary to satisfy such limit
in accordance with the same procedure as is set forth in Section 7.5 with regard
to Excess Aggregate Contributions.
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ARTICLE 8 - INVESTMENT OF CONTRIBUTIONS
8.1 INVESTMENT OF MATCHING CONTRIBUTIONS.
Beginning on and after July 1, 1998, all Matching Contributions shall be
invested in the Orion Common Stock Fund.
8.2 INVESTMENT OF ALL CONTRIBUTIONS OTHER THAN MATCHING CONTRIBUTIONS.
All Contributions other than Matching Contributions made or allocated to a
Participant's Account on and after July 1, 1998 shall be invested in 1%
increments in the Investment Fund or among the Investment Funds selected by such
Participant. Each Participant shall be required to designate, in the manner
required by the Plan Administrator, the Investment Fund(s) in which the
Participant elects to have his Contributions (other than Matching Contributions
made on his behalf, if any) invested.
8.3 CHANGES IN FUTURE ALLOCATIONS TO INVESTMENT FUNDS.
A Participant may change the Investment Funds in which Contributions to his
Account (other than his Matching Contribution Account) shall be invested,
effective as of any following Valuation Date.
8.4 REALLOCATION OF EXISTING ACCOUNT BALANCE.
A Participant may reallocate his existing Account balances (other than that
portion, if any, of his Matching Contributions Account invested in the Orion
Common Stock Fund) among the Investment Funds on any Valuation Date. Such
reallocation shall be effective as soon as practicable and in no event later
than 30 days after the Participant's reallocation request has been duly made.
Notwithstanding the foregoing, a Participant who has attained age 55 and who is
100% vested in his Account may make a one-time election to reallocate all or any
portion of his Account invested in the Orion Common Stock Fund among the other
Investment Funds. Such reallocation shall be effective as soon as practicable
and in no event later than 30 days after the Participant's reallocation request
has been duly made. Further, as of the first day of each Plan Year, a
Participant may reallocate in 1% increments up to 30% of his vested interest in
the Orion Common Stock Fund among any of the other Investment Funds.
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8.5 ADDITIONAL RULES AND PROCEDURES.
Notwithstanding any other Section of this Article 8, the Plan Administrator may
establish such rules and procedures regarding the investment of Contributions
that it deems necessary or advisable to prevent a violation of Section 4975 of
the Code or Section 406 of ERISA, including, but not limited to, placing limits
or restrictions on the amount of Contributions that may be invested in the Orion
Common Stock Fund; provided, however, that any such rules or procedures shall be
applied in a uniform and nondiscriminatory manner.
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ARTICLE 9 - PARTICIPANTS' ACCOUNTS
9.1 MAINTENANCE OF PARTICIPANTS' ACCOUNTS.
Each Participant shall have Accounts established to which Contributions shall be
credited and which shall be revalued as of each Valuation Date based on the
number of units in each Investment Fund as of such Valuation Date and the value
of each unit on that Date.
9.2 COMPANY STOCK - VOTING AND CONSENTS.
Company Stock held by the Trustee shall be voted at each meeting of the
stockholders of the Company, and written consents of stockholders to Company
action shall be given, as directed by the Participant to whose Account units of
such Stock are credited as of the Valuation Date immediately preceding the
record date. The Company shall cause each Participant to be provided with a copy
of the notice of each stockholder meeting or other document soliciting written
stockholder consent and the proxy statement relating to such meeting or consent,
together with an appropriate form for the Participant to indicate his voting or
consent instructions. If instructions are not timely received by the Trustee
with respect to the voting of any Company Stock and with respect to any Company
Stock held by the Trustee on a record date and not allocated to the Accounts of
Participants as of the Valuation Date preceding the record date, the Trustee
shall vote such Stock or give consents in respect of it in the same proportions
as the Trustee was instructed to vote or give such consents with respect to the
shares of Company Stock for which it received instructions.
9.3 COMPANY STOCK - TENDER OFFERS.
In the event that any person shall lawfully offer to purchase by means of a
tender offer all or any part of the Company Stock, then each Participant shall,
with respect to the shares of Company Stock credited to his Account as of the
Valuation Date immediately preceding the date of such tender offer, have the
right to instruct the Trustee to tender such shares. If no instructions are
timely received by the Trustee, such Company Stock shall not be tendered by the
Trustee except to the extent such inaction by the Trustee would constitute a
violation of ERISA.
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ARTICLE 10 - VESTING OF CONTRIBUTIONS
10.1 VESTING OF PARTICIPANT CONTRIBUTIONS, QUALIFIED NON-ELECTIVE CONTRIBUTIONS
AND RETIREMENT CONTRIBUTIONS.
A Participant shall at all times be 100% vested in all amounts to the credit of
(a) his Accounts attributable to Participant Contributions and the earnings
thereon and (b) his Qualified Non-Elective Contribution Account and the earnings
thereon.
10.2 VESTING OF MATCHING CONTRIBUTIONS AND PROFIT SHARING CONTRIBUTIONS.
A Participant shall become vested in the amount to the credit of his Matching
Contribution Account and his Profit Sharing Contribution Account, and the
earnings thereon, in accordance with the following schedule:
COMPLETED YEARS OF
SERVICE VESTED PERCENTAGE
ess than 1 0%
1 10%
2 40%
3 55%
4 70%
5 85%
6 or more 100%
Notwithstanding the foregoing, a Participant who had an accrued benefit under
the Unisun Plan of the date of the merger of the Unisun Plan into the Plan shall
be fully vested in those amounts as of the date on which the Unisun Plan is
merged into the Plan.
10.3 VESTING OF MATCHING CONTRIBUTIONS AND PROFIT SHARING CONTRIBUTIONS UPON
DISABILITY, DEATH OR ATTAINMENT OF AGE 65 WHILE EMPLOYED BY THE COMPANY.
Notwithstanding Section 10.2, a Participant shall automatically become 100%
vested in the amount to the credit of his Matching Contribution Account and his
Profit Sharing Contribution Account, and the earnings thereon, upon the
occurrence of one of the following: his (a) Retirement, (b) Disability, (c)
death or (d) the later of his (i) attainment of age 65 or (ii) completion of 5
years of participation in the Plan.
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10.4 FORFEITURES AND RESTORATION OF ACCOUNT BALANCES.
A Participant who terminates his employment with the Company other than by his
Retirement, Disability, death or after the later of his (i) having attained age
65, or (ii) completion of 5 years of participation in the Plan, shall forfeit
all non-vested portions of his Matching Contribution Account and Profit Sharing
Contribution Account as of the Participant's Severance Date. If such Participant
resumes employment with the Company prior to having incurred 5 consecutive
One-Year Breaks-in-Service, any amount previously forfeited (unadjusted for
gains and losses) shall be restored as of the date of reemployment. All
forfeitures during the Plan Year shall be used to reduce the Matching
Contributions and Profit Sharing Contributions required of the Company;
provided, however, in the event of the termination of the Plan, any forfeitures
not previously so applied shall be credited ratably to the Accounts of all
Participants at the time of termination.
10.5 CHANGE IN VESTING SCHEDULE.
If the Plan's vesting schedule is amended in any way that affects the
computation of the Participant's nonforfeitable percentage or if the Plan is
deemed amended by an automatic change to or from the top-heavy vesting schedule
set forth under Section 18.5(a), each Participant with at least 3 Years of
Service may elect, within a reasonable period after the adoption of the
amendment or the change, to have the nonforfeitable percentage computed under
the Plan without regard to such amendment or change. The period during which the
election may be made shall end on the latest of (a) 60 days after the amendment
is adopted, (b) 60 days after the amendment becomes effective, or (c) 60 days
after the Participant is issued written notice of the amendment.
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ARTICLE 11 - DISTRIBUTIONS FROM
PARTICIPANTS' ACCOUNTS UPON TERMINATION OF EMPLOYMENT
11.1 LUMP SUM PAYMENTS.
As soon as practicable after a Participant's termination of employment with
the Company, and except as required in Section 11.2 or as elected by the
Participant in Sections 11.3 and 11.4, the Company Stock and cash credited to
his Account shall be distributed to the Participant in accordance with this
Article 11 as follows:
(a) Retirement, Disability or Death. In the event of a Participant's
Retirement or Disability there shall be distributed to the Participant or, in
the case of his death to his Beneficiaries, in a lump sum distribution:
(i) As to such portion of his Account invested in the Orion Common
Stock Fund, at the Participant's election, either (A) the number of whole
shares of Company Stock credited to his Account, together with cash in an
amount equal to the then market value of any fractional share, or (B) cash
in an amount equal to such whole and fractional shares; and
(ii) As to such portion of his Account invested in the Investment
Funds other than the Orion Common Stock Fund, cash, representing the then
market value of the Participant's Account invested in such Investment
Fund(s).
(b) Other Reasons. In the event of a Participant's termination of
employment with the Company other than as a result of his Retirement, Disability
or death, there shall be distributed to the Participant in a lump sum
distribution, to the extent of his vested interest in his Accounts in accordance
with the provisions of Article 10:
(i) As to such portion of his Account invested in the Orion Common
Stock Fund, at the Participant's election, either (A) the number of whole
shares of Company Stock credited to his Account to the extent vested,
together with cash in an amount equal to the then market value of any
fractional share, or (B) cash in an amount equal to such whole and
fractional shares; and
(ii) As to such portion of his Account invested in the Investment
Funds other than the Orion Common Stock Fund, cash, representing the then
market value of the Participant's Account invested in such Investment
Fund(s).
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11.2 QUALIFIED JOINT AND SURVIVOR ANNUITY AND QUALIFIED PRERETIREMENT SURVIVOR
ANNUITY: IRP PLAN ACCOUNTS ONLY.
