<PAGE> 1
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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934. [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934. [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM _______________ TO _______________.
COMMISSION FILE NO. 0-132
THE REYNOLDS AND REYNOLDS COMPANY
(Exact name of registrant as specified in its charter)
OHIO 31-0421120
(State of Incorporation) (IRS Employer Identification No.)
115 SOUTH LUDLOW STREET
DAYTON, OHIO 45402
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (513) 443-2000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
CLASS A COMMON SHARES PAR VALUE $.625 PER SHARE NEW YORK STOCK EXCHANGE
(Title of class) (Exchange on which registered)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in PART III
of this Form 10-K or any amendment to this Form 10-K. X
---
The aggregate market value of the Class A Common Shares held by
non-affiliates of the registrant, as of December 1, 1995, was $1,499,427,122.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of December 1, 1995:
Class A Common Shares: 41,028,604 (exclusive of 5,169,958 Treasury shares)
Class B Common Shares: 10,000,000
DOCUMENTS INCORPORATED BY REFERENCE
Part III -- Portions of Proxy Statement for 1996 Annual Meeting of Shareholders.
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PART I
(DOLLARS IN THOUSANDS)
ITEM 1. BUSINESS
GENERAL
The Reynolds and Reynolds Company (the "Company"), an Ohio corporation,
incorporated in 1889, operates principally in two business segments -- computer
systems and business forms.
COMPUTER SYSTEMS
The computer systems segment offers its products and services to the
automotive and healthcare markets.
The Company markets turnkey information management systems and
professional services primarily to automobile dealers. The hardware sold is
purchased from computer hardware manufacturers which specialize in platforms for
the UNIX operating system. With a few minor exceptions, the application software
products are owned by the Company and licensed to users. Some of the software
products offered include standard programs for accounting, payroll, vehicle and
parts inventory control and related billing, service merchandising, scheduling
and related billing, leasing, finance and insurance, parts and vehicle locators
and manufacturer communications. Also offered are applications linking
dealerships to credit bureaus to verify the credit worthiness of prospective
customers, process and approve credit documentation and electronically process
vehicle registrations in three states.
Hardware maintenance, software support and training and other
professional services are integral parts of the Company's turnkey approach to
marketing computer systems. These services are provided by service and support
personnel located in nearly 125 offices in principal cities in the United States
and Canada.
The Company also markets computer products and services directly to
automobile manufacturers.
With the November, 1994 acquisition of PD Medical Systems, and the May,
1995 acquisition of Salcris Corporation, the Company expanded its array of
turnkey computer systems offered to physician groups and integrated healthcare
delivery networks. Those acquisitions have been combined with the former
subsidiary, NMC Services, and together they now operate as Reynolds and Reynolds
Healthcare Systems. (See Management Discussion and Analysis beginning on page
8.)
FINANCING SUBSIDIARIES -- Various subsidiaries provide financing
primarily for the Company's computer systems through non-cancellable finance
leases.
Financial information about industry segments is included in Notes 4
and 10 on pages 31 and 38, respectively.
BUSINESS FORMS
The business forms segment offers its products and services to
value-seeking customers in the automotive, healthcare and general business
markets.
In the automotive market, the Company offers its products and services
to all departments of automobile, truck and recreational vehicle dealerships
including sales, parts, repair service, accounting, finance and insurance. The
Company also markets its products and services to related-automotive businesses
such as repair garages, auto parts stores, service stations and body shops.
Products and services include standard and custom business forms (including
dealer image products), forms management services, promotional items, custom
designed filing systems, dealership customer satisfaction measurement and
management services, customer prospecting services, and promotional mailing
services.
In the healthcare market, the Company offers standard and custom forms
and forms management services to hospitals and large healthcare organizations.
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In the general business market, the Company offers a wide variety of
paper-based and electronic business document solutions to value-seeking
businesses. Solutions offered include standard and custom business forms,
electronic business forms, on-demand printing services, checks, labels, mailers,
stationery, envelopes and tickets. Many of these business documents incorporate
a broad range of security features to help deter fraudulent document
reproduction and counterfeiting. The Company also offers a wide variety of forms
management solutions to help customers improve their productivity: forms survey
and analysis, inventory management and reporting, cost center reporting, low
stock reporting, distribution services and process work flow reengineering
services. Additionally, pegboard accounting systems are sold to smaller
businesses through a network of office supply dealers and independent forms
distributors.
The business forms segment operates 13 manufacturing facilities in the
United States and Canada.
NEW PRODUCTS
The Company continued to enhance its computer systems product line for
automobile dealers. Several acquisitions enhance the Company's service offerings
of consulting services. One offering is designed to improve automotive dealers'
abilities to effectively sell vehicles while the other provides outsourced
services to help dealers effectively market themselves to prospective customers
for vehicles and services. By acquisition, the Company also became the leading
source of automotive information on the Internet for the car-buying public.
These acquisitions strengthen the Company's ability to help its clients attract
and retain customers and to market their products and services to a wider
audience.
The Company enhanced its document solutions capability by expanding its
security features offering, strengthening its electronic forms capabilities,
enhancing on-demand printing capabilities and launching its process
reengineering offering. A universally accepted finance contract has been
developed for automotive dealerships and is being marketed.
Additionally, the Company has expanded its service offering by
launching customer satisfaction measurement and management services, customer
prospecting services and promotional mailing services primarily for automotive
dealerships.
In healthcare, the Company expanded its product line with two strategic
acquisitions which added physician information systems targeted at complementary
market segments. The healthcare systems division also completed a strategic
remarketing agreement to offer a computerized medical records product developed
by Medicalogic, Inc.
RAW MATERIALS
An adequate supply of paper products is essential to the Company's
business forms segment. The Company obtains those products from a variety of
sources and, historically has not experienced any difficulty in obtaining them.
An adequate supply of paper is expected for the foreseeable future and is not
anticipated to adversely impact the Company's ability to fully meet the needs of
customers.
Computer hardware is essential to the Company's computer systems
segment. This hardware comes from a variety of sources, principally Silicon
Graphics, Inc. in the automotive sector and Hewlett Packard and IBM in the
healthcare sector. Historically, the Company has experienced an ample supply.
In the opinion of the Company, loss of one or more if its present
suppliers of either paper products or computer hardware would not have a
significant impact on the Company's operations because of the general
availability of alternate sources.
PATENTS, TRADEMARKS AND RELATED RIGHTS
Except as described below, the Company does not have any patents,
trademarks, licenses, franchises or cocessions which are material to an
understanding of the Company's business.
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The Company's trademark REYNOLDS + REYNOLDS(R) is associated with many
goods and services provided by the Company. In the computer systems segment, the
Company has a number of distribution and licensing arrangements with equipment
and software vendors relating to certain components of Reynolds' products,
including a distribution arrangement for UNIX operating systems (a product and
trademark of Bell Laboratories) and MS-DOS and Windows operating systems
(products and trademarks of Microsoft Corporation). Such arrangements are in the
aggregate, but not individually (except for the operating systems), material to
Reynolds' business.
COMPETITION
Both in the provision of computer systems products and services and in
the manufacture and sale of business forms, the Company is subject to
competition from a number of other business organizations, some of which have
substantially greater assets and financial resources than the Company. The
Company believes that it competes by providing high value products and services
that meet customers changing needs and which utilize current technology to
provide additional value and to improve price and performance. The Company has
specialized in selected markets and has emphasized service and long-term
relationships to meet customer needs more effectively. While no single customer
represents 5% or more of the revenues of either principal business segment, the
Company does have several significant customers whose loss, in the aggregate,
could be material to the business forms segment. The Company believes that the
likelihood of losing all of such customers is remote.
BACKLOG
COMPUTER SYSTEMS: Units in the backlog consist of the number of unbilled
computer systems or terminals which have been approved but not yet shipped or
for which signed contracts are pending credit investigation. The dollar value of
the products backlog as of December 1, 1995, is estimated to be $24,861
including software license fees, compared with $36,626 at December 1, 1994.
BUSINESS FORMS: The Company manufactures several thousand different types of
standard and custom business forms. The dollar value of the printing backlog as
of December 1, 1995, is estimated to be $19,406 compared with $17,263 at
December 1, 1994.
RESEARCH AND DEVELOPMENT
During fiscal 1995, the Company continued its research and development
of in-house computer systems, terminal products, electronic image-based systems
and printing plant automation. In addition to those programs, the Company also
had several other development projects of lesser magnitude. Expenditures for all
such activities were approximately $21,000 in 1995, $18,100 in 1994 and $12,400
in 1993.
ENVIRONMENTAL PROTECTION
The Company believes that it is in substantial compliance with all
applicable federal, state and local statutes concerning environmental
protection. The Company has not experienced any material costs in this regard.
The U.S. Environmental Protection Agency has designated the Company as one of a
number of potentially responsible parties under the Comprehensive Environmental
Response, Compensation and Liability Act at three environmental remediation
sites. (See Note 11, pages 39 and 40.)
EMPLOYEES
On December 1, 1995, the Company and its subsidiaries had 6,057
employees. It is party to a number of collective bargaining agreements with
union locals which represent an aggregate of approximately 332 employees at its
Dayton, Ohio, Hagerstown, Maryland, North Hollywood, California and Lebanon,
Indiana plants.
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ITEM 2. PROPERTIES
As of September 30, 1995, the Company operated twelve forms
manufacturing plants in the United States and one in Canada encompassing
approximately 1.4 million square feet. Of those, more than 1 million square feet
are owned outright by the Company. The remaining .4 million square feet are
leased. Corporate headquarters and the respective headquarters of the business
forms segment and the computer systems segment are located in Dayton, Ohio in
several buildings owned by the Company which contain more than one half million
square feet. In addition, the Company leases approximately 125 sales offices and
more than sixteen warehouses throughout the country. The Company believes its
facilities are suitable and adequate for its current business needs.
The Company has no encumbrances securing long-term debt as of September
30, 1995, on its owned facilities.
Substantially all printing and other equipment used in the manufacture
of business forms and systems is owned by the Company and its subsidiaries.
The Company believes its properties are in good condition and adequate
for current activities.
ITEM 3. LEGAL PROCEEDINGS
Relevant information appears in Note 11 to the Financial Statements on
pages 39 and 40.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
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PART II
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's Class A Common Shares are listed on the New York Stock
Exchange. There is no principal market for the Class B Common Shares. The
Company also has an authorized class of 60 million preferred shares with no par
value. The Company currently has no agreements or commitments with respect to
the sale or issuance of the preferred shares.
Information on market prices and dividends is set forth below:
CLASS A COMMON SHARES SALE PRICES*
<TABLE>
<CAPTION>
1995 1994
---- ----
Fiscal Quarter High Low High Low
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
First 25.88 22.25 $22.81 $19.06
Second 28.50 23.25 $24.63 $21.19
Third 30.63 26.00 $25.38 $19.88
Fourth 36.38 30.25 $26.50 $22.50
</TABLE>
CASH DIVIDENDS PAID*
<TABLE>
<CAPTION>
Class A Common Class B Common
-------------- --------------
Months 1995 1994 1995 1994
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
January $.10 $.075 $.005 $.00375
April $.10 $.085 $.005 $.00425
June $.10 $.085 $.005 $.00425
September $.10 $.085 $.005 $.00425
</TABLE>
* Reflects the two-for-one stock split of the Company's Common Shares
effective March 1, 1994.
As of December 1, 1995, there were approximately 2,400 holders of
record of Class A Common Shares and one holder of record of Class B Common
Shares. See Note 5 on pages 32 and 33 regarding the amount of retained earnings
available for dividends.
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
For The Years Ended September 30 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED
Net Sales and Revenues
Information systems $ 888,580 $789,306 $677,748 $625,634 $614,679
Financial services 22,311 19,488 19,218 19,190 17,320
--------- -------- -------- -------- --------
Total net sales and revenues $ 910,891 $808,794 $696,966 $644,824 $631,999
========= ======== ======== ======== ========
Income Before Effect of Accounting Changes $ 78,594 $ 66,204 $ 52,522 $ 38,092 $ 24,634
Effect of Accounting Changes(1) (19,106) 1,100
--------- -------- -------- -------- --------
Net Income $ 78,594 $ 66,204 $ 33,416 $ 39,192 $ 24,634
========= ======== ======== ======== ========
Earnings Per Common Share
Income before effect of accounting changes $ 1.85 $ 1.51 $ 1.20 $ .81 $ .54
Effect of accounting changes(1) (.44) .03
--------- -------- -------- -------- --------
Net income $ 1.85 $ 1.51 $ .76 $ .84 $ .54
========= ======== ======== ======== ========
Return on Equity
Income before effect of accounting changes 25.1% 23.8% 20.2% 14.8% 9.9%
Net income 25.1% 23.8% 12.9% 15.3% 9.9%
Cash Dividends Per Class A Common Share $ .40 $ .33 $ .26 $ .225 $ .21
Book Value Per Outstanding Common Share $ 8.01 $ 6.94 $ 6.15 $ 5.90 $ 5.64
Assets
Information systems $ 489,501 $430,592 $407,761 $366,173 $375,535
Financial services 265,965 204,107 162,790 155,672 159,582
--------- -------- -------- -------- --------
Total assets $ 755,466 $634,699 $570,551 $521,845 $535,117
========= ======== ======== ======== ========
Long-Term Debt
Information systems $ 41,443 $ 41,014 $ 40,000 $ 28,284 $ 40,541
Financial services 92,425 76,638 62,771 70,250 73,075
--------- -------- -------- -------- --------
Total long-term debt $ 133,868 $117,652 $102,771 $ 98,534 $113,616
========= ======== ======== ======== ========
Number of Employees 6,036 5,478 5,636 4,995 5,225
INFORMATION SYSTEMS (with financial services on an equity basis)
Current Ratio 1.81 2.27 2.21 2.23 2.37
Net Property, Plant and Equipment $ 128,462 $117,485 $111,177 $105,014 $107,191
Total Debt $ 51,649 $ 41,301 $ 40,000 $ 37,713 $ 54,573
Total Debt to Capitalization 13.4% 12.4% 13.2% 12.8% 17.5%
</TABLE>
(1) Represents the cumulative effect of accounting changes for the adoption
of Statement of Financial Accounting Standards (SFAS) No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions"
in 1993 and SFAS No. 109, "Accounting for Income Taxes" in 1992.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
BUSINESS ENVIRONMENT
AUTOMOTIVE MARKET
Automobile dealerships are the largest customers for the company's products and
services. The business environment for automobile dealerships was positive in
1995 as the automotive market experienced another good year. In November 1995,
analysts projected new vehicle sales to be almost 15 million units for calendar
year 1995, slightly under 1994. Those analysts also projected continued strength
of new vehicle sales in 1996. However, automobile dealerships are no longer
solely dependent on new vehicle sales for profitability, as used vehicle sales,
service and repair work and parts sales have become the major sources of a
dealership's profits. Strong used vehicle sales are expected to continue because
of the increased supply of previously leased vehicles.
GENERAL BUSINESS MARKET
Overall economic conditions were strong in 1995 as the economy, measured by
gross domestic product, grew at its second fastest rate since 1988. The strong
economy and growing demand for paper allowed paper manufacturers to increase
prices several times in 1995. As a result, the company's cost of paper increased
significantly. The company raised sales prices throughout the year to offset the
effects of these higher material costs. In 1996, the company expects paper costs
to increase at a slower rate than in 1995.
HEALTHCARE MARKET
The market for healthcare systems improved in 1995 as the threat of major
legislative change lessened and the trend toward managed care became clearer.
This industry is experiencing significant growth in integrated healthcare
delivery networks and large group practices as physicians strive to operate
efficiently in a managed care environment. In 1995, the company aggressively
increased its presence in this growing market and purchased two providers of
healthcare information management systems. These acquisitions provided the
company with additional market share and managed care systems solutions to serve
the complex needs of this market.
SIGNIFICANT EVENTS
BUSINESS CHANGES
In 1995, the company purchased ten businesses in the automotive, healthcare and
general business forms markets. Automotive business combinations consisted
primarily of new products to supplement the company's existing product
offerings. Healthcare and general business forms acquisitions resulted in
stronger products and services offerings and additional customers for the
company. In 1994 and 1993, the company purchased six businesses serving the
automotive and forms management markets.
During the third quarter of 1994, the company sold its French automotive
computer systems subsidiary. This subsidiary reported sales of $10,000 in 1994
and $18,000 in 1993. See Note 2 to the Consolidated Financial Statements for
additional disclosures about the company's business changes.
BUSINESS FORMS RESTRUCTURING
During the third quarter of 1994, the company recorded a $12,400 restructuring
charge for costs to be incurred in the disposal of part of its computer paper
product line and the consolidation of certain custom business forms printing
operations. General business forms operations were restructured to focus on
value-added solutions for customers and to improve profitability. The company
discontinued the manufacture of certain low-margin computer paper products and
closed its Chambersburg, Pennsylvania, plant. The company also closed its custom
business forms plant in Chestertown, Maryland, and several distribution
facilities and sales offices. This transaction
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generated $11,500 of income tax benefits which more than offset the negative
after-tax effect of the restructuring charge.
RESULTS OF OPERATIONS
CONSOLIDATED
<TABLE>
<CAPTION>
1995 VS. 1994 1994 VS. 1993
1995 1994 1993 CHANGE CHANGE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $910,891 $808,794 $696,966 $102,097 13% $111,828 16%
Gross profit $417,935 $359,392 $308,034 $ 58,543 16% $ 51,358 17%
Operating income $137,015 $ 98,067 $ 91,097 $ 38,948 40% $ 6,970 8%
Net income $ 78,594 $ 66,204 $ 33,416 $ 12,390 19% $ 32,788 98%
Earnings per share $ 1.85 $ 1.51 $ .76 $ .34 23% $ .75 99%
</TABLE>
In 1995, consolidated net sales and revenues set a record for the third
consecutive year as computer systems, business forms and financial services all
reported significant sales growth. The net effect of business combinations and
divestitures was to increase 1995 consolidated sales $9 million. In 1994,
revenues rose primarily because of strong growth of computer systems sales.
Consolidated gross profit represented 47.0% of information systems sales,
compared to 45.5% in 1994 and 45.4% in 1993. Gross profit increased in 1995
primarily because of business forms improvement as a result of the 1994
restructuring. Computer systems gross profit percentage also rose in 1995 after
declining in 1994.
Record 1995 consolidated operating income grew significantly over last year
primarily because of business forms higher operating income. Computer systems
and financial services operating income also rose in 1995. In 1994, the company
recorded a $12,400 restructuring charge and $2,793 of restructuring related
costs and environmental expenses related to business forms operations. The
successful completion of this restructuring drove business forms operating
income higher and caused consolidated operating income to increase $23,755 or
21% over last year (excluding the restructuring and other unusual expenses from
1994's operating income). In 1994, consolidated operating income increased
$22,163 or 24% (excluding the previously mentioned 1994 charges). All businesses
improved their operating income substantially in 1994 as computer systems
increased 34%, financial services grew 24% and business forms rose 12%
(excluding the previously mentioned 1994 charges). As a percentage of sales,
operating income was 15% in 1995, 12% in 1994 (14% excluding the previously
mentioned charges) and 13% in 1993.
Total other charges were $260 in 1995, $745 in 1994 and $1,813 in 1993. Net
interest expense was flat during the last three years as information systems
debt balances remained relatively stable. In 1995 and 1994 other income included
gains on the sale of a healthcare service bureau and the French subsidiary,
respectively.
The effective income tax rate was 42.5% in 1995, compared to 32.0% in 1994 and
41.2% in 1993. In 1994, the company recorded an $11,500 tax benefit associated
with the computer paper divestiture. The company also recorded $581 of tax
expense related to the sale of the French subsidiary. The 1994 effective tax
rate was 41.8%, excluding the effect of the computer paper and French
divestitures. The remaining increase over 1994 and 1993 resulted principally
from an increase in non-deductible goodwill amortization. The 1994 effective tax
rate also increased over 1993's rate because of the full year effect of 1993 tax
law changes.
The company's 1995 net income and earnings per share set a record for the fourth
straight year and significantly exceeded last year's strong results. In 1994,
net income increased $13,682 or 26% over 1993's income before the effect of the
accounting change. The after-tax effect of 1994's restructuring charge,
restructuring related costs and environmental expenses increased 1994's net
income by $840 or $.02 per share. The earnings per share percentage increase was
greater than net income's in both 1995 and 1994 because of the effect of share
repurchases which
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reduced outstanding shares. In 1995, return on average shareholders' equity
(ROE) was 25.1% compared to 23.8% in 1994. In 1993, ROE was 20.2% calculated
using income before the accounting change.
In 1993, the company adopted Statement of Financial Accounting Standards (SFAS)
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." The cumulative effect of adopting SFAS No. 106 was to reduce net
income by $19,106 or $.44 per share in 1993.
COMPUTER SYSTEMS (excluding financial services)
<TABLE>
<CAPTION>
1995 VS. 1994 1994 VS. 1993
1995 1994 1993 CHANGE CHANGE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $422,678 $363,763 $281,520 $58,915 16% $82,243 29%
Gross profit $198,667 $169,031 $135,323 $29,636 18% $33,708 25%
% of revenues 47.0% 46.5% 48.1%
Operating income $ 64,138 $ 59,254 $ 44,081 $ 4,884 8% $15,173 34%
% of revenues 15.2% 16.3% 15.7%
</TABLE>
Computer systems revenues grew significantly in 1995 and 1994 because of record
sales of the company's ERA(R) computer systems to automobile dealers, higher
recurring service revenues and the net effect of acquisitions and the French
divestiture. The number of ERA computer systems sold continued to increase in
1995 and 1994 because of strong customer demand. The sales order backlog
remained strong at September 30, 1995. Recurring service revenues continued to
grow because strong ERA systems sales increased the number of software
applications supported. These recurring service revenues result primarily from
monthly billings for technical support, software updates and hardware
maintenance that allow customers to maximize the value of their computer
systems. Recurring service revenues also increased because of the expansion of
the Customer For Life database marketing program for automobile dealerships. The
net effect of acquisitions and divestiture was to increase revenues $13 million
in 1995 and $24 million in 1994. The 1995 business combinations included the
purchase of two companies integral to the company's Customer For Life program.
Also included in 1995 acquisitions were the purchases of two healthcare computer
systems businesses that contributed $12 million of the sales increase. In 1994,
healthcare computer systems sales declined as medical practices were hesitant to
purchase computer systems because of uncertainty surrounding national healthcare
legislation.
Computer systems gross profit percentage increased primarily because of a change
in the revenue mix to higher margin recurring service revenues. In 1994, the
gross profit margin declined primarily because of training costs associated with
increasing installation capacity.
Selling, general and administrative (SG&A) expenses were 31.8% of revenues in
1995, compared to 30.2% of revenues in 1994 and 32.4% in 1993. The 1995 increase
in SG&A expenses, as a percentage of revenues, reflected new investments in both
the automotive and healthcare businesses. Automotive investments were oriented
toward new products and services. Healthcare investments involved integrating
two acquisitions with the existing business and implementing sales, marketing
and product development strategies for future growth. In 1994, SG&A expenses
declined, as a percentage of revenues, primarily from the full year effect of
successfully integrating COIN (acquired in 1993) into the company's operations.
Computer systems operating income grew over 1994, but declined as a percentage
of sales because of new investments in both automotive and healthcare products.
Automotive's operating margin was negatively affected by new products, whose
sales have not reached the break-even point. Also negatively affecting the
segment's operating margin was healthcare systems, which operated at a loss in
1995. As sales of these products increase, operating margins should improve.
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BUSINESS FORMS
<TABLE>
<CAPTION>
1995 VS. 1994 1994 VS. 1993
1995 1994 1993 CHANGE CHANGE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $465,902 $425,543 $396,228 $40,359 9% $ 29,315 7%
Gross profit $219,268 $190,361 $172,711 $28,907 15% $ 17,650 10%
% of revenues 47.1% 44.7% 43.6%
Operating income $ 59,716 $ 25,741 $ 36,451 $33,975 132% $(10,710) (29)%
% of revenues 12.8% 6.0% 9.2%
</TABLE>
In 1995, business forms revenues increased primarily because of growth in forms
management products and services and the effect of sales price increases on both
automotive and general business forms. Sales of businesses acquired were less
than sales lost in the 1994 divestiture of certain low margin products. The
company raised sales prices in 1995 to counteract the effect of rising paper
costs. In 1994, sales increased because of volume growth and modest sales price
increases in both automotive forms and forms management products and services.
Business forms gross profit percentage increased primarily because of the
successful completion of the 1994 restructuring which improved the sales mix and
reduced operating expenses. In 1995, the company experienced significantly
higher paper costs accounted for under the LIFO method. The effect of the higher
paper costs reported in cost of sales was offset by higher sales prices. In
1994, gross profit margin grew as a result of strong growth in higher margin
automotive forms and forms management products and services revenues.
SG&A expenses were 34.3% of revenues in 1995, compared to 35.8% in 1994 and
34.4% in 1993. Higher SG&A expenses in 1994 occurred primarily because of
restructuring related costs and environmental expenses.
Business forms operating income grew substantially over 1994 which included a
$12,400 restructuring charge, $1,043 of restructuring related costs and $1,750
of environmental expenses. Excluding these expenses from 1994, operating income
increased $18,782 or 46% over last year. This increase occurred largely as a
result of a $16 million operating income improvement in general business forms
and forms management products and services. 1994's operating income of $40,934
(excluding the aforementioned expenses) was 10% of sales and increased $4,483 or
12% over 1993.
FINANCIAL SERVICES
<TABLE>
<CAPTION>
1995 1994 1993 1995 vs. 1994 1994 vs. 1993
Change Change
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $22,311 $19,488 $19,218 $2,823 14% $ 270 1%
Operating income $13,161 $13,072 $10,565 $ 89 1% $2,507 24%
% of revenues 59.0% 67.1% 55.0%
</TABLE>
In 1995, average finance receivables grew 27% as a result of strong computer
systems sales. Financial services revenues grew at a slower rate than
receivables because interest rates on new receivables were less than those for
maturing receivables. In 1994, revenues increased only slightly as the effect of
higher average receivable balances was substantially offset by lower interest
rates.
Financial services operating income increased only slightly in 1995 because the
revenue growth was largely offset by higher interest expense. Interest expense
rose because of additional borrowings required to fund the finance receivables
growth. Interest rates on new borrowings were also higher than last year.
Operating income increased in 1994 primarily because bad debt expenses declined
$1,800 as customer defaults remained at historically low levels.
11
<PAGE> 12
The company has entered into various interest rate management agreements to
limit interest rate exposure on financial services variable rate debt. It is
important to manage this interest rate exposure because the proceeds from these
borrowings were invested in fixed rate finance receivables. The company believes
it has reduced interest expense by using interest rate management agreements and
variable rate debt instead of directly obtaining fixed rate debt. See Note 5 to
the Consolidated Financial Statements for additional disclosures regarding the
company's interest rate management agreements.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
Information systems strong cash flow from operating activities of $107,222
resulted from record net income. Cash invested in accounts receivable grew
because of strong fourth quarter sales. Other working capital components
resulted in sources of cash which more than offset accounts receivable growth.
Capital expenditures of $30,750 occurred in the normal course of business with
about half constituting computer equipment. The company purchased several
businesses during 1995. See the Business Changes section and Note 2 to the
Consolidated Financial Statements for additional information regarding these
transactions. The company also returned cash to shareholders paying $16,651 of
cash dividends and repurchasing $35,079 of capital stock. See the Shareholders'
Equity section for a discussion of dividends and share repurchases.
Financial services operating cash flow and collections on finance receivables
were invested in new finance receivables for the company's computer systems and
used to make scheduled debt repayments.
CAPITALIZATION
The company's ratio of total debt (total information systems debt) to
capitalization (total information systems debt plus shareholders' equity) was
13.4% at September 30, 1995 and 12.4% at September 30, 1994. Available credit
under existing revolving credit agreements was $42,450 at September 30, 1995. In
addition to committed credit agreements, the company also has a variety of other
short-term credit lines available. It is expected that cash balances and
internally generated cash will be sufficient to fund 1996 normal operations,
which include anticipated capital expenditures of about $35,000.
SHAREHOLDERS' EQUITY
The company lists its Class A common shares on the New York Stock Exchange.
There is no principal market for Class B common shares. The company also has an
authorized class of 60 million preferred shares with no par value. As of
November 10, 1995, none of these preferred shares was outstanding and there were
no agreements or commitments with respect to the sale or issuance of these
shares.
The company paid cash dividends of $16,651 in 1995, $14,226 in 1994 and $11,139
in 1993. Dividends per Class A common share were $.40 in 1995, $.33 in 1994 and
$.26 in 1993. Dividends are typically declared each November, February, May and
August and paid in January, April, June and September, respectively. Dividends
per Class A common share must be twenty times the dividends per Class B common
share and all dividend payments must be simultaneous. In November 1995, the
board of directors raised the quarterly dividend 20% to $.12 per Class A common
share. The company has increased cash dividends nine times since 1989 and paid
dividends each year since the company's initial public offering in 1961.
The company has conducted an active share repurchase program during recent years
to provide increased returns to shareholders. The company repurchased $35,079 of
Class A common shares in 1995, $39,083 in 1994 and $16,500 in 1993. Average
prices paid per share were $25.86 in 1995, $23.61 in 1994 and $13.50 in 1993.
The company could repurchase an additional 2,569,500 Class A common shares under
existing board authorizations as of September 30, 1995.
12
<PAGE> 13
ENVIRONMENTAL MATTERS
See Note 11 to the Consolidated Financial Statements for a discussion of the
company's environmental contingencies.
ACCOUNTING STANDARD
In October 1995, the Financial Accounting Standards Board issued SFAS No. 123,
"Accounting for Stock-Based Compensation." This statement encourages, but does
not require, stock options to be accounted for under a fair value method.
Companies are permitted to continue accounting for stock options under the
intrinsic value method prescribed by Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees." If APB Opinion No. 25 is
followed, SFAS No. 123 requires disclosure of the pro forma effect of the new
standard on net income and earnings per share. The company has not yet
determined the effect on net income and earnings per share. This statement will
be effective for the fiscal year ending September 30, 1997.
ITEM. 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial information required by Item 8 is contained in Item 14 of
Part IV (page 16) of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
13
<PAGE> 14
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The name, age and background information for each of the Company's
directors and nominees are incorporated herein by reference to the section of
the Company's Proxy Statement for its 1996 Annual Meeting of Shareholders
captioned "ELECTION OF DIRECTORS."
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are elected by the Board of
Directors at its meeting immediately following the Annual Meeting of
Shareholders to serve generally for a term of one year. The executive officers
of the Company, as of December 1, 1995, are:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Richard H. Grant, Jr. 82 Chairman of the Steering Committee and Director
David R. Holmes 55 Chairman of the Board, President and Chief
Executive Officer
Robert C. Nevin 55 President, Business Forms Division and
Director
Joseph N. Bausman 52 President, Automotive Systems Division and
Director
Dale L. Medford 45 Vice President, Corporate Finance and Chief
Financial Officer, and Director
H. John Proud 47 President, Healthcare Systems Division
Michael J. Gapinski 45 Treasurer and Assistant Secretary
Adam M. Lutynski 53 General Counsel and Secretary
</TABLE>
A description of prior positions held by executive officers of the Company
within the past 5 years, to the extent applicable, is as follows:
Mr. Bausman has been President, Automotive Systems Division and Director
since February 1995; prior thereto was President, Computer Systems Division.
Mr. Proud has been President, Healthcare Systems Division since February
1995; prior thereto was Senior Vice President and General Manager, Automotive
Computer Systems Group.
ITEM 11. EXECUTIVE COMPENSATION
Information on compensation of the Company's executive officers and
directors is incorporated herein by reference to the section of the Company's
Proxy Statement for its 1996 Annual Meeting of Shareholders captioned "EXECUTIVE
COMPENSATION."
14
<PAGE> 15
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The number of Common Shares of the Company beneficially owned by each five
percent shareholder, director or current nominee for director, and by all
directors and officers as a group as of December 1, 1995 is incorporated herein
by reference to the section of the Company's Proxy Statement for its 1996 Annual
Meeting of Shareholders captioned "VOTING SECURITIES OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning transactions with management, certain business
relationships and indebtedness of management is incorporated herein by reference
to the section of the Company's Proxy Statement for its 1996 Annual Meeting of
Shareholders captioned "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
15
<PAGE> 16
PART IV
(Dollars in thousands)
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) (1) FINANCIAL STATEMENTS
The following consolidated financial statements of the Company are set
forth on pages 23 through 41.
Statements of Consolidated Income - for the years ended
September 30, 1995, 1994 and 1993
Consolidated Balance Sheets - September 30, 1995 and 1994
Statements of Consolidated Shareholders' Equity - for the years ended
September 30, 1995, 1994 and 1993
Statements of Consolidated Cash Flows - for the years ended September
30, 1995, 1994 and 1993
Notes to Financial Statements (Including Supplementary Data)
(a) (2) FINANCIAL STATEMENT SCHEDULES FOR EACH OF THE THREE YEARS IN THE PERIOD
ENDED SEPTEMBER 30, 1995 ARE ATTACHED HERETO:
Schedule II - Valuation Accounts Page 42
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and, therefore, have
been omitted.
(B) REPORTS ON FORM 8-K
The Company has filed two reports on Form 8-K during the last quarter of
the period covered by this Report reporting the resignation of William H. Seall
as a director. The reports were filed on July 17 and July 19, 1995.
(C) EXHIBITS
The exhibits as shown in "Index of Exhibits" (pages 43-49) are filed as a
part of this Report.
(D) CONSOLIDATED FINANCIAL STATEMENTS
Individual financial statements and schedules of the Company's
consolidated subsidiaries are omitted from this Annual Report on Form 10-K
because consolidated financial statements and schedules are submitted and
because the registrant is primarily an operating company and all subsidiaries
included in the consolidated financial statements are wholly owned.
------------------------------------------------------------
The Company will provide a copy of its 1995 Annual Report to
Shareholders to those persons receiving a copy of the Form 10-K
without the exhibits upon written request to:
ADAM M. LUTYNSKI, GENERAL COUNSEL & SECRETARY
THE REYNOLDS AND REYNOLDS COMPANY
P. O. BOX 2608
DAYTON, OHIO 45401
------------------------------------------------------------
16
<PAGE> 17
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
THE REYNOLDS AND REYNOLDS COMPANY
By /S/ ADAM M. LUTYNSKI
----------------------------------
ADAM M. LUTYNSKI
General Counsel and Secretary
Date: December 18, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: December 18, 1995 By /S/ DAVID R. HOLMES
-------------------------------------------
DAVID R. HOLMES
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
Date: December 18, 1995 By /S/ DALE L. MEDFORD
-------------------------------------------
DALE L. MEDFORD
Vice President, Corporate Finance and Chief
Financial Officer (Principal Financial and
Accounting Officer) and Director
Date: December 18, 1995 By /S/ JOSEPH N. BAUSMAN
----------------------------------------------
JOSEPH N. BAUSMAN
President, Automotive Systems Division
and Director
17
<PAGE> 18
Date: December 18, 1995 By /S/ DR. DAVID E. FRY
-------------------------------------------
DR. DAVID E. FRY, Director
Date: December 18, 1995 By /S/ RICHARD H. GRANT, JR.
-------------------------------------------
RICHARD H. GRANT, JR.
Chairman of the Steering
Committee and Director
Date: December 18, 1995 By /S/ RICHARD H. GRANT, III
-------------------------------------------
RICHARD H. GRANT, III, Director
Date: December 18, 1995 By /S/ ROBERT C. NEVIN
-------------------------------------------
ROBERT C. NEVIN
President, Business Forms Division
and Director
Date: December 18, 1995 By /S/ GAYLE B. PRICE, JR.
-------------------------------------------
GAYLE B. PRICE, JR., Director
Date: December 18, 1995 By /S/ KENNETH W. THIELE
-------------------------------------------
KENNETH W. THIELE, Director
Date: December 18, 1995 By /S/ MARTIN D. WALKER
-------------------------------------------
MARTIN D. WALKER, Director
18
<PAGE> 19
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (2); 14(c) and (d)
Financial Statements, Schedules and Exhibits
Year Ended September 30, 1995
The Reynolds and Reynolds Company
Dayton, Ohio
19
<PAGE> 20
MANAGEMENT'S STATEMENT OF RESPONSIBILITY
November 10, 1995
To Our Shareholders:
The management of The Reynolds and Reynolds Company is responsible for
accurately and objectively preparing the company's consolidated financial
statements. These statements are prepared in accordance with generally accepted
accounting principles and include amounts based on management's best estimates
and judgments. Management believes that the financial information in this annual
report is free from material misstatement.
The company's management maintains an environment of multilevel controls. The
Company Business Principles, for example, is distributed to all employees and
communicates high standards of integrity that are expected in the company's
day-to-day business activities. The Company Business Principles addresses a
broad range of issues including potential conflicts of interest, business
relationships, accurate and timely reporting of financial information,
confidentiality of proprietary information, insider trading and social
responsibility.
The company also maintains and monitors a system of internal controls designed
to provide reasonable assurances regarding the safeguarding of company assets
and the integrity and reliability of financial records. These internal controls
include the appropriate segregation of duties and the application of formal
policies and procedures. Furthermore, an internal audit department, which has
access to all financial and other corporate records, regularly performs tests to
evaluate the system of internal controls to ensure the system is adequate and
operating effectively. At the date of these financial statements, management
believes the company has an effective internal control system.
The company's independent auditors, Deloitte & Touche LLP, perform an
independent audit of the company's consolidated financial statements. They have
access to minutes of board meetings, all financial information and other
corporate records. Their audit is conducted in accordance with generally
accepted auditing standards and includes consideration of the system of internal
controls. Their report is included in this annual report on page 21.
Another level of control resides with the audit committee of the company's board
of directors. The committee, comprised of directors who are not members of
management, oversees the company's financial reporting process. They recommend
to the board, subject to shareholder approval, the selection of the company's
independent auditors. They discuss the overall audit scope and the specific
audit plans with the independent auditors and the internal auditors. This
committee also meets regularly (separately and jointly) with the independent
auditors, the internal auditors and management to discuss the results of those
audits, the evaluation of internal controls, the quality of financial reporting
and specific accounting and reporting issues.
David R. Holmes Dale L. Medford
Chairman, President and Vice President, Corporate Finance
Chief Executive Officer and Chief Financial Officer
20
<PAGE> 21
INDEPENDENT AUDITORS' REPORT
The Shareholders of The Reynolds and Reynolds Company:
We have audited the accompanying consolidated balance sheets of The Reynolds and
Reynolds Company and its subsidiaries as of September 30, 1995 and 1994, and the
related statements of consolidated income, shareholders' equity and cash flows
for each of the three years in the period ended September 30, 1995. Our audits
also included the financial statement schedules included at Item 14(a) (2).
These financial statements and financial statement schedules are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of The Reynolds and Reynolds Company
and its subsidiaries at September 30, 1995 and 1994 and the results of their
operations and their cash flows for each of the three years in the period ended
September 30, 1995, in conformity with generally accepted accounting principles.
Also, in our opinion, such financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
As discussed in Note 8 to the Consolidated Financial Statements, in 1993, the
company changed its method of accounting for postretirement benefits other than
pensions to conform with Statement of Financial Accounting Standards No. 106.
/s/ DELOITTE & TOUCHE LLP
- --------------------------
Dayton, Ohio
November 10, 1995
21
<PAGE> 22
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement No.
33-56045 of The Reynolds and Reynolds Company on Form S-8, Post-Effective
Amendments No. 1 and No. 2 to Registration Statement No. 33-48546 of The
Reynolds and Reynolds Company on Form S-3, Post-Effective Amendment No. 1 to
Registration Statement No. 33-51895 of The Reynolds and Reynolds Company on Form
S-3, Pre-Effective Amendment No. 1 to Registration Statement No. 33-58877 of The
Reynolds and Reynolds Company on Form S-3, Pre-Effective Amendment No. 1 to
Registration Statement No. 33-61725 of The Reynolds and Reynolds Company on Form
S-3, Registration Statement No. 33-59615 of The Reynolds and Reynolds Company on
Form S-3 and Registration Statement No. 33-59617 of The Reynolds and Reynolds
Company on Form S-3 of our report dated November 10, 1995, which includes an
explanatory paragraph concerning a change in the method of accounting for
post-retirement benefits other than pensions in 1993, appearing in this Annual
Report on Form 10-K of The Reynolds and Reynolds Company for the year ended
September 30, 1995, and to the reference to us under the heading "Experts" in
the Prospectus, which is part of such Registration Statements.
/s/ DELOITTE & TOUCHE LLP
- --------------------------
Dayton, Ohio
December 18, 1995
22
<PAGE> 23
STATEMENTS OF CONSOLIDATED INCOME
(In thousands except per share data)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED SEPTEMBER 30 1995 1994 1993
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales and Revenues
Information systems
Products $621,909 $564,976 $497,974
Services 266,671 224,330 179,774
-------- -------- --------
Total information systems 888,580 789,306 677,748
Financial services 22,311 19,488 19,218
-------- -------- --------
Total net sales and revenues 910,891 808,794 696,966
-------- -------- --------
Costs and Expenses
Cost of sales
Products 363,303 333,630 297,339
Services 107,342 96,284 72,375
-------- -------- --------
Total cost of sales 470,645 429,914 369,714
Selling, general and administrative expenses 294,081 261,997 227,502
Restructuring charge 12,400
Financial services 9,150 6,416 8,653
-------- -------- --------
Total costs and expenses 773,876 710,727 605,869
-------- -------- --------
Operating Income 137,015 98,067 91,097
-------- -------- --------
Other Charges (Income)
Interest expense 3,779 3,820 3,690
Interest income (1,674) (1,449) (1,701)
Other (1,845) (1,626) (176)
-------- -------- --------
Total other charges 260 745 1,813
-------- -------- --------
Income Before Income Taxes 136,755 97,322 89,284
Provision for Income Taxes 58,161 31,118 36,762
-------- -------- --------
Income Before Effect of Accounting Change 78,594 66,204 52,522
Effect of Accounting Change (19,106)
-------- -------- --------
Net Income $ 78,594 $ 66,204 $ 33,416
======== ======== ========
Earnings Per Common Share
Income before effect of accounting change $1.85 $1.51 $1.20
Effect of accounting change (.44)
----- ----- -----
Net income $1.85 $1.51 $ .76
===== ===== =====
Average Number of Common Shares Outstanding 42,516 43,781 43,787
====== ====== ======
</TABLE>
See Notes to Consolidated Financial Statements.
23
<PAGE> 24
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994
- --------------------------------------- ----------------------
<S> <C> <C>
INFORMATION SYSTEMS ASSETS
Current Assets
Cash and equivalents $ 18,366 $ 20,230
-------- --------
Accounts receivable (less allowance for doubtful accounts:
1995--$3,166;1994--$2,683) 114,617 101,872
-------- --------
Inventories
Finished products 33,064 31,027
Work in process 1,541 1,720
Raw materials and supplies 3,191 4,527
-------- --------
Total inventories 37,796 37,274
-------- --------
Deferred income taxes 10,912 8,832
-------- --------
Prepaid expenses and other assets 6,500 7,308
-------- --------
Total current assets 188,191 175,516
-------- --------
Property, Plant and Equipment
Land and improvements 8,237 7,659
Buildings and improvements 70,678 65,900
Machinery and equipment 168,761 158,303
Furniture and other 28,216 26,242
Construction in progress 6,154 2,748
-------- --------
Total property, plant and equipment 282,046 260,852
Less accumulated depreciation 153,584 143,367
-------- --------
Net property, plant and equipment 128,462 117,485
-------- --------
Intangible Assets
Goodwill 101,275 78,277
Software licensed to customers 15,063 14,413
Other 13,551 10,816
-------- --------
Total intangible assets 129,889 103,506
-------- --------
Other Assets 42,959 34,085
-------- --------
Total Information Systems Assets 489,501 430,592
-------- --------
FINANCIAL SERVICES ASSETS
Finance Receivables 264,901 202,620
Cash and Other Assets 1,064 1,487
-------- --------
Total Financial Services Assets 265,965 204,107
-------- --------
TOTAL ASSETS $755,466 $634,699
======== ========
INFORMATION SYSTEMS LIABILITIES
Current Liabilities
Current portion of long-term debt $ 714 $ 287
Notes payable 9,492
Accounts payable
Trade 32,636 28,853
Other 6,715 4,340
Accrued liabilities
Compensation 26,838 23,407
Income taxes 8,886 2,147
Other 34,301 27,953
Deferred revenues 6,251 3,052
-------- --------
Total current liabilities 125,833 90,039
-------- --------
Long-Term Debt 41,443 41,014
-------- --------
Other Liabilities
Postretirement medical 35,462 33,566
Pensions 18,285 16,028
Other 1,406 2,823
-------- --------
Total other liabilities 55,153 52,417
-------- --------
Total Information Systems Liabilities 222,429 183,470
-------- --------
FINANCIAL SERVICES LIABILITIES
Notes Payable 131,675 104,363
Deferred Income Taxes 67,159 51,602
Other Liabilities 1,648 2,225
-------- --------
Total Financial Services Liabilities 200,482 158,190
-------- --------
SHAREHOLDERS' EQUITY
Capital Stock
Preferred
Class A common 25,628 26,067
Class B common 313 313
Additional Paid-In Capital 15,815 2,557
Other Adjustments (3,581) (2,566)
Retained Earnings 294,380 266,668
-------- --------
Total Shareholders' Equity 332,555 293,039
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $755,466 $634,699
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
24
<PAGE> 25
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
(In thousands except per share data)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED SEPTEMBER 30 1995 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Capital Stock
Class A common
Balance, beginning of year $ 26,067 $ 13,199 $ 13,401
Stock split effective March 1, 1994 13,199
Capital stock issued 420 670 199
Converted from Class B common 63
Capital stock repurchased (848) (1,035) (382)
Capital stock retired (11) (29) (19)
-------- --------- --------
Balance, end of year 25,628 26,067 13,199
-------- --------- --------
Class B common
Balance, beginning of year 313 188 188
Stock split effective March 1, 1994 188
Converted to Class A common (63)
-------- --------- --------
Balance, end of year 313 313 188
-------- --------- --------
Additional Paid-In Capital
Balance, beginning of year 2,557 2,693 7,221
Stock split effective March 1, 1994 (13,387)
Capital stock issued 12,507 15,315 3,446
Capital stock repurchased (2,177) (8,518)
Capital stock retired (451) (999) (746)
Tax benefits from stock options 1,202 1,112 1,290
-------- --------- --------
Balance, end of year 15,815 2,557 2,693
-------- --------- --------
Other Adjustments
Balance, beginning of year (2,566) (3,316) (22)
Foreign currency translation 28 (328) (2,460)
Minimum pension liability (1,043) 1,078 (834)
-------- --------- --------
Balance, end of year (3,581) (2,566) (3,316)
-------- --------- --------
Retained Earnings
Balance, beginning of year 266,668 250,561 235,884
Net income 78,594 66,204 33,416
Cash dividends
Class A common (1995--$.40 PER SHARE;
1994--$.33 per share; 1993--
$.26 per share) (16,451) (14,036) (10,983)
Class B common (1995--$.02 PER SHARE;
1994--$.0165 per share; 1993--
$.013 per share) (200) (190) (156)
Capital stock repurchased (34,231) (35,871) (7,600)
-------- --------- --------
Balance, end of year 294,380 266,668 250,561
-------- --------- --------
Total Shareholders' Equity $332,555 $ 293,039 $263,325
======== ========= ========
</TABLE>
See Notes to Consolidated Financial Statements.
25
<PAGE> 26
STATEMENTS OF CONSOLIDATED CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED SEPTEMBER 30 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INFORMATION SYSTEMS
Cash Flows Provided by Operating Activities $ 107,222 $ 94,956 $ 63,967
--------- --------- ---------
Cash Flows Provided by (Used for) Investing Activities
Business combinations (20,824) (9,814) (40,072)
Capital expenditures (30,750) (27,888) (18,895)
Net proceeds from sales of assets 3,744 8,312 2,285
Proceeds from sale of receivables 6,000
Capitalization of software licensed to customers (3,471) (2,695) (391)
(Advances to) repayments from financial services (9,708) 336 3,637
--------- --------- ---------
Net cash used for investing activities (55,009) (31,749) (53,436)
--------- --------- ---------
Cash Flows Provided by (Used for) Financing Activities
Additional borrowings 1,254 1,250 11,716
Principal payments on debt (5,051) (2,266) (9,429)
Cash dividends paid (16,651) (14,226) (11,139)
Capital stock issued 1,422 1,882 2,880
Capital stock repurchased (35,079) (39,083) (16,500)
--------- --------- ---------
Net cash used for financing activities (54,105) (52,443) (22,472)
--------- --------- ---------
Effect of Exchange Rate Changes on Cash 28 29 (2,460)
--------- --------- ---------
Increase (Decrease) in Cash and Equivalents (1,864) 10,793 (14,401)
Cash and Equivalents, Beginning of Year 20,230 9,437 23,838
--------- --------- ---------
Cash and Equivalents, End of Year $ 18,366 $ 20,230 $ 9,437
========= ========= =========
FINANCIAL SERVICES
Cash Flows Provided by Operating Activities $ 13,854 $ 10,767 $ 7,201
--------- --------- ---------
Cash Flows Provided by (Used for) Investing Activities
Finance receivables originated (115,643) (81,940) (62,898)
Collections on finance receivables 64,232 55,038 58,179
--------- --------- ---------
Net cash used for investing activities (51,411) (26,902) (4,719)
--------- --------- ---------
Cash Flows Provided by (Used for) Financing Activities
Additional borrowings 70,000 41,650 40,000
Principal payments on debt (42,688) (24,975) (38,812)
Advances from (repayments to) information systems 9,708 (336) (3,637)
--------- --------- ---------
Net cash provided by (used for) financing activities 37,020 16,339 (2,449)
--------- --------- ---------
Increase (Decrease) in Cash and Equivalents (537) 204 33
Cash and Equivalents, Beginning of Year 1,200 996 963
--------- --------- ---------
Cash and Equivalents, End of Year $ 663 $ 1,200 $ 996
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
26
<PAGE> 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands except per share data)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION
The consolidated financial statements include the accounts of the parent company
and its domestic and foreign subsidiaries and present details of revenues,
expenses, assets, liabilities and cash flows for both information systems and
financial services. Information systems is comprised of the company's computer
systems and business forms operations. Financial services is comprised of Reyna
Financial Corporation, the company's wholly-owned financial services subsidiary
and a similar operation in Canada. In accordance with industry practice, the
assets and liabilities of information systems are classified as current or
non-current and those of financial services are unclassified. Intercompany
balances and transactions between the consolidated companies are eliminated.
CASH AND EQUIVALENTS
For purposes of reporting cash flows, cash and equivalents includes cash on
hand, cash deposits and investments with maturities of three months or less at
the time of purchase.
TRANSFER OF RECEIVABLES
The company has entered into an agreement to transfer a percentage interest in a
pool of accounts receivable. Under terms of the agreement, which is accounted
for as a sale of receivables, the transferee advances the company funds equal to
the face value of the receivables transferred. Monthly, the company pays the
transferee a discount, based on market interest rates, on the uncollected
receivable balances. The company may transfer up to $10,000 of receivables under
this agreement, which expires September 30, 1998. At September 30, 1995, the
company has transferred $6,000 of receivables. The transferee also has a
collateral interest in $1,500 of other receivables at September 30, 1995.
CONCENTRATIONS OF CREDIT RISK
The company is a leading provider of information management systems to
automobile dealerships. Finance receivables and a significant portion of
accounts receivable are from automobile dealerships.
ALLOWANCE FOR LOSSES
An allowance for losses on finance receivables is established based on
historical loss experience, portfolio profile, industry averages and current
economic conditions. Finance receivables are charged to the allowance for losses
when an account is deemed to be uncollectible, taking into consideration the
financial condition of the customer and the value of the collateral. Recoveries
of finance receivables, previously charged off as uncollectible, are credited to
the allowance for losses.
INVENTORIES
Inventories are stated at the lower of cost or market. Costs of domestic
business forms inventories are determined by the last-in, first-out (LIFO)
method. At September 30, 1995 and 1994, LIFO inventories were $27,928 and
$29,341, respectively. These inventories determined by the first-in, first-out
(FIFO) method would increase by $7,096 in 1995, $4,256 in 1994 and $4,203 in
1993. For other inventories, cost is determined by specific identification or
the FIFO method. Market is based on net realizable value.
27
<PAGE> 28
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation and amortization
are provided over the estimated useful service lives of the assets or asset
groups, principally on the straight-line method for financial reporting
purposes. Estimated asset lives are:
<TABLE>
<CAPTION>
Years
- --------------------------------------------------------------------------------
<S> <C>
Land improvements 10
Buildings and improvements 3--33
Machinery and equipment 3--18
Furniture and other 3--15
</TABLE>
Generally, upon asset disposal any gain or loss is included in current income.
Improvements and expenditures for maintenance that add materially to productive
capacity or extend asset lives are capitalized.
INTANGIBLE ASSETS
The excess of cost over net assets of companies acquired is recorded as goodwill
and amortized on a straight-line basis typically over five to forty years. The
company periodically reviews goodwill balances for impairment based on the
expected future cash flows of the related businesses acquired. Amortization
expense was $8,530 in 1995, $5,707 in 1994 and $2,609 in 1993. At September 30,
1995 and 1994, the accumulated amortization was $25,644 and $17,114,
respectively.
The company capitalizes certain costs of developing its software products. Upon
completion of a software product, amortization is determined based on the larger
of the amounts computed using (a) the ratio that current gross revenues for each
product bears to the total of current and anticipated future gross revenues for
that product or (b) the straight-line method over the remaining estimated
economic life of the product, ranging from five to seven years. Amortization
expense for software licensed to customers was $3,746, $4,059 and $3,936 during
the years ended September 30, 1995, 1994 and 1993, respectively. At September
30, 1995 and 1994, the accumulated amortization was $39,347 and $35,626,
respectively.
Other intangible assets are amortized over periods ranging from three to fifteen
years. Amortization expense was $2,165 in 1995, $1,688 in 1994 and $1,800 in
1993. At September 30, 1995 and 1994, the accumulated amortization was $8,099
and $8,252, respectively.
REVENUE RECOGNITION - INFORMATION SYSTEMS
Information systems revenues consist of both product sales and service revenues.
Product sales, including computer hardware, software licenses and business
forms, are generally recorded upon shipment to customers. In certain instances,
computer systems sales are not recognized until installation is completed. In
most cases, computer systems product sales are financed for customers through
the company's wholly-owned financial services subsidiary. Upon shipment of
computer systems, the company records sales and finance receivables pending
customer acceptance. These receivables pending customer acceptance are
transferred to interest bearing receivables when installation is completed.
Under certain forms management contractual arrangements, custom forms are stored
for future delivery to customers, and are recognized as revenue when title
passes and the customer has been invoiced. Service revenues, which include
computer hardware maintenance, software support, training and forms management
services, are recorded ratably over the contract period or as services are
performed. Forms management services represent fees for inventory management and
warehousing services. Forms management services may be included in product sales
or separately billed to customers.
REVENUE RECOGNITION - FINANCIAL SERVICES
Financial services revenues consist primarily of interest earned on financing
the company's computer systems product sales. Revenues are recognized over the
lives of financing contracts, generally five to seven years, using the interest
method.
28
<PAGE> 29
LEASE OBLIGATIONS
The company leases premises and equipment under various operating lease
agreements. As of September 30, 1995, future minimum lease payments relating to
these agreements were $15,774 in 1996, $11,185 in 1997, $5,971 in 1998, $2,949
in 1999 and $1,498 in 2000. Rental expenses were $19,408 in 1995, $19,577 in
1994 and $18,111 in 1993.
RESEARCH AND DEVELOPMENT COSTS
The company expenses research and development costs as incurred. These costs
were $20,978 in 1995, $18,115 in 1994 and $12,354 in 1993.
INCOME TAXES
The parent company and its domestic subsidiaries file a consolidated U.S.
federal income tax return. Deferred income taxes are provided for temporary
differences between the tax basis of an asset or liability and its reported
amount in the financial statements. Temporary differences result principally
from financial services product financing activities, postretirement benefits
and different depreciation methods. No deferred income tax liabilities are
recorded on undistributed earnings of the foreign subsidiary because, for the
most part, those earnings are permanently reinvested. Undistributed earnings of
the foreign subsidiary at September 30, 1995 were $18,148. The calculation of
the unrecognized deferred income tax liability on these earnings is not
practicable.
EARNINGS PER COMMON SHARE
Earnings per common share are computed by dividing net income by the weighted
average number of Class A common shares and Class A common share equivalents
outstanding during each year. Class A common share equivalents consist of those
shares which would be outstanding, assuming all Class B common shares were
converted into Class A common shares and assuming all dilutive stock options
were exercised and the proceeds used to repurchase Class A common shares at the
average market price. The dilutive effect of stock options is not material.
BUSINESS FORMS RESTRUCTURING
During the third quarter of 1994, the company recorded a restructuring charge of
$12,400 for costs to be incurred in the disposal of part of its computer paper
product line and the consolidation of certain custom business forms printing
operations. This transaction generated $11,500 of income tax benefits which more
than offset the negative after-tax effect of the restructuring charge. During
the third quarter of 1995 this restructuring was completed and the costs
incurred approximated those originally accrued.
2. BUSINESS CHANGES
BUSINESS COMBINATIONS
The company purchased several businesses in the automotive, healthcare and
general business forms markets during the last three years. The businesses
purchased in 1995 had annual sales of $56,000. Those businesses acquired in 1994
and 1993 had annual sales of $32,000 and $72,000, respectively. The business
combinations were financed with a combination of cash, notes payable and stock
as reported in the table below. The issuances of notes payable and capital stock
were considered non-cash transactions for accounting purposes and were not
included in the statements of cash flows. These business combinations were
accounted for as purchases and the accounts of the acquired businesses were
included in the company's financial statements since the dates of acquisition.
In connection with these business combinations, the company recorded goodwill of
$31,367 in 1995, $18,979 in 1994 and $20,603 in 1993. This goodwill is being
amortized on a straight-line basis over five to fifteen years. Under the terms
of some of the purchase agreements, the company may be required to make
additional payments, contingent on the sales and profitability of the business
purchased. These payments, if made, will either be expensed in the period
incurred or charged to goodwill. Contingent payments may be made through 2006.
29
<PAGE> 30
COMPONENTS OF PURCHASE PRICES
<TABLE>
<CAPTION>
1995 1994 1993
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash $20,824 $ 9,814 $40,072
Notes payable 9,492
Capital stock issued (1995 -- 413,788 SHARES;
1994 -- 612,692 shares) 11,383 13,075
------- ------- -------
Totals $41,699 $22,889 $40,072
======= ======= =======
</TABLE>
DIVESTITURE
On June 10, 1994, the company completed the sale of its French subsidiary,
Reynolds and Reynolds S.A., to Turbodata N.V. of Belgium, and recorded an
after-tax gain of $236. In 1993, this subsidiary reported sales of $18,000 and a
net loss of $500.
3. INCOME TAXES
PROVISION FOR INCOME TAXES
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal $ 36,800 $ 20,340 $ 31,225
State and local 9,221 4,121 7,212
Foreign (276) (380) 410
Deferred
Financial services product financing activities 15,557 9,538 2,321
Depreciation 2,774 (5,778) 73
Capital losses 2,814 (3,900) (169)
Capital losses valuation allowance (1,800) 2,198 169
Other (6,929) 4,979 (4,479)
-------- -------- --------
Provision for income taxes $ 58,161 $ 31,118 $ 36,762
======== ======== ========
Income taxes paid (net of refunds) $ 39,821 $ 24,017 $ 36,340
======== ======== ========
</TABLE>
RECONCILIATION OF INCOME TAX RATES
<TABLE>
<CAPTION>
1995 1994 1993
AMOUNT PERCENT Amount Percent Amount Percent
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Statutory federal income taxes $47,864 35.0% $34,062 35.0% $31,026 34.8%
State and local taxes less federal
income tax effect 7,573 5.5 5,631 5.8 4,609 5.2
Divestiture of computer paper
business (11,500) (11.8)
Goodwill amortization
and write-off 2,228 1.6 3,207 3.3 900 1.0
Revaluing deferred taxes 939 1.0
Settlement of tax audits (1,047) (1.2)
Other 496 .4 (282) (.3) 335 .4
------- ---- ------- ---- ------- ----
Provision for income taxes $58,161 42.5% $31,118 32.0% $36,762 41.2%
======= ==== ======= ==== ======= ====
</TABLE>
In August 1993, the federal income tax rate was increased from 34% to 35%,
retroactive to January 1, 1993.
30
<PAGE> 31
INFORMATION SYSTEMS DEFERRED INCOME TAX ASSETS (LIABILITIES)
<TABLE>
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Current $ 10,912 $ 8,832
-------- --------
Non-current
Postretirement medical 14,371 13,603
Pensions 5,496 5,134
Depreciation (11,341) (8,507)
Capital losses 1,853 4,667
Capital losses valuation allowance (1,165) (2,965)
Other (6,945) (11,662)
-------- --------
Total non-current 2,269 270
-------- --------
Totals $ 13,181 $ 9,102
======== ========
</TABLE>
The carryforward of capital losses expires primarily in 1997 and 1999.
4. FINANCIAL SERVICES
INCOME STATEMENTS
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 22,311 $ 19,488 $19,218
-------- -------- -------
Expenses
Interest expense 7,191 5,044 5,550
Allowance for losses provision (benefit) (150) (700) 1,100
General and administrative 2,109 2,072 2,003
-------- -------- -------
Total expenses 9,150 6,416 8,653
-------- -------- -------
Income before income taxes 13,161 13,072 10,565
Provision for income taxes 5,192 5,199 5,420
-------- -------- -------
Net income $ 7,969 $ 7,873 $ 5,145
======== ======== =======
</TABLE>
FINANCE RECEIVABLES
<TABLE>
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Product financing receivables $ 261,860 $ 205,178
Receivables pending customer acceptance 37,415 27,447
Unguaranteed residual values 13,502 11,117
Allowance for losses (3,903) (4,854)
Unearned interest income (45,866) (37,302)
Other 1,893 1,034
-------- --------
Totals $ 264,901 $ 202,620
======== ========
</TABLE>
As of September 30, 1995, product financing receivables due for each of the next
five years were $83,165 in 1996, $71,791 in 1997, $55,000 in 1998, $37,416 in
1999 and $13,214 in 2000.
31
<PAGE> 32
ALLOWANCE FOR LOSSES
<TABLE>
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Balance, beginning of year $ 4,854 $ 5,846
Provision (benefit) (150) (700)
Net losses (801) (292)
------- -------
Balance, end of year $ 3,903 $ 4,854
======= =======
</TABLE>
5. FINANCING ARRANGEMENTS
INFORMATION SYSTEMS
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Fixed rate notes, weighted average interest rate of
7.3%, maturing in 1996 $ 9,492
=======
Fixed rate notes, weighted average interest rates
of 6.6% in 1995 and 6.7% in 1994, maturing
through 2003 $42,157 $41,301
Current portion 714 287
------- -------
Long-term portion $41,443 $41,014
======= =======
</TABLE>
Loan agreements limit consolidated indebtedness and require a minimum current
ratio of 1.50. Loan agreements also limit dividend payments to $39,781 as of
September 30, 1995. The fair value of information systems notes maturing in 1996
was $9,525 at September 30, 1995. The fair value of information systems notes
maturing through 2003 was $41,148 and $37,590 at September 30, 1995 and 1994,
respectively. At September 30, 1995, debt maturities were $714 in 1996, $6,841
in 1997, $6,031 in 1998, $5,714 in 1999 and $5,714 in 2000. Interest paid was
$3,006 in 1995, $3,153 in 1994 and $3,428 in 1993.
FINANCIAL SERVICES
In the ordinary course of business, the company borrows cash to fund investments
in finance receivables from the sale of the company's products. The company
attempts to limit its interest rate exposure between the interest earned on
fixed rate finance receivables and the interest paid on variable rate financing
agreements through the use of interest rate management agreements. Interest rate
swaps provide for interest to be received on notional amounts at variable rates
and provide for interest to be paid on the same notional amounts at fixed rates.
Ceiling agreements limit the maximum interest rates the company pays on variable
rate financing agreements. Fixed interest rates do not change over the life of
the agreements. Variable interest rates are reset at least every ninety days and
are based on LIBOR or commercial paper indices. Net interest received or paid on
these contracts is reflected in interest expense when these contracts settle.
The company is exposed to credit related losses in the event of nonperformance
by counterparties to the interest rate management agreements. The company
attempts to minimize this credit risk by only entering into agreements with
counterparties that have a Standard & Poor's rating of "A" or higher. The
company also diversifies its interest rate management agreements among several
financial institutions.
32
<PAGE> 33
<TABLE>
<CAPTION>
Notional Amounts
Notes Swaps Ceilings
- ------------------------------------------------------------------------------------------
1995
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Variable rate notes, maturing through 2000 $ 61,675 $10,938 $30,625
Weighted average interest rates paid 6.0% 5.0%
Weighted average interest rate received 5.8%
Weighted average ceiling interest rate 7.2%
Fixed rate notes, maturing through 1999 70,000
Weighted average interest rate paid 6.0%
---------- ------- -------
Totals $ 131,675 $10,938 $30,625
========== ======= =======
</TABLE>
<TABLE>
<CAPTION>
1994
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Variable rate notes $ 51,200 $21,155 $18,750
Weighted average interest rates paid 4.2% 5.4%
Weighted average interest rate received 3.8%
Weighted average ceiling interest rate 6.5%
Fixed rate notes 53,163
Weighted average interest rate paid 5.7%
---------- ------- -------
Totals $ 104,363 $21,155 $18,750
========== ======= =======
</TABLE>
Loan agreements require financial services to maintain a minimum ratio of income
before income taxes and interest expense to interest expense of 1.25. The fair
value of financial services debt was $131,293 and $103,266 at September 30, 1995
and 1994, respectively. At September 30, 1995, maturities of notes were $39,250
in 1996, $37,313 in 1997, $31,987 in 1998, $20,313 in 1999 and $2,812 in 2000.
Interest paid was $7,211 in 1995, $5,141 in 1994 and $5,515 in 1993.
At September 30, 1995, notional amount maturities of interest rate swap
agreements were $9,063 in 1996 and $1,875 in 1997. Notional amount maturities of
ceiling agreements were $10,000 in 1996, $10,000 in 1997, $8,750 in 1998 and
$1,875 in 1999. The fair value of interest rate swap agreements represented an
unrecorded asset of $62 and $297 at September 30, 1995 and 1994, respectively.
The fair value of interest rate ceiling agreements represented an unrecorded
asset of $83 and $262 at September 30, 1995 and 1994.
REVOLVING CREDIT AGREEMENTS
Information systems and financial services share variable rate revolving credit
agreements which total $60,000 and require commitment fees on unused credit. At
September 30, 1995, available balances under these agreements were $42,450.
FAIR VALUES
Fair values of financial instruments are determined using interest rates
available to the company for debt and interest rate management agreements with
the same remaining maturities.
33
<PAGE> 34
6. CAPITAL STOCK
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Preferred
No par value
Authorized shares 60,000,000 60,000,000 60,000,000
Class A common
Par value per share $ .625 $ .625 $ .625
Authorized shares 120,000,000 60,000,000 60,000,000
============ =========== ===========
Issued and outstanding shares
Balance, beginning of year 41,707,576 42,238,022 42,883,624
Issued 671,463 1,072,134 637,978
Converted from Class B common 100,000
Repurchased (1,356,300) (1,655,400) (1,222,000)
Retired (17,171) (47,180) (61,580)
------------ ----------- -----------
Balance, end of year 41.005.568 41,707,576 42,238,022
============ =========== ===========
Class B common
Par value per share $ .03125 $ .03125 $ .03125
Authorized shares 60,000,000 30,000,000 30,000,000
Issued and outstanding shares 10,000,000 10,000,000 12,000,000
</TABLE>
Dividends on Class A common shares must be twenty times the dividends on Class B
common shares and must be paid simultaneously. Each share of Class A common and
Class B common is entitled to one vote. The Class B common shareholder may
convert twenty Class B common shares to one share of Class A common. In 1994,
2,000,000 Class B common shares were converted into 100,000 Class A common
shares. The company has reserved sufficient authorized Class A common shares for
Class B conversions and stock option plans.
Each outstanding Class A common share has one preferred share purchase right.
Each outstanding Class B common share has one-twentieth of a right. Rights
become exercisable if a person or group acquires or seeks to acquire, through a
tender or exchange offer, 20% or more of the company's Class A common shares. In
that event, all holders of Class A common shares and Class B common shares,
other than the acquirer, could exercise their rights and purchase preferred
shares at a substantial discount. At the date of these financial statements, the
company had no agreements or commitments with respect to the sale or issuance of
the preferred shares.
On February 17, 1994, the company's board of directors approved a two-for-one
common stock split. As a result of the split, on March 15, 1994, common
shareholders received one additional share for each share held as of March 1,
1994. Par value remained $.625 per Class A common share and $.03125 per Class B
common share. The company reclassified $13,199 to Class A common and $188 to
Class B common from additional paid-in capital because par value did not change.
Share and per share information presented in the accompanying financial
statements reflects the stock split.
