<PAGE> 1
As filed with the Securities and Exchange Commission on May 1, 1998
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
------------------------------
WESTCORP
--------------------
(Exact Name of Registrant as Specified in Charter)
CALIFORNIA 51-0308535
(Jurisdiction of Incorporation (I.R.S. Employer
or Organization) Identification Number)
23 PASTEUR ROAD
IRVINE, CALIFORNIA 92713-9762
(Address of Principal Executive Offices)
WESTCORP EMPLOYEE STOCK OWNERSHIP AND SALARY SAVINGS PLAN
(Full title of the Plan)
Harriet Burns Feller
General Counsel
23 Pasteur Road
Irvine, California 92618-3816
(714) 727-1000
(Name, Address and Telephone Number, Including Area Code, of Agent For Service)
Copies of communications to:
Andrew E. Katz, Esq.
Mitchell, Silberberg & Knupp LLP
11377 West Olympic Boulevard
Los Angeles, California 90064-1683
(310) 312-3738
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
========================================================================================================================
Title of Each Proposed Proposed
Class of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Share Price Fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $1.00 per share 200,000 $15.28(1) $3,056,250(1) $901.60(1)
========================================================================================================================
</TABLE>
(1) Computed pursuant to Rules 457(c) and 457(h)(1) based on the average of
the high ($15.375) and low ($15.1875) sales price of the Common Stock as
reported on the New York Stock Exchange, Inc. on April 28, 1998.
In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
as amended, this registration statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the employee benefit plan described
herein.
================================================================================
<PAGE> 2
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
This Registration Statement on Form S-8 is filed pursuant to General
Instruction E for the purpose of registering additional shares of Common Stock
of Westcorp (the "Registrant") issuable under the Westcorp Employee Stock
Ownership and Salary Savings Plan (the "Plan"). The information set forth below
is incorporated by reference in this Registration Statement as provided by
General Instruction E and as otherwise provided by the General Instructions to
Form S-8. The Registrant and the Plan each hereby incorporates by reference in
this Registration Statement the following documents filed with the Commission by
the Registrant or the Plan pursuant to the Exchange Act of 1934, as amended:
1. The Registrant's Registration Statement on Form S-8 (File No.
333-11039) filed on August 29, 1996 with respect to the
registration of 200,000 shares of Common Stock of the Registrant;
2. The Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997;
3. The Registrant's Current Report on Form 8-K filed on March 25,
1998;
4. The Plan's Annual Report on Form 11-K for the year ended December
31, 1996;
5. The description of the common stock of the Company contained in
Item 9 of the Registrant's registration statement on Form S-1
filed with the Commission on May 21, 1986 (Registration No.
33-04295), including any amendment filed for the purpose of
updating such description.
6. All other reports filed by the Registrant or the Plan pursuant to
Sections 13(a) or 15(d) of the Exchange Act since the end of the
fiscal year covered by the annual report referred to in paragraph
1, above.
All documents and other reports subsequently filed by the Registrant or
the Plan pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after
the date of this Registration Statement and prior to the filing of a
post-effective amendment to this Registration Statement 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 part hereof from the date of filing of such
documents or reports. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is, or is deemed to be, incorporated by reference herein modifies or
supersedes 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.
EXHIBITS
The Exhibit Index immediately preceding the exhibits is incorporated
herein by reference.
2
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement on Form S-8 to be signed
on its behalf by the undersigned, thereunto duly authorized, in Irvine,
California, on April 30, 1998.
WESTCORP
By: /s/ Ernest Rady
-------------------------------------
Ernest S. Rady, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, Registration
Statement on Form S-8 has been signed by the following persons in the capacities
and on the date indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ Ernest Rady Chairman of the Board, President and Chief April 30, 1998
- -------------------------- Executive Officer
Ernest S. Rady
/s/ Andrey Kosovych Vice Chairman April 30, 1998
- --------------------------
Andrey R. Kosovych
/s/ J. M. Bardwick Director April 30, 1998
- --------------------------
Judith M. Bardwick
/s/ Stanley Foster Director April 30, 1998
- --------------------------
Stanley E. Foster
/s/ Charles E. Scribner Director April 30, 1998
- --------------------------
Charles E. Scribner
/s/ Howard C. Reese Director April 30, 1998
- --------------------------
Howard C. Reese
/s/ Lee A. Whatcott Senior Vice President (Principal Financial and April 30, 1998
- -------------------------- Accounting Officer) and Chief Financial Officer
Lee A. Whatcott
</TABLE>
3
<PAGE> 4
Pursuant to the requirements of the Securities Act of 1933, the Westcorp
Employee Stock Ownership and Salary Savings Plan has duly caused this
Registration Statement on Form S-8 to be signed on its behalf by the
undersigned, thereunto duly authorized, in Irvine, California, on April 30,
1998.
THE WESTCORP EMPLOYEE STOCK
OWNERSHIP AND SALARY SAVINGS PLAN
By: /s/ Lee A. Whatcott
--------------------------------
Lee A. Whatcott, Committee Member
4
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Exhibit
- ------- -------
<S> <C>
4.1 Westcorp Employee Stock Ownership and Salary Saving Plan, as amended
and restated as of May 26, 1994.
4.2 Amendment to Westcorp Employee Stock Ownership and Salary Saving
Plan, adopted August 22, 1995.
4.3 Amendment to Westcorp Employee Stock Ownership and Salary Saving
Plan, adopted July 30, 1996.
5 Opinion of Mitchell, Silberberg & Knupp LLP re: legality
23.1 Consent of Mitchell, Silberberg & Knupp LLP
(included in its opinion contained in Exhibit 5)
23.2 Consent of Ernst & Young LLP
</TABLE>
5
<PAGE> 1
Exhibit 4.1
THE WESTCORP, INC.
EMPLOYEE STOCK OWNERSHIP
AND
SALARY SAVING PLAN
Amended and Restated
Effective January 1, 1990
<PAGE> 2
THE WESTCORP, INC.
EMPLOYEE STOCK OWNERSHIP AND
SALARY SAVING PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE Page
------- ----
<S> <C>
I. DEFINITIONS................................................................. 1
Accumulation Account........................................................ 1
Anniversary Date............................................................ 1
Annual Additions............................................................ 1
Beneficiary................................................................. 1
Board....................................................................... 1
Break in Service............................................................ 2
Code........................................................................ 2
Committee................................................................... 2
Company Stock............................................................... 2
Compensation................................................................ 2
Controlled Group............................................................ 2
Earnings.................................................................... 2
Effective Date.............................................................. 4
Eligibility Computation Period.............................................. 4
Employee.................................................................... 4
ESOP Contribution Account................................................... 4
Employer.................................................................... 4
Employment Anniversary Date................................................. 4
Employment Commencement Date................................................ 4
Entry Date.................................................................. 4
ERISA....................................................................... 4
Forfeiture.................................................................. 5
Highly Compensated Employee................................................. 5
Hour of Service............................................................. 6
Leased Employee............................................................. 7
Leave of Absence............................................................ 7
</TABLE>
i
<PAGE> 3
THE WESTCORP, INC.
EMPLOYEE STOCK OWNERSHIP AND
SALARY SAVINGS PLAN
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
ARTICLE Page
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<S> <C>
I. DEFINITIONS (continued)
Limitation Year............................................................. 8
Matching Employer Contribution Account...................................... 8
Normal Retirement Date...................................................... 8
Participant................................................................. 8
Plan........................................................................ 8
Plan Administrator.......................................................... 8
Plan Year................................................................... 8
Postponed Retirement Date................................................... 9
Salary Savings Contribution Account......................................... 9
Separation From Service..................................................... 9
Service..................................................................... 9
Trustee..................................................................... 9
Trust Agreement............................................................. 9
Trust Fund.................................................................. 9
Valuation Date.............................................................. 10
Year of Service............................................................. 10
II. ELIGIBILITY AND PARTICIPATION............................................... 11
2.1 Eligibility.......................................................... 11
2.2 Participation........................................................ 11
2.3 Reemployment......................................................... 11
2.4 Employment After Normal Retirement Date.............................. 11
2.5 Ineligibility After Becoming Eligible................................ 11
2.6 Termination of Participation......................................... 12
2.7 Waiver of Participation.............................................. 12
III. CONTRIBUTIONS............................................................... 12
3.1 Employee Stock Ownership Plan Contributions.......................... 12
3.2 Allocation of ESOP Contributions..................................... 13
3.3 Matching Employer Contribution....................................... 13
3.4 Allocation of Matching Employer Contributions........................ 13
</TABLE>
ii
<PAGE> 4
THE WESTCORP, INC.
EMPLOYEE STOCK OWNERSHIP AND
SALARY SAVINGS PLAN
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
ARTICLE Page
------- ----
<S> <C>
III. CONTRIBUTIONS (continued)
3.5 Compliance With Matching Employer Contribution
Non-Discrimination Rules............................................. 13
3.6 Maximum Deductible Employer Contribution Limitation.................. 14
3.7 Insufficient Earnings By A Participating Employer.................... 14
3.8 Timing of Employer Contributions..................................... 14
3.9 Limitation of Liability.............................................. 15
3.10 Limitation on Reversion of Contributions............................. 15
3.11 Salary Saving Contributions.......................................... 15
3.12 Allocation of Salary Savings Contributions........................... 16
3.13 Compliance With Salary Savings Contribution
Non-Discrimination Rules............................................. 16
3.14 Failure to Satisfy Salary Saving Non-Discrimination Rules............ 16
3.15 Initiating a Salary Savings Contribution............................. 17
3.16 Change in Salary Savings Contribution Amounts........................ 17
3.17 Timing of Salary Savings Contributions to the Trust.................. 17
IV. PARTICIPANT'S ACCOUNTS: ALLOCATIONS AND LIMITATIONS......................... 18
4.1 Crediting Employer Contributions..................................... 18
4.2 Crediting Employee Salary Savings Contributions...................... 18
4.3 Investment of Contributions Allocated to Each
Participant's Accounts............................................... 18
4.4 Allocation of Net Gains, Losses and
Earnings to a Participant's Account.................................. 19
4.5 Limitation on Annual Additions....................................... 20
4.6 Voting Rights........................................................ 22
4.7 ESOP Contribution Account Diversification Requirements............... 22
4.8 Rollover Contributions............................................... 23
V. RETIREMENT, DISABILITY AND DEATH BENEFITS................................... 24
5.1 Retirement Benefits.................................................. 24
5.2 Disability Retirement Benefits....................................... 24
5.3 Death Benefits....................................................... 24
</TABLE>
iii
<PAGE> 5
THE WESTCORP, INC.
EMPLOYEE STOCK OWNERSHIP AND
SALARY SAVINGS PLAN
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
ARTICLE Page
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<S> <C>
VI. TERMINATION BENEFITS AND VESTING REQUIREMENTS............................... 25
6.1 Benefits Upon Termination of Employment.............................. 25
6.2 Vesting Requirements................................................. 25
6.3 Forfeitures.......................................................... 27
VII. DISTRIBUTION OF BENEFITS.................................................... 27
7.1 Forms of Benefit Payment............................................. 27
7.2 Timing of Benefit Payments........................................... 30
7.3 Distribution Requirements............................................ 30
7.4 Limitation on Benefit Liability...................................... 31
7.5 Release For Payment.................................................. 31
VIII. DEATH BENEFITS.............................................................. 32
8.1 Entitlement to Preretirement Death Benefits.......................... 32
8.2 Proof of Death....................................................... 32
8.3 Death After Distribution Commencement................................ 33
8.4 Death Prior to Distribution Commencement............................. 33
8.5 Postretirement Death Benefits........................................ 33
8.6 Designation of Beneficiary........................................... 33
IX. DISABILITY BENEFITS.......................................................... 34
9.1 Disability Benefits.................................................. 34
9.2 Determination of Total Disability.................................... 34
9.3 Recovery From Total Disability....................................... 35
X. HARDSHIP WITHDRAWALS......................................................... 35
10.1 Financial Hardship Withdrawals....................................... 35
10.2 Amount and Payment of Withdrawals.................................... 36
</TABLE>
iv
<PAGE> 6
THE WESTCORP, INC.
EMPLOYEE STOCK OWNERSHIP AND
SALARY SAVINGS PLAN
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
ARTICLE Page
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<S> <C>
XI. COMMITTEE................................................................... 37
11.1 Appointment of the Committee......................................... 37
11.2 Powers and Duties.................................................... 37
11.3 Investment Powers.................................................... 39
11.4 Actions by the Committee............................................. 39
11.5 Interested Party Restrictions........................................ 39
11.6 Indemnification...................................................... 39
11.7 Acceptance of Legal Service.......................................... 40
11.8 Conclusiveness of Action............................................. 40
11.9 Payment of Expenses.................................................. 40
11.10 Annual Review........................................................ 40
11.11 Multiple Fiduciary Responsibility.................................... 41
11.12 Claims Procedure..................................................... 41
XII. AMENDMENT TO THE PLAN....................................................... 42
12.1 Right to Amend....................................................... 42
12.2 Amended Vesting Schedule............................................. 42
XIII. TERMINATION OF THE PLAN..................................................... 43
13.1 Right to Terminate................................................... 43
13.2 Effect of Termination on Participant's Account....................... 43
13.3 Automatic Plan Termination........................................... 44
13.4 Plan Merger and Consolidation........................................ 44
XIV. TRUSTEE..................................................................... 44
14.1 Trust Establishment and Continuance.................................. 44
14.2 Trustee Accounting Responsibilities.................................. 44
14.3 Trustee Administration and Investment Responsibilities............... 45
14.4 Committee Investment Direction....................................... 45
14.5 Appointment of Agents................................................ 45
14.6 Treatment of Plan and Trust Expenses................................. 46
</TABLE>
v
<PAGE> 7
THE WESTCORP, INC.
EMPLOYEE STOCK OWNERSHIP AND
SALARY SAVINGS PLAN
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
ARTICLE Page
------- ----
<S> <C>
XIV. TRUSTEE (continued)
14.7 Resignation and Removal of the Trustee............................... 46
14.8 Voting Shares of Company Stock....................................... 47
14.9 Borrowing to Purchase Shares of Company Stock........................ 47
XV. TOP-HEAVY PLAN REQUIREMENTS................................................. 47
15.1 General Rule......................................................... 47
15.2 Minimum Contribution Provisions...................................... 48
15.3 Limitation on Compensation........................................... 48
15.4 Limitation on Contributions.......................................... 48
15.5 Coordination with Other Plans........................................ 49
15.6 Determination of Top-Heavy Status.................................... 49
15.7 Top-Heavy Vesting Schedule........................................... 53
XVI. MISCELLANEOUS............................................................... 53
16.1 Voluntary Plan....................................................... 53
16.2 Nonalienation of Benefits............................................ 54
16.3 Inability to Receive Benefits........................................ 54
16.4 Lost Participants.................................................... 54
16.5 Limitation of Rights................................................. 54
16.6 Invalid Provisions................................................... 55
16.7 One Plan............................................................. 55
16.8 Limitation on Beneficial Interest.................................... 55
16.9 Rollover to Another Qualified Plan................................... 55
16.10 Rollover to Participant's Individual Retirement Account.............. 55
16.11 Governing Law........................................................ 56
16.12 Application of Plan Terms............................................ 56
16.13 Multiple Employer and Associated Employer Adoption................... 56
16.14 Participant Information.............................................. 56
</TABLE>
vi
<PAGE> 8
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases shall have the meaning
specified below. Additional words and phrases may be defined in the text of the
Plan.
Accumulation Account
"Accumulation Account" means the sum of the Participant's ESOP Contribution
Account, Rollover Account, Matching Employer Contribution Account and Salary
Savings Contribution Account, if any, established for each Participant.
Anniversary Date
"Anniversary Date" means the last day of the Plan Year, December 31st.
Annual Additions
"Annual Additions" means the amount contributed to a Participant's Accumulation
Account for any Limitation Year which equals the sum of (a), (b), (c), (d) and
(e) below as applicable:
(a) Employer contributions;
(b) the Participant's after-tax contributions, if any;
(c) relocated forfeitures, if applicable under any tax-supported defined
contribution plan maintained by the Employer.
(d) Salary Savings Contributions authorized by the Participant.
(e) Amounts allocated after December 31, 1984, to an individual medical
account, as defined in Section 415(l)(1) of the Code, which are part of
a defined benefit plan maintained by the Employer, are treated as annual
additions to a defined contribution plan. Amounts derived from
contributions paid or accrued after December 31, 1985, for taxable years
ending after such date, which are attributable to post retirement
medical benefits allocated to the separate account of a Key Employee as
defined in Section 419(A)(d)(3), under a welfare benefit fund as defined
in Section 419(e), maintained by the Employer, are treated as annual
additions to a defined contribution plan.
Beneficiary
"Beneficiary" shall mean the person, or persons, designated by the participant
to receive any benefits payable under the Plan by reason of the death of a
Participant in accordance with Section 8.6 of the Plan.
Board
"Board" means the board of directors of Westcorp, Inc.
1
<PAGE> 9
Break in Service
"Break in Service" means any Plan Year in which an Employee does not complete
more than 500 Hours of Service.
Code
"Code" means the Internal Revenue Code of 1986, as amended.
Committee
"Committee" or "Administrative Committee" means the committee appointed to
administer the Plan as described in Article XI.
Company Stock
"Company Stock" means Westcorp, Inc. common stock, $1 par value.
Compensation
"Compensation" means compensation of the Participant as defined in Section
415(c)(3) of the Code, paid by the Employer during the Plan Year.