(a) Qualified Joint and Survivor Annuity. Notwithstanding section 11.1(a)
and (b) above, unless the Participant has no Spouse or has made a "qualified
election" during the "election period" (each as defined in Section 11.2(c)),
with respect only to amounts in a Participant's IRP Plan Account, as the normal
form of Plan benefit, the Plan Administrator shall direct the Trustee to use the
Participant's vested IRP Plan Account balance to purchase on behalf of the
Participant and his Spouse, an annuity from an insurance company selected by the
Committee, which annuity shall provide a benefit to commence when the
Participant attains age 65 which shall be the actuarial equivalent of the
Participant's vested Account balance, calculated using an interest rate and
mortality table selected by the Plan Administrator for this purpose on a uniform
basis for all such Participants. Such annuity (a "qualified joint and survivor
annuity") shall provide for a reduced monthly retirement benefit payable to the
Participant for his life and continuing after his death to his surviving Spouse,
if any, for the Spouse's life, at the rate of 50% of the monthly amount which
was payable to the Participant while he was alive.
(b) Qualified Preretirement Survivor Annuity. Upon the death of a
Participant (i) who has a vested interest in any portion of his IRP Plan
Account, (ii) who has a Spouse on the date of his death and (iii) to whom no
benefits have been paid from the Plan as of the date of his death, the Plan
Administrator shall (unless the Spouse elects to receive one of the optional
forms of payment under Section 11.3) direct the Trustee to use the Participant's
IRP Account balance to purchase on behalf of such Participant's surviving
Spouse, an annuity from an insurance company selected by the Committee. Such
annuity (a "qualified preretirement survivor annuity") shall provide the
Participant's Spouse with monthly payments for her life, which shall be the
actuarial equivalent (determined using the interest and mortality table selected
by the Plan Administrator for this purpose on a uniform basis) of the
Participant's Account balance, and the payment of which shall commence within a
reasonable time after the Participant's death.
A Participant may waive the qualified preretirement survivor annuity form of
benefit under rules similar to those found in Section 11.2(c)(ii) (except with
regard to subsection (C) thereof); provided, however, that any waiver made prior
to the Plan Year in which the Participant attains age 35 shall become invalid at
the beginning of such Plan Year unless confirmed by a subsequent waiver. A
Participant may revoke any waiver of the qualified preretirement survivor
annuity form of benefit at any time.
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(c) ELECTION REQUIREMENTS
(i) Definition of Election Period. The 90-day period ending on the
Participant's Annuity Starting Date.
(ii) Definition of Qualified Election. A written election by a Participant
who has a Spouse to waive the otherwise normal qualified joint and survivor
annuity form of benefit. Any such election to waive the qualified joint and
survivor annuity form of benefit shall not be pursuant to a "qualified election"
unless (A) the Participant's Spouse consents in writing to the election; (B) the
election designates a specific Beneficiary, including any class of Beneficiaries
or any contingent Beneficiaries, which may not be changed without spousal
consent (or the Spouse in writing expressly permits designations by the
Participant without any further spousal consent); (C) the Participant's election
designates the form of benefit payment elected by the Participant (which form
may not be changed without spousal consent unless the Spouse in writing
expressly permits other benefit form elections by the Participant without any
requirement for further spousal consent); (D) the Spouse's consent acknowledges
the effect of the election; and (E) the Spouse's consent is witnessed by a Plan
representative or notary public. If it is established to the satisfaction of the
Plan Administrator that there is no Spouse or that the Spouse cannot be located,
the Participant's written election to waive the qualified joint and survivor
annuity shall be deemed to be a "qualified election."
Any consent by a Spouse obtained pursuant to a "qualified election" (or
establishment that spousal consent cannot be obtained) shall be effective only
with respect to such Spouse. A consent that permits designations by the
Participant without any requirement of further consent by the Spouse must
acknowledge that the Spouse has the right to limit consent to a specific
Beneficiary, and/or a specific form of benefit, as applicable, and that the
Spouse voluntarily elects to relinquish either or both of such rights. A
revocation of a prior waiver may be made by a Participant without the consent of
the Spouse at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this provision shall
be valid unless the Participant has received the notice provided for in Section
11.5(a).
(iii) No Chances After Election Period. No change may be made to any
elected benefit option or to the automatic normal form of benefit, as
applicable, after the Election Period has ended.
11.3 OPTIONAL FORMS OF PAYMENT.
In lieu of the automatic form of benefit described in Sections 11.1 and 11.2
(for Participants who have vested IRP Plan Accounts and who have a Spouse), and
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if applicable, subject to the requirements of Section 11.2, a Participant who so
elects may receive the vested portion of his Account balance under any of the
following options, each of which shall be the actuarial equivalent of the
Participant's vested Account balance:
(a) The "Single Life Option," under which the Participant's benefit shall
consist of unreduced monthly payments which shall continue for the life of the
Participant, with no further benefits payable after his death;
(b) The "Contingent Annuitant Option," under which the Participant shall
receive a reduced monthly benefit for his life, and if his designated contingent
annuitant survives the Participant's death, a monthly survivor annuity shall be
payable for the life of such contingent annuitant which is equal to 100%, 75%,
66-2/3% or 50%, as the Participant elects, of the monthly benefit payable to the
Participant during his life;
(c) The "Equal Installments Option," under which the Participant shall
receive equal monthly, quarterly, semi-annual or annual payments (the frequency
as elected by the Participant) either (A) in an amount selected by the
Participant over a time not to exceed the life expectancy of the Participant or
the joint life and last survivor expectancy of the Participant and the
Participant's Beneficiary; or (B) not to exceed 10 years (paid at such intervals
as elected by the Participant), with any unpaid amounts as of the date of the
Participant's death being continued to the Participant's Beneficiary until a
total of 10 years of payments have been made(the period as elected by the
Participant); or
(d) The "Lump Sum Option," under which the Participant shall receive his
entire benefit in a single sum payment.
(e) Participants shall be entitled to elect to defer the commencement of
their benefits under this Section 11.3 to any date selected thereby, subject to
the applicable requirements of Sections 11.6 and 11.8. Participants making such
a deferral election shall be entitled to request one partial withdrawal each
Plan Year, and any payment option under Section 11.1, 11.2 or 11.3 may be
elected at any time. Participants making said deferral election shall not be
eligible to make Participant Contributions, receive Company Contributions, or
receive loans from the Plan.
11.4 Consent Requirements.
Notwithstanding any other provision of the Plan to the contrary, if the amount
to the credit of a Participant's Account exceeds (or at the time of any prior
Plan distribution exceeded) $3,500 for Plan Years beginning prior to January 1,
1998 or $5,000 for Plan Years beginning on and after January 1, 1998 and becomes
distributable to him on an immediate lump sum basis pursuant to any provision of
this Article 11, no such distribution shall be made to him unless he consents in
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writing to the distribution pursuant to election forms and notices provided by
the Plan Administrator no more than 90 days and no less than 30 days prior to
the anticipated date of the Participant's distribution, as required by Section
1.411 (a)-11 (e) of the Treasury Regulations. The failure of a Participant to
provide such consent shall be deemed to be an election by him to have the
balance to the credit of his Account, as of the Valuation Date coinciding with
or next following the earliest of the date on which he provides such consent or
on which he attains age 65 or on which the Plan Administrator receives notice of
his death, to the extent not forfeited, distributed in a lump sum to him or to
his designated Beneficiary if he is not living as soon thereafter as
practicable; provided, however, if the Participant has a Spouse on the date of
his death, his surviving Spouse shall be considered to be his designated
Beneficiary unless such Spouse has consented to the Participant's designation of
another Beneficiary pursuant to requirements identical to those contained in
Section 11.2(e)(ii). For purposes of this Section 11.4, any election by a
Participant to receive an optional form of benefit under Section 11.3 (with any
required spousal consent, as applicable) shall be deemed to be his consent to
receive such benefit. Failure to give the requisite consent hereunder shall also
be deemed to be an election by the Participant to defer the commencement of his
benefit pursuant to Section 11.3(d).
11.5 Notice Requirements.
In the case of a qualified joint and survivor annuity described in Section
11.2(a), during the "notice period" (as defined below) the Plan Administrator
shall provide each Participant with a written explanation of: (a) the terms and
conditions of the qualified joint and survivor annuity form of benefit; (b) the
Participant's right to waive the qualified joint and survivor annuity form of
benefit and the financial consequences thereof; (c) for notices required to be
provided after December 31, 1988, the relative values of the various optional
forms of benefit under Section 11.3; (d) the rights of the Participant's Spouse
regarding a waiver by the Participant of the qualified joint and survivor form
of benefit; and (e) the right of the Participant to make, and the effect of, a
revocation of a previous election to waive the qualified joint and survivor
annuity form of benefit and the financial consequences thereof.
For purposes of the immediately preceding paragraph, the term "notice period"
shall mean in the case of Plan benefits commencing (i) after December 31, 1988,
the 60-day period ending on the Participant's Annuity Starting Date, and (ii)
before January 1, 1989, the 90-day period ending on the Participant's Annuity
Starting Date.
11.6 Payment of Benefits.
Other provisions of this Article 11 notwithstanding, the payment of benefits
under the Plan to a Participant shall not, unless the Participant elects
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otherwise, begin later than the 60th day after the close of the Plan Year in
which occurs the latest of:
(a) The Participant's attainment of age 65;
(b) The tenth anniversary of the date on which the Participant commenced
participation in the Plan; or
(c) The Participant's termination of employment with the Company.
11.7 Distributions Upon Participant's Death.
(a) If a Participant who is currently receiving Plan benefits in the form
of periodic payments pursuant to Section 11.3 dies before his entire Account
balance has been distributed to him, any remaining amounts credited to his
Account must be distributed to his Beneficiary at least as rapidly as under the
method of distribution in effect for his Account prior to his death.