The company repurchased Class A common shares for treasury at average prices of
$25.86 in 1995, $23.61 in 1994 and $13.50 in 1993. The remaining balance of
shares authorized for repurchase by the board of directors was 2,569,500 at
September 30, 1995. Treasury shares at September 30 were 5,204,349 in 1995,
4,519,512 in 1994 and 4,036,246 in 1993.
34
<PAGE> 35
7. EMPLOYEE STOCK OPTION PLANS
The company's stock option plans consist of incentive stock options and
non-qualified stock options to purchase Class A common shares which are awarded
to certain key employees. Stock options are generally granted at a price equal
to fair market value on the date of grant. Options may be granted at any price
not less than par value ($.625 at September 30, 1995). During the three years
ended September 30, 1995, no options were granted at a price less than fair
market value. At September 30, 1995, options to purchase 713,926 Class A common
shares were exercisable and options to purchase 1,000,000 additional Class A
common shares were available for future awards.
<TABLE>
<CAPTION>
Weighted Average
Shares Under Option Prices
Option Per Share
- -----------------------------------------------------------------------------------
<S> <C> <C>
Outstanding, September 30, 1992 1,571,796 $ 5.47
Granted 411,000 10.43
Exercised (637,978) 5.38
Canceled (4,432) 6.27
---------
Outstanding, September 30, 1993 1,340,386 7.03
Granted 2,735,640 24.76
Exercised (459,442) 6.51
Canceled (9,960) 20.00
---------
Outstanding, September 30, 1994 3,606,624 20.51
Granted 368,040 25.03
Exercised (273,628) 7.64
Canceled (41,000) 24.38
---------
Outstanding, September 30, 1995 3,660,036 21.88
=========
</TABLE>
8. POSTRETIREMENT BENEFITS
PENSION EXPENSE
<TABLE>
<CAPTION>
1995 1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Defined benefit plans
Service cost $ 5,384 $ 5,314 $ 3,817
Interest on projected benefit obligation 8,463 7,546 6,543
Actual return on plan assets (12,640) (85) (8,156)
Net amortization and deferral 5,535 (5,781) 1,444
-------- ------- -------
Net periodic pension cost 6,742 6,994 3,648
Defined contribution plans 2,007 1,916 1,667
Multi-employer plans 319 255 423
-------- ------- -------
Totals $ 9,068 $ 9,165 $ 5,738
======== ======= =======
Actuarial assumptions of defined benefit plans
Discount rate 8.25% 7.5% 8.0%
Rate of compensation increase 5.0% 4.5% 5.0%
Expected long-term rate of return on assets 9.0% 9.0% 9.5%
Actuarial cost method PROJECTED UNIT CREDIT
Measurement period JULY 1 - JUNE 30
</TABLE>
The company sponsors non-contributory, defined benefit pension plans for most
full-time employees. Pension benefits are based on years of service and
compensation during an employee's final ten years of employment. The company's
funding policy is to make annual contributions to the plans sufficient to meet
or exceed the minimum
35
<PAGE> 36
statutory requirements. The company and its actuaries review the pension plans
each year. The actuarial assumptions are intended to reflect expected experience
over the life of the pension liability.
The company sponsors defined contribution savings plans covering most domestic
employees. Generally, contributions are funded monthly and represent 40% of the
first 3% of compensation contributed to the plan by participating employees. The
company also participates in several multi-employer plans which provide defined
benefits to union employees.
FUNDED STATUS OF DEFINED BENEFIT PENSION PLANS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1995 September 30, 1994
ABO ABO
ASSETS EXCEEDS Assets Exceeds
EXCEED ABO Assets Exceed ABO Assets
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Defined benefit plans
Vested benefit obligation $ 71,428 $ 22,200 $ 61,791 $ 16,331
======== ======== ======== ========
Accumulated benefit obligation (ABO) $ 73,732 $ 23,765 $ 64,004 $ 21,013
======== ======== ======== ========
Projected benefit obligation (PBO) $ 95,696 $ 26,768 $ 79,695 $ 25,159
Fair market value of plan assets (87,838) (2,187) (75,835) (2,664)
-------- -------- -------- --------
PBO greater than plan assets 7,858 24,581 3,860 22,495
Unrecognized net loss (10,832) (5,414) (7,364) (4,924)
Minimum pension liability 7,548 6,257
Unrecognized prior service cost (764) (2,556) (775) (2,838)
Unrecognized net asset (liability)
being amortized over 8 to 15 years 2,762 (2,581) 3,631 (2,784)
-------- -------- -------- --------
Net pension (asset) liability (976) 21,578 (648) 18,206
Multi-employer liability 219 225
-------- -------- -------- --------
Totals $ (976) $ 21,797 $ (648) $ 18,431
======== ======== ======== ========
Minimum pension liability
Intangible asset $ 5,144 $ 5,607
Deferred income tax benefit 974 263
Charge to shareholders' equity 1,430 387
-------- --------
Totals $ 7,548 $ 6,257
======== ========
Actuarial assumptions of defined benefit plans
PBO discount rate 7.875% 8.25%
Rate of compensation increase 5.0% 5.0%
</TABLE>
At September 30, 1995 and 1994, about 53% and 56% of the plans' assets were
invested in cash, cash equivalents, U.S. treasury bonds and mortgage backed
government agency securities. The balance of the plans' assets were invested in
equities.
ACCOUNTING CHANGE
Effective October 1, 1992, the company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions" and elected to
immediately recognize the transition obligation recording a cumulative effect of
the accounting change of $31,500 ($19,106 or $.44 per share net of income tax
benefits) in the first quarter of 1993.
36
<PAGE> 37
POSTRETIREMENT MEDICAL AND LIFE INSURANCE EXPENSE
<TABLE>
<CAPTION>
1995 1994 1993
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Defined contribution plan $3,434 $3,416
------ ------
Defined benefit plans
Service cost 935 1,016 $ 981
Interest on accumulated benefit obligation 2,835 2,460 2,315
------ ------ ------
Total defined benefit plans 3,770 3,476 3,296
------ ------ ------
Totals $7,204 $6,892 $3,296
====== ====== ======
Actuarial assumptions of defined benefit plans
Discount rate 8.25% 7.5% 7.5%
Healthcare cost trend rate through 2007 6.0% 6.0% 6.0%
Healthcare cost trend rate thereafter 5.0% 5.0% 5.0%
</TABLE>
In 1994, the company introduced Retiree Medical Savings Accounts, a company
funded defined contribution plan. This plan, which covers substantially all
employees, will enable future retirees to purchase postretirement medical
insurance from the company. Contributions are funded annually based on the
company's return on equity and are the same for each eligible employee.
Forfeitures of non-vested savings accounts are used to reduce contributions
required by the company.
The company sponsors a defined benefit life insurance plan for substantially all
employees. Upon retirement, this plan provides for a fixed death benefit to be
paid to the designated beneficiary. The company also sponsors a defined benefit
medical plan for employees who retired before October 1, 1993. The cost sharing
provisions of the plan depend on the medical plan provisions in effect at the
date of retirement. Effective October 1, 1993, the company no longer provides a
defined benefit medical plan for new retirees. Future retirees may purchase
postretirement medical insurance from the company using Retiree Medical Savings
Accounts. Discounts from the market price of postretirement medical insurance
will be provided to certain retirees based on age and length of remaining
service as of October 1, 1993. These discounts are included in the determination
of the accumulated benefit obligation. The company funds medical and life
insurance benefits on a pay-as-you-go basis.
POSTRETIREMENT MEDICAL AND LIFE INSURANCE OBLIGATION
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------
<S> <C> <C>
Accumulated benefit obligation
Retirees $ 21,681 $ 17,968
Fully eligible active plan participants 6,724 6,366
Other active plan participants 12,455 10,802
Unrecognized net loss (3,798) (45)
-------- --------
Totals $ 37,062 $ 35,091
======== ========
Actuarial assumptions
Discount rate 7.875% 8.25%
Healthcare cost trend rate through 2007 6.0% 6.0%
Healthcare cost trend rate thereafter 5.0% 5.0%
</TABLE>
The effect of a 1% increase in the assumed healthcare cost trend rate would have
increased the service and interest cost components of postretirement medical
insurance in 1995 by $155 and the accumulated benefit obligation at September
30, 1995 by $2,206.
37
<PAGE> 38
9. CASH FLOW STATEMENTS
<TABLE>
<CAPTION>
1995 1994 1993
----------------------------------------
<S> <C> <C> <C>
INFORMATION SYSTEMS
Cash flows provided by (used for) operating activities
Net income $ 70,625 $58,331 $28,271
Adjustments to reconcile net income to
net cash provided by operating activities
Effect of accounting change 19,106
Depreciation and amortization 37,348 34,934 25,092
Deferred income taxes (3,314) (2,484) (4,552)
Deferred income taxes transferred to
financial services 8,664 6,026 1,737
Loss on sales of assets (617) 3,743 1,072
Changes in operating assets and liabilities
Accounts receivable (22,406) (10,184) (7,135)
Inventories 4,500 2,687 2,135
Prepaid expenses, intangible and other assets (6,279) (6,013) (1,695)
Accounts payable 1,882 5,879 (4,319)
Accrued and other liabilities 16,819 2,037 4,255
-------- ------- -------
Net cash provided by operating activities $107,222 $94,956 $63,967
======== ======= =======
FINANCIAL SERVICES
Cash flows provided by (used for) operating activities
Net income $ 7,969 $ 7,873 $5,145
Adjustments to reconcile net income to
net cash provided by operating activities
Deferred income taxes 15,557 9,538 2,321
Deferred income taxes transferred from
information systems (8,664) (6,026) (1,737)
Changes in receivables, other assets
and other liabilities (1,008) (618) 1,472
-------- ------- -------
Net cash provided by operating activities $13,854 $10,767 $7,201
======== ======= =======
</TABLE>
10. SEGMENT REPORTING
The company operates principally in two industry segments, computer systems and
business forms.
The computer systems segment provides integrated computer systems products and
services to automotive and healthcare markets. The segment's products include
integrated software packages, computer hardware and hardware and software
installation. Services include customer training and consulting, hardware
maintenance, software support, database management and financial services.
The business forms segment manufactures and distributes printed business forms
and systems, custom continuous and snap out forms, specialty printed products
and provides forms management services to automotive, healthcare and general
business markets.
38
<PAGE> 39
<TABLE>
<CAPTION>
Computer Systems
Products & Financial Business
Services Services Forms Corporate Totals
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
- -----------------------------------------------------------------------------------------------------------------
Net sales and revenues $422,678 $ 22,311 $465,902 $910,891
Operating income 64,138 13,161 59,716 137,015
Income before income taxes 66,903 13,161 59,500 $(2,809) 136,755
Identifiable assets 182,727 265,965 257,022 49,752(1) 755,466
Depreciation and amortization 21,832 14,246 1,270 37,348
Capital expenditures 18,462 10,927 1,361 30,750
1994
- -----------------------------------------------------------------------------------------------------------------
Net sales and revenues $363,763 $ 19,488 $425,543 $808,794
Operating income(2) 59,254 13,072 25,741 98,067
Income before income taxes(2) 61,760 13,072 25,448 $(2,958) 97,322
Identifiable assets 139,038 204,107 242,838 48,716(1) 634,699
Depreciation and amortization 17,218 16,746 970 34,934
Capital expenditures 13,933 8,502 5,453 27,888
1993
- -----------------------------------------------------------------------------------------------------------------
Net sales and revenues $281,520 $ 19,218 $396,228 $696,966
Operating income 44,081 10,565 36,451 91,097
Income before income taxes 44,601 10,565 36,425 $(2,307) 89,284
Identifiable assets 145,365 162,790 235,900 26,496(1) 570,551
Depreciation and amortization 12,972 11,121 999 25,092
Capital expenditures 9,889 8,110 896 18,895
</TABLE>
(1) Principally cash and equivalents, and corporate headquarters office building
and contents.
(2) Business forms income was reduced by a $12,400 restructuring charge.
11. CONTINGENCIES
The U.S. Environmental Protection Agency (EPA) has designated the company as one
of a number of potentially responsible parties (PRP) under the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA) at three
environmental remediation sites. The EPA has contended that any company linked
to a CERCLA site is potentially liable for all response costs under the legal
doctrine of joint and several liability.
The first site relates to a privately owned and operated solid waste disposal
facility. The EPA has issued a record of decision mandating certain remediation
activities. The company has shared costs with other PRPs for the remedial
investigation and feasibility study of the site. The company believes it is a
minor participant, and has accrued its estimated share of response costs as of
September 30, 1995. The company believes that the reasonably foreseeable
resolution will not have a material adverse effect on the financial statements.
The second site involves a municipal waste disposal facility owned and operated
by four municipalities. The company joined a PRP coalition and is sharing
remedial investigation and feasibility study costs with other PRPs. From almost
all indications during an October, 1995 public meeting hosted by the EPA, it
appears as if the EPA will select the remedy proposed in the engineering
evaluation/cost analysis. However, until a remedy is officially selected,
potential remediation costs for this site remain uncertain. Remediation costs
for a typical CERCLA site on the National Priorities List average about $30,000.
The engineering evaluation/cost analysis was consistent with
39
<PAGE> 40
this average. The company has accrued its estimated share of response costs as
of September 30, 1995. The company believes that the reasonably foreseeable
resolution will not have a material adverse effect on the financial statements.
In January 1994, by means of a special notice letter, the EPA notified the
company that it was considered to be one of more than three hundred PRPs at a
former drum reconditioning facility. A remedial investigation and feasibility
study is complete. A record of decision has been issued, and a statement of work
for the remedial design and remedial action is in circulation. The company was
unable to substantiate any previous involvement with this facility and believes
that the reasonably foreseeable resolution will not have a material adverse
effect on the financial statements.
[REMAINDER OF PAGE LEFT BLANK]
40
<PAGE> 41
12. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
- -----------------------------------------------------------------------------------------------------------------
Net sales and revenues
Information systems $203,599 $223,138 $225,327 $236,516
Financial services 5,100 5,380 5,871 5,960
-------- -------- -------- --------
Totals $208,699 $228,518 $231,198 $242,476
======== ======== ======== ========
Costs and expenses
Cost of sales $107,758 $120,391 $120,094 $122,402
Selling, general and administrative expenses 65,866 72,554 74,229 81,432
Financial services 2,035 2,131 2,445 2,539
-------- -------- -------- --------
Totals $175,659 $195,076 $196,768 $206,373
======== ======== ======== ========
Net income $ 18,889 $ 19,330 $ 19,860 $ 20,515
Earnings per common share $ .44 $ .46 $ .47 $ .48
Cash dividends declared per share
Class A common $ .10 $ .10 $ .10 $ .10
Class B common $ .005 $ .005 $ .005 $ .005
Closing market prices of Class A common shares
High $ 25.88 $ 28.50 $ 30.63 $ 36.38
Low $ 22.25 $ 23.25 $ 26.00 $ 30.25
1994
- -----------------------------------------------------------------------------------------------------------------
Net sales and revenues
Information systems $187,832 $200,644 $197,477 $203,353
Financial services 4,810 4,815 4,836 5,027
-------- -------- -------- --------
Totals $192,642 $205,459 $202,313 $208,380
======== ======== ======== ========
Costs and expenses
Cost of sales $103,839 $111,445 $106,649 $107,981
Selling, general and administrative expenses 62,160 65,770 67,187 66,880
Restructuring charge 12,400
Financial services 1,462 1,495 1,762 1,697
-------- -------- -------- --------
Totals $167,461 $178,710 $187,998 $176,558
======== ======== ======== ========
Net income $ 14,409 $ 15,469 $ 18,097 $ 18,229
Earnings per common share $ .33 $ .35 $ .41 $ .42
Cash dividends declared per share
Class A common $ .075 $ .085 $ .085 $ .085
Class B common $.00375 $.00425 $ .00425 $ .00425
Closing market prices of Class A common shares
High $ 22.81 $24.63 $ 25.38 $ 26.50
Low $ 19.06 $21.19 $ 19.88 $ 22.50
</TABLE>
41
<PAGE> 42
Schedule II
VALUATION ACCOUNTS
FOR THE YEARS ENDED SEPTEMBER 30, 1995, 1994, AND 1993
(Dollars in Thousands)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
------Additions------ ----Deductions----
Balance Charged
Description at to Costs Other Write-offs Other Balance
Beginning and Net of at End
of Year Expenses (a) Recoveries (a) of Year
- ------------------------------------------------------------------------------------------------------------------------------
Valuation Accounts - Deducted From Assets to Which They Apply
<S> <C> <C> <C> <C> <C> <C>
INFORMATION SYSTEMS
Reserves for accounts receivable:
Year ended September 30, 1995 2,683 1,977 202 1,696 0 3,166
Year ended September 30, 1994 6,090 1,040 52 4,102 397 2,683
Year ended September 30, 1993 3,183 2,220 4,796 4,032 77 6,090
Reserves for inventory:
Year ended September 30, 1995 1,503 1,660 0 1,776 0 1,387
Year ended September 30, 1994 1,887 1,761 0 1,943 202 1,503
Year ended September 30, 1993 1,832 1,380 175 1,463 37 1,887
Reserves for notes receivable:
Year ended September 30, 1995 731 (205) 0 55 0 471
Year ended September 30, 1994 3,023 575 0 2,867 0 731
Year ended September 30, 1993 2,858 247 142 224 0 3,023
FINANCIAL SERVICES
Reserves for finance receivables:
Year ended September 30, 1995 4,854 (150) 0 801 0 3,903
Year ended September 30, 1994 5,846 (700) 0 292 0 4,854
Year ended September 30, 1993 5,871 1,100 0 1,125 0 5,846
</TABLE>
(a) Includes adjustments from translation of foreign currency to United States
dollars and the effects of acquisitions and disposals of businesses.
42
<PAGE> 43
INDEX OF EXHIBITS
Securities Exchange Act of 1934
<TABLE>
<CAPTION>
Exhibit No. Item
- ----------------------------------------------------------------------------------------------------------
<S> <C>
(3)(a) Amended Articles of Incorporation; incorporated by reference to Exhibit A
of the Company's definitive proxy statement dated January 8, 1990 filed
with the Securities and Exchange Commission.
(3)(b) Consolidated Code of Regulations; incorporated by reference to Exhibit B
to the Company's definitive proxy statement dated January 8, 1990 filed
with the Securities and Exchange Commission.
(4)(a) Loan Agreement with Metropolitan Life Insurance Company dated September
17, 1986, incorporated by reference to Exhibit (4)(a) to Form 10-K for
the fiscal year ended September 30, 1986.
(4)(b) Copies of the agreements relating to long-term debt, which are not
required as exhibits to this Form 10-K, will be provided to the
Securities and Exchange Commission upon request.
(4)(c) Shareholder Rights Plan incorporated by reference to Exhibit I to the
Company's Form 8-A (File No. 1-10147), which was adopted on May 6, 1991
and filed with the Securities and Exchange Commission on May 8, 1991.
(9) Not applicable.
(10)(a) Amended and Restated Employment Agreement with David R. Holmes dated as
of October 1, 1995.
(10)(b) Form of Amended and Restated Employment Agreement with Robert C. Nevin
dated as of November 9, 1987; incorporated by reference to Exhibit
(10)(c) to Form 10-K for the fiscal year ended September 30, 1987.
(10)(c) Amendment to Amended and Restated Employment Agreement with Robert C.
Nevin dated as of December 1, 1989; incorporated by reference to Exhibit
(10)(g) to Form 10-K for the fiscal year ended September 30, 1989.
(10)(d) Amended and Restated Employment Agreement with Robert C. Nevin dated as
of September 30, 1992; incorporated by reference to Exhibit (10)(e) to
Form 10-K for the fiscal year ended September 30, 1992.
(10)(e) Amended and Restated Employment Agreement with Joseph N. Bausman dated
May 31, 1995.
(10)(f) Employment Agreement with H. John Proud dated September 1, 1995.
</TABLE>
43
<PAGE> 44
<TABLE>
<CAPTION>
Exhibit No. Item
- -----------------------------------------------------------------------------------------------
<S> <C>
(10)(g) Settlement Agreement with Wayne C. Jira dated as of November 9, 1987;
incorporated by reference to Exhibit (10)(f) to Form 10-K for the fiscal
year ended September 30, 1987.
(10)(h) General form of Indemnification Agreement between the Company and each of
its directors dated as of December 1, 1989; incorporated by reference to
Exhibit (10)(m) to Form 10-K for the fiscal year ended September 30,
1989.
(10)(i) Non-Qualified Stock Option Plan -- 1980, Amended and Restated August 11,
1987; incorporated by reference to Exhibit (10)(h) to Form 10-K for the
fiscal year ended September 30, 1987.
(10)(j) Amendment to Non-Qualified Stock Option Plan -- 1980 dated as of December
8, 1989; incorporated by reference to Exhibit (10)(o) to Form 10-K for
the fiscal year ended September 30, 1989.
(10)(k) Amended and Restated Stock Option Plan -- 1989, effective September 29,
1993; incorporated by reference to Exhibit (10)(l) to Form 10-K for the
fiscal year ended September 30, 1993.
(10)(l) Stock Option Plan - 1995; incorporated by reference to Exhibit B of the
Company's definitive proxy statement dated January 5, 1995.
(10)(m) Performance Options Policy of the Compensation Committee of the Board of
Directors of The Reynolds and Reynolds Company under the Non-Qualified
Stock Option Plan -- 1980, effective October 1, 1986; incorporated by
reference to Exhibit (10)(i) to Form 10-K for the fiscal year ended
September 30, 1987.
(10)(n) Amendment and Restatement No. 1 to the Performance Options Policy of the
Compensation Committee of the Board of Directors of The Reynolds and
Reynolds Company under the Non-Qualified Stock Option Plan -- 1980,
effective October 28, 1987; incorporated by reference to Exhibit (10)(j)
to Form 10-K for the fiscal year ended September 30, 1987.
(10)(o) Amendment and Restatement No. 2 to the Performance Options Policy of the
Compensation Committee of the Board of Directors of The Reynolds and
Reynolds Company under the Non-Qualified Stock Option Plan -- 1980,
effective November 12, 1987; incorporated by reference to Exhibit (10)(k)
to Form 10-K for the fiscal year ended September 30, 1987.
(10)(p) The Reynolds and Reynolds Company Supplemental Retirement Plan;
incorporated by reference to Exhibit (10)(G) to Form 10-K for the fiscal
year ended September 30, 1980.
</TABLE>
44
<PAGE> 45
<TABLE>
<CAPTION>
Exhibit No. Item
- ----------------------------------------------------------------------------------------------
<S> <C>
(10)(q) The Reynolds and Reynolds Company Supplemental Retirement Plan; Amendment
No. 2, adopted on August 17, 1982; incorporated by reference to Exhibit
(10)(j) to Form 10-K for the fiscal year ended September 30, 1982.
(10)(r) The Reynolds and Reynolds Company Supplemental Retirement Plan, Amendment
No. 3, adopted on August 16, 1983; incorporated by reference to Exhibit
(10)(j) to Form 10-K for the fiscal year ended September 30, 1983.
(10)(s) The Reynolds and Reynolds Company Supplemental Retirement Plan, Amendment
No. 4, adopted on November 6, 1984; incorporated by reference to Exhibit
(10)(l) to Form 10-K for the fiscal year ended September 30, 1984.
(10)(t) The Reynolds and Reynolds Company Supplemental Retirement Plan, Amendment
No. 5, adopted on May 13, 1985; incorporated by reference to Exhibit
(10)(s) to Form 10-K for the fiscal year ended September 30, 1985.
(10)(u) The Reynolds and Reynolds Company Supplemental Retirement Plan, Amendment
No. 6, adopted on February 11, 1986; incorporated by reference to Exhibit
(10)(r) to Form 10-K for the fiscal year ended September 30, 1986.
(10)(v) The Reynolds and Reynolds Company Supplemental Retirement Plan, Amendment
No. 7, adopted on August 12, 1986; incorporated by reference to Exhibit
(10)(s) to Form 10-K for the fiscal year ended September 30, 1986.
(10)(w) The Reynolds and Reynolds Company Supplemental Retirement Plan, Amendment
No. 8, adopted on February 10, 1987; incorporated by reference to Exhibit
(10)(s) to Form 10-K for the fiscal year ended September 30, 1987.
(10)(x) The Reynolds and Reynolds Company Supplemental Retirement Plan, Amendment
No. 9, adopted on August 11, 1987; incorporated by reference to Exhibit
(10)(t) to Form 10-K for the fiscal year ended September 30, 1987.
(10)(y) The Reynolds and Reynolds Company Supplemental Retirement Plan, Amendment
No. 10, adopted on May 8, 1989; incorporated by reference to Exhibit
(10)(dd) to Form 10-K for the fiscal year ended September 30, 1989.
(10)(z) The Reynolds and Reynolds Company Restated Supplemental Retirement Plan
adopted November 9, 1988; incorporated by reference to Exhibit (10)(ee)
to Form 10-K for the fiscal year ended September 30, 1989.
(10)(aa) Resolution of the Board of Directors amending The Reynolds and Reynolds
Company Supplemental Retirement Plan dated as of December 1, 1989;
incorporated by reference to Exhibit (10)(ff) to Form 10-K for the fiscal
year ended September 30, 1989.
</TABLE>
45
<PAGE> 46
<TABLE>
<CAPTION>
Exhibit No. Item
- ----------------------------------------------------------------------------------------------
<S> <C>
(10)(bb) Resolution of the Board of Directors amending The Reynolds and Reynolds
Company Supplemental Retirement Plan (Amendment No. 1), dated as of
November 13, 1990; incorporated by reference to Exhibit (10)(ff) to Form
10-K for the fiscal year ended September 30, 1990.
(10)(cc) Resolution of the Board of Directors amending The Reynolds and Reynolds
Company Supplemental Retirement Plan (Amendment No. 2), dated as of July
23, 1991; incorporated by reference to Exhibit (10)(dd) to Form 10-K for
the fiscal year ended September 30, 1991.
(10)(dd) The Reynolds and Reynolds Company Supplemental Retirement Plan Amendment
No. 3, adopted August 8, 1995.
(10)(ee) Description of The Reynolds and Reynolds Company Annual Incentive
Compensation Plan adopted as of October 1, 1986; incorporated by
reference to Exhibit (10)(t) to Form 10-K for the fiscal year ended
September 30, 1987.
(10)(ff) Description of The Reynolds and Reynolds Company Amended and Restated
Annual Incentive Compensation Plan effective October 1, 1995.
(10)(gg) Description of The Reynolds and Reynolds Company Intermediate Incentive
Compensation Plan adopted as of October 1, 1986; incorporated by
reference to Exhibit (10)(v) to Form 10-K for the fiscal year ended
September 30, 1987.
(10)(hh) Resolution of the Board of Directors amending The Reynolds and Reynolds
Company Intermediate Incentive Compensation Plan dated as of December 1,
1989; incorporated by reference to Exhibit (10)(jj) to Form 10-K for the
fiscal year ended September 30, 1989.
(10)(ii) The Reynolds and Reynolds Company Retirement Plan (formerly The Reynolds
and Reynolds Company Salaried Retirement Plan) October 1, 1995
Restatement.
(10)(jj) The Reynolds and Reynolds Company Tax Deferred Savings and Protection
Plan ("401(k)" Plan), January 1, 1994 Restatement.
(10)(kk) The Reynolds and Reynolds Company Tax Deferred Savings and Protection
Plan ("401(k)" Plan) First Amendment adopted March 31, 1995.
(10)(ll) The Reynolds and Reynolds Company Tax Deferred Savings and Protection
Plan ("401(k)" Plan) Second Amendment adopted March 31, 1995.
(10)(mm) The Reynolds and Reynolds Company Tax Deferred Savings and Protection
Plan ("401(k)" Plan ) Third Amendment adopted August 8, 1995.
</TABLE>
46
<PAGE> 47
<TABLE>
<CAPTION>
Exhibit No. Item
- ---------------------------------------------------------------------------------------------
<S> <C>
(10)(nn) The Reynolds and Reynolds Company Tax Deferred Savings and Protection
Plan ("401(k)" Plan) Fourth Amendment adopted August 8, 1995.
(10)(oo) The Reynolds and Reynolds Company Retiree Medical Savings Account Plan
effective October 1, 1993.
(10)(pp) The Reynolds and Reynolds Company Retiree Medical Savings Account Plan,
Amendment No. 1, adopted August 8, 1995.
(10)(qq) General Form of Deferred Compensation Agreement between the Company and
each of the following officers; incorporated by reference to Exhibit
(10)(p) to Form 10-K for the fiscal year ended September 30, 1983.
Joseph N. Bausman, R. H. Grant, III, David R. Holmes, Dale L. Medford
and Robert C. Nevin
(10)(rr) Resolution of the Board of Directors and General Form of Amendment dated
December 1, 1989 to the Deferred Compensation Agreements between the
Company and each of the following officers; incorporated by reference to
Exhibit (10)(fff) to Form 10-K for the fiscal year ended September 30,
1989.
Joseph N. Bausman, R. H. Grant, III, David R. Holmes, Dale L. Medford
and Robert C. Nevin
(10)(ss) General Form of Collateral Assignment Split-Dollar Insurance Agreement
and Policy and Non-Qualified Compensation and Disability Benefit
Agreement between the Company and each of the following officers;
incorporated by reference to Exhibit (10)(dd) to Form 10-K for the fiscal
year ended September 30, 1985.
Joseph N. Bausman, Michael J. Gapinski, R. H. Grant, III, David R.
Holmes, Adam M. Lutynski, Dale L. Medford and Robert C. Nevin.
(10)(tt) Resolution of the Board of Directors and General Form of Amendment dated
December 1, 1989 to the Non-Qualified Compensation and Disability Benefit
between the Company and each of the following officers; incorporated by
reference to Exhibit (10)(hhh) to Form 10-K for the fiscal year ended
September 30, 1989.
Joseph N. Bausman, Michael J. Gapinski, R. H. Grant, III, David R. Holmes,
Adam M. Lutynski, Dale L. Medford and Robert C. Nevin.
</TABLE>
47
<PAGE> 48
<TABLE>
<CAPTION>
Exhibit No. Item
- ----------------------------------------------------------------------------------------------
<S> <C>
(10)(uu) Agreement dated March 11, 1963, between the Company and Richard H. Grant,
Jr., restricting transfer of Class B Common Stock of the Company;
incorporated by reference to Exhibit 9 to Registration Statement No.
2-40237 on Form S-7.
(10)(vv) Amendment dated February 14, 1984 to Richard H. Grant, Jr.'s Agreement
restricting transfer of Class B Common Stock of the Company dated March
11, 1963; incorporated by reference to Exhibit (10)(u) to Form 10-K for
the fiscal year ended September 30, 1984.
(10)(ww) Exchange Agreement dated May 29, 1992 among the Company, Norick
Investment Company A Limited Partnership, Frances N. Lilly and Majorie K.
Norick; incorporated by reference to Exhibit 2(b) to the Company's
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission on June 11, 1992 (Registration Statement No. 33-48546).
(10)(xx) Exchange Agreement dated May 29, 1992 between the Company and Third
Generation Leasing Company; incorporated by reference to Exhibit 2(c) to
the Company's Registration Statement on Form S-3 filed with the
Securities and Exchange Commission on June 11, 1992 (Registration
Statement No. 33-48546).
(11) Not applicable
(12) Not applicable
(13) Not applicable
(18) Not applicable
(21) List of subsidiaries
(22) Not applicable
(23) Consent of Independent Auditors (contained herein on page 22)
(24) Not applicable
(27) Financial Data Schedule
(28) Not applicable
(99) Not applicable
</TABLE>
48
<PAGE> 1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") made and
entered into as of the 1st day of October, 1995, by and between THE REYNOLDS
AND REYNOLDS COMPANY, a corporation existing under the laws of the State of
Ohio ("Reynolds"), and DAVID R. HOLMES ("Holmes").
W I T N E S S E T H:
WHEREAS, Holmes and Reynolds have entered into an Employment Agreement
dated as of November 9, 1987, as amended effective May 8, 1989 and December 1,
1989, respectively (as so amended the "Employment Agreement"), pursuant to
which Holmes is currently employed as Chairman of the Board, President and
Chief Executive Officer of Reynolds; and
WHEREAS, Holmes and Reynolds desire to amend, restate in its entirety,
and continue the Employment Agreement and enter into this Agreement on the
terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing premises and of the
mutual promises set forth below, Reynolds and Holmes hereby agree as follows:
1. AMENDMENT, RESTATEMENT IN ITS ENTIRETY AND CONTINUATION OF EMPLOYMENT
AGREEMENT.
Effective as of the date hereof, the Employment Agreement shall be,
and hereby is, amended, restated in its entirety and continued as set forth in
this Agreement, and all terms, conditions and provisions of the Employment
Agreement shall be, and hereby are, superseded by this Agreement and shall no
longer be of any force and effect.
<PAGE> 2
2. DEFINITIONS.
-----------
For purposes of this Agreement, the terms set forth below shall have
the following meanings:
(a) "Annual Compensation Value" shall mean Holmes' then-current
Base Compensation plus an amount equal to the average of all Bonuses (excluding
any compensation attributable to stock options of any type granted by Reynolds)
earned by Holmes during the three (3) calendar years preceding the date upon
which the valuation is made.
(b) "Base Compensation" shall mean the then-current annual base
salary (exclusive of Bonuses) of Holmes.
(c) "Bonuses" shall mean bonus payments earned by Holmes under
Reynolds' Incentive Compensation Plans and under any future bonus
or incentive compensation plans of Reynolds for its executive officers.
(d) "Change in Control" shall mean the occurrence of any of the
following:
(i) Any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than Richard H. Grant, Jr., his children or his grandchildren,
Reynolds, any trustee or other fiduciary holding securities under an employee
benefit plan of Reynolds, or any company owned, directly or indirectly, by the
shareholders of Reynolds in substantially the same proportions as their
ownership of stock of Reynolds), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Reynolds representing fifty percent
2
<PAGE> 3
(50%) or more of the combined voting power of Reynolds' then outstanding
securities;
(ii) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, any new director (other
than a director designated by a person who has entered into an agreement with
Reynolds to effect a transaction described in clause (i), (iii) or (iv) of this
Section whose election by the Board or nomination for election by Reynolds'
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
the period or whose election was previously so approved) cease for any reason
to constitute at least a majority thereof;
(iii) the shareholders of Reynolds approve a merger or
consolidation of Reynolds with any other company, other than (1) a merger or
consolidation which would result in the voting securities of Reynolds
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the combined voting power of
the voting security of Reynolds or such surviving entity outstanding
immediately after such merger or consolidation or (2) a merger or consolidation
effected to implement a recapitalization of Reynolds (or similar transaction)
in which no "person" (as hereinabove defined) acquires more than fifty percent
(50%) of the combined voting power of Reynolds' then outstanding securities; or
3
<PAGE> 4
(iv) the shareholders of Reynolds approve a plan of
liquidation, dissolution or winding up of Reynolds or an agreement for the sale
or disposition by Reynolds of all or substantially all of Reynolds' assets.
(e) "Discharge For Cause" shall be construed to have occurred
whenever occasioned by reason of felonious acts on the part of Holmes, actions
by Holmes involving serious moral turpitude or his misconduct in such manner as
to bring substantial and material discredit upon Reynolds, following the giving
of thirty (30) days' written notice to Holmes specifying the respect in which
Reynolds claims Holmes has violated this provision and the failure, inability
or unwillingness of Holmes to remedy the situation to the satisfaction of
Reynolds within said thirty-day period. In establishing whether a Discharge
For Cause shall have occurred, the standard for judgment shall be the level of
conduct by Holmes and by other comparably situated executive officers prior to
the alleged improper activity of Holmes for which the Discharge For Cause has
been made.
(f) "Escrow Agreement" shall mean the agreement dated November 9,
1987 as amended simultaneously herewith entered into between Reynolds and Bank
One, Dayton, NA, a copy of which (including the amendment) is attached hereto
and made a part hereof as Exhibit A.
(g) "Escrow Agent" shall mean Bank One, Dayton, NA.
(h) "Escrow Amount" shall mean the amounts placed in escrow by
Reynolds pursuant to subsection (e)(iii) of Section 8 of this Agreement.
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(i) "Escrow Funding Event" shall mean the occurrence of any of the
following events:
(i) Class A Common Shares of Reynolds have been acquired
other than directly from Reynolds in exchange for cash or property by any
person (other than Richard H. Grant, Jr., his children or his grandchildren,
Reynolds, any trustee or other fiduciary holding securities under an employee
benefit plan of Reynolds, or any company owned directly or indirectly by the
shareholders of Reynolds in substantially the same proportions as their
ownership of the stock of Reynolds) who either thereby becomes the owner of
more than nine and one half percent (9.5%) of Reynolds' outstanding Class A
Common Shares, or having directly or indirectly become the owner of more than
five percent (5%) of Reynolds' Class A Common Shares either alone or in
conjunction with another person has expressed an intent to continue acquiring
Reynolds' outstanding Class A Common Shares so as to become thereby the owner
of more than nine and one-half percent (9.5%) of such stock either directly or
indirectly;
(ii) Any person (other than Richard H. Grant, Jr., his
children or grandchildren, Reynolds, any trustee or other fiduciary holding
securities under an employee benefit plan of Reynolds, or any company owned
directly or indirectly by the shareholders of Reynolds in substantially the
same proportions as their ownership of stock of Reynolds) has made a tender
offer for, or a request for invitations for tenders of, Class A Common Shares
of Reynolds.
(iii) Any person forwards or causes to be forwarded to
shareholders of Reynolds proxy statement(s) in any period of
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twenty-four (24) consecutive months, soliciting proxies, to elect to the Board
of Reynolds two (2) or more candidates who were not nominated as candidates in
proxy statements forwarded to shareholders during such period by the Board; or
(iv) The Board adopts a resolution to the effect that, for
purposes of this Agreement, an Escrow Funding Event has occurred.
(j) "Final Annual Compensation" shall mean Holmes' Base
Compensation at the time of termination of employment plus an amount equal to
the average of all Bonuses (excluding any compensation attributable to stock
options of any type granted by Reynolds) earned by Holmes during the three (3)
calendar years preceding his termination of employment.
(k) "Final Average Annual Compensation" shall mean the average of
Holmes' Base Compensation and Bonuses (excluding any compensation attributable
to stock options of any type granted by Reynolds) as determined for the five
(5) consecutive calendar years of the last ten (10) calendar years preceding
and including the calendar year in which Holmes' employment terminates which
yields the highest sum.
(l) "Pension Plan" shall mean the existing Reynolds and Reynolds
Company Non-Union Pension Plan, as the same may be amended from time to time.
(m) "Retirement Benefits" shall mean payments to Holmes based upon
his lifetime in an annual amount equal to a designated percentage of Holmes'
Final Average Annual Compensation or, in the case of Section 8(d) below, Final
Annual Compensation, which shall
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be comprised of the sum of (i) Holmes' primary Social Security retirement
benefits when he is entitled to receive such benefit (age sixty-two (62))
[until that time an amount equal to the primary Social Security retirement
benefit shall be paid to Holmes from Reynolds' Supplemental Plan], (ii) Holmes'
pension benefits determined as a life annuity (without regard to actual payment
form) under the Pension Plan and deferred compensation payments under the
Non-Qualified Deferred Compensation and Disability Benefit Agreement dated
December 20, 1984 between Holmes and Reynolds, or such other non-contributory
deferred compensation agreement(s) then existing between Reynolds and Holmes,
and (iii) such amount of supplemental retirement benefits under the
Supplemental Plan as shall be necessary to achieve the designated percentage of
Holmes' Final Average Annual Compensation or, in the case of Section 8(d)
below, Final Annual Compensation. In addition to said annual amount,
Retirement Benefits shall include a continuation of coverage for the remainder
of Holmes' life under Reynolds-sponsored medical benefits and life insurance
programs, but only to the extent applicable to participants in Reynolds'
Qualified Retiree Medical Plans. For purposes of determining the amount of
supplemental retirement benefits to be made by Reynolds pursuant to the
Supplemental Plan, the method of payment of retirement benefits to Holmes
pursuant to the Pension Plan shall determine the amount and method of payment
of the supplemental retirement payments pursuant to the Supplemental Plan.
These supplemental retirement payments by Reynolds pursuant to the Supplemental
Plan shall continue so long as pension benefits are
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payable under the Pension Plan and shall be in addition to the pension benefit
payments under the Pension Plan.
(n) "Supplemental Plan" shall mean Reynolds' existing Supplemental
Retirement Plan, as the same may be amended from time to time.
3. TERMS AND DUTIES.
----------------
(a) The term of this Agreement shall continue from the date hereof
and end on October 3, 2000, unless extended in accordance herewith. Holmes
shall continue in the employ of Reynolds as Chairman of the Board, President
and Chief Executive Officer or such other substantially equivalent position
designated by the Board, consistent with the provisions of this Agreement. In
addition, Holmes agrees to perform such other duties as may be specifically
designated for him from time to time by the Board, consistent with the
provisions of this Agreement. Subject to Holmes' willingness to so extend his
employment, Reynolds may extend the term of this Agreement for additional
renewal periods of one (1) year each by giving written notice thereof not less
than twelve (12) months prior to October 3, 2000 initially and not less than
twelve (12) months prior to each succeeding October 3rd thereafter.
(b) At all times Holmes will, to the best of his ability, energy
and skill, faithfully perform all of the duties that may be required of him
from time to time by the Board and diligently devote his entire working time,
attention and efforts to the business affairs and best interests of Reynolds,
except for absences for sickness and vacations. If the Board determines that
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any outside activity engaged in by him is detrimental to the best interests of
Reynolds, he will discontinue such outside activity within thirty (30) days
after written notice from the Board.
(c) Holmes agrees that during the period of his employment by
Reynolds, for so long as he is entitled to receive payments under this
Agreement, and for a period of two (2) years thereafter (subject to the
provisions of Section 9 below), he will not, directly or indirectly, further
the affairs of any other corporation, partnership, or any business enterprise
by employment of any kind, investment therein (except as otherwise permitted
under Section 9(d) below), counseling or otherwise, if the same is in
competition with Reynolds, without the written consent of the Board. This
provision, however, shall not be construed to prevent him from pursuing
personal investments in any business or enterprise which is not in competition
with Reynolds and which do not interfere with his employment and the
performance of his duties to Reynolds hereunder.
4. COMPENSATION AND FRINGE BENEFITS.
--------------------------------
(a) The Base Compensation of Holmes during the term of this
Agreement shall be $436,300, which may be increased from time to time by the
Board or, in the case of any proposed decrease, such other amount as mutually
may be agreed upon by Holmes and Reynolds; provided, however, that such Base
Compensation may not be reduced below said rate of $436,300 without Holmes'
consent, unless necessitated by general business conditions adversely affecting
Reynolds' operations; but, in the event of a reduction, his Base Compensation
shall be fair and reasonable, and any disagreement
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concerning the same shall be resolved by arbitration in the manner provided in
Section 10 below. Holmes' Base Compensation shall be reviewed at least
annually to determine whether in view of Reynolds' performance during the year
any increase is warranted. Responsibility for this determination rests within
the sole discretion of the Board, and this provision shall not be construed as
requiring any such increase for any given year.
(b) Holmes shall continue his participation in the existing
Deferred Compensation Plan and the existing bonus plan arrangements under the
Incentive Compensation Plans (or their equivalent) for executive officers of
Reynolds and shall be entitled to such awards under any future bonus,
incentive, or similar compensation plans of Reynolds, as shall, in the
determination of the Board, be appropriate and consistent with the purposes of
such plans and with the awards granted to other executive officers of Reynolds.
(c) Holmes shall continue to be eligible for participation in the
Stock Option Plan - 1995 of Reynolds and shall be entitled to the grant of such
options to purchase shares of Class A Common Stock ("Common Stock") of Reynolds
under any other future stock option plans for employees and to participate in
such other executive compensation incentive plans awarding stock as shall, in
the determination of the Board, be appropriate and consistent with the purposes
of the plans and with the grants of such options to the executive officers of
Reynolds. Effective the date hereof, Reynolds hereby awards Holmes
non-qualified stock options covering 200,000 shares of Common Stock on the
terms and conditions of the Stock Option Agreement entered into between the
parties
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simultaneously herewith and attached hereto as Exhibit B and made a part
hereof. Subject to his then being employed by Reynolds, on October 1, 1996,
Reynolds shall award Holmes non-qualified stock options covering an additional
100,000 shares of Common Stock. At the time of this option award, Reynolds and
Holmes shall enter into a Stock Option Agreement covering such options in the
form of Exhibit C attached hereto and made a part hereof.
(d) In addition to the specific benefits provided for Holmes under
the terms of this Agreement, Reynolds shall provide him with other fringe
benefits (including bonuses, vacations, health and disability insurance,
pension plan participation and others) at least equivalent to those of the
other executive officers of Reynolds and as set forth on Exhibit D attached
hereto and made a part hereof.
5. EXPENSES.
--------
Holmes shall be reimbursed for his reasonable business-related
expenses incurred for the benefit of Reynolds in accordance with Reynolds'
policies governing such reimbursement in effect from time to time. Such
expenses shall include, but shall not be limited to, travel, lodging away from
home, entertainment, and meals. With respect to any expenses which are
reimbursed by Reynolds to Holmes, Holmes shall account to Reynolds in
sufficient detail to entitle Reynolds to a federal income tax deduction for
such reimbursed item if such item is deductible.
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6. RETIREMENT AND EARLY RETIREMENT BENEFITS.
----------------------------------------
(a) If Holmes continues his employment with Reynolds until he
attains age fifty-nine (59), he shall be entitled to receive at the time of his
retirement Retirement Benefits at a level equal to sixty-five percent (65%) of
his Final Average Annual Compensation. If Holmes continues his employ with
Reynolds beyond age fifty-nine (59), the level of his retirement benefits as a
percentage of his Final Average Annual Compensation shall be increased by one
percent (1%) for each additional twelve (12) month period over age fifty-nine
(59).
(b) Holmes may elect to retire from Reynolds upon giving twelve
(12) months prior written notice and having attained at least age fifty-five
(55) and he shall be entitled to receive at the time of such early retirement
Retirement Benefits at a level equal to sixty-one percent (61%) of his Final
Average Annual Compensation. If Holmes elects to retire upon giving twelve
(12) months prior written notice at any time from age fifty-six (56) through
age fifty-nine (59), the level of his Retirement Benefits as a percentage of
his Final Average Annual Compensation shall be increased by one percent (1%)
for each additional twelve (12) month period over age fifty-five (55).
(c) To the extent Holmes receives any similar benefits under the
Pension Plan, Supplemental Plan or other Reynolds benefit plan for any of its
employees, such benefits shall be included in calculating the amount to which
Holmes shall be entitled under Sections 6(a) and 6(b) above; provided, however,
that in no event
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shall the benefits described in Sections 6(a) and 6(b) above be reduced by the
provisions of this Section 6(c).
7. DISABILITY AND DEATH BENEFITS.
-----------------------------
(a) If Holmes becomes disabled prior to his retirement, he shall
be deemed to have elected retirement under this Agreement. See Section 8(c)
below.
(b) In the event of Holmes' death while still employed by Reynolds
pursuant to this Agreement, Holmes shall be entitled to Retirement Benefits
calculated as if he had elected retirement as of the day before his actual
death. Reynolds shall also pay to such beneficiary or beneficiaries as he
shall have designated by written notice delivered to Reynolds prior to his
death, or failing such written notice, to his estate, an amount equal to the
Base Compensation plus the Bonuses, if any, which Holmes would have received or
which would have been accrued for his benefit during the period of six (6)
months immediately following his death if he had lived and had been employed by
Reynolds during that period. Such payment shall be made in one lump sum or in
six (6) equal monthly installments as Reynolds shall elect and shall be in
addition to the proceeds of any insurance policies carried on Holmes' life with
respect to which he has the right to designate beneficiaries. Also, Reynolds
shall pay to Holmes' spouse an amount, periodically as such payments are
required to be made by said spouse, to enable her to continue medical coverage
for her and her dependents in the same manner as immediately prior to Holmes'
death for a period expiring at the earlier of: (i) her death; (ii) forty-two
(42) months after Holmes' death; or (iii)
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eligibility for regular Medicare and Medicaid or any successor programs
furnished by the government. Thereafter, Reynolds shall make available to
Holmes' spouse (including her dependents), at her cost, such medical coverage
as shall be available to a person of her then age under the then-existing
Reynolds-sponsored medical benefits program, but only to the extent coverage is
available under such program.
8. TERMINATION; DISCHARGE.
----------------------
(a) TERMINATION OR DISCHARGE WITHOUT CAUSE. Reynolds reserves the
right to discharge Holmes at any time and for any reason and not to renew this
Agreement; but such non-renewal or discharge, unless a Discharge For Cause,
shall not extinguish the obligation of Reynolds to provide Holmes (and, in the
event of his prior death, his designated beneficiary or beneficiaries or his
estate) with the following severance benefits:
(i) If Reynolds does not renew this Agreement, Holmes
shall be deemed to have elected retirement under this Agreement and he shall be
entitled to receive the Retirement Benefits set forth in Section 6 above. He
shall not be entitled to any other severance benefits under this Agreement.
(ii) If such discharge occurs prior to October 3, 2000,
Holmes shall be entitled to receive for a period expiring two (2) years from
the date of discharge, payments from Reynolds in an amount equal to his Annual
Compensation Value, which shall be reduced by seventy percent (70%) of the
amount of compensation received by Holmes from any subsequent employment
obtained by him during said payment period.
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(iii) Holmes shall be entitled, during the period expiring
on the earlier of Holmes' securing other employment or two (2) years from the
date of discharge (or such longer period as required by law), to continuing
coverage under the then-existing Reynolds-sponsored medical benefits program,
which, at the option of Reynolds, may be provided outside of such program
through the purchase of insurance or otherwise.
(iv) For purposes of determining Holmes' benefits under
the Supplemental Plan, Holmes shall receive credit toward his Years of Service
under the Supplemental Plan for the time period that he receives or is entitled
to receive payments under subsection (ii) of this Section 8(a). In addition,
during the time period that he receives or is entitled to receive payments
under said subsection (ii) of this Section 8(a), Holmes' Base Compensation
shall be deemed to be increased by the annual economic range adjustment for
Reynolds' salaried employees announced in October of each year (or, if there is
no such announced economic range adjustment in a given year, by an assumed five
(5%) increase for that year) in order to calculate his highest earnings during
five (5) consecutive years out of the last ten (10) years prior to retirement
under the Supplemental Plan, and his Final Annual Compensation (see Section
8(d) below) and Final Average Annual Compensation shall be deemed to increase
in the same manner for purposes of determining the amount of his Retirement
Benefits under this Agreement.
(v) Holmes shall be reimbursed for up to $20,000 for
out-placement fees if he chooses to seek other employment following his
discharge by Reynolds. Holmes shall not be obligated to seek
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other employment in order to mitigate his damages resulting from his discharge.
(vi) In addition to all of the foregoing, Holmes shall be
entitled to receive the payments required of Reynolds under his then-existing
deferred compensation agreement(s) with Reynolds in accordance with the terms
of such agreement(s).
Holmes acknowledges that he shall remain subject to and bound
by the restrictive provisions of Section 9 below.
(b) DISCHARGE FOR CAUSE. If Holmes' employment with Reynolds is
terminated by a Discharge For Cause, regardless of whether such Discharge For
Cause occurs after the occurrence of any of the events set forth in Sections
8(d) or 8(e) below, he shall be entitled to receive only his Base Compensation
up to the date of his discharge and no further payments hereunder shall be
required from Reynolds; provided, however, that Holmes shall be entitled to
receive his benefits, if any, under the Pension Plan and the payments required
of Reynolds under his then-existing deferred compensation agreement(s) with
Reynolds in accordance with the terms of such agreement(s). Holmes shall
remain subject to the restrictive provisions of Section 9 below for a period
for two (2) years from the date of discharge. Should Holmes disagree that his
discharge was a Discharge For Cause the question shall be submitted to
arbitration in accordance with Section 10 below.
(c) TERMINATION DUE TO DISABILITY. If, by reason of illness,
disability, or other incapacity certified by two (2) physicians competent to do
so in the opinion of Reynolds' Board of Directors, Holmes is unable to perform
the duties required of him under this
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Agreement for a period of six (6) consecutive months, Reynolds, following the
giving of thirty (30) days' written notice to Holmes and the failure of Holmes
by reason of illness, disability, or other incapacity to resume his duties
within such thirty (30) days and thereafter perform the same for a period of
two (2) consecutive months, may terminate Holmes' employment by giving Holmes
written notice thereof; and in that event all obligations of Reynolds hereunder
shall cease on the date such notice of termination is given except for payment
of the Retirement Benefits under Section 6 above.
(d) BENEFITS UPON TERMINATION UNDER CERTAIN CURCUMSTANCES. If
Holmes voluntarily terminates his employment or Holmes is discharged by
Reynolds and such discharge is not a Discharge For Cause, and if such voluntary
termination or involuntary discharge takes place within eighteen (18) months
after the occurrence of any of the following events:
(i) Holmes is required by Reynolds, prior to a Change in
Control, to perform duties or services which differ significantly from those
performed by him on the effective date hereof, or which are not ordinarily and
generally performed by a Chairman of the Board, President and Chief Executive
Officer of a corporation similar in size and scope to Reynolds; or
(ii) The nature of the duties or services which Reynolds,
prior to a Change in Control, requires him to perform necessitates absence
overnight from his place of residence on the effective date hereof, because of
travel involving the business or affairs of Reynolds, for more than ninety (90)
days during any period of
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twelve (12) consecutive months; Holmes shall be entitled to receive from
Reynolds all of the severance benefits set forth in Section 8(a) above, except
that severance payments shall be made until the later of the end of the term of
this Agreement or two (2) years from the date of his termination of employment
and Holmes' right to receive his Retirement Benefits shall be based upon his
Final Annual Compensation, as the same may be adjusted pursuant to Section
8(a)(iv) above. Holmes shall remain subject to and bound by the restrictive
provisions of Section 9 below.
(e) BENEFITS UPON A CHANGE IN CONTROL. Reynolds recognizes that
the threat of a Change in Control would be of significant concern to Holmes.
The following provisions provide termination protection for Holmes in the event
of a Change in Control. These provisions, among other purposes, are intended
to foster and encourage Holmes' continued attention and dedication to his
duties in the event of such potentially disturbing and disruptive
circumstances. Reynolds, therefore, agrees to do the following:
(i) If Reynolds terminates Holmes' employment for any reason
other than a Discharge for Cause, or if Holmes terminates his employment with
Reynolds voluntarily for any reason other than disability or retirement within
the twenty-four (24) month period following a Change in Control, Holmes shall
be entitled to receive from Reynolds the following benefits:
(A) A lump sum severance payment (the "Severance
Payment"), in cash, equal to three (3) times the sum of (i) the higher of
Holmes' annual Base Compensation in effect immediately prior to the occurrence
of the event or circumstance upon which
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such termination of employment is based or in effect immediately prior to the
Change in Control, and (ii) the average of Holmes' Bonuses during the three (3)
calendar years immediately preceding the year in which the date of termination
occurs.
(B) Holmes shall be entitled, during the period expiring
on the earlier of Holmes' securing other employment or twenty-four (24) months
from the date of such termination of employment (or such longer period as
required by law), to continued coverage under the Reynolds sponsored medical
benefits program in existence on such date of termination or, if such continued
coverage is barred, Reynolds shall provide equivalent medical benefit coverage
through the purchase of insurance or otherwise.
(C) For purposes of determining Holmes' benefits under
the Supplemental Plan, Holmes shall receive credit toward his Years of Service
under the Supplemental Plan for the two (2) year period following such
termination of employment. In addition, with respect to the two (2) year
period following such termination of employment, Holmes' Base Compensation
shall be deemed to be increased by the annual economic range adjustment for
Reynolds' salaried employees announced in October of each year (or, if there is
no such announced economic range adjustment in a given year, by an assumed five
percent (5%) increase for that year) in order to calculate his highest earnings
during five (5) consecutive years out of the last ten (10) years prior to
retirement under the Supplemental Plan.
(D) Holmes shall be reimbursed for up to $20,000 for
outplacement fees if he chooses to seek other employment following
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his discharge by Reynolds. Holmes shall not be obligated to seek other
employment in order to mitigate his damages resulting from his discharge.
(E) In addition to all of the foregoing, Holmes shall be
entitled to receive the payments required of Reynolds under his then-existing
deferred compensation agreement(s) with Reynolds in accordance with the terms
of such agreement(s), and the retirement benefit provided for in Section 6 of
this Agreement.
The benefits provided in this Section 8(e) shall be in lieu of
any benefits provided under Section 8(d) of this Agreement.
(ii) Notwithstanding any other provisions of this Agreement,
in the event that any payment or benefit received or to be received by Holmes in
connection with a Change in Control or the termination of Holmes' employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with Reynolds, any person whose actions result in a Change in
Control or any person affiliated with Reynolds or such person) (all such
payments and benefits, including the Severance Payment, being hereinafter
called "Total Payments") would be subject (in whole or part), to an excise tax
pursuant to Sections 280G and 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (such tax hereinafter referred to as the "Excise Tax"),
then the Severance Payment shall be reduced to the extent necessary so that no
portion of the Total Payments is subject to Excise Tax (after taking into
account any reduction in the Total Payments provided by reason of Section 280G
of the Code in such other plan, arrangement or agreement) if (A) the net amount
of such Total Payments, as so
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reduced, (and after deduction of the net amount of federal, state and local
income tax on such Total Payments), is greater than (B) the excess of (i) the
net amount of such Total Payments, without reduction (but after deduction of
the net amount of federal, state and local income tax on such Total Payments),
over (ii) the amount of Excise Tax to which Holmes would be subject in respect
of such Total Payments. For purposes of determining whether and the extent to
which the Total Payments will be subject to the Excise Tax, (i) no portion of
the Total Payments the receipt or enjoyment of which Holmes shall have
effectively waived in writing prior to the date of this termination of
employment shall be taken into account, (ii) no portion of the Total Payments
shall be taken into account which in the opinion of tax counsel selected by
Reynolds does not constitute a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code, (including by reason of Section 280G(b)(4)(A)
of the Code) and, in calculating the Excise Tax, no portion of such Total
Payment shall be taken into account which constitutes reasonable compensation
for services actually rendered, within the meaning of Section 280G(b)(4)(B) of
the Code, in excess of the base amount as defined in Section 280G(b)(3) of the
Code allowable to such reasonable compensation, and (iii) the value of any
non-cash benefit or any deferred payment or benefit included in the Total
Payments shall be determined by Reynolds in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. Prior to the fifth day following the
date of Holmes' termination of employment, Reynolds shall provide Holmes with
its calculation of the amounts referred to in this Section and such supporting
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materials as are reasonably necessary for Holmes to evaluate Reynolds'
calculations. If Holmes objects to Reynolds' calculations, he shall notify
Reynolds of his objections prior to the initial payment date set forth in
Section 8(e)(vi) hereof, and Reynolds shall pay to Holmes such portion of the
Severance Payment (up to one hundred percent (100%) thereof) as Holmes
determines is necessary to result in Holmes' receiving the greater of clauses
(A) and (B) of this Section.
(iii) Upon the occurrence of an Escrow Funding Event,
Reynolds shall pay into an escrow account at the Escrow Agent an amount equal
to three (3) times the sum of (i) Holmes' Base Compensation in effect
immediately prior to the Escrow Funding Event and (ii) the average of Holmes'
Bonuses during the three (3) calendar years immediately preceding the year in
which the Escrow Funding Event occurs. Subsequent to the delivery to the
Escrow Agent of the Escrow Amount, Reynolds shall, in the event that either
Holmes' Base Compensation is increased (or decreased) or he receives a Bonus
that affects the amount described in Section 8(e)(i)(A), unless the Escrow
Amount shall theretofore have been released pursuant to this subsection,
recalculate the Escrow Amount as of the date such change in Base Compensation
or receipt of Bonus occurs, treating the Escrow Funding Event as having
occurred on such date. If the amount so calculated exceeds the fair market
value of the Escrow Amount, Reynolds shall promptly (and in no event later than
seven (7) days from such date) pay to the Escrow Agent an amount in cash (or
marketable securities or any combination thereof) equal to such excess. If the
Escrow Amount so
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calculated is less than the fair market value of the Escrow Amount then held in
the escrow account, the Escrow Agent, upon receipt of a written request from
Reynolds, shall distribute to Reynolds such difference in cash; provided,
however, that this sentence shall not apply after the occurrence of a Change in
Control.
(iv) Unless the parties otherwise agree, Reynolds may
withdraw the Escrow Amount when and only when two (2) years have expired from
the date of deposit and no proper demand pursuant to Section 8(e)(vi) below has
been made during the time, or when the conditions requiring the deposit have
ceased to exist for a period of ninety (90) days without a demand right having
been created, or when Holmes' right to a payment under this Section 8(e) has
been forfeited, whichever occurs first. If, before the expiration of such
period or forfeiture, there shall occur another Escrow Funding Event, Reynolds
will not be required to make an additional deposit, but the two (2) year period
shall then be measured from the date of the last such event. Notwithstanding a
deposit with the Escrow Agent pursuant to subsection (iii) of this Section
8(e), Holmes shall continue to be entitled to receive all of the benefits from
Reynolds under this Agreement until a termination of employment shall occur.
(v) Reynolds shall pay the charges of the Escrow Agent
for its services under the Escrow Agreement, and Reynolds will be entitled to
any interest or other income arising from the date of the deposit of the Escrow
Amount until all payments have been made under the Escrow Agreement to Holmes.
All interest or other income
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arising from the Escrow Amount deposited with the Escrow Agent shall be paid
monthly to Reynolds.
(vi) If Reynolds terminates Holmes' employment for any
reason but a Discharge for Cause, or if Holmes terminates his employment with
Reynolds voluntarily for any reason other than disability or retirement within
the twenty-four (24) month period following the date of a Change in Control,
the Escrow Agent, upon written demand made on or after the tenth (10th) day
following such termination of employment, shall pay the Escrow Amount in
accordance with this Section and Holmes shall no longer be subject to the
restrictive provisions of Section 9 below, except for Section 9(e). Holmes
shall notify the Escrow Agent prior to the tenth (10th) day following his
termination of employment as to whether he has accepted the determination of
Reynolds of the amount of the Severance Payments pursuant to Section 8(e)
(iii). If he has accepted such determination, Reynolds shall provide the
Escrow Agent with Reynolds' written determination as set forth in Section 8(e)
(iii) and the Escrow Agent shall pay to Holmes all or a portion of the Escrow
Amount as provided in such determination, and any remaining amount shall be
paid to Reynolds. If Holmes does not accept Reynolds' determination, Holmes
shall provide to the Escrow Agent his determination of the Severance Payment,
and the Escrow Agent shall pay to Holmes all or a portion of the Escrow Amount
as provided in Holmes' determination and any remaining amount shall be paid to
Reynolds.
(vii) In the event that, following the creation of a demand
right pursuant to Section 8(e)(vi) above, Holmes incurs any
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costs or expenses, including attorneys' fees, in the enforcement of rights
under this Section 8(e) or under any plan for the benefit of employees of
Reynolds, including without limitation the stock option plan, pension plans,
payroll-based stock ownership plan, tax deferred savings and protection plan,
bonus arrangements, supplemental pension plan, deferred compensation
agreements, incentive compensation plans, and life insurance and compensation
program, then, unless Reynolds or the consolidated, surviving or transferee
entity in the event of a consolidation, merger or sale of assets, is wholly
successful in defending against the enforcement of such rights, Reynolds, or
such consolidated, surviving or transferee entity, shall promptly pay to Holmes
all such costs and expenses.
9. NON-COMPETITION; CONFIDENTIALITY.
--------------------------------
(a) In order to protect Reynolds, it is understood that a covenant
not to compete is a necessary and appropriate adjunct to the other provisions
of this Agreement. Therefore, should Holmes at any time determine prior to the
expiration of this Agreement that he does not desire to remain an employee of
Reynolds and shall terminate his employment for any reason other than the
grounds specified in Section 8(e) above, or should he be Discharged For Cause
by Reynolds, Holmes shall remain subject to the restrictive provisions
hereinafter set forth. In addition, these restrictive provisions shall remain
in full force and effect at any other time during which payments are required
to be made by Reynolds pursuant to the retirement (Section 6), severance
(Section 8, except for Section 8(e)(vi)) or disability (Section 7)
25
<PAGE> 26
provisions of this Agreement. These restrictive provisions are as follows:
(b) For a period of two (2) years from and after Holmes'
employment with Reynolds shall have terminated and after he shall have ceased
receiving retirement, severance or disability benefits under this Agreement,
whichever shall last occur, he shall not, directly or indirectly, compete with
Reynolds or any of its related or affiliated companies. For purposes of this
Agreement, competition with Reynolds or any of its related or affiliated
companies shall include the manufacture, distribution, and sale of business
forms and computer hardware and software and the furnishing of EDP services
which are similar in nature or function to the products and/or services then
being furnished by Reynolds for sale in the same vertical markets in which
Reynolds' products and/or services are then being marketed at the time of
Holmes' termination of employment or upon the cessation of any retirement,
severance or disability benefits under this Agreement.
(c) From and after the execution of this Agreement and for a
period of two (2) years after termination of his employment with Reynolds and
after he shall have ceased receiving retirement, severance or disability
benefits under this Agreement, whichever shall last occur, Holmes shall not,
directly or indirectly, by direct participation, by purchase of stocks or bonds
or other evidences of indebtedness, by loaning of money, by guarantee of loans
of others, by gift to establish or assist others, or in any other manner or
fashion, engage in any such restricted activity in competition with Reynolds or
any of its related or affiliated
26
<PAGE> 27
companies, nor shall he assist any present employees of Reynolds or any other
person similarly to engage in such competing business for the full two-year
prohibition period set forth in this Agreement.
(d) The restrictive provisions of this Section 9, however, are in
no way intended to prohibit Holmes from acquiring in open market transactions
investments in equity stock or evidences of indebtedness of a corporation if
the said stock or if the said evidence of indebtedness is traded on a national
or regional securities exchange or in the over-the-counter market and the
investment therein represents no more than five percent (5%) of the outstanding
securities of the issue being acquired. Moreover, it is not the intention of
this Section 9 to limit in any way Holmes' ability to invest in businesses not
competitive with Reynolds.
(e) Holmes shall keep secret and inviolate all knowledge or
information of a confidential nature (which is not then nor later, through no
breach of this Agreement, in the public domain), including all unpublished
matters related to, without limitation thereof, the business, properties,
accounts, books and records, research and development information, processes,
procedures, products, know-how, trade secrets, memoranda, devices, suppliers,
and customers of Reynolds which he may now know or hereafter come to know as a
result of his affiliation in business with Reynolds.
(f) All copyrights, improvements, discoveries and inventions and
all claims, interest and rights thereto relating to any part of the business of
Reynolds conceived, developed or made by Holmes, either alone or with others,
during the period of his employment, and whether conceived, developed or made
during his regular working
27
<PAGE> 28
hours or at any other time during such period, shall be and are the sole
property of Reynolds and Holmes hereby assigns to Reynolds all right, title and
interest in and to such copyrights, improvements, discoveries and inventions.
Further, Holmes will, at any time in the future upon Reynolds' request, execute
specific assignments of any said copyrights, improvements, discoveries and
inventions as well as execute all documents and perform all lawful acts which
Reynolds deems necessary or advisable to vest full ownership thereof in
Reynolds, to register same in the name of Reynolds or its designee or otherwise
to provide legal protection for Reynolds' ownership interests therein.
(g) This Agreement shall be without geographical limitation in
continental North America and, in addition, in any other areas of the world in
which Reynolds or any of its related or affiliated companies shall be doing
business at the time of the proposed competing entry into business by Holmes,
it being agreed that the contacts of Holmes and the potential scope of
operation of Reynolds is without any limitation within the area of prohibition.
Any violation of this covenant may be enforced by specific performance in any
court of competent jurisdiction within the area of limitation imposed by this
provision. If any court of competent jurisdiction shall determine that either
the period or the territory covered by this provision against competition in
unreasonable, said provision shall not be determined to be null, void, and of
no effect but shall be reformed by said court to impose a reasonable period or
a reasonable geographical limitation, as the case may be.
28
<PAGE> 29
10. RESOLUTION OF DISPUTES; ARBITRATION.
(a) Except for the breach or threatened breach by Holmes of the
noncompetition provisions of this Agreement which may be enforced by
appropriate injunctive relief at the option of Reynolds, any dispute or
controversy arising out of or relating to this Agreement, including, but not
limited to, whether Holmes has been Discharged for Cause, shall be submitted to
and settled by arbitration in Dayton, Ohio in accordance with the rules then
pertaining of the American Arbitration Association.
(b) Should Holmes disagree that his termination was due to a
Discharge for Cause, the question shall, within thirty (30) days after the
termination, be submitted to arbitration by three (3) arbitrators, one of whom
shall be selected by Reynolds, another of whom shall be selected by Holmes, and
the third of whom shall be selected by the two arbitrators so appointed. The
decision of these arbitrators on the question shall be final and conclusive
upon Reynolds and upon Holmes and his wife or widow, personal representatives,
designated beneficiaries and heirs, and shall be enforceable in any court
having competent jurisdiction thereof. A discharge which is eventually
determined under arbitration to have been a Discharge for Cause, or no
arbitration having been requested and the discharge being one which Reynolds
had determined was for a Discharge for Cause, shall extinguish any and all
liability of Reynolds under this Agreement from and after the date of
termination.