Controlled Group
"Controlled Group" shall mean for purposes of Code Sections 401, 411 and 415,
relating to qualification, participation, vesting and the limitation on benefits
and contributions, all businesses which are members of a controlled group of
businesses, within the meaning of Code Section 1563(a), determined without
regard to Section 1563(a)(4) and (e)(3)(C) or are members of an Affiliated
Service Group. All Employees of a Controlled Group shall be treated as employed
by a single Employer. With respect to a Plan adopted by more than one business,
the applicable limitations provided by Section 404(a), the minimum funding
standard of Section 412, and the taxes imposed by Section 4971 for failure to
meet minimum funding standards shall be determined as if all such Employers were
a single Employer and allocated to each Employer in accordance with regulations
prescribed by the Department of Labor. For purposes of Code Section 415, Section
1563(a) shall be modified by Code Section 415(h).
Earnings
"Earnings" for purposes of allocating the ESOP contribution in accordance with
Section 3.2 of the Plan means wages and salaries, but excludes commissions,
overtime and bonuses paid during the Plan Year. Earnings for purposes of
allocating the Matching Employer Contribution and Salary Savings Contributions
in accordance with Sections 3.4 and 3.12 of the Plan means the regular income
paid or accrued to an Employee by the Employer during a Plan Year. This shall
include basic salaries and wages and commissions, but shall not include
overtime, bonuses or Employer contributions under this Plan or any other
Employee welfare agreement or plan, or the reimbursement of Employee incurred
business expenses, or stock options and other distributions for which the
Employee receives favorable tax benefits. Earnings shall be limited to a maximum
of $200,000 during any Plan Year for purposes of determining the allocation of
any ESOP or Matching Employer Contributions or the Actual Deferral Percentages
in Section 3.13 or Actual Contribution Percentages in Section 3.5
2
<PAGE> 10
of the Plan. The $200,000 limit shall be adjusted annually in accordance with
Section 401(a)(17) of the Code.
The following shall be effective January 1, 1987:
Annual Earnings shall be limited to $200,000 or such greater amount as
may be recognized for increases in the cost of living as determined by
the Secretary of the Treasury under Code Section 415(d). In the case of
an Employee who is a 5 percent owner (within the meaning of Section
414(q)(3) of the Code) or who is both a Highly Compensated Employee and
one of the ten most highly compensated Employees paid the highest
Earnings for the Plan Year, the "family" of such Employee will be
treated as a single Employee for purposes of applying the $200,000
Limit. "Family" includes the Employee, the spouse of the Employee and
any lineal descendants of the Employee who have not attained age 19
before the close of the Plan Year. Earnings for each family member shall
be determined by multiplying the $200,000 limit by a fraction, the
numerator of which is the family member's Earnings (determined without
regard to this paragraph) and the denominator of which is the family's
aggregate Earnings (determined without regard to this paragraph).
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual Earnings of
each Employee taken into account under the Plan shall not exceed the
OBRA '93 annual compensation limit. The OBRA '93 annual compensation
limit is $150,000, as adjusted by the Commissioner for increases in the
cost of living in accordance with section 401(a)(17)(B) of the Internal
Revenue Code. The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over which Earnings
is determined (determination period) beginning in such calendar year. If
a determination period consists of fewer than 12 months, the OBRA '93
annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the determination period,
and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under section 401(a)(17) of the Code shall
mean the OBRA '93 annual compensation limit set forth in this provision.
If Earnings for any prior determination period is taken into account in
determining an Employee's benefits accruing in the current Plan Year,
the Earnings for that prior determination period is subject to the OBRA
'93 annual compensation limit in effect for that prior determination
period. For this purpose, for determination periods beginning before the
first day of the first Plan Year beginning on or after January 1, 1994,
the OBRA '93 annual compensation limit is $150,000.
3
<PAGE> 11
Effective Date
"Effective Date" means January 1, 1975, the date the Employee Stock Ownership
Plan and Trust became effective.
Eligibility Computation Period
"Eligibility Computation Period" for each Eligible Employee shall mean a twelve
(12) consecutive month period beginning on the date such eligible Employee first
performs an Hour of Service with the Employer or, in years subsequent to the
initial Eligibility Computation Period, such twelve (12) consecutive month
period shall be the Plan Year starting with the Plan Year which includes the
first anniversary of the date the Employee first performs an Hour of Service
with the Employer.
Employee
"Employee" means an individual employed by the Employer, any portion of whose
Compensation is subject to withholding of income tax and/or for whom Social
Security contributions are made by the Employer, as well as any other person
qualifying as a common law employee of the Employer, including persons on
authorized Leave of Absence, as well as a self-employed individual,
owner-employee or partner-employee.
ESOP Contribution Account
"ESOP Contribution Account" means the value of the Participant's Employee Stock
Ownership Plan Contributions made in accordance with Section 3.1 of the Plan,
determined as of any Valuation Date. The value of the Participant's ESOP
Contribution Account will be the sum of the Company Stock portion and any cash
or other investments resulting from contributions in accordance with Section
3.1.
Employer
"Employee" shall mean Westcorp, Inc. and its subsidiaries who are the sponsors
of this Plan and to any successor entity which elects to continue this Plan. The
term may refer to more than one business entity and may include members of a
Controlled Group of business entities.
Employment Anniversary Date
"Employment Anniversary Date" shall mean the date twelve (12) consecutive months
after the date an Employee first performed an Hour of Service for the Employer.
Employment Commencement Date
"Employment Commencement Date" means the date the Employee is first credited
with an Hour of Service.
Entry Date
"Entry Date" means January 1, April 1, July 1 or October 1.
ERISA
"ERISA" means the Employee Retirement Income Security Act of 1974, as
periodically amended.
4
<PAGE> 12
Forfeiture
"Forfeiture" shall mean that portion of a Participant's ESOP or Matching
Employer Contribution Account which is not vested, and shall occur on the
Anniversary Date following the Participant's Separation From Service.
Highly Compensated Employee
"Highly Compensated Employee" means any Employee who, during the current or
preceding Plan Year:
(a) was at any time a 5 percent owner,
(b) received Compensation from the Employer in excess of $81,720, adjusted
annually by the Secretary of the Treasury,
(c) received Compensation from the Employer in excess of $54,480, adjusted
annually by the Secretary of the Treasury, and was in the top 20% of the
Employees when ranked on the basis of Compensation paid during such Plan
Year,
(d) was at any time an officer and received Compensation greater than 150
percent of the amount in effect under Section 415(c)(1)(A) for such Plan
Year.
An Employee in (b), (c) or (d) in the current, but not preceding Plan Year shall
not be treated as a Highly Compensated Employee unless such Employee is a member
of the group consisting of the 100 Employees paid the greatest Compensation
during the year for which such determination is being made.
For purposes of (d) above, not more than 50 officers, or if less, the greater of
3 officers or ten percent of the Employees shall be treated as officers. If for
any Plan Year no officer of the Employer is described in (d) above, the highest
paid officer of the Employer shall be treated as described in such paragraph.
If an Employee is a spouse, lineal ascendant or descendant, or the spouse of a
lineal ascendant or descendant of a five percent owner or one of the ten Highly
Compensated Employees paid the greatest Compensation during the Plan Year, then:
(i) such individual shall not be considered a separate Employee, and
(ii) any Compensation paid to such Employee and any applicable contribution
or benefit on behalf of such Employee shall be treated as if it were
paid to the five percent owner or Highly Compensated Employee.
For purposes of this definition, the term "Compensation" means compensation
within the meaning of Section 415(c)(3) of the Code, without regard to Sections
125, 402(a)(8), 402(h)(1)(B) and 403(b) salary deductions.
5
<PAGE> 13
Former Employees shall be treated as Highly Compensated Employees if such
Employee was a Highly Compensated Employee at the time the Employee Separated
From Service or at any time after attaining age 55.
Hour of Service
"Hour of Service" means:
(a) Each hour for which an Employee is paid, or entitled to payment, for the
performance of duties for the Employer. These hours shall be credited to
the Employee for the computation period or periods in which the duties
are performed.
(b) Each hour for which an Employee is paid, or entitled to payment, by the
Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty, or paid Leave of Absence.
No more than 501 Hours of Service shall be credited under this paragraph
for any single continuous period (whether or not such period occurs in a
single computation period). Employment will not be considered to have
terminated during a Leave of Absence for any purpose including, but not
limited to, sickness, accident, vacation or military leave unless the
person fails to return to the employ of the Employer on or before the
expiration date of such leave, in which case he will be deemed to have
terminated as of the date of commencement of such leave. Hours under
this paragraph shall be calculated and credited pursuant to Section
2530.200b-2 of the Department of Labor regulations which are
incorporated herein by reference.
(c) Each hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer. An Hour of Service credited
under subsection (a) or (b) above will not be credited under this
subsection (c). These hours shall be credited to the Employee for the
computation period or periods to which the award or agreement pertains
rather than the computation period in which the award, agreement or
payment is made.
(d) Solely for the purpose of determining whether a Break in Service has
occurred, an Employee who is absent from work for maternity or paternity
reasons shall receive credit for the Hours of Service which would
otherwise have been credited but for such absence, to a maximum of 501
Hours of Service. For purposes of this paragraph, an absence from work
for maternity or paternity reasons means an absence due to:
(i) The pregnancy of the Employee;
(ii) The birth of a child of the Employee;
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<PAGE> 14
(iii) The placement of a child with the Employee in connection with the
adoption of such child by the Employee; or
(iv) The caring for a child for a period beginning immediately after
birth or placement.
The Hours of Service credited under this subsection (d) shall be
credited either in the computation period in which the absence
begins if the crediting is necessary to prevent a Break in
Service in that computation period, or, in all other cases, in
the following computation period.
Leased Employee
"Leased Employee" shall mean any person who pursuant to an agreement between the
recipient and any other person ("leasing organization") has performed services
for the recipient, or for the employer and related persons determined in
accordance with Section 414(n)(6) of the Code, on a substantially full-time
basis for a period of at least one (1) year and such services are of a ripe
historically performed by employees in the business field of the recipient
employer. A Leased Employee shall be treated as an employee of the recipient
employer, however, contributions or benefits provided by the leasing
organization which are attributable to services performed for the recipient
employer shall not apply to any Leased Employee if such employee is covered by a
money purchase pension plan providing:
(a) A non-integrated employer contribution rate of at least ten percent
(10%) of Compensation,
(b) Immediate participation, and
(c) Full and immediate vesting.
Leave of Absence
"Leave of Absence" shall mean leaves authorized by the Employer, in accordance
with rules uniformly applied to all Employees, for reasons of health or public
service, or for reasons determined by the Employer to be in its best interests.
An Employee's employment shall also not be deemed to have been terminated while
he is a member of the Armed Forces of the United States, under the Selective
Service Act, or similar involuntary enlistment acts, provided that he returns to
the Service of the Employer within ninety (90) days (or such longer period as
may be prescribed by law) from the date he first became entitled to his
discharge. Employees who do not return to the employ of the Employer within
ninety (90) days following the end of the Leave of Absence, or within the
required time in case of service with the Armed Forces, shall be deemed to have
terminated their employment as of the date when their leave began unless such
failure to return was the result of their death, Total Disability, or deferred
or Normal Retirement.
A "Maternity or Paternity Leave of Absence" shall mean, for Plan Years beginning
after December 31, 1984, an absence from work for any period by reason of the
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<PAGE> 15
Employee's pregnancy, birth of the Employee's child, placement of such a child
with the Employee in connection with the adoption of such child or any absence
for the purpose of caring for such child for a period immediately following such
birth or placement. For this purpose, Hours of Service shall be credited for the
Plan Year in which the absence from work begins, only if credit therefore is
necessary to prevent the Employee from incurring a one-year Break in Service,
or, in any other case, in the immediately following Plan Year. The Hours of
Service credited for a Maternity or Paternity Leave of Absence shall be those
which would normally have been credited but for such absence, or, in any case in
which the Committee is unable to determine such hours normally credited, eight
Hours Of Service per day. The total Hours of Service required to be credited for
a Maternity or Paternity Leave of Absence shall not exceed five hundred and one
(501) in either Plan Year.
Limitation Year
"Limitation Year" shall mean the Plan Year.
Matching Employer Contribution Account
"Matching Employer Contribution Account" means the value of each Participant's
contributions made in accordance with Section 3.3, determined as of any
Valuation Date.
Normal Retirement Date
"Normal Retirement Date" means the first day of the month coincident with or
following the Participant's attainment of age 65.
Participant
"Participant" means an Employee who is participating in the Plan in accordance
with Article II and for whom an Accumulation Account is being maintained.
Plan
Prior to January 1, 1985, "Plan" means The Western Thrift Financial Corporation
Profit Sharing Retirement Plan. On and after January 1, 1985, but prior to
January 1, 1988, "Plan" means The Western Financial Savings Bank Profit Sharing
Retirement Plan. On and after January 1, 1988 but prior to January 1, 1990,
"Plan" means the Westcorp, Inc. Employee Stock Ownership Plan. On and after
January 1, 1990, "Plan" means the Westcorp, Inc. Employee Stock Ownership and
Salary Savings Plan, as described in this document and as it may be periodically
amended.
Plan Administrator
"Plan Administrator" means the Administrative Committee or Committee.
Plan Year
"Plan Year" means the calendar year. The Plan Year shall be the Limitation Year
for purposes of Section 415 of the Code and Section 4.5 of the Plan.
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Postponed Retirement Date
"Postponed Retirement Date" means the first day of any month following the
Participant's Normal Retirement Date upon which the Participant Separates From
Service.
Rollover Account
"Rollover Account" means the accumulated value of the Participant's rollover
contributions and investment earnings, if any, made in accordance with Section
4.8, determined as of any Valuation Date.
Salary Savings Contribution Account
"Salary Savings Contribution Account" means the accumulated value of the
Participant's salary deferrals and investment earnings, if any, made in
accordance with Section 3.11, determined as of any Valuation Date.
Separation From Service
"Separation From Service" or Separates From Service means termination of
employment with the Employer for any reason, but excluding authorized Leaves of
Absence, and the date of such Separation From Service shall be the date
immediately following the last day of employment with the Employer. Separation
From Service may result from normal or delayed retirement, death, disability,
voluntary or involuntary termination of employment, an unauthorized Leave of
Absence, or by failure to return to active employment with the Employer by the
date on which an authorized Leave of Absence expires.
Service
"Service" shall mean employment with the Employer, any Affiliated Service Group,
or any Controlled Group.
Trustee
"Trustee" means the Bank of America or any successor bank, trust company, and/or
individual or individuals designated by the Board to hold and invest the Trust
Fund and to pay benefits and expenses as authorized by the Committee in
accordance with the terms and provisions of the agreement by and between the
Board and such bank or trust company and/or individual/individuals.
Trust Agreement
"Trust Agreement" means the written agreement between the Employer and the
Trustee providing for the investment and custodial services of the Trust Fund as
such agreement may be amended from time to time.
Trust Fund
"Trust Fund" means the fund established pursuant to the terms of the Trust
Agreement executed by the Employer for the accumulation of contributions and the
payment of benefits under the Plan.
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Valuation Date
"Valuation Date" means December 31, or such other interim dates determined by
the Committee.
Year of Service
"Year of Service" for purposes of eligibility means an Eligibility Computation
Period during which the Employee completes at least 1000 Hours of Service.
"Year of Service" for vesting in the ESOP Contribution Account means a Plan Year
during which the Employee completes at least 1000 Hours of Service. "Year of
Service" for vesting in the Matching Employer Contribution Account means a
twelve consecutive month period commencing on the date the Employee first
performs an Hour of Service or an anniversary thereof during which the Employee
completes at least 1000 Hours of Service.
Effective January 1, 1994, a "Year of Service" for vesting in the Matching
Employer Contribution Account means a Plan Year during which the Employee
completes at least 1,000 Hours of Service. An Employee shall be credited with a
Year of Service for vesting in the Matching Employer Contribution Account for
each of the following periods in which he completes at least 1,000 Hours of
Service:
1. The twelve-month period which both begins on the anniversary of
the date the Employee first performs an Hour of Service and
contains January 1, 1994; and
2. The Plan Year which begins January 1, 1994.
In the event an Employee incurs a Break in Service:
(a) Years of Service before a Break in Service shall not be taken into
account until the Participant has thereafter completed a Year of
Service.
(b) In the event a non-vested Participant incurred a Break in Service prior
to January 1, 1985, and his Years of Service prior to such Break in
Service are equal to, or less than the period of his Break in Service,
his Years of Service prior to such Break in Service will be permanently
disregarded.
(c) In the event a non-vested Participant Separates From Service after
December 31, 1984, and is rehired after incurring 5 consecutive one year
Breaks in Service, his Years of Service prior to such Break in Service
will be permanently disregarded.
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ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.1 Eligibility
All Employees are eligible to participate except hourly employees
included in a unit of Employees covered by a collective bargaining agreement
between Employee representatives and the Employer, where there is evidence
retirement benefits were the subject of good faith bargaining (regardless of the
result), unless the collective bargaining agreement provides for coverage under
the Plan.
2.2 Participation
Each Employee participating in the Westcorp, Inc. Employee Stock
Ownership Plan prior to January 1, 1990 shall continue to be a Participant on
and after January 1, 1990.
Each eligible Employee who is not a Participant in the Westcorp,
Inc, Employee Stock Ownership Plan prior to January 1, 1990, shall become a
Participant in the Plan on the Entry Date following the completion of one Year
of Service and the attainment of age 21.
2.3 Reemployment
If a Participant whose employment has terminated is subsequently
reemployed as an eligible Employee before he incurs a one year Break in Service,
he shall become a Participant in the Plan on his date of reemployment.
If a Participant whose employment has terminated is subsequently
reemployed as an eligible Employee after be incurs a one year Break in Service,
he shall become a Participant in the Plan on his date of reemployment.