(b) If a Participant dies prior to the commencement of his Plan benefits,
the entire Account balance must be distributed to his Beneficiary by December 31
of the calendar year containing the fifth anniversary of the Participant's death
(the "5-Year Rule"); provided, however, that subject to the optional forms of
benefit under Section 11.3, the 5-Year Rule shall not be applicable to the
extent that an election otherwise permissible under the Plan is made by the
Participant's Beneficiary to receive distributions in accordance with clause (i)
or (ii), as follows:
(i) If any portion of a Participant's Account balance is payable to
the Participant's Beneficiary and such Beneficiary is not the Participant's
spouse, distributions may be made for the lifetime of such Beneficiary or
for a period not greater than the Beneficiary's life expectancy (calculated
using the expected return multiples contained in the applicable tables
under Treasury Regulation Section 1.72-9), in either case, commencing on or
before December 31 of the calendar year next following the calendar year in
which the Participant died; or
ii) If any portion of the Participant's Account balance is payable to
the Participant's Beneficiary and such Beneficiary is the Participant's
spouse, distributions may be made for the lifetime of such Beneficiary or
for a period not greater than the Beneficiary's life expectancy (calculated
using the expected return multiples contained in the applicable tables
under Treasury Regulation Section 1.72-9), in either case, commencing on or
before the later of (A) December 31 of the calendar year in which the
Participant died, or (B) December 31 of the calendar year in which the
Participant would have attained age 70-1/2.
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11.8 In-Service Required Distributions.
(a) For Plan Years beginning prior to January 1, 1997, if a Participant who
had not attained age 70-1/2 before January 1, 1988 is still an Employee as of
the April 1 following the calendar year in which he attained age 70-1/2 and he
is not a Five Percent Owner, distribution of the balance to the credit of his
Account must commence by such April 1, pursuant to the provisions of paragraph
(b) of this Section 11.8. If a Participant who had attained age 70-1/2 before
January 1, 1988 is still an Employee as of the April 1 following the calendar
year in which he attained age 70-1/2 and he is a Five Percent Owner,
distribution of the balance to the credit of his Account must commence by the
later of (i) such April 1 or (ii) the earlier of the April 1 of the calendar
year (A) with or within which ends the Plan Year in which he becomes a Five
Percent Owner, or (B) in which he retires. For Plan Years beginning on and after
January 1, 1997, distribution of the balance to the credit of a Participant's
account where the Participant is not a Five Percent Owner must commence by the
April 1 following the calendar year in which he both (i) attained age 70-1/2 and
(ii) terminated from service with the Company.
(b) The minimum distribution required under paragraph (a) of this Section
11.8 shall be equal to an amount determined by dividing the balance to the
credit of the Participant's Account as of the then most recent Valuation Date by
whichever of the following life expectancies is selected by the Participant:
(i) The Participant's life expectancy; or
(ii) (A) If the Participant's Beneficiary is his spouse, the joint
life and last survivor expectancy of the Participant and his spouse, or (B)
if the Participant's Beneficiary is not his spouse, the life expectancy
determined using the applicable table contained in Treasury Regulation
Section 1.79-9.
Notwithstanding the foregoing, the aforementioned life expectancies may be
recalculated pursuant to applicable Treasury Regulations.
(c) The commencement of a Participant's minimum required distributions
under paragraph (a) of this Section 11.8 shall not affect his ability to make
Participant Contributions under the Plan or to receive Company Contributions
under the Plan.
(d) Regardless of the form of payment, all benefit payments under the Plan
shall comply with the requirements of Section 401(a)(9) of the Code and the
Treasury Regulations promulgated thereunder, and said provisions shall override
any Plan provisions otherwise inconsistent therewith.
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11.9 Distributions Pursuant to QDROs.
Notwithstanding any other provision of the Plan to the contrary, Plan benefits
awarded to an "alternate payee" (as defined in Section 414(p)(8) of the Code)
under a "domestic relations order" (as defined in Section 414(p)(1)(B) of the
Code) determined by the Plan Administrator to be a "qualified domestic relations
order" (as defined in Section 41 4(p)(1)(A) of the Code) may be distributed to
the alternate payee at any time pursuant to the qualified domestic relations
order without regard to any limitation in the Plan as to the time when such
benefits would otherwise have been distributable.
11.10 Direct Trustee-to-Trustee Rollovers.
(a) For purposes of this Section l1.10, the following terms shall have the
following meanings:
(i) Eligible Rollover Distribution. An "eligible rollover
distribution" is any distribution of all or any portion of the balance to
the credit of the distributed, except that an "eligible rollover
distribution" does not include: (A) any distribution that is one of a
series of substantially equal periodic payments (payable not less
frequently than annually) made for the life (or life expectancy) of the
distributed or the joint lives (or joint life expectancies) of the
distributed and the distributee's designated beneficiary, or for a
specified period of 10 years or more, (B) any distribution to the extent
such distribution is required under Section 401(a)(9) of the Code, and (C)
the portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized appreciation
with respect to shares of Company Stock).
(ii) Eligible Retirement Plan. An "eligible retirement plan" is (A) an
individual retirement account described in Section 408(a) of the Code, (B)
an individual retirement annuity described in Section 408(b) of the Code,
(C) an annuity plan described in Section 403(a) of the Code, or (D) a
qualified trust described in Section 401(a) of the Code that accepts the
distributee's eligible rollover distribution. Notwithstanding anything
contained herein to the contrary, in the case of an eligible rollover
distribution to a Participant's surviving spouse, an "eligible retirement
plan" is an individual retirement account or an individual retirement
annuity only.
(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), shall be "distributees" with regard to the
interest of the spouse or former spouse.
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(iv) Direct Rollover. A "direct rollover" is a payment by the Plan to
the eligible retirement plan specified by the distributed.
(b) Notwithstanding anything to the contrary in the Plan, a
distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover distribution
paid directly to an eligible retirement plan specified by the distributed
in a direct rollover.
(c) In the event the provisions of this Section 11.10 or any part
hereof shall cease to be required by law as a result of subsequent
legislation or otherwise, this Section 11.10 shall be ineffective without
necessity of further amendment of the Plan.
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ARTICLE 12 - HARDSHIP WITHDRAWALS
12.1 In General. E
xcept with respect to that portion of his Savings Contribution Account
attributable to post-1988 investment earnings, in the event of financial
hardship, a Participant may request that the Plan Administrator approve a
hardship withdrawal of all or a portion of his Accounts. Hardship withdrawals by
a Participant under this Article 12 shall be limited to 1 withdrawal during any
Plan Year and shall be made only after the Participant files a written request
with the Plan Administrator pursuant to such terms and conditions as the Plan
Administrator may prescribe on a uniform and nondiscriminatory basis, including
but not limited to those required by Section 12.4.
12.2 Hardship.
For purposes of this Article 12, a financial hardship is an immediate and heavy
financial need of the Participant for which the Participant lacks other
available resources (or where the hardship involves the Participant's spouse or
dependents, for which the spouse or dependents also lack other available
resources) to meet the financial need. For this purpose, the only financial
needs which shall be considered to be immediate and heavy are as follows:
(a) Deductible medical expenses (as described in Section 213(d) of the
Code) incurred or necessary for the medical care of the Participant and/or
his spouse, children and/or "dependents" (as defined in Section 152 of the
Code);
(b) Purchase of the Participant's principal residence (excluding
mortgage payments);
(c) Payment of tuition for the next 12 months of post-secondary
education for the Participant and/or his spouse, children and "dependents"
(as defined in Section 152 of the Code);
(d) The need to prevent the eviction of the Participant from, or
foreclosure on the mortgage on, the Participant's principal residence;
(e) Such other expenses as may be announced for this purpose by the
Commissioner of the Internal Revenue Service; and
(f) such other expenses as may be approved by the Plan Administrator,
in its sole discretion, on a uniform and nondiscriminatory basis.
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12.3 Necessary to Satisfy Immediate and Heavy Need.
For purposes of this Article 12, a withdrawal shall be deemed necessary to
satisfy an immediate and heavy financial need of the Participant only if:
(a) The amount of the withdrawal does not exceed the amount of the
immediate and heavy financial need of the Participant, including any amounts
necessary to pay any federal, state or local income taxes or penalties
reasonably anticipated from the distribution;
(b) The Participant has received all distributions, other than hardship
distributions, and all nontaxable loans under all Company plans;
(c) The Participant is prohibited from making elective contributions and
employee contributions to the Plan and all other plans of deferred compensation
maintained by the Company for at least 12 months after his receipt of the
hardship withdrawal; and
(d) The Participant is prohibited from making elective contributions to the
Plan and all other plans of deferred compensation maintained by the Company for
his taxable year immediately following the taxable year in which the hardship
withdrawal occurred in excess of the amount determined by reducing the otherwise
applicable limitation for such immediately following taxable year under Section
402(g) of the Code by the amount of the Participant's elective contributions for
the taxable year in which the hardship withdrawal occurred.
All plans of deferred compensation maintained by the Company which provide for
elective employee contributions shall give effect to paragraphs (c) and (d) of
this Section 12.3.
12.4 Reliance on Participant Representations.
In making its determination of whether or not a Participant's hardship
withdrawal request satisfies the requirements of Sections 12.2 and 12.3, the
Plan Administrator shall rely on the written representations of the Participant
(unless the Plan Administrator shall have actual knowledge to the contrary )
provided by him on a form prescribed therefor by the Plan Administrator, that
the Participant's need cannot reasonably be met:
(a) Through reimbursement or compensation by insurance or otherwise;
(b) By liquidation of the Participant's assets;
(c) By termination of a salary reduction agreement in effect between the
Participant and the Company;
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(d) By other distributions, withdrawals or nontaxable loans from plans
maintained by the Company; and/or (
e) By borrowing from commercial sources on reasonable commercial terms in
an amount sufficient to satisfy the need.