(c) The arbitrators for all other disputes or controversies under
this Agreement shall be selected as set forth above and the
29
<PAGE> 30
parties shall select the arbitrators within thirty (30) days after demand from
Holmes or Reynolds to the other to settle matters by arbitration. As stated
above, the decision of the arbitrators shall be final and conclusive.
11. NONASSIGNABLE RIGHTS.
--------------------
Holmes, his wife, or his widow after his death, or his personal
representatives, designated beneficiaries and heirs, shall not have the right
to anticipate or commute, or to sell, assign, transfer, or otherwise alienate
or convey the right to receive any payments hereunder, whether by his, her or
their voluntary or involuntary act, or by operation of law and, in particular,
that any payments due hereunder shall not be subject to attachment or
garnishment or any other legal proceedings by any creditor, or be in any way
responsible for the debts or liabilities of Holmes or his wife or his widow
after his death or his personal representatives, designated beneficiaries and
heirs. Should Holmes or his wife or his widow after his death or his personal
representatives, designated beneficiaries and heirs, voluntarily attempt to
breach this Section of this Agreement, Reynolds' liability to make payments
hereunder from and after the date of said attempt shall be extinguished; and
should any attempt be made to reach the payments by other than Holmes or his
wife or his widow after his death or his personal representatives, designated
beneficiaries and heirs, Reynolds shall make each payment as it becomes due to
such person or persons for the sole benefit of Holmes or his wife or his widow
or his personal representatives,
30
<PAGE> 31
designated beneficiaries and heirs, as the case may be, as Reynolds may deem
expedient.
12. UNFUNDED AGREEMENT.
------------------
(a) Reynolds' obligation under this Agreement shall be unfunded,
but Reynolds reserves the right to provide for its liability under this
Agreement in any manner it deems advisable, including the purchasing of such
assets (including an insurance policy or policies on Holmes' life) as it may
deem necessary or proper; provided, however, that Holmes' insurability or
non-insurability shall in no way affect Reynolds' obligations pursuant to this
Agreement. Any asset so purchased by Reynolds shall be the sole property of
Reynolds and shall not be deemed to provide funding of Reynolds' obligations
under this Agreement.
(b) In the event Reynolds determines to purchase any insurance
policy or policies on Holmes' life, Holmes agrees to submit to such examination
and to supply information as may be required by the insurer.
(c) Any policy so purchased by Reynolds shall be issued so that
Reynolds is the sole, full, and complete owner of the policy or policies, with
the right and power to exercise any and all privileges and options thereof or
available under the rules of the issuing insurer without the consent of any
other persons.
(d) Holmes, his wife, or his widow after his death, or his
designated beneficiaries, personal representatives, heirs, successors and
assigns shall have no claim or rights with respect to, and shall have no
property or equitable interests whatsoever in, any specific funds or assets of
Reynolds and shall have only
31
<PAGE> 32
the status of a general creditor with respect to Reynolds hereunder.
13. FACILITY OF PAYMENT.
-------------------
In the event of a physical or mental illness or disability of Holmes
or of his widow after his death or of his designated beneficiaries at a time
when he or she (or they) is (are) entitled to payments hereunder, such payments
as may be due shall be paid to such person or persons for the benefit of Holmes
or his widow or his designated beneficiaries, as the case may be, as Reynolds
or, if applicable, the Escrow Agent may deem proper. In the event of Holmes'
death after he has made demand pursuant to Section 8(e)(v) above, the Escrow
Agent shall pay such amounts as thereafter are due to such beneficiary or
beneficiaries as Holmes shall have designated in writing, or failing such
writing, to his estate. No liability shall accrue to Reynolds or Escrow Agent
for any alleged payment to an improper person or representative if so made
after such reasonable investigation and Reynolds and Escrow Agent shall have no
responsibility to see to the proper application of such payments.
14. MISCELLANEOUS PROVISIONS.
------------------------
(a) All notices required or permitted to be given under this
Agreement shall be in writing and shall be mailed, postage prepaid, by
registered or certified mail or personally delivered, if to Reynolds, addressed
to:
The Reynolds and Reynolds Company
Attention: Vice President, Corporate Finance and
Chief Financial Officer
115 South Ludlow St.
Dayton, Ohio 45402
32
<PAGE> 33
and, if to Holmes, addressed to:
David R. Holmes
5 Volusia Avenue
Dayton, Ohio 45409
Either party may change the address to which notices to such party are to be
sent by giving written notice of such change to the other party in the manner
specified in this provision.
(b) (i) This Agreement shall be binding upon Holmes, his
wife, and upon his or her heirs, executors, administrators, designated
beneficiaries and upon anyone claiming under him or his wife or widow, and upon
Reynolds and its successor or assigns.
(ii) Reynolds shall not merge or consolidate with any
other entity unless and until such other entity shall expressly assume
Reynolds' obligations under this Agreement or Reynolds has provided an
appropriate alternative arrangement covering its contingent liabilities under
this Agreement, and Reynolds shall not voluntarily dissolve without first
providing an appropriate arrangement covering its contingent liabilities under
this Agreement.
(c) This Agreement may be amended, but only with the consent of
Holmes during his lifetime and, after his death only with the consent of his
widow during her lifetime or his other designated beneficiaries during their
lifetime, as the case may be. Any agreement of amendment shall be executed
with the same formality as this Agreement.
(d) This Agreement supersedes any prior agreements or
understandings covering the subject matter hereof, either written or oral,
between the parties.
33
<PAGE> 34
(e) This Agreement shall be construed under the laws of the State
of Ohio.
(f) The paragraph headings used in this Agreement are for
convenience of reference only and shall not be considered in construing this
Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
respective hands the year and date first above written.
THE REYNOLDS AND REYNOLDS COMPANY
By
----------------------------------
---------------------------------
DAVID R. HOLMES
34
<PAGE> 35
EXHIBIT A
ESCROW AGREEMENT DATED NOVEMBER 9, 1987 BETWEEN THE REYNOLDS
AND REYNOLDS COMPANY AND BANK ONE DAYTON, N.A., AS AMENDED AS
OF OCTOBER 1, 1995
<PAGE> 36
AMENDMENT NO. 1
TO
ESCROW AGREEMENT
----------------
THIS AMENDMENT NO. 1 TO ESCROW AGREEMENT ("Amendment") is made and
entered into as of this 1st day of October, 1995 by and between THE REYNOLDS
AND REYNOLDS COMPANY, an Ohio corporation (hereinafter referred to as
"Reynolds"), and BANK ONE, DAYTON, NA (hereinafter referred to as the "Escrow
Agent").
WITNESSETH:
----------
WHEREAS, Reynolds and the Bank have entered into an Escrow Agreement
dated November 9, 1987 pursuant to an Employment Agreement dated as of November
9, 1987, as amended effective May 8, 1989 and December 1, 1989, respectively
(as so amended the "November 7, 1989 Agreement") between Reynolds and David R.
Holmes ("Holmes"), an employee of Reynolds; and
WHEREAS, Holmes and Reynolds have entered into a new Amended and
Restated Employment Agreement effective October 1, 1995 (the "Employment
Agreement"), pursuant to which Reynolds has agreed to continue to provide
termination pay protection for Holmes and which provides that the required
protective payments under the Employment Agreement are to continue to be paid
into an escrow account at the Escrow Agent; and
WHEREAS, the parties hereto desire that the Escrow Agreement shall
continue in full force and effect and for the benefit of Holmes and with full
applicability to the Employment Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements
contained in this Amendment, the parties hereby agree as follows:
1. All references to the November 9, 1987 Agreement between
Reynolds and Holmes contained in the Escrow Agreement shall include and apply
with full force and effect to the Employment Agreement.
2. Except as set forth herein, the Escrow Agreement shall remain
unchanged and continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
respective hands as of the day and year first above written.
THE REYNOLDS AND REYNOLDS COMPANY
By
-------------------------------
BANK ONE, DAYTON, NA
By
-------------------------------
- -
<PAGE> 37
EXHIBIT D
SCHEDULE OF FRINGE BENEFITS
PURSUANT TO SECTION 4(d)
------------------------
<TABLE>
<CAPTION>
Benefit Amount
------- ------
<S> <C>
Annual Physical Exam Local Clinic, maximum of $600
Auto/Gas Allowance $916 monthly
Charitable Allowance $1,000 annually to charities of his choice
Income Tax Planning and $1,000 annually
Preparation
Estate Planning and
Will Preparation
Initial Service $900
Updates $300 annually
Country Club Dues 50% annually, including initiation fee up to $3,500
Luncheon Club Dues 100% annually
Corporate aircraft (personal use) Yes; in connection with company business use Holmes may
include personal passengers, subject to seat availability.
Holmes shall receive W-2 for personal use value per IRS
regulations
Vacation Five (5) weeks annually at mutually agreed times.
</TABLE>
<PAGE> 1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") made and
entered into as of the 31st day of May, 1995, by and between THE REYNOLDS AND
REYNOLDS COMPANY, a corporation existing under the laws of the State of Ohio
("Reynolds"), and JOSEPH N. BAUSMAN ("Bausman").
W I T N E S S E T H:
WHEREAS, Bausman and Reynolds have entered into an Employment
Agreement dated as of May 8, 1989, as amended effective December 1, 1989 and
extended effective May 31, 1994 (as so amended and extended the "Employment
Agreement"), pursuant to which Bausman is currently employed as President of
the Reynolds Automotive Systems Division; and
WHEREAS, Bausman and Reynolds desire to amend, restate in its
entirety, and continue the Employment Agreement and enter into this Agreement
on the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the foregoing premises and of the
mutual promises set forth below, Reynolds and Bausman hereby agree as follows:
1. AMENDMENT, RESTATEMENT IN ITS ENTIRETY AND CONTINUATION OF EMPLOYMENT
AGREEMENT.
Effective as of the date hereof, the Employment Agreement shall be,
and hereby is, amended, restated in its entirety and continued as set forth in
this Agreement, and all terms, conditions and provisions of the Employment
Agreement shall be, and hereby are, superseded by this Agreement and shall no
longer be of any force and effect.
<PAGE> 2
2. DEFINITIONS.
------------
For purposes of this Agreement, the terms set forth below shall have
the following meanings:
(a) "Annual Compensation Value" shall mean Bausman's then-current
Base Compensation plus an amount equal to the average of all Bonuses (excluding
any compensation attributable to stock options of any type granted by Reynolds)
earned by Bausman during the three (3) calendar years preceding the date upon
which the valuation is made.
(b) "Base Compensation" shall mean the then-current annual base
salary (exclusive of Bonuses) of Bausman.
(c) "Bonuses" shall mean bonus payments earned by Bausman under
Reynolds' Incentive Compensation Plans and under any future bonus or incentive
compensation plans of Reynolds for its executive officers.
(d) "Change in Control" shall mean the occurrence of any of the
following:
(i) Any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than Richard H. Grant, Jr., his children or his grandchildren,
Reynolds, any trustee or other fiduciary holding securities under an employee
benefit plan of Reynolds, or any company owned, directly or indirectly, by the
shareholders of Reynolds in substantially the same proportions as their
ownership of stock of Reynolds), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Reynolds representing fifty percent
2
<PAGE> 3
(50%) or more of the combined voting power of Reynolds' then outstanding
securities;
(ii) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, any new director (other
than a director designated by a person who has entered into an agreement with
Reynolds to effect a transaction described in clause (i), (iii) or (iv) of this
Section whose election by the Board or nomination for election by Reynolds'
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
the period or whose election was previously so approved) cease for any reason
to constitute at least a majority thereof;
(iii) the shareholders of Reynolds approve a merger or
consolidation of Reynolds with any other company, other than (1) a merger or
consolidation which would result in the voting securities of Reynolds
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the combined voting power of
the voting security of Reynolds or such surviving entity outstanding
immediately after such merger or consolidation or (2) a merger or consolidation
effected to implement a recapitalization of Reynolds (or similar transaction)
in which no "person" (as hereinabove defined) acquires more than fifty percent
(50%) of the combined voting power of Reynolds' then outstanding securities; or
3
<PAGE> 4
(iv) the shareholders of Reynolds approve a plan of
liquidation, dissolution or winding up of Reynolds or an agreement for the sale
or disposition by Reynolds of all or substantially all of Reynolds' assets.
(e) "Disability Benefits" shall mean an annual amount equal to
fifty-five percent (55%) of Bausman's Final Average Annual Compensation,
determined at the time of Bausman's disability rather than his retirement;
provided, however, that the amount of disability benefit payments to be made
hereunder shall be reduced by the amount of regular disability benefits payable
to Bausman under Reynolds' long-term disability program.
(f) "Discharge For Cause" shall be construed to have occurred
whenever occasioned by reason of felonious acts on the part of Bausman, actions
by Bausman involving serious moral turpitude or his misconduct in such manner
as to bring substantial and material discredit upon Reynolds, following the
giving of thirty (30) days' written notice to Bausman specifying the respect in
which Reynolds claims Bausman has violated this provision and the failure,
inability or unwillingness of Bausman to remedy the situation to the
satisfaction of Reynolds within said thirty-day period. In establishing
whether a Discharge For Cause shall have occurred, the standard for judgment
shall be the level of conduct by Bausman and by other comparably situated
executive officers prior to the alleged improper activity of Bausman for which
the Discharge For Cause has been made.
(g) "Escrow Agreement" shall mean the agreement dated May 8, 1989
as amended simultaneously herewith entered into between
4
<PAGE> 5
Reynolds and Bank One, Dayton, NA, a copy of which (including the amendment) is
attached hereto and made a part hereof as Exhibit A.
(h) "Escrow Agent" shall mean Bank One, Dayton, NA.
(i) "Escrow Amount" shall mean the amounts placed in escrow by
Reynolds pursuant to subsection (e)(iii) of Section 8 of this Agreement.
(j) "Escrow Funding Event" shall mean the occurrence of any of the
following events:
(i) Class A Common Shares of Reynolds have been acquired
other than directly from Reynolds in exchange for cash or property by any
person (other than Richard H. Grant, Jr., his children or his grandchildren,
Reynolds, any trustee or other fiduciary holding securities under an employee
benefit plan of Reynolds, or any company owned directly or indirectly by the
shareholders of Reynolds in substantially the same proportions as their
ownership of the stock of Reynolds) who either thereby becomes the owner of
more than nine and one half percent (9.5%) of Reynolds' outstanding Class A
Common Shares, or having directly or indirectly become the owner of more than
five percent (5%) of Reynolds' Class A Common Shares either alone or in
conjunction with another person has expressed an intent to continue acquiring
Reynolds' outstanding Class A Common Shares so as to become thereby the owner
of more than nine and one-half percent (9.5%) of such stock either directly or
indirectly;
(ii) Any person (other than Richard H. Grant, Jr., his
children or grandchildren, Reynolds, any trustee or other fiduciary holding
securities under an employee benefit plan of Reynolds, or
5
<PAGE> 6
any company owned directly or indirectly by the shareholders of Reynolds in
substantially the same proportions as their ownership of stock of Reynolds) has
made a tender offer for, or a request for invitations for tenders of, Class A
Common Shares of Reynolds.
(iii) Any person forwards or causes to be forwarded to
shareholders of Reynolds proxy statement(s) in any period of twenty-four (24)
consecutive months, soliciting proxies, to elect to the Board of Reynolds two
(2) or more candidates who were not nominated as candidates in proxy statements
forwarded to shareholders during such period by the Board; or
(iv) The Board adopts a resolution to the effect that, for
purposes of this Agreement, an Escrow Funding Event has occurred.
(k) "Final Annual Compensation" shall mean Bausman's Base
Compensation at the time of termination of employment plus an amount equal to
the average of all Bonuses (excluding any compensation attributable to stock
options of any type granted by Reynolds) earned by Bausman during the three (3)
calendar years preceding his termination of employment.
(l) "Final Average Annual Compensation" shall mean the average of
Bausman's Base Compensation and Bonuses (excluding any compensation
attributable to stock options of any type granted by Reynolds) as determined
for the five (5) consecutive calendar years of the last ten (10) calendar years
preceding and including the calendar year in which Bausman's employment
terminates which yields the highest sum.
6
<PAGE> 7
(m) "Pension Plan" shall mean the existing Reynolds and Reynolds
Company Non-Union Pension Plan, as the same may be amended from time to time.
(n) "Retirement Benefits" shall mean payments to Bausman based
upon his lifetime in an annual amount equal to a designated percentage of
Bausman's Final Average Annual Compensation or, in the case of Section 8(d)
below, Final Annual Compensation, which shall be comprised of the sum of (i)
Bausman's primary Social Security retirement benefits when he is entitled to
receive such benefit (age sixty-two (62)) [until that time an amount equal to
the primary Social Security retirement benefit shall be paid to Bausman from
Reynolds' Supplemental Plan], (ii) Bausman's pension benefits determined as a
life annuity (without regard to actual payment form) under the Pension Plan and
deferred compensation payments under the Non-Qualified Deferred Compensation
and Disability Benefit Agreement dated December 20, 1984 between Bausman and
Reynolds, or such other non-contributory deferred compensation agreement(s)
then existing between Reynolds and Bausman, and (iii) such amount of
supplemental retirement benefits under the Supplemental Plan as shall be
necessary to achieve the designated percentage of Bausman's Final Average
Annual Compensation or, in the case of Section 8(d) below, Final Annual
Compensation. In addition to said annual amount, Retirement Benefits shall
include a continuation of coverage for the remainder of Bausman's life under
Reynolds-sponsored medical benefits and life insurance programs, but only to
the extent applicable to participants in Reynolds' Qualified Retiree Medical
Plans. For
7
<PAGE> 8
purposes of determining the amount of supplemental retirement benefits to be
made by Reynolds pursuant to the Supplemental Plan, the method of payment of
retirement benefits to Bausman pursuant to the Pension Plan shall determine the
amount and method of payment of the supplemental retirement payments pursuant
to the Supplemental Plan. These supplemental retirement payments by Reynolds
pursuant to the Supplemental Plan shall continue so long as pension benefits
are payable under the Pension Plan and shall be in addition to the pension
benefit payments under the Pension Plan.
(o) "Supplemental Plan" shall mean Reynolds' existing Supplemental
Retirement Plan, as the same may be amended from time to time.
3. TERMS AND DUTIES.
-----------------
(a) The term of this Agreement shall continue from the date hereof
and end on May 31, 2000, unless extended in accordance herewith. Bausman shall
continue in the employ of Reynolds as President of the Reynolds Automotive
Systems Division or such other substantially equivalent position designated by
the Board, consistent with the provisions of this Agreement. In addition,
Bausman agrees to perform such other duties as may be specifically designated
for him from time to time by the Board, consistent with the provisions of this
Agreement. Subject to Bausman's willingness to so extend his employment,
Reynolds may extend the term of this Agreement for additional renewal periods
of one (1) year each by giving written notice thereof not less than twelve (12)
months prior to May 31, 2000 initially and not less than twelve (12) months
prior to each succeeding May 31st thereafter.
8
<PAGE> 9
(b) At all times Bausman will, to the best of his ability, energy
and skill, faithfully perform all of the duties that may be required of him
from time to time by the Board and diligently devote his entire working time,
attention and efforts to the business affairs and best interests of Reynolds,
except for absences for sickness and vacations. If the Board determines that
any outside activity engaged in by him is detrimental to the best interests of
Reynolds, he will discontinue such outside activity within thirty (30) days
after written notice from the Board.
(c) Bausman agrees that during the period of his employment by
Reynolds, for so long as he is entitled to receive payments under this
Agreement, and for a period of two (2) years thereafter (subject to the
provisions of Section 9 below), he will not, directly or indirectly, further
the affairs of any other corporation, partnership, or any business enterprise
by employment of any kind, investment therein (except as otherwise permitted
under Section 9(d) below), counseling or otherwise, if the same is in
competition with Reynolds, without the written consent of the Board. This
provision, however, shall not be construed to prevent him from pursuing
personal investments in any business or enterprise which is not in competition
with Reynolds and which do not interfere with his employment and the
performance of his duties to Reynolds hereunder.
4. COMPENSATION AND FRINGE BENEFITS.
---------------------------------
(a) The Base Compensation of Bausman during the term of this
Agreement shall be $280,160, which may be increased from time to time by the
Board or, in the case of any proposed decrease, such
9
<PAGE> 10
other amount as mutually may be agreed upon by Bausman and Reynolds; provided,
however, that such Base Compensation may not be reduced below said rate of
$280,160 without Bausman's consent, unless necessitated by general business
conditions adversely affecting Reynolds' operations; but, in the event of a
reduction, his Base Compensation shall be fair and reasonable, and any
disagreement concerning the same shall be resolved by arbitration in the manner
provided in Section 10 below. Bausman's Base Compensation shall be reviewed at
least annually to determine whether in view of Reynolds' performance during the
year any increase is warranted. Responsibility for this determination rests
within the sole discretion of the Board, and this provision shall not be
construed as requiring any such increase for any given year.
(b) Bausman shall continue his participation in the existing
Deferred Compensation Plan and the existing bonus plan arrangements under the
Incentive Compensation Plans (or their equivalent) for executive officers of
Reynolds and shall be entitled to such awards under any future bonus,
incentive, or similar compensation plans of Reynolds, as shall, in the
determination of the Board, be appropriate and consistent with the purposes of
such plans and with the awards granted to other executive officers of Reynolds.
(c) Bausman shall continue to be eligible for participation in the
Stock Option Plan - 1995 of Reynolds and shall be entitled to the grant of such
options to purchase shares of Class A Common Stock of Reynolds under any other
future stock option plans for employees and to participate in such other
executive compensation incentive plans awarding stock as shall, in the
determination of
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the Board, be appropriate and consistent with the purposes of the plans and
with the grants of such options to the executive officers of Reynolds.
(d) In addition to the specific benefits provided for Bausman
under the terms of this Agreement, Reynolds shall provide him with other fringe
benefits (including bonuses, vacations, health and disability insurance,
pension plan participation and others) at least equivalent to those of the
other executive officers of Reynolds and as set forth on Exhibit B attached
hereto and made a part hereof.
(e) It is understood and agreed that Bausman shall have no rights
to benefits under the Pension Plan unless he becomes vested under the Pension
Plan in accordance with its terms (currently, five (5) Years of Service), and
that Bausman shall have no rights to deferred compensation payments under the
Non-Qualified Deferred Compensation and Disability Benefit Agreement dated
December 20, 1984 between Bausman and Reynolds unless and until Bausman has
satisfied the service requirement therein (currently, 174 calendar months of
employment with Reynolds).
5. EXPENSES.
Bausman shall be reimbursed for his reasonable business-related
expenses incurred for the benefit of Reynolds in accordance with Reynolds'
policies governing such reimbursement in effect from time to time. Such
expenses shall include, but shall not be limited to, travel, lodging away from
home, entertainment, and meals. With respect to any expenses which are
reimbursed by Reynolds to Bausman, Bausman shall account to Reynolds in
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<PAGE> 12
sufficient detail to entitle Reynolds to a federal income tax deduction for
such reimbursed item if such item is deductible.
6. RETIREMENT AND EARLY RETIREMENT BENEFITS.
(a) If Bausman continues his employment with Reynolds until he
attains age sixty-five (65), he shall be entitled to receive at the time of his
retirement Retirement Benefits at a level equal to sixty-five percent (65%) of
his Final Average Annual Compensation.
(b) If Bausman continues his employment with Reynolds until he
attains age fifty-five (55), he may elect to retire from Reynolds upon giving
twelve (12) months prior written notice and having attained at least age
fifty-five (55) but not yet having attained age fifty-eight (58), and he shall
be entitled to receive at the time of such early retirement, Retirement
Benefits at a level equal to fifty-five percent (55%) of his Final Average
Annual Compensation, reduced by one-fifteenth (1/15) for each Year of Service
(as defined in the Pension Plan) less than fifteen (15). If Bausman shall
elect to retire upon giving twelve (12) months prior written notice at an age
between fifty-eight (58) and sixty-five (65), the level of this Retirement
Benefits as a percentage of his Final Average Annual Compensation shall be
increased by one percent (1%) for each additional twelve (12) month period over
age fifty-eight (58), but shall not be reduced even if Years of Service are
less than fifteen (15).
(c) If Bausman voluntarily terminates his employment or if Bausman
is discharged by Reynolds (and such discharge is not a Discharge For Cause)
prior to the date that he attains fifty-five (55), Bausman will be entitled to
receive, commencing on the date
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<PAGE> 13
he attains age fifty-five (55), (i) the total amount of his benefits under the
Non-Qualified Deferred Compensation and Disability Benefit Agreement dated
December 20, 1984 between Bausman and Reynolds (the "Continuation Agreement"),
or such other deferred compensation agreement(s) then existing between Reynolds
and Bausman to the extent benefits are then payable under such agreements, (ii)
the benefits paid under Section 4.1 of the Supplemental Plan, and (iii) the
difference between the Retirement Benefits provided under this Agreement less
the benefits payable under Section 4.1 of the Supplemental Plan multiplied by a
fraction (A) the numerator of which is the sum of his Years of Service (as
defined in the Pension Plan) accrued after November 9, 1987 and (B) the
denominator of which is the number of years from November 9, 1987 until the
date that Bausman would attain age fifty-five (55). The benefits described in
the preceding sentence shall be payable in the manner set forth in the
Continuation Agreement (or any other applicable deferred compensation
agreement) and in the Supplemental Plan. Except for the benefits provided for
in this section and Sections 8(d) and (e) of the Agreement, Bausman shall not
be entitled to any other benefits under this Agreement upon his voluntary
termination of employment prior to his attainment of age fifty-five (55) (other
than upon his disability or death). The preceding sentence shall not affect
Bausman's benefit under his then existing deferred compensation agreement.
(d) If Bausman's employment is terminated under the circumstances
described in Section 8(e)(i) below, prior to the date that he attains age
fifty-five (55), he will be entitled to
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<PAGE> 14
receive, commencing on the date that he attains age fifty-five (55), Retirement
Benefits at a level equal to fifty-five percent (55%) of his Final Average
Annual Compensation.
(e) To the extent Bausman receives any similar benefits under the
Pension Plan, Supplemental Plan or other Reynolds benefit plan for any of its
employees, such benefits shall be included in calculating the amount to which
Bausman shall be entitled under Sections 6(a) -- (d), above; provided, however,
that in no event shall the benefits described in Sections 6(a) -- (d) above be
reduced by the provisions of this Section 6(e).
7. DISABILITY AND DEATH BENEFITS.
------------------------------
(a) If prior to his attaining age fifty-five (55) Bausman becomes
so ill or disabled as to be permanently incapacitated from performing the
duties of his employment with Reynolds (this disability to be certified by two
(2) physicians competent to do so in the opinion of the Board), Reynolds shall
provide Bausman with Disability Benefits until either the disability
terminates, if earlier, or until Bausman reaches age fifty-five (55) at which
time he shall be entitled to receive the Retirement Benefits set forth in
Section 6(b) above. Such Retirement Benefits, however, shall be calculated on
the basis of Bausman's Final Average Annual Compensation at the time of his
disability, not the time of his retirement. If Bausman becomes disabled
subsequent to his attaining age fifty-five (55), but prior to his retirement,
Bausman shall be deemed to have elected retirement under this Agreement. See
also Section 8(c) of this Agreement.
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<PAGE> 15
(b) In the event of Bausman's death while still employed by
Reynolds pursuant to this Agreement, Reynolds shall pay to such beneficiary or
beneficiaries as he shall have designated by written notice delivered to
Reynolds prior to his death, or failing such written notice, to his estate, an
amount equal to the Base Compensation plus the Bonuses, if any, which Bausman
would have received or which would have been accrued for his benefit during the
period of six (6) months immediately following his death if he had lived and
had been employed by Reynolds during that period. Such payment shall be made
in one lump sum or in six (6) equal monthly installments as Reynolds shall
elect and shall be in addition to the proceeds of any insurance policies
carried on Bausman's life with respect to which he has the right to designate
beneficiaries. Also, Reynolds shall pay to Bausman's spouse an amount,
periodically as such payments are required to be made by said spouse, to enable
her to continue medical coverage for her and her dependents in the same manner
as immediately prior to Bausman's death for a period expiring at the earlier
of: (i) her death; (ii) forty-two (42) months after Bausman's death; or (iii)
eligibility for regular Medicare and Medicaid or any successor programs
furnished by the government. Thereafter, Reynolds shall make available to
Bausman's spouse (including her dependents), at her cost, such medical coverage
as shall be available to a person of her then age under the then-existing
Reynolds-sponsored medical benefits program, but only to the extent coverage is
available under such program.
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8. TERMINATION; DISCHARGE.
-----------------------
(a) TERMINATION OR DISCHARGE WITHOUT CAUSE. Reynolds reserves the
right to discharge Bausman at any time and for any reason and not to renew this
Agreement; but such non-renewal or discharge, unless a Discharge For Cause,
shall not extinguish the obligation of Reynolds to provide Bausman (and, in the
event of his prior death, his designated beneficiary or beneficiaries or his
estate) with the following severance benefits:
(i) If Reynolds does not renew this Agreement, Bausman
shall be entitled to receive for a period expiring one (1) year from May 31,
2000 (or any renewal thereof) payments from Reynolds in an amount equal to his
Annual Compensation Value, which shall be reduced by seventy percent (70%) of
the amount of compensation received by Bausman from any subsequent employment
obtained by him during said payment period.
(ii) If such discharge occurs prior to May 31, 2000,
Bausman shall be entitled to receive for a period expiring two (2) years from
the date of discharge, payments from Reynolds in an amount equal to his Annual
Compensation Value, which shall be reduced by seventy percent (70%) of the
amount of compensation received by Bausman from any subsequent employment
obtained by him during said payment period.
(iii) Bausman shall be entitled, during the period expiring
on the earlier of Bausman's securing other employment or two (2) years from the
date of discharge (or such longer period as required by law), to continuing
coverage under the then-existing Reynolds-sponsored medical benefits program,
which, at the option
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<PAGE> 17
of Reynolds, may be provided outside of such program through the purchase of
insurance or otherwise.
(iv) For purposes of determining Bausman's benefits under
the Supplemental Plan, Bausman shall receive credit toward his Years of Service
under the Supplemental Plan for the time period that he receives or is entitled
to receive payments under subsections (i) or (ii) of this Section 8(a). In
addition, during the time period that he receives or is entitled to receive
payments under said subsections (i) or (ii) of this Section 8(a), Bausman's
Base Compensation shall be deemed to be increased by the annual economic range
adjustment for Reynolds' salaried employees announced in October of each year
(or, if there is no such announced economic range adjustment in a given year,
by an assumed five (5%) increase for that year) in order to calculate his
highest earnings during five (5) consecutive years out of the last ten (10)
years prior to retirement under the Supplemental Plan, and his Final Annual
Compensation (see Section 8(d) below) and Final Average Annual Compensation
shall be deemed to increase in the same manner for purposes of determining the
amount of his Retirement Benefits under this Agreement.
(v) Bausman shall be reimbursed for up to $20,000 for
out-placement fees if he chooses to seek other employment following his
discharge by Reynolds. Bausman shall not be obligated to seek other employment
in order to mitigate his damages resulting from his discharge.
(vi) In addition to all of the foregoing, Bausman shall be
entitled to receive the payments required of Reynolds under his
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<PAGE> 18
then-existing deferred compensation agreement(s) with Reynolds in accordance
with the terms of such agreement(s).
Bausman acknowledges that he shall remain subject to and
bound by the restrictive provisions of Section 9 below.
(b) DISCHARGE FOR CAUSE. If Bausman's employment with Reynolds is
terminated by a Discharge For Cause, regardless of whether such Discharge For
Cause occurs after the occurrence of any of the events set forth in Sections
8(d) or 8(e) below, he shall be entitled to receive only his Base Compensation
up to the date of his discharge and no further payments hereunder shall be
required from Reynolds; provided, however, that Bausman shall be entitled to
receive his benefits, if any, under the Pension Plan and the payments required
of Reynolds under his then-existing deferred compensation agreement(s) with
Reynolds in accordance with the terms of such agreement(s). Bausman shall
remain subject to the restrictive provisions of Section 9 below for a period
for two (2) years from the date of discharge. Should Bausman disagree that his
discharge was a Discharge For Cause the question shall be submitted to
arbitration in accordance with Section 10 below.
(c) TERMINATION DUE TO DISABILITY. If, by reason of illness,
disability, or other incapacity (certified in accordance with Section 7(a)
above), Bausman is unable to perform the duties required of him under this
Agreement for a period of six (6) consecutive months, Reynolds, following the
giving of thirty (30) days' written notice to Bausman and the failure of
Bausman by reason of illness, disability, or other incapacity to resume his
duties within such thirty (30) days and thereafter perform the same
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<PAGE> 19
for a period of two (2) consecutive months, may terminate Bausman's employment
by giving Bausman written notice thereof; and in that event all obligations of
Reynolds hereunder shall cease on the date such notice of termination is given
except for: (1) Reynolds' obligation to pay the Disability Benefits under
Section 7 above; (ii) payment of the Retirement Benefits under Section 6 above;
(iii) payments required of Reynolds under Bausman's then-existing deferred
compensation agreement(s) in accordance with the terms of such agreement(s);
and (iv) benefits, if any, under medical and hospital care insurance coverage
for Bausman comparable to that provided for other employees of Reynolds;
provided, however, such insurance benefits shall be coordinated with the
benefits Bausman is entitled to receive under regular Medicare and Medicaid or
any successor programs furnished by the government. If Bausman is at least age
fifty-five (55) at the time Reynolds gives notice under this Section 8(c), he
shall be deemed to have elected retirement under this Agreement.
(d) BENEFITS UPON TERMINATION UNDER CERTAIN CIRCUMSTANCES. If
Bausman voluntarily terminates his employment or Bausman is discharged by
Reynolds and such discharge is not a Discharge For Cause, and if such voluntary
termination or involuntary discharge takes place within eighteen (18) months
after the occurrence of any of the following events:
(i) Bausman is required by Reynolds, prior to a Change in
Control, to perform duties or services which differ significantly from those
performed by him on the effective date hereof, or which are not ordinarily and
generally performed by a
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President of a division or corporation similar in size and scope to the
Reynolds Computer Systems Division; or
(ii) The nature of the duties or services which Reynolds,
prior to a Change in Control, requires him to perform necessitates absence
overnight from his place of residence on the effective date hereof, because of
travel involving the business or affairs of Reynolds, for more than ninety (90)
days during any period of twelve (12) consecutive months; Bausman shall be
entitled to receive from Reynolds all of the severance benefits set forth in
Section 8(a) above, except that severance payments shall be made until the
later of the end of the term of this Agreement or two (2) years from the date
of his termination of employment and Bausman's right to receive his Retirement
Benefits upon attaining age fifty-five (55) shall be based upon his Final
Annual Compensation, as the same may be adjusted pursuant to Section 8(a)(iv)
above. Bausman shall remain subject to and bound by the restrictive provisions
of Section 9 below.
(e) BENEFITS UPON A CHANGE IN CONTROL. Reynolds recognizes that
the threat of a Change in Control would be of significant concern to Bausman.
The following provisions provide termination protection for Bausman in the
event of a Change in Control. These provisions, among other purposes, are
intended to foster and encourage Bausman's continued attention and dedication
to his duties in the event of such potentially disturbing and disruptive
circumstances. Reynolds, therefore, agrees to do the following:
(i) If Reynolds terminates Bausman's employment for any reason
other than a Discharge for Cause, or if Bausman terminates
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his employment with Reynolds voluntarily for any reason other than disability
or retirement within the twenty-four (24) month period following a Change in
Control, Bausman shall be entitled to receive from Reynolds the following
benefits:
(A) A lump sum severance payment (the "Severance
Payment"), in cash, equal to three (3) times the sum of (i) the higher of
Bausman's annual Base Compensation in effect immediately prior to the
occurrence of the event or circumstance upon which such termination of
employment is based or in effect immediately prior to the Change in Control,
and (ii) the average of Bausman's Bonuses during the three (3) calendar years
immediately preceding the year in which the date of termination occurs.
(B) Bausman shall be entitled, during the period expiring
on the earlier of Bausman's securing other employment or twenty-four (24)
months from the date of such termination of employment (or such longer period
as required by law), to continued coverage under the Reynolds sponsored medical
benefits program in existence on such date of termination or, if such continued
coverage is barred, Reynolds shall provide equivalent medical benefit coverage
through the purchase of insurance or otherwise.
(C) For purposes of determining Bausman's benefits under
the Supplemental Plan, Bausman shall receive credit toward his Years of Service
under the Supplemental Plan for the two (2) year period following such
termination of employment. In addition, with respect to the two (2) year
period following such termination of employment, Bausman's Base Compensation
shall be deemed to be increased by the annual economic range adjustment for
Reynolds'
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salaried employees announced in October of each year (or, if there is no such
announced economic range adjustment in a given year, by an assumed five percent
(5%) increase for that year) in order to calculate his highest earnings during
five (5) consecutive years out of the last ten (10) years prior to retirement
under the Supplemental Plan.
(D) Bausman shall be reimbursed for up to $20,000 for
outplacement fees if he chooses to seek other employment following his
discharge by Reynolds. Bausman shall not be obligated to seek other employment
in order to mitigate his damages resulting from his discharge.
(E) In addition to all of the foregoing, Bausman shall be
entitled to receive the payments required of Reynolds under his then-existing
deferred compensation agreement(s) with Reynolds in accordance with the terms
of such agreement(s), and the retirement benefit provided for in Section 6(d)
of this Agreement.
The benefits provided in this Section 8(e) shall be in lieu of
any benefits provided under Section 8(d) of this Agreement.
(ii) Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received or to be received
by Bausman in connection with a Change in Control or the termination of
Bausman's employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with Reynolds, any person whose actions
result in a Change in Control or any person affiliated with Reynolds or such
person) (all such payments and benefits, including the Severance Payment, being
hereinafter called "Total Payments") would be subject (in whole or
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part), to an excise tax pursuant to Sections 280G and 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") (such tax hereinafter referred to
as the "Excise Tax"), then the Severance Payment shall be reduced to the extent
necessary so that no portion of the Total Payments is subject to Excise Tax
(after taking into account any reduction in the Total Payments provided by
reason of Section 280G of the Code in such other plan, arrangement or
agreement) if (A) the net amount of such Total Payments, as so reduced, (and
after deduction of the net amount of federal, state and local income tax on
such Total Payments), is greater than (B) the excess of (i) the net amount of
such Total Payments, without reduction (but after deduction of the net amount
of federal, state and local income tax on such Total Payments), over (ii) the
amount of Excise Tax to which Bausman would be subject in respect of such Total
Payments. For purposes of determining whether and the extent to which the
Total Payments will be subject to the Excise Tax, (i) no portion of the Total
Payments the receipt or enjoyment of which Bausman shall have effectively
waived in writing prior to the date of this termination of employment shall be
taken into account, (ii) no portion of the Total Payments shall be taken into
account which in the opinion of tax counsel selected by Reynolds does not
constitute a "parachute payment" within the meaning of Section 280G(b)(2) of
the Code, (including by reason of Section 280G(b)(4)(A) of the Code) and, in
calculating the Excise Tax, no portion of such Total Payment shall be taken
into account which constitutes reasonable compensation for services actually
rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess
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of the base amount as defined in Section 280G(b)(3) of the Code allowable to
such reasonable compensation, and (iii) the value of any non-cash benefit or
any deferred payment or benefit included in the Total Payments shall be
determined by Reynolds in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code. Prior to the fifth day following the date of Bausman's
termination of employment, Reynolds shall provide Bausman with its calculation
of the amounts referred to in this Section and such supporting materials as are
reasonably necessary for Bausman to evaluate Reynolds' calculations. If
Bausman objects to Reynolds' calculations, he shall notify Reynolds of his
objections prior to the initial payment date set forth in Section 8(e)(vi)
hereof, and Reynolds shall pay to Bausman such portion of the Severance Payment
(up to one hundred percent (100%) thereof) as Bausman determines is necessary
to result in Bausman's receiving the greater of clauses (A) and (B) of this
Section.
(iii) Upon the occurrence of an Escrow Funding Event,
Reynolds shall pay into an escrow account at the Escrow Agent an amount equal
to three (3) times the sum of (i) Bausman's Base Compensation in effect
immediately prior to the Escrow Funding Event and (ii) the average of Bausman's
Bonuses during the three (3) calendar years immediately preceding the year in
which the Escrow Funding Event occurs. Subsequent to the delivery to the
Escrow Agent of the Escrow Amount, Reynolds shall, in the event that either
Bausman's Base Compensation is increased (or decreased) or he receives a Bonus
that affects the amount described in Section 8(e)(i)(A), unless the Escrow
Amount shall theretofore have been
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released pursuant to this subsection, recalculate the Escrow Amount as of the
date such change in Base Compensation or receipt of Bonus occurs, treating the
Escrow Funding Event as having occurred on such date. If the amount so
calculated exceeds the fair market value of the Escrow Amount, Reynolds shall
promptly (and in no event later than seven (7) days from such date) pay to the
Escrow Agent an amount in cash (or marketable securities or any combination
thereof) equal to such excess. If the Escrow Amount so calculated is less than
the fair market value of the Escrow Amount then held in the escrow account, the
Escrow Agent, upon receipt of a written request from Reynolds, shall distribute
to Reynolds such difference in cash; provided, however, that this sentence
shall not apply after the occurrence of a Change in Control.
(iv) Unless the parties otherwise agree, Reynolds may
withdraw the Escrow Amount when and only when two (2) years have expired from
the date of deposit and no proper demand pursuant to Section 8(e)(vi) below has
been made during the time, or when the conditions requiring the deposit have
ceased to exist for a period of ninety (90) days without a demand right having
been created, or when Bausman's right to a payment under this Section 8(e) has
been forfeited, whichever occurs first. If, before the expiration of such
period or forfeiture, there shall occur another Escrow Funding Event, Reynolds
will not be required to make an additional deposit, but the two (2) year period
shall then be measured from the date of the last such event. Notwithstanding a
deposit with the Escrow Agent pursuant to subsection (iii) of this Section
8(e), Bausman shall continue to be entitled to receive all of the benefits from
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Reynolds under this Agreement until a termination of employment shall occur.
(v) Reynolds shall pay the charges of the Escrow Agent
for its services under the Escrow Agreement, and Reynolds will be entitled to
any interest or other income arising from the date of the deposit of the Escrow
Amount until all payments have been made under the Escrow Agreement to Bausman.
All interest or other income arising from the Escrow Amount deposited with the
Escrow Agent shall be paid monthly to Reynolds.
(vi) If Reynolds terminates Bausman's employment for any
reason but a Discharge for Cause, or if Bausman terminates his employment with
Reynolds voluntarily for any reason other than disability or retirement within
the twenty-four (24) month period following the date of a Change in Control,
the Escrow Agent, upon written demand made on or after the tenth (10th) day
following such termination of employment, shall pay the Escrow Amount in
accordance with this Section and Bausman shall no longer be subject to the
restrictive provisions of Section 9 below, except for Section 9(e). Bausman
shall notify the Escrow Agent prior to the tenth (10th) day following his
termination of employment as to whether he has accepted the determination of
Reynolds of the amount of the Severance Payments pursuant to Section 8(e)
(iii). If he has accepted such determination, Reynolds shall provide the
Escrow Agent with Reynolds' written determination as set forth in Section 8(e)
(iii) and the Escrow Agent shall pay to Bausman all or a portion of the Escrow
Amount as provided in such determination, and any remaining amount shall be
paid to Reynolds. If Bausman does
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not accept Reynolds' determination, Bausman shall provide to the Escrow Agent
his determination of the Severance Payment, and the Escrow Agent shall pay to
Bausman all or a portion of the Escrow Amount as provided in Bausman's
determination and any remaining amount shall be paid to Reynolds.
(vii) In the event that, following the creation of a demand
right pursuant to Section 8(e)(vi) above, Bausman incurs any costs or expenses,
including attorneys' fees, in the enforcement of rights under this Section 8(e)
or under any plan for the benefit of employees of Reynolds, including without
limitation the stock option plan, pension plans, payroll-based stock ownership
plan, tax deferred savings and protection plan, bonus arrangements,
supplemental pension plan, deferred compensation agreements, incentive
compensation plans, and life insurance and compensation program, then, unless
Reynolds or the consolidated, surviving or transferee entity in the event of a
consolidation, merger or sale of assets, is wholly successful in defending
against the enforcement of such rights, Reynolds, or such consolidated,
surviving or transferee entity, shall promptly pay to Bausman all such costs
and expenses.
9. NON-COMPETITION; CONFIDENTIALITY.
---------------------------------
(a) In order to protect Reynolds, it is understood that a covenant
not to compete is a necessary and appropriate adjunct to the other provisions
of this Agreement. Therefore, should Bausman at any time determine prior to
the expiration of this Agreement that he does not desire to remain an employee
of Reynolds and shall terminate his employment for any reason other than the
grounds
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specified in Sections 8(d) and 8(e) above, or should he be Discharged For Cause
by Reynolds, Bausman shall remain subject to the restrictive provisions
hereinafter set forth. In addition, these restrictive provisions shall remain
in full force and effect at any other time during which payments are required
to be made by Reynolds pursuant to the retirement (Section 6), severance
(Section 8, except for Section 8(e)(vi)) or disability (Section 7) provisions
of this Agreement. These restrictive provisions are as follows:
(b) For a period of two (2) years from and after Bausman's
employment with Reynolds shall have terminated and after he shall have ceased
receiving retirement, severance or disability benefits under this Agreement,
whichever shall last occur, he shall not, directly or indirectly, compete with
Reynolds or any of its related or affiliated companies. For purposes of this
Agreement, competition with Reynolds or any of its related or affiliated
companies shall include the manufacture, distribution, and sale of business
forms and computer hardware and software and the furnishing of EDP services
which are similar in nature or function to the products and/or services then
being furnished by Reynolds for sale in the same vertical markets in which
Reynolds' products and/or services are then being marketed at the time of
Bausman's termination of employment or upon the cessation of any retirement,
severance or disability benefits under this Agreement.
(c) From and after the execution of this Agreement and for a
period of two (2) years after termination of his employment with Reynolds and
after he shall have ceased receiving retirement,
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severance or disability benefits under this Agreement, whichever shall last
occur, Bausman shall not, directly or indirectly, by direct participation, by
purchase of stocks or bonds or other evidences of indebtedness, by loaning of
money, by guarantee of loans of others, by gift to establish or assist others,
or in any other manner or fashion, engage in any such restricted activity in
competition with Reynolds or any of its related or affiliated companies, nor
shall he assist any present employees of Reynolds or any other person similarly
to engage in such competing business for the full two-year prohibition period
set forth in this Agreement.
(d) The restrictive provisions of this Section 9, however, are in
no way intended to prohibit Bausman from acquiring in open market transactions
investments in equity stock or evidences of indebtedness of a corporation if
the said stock or if the said evidence of indebtedness is traded on a national
or regional securities exchange or in the over-the-counter market and the
investment therein represents no more than five percent (5%) of the outstanding
securities of the issue being acquired. Moreover, it is not the intention of
this Section 9 to limit in any way Bausman's ability to invest in businesses
not competitive with Reynolds.
(e) Bausman shall keep secret and inviolate all knowledge or
information of a confidential nature (which is not then nor later, through no
breach of this Agreement, in the public domain), including all unpublished
matters related to, without limitation thereof, the business, properties,
accounts, books and records, research and development information, processes,
procedures,
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products, know-how, trade secrets, memoranda, devices, suppliers, and customers
of Reynolds which he may now know or hereafter come to know as a result of his
affiliation in business with Reynolds.
(f) All copyrights, improvements, discoveries and inventions and
all claims, interest and rights thereto relating to any part of the business of
Reynolds conceived, developed or made by Bausman, either alone or with others,
during the period of his employment, and whether conceived, developed or made
during his regular working hours or at any other time during such period, shall
be and are the sole property of Reynolds and Bausman hereby assigns to Reynolds
all right, title and interest in and to such copyrights, improvements,
discoveries and inventions. Further, Bausman will, at any time in the future
upon Reynolds' request, execute specific assignments of any said copyrights,
improvements, discoveries and inventions as well as execute all documents and
perform all lawful acts which Reynolds deems necessary or advisable to vest
full ownership thereof in Reynolds, to register same in the name of Reynolds or
its designee or otherwise to provide legal protection for Reynolds' ownership
interests therein.
(g) This Agreement shall be without geographical limitation in
continental North America and, in addition, in any other areas of the world in
which Reynolds or any of its related or affiliated companies shall be doing
business at the time of the proposed competing entry into business by Bausman,
it being agreed that the contacts of Bausman and the potential scope of
operation of Reynolds is without any limitation within the area of prohibition.
Any violation of this covenant may be enforced by specific
30
<PAGE> 31
performance in any court of competent jurisdiction within the area of
limitation imposed by this provision. If any court of competent jurisdiction
shall determine that either the period or the territory covered by this
provision against competition in unreasonable, said provision shall not be
determined to be null, void, and of no effect but shall be reformed by said
court to impose a reasonable period or a reasonable geographical limitation, as
the case may be.
10. RESOLUTIONS OF DISPUTES; ARBITRATION.
-------------------------------------
(a) Except for the breach or threatened breach by Bausman of the
noncompetition provisions of this Agreement which may be enforced by
appropriate injunctive relief at the option of Reynolds, any dispute or
controversy arising out of or relating to this Agreement, including, but not
limited to, whether Bausman has been Discharged for Cause, shall be submitted
to and settled by arbitration in Dayton, Ohio in accordance with the rules then
pertaining of the American Arbitration Association.
(b) Should Bausman disagree that his determination was due to a
Discharge for Cause, the question shall, within thirty (30) days after the
termination, be submitted to arbitration by three (3) arbitrators, one of whom
shall be selected by Reynolds, another of whom shall be selected by Bausman,
and the third of whom shall be selected by the two arbitrators so appointed.
The decision of these arbitrators on the question shall be final and conclusive
upon Reynolds and upon Bausman and his wife or widow, personal representatives,
designated beneficiaries and heirs, and shall be enforceable in any court
having competent jurisdiction thereof. A
31
<PAGE> 32
discharge which is eventually determined under arbitration to have been a
Discharge for Cause, or no arbitration having been requested and the discharge
being one which Reynolds had determined was for a Discharge for Cause, shall
extinguish any and all liability of Reynolds under this Agreement from and
after the date of termination.
(c) The arbitrators for all other disputes or controversies under
this Agreement shall be selected as set forth above and the parties shall
select the arbitrators within thirty (30) days after demand from Bausman or
Reynolds to the other to settle matters by arbitration. As stated above, the
decision of the arbitrators shall be final and conclusive.
11. NONASSIGNABLE RIGHTS.
---------------------
Bausman, his wife, or his widow after his death, or his personal
representatives, designated beneficiaries and heirs, shall not have the right
to anticipate or commute, or to sell, assign, transfer, or otherwise alienate
or convey the right to receive any payments hereunder, whether by his, her or
their voluntary or involuntary act, or by operation of law and, in particular,
that any payments due hereunder shall not be subject to attachment or
garnishment or any other legal proceedings by any creditor, or be in any way
responsible for the debts or liabilities of Bausman or his wife or his widow
after his death or his personal representatives, designated beneficiaries and
heirs. Should Bausman or his wife or his widow after his death or his personal
representatives, designated beneficiaries and heirs, voluntarily attempt to
breach this Section of this Agreement, Reynolds'
32
<PAGE> 33
liability to make payments hereunder from and after the date of said attempt
shall be extinguished; and should any attempt be made to reach the payments by
other than Bausman or his wife or his widow after his death or his personal
representatives, designated beneficiaries and heirs, Reynolds shall make each
payment as it becomes due to such person or persons for the sole benefit of
Bausman or his wife or his widow or his personal representatives, designated
beneficiaries and heirs, as the case may be, as Reynolds may deem expedient.
12. UNFUNDED AGREEMENT.
-------------------
(a) Reynolds' obligation under this Agreement shall be unfunded,
but Reynolds reserves the right to provide for its liability under this
Agreement in any manner it deems advisable, including the purchasing of such
assets (including an insurance policy or policies on Bausman's life) as it may
deem necessary or proper; provided, however, that Bausman's insurability or
non-insurability shall in no way affect Reynolds' obligations pursuant to this
Agreement. Any asset so purchased by Reynolds shall be the sole property of
Reynolds and shall not be deemed to provide funding of Reynolds' obligations
under this Agreement.
(b) In the event Reynolds determines to purchase any insurance
policy or policies on Bausman's life, Bausman agrees to submit to such
examination and to supply information as may be required by the insurer.
(c) Any policy so purchased by Reynolds shall be issued so that
Reynolds is the sole, full, and complete owner of the policy or policies, with
the right and power to exercise any and all
33
<PAGE> 34
privileges and options thereof or available under the rules of the issuing
insurer without the consent of any other persons.
(d) Bausman, his wife, or his widow after his death, or his designated
beneficiaries, personal representatives, heirs, successors and assigns shall
have no claim or rights with respect to, and shall have no property or
equitable interests whatsoever in, any specific funds or assets of Reynolds and
shall have only the status of a general creditor with respect to
Reynolds hereunder.
13. FACILITY OF PAYMENT.
--------------------
In the event of a physical or mental illness or disability of Bausman
or of his widow after his death or of his designated beneficiaries at a time
when he or she (or they) is (are) entitled to payments hereunder, such payments
as may be due shall be paid to such person or persons for the benefit of
Bausman or his widow or his designated beneficiaries, as the case may be, as
Reynolds or, if applicable, the Escrow Agent may deem proper. In the event of
Bausman's death after he has made demand pursuant to Section 8(e)(v) above, the
Escrow Agent shall pay such amounts as thereafter are due to such beneficiary
or beneficiaries as Bausman shall have designated in writing, or failing such
writing, to his estate. No liability shall accrue to Reynolds or Escrow Agent
for any alleged payment to an improper person or representative if so made
after such reasonable investigation and Reynolds and Escrow Agent shall have no
responsibility to see to the proper application of such payments.
34
<PAGE> 35
14. MISCELLANEOUS PROVISIONS.
-------------------------
(a) All notices required or permitted to be given under this
Agreement shall be in writing and shall be mailed, postage prepaid, by
registered or certified mail or personally delivered, if to Reynolds, addressed
to:
The Reynolds and Reynolds Company
Attention: Vice President, Corporate Finance and
Chief Financial Officer
115 South Ludlow St.
Dayton, Ohio 45402
and, if to Bausman, addressed to:
Joseph N. Bausman
760 Winding Way
Kettering, Ohio 45419
Either party may change the address to which notices to such party are to be
sent by giving written notice of such change to the other party in the manner
specified in this provision.
(b) (i) This Agreement shall be binding upon Bausman, his
wife, and upon his or her heirs, executors, administrators, designated
beneficiaries and upon anyone claiming under him or his wife or widow, and upon
Reynolds and its successor or assigns.
(ii) Reynolds shall not merge or consolidate with any
other entity unless and until such other entity shall expressly assume
Reynolds' obligations under this Agreement or Reynolds has provided an
appropriate alternative arrangement covering its contingent liabilities under
this Agreement, and Reynolds shall not voluntarily dissolve without first
providing an appropriate arrangement covering its contingent liabilities under
this Agreement.
35
<PAGE> 36
(c) This Agreement may be amended, but only with the consent of
Bausman during his lifetime and, after his death only with the consent of his
widow during her lifetime or his other designated beneficiaries during their
lifetime, as the case may be. Any agreement of amendment shall be executed
with the same formality as this Agreement.
(d) This Agreement supersedes any prior agreements or
understandings covering the subject matter hereof, either written or oral,
between the parties.
(e) This Agreement shall be construed under the laws of the State
of Ohio.
(f) The paragraph headings used in this Agreement are for
convenience of reference only and shall not be considered in construing this
Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
respective hands the year and date first above written.
THE REYNOLDS AND REYNOLDS
COMPANY
By___________________________________
_____________________________________
JOSEPH N. BAUSMAN
648000\440JAM2.AGR
5-3-95-5
36
<PAGE> 37
EXHIBIT A
ESCROW AGREEMENT DATED MAY 8, 1989 BETWEEN THE REYNOLDS AND
REYNOLDS COMPANY AND BANK ONE DAYTON, N.A., AS AMENDED AS OF
MAY 31, 1995
<PAGE> 38
ESCROW AGREEMENT
----------------
This Escrow Agreement made and entered into as of this 8th day of May,
1989, by and between THE REYNOLDS AND REYNOLDS COMPANY, an Ohio corporation
(hereinafter referred to as "REYNOLDS") and BANK ONE, DAYTON, N.A. (hereinafter
referred to as the "ESCROW AGENT"),
WITNESSETH:
WHEREAS, REYNOLDS, has agreed to provide termination pay protection for
Joseph N. Bausman ("Employee") under conditions set forth in an Employment
Agreement with Employee dated May 8, 1989 (hereinafter referred to as the
"Agreement"); and
WHEREAS, the required protective payments under the Agreement are to be
paid to an escrow account at Bank One, Dayton, N.A.;
NOW, THEREFORE, in consideration of the covenants and agreements
contained in this ESCROW AGREEMENT, the parties hereby do agree as
follows:
1. ACCEPTANCE OF ESCROW. The ESCROW AGENT shall serve as
ESCROW AGENT in accordance with the provisions of this ESCROW
AGREEMENT, and the duties of the ESCROW AGENT shall be solely those imposed by
this ESCROW AGREEMENT.
2. TERMS. The ESCROW AGENT shall receive, hold and disburse
funds as ESCROW AGENT in accordance with the Agreement, in the form attached
hereto as Exhibit A and made a part hereof. The ESCROW AGENT acknowledges that
it has reviewed and is familiar with the Agreement and shall be bound by the
obligations, terms and conditions therein relating to the ESCROW AGENT and its
duties.
However, the ESCROW AGENT is not a party to or bound by the Agreement,
except as specifically provided for therein and as provided in Sections 2, 4,
6, 7 and 8 of this ESCROW
<PAGE> 39
AGREEMENT. The ESCROW AGENT shall be liable for only such funds and items as
are actually deposited and received by it for the purposes of said escrow.
3. INDEMNIFICATION. So long as the ESCROW AGENT shall follow the
terms of this ESCROW AGREEMENT and any instructions issued hereunder in good
faith, relying upon documents which it believes to be genuine and properly
signed and executed, it shall be held free, clear and harmless and shall incur.
no liability hereunder. REYNOLDS shall indemnify and hold the ESCROW AGENT
harmless from any loss, liability, cost, or expense, including reasonable legal
fees, which may arise or be incurred by reason of this ESCROW AGREEMENT or the
ESCROW AGENT's performance in good faith of any duty or obligation hereunder.
The ESCROW AGENT shall not be liable for any error of judgment or for
any act done or omitted by it in good faith, or for anything which it may in
good faith do or refrain from doing in connection with said escrow; nor will
any liability be incurred by the ESCROW AGENT if, in the event of any dispute
or question as to the construction of this ESCROW AGREEMENT or any demand or
notice hereunder, the ESCROW AGENT acts in accordance with the opinion of its
legal counsel.
4. INVESTMENTS BY ESCROW AGENT; INCOME. The ESCROW AGENT
shall invest escrow funds in federally-insured interest bearing accounts
selected by the ESCROW AGENT or in any one or more of the following
investments, selected by the ESCROW AGENT:
(a) Certificates of Deposit of United States commercial
banks holding membership in the Federal Reserve
System. Such U. S. banks shall have minimum tota I
assets of $1,000,000,000 and shall not be currently
listed on any publicly-disclosed report of U.S.
banks having financial problems warranting close
monitoring by the Federal Reserve Board.
(b) Euro-dollar Certificates of Deposit issued by the
twenty-five (25) largest United States commercial
banks, which banks shall have minimum total assets of
$1,000,000,000 and shall not be currently listed on
any publicly-disclosed report of U. S. banks having
financial problems warranting close monitoring by the
Federal Reserve Board.
<PAGE> 40
(c) Bankers Acceptances of United States commercial banks
holding membership in the Federal Reserve System.
Such U.S. banks shall have minimum total assets of
$1,000,000,000 and shall not be currently listed on
any publicly-disclosed report of U.S. banks having
financial problems warranting close monitoring by the
Federal Reserve Board.
(d) United States Treasury Bills.
(e) United States Treasury Notes.
(f) United States Government Guaranteed "Project
Notes" and/or Tax-Exempt Notes rated MIG 1 by
Moody's rating agency.
(g) Debt instruments issued by the following
five United States Government agencies:
Federal Intermediate Credit Banks
Banks for Cooperatives
Federal Land Banks
Federal Home Loan Banks
Federal National Mortgage Association
(h) Commercial Paper rated Prime-1 by Moody's rating
agency or rated A-1 by Standard & Poors rating
agency. In addition, with respect to any
corporation's commercial paper being purchased, such
corporation's long-term debt, if any, must be rated
either A by Moody's rating agency or A by Standard &
Poors rating agency.
The total investments in the above-described approved Certificates of Deposit,
Bankers Acceptances, Commercial Paper, and/or Tax-Exempt Notes shall be limited
to a maximum of $1,000,000 at any one time in any one single bank, corporation,
state and/or municipality.
With respect to funds deposited in escrow by REYNOLDS pursuant to the
terms of the Agreement, principal shall be used only for the payments to the
Employee. Any and all income on invested funds shall be paid to REYNOLDS in
accordance with subsection (c) of Section 2 of the Agreement. Fees of the
Escrow Agent shall be paid by REYNOLDS in accordance with subsection
(c) of Section 2 of the Agreement.
With respect to funds deposited pursuant to the Agreement, the ESCROW
AGENT shall be authorized to invest such funds. The ESCROW AGENT will maintain
such liquidity in the
<PAGE> 41
investments as will permit them to be cashed when necessary to fund the
required distributions to Employee.
5. TERMINATION. This ESCROW AGREEMENT and all obligations of the
ESCROW AGENT shall terminate upon satisfaction by the ESCROW AGENT of all of
its obligations under this ESCROW AGREEMENT and the Agreement.
6. ADVERSE CLAIMS. - ESCROW AGENT shall make delivery or
disbursement of the funds deposited hereunder in accordance with the terms of
the ESCROW AGREEMENT and the Agreement, regardless of any disagreement or the
presentation of any adverse claims or demands of any person, unless such person
shall have obtained an injunction from a court having proper jurisdiction,
enjoining ESCROW AGENT from making such delivery or disbursement. ESCROW AGENT
shall not become liable to REYNOLDS or to any other person, for or because of
such delivery or disbursement of such funds, even with knowledge of a
disagreement or adverse claim or demand.
7. DEMANDS. Except in cases where demand or notice by a single
party is specifically provided for in this ESCROW AGREEMENT or in the
Agreement, the ESCROW AGENT shall not be bound to recognize any notice,
demand or change of instructions as having any effect on this escrow unless
given in writing and signed by all parties considered by the ESCROW AGENT to be
affected thereby.
8. NOTICES. Any notice required or permitted to be given
hereunder shall be given in writing and shall be sufficiently delivered if sent
by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
Trust Officer
Trust Division
Bank One, Dayton, NA
Kettering Tower
Dayton, Ohio 45423
The Reynolds and Reynolds Company
129 S. Ludlow Street
<PAGE> 42
Dayton, Ohio 45401
Attn: Chief Financial Officer
Should the address of any party identified above change for the purposes
herein, such party shall give written notice of the new address to the other
parties identified above.
All notice hereunder to the ESCROW AGENT shall be given in writing to
an officer of the ESCROW AGENT. Unless written notice shall so be given, the
ESCROW AGENT shall not be required to take or be bound by said notice or to
take action concerning such notice. If written notice be properly given and
the ESCROW AGENT is required upon receipt thereof to take any action hereunder
and such action involves any expense or liability, the ESCROW AGENT shall not
be required to take any such action unless it is indemnified against such
expense or liability in a manner reasonably satisfactory to the ESCROW AGENT.
At the time of depositing funds into escrow on behalf of Employee, REYNOLDS
shall deliver to the ESCROW AGENT a written notice setting forth such person's
name and address, and social security number identifying the amounts being
deposited on such person's behalf, and the conditions of the Agreement, which
have been met and which, therefore, require that such deposit be made.
9. RECORD KEEPING. The ESCROW AGENT shall maintain records
showing the amount and date of all deposits made by REYNOLDS for the benefit of
Employee and the amount and date of all disbursements made to Employee, his
heirs, successors and assigns. REYNOLDS shall be given access to said records
at reasonable times upon request.
10. ESCROW Fee. REYNOLDS shall pay to the ESCROW AGENT for its
services hereunder an escrow fee based upon the then-current schedule of
charges for such services promulgated by the ESCROW AGENT and shall pay
additional reasonable compensation for any further or extraordinary service
which the ESCROW AGENT may be required to render pursuant to the terms of this
ESCROW AGREEMENT.
<PAGE> 43
11. BINDING EFFECT. -This ESCROW AGREEMENT shall be binding upon
and inure to the heirs, executors, administrators, personnel representatives,
successors and assigns of all parties hereto.
12. MISCELLANEOUS. Employee is acknowledged to be third party
beneficiary upon the deposit of any amounts under this ESCROW AGREEMENT for his
benefit. This ESCROW AGREEMENT may be modified or amended only by a writing
signed (i) by all parties hereto, (ii) by the third party beneficiary and (iii)
by any other person the ESCROW AGENT considers to be affected by said
modification or amendment. This ESCROW AGREEMENT shall be construed and
enforced in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have set their respective hands
the year and date first hereinabove written.
THE REYNOLDS AND REYNOLDS COMPANY
By
"REYNOLDS"
BANK ONE, DAYTON, NA
By
<PAGE> 44
AMENDMENT NO. 1
TO
ESCROW AGREEMENT
----------------
THIS AMENDMENT NO. 1 TO ESCROW AGREEMENT ("Amendment") is made and
entered into as of this 31st day of May, 1995 by and between THE REYNOLDS AND
REYNOLDS COMPANY, an Ohio corporation (hereinafter referred to as "Reynolds"),
and BANK ONE, DAYTON, NA (hereinafter referred to as the "Escrow Agent").
WITNESSETH:
-----------
WHEREAS, Reynolds and the Bank have entered into an Escrow Agreement
dated May 8, 1989 pursuant to an Employment Agreement dated as of May 8, 1989,
as amended effective December 1, 1989 and extended May 31, 1994 (as so amended
and extended (the "May 8, 1989 Agreement") between Reynolds and Joseph N.
Bausman ("Bausman"), an employee of Reynolds; and
WHEREAS, Bausman and Reynolds have entered into a new Amended and
Restated Employment Agreement effective May 31, 1995 (the "Employment
Agreement"), pursuant to which Reynolds has agreed to continue to provide
termination pay protection for Bausman and which provides that the required
protective payments under the Employment Agreement are to continue to be paid
into an escrow account at the Escrow Agent; and
WHEREAS, the parties hereto desire that the Escrow Agreement shall
continue in full force and effect and for the benefit of Bausman and with full
applicability to the Employment Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements
contained in this Amendment, the parties hereby agree as follows:
1. All references to the May 8, 1989 Agreement between Reynolds
and Bausman contained in the Escrow Agreement shall include and apply with full
force and effect to the Employment Agreement.
2. Except as set forth herein, the Escrow Agreement shall remain
unchanged and continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
respective hands as of the day and year first above written.
THE REYNOLDS AND REYNOLDS COMPANY
By_________________________________
BANK ONE, DAYTON, NA
By_________________________________
<PAGE> 45
EXHIBIT B
SCHEDULE OF FRINGE BENEFITS
PURSUANT TO SECTION 4(d)
------------------------
<TABLE>
<CAPTION>
BENEFIT AMOUNT
------- ------
<S> <C>
Annual Physical Exam Local Clinic, maximum of $600
Auto/Gas Allowance $916 monthly
Charitable Allowance $1,000 annually to charities of his choice
Income Tax Planning and $1,000 annually
Preparation
Estate Planning and
Will Preparation
Initial Service $900
Updates $300 annually
Country Club Dues 50% annually, including initiation fee up to $3,500
Luncheon Club Dues 100% annually
Corporate aircraft (personal use) Yes; in connection with company business use Bausman may include personal passengers,
subject to seat availability. Bausman shall receive W-2 for personal use value per IRS
regulations
Vacation Five (5) weeks annually at mutually agreed times.
</TABLE>
<PAGE> 1
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT ("Agreement") made and entered into as of the
1st day of September, 1995, by and between THE REYNOLDS AND REYNOLDS COMPANY, a
corporation existing under the laws of the State of Ohio ("Reynolds"), and H.
JOHN PROUD ("Proud").
W I T N E S S E T H:
WHEREAS, Proud is now President of the Healthcare Systems Division of
Reynolds; and
WHEREAS, Reynolds desires to retain Proud's services and has offered
him substantial inducements so that he would deem continued employment by
Reynolds beneficial to him and to provide him reasonable employment security
and economic protection; and
WHEREAS, Proud is willing to accept the same and continue in the
employ of Reynolds;
NOW THEREFORE, in consideration of the foregoing premises and of the
mutual promises set forth below, Reynolds and Proud hereby agree as follows:
1. DEFINITIONS.
-----------
For purposes of this Agreement, the terms set forth below shall have
the following meanings:
(a) "Annual Compensation Value" shall mean Proud's then-current
Base Compensation plus an amount equal to the average of all Bonuses (excluding
any compensation attributable to stock options of any type granted by Reynolds)
earned by Proud during the three (3) calendar years preceding the date upon
which the valuation is made.
<PAGE> 2
(b) "Base Compensation" shall mean the then-current annual base
salary (exclusive of Bonuses) of Proud.