If an Employee who is not a Participant terminates his employment
with the Employer and is reemployed, he shall become a Participant in the Plan
upon completion of the requirements of Section 2.1 and 2.2.
2.4 Employment After Normal Retirement Date
A Participant who continues in the employ of the Employer after
his Normal Retirement Date shall continue to be a Participant for all purposes
of the Plan.
2.5 Ineligibility After Becoming Eligible
A Participant who becomes ineligible to participate because he is
no longer considered an eligible Employee shall resume participation in this
Plan immediately upon his return to the status of an Eligible Employee.
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2.6 Termination of Participation
Participation in the Plan continues until the Plan Year within
which a Participant: (1) Separates From Service by normal retirement, by
deferred retirement, by death, or by reason of total and permanent disability;
or (2) Separates From Service for any reason and, after such separation,
receives a distribution of his vested Accumulation Account.
2.7 Waiver of Participation
An Eligible Employee may elect to waive participation in this
Plan by completing a waiver form to be maintained by the Committee. A
Participant who declines participation will continue to be eligible to
participate and may become a Participant on any Entry Date while actively
employed thereafter.
ARTICLE III
CONTRIBUTIONS
3.1 Employee Stock Ownership Plan Contributions
Each Plan Year this Plan is in effect, the Employer may make
contributions to the Trust Fund as determined by resolution of the Board of
Directors and communicated to Employees within 120 days of the Employer's fiscal
year end. This contribution shall be known as the Employee Stock Ownership Plan
or ESOP contribution. A Participant must complete 1000 Hours of Service in the
Plan Year, but need not be an Employee on the last day of the Plan Year to be
eligible for a ESOP contribution for that Plan Year.
For Plan Years beginning on or after January 1, 1994, a
Participant must complete at least 1,000 Hours of Service during the Plan Year
and must be an Employee on the last day of the Plan Year to be eligible for an
ESOP contribution for that Plan Year.
A Participant shall be eligible for a ESOP contribution
regardless of whether or not he is making Salary Savings contributions under
Section 3.11.
Forfeitures arising during the Plan Year from the ESOP
contribution Account of Participants who incur a Separation From Service with
the Employer in accordance with Article VI, will be allocated to all
Participants who are Employees on the last day of the Plan Year as provided in
Section 3.2 of the Plan.
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3.2 Allocation of ESOP Contributions
Each Participant's ESOP Contribution Account shall be credited at
the end of each Plan Year with a share of the total Employer contribution and
Forfeiture for the year in proportion to units as follows: Each Participant
shall be credited with one unit for each one hundred dollars ($100) of Earnings
paid to such participant by the Employer during the year, plus an additional
unit for each full Year of Service which is continuous and uninterrupted. For
the purposes of this allocation only, Years of Service shall exclude periods
prior to any Break in Service but shall include years during which a participant
was on a Leave of Absence authorized by the Employer due to sickness, military
service, or temporary relief of assignment. If such computation results in the
total involving a fractional unit, then a unit of one-half or less shall be
disregarded and more than one-half shall be counted as one unit.
The allocated ESOP contribution together with Forfeitures shall
be added to each Participant's ESOP Contribution Account.
3.3 Matching Employer Contribution
In addition to the ESOP contribution, the Employer may contribute
to the Trust Fund a variable Matching Employer Contribution, determined annually
by the Board. Forfeitures resulting from Participants who incur a Separation
From Service and are partially vested in their Matching Employer Contribution
Account in accordance with Section 6.2(c), shall be used to reduce the
Employer's Matching Employer Contribution.
3.4 Allocation of Matching Employer Contributions
Matching Employer Contributions shall be allocated to the
Matching Employer Contribution Account of each Participant who elects to make
Salary Savings Contributions during the Plan Year in the proportion each
Participant's Salary Savings Contributions of up to six percent (6%) of Earnings
bears to the total of all Participants' Salary Savings Contributions of up to
six percent (6%) of Earnings.
A Participant must be an Employee on the last day of the Plan
Year to be eligible to receive a Matching Employer Contribution for the Plan
Year.
3.5 Compliance With Matching Employer Contribution
Non-Discrimination Rules
The allocation of the Matching Employer Contribution and any
Forfeitures under Section 3.4 of this Plan shall be modified as provided in this
subsection (b) if the requirements in this subsection (a) are not satisfied as
follows:
(a) An "actual contribution percentage" shall be
determined for each eligible Employee. Such percentage shall equal the
Matching Employer Contribution under Section 3.4 of the Plan on behalf
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<PAGE> 21
of each eligible Employee for the Plan Year divided by his Compensation,
including Salary Savings Contributions under Section 3.11 of the Plan,
for the Plan Year.
The average of the actual contribution percentages for all
eligible Highly Compensated Employees for the Plan Year when compared to
the average of the actual contribution percentages for all other
eligible Employees for the Plan Year must meet one of the following
requirements:
(i) The average for the eligible Highly Compensated
Employees shall be no greater than the average for all other
eligible Employees, multiplied by 1.25.
(ii) The excess of the average for the eligible
Highly Compensated Employees over the average for all other
eligible Employees shall not be greater than two percentage
points (2%) and the average for the eligible Highly Compensated
Employees shall be no greater than the average for all other
eligible Employees times two (2.0).
(b) To the extent the average contribution percentage
fails or might fail to meet the requirements of subsection (a) above,
the Committee shall take such steps, consistent with Section 401(m)(6)
of the Code and Section 3.13 and 3.14, as may be required to meet such
requirements.
3.6 Maximum Deductible Employer Contribution Limitation
In no event shall the contributions under Section 3.1, 3.3 and
3.11 for any Plan Year exceed the maximum amount deductible under the provisions
of Section 404 of the Code, or any other statute of similar import.
3.7 Insufficient Earnings By A Participating Employer
For any Plan Year in which one or more Employers has insufficient
current or accumulated earnings to make its contributions pursuant to this
Article III, the Board of Directors of the Employer may direct that the
Employer, or one or more of the other employers, make the appropriate
contribution pursuant to Section 3.1 or 3.3 on behalf of the Employees of such
Employer or Employers which do not have sufficient current or accumulated
earnings or profit for that Plan Year to make contributions.
3.8 Timing of Employer Contributions
All contributions shall be made by the Employer no later than a
reasonable time following the close of the Plan Year for which the contributions
are made, provided that in no event shall any contributions be made after the
time prescribed for filing the federal income tax return of the Employer
(including extension thereof) with respect to its fiscal year.
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3.9 Limitation of Liability
Each Employer contribution will be in complete discharge of the
financial obligations of the Employer under the Plan with respect to the period
for which it is made.
3.10 Limitation on Reversion of Contributions
Except as provided in subsections (a) through (c) below, Employer
contributions made under the Plan shall be held for the exclusive benefit of
Participants and their Beneficiaries and may not revert to the Employer.
(a) In the case of a contribution which is made by the
Employer by a mistake of fact, such contribution may be returned to the
Employer within one year after it is contributed to the Plan.
(b) In the case of a contribution conditioned on the
Plan's continued qualification under Section 401(a) of the Code, if the
Plan fails to qualify initially, such contribution may be returned to
the Employer within one year after the date the Plan's qualification is
denied.
(c) In the case of a contribution conditioned upon its
deductibility under Section 404 of the Code, to the extent the deduction
is disallowed, the amount disallowed may be returned to the Employer
within one year after the disallowance.
3.11 Salary Saving Contributions
Each Participant may elect to contribute to the Trustee through
regular payroll deductions, a portion of his Earnings as described in the
following paragraph, to be known as his Salary Savings Contribution in
accordance with Section 401(k) of the Code, by authorizing the Employer to
contribute such Earnings to the Plan in his behalf. Participants who do not
elect to make a Salary Savings Contribution hereunder shall receive such
Earnings in cash as part of their basic Earnings. A Participant shall always be
100% vested in his Salary Savings Contributions.
Subject to Section 3.13, a Participant's Salary Savings
Contribution may be any percentage no less than 1% and in increments of 1/2%, of
his otherwise payable Earnings (not to exceed 10%), or, if less, $7,627 of his
otherwise payable Earnings. The $7,627 limit on elective deferrals shall be
adjusted annually in accordance with Section 402(g)(5) of the Code.
In the event, for any reason, a Participant's Salary Savings
Contributions to all plans of all employers exceeds the $7,627 adjusted limit,
the Committee shall authorize the Trustee to distribute such excess contribution
and any allocable investment earnings to the Participant. The distribution shall
be made no later than the April 15 following the Plan Year in which the excess
deferral was made. Such
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<PAGE> 23
distribution will be made without regard to any other Plan provision limiting
distributions in accordance with Section 402(g) of the Code.
3.12 Allocation of Salary Savings Contributions
Any Salary Savings Contribution made by the Participant shall be
added to his Salary Savings Contribution Account as defined in Article I.
3.13 Compliance With Salary Savings Contribution
Non-Discrimination Rules
As of each Valuation Date (or at such other intervals as it shall
deem proper), the Committee shall review each Employee's Contribution Directive
provided for in Section 3.15, in order to determine that the Salary Savings
Contributions with respect to all Participants satisfy one of the following
tests:
(a) The Actual Deferral Percentage (as hereinafter
defined), of the eligible Highly Compensated Employees, is not more than
the Actual Deferral Percentage of all other eligible Employees,
multiplied by 1.25.
(b) The excess of the Actual Deferral Percentage for the
eligible Highly Compensated Employees over all other eligible Employees
is not more than two percentage points, and the Actual Deferral
Percentage for the eligible Highly Compensated Employees is not more
than the Actual Deferral Percentage of all other eligible Employees,
multiplied by 2.
For purposes of this Section, Actual Deferral Percentage shall
mean with respect to the eligible Highly Compensated and all other eligible
Employees for a Plan Year, the average of the ratios, calculated separately for
each eligible Employee in such group, of the Salary Savings Contribution made on
behalf of each such eligible Employee for such Plan Year, to such eligible
Employee's Compensation for such Plan Year.
In the event the Committee determines that one of the foregoing
tests is not satisfied at the time of its review hereunder, it shall require
that one or more Participants adjust their Contribution Directive for the next
and subsequent payroll periods, in order that the test set forth in paragraph
(a) or (b), above, is thereafter satisfied. The adjustment shall reduce the
Salary Savings Contributions of the Highly Compensated Employees deferring the
highest percentage of Compensation until the test is met. Alternatively, the
Employer may authorize additional qualified non-elective contributions on behalf
of the non-Highly Compensated Employees to ensure compliance with the foregoing
tests.
3.14 Failure to Satisfy Salary Saving Non-Discrimination Rules
In the event the Plan Year has ended and the Committee determines
one of the tests set forth in Section 3.13 (a) or (b) were not satisfied, the
Committee shall
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take the following actions to meet those tests for that Plan Year before the
close of the next following Plan Year:
(a) The Committee shall determine the amount of any excess
contribution for such Plan Year and any investment earnings allocable to
the excess contribution by adjusting the Salary Savings Contributions of
the Highly Compensated Employees deferring the highest percentage of
Compensation until the test is met.
(b) The Committee shall direct the Trustee to distribute the
excess contributions and allocable investment earnings to the affected
Highly Compensated Employees on the basis of the respective portions of
the excess contributions attributable to each of such Employees.
Any distribution of excess contributions and allocable investment
earnings may be made without regard to any other Plan provision limiting
distributions, in accordance with Section 401(k)(8) of the Code.
3.15 Initiating a Salary Savings Contribution
Each Participant shall deliver to his Employer a written
directive (herein called his "Contribution Directive"), in a form to be
prescribed by the Committee, directing such Employer to reduce his Earnings and
to pay to the Trustee the amount specified therein which shall be within the
limits set forth in Section 3.11. Such Contribution Directive shall become
effective on his first payday following the date on which it is delivered to his
Employer.
3.16 Change in Salary Savings Contribution Amounts
By delivering to his Employer a new Contribution Directive, in a
form to be prescribed by the Committee, a Participant may start, increase or
decrease his Salary Savings Contribution (within the limits set forth in Section
3.11 and 3.13), effective as soon as administratively possible after filing the
election. A Participant may stop his Salary Savings Contribution at any time.
3.17 Timing of Salary Savings Contributions to the Trust
The Employer shall forward all Salary Savings Contributions to
the Trustee for investment as soon as administratively practicable after such
contributions have been made pursuant to Section 3.11 and 3.16, but in no event
later than the earlier of 90 days after the date in which the Earnings were
deferred or 30 days after the end of the Plan Year for which the contribution is
made.
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ARTICLE IV
PARTICIPANT'S ACCOUNTS: ALLOCATIONS AND LIMITATIONS
4.1 Crediting Employer Contributions
Employer Contributions made under Section 3.1 and 3.3 shall be
credited to each Participant's ESOP Contribution Account or Matching Employer
Contribution Account as of the last day of each Plan Year (December 31).
4.2 Crediting Employee Salary Savings Contributions
Employee Salary Savings Contributions made under Section 3.11 of
the Plan shall be credited to each Participant's Salary Savings Contribution
Account as soon as administratively possible following the end of the quarter
for which the contribution was made.
4.3 Investment of Contributions Allocated to Each
Participant's Accounts
(a) Each ESOP Contribution made in accordance with Section
3.1 may be invested 100% in Company Stock purchased on the open market
at the current market price on the day of purchase or interest bearing
accounts as determined by the Committee. Fractional shares may be
invested in cash.
The Committee shall allocate each Participant's ESOP
contribution made in accordance with Section 3.1 to his ESOP
Contribution Account. Except as provided in Section 4.7, the Committee
shall direct the Trustee to invest the ESOP contributions to the Trust
Fund, and may, at his option, invest 100% of the contributions in
Company Stock or other investment alternatives permitted by the Trust.
Employer contributions, in Company Stock will remain invested in Company
Stock. Employer contributions in cash and other cash received by the
Trust may be used to purchase additional shares of Company Stock on the
open market at current market price at the time of purchase. The Trustee
may also invest such assets in savings accounts, certificates of
deposit, high-grade short-term securities, or equity stock, bonds, or
other investments desirable for the Trust, or such assets may be held in
cash. All investments will be made by the Trustee only upon the
direction of the Administrative Committee, and all purchases of Company
Stock will be made at fair market value. The Committee may direct that
all the Trust Fund's ESOP contribution assets be invested and held in
Company Stock.
(b) Each Matching Employer Contribution made in accordance
with Section 3.3 will be invested in Company Stock purchased on the open
market at the current market price on the day of purchase, unless
otherwise
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directed by the Administrative Committee. Fractional shares may be
invested in cash.
The Plan Administrator shall allocate each Participant's
Matching Employer Contribution made in accordance with Section 3.3 to
his Matching Employer Contribution Account. The Plan Administrator shall
direct the Trustee to invest the Matching Employer Contributions to the
Trust Fund in accordance with the Trust Agreement.
(c) Each Participant shall direct the investment of each
Salary Savings Contribution, if any, among the investment options
selected by the Administrative Committee, investment manager or Trustee
for the Plan. The Administrative Committee shall establish a uniform,
non-discriminatory policy and procedure regarding minimum increments for
investment allocation, changes in future allocations or the transfer of
existing account balances among investment options available for
Participant selection. The Administrative Committee may add or delete
investment options at any time with proper notice to the Trustee and
Participants. The Administrative Committee may provide for additional
dates for allocation changes or account transfers among investment
options, on either a one time or ongoing basis, by giving proper notice
to the Trustee and Participants.
(d) Compliance With ERISA Section 404(c):
This Plan is intended to constitute a plan described in
section 404(c) of ERISA and Title 29 of the Code of Federal Regulations
Section 2550.404c-1. It is intended that the fiduciaries of the Plan
shall be relieved of liability for any losses which are the direct and
necessary result of investment instructions given by a Participant or
Beneficiary.
4.4 Allocation of Net Gains, Losses and Earnings to a
Participant's Account
Interest earnings, cash and stock dividends, gains and losses
shall be allocated to each Participant's ESOP Contribution Account, Matching
Employer Contribution Account and Salary Savings Contribution Account in the
same proportion that the cash or shares of each Participant's account bears to
the total accounts of all Participants in the same investment option at the time
of the valuation under a uniform, non-discriminating accounting procedures
approved by the Administrative Committee.
Dividends paid in the form of additional shares of Company Stock
on Company Stock held in the Participant's ESOP Contribution Account will be
allocated to the Participant's ESOP Contribution Account. Cash dividends will be
reinvested in Company Stock or other interest bearing accounts, or paid directly
to the Participant within 90 days of the close of the Plan Year in which the
dividend is paid in
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accordance with Section 404(k) of the Code, as directed by the Administrative
Committee.
4.5 Limitation on Annual Additions
(a) Basic Limitation
Notwithstanding Section 3.1, 3.3 and 3.11, and subject to
the provisions of paragraphs (b) and (c) below, the amount of Annual
Additions allocated to any Participant's Account for a Plan Year shall
not exceed the lesser of (i) twenty-five percent of his Compensation
paid in such year, or (ii) $30,000. The dollar limitation of subsection
(a)(ii) above shall be adjusted, if greater, to one-fourth of the
defined benefit dollar limitation set forth in Section 415(b)(1) of the
Code. Such adjusted amount shall apply for all Limitation Years ending
with or within such Plan Year.
For purposes of applying the percentage limitation of
subsection (a)(i) above, "Compensation" includes a Participant's earned
income, wages, salaries, commissions and bonuses, and excludes the
following:
(i) Employer contributions to a plan of deferred
compensation which are not included in the Employee's gross
income for the taxable year in which contributed, or any
distributions from a plan of deferred compensation;
(ii) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or property)
held by the Employee either becomes freely transferable or is no
longer subject to a substantial risk of forfeiture;
(iii) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock
option; and
(iv) Other amounts which received special tax
benefits.