12.5 Timing of Hardship Withdrawals.
Hardship withdrawal requests received by the Plan Administrator shall be
reviewed thereby as soon as practicable, generally within 30 days of their
receipt. Upon approval of a hardship request by the Plan Administrator, the Plan
Administrator shall direct the Trustee to distribute the approved amount from
the Participant's Account.
12.6 Distribution from Accounts.
An approved hardship withdrawal under this Article 12 shall be distributed from
the Participant's Account in the following order:
(a) The portion of the Participant's After-Tax Contribution Account
attributable to his After-Tax Contributions which did not qualify for Matching
Contributions, until exhausted; and then,
(b) The portion of the Participant's After-Tax Contribution Account
attributable to his After-Tax Contributions which qualified for Matching
Contributions, until exhausted; and then,
(c) The Participant's Voluntary Deductible Contribution Account, until
exhausted; and then,
(d) The Participant's Rollover Contribution Account; and then,
(e) The Participant's Profit Sharing Contribution Account, until exhausted;
and then,
(f) The Participant's Matching Contribution Account, until exhausted; and
then,
(g) The portion of the Participant's Savings Contribution Account
attributable to his Savings Contributions which qualified for Matching
Contributions, until exhausted; and then,
(h) The portion of the Participant's Savings Contribution Account
attributable to his Savings Contributions which did not qualify for Matching
Contributions.
(i) The Participant's Qualified Non-Elective Contribution Account.
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In no event shall a Participant be entitled to a distribution from the
Participant's IRP Plan Account, if any.
12.7 Continued Eligibility under Plan.
Except as otherwise set forth in this Article 12, a hardship withdrawal under
this Article 12 shall not impair the eligibility of a Participant to continue
his participation in the Plan nor shall it affect such Participant's rights and
privileges with respect to his Account.
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ARTICLE 13 - OTHER PERMITTED IN-SERVICE WITHDRAWALS
13.1 Withdrawals at or After Age 59-1/2.
At any time after a Participant has attained the age of 59-1/2, such a
Participant may request a withdrawal from his Account of any or all of the
amount credited thereto; provided, however, that the portion of the Savings
Contribution Account attributable to post-1988 investment earnings shall not be
available for such a withdrawal.
13.2 Withdrawals Prior to Age 59-1/2.
Any Participant may at any time effect a withdrawal from any or all of his
After-Tax Contribution Account, Voluntary Deductible Contribution Account and/or
Rollover Contribution Account (and any earnings thereon) by submitting the form
prescribed therefor by the Plan Administrator. In addition, a Participant who
was a participant in the Individual Retirement Plan of Viking Insurance Company
of Wisconsin and who transferred amounts into this Plan may withdraw, solely
from those transferred amounts, vested Matching Contributions 24 months or more
after the date such contributions were made plus the earnings credited under the
Plan on such amounts.
13.3 Timing of Withdrawals.
Withdrawal requests under Section 13.1 shall be reviewed by the Plan
Administrator as soon as practicable, generally within 30 days of their receipt.
Withdrawals to be effected under Section 13.2 shall be processed as soon as
shall be reasonably practicable, generally within 30 days of the Plan
Administrator's receipt of the Participant's notice thereto of his desire to
effect such a withdrawal.
13.4 Distribution from Accounts.
A withdrawal under this Article 13 shall be distributed from the Participant's
Account in the following order:
(a) The portion of the Participant's After-Tax Contribution Account
attributable to his After-Tax Contributions which did not qualify for Matching
Contributions, until exhausted; and then,
(b) The portion of the Participant's After-Tax Contribution Account
attributable to his After-Tax Contributions which qualified for Matching
Contributions, until exhausted; and then,
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(c) The Participant's Voluntary Deductible Contribution Account, until
exhausted; and then,
(d) The Participant's Rollover Contribution Account; and then,
(e) For purposes of withdrawals under Section 13.1 only, the Participant's
Profit Sharing Contribution Account, until exhausted; and then,
(f) For purposes of withdrawals under Section 13.1 only, the Participant's
Matching Contribution Account, until exhausted; and then,
(g) For purposes of withdrawals under Section 13.1 only, the portion of the
Participant's Savings Contribution Account attributable to his Savings
Contributions which qualified for Matching Contributions, until exhausted; and
then,
(h) For purposes of withdrawals under Section 13.1 only, the portion of the
Participant's Savings Contribution Account attributable to his Savings
Contributions which did not qualify for Matching Contributions, until exhausted;
and then,
(i) For purposes of withdrawals under Section 13.1 only, the Participant's
Qualified Non-Elective Contribution Account.
In no event shall a Participant be entitled to a distribution from the
Participant's IRP Plan Account, if any.
13.5 Continued Eligibility under Plan.
Except as otherwise set forth in this Article 13, a withdrawal under this
Article 13 shall not impair the eligibility of a Participant to continue his
participation in the Plan nor shall it affect such Participant's rights and
privileges with respect to his Account.
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ARTICLE 14 - PLAN LOANS
14.1 In General.
Effective September 1, 1998, upon the application of any Participant who is a
current Employee, the Plan Administrator may, but shall not be required to,
direct the Trustee to make a loan to such Participant from the Plan (a
"Participant Loan"). The Plan Administrator may establish or change from time to
time the standards or requirements for making any Participant Loan, provided
that the standards or requirements shall be nondiscriminatory, uniformly
applicable to all Participants similarly situated and shall permit Participant
Loans to be available to all Participants on a reasonably equivalent basis and
in amounts which are not less than the amounts of Participant Loans made
available to Participants who are Highly Compensated Employees. Only one loan
may be outstanding at any time. Any loan policy adopted by the Plan
Administrator shall be deemed to be incorporated into the Plan by reference
herein.
14.2 Loan Requirements.
Each Participant Loan:
(a) Shall not exceed the lesser of (i) $50,000, reduced by the excess, if
any, of (A) the highest outstanding balance of the Participant Loans to the
Participant during the 1-year period ending on the day immediately preceding the
date on which such Participant Loan was made, over (B) the outstanding balance
of the Participant Loans to the Participant on the date on which such
Participant Loan was made, or (ii) 50% of the vested balance to the credit of
the Participant's Account;
(b) Shall bear a rate of interest commensurate with the interest rate
charged by persons in the business of lending money for loans made under similar
circumstances, as determined from time to time by the Plan Administrator in its
sole discretion, but not in excess of the maximum rate permitted by law;
(c) Shall be repaid in substantially level installments, not less
frequently than quarterly, over the term of the Participant Loan;
(d) Shall be repayable within 60 months of the date of the Participant
Loan;
(e) Shall be adequately secured with a portion of the Participant's vested
account balance not to exceed 50% of such account balance; and
(f) Shall contain such other terms and conditions as may be required from
time to time by the Plan Administrator.
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14.3 Investment of Loan.
A Participant's application for a Participant Loan submitted to the Plan
Administrator shall constitute an investment direction by the Participant to
sell or liquidate from the investments in the Participant's Account (as of the
Valuation Date coinciding with or next following the date of the loan) an amount
sufficient to yield the amount of the Participant Loan approved by the Plan
Administrator, regardless of whether the Participant subsequently declines the
Participant Loan. The liquidation of the investments in the Participant's
Account shall be made proportionately among the Investment Funds in which the
Participant's Account is invested at that time.
Until disbursed by the Trustee to the Participant as a Participant Loan, the
proceeds of the liquidation of the investments in a Participant's Account shall
be held uninvested. If a Participant declines a Participant Loan after such
Participant Loan has been approved by the Plan Administrator, the proceeds of
the liquidation shall be reinvested in the Investment Funds in the same
proportion that amounts in the Participant's Account were invested in such
Investment Funds immediately before liquidation.
Upon the disbursement of the Participant Loan to the Participant, the
Participant's Account shall be deemed invested (and each Participant's
application for a Participant Loan shall constitute an election to invest), to
the extent of the unpaid balance of such Participant Loan, in the Participant
Loan extended to the Participant. The unpaid balance of any Participant Loan
shall not reduce the amount credited to the Participant's Account.
Proceeds from the repayment of a Participant Loan shall be allocated among the
Investment Funds in which the Participant's Account is invested, in the same
proportion, if any, that the Participant has elected to invest future
contributions to his Account as of the time of each such repayment (to the
extent that the Participant controls such investments).
14.4 Default on Loan.
In the event of any default under any Participant Loan, the Plan Administrator
may take any action the Plan Administrator deems necessary or appropriate to
enforce the collection of all or any portion of the unpaid balance of the
Participant Loan and any accrued interest thereon, including without limitation,
foreclosing on the Participant's interest in his Account that was pledged as
security for the Participant Loan. Notwithstanding the foregoing, under no
circumstances shall the Plan Administrator take any action, whether upon the
occurrence of an event of default or otherwise, which shall result in a deemed
distribution of all or any of the Participant's "elective deferrals" (within the
meaning of Section 402(g) of the Code), if any, and the earnings thereon,
whether or not pledged as security for the Participant Loan, until a
distributable event occurs.
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For purposes of the foregoing sentence, a
"distributable event" means the termination of the Participant's employment with
the Company or his death, Disability or attainment of age 59-1/2.