(c) "Bonuses" shall mean bonus payments earned by Proud under
Reynolds' Incentive Compensation Plans and under any future bonus or incentive
compensation plans of Reynolds for its executive officers.
(d) "Change in Control" shall mean the occurrence of any of the
following:
(i) Any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than Richard H. Grant, Jr., his children or his grandchildren,
Reynolds, any trustee or other fiduciary holding securities under an employee
benefit plan of Reynolds, or any company owned, directly or indirectly, by the
shareholders of Reynolds in substantially the same proportions as their
ownership of stock of Reynolds), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of Reynolds representing fifty percent (50%) or more of the combined
voting power of Reynolds' then outstanding securities;
(ii) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board, any new director (other
than a director designated by a person who has entered into an agreement with
Reynolds to effect a transaction described in clause (i), (iii) or (iv) of this
Section
2
<PAGE> 3
whose election by the Board or nomination for election by Reynolds'
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
the period or whose election was previously so approved) cease for any reason
to constitute at least a majority thereof;
(iii) the shareholders of Reynolds approve a merger or
consolidation of Reynolds with any other company, other than (1) a merger or
consolidation which would result in the voting securities of Reynolds
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the combined voting power of
the voting security of Reynolds or such surviving entity outstanding
immediately after such merger or consolidation or (2) a merger or consolidation
effected to implement a recapitalization of Reynolds (or similar transaction)
in which no "person" (as hereinabove defined) acquires more than fifty percent
(50%) of the combined voting power of Reynolds' then outstanding securities; or
(iv) the shareholders of Reynolds approve a plan of
liquidation, dissolution or winding up of Reynolds or an agreement for the sale
or disposition by Reynolds of all or substantially all of Reynolds' assets.
(e) "Discharge For Cause" shall be construed to have occurred
whenever occasioned by reason of felonious acts on the part of Proud, actions
by Proud involving serious moral turpitude or his
3
<PAGE> 4
misconduct in such manner as to bring substantial and material discredit upon
Reynolds, following the giving of thirty (30) days' written notice to Proud
specifying the respect in which Reynolds claims Proud has violated this
provision and the failure, inability or unwillingness of Proud to remedy the
situation to the satisfaction of Reynolds within said thirty-day period. In
establishing whether a Discharge For Cause shall have occurred, the standard
for judgment shall be the level of conduct by Proud and by other comparably
situated executive officers prior to the alleged improper activity of Proud for
which the Discharge For Cause has been made.
(f) "Escrow Agreement" shall mean the agreement dated entered into
simultaneously herewith between Reynolds and Bank One, Dayton, NA, a copy of
which is attached hereto and made a part hereof as Exhibit A.
(g) "Escrow Agent" shall mean Bank One, Dayton, NA.
(h) "Escrow Amount" shall mean the amounts placed in escrow by
Reynolds pursuant to subsection (e)(iii) of Section 5 of this Agreement.
(i) "Escrow Funding Event" shall mean the occurrence of any of the
following events:
(i) Class A Common Shares of Reynolds have been acquired
other than directly from Reynolds in exchange for cash or property by any
person (other than Richard H. Grant, Jr., his children or his grandchildren,
Reynolds, any trustee or other fiduciary holding securities under an employee
benefit plan of Reynolds, or any
4
<PAGE> 5
company owned directly or indirectly by the shareholders of Reynolds in
substantially the same proportions as their ownership of the stock of Reynolds)
who either thereby becomes the owner of more than nine and one half percent
(9.5%) of Reynolds' outstanding Class A Common Shares, or having directly or
indirectly become the owner of more than five percent (5%) of Reynolds' Class A
Common Shares either alone or in conjunction with another person has expressed
an intent to continue acquiring Reynolds' outstanding Class A Common Shares so
as to become thereby the owner of more than nine and one-half percent (9.5%) of
such stock either directly or indirectly;
(ii) Any person (other than Richard H. Grant, Jr., his
children or grandchildren, Reynolds, any trustee or other fiduciary holding
securities under an employee benefit plan of Reynolds, or any company owned
directly or indirectly by the shareholders of Reynolds in substantially the
same proportions as their ownership of stock of Reynolds) has made a tender
offer for, or a request for invitations for tenders of, Class A Common Shares
of Reynolds.
(iii) Any person forwards or causes to be forwarded to
shareholders of Reynolds proxy statement(s) in any period of twenty-four (24)
consecutive months, soliciting proxies, to elect to the Board of Reynolds two
(2) or more candidates who were not nominated as candidates in proxy statements
forwarded to shareholders during such period by the Board; or
5
<PAGE> 6
(iv) The Board adopts a resolution to the effect that, for
purposes of this Agreement, an Escrow Funding Event has occurred.
(j) "Final Annual Compensation" shall mean Proud's Base
Compensation at the time of termination of employment plus an amount equal to
the average of all Bonuses (excluding any compensation attributable to stock
options of any type granted by Reynolds) earned by Proud during the three (3)
calendar years preceding his termination of employment.
(k) "Final Average Annual Compensation" shall mean the average of
Proud's Base Compensation and Bonuses (excluding any compensation attributable
to stock options of any type granted by Reynolds) as determined for the five
(5) consecutive calendar years of the last ten (10) calendar years preceding
and including the calendar year in which Proud's employment terminates which
yields the highest sum.
(l) "Pension Plan" shall mean the existing Reynolds and Reynolds
Company Non-Union Pension Plan, as the same may be amended from time to time.
(m) "Supplemental Plan" shall mean Reynolds' existing Supplemental
Retirement Plan, as the same may be amended from time to time.
2. TERMS AND DUTIES.
----------------
(a) The term of this Agreement shall continue from the date hereof
and end on September 1, 1999, unless extended in accordance herewith. Proud
shall continue in the employ of Reynolds as
6
<PAGE> 7
President of the Healthcare Systems Division or such other substantially
equivalent position designated by the Board, consistent with the provisions of
this Agreement. In addition, Proud agrees to perform such other duties as may
be specifically designated for him from time to time by the Board, consistent
with the provisions of this Agreement. Subject to Proud's willingness to so
extend his employment, Reynolds may extend the term of this Agreement for
additional renewal periods of one (1) year each by giving written notice
thereof not less than twelve (12) months prior to September 1, 1999 initially
and not less than twelve (12) months prior to each succeeding September 1st
thereafter.
(b) At all times Proud will, to the best of his ability, energy
and skill, faithfully perform all of the duties that may be required of him
from time to time by the Board and diligently devote his entire working time,
attention and efforts to the business affairs and best interests of Reynolds,
except for absences for sickness and vacations. If the Board determines that
any outside activity engaged in by him is detrimental to the best interests of
Reynolds, he will discontinue such outside activity within thirty (30) days
after written notice from the Board.
(c) Proud agrees that during the period of his employment by
Reynolds, for so long as he is entitled to receive payments under this
Agreement, and for a period of two (2) years thereafter (subject to the
provisions of Section 6 below and provided, however, in the event of
termination of Proud's employment due to Reynolds' decision not to renew this
Agreement the period shall be
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one (1) year), he will not, directly or indirectly, further the affairs of any
other corporation, partnership, or any business enterprise by employment of any
kind, investment therein (except as otherwise permitted under Section 6(d)
below), counseling or otherwise, if the same is in competition with Reynolds,
without the written consent of the Board. This provision, however, shall not
be construed to prevent him from pursuing personal investments in any business
or enterprise which is not in competition with Reynolds and which do not
interfere with his employment and the performance of his duties to Reynolds
hereunder.
3. COMPENSATION AND FRINGE BENEFITS.
--------------------------------
(a) The Base Compensation of Proud during the term of this
Agreement shall be $210,000, which may be increased from time to time by the
Board or, in the case of any proposed decrease, such other amount as mutually
may be agreed upon by Proud and Reynolds; provided, however, that such Base
Compensation may not be reduced below said rate of $210,000 without Proud's
consent, unless necessitated by general business conditions adversely affecting
Reynolds' operations; but, in the event of a reduction, his Base Compensation
shall be fair and reasonable, and any disagreement concerning the same shall be
resolved by arbitration in the manner provided in Section 7 below. Proud's
Base Compensation shall be reviewed at least annually to determine whether in
view of Reynolds' performance during the year any increase is warranted.
Responsibility for this determination rests within the sole
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<PAGE> 9
discretion of the Board, and this provision shall not be construed as requiring
any such increase for any given year.
(b) Proud shall continue his participation in the existing bonus
plan arrangements under the Incentive Compensation Plans (or their equivalent)
for executive officers of Reynolds and shall be entitled to such awards under
any future bonus, incentive, or similar compensation plans of Reynolds, as
shall, in the determination of the Board, be appropriate and consistent with
the purposes of such plans and with the awards granted to other executive
officers of Reynolds.
(c) Proud shall continue to be eligible for participation in the
Stock Option Plan - 1995 of Reynolds and shall be entitled to the grant of such
options to purchase shares of Class A Common Stock of Reynolds under any other
future stock option plans for employees and to participate in such other
executive compensation incentive plans awarding stock as shall, in the
determination of the Board, be appropriate and consistent with the purposes of
the plans and with the grants of such options to the executive officers of
Reynolds.
(d) In addition to the specific benefits provided for Proud under
the terms of this Agreement, Reynolds shall provide him with other fringe
benefits (including bonuses, vacations, health and disability insurance,
pension plan participation and others) at least equivalent to those of the
other executive officers of Reynolds and as set forth on Exhibit B attached
hereto and made a part hereof.
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4. EXPENSES.
--------
Proud shall be reimbursed for his reasonable business-related expenses
incurred for the benefit of Reynolds in accordance with Reynolds' policies
governing such reimbursement in effect from time to time. Such expenses shall
include, but shall not be limited to, travel, lodging away from home,
entertainment, and meals. With respect to any expenses which are reimbursed by
Reynolds to Proud, Proud shall account to Reynolds in sufficient detail to
entitle Reynolds to a federal income tax deduction for such reimbursed item if
such item is deductible.
5. TERMINATION; DISCHARGE.
----------------------
(a) TERMINATION OR DISCHARGE WITHOUT CAUSE. Reynolds reserves the
right to discharge Proud at any time and for any reason and not to renew this
Agreement; but such non-renewal or discharge, unless a Discharge For Cause,
shall not extinguish the obligation of Reynolds to provide Proud (and, in the
event of his prior death, his designated beneficiary or beneficiaries or his
estate) with the following severance benefits:
(i) If Reynolds does not renew this Agreement, Proud
shall be entitled to receive for a period expiring one (1) year from September
1, 1999 (or any renewal thereof) payments from Reynolds in an amount equal to
his Annual Compensation Value.
(ii) If such discharge occurs prior to September 1, 1999,
Proud shall be entitled to receive for a period expiring two (2) years from the
date of discharge, payments from Reynolds in an amount equal to his Annual
Compensation Value.
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(iii) Proud shall be entitled, during the period expiring
on the earlier of Proud's securing other employment or two (2) years from the
date of discharge (or such longer period as required by law), to continuing
coverage under the then-existing Reynolds-sponsored medical benefits program,
which, at the option of Reynolds, may be provided outside of such program
through the purchase of insurance or otherwise.
(iv) For purposes of determining Proud's benefits under
the Supplemental Plan, Proud shall receive credit toward his Years of Service
under the Supplemental Plan for the time period that he receives or is entitled
to receive payments under subsections (i) or (ii) of this Section 5(a). In
addition, during the time period that he receives or is entitled to receive
payments under said subsections (i) or (ii) of this Section 5(a), Proud's Base
Compensation shall be deemed to be increased by the annual economic range
adjustment for Reynolds' salaried employees announced in October of each year
(or, if there is no such announced economic range adjustment in a given year,
by an assumed five (5%) increase for that year) in order to calculate his
highest earnings during five (5) consecutive years out of the last ten (10)
years prior to retirement under the Supplemental Plan, and his Final Annual
Compensation (see Section 5(d) below) and Final Average Annual Compensation
shall be deemed to increase in the same manner for purposes of determining the
amount of his Retirement Benefits under this Agreement.
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(v) Proud shall be reimbursed for up to $20,000 for
out-placement fees if he chooses to seek other employment following his
discharge by Reynolds. Proud shall not be obligated to seek other employment
in order to mitigate his damages resulting from his discharge.
Proud acknowledges that he shall remain subject to and bound
by the restrictive provisions of Section 6 below.
(b) DISCHARGE FOR CAUSE. If Proud's employment with Reynolds is
terminated by a Discharge For Cause, regardless of whether such Discharge For
Cause occurs after the occurrence of any of the events set forth in Sections
5(d) or 5(e) below, he shall be entitled to receive only his Base Compensation
up to the date of his discharge and no further payments hereunder shall be
required from Reynolds; provided, however, that Proud shall be entitled to
receive his benefits, if any, under the Pension Plan and the Supplemental Plan
to the extent applicable. Proud shall remain subject to the restrictive
provisions of Section 6 below for a period for two (2) years from the date of
discharge. Should Proud disagree that his discharge was a Discharge For Cause
the question shall be submitted to arbitration in accordance with Section 7
below.
(c) TERMINATION DUE TO DISABILITY OR DEATH. If, by reason of
illness, disability, or other incapacity certified by two (2) physicians
competent to do so in the opinion of the Board, Proud is unable to perform the
duties required of him under this Agreement for a period of six (6) consecutive
months, Reynolds, following the
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giving of thirty (30) days' written notice to Proud and the failure of Proud by
reason of illness, disability, or other incapacity to resume his duties within
such thirty (30) days and thereafter perform the same for a period of two (2)
consecutive months, may terminate Proud's employment by giving Proud written
notice thereof; and in that event all obligations of Reynolds hereunder shall
cease on the date such notice of termination is given except for disability
benefits, including medical benefits, to which Proud may then be entitled by
virtue of his participation in any Reynolds' sponsored programs then in effect.
Similarly, upon his death, all obligations of Reynolds hereunder shall cease
except for any death benefits to which Proud (or his beneficiaries) may be
entitled by virtue of his participation in any Reynolds' sponsored programs
then in effect.
(d) BENEFITS UPON TERMINATION UNDER CERTAIN CIRCUMSTANCES. If
Proud voluntarily terminates his employment or Proud is discharged by Reynolds
and such discharge is not a Discharge For Cause, and if such voluntary
termination or involuntary discharge takes place within eighteen (18) months
after the occurrence of any of the following events:
(i) Proud is required by Reynolds, prior to a Change in Control,
to perform duties or services which differ significantly from those performed
by him on the effective date hereof, or which are not ordinarily and generally
performed by a President of a division or corporation similar in size and scope
to the Reynolds Healthcare Systems Division; or
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<PAGE> 14
(ii) The nature of the duties or services which Reynolds,
prior to a Change in Control, requires him to perform necessitates absence
overnight from his place of residence on the effective date hereof, because of
travel involving the business or affairs of Reynolds, for more than ninety (90)
days during any period of twelve (12) consecutive months; Proud shall be
entitled to receive from Reynolds all of the severance benefits set forth in
Section 5(a) above, except that severance payments shall be made until the
later of the end of the term of this Agreement or two (2) years from the date
of his termination of employment. Proud shall remain subject to and bound by
the restrictive provisions of Section 6 below.
(e) BENEFITS UPON A CHANGE IN CONTROL. Reynolds recognizes that
the threat of a Change in Control would be of significant concern to Proud.
The following provisions provide termination protection for Proud in the event
of a Change in Control. These provisions, among other purposes, are intended
to foster and encourage Proud's continued attention and dedication to his
duties in the event of such potentially disturbing and disruptive
circumstances. Reynolds, therefore, agrees to do the following:
(i) If Reynolds terminates Proud's employment for any
reason other than a Discharge for Cause, or if Proud terminates his employment
with Reynolds voluntarily for any reason other than disability or retirement
within the twenty-four (24) month period following a Change in Control, Proud
shall be entitled to receive from Reynolds the following benefits:
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<PAGE> 15
(A) A lump sum severance payment (the "Severance
Payment"), in cash, equal to three (3) times the sum of (i) the higher of
Proud's annual Base Compensation in effect immediately prior to the occurrence
of the event or circumstance upon which such termination of employment is based
or in effect immediately prior to the Change in Control, and (ii) the average
of Proud's Bonuses during the three (3) calendar years immediately preceding
the year in which the date of termination occurs.
(B) Proud shall be entitled, during the period expiring
on the earlier of Proud's securing other employment or twenty-four (24) months
from the date of such termination of employment (or such longer period as
required by law), to continued coverage under the Reynolds sponsored medical
benefits program in existence on such date of termination or, if such continued
coverage is barred, Reynolds shall provide equivalent medical benefit coverage
through the purchase of insurance or otherwise.
(C) For purposes of determining Proud's benefits under
the Supplemental Plan, Proud shall receive credit toward his Years of Service
under the Supplemental Plan for the two (2) year period following such
termination of employment. In addition, with respect to the two (2) year
period following such termination of employment, Proud's Base Compensation
shall be deemed to be increased by the annual economic range adjustment for
Reynolds' salaried employees announced in October of each year (or, if there is
no such announced economic range adjustment in a given year, by an assumed five
percent (5%) increase for that year) in order to
15
<PAGE> 16
calculate his highest earnings during five (5) consecutive years out of the
last ten (10) years prior to retirement under the Supplemental Plan.
(D) Proud shall be reimbursed for up to $20,000 for
outplacement fees if he chooses to seek other employment following his
discharge by Reynolds. Proud shall not be obligated to seek other employment
in order to mitigate his damages resulting from his discharge.
The benefits provided in this Section 5(e) shall be in lieu of
any benefits provided under Section 5(d) of this Agreement.
(ii) Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received or to be
received by Proud in connection with a Change in Control or the termination of
Proud's employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with Reynolds, any person whose actions
result in a Change in Control or any person affiliated with Reynolds or such
person) (all such payments and benefits, including the Severance Payment, being
hereinafter called "Total Payments") would be subject (in whole or part), to an
excise tax pursuant to Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended (the "Code") (such tax hereinafter referred to as the "Excise
Tax"), then the Severance Payment shall be reduced to the extent necessary so
that no portion of the Total Payments is subject to Excise Tax (after taking
into account any reduction in the Total Payments provided by reason of Section
280G of the Code in such other plan, arrangement or
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<PAGE> 17
agreement) if (A) the net amount of such Total Payments, as so reduced, (and
after deduction of the net amount of federal, state and local income tax on
such Total Payments), is greater than (B) the excess of (i) the net amount of
such Total Payments, without reduction (but after deduction of the net amount
of federal, state and local income tax on such Total Payments), over (ii) the
amount of Excise Tax to which Proud would be subject in respect of such Total
Payments. For purposes of determining whether and the extent to which the
Total Payments will be subject to the Excise Tax, (i) no portion of the Total
Payments the receipt or enjoyment of which Proud shall have effectively waived
in writing prior to the date of this termination of employment shall be taken
into account, (ii) no portion of the Total Payments shall be taken into account
which in the opinion of tax counsel selected by Reynolds does not constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code,
(including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating
the Excise Tax, no portion of such Total Payment shall be taken into account
which constitutes reasonable compensation for services actually rendered,
within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the base
amount as defined in Section 280G(b)(3) of the Code allowable to such
reasonable compensation, and (iii) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
by Reynolds in accordance with the principles of Sections 280G(d)(3) and (4) of
the Code. Prior to the fifth day following the date of Proud's termination of
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<PAGE> 18
employment, Reynolds shall provide Proud with its calculation of the amounts
referred to in this Section and such supporting materials as are reasonably
necessary for Proud to evaluate Reynolds' calculations. If Proud objects to
Reynolds' calculations, he shall notify Reynolds of his objections prior to the
initial payment date set forth in Section 8(e)(vi) hereof, and Reynolds shall
pay to Proud such portion of the Severance Payment (up to one hundred percent
(100%) thereof) as Proud determines is necessary to result in Proud's receiving
the greater of clauses (A) and (B) of this Section.
(iii) Upon the occurrence of an Escrow Funding Event, Reynolds shall
pay into an escrow account at the Escrow Agent an amount equal to three (3)
times the sum of (i) Proud's Base Compensation in effect immediately prior to
the Escrow Funding Event and (ii) the average of Proud's Bonuses during the
three (3) calendar years immediately preceding the year in which the Escrow
Funding Event occurs. Subsequent to the delivery to the Escrow Agent of
the Escrow Amount, Reynolds shall, in the event that either Proud's Base
Compensation is increased (or decreased) or he receives a Bonus that affects
the amount described in Section 5(e)(i)(A), unless the Escrow Amount shall
theretofore have been released pursuant to this subsection, recalculate the
Escrow Amount as of the date such change in Base Compensation or receipt of
Bonus occurs, treating the Escrow Funding Event as having occurred on such
date. If the amount so calculated exceeds the fair market value of the Escrow
Amount, Reynolds shall promptly (and in no
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<PAGE> 19
event later than seven (7) days from such date) pay to the Escrow Agent an
amount in cash (or marketable securities or any combination thereof) equal to
such excess. If the Escrow Amount so calculated is less than the fair market
value of the Escrow Amount then held in the escrow account, the Escrow Agent,
upon receipt of a written request from Reynolds, shall distribute to Reynolds
such difference in cash; provided, however, that this sentence shall not apply
after the occurrence of a Change in Control.
(iv) Unless the parties otherwise agree, Reynolds may
withdraw the Escrow Amount when and only when two (2) years have expired from
the date of deposit and no proper demand pursuant to Section 5(e)(vi) below has
been made during the time, or when the conditions requiring the deposit have
ceased to exist for a period of ninety (90) days without a demand right having
been created, or when Proud's right to a payment under this Section 5(e) has
been forfeited, whichever occurs first. If, before the expiration of such
period or forfeiture, there shall occur another Escrow Funding Event, Reynolds
will not be required to make an additional deposit, but the two (2) year period
shall then be measured from the date of the last such event. Notwithstanding a
deposit with the Escrow Agent pursuant to subsection (iii) of this Section
5(e), Proud shall continue to be entitled to receive all of the benefits from
Reynolds under this Agreement until a termination of employment shall occur.
(v) Reynolds shall pay the charges of the Escrow Agent for
its services under the Escrow Agreement, and Reynolds will be
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<PAGE> 20
entitled to any interest or other income arising from the date of the deposit
of the Escrow Amount until all payments have been made under the Escrow
Agreement to Proud. All interest or other income arising from the Escrow
Amount deposited with the Escrow Agent shall be paid monthly to Reynolds.
(vi) If Reynolds terminates Proud's employment for any
reason but a Discharge for Cause, or if Proud terminates his employment with
Reynolds voluntarily for any reason other than disability or retirement within
the twenty-four (24) month period following the date of a Change in Control,
the Escrow Agent, upon written demand made on or after the tenth (10th) day
following such termination of employment, shall pay the Escrow Amount in
accordance with this Section and Proud shall no longer be subject to the
restrictive provisions of Section 6 below, except for Section 6(e). Proud
shall notify the Escrow Agent prior to the tenth (10th) day following his
termination of employment as to whether he has accepted the determination of
Reynolds of the amount of the Severance Payments pursuant to Section 5(e)(iii).
If he has accepted such determination, Reynolds shall provide the Escrow Agent
with Reynolds' written determination as set forth in Section 5(e)(iii) and the
Escrow Agent shall pay to Proud all or a portion of the Escrow Amount as
provided in such determination, and any remaining amount shall be paid to
Reynolds. If Proud does not accept Reynolds' determination, Proud shall
provide to the Escrow Agent his determination of the Severance Payment, and the
Escrow Agent shall pay to Proud all or a portion of the Escrow Amount as
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provided in Proud's determination and any remaining amount shall be paid to
Reynolds.
(vii) In the event that, following the creation of a demand
right pursuant to Section 5(e)(vi) above, Proud incurs any costs or expenses,
including attorneys' fees, in the enforcement of rights under this Section 5(e)
or under any plan for the benefit of employees of Reynolds, including without
limitation the stock option plan, pension plans, payroll-based stock ownership
plan, tax deferred savings and protection plan, bonus arrangements,
supplemental pension plan, deferred compensation agreements, incentive
compensation plans, and life insurance and compensation program, then, unless
Reynolds or the consolidated, surviving or transferee entity in the event of a
consolidation, merger or sale of assets, is wholly successful in defending
against the enforcement of such rights, Reynolds, or such consolidated,
surviving or transferee entity, shall promptly pay to Proud all such costs and
expenses.
6. NON-COMPETITION; CONFIDENTIALITY.
--------------------------------
(a) In order to protect Reynolds, it is understood that a covenant
not to compete is a necessary and appropriate adjunct to the other provisions
of this Agreement. Therefore, should Proud at any time determine prior to the
expiration of this Agreement that he does not desire to remain an employee of
Reynolds and shall terminate his employment for any reason other than the
grounds specified in Section 5(e) above, or should he be Discharged For Cause
by Reynolds, Proud shall remain subject to the restrictive
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provisions hereinafter set forth. In addition, these restrictive provisions
shall remain in full force and effect at any other time during which payments
are required to be made by Reynolds pursuant to the severance or disability
provisions (Section 5) of this Agreement. These restrictive provisions are as
follows:
(b) For a period of two (2) years from and after Proud's employment
with Reynolds shall have terminated (provided, however, in the event of
termination of Proud's employment due to Reynolds' decision not to renew
this Agreement the period shall be one (1) year) and after he shall have ceased
receiving severance or disability benefits under this Agreement, whichever
shall last occur, he shall not, directly or indirectly, compete with Reynolds
or any of its related or affiliated companies. For purposes of this Agreement,
competition with Reynolds or any of its related or affiliated companies shall
include the manufacture, distribution, and sale of business forms and computer
hardware and software and the furnishing of EDP services which are similar in
nature or function to the products and/or services then being furnished by
Reynolds for sale in the same vertical markets in which Reynolds' products
and/or services are then being marketed at the time of Proud's termination of
employment or upon the cessation of any retirement, severance or disability
benefits under this Agreement.
(c) From and after the execution of this Agreement and for a
period of two (2) years after termination (provided, however, in the event of
termination of Proud's employment due to Reynolds' decision not to renew this
Agreement the period shall be one (1)
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year) of his employment with Reynolds and after he shall have ceased receiving
severance or disability benefits under this Agreement, whichever shall last
occur, Proud shall not, directly or indirectly, by direct participation, by
purchase of stocks or bonds or other evidences of indebtedness, by loaning of
money, by guarantee of loans of others, by gift to establish or assist others,
or in any other manner or fashion, engage in any such restricted activity in
competition with Reynolds or any of its related or affiliated companies, nor
shall he assist any present employees of Reynolds or any other person similarly
to engage in such competing business for the full two-year prohibition period
set forth in this Agreement.
(d) The restrictive provisions of this Section 6, however, are in
no way intended to prohibit Proud from acquiring in open market transactions
investments in equity stock or evidences of indebtedness of a corporation if
the said stock or if the said evidence of indebtedness is traded on a national
or regional securities exchange or in the over-the-counter market and the
investment therein represents no more than five percent (5%) of the outstanding
securities of the issue being acquired. Moreover, it is not the intention of
this Section 6 to limit in any way Proud's ability to invest in businesses not
competitive with Reynolds.
(e) Proud shall keep secret and inviolate all knowledge or
information of a confidential nature (which is not then nor later, through no
breach of this Agreement, in the public domain), including all unpublished
matters related to, without limitation
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thereof, the business, properties, accounts, books and records, research and
development information, processes, procedures, products, know-how, trade
secrets, memoranda, devices, suppliers, and customers of Reynolds which he may
now know or hereafter come to know as a result of his affiliation in business
with Reynolds.
(f) All copyrights, improvements, discoveries and inventions and
all claims, interest and rights thereto relating to any part of the business of
Reynolds conceived, developed or made by Proud, either alone or with others,
during the period of his employment, and whether conceived, developed or made
during his regular working hours or at any other time during such period, shall
be and are the sole property of Reynolds and Proud hereby assigns to Reynolds
all right, title and interest in and to such copyrights, improvements,
discoveries and inventions. Further, Proud will, at any time in the future
upon Reynolds' request, execute specific assignments of any said copyrights,
improvements, discoveries and inventions as well as execute all documents and
perform all lawful acts which Reynolds deems necessary or advisable to vest
full ownership thereof in Reynolds, to register same in the name of Reynolds or
its designee or otherwise to provide legal protection for Reynolds' ownership
interests therein.
(g) This Agreement shall be without geographical limitation in
continental North America and, in addition, in any other areas of the world in
which Reynolds or any of its related or affiliated companies shall be doing
business at the time of the proposed competing entry into business by Proud, it
being agreed that the
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contacts of Proud and the potential scope of operation of Reynolds is without
any limitation within the area of prohibition. Any violation of this covenant
may be enforced by specific performance in any court of competent jurisdiction
within the area of limitation imposed by this provision. If any court of
competent jurisdiction shall determine that either the period or the territory
covered by this provision against competition in unreasonable, said provision
shall not be determined to be null, void, and of no effect but shall be
reformed by said court to impose a reasonable period or a reasonable
geographical limitation, as the case may be.
7. RESOLUTION OF DISPUTES; ARBITRATION.
-----------------------------------
(a) Except for the breach or threatened breach by Proud of the
noncompetition provisions of this Agreement which may be enforced by
appropriate injunctive relief at the option of Reynolds, any dispute or
controversy arising out of or relating to this Agreement, including, but not
limited to, whether Proud has been Discharged for Cause, shall be submitted to
and settled by arbitration in Dayton, Ohio in accordance with the rules then
pertaining of the American Arbitration Association.
(b) Should Proud disagree that his determination was due to a
Discharge for Cause, the question shall, within thirty (30) days after the
termination, be submitted to arbitration by three (3) arbitrators, one of whom
shall be selected by Reynolds, another of whom shall be selected by Proud, and
the third of whom shall be selected by the two arbitrators so appointed. The
decision of
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these arbitrators on the question shall be final and conclusive upon Reynolds
and upon Proud and his wife or widow, personal representatives, designated
beneficiaries and heirs, and shall be enforceable in any court having competent
jurisdiction thereof. A discharge which is eventually determined under
arbitration to have been a Discharge for Cause, or no arbitration having been
requested and the discharge being one which Reynolds had determined was for a
Discharge for Cause, shall extinguish any and all liability of Reynolds under
this Agreement from and after the date of termination.
(c) The arbitrators for all other disputes or controversies under
this Agreement shall be selected as set forth above and the parties shall
select the arbitrators within thirty (30) days after demand from Proud or
Reynolds to the other to settle matters by arbitration. As stated above, the
decision of the arbitrators shall be final and conclusive.
8. NONASSIGNABLE RIGHTS.
--------------------
Proud, his wife, or his widow after his death, or his personal
representatives, designated beneficiaries and heirs, shall not have the right
to anticipate or commute, or to sell, assign, transfer, or otherwise alienate
or convey the right to receive any payments hereunder, whether by his, her or
their voluntary or involuntary act, or by operation of law and, in particular,
that any payments due hereunder shall not be subject to attachment or
garnishment or any other legal proceedings by any creditor, or be in any way
responsible for the debts or liabilities of Proud or his wife or
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his widow after his death or his personal representatives, designated
beneficiaries and heirs. Should Proud or his wife or his widow after his death
or his personal representatives, designated beneficiaries and heirs,
voluntarily attempt to breach this Section of this Agreement, Reynolds'
liability to make payments hereunder from and after the date of said attempt
shall be extinguished; and should any attempt be made to reach the payments by
other than Proud or his wife or his widow after his death or his personal
representatives, designated beneficiaries and heirs, Reynolds shall make each
payment as it becomes due to such person or persons for the sole benefit of
Proud or his wife or his widow or his personal representatives, designated
beneficiaries and heirs, as the case may be, as Reynolds may deem expedient.
9. UNFUNDED AGREEMENT.
------------------
(a) Reynolds' obligation under this Agreement shall be unfunded,
but Reynolds reserves the right to provide for its liability under this
Agreement in any manner it deems advisable, including the purchasing of such
assets (including an insurance policy or policies on Proud's life) as it may
deem necessary or proper; provided, however, that Proud's insurability or
non-insurability shall in no way affect Reynolds' obligations pursuant to this
Agreement. Any asset so purchased by Reynolds shall be the sole property of
Reynolds and shall not be deemed to provide funding of Reynolds' obligations
under this Agreement.
(b) In the event Reynolds determines to purchase any insurance
policy or policies on Proud's life, Proud agrees to
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submit to such examination and to supply information as may be required by the
insurer.
(c) Any policy so purchased by Reynolds shall be issued so that
Reynolds is the sole, full, and complete owner of the policy or policies, with
the right and power to exercise any and all privileges and options thereof or
available under the rules of the issuing insurer without the consent of any
other persons.
(d) Proud, his wife, or his widow after his death, or his
designated beneficiaries, personal representatives, heirs, successors and
assigns shall have no claim or rights with respect to, and shall have no
property or equitable interests whatsoever in, any specific funds or assets of
Reynolds and shall have only the status of a general creditor with respect to
Reynolds hereunder.
10. FACILITY OF PAYMENT.
-------------------
In the event of a physical or mental illness or disability of Proud or
of his widow after his death or of his designated beneficiaries at a time when
he or she (or they) is (are) entitled to payments hereunder, such payments as
may be due shall be paid to such person or persons for the benefit of Proud or
his widow or his designated beneficiaries, as the case may be, as Reynolds or,
if applicable, the Escrow Agent may deem proper. In the event of Proud's death
after he has made demand pursuant to Section 5(e)(v) above, the Escrow Agent
shall pay such amounts as thereafter are due to such beneficiary or
beneficiaries as Proud shall have designated in writing, or failing such
writing, to his estate. No
28
<PAGE> 29
liability shall accrue to Reynolds or Escrow Agent for any alleged payment to
an improper person or representative if so made after such reasonable
investigation and Reynolds and Escrow Agent shall have no responsibility to see
to the proper application of such payments.
11. MISCELLANEOUS PROVISIONS.
------------------------
(a) All notices required or permitted to be given under this
Agreement shall be in writing and shall be mailed, postage prepaid, by
registered or certified mail or personally delivered, if to Reynolds, addressed
to:
The Reynolds and Reynolds Company
Attention: Vice President, Corporate Finance and
Chief Financial Officer
115 South Ludlow St.
Dayton, Ohio 45402
and, if to Proud, addressed to:
H. John Proud
9618 Meadow Woods Lane
Spring Valley, Ohio 45370
Either party may change the address to which notices to such party are to be
sent by giving written notice of such change to the other party in the manner
specified in this provision.
(b) (i) This Agreement shall be binding upon Proud, his wife,
and upon his or her heirs, executors, administrators, designated beneficiaries
and upon anyone claiming under him or his wife or widow, and upon Reynolds and
its successor or assigns.
(ii) Reynolds shall not merge or consolidate with any
other entity unless and until such other entity shall expressly assume
Reynolds' obligations under this Agreement or Reynolds has
29
<PAGE> 30
provided an appropriate alternative arrangement covering its contingent
liabilities under this Agreement, and Reynolds shall not voluntarily dissolve
without first providing an appropriate arrangement covering its contingent
liabilities under this Agreement.
(c) This Agreement may be amended, but only with the consent of
Proud during his lifetime and, after his death only with the consent of his
widow during her lifetime or his other designated beneficiaries during their
lifetime, as the case may be. Any agreement of amendment shall be executed
with the same formality as this Agreement.
(d) This Agreement supersedes any prior agreements or
understandings covering the subject matter hereof, either written or oral,
between the parties.
(e) This Agreement shall be construed under the laws of the State
of Ohio.
(f) The paragraph headings used in this Agreement are for
convenience of reference only and shall not be considered in construing this
Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto set their
respective hands the year and date first above written.
THE REYNOLDS AND REYNOLDS COMPANY
By
------------------------------
------------------------------
H. JOHN PROUD
30
<PAGE> 31
31
<PAGE> 32
EXHIBIT A
---------
ESCROW AGREEMENT
----------------
This Escrow Agreement made and entered into as of this 1st day of
September, 1995, by and between THE REYNOLDS AND REYNOLDS COMPANY, an Ohio
corporation (hereinafter referred to as "REYNOLDS") and BANK ONE, DAYTON, N.A.
(hereinafter referred to as the "ESCROW AGENT"),
WITNESSETH:
WHEREAS, REYNOLDS, has agreed to provide termination pay protection
for H. John Proud ("Employee") under conditions set forth in an Employment
Agreement with Employee dated September 1, 1995 (hereinafter referred to as the
"Agreement"); and
WHEREAS, the required protective payments under the Agreement are to
be paid to an escrow account at Bank One, Dayton, N.A.;
NOW, THEREFORE, in consideration of the covenants and agreements
contained in this ESCROW AGREEMENT, the parties hereby do agree as follows:
1. ACCEPTANCE OF ESCROW. The ESCROW AGENT shall serve as ESCROW
AGENT in accordance with the provisions of this ESCROW AGREEMENT, and the
duties of the ESCROW AGENT shall be solely those imposed by this ESCROW
AGREEMENT.
2. TERMS. The ESCROW AGENT shall receive, hold and disburse
funds as ESCROW AGENT in accordance with the Agreement, in the form attached
hereto as Exhibit A and made a part hereof. The ESCROW AGENT acknowledges that
it has reviewed and is familiar with the Agreement and shall be bound by the
obligations, terms and conditions therein relating to the ESCROW AGENT and its
duties.
<PAGE> 33
However, the ESCROW AGENT is not a party to or bound by the Agreement,
except as specifically provided for therein and as provided in Sections 2, 4,
6, 7 and 8 of this ESCROW AGREEMENT. The ESCROW AGENT shall be liable for only
such funds and items as are actually deposited and received by it for the
purposes of said escrow.
3. INDEMNIFICATION. So long as the ESCROW AGENT shall follow the
terms of this ESCROW AGREEMENT and any instructions issued hereunder in good
faith, relying upon documents which it believes to be genuine and properly
signed and executed, it shall be held free, clear and harmless and shall incur
no liability hereunder. REYNOLDS shall indemnify and hold the ESCROW AGENT
harmless from any loss, liability, cost, or expense, including reasonable legal
fees, which may arise or be incurred by reason of this ESCROW AGREEMENT or the
ESCROW AGENT's performance in good faith of any duty or obligation hereunder.
The ESCROW AGENT shall not be liable for any error of judgment or for
any act done or omitted by it in good faith, or for anything which it may in
good faith do or refrain from doing in connection with said escrow; nor will
any liability be incurred by the ESCROW AGENT if, in the event of any dispute
or question as to the construction of, this ESCROW AGREEMENT or any demand or
notice hereunder, the ESCROW AGENT acts in accordance with the opinion of its
legal counsel.
4. INVESTMENTS BY ESCROW AGENT; INCOME. The ESCROW AGENT shall
invest escrow funds in federally-insured interest bearing
33
<PAGE> 34
accounts selected by the ESCROW AGENT or in any one or more of the following
investments, selected by the ESCROW AGENT:
(a) Certificates of Deposit of United States commercial
banks holding membership in the Federal Reserve
System. Such U.S. banks shall have minimum
total assets of $1,000,000,000 and shall not be
currently listed on any publicly-disclosed report of
U.S. banks having financial problems warranting close
monitoring by the Federal Reserve Board.
(b) Euro-dollar Certificates of Deposit issued by the
twenty-five (25) largest United States commercial
banks, which banks shall have minimum total assets of
$1,000,000,000 and shall not be currently listed on
any publicly-disclosed report of U. S. banks having
financial problems warranting close monitoring by the
Federal Reserve Board.
(c) Bankers Acceptances of United States commercial banks
holding membership in the Federal Reserve System.
Such U.S. banks shall have minimum total assets of
$1,000,000,000 and shall not be currently listed on
any publicly-disclosed report of U.S. banks having
financial problems warranting close monitoring by the
Federal Reserve Board.
(d) United States Treasury Bills.
(e) United States Treasury Notes.
(f) United States Government Guaranteed "Project Notes"
and/or Tax-Exempt Notes rated MIG 1 by Moody's rating
agency.
(g) Debt instruments issued by the following five United
States Government agencies:
Federal Intermediate Credit Banks
Banks for Cooperatives
Federal Land Banks
Federal Home Loan Banks
Federal National Mortgage Association
(h) Commercial Paper rated Prime-1 by Moody's rating
agency or rated A-1 by Standard & Poors rating
agency. In addition, with respect to any
corporation's commercial paper being purchased, such
corporation's long-term debt, if any, must be
34
<PAGE> 35
rated either A by Moody's rating agency or A by Standard
& Poors rating agency.
The total investments in the above-described approved Certificates of Deposit,
Bankers Acceptances, Commercial Paper, and/or Tax-Exempt Notes shall be limited
to a maximum of $1,000,000 at any one time in any one single bank, corporation,
state and/or municipality.
With respect to funds deposited in escrow by REYNOLDS pursuant to the
terms of the Agreement, principal shall be used only for the payments to the
Employee. Any and all income on invested funds shall be paid to REYNOLDS in
accordance with subsection (c) of Section 2 of the Agreement. Fees of the
Escrow Agent shall be paid by REYNOLDS in accordance with subsection (e)(v) of
Section 5 of the Agreement.
With respect to funds deposited pursuant to the Agreement, the ESCROW
AGENT shall be authorized to invest such funds. The ESCROW AGENT will maintain
such liquidity in the investments as will permit them to be cashed when
necessary to fund the required distributions to Employee.
5. TERMINATION. This ESCROW AGREEMENT and all obligations of the
ESCROW AGENT shall terminate upon satisfaction by the ESCROW AGENT of all of
its obligations under this ESCROW AGREEMENT and the Agreement.
6. ADVERSE CLAIMS. ESCROW AGENT shall make delivery or disbursement
of the funds deposited hereunder in accordance with the terms of the ESCROW
AGREEMENT and the Agreement, regardless of any disagreement or the presentation
of any adverse claims or
35
<PAGE> 36
demands of any person, unless such person shall have obtained an injunction
from a court having proper jurisdiction, enjoining ESCROW AGENT from making
such delivery or disbursement. ESCROW AGENT shall not become liable to
REYNOLDS or to any other person, for or because of such delivery or
disbursement of such funds, even with knowledge of a disagreement or adverse
claim or demand.
7. DEMANDS. Except in cases where demand or notice by a single
party is specifically provided for in this ESCROW AGREEMENT or in the
Agreement, the ESCROW AGENT shall not be bound to recognize any notice, demand
or change of instructions as having any effect on this escrow unless given in
writing and signed by all parties considered by the ESCROW AGENT to be affected
thereby.
8. NOTICES. Any notice required or permitted to be given
hereunder shall be given in writing and shall be sufficiently delivered if sent
by registered or certified mail, return receipt requested, prepaid, addressed
as follows:
, Trust Officer
-------------------------
Trust Division
Bank One, Dayton, NA
Kettering Tower
Dayton, Ohio 45423
The Reynolds and Reynolds Company
129 S. Ludlow Street
Dayton, Ohio 45401
Attn: Chief Financial Officer
Should the address of any party identified above change for the purposes
herein, such party shall give written notice of the new address to the other
parties identified above.
All notice hereunder to the ESCROW AGENT shall be given in writing to
an officer of the ESCROW AGENT. Unless written notice
36
<PAGE> 37
shall so be given, the ESCROW AGENT shall not be required to take or be bound
by said notice or to take action concerning such notice. If written notice be
properly given and the.ESCROW AGENT is required upon receipt thereof to take
any action hereunder and such action involves any expense or liability, the
ESCROW AGENT shall not be required to take any such action unless it is
indemnified against such expense or liability in a manner reasonably
satisfactory to the ESCROW AGENT. At the time of depositing funds into escrow
on behalf of Employee, REYNOLDS shall deliver to the ESCROW AGENT a written
notice setting forth such person's name and address, and social security number
identifying the amounts being deposited on such person's behalf, and the
conditions of the Agreement, which have been met and which, therefore, require
that such deposit be made.
9. RECORD KEEPING. The ESCROW AGENT shall maintain records
showing the amount and date of all deposits made by REYNOLDS for the benefit of
Employee and the amount and date of all disbursements made to Employee, his
heirs, successors and assigns. REYNOLDS shall be given access to said records
at reasonable times upon request.
10. ESCROW FEE. REYNOLDS shall pay to the ESCROW AGENT for its
services hereunder an escrow fee based upon the then-current schedule of
charges for such services promulgated by the ESCROW AGENT and shall pay
additional reasonable compensation for any further or extraordinary service
which the ESCROW AGENT may be required to render pursuant to the terms of this
ESCROW AGREEMENT.
37
<PAGE> 38
11. BINDING EFFECT. This ESCROW AGREEMENT shall be binding upon
and inure to the heirs, executors, administrators, personnel representatives,
successors and assigns of all parties hereto.
12. MISCELLANEOUS. Employee is acknowledged to be third party
beneficiary upon the deposit of any amounts under this ESCROW AGREEMENT for his
benefit. This ESCROW AGREEMENT may be modified or amended only by a writing
signed (i) by all parties hereto, (ii) by the third party beneficiary and (iii)
by any other person the ESCROW AGENT considers to be affected by said
modification or amendment. This ESCROW AGREEMENT shall be construed and
enforced in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have set their respective hands
the year and date first hereinabove written.
THE REYNOLDS AND REYNOLDS
COMPANY
By
-------------------------------
"REYNOLDS"
BANK ONE, DAYTON, NA
By
-------------------------------
"ESCROW AGENT"
38
<PAGE> 39
<TABLE>
EXHIBIT B
SCHEDULE OF FRINGE BENEFITS
PURSUANT TO SECTION 3(d)
------------------------
<CAPTION>
Benefit Amount
------- ------
<S> <C>
Annual Physical Exam Local Clinic, maximum of $600
Auto/Gas Allowance $916 monthly
Charitable Allowance $1,000 annually to charities of his choice
Income Tax Planning and $1,000 annually
Preparation
Estate Planning and
Will Preparation
Initial Service $900
Updates $300 annually
Country Club Dues 50% annually, including initiation fee up to $3,500
Luncheon Club Dues 100% annually
Corporate aircraft (personal use) Yes; in connection with company business use Proud may include personal passengers,
subject to seat availability. Proud shall receive W-2 for personal use value per IRS
regulations
Vacation Five (5) weeks annually at mutually agreed times.
</TABLE>
39
<PAGE> 1
ITEM X
AMENDMENT NO. 3 TO
THE REYNOLDS AND REYNOLDS COMPANY
SUPPLEMENTAL RETIREMENT PLAN
(OCTOBER 1, 1986 RESTATEMENT)
WHEREAS, the company adopted a Supplemental Retirement Plan
effective October 1, 1978; and
WHEREAS, effective as of October 1, 1986, the Company amended
and restated the Supplemental Retirement Plan as The Reynolds and Reynolds
Company Supplemental Retirement Plan (October 1, 1986 Restatement) (the
"Plan"); and
WHEREAS, by Section 8.5 of Article VIII of the Plan, the Company
reserved the right to amend the Plan; and
WHEREAS, the Plan has been amended on two subsequent occasions; and
WHEREAS, the Company desires to amend the Plan further;
NOW, THEREFORE, BE IT RESOLVED that the Company hereby amends the
Plan as set forth on Exhibit A attached hereto and made a part hereof;
AND BE IT FURTHER RESOLVED, that the Amendments set forth on Exhibit
A shall become effective as of August 8, 1995, unless another effective date is
specifically set forth therein;
AND BE IT FURTHER RESOLVED, that the Secretary shall file certified
copies of the foregoing Resolution with the Retirement Committee and the Plan
Administrator and that the Plan Administrator shall cause any affected
Participant to be notified of the changes by said Resolution;
AND BE IT FURTHER RESOLVED, that any officer of the Company is
hereby authorized, in his discretion, to adopt an amendment or amendments to
the Plan at such time or times, in such manner, and with such
49
<PAGE> 2
contents, as such officer deems to be necessary, desirable, or appropriate, to
reduce benefits under the Plan to take into account the cost to the Company of,
and the value to Plan Participants of, benefits provided to Plan Participants
but not employees generally that exceed the level of such benefits provided as
of August 8, 1995, and to make any related or conforming amendments to the
Plan;
AND BE IT FURTHER RESOLVED, that any officer of the Company is
hereby authorized to take all actions such officer deems to be necessary,
desirable, or appropriate to effectuate the foregoing resolutions.
(Corporate Seal)
-------------------------
Secretary
THE REYNOLDS AND REYNOLDS COMPANY
50
<PAGE> 3
EXHIBIT A
AMENDMENTS TO THE REYNOLDS AND REYNOLDS
COMPANY SUPPLEMENTAL RETIREMENT PLAN
(October 1, 1986 Restatement)
1. Section 1.13(c) is amended and restated to read as follows:
(c) Retired Participant
-------------------
A Participant whose employment with the Company and all Related
Companies has terminated, and who is receiving or is entitled to
receive a Pension under the Plan.
2. Effective as of January 1, 1991, Section 1.20 is amended
and restated to read as follows:
Section 1.20 - Salaried Retirement Plan
---------------------------------------
The Reynolds and Reynolds Company Retirement Plan, as in effect
with respect to a Participant as of the time in respect of which such
term is used.
3. Section 2.1 is amended and restated to read as follows:
Section 2.1 - Eligibility
-------------------------
An Employee of the Company who is an officer of the
Company, who is a management or highly compensated employee within the
meaning of all of Section 201(2), Section 301(a)(3) and Section
401(a)(1) of ERISA, and who has accrued three years of Service (as
defined in the Salaried Retirement Plan) as an officer of the Company
shall be eligible to become a Participant under the Plan. In
addition, the Board may at any time and from time to time designate
employees (including officers)
51
<PAGE> 4
of the Company or of a Related Company who are management or highly compensated
employees within the meaning of all of Section 201(2), Section 301(a)(3) and
Section 401(a)(1) of ERISA as eligible to become Participants under the Plan by
giving notice of such designation to the Committee. Furthermore, the Board may
at any time and from time to time designate employees of the Company or of a
Related Company (including officers and active Participants) who were eligible
to participate in the Plan as being ineligible to participate in the Plan.
4. Section 2.2 is amended and restated to read as follows:
Section 2.2 - Conditions of Participation
- -----------------------------------------
The Committee shall notify each eligible employee (including an
officer) of his eligibility to participate in the Plan. An eligible
employee (including an officer) shall not become a Participant herein unless he
furnishes within a reasonable time limit established by the Committee such
applications, consents, proofs of date of birth, elections, beneficiary
designations and other documents and information as prescribed by the
Committee, and upon furnishing the same to the Committee he shall thereupon
become a Participant. Each eligible employee (including an officer) upon
becoming a Participant shall be deemed conclusively, for all purposes, to have
assented to the terms and provisions of the Plan and shall be bound thereby.
Notwithstanding any other provision herein to the contrary, if any Participant
ceases being an officer of the Company or no longer qualifies as a management
or highly compensated employee under Section 201(2), Section 301(a)(3) or
Section 401(a)(1) of ERISA (other than by reason of termination of employment
with the Company and all Related Companies), or if, as provided in Section 2.1,
the Board determines that any Participant is no longer eligible to participate
in the Plan, such Participant shall cease accruing benefits under the Plan as
of the date such Participant ceased being an officer, failed to qualify as a
management or highly compensated employee, or was designated by the Board as
being ineligible to participate in the Plan, as determined by the Committee.
5. Section 3.1 is amended and restated to read as follows:
Section 3.1 - Retirement Benefit; Vesting
- -----------------------------------------
A Participant whose employment terminates with the Company and
all Related Companies (a) under conditions entitling such Participant to an
Early Retirement Pension or a Normal
52
<PAGE> 5
Retirement Pension under the Salaried Retirement Plan or (b) has accrued five
years of Service (as defined in the Salaried Retirement Plan) as an officer of
the Company as of the date of his termination of employment shall be eligible
for a Pension under the Plan in the amount, if any, provided in Section 4.1.
6. Section 3.3 is amended and restated to read as follows:
SECTION 3.3 - TERMINATION PRIOR TO ELIGIBILITY FOR RETIREMENT BENEFIT OR DEATH
BENEFIT; CHANGE OF STATUS
Notwithstanding any other provision herein to the contrary except
Section 3.4 and Section 8.8, if a Participant's employment with the Company and
all Related Companies terminates for any reason prior to the date that he or
his Beneficiary is eligible for a benefit in accordance with Section 3.1 or
Section 3.2, respectively, no benefits shall be payable under the Plan with
respect to such former Participant. Notwithstanding any other provision herein
to the contrary except Section 3.4, if a Participant has a change of status as
described in the last sentence of Section 2.2, the benefits payable under the
Plan to such Participant will be determined as if such Participant's employment
had terminated as of the date of such change of status, but no benefits will be
paid or payable with respect to such Participant prior to the actual termination
of the Participant's employment.
53
<PAGE> 1
EXHIBIT _____
DESCRIPTION OF
ANNUAL INCENTIVE COMPENSATION PLAN
Effective October 1, 1986, the Reynolds and Reynolds Company (the
"Company") established an Annual Incentive Compensation Plan (the "Annual
Plan") applicable to those key executive employees of the Company and its
subsidiaries selected by the Compensation Committee of the Board of Directors
of the Company (the "Committee"), and to those other key employees of the
Company and its subsidiaries selected by the executive officers of the Company.
The Annual Plan has been amended effective October, 1995.
For each fiscal year of the Company that the Annual Plan is in effect,
the Committee selects and/or reviews relevant performance factors ("Performance
Factors") and also certain performance goals (at "Threshold," "Par" and
"Target" levels) relating to such Performance Factors. Performance factors
applicable to participants at the corporate level include corporate earnings
before tax and corporate return on equity, and growth of sales and operating
income independent of corporate return on equity (the "Corporate Performance
Factors"). Performance Factors applicable to participants at the divisional
level include divisional net sales, divisional earnings before tax and
divisional return on average net assets (the "Divisional Performance Factors").
Both the Corporate Performance Factors and the Divisional Performance Factors
are applicable to executive participants at the divisional level, but only the
Divisional Performance Factors are applicable to non-executive participants at
the divisional level.
Under the Annual Plan, a participant earns an annual cash bonus in an
amount equal to a specified percentage of the base compensation earned by him
in the fiscal year in question, depending upon his position with the Company
and the extent of attainment of the performance goals (with interpolations made
for actual performance which falls between Threshold and Par, or between Par
and Target) for the applicable Performance Factors during such year. Such cash
bonus is paid during the first quarter of the fiscal year following such year.
<PAGE> 1
Exhibit (10)(ii)
THE REYNOLDS AND REYNOLDS COMPANY
RETIREMENT PLAN
(October 1, 1994 Restatement)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE PAGE
I DEFINITIONS 1
II PARTICIPATION 16
2.1 - Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.2 - Conditions of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.3 - Changes in Employment Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.4 - Adoption of the Plan by Related Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
III SERVICE AND CREDITED SERVICE 22
3.1 - Hours of Service and Continuous
Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.2 - Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.3 - Credited Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.4 - Break in Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.5 - Military Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
IV ELIGIBILITY FOR RETIREMENT BENEFITS 29
4.1 - Normal Retirement Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.2 - Early Retirement Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.3 - Deferred Vested Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.4 - Retirement While on Approved Absence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.5 - Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
V AMOUNT OF RETIREMENT BENEFITS 31
5.1 - Normal Retirement Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.2 - Early Retirement Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.3 - Deferred Vested Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.4 - Benefit Coordination With Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.5 - Special Minimum Benefit Provision For
Participants on September 30, 1974 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
VI COMMENCEMENT, FORM, AND DURATION OF BENEFITS 34
6.1 - Normal and Early Retirement Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.2 - Deferred Vested Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.3 - Reemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.4 - Payment of Small Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
6.5 - Employment Past Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.6 - Limitations on Commencement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.7 - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
VII NORMAL FORM OF PAYMENT AND OPTIONAL BENEFITS 42
7.1 - Normal Form of Pension Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE PAGE
- ------- ----
7.2 - Qualified Joint and Survivor Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.3 - Optional Forms of Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.4 - Conditions Regarding Election of Optional
Forms of Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
VIII PRE-RETIREMENT DEATH BENEFITS 47
8.1 - Eligibility for Spouse Survivor
Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.2 - Spouse Survivor Benefit Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.3 - Spouse Survivor Benefit Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.4 - Effect of Payment Under Article VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.5 - Coverage Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.6 - Rejection of Spouse Survivor Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.7 - Death Benefit Where Spouse Survivor
Benefit Rejected or Eligible
Participant Has No Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.8 - Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.9 - Rejection by Surviving Eligible Spouse of
Spouse Survivor Benefit and Election of
Benefit Under Section 8.7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.10 - Payment of Small Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
IX TOP HEAVY PROVISIONS 53
9.1 - Applicability of Top Heavy Plan
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.2 - Top Heavy Plan Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
9.3 - Top Heavy Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.4 - Minimum Top Heavy Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.5 - Adjustment of Maximum Retirement
Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.6 - Maximum Compensation Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
X MAXIMUM RETIREMENT BENEFITS 58
10.1 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.2 - Maximum Defined Benefit Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.3 - Exception . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.4 - Manner of Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.5 - Maximum Defined Benefit and Defined
Contribution Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.6 - Protection of Pre-TEFRA Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
XI PLAN FINANCING 65
11.1 - Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.2 - Funding Policy and Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.3 - Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.4 - Records; Annual Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
</TABLE>
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11.5 - Actuarial Examinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
11.6 - Responsibility of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.7 - Trustee's Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.8 - Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
XII ADMINISTRATION 68
12.1 - Allocation of Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
12.2 - Fiduciary Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
12.3 - Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
12.4 - Appointment of Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
12.5 - Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
12.6 - Records and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
12.7 - Committee Powers and Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
12.8 - Facility of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
12.9 - Agent for Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.10 - Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.11 - Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.12 - Underwriting of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.13 - Misstatements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
12.14 - Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
12.15 - Agents; Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
XIII AMENDMENT AND TERMINATION 78
13.1 - Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
13.2 - Discontinuance of Benefit Accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
13.3 - Termination; Restrictions on Benefits
of Highly Compensated Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
13.4 - Termination Following Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
XIV ADOPTION AND EXTENSION OF THE PLAN 84
14.1 - Adoption by Related Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
14.2 - Extension to Non-Covered Units;
Business Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
14.3 - Special Provisions Regarding
Eligibility and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
14.4 - Action by Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
14.5 - Overriding Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
XV SUCCESSOR EMPLOYER AND MERGER OR
CONSOLIDATION OF PLANS 86
15.1 - Successor Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
15.2 - Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
XVI MISCELLANEOUS PROVISIONS 89
16.1 - Non-guarantee of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
</TABLE>
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16.2 - Rights to Trust Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
16.3 - Non-alienation of Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
16.4 - Election of Former Vesting Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
16.5 - Benefits Determined Under Plan as in
Effect Before October 1, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
XVII GENERAL PROVISIONS 92
17.1 - Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
17.2 - Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
17.3 - Controlling Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
17.4 - Effect of Invalidity of Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
17.5 - Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
XVIII RECEIPT OF ASSETS AND LIABILITIES
ATTRIBUTABLE TO NON-UNION HOURLY EMPLOYEES 93
18.1 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
18.2 - Crediting of Compensation, Continuous
Employment, Service, and Credited
Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
18.3 - Transfer of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
18.4 - Continuation of Portion of Transferor
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
18.5 - Overriding Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
XIX DIRECT ROLLOVER 96
19.1 - Direct Rollover Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
19.2 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
XX EFFECTIVE DATE 98
SCHEDULE I - PARTICIPATING EMPLOYERS
SCHEDULE II - PROVISIONS REGARDING PREDECESSOR EMPLOYMENT
</TABLE>
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<PAGE> 6
THE REYNOLDS AND REYNOLDS COMPANY
RETIREMENT PLAN
(October 1, 1994 Restatement)
WHEREAS, The Reynolds and Reynolds Company Retirement
Plan (the "Plan") was established effective September 30, 1968 by the Reynolds
and Reynolds Company (the "Company") and is presently maintained under an
amendment and restatement effective as of October 1, 1986, which restatement
has been amended on several occasions; and
WHEREAS, The Reynolds and Reynolds Company Retirement
Trust, which was established by trust agreement executed on March 25, 1975, is
a part of the Plan; and
WHEREAS, it is deemed desirable to amend further and
restate the Plan;
NOW, THEREFORE, the Plan is hereby amended and restated in its entirety as
hereinafter set forth.
ARTICLE I
DEFINITIONS
-----------
For purposes of the Plan, the following words and
phrases shall have the following meanings unless a different meaning is clearly
required by the context:
Section 1.1 - Actuarial (or Actuarially) Equivalent
- ---------------------------------------------------
A benefit equal in value, as of the effective date of
determination, to the benefit for which it is substituted, the value of both
benefits being computed, except as otherwise specifically provided herein, on
the basis of the following actuarial assumptions: the mortality table shall be
the 1971 Group Annuity Mortality Table for Males projected to 1990 by Scale D
with an age setback of one year for the Participant and five years for any
Eligible Spouse, Beneficiary, or Contingent Annuitant; the interest rate shall
be an effective annual rate of 7%; except that in determining the single sum
payment Actuarially Equivalent to any life-time Pension, for distributions
occurring prior to September 25, 1995, the interest rate used shall be the
interest rate which would be used as of the first day of the Plan Year in which
occurs the date of the distribution by the Pension Benefit Guaranty Corporation
for purposes of determining the present value of a lump sum distribution on
Plan termination, and, effective for distributions occurring on
-1-
<PAGE> 7
or after September 25, 1995, the interest rate used shall be the annual rate of
interest on 30-year Treasury securities for the first full calendar month
preceding the Plan Year in which occurs the date of distribution, as specified
by the Commissioner of Internal Revenue in revenue rulings, notices, or other
guidance, and the mortality assumption used shall be the mortality table based
on the prevailing commissioners' standard table (described in Section
807(d)(5)(A) of the Code) used to determine reserves for group annuity
contracts issued on the date of the adjustment is being made (without regard to
any other subparagraph of Section 807(d)(5) of the Code), as specified by the
Commissioner of Internal Revenue in revenue rulings, notices, or other
guidance. In determining a lump sum Actuarially Equivalent to any life- time
Pension, the benefit will be the Actuarial Equivalent of the benefit that would
have been payable at the Participant's Normal Retirement Date, or, if the
Participant's employment with an Employer or a Related Company continues beyond
his Normal Retirement Date, the benefit will be the Actuarial Equivalent of the
benefit that would have been payable upon his Retirement. In determining the
Actuarial Equivalent benefit of any benefit payable pursuant to Section 8.10,
the benefit will be the Actuarial Equivalent of the benefit that would have
been payable to the recipient at the time payment of such benefit would
otherwise commence.
Section 1.2 - Actuary
- ---------------------
An actuary, selected by the Company, who is an
enrolled actuary as defined in Section 7701(a)(35) of the Code, or a firm or
corporation of actuaries having such a person on its staff, and who serves as
the actuarial consultant for the Plan.
Section 1.3 - Applicable Law
- ----------------------------
The Code or ERISA or any other law of the United
States or any state or political subdivision thereof that now or hereafter
applies to the Plan.
Section 1.4 - Approved Absence
- ------------------------------
Absence of an Eligible Employee that is (i)
authorized or approved by his Employer, or (ii) during layoff or furlough while
recall rights continue, as determined in accordance with the normal practices
of the Employer, provided his Employee returns within the period specified.
The provisions of this Section shall be uniformly applied to all Participants
similarly situated.
-2-
<PAGE> 8
Section 1.5 - Beneficiary
- -------------------------
The meaning described in Section 12.14.
Section 1.6 - Board
- -------------------
The present and any succeeding Board of Directors of
the Company.
Section 1.7 - Break in Service
- ------------------------------
The meaning described in Section 3.4.
Section 1.8 - Code
- ------------------
The Internal Revenue Code of 1986, as amended from
time to time. Reference to a section of the Code shall include such section
and any comparable section, or sections, of any future legislation that amends,
supplements, or supersedes such section.
Section 1.9 - Committee
- -----------------------
The retirement committee provided for in Article XII.
Section 1.10 - Company
- ----------------------
The Reynolds and Reynolds Company, an Ohio
corporation and its corporate successors.
Section 1.11
- ------------
(a) COMPENSATION - The monthly equivalent of the total cash
remuneration paid for services rendered to the Employer or a
Related Company, as determined for purposes of Federal Income
Tax Form W-2 or any replacement thereof, plus the amount, if
any, of employee-elective compensation reduction amounts
pursuant to Code Sections 125 and/or 401(k) if such
employee-elective compensation reduction amounts would have
been Compensation but for such employee-elective compensation
reduction. Compensation shall not include severance pay,
pensions, cost of life insurance, income from the personal use
of Employer or Related Company owned assets, income from the
premature or disqualifying disposition of securities acquired
pursuant to a qualified, restricted or similar stock option
type plan including compensation which represents a return of
all or a portion of a previously designated
-3-
<PAGE> 9
salary reduction amount in connection with any non-qualified
deferred compensation arrangements sponsored by an Employer or
Related Company and any other similar type of income, from
whatever source, which the Committee determines, on a uniform
and consistent basis, should not be included in the definition
of Compensation. Where the above stated definition cannot be
applied because the Employer or Related Company has not been
in business for a sufficient period of time, Compensation
shall be the monthly equivalent of the Participant's
annualized rate of Compensation as of the effective
determination thereof.
(b) FINAL AVERAGE COMPENSATION - A Participant's highest average
monthly Compensation during any five (5) consecutive complete
or partial calendar years among the final ten (10) complete or
partial calendar years of his Service prior to his Retirement
or other termination of employment; provided, however, that if
the Participant shall not have completed five (5) calendar
years of Service, such average shall be based on Compensation
averaged over such lesser period of Service; and further
provided that if the Participant's Final Average Compensation
is to be determined at a date preceding his Normal Retirement
Date, it shall be determined by the two-step method described
in Section 1.23(e)(iii).
(c) Notwithstanding anything in the Plan to the contrary, in no
event shall the Compensation of a Participant taken into
account under the Plan for any Plan Year exceed (1) $200,000
for Plan Years beginning prior to January 1, 1994, or (2)
$150,000 for Plan Years beginning on or after January 1, 1994
(subject to adjustment annually as provided in Section
401(a)(17)(B) and Section 415(d) of the Code; provided,
however, that the dollar increase in effect on January 1 of
any calendar year, if any, is effective for Plan Years
beginning in such calendar year). For purposes of applying
such dollar limitation, the rules of Section 414(q)(6) of the
Code requiring aggregation of certain family members shall
apply, except that in applying such rules, the term "family"
shall include only the spouse of the Participant and any
lineal descendants of the Participant who have not attained
age 19 before the close of the year.
-4-
<PAGE> 10
(1) Each 1989 Section 401(a)(17) employee's accrued
benefit under the Plan will be the greater of the
accrued benefit determined for such Participant under
(A) or (B) below:
(A) the Participant's accrued benefit determined
with respect to the benefit formula
applicable for the Plan Year beginning on or
after January 1, 1989, as applied to the
participant's total years of service taken
into account under the Plan for the purposes
of benefit accruals, or
(B) the Participant's accrued benefit as of the
last day of the last Plan Year beginning
before January 1, 1989, frozen in accordance
with Section 1.401(a)(4)-13 of the Income Tax
Regulations.
A "1989 Section 401(a)(17) employee" means a
Participant whose current accrued benefit as
of a date on or after the first day of the
first Plan Year beginning on or after January
1, 1989, is based on annual earnings for a
year beginning prior to the first day of the
first Plan Year beginning on or after January
1, 1989, that exceeded $200,000.
(2) Each 1994 Section 401(a)(17) employee's accrued
benefit under this Plan will be the greater of the
accrued benefit determined for such Participant under
(A) or (B) below:
(A) the Participant's accrued benefit determined
with respect to the benefit formula
applicable for the Plan Year beginning on or
after January 1, 1994, as applied to the
Participant's total years of service taken
into account under the Plan for the purposes
of benefit accruals, or
(B) the Participant's accrued benefit as of the
last day of the last Plan Year beginning
before January 1, 1994, frozen in accordance
with
-5-
<PAGE> 11
Section 1.401(a)(4)-13 of the Income Tax
Regulations.
A "1994 Section 401(a)(17) employee" means a
Participant whose current accrued benefit as
of a date on or after the first day of the
first Plan Year beginning on or after January
1, 1994, is based on annual earnings for a
year beginning prior to the first day of the
first Plan Year beginning on or after January
1, 1994, that exceeded $150,000.
Section 1.12
- ------------
(a) CONTINGENT ANNUITANT - The person designated by a Participant
to receive a Pension subsequent to a Participant's death
pursuant to Section 7.3(b).
(b) CONTINGENT ANNUITANT OPTION - The form of Pension described in
Section 7.3(b).
Section 1.13 - Continuous Employment
- ------------------------------------
The period of employment described in Section 3.1.
Section 1.14 - Effective Date
- -----------------------------
October 1, 1976.
Section 1.15 - Eligible Spouse
- ------------------------------
The lawful husband or wife, as the case may be, of
the Participant, as recognized under applicable state law, as of any date
relevant hereunder.
Section 1.16
- ------------
(a) EMPLOYEE OR ELIGIBLE EMPLOYEE - Except as otherwise provided
herein, any person classified as a regular salaried employee
or salesman of an Employer, on or after the Effective Date,
and, with respect to periods after December 31, 1990, any
person classified as a regular hourly-rated employee of an
Employer, who is receiving remuneration for personal services
rendered to the Employer (or who would be receiving such
remuneration except for an Approved Absence or Military
Service). Any person who is covered by a collective
bargaining agreement which does not
-6-
<PAGE> 12
provide for such person's inclusion in the Plan shall not be
an Employee, and any person who performs services for an
Employer solely as an independent contractor shall not be
considered to be employed by such Employer.