(v) Amounts allocated to an individual medical
account, as defined in Section 415(l)(1) of the Code, which is
part of a defined benefit plan maintained by the Employer and
amounts derived from contributions paid or accrued on or after
December 31, 1985, which are attributable to post-retirement
medical benefits allocated to the separate account of a Key
Employee, as defined in Section 15.6, under a welfare benefit
fund, as defined in Section 419(e) of the Code, maintained by the
Employer.
Compensation for any Limitation Year is the Compensation
actually paid or includable in gross income during such year.
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<PAGE> 28
(b) Participation in Other Defined Contribution Plan
The limitation of this Section 4.5 with respect to any
Participant who at any time has participated in any other qualified
defined contribution plan (as defined in Section 3(34) of ERISA and
Section 414(i) of the Code) maintained by the Employer will apply as if
the total contributions allocated under all such defined contribution
plans in which the Participant has participated were allocated under one
plan.
(c) Participation in this Plan and Defined Benefit Plan
If a Participant has been a participant in a qualified
defined benefit plan (as defined in Section 3(35) of ERISA and Section
414(j) of the Code) maintained by the Employer, the sum of the
Participant's Defined Benefit Plan Fraction and Defined Contribution
Plan Fraction for any year shall not exceed one (1.0).
For purposes of this subsection (c) only, the following
words and phrases will have the meaning specified below:
(i) "Defined Benefit Plan Fraction" for any Plan
Year will mean a fraction where the numerator is the
Participant's Projected Annual Benefit, as defined below, as of
the end of the year and the denominator is the lesser of one and
twenty five-hundredths (1.25) multiplied by the dollar limitation
in effect under Section 415(b)(1)(A) of the Code for such Plan
Year or one and four-tenths (1.4) multiplied by one hundred
percent of the Participant's average annual total earnings for
the highest three consecutive calendar years of participation.
(ii) "Defined Contribution Plan Fraction" for any
Plan Year will mean a fraction, not to exceed one (1.0), where
the numerator is the sum of all Annual Additions made on behalf
of such Participant to his Accounts in such Plan Year and for all
prior Plan Years, and the denominator is the sum of the lesser of
(A) or (B) determined for such Plan Year and for each prior Plan
Year during which the Participant was employed by the Employer.
(A) one and twenty five-hundredths (1.25)
multiplied by the dollar limitation in effect under
Section 415(c)(1)(A) of the Code for such Plan Year; or
(B) one and four-tenths (1.4) multiplied by
the twenty-five percent (25%) of the Participant's total
earnings in such Plan Year.
(iii) "Participant's Projected Annual Benefit" will
mean the annual benefit to which the Participant would be
entitled under all
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<PAGE> 29
Employer sponsored defined benefit plans assuming that the
Participant continues employment until his normal retirement
date, that the Participant's Compensation continues until his
normal retirement date at the rate in effect during the current
calendar year, and that all other factors relevant for
determining benefits under the plan remain constant at the level
in effect during the current calendar year. If the limit
described herein is exceeded, then the Defined Benefit Plan
Fraction shall be reduced to the amount necessary to comply with
this Section.
(d) If the limitation described in this Section 4.5 is
effective in limiting the amount to be allocated to the ESOP or Matching
Employer Contribution Account of a Participant for a Plan Year, such
Account will be adjusted as follows:
(i) First, if the limit of Section 4.5(c) is
exceeded, the benefit provided by the defined benefit plan shall
be adjusted to the extent necessary to satisfy such subsection,
unless payment has commenced or benefits under the Plan have been
transferred to another plan at the time of computation; and
(ii) Second, the Employer contribution allocated to
the Participant's ESOP or Matching Employer Contribution Account
will be reduced. The amount of the reduction will be credited to
an unallocated ESOP or Matching Employer Contribution Account and
will reduce current or future ESOP or Matching Employer
Contributions.
4.6 Voting Rights
(a) The Trustees will vote all shares of Company Stock
held in a Participant's Accumulation Account in accordance with proxy
statements filed by the Participant.
(b) Each Participant is also entitled to direct the
Trustee regarding the exercise of rights arising under shares of Company
Stock allocated to his Accumulation Account, other than voting rights
(for example, a conversion privilege).
4.7 ESOP Contribution Account Diversification Requirements
Each Participant shall have certain investment diversification
options, commencing the start of the first Plan Year following the completion of
ten (10) years of participation in the Plan and the attainment of age 55. These
diversification options shall apply to Company Stock allocated to his ESOP
Contribution Account after December 31, 1986. The Participant's investment
diversification options are as follows:
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<PAGE> 30
(a) For each of the first four Plan Years, the Participant
may elect to diversify up to twenty-five percent (25%) of his applicable
ESOP Contribution Account, less any amounts previously diversified.
(b) For the fifth Plan Year, the Participant may elect to
diversify up to fifty percent of his applicable ESOP Contribution
Account, less any amounts previously diversified.
(c) Each Participant who qualifies for this investment
diversification election, must elect to diversify the applicable portion
of his ESOP Contribution Account in accordance with Section 4.7(a) and
(b) above, within 90 days of the close of each Plan Year.
(d) The Plan Administrator may elect to distribute to each
Participant who qualifies for this investment election, the portion of
the Participant's ESOP Contribution Account covered by this election
under Section 4.7(a) and (b) within 90 days after the end of each Plan
Year, in lieu of providing three additional investment options for
diversification within this Plan.
4.8 Rollover Contributions
Each Participant in the Plan or each Employee who is expected to
become eligible to participate in the Plan who has had distributed to him his
entire interest in a plan (the "Other Plan") which meets the requirements of
Section 401(a) of the Code may, in accordance with procedures approved by the
Committee, transfer the distribution received from such Other Plan to the
Trustee provided the following conditions are met:
(a) Timing of Transfer:
The transfer occurs on or before the sixtieth (60th) day
following his receipt of the distribution from the Other Plan (or from
an Individual Retirement Account which consisted of a prior distribution
from the Other Plan):
(b) Maximum Amount of Transfer:
The amount transferred is not in excess of the total
distribution he received from the Other Plan (plus earnings thereon
accrued during the period that an interim Individual Retirement Account
had been established) less the amount, if any, considered contributed by
him in accordance with Section 402(e)(4)(D)(i) of the Code;
(c) Type of Transfer:
The transfer consists entirely of cash; and
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<PAGE> 31
(d) Certain Transfers Prohibited:
No transfer shall be made to this Plan from an Other Plan
which is subject to the annuity requirements of Code Section 401(a)(11).
The Committee shall have full responsibility for determining whether or not the
requirements of the Code have been met with respect to each transfer.
ARTICLE V
RETIREMENT, DISABILITY AND DEATH BENEFITS
5.1 Retirement Benefits
The retirement benefit payable under the Plan in the case of a
Participant whose employment with the Employer is terminated on or after his
Normal or Postponed Retirement Date shall be one hundred percent (100%) of his
Accumulation Account. Subject to the provisions of Section 7.2 and 7.3, the
value of such Accumulation Account shall be determined on the Valuation Date
coincident with or immediately following his termination of employment.
5.2 Disability Retirement Benefits
The disability retirement benefit payable under the Plan in the
case of a Participant whose employment with the Employer is terminated because
he is totally and permanently disabled shall be one hundred percent (100%) of
his Accumulation Account. The value of such Accumulation Account shall be
determined on the Valuation Date coincident with or immediately following the
date on which he is determined to be totally and permanently disabled, and the
benefits distributed in accordance with Sections 7.2, 7.3 and Article IX the
Plan.
5.3 Death Benefits
The death benefit payable to a Beneficiary under the Plan in the
case of a Participant whose employment with the Employer is terminated due to
his death shall be one hundred percent (100%) of the Participant's Accumulation
Account. The value of such Accumulation Account shall be determined as of the
Valuation Date coincident with or immediately following the date on which the
Participant's death occurs, in accordance with Article VIII.
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<PAGE> 32
ARTICLE VI
TERMINATION BENEFITS AND VESTING REQUIREMENTS
6.1 Benefits Upon Termination of Employment
The benefit payable under the Plan in the case of a Participant
whose employment is terminated for any reason other than permanent and total
disability, death, or retirement on or after his Normal Retirement Date shall
equal the vested portion of the value of his Accumulation Account. Subject to
the provisions of Section 7.2 and 7.3, the value of such Accumulation Account
shall be determined on the Valuation Date coincident with or immediately
following his Separation From Service.
6.2 Vesting Requirements
A Participant who Separates From Service prior to his Normal
Retirement Date for reasons other than death or permanent and total disability,
will have the following vested interest in his Accumulation Account:
(a) the Participant's Salary Savings Contribution Account
and Rollover Account, if any, shall always be 100% vested.
(b) the Participant's ESOP Contribution Account resulting
from contributions made in accordance with Section 3.1 of the Plan and
Matching Employer Contribution Account resulting from contributions made
in accordance with Section 3.3 of the Plan shall be vested in accordance
with his Years of Service as of his Separation From Service as follows:
(i) A Participant who incurs a Separation From
Service prior to January 1, 1989 shall have a non-forfeitable
right to the portion of his ESOP Contribution Account and
Matching Employer Contribution Account determined from the
following table:
<TABLE>
<CAPTION>
Years of Service at Date of Non-Forfeitable
Separation of Service Vesting Percentage
--------------------- ------------------
<S> <C>
Less than 4 Years 0%
4 Years, but less than 5 40%
5 Years, but less than 6 50%
6 Years, but less than 7 60%
7 Years, but less than 8 70%
8 Years, but less than 9 80%
9 Years, but less than 10 90%
10 Years or more 100%
</TABLE>
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<PAGE> 33
(ii) A Participant who incurs a Separation From
Service after December 31, 1988 shall have a non-forfeitable
right to the portion of his ESOP Contribution Account and
Matching Employer Contribution Account determined from the
following table:
<TABLE>
<CAPTION>
Years of Service at Date of Non-Forfeitable
Separation of Service Vesting Percentage
--------------------- ------------------
<S> <C>
Less than 3 Years 0%
3 Years, but less than 4 20%
4 Years, but less than 5 40%
5 Years, but less than 6 60%
6 Years, but less than 7 80%
7 Years or more 100%
</TABLE>
(c) With respect to a Participant who terminated
employment and received a benefit distribution without being one hundred
percent (100%) vested in his ESOP Contribution or Matching Employer
Contribution Account and who is reemployed prior to incurring five
consecutive one-year Breaks in Service, the vested percentage of such
Accounts will be determined as follows:
(i) The value of his ESOP and Matching Employer
Contribution Accounts which were not vested when he terminated
employment will not be forfeited but will be reinstated,
unadjusted for any gains or losses, on his re-employment
Employment Commencement Date. If the Participant again Separates
From Service before he is 100% vested in his ESOP or Matching
Employer Contribution Account, his vested interest in such
Account will be determined by multiplying the Non-Forfeitable
Percentage determined under Section 6.2(a) and (b), based on his
Years of Service completed as of such subsequent date of
Separation From Service by the sum of (A) and (B), then
subtracting (B) from the results of such multiplication; where:
(A) is the value of the accounts as of the
Valuation Date following the Participant's most recent
Separation From Service including the amount, if any,
distributed to the Participant from such accounts as a
result of his prior Separation From Service; and
(B) is the amount, if any, which was
distributed to the Participant from such accounts as a
result of his prior Separation From Service.
(ii) If the Participant is less than one hundred
percent (100%) vested at the time of his subsequent Separation
From Service, the balance of his ESOP and Matching Employer
Contribution Accounts
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<PAGE> 34
shall be segregated under the Participant's name, and, to the
extent non-vested, forfeited in accordance with Section 6.3 of
the Plan.
(d) With respect to a Participant who terminates
employment without being one hundred percent (100%) vested in his ESOP
and Matching Employer Contribution Accounts and who is reemployed after
incurring five consecutive one year Breaks in Service, his Years of
Service after his Break in Service will not increase the vested
percentage of the amount in his ESOP and Matching Employer Contribution
Accounts as of such prior termination of employment.
6.3. Forfeitures
The nonvested portion of a Participant's ESOP and Matching
Employer Contribution Accounts will be forfeited as of the Anniversary Date
following distribution of his entire vested Accumulation Account, subject to
Section 6.2(c)(i), or, if earlier, the Anniversary Date of the Plan Year in
which he incurs five consecutive one year Breaks in Service. Forfeitures shall
be added to any ESOP contributions or used to reduce any Matching Employer
contributions pursuant to Sections 3.1 and 3.3. A non-vested Participant's
distribution of his entire vested Accumulation Account will be deemed to occur
at the end of the Plan Year following his Separation From Service.
ARTICLE VII
DISTRIBUTION OF BENEFITS
7.1 Forms of Benefit Payment
Upon Separation From Service, the Administrative Committee shall
direct the Trustee to distribute to the Participant his vested Accumulation
Account under one of the optional forms of benefit payment as selected by the
Participant:
(a) A single sum payment to the Participant in cash or a
combination of cash and Company Stock in an amount equal to his vested
Accumulation Account. Thereafter, the Plan shall have no further
obligation with respect to such Participant's coverage hereunder.
(b) For an unmarried Participant or a married Participant
with prior spousal approval in accordance with Section 7.3(c), by
payment in substantially equal monthly or annual payments of cash or
cash and shares of Company Stock converted to cash over a fixed period
of time, not to exceed the Participant's life expectancy. If at the
death of the Participant any of the specified installments remain
unpaid, payments will continue to the Participant's Beneficiary until
all specified payments have been made to the Participant and his
Beneficiary.
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<PAGE> 35
(c) For a married Participant as follows:
(i) Unless otherwise elected and approved in
writing by the Participant's spouse in the presence of a member
of the Committee, an authorized representative, or a Notary
Public, if the Participant does not elect (a) above, payment
shall be made as a Qualified Joint and Survivor Annuity through
the application of the Participant's vested Accumulation Account,
or
(ii) With prior spousal approval in accordance with
Section 7.1(c)(1) above, in substantially equal monthly
installments of cash or cash and shares of Stock, converted to
cash, for a period of time specified by the Participant, but not
to exceed the joint life expectancy of the Participant and his
spouse. If at the death of the Participant, any of the specified
installments remain unpaid, payments will continue to the
Participant's Beneficiary until all specified payments have been
made to the Participant and his Beneficiary.
(d) If the value of the Participant's vested Accumulation
Account is less than $3,500, the benefit will be paid in a single sum.
(e) Distribution of a Participant's ESOP and Matching
Employer Contribution Accounts benefit under the above options may be
made in cash or Company Stock or both, provided, however, that if a
Participant or Beneficiary so demands, such benefit shall be distributed
only in the form of Company Stock. Prior to making a distribution of
benefits, the Committee shall advise the Participant or his Beneficiary,
in writing, of the right to demand that benefits be distributed solely
in Company Stock. If the Participant or his Beneficiary fails to make
such demand in writing within 90 days after receipt of such written
notice, the Committee shall direct the Trustee to make such distribution
in such form as the Committee, in its sole discretion, shall determine.
If a Participant or Beneficiary demands that benefits be
distributed solely in Company Stock, distribution of a Participant's
benefit will be made entirely in whole shares of Company Stock. Any
balance in a Participant's Account will be applied to acquire the
maximum number of whole shares of Company Stock at the then fair market
value. Any remaining fractional unit value will, be distributed in cash.
If Company Stock is not available for purchase by the Trustee, then the
Trustee shall hold such balance until Company Stock is acquired and then
make such distribution. If the Trustee is unable to purchase the Company
Stock required for distribution, it shall make distribution in cash
within one (1) year after the date the distribution is to be made,
except in the case of a retirement distribution which shall be made
within sixty (60) days after the close of the Plan Year in which a
Participant's retirement occurs.
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<PAGE> 36
(f) This Section 7.1(f) applies to distributions made on
or after January 1, 1993. Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a distributee's election under
this Section 7.1, a distributee may elect, at the time and in the manner
prescribed by the Administrative Committee, to have any portion of an
eligible rollover distribution paid directly to an eligible retirement
plan specified by the distributee in a direct rollover.
Definitions:
(i) Eligible rollover distribution:
An eligible rollover distribution is any
distribution of all or any portion of the balance to the credit
of the distributee, except that an eligible rollover distribution
does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary, or
for a specified period of ten years or more; any distribution to
the extent such distribution is required under section 401(a)(9)
of the Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to
employer securities).
(ii) Eligible retirement plan:
An eligible retirement plan is an individual
retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the
Code, or a qualified trust described in section 401(a) of the
Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, and eligible retirement
plan is an individual retirement account or individual retirement
annuity.
(iii) Distributee:
A distributee includes an employee or former
employee. In addition, the employee's or former employee's
surviving spouse and the employee's or former employee's spouse
or former spouse who is the alternate payee under a quaLified
domestic relations order, as defined in section 414(p) of the
Code, are distributees with respect to the interest of the spouse
or former spouse.
29
<PAGE> 37
(iv) Direct rollover:
A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
7.2 Timing of Benefit Payments
Any distribution called for in Section 7.1 shall commence as soon
as administratively possible after the end of the Plan Year in which the
Participant Separates From Service unless the Participant makes an irrevocable
election to receive his benefits at a later date within the distribution
requirements of Section 7.3 of the Plan. Such election must be made before the
end of the Plan Year in which his Separation From Service occurs. The Committee,
in its sole discretion, may direct the Trustee to defer any distribution until
the end of the Plan Year following the Participant's actual Separation From
Service, unless an earlier distribution is required in accordance with Section
7.3 of the Plan.
7.3 Distribution Requirements
(a) The payment of benefits shall commence not later than
the sixtieth (60th) day after the latest of.