14.5 Distribution from Accounts.
A Participant Loan shall be made from the Participant's Account in the following
order:
(a) The Participant's Qualified Non-Elective Contribution Account, until
exhausted; and then,
(b) The portion of the Participant's Savings Contribution Account
attributable to his Savings Contributions which did not qualify for Matching
Contributions, until exhausted; and then,
(c) The portion of the Participant's Savings Contribution Account
attributable to his Savings Contributions which qualified for Matching
Contributions, until exhausted; and then
(d) The Participant's Voluntary Deductible Contribution Account, until
exhausted; and then,
(e) The Participant's Rollover Contribution Account; and then,
(f) The Participant's Profit Sharing Contribution Account, until exhausted;
and then,
(g) The Participant's Matching Contribution Account, until exhausted; and
then,
(h) The portion of the Participant's After-Tax Contribution Account
attributable to his After-Tax Contributions which did not qualify for Matching
Contributions, until exhausted; and then,
(i) The portion of the Participant's After-Tax Contribution Account
attributable to his After-Tax Contributions which qualified for Matching
Contributions.
In no event shall a Participant be entitled to a distribution from the
Participant's IRP Plan Account, if any.
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14.6 Continued Eligibility under Plan.
Except as otherwise set forth in this Article 14, a Participant Loan under this
Article 14 shall not impair the eligibility of a Participant to continue his
participation in the Plan nor shall it affect such Participant's rights and
privileges with respect to his Account.
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ARTICLE 15 - ADMINISTRATION OF THE PLAN
15.1 Named Fiduciaries.
The Board of Directors shall be the "named fiduciary" with respect to the
appointment and removal of the Committee and the appointment and removal of the
Trustee. The Committee shall be the "named fiduciary" with respect to the
issuance of directions to the Trustee to purchase appropriate contract(s) to
provide investments for Plan funds other than the Company Stock Fund and for the
review of the investment and management of the assets held under the Trust. The
Company, through it human resources department and such other employees who are
given authority to operate and administer the Plan shall be designated as the
"Plan Administrator" within the meaning of Section 414(g) of the Code.
15.2 Appointment of Committee.
The Committee shall consist of no less than 3 persons who shall be appointed by
and serve at the pleasure of the Board of Directors.
15.3 Existence of the Committee.
If at any time the Committee is not appointed and acting, then for purposes of
the Plan, the Board of Directors shall be deemed to be such Committee.
15.4 Vacancies and Resignations.
Any member of the Committee may resign by delivering or mailing a written
resignation to the Board of Directors and to the Secretary or Chairman of the
Committee, and such resignation will become effective upon such delivery or at
any later date specified therein. Vacancies on the Committee shall be filled by
the Board of Directors.
15.5 Committee Officers.
The Committee shall designate a secretary (who need not be a member of the
Committee) who shall keep or cause to be kept minutes of all Committee
proceedings and keep all data, records and documents relating to the Committee's
administration of the Plan.
15.6 Committee Meetings.
The Committee shall act and hold meetings upon such notice, at such time, and at
such place as it may determine. A majority of the members of the Committee shall
constitute a quorum for the transaction of its business. All resolutions or
actions taken by the Committee shall be by vote of a majority of those present
at a meeting, participating in a telephone conference call, or in writing by a
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majority of all the members if they act without a meeting or telephone
conference call.
F15.7 Employment of Experts.
The Committee or the Plan Administrator may employ or engage such independent
actuaries, accountants, counsel, record keeping agents, other experts or persons
as it deems necessary in connection with discharging its duties under the Plan.
15.8 Committee Compensation.
Unless otherwise determined by the Board of Directors, the members of the
Committee shall not be compensated by the Plan or the Company for their services
as such.
15.9 Payment of Expenses.
To the extent not paid from the assets of the Trust, all expenses incurred in
connection with the administration of the Plan, including, but not limited to,
Trustee's fees, agents' fees, the compensation of any actuary, accountant,
counsel, or other expert(s) or person(s) who shall be employed by the Committee
shall be paid by the Company. All commissions, transfer taxes, charges and costs
directly related to the purchase or sale by the Trustee of shares of Company
Stock and/or investments related to other Plan funds and other costs of
operation shall be paid from the assets of the Trust.
15.10 Binding Action.
To the fullest extent permitted by law, all actions taken and decisions made by
the Committee or the Plan Administrator shall be final, conclusive and binding
on all persons having any interest in the Plan or in any benefits payable
thereunder.
15.11 Committee Powers and Duties.
The Committee shall have the following powers and duties:
(a) Recommend to the Board of Directors any amendments to the Plan required
to comply with ERISA or any other law;
(b) Review and approve the selection of the Investment Funds under the
Plan, and/or appoint, remove or change, from time to time, persons constituting
"Investment Managers" as defined in Section 3(38) of ERISA, subject in each case
to ratification by the Board of Directors; and
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(c) Review rejected claims for Plan benefits under the Plan's claims
procedures set forth in Article 19.
15.12 Plan Administrator Powers and Duties.
Except to the extent otherwise provided herein, the Plan Administrator shall
administer the Plan and be responsible for carrying out its terms. The Plan
Administrator shall have the power to take all action and to make all decisions
necessary or proper in order to carry out its duties and responsibilities under
the provisions of the Plan, including without limitation, the following:
(a) Make and enforce such rules and regulations and to issue such forms as
it shall deem necessary or proper for the efficient administration of the Plan,
including rules governing the designation of Beneficiaries and circumstances
under which any intended election or designation may be revoked or will be
ineffective; and
(b) Interpret the Plan and its regulations.
(c) Cause to be maintained such data, records, and documents as are
necessary or desirable for the administration of the Plan and the determination
of benefits due under the Plan;
(d) Establish rules necessary for the administration of the Plan and the
distribution of benefits under the Plan;
(e) Determine eligibility for benefits under the Plan and the amount due,
if any;
(f) Direct disbursement of benefit payments by the Trustee;
(g) Cause to be prepared the annual report of the Plan and financial
condition of the assets of the Plan for submission to the Board of Directors for
its approval and any further information pertaining to the Plan which the Board
of Directors may request;
(h) Cause to be prepared and distributed descriptions and reports as
required by ERISA;
(i) Adopt the necessary procedures and rules to maintain the Plan loans
program under Article 14;
(j) Review domestic relations orders to determine their status as qualified
domestic relations orders under Section 15.14; and
(k) Determine the entitlement of Participants to withdrawals under Articles
12 and 13.
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15.13 Conflicts of Interest.
No person who is an Employee and who is a member of the Committee or the Board
of Directors shall participate in the resolution of any question which relates
directly or indirectly to him and which, if applied to him, would significantly
vary his eligibility for, or the amount of, any Plan benefit to him. The
decision of any member of the Committee that he or any other member of the
Committee is disqualified under this Section 15.13 from participating in the
resolution of any question shall be controlling. In cases involving the
disqualification under this Section 15.13 of a majority of the members of the
Committee, the questions at issue shall be certified to the Board of Directors
for resolution.
15.14 Domestic Relations Orders.
The Plan Administrator shall adopt reasonable procedures to determine whether a
"domestic relations order" (as defined in Section 414(p)(1)(B) of the Code)
constitutes a "qualified domestic relations order" (as defined in Section
414(p)(1)(A) of the Code) and to administer distributions under any such
qualified domestic relations order.
15.15 Delegation.
Any fiduciary may delegate or authorize the delegation of any fiduciary
responsibilities under the Plan by so delegating or authorizing such delegation
in writing.
15.16 Modification of Procedures of the Plan.
Notwithstanding any provision of this Plan to the contrary, the Plan
Administrator may adopt, modify or change the procedures for effecting the
various provisions of the Plan, from time to time in order to facilitate the
administration of the Plan; provided, however, that any such procedures shall be
applied in a nondiscriminatory manner.
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ARTICLE 16 - MISCELLANEOUS
16.1 Participant's Rights Not Transferable.
(a) No right or interest of any Participant under the Plan or to the
Participant's Account shall be assignable or transferable, in whole or in part,
either directly or by operation of law or otherwise, including without
limitation, by execution, levy, garnishment, attachment, pledge or in any other
way or manner, except upon death or mental incompetency.
(b) No attempted assignment or transfer of any such right or interest of
any Participant shall be effective.
(c) No right or interest of any Participant under the Plan or to the
Participant's Account shall be liable for, or subject to, any obligation or
liability of such Participant.
(d) Notwithstanding any other provision of this Section 16.1, the creation,
assignment or recognition of a right to any Plan benefit payable to a
Participant pursuant to a "qualified domestic relations order" (as defined in
Section 414(p)(1)(B) of the Code) shall not be treated as an assignment,
transfer or alienation prohibited by this Section 16.1.
16.2 Notices.
All notices, statements, and other communications from the Trustee or the
Company to any Employee, Participant or Beneficiary required or permitted under
the Plan shall be deemed to have been duly given, furnished, delivered or
transmitted, as the case may be, when delivered to (or when mailed by first
class mail, postage prepaid and addressed to) the Employee, Participant or
Beneficiary at his address last appearing on the books of the Company.
16.3 Purchases from Participant Accounts.
Whenever the Trustee is authorized or required to sell shares of Company Stock
from the Account of a Participant, it may, in its absolute discretion, purchase
for the benefit of the Trust Fund the shares of Company Stock to be sold at
their value (as determined by the Trustee on a uniform basis consistently
applied) on the applicable date.
16.4 No Guarantee of Employment.
The Plan shall not be deemed to constitute a contract between the Company and
any Employee or to be in consideration of, or an inducement for, the employment
of any Employee by the Company. Nothing contained in the Plan shall be deemed to
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give any Employee the right to be retained in the service of the Company or to
interfere with the right of the Company to discharge or to terminate the service
of any Employee at any time without regard to the effect such discharge or
termination may have on any rights of such Employee under the Plan.
16.5 Payments to Minors and Incompetents.
If a Participant or Beneficiary entitled to receive any Plan benefit is a minor
or is deemed by the Plan Administrator or is adjudged to be legally incapable of
giving valid receipt and discharge for such benefits, they will be paid to such
persons as the Plan Administrator shall designate or to the duly appointed
guardian. Such payments shall, to the extent made, be deemed a complete
discharge of any liability for the payment of any such benefit under the Plan.