(b) INELIGIBLE EMPLOYEE - Any person employed by an Employer who
is not an Eligible Employee. The term "Ineligible Employee"
shall also include a person who had been an Eligible Employee
and either has been transferred to an employment status other
than that of an Employee or has been transferred to a Related
Company which has not adopted the Plan, for so long as he
remains so employed. The term "Ineligible Employee" shall
also include any "leased employee", as defined in Section
414(n)(2) of the Code, with respect to an Employer or a
Related Company (other than a leased employee excludable
pursuant to Section 414(n)(5) of the Code). Provided,
however, that any person who performs services for an Employer
or Related Company solely as an independent contractor shall
not be considered to be employed by such Employer.
Section 1.17 - Employer
- -----------------------
Each of the following business entities:
(i) The Company.
(ii) Any Related Company, that adopts the Plan
pursuant to Article XIV.
(iii) Any predecessor of an entity described in (i) or
(ii) above, or successor thereto.
Section 1.18
- ------------
(a) EMPLOYMENT COMMENCEMENT DATE - The date upon which an Employee
or Ineligible Employee first performs an Hour of Service for
an Employer or a Related Company.
(b) REEMPLOYMENT COMMENCEMENT DATE - The date upon which a former
Employee or Ineligible Employee who has incurred a Break in
Service first performs an Hour of Service for an Employer or a
Related Company after such Break in Service.
-7-
<PAGE> 13
Section 1.19 - ERISA
- --------------------
Public Law No. 93-406, the Employee Retirement
Income Security Act of 1974, as amended from time to time.
Section 1.20 - Fiduciary
- ------------------------
The Company and other Employers (acting through their
respective boards of directors or duly authorized officers), the Committee, the
Trustee, the Investment Manager, if any, and/or other parties named as
Fiduciaries pursuant to Article XII, but only with respect to the specific
responsibilities of each for Plan and Trust administration, all as described in
Article XII.
Section 1.21 - Investment Manager
- ---------------------------------
A Fiduciary, other than the Trustee, (a) who has the
power to manage, acquire or dispose of any Plan assets pursuant to an
Investment Manager agreement, and (b) who is (1) a bank, as defined in the
Investment Advisers Act of 1940; (2) an insurance company qualified to manage,
acquire or dispose of the assets of an employee benefit plan under the laws of
more than one state; or (3) a firm registered as an investment advisor under
the Investment Advisers Act of 1940.
Section 1.22
- ------------
(a) PARTICIPANT - An Eligible Employee who (i) has met all the
participation requirements of the Plan, (ii) has commenced
participation in the Plan as provided in Article II, and (iii)
is an Active Participant, Inactive Participant, Retired
Participant, Disabled Participant, or Suspended Participant.
(b) ACTIVE PARTICIPANT - A Participant who is an Eligible Employee
and does not come under the purview of subsections (c) through
(g) of this Section.
(c) INACTIVE PARTICIPANT - A Participant whose employment covered
under the Plan has terminated and who is entitled to, but has
not yet commenced to receive, Pension benefits hereunder.
(d) RETIRED PARTICIPANT - A Participant who has retired under the
Plan in accordance with its provisions, and who is receiving
or is entitled to receive a Pension under the Plan, and shall
-8-
<PAGE> 14
include a formerly Inactive Participant from the time he
commences receiving a Pension.
(e) DISABLED PARTICIPANT - A Participant described in Section 4.5.
(f) SUSPENDED PARTICIPANT - A previously Active Participant who
either (i) is still in the employment of an Employer (or a
Related Company which is not an Employer) and has not incurred
a Break in Service, but who is an Ineligible Employee, or (ii)
has incurred a termination of employment and has neither
incurred a one year Break in Service nor been reemployed.
(g) PRIOR PARTICIPANT - A Participant who has incurred a Break in
Service, but whose credit for previous employment with an
Employer would be restored pursuant to Section 3.4 should he
return to the employment of an Employer and resume his status
as an Eligible Employee; provided, however, that a Prior
Participant shall not be regarded as a Participant unless he
is also a Retired or Inactive Participant.
Section 1.23
- ------------
(a) PENSION - The retirement income provided to a person entitled
to receive benefits under the Plan, normally payable in
monthly installments.
(b) NORMAL RETIREMENT PENSION - The Pension described in Section
5.1.
(c) EARLY RETIREMENT PENSION - The Pension described in Section
5.2.
(d) DEFERRED VESTED PENSION - The Pension described in Section 5.3.
(e) ACCRUED RETIREMENT PENSION - As of any date of determination
prior to his Normal Retirement Date, other than the Early
Retirement Date of a Participant who retires on Early
Retirement under Section 4.2 after completing thirty-five (35)
or more years of Service:
(i) The Pension which the Participant would have been
entitled to receive under the provisions of
Section 5.1 at his Normal Retirement Date had he
remained in the employ of an Employer accruing
Credited
-9-
<PAGE> 15
Service at the maximum annual rate until his
Normal Retirement Date, and based on the two-step
method for calculating Final Average Compensation
set forth in paragraph (iii) below and his
projected Primary Social Security Benefit,
multiplied by
(ii) A fraction, the numerator of which is the actual
number of years and fractions thereof of his
Credited Service up to the date of determination
and the denominator of which is the total number
of years and fractions thereof of Credited Service
he would have had if he had remained in the employ
of an Employer until his Normal Retirement Date
accruing Credited Service at the maximum annual
rate until that date.
(iii) As of any date of determination prior to Normal
Retirement Date, Accrued Retirement Pensions will
be determined on the basis of a Final Average
Compensation figure which is computed in two steps
as follows:
STEP 1 - Calculate the Participant's historical Final Average
Compensation based on the average monthly Compensation during the
highest five (5) consecutive complete or partial calendar years among
the final ten (10) complete or partial calendar years of a
Participant's Service prior to the date as of which the Accrued
Retirement Pension is being determined.
STEP 2 - Assume that the Participant continued to earn annually until
Normal Retirement Date Compensation at the level equivalent to the
historical Final Average Compensation calculated in Step 1 above.
Then, using both the Participant's historical Final Average
Compensation and this assumed level of future Compensation projected
until Normal Retirement Date, determine the average monthly
Compensation during the highest five (5) consecutive complete or
partial calendar years among the final ten (10) complete or partial
calendar years preceding the Participant's Normal Retirement Date.
The Participant's Accrued Retirement Pension will then be calculated
using the average monthly Compensation during that five-year period.
As of his Early Retirement Date in the case of a Participant who
retires on Early Retirement under
-10-
<PAGE> 16
Section 4.2 after completing thirty-five (35) or more years of
Service, the Pension calculated in the manner described in Section 5.1
but based on his Credited Service as of his Early Retirement Date and
the two-step method for calculating Final Average Compensation set
forth in paragraph (iii) above.
Provided, however, that for participants as of September 30, 1976
under the Prior Plan, in no event shall the amount of Accrued
Retirement Pension developed under the above procedure be less than
the accrued retirement pension developed as of September 30, 1976
under the Prior Plan, and provided further that with respect to an
Active Participant on or after September 30, 1982 who was a
Participant on October 1, 1977, in no event shall the amount of his
Accrued Retirement Pension developed under the above procedure be less
than his Accrued Retirement Pension developed as of September 30, 1982
under the Plan.
(f) QUALIFIED JOINT AND SURVIVOR PENSION - The form of Pension
described in Section 7.2.
Section 1.24 - Period-Certain and Life Option
- ---------------------------------------------
The form of Pension described in Section 7.3(a).
Section 1.25
- ------------
(a) PLAN - The Reynolds and Reynolds Company Retirement Plan, as
set forth herein, as it may be amended from time to time.
(b) OTHER PLAN - Any pension, deferred profit sharing or other
retirement plan to which an Employer or Related Company
contributes directly (or indirectly through compensation
increases for pension purposes), which qualifies under Section
401(a) of the Code, other than the Plan or any plan which
provides benefits intended to be supplemental to the benefits
provided under the Plan; provided, however, that the term
Other Plan shall not include any profit sharing plan qualified
under Section 401(a) of the Code maintained by the Company
prior to October 1, 1976, The Reynolds and Reynolds Company
PAYSOP (Payroll-Based Employee Stock Ownership Plan), The
Reynolds and Reynolds Company 401(k) Savings Plan, The
Reynolds and Reynolds Company Retiree Medical Savings Account
Plan, the Money Accumulation Pension Plan For Employees of
-11-
<PAGE> 17
Reynolds and Reynolds, nor The Arnold Corporation Printed
Communications For Business Savings Plan.
(c) PRIOR PLAN - The Plan as in effect as of September 30, 1976.
Section 1.26 - Plan Administrator
- ---------------------------------
The Company, notwithstanding the fact that certain
administrative functions under or with respect to the Plan have been or may be
delegated to the Committee or to any other person, persons or entity.
Section 1.27 - Plan Year
- ------------------------
The twelve-month period commencing on October 1 and
ending on September 30.
Section 1.28 - Primary Social Security Benefit
- ----------------------------------------------
The monthly primary insurance amount to which a
Participant making timely and proper application and not engaging in any
disqualifying employment would be entitled under the Federal Social Security
Act, as amended, upon attaining his sixty-fifth (65th) birthday. For any Plan
Year in which a Participant's Primary Social Security Benefit is to be
determined, the Federal Social Security Act and all factors used to compute
benefits thereunder (e.g., the Consumer Price Index) shall be treated as
remaining constant after the beginning of such Plan Year.
In order to determine Accrued Retirement Pensions,
the Committee shall adopt a procedure, uniformly applied to all Participants,
to estimate Primary Social Security Benefits based on the Social Security Act
in effect at the first day of the Plan Year during which such determination is
made. Such estimate will be made on the basis that the Participant, if under
age 65, continues to receive until age 65 annual wages for purposes of Social
Security at the same rate as his most recent Compensation amount.
Except as provided below, the amount of any benefit
determined under the Plan shall not be reduced by reason of an increase in the
amount of Participant's Primary Social Security Benefit which takes place after
he ceases to be an Active Participant. In the event a Retired, Inactive or
Suspended Participant again becomes an Active Participant, his benefits under
the Plan shall be determined based upon his Primary Social Security Benefit on
the date of his Retirement or other termination of employment; provided,
however, that the amount of his
-12-
<PAGE> 18
Pension benefit shall not be less than the Pension benefit to which he would
have been entitled if he had not returned to such employment and again become a
Participant.
Notwithstanding the foregoing, if a Participant who
retires or terminates employment with vested rights under the Plan provides to
the Committee within the relevant computation period a statement from the
Social Security Administration evidencing his actual wages for social security
purposes for all years (previously estimated) prior to his retirement or
termination of employment or a Social Security award letter evidencing the
amount of his actual primary Social Security benefit, such wages or actual
primary Social Security benefit shall be taken into account, as set forth
below, for purposes of the Plan. If such a statement or award letter is not
provided to the Committee during the relevant computation period, the Committee
shall be entitled to estimate the Participant's wages for such years in
accordance with a method, uniformally applied, which satisfies the rules for
use of estimated earnings history that are set forth in Revenue Ruling 84-45.
For purposes hereof, the relevant computation period shall be a period of 120
days beginning on the later of (A) the date of his retirement or termination of
employment with vested rights under the Plan, or (B) the date on which the
Committee has furnished or caused to be furnished to him (i) a calculation of
his Pension benefit under the Plan, determined with the Primary Social Security
Benefit calculated on the basis of estimated wages, (ii) a statement that the
Participant has the right, within the relevant computation period, to supply
his actual wage history or actual primary Social security benefit and to have
it taken into account in calculating his retirement benefit, and (iii) a
statement that the Participant can obtain his actual wage history from the
Social Security Administration.
If such Participant furnishes documentation of his
actual compensation history or actual primary Social Security benefit in
accordance with the above provisions and within the time specified such
Participant's Pension benefit shall be recomputed to reflect such actual
compensation history or actual primary Social Security benefit. If such
recomputation yields a benefit that is larger than the benefit then being paid
to such Participant, then as soon as administratively practicable such benefit
shall be adjusted, retroactively and prospectively, by an amount equal to the
difference.
-13-
<PAGE> 19
Section 1.29 - Related Company
- ------------------------------
Any corporation or trade or business required to be
aggregated with The Reynolds and Reynolds Company, by Section 414(b), (c), (m),
(n), or (o) of the Code.
Section 1.30
- ------------
(a) RETIREMENT - Termination of employment for reason other than
death or transfer to another Employer or a Related Company
after a Participant has fulfilled all requirements for a
Normal or Early Retirement Pension. Retirement shall be
considered to occur on the day immediately following a
Participant's last day of employment or Approved Absence, if
later.
(b) NORMAL RETIREMENT - Retirement under the circumstances
described in Section 4.1 qualifying the Retired Participant
for benefits pursuant to Section 5.1.
(c) NORMAL RETIREMENT DATE - The first day of the month coincident
with or next following a Participant's attainment of his 65th
birthday.
(d) EARLY RETIREMENT - The Retirement of a Participant prior to
his Normal Retirement Date under the circumstances defined in
Section 4.2 qualifying the Retired Participant for benefits
pursuant to Section 5.2.
(e) EARLY RETIREMENT DATE - In the case of a Retired Participant
on Early Retirement, the first day of the month coincident
with or next following his Retirement.
Section 1.31
- ------------
(a) SERVICE - The period of a Participant's employment considered
in determining eligibility for benefits to or on behalf of a
Participant as provided in Section 3.2.
(b) CREDITED SERVICE - The period of a Participant's employment
considered in determining the amount of benefits payable to or
on behalf of a Participant as provided in Section 3.3.
(c) PAST CREDITED SERVICE - The meaning described in Section
3.3(a).
-14-
<PAGE> 20
(d) FUTURE CREDITED SERVICE - The meaning described in Section
3.3(b).
(e) HOUR OF SERVICE - The meaning described in Section 3.1.
Section 1.32 - Trust Agreement
- ------------------------------
The trust agreement executed on March 25, 1975
establishing The Reynolds and Reynolds Company Retirement Trust, as the same
may be amended from time to time, which constitutes a part of the Plan.
Section 1.33 - Trust or Trust Fund
- ----------------------------------
The fund known as The Reynolds and Reynolds Company
Retirement Trust, maintained in accordance with the terms of the Trust
Agreement, as it may be amended from time to time, which constitutes a part of
the Plan.
Section 1.34 - Trustee
- ----------------------
The trustee or trustees named in the Trust Agreement
and any additional or successor trustee or trustees from time to time acting as
Trustee of the Trust Fund. "Trustee" shall be deemed to refer to the plural as
well as the singular, except where the context otherwise requires.
-15-
<PAGE> 21
ARTICLE II
PARTICIPATION
-------------
Section 2.1 - Eligibility
- -------------------------
An Employee shall become a Participant as follows:
(a) Any Employee included under the provisions of the Prior Plan
as of the Effective Date continued to participate in
accordance with the provisions of the Plan as amended and
restated as of October 1, 1976.
(b) Any Employee on the Effective Date whose Employment
Commencement Date was after he had attained age 50 but before
the first day of the calendar month coincident with or next
following his 60th birthday became a Participant on the
Effective Date.
(c) Any Employee not included in (a) or (b) above whose Employment
Commencement Date, or latest Reemployment Commencement Date or
date of rehire, is prior to October 1, 1976 becomes a
Participant on the October 1 coincident with or next following
the later of (i) the date he attains age 24-1/2, and (ii) the
date he completes 6 or more months of continuous employment.
(d) Any Employee whose Employment Commencement Date was after the
first day of the calendar month coincident with or next
following his 60th birthday and who, as of October 1, 1988,
was an Employee who had completed six (6) or more months of
Continuous Employment, became a Participant on October 1,
1988.
(e) Any Employee not included in (a), (b), (c), or (d) above
becomes a Participant on the October 1 coincident with or next
following the later of (i) the date he attains age 20-1/2, and
(ii) the date he completes six (6) or more months of
Continuous Employment.
Notwithstanding any other provision herein to the
contrary, any person (i) whose Employment Commencement Date was after the first
day of the month coincident with or next following his 60th birthday, and (ii)
who is not credited with an Hour of Service on or
-16-
<PAGE> 22
after October 1, 1988, shall not be eligible to participate in the Plan.
An Employee or Ineligible Employee whose employment
with his Employer and all Related Companies terminates on or after the
Effective Date and who is rehired by an Employer or Related Company (i) prior
to incurring a Break in Service, or (ii) subsequent to incurring a Break in
Service with his pre-break Service restored pursuant to Section 3.4, shall have
his prior period of Continuous Employment and his age on his original
Employment Commencement Date taken into account for purposes of determining his
eligibility to participate under this Section. In the case of such a former
Employee or Ineligible Employee who is rehired by an Employer or Related
Company prior to incurring a Break in Service, Continuous Employment shall also
include the period between his date of termination of employment and his date
of rehire. If such a former Employee or Ineligible Employee satisfies the
participation requirements of this Section 2.1 on his Reemployment Commencement
Date or date of rehire, as applicable, he shall thereupon become a Participant.
On and after the Effective Date, a former Employee or
Ineligible Employee who is rehired by an Employer or Related Company subsequent
to incurring a Break in Service with his pre-break Service not restored must
satisfy the participation requirements of this Section based solely on his age
on and his Continuous Employment after his Reemployment Commencement Date or
date of rehire, as applicable.
Section 2.2 - Conditions of Participation
- -----------------------------------------
Participation in the Plan by any Employee shall be
contingent upon receipts by the Committee of such applications, consents,
proofs of birth, elections, beneficiary designations and other documents and
information as prescribed by the Committee. Each Employee upon becoming a
Participant shall be deemed conclusively, for all purposes, to have assented to
the terms and provisions of the Plan and shall be bound thereby.
Section 2.3 - Changes in Employment Status
- ------------------------------------------
(a) CHANGE FROM ELIGIBLE TO INELIGIBLE STATUS - If an Active
Participant becomes an Ineligible Employee, he shall not be
deemed to have incurred a Break in Service, but shall become
and shall remain a Suspended Participant for so long as he
-17-
<PAGE> 23
remains in such ineligible status, and the following special
provisions shall apply:
(i) His Accrued Retirement Pension determined as of
the date he becomes a Suspended Participant shall
be frozen and shall not be increased on account of
any service rendered or Compensation received
while he is a Suspended Participant.
(ii) His Continuous Employment while a Suspended
Participant shall be counted as part of his
Service in determining his vested right to a
deferred benefit pursuant to the provisions of
Section 4.3, and in determining his right to a
benefit under any other provision hereof (if and
to the extent that the requirements of Section 3.2
are otherwise satisfied). Such Continuous
Employment shall not, however, be counted as
Credited Service in determining the amount of his
benefits under the Plan (unless he again becomes
an Eligible Employee and Active Participant).
(iii) While he is a Suspended Participant, he shall have
the same right as an Active Participant who is
otherwise in a similar position to elect an
optional form of Pension or to make any other
election hereunder.
(iv) When a Suspended Participant's employment
terminates with his Employer and all Related
Companies for any reason, including Retirement or
death, he (or, in the event of death, his Eligible
Spouse or beneficiary, if any) shall be entitled
to the benefits provided under the applicable
provisions of Articles IV, V, VI, VII and VIII in
effect at the date of change in employment status.
(To the extent that a benefit is payable to or
with respect to him pursuant to any Other Plan,
the provisions of Section 5.4 shall apply.)
(v) If a Suspended Participant returns to the status
of an Eligible Employee, he thereupon shall again
become an Active Participant and, upon his
subsequent Retirement or other termination of
employment, his benefit shall be based
-18-
<PAGE> 24
upon his Credited Service and his Final Average
Compensation. Such Final Average Compensation
shall include any Compensation paid to the
Suspended Participant while in the employ of a
Related Company, which is not an Employer
participating under this Plan. (To the extent
that a benefit is payable to or with respect to
him pursuant to any Other Plan, the provisions of
Section 5.4 shall apply.)
(b) CHANGE FROM INELIGIBLE TO ELIGIBLE STATUS - If a person who
had been an Ineligible Employee becomes an Eligible Employee,
the following special provisions shall apply:
(i) His prior period of employment while an Ineligible
Employee shall be considered in measuring his
Continuous Employment to determine his eligibility
to become an Active Participant of the Plan
pursuant to the provisions of Section 2.1. He
shall become (or again become) an Active
Participant as of the later of the last date he
became an Eligible Employee or the date he has
satisfied the requirements of Section 2.1.
(ii) His prior period of employment while an Ineligible
Employee shall be considered in measuring his
Service to determine his vested right to a
deferred benefit pursuant to the provisions of
Section 4.4, and in determining his right to a
benefit under any other provision hereof (if and
to the extent that the requirements of Section 3.2
are otherwise satisfied). Such prior employment
while an Ineligible Employee shall also be counted
as Credited Service in determining the amount of
his benefits under the Plan (if and to the extent
that the requirements of Section 3.3 are otherwise
satisfied); provided, however, that with respect
to an Employee who becomes a Participant on or
after October 1, 1982 in no event shall Credited
Service be granted for any period of employment
during which the Participant was a member of a
defined benefit pension plan sponsored by a
collective bargaining unit to which the Company
does not
-19-
<PAGE> 25
contribute but which was the subject of
bargaining with the Company.
(iii) (To the extent that a benefit is payable to or
with respect to him pursuant to any Other Plan,
the provisions of Section 5.4 shall apply.)
(c) TRANSFER FROM ONE EMPLOYER TO ANOTHER - If a Participant
leaves the employ of one Employer to enter directly into the
employ of another Employer, he shall not be deemed to have
terminated his participation hereunder by reason thereof, but
shall be considered for all purposes of the Plan thereafter as
an Eligible Employee or Ineligible Employee, whichever
applies, of the succeeding Employer from the date of such
transfer. Any such transferred Participant shall receive
credit for his aggregate Service and Credited Service with all
his Employers (that is otherwise credited to such Participant
under the Plan's provisions); provided, however, that he shall
not receive duplicate Service or Credited Service for any one
period of time.
(d) CERTAIN TRANSFERS EXCEPTED RE CREDITED SERVICE -
Notwithstanding any other provision herein to the contrary, in
no event shall any person receive credit for purposes of
determining Credited Service hereunder for any period of
employment with a Related Company with respect to a period
during which such Related Company is a Related Company solely
by reason of being an organization that is a member of an
affiliated service group of which the Employer is also a
member as determined under Section 414(m) of the Code nor
shall any person receive credit for purposes of determining
Credited Service hereunder for any period of employment as a
"leased employee" as defined in Section 414(n)(2) of the Code.
Section 2.4 - Adoption of the Plan by Related Company
- -----------------------------------------------------
Except as otherwise provided herein or in any
Schedule hereto, if a Related Company authorized by the Board to participate
herein adopts the Plan, each Employee of such Employer to whom such Employer
has extended the Plan shall become a Participant on the first day of the Plan
Year coinciding with or next following such adoption or later completion of the
eligibility requirements of Section 2.1, and his Credited Service shall be
based upon his employment from the date of his participation only,
-20-
<PAGE> 26
unless otherwise specifically provided in a resolution adopted by the Board and
in any Schedule hereto.
-21-
<PAGE> 27
ARTICLE III
SERVICE AND CREDITED SERVICE
----------------------------
Section 3.1 - Hours of Service and Continuous Employment
- --------------------------------------------------------
(a) HOURS OF SERVICE - GENERAL RULE - An Hour of Service as
defined in this subparagraph (a) shall be credited to the Plan
Year in which the Hours of Service are worked or credited to
an employee. An Employer may round up fractional hours at the
end of a Plan Year or more frequently.
(1) HOURS OF SERVICE FOR PERFORMANCE OF DUTIES - An Hour
of Service shall be granted hereunder for each hour
for which an employee is paid, or entitled to
payment, for the performance of duties for an
Employer or Related Company during a Plan Year.
(2) HOURS OF SERVICE WHEN NO DUTIES ARE PERFORMED - An
Hour of Service shall also be granted (up to a
maximum of 501 hours for any single continuous
period) for each hour an employee is paid, or
entitled to payment, by an Employer or Related
Company on account of a period during which he
performs no duties (irrespective of whether the
employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including
disability), layoff, military absence, jury duty or
Approved Absence. Notwithstanding the preceding
sentence:
(i) An hour for which an employee is directly
or indirectly paid, or entitled to payment
on account of a period during which no
duties are performed shall not be credited
to the employee if such payment is made or
due under a plan maintained solely for the
purpose of complying with applicable
workmen's compensation, unemployment
compensation or disability insurance laws;
and
(ii) Hours of Service shall not be credited for
a payment which solely reimburses an
employee for medical or medically related
expenses incurred by the employee.
-22-
<PAGE> 28
For purposes of this subparagraph (a)(2), a payment
shall be deemed to be made by or due from an Employer
or Related Company regardless of whether such payment
is made by or due from an Employer or Related Company
directly, or indirectly through, among others, a
trust fund or insurer to which an Employer or Related
Company contributes or pays premiums and regardless
of whether contributions made or due to the trust
fund, insurer or other entity are for the benefit of
particular employees or are on behalf of a group of
employees in aggregate.
(3) An Hour of Service shall be granted for each hour for
which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by an
Employer or Related Company. The same Hours of
Service shall not be credited both under subparagraph
(a)(1) or (a)(2), as the case may be, and under this
subparagraph (a)(3). Crediting of Hours of Service
for back pay awarded or agreed to with respect to
periods described in subparagraph (a)(2) shall be
subject to the limitations set forth in that
subparagraph.
(b) SPECIAL RULE FOR DETERMINING HOURS OF SERVICE FOR REASONS
OTHER THAN THE PERFORMANCE OF DUTIES - In the case of a
payment which is made or due on account of a period during
which an employee performs no duties, and which results in
crediting of Hours of Service under subparagraph (a)(2) of
this Section, or in the case of an award or agreement for back
pay to the extent that such award or agreement is made with
respect to a period described in subparagraph (a)(2) of this
Section, the number of Hours of Service to be credited shall
be the number of regularly scheduled working hours included in
the units of time for which the payment is made or, in the
case of an employee without a regular work schedule, at the
rate of forty (40) hours per week or eight (8) hours per day,
and shall be credited to the Plan Year in which the Hours of
Service are credited to the employee. In no event shall Hours
of Service be calculated or credited in a manner inconsistent
with Department of Labor Regulations Section 2530.200b-2,
which are incorporated herein by reference.
-23-
<PAGE> 29
(c) CONTINUOUS EMPLOYMENT - "Continuous Employment" as used herein
shall mean an employee's total period of employment with one
or more Employers or Related Companies from his Employment
Commencement Date or most recent Reemployment Commencement
Date, and in the case of a Participant who is rehired after a
Break in Service with pre-break Service restored, shall
include the aggregate of his pre-break and post-break periods
of employment. Continuous Employment shall be measured in
years and fractions thereof to completed months, with one (1)
day or more of employment in a calendar month being deemed a
completed month. Continuous Employment shall not be deemed
terminated under the following circumstances:
(i) Change to or from employment status as an
Eligible Employee; or
(ii) Employment by another Employer or a Related
Company provided employment terminates merely to
become an employee of the other Employer or
Related Company; or
(iii) During the first twelve (12) consecutive months of
an Approved Absence. In the event that an
employee fails to return to the employ of the
Employer or Related Company within the Approved
Absence period prescribed by the Employer or at
the end of twelve (12) months of Approved Absence
if earlier, his Continuous Employment shall be
deemed to terminate as of the last day of such
prescribed period or twelve (12) months of
Approved absence, whichever is earlier. An
Employee's Service and Credited Service shall be
determined in accordance with the foregoing.
(iv) During Military Service.
(v) With respect to termination of employment which
occurs after the Effective Date if the employee is
reemployed by an Employer or Related Company prior
to incurring a Break in Service.
-24-
<PAGE> 30
Section 3.2 - Service
- ---------------------
A Participant's eligibility for benefits and vesting
under the Plan shall be determined by his period of Service. Service shall be
granted for the period of a Participant's Continuous Employment ending on the
date of his termination of employment. Any fractional month of Service shall
be rounded up and deemed a full month of Service. Notwithstanding any other
provision herein to the contrary, in no event will periods of employment with
two or more Employers (or, if applicable, with an Employer and a Related
Company which is not an Employer) at the same time result in duplication of
Service.
Section 3.3 - Credited Service
- ------------------------------
The amount of benefits payable to or on behalf of a
Participant shall be determined on the basis of his Credited Service in
accordance with the following:
(a) CREDITED SERVICE PRIOR TO THE EFFECTIVE DATE (PAST CREDITED
SERVICE) - Credited Service shall be granted for the period of
a Participant's Continuous Employment prior to the Effective
Date unless otherwise specifically limited in an applicable
Schedule, and with respect to any Participant as of the
Effective Date whose Employment Commencement Date was after he
had attained age 50, Credited Service shall include such
Employee's period of Continuous Employment prior to the
Effective Date during which the Employee was not a participant
of the Prior Plan. Credited Service shall not otherwise be
granted for periods prior to the Effective Date unless
specifically provided in an applicable Schedule.
(b) CREDITED SERVICE FROM AND AFTER THE EFFECTIVE DATE (FUTURE
CREDITED SERVICE) - A Participant shall be granted Credited
Service for the period of his Continuous Employment after the
Effective Date beginning on the October 1 coincident with or
next following the later of (i) the date he attains age
20-1/2, and (ii) the date he completes six (6) months of
Continuous Employment, and ending on the date of his
termination of employment or Retirement, whichever is later,
except as otherwise specifically limited in an applicable
Schedule.
(c) Notwithstanding any other provision herein to the contrary,
with respect to an Employee who becomes a Participant on or
after October 1, 1982, in no
-25-
<PAGE> 31
event shall Credited Service be granted for any period of
employment during which the Participant was a member of a
defined benefit pension plan sponsored by a collective
bargaining unit to which the Company does not contribute but
which was the subject of bargaining with the Company.
(d) Notwithstanding any other provision herein to the contrary, in
no event will periods of employment with two or more Employers
(or, if applicable, with an Employer and a Related Company
which is not an Employer) at the same time result in
duplication of Credited Service.
Section 3.4 - Break in Service
- ------------------------------
(a) An individual shall incur a Break in Service in the event (i)
his employment with an Employer and all Related Companies is
terminated on or after the Effective Date, and (ii) he does
not perform an Hour of Service during the twelve (12)
consecutive month period beginning on the date of his
termination of employment.
(b) If a Suspended Participant is rehired by an Employer or
Related Company prior to incurring a Break in Service, he
shall resume immediately his status as an Active Participant
if he is then an Eligible Employee and his termination of
employment shall not be deemed a termination of employment for
purposes of determining his Service or Credited Service.
(c) A Participant's Service and Credited Service shall be
cancelled if he has a Break in Service before he has met the
requirements for Retirement or for a Deferred Vested Pension
as provided in the applicable sections of Article IV.
Participants who have met the requirements for Retirement or a
Deferred Vested Pension shall at all times retain their
Service and Credited Service. If a terminated employee is
reemployed by an Employer or Related Company after a Break in
Service and his Service and Credited Service were cancelled,
such Service and Credited Service will be restored in
determining rights and benefits under the Plan only if his
number of consecutive years of Break in Service is less than
the greater of five or the aggregate of his Years of Service
prior to such Break in Service (not including any unrestored
Service cancelled by reason of a prior Break in Service);
provided,
-26-
<PAGE> 32
however, that no such Service or Credited Service shall be
restored to a reemployed employee if his Service and Credited
Service would not have been restored under the terms of the
Plan in effect as of September 30, 1985 if such reemployed
employee had been reemployed by an Employer or a Related
Company on September 30, 1985. Notwithstanding the provisions
of Section 3.4(a) or the immediately preceding sentence, an
individual whose employment with the Employer or a Related
Company is terminated solely by reason of a maternity or
paternity absence beginning on or after October 1, 1985 and
who would otherwise incur a Break in Service by reason thereof
shall not be deemed to incur a Break in Service until the
second anniversary of the individual's date of termination of
employment, but in no event shall the operation of this
sentence result in any individual receiving credit for Service
or Credited Service for a period during which he is not
employed by the Employer or a Related Company. For purposes
of the immediately preceding sentence, an absence from
employment for maternity or paternity reasons means an absence
due to (i) the pregnancy of the individual, (ii) the birth of
a child of the individual, (iii) the placement of a child with
the individual, or (iv) the caring of such child for a period
beginning immediately following such birth or placement. In
the event of a reemployment of a Participant prior to his
Normal Retirement Date who received a cash distribution of
vested benefits hereunder at a prior termination of
employment, his pre-break Service and Credited Service shall
be retained.
(d) Notwithstanding any other provision herein to the contrary, in
no event shall a Participant be granted Service or Credited
Service hereunder in respect to any employment period which
ended by termination of his employment with an Employer or a
Related Company prior to the Effective Date.
(e) Notwithstanding any other provision herein to the contrary, in
the event of the reemployment by an Employer or Related
Company of a Retired Participant who retired on or after his
Normal Retirement Date, any increase in such Participant's
benefits under the Plan because of additional Service,
Credited Service, or Compensation attributable to his
reemployment shall be reduced actuarially (but not below zero)
-27-
<PAGE> 33
to reflect the value of any Pension or lump sum payment in
lieu thereof that he received under the Plan attributable to
his prior employment or during such reemployment. Any such
increase shall become effective once each year, on a
prospective basis only, as of the first day of each Plan Year.
Section 3.5 - Military Service
- ------------------------------
Absence from employment by an Employer or Related
Company due to service in the armed forces of the United States shall not
constitute a Break in Service, and the period during such absence shall be
considered as Service and Credited Service, but with respect to Credited
Service only if the individual was an Active Participant immediately prior to
the commencement of such Military Service, to the extent required by applicable
laws of the United States. If such Participant does not return to employment
with the Employer or a Related Company within the period provided by law, he
shall be deemed to have terminated employment on the date he left the
employment of the Employer or Related Company for service in the armed forces
of the United States.
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<PAGE> 34
ARTICLE IV
ELIGIBILITY FOR RETIREMENT BENEFITS
-----------------------------------
Section 4.1 - Normal Retirement Pension
- ---------------------------------------
The Normal Retirement Date of each Participant shall
be the first day of the month coincident with or next following the attainment
of his 65th birthday. A Participant's right to his Normal Retirement Pension
shall be nonforfeitable upon and after his attainment of age 65 while employed
by an Employer or a Related Company, except to the extent that such Pension is
forfeitable because it has not been paid or distributed to him prior to his
death. A Participant whose employment with his Employer and all Related
Companies is terminated for any reason other than his death on or after his
Normal Retirement Date shall be eligible for a Normal Retirement Pension in an
amount determined in accordance with the provisions of Section 5.1.
Section 4.2 - Early Retirement Pension
- --------------------------------------
A Participant and whose employment with his Employer
and all Related Companies is terminated for any reason other than his death
prior to his Normal Retirement Date and after he has attained age 55 and
completed at least fifteen (15) years of Service shall be eligible for an Early
Retirement Pension in an amount determined in accordance with the provisions of
Section 5.2.
Section 4.3 - Deferred Vested Pension
- -------------------------------------
A Participant who has completed ten (10) or more
years of Service, and whose employment with his Employer and all Related
Companies terminates for any reason other than his death or Retirement, shall
be eligible to receive a Deferred Vested Pension in an amount determined in
accordance with the provisions of Section 5.3. With respect to a Participant
who has been credited with an Hour of Service on or after October 1, 1989,
"five (5) or more years of Service" shall be substituted for "ten (10) of more
years of Service" in the immediately preceding sentence.
Section 4.4 - Retirement While on Approved Absence
- --------------------------------------------------
A Participant otherwise eligible to retire may elect
to do so without returning to active employment if he is absent from work
pursuant to an Approved Absence.
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<PAGE> 35
Section 4.5 - Disability
- ------------------------
(a) In the event a Participant qualifies for either Federal Social
Security disability or a disability benefit payable under the
Employer's long term disability plan based upon his physical
or mental condition and is under 65 years of age, the
Participant will be treated for purposes of the Plan as if he
continued in employment as an Eligible Employee at the same
rate of Compensation in effect immediately prior to his
termination of employment until the earliest of: (i) the
date of his death; (ii) the date of the cessation of the
physical or mental condition that created the entitlement to
disability benefits under the Federal Social Security Act or
the Employer's long term disability plan; or (iii) the date
immediately preceding the date as of which his Normal
Retirement Pension or Early Retirement Pension payments
commence. Upon attaining his Normal Retirement Age, such a
Participant shall be entitled to a Normal Retirement Pension
in accordance with Section 5.1. A Disabled Participant who
satisfies the conditions for Early Retirement under Section
4.2 (on or after becoming Disabled) may, in lieu of such
Normal Retirement Pension, elect Early Retirement in
accordance with Section 4.2 and receive an Early Retirement
Pension in accordance with Section 5.2. The monthly Primary
Social Security Benefit used in determining such a
Participant's Early Retirement Pension or Normal Retirement
Pension shall be based on the Federal Social Security Act in
effect at the first day of the Plan Year during which the
Participant's disability occurs. If the Disabled Participant
becomes both ineligible to receive Federal Social Security
disability benefits and ineligible to receive a disability
benefit payable under the Employer's long term disability plan
before his Normal Retirement Date or he commences to receive
an Early Retirement Pension under the Plan, then the
Participant shall thereafter no longer be treated as though
continued in employment as an Eligible Employee and his
benefits shall be determined under the applicable provisions
of the Plan as if he had terminated employment with the
Employer (and all Related Companies) on the date that such
Federal Social Security disability benefits ceased or the date
such long term disability benefits ceased, whichever is later,
or his Early Retirement Date if applicable.
-30-
<PAGE> 36
ARTICLE V
AMOUNT OF RETIREMENT BENEFITS
-----------------------------
Section 5.1 - Normal Retirement Pension
- ---------------------------------------
The Normal Retirement Pension of a Participant
eligible therefor shall be an amount, payable monthly for his life, equal to:
One and one-half percent (1.5%) of the Participant's Final Average
Compensation less one and sixty-seven hundredths percent (1.67%) of
the Participant's Primary Social Security Benefit, such result
multiplied by the Participant's years of Credited Service (maximum
thirty (30) years of Credited Service.)
Provided, however, that in no event shall such a Participant's Normal
Retirement Pension be less than the Pension the Participant could have received
had he elected an immediate Early Retirement Pension commencing as of the first
day of any Plan Year following his eligibility for Early Retirement, that in no
event shall the Normal Retirement Pension of such a Participant who retires
after his Normal Retirement Date be less than the Pension the Participant could
have received if he had elected an immediate Normal Retirement Pension
immediately following his eligibility for Normal Retirement, and that in no
event shall a Participant's monthly Normal Retirement Pension be less than an
amount equal to Fifteen Dollars ($15.00) multiplied by the Participant's years
of Credited Service (maximum thirty (30) years of Credited Service).
Section 5.2 - Early Retirement Pension
- --------------------------------------
The Early Retirement Pension of a Participant
eligible therefor shall be an amount, payable monthly for his life, equal to
his Accrued Retirement Pension reduced at the rate of four-tenths of one
percent (0.4%) for each full month by which the starting date of the Early
Retirement Pension precedes his Normal Retirement Date.
Section 5.3 - Deferred Vested Pension
- -------------------------------------
The Deferred Vested Pension of a Participant eligible
therefor shall be an amount, payable for his life, in an amount equal to his
Accrued Retirement Pension reduced at the rate of four tenths of one percent
(0.4%) for each full month by which the starting date of the
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<PAGE> 37
Deferred Vested Pension precedes his Normal Retirement Date.
Section 5.4 - Benefit Coordination With Other Plans
- ---------------------------------------------------
If a Participant (or his Eligible Spouse, Contingent
Annuitant, Beneficiary, or beneficiary) receives or is entitled to receive a
benefit under any Other Plan, his Pension (or benefit) shall be reduced by the
Actuarial Equivalent of his pension benefit from any Other Plan (prior to
reduction for any optional preretirement coverage for survivor benefits
hereunder), but only to the extent that:
(a) The benefits from the plans are attributable to the same
earnings and/or the same period of employment; and
(b) The benefit from the Other Plan is not attributable to the
voluntary or mandatory contributions (other than those
provided by compensation increases for pension purposes) made
by the Participant.
If a Participant is entitled to benefits from the
Plan and one or more Other Plans for the same period of employment and if one
or more of such plans contains a benefit coordination provision, then the
benefits payable to the Participant shall be determined as follows:
(c) The "Primary Plan" shall be the Plan in which the Participant
last was an active participant before his Retirement, death or
other termination of employment with an Employer and Related
Companies. The benefits payable under the Primary Plan shall
be determined in accordance with its benefit coordination
provision.
(d) The "Secondary Plan" shall be the plan and/or plans in which
the Participant was an active participant before he became an
active participant in the Primary Plan. The benefits payable
under the Secondary Plan shall be determined without regard to
its or their benefit coordination provision.
In all events, principles of benefit coordination shall be applied on a basis
equitable to the Participant considering his total covered earnings and
service.
-32-
<PAGE> 38
Section 5.5 - Special Minimum Benefit Provision For Participants
- -----------------------------------------------------------------
on September 30, 1974
- ---------------------
In the event of the Early Retirement or Normal
Retirement hereunder of an Employee who was a Participant under the Prior Plan
as of September 30, 1974, such Participant may elect in lieu of the Pension to
which he would be entitled under the Plan a Pension of Actuarially Equivalent
value to the pension he would have been eligible to receive under the
provisions of the Prior Plan as in effect on September 30, 1974, assuming for
such purpose that he continued to be covered by the Prior Plan as in effect on
September 30, 1974 until his Service with the Employer terminates. For the
purpose of the administration of this provision, the amount of each applicable
Participant's estimated minimum Pension as specified in this Section shall be
calculated by the Actuary and reported to the Committee as part of the
Actuarial Valuation and the Committee shall maintain a permanent record of the
Prior Plan's benefit provisions as in effect September 30, 1974 including
applicable procedures of calculating benefits under such provisions and any
other applicable administrative procedures or interpretations. Further, in the
event of Early Retirement under this special minimum benefit provision, the
reduction of the Participant's Pension for early commencement thereof shall be
determined only by reduction at the rate of 1/15 for each of the first five (5)
years and 1/30 for each of the next five (5) years by which the starting date
of the Pension precedes Normal Retirement Date.
-33-
<PAGE> 39
ARTICLE VI
COMMENCEMENT, FORM, AND DURATION OF BENEFITS
--------------------------------------------
Section 6.1 - Normal and Early Retirement Pension
- -------------------------------------------------
A Normal or Early Retirement Pension shall be payable
to an eligible Participant, who applies therefor in accordance with rules
established by the Committee, commencing with the later of (i) the month
following the month in which he becomes eligible for such Pension, or (ii) the
month designated by him in writing to the Committee, and shall be payable
monthly thereafter during the life of such Retired Participant. The last
payment thereof shall be for the month in which the death of such Retired
Participant occurs.
Section 6.2 - Deferred Vested Pension
- -------------------------------------
A Deferred Vested Pension shall be payable to an
eligible Participant commencing with the later of (i) his Normal Retirement
Date, or (ii) the month in which he makes application therefor in accordance
with the rules established by the Committee, and shall be payable monthly
thereafter during his life. Notwithstanding the foregoing, a Participant
eligible for a Deferred Vested Pension who had a least fifteen (15) years of
Service prior to his termination of employment may elect commencement of his
Deferred Vested Pension benefits as of the beginning of any calendar month
within the ten-year period preceding his Normal Retirement Date. To be
effective, such an election must be made in writing and filed with the
Committee on forms provided by the Committee no less than thirty (30) days
prior to the date the Deferred Vested Pension is to commence. The last payment
thereof shall be for the month in which the death of such Retired Participant
occurs.
Section 6.3 - Reemployment
- --------------------------
If a Participant whose employment with his Employer
and all Related Companies had previously terminated and who began receiving
Pension payments prior to his Normal Retirement Date should return to
employment in any capacity with an Employer or a Related Company, his Pension
payments shall continue during the period of such reemployment, but any
increase in such Participant's benefits under the Plan because of additional
Service, Credited Service, or Compensation attributable to his reemployment
shall be reduced actuarially (but not below zero) to reflect the value of any
Pension or lump sum payment in lieu thereof that he received under the Plan
attributable to his prior employment or during such
-34-
<PAGE> 40
reemployment. If there is any increase in such Participant's benefits under
the Plan, benefits with respect to such increase based on a separate annuity
starting date shall be payable after such Participant's employment with his
Employer and all Related Companies has terminated or as required under Section
6.6, in accordance with otherwise applicable provisions of the Plan.
Section 6.4 - Payment of Small Benefits
- ---------------------------------------
If any benefit payable pursuant to this Article
shall, prior to the commencement or distribution thereof have an Actuarial
Equivalent lump sum value not in excess of $3,500 (and did not exceed $3,500 at
the time of any prior distribution), the Plan Administrator shall direct the
Trustee to make a lump sum cash settlement of such benefit. If a Participant
is eligible for a Normal Retirement Pension or Early Retirement Pension, the
Actuarial Equivalent lump sum value of any benefit for purposes of this
paragraph shall be determined as of the first day of the month following the
month in which such Participant's employment terminates. If a Participant is
eligible for a Deferred Vested Pension and his employment terminates in
September, October, November, December, January, February, or March, the
Actuarial Equivalent lump sum value of any benefit for purposes of this
paragraph shall be determined as of the next following September 1. If a
Participant is eligible for a Deferred Vested Pension and his employment
terminates in April, May, June, July, or August, the Actuarial Equivalent lump
sum value of any benefit for purposes of this paragraph shall be determined as
of the second following September 1.
If any benefit payable pursuant to this Article
shall, prior to the commencement or distribution thereof have an Actuarial
Equivalent lump sum value greater than $3,500 (or greater than $3,500 at the
time of any prior distribution) but not in excess of $5,250, the Participant
may elect, subject to the provisions of Section 7.2 and Section 7.4 hereof, to
receive a lump sum cash settlement of such benefit. If a Participant is
eligible for a Normal Retirement Pension or Early Retirement Pension, the
Actuarial Equivalent lump sum value of any benefit for purposes of this
paragraph shall be determined as of the first day of the month in which such
Normal Retirement Pension or Early Retirement Pension payments would otherwise
begin. An election to receive the lump sum cash settlement described in this
paragraph shall be made at the same time as the Participant makes an election
as to his form of Pension pursuant to the provisions of Section 7.2 and Section
7.4. If a Participant is eligible for a Deferred Vested Pension, an
-35-
<PAGE> 41
election to receive the lump sum cash settlement described in this paragraph
shall be made at the same time as the Participant makes an election as to his
form of Pension pursuant to the provisions of Section 7.2 and Section 7.4. For
purposes of any Participant eligible for a Deferred Vested Pension, the
Actuarial Equivalent lump sum value shall be determined as of the September 1
next following the date the Participant elects to receive such lump sum cash
settlement. Notwithstanding the immediately preceding sentence, with respect
to any Participant who is eligible for a Deferred Vested Pension and whose
employment terminates in April, May, June, July, or August, the Actuarial
Equivalent lump sum value may not be determined as of a date that is prior to
the second September 1 following the date such Participant's employment
terminates.
Any lump sum cash settlement payable pursuant to the
provisions of this Section 6.4 shall be paid to such Participant as soon as
reasonably practicable after the date as of which the Actuarial Equivalent lump
sum value is determined.
If the nonforfeitable Accrued Retirement Pension of a
former Employee or Participant is zero, such former Employee or Participant
shall be deemed to have received distribution of his entire vested Accrued
Retirement Pension under the Plan, in lieu of all other benefits under the
Plan, as of the date of his termination of employment with the Employer (and
any other Related Company) and he shall cease to be a Participant under the
Plan as of such date.
Section 6.5 - Employment Past Normal Retirement Date
- ----------------------------------------------------
Notwithstanding any other provision of the Plan to
the contrary, a Participant who continues in employment with an Employer or a
Related Company after his Normal Retirement Date shall be eligible for his
benefit payments for any month in which he is employed for less than 40 hours
or such other amount of time that does not constitute Section 203(a)(3)(B)
service under ERISA and regulations issued thereunder. Any monthly payments
made pursuant to this Section shall be paid in accordance with the provisions
of the Plan otherwise applicable to determining the amount of his benefit
payments, the duration of such benefit payments, and the method of payment, and
as of the date the first such payment is made such Participant shall be deemed
to have retired and been reemployed under the Plan and shall thereafter be
subject to the provisions of Section 3.4(e).
-36-
<PAGE> 42
Section 6.6 - Limitations on Commencement
- -----------------------------------------
Notwithstanding any other provision herein to the
contrary, unless a Participant elects a later commencement or fails to properly
apply for commencement of his Pension, payment of a Participant's Pension shall
commence not later than the 60th day after the end of the Plan year in which
the Participant's Normal Retirement Date occurs, the tenth anniversary of the
date on which he first became an Active Participant, or the Participant's
Retirement or other termination of employment with his Employer and all Related
Companies, whichever is latest.
Notwithstanding any other provision in the Plan to
the contrary:
(a) Limits on Settlement Options: Distributions, if not made in a
lump-sum, shall be made only over one of the following periods
(or a combination thereof):
(1) the life of the Participant,
(2) the life of the Participant and his beneficiary,
(3) a period certain not extending beyond the life
expectancy of the Participant, or
(4) a period certain not extending beyond the joint and
last survivor expectancy of the Participant and his
beneficiary.
(b) Minimum Amounts to be Distributed: If the Participant's
entire interest is to be distributed in other than a lump-sum,
then the amount to be distributed each year shall be at least
an amount equal to the quotient obtained by dividing the
Participant's entire interest by the life expectancy of the
Participant or joint and last survivor expectancy of the
Participant and his beneficiary. Life expectancy and joint
and last survivor expectancy shall be computed by the use of
the return multiples contained in Section 1.72-9 of the Income
Tax Regulations. For purposes of this computation, life
expectancy may be recalculated no more frequently than
annually; however, the life expectancy of a non-spouse
beneficiary shall not be recalculated. If the Participant's
spouse is not his beneficiary, the method of distribution
selected shall assure that at least 50 percent of the present
value of the
-37-
<PAGE> 43
amount available for distribution is paid within the life
expectancy of the Participant.
(c) Distributions to 5-percent Owners: The entire interest of a
5-percent owner (as defined in Code Section 416(i) and
determined with respect to the Plan Year ending in the
calendar year in which such individual attains age 70-1/2)
shall be distributed or commence to be distributed, no later
than the first day of April following the calendar year in
which such individual attains age 70-1/2.
(d) Distributions to Non-5-percent Owners: Distribution to a
Participant other than a 5-percent owner shall commence no
later than the first day of April following the calendar year
in which the Participant attains age 70 1/2. Notwithstanding
the immediately preceding sentence, if the Participant attains
age 70 1/2 prior to January 1, 1988, and was not a five
percent owner at any time during the five plan year period
ending in the calendar year in which he attained age 70 1/2,
distribution shall commence no later than the first day of
April following the calendar year in which the later of his
termination of employment or attainment of age 70-1/2 occurs.
(e) Death Distribution Provisions: The following distribution
provisions shall apply in the event of a Participant's death:
(i) If the Participant dies after distribution of his
interest has commenced, the remaining portion of
such interest shall continue to be distributed at
least as rapidly as under the method of distribution
being used prior to the Participant's death.
(ii) If the Participant dies before distribution of his
interest commences, the entire interest shall be
distributed no later than 5 years after the
Participant's death, except to the extent that an
election is made to receive distributions in
accordance with (A) or (B) below:
(A) if any portion of the Participant's
interest is payable to a beneficiary,
distributions may be made in
-38-
<PAGE> 44
substantially equal installments over the
life or life expectancy of the beneficiary
commencing no later than 1 year after
the Participant's death;
(B) if the beneficiary is the Participant's
surviving spouse, the date distributions
are required to begin in accordance with
(i) above shall not be earlier than the
date on which the Participant would have
attained age 70-1/2, and, if the spouse
dies before payments begin, subsequent
distributions shall be made as if the
spouse had been the Participant.
(iii) For purposes of (ii) above, payments shall be
calculated by use of the return multiples specified
in Section 1.72-9 of the Income Tax Regulations.
Life expectancy of a surviving spouse may be
recalculated annually; however, in the case of any
other beneficiary, such life expectancy shall be
calculated at the time payment first commences
without further recalculation. For purposes of (i),
(ii), (iii) above, any amount paid to a child of the
Participant will be treated as if it had been paid
to the surviving spouse if the amount becomes
payable to the surviving spouse when the child
reaches the age of majority.
(f) Transitional Rule: Notwithstanding the above distribution
requirements, distribution on behalf of any Participant,
including a 5-percent owner, may be made in accordance with
all of the following requirements (regardless of when such
distribution commences):
(i) The distribution is one which would not have
disqualified the Plan under Code Section 401(a)(9)
as in effect prior to amendment by the Tax Equity
and Fiscal Responsibility Act of 1982.
(ii) The distribution is in accordance with a method of
distribution designated by the Participant whose
interest is being distributed or, if the Participant
is
-39-
<PAGE> 45
deceased, by a beneficiary of such Participant.
(iii) Such designation was in writing, was signed by the
Participant or the beneficiary, and was made before
January 1, 1984.
(iv) The Participant had accrued a benefit under the Plan
as of December 31, 1983.
(v) The method of distribution designated by the
Participant or the beneficiary specifies the time at
which distribution will commence, the period over
which distributions will be made, and in the case of
any distribution upon the Participant's death, the
beneficiaries of the Participant listed in order of
priority.
Unless paid to a surviving spouse under a qualified joint and
survivor annuity, the method of distribution selected must
assure that at least 50 percent of the present value of the
amount available for distribution is paid within the life
expectancy of the Participant.
A distribution upon death shall not be covered by
this transitional rule unless the information in the
designation contains the required information described above
with respect to the distributions to be made upon the death of
the Participant.
For any distribution which commences before January
1, 1984, but continues after December 31, 1983, the
Participant, or the beneficiary, to whom such distribution is
being made, will be presumed to have designated the method of
distribution under which the distribution is being made if the
method of distribution was specified in writing and the
distribution satisfies the requirements in (i) and (v) above.
If a designation is revoked any subsequent
distribution shall satisfy the requirements of Code Section
401(a)(9), as amended. Any changes in the designation shall
be considered to be a revocation of the designation. However,
the mere substitution or addition of another beneficiary (one
not named in the designation) under the designation shall not
be considered to be a revocation of the designation, if such
-40-
<PAGE> 46
substitution or addition does not alter the period over which
distributions are to be made under the designation, directly
or indirectly.
(g) Distributions required under this Section shall be made in
accordance with Section 401(a)(9) of the Code and the
regulations issued thereunder, including the minimum
distribution incidental benefit requirements of Treas. Reg.
1.401(a)(9)-2. The provisions of this subsection shall
prevail over any other provision of the Plan which is
inconsistent therewith.
Section 6.7 - Miscellaneous
- ---------------------------
Benefit payments shall commence on the applicable
date specified herein; provided, however, that if the amount of payment
required cannot be ascertained by such date, a payment retroactive to such date
may be made no later than sixty (60) days after the earliest date on which the
amount of payment can be ascertained. If an appropriate application for
commencement of the payment of a Pension or other benefit hereunder is not
received by the Committee within five (5) years after the date the benefit
would normally commence, such benefit shall be forfeited as the end of the Plan
Year in which such fifth anniversary occurs. If, following such a forfeiture,
the Participant, his Eligible Spouse, his Contingent Annuitant, or his
Beneficiary or his beneficiary makes appropriate application for a benefit
which the Committee determines such person would have been entitled to upon
prior timely application, the Committee shall authorize the benefit to be
reinstated and payment to commence as of the first day of the month coincident
with or next following such determination.
-41-
<PAGE> 47
ARTICLE VII
NORMAL FORM OF PAYMENT AND OPTIONAL BENEFITS
--------------------------------------------
Section 7.1 - Normal Form of Pension Payment
- --------------------------------------------
The normal form of payment of the Pension as
determined under the applicable Section of Article V shall be monthly payments
made for the life of the Participant, with no further payments made after his
death. Pensions shall be paid in the normal form for Participants who, on the
date Pension payments commence, (i) do not have an Eligible Spouse, or (ii)
have revoked the Qualified Joint and Survivor Pension and have not made an
election of any optional form of Pension pursuant to Section 7.3.
Section 7.2 - Qualified Joint and Survivor Pension
- --------------------------------------------------
If on the date a Participant's Pension payment
commences he has an Eligible Spouse, such Pension shall be paid in the form of
a Qualified Joint and Survivor Pension which is Actuarially Equivalent to the
Participant's Pension payable in the normal form of payment. Under the
Qualified Joint and Survivor Pension, a reduced amount shall be paid to the
Participant for his lifetime, and such Eligible Spouse, if surviving at the
Participant's death, shall be entitled to receive thereafter a lifetime
survivorship Pension in a monthly amount equal to fifty percent (50%) of the
reduced monthly Pension which had been payable to the Participant. The last
payment of the Qualified Joint and Survivor Pension shall be made as of the
first day of the month in which the death of the later to survive of the
Participant and his Eligible Spouse occurs. In lieu of the Qualified Joint and
Survivor Pension, such a Participant may elect in writing, prior to the
commencement of his Pension payments, to receive the normal form of payment or
an optional form of payment under Section 7.3 in accordance with the conditions
set forth in Section 7.4.
Section 7.3 - Optional Forms of Pension
- ---------------------------------------
In lieu of the normal form of Pension payable to a
Participant, a Participant may elect to receive benefits of Actuarial
Equivalent value as described below. The election of an optional form of
Pension shall be in writing on a form approved by the Committee and, if in
accordance with the conditions set forth in Section 7.4 below, shall become
effective only upon the date, if at all, that such Pension commences, and in no
event prior to the date the written election is filed with the Committee.
-42-
<PAGE> 48
(a) PERIOD-CERTAIN AND LIFE OPTION - A reduced Pension payable
until death and, if the Participant's death occurs prior to
his having received sixty (60) or one hundred twenty (120)
monthly reduced Pension payments (as elected by the
Participant), payment of the reduced Pension will be continued
monthly in the same amount to the Beneficiary designated by
the Participant until sixty (60) or one hundred twenty (120)
monthly Pension payments, as the case may be, have been made
in total to the Participant and Beneficiary.
(b) CONTINGENT ANNUITANT OPTION - A reduced Pension payable during
his life and, following his death, payment of the Pension in
an amount equal either to fifty percent (50%), sixty-six and
two-thirds percent (66 2/3%), or one hundred percent (100%)
(as elected by the Participant) of the Participant's reduced
Pension shall continue to the Contingent Annuitant designated
by the Participant, if surviving, with the last payment to be
made as of the first day of the month in which the death of
the later to survive of the Participant and his Contingent
Annuitant occurs.
Notwithstanding any provision hereof to the contrary,
if the Contingent Annuitant (or Beneficiary) is other than the Participant's
Eligible Spouse and if the value of the Participant's benefit under any of the
above options will be less than fifty-one percent (51%) of the value of his
single-life Pension, the optional benefit will be adjusted so that the value of
the Participant's benefit under the option will be equal to fifty-one percent
(51%) of the value of the Participant's single-life Pension.
Section 7.4 - Conditions Regarding Election of Optional Forms of Pension
- ------------------------------------------------------------------------
Any election of an optional form of Pension provided
under this Plan shall be subject to the following conditions:
(a) An election of an optional form of Pension or a designation of
Contingent Annuitant shall become effective only if it shall
be filed with the Committee in writing on a form approved by
the Committee during the "applicable election period," as
hereinafter defined, in accordance with the provisions of this
Section 7.4. Any attempted election of an optional form of
Pension or designation of a Contingent Annuitant not
-43-
<PAGE> 49
meeting the conditions of this Section 7.4 shall be void for
all purposes.
(b) To elect an option (and/or to designate a Contingent
Annuitant), a Participant shall complete a form provided for
this purpose, and with such form shall furnish proof
satisfactory to the Committee of the age of a Contingent
Annuitant.
(c) With respect to any Participant who has an Eligible Spouse on
the date his Pension payment commences, any election of an
optional form of Pension or designation of Contingent
Annuitant shall, other than an election of the optional form
of Pension described in Section 7.3(b) with the Eligible
Spouse as Contingent Annuitant, be effective only if:
(i) The Participant's Eligible Spouse consents in
writing to such election or change;
(ii) Such election designates a Contingent Annuitant or
a form of payment which may not be changed without
the consent of the Eligible Spouse (unless any
written consent of the Eligible Spouse to the
designation of a particular Contingent Annuitant
or a different form of payment expressly permits
changes by the Participant without any requirement
of further consent by the Eligible Spouse);
(iii) The written consent of the Eligible Spouse
acknowledges the effect of such election and is
witnessed by either a representative of the Plan
Administrator or a notary public.
The foregoing requirements for a valid spousal consent need
not be met if it is established to the satisfaction of the
Plan Administrator that the required spousal consent cannot be
obtained, because the spouse cannot be located, because there
is no spouse, or because of such other circumstances as are
described in the Code and regulations promulgated thereunder.
(d) A Participant may revoke any election described in this
Section 7.4 at any time during the applicable election period.
-44-
<PAGE> 50
(e) The "applicable election period" described in this Section 7.4
shall mean the 90-day period ending on the date on which
Pension payments are to commence, or, if Section 6.4 applies,
the date as of which a lump sum cash settlement is to be paid.
(f) The plan administrator shall provide each Participant no less
than 30 days and no more than 90 days prior to the Pension
commencement date a written explanation of: (i) the terms and
conditions of a Qualified Joint and Survivor Annuity; (ii) the
Participant's right to make and the effect of an election to
waive the Qualified Joint and Survivor Annuity form of
benefit; (iii) the rights of a Participant's spouse; (iv) the
right to make, and the effect of, a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity;
(v) the relative values of the various optional forms of
pension benefit payment under the plan; (vi) any notice or
communication required by the Internal Revenue Service; and
(vii) an election form.
(g) An election made pursuant to this Section 7.4 shall become
inoperative if the death of the Participant or the Contingent
Annuitant occurs before the election of the optional form of
Pension becomes effective.
(h) If the Contingent Annuitant dies after the election of an
optional form of Pension under Section 7.3(b) becomes
effective but before the death of the retired Participant,
such Participant shall continue to receive the reduced Pension
payable to him in accordance with such election.
(i) If the Participant shall become reemployed by an Employer or a
Related Company after the election has become effective and
the provisions of Section 3.4(e) apply, his election shall
nevertheless continue to be effective. If the Participant
shall become reemployed by an Employer or a Related Company
after the election has become effective and the provisions of
Section 6.3 apply, as of the effective date of such
reemployment, his election shall become inoperative.
Any optional form of Pension provided under this Plan
through an insurance or annuity contract shall be
-45-
<PAGE> 51
subject to the conditions contained in or otherwise applicable to such
insurance or annuity contract.
-46-
<PAGE> 52
ARTICLE VIII
PRE-RETIREMENT DEATH BENEFITS
-----------------------------
Section 8.1 - Eligibility for Spouse Survivor Benefit
- -----------------------------------------------------
If a Participant dies after becoming entitled to a
vested benefit under the Plan, and if such death occurs during such
Participant's "Coverage Period," as defined in Section 8.5, his surviving
Eligible Spouse, if any, shall be eligible for a survivor benefit as provided
in this Article.
Section 8.2 - Spouse Survivor Benefit Amount
- --------------------------------------------
The monthly survivor benefit payable to the Eligible
Spouse of such a deceased Participant shall be an amount determined as follows:
(a) If the Participant dies while employed by the Employer or a
Related Company and after attaining both age 55 and 15 years
of Service or after attaining his Normal Retirement Date, the
amount of such monthly survivor benefit shall be equal to the
amount his Eligible Spouse would have been entitled to receive
if such Participant had retired under the Qualified Joint and
Survivor Pension on the day immediately preceding the date of
his death, computed based upon his Credited Service on the
date of his death and the benefit formula in effect on the
last day he was an Active Participant and reduced in
accordance with Section 8.8, if applicable.
(b) If the Participant dies while employed by the Employer or a
Related Company and prior to attaining age 55 and after
attaining 15 years of Service, the amount of such monthly
survivor benefit shall be equal to the amount his Eligible
Spouse would have been entitled to receive if such Participant
had terminated employment with the Employer or Related Company
on the date of his death, had survived to age 55, and had
retired under the Qualified Joint and Survivor Pension at age
55, computed based upon his Credited Service on the date of
his death and the benefit formula in effect on the last day he
was an Active Participant and reduced in accordance with
Section 8.8, if applicable.
(c) If the Participant dies prior to his Normal Retirement Date
while employed by the Employer or
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<PAGE> 53
a Related Company after attaining age 55 but prior to
attaining 15 years of Service, the amount of such monthly
survivor benefit shall be equal to the amount his Eligible
Spouse would have been entitled to receive if such Participant
had terminated employment with the Employer or Related Company
on the date of his death, had survived to the earliest later
date on which he would have either attained his Normal
Retirement Date or completed 15 years of Service had his
Continuous Employment continued from the date of his death
until such earliest later date, had received credit for years
of Service from the date of his death until such earliest
later date solely for purposes of determining whether he would
have been eligible for commencement of his Deferred Vested
Pension benefit prior to his Normal Retirement Date, and had
retired under the Qualified Joint and Survivor Pension on such
earliest later date, computed based upon his Credited Service
on the date of his death and the benefit formula in effect on
the last day he was an Active Participant and reduced in
accordance with Section 8.8, if applicable.
(d) If the Participant dies while employed by the Employer or a
Related Company and prior to both attaining age 55 and 15
years of Service, the amount of such monthly survivor benefit
shall be equal to the amount his Eligible Spouse would have
been entitled to receive if such Participant had terminated
employment with the Employer or Related Company on the date of
his death, had survived to a later date on which he would have
both attained age 55 and 15 years of Service had his
Continuous Employment continued from the date of his death
until such later date, had received credit for years of
Service from the date of his death until such later date
solely for purposes of determining whether he would have been
eligible for commencement of his Deferred Vested Pension
benefit prior to his Normal Retirement Date, and had retired
under the Qualified Joint and Survivor Pension on such later
date, computed based upon his Credited Service on the date of
his death and the benefit formula in effect on the last day he
was an Active Participant and reduced in accordance with
Section 8.8, if applicable.
(e) If the Participant dies while not employed by the Employer or
a Related Company and after the
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<PAGE> 54
attaining age 55 and 15 years of Service or after his Normal
Retirement Date, the amount of such monthly survivor benefit
shall be equal to the amount his Eligible Spouse would have
been entitled to receive if such Participant had retired under
the Qualified Joint and Survivor Pension on the day
immediately preceding the date of his death, computed based
upon his Credited Service on the date of his death and the
benefit formula in effect on the last day he was an Active
Participant and reduced in accordance with Section 8.8, if
applicable.
(f) If the Participant dies prior to his Normal Retirement Date
while not employed by the Employer or a Related Company and
prior to attaining age 55 and 15 years of Service, the amount
of such monthly survivor benefit shall be equal to the amount
his Eligible Spouse would have been entitled to receive if
such Participant had survived to age 65 and had retired under
the Qualified Joint and Survivor Pension at age 65, computed
based upon his Credited Service on the date of his death and
the benefit formula in effect on the last day he was an Active
Participant and reduced in accordance with Section 8.8, if
applicable.
Section 8.3 - Spouse Survivor Benefit Payments
- ----------------------------------------------
A survivor benefit shall be paid to the surviving
Eligible Spouse commencing with the month after the month in which the
Participant is deemed to have retired under the Qualified Joint and Survivor
Pension under clause (a), (b), (c), (d), (e), or (f) above for purposes of
determining the amount of the survivor benefit, whichever is applicable, and
shall be payable monthly thereafter during the life of the Eligible Spouse, the
last payment being for the month in which the death of the Eligible Spouse
occurs. In the event of the death of the Eligible Spouse prior to the
commencement of the payment of the spouse survivor benefit, no benefit shall be
payable pursuant to the provisions of this Article with respect to such
deceased Participant.
Section 8.4 - Effect of Payment Under Article VII
- -------------------------------------------------
Notwithstanding any other provision herein to the
contrary, in the event a benefit is payable with respect to any deceased
Participant pursuant to Article VII, no benefit shall be payable pursuant to
any
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<PAGE> 55
provision of this Article with respect to such deceased Participant.
Section 8.5 - Coverage Period
- -----------------------------
A Participant's "Coverage Period" shall be the total
of all periods of time subsequent to August 22, 1984 during which the
Participant (i) has a vested benefit under the Plan and (ii) has a living
Eligible Spouse, and (iii) during which no rejection of the spouse survivor
benefit is in effect pursuant to Section 8.6, but excluding, in any event, the
period beginning on the date the Participant begins to receive a Pension under
Article VII.