(i) The close of the Plan Year in which the
Participant attains the earlier of age sixty-five (65) or the
Normal Retirement Date,
(ii) The close of the Plan Year in which occurs the
tenth (10th) anniversary of the year in which he commenced
participation in the Plan,
(iii) The close of the Plan Year in which the
Participant terminates his service with the Company, or,
(iv) The earliest date which the Committee
ascertains the total value of the Participant's benefits.
(b) In any event, distributions must be made by the April
1st of the calendar year following the calendar year in which the
Participant attains age seventy and one-half (70 1/2).
(c) If the value of a Participant's Accumulation Account
is to be distributed in other than a lump sum, then the form of benefit
must provide for distribution of the Participant's entire Accumulation
Account over a period not to exceed the joint life expectancy of the
Participant and his spouse.
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<PAGE> 38
(d) In the event of the Participant's death following
commencement of distribution, the remaining interest will be distributed
at least as rapidly as under the method being used as of the date of the
Participant's death.
(e) In the event the Participant dies before distribution
of his benefit has commenced, the Participant's entire interest will be
distributed no later than five years after the Participant's death
except to the extent that an election is made to receive distributions
in accordance with (1) or (2) below:
(i) If any portion of the Participant's interest is
payable to a designated Beneficiary, distributions may be made in
substantially equal installments over the life or life expectancy
of the designated Beneficiary commencing no later than one year
after the Participant's death;
(ii) If the designated Beneficiary is the
Participant's surviving spouse, the date distributions are
required to begin in accordance with (a) above shall not be
earlier than the date on which the Participant would have
attained age seventy and one-half (70 1/2), and, if the spouse
dies before payments begin, subsequent distributions shall be
made as if the spouse had been the Participant.
7.4 Limitation on Benefit Liability
Any payment to any Participant, to his Beneficiary, or to his
legal representative, in accordance with the provisions of the Plan, shall be in
full satisfaction of all claims hereunder against the Trustee, the Committee, or
the Employer, any of whom may require such Participant, Beneficiary, or legal
representative, as a condition precedent to such payment, to execute a receipt
in such form as shall be determined by the Trustee, the Committee, or the
Employer, as the case may be. The Employer does not guarantee the Trust, the
Participants, former Participants, or their Beneficiaries against loss or
depreciation in value of any right or benefit, that any of them may acquire
under the terms of this agreement. All of the benefits payable hereunder shall
be paid, or provided, solely from the Trust and the Employer does not assume any
liability or responsibility therefor.
7.5 Release For Payment
The Plan Administrator may require a Participant, a Beneficiary,
or any one receiving payments on behalf of such person to sign a receipt of
acquittance as a condition of final payment of his Plan benefit, in full
satisfaction of all claims against the Plan, the Plan Administrator, the former
and present members of the Committee, and the Employer.
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<PAGE> 39
ARTICLE VIII
DEATH BENEFITS
8.1 Entitlement to Preretirement Death Benefits
(a) If a Participant's death occurs
(i) prior to his actual retirement date,
(ii) prior to his date of termination with the
Employer, and
(iii) after he has become entitled to any benefit
under the Plan,
the Participant's Beneficiary will be entitled to receive
a benefit payable as an immediate lump sum or in monthly or
annual installments in accordance with Sections 7.1 and 7.3 of
the Plan, based on the value of the Participant's Accumulation
Account.
(b) If a former Participant's death occurs
(i) prior to the date on which his monthly
retirement benefits are due to commence,
(ii) after his date of termination with the
Employer, and
(iii) after he has become entitled to any vested
benefit under the Plan,
the Participant's Beneficiary will be entitled to receive
an immediate lump sum or monthly or annual installments in accordance
with Sections 7.1 and 7.3 of the Plan, based on the vested value of the
Participant's Accumulation Account.
(c) Notwithstanding clauses (a) and (b) above, payment
made to a Beneficiary shall be subject to any qualified domestic
relations order.
8.2 Proof of Death
The Committee may require such proper proof of death and evidence
of the right of any person to receive payment of the benefits of a deceased
Participant, or former Participant, as the Committee may deem desirable.
The Committee's determination of death and the right of any
person to receive payment shall be final.
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<PAGE> 40
8.3 Death After Distribution Commencement
If a Participant dies after his Plan benefits have begun to be
distributed, any amount remaining must be distributed at least as rapidly as
under the method of distribution being used as of the date of his death.
8.4 Death Prior to Distribution Commencement
If a Participant dies before his Plan benefits have begun to be
distributed, his benefits must be distributed: (a) within five (5) years of his
death, or (b) over the life expectancy of his designated Beneficiary if.
(i) Benefits commence within one year of the date
of the Employee's death, or,
(ii) Benefits commence as of the date the Employee
would have turned age seventy and one-half (701/2) if the spouse
is the designated Beneficiary. If the surviving spouse dies prior
to the distribution beginning, this subparagraph shall be applied
as though the surviving spouse were the Employee.
8.5 Postretirement Death Benefits
Upon the death of a former Participant on or after the date on
which his benefit payments are due to commence, the death benefits payable under
the Plan as a result thereof will be determined by the form of retirement
benefit, as described in Article VII, which is in force for, or had been elected
by, the Participant prior to his death.
8.6 Designation of Beneficiary
Each Participant from time to time may designate any person, or
persons (who may be designated contingently or successively, and who may be an
entity other than a natural person) as a Beneficiary or Beneficiaries to whom
the Plan benefits are paid if the Participant dies before receipt of all such
benefits. If the Participant is married, the Participant's spouse must be
Beneficiary for 100% of his Accumulation Account unless such spouse consents to
forego receipt of any portion of the Participant's benefits by providing written
consent to such non-spousal Beneficiary designation. The spouse's consent must
acknowledge the effect of the waiver and must be witnessed by the Plan's
representative or a Notary Public. Each Beneficiary designation shall be in a
written form prescribed by the Committee, and will be effective only when filed
with the Committee during the Participant's lifetime. Each succeeding
Beneficiary designation filed with the Committee will cancel all Beneficiary
designations previously filed with the Committee.
If any Participant fails to designate a Beneficiary in the manner
provided above, or if the Beneficiary designated by a deceased Participant dies
before the
33
<PAGE> 41
Participant or before complete distribution of the Participant's benefits,
payment of any death benefit, to the extent permitted by law, shall be made to
the surviving person or persons in the first of the following classes of
successive preference of Beneficiaries: (a) surviving spouse, (b) lineal
descendants on the principle of representation, (c) parents, (d) executors or
administrators. Any minor's share shall be paid to such adult or adults as have,
in the opinion of the Committee assumed custody and support of such minor. Proof
of death satisfactory to the Committee must be furnished prior to the payment of
any death benefit under the Plan.
Whenever the rights of the Participant are stated or limited in
the Plan, his Beneficiaries shall also be bound thereby.
ARTICLE IX
DISABILITY BENEFITS
9.1 Disability Benefits
If a Participant retires by reason of total and permanent
disability (as used herein, this means a physical or mental incapacity resulting
from a bodily injury, disease, or mental disorder which renders the Participant
incapable of engaging in his customary employment on a continuing or sustained
basis, while in the employ of the Employer), he shall become entitled to receive
benefits equal to one hundred percent (100%) of his Accumulation Account. Such
benefits shall commence and shall be paid in a lump-sum, or in accordance with
one of the forms of payment set forth in Article VII, subject to Section 7.3, no
later than the later of:
(a) Sixty (60) days after the Anniversary Date of the Plan
Year within which the Committee deems disability under the
Article to have occurred, or,
(b) Sixty (60) days after the earliest date on which the
amount of such benefits can be ascertained.
9.2 Determination of Total Disability
The Committee shall determine whether a Participant has suffered
total and permanent disability on a basis uniformly applicable to all
Participants, and its determination is binding upon the Participant. Total and
permanent disability shall not include any injury or disability resulting from
or attributable to any self-inflicted injury, an unlawful enterprise or the use
of intoxicants, drugs or narcotics. The Committee shall rely upon professional
medical advice in making such determination. In the event a dispute shall arise
between the Participant and the Committee as to the occurrence of such
disability, such dispute shall be settled by a majority decision of three
doctors, one to be appointed by the Committee, one by the Participant, and the
third by the two doctors appointed. In the event no dispute exists between the
34
<PAGE> 42
Participant and the Committee as to the occurrence of such disability, the
Committee is to base its findings of disability on the certification of at least
one doctor. Except as otherwise provided in this Section 9.2, any Participant
who qualifies for disability benefits under the Federal Social Security Act
shall automatically qualify for a disability benefit under this Plan.
9.3 Recovery From Total Disability
In the event of the full and complete recovery from total and
permanent disability of a former Participant prior to his Normal Retirement
Date, where such recovery is certified to the Committee by competent medical
authority satisfactory to the Committee, if the former Participant is rehired by
the Employer, he shall begin participation in the Plan immediately upon rehire
and shall be credited for all Years of Service earned prior to the disability
for the purposes of vesting of future Employer contributions. Any unpaid
Accumulation Account balance due from the Trust because of prior disability
status shall remain fully vested.
ARTICLE X
HARDSHIP WITHDRAWALS
10.1 Financial Hardship Withdrawals
Upon 15 days written notice to the Committee and subject to the
Committee's approval, a Participant may withdraw up to the amount of his
accumulated Rollover Account plus his accumulated Salary Savings Contributions,
without investment earnings, as soon as administratively possible following
Committee approval of his withdrawal request to the extent necessary to meet a
financial hardship.
A withdrawal request will be presumed to be on account of
financial hardship if the distribution is necessary in light of immediate and
heavy financial needs of the Participant. The amount approved hereunder may not
exceed the amount required to meet the immediate financial need created by the
hardship and must not be reasonably available from other resources of the
Participant. The Committee's determination of the existence of financial
hardship and the amount required to meet the need created by the hardship shall
be made in a uniform and nondiscriminatory manner with respect to all
Participants, based on the following causes:
(a) Unreimbursed medical expenses incurred by the
Participant, his spouse or dependents, to the extent deductible for
federal income tax;
(b) Purchase (excluding mortgage payments) of a principal
residence for the Participant;
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(c) Payment of tuition for the next semester or quarter of
post-secondary education for the Participant, his spouse or children; or
(d) Payment of amounts necessary to prevent eviction of
the Participant from his principal residence or foreclosure on the
mortgage of the Participant's principal residence.
(e) Other causes established by the Commissioner of
Internal Revenue and payment of such extraordinary expenses as may be
deemed by the Administrative Committee to constitute financial hardship.
A distribution shall be determined by the Committee to be
necessary to satisfy an immediate and heavy financial need of a Participant if
all of the following requirements are satisfied:
(i) Prior to the hardship distribution, the
Participant has obtained all nonhardship distributions and all
nontaxable loans currently available under all plans maintained
by the Employer;
(ii) All Salary Savings Contributions and
Participant contributions under this Plan and all other qualified
retirement plans maintained by the Employer shall be suspended
for a twelve month period following the effective date of the
hardship distribution; and
(iii) This Plan, and all other qualified retirement
plans maintained by the Employer, limit the Participant's
elective contributions for the Participant's taxable year
immediately following the taxable year of the hardship withdrawal
to:
(A) the applicable limit under Section
402(g) of the Code for such following taxable year, minus
(B) the amount of such Participant's
elective contributions for the taxable year in which the
hardship withdrawal occurred.
10.2 Amount and Payment of Withdrawals.
A withdrawal under this Article X shall be effective as soon as
administratively possible following the date the Committee receives and approves
a withdrawal request from the Participant. The amount of such withdrawal shall
be taken at such time first from the Participant's Rollover Account, until
exhausted, and then from his Salary Savings Account and paid to the Participant
in a single sum.
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ARTICLE XI
COMMITTEE
11.1 Appointment of the Committee
The Board shall appoint an Administrative Committee, hereinafter
referred to as the Committee, to consist of three, or more, members. The members
of the Committee shall serve at the pleasure of the Employer and any member may
resign by written instruction addressed to the Board and may be removed by the
Board with, or without cause. While a vacancy exists, the remaining member(s) of
the Committee may perform any acts which the Committee is authorized to perform.
The Employer shall certify to the Trustee the names and specimen signatures of
any successor Committee members and the names of those members replaced. The
Committee may act with, or without, a meeting being called, or held, and shall
keep minutes of all meetings held and a record of all actions taken by written
consent.
The Board reserves the right, at any time, by an instrument in
writing, to discharge any Fiduciary and to appoint a successor Fiduciary. Any
Fiduciary may resign, at any time, by giving appropriate written notice to the
Board. In addition, the Employer reserves the right, by a written instrument, to
change any allocation of responsibilities among named Fiduciaries at any time
that is deemed reasonable and prudent to do so.
11.2 Powers and Duties
The Committee shall have full power to administer the Plan and to
construe and apply all of its provisions on behalf of the Employer. The
Committee shall be the named Fiduciary within the meaning of Section 402(a) of
ERISA for purposes of Plan administration. The Committee's powers and duties,
unless properly delegated, shall include, but shall not be limited to:
(a) Deciding questions relating to eligibility, continuity
of service and benefit amounts.
(b) Deciding disputes which may arise with regard to the
rights of Employees, Participants and their legal representatives,
spouses, or Beneficiaries under the terms of the Plan. Such decisions by
the Committee shall be deemed final in each case.
(c) Obtaining such information from the Employer with
respect to Employees as shall be necessary to determine the rights and
benefits of such Employees under the Plan. The Committee may rely
conclusively upon such information furnished by the Employer.
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(d) Compiling and maintaining all documents and records
necessary for the Plan and furnishing the Employer such reports as are
reasonable and appropriate.
(e) Authorizing the Trustee to make payment of all
benefits as they become payable under the Plan and delivering statements
of vested benefits to terminated Participants.
(f) Engaging such legal, administrative, actuarial,
investment, consulting, accounting and other professional services as
the Committee deems proper.
(g) Adopting rules and regulations for the administration
of the Plan, not inconsistent with the Plan.
(h) Determining whether domestic relations orders
represent "qualified domestic relations orders" as that term is defined
in Section 414(p) of the Code or a successor provision. If the Committee
determines the order is a qualified domestic relations order it shall
direct the manner and time of distribution pursuant to the order. Prior
to such determination the Committee shall promptly notify the
Participant affected with respect to the order and any payee under the
order of the receipt of the order. The Committee shall send such notices
to the addresses set forth in the order, or if the address is not set
forth therein, to the last known address. Such notice shall state that
the Committee is in the process of determining whether the order is a
qualified domestic relations order and such notice shall also permit a
reasonable period under the circumstances for comment with respect to
such determination. During such period the Committee shall notify the
Participant and any payee under the order of such determination. Any
payee may designate a representative for receipt of copies of notices
sent to the payee with respect to the order.
(i) Doing and performing such other actions as may be
provided for in other parts of this Plan, including acting as agent for
service of legal process for matters pertaining to the Plan.
(j) Filing such reports, returns, and Plan descriptions
with the Department of Labor and the Internal Revenue Service as may be
required by regulations.
(k) Making available copies of the Plan, Trust Agreement,
and latest annual report during reasonable business hours.
(l) Publishing and transmitting to each Participant such
Plan summaries, reports and statements of benefits as may be required by
regulations.
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(m) Reporting to the Employer the amount and due dates of
the contributions which are required to maintain the Plan as a qualified
plan under the appropriate Code Sections, and as set forth in the
provisions of this Plan.
(n) Providing for a valuation of trust assets at fair
market value, as of the last day of each Plan Year.
11.3 Investment Powers
The Trustee may be directed by the Committee or by individual
Employee direction through the Committee. If the Committee transfers the right
to direct the Trustee concerning the investment and reinvestment of the Trust
Fund, it shall retain responsibility to communicate information regarding the
Plan as necessary or required to coordinate investment policy or pay Plan
expenses or benefits as due.
11.4 Actions by the Committee
The Committee may appoint agents as he may deem necessary for the
effective performance of his duties, and may delegate to such agents such powers
and duties as the Committee may deem expedient or appropriate, except that any
dispute shall be settled by the Committee. The members of the Committee will
select from their number a chairman and will appoint a secretary, who need not
be a member of the Committee. The Committee will hold meetings upon such notice,
at such time, and at such place as it may determine. A majority of the Committee
at the time in office constitutes a quorum for the transaction of business. All
resolutions or other actions taken by the Committee must be by vote of a
majority of those present at a meeting, but not less than two, or in writing by
all the members at the time in office, if they act without a meeting.
11.5 Interested Party Restrictions
A Committee member shall not participate in any decision on a
matter in which the member has an individual interest as a Participant in the
Plan. If a matter arises affecting a Committee member, such member shall be
decided by a majority of the remainder of the Committee. Nothing in this Plan
will be construed to prohibit a Committee member from receiving any benefit he
may be entitled to as a Participant or Beneficiary in the Plan, so long as the
benefit is computed and paid on a basis consistent with the terms of the Plan as
applied to all other Participants and Beneficiaries.
11.6 Indemnification
The Employer shall indemnify and hold harmless, to the extent
permitted by law, members of the Committee, and each of them, from the effects
and consequences of their acts, omissions and conduct in their official
capacities, except to the extent that the effects and consequences thereof shall
result from their own willful misconduct, breach of good faith, or gross
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negligence in the performance of their duties. The foregoing right of
indemnification shall not be exclusive of other rights to which each such member
may be entitled as a matter of law.
The Employer's obligations under this Section may be satisfied
through purchase of a policy or policies of insurance providing equivalent
protection.
11.7 Acceptance of Legal Service
The Committee is empowered to accept any legal service on this
Plan and said acceptance is binding. On acceptance of any legal service, the
Committee will seek counsel to obtain such relief as may be necessary and
consistent with facts as they deem necessary.