16.6 Evidence of Survivor.
If the Plan Administrator or the Trustee, with the assistance of the Plan
Administrator, cannot make payment of any amount to a Participant or Beneficiary
within 5 years after such amount becomes payable because the identity or
whereabouts of such Participant or Beneficiary cannot be ascertained,
notwithstanding the mailing of a notice to such Participant or Beneficiary by
certified mail to his last known address, the Plan Administrator at the end of
such 5-year period shall direct that all unpaid amounts which would have been
payable to such Participant or Beneficiary be forfeited and treated as a
forfeiture under Section 10.5. Notwithstanding the foregoing, the forfeited
benefits of any Participant or Beneficiary shall be reinstated and payment of
such benefits shall commence upon the filing at any time of a claim for such
benefits by such Participant or Beneficiary.
16.7 Return of Certain Profit Sharing Contributions or Matching Contributions.
Notwithstanding any other provisions of the Plan to the contrary, in the case of
any Contribution made by the Company as a result of a mistake of fact or which
is conditioned upon its deductibility under Section 404 of the Code, such
Contribution, to the extent made by a mistake of fact or to the extent that the
deduction is disallowed, may be returned to the Company, provided that such
Contribution is returned within 1 year after it is mistakenly paid or is
disallowed, as the case may be. For this purpose, all Contributions made by the
Company under the Plan are expressly declared to be conditioned upon their
deductibility under Section 404 of the Code.
16.8 Liability and Indemnification. No director, officer, or Employee of the
Company carrying out any Plan administration responsibilities shall be liable
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for any action or failure to act, unless such action or inaction shall have been
in bad faith. Each such person shall be indemnified and held harmless by the
Company against and from any and all loss, cost, liability, or expense which may
be imposed upon or reasonably incurred by him in connection with or resulting
from any claim, action, suit, or proceeding to which he may be a party or in
which he may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him (with the approval
of the Board of Directors) in settlement thereof or paid by him in satisfaction
of a judgment in favor of the Company based upon a finding of his bad faith;
subject, however, to the condition that, upon the assertion or institution of
any such claim, action, suit, or proceeding against him, he shall in writing
provide the Company with the opportunity, at its own expense, to undertake and
defend it on his behalf.
The foregoing right of indemnification shall not be exclusive of any other right
to which such person may be entitled, as a matter of law or otherwise, or any
obligation or power of the Company to indemnify him or hold him harmless. The
provisions of this Section 16.8 shall be subject to the limitations of ERISA
regarding exculpatory provisions.
16.9 Forfeiture Suspense Account.
If for any Plan Year the amount of forfeitures exceeds the sum of the amount
required to be contributed by the Company under Article 4 and any expenses of
the Plan, such excess shall be allocated to a suspense account used in
succeeding Plan Years to reduce the Company's Profit Sharing Contributions and
Matching Contributions and for payment of expenses of the Plan. The suspense
account shall be charged with its proportionate share of the Trust Fund's
income, gains and losses. In the event that the Plan shall be terminated, a
partial termination shall occur, or the Company shall completely discontinue
contributions to the Plan, the amount in the suspense account, or in the case of
a partial termination or complete discontinuance of contributions, the portion
of the suspense account allocable to the Participants affected by such partial
termination or complete discontinuance, shall be treated as a Profit Sharing
Contribution made immediately prior to such termination, partial termination or
complete discontinuance of contributions, which Contribution shall be allocated
among the affected Participants.
16.10 Governing Law. To the extent not preempted by federal law, the Plan shall
be construed according to the laws of the State of Colorado and all of its
provisions shall be administered according to the laws of such State.
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16.11 Gender.
In all cases when the context so permits, any word used herein in the masculine
gender shall be construed as if it had also been used in the feminine gender.
16.12 Restrictions Required by Section 16b of the Securities Exchange Act of
1934.
Notwithstanding anything in this Plan to the contrary, a Participant who is an
"officer" (within the meaning of Section 16 of the Securities Exchange Act) may
not, within 6 months following an election to engage in a discretionary
transaction, elect to engage in an opposite discretionary transaction. A
"discretionary transaction" shall mean (1) the voluntary reallocation by a
Participant of any portion of his Account balance which is invested in the Orion
Common Stock Fund into another Investment Fund, (2) the voluntary reallocation
by a Participant of his Account balance invested in an Investment Fund (other
than the Orion Common Stock Fund) into the Orion Common Stock Fund and (3) any
of the following transactions to the extent they result in the disposition of
shares from the Orion Common Stock Fund: (a) a hardship withdrawal under Article
12; (b) a voluntary withdrawal under Article 13 or (c) a loan under Article 14.
Discretionary transactions shall be considered "opposite" if one discretionary
transaction results in the acquisition of shares in the Orion Common Stock Fund
and the other discretionary transaction results in the disposition of shares
from the Orion Common Stock Fund.
56
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ARTICLE 17 - TERMINATION. AMENDMENT, OR REVISION OF PLAN
17.1 Right to Amend or Terminate.
The Company intends and expects to continue the Plan indefinitely. Nevertheless,
the Company maintains the right to suspend, terminate or completely discontinue
contributions under the Plan. In addition, the Plan may be amended, modified or
terminated from time to time in the sole discretion of the Company; provided,
however, that no such action shall adversely affect the accrued benefit of any
Participant. Notwithstanding the foregoing, however, any modification or
amendment of the Plan may be made prospectively or retroactively, including
retroactively if necessary or appropriate to qualify or maintain the Plan as a
plan meeting the requirements of the Code and ERISA, as now in effect or
hereafter amended, or any other provisions of law, as now in effect or hereafter
amended or adopted, and any regulation issued thereunder.
Any amendment of the Plan shall be made by:
(a) The adoption of a resolution by the Board of Directors amending the
Plan; or
(b) If such amendment does not increase the contributions to be made by the
Company or would not adversely affect the accrued benefit of any Participant,
upon the execution of a certificate of amendment by the Chairman of the Board of
Directors or the President and by the General Counsel of the Company.
No amendment or revision may be made which would permit any funds paid to or
received by the Trustee to revert to the Company, except as expressly permitted
by law and under the terms of the Plan.
17.2 Rights of Participants.
Upon termination of the Plan, or upon the complete discontinuance of
contributions to the Plan, the rights of all Participants affected by such
termination or discontinuance to the amounts credited to their Accounts shall
become fully vested. In the event of a partial termination, this Section 17.2
shall apply solely to the portion of the Plan terminated.
17.3 Merger or Consolidation of Plan.
The Plan may be merged or consolidated with, or its assets or liabilities
transferred in whole or in part to, another plan which meets the requirements of
Section 401(a), 401(k), and 501(a) of the Code solely if each Participant would,
if either this Plan or the other plan terminated immediately after the merger,
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consolidation or transfer, be entitled to a benefit which is equal to or greater
than the benefit to which he would have been entitled immediately before the
merger, consolidation, or transfer if the Plan then terminated or as may
otherwise be provided under applicable law or regulation.
58
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ARTICLE 18 - TOP-HEAVY PLAN REQUIREMENTS
18.1 In General.
Notwithstanding any other provision of the Plan to the contrary, for any Plan
Year for which the Plan is a "Top-Heavy Plan" as defined in Section 18.2, the
Plan shall be subject to the following provisions:
(a) The vesting provisions set forth in Section 18.5; and
(b) The minimum contribution provisions set forth in Section 18.6.
18.2 Definition of Top-Heavy Plan.
The Plan shall be considered a "Top-Heavy Plan" for any Plan Year if, as of the
last day of the preceding Plan Year (the "Determination Date"):
(a) More than 60% of the aggregate Account balances under the Plan are
allocable to Key Employees (as defined in Section 18.8); or
(b) It is part of an Aggregation Group (as defined in Section 18.3(a))
which is a Top-Heavy Group.
18.3 Definition of Top-Heavy Group.
(a) "Aggregation Group" means:
(i) A group of plans required to be aggregated under Section
416(g)(2)(A)(i) of the Code that includes (A) each plan of the Company in which
a Key Employee (as defined in Section 18.9) participates; and (B) each other
plan of the Company which is aggregated with the Plan to meet the
nondiscrimination requirements of Section 401(a)(4) of the Code or the coverage
requirements of Section 410 of the Code; or
(ii) A group of plans that includes (A) the group of plans listed in clause
(i) of this paragraph (a) and (B) plans that are permitted to be aggregated with
the Plan under Section 416(g)(2)(A)(ii) of the Code.
(b) "Top-Heavy Group" means any Aggregation Group if as of the
Determination Date, the sum of (i) the present value of the cumulative accrued
benefits for Key Employees under all defined benefit plans included in such
Group and (ii) the aggregate of the accounts of Key Employees under all defined
contribution plans included in such Group exceeds 60% of a similar sum
determined for all Employees. Notwithstanding Section 18.2, the Plan shall not
be a Top-Heavy Plan if its Aggregation Group is not a Top-Heavy Group.
59
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18.4 Definition of Super Top-Heavy Plan.
For any Plan Year in which the Plan is a Top-Heavy Plan, the Plan will be a
"Super Top-Heavy Plan" if under the test provided in Section 18.2, "90%" were
substituted for "60%" wherever it appears therein.
18.5 Vesting.
(a) Notwithstanding any other provision contained in the Plan, including
but not limited to the provisions of Article 10, if the Plan is a Top-Heavy Plan
for any Plan Year, a Participant's vested interest in his Account shall be
computed as follows:
Vested
Years of Service Percentage
2 20%
3 40%
4 60%
5 80%
6 or more 100%
In no event shall a Participant's vested interest in his Account be reduced by
reason of the application of this Section 18.5.