Section 8.6 - Rejection of Spouse Survivor Benefit
- --------------------------------------------------
Notwithstanding anything to the contrary contained in
this Article, a Participant who has an Eligible Spouse may reject the spouse
survivor benefit payable pursuant to the preceding provisions of this Article,
or revoke a prior such rejection, by delivery of notice to such effect in
writing to the Committee on the appropriate form provided therefor by the
Committee at any time after the earlier of the first day of the Plan Year
during which he attains age 35 or the date he terminates employment with the
Employer (and any Related Company); provided, however, that in the case of a
Participant who rejects the spouse survivor benefit prior to the first day of
the Plan Year in which he attains age 35, such rejection shall apply only with
respect to benefit accruals prior to such termination of employment. Upon the
date of delivery of notice of any such rejection of the spouse survivor
benefit, eligibility of the rejecting Participant's Eligible Spouse for such
benefit shall terminate. The rejection of the spouse survivor benefit payable
pursuant to the preceding provisions of this Article VIII must include a
written consent of the Participant's Eligible Spouse, unless a Plan
representative finds that such consent cannot be obtained because the spouse
cannot be located or because of other circumstances set forth in Section
401(a)(11) of the Code and regulations issued thereunder. Such spousal consent
shall acknowledge the effect of such rejection and shall be witnessed by a
notary public. A Participant may subsequently file a revocation of a rejection
under this Section on the appropriate form provided therefor by the Committee,
and such revocation shall be effective upon the date of delivery of such notice
thereof to the Committee.
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<PAGE> 56
Section 8.7 - Death Benefit Where Spouse Survivor Benefit Rejected or Eligible
- ------------------------------------------------------------------------------
Participant Has No Spouse
- -------------------------
(a) If a Participant with respect to whom a spouse survivor
benefit would be payable pursuant to the preceding Sections of
this Article if such Participant had an Eligible Spouse on the
date of his death and who either has no Eligible Spouse on the
date of his death or has validly rejected the spouse survivor
benefit pursuant to Section 8.6 dies under conditions in which
such spouse survivor benefit would be payable but for either
the non-existence of an Eligible Spouse or rejection of the
spouse survivor benefit in accordance with Section 8.6, a
death benefit computed in accordance with subsection (c) of
this Section shall be payable as hereinafter provided in this
Section.
(b) According to uniform rules and procedures prescribed by the
Committee, a Participant who is or may become eligible for the
benefit provided pursuant to this Section may designate either
(i) one or more members of his immediate family, including his
Eligible Spouse, or (ii) an estate, a trust, or other entity
as his beneficiary(s), for purposes of this Section only, to
receive such death benefit. In the event such a Participant
fails to designate such a beneficiary or no such beneficiary
survives the Participant or is in existence at the
Participant's death, the beneficiary shall be the
Participant's estate.
(c) Any death benefit payable pursuant to this Section shall be an
amount equal to 50% of monthly amount of the Participant's
Accrued Retirement Pension as of the date of his death,
unreduced for early commencement thereof if applicable,
payable for 60 consecutive monthly installments commencing as
of the first day of the month next following the date of the
Participant's death. If the Participant has designated
multiple beneficiaries to receive such benefit, such benefit
will be divided between or among such beneficiaries living on
the date of the Participant's death proportionately as
specified by the Participant and in accordance with uniform
rules prescribed by the Committee for dividing such benefit.
-51-
<PAGE> 57
Section 8.8 - Reserved
- ----------------------
Section 8.9 - Rejection by Surviving Eligible Spouse of Spouse Survivor Benefit
- -------------------------------------------------------------------------------
and Election of Benefit Under Section 8.7
- -----------------------------------------
Notwithstanding anything to the contrary contained in
this Article, according to uniform rules and procedures prescribed by the
Committee, the surviving Eligible Spouse of a deceased Participant who is
entitled to a survivor benefit as provided in Sections 8.1 through 8.5 may
elect to receive the death benefit otherwise payable pursuant to Section 8.7
determined as if the spouse survivor benefit had been rejected pursuant to
Section 8.6 and the Eligible Spouse had been the sole named beneficiary under
Section 8.7 in lieu of the survivor benefit otherwise payable to the surviving
Eligible Spouse pursuant to Sections 8.1 through 8.5.
Section 8.10 - Payment of Small Benefits
- ----------------------------------------
If any benefit payable pursuant to this Article
shall, prior to the commencement or distribution thereof have an Actuarial
Equivalent lump sum value not in excess of $3,500 (and did not exceed $3,500 at
the time of any prior distribution), the Plan Administrator shall direct the
Trustee to make a lump sum cash settlement of the Actuarial Equivalent lump sum
value of such benefit as soon as practicable after the Plan Administrator is
notified of the Participant's death.
If any benefit payable pursuant to this Article
shall, prior to the commencement or distribution thereof have an Actuarial
Equivalent lump sum value greater than $3,500 (or greater than $3,500 at the
time of any prior distribution) but not in excess of $5,250, the Eligible
Spouse or other beneficiary, as the case may be, may elect to receive a lump
sum cash settlement of the Actuarial Equivalent lump sum value of such benefit,
which shall be paid as soon as practicable after the Plan Administrator
receives written notice of such election.
-52-
<PAGE> 58
ARTICLE IX
TOP HEAVY PROVISIONS
--------------------
Section 9.1 - Applicability of Top Heavy Plan Provisions
- --------------------------------------------------------
Notwithstanding any other provision of the Plan to
the contrary, in the event the Plan is deemed to be a top heavy plan for any
Plan Year beginning after December 31, 1983, the provisions of this Article
with respect to vesting, benefit accrual, maximum retirement benefits, and
maximum compensation shall be applicable with respect to such Plan Year;
provided, however that no Participant's Accrued Retirement Pension as of the
date the Plan becomes a top heavy plan shall be reduced thereby. If the Plan
is determined to be a top heavy plan and upon a subsequent determination date
is determined to no longer be a top heavy plan, the regular provisions of the
Plan regarding such matters shall again become applicable as of such subsequent
determination date; provided, however, that in the event such prior vesting
provisions do again become applicable, (i) the nonforfeitable percentage of any
Participant in his Accrued Retirement Pension as of such subsequent
determination date shall not be reduced as a result thereof, and (ii) any
Participant with five years of Service may elect to continue to have his
nonforfeitable interest in his accrued benefit determined in accordance with
the vesting schedule specified in Section 9.3.
Section 9.2 - Top Heavy Plan Definitions
- ----------------------------------------
For purposes of this Article, the following
definitions shall apply in addition to those set forth in the Plan:
(a) The term "annual compensation" shall mean the aggregate
earnings of an Active Participant paid to him by the Employer
or a Related Company during a Plan Year beginning after
December 31, 1983, and with respect to which the Plan is
determined to be a top heavy plan.
(b) The term "determination date" shall mean the last day of the
immediately preceding plan year.
(c) The term "key employee" shall mean a person who is a key
employee with respect to the Employer pursuant to the
provisions of Section 416(i)(1) of the Code or a beneficiary
of such a person.
(d) The term "permissive aggregation group" shall mean the group
of tax-qualified pension plans maintained by the Employer or a
Related Company
-53-
<PAGE> 59
consisting of the plans in the required aggregation group and
any other plan or plans selected by the Company for permissive
aggregation; provided, however, that the entire such group of
plans, when considered as a group, satisfies the requirements
of Section 401(a)(4) and Section 410 of the Code.
(e) The term "required aggregation group" shall mean the group of
tax-qualified pension plans maintained by the Employer or a
Related Company consisting of each plan in which a key
employee participates and each other plan which enables a plan
in which a key employee participates to meet the requirements
of Section 401 (a)(4) or Section 410 of the Code.
(f) The term "super top heavy group" shall mean a required or
permissive aggregation group that, as of the determination
date, would satisfy the definition of top heavy group under
paragraph (i) of this Section with "90 percent" substituted
for "60 percent" each place where "60 percent" appears in such
definition.
(g) The term "super top heavy plan" shall mean a plan that, as of
the determination date, would satisfy the definition of top
heavy plan under clause (i) or clause (ii) of paragraph (j) of
this Section with "90 percent" substituted for "60 percent"
each place where "60 percent" appears in such definition. A
plan is also a super top heavy plan if it is included in a
super top heavy group unless the plan is not otherwise a super
top heavy plan and is not required to be included in the
aggregation group under the definition of required aggregation
group. Notwithstanding the foregoing if a plan is included in
a required or permissive aggregation group which is not a
super top heavy group, such plan shall not be a super top
heavy plan.
(h) The term "testing period" shall mean the period of consecutive
years of Service, not in excess of five, during which an
Active Participant has the greatest aggregate compensation
from the Employer or a Related Company, excluding, however,
any year which begins after the close of the last year in
which the Plan was a top heavy plan.
(i) The term "top heavy group" shall mean a required or permissive
aggregation group if the sum, as of
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<PAGE> 60
the determination date of the present value of the cumulative
accrued benefits for key employees under all defined benefit
plans included in such group and the aggregate of the account
balances of key employees under all defined contribution plans
included in such group exceeds 60 percent of a similar sum
determined for all employees covered by the plans included in
such group.
(j) The term "top heavy plan" shall mean (i) a defined benefit
plan with respect to which, as of a determination date, the
present value of the cumulative accrued benefits under the
plan for key employees exceeds 60 percent of the present value
of the cumulative accrued benefits under the plan for all
employees, or (ii) a defined contribution plan with respect to
which, as of the determination date, the aggregate of the
accounts of key employees exceeds 60 percent of the aggregate
of the accounts of all employees covered under the Plan, with
the accounts valued as of the most recent valuation date
coinciding with or preceding the determination date, and (iii)
a plan included in a required aggregation group which is a top
heavy group. Notwithstanding the foregoing, if a plan is
included in a required or permissive aggregation group which
is not a top heavy group, such plan shall not be a top heavy
plan. For purposes of this paragraph, the present value of
the cumulative accrued benefits under the Plan shall be
determined as of the date Plan costs for minimum funding
purposes are computed, and shall be calculated using the
actuarial assumptions otherwise employed under the Plan for
actuarial valuations. For purposes of this paragraph
"cumulative accrued benefits" and "the aggregate of the
accounts" shall have the meanings provided under and be
determined in accordance with Section 416 of the Code and
regulations and rulings thereunder.
Section 9.3 - Top Heavy Vesting
- -------------------------------
Except in cases where the applicable terms of the
Plan in effect immediately prior to the effective date of operation of this
Section would be more favorable to the Participant, in the event the Plan is
determined to be a top heavy plan, the nonforfeitable right to a percentage of
his Accrued Retirement Pension of any non-key employee who is an Active
Participant during a Plan Year in
-55-
<PAGE> 61
which the Plan is a top heavy plan shall be ascertained in accordance with the
vesting schedule hereinafter set forth.
Vesting Schedule
----------------
<TABLE>
<CAPTION>
Years of Service Nonforfeitable Percentage
- ---------------- -------------------------
<S> <C>
Less than 2 years 0
2 years but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years or more 100%
</TABLE>
Section 9.4 - Minimum Top Heavy Benefit
- ---------------------------------------
In the event the Plan is determined to be a top heavy
plan, the annual Normal Retirement Pension under the Plan of any non-key
employee who is an Active Participant during a Plan Year in which the Plan is a
top heavy plan, payable in the form of a single life annuity beginning at his
Normal Retirement Date, shall not be less than such Participant's average
compensation for years in the testing period multiplied by the lesser of:
(a) Two percent multiplied by his Credited Service; or
(b) 20 percent.
For purposes of this Section, "Credited Service" shall include only Credited
Service completed after December 31, 1983 and shall not include any such
Credited Service if the Plan was not a top heavy plan with respect to the Plan
Year in which such Credited Service was earned.
Section 9.5 - Adjustment of Maximum Retirement Benefits
- -------------------------------------------------------
In the event the Plan is determined to be a top heavy
plan for any Plan Year, for purposes of Article X 1.00 shall be substituted for
1.25 in the denominations of the defined benefit plan fraction and the defined
contribution plan fraction, and for purposes of applying Section
415(e)(6)(B)(i) of the Code to the Plan, $41,500 shall be substituted for
$51,875, except that such substitutions shall not be applied if for such Plan
Year (i) the Plan is not a super top heavy plan and (ii) the requirements of
Section 416(h)(2) of the Code are met.
Section 9.6 - Maximum Compensation Limitation
- ---------------------------------------------
For the Plan Years beginning prior to January 1,
1989, in the event the Plan is determined to be
-56-
<PAGE> 62
a top heavy plan for any Plan Year, the annual compensation of any Participant
to be taken into account for Plan purposes for such Plan Year shall not exceed
the first $200,000 thereof; provided, however, that such limitation shall be
adjusted automatically each Plan Year to the amount prescribed by the Secretary
of the Treasury with respect to such Plan Year pursuant to the provisions of
Section 416 (d)(2) of the Code.
-57-
<PAGE> 63
ARTICLE X
MAXIMUM RETIREMENT BENEFITS
---------------------------
Section 10.1 - Definitions
- --------------------------
For purposes only of this Article, the following
definitions shall apply in addition to those set forth in the Plan:
(a) The term "employer" shall mean the Company and any entity
required to be aggregated with the Company under Section 415
of the Code.
(b) A "limitation year" shall mean a calendar year or such other
12-month period elected by the Company pursuant to Internal
Revenue Service regulations and rulings under Section 415 of
the Code, or applicable portion thereof, commencing on or
after January 1, 1976, and each such calendar year or other
such 12-month period thereafter.
(c) A Participant's "annual retirement benefit" shall mean the
retirement benefit which is payable to him annually under the
Plan, multiplied by the appropriate factor if the
Participant's retirement benefit is to be paid in a manner
other than to the Participant for life only or under the
Qualified Joint and Survivor Pension, which converts such
benefit to a benefit payable annually in the form of a
straight life annuity. Such factor shall be determined using
an interest rate assumption that is not less than the greater
of five percent or the rate specified in the Plan, if any,
subject to the provisions of the applicable regulations under
the Code.
(d) A Participant's "projected annual retirement benefit" shall
mean the annual retirement benefit which would be payable to
such Participant under the Plan based on the assumptions that
he continues his employment as an Active Participant until his
Normal Retirement Date and that his compensation for the
limitation year continues at the same rate until his Normal
Retirement Date, and on the basis of the federal Social
Security Act as in effect on the last day of the limitation
year. A Participant's "aggregate projected annual retirement
benefit" shall include his projected annual retirement benefit
under the Plan and his projected annual
-58-
<PAGE> 64
retirement benefit, if any, under any other defined benefit
plan maintained by an employer.
(e) A Participant's "compensation" shall mean his wages, salaries,
fees for professional service, and other amounts received for
personal services actually rendered in the course of
employment with an employer, excluding, however, contributions
made by an employer to a plan of deferred compensation to the
extent that, before the application of the limitations of
Section 415 of the Code to such plan, the contributions are
not includible in the gross income of the Participant for the
taxable year in which contributed, contributions made by an
employer on his behalf to a simplified employee pension
described in Section 408(k) of the Code, any distributions
from a plan of deferred compensation (except amounts received
pursuant to an unfunded non-qualified plan in the year such
amounts are includible in the gross income of the
Participant), amounts received from the exercise of a
non-qualified stock option or when restricted stock or other
property held by the Participant becomes freely transferable
or is no longer subject to substantial risk of forfeiture,
amounts received from the sale, exchange, or other disposition
of stock acquired under a qualified stock option, and any
other amounts which receive special tax benefits, such as
premiums for group term life insurance (but only to the extent
that the premiums are not includible in gross income).
(f) The limitations contained in this Article shall be applicable
only with respect to benefits provided pursuant to defined
contribution plans and defined benefit plans specified in
Section 415(k) of the Code.
Section 10.2 - Maximum Defined Benefit Limitation
- -------------------------------------------------
Subject to the provisions of Section 10.3, the
maximum aggregate annual retirement benefit to which an Participant is entitled
under the Plan and any other defined benefit plan maintained by an employer may
not at any time within a limitation year exceed the lesser of:
(a) 100% of the Participant's average annual compensation for his
highest three consecutive Plan Years; or
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(b) The following dollar limitation, based upon the age of the
Participant at the time he begins receiving benefits under the
Plan:
(i) as to each Participant who begins receiving
benefits upon attaining social security retirement
age: $90,000; provided, however, that such amount
shall be adjusted to equal the maximum permissible
dollar limitation for such purpose as determined
by the Commissioner of Internal Revenue (any
adjustment of the Ninety Thousand Dollar ($90,000)
limit shall become effective on the first day of
the first limitation year beginning on or after
the January 1 effective date of such adjustment);
(ii) as to each Participant who begins receiving
benefits before attaining social security
retirement age: the amount that would be payable
to such Participant annually in the form of a
straight life annuity based upon such
Participant's age at the time he begins receiving
benefits, which amount is the actuarial equivalent
of $90,000 (as adjusted in the manner provided for
in paragraph (b)(i) of this Section) payable
annually in the form of a straight life annuity
commencing at social security retirement age;
provided however, that the amount determined
pursuant to this paragraph (b)(ii) with respect to
any Participant shall not be less than the amount
such Participant could have received had his
employment covered under the Plan terminated on
the last day of the last limitation year ending
prior to January 1, 1989 under the terms of the
Plan then in effect;
(iii) as to each Participant who begins receiving
benefits after attaining social security
retirement age: the amount that would be payable
annually to such Participant in the form of a
straight life annuity based upon such
Participant's age at the time he begins receiving
benefits, which amount is the actuarial equivalent
of $90,000 (as adjusted in the manner described in
paragraph (b)(i) of this Section) payable annually
in the form of a
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straight life annuity commencing at social security
retirement age;
multiplied by the following:
(c) The percentage determined by dividing the number of years of
participation he will have as of the end of the limitation
year by ten, if the Participant will have credit for less than
ten years of participation at that time.
For limitation years beginning before January 1, 1995, for purposes of
computing actuarially equivalent limitation amounts under paragraph
(b)(ii) above, an interest rate assumption that is not less than the
greater of 5% or the rate specified in the Plan, if any, shall be
assumed, subject to the provisions of applicable regulations under the
Code. For purposes of computing actuarially equivalent limitation
amounts under paragraph (b)(iii) above, an interest rate assumption
that is not greater than the lesser of 5% or the rate specified in the
Plan, if any, shall be assumed, subject to the provisions of
applicable regulations under the Code.
For limitation years beginning after December 31, 1994, for purposes
of computing actuarially equivalent amounts under paragraph (b)(ii)
above, the interest rate assumption shall not be less than the greater
of five percent (5%) or the rate specified in the Plan; provided,
however, that for purposes of adjusting the benefit or limitation of
any form of benefit subject to Section 417(e)(3), the applicable
interest rate (as defined in Section 417(e)(3)) shall be substituted
for 5 percent. For purposes of adjusting any benefit under subsection
(b)(iii), the interest rate assumption shall not be more than the
lesser of five percent (5%) or the rate specified in the Plan. For
purposes of adjusting any benefit or limitation under subsections
(b)(ii) or (b)(iii), the mortality table used shall be the table
prescribed by the Secretary of the Treasury. Such table shall be
based on the prevailing commissioners' standard table (described in
Section 807(d)(5)(A) of the Code) used to determine reserves for group
annuity contracts issued on the date the adjustment is being made
(without regard to any other subparagraph of Section 807(d)(5) of the
Code). Provided, however, that the application of this paragraph will
not result in any Participant's benefit being adjusted to an amount
that is less than the benefit that would be payable on behalf of such
Participant after taking into account the adjustments
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described in the immediately preceding paragraph as if such
Participant's employment covered under the Plan terminated on the last
day of the last limitation year ending before January 1, 1995.
For purposes of adjusting any benefit under subsections (b)(ii) or
(b)(iii), no adjustment in the Ninety Thousand Dollar ($90,000) limit
by the Secretary of the Treasury or his delegate shall be taken into
account before the year for which such adjustment first takes effect.
Section 10.3 - Exception
- ------------------------
If the Participant's annual retirement benefit in a
limitation year or any prior limitation year does not exceed $10,000 (adjusted
by the percentage shown in paragraph (c) of Section 10.2, if applicable), he
may receive the full amount of such benefit without regard to the limitation
specified in paragraph (a) of Section 10.2, provided that the Participant did
not participate at any time in any defined contribution plan maintained by an
employer.
Section 10.4 - Manner of Reduction
- ----------------------------------
If the Participant's aggregate annual retirement
benefit would exceed the limitations specified in Section 10.2 absent such
limitations, the reduction in the amount of his annual retirement benefit under
the Plan shall be equal to the amount by which his aggregate annual retirement
benefit would exceed the limitations of Section 10.2 multiplied by a fraction,
the numerator of which is his annual retirement benefit under the Plan
(determined without regard to the limitations of Section 10.2) and the
denominator of which is his aggregate annual retirement benefit under the Plan
and any other defined benefit plan maintained by an employer (determined
without regard to the limitations of Section 10.2 or any corresponding
limitation in any other defined benefit plan maintained by an employer).
Section 10.5 - Maximum Defined Benefit and Defined Contribution Limitation
- --------------------------------------------------------------------------
If a Participant also is covered by one or more
defined contribution plans maintained by an employer, the sum of the defined
benefit plan fraction described in paragraph (a) and the defined contribution
plan fraction described in paragraph (b) of this Section in no event shall
exceed 1.0 in any limitation year.
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(a) The defined benefit plan fraction (determined as of the close
of such limitation year) shall be a fraction the numerator of
which is the aggregate projected annual retirement benefit of
such Participant and the denominator of which is the lesser of
(i) the product of the dollar limitation in effect under
Section 415 (b)(1)(A) of the Code for such year multiplied by
1.25, or (ii) the product of the amount which may be taken
into account under Section 415(b)(1)(B) of the Code with
respect to such Participant for such year multiplied by 1.4.
(b) The defined contribution plan fraction shall be a fraction the
numerator of which is equal to the sum of:
(i) total employer contributions allocated to the
Participant's account or accounts maintained under
all such plans during each limitation year;
(ii) total forfeitures, if any, allocated to the
Participant's account or accounts maintained under
all such plans during each limitation year;
(iii) the amount of the Participant's own contributions
to all such plans during each (required to be
taken into account if for years prior to 1987)
limitation year; and
(iv) amounts allocated to an individual medical account
(as defined in Section 415(1)(1) of the Code) of
the Participant that is part of any defined
benefit plan maintained by an employer, and
amounts derived from contributions paid or accrued
after December 31, 1985 in taxable years ending
after such date attributable to post-retirement
medical benefits allocated to the separate account
of a Participant who is a key employee (as defined
in Section 419(A)(d)(3) of the Code) under any
welfare benefit fund (as defined in Section 419(e)
of the Code) maintained by an employer.
and the denominator of which is the sum of the lesser of the
following amounts determined for such limitation year and each
prior year of
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service with an employer: (1) the product of 1.25 multiplied
by the dollar limitation in effect under Section 415(c)(1)(A)
of the Code for such limitation year (determined without
regard to Section 415(c)(6) of the Code), or (2) the product
of 1.4 multiplied by the amount which may be taken into
account under Section 415(c)(1)(B) of the Code (or Sections
415(c)(7) or (8), if applicable) with respect to such
Participant for such limitation year; provided, however, that
with respect to limitation years beginning prior to January 1,
1976, the special transition rules set forth in Section
415(e)(4) of the Code shall apply and that at the Plan
Administrator's election, in applying the defined contribution
plan fraction for any limitation year ending after December
31, 1982, the amount taken into account as the denominator
hereunder with respect to each Participant for all limitation
years ending before January 1, 1983, may be determined in
accordance with the special transitional rule set forth in
Section 415(e)(6) of the Code.
If the sum of the defined benefit plan fraction and the defined
contribution plan fraction would exceed the limitation of 1.0, the
benefits otherwise payable to the Participant under the Plan shall be
reduced to the extent necessary to meet such limitation.
Section 10.6 - Protection of Pre-TEFRA Accrued Benefit
- ------------------------------------------------------
Notwithstanding any other provision of this Article
to the contrary, in the case of an Eligible Employee who became a Participant
in the Plan prior to January 1, 1983, if such Participant's Accrued Retirement
Pension under the Plan determined as of the close of the last limitation year
beginning before January 1, 1983 exceeds the limitations of Section 10.2, then,
until such Accrued Retirement Pension no longer exceeds the limitations of
Section 10.2, the limitations of Section 10.2 shall be equal to such Accrued
Retirement Pension, and, for purposes of Section 10.5, such Participant's
defined benefit plan fraction shall be computed by substituting for the words
"dollar limitation in effect under Section 415(b)(1)(A) of the Code for such
year" in paragraph (a) thereof, the following: "Participant's Accrued
Retirement Pension determined in accordance with Section 10.6." For purposes
of this Section, in determining any Accrued Retirement Pension, no change in
the terms and conditions of the Plan occurring after July 1, 1982 and no
cost-of-living adjustment occurring after July 1, 1982 shall be taken into
account.
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ARTICLE XI
PLAN FINANCING
--------------
Section 11.1 - Contributions
- ----------------------------
No contributions shall be required or permitted under
the Plan from any Participant. The Employers shall make contributions in such
amounts and at such times as in accordance with a funding method and policy to
be established by the Company which will be consistent with Plan objectives;
provided, however, that nothing contained herein or in the Trust Agreement
shall be deemed to require any Employer to make contributions under the Plan,
and no Employer shall be under any legal obligation to contribute to the Plan.
Forfeitures arising under the Plan because of severance of employment before a
Participant becomes eligible for a Pension, or for any other reason, shall be
applied to reduce the cost of the Plan, not to increase the benefits otherwise
payable to Participants.
Section 11.2 - Funding Policy and Method
- ----------------------------------------
The Company shall establish a funding policy and
method, and advise the Trustee thereof, so that the investment of the Trust
Fund can be appropriately coordinated with the Plan's financial needs (such as
the requirements for liquidity and investment performance to meet expected
benefit payments) both on a short-term and a long-term basis.
Section 11.3 - Trust Fund
- -------------------------
(a) All contributions made by Employers hereunder shall be paid to
the Trustee and deposited in the Trust Fund. The Trustee
shall invest the assets of the Trust Fund, including any
insurance or annuity contracts (individual or group)
comprising a part thereof, in accordance with the Trust
Agreement. Except as otherwise provided herein, all assets of
the Trust Fund allocable to the Plan, including investment
income, shall be retained for the exclusive benefit of
Participants and their Beneficiaries, shall be used to pay
benefits to such persons or to pay Plan expenses to the extent
not paid by the Employers, and shall not revert to or inure to
the benefit of any Employer.
(b) Notwithstanding anything herein to the contrary, upon an
Employer's request, a contribution which
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was made by a mistake of fact, or conditioned upon
qualification of the Plan or any amendment thereof under Code
Section 401, or upon the deductibility of the contribution
under Code Section 404, shall be returned to the Employer
within one (1) year after the payment of the contribution, the
denial of the qualification, or the disallowance of the
deduction (to the extent disallowed), whichever is applicable,
and all contributions to the Plan shall be deemed to be so
conditioned unless an Employer specifies to the contrary in
writing to the Trustee.
Section 11.4 - Records; Annual Valuation
- ----------------------------------------
The Trustee and/or Investment Manager, if any, shall
keep and maintain records under the direction of the Committee which will
accurately disclose the state of the Trust Fund. The assets of the Trust Fund
shall be valued at their fair market value annually on the last day of the Plan
Year, and the values certified to the Committee and the Actuary, together with
a statement of the costs of such assets and of receipts and disbursements for
the preceding Plan Year.
Section 11.5 - Actuarial Examinations
- -------------------------------------
As often as required under Applicable Law or more
often in the Committee's discretion, the Committee shall cause the Actuary to
prepare an examination of the Trust Fund and to report to it with respect to:
(a) The adequacy of the Trust Fund under applicable legal
standards to meet all liabilities for benefits under the Plan;
(b) The amount or range of the annual contribution for each
Employer which would be sufficient to provide for currently
accruing liabilities for such benefits;
(c) The applicable limitations established by the Code and ERISA
as to the maximum and minimum amount of the contributions
(with respect to both past and currently accruing liabilities
for benefits); and
(d) Any other matters within the scope of the Actuary's service to
the Plan and Trust Fund that the Committee needs to meet
applicable legal requirements of reporting, disclosure and
record keeping.
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In making any actuarial valuation of the Plan and Trust Fund, the Actuary may
rely upon the written statement of the Trustee, Investment Manager, if any,
and/or an insurance company which holds Trust Fund assets concerning the cost
and market value of the assets in the Trust Fund and shall not be required to
make any independent investigation with respect thereto. The Actuary may rely
upon any information furnished by the Employers or the Committee. In making
any actuarial valuation hereunder, the Actuary shall use such actuarial tables
as he deems appropriate, but he shall use the same tables in making all
calculations during a specified period; provided, however, the Actuary may from
time to time change the actuarial tables and other assumptions used by him
hereunder.
Section 11.6 - Responsibility of Trustee
- ----------------------------------------
The Trustee shall not be responsible for the validity
of the Trust and Plan, nor for the adequacy of the Trust Fund to meet the
obligations hereunder but shall be accountable only for funds paid to it or
received by it under the Trust.
Section 11.7 - Trustee's Compensation
- -------------------------------------
Unless otherwise prohibited under Applicable Law, the
Trustee from time to time shall receive such compensation for its services as
may be agreed upon with the Company.
Section 11.8 - Replacement of Trustee
- -------------------------------------
The Trustee may be replaced at any time by the
Company upon notice as provided in the Trust Agreement.
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ARTICLE XII
ADMINISTRATION
--------------
Section 12.1 - Allocation of Responsibility
- -------------------------------------------
The Fiduciaries shall have only those specific
powers, duties, responsibilities and obligations as are specifically given them
under the Plan or the Trust and any power, duty, responsibility or obligation
for the control, management or administration of the Plan or Trust Fund which
is not specifically allocated to any Fiduciary, or with respect to which the
allocation is in doubt, shall be deemed allocated to the Committee. In
general, the Employers shall have the sole responsibility for making
contributions under the Plan. The Company shall have the sole authority to
appoint and remove the Trustee, members of the Committee and any Investment
Manager (including any insurance company) and to amend or terminate, in whole
or in part, the Plan or the Trust. The Committee shall have sole
responsibility for the administration of the Plan, which responsibility is
specifically described herein and in the Trust. The Trustee shall have sole
responsibility for the administration of the Trust and the management of the
assets held under the Trust except in respect to insurance or annuity contracts
or in respect to Trust powers delegated to an Investment Manager, all as
specifically provided in the Trust Agreement. In the event that Trust assets
are placed in insurance or annuity contracts, the applicable insurance company
shall be considered to be an Investment Manager of the Plan, and a Fiduciary of
the Plan, within the meaning of those terms in ERISA, but only to the extent of
investing amounts held by the insurance company from time to time in one or
more separate accounts specified in the applicable insurance or annuity
contract and not in respect to amounts held in the insurance company's general
account. Such insurance company will have no fiduciary responsibility with
respect to any other assets of the Plan except as specified in the applicable
insurance or annuity contract. In the event that Trust powers are delegated to
an Investment Manager other than the Trustee or an insurance company, the
applicable Investment Manager shall be considered to be an Investment Manager
of the Plan and a Fiduciary of the Plan within the meaning of ERISA and shall
be required to acknowledge such appointment in writing.
The Company, by written instrument filed with the
records of the Plan and available to any Participant upon request, may name
fiduciary capacities and/or Fiduciaries other than those named herein. Any
party so named shall become a Fiduciary, if he accepts his
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appointment, as though named herein. The Company, by written instrument filed
with the records of the Plan and available to any Participant upon request, may
allocate or reallocate fiduciary responsibilities under the Plan, including the
power to appoint an Investment Manager but not other Trustee responsibilities
as defined in ERISA Section 405(c)(3), among and between one or more
Fiduciaries so named. A Fiduciary may serve in more than one fiduciary
capacity in respect to the Plan. A Fiduciary shall have the authority to
designate parties other than Fiduciaries to carry out all or a portion of his
fiduciary responsibilities, including the power to appoint an Investment
Manager but not other Trustee responsibilities as defined in ERISA Section
405(c)(3), through a written instrument filed with the records of the Plan and
available to any Participant upon request. A Fiduciary or party designated to
carry out all or a portion of a Fiduciary's responsibilities, as provided
above, may employ one or more parties to render advice with regard to any
responsibility he has under the Plan.
Directions given, information furnished, or action
taken by each Fiduciary or party designated to carry out fiduciary
responsibilities, as provided above, shall be in accordance with the provisions
of the Plan or the Trust, as the case may be, authorizing or providing for such
direction, information or action. Except as otherwise provided in Section
12.2, each Fiduciary may rely upon any such direction, information or action of
another Fiduciary or party designated to carry out fiduciary responsibilities,
as provided above, as being proper under the Plan or the Trust, and is not
required under the Plan or the Trust to inquire into the propriety of any such
direction, information or action. It is intended under the Plan and the Trust
that each Fiduciary shall be responsible for the proper exercise of his own
powers, duties, responsibilities and obligations under this Plan and the Trust
and shall not be responsible for any act or failure to act of another Fiduciary
except as otherwise provided by law. A Fiduciary shall not be liable for any
act or omission of any other party in carrying out a fiduciary responsibility
to the extent that (i) such responsibility was properly allocated to such other
party as a Fiduciary, or (ii) such other party has been properly designated to
carry out such responsibility in accord with the procedures set forth above
unless liability is otherwise provided under ERISA. No Fiduciary guarantees
the Trust Fund in any manner against investment loss or depreciation in asset
value.
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Section 12.2 - Fiduciary Duties
- -------------------------------
Each Fiduciary shall discharge his duties hereunder
solely in the interests of the Participants and their beneficiaries, and
(i) For the exclusive purpose of providing benefits to
Participants and their beneficiaries in accordance with the
provisions of the Plan insofar as they are consistent with
the applicable provisions of the Code and with the
provisions of ERISA, and the regulations issued thereunder;
and
(ii) With the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in
a like capacity and familiar with such matters would use in
the conduct of an enterprise of like character and with
like aims.
A Fiduciary shall not be liable, except as provided
in this Section, by reason of taking or refraining from taking any action in
accordance with the advise of any legal counsel, physician, accountant, Actuary
or other professional adviser. A Fiduciary shall be liable for a breach of
fiduciary responsibility by another Fiduciary or any other party deemed a
Fiduciary pursuant to the applicable provisions of the Plan or of ERISA only if
such Fiduciary:
(i) Participates knowingly in, or knowingly undertakes to
conceal, an act or omission of such other Fiduciary,
knowing such act or omission is a breach; or
(ii) By his failure to act prudently, has enabled such other
Fiduciary to commit a breach; or
(iii) Has knowledge of a breach of such other Fiduciary, unless
he makes reasonable efforts under the circumstances to
remedy such breach.
In the event that is shall be determined by statute,
court decision, ruling by the Internal Revenue Service or Department of Labor,
or otherwise, that part or all of the responsibilities prescribed for
Fiduciaries by ERISA as set forth in this Section are no longer applicable,
this Section or appropriate part thereof shall be ineffective with respect to
such responsibilities without amendment to the Plan.
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Section 12.3 - Indemnification
- ------------------------------
The Company shall indemnify each member of the
Committee and any other employee, officer or director of the Company or a
Related Company against any claims, loss, damage, expense and liability (other
than amounts paid in settlement not approved by the Company) reasonably
incurred by him in connection with any action or failure to act to which he may
be party by reason of his membership on the Committee or performance of an
authorized duty or responsibility for or on behalf of the Company or a Related
Company pursuant to the Plan or Trust unless the same is judicially determined
to be the result of the individual's gross negligence or willful misconduct.
Such indemnification by the Company shall be made only to the extent (i) such
expense or liability is not payable to or on behalf of such person under any
liability insurance coverage, and (ii) the Trust is precluded from assuming
such expense or liability because of the operation of ERISA or other Applicable
Law. The foregoing right to indemnification shall be in addition to any other
rights to which any such person may be entitled as a matter of law.
Section 12.4 - Appointment of Committee
- ---------------------------------------
The Plan shall be administered by a retirement
committee consisting of at least three (3) persons who shall be appointed by
and serve at the pleasure of the Board of Directors of the Company (the
"Committee"). All usual and reasonable expenses of the Committee may be paid
in whole or in part by the Employers, and any expenses not paid by the
Employers shall be paid by the Trustee out of the principal or income of the
Trust Fund. Any members of the Committee who are employees of the Company or a
Related Company shall not receive compensation with respect to their services
as Committee members.
Section 12.5 - Claims Procedure
- -------------------------------
The Committee shall provide appropriate forms on
which application for benefits under the Plan may be made. Each person
claiming a benefit under the Plan must complete and file such application forms
with the Committee. One Committee member shall be designated to review all
applications for benefits. He shall notify the claimant in writing of his
decision within ninety (90) days of his receipt of the application. If special
circumstances require any extension of time, not to exceed ninety (90) days,
for processing the claim, the claimant will be notified in writing of the
extension prior to the expiration of the initial ninety (90) day period.
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The reviewing member of the Committee shall make all
determinations on behalf of the Committee as to the right of any person to a
benefit. Any denial by the reviewing Committee member of a claim for benefits
by a Participant or Beneficiary shall be stated in writing and delivered or
mailed to the Participant or Beneficiary. Such notice shall set forth specific
reasons for the denial and, if applicable, a description of additional material
or information necessary for the claimant to perfect his claim. If the
reviewing Committee member rejects the application solely because the claimant
failed to furnish certain necessary material or information, the notice shall
explain what additional material is needed and why, and advise the claimant
that he may refile a proper application under the above claim procedure.
If a claim has been denied by the reviewing Committee
member, the claimant may appeal the denial within sixty (60) days after his
receipt of written notice thereof by submitting in writing to the Committee a
request for review of the denial of claim. A claimant may also submit a
written statement of issues and comments concerning his claim, and he may
request an opportunity to review the Plan, the Trust Agreement and any other
pertinent documents, which shall be made available to him by the Committee
within their (30) days after his receipt of a copy of the request, at a
convenient location during regular business hours. If an appeal is made, the
Committee shall render its final decision with the specific reasons therefor in
writing and transmit it to the claimant by certified mail within sixty (60)
days of its receipt of the request for review.
Section 12.6 - Records and Reports
- ----------------------------------
The Committee shall exercise such authority and
responsibility as it deems appropriate in order to comply with the Code, ERISA
and governmental regulations issued thereunder relating to records of
Participants' Service, accrued benefits and the percentage of such benefits
which is nonforfeitable under the Plan; notifications to Participants, annual
registration with the Internal Revenue Service, annual reports to the
Department of Labor; and reports to the Pension Benefit Guaranty Corporation.
Section 12.7 - Committee Powers and Duties
- ------------------------------------------
The Committee shall have such duties and powers as
may be necessary to discharge its duties hereunder, including, without
limitation, the following:
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(a) To construe and interpret the Plan, including the supplying of
any omissions in accordance with the intent of the Plan,
decide all questions of eligibility, determine the amount,
manner and time of payment of any benefits hereunder, and to
authorize the payment of benefits.
(b) To prescribe procedures to be followed by the Participants and
beneficiaries filing applications for benefits;
(c) To prepare and distribute, in such manner as the Committee
determines to be appropriate, information explaining the Plan;
(d) To receive from the Employers and from Participants such
information as shall be necessary for the proper
administration of the Plan;
(e) To furnish the Employers, upon request, such annual reports
with respect to the administration of the Plan as are
reasonable and appropriate;
(f) To receive, review and keep on file (as it may deem convenient
or proper) reports of the financial condition, and of the
receipts and disbursements, of the Trust Fund from the
Trustee;
(g) To appoint, employ or designate individuals to assist in the
administration of the Plan and any other agents it deems
advisable, including legal and actuarial counsel; and
(h) To exercise such other powers and duties as the Board may
delegate to it.
The Committee may adopt such rules as it deems
necessary, desirable or appropriate for the proper and efficient administration
of the Plan and as are consistent with the provisions of the Plan. All rules
and decisions of the Committee shall be uniformly and consistently applied to
all Participants in similar circumstances. When making a determination or
calculation, the Committee shall be entitled to rely upon information furnished
by a Participant or beneficiary, an Employer, the legal counsel of an Employer,
the Actuary, or the Trustee. Except as otherwise provided in Section 12.6, the
determination of the Committee as to any disputed question arising hereunder
including, but without limitation, questions of construction, administration
and
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interpretation, shall be final and conclusive upon all persons including,
without limitation, employees, Participants, beneficiaries, and their heirs,
distributees and personal representatives, and any other person claiming an
interest under the Plan.
The Committee may act at a meeting or in writing
without a meeting. The Committee shall elect one of its members as a chairman,
appoint a secretary, who may or may not be a Committee member, and advise the
Trustee of such actions in writing. The secretary shall keep a record of all
meetings and forward all necessary communications to the Participants and
beneficiaries, the Employers, the Trustee, and the Actuary. The secretary
shall perform all the purely ministerial acts on behalf of the Committee.
Certifications, applications and documents must be signed on behalf of the
Committee by the secretary and at least one other member of the Committee. The
Committee may adopt such bylaws and regulations as it deems desirable for the
conduct of its affairs. All decisions of the Committee shall be made by the
vote of the majority including actions in writing taken without a meeting. A
dissenting Committee member who, within a reasonable time after he has
knowledge of any action or failure to act by the majority, registers his
dissent in writing delivered to the other Committee members, the Company and
the Trustee, shall not be responsible for any such action or failure to act,
except as otherwise provided under Section 12.2.
The Committee shall issue directions to the Trustee
and/or the applicable insurance company, if any, concerning all benefits which
are to be paid from the Trust Fund pursuant to the provisions of the Plan, and
certify that all such directions are in accordance with the Plan.
The Committee may require a Participant to complete
and file with the Committee an application for Pension and all other forms
approved by the Committee, and to furnish all pertinent information requested
by the Committee. The Committee may rely upon all such information so
furnished it, including the Participant's current mailing address.
Section 12.8 - Facility of Payment
- ----------------------------------
Whenever, in the Committee's opinion, a person
entitled to receive any payment of a benefit, or installment thereof, hereunder
is under a legal disability or is incapacitated in any way so as to be unable
to manage his financial affairs, the Committee may direct the Trustee, the
Investment Manager, if any, and/or the applicable insurance company, if any, to
make payments to
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such person or to his legal representative or to a relative or friend of such
person for his benefit, or the Committee may direct the Trustee to apply the
payment for the benefit of such person in such manner as the Committee
considers advisable. Any payment of a benefit or installment thereof in
accordance with the provisions of this Section shall be a complete discharge of
any liability for the making of such payment under the provisions of the Plan.
Section 12.9 - Agent for Service of Process
- -------------------------------------------
The agent for service of process for the plan shall
be the person currently listed in the records of the Secretary of State of Ohio
as the agent for service of process for the Company.
Section 12.10 - Notices
- -----------------------
Notices and documents relating to the Plan to be
filed with the Committee may be delivered, or mailed by registered mail,
postage prepaid, to the Committee in care of the Company at such address as the
Committee may specify from time to time. Any notice required under the Plan
may be waived by the person entitled to notice.
Section 12.11 - Evidence
- ------------------------
Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting
on it considers pertinent and reliable, and signed, made or presented by the
proper party or parties.
Section 12.12 - Underwriting of Benefits
- ----------------------------------------
The Company in its sole discretion and from time to
time may direct the Trustee to provide the benefits hereunder for one or more
Participants or their Beneficiaries by purchase of insurance company annuity
contracts or otherwise.
Section 12.13 - Misstatements
- -----------------------------
If any person in his application to participate in
the Plan or for benefits hereunder, or in response to any request of the
Committee or an Employer for information, makes any statement which is
erroneous or omits any material fact or fails before receiving his first
payment to correct any information he previously incorrectly furnished to the
Employer or the Committee for its records, the amount of his retirement income
shall be adjusted on the basis of the true facts, and the amount of
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any overpayment theretofore made to such person shall be deducted from his next
succeeding payments as the Committee shall direct.
Section 12.14 - Beneficiary Designation
- ---------------------------------------
Each Participant who has elected a Period-Certain and
Life Option may from time to time designate any person or persons (who may be
designated contingently or successively and who may be an entity other than a
natural person) as his Beneficiary or Beneficiaries to whom his Pension
benefits shall be paid if he dies before the end of the period certain. Each
Beneficiary designation shall be filed in the form prescribed by the Committee
and will be effective only when filed with the Committee during the
Participant's lifetime. Each Beneficiary designation filed with the Committee
will cancel all Beneficiary designations previously filed with the Committee.
The revocation of a Beneficiary designation, no matter how effected, shall not
require the consent of any person, unless otherwise required under Code Section
401(a) and 417.
If any Participant fails to designate a Beneficiary
in the manner provided above, or if the Beneficiary designated by the deceased
Participant dies before him or before complete distribution of the
Participant's benefits, any death benefit payable hereunder upon the
Participant's death shall be paid to the heir or heirs of the Participant in
the following order of priority:
(a) His Eligible Spouse;
(b) His natural and adopted children;
(c) His parents or the survivor thereof; or
(d) In the event none of the above survive the Participant, then
to the estate of the Participant; and if payable to more than
one person in a class, all persons in that class shall share
equally. Similarly, if the Beneficiary survived the
Participant but dies before receiving the entire death benefit
otherwise payable (and he is not survived by a secondary
Beneficiary, or the secondary Beneficiary also dies), the
remainder shall be paid to the heir or heirs of the last
surviving Beneficiary or to the Participant's estate in
accordance with priorities (a) through (d) above.
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Section 12.15 - Agents; Expenses
- --------------------------------
The Company and the Committee may employ such agents,
attorneys (including without limitation attorneys who may be counsel for the
Company), Actuaries, and accountants as they, or either of them, deem necessary
or proper in connection with the maintenance and administration of the Plan.
The reasonable compensation and expenses of such agents, attorneys, Actuaries,
and accountants and all other reasonable expenses incident to the operation and
maintenance of the Plan shall be paid out of the Trust Fund and the Trustee is
empowered at the Committee's direction to pay the same out of the Trust Fund as
a charge thereon, unless the Employers elect to make payment of such amounts.
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ARTICLE XIII
AMENDMENT AND TERMINATION
-------------------------
Section 13.1 - Amendment
- ------------------------
The Company reserves the right at any time and from
time to time by action of its Board to modify or amend in whole or in part any
or all of the provisions of the Plan. No modifications or amendment may result
in a retroactive reduction in benefits unless the Secretary of Labor determines
that such retroactive reduction is required to avoid a substantial business
hardship and that a variance from the minimum funding standards under ERISA is
unavailable or inadequate to relieve such hardship; provided, however, if any
such modification or amendment resulting in a retroactive reduction in benefits
is so approved, it shall apply in a like manner to all Participants, and the
total value of such reduced benefits shall not be less than the value of the
assets of the Trust Fund on the effective date of such modification or
amendment.
Notwithstanding any other provision herein to the
contrary, the Board in its sole discretion may make any modifications or
amendments, additions, or deletions in the this Plan as to benefits or
otherwise, retroactively if necessary, and regardless of the effect on the
rights of any particular person, which it deems appropriate in order to bring
the Plan into conformity with or to satisfy any conditions of Applicable Law
and in order to maintain the qualification of the Plan under Code Section
401(a) and to maintain the tax-exempt status of the Trust under Code Section
501(a).
Notwithstanding any other provisions of this Plan,
for a period of three years following a Change of Control (as defined in
Section 13.4 hereof), the provisions of this Plan may not be amended (except as
may be required by law) in any manner which would adversely affect the
computation or amount of or the entitlement to retirement benefits hereunder
including, but not limited to, any adverse change in or to (a) the rate at
which benefits accrue or vest, (b) the compensation recognized hereunder, or
(c) the optional forms of payment available to a Participant or beneficiary
hereunder, including the time of commencement of such benefits and any
actuarial factors used in connection therewith. Notwithstanding any other
provisions of this Section 13.1, the foregoing provisions of this paragraph may
not be amended during the three year period commencing upon a Change in Control
without the written consent of the majority in both number and interest
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of the Participants who are actively employed by the Company (or, if
applicable, the Employer), both immediately prior to the Change in Control and
at the date of such amendment.
Any officer of the Company may amend the Plan, in any
manner in which the Board may amend the Plan as described above, but only for
purposes of complying with Applicable Law, as the Internal Revenue Service may
require as a condition to issuing a favorable determination letter with respect
to the Plan, or with respect to the administrative provisions of the Plan, and
to the extent that such amendment(s) does (do) not materially increase or
decrease the Employers cost of maintaining the Plan.
In addition, to the extent provided from time to time
by action of the Board, any officer of the Company may amend the Plan for
purposes of extending coverage under the Plan to any division, operating unit,
or group of employees of the Company not theretofore covered under by the Plan,
or extending coverage to persons acquired in the Company's employ incident to a
merger, the purchase of assets of another corporation as a going concern, or
other acquisitions, and, in connection with any such extension of coverage, to
provide that prior employment shall be considered periods of Continuous
Employment only for purposes of Service for purposes of eligibility for an
Early Retirement Pension and for purposes of determining the Accrued Retirement
Pension of a Participant who retires on Early Retirement under Section 4.2
after completing thirty-five (35) or more years of Service.
Section 13.2 - Discontinuance of Benefit Accrual
- ------------------------------------------------
The Company and any Employer reserves the right to
provide that the benefits accrued for affected Participants be "frozen" as of a
specified date and be distributed on an ongoing plan basis in accordance with
the applicable provisions for Retirement, death or other termination of
employment.
Section 13.3 - Termination; Restrictions on Benefits of
- --------------------------------------------------------
Highly Compensated Employees
- ----------------------------
(a) The Company reserves the right at any time and from time to time, by
action of its Board to terminate the Plan as to any Employer or all
Employers. In the event of a complete or partial termination of the
Plan (within the meaning of Section 411(d)(3) of the Code and
regulations issued thereunder), the rights of all affected
Participants to their Accrued Retirement
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Pensions, to the extent then funded, shall become fully vested and
nonforfeitable (to the extent not already fully vested and
nonforfeitable).
(b) Each Employer shall have the right to withdraw from the Plan by action
of its Board of Directors, and by filing written notice thereof with
the Company, in which event the Employer shall cease to be an Employer
for purposes of the Plan. Upon any such withdrawal of an Employer,
the employees of such Employer shall become Ineligible Employees as of
the date of such withdrawal. Notwithstanding any other provision of
the Plan to the contrary, an Employer shall be deemed automatically to
withdraw from the Plan in the event it ceases to be a Related Company,
and such withdrawal shall be deemed to be a termination of employment
for all purposes under the Plan with respect to any persons employed
by the withdrawing Employer on the date such withdrawing Employer
ceased to be a Related Company and who are neither transferred to nor
continued in employment with any other Employer or Related Company.
(c) In the event of termination of the Plan, written notice thereof shall
be given by the Company to the Trustee, no further contributions shall
be made by any Employer (except any contributions as may be necessary
to make the Plan sufficient for purposes of a standard termination
under Title IV of ERISA), and the Trust Fund, after provision is made
for expenses, shall be applied by the Trustee as provided in
subsection (d) of this Section.
(d) Upon termination of the Plan the Trust Fund shall be applied as
directed by the Company in accordance with ERISA, subject to
subsection (e) of this Section if applicable, to provide benefits for
Participants and beneficiaries affected by such termination, and any
amount remaining after such application shall be disposed of as
provided in subsection (f) of this Section.
(e) Notwithstanding any other provision of the Plan to the contrary, to
conform to the requirements of Income Tax Regulations, the benefit
payable under the Plan shall be subject to the following limitations:
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<PAGE> 86
(i) If the Plan is terminated, the benefit of any "highly
compensated employee" or "highly compensated former employee",
as defined in Section 414(q) of the Code, shall be limited to
a benefit that is nondiscriminatory under Section 401(a)(4) of
the Code.
(ii) The annual payments in any one year to any of the 25 highly
compensated employees or highly compensated former employees
with the greatest compensation (hereinafter referred to as a
"Restricted Employee") in the current or any prior year shall
not exceed an amount equal to the payments that would be made
on behalf of the Restricted Employee under (1) a life annuity
that is the actuarial equivalent of the Restricted Employee's
Accrued Retirement Pension and other benefits to which the
Restricted Employee is entitled under the Plan (other than a
Social Security supplement), and (2) the amount of the
payments the Restricted Employee is entitled to receive under
a Social Security supplement. For purposes of this subsection
(e)(ii) "benefit" includes, among other benefits, loans in
excess of the amounts set forth in Section 72(p)(2)(A) of the
Code, any periodic income, any withdrawal values payable to a
living employee, and any death benefits not provided for by
insurance on the Restricted Employee's life. The foregoing
provisions of this subsection (e)(ii) shall not apply,
however, if:
(A) After payment to a Restricted Employee of all benefits
payable to the Restricted Employee under the Plan, the
value of Plan assets equals or exceeds 110% of the
value of "current liabilities", as defined in Section
412(b)(7) of the Code (each value being determined as
of the same date in accordance with applicable
Treasury regulations);
(B) The value of the benefits payable under the Plan to or
for a Restricted Employee is less than one percent of
the value of current liabilities before distribution;
or
(C) The value of benefits payable under the Plan to or
for a Restricted Employee does not
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exceed the amount described in Section 411(a)(11)(A) of the
Code.
(f) After satisfaction of all liabilities of the Plan, such remaining part
of the Trust Fund, if any, as shall be the result of actuarial error
shall revert to the Employers (the share of each to be determined by
the Company on a fair and equitable basis).
Section 13.4 - Termination Following Change in Control
- ------------------------------------------------------
Notwithstanding the provisions of Section 13.3 hereof
or any other provisions of the Plan, in the event this Plan is terminated
within three years following a "Change in Control of the Company" (as
hereinafter defined), all Participants shall be fully vested in their accrued
benefit and the assets of the Plan shall be applied in accordance with the
provisions of Section 13.3 hereof to satisfy all fixed and contingent
liabilities to Participants and their beneficiaries. If, after satisfaction of
such liabilities, there are assets remaining in the Plan, such remainder shall
first be applied to the payment of retiree medical and retiree life insurance
payable to Participants and their beneficiaries (subject, however, to the
applicable legal limitations on the payment of such benefits from qualified
plans), and any assets still remaining shall be applied on a pro rata basis to
increase the benefits of such Participants and their beneficiaries, subject,
however, to the applicable legal limitations on benefits payable from
tax-qualified plans. For purposes hereof, a change in control of the Company
("Change in Control") shall occur if (a) any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") (other than Richard H. Grant, Jr., his children or his
grandchildren, the Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any company owned, directly
or indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities; (b) during
any period of two consecutive years (not including any period prior to the
execution of this Plan), individuals who at the beginning of such period
constitute the Board, and any new director (other than a director designated by
a person who has entered into an agreement with the Company to effect a
transaction described in clause (a), (c) or (d) of this Section) whose election
by the Board or nomination for
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election by the Company's shareholders was approved by a vote of at least
two-thirds (2/3) of the directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for any
reason to constitute at least a majority thereof; (c) the shareholders of the
Company approve a merger or consolidation of the Company with any other
company, other than (1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (2) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (as hereinabove defined) acquires
more than 50% of the combined voting power of the Company's then outstanding
securities; or (d) the shareholders of the Company approve a plan of
liquidation, dissolution or winding up of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of the Company's
assets; provided, however, that none of the transactions described in clauses
(a) - (d), above, shall constitute a change in control if such transaction is
arranged by, or consummated with the prior approval of, the Board of Directors.
The foregoing provisions of this paragraph may not be amended during the three
year period commencing upon a Change in Control without the written consent of
the majority in both number and interest of the Participants who are actively
employed by the Company (or, if applicable, the Employer), both immediately
prior to the Change in Control and at the date of such amendment.
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ARTICLE XIV
ADOPTION AND EXTENSION OF THE PLAN
----------------------------------
Section 14.1 - Adoption by Related Company
- ------------------------------------------
Any Related Company which is not an Employer
hereunder may adopt the Plan, with the consent of the Board, and become an
Employer by resolution of its Board of Directors, a certified copy of which
shall be filed with the Company. Such resolution shall specify the covered
unit or units and Employees of the Employer to which the Plan is being extended
by virtue of its adoption of the Plan, and shall specify the effective date of
such adoption. Any Related Company that adopts the Plan shall contribute its
appropriate share, as determined by the Board of any contributions thereafter
made to the Trustee hereunder. Except as otherwise provided herein, the
provisions of the Plan shall be applied to each Employer as though it were the
sole Employer under the Plan.
Section 14.2 - Extension to Non-Covered Units; Business Acquisitions
- --------------------------------------------------------------------
The Board, or any other Employer by its Board of
Directors with the consent of the Board, may extend the Plan to cover any
division, operating unit, or group of employees thereof not theretofore covered
by the Plan, which shall thereupon become a covered unit hereunder. In
addition, coverage under the Plan may be extended as provided in Section 13.1.
Such action shall specify the effective date of such extension of coverage.
Any new division or other operating unit which is established by an Employer
for the purpose of continuing in whole or in part any business operation
acquired by an Employer, shall not become a covered unit solely by virtue of
the fact that it is part of such Employer or part of a division or other
operating unit which at the time constitutes a covered unit; any such new
division or other operating unit shall become a covered unit only if Plan
coverage is expressly extended thereto in accordance with the procedures
specified in the foregoing provisions of this Section, or pursuant to the
provisions of Section 13.1. In the event that an Employer or a Related Company
acquires or has acquired persons in its employ incident to a merger, the
purchase of assets of another corporation as a going concern or other
acquisitions, or an entity employing or formerly employing persons otherwise
becomes or has become an Employer or a Related Company in connection with any
such transaction, such persons and former employees of such acquired business
who are subsequently employed by an Employer or a Related Company
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<PAGE> 90
shall not be Employees unless the Board specifically resolves in a written
instrument to include them as Employees hereunder or they are included as
Employees as provided in Section 13.1, and employment with their predecessor
employer shall be considered as Continuous Employment for purposes of measuring
Service and Credited Service hereunder only to the extent provided in such
resolution or provided pursuant to the provisions of Section 13.1 and noted on
an appropriate Schedule hereto.
An appropriate Schedule hereof shall contain a list
of all participating Employers indicating, for each such Employer, its name and
date of participation, any special provisions with respect to the recognition
or nonrecognition of employment with such Employer prior to its participation
in the Plan, such as Service and Credited Service under the Plan, and any other
special provisions.
Section 14.3 - Special Provisions Regarding Eligibility and Benefits
- --------------------------------------------------------------------
In the event that it is necessary to accommodate the
transition from benefit arrangements which were in effect for the benefit of
the employees of an Employer, Related Company, division, or other operating
unit prior to the adoption of the Plan by such a Related Company or the
extension of the Plan to such a division or operating unit, a Schedule setting
forth special overriding provisions applicable to such adoption or extension of
the Plan may be added to the Plan. Each such Schedule shall control in the
event of conflict with any other provision of the Plan.
Section 14.4 - Action by Employer
- ---------------------------------
Any action by an Employer under this Plan may be by
resolution of its Board of Directors, or by any person or persons duly
authorized by resolution of said board to take such action.
Section 14.5 - Overriding Provisions
- ------------------------------------
The provisions of this Article shall apply
notwithstanding any other provision herein to the contrary.
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ARTICLE XV
SUCCESSOR EMPLOYER AND
MERGER OR CONSOLIDATION OF PLANS
--------------------------------
Section 15.1 - Successor Employer
- ---------------------------------
In the event of the dissolution, merger,
consolidation or reorganization of an Employer, provision may be made by which
the Plan and Trust will be continued by the successor; and, in that event, such
successor shall be substituted for such Employer under the Plan. Unless
otherwise provided, the substitution of the successor shall constitute an
assumption of the Plan liabilities by the successor and the successor shall
have all of the powers, duties and responsibilities of the Employer under the
Plan.
If any entity other than an Employer acquires an
Employer or any plant, division, department or operation of an Employer as a
going concern, then the Company, as determined by the Board, may, in lieu of
the normal operation of the Plan's provisions, cause any part of the Trust Fund
which is allocable to Participants who thereupon become employed (directly or
indirectly) by the acquirer and their Eligible Spouses, Contingent Annuitants,
Beneficiaries and beneficiaries, if any, to be segregated and deposited in a
separate fund, which fund shall thereafter be held subject to a separate plan
governed by the same provisions as the Plan until amended. Such allocation of
Trust Fund assets shall be determined by the Company upon the advice of the
Actuary in accordance with Applicable Law. Unless otherwise provided, such
event shall constitute the assumption by the acquirer (through such separate
plan) of this Plan's liabilities related to the acquirer's employees, and the
acquirer shall assume all the powers, duties and responsibilities of the
sponsoring Employer under the separate plan. In such case, the Plan shall not
be deemed terminated or discontinued in whole or in part as it applies to any
Employer. Alternatively, the Company may discontinue the Plan as to such
acquired Employer or unit and the provisions of Article XIII shall be applied.
Section 15.2 - Merger
- ---------------------
Neither the merger of any Employer with any other
organization nor the merger of the Plan with any other retirement plan shall in
and of itself result in the termination of the Plan or be deemed a termination
of employment as respects any person.
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<PAGE> 92
The Plan may not be merged nor its assets transferred
to any other plan unless:
(a) The benefit to which each Participant and beneficiary would be
entitled upon termination of the Plan and/or the transferee
plan immediately after such merger will be equal to or greater
than the benefit to which he would be entitled if the Plan
were to terminate immediately prior to such merger, except as
otherwise specified or allowed by Applicable Law or
regulations; and
(b) Resolutions of the Board, and any new or successor employer
employing Participants, shall authorize such transfer of
assets; and
(c) Such other plan and trust are qualified under Sections 401(a)
and 501(a), respectively, of the Code.
Notwithstanding the preceding provisions of this
Section 15.2 or any other provision of this Plan, in the event of any merger or
consolidation of this Plan with another plan or any transfer of assets or
liabilities of this Plan to another plan which is effected within three years
following a Change in Control (as such term is defined in Section 13.4 hereof),
(a) the accrued benefit of each Participant who is actively employed by the
Company as of the effective date of such merger, consolidation or transfer of
assets or liabilities shall become fully vested; (b) prior to consummation of
any such merger, consolidation or transfer, the accrued benefit of each
Participant and beneficiary shall be satisfied by the purchase of a guaranteed
annuity contract from a financially sound insurance company which represents an
irrevocable commitment to satisfy the accrued benefit (as increased hereunder,
if applicable) of such person; (c) any assets remaining in the Plan after the
purchase of such annuity shall be applied to the payment of retiree medical and
life insurance benefits payable to Participants and beneficiaries (subject,
however, to applicable limitations of law); and (d) any assets still remaining
after the application of clause (c) shall be applied on a pro rata basis to
increase the benefits of such Participants and beneficiaries, subject, however,
to the applicable legal limitations on benefits payable from tax-qualified
plans. Notwithstanding the provisions of Section 13.1 hereof, the foregoing
provisions of this paragraph may not be amended during the three year period
commencing upon a Change in Control without the written consent of a majority
in both number and interest of the Participants who are actively employed by
the Company (or, if applicable, the Employer)
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both immediately prior to the Change in Control and at the date of such
amendment.
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<PAGE> 94
ARTICLE XVI
MISCELLANEOUS PROVISIONS
------------------------
Section 16.1 - Non-guarantee of Employment
- ------------------------------------------
Nothing contained herein shall be construed as a
contract of employment between an Employer or Related Company and any employee,
or as a right of any employee to be continued in the employment of an Employer
or Related Company, or as a limitation of the right of an Employer or Related
Company to discharge any of its employees, with or without cause.
Section 16.2 - Rights to Trust Assets
- -------------------------------------
No person shall have any right to, or interest in,
any assets of the Trust Fund upon termination of his employment or otherwise,
except as provided herein from time to time, and then only to the extent of the
benefits payable under the Plan to such person out of the assets of the Trust
Fund. Except as otherwise may be provided for herein shall be made solely out
of the assets of the Trust Fund. Neither the Trustee, any applicable insurance
company, the Committee, nor any Employer or Related Company in any way
guarantees the Trust Fund from loss or depreciation. No Employer or Related
Company guarantees hereby any payment to any person.
Section 16.3 - Non-alienation of Benefits
- -----------------------------------------
Except as otherwise provided by law, no benefits,
payment or distribution under the Plan shall be subject either to the claim of
any creditor of a Participant, Eligible Spouse, Contingent Annuitant,
Beneficiary, or beneficiary or to attachment, garnishment, levy (other than a
federal tax levy under Section 6331 or the Code), execution or other legal or
equitable process, by any creditor of such person, and no such person shall
have any right to alienate, commute, anticipate or assign (either at law or
equity) all or any portion of any benefit, payment or distribution under the
Plan. The Trust Fund shall not in any manner be liable for or subject to the
debts, contracts, liabilities, engagements or torts of any person entitled to
benefits hereunder. In the event that any Participant's benefits are garnished
or attached by order of any court, the Committee may elect to bring an action
for a declaratory judgment in a court of competent jurisdiction to determine
the proper recipient of the benefits to be paid by the Plan. During the
pendency of said action, any benefits that become payable may be paid into the
court as they become payable, to be distributed by
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<PAGE> 95
the Court to the recipient it deems proper at the close of said action. The
Committee shall establish reasonable procedures to determine the status of
domestic relations orders entered on or after January 1, 1985 and to administer
distributions under such domestic relations orders which are deemed to be
qualified orders. Such procedures shall be in writing and shall comply with
the provisions of Section 414(p) of the Code and regulations issued thereunder.
Section 16.4 - Election of Former Vesting Schedule
- --------------------------------------------------
In the event the Company adopts an amendment to the
Plan that changes the vesting schedule under the Plan, including any amendment
which directly or indirectly affects the computation of the nonforfeitable
interest of Participants' rights to accrued benefits, any Participant with five
or more years of vesting service shall have a right to have his nonforfeitable
interest in his accrued benefit continue to be determined under the vesting
schedule in effect prior to such amendment rather than under the new vesting
schedule, unless his nonforfeitable interest in his accrued benefit under the
Plan, as amended, at any time is not less than such interest determined without
regard to such amendment. Such Participant shall exercise such right by giving
written notice of his exercise thereof to the Committee within 60 days after
the latest of (i) the date he receives notice of such amendment from the
Committee, (ii) the effective date of the amendment, or (iii) the date the
amendment is adopted. Notwithstanding the foregoing provisions of this
Section, the vested interest of each Participant on the effective date of such
amendment shall not be less than his vested interest under the Plan as in
effect immediately prior to the effective date thereof.
Section 16.5 - Benefits Determined Under Plan as in Effect Before
- -----------------------------------------------------------------
October 1,1994
- --------------
Notwithstanding any other provision herein to the
contrary except Article XX: The conditions of eligibility for and amount of
any benefits being paid or which may become payable under the Plan by reason of
a person's retirement or other termination of employment before October 1,
1994, and a person's death after any such retirement or other termination of
employment shall continue to be determined under and in accordance with the
applicable provisions of the Plan as in effect prior to October 1, 1994. The
provisions of this instrument shall apply, however, for purposes of determining
the effect of reemployment and application of the various administrative
provisions of the Plan, and with respect to the financing
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<PAGE> 96
of benefits and other matters set forth in Articles XI and XII, and with
respect to the amendment and termination of the Plan and other appropriate,
applicable matters set forth in Articles XIII, XV, XVII and this Article.
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<PAGE> 97
ARTICLE XVII
GENERAL PROVISIONS
------------------
Section 17.1 - Headings
- -----------------------
The headings and subheadings herein have been
inserted for convenience of reference only and are to be ignored in any
construction of the provisions hereof.
Section 17.2 - Construction
- ---------------------------
In the construction of this instrument and any
amendment to this instrument, the masculine shall include the feminine and the
singular the plural in all cases where such meanings would be appropriate. The
words "hereof," "herein," "hereunder," and other similar compounds of the word
"here" shall mean and refer to the entire instrument and/or amendment hereof,
as appropriate and not to any particular provision or section.
Section 17.3 - Controlling Law
- ------------------------------
The law of the State of Ohio shall be the controlling
state law in all matters relating to the Plan and shall apply to the extent
that it is not preempted by the laws of the United States of America.
Section 17.4 - Effect of Invalidity of Provision
- ------------------------------------------------
If any provision of the Plan is held invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provisions hereof, and the Plan shall be construed and enforced as if such
provision had not been included.
Section 17.5 - Counterparts
- ---------------------------
This instrument and any amendment hereto may be
executed in any number of counterparts, each of which shall be deemed an
original, and the counterparts shall constitute one and the same instrument
which shall be sufficiently evidenced by any one thereof.
-92-
<PAGE> 98
ARTICLE XVIII
RECEIPT OF ASSETS AND LIABILITIES
ATTRIBUTABLE TO
NON-UNION HOURLY EMPLOYEES
--------------------------
Section 18.1 - Definitions
- --------------------------
For purposes of this Article XVIII, the following
definitions shall apply:
(a) The "Transfer Date" shall mean December 31, 1990.
(b) The "Transfer Employees" shall mean those persons who are
"Transfer Employees" as defined in Article XVIII of the
Transferor Plan.
(c) The "Transferor Plan" shall mean The Reynolds and Reynolds
Company Employees' Retirement Plan (as of the close of
business on December 31, 1990, to be known as The Reynolds and
Reynolds Company Union Retirement Plan).
Section 18.2 - Crediting of Compensation, Continuous Employment,
- ---------------------------------------------------------------
Service, and Credited Service
- -----------------------------
(a) For purposes of crediting Compensation, Continuous Employment,
Service, and Credited Service, the Transfer Employees shall be
subdivided into Group I and Group II, where Group I shall
consist of all Transfer Employees who are Employees on the day
immediately following the Transfer Date and all Transfer
Employees who, on or after October 1, 1989, terminated
employment covered under the Transferor Plan under conditions
entitling them to a "Normal Retirement Pension" or an "Early
Retirement Pension" under Section 4.1 or Section 4.2, as
applicable, of the Transferor Plan, and where Group II shall
consist of all other Transfer Employees; provided, however,
that Group II Transfer Employees who, after the Transfer Date,
are reemployed by an Employer as an Eligible Employee shall,
as of such reemployment date, be excluded from Group II and
included in Group I.