11.8 Conclusiveness of Action
Any action on matters within the discretion of the Committee
shall be conclusive, final and binding upon all Participants in the Plan and
upon all persons claiming any rights hereunder, including Beneficiaries.
11.9 Payment of Expenses
The members of the Committee shall serve without compensation for
services as such. However, the Trustee shall reimburse, from the Trust Fund,
each member of the Committee for all necessary and proper expenses incurred in
carrying out his duties under the Plan. The compensation or fees of accountants,
counsel and other specialists and any other costs of administering the Plan or
Trust Fund shall be paid by the Employer or may be paid from the Trust Fund, at
the discretion of the Employer.
11.10 Annual Review
At least once during each Plan Year, the Committee shall meet for
the express purpose of reviewing the Plan and Trust Fund for determination
initially, and to review subsequently, a funding method and investment policy
which are consistent with:
(a) The short and long term requirements for funds to pay
expenses and benefits as they become due,
(b) The terms and objectives of the Plan, and
(c) The requirements of ERISA.
Furthermore, the Committee shall communicate decisions regarding
funding policy to the Trustee, and any other persons, responsible for the
investment of Plan assets.
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11.11 Multiple Fiduciary Responsibility
Any person, or group of persons, may serve in more than one
Fiduciary capacity with respect to the agreement; specifically including service
both as Trustee and as a member of the Committee subject to the approval of the
Employer, except where otherwise prohibited under this agreement.
11.12 Claims Procedure
All applications for benefits under the Plan shall be submitted
to the Committee at the Employer's principal place of business. Applications for
benefits must be in writing on forms acceptable by the Committee and must be
signed by the Participant and his or her spouse, or in the case of a death
benefit, by the designated Beneficiary or legal representative of the deceased
Participant. The Committee reserves the right to require the Participant to
furnish proof of his or her age and that of his or her spouse, if any, prior to
processing any application. Each application shall be acted upon and approved or
disapproved by the Committee within sixty (60) days following its receipt by the
responsible officer of the Employer.
If any application for benefits is denied, in whole or in part,
the Committee shall notify the applicant in writing of such denial and of his or
her right to a review by the Committee and shall set forth, in a manner
calculated to be understood by the applicant, the specific reasons for such
denial, the specific references to pertinent Plan provisions on which the denial
is based, a description of any additional material or information necessary for
the applicant to perfect his or her application, an explanation of why such
material or information is necessary, and an explanation of the Plan's review
procedure.
Any person whose application for benefit is denied in whole or in
part may appeal to the Committee for a review of the decision by submitting a
written statement to the Committee within 90 days after receiving written notice
from the Committee of the denial of his or her claim:
(a) requesting a review by the Committee of his or her
application for benefits;
(b) setting forth all of the grounds upon which his or her
request for review is based and any facts in support of such request;
and
(c) setting forth any issues or comments which the
applicant deems pertinent to his or her application. The Committee shall
meet as required to review appeals of denials of applications for
benefits submitted to it. The Committee shall act upon each appeal
within sixty (60) days after receipt of the applicant's request for
review by the Committee. The Committee shall make a full and fair review
of each such application and any written material submitted by the
applicant or the Employer in connection with such review and may require
the Employer or the applicant to submit such additional facts,
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documents, or other evidence as the Committee, in its sole discretion,
deems necessary or advisable in making such a review. On the basis of
its review, the Committee shall make an independent determination of the
applicant's eligibility for benefits under the Plan. The decision of the
Committee on any application for benefits shall be final and conclusive
upon all persons if supported by substantial evidence in the records.
ARTICLE XII
AMENDMENT TO THE PLAN
12.1 Right to Amend
The Board shall have the right to amend the Plan at any time and,
from time to time, to any extent that it deems advisable. No such amendment
shall:
(a) increase, change or modify duties or responsibilities
of the Trustee without written consent thereto,
(b) attempt to transfer any part of the principal or
income of the Trust to purposes other than the exclusive benefit of
Participant and their beneficiaries,
(c) deprive any Participant or Beneficiary of any benefits
to which he is entitled under the Plan with respect to contributions
previously made to the Plan except to the extent required to preserve
qualification pursuant to Sections 401(a) and 501(a) of the Code,
(d) except as provided in Section 3.10 of this Plan, shall
cause, or permit, any portions of the Trust Fund to revert to, or
become, the property of the Employer,
(e) shall permit any part of the Trust Fund to be used to
pay premiums or contributions of the Employer under any other plan
maintained by Employer for the benefit of its Employees.
12.2 Amended Vesting Schedule
Each Participant having three or more Years of Service, whose
non-forfeitable percentage of his ESOP Contribution Account and Matching
Employer Contribution Account is determined under an amended schedule, may elect
to have the non-forfeitable percentage of his ESOP Contribution Account and
Matching Employer Contribution Account determined without regard to such
amendment if the non-forfeitable percentage under the amended Plan is, at any
time, less than such percentage prior to such amendment.
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A Participant's election period begins no later than the date the
Plan amendment is adopted and ends no later than 60 days after:
(a) the day the amendment is adopted
(b) the day the amendment becomes effective
(c) the day the Participant is issued written notice of
amendment by the Employer or Plan Administrator.
ARTICLE XIII
TERMINATION OF THE PLAN
13.1 Right to Terminate
The Board shall have the right to terminate the Plan in whole or
in part at any time. In the event of a termination or partial termination of the
Plan, each affected Participant shall be one hundred percent (100%) vested in
the value of his Accumulation Account.
Although the Employer has established the Plan with the intention
that it will be able to make contributions indefinitely, nevertheless the
Employer is not under any obligation or liability to continue its contributions
or to maintain the Plan for any given length of time. The Employer may, in its
sole and absolute discretion, discontinue contributions or terminate the Plan,
in whole or in part, in accordance with its provisions at any time without any
liability for discontinuance or termination. The Employer may, without
terminating the Trust, adopt an appropriate resolution to the Committee and to
the Trustee to institute such intended action and to set an effective date for
such action to commence.
Notwithstanding any other provisions of the Plan, the rights of
all affected Participants in their Accumulation Accounts shall become
non-forfeitable on the effective date of the full or partial termination of the
Plan or on the complete discontinuance of contributions.
13.2 Effect of Termination on Participant's Account
Upon the termination of the Plan, after payment of expenses and
proportional adjustment of Accounts to reflect such expenses, fund losses or
profits, and reallocations to the date of termination, each Participant, former
Participant, and Beneficiary shall be entitled to receive any amounts then
credited to their respective Accumulation Account in the Trust Fund in
accordance with the Plan termination amendment. The Committee shall direct the
Trustee to make payments of such amounts in cash, or assets of the Trust Fund
valued at their fair market value as elected by the Participant, subject to
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Article VII. The Trust shall continue until all Participants' Accumulation
Accounts have been completely distributed to or for the benefit of the
Participants in accordance with the Plan.
13.3 Automatic Plan Termination
The Plan shall automatically terminate and likewise the
Employer's liability to make contributions to the Trust upon the Employer's
legal dissolution, or upon its adjudication as bankrupt or insolvent, or upon
its making a general assignment for the benefit of creditors, or upon a receiver
being appointed for its assets, or upon a complete discontinuance of
contributions under the Plan within the meaning of Section 411(d)(3) of the
Code.
13.4 Plan Merger and Consolidation
If the Plan is merged or consolidated with any other plan, or if
the assets or liabilities of the Plan are transferred to any other plan, each
Participant shall be entitled to a distribution immediately after such merger,
consolidation or transfer (determined as if such plan then terminated) at least
equal to the distribution to which he would have been entitled had the Plan
terminated immediately prior to such merger, consolidation or transfer.
ARTICLE XIV
TRUSTEE
14.1 Trust Establishment and Continuance
The Employer has entered into the Trust Agreement providing for
the establishment of a Trust to hold the assets of the Plan. The assets of the
Plan may consist of cash, qualifying Employer real property or qualifying
Employer securities within the meaning of Section 407(d)(4) and (5) of ERISA, or
other property. All Employer contributions shall be paid over to the Trustee and
held pursuant to the provisions of the Trust Agreement, which, as amended from
time to time, shall constitute a part of the Plan. The Board may, at any time,
in accordance with the terms of the Trust Agreement, remove the incumbent
Trustee and designate a successor.
14.2 Trustee Accounting Responsibilities
The Trustee shall keep accurate and detailed accounts of all
receipts, investments, disbursements and other transactions hereunder. All
accounts, books and records relating to such transaction shall be open to
inspection and audit at all reasonable times by any person designated by the
Employer or Committee.
Within 90 days following the end of each Plan Year and within 90
days after any removal or resignation of the Trustee as provided in paragraph
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14.8 hereto, or as soon as administratively possible, the Trustee shall file
with the Committee a written account setting forth all receipts, investment,
reimbursements and other transactions by it during such Plan Year or during the
period from the end of the last Plan Year to the date of such removal or
resignation, and setting forth the current value of all Trust assets and
liabilities. Upon the expiration of 90 days from the date of filing such annual
or other accounts, the Trustee shall be forever released and discharged from all
liability and accountability with respect to the propriety of its acts and
transactions shown in such account, except with respect to any such acts or
transactions as to which the Committee or the Employer shall file with the
Trustee written objections within such 90 day period.
14.3 Trustee Administration and Investment Responsibilities
The Trustee may rely on the representation of the Committee that
the Plan and Trust hereby created are qualified within the meaning of Section
401(a) of the Internal Revenue Code, and the Trustee shall have no obligation to
inquire into the continuance of such qualification.
The Trustee shall not be responsible for administration of the
Plan established by this Agreement and shall not be obliged to determine whether
any particular instruction or direction of the Committee accords with the terms
and conditions of same. Neither shall the Trustee be obliged to collect
contributions due under this Agreement, to determine whether contributions are
in accordance therewith or to account for allocations to Participants.
The Plan Administrator shall be vested with full and sole
responsibility for the investment and management of the Trust assets. The
Trustee shall not invest, sell, exchange, encumber or otherwise act with respect
to the assets without specific written direction of the Plan Administrator. The
Trustee shall incur no liability by complying with any such written direction
and shall be under no duty or obligation to review, evaluate or reevaluate the
investments made pursuant to such directions.
14.4 Committee Investment Direction
The Committee shall accompany each transfer of contributions to
the Trust with such information as the Trustee may reasonably require for
purposes of discharging its duties. The Trustee shall give the Committee a
receipt for each contribution received and information as to the application
thereof.
14.5 Appointment of Agents
The Trustee may appoint one or more administrative agents or
contract for the performance of such administrative and service functions as it
may deem necessary or desirable for the effective installation and operation of
the Trust.
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14.6 Treatment of Plan and Trust Expenses
All expenses chargeable to the Trust hereunder shall be paid by
the Employer. Expenses chargeable to the Trust shall include but not be limited
to the following:
(a) Commissions and other sales or service charges;
(b) Taxes of any kind;
(c) Administrative and clerical costs;
(d) Legal fees; and
(e) Trustee's fee.
The Trustee shall be compensated by the Employer for its services
by payment of the Trustee's fee, the amount of which shall be agreed upon from
time to time between the Employer and the Trustee; provided however, that no
Trustee who receives full-time compensation from the Employer shall receive
compensation for services provided to the Plan except reimbursement of expenses
properly and actually incurred in conjunction with the operation of the Trust.
14.7 Resignation and Removal of the Trustee
The Trustee may resign as Trustee at any time by providing the
Employer with 60 days written notice of resignation. Upon receipt of such notice
the Employer shall forthwith appoint a successor Trustee who shall notify the
Trustee in writing that it has accepted the appointment as successor Trustee.
Upon receiving such notice of acceptance, the Trustee may first reserve and
liquidate such assets as are necessary for the payment of its compensation and
expenses and for the payment of any liabilities involving the Trustee. It shall
then transfer to the successor Trustee the remaining assets of the Trust and all
records pertinent thereto. If the Employer fails to appoint a successor Trustee
within 60 days of receiving the Trustee's resignation, the Trustee may appoint a
successor Trustee.
Except for removal for cause, the Employer may remove the Trustee
only by first designating a successor Trustee and by providing the Trustee with
not less than 60 days notice of the removal. The removal shall not be effective
until the Trustee is notified in writing by the successor Trustee that it has
accepted the appointment as successor. In such case, the Trustee, after first
preserving and liquidating such assets as may be necessary for the payment of
its compensation and expenses and the payment of any liabilities involving the
Trustee, shall transfer to the successor Trustee the remaining assets of the
Trust and records pertinent thereto.
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14.8 Voting Shares of Company Stock
The Trustee shall vote Shares held by it as directed by the
participant in accordance with Section 4.6. If a Participant does not direct the
Trustee with respect to voting Company Stock allocated to his ESOP Contribution
Account and Matching Employer Contribution Account, the Trustee shall not vote
such shares except to the extent actually directed by the Participant.
14.9 Borrowing to Purchase Shares of Company Stock
The Committee may direct the Trustee to borrow from any lender
for the purpose of purchasing Company Stock or to enter into contracts for the
purchase of Company Stock pursuant to which the purchase price is paid in
installments. Any such loan or contract must be primarily for the benefit of
Participants and their Beneficiaries and must provide for no more than a
reasonable rate of interest. If any collateral is given by the Trust, such
collateral shall consist of only the Company Stock thus purchased, and the
creditor shall have no recourse against the Trust Fund except as to such
collateral. The Employer shall contribute sufficient amounts to enable the
Trustee to pay the principal and interest as it becomes due, irrespective of
whether a tax benefit results from such contribution. Upon the payment of a
portion of the indebtedness, a pro rata portion of any Company Stock pledged as
collateral shall be released from the pledge. The number of shares thus paid for
based upon the amount of principal and interest paid on the indebtedness shall
be allocated to the Participant ESOP Contribution Accounts as provided to
Section 3.2 in the same manner as if there were no indebtedness.
All assets acquired by the Plan with the proceeds of an exempt
loan under Section 4975(d)(3) of the Code shall be added to and maintained in a
suspense account and shall otherwise be treated in accordance with Treasury
Regulation Section 54.4975-11(c). The rights of Participants in the Plan with
respect to Plan assets acquired by use of an exempt loan shall be protected in
accordance with Treasury Regulation Section 54.4975-11(a).
ARTICLE XV
TOP-HEAVY PLAN REQUIREMENTS
15.1 General Rule
For any Plan Year for which this Plan is a Top-Heavy Plan, as
defined in Section 15.6, and notwithstanding any other provisions of this Plan
to the contrary, this Plan shall be subject to the provisions of this Article
XV.
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15.2 Minimum Contribution Provisions
Each Participant who (a) is a Non-Key Employee, as defined in
Section 15.6 and (b) is employed on the last day of the Plan Year, even if such
individual has failed to complete 1,000 Hours of Service during such Plan Year,
and regardless of such Employee's level of Compensation, will be entitled to
have a contribution allocated to his ESOP Contributions Account equal to not
less a than three percent (the "Minimum Contribution Percentage") of his
Compensation. The Minimum Contribution Percentage will be reduced for any Plan
Year to the percentage at which such contributions are made or are required to
be made under the Plan in such Plan Year for the Key Employee for whom such
percentage is the highest for such Plan Year. For this purpose, the percentage
with respect to a Key Employee, as defined in Section 15.6, will be determined
by dividing such contributions made for such Key Employee by the amount of his
total Compensation for the Plan Year that does not exceed $200,000. Such amount
will be adjusted in the same manner as the amount set forth in Section 15.3
below.
Contributions considered under the first paragraph of this
Section 15.2 will include the contributions described above under this Plan and
contributions under all other defined contribution plans required to be included
in an Aggregation Group (as defined in Section 15.6 below), but will not include
any plan required in such aggregation group if the plan enables a defined
contribution plan required to be included in such group to meet the requirements
of the Code, prohibiting discrimination as to contributions in favor of
employees who are officers, shareholders, or the highly compensated or
prescribing the minimum participation standards.
Contributions considered under this Section will not include any
contributions under the Social Security Act or any other federal or state law.
15.3 Limitation on Compensation
Annual Participant's Compensation taken into account under this
Article XV for purposes of computing benefits under this Plan will not exceed
the first $200,000. This dollar limitation will be adjusted automatically for
each Plan Year to the amount prescribed by the Secretary of the Treasury or his
delegate pursuant to regulations for the calendar year in which such Plan Year
commences.
15.4 Limitation on Contributions
In the event that the Employer also maintains a defined benefit
plan providing benefits on behalf of Participants in this Plan, one of the two
following provisions will apply:
(a) If for the Plan Year this Plan is a Top-Heavy Plan but
would not be a Top-Heavy Plan if "ninety percent" were substituted for
"sixty percent" in Section 15.6, then the percentage of three percent
used in Section 15.2 is changed to four percent.
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(b) If for the Plan Year this Plan would continue to be a
Top-Heavy Plan if "ninety percent" were substituted for "sixty percent"
in Section 15.6, then the denominator of both the defined contribution
plan fraction and the defined benefit plan fraction will be calculated
as set forth in Section 4.5(c) for the limitation year ending in such
Plan Year by substituting "one" for "one and twenty-five hundredths" in
each place such figure appears. This subsection (b) will not apply for
such Plan Year with respect to any individual for whom there are no
Employer contributions or Forfeitures allocated to his ESOP Contribution
Account or Matching Employer Contribution Account or accruals earned
under the defined benefit plan.
15.5 Coordination with Other Plans
If another defined contribution or defined benefit plan
maintained by the Employer provides contributions or benefits on behalf of a
Participant in this Plan, the other plan will be treated as a part of this Plan
in determining whether this Plan satisfies the requirements of Sections 15.2 and
15.3. The determination will be made by the Employer upon the advice of counsel.
15.6 Determination of Top-Heavy Status
The Plan will be a Top-Heavy Plan for any Plan Year if, as of the
Determination Date, the aggregate of the Value of Accounts under the Plan for
Key Employees exceeds sixty percent of the aggregate of the Value of Accounts
for all Employees, or if this Plan is required to be in an Aggregation Group,
any such Plan Year in which such Group is a Top-Heavy Group.