(b) If after the Plan has become a Top-Heavy Plan it ceases to be a
Top-Heavy Plan for a subsequent Plan Year, any part of a Participant's Account
which was vested prior to the end of the Plan Year in which the Plan ceases to
be a Top-Heavy Plan shall continue to be vested; provided, however, that the
normal vesting schedule set forth in Article 10 shall apply to all amounts
contributed to a Participant's Account for any Plan Year after the Plan ceases
to be a Top-Heavy Plan.
(c) Notwithstanding paragraph (b) of this Section 18.5, each Participant
who has completed 5 Years of Service or who shall complete 5 Years of Service
during the last Plan Year in which the Plan was a Top-Heavy Plan may elect to
have the vesting schedule set forth in paragraph (a) of this Section 18.5
continue to apply; provided, however, that such election must be made within 60
days after the first day of the Plan Year in which the Plan ceases to be a
Top-Heavy Plan.
18.6 Minimum Contribution.
(a) For any Plan Year in which the Plan is a Top-Heavy Plan, those
Participants who are not Key Employees and who have not separated from service
with the Company at the end of a Plan Year will receive the minimum contribution
described in paragraph (b) of this Section 18.6.
60
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(b) For any Plan Year in which the Plan is a Top-Heavy Plan, each
Participant who is not a Key Employee shall receive a minimum Company
contribution in an amount equal to the lesser of (i) 3% of his "compensation"
(as defined in Treasury Regulation Section 1.415-2(d)), or (ii) the percentage
of his "compensation" (as defined in Treasury Regulation Section 1.415-2(d)) at
which percentage contributions are made under the Plan for the Key Employee for
whom such percentage is the highest.
(c) For purposes hereof, all defined contribution plans required to be
included in the Aggregation Group shall be treated as one plan.
18.7 Impact on Maximum Benefits.
For any Plan Year for which the Plan is a Top-Heavy Plan, the dollar limitations
in the "defined benefit plan fraction" and the "defined contribution plan
fraction" applicable under Section 415(e) of the Code shall be multiplied by
1.00 rather than 1.25; provided, however, for any Plan Year in which the Plan is
a Top-Heavy Plan but not a Super Top-Heavy Plan, the contribution fraction
applicable under Section 415(e) of the Code shall be multiplied by 1.25 and not
by 1.00 if Section 18.6(b) is applied by substituting "4%" for "3%."
18.8 Definition of Key Employee.
(a) For purposes of this Article 18, the term "Key Employee" shall mean any
Employee or former Employee who, at any time during the Plan Year or any of the
4 preceding Plan Years, is:
(i) An officer of the Company who earns greater than 50% of the amount
in effect under Section 415(b)(1)(A), unless 50 other such officers (or, if
lesser, a number of such officers equal to the greater of 3 officers or 10%
of all Employees) have higher Annual Earnings;
(ii) One of the 10 Employees owning (or considered as owning within
the meaning of Section 318 of the Code) the largest interest in the
Company, who has Annual Earnings in excess of the limitation set forth in
Section 415(c)(1)(A) of the Code;
(iii) A Five Percent Owner; or
(iv) The owner of more than 1% of the outstanding stock of the Company
or stock possessing more than 1% of the total combined voting power of all
stock of the Company and the recipient of more than $150,000 of Annual
Earnings from the Company.
(b) For purposes of determining ownership under this Section 18.8,
Section 318(a)(2)(C) of the Code (relating to constructive ownership) shall
61
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be applied by substituting "5 percent" for "50 percent" and the rules of
subsections (b), (c) and (m) of Section 414 of the Code shall not apply.
(c) For purposes of this Section 18.8, the terms "Employee" and "former
Employee" include Beneficiaries of such persons.
62
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ARTICLE 19 - CLAIMS PROCEDURE
19.1 In General.
(a) In the event any person disputes the amount of, or his entitlement to,
any benefits under the Plan or their method of payment, such person shall file a
claim in writing (identified as a claim) for the benefits to which he believes
he is entitled with the Plan Administrator, setting forth the reason for his
claim. The Plan Administrator shall consider the claim and, if the Plan
Administrator shall deny such claim in whole or in part, the Plan Administrator
shall provide to such person (and if such person has designated in writing any
representative, the Plan Administrator shall also provide a copy to such
representative) a written notice setting forth the specific reason or reasons
for the denial of the claim, including references to the applicable provisions
of the Plan, a description of any additional material or information necessary
to perfect such claim along with an explanation of why such material or
information is necessary, and appropriate information as to the procedure to be
followed for review of such claim by the Committee. If the Plan Administrator
shall fail to respond to such claim within 90 days after its receipt, such
claim, for purposes of seeking review by the Committee, shall be deemed denied.
(b) Any person whose claim is denied by the Plan Administrator may request
a review of the Plan Administrator's decision by the Committee by filing a
written request with the Committee for such review within 60 days after such
claim is denied. In connection with that review such person (or his authorized
representative) may examine pertinent documents and submit such written comments
as may be appropriate. As part of his request for review, such person may
request a hearing before the Committee at which he may present such material,
information or arguments as are relevant to his claim. The Committee shall
render its decision within 60 days after the receipt of the request for review,
unless special circumstances, such as the need to hold a hearing, require an
extension of time up to an additional 60 days. Any decision of the Committee
shall be in writing, shall include specific reasons for the decision and
references to the pertinent provisions of the Plan on which the decision is
based and such decision of the Committee shall be final and conclusive.
63
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IN WITNESS WHEREOF, the Company has executed the Plan this------------ day
of------------------, 1998.
GUARANTY NATIONAL INSURANCE COMPANY
By:-----------------------------
Title:--------------------------
Date:---------------------------
64
<PAGE>
EXHIBIT A
INVESTMENT OPTIONS
FUND CATEGORY INVESTMENT FUND SELECTION
- -------------
Company Stock Fund Orion Common Stock Fund
"Fixed" Fund Vanguard Stable Value Fund
Money Market Fund Vanguard Money Market Reserves -
Prime Portfolio
Income Funds Vanguard Bond Index Fund -
Total Bond Market Portfolio
Balanced Fund Vanguard/Wellington Fund
Growth and Income Funds Vanguard Index Trust -
500 Portfolio
Vanguard Windsor II
Growth Fund Vanguard/PRIMECAP Fund
Vanguard U.S. Growth Portfolio
Aggressive Growth Fund Vanguard Explorer Fund
International Equity Fund Vanguard International Growth
Portfolio
DENVER:0855362.03
65
<PAGE>
TABLE OF CONTENTS
ARTICLE 1
PURPOSE
ARTICLE 2
DEFINITIONS
2.1 "Account" .................................................................2
2.2 "After-Tax Contributions" .................................................2
2.3 "After-Tax Contribution Account" ..........................................2
2.4 "Annual Earnings" .........................................................2
2.5 "Annuity Starting Date" ...................................................3
2.6 "Basic Compensation" ......................................................3
2.7 "Beneficiary" .............................................................3
2.8 "Board of Directors" ......................................................4
2.9 "Code" ....................................................................4
2.10 "Committee" ..............................................................4
2.11 "Company" ................................................................4
2.12 "Company Stock" ..........................................................4
2.13 "Disability" .............................................................4
2.14 "Employee" ...............................................................4
2.15 "Employment Commencement Date" ...........................................5
2.16 "ERISA" ..................................................................5
2.17 "Five Percent Owner" .....................................................5
2.18 "Highly Compensated Employee" ............................................5
2.19 "Highly Compensated Active Employee" .....................................5
2.20 "Highly Compensated Former Employee" .....................................6
2.21 "Hour of Service" ........................................................7
2.22 "Investment Funds" .......................................................8
2.23 "IRP Plan" ...............................................................8
2.24 "IRP Plan Account" .......................................................8
2.25 "Matching Contributions" .................................................8
2.26 "Matching Contribution Account" ..........................................8
2.27 "One-Year Break-in-Service" ..............................................8
2.28 "Orion Common Stock Fund" ................................................8
2.29 "Participant" ............................................................8
2.30 "Participant Contributions" ..............................................9
2.319 "Pay Period" ............................................................9
2.32 "Period of Severance" ....................................................9
2.33 "Plan" ...................................................................9
2.34 "Plan Administrator" .....................................................9
2.35 "Plan Year" ..............................................................9
2.36 "Profit Sharing Contributions" ...........................................9
2.37 "Profit Sharing Account" .................................................9
I
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2.38 "Qualified Non-Elective Contributions" ...................................9
2.39 "Qualified Non-Elective Contribution Account" ............................9
2.40 "Retirement" .............................................................9
2.41 "Rollover Contributions" ................................................10
2.42 "Rollover Contribution Account" .........................................10
2.43 "Savings Contributions" .................................................10
2.44 "Savings Contribution Account" ..........................................10
2.45 "Service" ...............................................................10
2.46 "Severance Date" ........................................................10
2.47 "Spouse" ................................................................11
2.48 "Trust Agreement" .......................................................11
2.49 "Trustee" ...............................................................11
2.50 "Trust Fund" ............................................................11
2.51 "Unisun Plan" ...........................................................11
2.52 "Valuation Date" ........................................................11
2.53 "Voluntary Deductible Contribution Account" .............................11
2.54 "Year of Service" .......................................................11
ARTICLE 3
PARTICIPATION
3.1 Participation ............................................................12
3.2 Union Employees ..........................................................12
3.3 Return to Employment .....................................................12
ARTICLE 4
COMPANY CONTRIBUTIONS
4.1 Profit Sharing Contributions, Matching Contributions and Qualified
Non-Elective Contributions............................................... 13
4.2 Additional Contributions .................................................13
4.3 Reduction for Forfeitures ................................................14
4.4 Payment of Profit Sharing Contributions and Qualified Non-Elective
Contributions............................................... .............14