(b) As of the day immediately following the Transfer Date (or as
of the date of reemployment under the Plan in the case of a
reemployed Group II Transfer Employee), each Transfer Employee
in Group I shall be credited under the Plan with:
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<PAGE> 99
(i) Continuous Employment under the Plan pursuant to
the provisions of the Plan; provided, however, that
the Continuous Employment credited in no event
shall be less than the "Continuous Employment" that
would be credited to the Transfer Employee under
the provisions of the Transferor Plan as in effect
on the Transfer Date; and
(ii) Service under the Plan pursuant to the provisions
of the Plan; provided, however, that the Service
credited in no event shall be less than the
"Service" that would be credited to the Transfer
Employee under the provisions of the Transferor
Plan as in effect on the Transfer Date; and
(iii) Credited Service under the Plan pursuant to the
provisions of the Plan; provided, however, that (a)
the Credited Service credited in no event shall be
less than the "Credited Service" credited to the
Transfer Employee under the provisions of the
Transferor Plan as of the close of business on
September 30, 1990, and (b) for the period October
1, 1990 through September 30, 1991, the Credited
Service credited shall be equal to the greater of
the "Credited Service" that would be credited to
the Transfer Employee pursuant to the provisions of
the Transferor Plan as in effect on the Transfer
Date or the Credited Service that would be credited
to the Transfer Employee pursuant to provisions of
the Plan; and
(iv) Compensation under the Plan pursuant to the
provisions of the Plan.
Notwithstanding the foregoing provisions of this
Section or any other provision of the Plan, however, in no event shall any
Transfer Employee receive dual credit under the Plan for Compensation,
Continuous Employment, Service, or Credited Service with respect to any period.
Section 18.3 - Transfer of Assets and Liabilities
- -------------------------------------------------
Effective as of the Transfer Date, all liabilities of
the Transferor Plan with respect to the Transfer Employees shall be transferred
to the Plan from
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<PAGE> 100
the Transferor Plan. On or as soon as practicable after the Transfer Date,
assets of the Transferor Plan with respect to the Transfer Employees'
liabilities so transferred to the Plan, in an amount that, based on the
certification of the Actuary, meets the requirements of Section 414(1) of the
Code and regulations and rulings thereunder, together with interest thereon at
the rate recommended by the Actuary from the Transfer Date to the date of the
asset transfer, shall, upon the direction of the Company to the Trustee, be
transferred to the Trust Fund from the trust fund maintained under the
Transferor Plan. Notwithstanding any provision of the Plan to the contrary, in
no event shall the accrued benefit under the Plan on or after the Transfer Date
of any Transfer Employee be less than his accrued benefit under the Transferor
Plan as of the Transfer Date. Any applications, elections, and waivers under
the Transferor Plan that are applicable to a Transfer Employee's benefit
transferred from the Transferor Plan to the Plan shall continue to be
applicable to such benefit hereunder.
Section 18.4 - Continuation of Portion of Transferor Plan
- ---------------------------------------------------------
The Plan shall be deemed to be a continuation of that
portion of the Transferor Plan transferred to the Plan as provided in Section
18.3 with respect to the Transfer Employees.
Section 18.5 - Overriding Provisions
- ------------------------------------
The provisions of this Article XVIII shall apply
notwithstanding any other provisions of the Plan, except Section 15.2, and
shall override any conflicting Plan provisions.
-95-
<PAGE> 101
ARTICLE XIX
DIRECT ROLLOVER
---------------
Section 19.1 - Direct Rollover Election
- ---------------------------------------
This Article 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
Article, a distributee of the Plan may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an eligible
rollover distribution paid directly to an eligible retirement plan specified by
the distributee in a direct rollover.
Section 19.2 - Definitions
- --------------------------
(a) 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).
(b) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of
the Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the distributee's
eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account
or individual retirement annuity.
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<PAGE> 102
(c) Distributee: A distributee includes an employee or former
employee. In addition, the employee's or former employee's
surviving spouse and the employee's or former employee's
spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in Section
414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
(d) Direct rollover: A direct rollover is a payment by the Plan
to the eligible retirement plan specified by the distributee.
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<PAGE> 103
ARTICLE XX
EFFECTIVE DATE
--------------
Except as provided below or otherwise in the Plan,
this amendment and restatement of the Plan shall be effective as of October 1,
1994, but only with respect to employees who are credited with an hour of
service on or after that date. Unless otherwise provided in the Plan, this
amendment and restatement is effective with respect to each change made to
satisfy the provision of (i) the Tax Reform Act of 1986 ("TRA '86"), (ii) any
other change in the Code or ERISA, or (iii) regulations, rulings, or other
published guidance issued under the Code, ERISA, or TRA '86, the first day of
the first period (which may or may not be the first day of a Plan Year) with
respect to which such change became required because of such provision
(including any day that became such as a result of an election or waiver by an
employee or a waiver or exemption issued under the Code, ERISA, or TRA '86),
but, unless otherwise indicated, with respect only to employees whose
employment covered under the Plan terminates on or after said date.
Notwithstanding the foregoing and subject to applicable law, with respect to
Plan Years beginning after December 31, 1986 and before the general effective
date of this amendment and restatement, the Company may elect to operate the
Plan in accordance with any transitional rule published by the Internal Revenue
Service or a reasonable, good faith interpretation of TRA '86 and related
applicable law, in which event such transitional rule or good faith
interpretation shall prevail over the provisions of the Plan with respect to
such Plan Year.
IN WITNESS WHEREOF, the Company has caused this
instrument to be executed by its duly authorized officers this ____ day of
______________, 1995.
THE REYNOLDS AND REYNOLDS COMPANY
Attest:
________________________ BY______________________________
Title: Title:
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<PAGE> 104
SCHEDULE I
PARTICIPATING EMPLOYERS
-----------------------
This Schedule I lists all participating Employers,
indicating their date of participation and any special provisions which may be
applicable.
Section 1 - Participating Employers
- -----------------------------------
<TABLE>
<CAPTION>
Employer Effective Date of Special Provisions
-------- ----------------- ------------------
Participation
-------------
<S> <C> <C>
The Reynolds and Reynolds October 1, 1976 None
Company
The Arnold Corporation - October 1, 1986 Plan adopted only for Employees who
Printed Communications For transferred to its employment directly
Business from the Reynolds and Reynolds Company
on or about October 1, 1986.
Loftins Business Forms Co., October 1, 1986 Plan adopted only for Employees who
Inc. transferred to its employment directly
from The Reynolds and Reynolds Company
on or about October 1, 1986.
The Arnold Corporation - October 1, 1989 Plan adopted only for Employees not
Printed Communications For described above under Special
Business Provisions with respect to its October
1, 1986 Effective Date of
Participation.
</TABLE>
-99-
<PAGE> 105
<TABLE>
<S> <C> <C>
NMCS, Inc. January 1, 1993 Plan adopted only for Employees other
than any person employed by NMCS, Inc.
in connection with NMCS, Inc.'s Total
Billing Management service and whose
primary duties are the performance of
services for a customer or customers
of NMCS, Inc.'s Total Billing
Management service at a field
location.
Norick Brothers, Inc. January 1, 1993 Plan adopted only for Employees.
</TABLE>
Section 2 - Special Provisions Applicable to Participants Who Were Employees of
- -------------------------------------------------------------------------------
Data Systems Corporation Prior to July 1, 1978
- ----------------------------------------------
For Participants who were employees of Data Systems
Corporation prior to July 1, 1978, "Compensation" as defined herein shall
specifically include any commission they may receive from the sale of Data
Systems Corporation products as set forth in their individual employment
contracts.
-100-
<PAGE> 106
SCHEDULE II
PROVISIONS REGARDING PREDECESSOR EMPLOYMENT
-------------------------------------------
Provisions regarding predecessor employment (as
provided in Section 14.2 of the Plan) are noted below.
<TABLE>
<CAPTION>
Predecessor Date of Provisions Regarding
---------- ------- --------------------
Employer Participation Predecessor Employment in
-------- ------------- -------------------------
Determining
-----------
Credited
--------
Service Service
------- -------
<S> <C> <C>
Data Systems Corporation October 1, 1978 None None
Accumation, Inc. October 1, 1979 In determining Service (Section 3.2), Credited
Service (Section 3.3), and eligibility to
participate in the Plan (Section 2.1) for former
employees of Accumation, Inc., periods of
employment with Accumation, Inc. shall not be
considered periods of Continuous Employment under
the Plan, except that periods of employment with
Accumation, Inc. between April 1, 1979 and
September 30, 1979, inclusive, shall be considered
periods of Continuous Employment with The Reynolds
and Reynolds Company, and except that periods of
employment prior to April 1, 1979 with Accumation,
Inc. shall be considered Continuous Employment only
for purposes of Service for purposes of eligibility
for an Early Retirement Pension (Section 4.2) and
for purposes of Service for purposes of determining
the Accrued Retirement Pension of a Participant who
retires on Early Retirement under Section 4.2 after
completing thirty-five (35) or more years of
Service (Section 1.23(e)).
</TABLE>
-101-
<PAGE> 107
<TABLE>
<S> <C> <C>
ReyZon January 1, 1980 In determining Service (Section 3.2), Credited
Service (Section 3.3), and eligibility to
participate in the Plan (Section 2.1) for former
employees of ReyZon periods of employment with
ReyZon shall not be considered periods of
Continuous Employment under the Plan, except that
periods of employment prior to January 2, 1980 with
ReyZon shall be considered Continuous Employment
only for purposes of Service for purposes of
eligibility for an Early Retirement Pension
(Section 4.2) and for purposes of Service for
purposes of determining the Accrued Retirement
Pension of a Participant who retires on Early
Retirement under Section 4.2 after completing
thirty-five (35) or more years of Service
(Section 1.23(e)).
</TABLE>
-102-
<PAGE> 108
<TABLE>
<S> <C> <C>
The Arnold Corporation - October 1, 1989 In determining Service (Section 3.2), Credited
Printed Communications Service (Section 3.3), and eligibility to
For Business ("Arnold") participate in the Plan (Section 2.1) for
(i) Employees of Arnold described in the Special
Provisions section of Schedule I dealing with
Arnold's October 1, 1989 Effective Date of
Participation, and (ii) for any employee or former
employee of Arnold, Loftins Business Forms Co.,
Inc., any subsidiary of Arnold or Loftins, or any
affiliate of any such entity (the "Arnold Group")
who on or after October 1, 1989 becomes an Employee
of an Employer other than the Arnold Group, periods
of employment with Arnold, Loftins, or any
subsidiary of Arnold or Loftins between May 30,
1986 and September 30, 1989, inclusive, shall be
considered periods of Continuous Employment with
The Reynolds and Reynolds Company, and, periods of
employment with Arnold, Loftins, or any subsidiary
of Arnold or Loftins between May 30, 1986 and
September 30, 1987, inclusive, shall be considered
periods of Credited Service under the Plan; periods
of employment with Arnold, Loftins, or any
subsidiary of Arnold or Loftins, or any affiliate
of any such entity prior to May 30, 1986 shall not
be considered periods of Continuous Employment
under the Plan, except that periods of employment
prior to May 30, 1986 with Arnold, Loftins, or any
subsidiary of Arnold or Loftins shall be considered
Continuous Employment only for
</TABLE>
-103-
<PAGE> 109
<TABLE>
<S> <C> <C>
purposes of Service for a Participant
who retires on Early
Retirement under Section 4.2
after completing thirty-five
(35) or more years of Service
(Section 1.23(e)); provided,
however, that this provision
shall not prevent crediting
of periods of employment as
Continuous Employment for
Employees described in the
Special Provisions section of
Schedule I dealing with
Arnold's October 1, 1986
Effective Date of
Participation; and, provided
further, however, that there
shall be no duplication of
credit for Service or
Credited Service for any one
period of time. The
foregoing special provisions
shall override any other
provision of the Plan,
including, without
limitation, Section 2.3, so
that employment with the
Arnold Group (or any member
thereof) prior to May 30,
1986 shall not be counted as
Continuous Employment under
the Plan except as
specifically provided above.
</TABLE>
-104-
<PAGE> 110
<TABLE>
<S> <C> <C>
Caseware, Inc. June 1, 1988 In determining Service (Section 3.2), Credited
Service (Section 3.3), and eligibility to
participate in the Plan (Section 2.1) for former
employees of Caseware, Inc. periods of employment
with Caseware, Inc. shall not be considered periods
of Continuous Employment under the Plan, except
that periods of employment prior to June 1, 1988
with Caseware, Inc. shall be considered Continuous
Employment only for purposes of Service for
purposes of eligibility for an Early Retirement
Pension (Section 4.2) and for purposes of Service
for purposes of determining the Accrued Retirement
Pension of a Participant who retires on Early
Retirement under Section 4.2 after completing
thirty-five (35) or more years of Service
(Section 1.23(e)).
</TABLE>
-105-
<PAGE> 111
<TABLE>
<S> <C> <C>
NMCS, Inc. January 1, 1993 In determining Service (Section 3.2), Credited
Service (Section 3.3), and eligibility to
participate in the Plan (Section 2.1) for
(i) (eligible) Employees of NMCS, Inc. described in
the Special Provisions section of Schedule I
dealing with NMCS, Inc.'s January 1, 1993 Effective
Date of Participation, and (ii) for any employee or
former employee of NMCS, Inc. who on or after
January 1, 1993 becomes an Employee of an Employer
other than NMCS, Inc., periods of employment with
NMCS, Inc. between January 1, 1990 and January 1,
1993, inclusive, shall be considered periods of
Continuous Employment with The Reynolds and
Reynolds Company; periods of employment with NMCS,
Inc. or any predecessor or affiliate of NMCS, Inc.
prior to January 1, 1990 shall not be considered
periods of Continuous Employment under the Plan,
except that periods of employment prior to
January 1, 1990 with NMCS, Inc. or any predecessor
or affiliate of NMCS, Inc. shall be considered
Continuous Employment only for purposes of Service
for purposes of eligibility for an Early Retirement
Pension (Section 4.2) and for purposes of Service
for purposes of determining the Accrued Retirement
Pension of a Participant who retires on Early
Retirement under Section 4.2 after completing
thirty-five (35) or more years of Service
(Section 1.23(e)); provided, however, that there
shall be no duplication of
</TABLE>
-106-
<PAGE> 112
<TABLE>
<S> <C> <C>
credit for Service or Credited Service for any one
period of time. The foregoing special provisions
shall override any other provision of the Plan,
including, without limitation, Section 2.3, so that
employment with NMCS, Inc. or any predecessor or
affiliate of NMCS, Inc. prior to November 30, 1986
shall not be counted as Continuous Employment under
the Plan except as specifically provided above.
</TABLE>
-107-
<PAGE> 113
<TABLE>
<S> <C> <C>
Norick Brothers, Inc. January 1, 1993 In determining Service (Section 3.2), Credited
Service (Section 3.3), and eligibility to
participate in the Plan (Section 2.1) for
(i) (eligible) Employees of Norick Brothers, Inc.
described in the Special Provisions section of
Schedule I dealing with Norick Brothers, Inc.'s
January 1, 1993 Effective Date of Participation,
and (ii) for any employee or former employee of
Norick Brothers, Inc. who on or after January 1,
1993 becomes an Employee of an Employer other than
Norick Brothers, Inc., periods of employment with
Norick Brothers, Inc. between June 1, 1992 and
January 1, 1993, inclusive, shall be considered
periods of Continuous Employment with The Reynolds
and Reynolds Company, and, periods of employment
with Norick Brothers, Inc. between June 1, 1992 and
September 30, 1993, inclusive, shall be considered
periods of Credited Service under the Plan; periods
of employment with Norick Brothers, Inc. or any
predecessor or affiliate of Norick Brothers Inc.
prior to June 1, 1992 shall not be considered
periods of Continuous Employment under the Plan,
except that periods of employment prior to June 1,
1992 with Norick Brothers, Inc. or any predecessor
or affiliate of Norick Brothers, Inc. shall be
considered Continuous Employment only for purposes
of Service for purposes of eligibility for an Early
Retirement Pension (Section 4.2) and for purposes
of Service for purposes of
</TABLE>
-108-
<PAGE> 114
<TABLE>
<S> <C> <C>
determining the Accrued Retirement Pension of a
Participant who retires on Early Retirement under
Section 4.2 after completing thirty-five (35) or
more years of Service (Section 1.23(e)); provided,
however, that there shall be no duplication of
credit for Service or Credited Service for any one
period of time. The foregoing special provisions
shall override any other provision of the Plan,
including, without limitation, Section 2.3, so that
employment with Norick Brothers, Inc. or any
predecessor or affiliate of Norick Brothers, Inc.
prior to June 1, 1992 shall not be counted as
Continuous Employment under the Plan except as
specifically provided above.
</TABLE>
-109-
<PAGE> 115
<TABLE>
<S> <C> <C>
Shumate Business Forms January 1, 1993 In determining Service (Section 3.2), Credited
Service (Section 3.3), and eligibility to
participate in the Plan (Section 2.1) for former
employees of Shumate Business Forms, periods of
employment with the Company shall be considered for
purposes of determining Continuous Employment under
the Plan beginning as of August 31, 1992, and
periods of employment with Shumate Business Forms
shall not be considered periods of Continuous
Employment under the Plan, except that periods of
employment prior to August 31, 1992 with Shumate
Business Forms shall be considered Continuous
Employment only for purposes of Service for
purposes of eligibility for an Early Retirement
Pension (Section 4.2) and for purposes of Service
for purposes of determining the Accrued Retirement
Pension of a Participant who retires on Early
Retirement under Section 4.2 after completing
thirty-five (35) or more years of Service
(Section 1.23(e)).
</TABLE>
-110-
<PAGE> 116
<TABLE>
<S> <C> <C>
Woodbury Business October 1, 1993 In determining Service (Section 3.2), Credited
Systems, Inc. Service (Section 3.3), and eligibility to
participate in the Plan (Section 2.1) for former
employees of Woodbury Business Systems, Inc.
periods of employment with of employment with the
Company shall be considered for purposes of
determining Continuous Employment under the Plan
beginning as of February 26, 1993, and period of
employment with Woodbury Business Systems, Inc.
shall not be considered periods of Continuous
Employment under the Plan, except that periods of
employment prior to February 26, 1993 with Woodbury
Business Systems, Inc. shall be considered
Continuous Employment only for purposes of Service
for purposes of eligibility for an Early Retirement
Pension (Section 4.2) and for purposes of
determining the Accrued Retirement Pension of a
Participant who retires on Early Retirement under
Section 4.2 after completing thirty-five (35) or
more years of Service (Section 1.23(e)).
</TABLE>
-111-
<PAGE> 117
<TABLE>
<S> <C> <C>
Coin, Inc. June 1, 1994 In determining Service (Section 3.2), Credited
Service (Section 3.3), and eligibility to
participate in the Plan (Section 2.1) for any
former employee of Coin, Inc. or any predecessor or
affiliate of Coin, Inc. who on or after June 1,
1994 is an Employee of an Employer, periods of
employment with Coin, Inc. or any predecessor or
affiliate of Coin, Inc. between June 29, 1993 and
October 1, 1993, inclusive, shall be considered
periods of Continuous Employment with The Reynolds
and Reynolds Company, and, periods of employment
with Coin, Inc. or any predecessor or affiliate of
Coin, Inc. between June 29, 1993 and September 30,
1994, inclusive, shall be considered periods of
Credited Service under the Plan; periods of
employment with Coin, Inc. or any predecessor or
affiliate of Coin, Inc. prior to June 29, 1993
shall not be considered periods of Continuous
Employment under the Plan, except that periods of
employment prior to June 29, 1993 with Coin, Inc.
or any predecessor or affiliate of Coin, Inc. shall
be considered Continuous Employment only for
purposes of Service for purposes of eligibility for
an Early Retirement Pension (Section 4.2) and for
purposes of Service for purposes of determining the
Accrued Retirement Pension of a Participant who
retires on Early Retirement under Section 4.2 after
completing thirty-five (35) or more years of
Service (Section 1.23(e));
</TABLE>
-112-
<PAGE> 118
<TABLE>
<S> <C> <C>
provided, however that there shall be no
duplication of credit for Service or Credited
Service for any one period of time. The foregoing
special provisions shall override any other
provision of the Plan, including, without
limitation, Section 2.3, so that employment with
Coin, Inc. or any predecessor or affiliate of Coin,
Inc. prior to June 29, 1993 shall not be counted as
Continuous Employment under the Plan except as
specifically provided above.
</TABLE>
-113-
<PAGE> 119
<TABLE>
<S> <C> <C>
LAW Printing, Inc. October 1, 1994 In determining Service (Section 3.2), Credited
Service (Section 3.3), and eligibility to
participate in the Plan (Section 2.1) for former
employees of LAW Printing, Inc., periods of
employment with the Company shall be considered for
purposes of determining Continuous Employment under
the Plan beginning as of January 4, 1994, and
periods of employment with LAW Printing, Inc. shall
not be considered periods of Continuous Employment
under the Plan, except that periods of employment
prior to January 4, 1994, with LAW Printing, Inc.
shall be considered Continuous Employment only for
purposes of Service for purposes of eligibility for
an Early Retirement Pension (Section 4.2) and for
purposes of Service for purposes of determining the
Accrued Retirement Pension of a Participant who
retires on Early Retirement under Section 4.2 after
completing thirty-five (35) or more years of
Service (Section 1.23(e)).
</TABLE>
-114-
<PAGE> 120
<TABLE>
<S> <C> <C>
Management Computer October 1, 1995 In determining Service (Section 3.2), Credited
Services, Inc. Service (Section 3.3), and eligibility to
participate in the Plan (Section 2.1) for former
employees of Management Computer Services, Inc.,
periods of employment with the Company shall be
considered for purposes of determining Continuous
Employment under the Plan beginning as of May 7,
1994, and periods of employment with Management
Computer Services, Inc. shall not be considered
periods of Continuous Employment under the Plan,
except that periods of employment prior to May 7,
1994, with Management Computer Services, Inc. shall
be considered Continuous Employment only for
purposes of Service for purposes of eligibility for
an Early Retirement Pension (Section 4.2) and for
purposes of Service for purposes of determining the
Accrued Retirement Pension of a Participant who
retires on Early Retirement under Section 4.2 after
completing thirty-five (35) or more years of
Service (Section 1.23(e)).
</TABLE>
-115-
<PAGE> 121
<TABLE>
<S> <C> <C>
Poorman Douglas October 1, 1995 In determining Service (Section 3.2), Credited
Service (Section 3.3), and eligibility to
participate in the Plan (Section 2.1) for former
employees of Poorman Douglas, periods of employment
with the Company shall be considered for purposes
of determining Continuous Employment under the Plan
beginning as of November 1, 1994, and periods of
employment with Poorman Douglas shall not be
considered periods of Continuous Employment under
the Plan, except that periods of employment prior
to November 1, 1994, with Poorman Douglas shall be
considered Continuous Employment only for purposes
of Service for purposes of eligibility for an Early
Retirement Pension (Section 4.2) and for purposes
of Service for purposes of determining the Accrued
Retirement Pension of a Participant who retires on
Early Retirement under Section 4.2 after completing
thirty-five (35) or more years of Service
(Section 1.23(e)).
</TABLE>
-116-
<PAGE> 122
<TABLE>
<S> <C> <C>
Pioneer Systems, October 1, 1995 In determining Service (Section 3.2), Credited
Incorporated Service (Section 3.3), and eligibility to
participate in the Plan (Section 2.1) for former
employees of Pioneer Systems, Incorporated, periods
of employment with the Company shall be considered
for purposes of determining Continuous Employment
under the Plan beginning as of April 1, 1995, and
periods of employment with Pioneer Systems,
Incorporated shall not be considered periods of
Continuous Employment under the Plan, except that
periods of employment prior to April 1, 1995, with
Pioneer Systems, Incorporated shall be considered
Continuous Employment only for purposes of Service
for purposes of eligibility for an Early Retirement
Pension (Section 4.2) and for purposes of Service
for purposes of determining the Accrued Retirement
Pension of a Participant who retires on Early
Retirement under Section 4.2 after completing
thirty-five (35) or more years of Service
(Section 1.23(e)).
</TABLE>
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<PAGE> 123
<TABLE>
<S> <C> <C>
Salcris Corporation October 1, 1996 In determining Service
(Section 3.2), Credited
Service (Section 3.3),
and eligibility to
participate in the Plan
(Section 2.1) for former
employees of Salcris
Corporation, periods of
employment with the
Company shall be
considered for purposes
of determining Continuous
Employment under the Plan
beginning as of May 12,
1995, and periods of
employment with Salcris
Corporation shall not be
considered periods of
Continuous Employment
under the Plan, except
that periods of
employment prior to May
12, 1995, with Salcris
Corporation shall be
considered Continuous
Employment only for
purposes of Service for
purposes of eligibility
for an Early Retirement
Pension (Section 4.2) and
for purposes of Service
for purposes of
determining the Accrued
Retirement Pension of a
Participant who retires
on Early Retirement under
Section 4.2 after
completing thirty-five
(35) or more years of
Service (Section
1.23(e)).
</TABLE>
-118-
<PAGE> 124
<TABLE>
<S> <C> <C>
D.I.S.C. October 1, 1996 In determining Service
(Section 3.2), Credited
Service (Section 3.3),
and eligibility to
participate in the Plan
(Section 2.1) for former
employees of D.I.S.C.,
periods of employment
with the Company shall be
considered for purposes
of determining Continuous
Employment under the Plan
beginning as of June 16,
1995, and periods of
employment with D.I.S.C.
shall not be considered
periods of Continuous
Employment under the
Plan, except that periods
of employment prior to
June 16, 1995, with
D.I.S.C. shall be
considered Continuous
Employment only for
purposes of Service for
purposes of eligibility
for an Early Retirement
Pension (Section 4.2) and
for purposes of Service
for purposes of
determining the Accrued
Retirement Pension of a
Participant who retires
on Early Retirement under
Section 4.2 after
completing thirty-five
(35) or more years of
Service (Section
1.23(e)).
</TABLE>
-119-
<PAGE> 125
<TABLE>
<S> <C> <C>
The Nickelsen Group October 1, 1996 In determining Service
(Section 3.2), Credited
Service (Section 3.3), and
eligibility to participate in
the Plan (Section 2.1) for
former employees of The
Nickelsen Group, periods of
employment with the Company
shall be considered for
purposes of determining
Continuous Employment under
the Plan beginning as of July
1, 1995, and periods of
employment with The Nickelsen
Group shall not be considered
periods of Continuous
Employment under the Plan,
except that periods of
employment prior to July 1,
1995, with The Nickelsen Group
shall be considered Continuous
Employment only for purposes
of Service for purposes of
eligibility for an Early
Retirement Pension (Section
4.2) and for purposes of
Service for purposes of
determining the Accrued
Retirement Pension of a
Participant who retires on
Early Retirement under Section
4.2 after
</TABLE>
-120-
<PAGE> 1
THE REYNOLDS AND REYNOLDS COMPANY
401(K) SAVINGS PLAN
(January 1, 1994 Restatement)
<PAGE> 2
TABLE OF CONTENTS
PREAMBLE
<TABLE>
<CAPTION>
ARTICLE I
DEFINITIONS
<S> <C> <C>
1.1 PLAN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II
ELIGIBILITY
2.1 ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 TRANSFERS OF EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 REEMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 NOTIFICATION CONCERNING NEW ELIGIBLE
EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 BINDING EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
TAX-DEFERRED CONTRIBUTIONS
3.1 TAX-DEFERRED CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 AMOUNT OF TAX-DEFERRED CONTRIBUTIONS . . . . . . . . . . . . . . . . . . 10
3.3 CHANGES IN REDUCTION AUTHORIZATION . . . . . . . . . . . . . . . . . . . 10
3.4 SUSPENSION OF TAX-DEFERRED CONTRIBUTIONS . . . . . . . . . . . . . . . . 11
3.5 RESUMPTION OF TAX-DEFERRED CONTRIBUTIONS . . . . . . . . . . . . . . . . 11
3.6 DELIVERY OF TAX-DEFERRED CONTRIBUTIONS . . . . . . . . . . . . . . . . . 11
3.7 VESTING OF TAX-DEFERRED CONTRIBUTIONS . . . . . . . . . . . . . . . . . . 11
ARTICLE IV
ROLLOVER CONTRIBUTIONS
4.1 ROLLOVER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 VESTING OF ROLLOVER CONTRIBUTION . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V
EMPLOYER CONTRIBUTIONS
5.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 CONTRIBUTION PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 QUALIFIED NONELECTIVE CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . 13
5.4 ALLOCATION OF QUALIFIED NONELECTIVE
CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.5 MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.6 ALLOCATION OF MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . . . . 14
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
5.7 VERIFICATION OF AMOUNT OF EMPLOYER
CONTRIBUTIONS BY THE SPONSOR . . . . . . . . . . . . . . . . . . . . . 15
5.8 PAYMENT OF EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . 15
5.9 ELIGIBILITY TO PARTICIPATE IN
ALLOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.10 VESTING OF EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . 15
5.11 ELECTION OF FORMER VESTING SCHEDULE . . . . . . . . . . . . . . . . . . . 15
ARTICLE VI
LIMITATIONS ON CONTRIBUTIONS
6.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.2 CODE SECTION 402(G) LIMIT . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3 LIMITATION ON TAX-DEFERRED CONTRIBUTIONS
OF HIGHLY COMPENSATED EMPLOYEES . . . . . . . . . . . . . . . . . . . . 21
6.4 DISTRIBUTION OF EXCESS TAX-DEFERRED
CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.5 LIMITATION ON MATCHING CONTRIBUTIONS
OF HIGHLY COMPENSATED EMPLOYEES . . . . . . . . . . . . . . . . . . . . 24
6.6 DISTRIBUTION OF EXCESS CONTRIBUTIONS . . . . . . . . . . . . . . . . . . 25
6.7 MULTIPLE USE LIMITATION . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.8 DETERMINATION OF INCOME OR LOSS . . . . . . . . . . . . . . . . . . . . . 26
6.9 CODE SECTION 415 LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . 26
6.10 COVERAGE UNDER OTHER QUALIFIED
DEFINED CONTRIBUTION PLAN . . . . . . . . . . . . . . . . . . . . . . . 27
6.11 COVERAGE UNDER QUALIFIED DEFINED
BENEFIT PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.12 SCOPE OF LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE VII
TRUST FUNDS AND SEPARATE ACCOUNTS
7.1 GENERAL FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.2 INVESTMENT FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.3 LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4 APPOINTMENT OF INVESTMENT MANAGERS . . . . . . . . . . . . . . . . . . . 29
7.5 INCOME ON TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.6 SEPARATE ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.7 SUB-ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.8 PAYROLL-BASED STOCK OWNERSHIP PLAN
("PAYSOP") ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VIII
LIFE INSURANCE CONTRACTS
8.1 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.2 PAYMENT OF PREMIUMS . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.3 OVERRIDING CONDITIONS AND LIMITATIONS . . . . . . . . . . . . . . . . . . 32
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
ARTICLE IX
DEPOSIT AND INVESTMENT OF CONTRIBUTIONS
<S> <C> <C>
9.1 FUTURE CONTRIBUTION INVESTMENT ELECTIONS . . . . . . . . . . . . . . . . .34
9.2 DEPOSIT OF CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . .34
9.3 ELECTION TO TRANSFER BETWEEN FUNDS . . . . . . . . . . . . . . . . . . . .34
ARTICLE X
CREDITING AND VALUING SEPARATE ACCOUNTS
10.1 CREDITING SEPARATE ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . .36
10.2 VALUING SEPARATE ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . .36
10.3 PLAN VALUATION PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . .36
10.4 FINALITY OF DETERMINATIONS . . . . . . . . . . . . . . . . . . . . . . . .37
10.5 NOTIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
ARTICLE XI
LOANS
ARTICLE XII
WITHDRAWALS
12.1 WITHDRAWALS OF ROLLOVERS AND PAYSOP
TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
12.2 AGE 59-1/2 AND POST-SEPARATION WITHDRAWALS
OF TAX-DEFERRED CONTRIBUTIONS AND
EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . .40
12.3 HARDSHIP WITHDRAWALS OF TAX-DEFERRED
CONTRIBUTIONS AND EMPLOYER
CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
12.4 LIMITATIONS ON WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . . . .40
12.5 ORDER OF WITHDRAWAL FROM A PARTICIPANT'S
SUB-ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
12.6 CONDITIONS AND LIMITATIONS ON HARDSHIP
WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
ARTICLE XIII
SEPARATION FROM SERVICE AND SETTLEMENT DATE
13.1 SEPARATION FROM SERVICE AND SETTLEMENT DATE . . . . . . . . . . . . . . . .43
ARTICLE XIV
DISTRIBUTIONS
14.1 DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
14.2 DISTRIBUTIONS TO BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . .44
14.3 CASH OUTS AND PARTICIPANT CONSENT . . . . . . . . . . . . . . . . . . . . .44
14.4 REQUIRED COMMENCEMENT OF DISTRIBUTION . . . . . . . . . . . . . . . . . . .45
14.5 REEMPLOYMENT OF A PARTICIPANT . . . . . . . . . . . . . . . . . . . . . . .45
14.6 RESTRICTIONS ON ALIENATION . . . . . . . . . . . . . . . . . . . . . . . .46
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C> <C>
14.7 FACILITY OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
14.8 INABILITY TO LOCATE PAYEE . . . . . . . . . . . . . . . . . . . . . . . . .46
14.9 DISTRIBUTION PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDERS . . . . . . .46
ARTICLE XV
FORM OF PAYMENT
15.1 FORM OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
15.2 CHANGE OF ELECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
15.3 NOTICE REGARDING FORMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . .48
15.4 REEMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
15.5 SECTION 242(B)(2) ELECTIONS . . . . . . . . . . . . . . . . . . . . . . . .49
ARTICLE XVI
BENEFICIARIES
16.1 DESIGNATION OF BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . .51
16.2 SPOUSAL CONSENT REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . .51
ARTICLE XVII
ADMINISTRATION
17.1 AUTHORITY OF THE COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . .52
17.2 ACTION OF THE COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . .52
17.3 CLAIMS REVIEW PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . .53
17.4 QUALIFIED DOMESTIC RELATIONS ORDERS . . . . . . . . . . . . . . . . . . . .54
17.5 RESPONSIBILITIES OF THE SPONSOR, THE
COMMITTEE, AND THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . 54
17.6 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
17.7 ACTIONS BINDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
ARTICLE XVIII
AMENDMENT AND TERMINATION
18.1 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
18.2 LIMITATION ON AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . .56
18.3 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56
18.4 REORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57
18.5 WITHDRAWAL OF AN EMPLOYER . . . . . . . . . . . . . . . . . . . . . . . . .58
ARTICLE XIX
ADOPTION BY OTHER ENTITIES
19.1 ADOPTION BY RELATED COMPANIES . . . . . . . . . . . . . . . . . . . . . . .59
19.2 EFFECTIVE PLAN PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . .59
</TABLE>
(iv)
<PAGE> 6
<TABLE>
<CAPTION>
ARTICLE XX
MISCELLANEOUS PROVISIONS
<S> <C> <C>
20.1 NO COMMITMENT AS TO EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . .60
20.2 BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
20.3 NO GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
20.4 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
20.5 PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
20.6 DUTY TO FURNISH INFORMATION . . . . . . . . . . . . . . . . . . . . . . . .60
20.7 WITHHOLDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
20.8 MERGER, CONSOLIDATION, OR TRANSFER OF
PLAN ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
20.9 CONDITION ON EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . .61
20.10 RETURN OF CONTRIBUTIONS TO AN EMPLOYER . . . . . . . . . . . . . . . . . .61
20.11 VALIDITY OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
20.12 TRUST AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
20.13 PARTIES BOUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
20.14 APPLICATION OF CERTAIN PLAN PROVISIONS . . . . . . . . . . . . . . . . . .62
20.15 LEASED EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62
20.16 TRANSFERRED FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
20.17 SPECIAL PROVISIONS REGARDING EMPLOYEES
COVERED BY COLLECTIVE BARGAINING
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
20.18 FORFEITURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63
ARTICLE XXI
TOP-HEAVY PROVISIONS
21.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
21.2 APPLICABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
21.3 MINIMUM EMPLOYER CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . .67
21.4 ADJUSTMENTS TO SECTION 415 LIMITATIONS . . . . . . . . . . . . . . . . . .67
21.5 ACCELERATED VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
ARTICLE XXII
ROLLOVERS TO ELIGIBLE RETIREMENT PLANS
22.1 ROLLOVER REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . .69
22.2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
ARTICLE XXIII
MERGER INTO THE PLAN OF THE ARNOLD CORPORATION
PRINTED COMMUNICATIONS FOR BUSINESS
SAVINGS PLAN
23.1. MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
23.2. ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
23.3. OVERRIDING PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .72
</TABLE>
(v)
<PAGE> 7
ARTICLE XXIV
MERGER INTO THE PLAN OF CERTAIN LIFE INSURANCE POLICIES
HELD UNDER THE NORICK BROTHERS, INC.
SECTION 401(K) SALARY REDUCTION PLAN AND
ADOPTION OF THE PLAN BY NORICK BROTHERS, INC.
<TABLE>
<S> <C> <C>
24.1. MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73
24.2. ADJUSTMENTS TO LIMITATIONS UNDER
SECTION 415 OF THE CODE . . . . . . . . . . . . . . . . . . . . . . . . .73
24.3. OVERRIDING PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .74
ARTICLE XXV
MERGER INTO THE PLAN OF THE NORICK BROTHERS, INC.
SECTION 401(K) SALARY REDUCTION PLAN
25.1. MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
25.2. ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75
25.3. OVERRIDING PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .75
ARTICLE XXVI
MERGER INTO THE PLAN OF THE COIN SYSTEMS, INC.
PROFIT SHARING PLAN
26.1. MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76
26.2. ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76
26.3. ADJUSTMENTS TO LIMITATIONS UNDER
SECTION 415 OF THE CODE . . . . . . . . . . . . . . . . . . . . . . . . .76
26.4. OVERRIDING PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .78
ARTICLE XXVII
MERGER INTO THE PLAN OF THE
MCS-ONE TOUCH 401(K) RETIREMENT PLAN
27.1. MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
27.2. ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .79
27.3. OVERRIDING PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .79
ARTICLE XXVIII
EFFECTIVE DATE
28.1 EFFECTIVE DATE OF AMENDMENT AND RESTATEMENT . . . . . . . . . . . . . . . .80
</TABLE>
(vi)
<PAGE> 8
PREAMBLE
The Reynolds and Reynolds Company 401(k) Savings Plan, originally effective as
of November 1, 1983, and heretofore known as The Reynolds and Reynolds Company
Tax Deferred Savings and Protection Plan, is hereby amended and restated in its
entirety. The Plan, as amended and restated hereby, is intended to qualify as
a profit-sharing plan under Section 401(a) of the Code. The Plan is intended
to be and shall be a profit-sharing plan for all purposes under the Code and
under ERISA notwithstanding the fact that there is no requirement that an
Employer have profits or current or accumulated net earnings for any Plan Year
or Contribution Period in order to make contributions to the Plan. The Plan
also includes a cash or deferred arrangement that is intended to qualify under
Section 401(k) of the Code. The Plan is maintained for the exclusive benefit
of eligible employees and their beneficiaries.
<PAGE> 9
ARTICLE I
DEFINITIONS
1.1 PLAN DEFINITIONS
As used herein, the following words and phrases have the meanings hereinafter
set forth, unless a different meaning is plainly required by the context:
The "ADMINISTRATOR" means the Committee, but in the event there is no
Committee, the "Administrator" means the Sponsor.
An "AFTER-TAX CONTRIBUTION" means any after-tax employee contribution made by a
Participant if any are permitted under the Plan.
The "ARNOLD PLAN" means the Arnold Corporation Printed Communications for
Business Savings Plan.
The "BENEFICIARY" of a Participant means the person or persons entitled under
the provisions of the Plan to receive distribution hereunder in the event the
Participant dies before receiving distribution of his entire interest under the
Plan.
The "CODE" means the Internal Revenue Code of 1986, as amended from time to
time. Reference to a section of the Code includes such section and any
comparable section or sections of any future legislation that amends,
supplements, or supersedes such section.
The "COMMITTEE" means the Reynolds and Reynolds Company 401(k) Savings Plan
Committee, as described in Article XVIII hereof.
The "COMPENSATION" of an Eligible Employee for any period means compensation
within the meaning of Section 1.415-2(d) of the Treasury Regulations, as amended
from time to time, which is paid by the Employers to such Eligible Employee
during a Plan Year, plus amounts that would have been so paid but for an
employee elective contribution under a cash or deferred arrangement under
Section 401(k) of the Code of an Employer or but for a compensation reduction
under Section 125 of the Code under a cafeteria plan of an Employer, but
excluding all of the following: reimbursements or other expense allowances,
fringe benefits (cash and noncash), moving expenses, deferred compensation,
welfare benefits, severance amounts, cost equalization, vacation bonuses, car
allowance, relocation amounts, suggestion awards, prizes and awards, tuition
refund, auto allowances, amounts arising out of incentive stock options,
gross-up payments, phone allowances, wage supplements, and payments with respect
to unused credits under a
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Code Section 125 plan. In no event, however, shall the Compensation of an
Eligible Employee taken into account under the Plan for any Plan Year exceed
(1) $200,000 for Plan Years beginning on or after January 1, 1989 and beginning
prior to January 1, 1994, or (2) $150,000 for Plan Years beginning on or after
January 1, 1994; both subject to adjustment annually at the same time and in
the same manner as under Section 401(a)(17)(B) and Section 415(d) of the Code,
with the dollar increase in effect on January 1 of any calendar year being
effective for Plan Years beginning in such calendar year. If the Compensation
of an Eligible Employee is determined over a period of time that contains fewer
than 12 calendar months, then the annual compensation limitation described
above shall be adjusted with respect to that Participant by multiplying the
annual compensation limitation in effect for the Plan Year by a fraction the
numerator of which is the number of full months in the period and the
denominator of which is 12; provided, however, that no proration is required
for an Eligible Employee who is covered under the Plan for less than one full
Plan Year if the formula for allocations is based on Compensation for a period
of at least 12 months. In determining the Compensation, for purposes of
applying the annual compensation limitation described above, of an Eligible
Employee who is a five percent owner or among the ten Highly Compensated
Employees receiving the greatest Compensation for the Plan Year, the
Compensation of the Eligible Employee's spouse and of his lineal descendants
who have not attained age 19 as of the close of the Plan Year shall be included
as Compensation of the Eligible Employee for the Plan Year. If as a result of
applying the family aggregation rule described in the preceding sentence the
annual compensation limitation would be exceeded, the limitation shall be
prorated among the affected family members in proportion to each member's
Compensation as determined prior to application of the family aggregation
rules.
A "CONTRIBUTION PERIOD" means the period specified in Article V for which
Employer Contributions shall be made.
An "ELIGIBLE EMPLOYEE" means any Employee who has met the eligibility
requirements of Article II.
An "EMPLOYEE" means any common law employee of an Employer or of a Related
Company or a person who is a "leased employee" as defined in Section 20.15.
An "EMPLOYER" means the Sponsor and any entity which has adopted the Plan as
may be provided under Article XIX.
An "EMPLOYER CONTRIBUTION" means the amount, if any, that an Employer
contributes to the Plan as may be provided under Article V or Article XXI.
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An "ENROLLMENT DATE" means January 1, 1994 and each January 1 thereafter.
Notwithstanding the foregoing, with respect to Employees who were employees of
Management Computer Services, Inc., on May 6, 1994 and became Employees on May
7, 1994, May 9, 1994 shall be an Enrollment Date. Notwithstanding the
foregoing, with respect to persons who were employees of Formcraft, Inc. on
July 1, 1994, July 1, 1994 shall be an Enrollment Date. Notwithstanding the
foregoing, with respect to persons who were employees of Poorman Douglas on
October 31, 1994 and became Employees on November 1, 1994, November 1, 1994
shall be an Enrollment Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time. Reference to a section of ERISA includes such section and
any comparable section or sections of any future legislation that amends,
supplements, or supersedes such section.
The "GENERAL FUND" means a Trust Fund established by the Trustee as required to
hold and administer any assets of the Trust that are not allocated among any
separate Investment Funds as may be provided in the Plan or the Trust
Agreement. No General Fund shall be established if all assets of the Trust are
allocated among separate Investment Funds.
A "HIGHLY COMPENSATED EMPLOYEE" means an Employee or former Employee who is a
highly compensated active employee or highly compensated former employee as
defined hereunder.
A "highly compensated active employee" includes any Employee who
performs services for an Employer during the determination year
and who (i) was a five percent owner at any time during the
determination year or the look back year, (ii) received
compensation from an Employer during the look back year in excess
of $75,000 (subject to adjustment annually at the same time and in
the same manner as under Section 415(d) of the Code), (iii) was in
the top paid group of employees for the Plan Year and received
compensation from an Employer during the look back year in excess
of $50,000 (subject to adjustment annually at the same time and in
the same manner as under Section 415(d) of the Code), (iv) was an
officer of an Employer during the look back year and received
compensation during that year in excess of 50 percent of the
dollar limitation in effect for that year under Section
415(b)(1)(A) of the Code or, if no officer received compensation
in excess of that amount for the look back year or the
determination year, received the greatest compensation for the
look back year of any officer, or (v) was one of the 100
employees paid the
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<PAGE> 12
greatest compensation by an Employer for the determination year
and would be described in (ii), (iii), or (iv) above if the term
"determination year" were substituted for "look back year".
A "highly compensated former employee" includes any Employee who
separated from service from an Employer and all Related Companies
(or is deemed to have separated from service from an Employer and
all Related Companies) prior to the determination year, performed
no services for an Employer during the determination year, and was
a highly compensated active employee for either the separation year
or any determination year ending on or after the date the Employee
attains age 55.
The determination of who is a Highly Compensated Employee hereunder, including
determinations as to the number and identity of employees in the top paid
group, the 100 employees receiving the greatest compensation from an Employer,
the number of employees treated as officers, and the compensation considered,
shall be made in accordance with the provisions of Section 414(q) of the Code
and regulations issued thereunder. For purposes of this definition, the
following terms have the following meanings:
(a) The "determination year" means the Plan Year.
(b) The "look back year" means the 12-month period
immediately preceding the determination year.
An "INVESTMENT FUND" means any separate investment Trust Fund established from
time to time by the Trustee as may be provided in the Plan or the Trust
Agreement to which assets of the Trust may be allocated and separately
invested.
The "NORMAL RETIREMENT DATE" of an employee means the date he attains age 65.
A "PARTICIPANT" means any Employee or former Employee who has a Separate
Account in the Trust.
The "PLAN" means The Reynolds and Reynolds Company 401(k) Savings Plan, as from
time to time in effect.
A "PLAN YEAR" means, for periods commencing on and after January 1, 1994, the
12-month period which ends on December 31 of each year.
A "RELATED COMPANY" means any corporation or business, other than an Employer,
which would be aggregated with an Employer for a
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relevant purpose under Section 414 of the Code, but only with respect to the
period during which it would be aggregated.
A "ROLLOVER CONTRIBUTION" means any rollover contribution to the Plan made by a
Participant as may be permitted under Article IV.
A "SEPARATE ACCOUNT" means the account maintained by the Trustee in the name of
a Participant that reflects his interest in the Trust and any Sub-Accounts
established thereunder, as provided in Article VII, and shall include, if
applicable, the PAYSOP Transfer Account.
The "SETTLEMENT DATE" of a Participant means the date on which a Participant's
interest under the Plan becomes distributable in accordance with Article XIV.
The "SPONSOR" means The Reynolds and Reynolds Company and any successor
thereto.
A "SUB-ACCOUNT" means any of the individual sub-accounts of a Participant's
Separate Account that is maintained as provided in Article VII, and shall
include, if applicable, the PAYSOP Transfer Account.
A "TAX-DEFERRED CONTRIBUTION" means the amount contributed to the Plan on a
Participant's behalf by his Employer in accordance with his reduction
authorization executed pursuant to Article III.
The "TRUST" means the trust maintained by the Trustee under the Trust
Agreement.
The "TRUST AGREEMENT" means the agreement entered into between the Sponsor and
the Trustee relating to the holding, investment, and reinvestment of the assets
of the Plan, together with all amendments thereto and shall include any
agreement establishing a custodial account, an annuity contract, or an
insurance contract (other than a life, health or accident, property, casualty,
or liability insurance contract) for the investment of assets if the custodial
account or contract would, except for the fact that it is not a trust,
constitute a qualified trust under Section 401 of the Code.
The "TRUSTEE" means the trustee or any successor trustee which at the time
shall be designated, qualified, and acting under the Trust Agreement and shall
include any insurance company that issues an annuity or insurance contract
pursuant to the Trust Agreement or any person holding assets in a custodial
account pursuant to the Trust Agreement.
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A "VALUATION DATE" means the last day of each calendar month and any other date
or dates designated by the Administrator and communicated in writing to the
Trustee for the purpose of valuing the General Fund and each Investment Fund
and adjusting Separate Accounts and Sub-Accounts hereunder, which other dates
need not be uniform with respect to the General Fund, each Investment Fund,
Separate Account, or Sub-Account.
1.2 INTERPRETATION
Where required by the context, the noun, verb, adjective, and adverb forms of
each defined term shall include any of its other forms. Wherever used herein,
the masculine pronoun shall include the feminine, the singular shall include
the plural, and the plural shall include the singular.
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ARTICLE II
ELIGIBILITY
2.1 ELIGIBILITY
Each Employee who is in an eligible employment classification as set forth in
this Section 2.1 shall become an Eligible Employee as of the Enrollment Date
next following the date on which he becomes an Employee. An Employee is in an
eligible employment classification unless he is:
(a) A nonresident alien who receives no earned income from an Employer
or a Related Company (within the meaning of section 911(b) of the
Code) that constitutes income from sources within the United States
(within the meaning of section 861(a)(3) of the Code);
(b) An Employee hired for a specific project of limited duration;
(c) An Employee of a Related Company;
(d) An Employee of an Employer at a plant, division, or other business
operation to which coverage has not been extended by such Employer;
(e) A leased employee; or
(f) A person included in a unit of employees covered by a collective
bargaining agreement, except as provided below.
As of January 1, 1994, each Eligible Employee who is covered by collective
bargaining agreement with one of the following unions are in an eligible
employment classification:
The Graphic Communications Union, Local No. 754-S, Subordinate to
The Graphic Communications International Union;
The Graphic Communications International Union, Local 508 OKI,
AFL/CIO (Printing Support Unit); and
International Union, United Automobile, Aerospace, and Agricultural
Implement Workers of America, UAW, and Its Local Union No. 2295.
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2.2 TRANSFERS OF EMPLOYMENT
If an Employee is transferred from employment with an Employer or with a
Related Company in a capacity other than an eligible employment classification
to employment as an Employee in an eligible employment classification, he shall
become an Eligible Employee as of the later of the date he is so transferred or
the date he would have become an Eligible Employee if he had been in an
eligible employment classification for his entire period of employment with the
Employer or Related Company. If an Eligible Employee becomes employed in a
capacity other than in an eligible employment classification, his ability to
have Tax-Deferred Contributions made to the Plan in accordance with Article III
shall cease as of the last day of his employment in an eligible employment
classification. Whether an Employee is in an eligible employment
classification shall be determined in accordance with Section 2.1.
2.3 REEMPLOYMENT
If a person whose employment as an Employee with an Employer and all Related
Companies terminated is reemployed as an Eligible Employee and if he had been
an Eligible Employee prior to his termination of employment, he shall again
become an Eligible Employee on the date he is reemployed. Otherwise, the
determination of Eligible Employee status of a person whose employment with an
Employer and all Related Companies terminated and who is reemployed by an
Employer or a Related Company shall be in accordance with Section 2.1 or 2.2.
2.4 NOTIFICATION CONCERNING NEW ELIGIBLE EMPLOYEES
Each Employer shall notify the Administrator as soon as practicable of
Employees becoming Eligible Employees as of any date.
2.5 BINDING EFFECT
Each Employee shall be bound by all the terms and conditions of the Plan and
the Trust Agreement.
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ARTICLE III
TAX-DEFERRED CONTRIBUTIONS
3.1 TAX-DEFERRED CONTRIBUTIONS
Effective beginning as of the date he becomes an Eligible Employee, each
Eligible Employee may elect in writing in accordance with rules prescribed by
the Administrator to have Tax-Deferred Contributions made to the Plan on his
behalf by his Employer as hereinafter provided. An Eligible Employee's written
election shall include his authorization for his Employer to reduce his
Compensation and to make Tax-Deferred Contributions on his behalf, the consent
of such Tax-Deferred Contributions (subject to the limitations described in
Section 3.2), and his election as to the investment of his contributions in
accordance with Article IX. Tax-Deferred Contributions on behalf of an
Eligible Employee shall commence with the first administratively available
payroll period beginning on or after the date on which his election is
effective.
3.2 AMOUNT OF TAX-DEFERRED CONTRIBUTIONS
The Administrator shall establish limits from time to time for the amount of
Tax-Deferred Contributions that an Eligible Employee may elect to have made to
the Plan. Such limits on the amount of Tax-Deferred Contributions may be
expressed as a percentage of an Eligible Employee's Compensation, and/or as a
specified monetary amount, and need not be uniform among any or all Eligible
Employees. The amount of Tax-Deferred Contributions to be made to the Plan on
behalf of an Eligible Employee by his Employer shall be either a percentage of
his Compensation within the percentage limits established by the Administrator,
or a specified monetary amount within the dollar amount limits established by
the Administrator. In the event an Eligible Employee elects to have his
Employer make Tax-Deferred Contributions on his behalf, his Compensation shall
be reduced for each payroll period by the percentage or amount he elects to
have contributed on his behalf to the Plan in accordance with the terms of his
currently effective reduction authorization.
3.3 CHANGES IN REDUCTION AUTHORIZATION
An Eligible Employee may change the percentage of his future Compensation that
his Employer contributes on his behalf as Tax-Deferred Contributions at such
times as the Administrator shall establish by filing an amended reduction
authorization with his Employer in accordance with rules prescribed by the
Administrator. An Eligible Employee who changes his reduction authorization
shall be limited to selecting a percentage or
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amount of his Compensation that is otherwise permitted under Section 3.2.
Tax-Deferred Contributions shall be made on behalf of such Eligible Employee by
his Employer pursuant to his amended reduction authorization filed in
accordance with this Section commencing with the first administratively
available payroll period beginning on or after the date on which his election
is effective, until otherwise altered or terminated in accordance with the
Plan.
3.4 SUSPENSION OF TAX-DEFERRED CONTRIBUTIONS
An Eligible Employee on whose behalf Tax-Deferred Contributions are being made
may have such contributions suspended by filing a suspension authorization with
his Employer, in accordance with rules presented by the Administrator. Any
such voluntary suspension shall take effect commencing with the first
administratively available payroll period beginning on or after the date on
which his election is effective, and shall remain in effect until Tax-Deferred
Contributions are resumed as hereinafter set forth.
3.5 RESUMPTION OF TAX-DEFERRED CONTRIBUTIONS
An Eligible Employee who has voluntarily suspended his Tax-Deferred
Contributions in accordance with Section 3.4 may have such contributions
resumed, effective with the next administratively available payroll period, by
filing a new reduction authorization with his Employer in accordance with
Section 3.3.
3.6 DELIVERY OF TAX-DEFERRED CONTRIBUTIONS
Each Employer shall cause to be delivered to the Trustee in cash all
Tax-Deferred Contributions with respect to a Plan Year on or before such time
required by regulations under Section 401(k) of the Code.
3.7 VESTING OF TAX-DEFERRED CONTRIBUTIONS
A Participant's vested interest in his Tax-Deferred Contributions Sub-Account
shall be at all times 100 percent.
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ARTICLE IV
ROLLOVER CONTRIBUTIONS
4.1 ROLLOVER CONTRIBUTIONS
An Employee who is in an eligible employment classification as set forth in
Section 2.1 and who was a participant in a plan qualified under Section 401 or
403 of the Code and who receives a cash distribution from such plan that he
elects either (i) to roll over immediately to a qualified retirement plan or
(ii) to roll over into a conduit IRA from which he receives a later cash
distribution, may elect to make a Rollover Contribution to the Plan if he is
entitled under Section 402(a)(5), Section 403(a)(4), or Section 408(d)(3)(A) of
the Code to roll over such distribution to another qualified retirement plan.
The acceptance of any such Rollover Contribution to the Plan shall be subject
to the approval of the Administrator, in its sole discretion. The
Administrator shall prescribe the time, manner, and form pursuant to which
Rollover Contributions may be made to the Plan. The Administrator may require
such an Employee to provide it with such information as it deems necessary or
desirable to show that he is entitled to roll over such distribution to another
qualified retirement plan.
4.2 VESTING OF ROLLOVER CONTRIBUTIONS
A Participant's vested interest in his Rollover Contributions Sub-Account shall
be at all times 100 percent.
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ARTICLE V
EMPLOYER CONTRIBUTIONS
5.1 DEFINITIONS
For purposes of this Article, the following terms have the following meanings.
(a) The "matching contribution" means any Employer Contribution made to
the Plan in accordance with the provisions of Section 5.5.
(b) The "qualified nonelective contribution" means any Employer
Contribution made to the Plan in accordance with the provision of
Section 5.3.
5.2 CONTRIBUTION PERIOD
The Contribution Period for matching contributions under the Plan shall be each
month. The Contribution Period for qualified nonelective contributions under
the Plan shall be each Plan Year.
5.3 QUALIFIED NONELECTIVE CONTRIBUTIONS
Each Employer may, in its discretion, for the purpose of enabling the Plan to
meet the requirements of Article VI make a qualified nonelective contribution
to the Plan for the Contribution Period in an amount, if any, specified by the
board of directors of the Sponsor in a resolution.
5.4 ALLOCATION OF QUALIFIED NONELECTIVE CONTRIBUTIONS
Any qualified nonelective contribution made by an Employer for a Contribution
Period shall be allocated among such group of its Eligible Employees during the
Contribution Period who are eligible to participate in the allocation of
qualified nonelective contributions for the Contribution Period as determined
under Section 5.9 and who are not Highly Compensated Employees for the
Contribution Period as shall be specified to the Administrator by the Employer
by written notice given prior to the payment of the contribution to the
Trustee. The allocable share of each such Eligible Employee shall be in the
ratio which his Compensation from the Employer for the Contribution Period
bears to the aggregate of such Compensation for all such Eligible Employees.
Notwithstanding any other provision of the Plan to the contrary, Compensation
with respect to any period ending prior to the date on which an Eligible
Employee became eligible to participate in the allocation of qualified
nonelective contributions in accordance with the provisions of Section 5.9
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<PAGE> 21
shall be disregarded in determining the amount of the Eligible Employee's
allocable share.
5.5 MATCHING CONTRIBUTIONS
Each Employer may, in its discretion, make a matching contribution to the Plan
for the Contribution Period in an amount, if any, specified by its board of
directors in a resolution adopted before the beginning of the Plan Year that
includes the Contribution Period. If the board of directors of an Employer
does not adopt a resolution, before the beginning of such Plan Year, to specify
the amount such Employer shall make as a matching contribution to the Plan,
then for Contribution Periods beginning after December 31, 1993, for Eligible
Employees who are not covered by a collective bargaining agreement as described
under Section 2.1, the matching contribution to be made by such Employer with
respect to each of its Eligible Employees shall be in an amount equal to 40
percent of the "eligible Tax-Deferred Contributions" made on behalf of each
such Eligible Employee for the Contribution Period. For purposes of this
Section and Section 5.6, "eligible Tax-Deferred Contributions" with respect to
an Eligible Employee means the Tax-Deferred Contributions made on his behalf
for the Contribution Period, in an amount up to, but not exceeding, three
percent of such Eligible Employee's Compensation for the Contribution Period.
Matching contributions for Eligible Employees covered by a collective
bargaining agreement shall be determined in accordance with Section 20.17.
Notwithstanding any other provision of the Plan to the contrary, Eligible
Employees of Formcraft, Inc. shall not receive matching contributions for any
Contribution Period ending before July 1, 1994. For Periods beginning after
June 30, 1994 and ending before January 1, 1995, the matching contribution to
be made by Formcraft, Inc. shall be determined pursuant to the formula as
provided above in this Section 5.5 except that, in determining the amount of
the matching contribution, "40 percent" shall be deleted and replaced with "20
percent".
5.6 ALLOCATION OF MATCHING CONTRIBUTIONS
Any matching contribution made by an Employer for the Contribution Period shall
be allocated among its Eligible Employees for the Contribution Period. The
allocable share of each such Eligible Employee shall be the amount as described
in Section 5.5.
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5.7 VERIFICATION OF AMOUNT OF EMPLOYER CONTRIBUTIONS BY THE SPONSOR
The Sponsor shall verify the amount of Employer Contributions to be made by
each Employer in accordance with the provisions of the Plan. Notwithstanding
any other provision of the Plan to the contrary, the Sponsor shall determine
the portion of the Employer Contribution to be made by each Employer (if any)
with respect to an Eligible Employee who transfers from employment with one
Employer as an Employee to employment with another Employer as an Employee.
5.8 PAYMENT OF EMPLOYER CONTRIBUTIONS
Employer Contributions with respect to a Plan Year shall be paid in cash to the
Trustee within the period of time required by regulations under section 401(k)
of the Code and/or under section 401(m) of the Code.
5.9 ELIGIBILITY TO PARTICIPATE IN ALLOCATION
Each Employee shall be eligible to participate in the allocation of Employer
Contributions in accordance with Section 5.4 beginning on the date he becomes,
or again becomes, an Eligible Employee in accordance with the provisions of
Article II.
5.10 VESTING OF EMPLOYER CONTRIBUTIONS
A Participant's vested interest in his Employer Contributions Sub-Account shall
be at all times 100 percent.
5.11 ELECTION OF FORMER VESTING SCHEDULE
If the Sponsor adopts an amendment to the Plan that directly or indirectly
affects the computation of a Participant's vested interest in his Employer
Contributions Sub-Account, any Participant with three or more years of Vesting
Service shall have a right to have his vested interest in his Employer
Contributions Sub-Account continue to be determined under the vesting
provisions in effect prior to the amendment rather than under the new vesting
provisions, unless the vested interest of the Participant in his Employer
Contributions Sub-Account under the Plan as amended is not at any time less
than such vested interest determined without regard to the amendment. A
Participant shall exercise his right under this Section by giving written
notice of his exercise thereof to the Administrator within 60 days after the
latest of (i) the date he receives notice of the amendment from the
Administrator, (ii) the effective date of the amendment, or (iii) the date the
amendment is adopted. Notwithstanding the foregoing, a Participant's
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vested interest in his Employer Contributions Sub-Account on the effective date
of such an amendment shall not be less than his vested interest in his Employer
Contributions Sub-Account immediately prior to the effective date of the
amendment.
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ARTICLE VI
LIMITATIONS ON CONTRIBUTIONS
6.1 DEFINITIONS
For purposes of this Article, the following terms have the following meanings:
(a) The "actual deferral percentage" with respect to an Eligible
Employee for a particular Plan Year means the ratio of the
Tax-Deferred Contributions made on his behalf for the Plan Year to
his test compensation for the Plan Year, except that, to the extent
permitted by regulations issued under Section 401(k) of the Code,
the Sponsor may elect to take into account in computing the
numerator of each Eligible Employee's actual deferral percentage
the qualified matching contributions and/or qualified nonelective
contributions made to the Plan on his behalf for the Plan Year;
provided, however, that contributions made on a Participant's
behalf for a Plan Year shall be included in determining his actual
deferral percentage for such Plan Year only if the contributions
are made to the Plan prior to the end of the 12-month period
immediately following the Plan Year to which the contributions
relate. The determination and treatment of the actual deferral
percentage amounts for any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the Treasury.
(b) The "aggregate limit" means the sum of (i) 125 percent of the
greater of the average contribution percentage for eligible
participants other than Highly Compensated Employees or the average
actual deferral percentage for Eligible Employees other than Highly
Compensated Employees and (ii) the lesser of 200 percent or two
plus the lesser of such average contribution percentage or average
actual deferral percentage, or, if it would result in a larger
aggregate limit, the sum of (iii) 125 percent of the lesser of the
average contribution percentage for eligible participants other
than Highly Compensated Employees or the average actual deferral
percentage for Eligible Employees other than Highly Compensated
Employees and (iv) the lesser of 200 percent or two plus the
greater of such average contribution percentage or average actual
deferral percentage.
(c) The "annual addition" with respect to a Participant for a
limitation year means the sum of the Tax-Deferred Contributions and
Employer Contributions allocated to his
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Separate Account for the limitation year (including any excess
contributions that are distributed pursuant to this Article), the
employer contributions, employee contributions, and forfeitures
allocated to his accounts for the limitation year under any other
qualified defined contribution plan (whether or not terminated)
maintained by an Employer or a Related Company concurrently with
the Plan, and amounts described in Sections 415(1)(2) and
419A(d)(2) of the Code allocated to his account for the limitation
year; provided, however, that the annual addition for limitation
years beginning prior to January 1, 1987 shall not be recalculated
to treat all employee contributions as annual additions.
(d) The "Code Section 402(g) limit" means the dollar limit imposed by
Section 402(g)(1) of the Code or established by the Secretary of
the Treasury pursuant to Section 402(g)(5) of the Code in effect on
January 1 of the calendar year in which an Eligible Employee's
taxable year begins.
(e) The "contribution percentage" with respect to an eligible
participant for a particular Plan Year means the ratio of the
matching contributions made to the Plan on his behalf for the Plan
Year to his test compensation for such Plan Year, except that, to
the extent permitted by regulations issued under Section 401(m) of
the Code, the Sponsor may elect to take into account in computing
the numerator of each eligible participant's contribution
percentage the Tax-Deferred Contributions and/or qualified
nonelective contributions made to the Plan on his behalf for the
Plan Year; provided, however, that any Tax-Deferred Contributions,
qualified matching contributions, and/or qualified nonelective
contributions that were taken into account in computing the
numerator of an eligible participant's actual deferral percentage
may not be taken into account in computing the numerator of his
contribution percentage; and provided, further, that contributions
made by or on a Participant's behalf for a Plan Year shall be
included in determining his contribution percentage for such Plan
Year only if the contributions are made to the Plan prior to the
end of the 12-month period immediately following the Plan Year to
which the contributions relate. The determination and treatment of
the contribution percentage amounts for any Participant shall
satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
(f) An "elective contribution" means any employer contribution made to
a plan maintained by an Employer or any Related
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Company on behalf of a Participant in lieu of cash compensation
pursuant to his written election to defer under any qualified CODA
as defined in Section 401(k) of the Code, any simplified employee
pension cash or deferred arrangement as described in Section
402(h)(1)(B) of the Code, any eligible deferred compensation plan
under Section 457 of the Code, or any plan as described in Section
501(c)(18) of the Code, and any contribution made on behalf of the
Participant by an Employer or a Related Company for the purchase of
an annuity contract under Section 403(b) of the Code pursuant to a
salary reduction agreement.
(g) An "eligible participant" means any Eligible Employee who was
eligible to have Tax-Deferred Contributions made on his behalf (if
Tax-Deferred Contributions are taken into account in computing
contribution percentages) or to participate in the allocation of
matching contributions (including qualified matching
contributions).
(h) A "family member" of an Employee means the Employee's spouse, his
lineal ascendants, his lineal descendants, and the spouses of such
lineal ascendants and descendants.
(i) The "interim period" for purposes of determining the income or loss
attributable to contributions that are distributed pursuant to this
Article means the period between the close of the Plan Year in
which the contributions were made and the date the contributions
are distributed.
(j) A "limitation year" means the calendar year.
(k) A "matching contribution" means any employer contribution allocated
to an Eligible Employee's account under the Plan or any other plan
of an Employer or a Related Company solely on account of elective
contributions made on his behalf or employee contributions made by
him.
(l) A "qualified matching contribution" means any matching contribution
that is a qualified matching contribution as defined in regulations
issued under Section 401(k) of the Code, is nonforfeitable when
made, and is distributable only as permitted in regulations issued
under Section 401(k) of the Code.
(m) A "qualified nonelective contribution" means any employer
contribution made on behalf of a Participant that the Participant
could not elect instead to receive in cash, that is a qualified
nonelective contribution as defined in
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Section 401(k) and Section 401(m) of the Code and regulations
issued thereunder, is nonforfeitable when made, and is
distributable only as permitted in regulations issued under Section
401(k) of the Code.
(n) The "test compensation" of an eligible participant for a Plan Year
means compensation as defined in Section 414(s) of the Code and
regulations issued thereunder, limited, however, to (1) $200,000
for Plan Years beginning after December 31, 1988 and prior to
January 1, 1994, or (2) $150,000 for Plan Years beginning on or
after January 1, 1994 (both subject to adjustment annually as
provided in Section 401(a)(17)(B) and Section 415(d) of the Code;
provided, however, that the dollar increase in effect on January 1
of any calendar year is effective for Plan Years beginning in such
calendar year). If the test compensation of an eligible
participant is determined over a period of time that contains fewer
than 12 calendar months, then the annual compensation limitation
described above shall be adjusted with respect to that eligible
participant by multiplying the annual compensation limitation in
effect for the Plan Year by a fraction the numerator of which is
the number of full months in the period and the denominator of
which is 12; provided, however, that no proration is required for
an eligible participant who is covered under the Plan for less than
one full Plan Year if the formula for allocations is based on
Compensation for a period of at least 12 months. In determining
the test compensation, for purposes of applying the annual
compensation limitation described above, of an eligible participant
who is a five percent owner or among the ten Highly Compensated
Employees receiving the greatest test compensation for the
limitation year, the test compensation of the eligible
participant's spouse and of his lineal descendants who have not
attained age 19 as of the close of the limitation year shall be
included as test compensation of the eligible participant for the
limitation year. If as a result of applying the family aggregation
rule described in the preceding sentence the annual compensation
limitation would be exceeded, the limitation shall be prorated
among the affected family members in proportion to each member's
test compensation as determined prior to application of the family
aggregation rules.