For purposes of this Section, the capitalized words have the
following meaning:
(a) "Aggregation Group" means the group of plans, if any,
that includes both the group of plans required to be aggregated and the
group of plans permitted to be aggregated.
The group of plans required to be aggregated (the
"required aggregation group") includes:
(i) Each plan of the Employer in which a Key
Employee is a participant, and
(ii) Each other plan of the Employer which enables
a plan in which a Key Employee is a participant to meet the
requirements of the Code, prohibiting discrimination as to
contributions or benefits in favor of employees who are officers,
shareholders, or the highly compensated or prescribing the
minimum participation standards.
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The group of plans that are permitted to be aggregated
(the "permissive aggregation group") includes the required aggregation
group plus one or more plans of the Employer that is not part of the
required aggregation group and that the Employer certifies as a plan
within the permissive aggregation group, Such plan or plans may be added
to the permissive aggregation group only if, after the addition, the
aggregation group as a whole continues not to discriminate as to
contributions or benefits in favor of officers, shareholders, or the
highly compensated and to meet the minimum participation standards under
the Code.
(b) "Determination Date" means for any Plan Year the last
day of the immediately preceding Plan Year. However, for the first Plan
Year of this Plan, Determination Date means the last day of that Plan
Year.
(c) "Key Employee" means any Employee or former Employee
who, at any time during the Plan Year in question or during any of the
four preceding Plan Years, is or was one of the following:
(i) An officer of the Employer having annual
Compensation in excess of 150% of the amount in effect under
Section 415(c)(1)(A) of the Code. Whether an individual is an
officer shall be determined by the Employer on the basis of all
the facts and circumstances, such as an individual's authority,
duties, and term of office, not on the mere fact that the
individual has the title of an officer. For any such Plan Year,
officers will be no more than the fewer of:
(A) Fifty Employees; or
(B) The greater of three Employees or ten
percent of the Employees.
For this purpose, the highest-paid officers shall be selected.
(ii) One of the ten Employees owning (or considered
as owning, within the meaning of the constructive ownership rules
of the Code) both more than a 1/2% interest and the largest
interests in the Employer. Such an Employee is considered to be
one of the top ten owners unless at least ten other Employees own
a greater interest in the Employer. If two Employees have the
same interest in the Employer, the Employee having the greater
annual Compensation shall be treated as having the greater
interest. An Employee will not be considered a top-ten owner for
a Plan Year if the Employee earns less than the maximum dollar
limitation on contributions and other annual additions to a
Participant's account in a defined contribution plan under the
Code, as in effect for the calendar year in which the
Determination Date falls.
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<PAGE> 58
(iii) Any person who owns (or is considered as
owning, within the meaning of the constructive ownership rules of
the Code) more than five percent of the outstanding stock of the
Employer or possessing more than five percent of the combined
voting power of all stock of the Employer.
(iv) A one percent owner of the Employer having an
annual Compensation from the Employer of more than one hundred
fifty thousand dollars and possessing more than one percent of
the combined total voting power of all stock of the Employer. For
purposes of this subsection, Compensation means all items
includable as Compensation for purposes of applying the
limitations on contributions and other annual additions to a
Participant's account in a defined contribution plan and the
maximum benefit payable under a defined benefit plan under the
Code.
For purposes of this subsection (c), a Beneficiary of a
Key Employee shall be treated a Key Employee.
(d) "Non-Key Employee" means any Employee (and any
Beneficiary of an employee) who is not a Key Employee.
(e) "Top-Heavy Group" means the Aggregation Group, if as
of the applicable Determination Date, the sum of the present value of
the cumulative accrued benefits for Key Employees under all defined
benefit plans included in the Aggregation Group plus the aggregate of
the Value of Accounts of Key Employees under all defined contribution
plans included in the Aggregation Group exceeds sixty percent of the sum
of the present value of the cumulative accrued benefits for all
employees under all such defined benefit plans plus the aggregate Value
of Accounts for all Employees, excluding former Key Employees, under all
such defined benefit plans plus the aggregate Value of Accounts for all
Employees under all such defined contribution plans. If the Aggregation
Group that is a Top-Heavy Group is a required aggregation group, each
plan in the group will be a Top-Heavy Plan. If the Aggregation Group
that is a Top-Heavy Group is a permissive aggregation group, only those
plans that are part of the required aggregation group will be treated as
Top-Heavy Plans. If the Aggregation Group is not a Top-Heavy Group, no
plan within such group will be a Top-Heavy Plan.
(f) "Value of Accounts" means the sum of (i) the value, as
of the most recent Valuation Date occurring within the twelve months
ending on the Determination Date, of the Participant's ESOP Contribution
Account and Matching Employer Contribution Accounts and (ii)
contributions due to such Accounts as of the Determination Date.
In determining whether this Plan constitutes a Top-Heavy
Plan, the Employer (or its agent) will make the following adjustments:
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<PAGE> 59
(g) When more than one plan is aggregated, the Employer
shall determine separately for each plan, as of each plan's
Determination Date, the present value of the accrued benefits or account
balance. The results shall then be aggregated by adding the results of
each plan as of the Determination Dates for such plans that fall within
the same calendar year.
(h) In determining the present value of the cumulative
accrued benefit or the amount of the account of any employee, such
present value or account will include the amount in dollar value of the
aggregate distributions made to such Employee under the applicable plan
during the five-year period ending on the Determination Date unless
reflected in the value of the accrued benefit or account balance as of
the most recent Valuation Date. The amounts will include distributions
to Employees representing the entire amount credited to their accounts
under the applicable plan and distributions under a terminated plan
which, if it had not been terminated, would have been required to be
included in an aggregation group.
(i) Further, in making such determination, such present
value or such account shall include any rollover contribution (or
similar transfer), as follows:
(i) If the rollover contribution (or similar
transfer) is initiated by the Employee and made to or from a plan
maintained by the Employer to a plan of an unrelated employer,
the plan providing the distribution shall include such
distribution in the present value or such account; the plan
accepting the distribution shall not include such distribution in
the present value or such account.
(ii) If the rollover contribution (or similar
transfer) is not initiated by the Employee or made from a plan
maintained by the Employer, the plan accepting the distribution
shall include such distribution in the present value or such
account; the plan making the distribution shall not include the
distribution in the present value or such account.
(j) In any case where an individual is a Non-Key Employee
with respect to an applicable plan but was a Key Employee with respect
to such plan for any prior Plan Year, any accrued benefit and any
account of such Employee will be altogether disregarded. For this
purpose, to the extent that a Key Employee is deemed to be a Key
Employee if he met the definition of Key Employee within any of the four
preceding Plan Years, this provision will apply following the end of
such period of time.
(k) Further, in making such determination, if any
individual has not performed any services for the Employer at any time
during the five year period ending on the Determination Date, such
present value or such account will be altogether disregarded.
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<PAGE> 60
15.7 Top-Heavy Vesting Schedule
If the Plan is a Top-Heavy Plan in a Plan Year, the
non-forfeitable percentage of the accrued benefit for such Plan Year of a
Participant who is credited with an Hour of Service in such Plan Year shall be
determined in accordance with the following schedule:
<TABLE>
<CAPTION>
YEARS OF SERVICE NON-FORFEITABLE PERCENTAGE
---------------- --------------------------
<S> <C>
0 0%
1 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
</TABLE>
If the Plan ceases to be Top Heavy, each Participant, regardless
of service, shall have a non-forfeitable accrued benefit not less than the value
of his Accumulation Account attributable to his non-forfeitable accrued benefit
determined as of the last day of the last Plan Year in which the Plan was a
Top-Heavy Plan.
If the Plan ceases to be Top-Heavy, each Participant with three
or more Years of Service (determined as of the first day of the Plan Year in
which the Plan ceases to be Top-Heavy) shall have their vested interest in their
Accumulation Account determined in accordance with the schedule contained in
this Section 15.7 or Section 6.2, whichever produces the greater vested
percentage.
If the Plan ceases to be Top-Heavy, each Participant with three
or more Years of Service (determined as of the first day of the Plan Year in
which the Plan ceases to be Top-Heavy) shall have the right to have their vested
accrued benefit determined in accordance with the schedule contained in this
Section 15.7 or Section 6.2. Each such Participant shall have the right to elect
the applicable schedule in accordance with regulations issued under Section
411(a)(10) of the Code.
ARTICLE XVI
MISCELLANEOUS
16.1 Voluntary Plan
The Plan is purely voluntary on the part of the Employer and
neither the establishment of the Plan nor any amendment thereof nor the creation
of any fund or account, nor the payment of any benefits shall be construed as
giving any person a legal or equitable right as against the Employer, the
Trustee or the Committee unless the same shall be specifically provided for in
this Plan or conferred by affirmative action of the Committee or the Employer in
53
<PAGE> 61
accordance with the terms and provisions of this Plan. Nor shall such actions be
construed as giving any Employee or Participant the right to be retained in the
service of the Employer. All Employees and/or Participants shall remain subject
to discharge to the same extent as though this Plan had not been established.
16.2 Nonalienation of Benefits
Participants and their Beneficiaries shall be entitled to all the
benefits specifically set out under the terms of the Plan, but said benefits or
any of the property rights therein shall not be assignable or distributable to
any creditor or other claimant of such Participant. A Participant shall not have
the right to anticipate, assign, pledge, accelerate or in any way dispose of or
encumber any of the monies or benefits or other property which may be payable or
become payable to such Participant or his Beneficiary. The preceding sentence
shall also apply to the creation, assignment, or recognition of a right to any
benefit payable with respect to Participant pursuant to a domestic relations
order, unless such order is determined to be a qualified domestic relations
order, as defined in Section 414(p) of the Code and determined pursuant to
Section 11.2(h).
16.3 Inability to Receive Benefits
If the Committee receives evidence that (a) a person entitled to
receive any payment under the Plan is a minor or physically or mentally
incompetent to receive payment and to give a valid release therefor, and (b)
another person or an institution is then maintaining or has custody of such
person, and no guardian, committee or other representative of the estate of such
person has been duly appointed by a Court of competent jurisdiction, such
payment may be made to such other person or institution referred to in (b)
above. The release to such other person or institution shall be a valid and
complete discharge for the payment.
16.4 Lost Participants
If the Committee is unable, after reasonable and diligent effort,
to locate a Participant or Beneficiary who is entitled to payment under the
Plan, the payment due such person shall become a forfeiture; provided, however,
that if the Participant or Beneficiary later files a claim for his benefit it
shall be reinstated. Notification by certified or registered mail to the last
known address of the Participant or Beneficiary shall be deemed a reasonable and
diligent effort to locate such person.
16.5 Limitation of Rights
Nothing in the Plan expressed or implied is intended or shall be
construed to confer upon or give to any person, firm or association other than
the Employer, the Participants and their successors in interest any right,
remedy or claim under or by reason of this Plan.
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<PAGE> 62
16.6 Invalid Provisions
In case any provision of this Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts of this Plan, but this Plan shall be construed and enforced as
if said illegal and invalid provisions had never been inserted herein.
16.7 One Plan
This Plan may be executed in any number of counterparts, each of
which shall be deemed an original and said counterparts shall constitute but one
and the same instrument and may be sufficiently evidenced by any one
counterpart.
16.8 Limitation on Beneficial Interest
No Participant shall have any interest in the Fund, policy, or
any asset of the Trust except as otherwise specifically provided herein.
16.9 Rollover to Another Qualified Plan
If a Participant shall be entitled to receive benefits under this
Plan, and the Participant is concurrently, or shall be subsequently, covered
under another retirement plan qualified pursuant to Section 401(a) of the Code,
the Trustee under direction from the Committee may transfer the Participant's
benefits under this Plan directly to the Trustee of the other plan, if the
following elements are satisfied:
(a) The Trustee of the other Plan shall be authorized to
accept the benefits under this Plan;
(b) The Participant's transferred assets shall be
maintained in a separate account in the other plan; and
(c) The Participant's transferred assets shall not be
forfeitable or reduce in any way the obligation of the new employer.
16.10 Rollover to Participant's Individual Retirement Account
A Participant, or his Beneficiary, who becomes eligible to
receive a lump sum distribution may request that the Committee cause the entire
balance of the distributable amount to be transferred on his behalf to an
individual retirement account, an individual retirement annuity, a qualified
Trust, or to an annuity plan. The amount so transferred from the Trust is herein
called a Rollover. Any Rollover to the Trust shall be fully vested but need not
be segregated from the remainder of the Participant's accounts unless the
Committee otherwise directs.
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<PAGE> 63
16.11 Governing Law
The Plan shall be governed by and construed in accordance with
the Federal laws governing employee benefit plans qualified under the Code and
in accordance with the laws of the State of California to the extent such laws
are not preempted by the aforementioned federal laws.
16.12 Application of Plan Terms
Words in the masculine include the feminine gender, words in a
singular, or plural, shall be construed as plural or singular as applicable.
16.13 Multiple Employer and Associated Employer Adoption
This Plan and Trust agreement, with the approval of the Employer,
may be adopted and joined by any successor, Affiliated Employer, or any other
business enterprise, by execution of a declaration of joinder in a form
acceptable to the Employer and Trustee.
16.14 Participant Information
All persons will promptly furnish information and proofs to the
Plan Administrator as to any and all facts which the Plan Administrator may
reasonably require concerning any person affected by the terms of the Plan
(including date of birth and satisfactory proof, by personal endorsement on
benefit checks or otherwise, of the survival of any payee to the due date of any
benefit payment).
Each terminated Participant will inform the Plan Administrator of
his changes of address. All notices to any person from the Plan Administrator
will be sent to the last known address of such person and there will be no
further obligation to such person in the event any such communication is not
received by the person.
If any fact relating to a Participant or any other payee has been
misstated, the correct fact may be used to determine the amount of benefit
payable to him or to such other payee. If overpayments or underpayments have
been made because of such incorrect statement, the amount of any future payments
may be appropriately adjusted.
56
<PAGE> 64
This Employee Stock Ownership and Salary Savings Plan is executed
on this 30th day of June, 1994.
Adoption by Westcorp, Inc.
By: /s/ Joy Schaefer
-----------------------------------------------
Title: Chief Financial Officer
-----------------------------------------------
By: [Corporate Seal]
-----------------------------------------------
Title:
-----------------------------------------------
By:
-----------------------------------------------
Title:
-----------------------------------------------
57
<PAGE> 1
Exhibit 4.2
AMENDMENT
TO THE
WESTCORP
EMPLOYEE STOCK OWNERSHIP AND SALARY SAVINGS PLAN
WHEREAS, Section 12.01 of the Westcorp Employee Stock Ownership and Salary
Savings Plan (the "Plan") provides that the Plan may be amended by action of the
Board of Directors;
NOW, THEREFORE, the Plan shall be amended as follows:
1. Article I shall be amended by replacing "5 consecutive one year Breaks
in Service" in subparagraph (c) under "Year of Service" with the
following:
"the greater of 5 or the aggregate number of Years of Service completed
as of such Separation From Service, consecutive one year Breaks in
Service".
2. Section 2.03 of the Plan shall be amended by adding the following to the
last paragraph of the Section:
"Notwithstanding the foregoing, if an Employee completed the
requirements of Sections 2.01 and 2.02, but his employment terminated
prior to the Entry Date and is subsequently rehired, he shall commence
participation immediately."
3. Section 3.10(b) of the Plan shall be amended by restating the Section in
its entirety as follows:
"(b) All contributions to this made by the Employer are conditioned
upon the Plan's initial qualification. If the Commissioner of
Internal Revenue determines that the Plan does not qualify, then
the contribution made incident to the initial qualification by
the Employer shall be returned within one year after the date of
denial of initial qualification of the Plan; provided that the
application for initial qualification is made by the time
prescribed by law for filing the Employer's tax return for the
taxable year in which the Plan is adopted, or such later date as
the Secretary of the Treasury may prescribe."
4. Section 3.05 shall be amended by adding the following as the second
paragraph of Section 3.05(a):
"In the event that this Plan is aggregated with one or more other plans
so that this Plan or such other plan satisfies the requirements of Code
Sections 401(m), 401(a)(4) or 410(b), then this Section shall be applied
by determining the actual contribution percentages of Employees as if
all such plans were a single plan. If
1
<PAGE> 2
this Plan is permissively aggregated with one or more other plans for
purposes of Code Section 401(m), then such aggregated plans must satisfy
Code Sections 401(a)(4) and 410(b) as though they were a single plan."
5. Section 3.05 of the Plan shall be amended by adding the following
paragraphs at the end of Section 3.05(a):
"The actual contribution percentage of a Participant who is a Highly
Compensated Employee shall be determined by treating all plans of the
Employer which are subject to Code Section 401(m) and under which the
Highly Compensated Employee participates (other than those plans that
may not be permissively aggregated) as a single plan.
For purposes of determining the actual contribution percentage of a
Participant who is a five-percent owner or one of the ten most
highly-paid Highly Compensated Employees, the contributions and
Compensation of such Participant shall include the contributions and
Compensation for the Plan Year of members of the Family of such Highly
Compensated Employees. Family members, with respect to Highly
Compensated Employees, shall be disregarded as separate Employees in
determining the average of the actual contribution percentages, both for
Participants who are Highly Compensated Employees and for all other
Participants. "Family" members of an Employee include the spouse and
lineal ascendants or descendants of the Employee and the spouses of such
lineal ascendants and descendants."