4.5 Payment of Savings Contributions, Matching Contributions and
After-Tax Contributions......................................... .........14
ARTICLE 5
PARTICIPANT CONTRIBUTIONS
5.1 Eligibility to Make Participant Contributions ............................15
5.2 Savings Contributions (Pre-Tax) ..........................................15
5.3 After-Tax Contributions ..................................................15
5.4 Rollover Contributions ...................................................16
II
<PAGE>
5.5 Increases and Decreases of Participant Contributions .....................16
5.6 Suspensions of Participant Contributions .................................16
5.7 Payment of Participant Contributions .....................................16
ARTICLE 6
ALLOCATION OF CONTRIBUTIONS
6.1 Allocation of Profit Sharing Contributions ...............................17
6.2 Allocation of Matching Contributions .....................................17
6.3 Allocation of Qualified Non-Elective Contributions .......................17
6.4 Allocation of Savings Contributions ......................................18
6.5 Allocation of After-Tax Contributions ....................................18
6.6 Maximum Allocation .......................................................18
ARTICLE 7
LIMITATIONS ON CONTRIBUTIONS
7.1 Company Contributions Conditioned on their Deductibility .................20
7.2 Nondiscrimination Requirements for Savings Contributions .................20
7.3 Correction of Excess Contributions .......................................21
7.4 Correction of Excess Savings Contributions ...............................22
7.5 Nondiscrimination Requirements for Matching Contributions and After-Tax
Contributions.................................................... ........23
7.6 Aggregate Nondiscrimination Requirement ..................................24
ARTICLE 8
INVESTMENT OF CONTRIBUTIONS
8.1 Investment of Matching Contributions .....................................25
8.2 Investment of all Contributions other than Matching Contributions ........25
8.3 Changes in Future Allocations to Investment Funds ........................25
8.4 Reallocation of Existing Account Balance .................................25
8.5 Additional Rules and Procedures ..........................................26
ARTICLE 9
PARTICIPANTS' ACCOUNTS
9.1 Maintenance of Participants' Accounts ....................................27
9.2 Company Stock - Voting and Consents ......................................27
9.3 Company Stock - Tender Offers ............................................27
ARTICLE 10
VESTING OF CONTRIBUTIONS
10.1 Vesting of Participant Contributions, Qualified Non-Elective
Contributions and Retirement Contributions ..............................28
III
<PAGE>
10.2 Vesting of Matching Contributions and Profit Sharing Contributions ......28
10.3 Vesting of Matching Contributions and Profit Sharing Contributions upon
Disability, Death or Attainment of Age 65 While Employed by the Company .28
10.4 Forfeitures and Restoration of Account Balances .........................29
10.5 Change in Vesting Schedule ..............................................29
ARTICLE 11
DISTRIBUTIONS FROM PARTICIPANTS' ACCOUNTS UPON TERMINATION OF EMPLOYMENT
11.1 Lump Sum Payments .......................................................30
11.2 Qualified Joint and Survivor Annuity and Qualified Preretirement
Survivor Annuity ........................................................31
11.3 Optional Forms of Payment ...............................................32
11.4 Consent Requirements ....................................................33
11.5 Notice Requirements .....................................................34
11.6 Payment of Benefits .....................................................34
11.7 Distributions Upon Participant's Death ..................................35
11.8 In-Service Required Distributions .......................................36
11.9 Distributions Pursuant to QDROs .........................................36
11.10 Direct Trustee-to-Trustee Rollovers ....................................37
ARTICLE 12
HARDSHIP WITHDRAWALS
12.1 In General ..............................................................39
12.2 Hardship ................................................................39
12.3 Necessary to Satisfy Immediate and Heavy Need ...........................40
12.4 Reliance on Participant Representations .................................40
12.5 Timing of Hardship Withdrawals ..........................................41
12.6 Distribution from Accounts ..............................................41
12.7 Continued Eligibility under Plan ........................................42
ARTICLE 13
OTHER PERMITTED IN-SERVICE WITHDRAWALS
13.1 Withdrawals at or After Age 59-1/2 ......................................43
13.2 Withdrawals Prior to Age 59-1/2 .........................................43
13.3 Timing of Withdrawals ...................................................43
13.4 Distribution from Accounts ..............................................43
13.5 Continued Eligibility under Plan ........................................44
IV
<PAGE>
ARTICLE 14
PLAN LOANS
14.1 In General ..............................................................45
14.2 Loan Requirements .......................................................45
14.3 Investment of Loan ......................................................46
14.4 Default on Loan .........................................................46
14.5 Distribution from Accounts ..............................................47
14.6 Continued Eligibility under Plan ........................................48
ARTICLE 15
ADMINISTRATION OF THE PLAN
15.1 Named Fiduciaries .......................................................49
15.2 Appointment of Committee ................................................49
15.3 Existence of the Committee ..............................................49
15.4 Vacancies and Resignations ..............................................49
15.5 Committee Officers ......................................................49
15.6 Committee Meetings ......................................................49
15.7 Employment of Experts ...................................................50
15.8 Committee Compensation ..................................................50
15.9 Payment of Expenses .....................................................50
15.10 Binding Action .........................................................50
15.11 Committee Powers .......................................................50
15.12 Committee Duties .......................................................51
15.13 Conflicts of Interest ..................................................52
15.14 Domestic Relations Orders ..............................................52
15.15 Delegation .............................................................52
15.16 Modification of Procedures of the Plan .................................52
ARTICLE 16
MISCELLANEOUS
16.1 Participant's Rights Not Transferable ...................................53
16.2 Notices .................................................................53
16.3 Purchases from Participant Accounts .....................................53
16.4 No Guarantee of Employment ..............................................53
16.5 Payments to Minors and Incompetents .....................................54
16.6 Evidence of Survivor ....................................................54
16.7 Return of Certain Profit Sharing Contributions or Matching Contribution..54
16.8 Liability and Indemnification ...........................................54
16.9 Forfeiture Suspense Account .............................................55
16.10 Governing Law ..........................................................55
16.11 Gender .................................................................55
16.12 Restrictions Required by Section 16b of the Securities Exchange Act of
1934 ...................................................................56
V
<PAGE>
ARTICLE 17
TERMINATION. AMENDMENT, OR REVISION OF PLAN
17.1 Right to Amend or Terminate .............................................57
17.2 Rights of Participants ..................................................57
17.3 Merger or Consolidation of Plan .........................................57
ARTICLE 18
TOP-HEAVY PLAN REQUIREMENTS
18.1 In General ..............................................................59
18.2 Definition of Top-Heavy Plan ............................................59
18.3 Definition of Top-Heavy Group ...........................................59
18.4 Definition of Super Top-Heavy Plan ......................................60
18.5 Vesting .................................................................60
18.6 Minimum Contribution ....................................................60
18.7 Impact on Maximum Benefits ..............................................61
18.8 Definition of Key Employee ..............................................61
ARTICLE 19
CLAIMS PROCEDURE
19.1 In General ..............................................................63
VI
<PAGE>
_________________________________________________________________
EXHIBIT 5
[LETTERHEAD OF JOHN J.MCCANN, ESQ.]
September 2, 1998
Orion Capital Corporation
9 Farm Springs Road
Farmington, Connecticut 06032
Orion Capital Corporation:
In connection with the Registration Statement on Form S-8 relating to
250,000 shares of Common Stock, (par value $1.00 per share) (the Shares) of
Orion Capital Corporation (Orion) under the Retirement Savings Plan for
Employees of Guaranty National Insurance Company (the Plan), it is my opinion
that:
1. Orion is duly incorporated and validly existing in good standing under
the laws of the State of Delaware.
2. All necessary corporate proceedings have been taken to authorize the
issuance of the Shares under the Plan, and all such Shares, upon
issuance in accordance with the Plan and upon full payment in cash for
such Shares issued, will be validly issued and outstanding and fully
paid and non-assessable.
In preparing this opinion, I have examined certificates of public
officials, certificates of officers and copies certified to my satisfaction of
such corporate documents and records of Orion and such other papers as I have
thought relevant and necessary as a basis for my opinion. I have relied on such
certificates in connection with the accuracy of actual matters contained in such
documents which were not independently established.
I consent to the use of this opinion in the Registration Statement and to
the reference to my name under the heading Legal Opinion in the Prospectus. In
giving such consent, I do not admit that I come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, or the
Rules and Regulations of the Securities and Exchange commission.
Very truly yours,
/s/ John J. McCann
---------------------------
John J. McCann
Executive Vice President,
Chief Legal Officer and
Secretary
<PAGE>
__________________________________________________________________
EXHIBIT 15
September 2, 1998
Orion Capital Corporation
9 Farm Springs Road
Farmington, CT 06032
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Orion Capital Corporation and subsidiaries for the periods ended
March 31, 1998 and 1997 and June 30, 1998 and 1997, as indicated in our reports
dated April 30, 1998 and July 29, 1998, respectively; because we did not perform
an audit, we expressed no opinion on that information.
We are aware that our reports referred to above, which were included in your
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998 and June
30, 1998 are being used in this Registration Statement on Form S-8.
We are also aware that the aforementioned reports, pursuant to Rule 436(c) under
the Securities Act, are not considered a part of the Registration Statement
prepared or certified by an accountant or a report prepared or certified by an
accountant within the meaning of Sections 7 and 11 of that Act.
Deloitte & Touche LLP
Hartford, Connecticut
_________________________________________________________________
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Orion Capital Corporation on Form S-8 of our report dated February 11,
1998, appearing in the Annual Report on Form 10-K of Orion Capital
Corporation for the year ended December 31, 1997.
Deloitte & Touche LLP
Hartford, Connecticut
September 2, 1998