6. Section 3.13 of the Plan shall be amended by adding the following as the
third paragraph of Section 3.13:
"In the event that this Plan is aggregated with one or more other plans
so that this Plan or such other plan satisfies the requirements of Code
Sections 401(k), 401(a)(4) or 410(b), then this Section shall be applied
by determining the deferral ratios of Employees as if all such plans
were a single plan. If this Plan is permissively aggregated with one or
more other plans for purposes of Code Section 401(k), then such
aggregated plans must satisfy Code Sections 401(a)(4) and 410(b) as
though they were a single plan.
The deferral ratio of a Participant who is a Highly Compensated Employee
shall be determined by treating all plans of the Employer which are
subject to Code Section 401(k) and under which the Highly Compensated
Employee participates (other than those plans that may not be
permissively aggregated) as a single plan.
For purposes of determining the deferral ratio of a Participant who is a
five-percent owner or one of the ten most highly-paid Highly Compensated
Employees, the Salary Savings Contributions and Compensation of such
Participant shall include the Salary Savings Contributions and
Compensation for the Plan Year of members of the Family of such Highly
Compensated Employees. Family members, with respect to Highly
Compensated Employees, shall be
2
<PAGE> 3
disregarded as separate Employees in determining the Actual Deferral
Percentage, both for Participants who are Highly Compensated Employees
and for all other Participants. "Family" members of an Employee include
the spouse and lineal ascendants or descendants of the Employee and the
spouses of such lineal ascendants and descendants."
7. Article XIII of the Plan shall be amended by adding the following
Section 13.18:
"13.18 Multiple Use Test
Each Plan Year the Plan shall satisfy the multiple use
test of Regulation Section 1.401(m)-2, the provisions of
which are hereby incorporated into this Plan by reference
as provided in Regulation Section 1.401(m)-2(b).
The Committee shall reduce either (but not both of) the
Actual Deferral Percentage or the actual contribution
percentage (as defined in Regulation 1.401(m)-I(f)(1)) for
the Plan Year with respect to all Highly Compensated
Employees for the Plan Year in order to satisfy the
multiple use test."
8. Article I of the Plan shall be amended by making the following changes
to the definition of "Highly Compensated Employee":
In the first sentence, replace "current or preceding Plan Year" with
"current Plan Year or the 12-month period immediately preceding the
current Plan Year";
In subparagraph (d), replace 150 percent of the amount in effect under
Section 415(c)(1)(A)" with "50 percent of the amount in effect under
Code Section 415(b)(1)(A)";
In the next-to-last paragraph, replace "without regard to" with
"including"; and
Add the following at the end of the Section:
"For purposes of this paragraph, "Employer" includes any entities
required to be aggregated with the Employer under Code Sections 414(b),
(c), (m) and (o).".
9. Section 4.05(a) of the Plan shall be amended by adding the following at
the end of the Section:
"If as a result of the allocation of Forfeitures to a Participant's
Account for a Limitation Year there is an excess Annual Addition, the
excess will be disposed of as follows:
If the Participant is covered by the Plan at the end of the
Limitation Year, the excess amount in the Participant's Account
shall be used to reduce
3
<PAGE> 4
Employer contributions (including any allocation of Forfeitures)
for such Participant in the next Limitation Year and each
succeeding Limitation Year, if necessary.
If the Participant is not covered by the Plan at the end of the
Limitation Year, the excess amount in the Participant's Account
shall be held unallocated in a suspense account. The suspense
account will be used to reduce Employer contributions (including
any allocation of Forfeitures) for such Participant in the next
Limitation Year and each succeeding Limitation Year, if
necessary. If a suspense account is in existence at any time
during a Limitation Year pursuant to this paragraph, it will not
participate in the allocation of investment gains and losses;
moreover, all amounts in the suspense account must be allocated
and reallocated to Participants' Accounts before any Employer
contributions may be made to the Plan for that Limitation Year.
Excess amounts may not be distributed to Participants or former
Participants."
10. Section 7.01(d) of the Plan shall be amended by adding the following at
the end of the Section:
"If the Participant's vested Accumulation Account exceeded $3,500 at the
time of a prior distribution, then such Participant's vested
Accumulation Account shall be deemed to exceed $3,500."
11. Section 7.01(c)(1) of the Plan shall be amended in its entirety as
follows:
"Unless an optional form of benefit is selected pursuant to a qualified
election within the 90-day period ending on the annuity starting date, a
married Participant's vested Accumulation Account will be applied to the
purchase of an qualified joint and survivor annuity, subject to the
requirements of Section 7.06. The Participant may elect to have such
annuity distributed upon attainment of the earliest retirement age under
the Plan."
12. Article VII of the Plan shall be amended by adding the following Section
7.06:
"7.06 Joint and Survivor Annuity Requirements
(a) The provisions of this Section 7.06 shall apply to any
Participant who is credited with at least one Hour Of
Service with the Employer on or after August 23, 1984.
(b) Unless an optional form of benefit has been selected
within the election period pursuant to a qualified
election, if a Participant dies before the annuity
starting date, then his vested Accumulation Account shall
be applied toward the purchase of an annuity for the life
of the surviving spouse. The surviving spouse may elect to
have
4
<PAGE> 5
such annuity distributed within a reasonable period after
the Participant's death.
(c) For purposes of Section 7.01(c)(1) and for this Section
7.06, the following definitions shall apply:
(i) "Election period" means the period which begins on
the first day of the Plan Year in which the
Participant attains age 35 and ends on the date of
the Participant's death. If a Participant separates
from service prior to the first day of the Plan
Year in which age 35 is attained, with respect to
the Accumulation Account balance as of the date of
separation, the election period shall begin on the
date of separation.
(ii) "Earliest retirement age" means the earliest date
under the Plan on which the Participant could elect
to receive retirement benefits.
(iii) "Qualified election" means a waiver of a qualified
joint and survivor annuity or qualified
preretirement survivor annuity (as described in
Section 7.06(b)). Such waiver shall not be
effective unless (a) the Participant's spouse
consents in writing to the waiver, (b) the waiver
designates a specific beneficiary, including any
class of beneficiaries or any contingent
beneficiaries, which may not be changed without
spousal consent (or the spouse expressly permits
designations by the Participant without any further
spousal consent), (c) the spouse's consent
acknowledges the effect of the waiver and (d) the
spouse's consent is witnessed by a Plan
representative or a notary public. Additionally,
such a waiver shall not be effective unless the
waiver designates a form of benefit payment which
may not be changed without spousal consent (or the
spouse expressly permits designations by the
Participant without any further spousal consent).
If it is established to the satisfaction of a Plan
representative that there is no spouse or that the
spouse cannot be located, the waiver will be deemed
a qualified election.
Any consent by a spouse obtained under this
provision (or establishment that the consent of a
spouse may not 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 such spouse must
acknowledge that the spouse has the right to limit
consent to a specific beneficiary and a specific
form of benefit, where applicable, and that the
spouse voluntarily elects to relinquish either or
both of such rights. A revocation
5
<PAGE> 6
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
such revocations shall not be limited. No consent
obtained under this provision shall be valid unless
the Participant has received notice as provided
below.
(iv) "Qualified joint and survivor annuity" means an
immediate annuity for the life of the Participant
with a survivor annuity for the life of the spouse
which is 50% of the amount of the annuity which is
payable during the joint lives of the Participant
and the spouse and which is the amount of benefit
which can be purchased with the Participant's
vested Accumulation Account.
(v) For purposes of this Section, a former spouse will
not be treated as a spouse or surviving spouse and
a current spouse will not be treated as a spouse or
surviving spouse to the extent provided under a
qualified domestic relations order as described in
Code Section 414(p).
(vi) "Annuity starting date" means the first day of the
first period for which an amount is payable as an
annuity or any other form.
(d) The Committee shall no less than 30 days and no more than
90 days prior to the annuity starting date provide each
participant a written explanation of the terms and
conditions of a qualified joint and survivor annuity, the
Participant's right to make and the effect of an election
to waive the qualified joint and survivor annuity form of
benefit the rights of the Participant's spouse and the
right to make and the effect of a revocation of a previous
election to waive the qualified joint and survivor
annuity.
(e) In the case of a qualified preretirement survivor annuity
as described in Section 7.06(b), the Committee shall
provide each Participant within the applicable period for
such Participant a written explanation of the qualified
preretirement survivor annuity in such terms and in such
manner as would be comparable to the explanation described
in Section 7.06(d).
The applicable period for a Participant is whichever of
the following periods ends last: (i) the period beginning
with the first day of the Plan Year in which the
Participant attains age 32 and ending with the close of
the Plan Year preceding the Plan Year in which the
Participant attains age 35; or (ii) the two-year period
beginning one year before the individual becomes a
Participant and ending one
6
<PAGE> 7
year after such event. If a Participant separates from
service before the Plan Year in which age 35 ) is
attained, notice shall be provided within the two-year
period beginning one year prior to separation and ending
one year after separation. If such a Participant
thereafter returns to employment with the Employer, the
applicable period for the Participant shall be
redetermined."
13. Article I of the Plan shall be amended by adding "(his Normal Retirement
Age)" after "65" in the definition of "Normal Retirement Date." Sections
6.01 and 6.02 of the Plan shall also be amended by replacing each
instance of "Normal Retirement Date" with "Normal Retirement Age".
14. Section 15.02 of the Plan shall be amended by adding the following to
the first paragraph of the Section after the sentence which begins "The
Minimum Contribution Percentage will be reduced...":
"For a Plan Year for which the Minimum Contribution Percentage is less
than three percent, the contributions for a Key Employee used to
determine such percentage shall include any Salary Savings Contributions
made on behalf of such Key Employee for the Plan Year."
15. Section 15.03 of the Plan shall be restated in its entirety as follows:
"For purposes of this Section 15, "Compensation" for a Plan Year means
wages, tips and other compensation otherwise required to be reported on
Form W-2, determined without regard to any rules under Code Section
3401(a) that limit the remuneration included in wages based on the
nature or location of the employment or the services to be performed.
Compensation shall include amounts contributed by the Employer pursuant
to a salary reduction agreement which are excludable from the Employee's
gross income under Code Sections 125, 402(e)(3), 402(h)(1)(B) or
403(b)."
16. Article I of the Plan shall be amended by replacing the first occurrence
of "commissions" with "35% of commissions" in the definition of
"Earnings".
17. Section 13.14(a) of the Plan shall be amended by adding the following to
the end of the Section:
"Excess contributions of Participants who are subject to the family
aggregation rules shall be allocated among the family members in
proportion to the Salary Savings Contributions of each family member
that is combined to determine the combined deferral ratio."
Section 13.14 of the Plan shall be further amended by adding the
following to the end of the Section:
7
<PAGE> 8
"The amount of excess contributions to be distributed to a Participant
for a Plan Year pursuant to this Section shall be reduced by excess
deferrals previously distributed to the Participant for his taxable year
ending with or within the Plan year. The amount of excess deferrals to
be distributed to a Participant for his taxable year, shall be reduced
by excess contributions previously distributed to the Participant for
the Plan Year beginning with or within the taxable year."
18. Article I shall be amended by adding the following definition:
"Qualified Non-elective Contribution:
For purposes of Section 3.13, "qualified non-elective contribution"
means a contribution made by the Employer that is not a Matching
Employer Contribution nor an ESOP contribution which is one hundred
percent (100%) vested and nonforfeitable when made, which a Participant
may not elect to have paid in cash instead of being contributed to the
Plan and which may not be distributed from the Plan prior to the
Separation from Service or death of the Participant or the termination
of the Plan without establishment of a successor plan."
19. Section 3.13 shall be amended by adding the following at the end of the
Section: "Any qualified non-elective contributions for a Plan Year shall
be contributed to the Trust no later than 12 months following the close
of the Plan Year, shall be allocated to Participants' Accounts as of the
last day of the Plan Year and such allocation shall not be contingent
upon any Employee's participation in the Plan or performance of any
services after such date."
20. Article I of the Plan shall be amended by changing the last instance of
"Westcorp, Inc." to "Westcorp" in the definition of "Plan" and each
instance in the definitions of "Board", "Company Stock" and "Employer".
Similarly, the signature page shall provide for adoption of the Plan by
"Westcorp" instead of "Westcorp, Inc.".
8
<PAGE> 9
Except as herein modified, all the terms, conditions and provisions of the
Westcorp Employee Stock Ownership and Salary Savings Plan are hereby ratified,
confirmed and carried forward.
IN WITNESS WHEREOF, Westcorp has caused this Amendment to be executed by its
duly authorized officer at ____________________, California, this _____day of
_______________, 19___.
WESTCORP
By: _________________________
9
<PAGE> 1
Exhibit 4.3
AMENDMENT NO. 2
TO THE
WESTCORP
EMPLOYEE STOCK OWNERSHIP AND SALARY SAVINGS PLAN
WHEREAS, Section 12.01 of the Westcorp Employee Stock Ownership and Salary
Savings Plan (the "Plan") provides that the Plan may be amended by action of the
Board of Directors;
NOW, THEREFORE, the Plan shall be amended as follows:
1. Article I shall be amended by replacing "5 consecutive one year Breaks
in Service" in subparagraph (c) under "Year of Service" with the
following:
"the greater of 5 or the aggregate number of Years of Service completed
as of such Separation From Service, consecutive one year Breaks in
Service".
2. Section 2.03 of the Plan shall be amended by adding the following to the
last paragraph of the Section:
"Notwithstanding the foregoing, if an Employee completed the
requirements of Sections 2.01 and 2.02, but his employment terminated
prior to the Entry Date and is subsequently rehired, he shall commence
participation immediately."
3. Section 3.10(b) of the Plan shall be amended by restating the Section in
its entirety as follows:
"(b) All contributions to this made by the Employer are conditioned
upon the Plan's initial qualification. If the Commissioner of
Internal Revenue determines that the Plan does not qualify, then
the contribution made incident to the initial qualification by
the Employer shall be returned within one year after the date of
denial of initial qualification of the Plan; provided that the
application for initial qualification is made by the time
prescribed by law for filing the Employer's tax return for the
taxable year in which the Plan is adopted, or such later date as
the Secretary of the Treasury may prescribe."
<PAGE> 2
Except as herein modified, all the terms, conditions and provisions of the
Westcorp Employee Stock Ownership and Salary Savings Plan are hereby ratified,
confirmed and carried forward.
IN WITNESS WHEREOF, Westcorp has caused this Amendment to be executed by its
duly authorized officer at ____________________, California, this _____day of
_______________, 19_____.
WESTCORP
By: _________________________
<PAGE> 1
EXHIBIT 5
LAW OFFICES
MITCHELL, SILBERBERG & KNUPP LLP
A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
TRIDENT CENTER
11377 WEST OLYMPIC BOULEVARD
LOS ANGELES, CALIFORNIA 90064-1683
TELEPHONE: (310) 312-2000
FAX: (310) 312-3100
FILE NO: 27426-26
DOC. NO: Opinion.ltr
April 30, 1998
Westcorp
23 Pasteur Road
Irvine, California 92713-9762
Re: Registration Statement on Form S-8
Dear Sirs:
You have requested the opinion of this firm with respect to
certain matters in connection with the Registration Statement on Form S-8
proposed to be filed by you under the Securities Act of 1933, as amended (the
"Securities Act"), for the purpose of registering the offer and sale of up to
200,000 additional authorized but unissued shares (the "Shares") of Common
Stock, par value $1.00 per share (the "Common Stock"), of Westcorp (the
"Company") issuable under the Company's Employee Stock Ownership and Salary
Savings Plan (the "Plan"). An aggregate of 200,000 shares of Common Stock were
previously registered by a Registration Statement on Form S-8 (File No.
333-11039) filed on August 29, 1996.
For the purpose of rendering the opinions contained in this
opinion letter, we have examined copies of:
(a) The Plan as amended and restated, and
executed on June 30, 1994;
(b) Amendments to the Plan adopted by the
Executive Committee of the Board of Directors of the Company on August
22, 1995 and July 30, 1996 (the "Amendments").
(b) Resolutions of the Board of Directors of the
Company adopting the Plan as amended and restated;
(c) Resolutions of the Executive Committee of the
Board of Directors of the Company adopting the Amendments;
(c) The Registration Statement; and
<PAGE> 2
Westcorp
April 30, 1998
Page 2
(d) Such other corporate records and other
instruments as we have deemed necessary or appropriate.
In the course of our examinations and investigations, we have assumed the
genuineness of all signatures on the original documents, and the due execution
and delivery of all documents requiring due execution and delivery for the
effectiveness thereof.
Based upon and subject to the foregoing, and in reliance
thereon, and subject to the assumptions set forth herein, it is our opinion
that the issuance of the Shares is duly authorized and when issued, delivered
and paid for in accordance with the terms of the Plan, the Shares will be
legally issued, fully paid and nonassessable.
We consent to the filing of this opinion with the Registration
Statement. In giving our consent, we do not hereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act or the rules or regulations thereunder. This opinion letter is
given as of the date hereof and we assume no obligation to advise you of any
change that may hereafter be brought to our attention.
Very truly yours,
/s/ MITCHELL, SILBERBERG & KNUPP LLP
MITCHELL, SILBERBERG & KNUPP LLP
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 333-_______) pertaining to the Westcorp Employee Stock
Ownership and Salary Savings Plan, as amended, of our reports (a) dated February
9, 1998 with respect to the consolidated financial statements of Westcorp
included in its Annual Report (Form 10-K) for the year ended December 31, 1997
and (b) dated May 31, 1997, with respect to the financial statements and
schedules of the Westcorp Employee Stock Ownership and Salary Savings Plan
included in the Plan's Annual Report on Form 11-K for the year ended
December 31, 1996, both filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Los Angeles, California
April 28, 1998