6.2 CODE SECTION 402(G) LIMIT
In no event shall the amount of the Tax-Deferred Contributions made on behalf
of an Eligible Employee for his taxable year, when aggregated with any elective
contributions made on behalf of the
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Eligible Employee under any other plan of an Employer or a Related Company for
his taxable year, exceed the Code Section 402(g) limit. In the event that the
Administrator determines that the reduction percentage elected by an Eligible
Employee will result in his exceeding the Code Section 402(g) limit, the
Administrator may adjust the reduction authorization of such Eligible Employee
by reducing the percentage of his Tax-Deferred Contributions to such smaller
percentage that will result in the Code Section 402(g) limit not being
exceeded. If the Tax-Deferred Contributions made on behalf of an Eligible
Employee would exceed the Code Section 402(g) limit for his taxable year, the
Tax-Deferred Contributions for such Eligible Employee shall be automatically
suspended for the remainder, if any, of such taxable year.
6.3 LIMITATION ON TAX-DEFERRED CONTRIBUTIONS OF HIGHLY COMPENSATED
EMPLOYEES
Notwithstanding any other provision of the Plan to the contrary, the
Tax-Deferred Contributions made with respect to a Plan Year on behalf of
Eligible Employees who are Highly Compensated Employees may not result in an
average actual deferral percentage for such Eligible Employees that exceeds the
greater of:
(a) a percentage that is equal to 125 percent of the average actual
deferral percentage for all other Eligible Employees; or
(b) a percentage that is not more than 200 percent of the average
actual deferral percentage for all other Eligible Employees and
that is not more than two percentage points higher than the average
actual deferral percentage for all other Eligible Employees.
In order to assure that the limitation contained herein is not exceeded with
respect to a Plan Year, the Administrator is authorized to suspend completely
further Tax-Deferred Contributions on behalf of Highly Compensated Employees
for any remaining portion of a Plan Year or to adjust the projected actual
deferral percentages of Highly Compensated Employees by reducing their
percentage elections with respect to Tax-Deferred Contributions for any
remaining portion of a Plan Year to such smaller percentages that will result
in the limitation set forth above not being exceeded. In the event of any such
suspension or reduction, Highly Compensated Employees affected thereby shall be
notified of the reduction or suspension as soon as possible and shall be given
an opportunity to make a new Tax-Deferred Contribution election to be effective
the first day of the next following Plan Year. In the absence of such an
election, the election in effect immediately prior to the suspension or
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adjustment described above shall be reinstated as of the first day of the next
following Plan Year.
For purposes of applying the limitation contained in this Section, the
Tax-Deferred Contributions, qualified nonelective contributions and qualified
matching contributions (to the extent that such qualified nonelective
contributions and qualified matching contributions are taken into account in
computing actual deferral percentages), and test compensation of any Eligible
Employee who is a family member of another Eligible Employee who is a five
percent owner or among the ten Highly Compensated Employees receiving the
greatest test compensation for the Plan Year shall be aggregated with the
Tax-Deferred Contributions, qualified nonelective contributions, qualified
matching contributions, and test compensation of such other Eligible Employee,
and such family member shall not be considered an Eligible Employee for
purposes of determining the average actual deferral percentage for all other
Eligible Employees.
In determining the actual deferral percentage for any Eligible Employee who is
a Highly Compensated Employee for the Plan Year, elective contributions made to
his accounts under any other plan of an Employer or a Related Company shall be
treated as if all such contributions were made to the Plan; provided, however,
that if such a plan has a plan year different from the Plan Year, any such
contributions made to the Highly Compensated Employee's accounts under such
plan for the plan year ending with or within the same calendar year as the Plan
Year shall be treated as if such contributions were made to the Plan.
Notwithstanding the foregoing, such contributions shall not be treated as if
they were made to the Plan if regulations issued under Section 401(k) of the
Code do not permit such plan to be aggregated with the Plan. If one or more
plans of an Employer or Related Company are aggregated with the Plan for
purposes of satisfying the requirements of Section 401(a)(4) or 410(b) of the
Code, then actual deferral percentages under the Plan shall be calculated as if
the Plan and such one or more other plans were a single plan. Plans may be
aggregated to satisfy Section 401(k) of the Code only if they have the same
plan year.
The Administrator shall maintain records sufficient to show that the limitation
contained in this Section was not exceeded with respect to any Plan Year and
the amount of the qualified nonelective contributions and/or qualified matching
contributions taken into account in computing actual deferral percentages for
any Plan Year.
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6.4 DISTRIBUTION OF EXCESS TAX-DEFERRED CONTRIBUTIONS
Notwithstanding any other provision of the Plan to the contrary, in the event
that the limitation contained in Section 6.3 is exceeded in any Plan Year, the
Tax-Deferred Contributions, qualified nonelective contributions, and qualified
matching contributions (to the extent that such qualified nonelective
contributions and qualified matching contributions are taken into account in
computing his actual deferral percentage) made with respect to a Highly
Compensated Employee that exceed the maximum amount permitted to be contributed
to the Plan on his behalf under Section 6.3, plus any income and minus any
losses attributable thereto, shall be distributed to the Highly Compensated
Employee prior to the end of the next succeeding Plan Year. If excess amounts
are attributable to participants aggregated under the family aggregation rules
described in Section 6.3, the excess shall be allocated among family members in
proportion to the Tax-Deferred Contributions made with respect to each family
member.
Excess amounts shall be distributed first from the Highly Compensated
Employee's Tax-Deferred Contributions and qualified matching contributions
Sub-Accounts in proportion to the Tax-Deferred Contributions and qualified
matching contributions (to the extent that such qualified matching
contributions are taken into account in computing his actual deferral
percentage) made on the Highly Compensated Employee's behalf for the Plan Year.
If any excess remains after the amount of Tax-Deferred Contributions and
qualified matching contributions made on behalf of the Highly Compensated
Employee for the Plan Year has been reduced to zero, the excess shall be
distributed from the Highly Compensated Employee's qualified nonelective
contributions Sub-Account.
The maximum amount permitted to be contributed to the Plan on a Highly
Compensated Employee's behalf under Section 6.3 shall be determined by reducing
Tax-Deferred Contributions, qualified nonelective contributions, and qualified
matching contributions (to the extent that such qualified nonelective
contributions and qualified matching contributions are taken into account in
computing his actual deferral percentage) made on behalf of Highly Compensated
Employees in order of their actual deferral percentages beginning with the
highest of such percentages.
If an amount of Tax-Deferred Contributions is distributed to a Participant in
accordance with this Section, matching contributions that are attributable
solely to the distributed Tax-Deferred Contributions, plus any income and minus
any losses attributable thereto, shall be forfeited by the Participant. Any
such forfeited amounts shall be treated as a forfeiture under the Plan in
accordance with the provisions of Section 20.18 as of the
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date as of which the distribution of Tax-Deferred Contributions pursuant to
this Section occurs.
6.5 LIMITATION ON MATCHING CONTRIBUTIONS OF HIGHLY COMPENSATED
EMPLOYEES
Notwithstanding any other provision of the Plan to the contrary, the matching
contributions made with respect to a Plan Year on behalf of eligible
participants who are Highly Compensated Employees may not result in an average
contribution percentage for such eligible participants that exceeds the greater
of:
(a) a percentage that is equal to 125 percent of the average
contribution percentage for all other eligible participants; or
(b) a percentage that is not more than 200 percent of the average
contribution percentage for all other eligible participants and
that is not more than two percentage points higher than the average
contribution percentage for all other eligible participants. For
purposes of applying the limitation contained in this Section, the
matching contributions, qualified nonelective contributions and
Tax-Deferred Contributions (to the extent that such qualified
nonelective contributions and Tax-Deferred Contributions are taken
into account in computing contribution percentages), and test
compensation of any eligible participant who is a family member of
another eligible participant who is a five percent owner or among
the ten Highly Compensated Employees receiving the greatest test
compensation for the Plan Year shall be aggregated with the
matching contributions, qualified nonelective contributions,
Tax-Deferred Contributions, and test compensation of such other
eligible participant, and such family member shall not be
considered an eligible participant for purposes of determining the
average contribution percentage for all other eligible
participants.
In determining the contribution percentage for any eligible participant who is
a Highly Compensated Employee for the Plan Year, matching contributions,
employee contributions, and elective contributions (to the extent that elective
contributions are taken into account in computing contribution percentages)
made to his accounts under any other plan of an Employer or a Related Company
shall be treated as if all such contributions were made to the Plan; provided,
however, that if such a plan has a plan year different from the Plan Year, any
such contributions made to the highly Compensated Employee's accounts under
such plan for the plan year ending with or within the same calendar year as the
Plan Year shall be treated as if such contributions
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were made to the Plan. Notwithstanding the foregoing, such contributions shall
not be treated as if they were made to the Plan if regulations issued under
Section 401(m) of the Code do not permit such plan to be aggregated with the
Plan.
If one or more plans of an Employer or a Related Company are aggregated with
the Plan for purposes of satisfying the requirements of Section 401(a)(4) or
410(b) of the Code, the contribution percentages under the Plan shall be
calculated as if the Plan and such one or more other plans were a single plan.
Plans may be aggregated to satisfy Section 401(m) of the Code only if they have
the same plan year.
The Administrator shall maintain records sufficient to show that the limitation
contained in this Section was not exceeded with respect to any Plan Year and
the amount of the elective contributions and qualified matching contributions
taken into account in computing contribution percentages for any Plan Year.
6.6 DISTRIBUTION OF EXCESS CONTRIBUTIONS
Notwithstanding any other provision of the Plan to the contrary, in the event
that the limitation contained in Section 6.5 is exceeded in any Plan Year, the
matching contributions made on behalf of a Highly Compensated Employee that
exceed the maximum amount permitted to be contributed to the Plan on behalf of
such Highly Compensated Employee under Section 6.5, plus any income and minus
any losses attributable thereto, shall be distributed prior to the end of the
next succeeding Plan Year as hereinafter provided. If excess amounts are
attributable to participants aggregated under the family aggregation rules
described in Section 6.4, the excess shall be allocated among family members in
proportion to the matching contributions made with respect to each family
member.
The maximum amount permitted to be contributed to the Plan on behalf of a
Highly Compensated Employee under Section 6.5 shall be determined by reducing
matching contributions made on behalf of Highly Compensated Employees in order
of their contribution percentages beginning with the highest of such
percentages.
Excess matching contributions shall be distributable to the extent of the
Participant's interest in his Employer Contributions Sub-Account, excluding
that portion of his Employer Contributions Sub-Account that is attributable to
qualified nonelective contributions or qualified matching contributions. The
determination of the amount of excess matching contributions shall be made
after application of Section 6.3, if applicable, and after application of
Section 6.4, if applicable.
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6.7 MULTIPLE USE LIMITATION
Notwithstanding any other provision of the Plan to the contrary, the following
multiple use limitation as required under Section 401(m) of the Code shall
apply: the sum of the average actual deferral percentage for Eligible
Employees who are Highly Compensated Employees and the average contribution
percentage for eligible participants who are Highly Compensated Employees may
not exceed the aggregate limit. In the event that, after satisfaction of
Section 6.4 and Section 6.6, it is determined that contributions under the Plan
fail to satisfy the multiple use limitation contained herein, the multiple use
limitation shall be satisfied by further reducing the contribution percentages
of eligible participants who are Highly Compensated Employees (beginning with
the highest such percentage) to the extent necessary to eliminate the excess,
with such further reductions to be treated as excess contributions and disposed
of as provided in Section 6.6, or in an alternative manner, consistently
applied, that may be permitted by regulations issued under Section 401(m) of
the Code.
6.8 DETERMINATION OF INCOME OR LOSS
The income or loss attributable to excess contributions that are distributed
pursuant to this Article shall be determined for the preceding Plan Year under
the method otherwise used for allocating income or loss to Participant's
Separate Accounts.
6.9 CODE SECTION 415 LIMITATIONS
Notwithstanding any other provision of the Plan to the contrary, the annual
addition with respect to a Participant for a limitation year shall in no event
exceed the lesser of (i) the greater of $30,000 or 25 percent of the defined
benefit dollar limitation set forth in Section 415(b)(1) of the Code in effect
for the limitation year or (ii) 25 percent of the Participant's compensation,
as defined in Section 415(c)(3) of the Code and regulations issued thereunder.
If the annual addition to the Separate Account of a Participant in any
limitation year would otherwise exceed the amount that may be applied for his
benefit under the limitation contained in this Section, the limitation shall be
satisfied by reducing contributions made on behalf of the Participant to the
extent necessary in the following order:
Tax-Deferred Contributions made on the Participant's behalf for the
limitation year that have not been matched, if any, shall be
reduced.
Tax-Deferred Contributions made on the Participant's behalf for the
limitation year that have been matched and
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the matching contributions attributable thereto, if any, shall be
reduced pro rata.
Qualified nonelective contributions made on the Participant's
behalf for the limitation year shall be reduced.
The amount of any reduction of Tax-Deferred Contributions (plus any income
attributable thereto) shall be returned to the Participant. The amount of
reduction of Employer Contributions shall be deemed a forfeiture for the
limitation year. Amounts deemed to be forfeitures under this Section shall be
held unallocated in a suspense account established for the limitation year and
shall be applied against the Employer's contribution obligation for the next
following limitation year (and succeeding limitation years, as necessary). If
a suspense account is in existence at any time during a limitation year, all
amounts in the suspense account must be allocated to Participants' Separate
Accounts (subject to the limitations contained herein) before any further
Tax-Deferred Contributions or Employer Contributions may be made to the Plan on
behalf of Participants. No suspense account established hereunder shall share
in any increase or decrease in the net worth of the Trust. For purposes of
this Article, excesses shall result only from the allocation of forfeitures, a
reasonable error in estimating a Participant's annual compensation (as defined
in Section 415(c)(3) of the Code and regulations issued thereunder), or
reasonable error in determining the amount of Tax-Deferred Contributions that
may be made with respect to any Participant under the limits of Section 415 of
the Code, or other limited facts and circumstances that justify the
availability of the provisions set forth above.
6.10 COVERAGE UNDER OTHER QUALIFIED DEFINED CONTRIBUTION PLAN
If a Participant is covered by any other qualified defined contribution plan
(whether or not terminated) maintained by an Employer or a Related Company
concurrently with the Plan, and if the annual addition for the limitation year
would otherwise exceed the amount that may be applied for the Participant's
benefit under the limitation contained in Section 6.9, adjustments to the
contributions to this Plan and any other defined contribution plan shall be
made in the following order: first, such excess shall be reduced by adjusting
the employee contributions made by the Participant for the limitation year
under all of the defined contribution plans and the income attributable
thereto; next, the excess shall be reduced by adjusting the employer
contributions made under this Plan; lastly, adjustments shall be made under any
defined contribution plan other than the Plan.
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Notwithstanding the above, in the event that any other defined contribution
plan maintained by an Employer or a Related Company specifically provides that
adjustments are to be made to such other defined contribution plan prior to
making adjustments to the Plan, then the terms of such other defined
contribution plan shall control with respect to the order of making such
adjustments.
6.11 COVERAGE UNDER QUALIFIED DEFINED BENEFIT PLAN
If a Participant in the Plan is also covered by a qualified defined benefit
plan (whether or not terminated) maintained by an Employer or a Related
Company, in no event shall the sum of the defined benefit plan fraction (as
defined in Section 415(e)(2) of the Code) and the defined contribution plan
fraction (as defined in Section 415(e)(3) of the Code) exceed 1.0 in any
limitation year. If, before October 3, 1973, the Participant was an active
participant in a qualified defined benefit plan maintained by an Employer or a
Related Company and otherwise satisfies the requirements of Section 2004(d)(2)
of ERISA, then for purposes of applying this Section, the defined benefit plan
fraction shall not exceed 1.0. In the event the special limitation contained
in this Section is exceeded, the benefits otherwise payable to the Participant
under any such qualified defined benefit plan shall be reduced to the extent
necessary to meet such limitation.
6.12 SCOPE OF LIMITATIONS
The limitations contained in Sections 6.9, 6.10, and 6.11 shall be applicable
only with respect to benefits provided pursuant to defined contribution plans
and defined benefit plans described in Section 415(k) of the Code.
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ARTICLE VII
TRUST FUNDS AND SEPARATE ACCOUNTS
7.1 GENERAL FUND
The Trustee shall establish a General Fund if and as required to hold and
administer any assets of the Trust that are not allocated among the Investment
Funds as provided in the Plan or the Trust Agreement. The General Fund (if
any) shall be held and administered as a separate common trust fund. The
interest of each Participant or Beneficiary under the Plan in the General Fund
(if any) shall be an undivided interest.
7.2 INVESTMENT FUNDS
The Administrator shall determine the number and type of Investment Funds,
select the investment vehicles for such Investment Funds, and select which of
the Investment Funds to be made available for Participant-directed investment.
Such Investment Funds (and any portion thereof) need not be uniform (or
uniformly available) with respect to any or all Participants. The
Administrator shall communicate the same and any changes therein in writing to
the Trustee. Each Investment Fund shall be held and administered as a separate
common trust fund. The interest of each Participant or Beneficiary under the
Plan in any Investment Fund shall be an undivided interest. Notwithstanding
the foregoing or any other provision of the Plan, unit accounting may be used
with respect to all or any portion of any Investment Fund.
7.3 LOANS
Notwithstanding any other provision of the Plan to the contrary, Participant
loans shall be allocated and shall be administered as provided in Article XI.
7.4 APPOINTMENT OF INVESTMENT MANAGERS
As provided in the Trust Agreement, one or more investment managers (as defined
in Section 3(38) of ERISA) or another fiduciary with respect to investment of
assets may be appointed with respect to any portion of any Trust Fund.
7.5 INCOME ON TRUST
Any dividends, interest, distributions, or other income received by the Trustee
with respect to any trust fund established hereunder shall be allocated by the
Trustee to the trust fund for which the income was received.
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7.6 SEPARATE ACCOUNTS
As of the first date a contribution is made by or on behalf of an Employee,
there shall be established a Separate Account in his name reflecting his
interest in the Trust. Each Separate Account shall be maintained and
administered for each Participant and Beneficiary in accordance with the
provisions of the Plan. The balance of each Separate Account shall be the
balance of the account after all credits and charges thereto, for and as of
such date, have been made as provided herein.
7.7 SUB-ACCOUNTS
A Participant's Separate Account shall be divided into individual Sub-Accounts
reflecting the portion of the Participant's Separate Account that is derived
from Tax-Deferred Contributions, Rollover Contributions, or Employer
Contributions. Each Sub-Account shall reflect separately contributions
allocated to each trust fund established hereunder and the earnings and losses
attributable thereto. Such other Sub-Accounts may be established as are
necessary or appropriate to reflect a Participant's interest in the Trust.
7.8 PAYROLL-BASED STOCK OWNERSHIP PLAN ("PAYSOP") ACCOUNTS
Effective December 15, 1988, the Sponsor terminated the Reynolds and Reynolds
Company PAYSOP (Payroll-Based Stock Ownership Plan) (the "PAYSOP") and
permitted Participants to: (1) receive a distribution of his PAYSOP account in
shares of Sponsor common stock or the cash equivalent, or (2) transfer the cash
equivalent value of his PAYSOP account to the Plan (the "Transfer Amount"). If
the Participant transferred the value of his PAYSOP account to the Plan, the
Transfer Amount is accounted for separately in a "PAYSOP Transfer Account" and
is subject to Plan rules regarding loans, distribution, investment, account
valuation and the special withdrawal rules for rollover contributions. The
Transfer Amount is not subject to Plan rules regarding deferrals and matching
contributions. Participants are fully vested in any amount in their PAYSOP
Transfer Accounts.
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ARTICLE VIII
LIFE INSURANCE CONTRACTS
8.1 GENERAL
To the extent permitted in accordance with the rules established by the
Administrator:
A Participant may elect to invest his Separate Account in individual or group
insurance policies covering the Participant, his spouse, or his children and in
individual or group annuity contracts issued by one or more insurance
companies. If individual policies are purchased for a Participant's Separate
Account, such purchases may only be made with the Participant's consent.
Individual policies shall be considered an earmarked investment of the
Participant's Separate Account and premiums on such policies shall be charged
to such Separate Account. At all times each such contract upon the life of any
Participant shall be held by the Trustee separate and apart from the remainder
of Trust. The value of such contract shall not be taken into account in
valuing the other assets of the Trust nor shall such value be considered in
determining the amount of a Participant's interest in the Trust. A Participant
may not borrow amounts from insurers issuing such policies or the collateral of
such policies; however, the Administrator in its sole discretion may direct
borrowing against the policies to fund loans under Article XI.
When a Participant's Separate Account is distributed as provided in Article
XIV, the Administrator shall direct the Trustee to convert into cash the entire
value of any individual policies or contracts purchased for a Participant's
Separate Account and to credit such amount to the Participant's Separate
Account. Alternatively, the Administrator, at the election of a Participant,
shall direct the Trustee to distribute any or all of such policies or contracts
intact to the Participant.
To the extent that a Participant's Separate Account is invested in a life
insurance policy on the Participant's life, the Participant may designate a
beneficiary under the policy, if permitted by the Administrator and the policy,
to whom death benefits under the policy shall be paid directly by the insurance
company issuing the policy. Absent such a designation, the beneficiary of such
a policy shall be determined as provided in Article XVI, and the Trustee shall
distribute the death proceeds of such a policy to the Beneficiary in accordance
with the Plan. Notwithstanding the foregoing or any other provisions of the
Plan, a Beneficiary may not defer distribution of that portion of
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the death proceeds of the policy that exceeds the cash surrender value.
To the extent that a Participant's Separate Account is invested in a life
insurance policy on the life of the Participant's spouse or children, the
beneficiary under such a policy shall be the Participant, to the extent of the
excess of the death proceeds over the cash value, if any, at the time of the
death of the insured, and the beneficiary of the balance of the death proceeds
shall be the Participant's Separate Account.
Any dividends that become payable on any contracts shall be used to provide
additional benefits for the Participant or shall be credited to the
Participant's Separate Account.
8.2 PAYMENT OF PREMIUMS
The Trustee, upon written instructions from the Administrator, shall pay each
premium on any such contract or contracts held for a Participant and shall
charge such premium payment to the Separate Account of such Participant. The
Trustee shall be under no obligation to pay any premium, however, unless there
are sufficient funds available from the interest of such Participant in the
Trust to make such payment.
8.3 OVERRIDING CONDITIONS AND LIMITATIONS
Notwithstanding anything to the contrary contained in the Plan, the provisions
of this Section shall govern:
(a) In the event of any conflict between the provisions of the Plan and
the terms of any insurance contract or contracts purchased pursuant
to this Article, the provisions of the Plan shall control.
(b) At no time shall the aggregate of the premiums paid for any
ordinary life or term life insurance contract or contracts upon the
life of any Participant hereunder equal or exceed the sum of
(i) if only ordinary life insurance contracts upon the life
of such Participant are held hereunder, 50% of the
Tax-Deferred Contributions made on his behalf and the
Employer Contributions allocated to him under the Plan;
or
(ii) if only term life insurance contracts upon the life of
such Participant are held hereunder, 25% of the
Tax-Deferred Contributions made on his behalf and
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the Employer Contributions allocated to him under the Plan.
If both ordinary life and term life insurance contracts upon the life of any
Participant are held hereunder, at no time shall the aggregate of one-half of
the premiums paid for any ordinary life insurance contracts plus the premiums
paid for any term life insurance contract equal or exceed 25% of the Employer
Contributions allocated to him under the Plan. In order to comply with these
limitations, the Administrator shall in writing direct the Trustee to take such
action with respect to any such contract or contracts held by it as the
Administrator shall deem advisable, including, but not limited to, conversion
to paid-up basis or surrender of such contract or contracts or any part or
parts thereof.
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ARTICLE IX
DEPOSIT AND INVESTMENT OF CONTRIBUTIONS
9.1 FUTURE CONTRIBUTION INVESTMENT ELECTIONS
Each Eligible Employee shall make an investment election in the manner and form
prescribed by the Administrator directing the manner in which his Tax-Deferred
Contributions, Rollover Contributions, and Employer Contributions shall be
invested. An Eligible Employee's investment election shall specify the
percentage, in such percent increments and/or amounts as the Administrator
shall establish from time to time, of such contributions that shall be
allocated to one or more of the Investment Funds as permitted by the
Administrator. The investment election by a Participant shall remain in effect
until his entire interest under the Plan is distributed or forfeited in
accordance with the provisions of the Plan or until he files a change of
investment election with the Administrator, in such form as the Administrator
shall prescribe. A Participant's change of investment election may be made
effective as of such dates as the Administrator shall establish and must be
filed with the Administrator such number of days prior to the effective date as
the Administrator shall prescribe.
9.2 DEPOSIT OF CONTRIBUTIONS
All Tax-Deferred Contributions, Rollover Contributions, and Employer
Contributions shall be deposited in the Trust and allocated among the
Investment Funds in accordance with the Participant's currently effective
investment election. If no investment election is on file with the
Administrator at the time contributions are to be deposited to a Participant's
Separate Account, the Participant shall be notified and an investment election
form shall be provided to him. Until such Participant shall make an effective
election under this Section, his contributions shall be allocated among the
Investment Funds as directed by the Administrator.
9.3 ELECTION TO TRANSFER BETWEEN FUNDS
A Participant may elect to transfer investments from any Investment Fund to any
other Investment Fund as permitted by the Administrator. The Participant's
transfer election shall specify in such percent increments and/or amounts as
the Administrator shall establish the amount eligible for transfer that is to
be transferred. Any transfer election must be filed with the Administrator in
writing, in such form as the Administrator shall prescribe. Subject to any
restrictions pertaining to a particular Investment Fund, a Participant's
transfer election may
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be made effective as of such dates as the Administrator shall establish, and
must be filed with the Administrator such number of days prior to the effective
date as the Administrator shall prescribe.
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ARTICLE X
CREDITING AND VALUING SEPARATE ACCOUNTS
10.1 CREDITING SEPARATE ACCOUNTS
All contributions made under the provisions of the Plan shall be credited to
Separate Accounts in the General Fund and any Investment Funds by the Trustee,
in accordance with procedures established in writing by the Administrator,
either when received or on the next succeeding Valuation Date after valuation
of the Fund has been completed for such Valuation Date as provided in Section
10.2, as shall be determined by the Administrator.
10.2 VALUING SEPARATE ACCOUNTS
Separate Accounts in the General Fund and any Investment Funds shall be valued
by the Trustee on the Valuation Date, in accordance with procedures established
by the Administrator, either in the manner adopted by the Trustee and approved
by the Administrator or in the manner set forth in Section 10.3 as Plan
valuation procedures, as determined by the Administrator.
10.3 PLAN VALUATION PROCEDURES
With respect to the General Fund and any Investment Funds, the Administrator
may determine to any extent that the following valuation procedures shall be
applied. As of each Valuation Date hereunder, the portion of any Separate
Accounts in the General Fund or any Investment Funds shall be adjusted to
reflect any such increase or decrease in the value of the General Fund and any
Investment Funds for the period of time occurring since the immediately
preceding Valuation Date for the fund (the "valuation period") in the following
manner:
(a) First, the value of the fund shall be determined by the Trustee by
valuing all of the assets of the fund at fair market value.
(b) Next, the net increase or decrease in the value of the fund
attributable to net income and all profits and losses, realized and
unrealized, during the valuation period shall be determined on the
basis of the valuation under paragraph (a) taking into account
appropriate adjustments for contributions, loan payments,
andtransfers to and distributions, withdrawals, loans, and
transfers from such fund during the valuation period.
(c) Finally, the net increase or decrease in the value of the fund
shall be allocated among Separate Accounts in the
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fund in the ratio of the balance of the portion of such Separate
Account in the fund as of the preceding Valuation Date less any
distributions, withdrawals, loans, and transfers from such Separate
Account balance in the fund since the Valuation Date to the
aggregate balances of the portions of all Separate Accounts in the
fund similarly adjusted, and each Separate Account in the fund
shall be credited or charged with the amount of its allocated
share. Notwithstanding the foregoing, the Administrator may adopt
such accounting procedures as it considers appropriate and
equitable to establish a proportionate crediting of net increase or
decrease in the value of the fund for contributions, loan payments,
and transfers to and distributions, withdrawals, loans, and
transfers from such fund made by or on behalf of a Participant
during the valuation period.
10.4 FINALITY OF DETERMINATIONS
The Trustee shall have exclusive responsibility for determining the value of
the Trust Fund, and Trustee's determinations thereof shall be conclusive upon
all interested parties. Except as provided in the immediately preceding
sentence, the Administrator shall have the exclusive responsibility for
determining the balance of each Separate Account maintained hereunder, and the
Administrator's determinations thereof shall be conclusive upon all interested
parties.
10.5 NOTIFICATION
Within a reasonable period of time after the end of each Plan Year, the
Administrator shall notify each Participant and Beneficiary of the balances of
his Separate Account and Sub-Accounts as of the last day of such Plan Year.
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ARTICLE XI
LOANS
Loans shall be made pursuant to the provisions of this Article as follows:
Subject to such uniform and nondiscriminatory rules as the Administrator may
establish and to the provisions of this Article, the Administrator may in its
discretion direct the Trustee to make a loan to a Participant, beneficiary or
alternate payee under a qualified domestic relations order with respect to the
Plan from his Separate Account. For purposes of this Article, the term
"Participant" shall include any such beneficiary or alternate payee except as
the context otherwise requires or as otherwise specified. Limitations on the
types and amount of loans shall be set forth in the "Loan Application and
Agreement" (as hereinafter defined) established by the Administrator.
For purposes of this Article, the loan application and agreement, as such
document is in effect from time to time as prescribed in writing by the
Administrator (the "Loan Application and Agreement") is hereby incorporated by
reference into the Plan. The Administrator shall approve a loan for an
eligible Participant who properly completes a Loan Application and Agreement in
compliance with the provisions of the Plan and the Loan Application and
Agreement.
A loan shall be an earmarked investment of the borrowing Participant's Separate
Account and such Separate Account shall be reduced, for purposes of valuation,
by the outstanding principal balance of such loan. A borrowing Participant's
Separate Account shall, for purposes of valuation, be increased by principal
and interest payments on the loan not later than 30 days after receipt thereof
by the Trustee. Loans and repayments with respect thereto shall be allocated
to the borrowing Participant's Separate Account in accordance with rules and
procedures established by the Administrator.
Loans made pursuant to this Article: (1) shall be made available to all
Participants on a reasonably equivalent basis, (2) shall not be made available
to highly compensated Participants (as determined under Code Section 4975),
officers or shareholders in a percentage amount greater than the percentage
amount available to other Participants, (3) shall be secured by (i) the
Participant's interest in the Trust, but not in excess of 50% of the value of
the Participant's Separate Account immediately prior to the origination of the
loan, provided that if the participant has more than one loan outstanding under
the Plan,
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the outstanding balance of all loans immediately after the origination of the
most recent loan will be secured by the Participant's interest in the Trust,
but not in excess of 50% of the value of the Participant's Separate Account
immediately prior to the origination of the most recent loan, and (ii) such
other collateral (if any) as the Administrator may require, and (4) shall be
evidenced by a promissory note executed by the Participant that provides for a
reasonable rate of interest, which shall be determined by the Administrator in
accordance with the Loan Application and Agreement, and for repayment (i)
within a specified period of time, which shall not extend beyond five years
from the date the loan is made unless the loan proceeds are used to acquire a
dwelling which within a reasonable time (determined at the time the loan is
made) is to be used as a principal residence of the borrowing Participant who
is not a beneficiary or an alternate payee under a qualified domestic relations
order, (ii) on terms that provide for substantially level amortization with
payments not less frequently than quarterly over the term of the loan, and
(iii) upon such other terms and conditions as the Administrator shall
determine.
A loan shall be repaid, with interest, in accordance with its terms. A
Participant who is an Employee shall authorize the Employer to deduct from his
wages and to pay to the Trustee each pay period an amount sufficient to pay the
principal and interest owed with respect to such pay period on the
Participant's loan. In the event of failure by a Participant to make, or cause
to be made, by payroll deduction or through other means, any payment required
under the terms of any loan within 60 days following the date on which such
payment shall become due, the Administrator may direct the Trustee to declare
all or any portion of the balance of such loan, together with accrued interest,
immediately due and payable. In any such event, if such balance and interest
thereon is not paid, the Trustee may charge the Separate Account of such
Participant with the amount of such balance and interest and may liquidate any
other collateral for the loan. The charging of a Participant's Separate
Account, in repayment or partial repayment of any loan, shall be deemed to be
an advance distribution to such Participant. All other matters relating to
loans shall be in accordance with the Loan Application and Agreement.
Notwithstanding any other provision of this Article to the contrary, any loan
made under the provisions of the Plan as in effect prior to a change in the
Plan provisions applicable to loans shall remain outstanding (until repaid) in
accordance with its terms, unless the amended Plan provisions specifically
provide otherwise.
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ARTICLE XII
WITHDRAWALS
12.1 WITHDRAWALS OF ROLLOVERS AND PAYSOP TRANSFERS
A Participant may elect in writing, subject to the limitations and conditions
prescribed in Section 12.4, to make a cash withdrawal from his Rollover
Contributions Sub-Account and/or his PAYSOP Transfer Account, if any.
12.2 AGE 59-1/2 AND POST-SEPARATION WITHDRAWALS OF TAX-DEFERRED
CONTRIBUTIONS AND EMPLOYER CONTRIBUTIONS
A Participant who has attained age 59 1/2 or has separated from service covered
under the Plan may elect in writing, subject to the limitations and conditions
prescribed in Section 12.4, to make a cash withdrawal from his Tax-Deferred
Contributions Sub-Account and/or Employer Contributions Sub-Account.
12.3 HARDSHIP WITHDRAWALS OF TAX-DEFERRED CONTRIBUTIONS
AND EMPLOYER CONTRIBUTIONS
A Participant who has not separated from service covered under the Plan and who
is determined by the Administrator to have incurred a hardship as defined in
Section 12.6 may elect in writing, subject to the limitations and conditions
prescribed in this Section, and Section 12.4 or 12.6, as appropriate, to make a
cash withdrawal from his Tax-Deferred Contributions Sub-Account and/or Employer
Contribution Sub-Account. A Participant may withdraw pursuant to this Section
from his Tax-Deferred Contributions Sub-Account only the balance of his
Tax-Deferred Contributions Sub-Account exclusive of any earnings credited to
such Sub-Account as of a date that is after December 31, 1988. A Participant
may withdraw pursuant to this Section from his Employer Contributions
Sub-Account only the lesser of the balance of his Employer Contributions
Sub-Account or the balance of his Employer Contributions Sub-Account as of
December 31, 1988.
12.4 LIMITATIONS ON WITHDRAWALS
A Participant must file a written withdrawal application with the Administrator
such number of days prior to the date as of which it is to be effective as the
Administrator shall prescribe. Withdrawals shall be made effective as of such
dates as the Administrator shall establish. Withdrawals made pursuant to this
Article shall be subject to the following conditions and limitations:
A Participant may make only one withdrawal each Plan Year.
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The minimum total withdrawal that a Participant may make shall be
an amount equal to the lesser of $500 or 100% of his Separate
Account balance.
A Participant whose separation from service has occurred who makes
a withdrawal that would reduce the balance of his Separate Account
to less than $3,500 must elect to withdraw his entire Separate
Account balance.
12.5 ORDER OF WITHDRAWAL FROM A PARTICIPANT'S SUB-ACCOUNTS
If the Sub-Account from which a Participant is receiving a withdrawal is
invested in more than one Investment Fund, the withdrawal shall be charged
against each Investment Fund in accordance with rules prescribed by the
Administrator.
12.6 CONDITIONS AND LIMITATIONS ON HARDSHIP WITHDRAWALS
A Participant must file a written application for a hardship withdrawal with
the Administrator such number of days prior to the date as of which it is to be
effective as the Administrator may prescribe. Hardship withdrawals may be made
effective only as of such date(s) as the Administrator shall establish. The
Administrator shall grant a hardship withdrawal only if it determines that the
withdrawal is necessary to meet an immediate and heavy financial need of the
Participant. An immediate and heavy financial need of the Participant means a
financial need on account of:
(a) expenses previously incurred by or necessary to obtain for the
Participant, the Participant's spouse, or any dependent of the
Participant (as defined in Section 152 of the Code) medical care
described in Section 213(d) of the Code;
(b) costs relating directly to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
(c) payment of tuition and related educational fees for the next 12
months of post-secondary education for the Participant, the
Participant's spouse, or any dependent of the Participant; or
(d) any extraordinary financial hardship that, based on all relevant
facts and circumstances, constitutes an immediate and heavy
financial need of the Participant.
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A withdrawal shall be deemed to be necessary to satisfy an immediate and heavy
financial need of a Participant only if all of the following requirements are
satisfied:
The withdrawal is not in excess of the amount of the immediate and
heavy financial need of the Participant.
The Participant has obtained all distributions, other than hardship
distributions, and all non-taxable loans currently available under
all plans maintained by an Employer or any Related Company.
The Participant's Tax-Deferred Contributions and the Participant's
elective tax-deferred contributions and employee after-tax
contributions under all other tax-qualified plans maintained by an
Employer or any Related Company shall be suspended for at least
twelve months after his receipt of the withdrawal.
The Participant shall not make Tax-Deferred Contributions or
elective tax-deferred contributions under any other tax-qualified
plan maintained by an Employer or any Related Company for the
Participant's taxable year immediately following the taxable year
of the withdrawal in excess of the applicable limit under Section
402(g) of the Code for such next taxable year less the amount of
the Participant's Tax-Deferred Contributions and elective
tax-deferred contributions under any other plan maintained by an
Employer or any Related Company for the taxable year of the
withdrawal.
The amount of a hardship withdrawal may include any amounts necessary to pay
any Federal, state, or local income taxes or penalties reasonable anticipated
to result from the distribution. A Participant shall not fail to be treated as
an Eligible Employee for purposes of applying the limitations contained in
Article VI of the Plan merely because his Tax-Deferred Contributions are
suspended in accordance with this Section.
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ARTICLE XIII
SEPARATION FROM SERVICE AND SETTLEMENT DATE
13.1 SEPARATION FROM SERVICE AND SETTLEMENT DATE
A Participant's Settlement Date shall occur on the date of his separation from
service with the Employer and all Related Companies because of death,
disability, retirement, or any other reason.
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ARTICLE XIV
DISTRIBUTIONS
14.1 DISTRIBUTIONS
A Participant whose Settlement Date occurs other than by death shall be
eligible to receive distribution of the value of the vested portions of his
Separate Account in the form provided under Article XV beginning as soon as
reasonably practicable following his Settlement Date or the date his
application for distribution is filed with the Administrator, if later.
14.2 DISTRIBUTIONS TO BENEFICIARIES
If a Participant dies prior to commencement of distribution of his Separate
Account under this Article, his Beneficiary shall be eligible to receive
distribution of the Participant's Separate Account in a single sum payment as
soon as reasonably practicable following the date his application for
distribution is filed with the Administrator. Notwithstanding the foregoing:
Distribution of the Participant's entire interest shall be made to the
Beneficiary no later than the end of the fifth calendar year beginning after
the Participant's death unless the Beneficiary is the Participant's spouse in
which case distribution of the Participant's entire interest shall be made not
later than the March 31st following the end of the calendar year in which the
Participant would have attained age 70 1/2; and if the value of the
Participant's Separate Account does not exceed $3,500 the Beneficiary shall
receive distribution as soon as practicable following the Participant's death.
If distribution is to be made to a Participant's spouse, it shall be made
available within a reasonable period of time after the Participant's death that
is no less favorable than the period of time applicable to other distributions.
If a Participant dies after the date distribution of his Separate Account
begins under Article XV, but before his entire interest in his Separate Account
is distributed, his Beneficiary shall receive distribution of the remainder of
the vested portions of the Participant's Separate Account beginning as soon as
reasonably practicable following the Participant's date of death in a form that
provides for distribution at least as rapidly as under the form in which the
Participant was receiving distribution.
14.3 CASH OUTS AND PARTICIPANT CONSENT
Notwithstanding any other provision of the Plan to the contrary, if the value
of the vested portions of a Participant's Separate Account does not exceed
$3,500, distribution of such value shall
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be made to the Participant in a single sum payment as soon as reasonably
practicable following his Settlement Date, unless such Settlement Date occurs
because of such Participant's disability or early retirement or normal
retirement under a defined benefit pension plan of the Employer. If a
Participant's Settlement Date occurs because of such Participant's disability
or retirement, or if the value of the vested portions of a Participant's
Separate Account exceeds $3,500, distribution shall not commence to such
Participant prior to his required date of distribution under Section 14.4
without the Participant's written consent. If a Participant made a withdrawal
in accordance with the provisions of Article XII and the value of his Separate
Account on the date of the withdrawal exceeded $3,500, then for purposes of
this Section, the value of his Separate Account shall be deemed to exceed
$3,500.
14.4 REQUIRED COMMENCEMENT OF DISTRIBUTION
Notwithstanding any other provision of the Plan to the contrary, distribution
of the vested portions of a Participant's Separate Account shall commence to
the Participant no later than the earlier of:
(a) unless the Participant elects a later date, 60 days after the close
of the Plan Year in which (i) the Participant's Normal Retirement
Date occurs, (ii) the 10th anniversary of the year in which he
commenced participation in the Plan occurs, or (iii) his Settlement
Date occurs, whichever is latest; or
(b) the March 31 following the close of the calendar year in which he
attains age 70 1/2, whether or not his Settlement Date has
occurred, except that if a Participant attained age 70 1/2 prior to
January 1, 1988, and was not a five percent owner (as defined in
Section 416 of the Code) at any time during the five-Plan-Year
period ending within the calendar year in which he attained age 70
1/2, distribution of the vested portion of such Participant's
Separate Account shall commence no later than the March 31
following the close of the calendar year in which he attains age 70
1/2 or retires, whichever is later.
14.5 REEMPLOYMENT OF A PARTICIPANT
If a Participant whose Settlement Date has occurred is reemployed by an
Employer or a Related Company, he shall continue to have a right to any
distribution or further distribution from the Trust arising from his prior
Settlement Date and any amounts credited to his Separate Account with respect
to employment after his prior Settlement Date shall be accounted for
separately.
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14.6 RESTRICTIONS ON ALIENATION
Except as provided in Section 401(a)(13) of the Code relating to qualified
domestic relations orders, no benefit under the Plan at any time shall be
subject in any manner to anticipation, alienation, assignment (either at law or
in equity), encumbrance, garnishment, levy, execution, or other legal or
equitable process; and no person shall have power in any manner to anticipate,
transfer, assign (either at law or in equity), alienate or subject to
attachment, garnishment, levy, execution, or other legal or equitable process,
or in any way encumber his benefits under the Plan, or any part thereof, and
any attempt to do so shall be void.
14.7 FACILITY OF PAYMENT
If the Administrator finds that any individual to whom an amount is payable
hereunder is incapable of attending to his financial affairs because of any
mental or physical condition, including the infirmities of advanced age, such
amount (unless prior claim therefor shall have been made by a duly qualified
guardian or other legal representative) may, in the discretion of the
Administrator, be paid to another person for the use or benefit of the
individual found incapable of attending to his financial affairs or in
satisfaction of legal obligations incurred by or on behalf of such individual.
The Trustee shall make such payment only upon receipt of written instructions
to such effect from the Administrator. Any such payment shall be charged to
the Separate Account from which any such payment would otherwise have been paid
to the individual found incapable of attending to his financial affairs and
shall be a complete discharge of any liability therefor under the Plan.
14.8 INABILITY TO LOCATE PAYEE
If any benefit becomes payable to any person, or to the executor or
administrator of any deceased person, and if that person or his executor or
administrator does not present himself to the Administrator within five years
after the Administrator mails written notice of his eligibility to receive a
distribution hereunder to his last known address, that benefit will be
forfeited. However, if the payee later files a claim for that benefit, the
benefit will be reinstated.
14.9 DISTRIBUTION PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDERS
Notwithstanding any other provision of the Plan to the contrary, if a qualified
domestic relations order so provides, distribution may be made to an alternate
payee pursuant to a qualified
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domestic relations order, as defined in Section 414(p) of the Code, regardless
of whether the Participant's Settlement Date has occurred or whether the
Participant is otherwise entitled to receive a distribution under the Plan,
provided that the order so requires.
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ARTICLE XV
FORM OF PAYMENT
15.1 FORM OF PAYMENT
A Participant whose Settlement Date occurs other than by death after he is
eligible for early retirement or normal retirement under a defined benefit
pension plan of the Employer may elect to receive distribution in one or a
combination of the following forms of payment:
(a) A single sum payment.
(b) Installment Payments - Distribution shall be made in a series of
installments over a period not exceeding the life expectancy of the
Participant. Each installment shall be equal in amount except as
necessary to adjust for any changes in the value of the
Participant's Separate Account, unless the Participant elects a
more rapid distribution schedule. The determination of life
expectancies shall be made on the basis of the expected return
multiples in Table V and VI of Section 1.72-9 of the Treasury
regulations and shall be calculated once at the time installment
payments begin.
A Participant not described above in this Section shall receive distribution
pursuant to this Article in a single sum payment.
15.2 CHANGE OF ELECTION
A Participant who has elected a form of payment under Section 15.1 may revoke
or change his election at any time prior to the date as of which his benefit
commences by filing with the Administrator a written election in the form
prescribed by the Administrator.
15.3 NOTICE REGARDING FORMS OF PAYMENT
Within a reasonable period of time prior to the date a Participant could
commence distribution of his Separate Account under the Plan, the Administrator
shall provide him with a written explanation of the forms of payment available
under the Plan.
15.4 REEMPLOYMENT
If a Participant is reemployed by an Employer or a Related Company prior to
receiving distribution of the entire balance of the vested portions of his
Separate Account, his prior election
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of a form of payment hereunder shall continue in effect with respect to that
portion of his Separate Account attributable to his prior employment.
15.5 SECTION 242(B)(2) ELECTIONS
Notwithstanding any other provisions of the Plan, distribution on behalf of a
Participant, including a five-percent owner, may be made pursuant to an
election under Section 242(b)(2) of the Tax Equity and Fiscal Responsibility
Act of 1982 and in accordance with all of the following requirements:
(a) The distribution is one which would not have disqualified the Trust
under Section 401(a)(9) of the Code as in effect prior to amendment
by the Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a method of distribution
elected by the Participant whose interest in the Trust is being
distributed or, if the Participant is deceased, by a Beneficiary of
such Participant.
(c) Such election was in writing, was signed by the Participant or the
Beneficiary, and was made before January 1, 1984.
(d) The Participant had accrued a benefit under the Plan as of December
31, 1983.
(e) The method of distribution elected by the Participant or the
Beneficiary specifies the time at which distribution will commence,
the period over which distribution will be made, and in the case of
any distribution upon the Participant's death, the Beneficiaries of
the Participant listed in order of priority.
(f) The distribution is permitted under the terms of the Plan
applicable to such distribution as in effect at all relevant times.
A distribution upon death shall not be made under this Section unless the
information in the election contains the required information described above
with respect to the distributions to be made upon the death of the Participant.
For any distribution which commences before January 1, 1984, but continues
after December 31, 1983, the Participant or the Beneficiary to whom such
distribution is being made will be presumed to have designated the method of
distribution under which the distribution is being made, if this method of
distribution was specified in writing and the distribution satisfies the
requirements in paragraphs (a) and (e) of this Section. If an
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election is revoked, any subsequent distribution will be in accordance with the
other provisions of the Plan. Any changes in the election will be considered
to be a revocation of the election. However, the mere substitution or addition
of another Beneficiary (one not designated as a Beneficiary in the election),
under the election will not be considered to be a revocation of the election,
so long as such substitution or addition does not alter the period over which
distributions are to be made under the election directly, or indirectly (for
example, by altering the relevant measuring life).
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ARTICLE XVI
BENEFICIARIES
16.1 DESIGNATION OF BENEFICIARY
A married Participant's Beneficiary shall be his spouse, unless the Participant
designates a person or persons other than his spouse as Beneficiary with his
spouse's written consent. A Participant may designate a Beneficiary on the
form prescribed by the Administrator. If no Beneficiary has been designated
pursuant to the provisions of this Section, or if no Beneficiary survives the
Participant and he has no surviving spouse, then the Beneficiary under the Plan
shall be the Participant's estate. If a Beneficiary dies after becoming
entitled to receive a distribution under the Plan but before distribution is
made to him in full, and if no other Beneficiary has been designated to receive
the balance of the distribution in that event, the estate of the deceased
Beneficiary shall be the Beneficiary as to the balance of the distribution.
16.2 SPOUSAL CONSENT REQUIREMENTS
Any written spousal consent given pursuant to this Article shall acknowledge
the effect of the action taken, shall specifically acknowledge any non-spouse
Beneficiary designated by the Participant, and shall be witnessed by a Plan
representative or a notary public. Such spousal consent shall be valid only
with respect to the spouse who signs the consent. Notwithstanding any other
provision of the Plan to the contrary, written spousal consent shall not be
required if the Participant establishes to the satisfaction of a Plan
representative that such consent cannot be obtained because the spouse cannot
be located or because of other circumstances set forth in Section 401(a)(11) of
the Code and regulations issued thereunder.
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ARTICLE XVII
ADMINISTRATION
17.1 AUTHORITY OF THE COMMITTEE
The Committee, which shall be the administrator for purposes of ERISA and the
plan administrator for purposes of the Code, shall be responsible for the
administration of the Plan and, subject to the limitations set forth in Section
17.5, in addition to the powers and authorities expressly conferred upon it in
the Plan, shall have all such powers and authorities as may be necessary to
carry out the provisions of the Plan, including the power and authority to
interpret and construe the provisions of the Plan, to make benefit
determinations, and to resolve any disputes which arise under the Plan. The
Committee shall consist of at least three persons appointed from time to time
by the Sponsor's board of directors who shall serve at the pleasure of the
Sponsor's board of directors. The Committee may employ such attorneys, agents,
and accountants as it may deem necessary or advisable to assist in carrying out
its duties hereunder. The Committee and each member thereof shall be "named
fiduciaries" as that term is defined in Section 402(a)(2) of ERISA. Members of
the Committee shall serve without compensation. The Committee may:
(a) allocate any of the powers, authority, or responsibilities for the
operation and administration of the Plan, which are retained by it
or granted to it by this Article, to the Trustee; and
(b) designate a person or persons other than the Committee to carry out
any of such powers, authority, or responsibilities;
except that no power, authority, or responsibility of the Trustee shall be
subject to the provisions of paragraph (b) of this Section, and except that no
allocation or delegation by the Committee of any of its powers, authority, or
responsibilities to the Trustee shall become effective unless such allocation
or delegation shall first be accepted by the Trustee in a writing signed by it
and delivered to the Committee.
17.2 ACTION OF THE COMMITTEE
Any act authorized, permitted, or required to be taken under the Plan by the
Committee and which has not been delegated in accordance with Section 17.1, may
be taken by a majority of the members of the Committee, either by vote at a
meeting, or in writing without a meeting. All notices, advice, directions,
certifications, approvals, and instructions required or
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authorized to be given by the Committee as under the Plan shall be in writing
and signed by a majority of the members of the Committee or by such member or
members as may be designated by an instrument in writing, signed by all the
members thereof, as having authority to execute such documents on its behalf.
17.3 CLAIMS REVIEW PROCEDURE
Whenever a claim for benefits under the Plan filed by any person (herein
referred to as the "Claimant") is denied, whether in whole or in part, the
Committee shall transmit a written notice of such decision to the Claimant,
which notice shall be written in a manner calculated to be understood by the
Claimant and shall contain a statement of the specific reasons for the denial
of the claim and a statement advising the Claimant that, within 60 days of the
date on which he receives such notice, he may obtain review of such decision in
accordance with the procedures hereinafter set forth. Within such 60-day
period, the Claimant or his authorized representative may request that the
claim denial be reviewed by filing with the Committee a written request
therefor, which request shall contain the following information:
(a) the date on which the Claimant's request was filed with the
Committee; provided, however, that the date on which the Claimant's
request for review was in fact filed with the Committee shall
control in the event that the date of the actual filing is later
than the date stated by the Claimant pursuant to this paragraph;
(b) the specific portions of the denial of his claim which the Claimant
requests the Committee to review;
(c) a statement by the Claimant setting forth the basis upon which he
believes the Sponsor should reverse the previous denial of his
claim for benefits and accept his claim as made; and
(d) any written material (offered as exhibits) which the Claimant
desires the Committee to examine in its consideration of his
position as stated pursuant to paragraph (c) of this Section.
Within 60 days of the date determined pursuant to paragraph (a) of this
Section, the Committee shall conduct a full and fair review of the decision
denying the Claimant's claim for benefits. Within 60 days of the date of such
review, the Committee shall render its written decision on review, written in a
manner calculated to be understood by the Claimant, specifying the reasons and
Plan provisions upon which its decision was based.
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17.4 QUALIFIED DOMESTIC RELATIONS ORDERS
The Committee shall establish reasonable procedures to determine the status of
domestic relations orders and to administer distributions under domestic
relations orders which are deemed to be qualified orders. Such procedures
shall be in writing and shall comply with the provisions of Section 414(p) of
the Code and regulations issued thereunder.
17.5 RESPONSIBILITIES OF THE SPONSOR, THE COMMITTEE, AND THE TRUSTEE
The Sponsor, the Committee, and the Trustee possess certain specified powers,
duties, responsibilities and obligations under the Plan and the Trust
Agreement. It is intended under the Plan and the Trust Agreement that each be
responsible solely for the proper exercise of its own functions and that each
shall not be responsible for any act or failure to act of another, unless
otherwise responsible as a breach of its fiduciary duty or for breach of duty
by another fiduciary under the rules of co-fiduciary responsibility. In
general:
(a) the Sponsor is responsible for appointing and removing the
Committee and for amending and terminating the Plan and the Trust
Agreement;
(b) the Committee is responsible for administering the Plan, for
adopting such rules and regulations as in the opinion of the
Committee are necessary or advisable to implement and administer
the Plan and to transact its business, for approving and amending
the Trust Agreement, and for appointing and removing the Trustee;
and
(c) the Trustee is responsible for the management and control of the
Plan assets to the extent provided in the Trust Agreement.
The Committee shall periodically review the performance of the Trustee and of
all other persons to whom fiduciary duties have been delegated or allocated
pursuant to the provisions of the Plan.
17.6 INDEMNIFICATION
The Sponsor agrees to indemnify and reimburse, to the fullest extent permitted
by law, members of the Committee and Employees acting for the Sponsor, and all
such former members and Employees, for any and all expenses, liabilities, or
losses arising out of any act or omission relating to the rendition of services
for the management and administration of the Plan,
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except for any such expenses, liabilities or losses arising out of any such
person's or persons' gross negligence or willful misconduct.
17.7 ACTIONS BINDING
Subject to the provisions of Section 17.3, any action taken by the Committee
which is authorized, permitted, or required under the Plan shall be final and
binding upon the Employers, the Trustee, all persons who have or who claim an
interest under the Plan, and all third parties dealing with the Employers or
the Trustee.
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ARTICLE XVIII
AMENDMENT AND TERMINATION
18.1 AMENDMENT
Subject to the provisions of Section 18.2 and Section 18.3, the Sponsor may at
any time and from time to time, pursuant to authorization by its board of
directors, amend the Plan, either prospectively or retroactively. Any such
amendment shall be by written instrument executed by an officer of the Sponsor.
Subject to the provisions of Section 18.2 and Section 18.3 any resolution of
the Sponsor's board of directors may provide that one or more appropriate
officers of the Sponsor shall have the power to amend the Plan in such
respects, to such extent, within such parameters, and for so long as authorized
by the board in such resolution (and not rescinded or modified by a subsequent
resolution of the board). Notwithstanding the foregoing provisions of this
Section, one or more appropriate officers of the Sponsor shall have the power
to amend the Plan for any of the following purposes: (i) to make any
amendments to the Plan necessary or appropriate in order to retain the
qualification of the Plan and exemption of the Trust under Sections 401(a) and
501(a), respectively, of the Code; (ii) to make any technical, administrative,
or clerical amendments to the Plan as such officer or officers in their
discretion deem necessary or appropriate; or (iii) to make any change to the
Plan that will not substantially increase the cost to the Sponsor of
maintaining the Plan.
18.2 LIMITATION ON AMENDMENT
The Sponsor shall make no amendment to the Plan which shall decrease the
accrued benefit of any Participant or Beneficiary, except that nothing
contained herein shall restrict the right to amend the provisions of the Plan
relating to the administration of the Plan and Trust. Moreover, no such
amendment shall be made hereunder which shall permit any part of the Trust to
revert to an Employer or any Related Company or be used or be diverted to
purposes other than the exclusive benefit of Participants and Beneficiaries.
18.3 TERMINATION
The Sponsor reserves the right, by action of its board of directors, to
terminate the Plan as to all Employers at any time (the effective date of such
termination being hereinafter referred to as the "termination date"). Upon any
such termination of the Plan, the following actions shall be taken for the
benefit of Participants and Beneficiaries:
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(a) All Separate Accounts shall be disposed of to or for the benefit of
each Participant or Beneficiary in accordance with the provisions
of Article XIV as if the termination date were his Settlement Date;
provided, however, that notwithstanding the provisions of Article
XIV, if the Plan does not offer an annuity option and if neither
his Employer nor a Related Company establishes or maintains another
defined contribution plan (other than an employee stock ownership
plan as defined in Section 4975(e)(7) of the Code), the
Participant's written consent to the commencement of distribution
shall not be required regardless of the value of the vested
portions of his Separate Account.
(b) Notwithstanding the provisions of paragraph (a) of this Section, no
distribution shall be made to a Participant of any portion of the
balance of his Tax-Deferred Contributions Sub-Account or his
Employer Contributions Sub-Account prior to his separation from
service (other than a distribution made in accordance with Article
XII or required in accordance with Section 401(a)(9) of the Code)
unless (i) neither his Employer nor a Related Company establishes
or maintains another defined contribution plan (other than an
employee stock ownership plan as defined in Section 4975(e)(7) of
the Code, a tax credit employee stock ownership plan as defined in
Section 409 of the Code, or a simplified employee pension as
defined in Section 408(k) of the Code) either at the time the plan
is terminated or at any time during the period ending 12 months
after distribution of all assets from the Plan; provided, however,
that this provision shall not apply if fewer than two percent of
the Eligible Employees under the Plan were eligible to participate
at any time in such other defined contribution plan during the
24-month period beginning 12 months before the Plan termination,
and (ii) the distribution the Participant receives is a "lump sum
distribution" as defined in Section 402(e)(4) of the Code, without
regard to clauses (i), (ii), (iii), and (iv) of sub-paragraph (A),
sub-paragraph (B), or sub-paragraph (H) thereof.
18.4 REORGANIZATION
The merger, consolidation, or liquidation of any Employer with or into any
other Employer or a Related Company shall not constitute a termination of the
Plan as to such Employer.
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18.5 WITHDRAWAL OF AN EMPLOYER
An Employer other than the Sponsor may withdraw from the Plan at any time upon
notice in writing to the Administrator (the effective date of such withdrawal
being hereinafter referred to as the "withdrawal date"), and shall thereupon
cease to be an Employer for all purposes of the Plan. An Employer shall be
deemed automatically to withdraw from the Plan in the event of its complete
discontinuance of contributions, or, subject to Section 18.4 and unless the
Sponsor otherwise directs, it ceases to be a Related Company of the Sponsor or
any other Employer. The withdrawal of an Employer shall be treated as a
termination of the Plan with respect to Participants who at the time are
employed by such Employer. In the event of any such withdrawal of an Employer,
the action specified in Section 18.3 shall be taken as of the withdrawal date,
as on a termination of the Plan, but with respect only to Participants who are
employed solely by the withdrawing Employer, and who, upon such withdrawal, are
neither transferred to nor continued in employment with any other Employer or a
Related Company. The interest of any Participant employed by the withdrawing
Employer who is transferred to or continues in employment with any other
Employer or a Related Company, and the interest of any Participant employed
solely by an Employer or a Related Company other than the withdrawing Employer,
shall remain unaffected by such withdrawal; no adjustment to his Separate
Accounts shall be made by reason of the withdrawal; and he shall continue as a
Participant hereunder subject to the remaining provisions of the Plan.
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ARTICLE XIX
ADOPTION BY OTHER ENTITIES
19.1 ADOPTION BY RELATED COMPANIES
A Related Company that is not an Employer may, with the consent of the Sponsor,
adopt the Plan and become an Employer hereunder by causing an appropriate
written instrument evidencing such adoption to be executed pursuant to the
authority of its board of directors. Any such instrument shall specify the
effective date of the adoption.
19.2 EFFECTIVE PLAN PROVISIONS
An Employer who adopts the Plan shall be bound by the provisions of the Plan as
in effect at the time of the adoption and as subsequently in effect because of
any amendment to the Plan.
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ARTICLE XX
MISCELLANEOUS PROVISIONS
20.1 NO COMMITMENT AS TO EMPLOYMENT
Nothing contained herein shall be construed as a commitment or agreement upon
the part of any person to continue his employment with an Employer or Related
Company, or as a commitment on the part of any Employer or Related Company to
continue the employment, compensation, or benefits of any person for any
period.
20.2 BENEFITS
Nothing in the Plan nor the Trust Agreement shall be construed to confer any
right or claim upon any person, firm, or corporation other than the Employers,
the Trustee, Participants, and Beneficiaries.
20.3 NO GUARANTEES
The Employers, the Administrator, and the Trustee do not guarantee the Trust
from loss or depreciation, nor do they guarantee the payment of any amount
which may become due to any person hereunder.
20.4 EXPENSES
The expenses of administration of the Plan, including the expenses of the
Administrator and fees of the Trustee, shall be paid from the Trust, unless the
Sponsor or an Employer elects to make payment. Administrative expenses that
are allocable to the Separate Account of a specific Participant may, as
determined by the Administrator, be paid from that Separate Account, unless the
Sponsor or an Employer elects to make payment.
20.5 PRECEDENT
Except as otherwise specifically provided, no action taken in accordance with
the Plan shall be construed or relied upon as a precedent for similar action
under similar circumstances.
20.6 DUTY TO FURNISH INFORMATION
The Employers, the Administrator, and the Trustee shall furnish to any of the
others any documents, reports, returns, statements, or other information that
the other reasonably deems necessary to perform its duties hereunder or
otherwise imposed by law.
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20.7 WITHHOLDING
The Trustee shall withhold any tax which by any present or future law is
required to be withheld, and which the Administrator notifies the Trustee in
writing is to be so withheld, from any payment to any Participant or
Beneficiary hereunder.
20.8 MERGER, CONSOLIDATION, OR TRANSFER OF PLAN ASSETS
The Plan shall not be merged or consolidated with any other plan, nor shall any
of its assets or liabilities be transferred to another plan, unless,
immediately after such merger, consolidation, or transfer of assets or
liabilities, each Participant in the Plan would receive a benefit under the
Plan which is at least equal to the benefit he would have received immediately
prior to such merger, consolidation, or transfer of assets or liabilities
(assuming in each instance that the Plan had then terminated).
20.9 CONDITION ON EMPLOYER CONTRIBUTIONS
Notwithstanding anything to the contrary contained in the Plan or the Trust
Agreement, any contribution of an Employer hereunder is conditioned upon the
continued qualification of the Plan under Section 401(a) of the Code, the
exempt status of the Trust under Section 501(a) of the Code, and the
deductibility of the contribution under Section 404 of the Code. Except as
otherwise provided in this Section and Section 20.10, however, in no event
shall any portion of the property of the Trust ever revert to or otherwise
inure to the benefit of an Employer or any Related Company.
20.10 RETURN OF CONTRIBUTIONS TO AN EMPLOYER
Notwithstanding any other provision of the Plan or the Trust Agreement to the
contrary, in the event any contribution of an Employer made hereunder:
(a) is made under a mistake of fact, or
(b) is disallowed as a deduction under Section 404 of the Code,
such contribution may be returned to the Employer within one year after the
payment of the contribution or the disallowance of the deduction to the extent
disallowed, whichever is applicable. In the event the Plan does not initially
qualify under Section 401(a) of the Code, any contribution of an Employer made
hereunder may be returned to the Employer within one year of the date of denial
of the initial qualification of the Plan, but only
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if an application for determination was made within the period of time
prescribed under Section 403(c)(2)(B) of ERISA.
20.11 VALIDITY OF PLAN
The validity of the Plan shall be determined and the Plan shall be construed
and interpreted in accordance with the laws of the State of Ohio, except as
preempted by applicable federal law. The invalidity or illegality of any
provision of the Plan shall not affect the legality or validity of any other
part thereof.
20.12 TRUST AGREEMENT
The Trust Agreement and the Trust maintained thereunder shall be deemed to be a
part of the Plan as if fully set forth herein and the provisions of the Trust
Agreement are hereby incorporated by reference into the Plan.
20.13 PARTIES BOUND
The Plan shall be binding upon the Employers, all Participants and
Beneficiaries hereunder, and, as the case may be, the heirs, executors,
administrators, successors, and assigns of each of them.
20.14 APPLICATION OF CERTAIN PLAN PROVISIONS
For purposes of the general administrative provisions and limitations of the
Plan, a Participant's Beneficiary shall be treated as any other person entitled
to receive benefits under the Plan. Upon any termination of the Plan, any such
Beneficiary who has an interest under the Plan at the time of such termination,
which does not cease by reason thereof, shall be deemed to be a Participant for
all purposes of the Plan.
20.15 LEASED EMPLOYEES
Any leased employee, other than an excludable leased employee, shall be treated
as an Employee for all purposes of the Plan with respect to the provisions of
Sections 401(a)(3), (4), (7), and (16), and 408(k), 410, 411, 415, and 416 of
the Code; provided, however, that no leased employee shall accrue a benefit
hereunder based on service as a leased employee. A "leased employee" means any
person who performs services for an Employer or a Related Company (the
"recipient") (other than an employee of the recipient) pursuant to an agreement
between the recipient and any other person (the "leasing organization") on a
substantially full-time basis for a period of at least one year, provided that
such services are of a type historically performed, in the business field of
the recipient, by employees. An "excludable
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leased employee" means any leased employee of the recipient who is covered by a
money purchase pension plan maintained by the leasing organization which
provides for (i) a nonintegrated employer contribution on behalf of each
participant in the plan equal to at least ten percent of compensation, (ii)
full and immediate vesting, and (iii) immediate participation by employees of
the leasing organization (other than employees who perform substantially all of
their services for the leasing organization or whose compensation from the
leasing organization in each plan year during the four-year period ending with
the plan year is less than $1,000); provided, however, that leased employees do
not constitute more than 20 percent of the recipient's nonhighly compensated
work force. For purposes of this Section, contributions or benefits provided
to a leased employee by the leasing organization that are attributable to
services performed for the recipient shall be treated as provided by the
recipient.
20.16 TRANSFERRED FUNDS
If funds from another qualified plan are transferred or merged into the Plan,
such funds shall be held and administered in accordance with any restrictions
applicable to them under such other plan to the extent required by law and
shall be accounted for separately to the extent necessary to accomplish the
foregoing.
20.17 SPECIAL PROVISIONS REGARDING EMPLOYEES COVERED BY COLLECTIVE
BARGAINING AGREEMENT
If necessary or appropriate to accommodate extension of the Plan to Employees
covered by a collective bargaining agreement, a Schedule setting forth special
over-riding provisions applicable to such Employees may be added to the Plan.
Such schedule shall control in the event of conflict with any other provision
of the Plan.
20.18 FORFEITURES
Any forfeiture under the Plan shall be applied to offset Employer
Contributions.
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ARTICLE XXI
TOP-HEAVY PROVISIONS
21.1 DEFINITIONS
For purposes of this Article, the following terms have the following meanings.
(a) The "compensation" of an Employee means compensation as defined in
Section 415 of the Code and regulations issued thereunder. In no
event, however, shall the compensation of a Participant taken into
account under the Plan for any Plan Year exceed (1) $200,000 for
Plan Years beginning prior to January 1, 1994, or (2) $150,000 for
Plan Years beginning on or after January 1, 1994 (both subject to
adjustment annually as provided in Section 401(a)(17)(B) and
Section 415(d) of the Code; provided, however, that the dollar
increase in effect on January 1 of any calendar year is effective
for Plan Years beginning in such calendar year). If the
compensation of a Participant is determined over a period of time
that contains fewer than 12 calendar months, then the annual
compensation limitation described above shall be adjusted with
respect to that Participant by multiplying the annual compensation
limitation in effect for the Plan Year by a fraction the numerator
of which is the number of full months in the period and the
denominator of which is 12; provided, however, that no proration is
required for a Participant who is covered under the Plan for less
than one full Plan Year if the formula for allocations is based on
Compensation for a period of at least 12 months. In determining
the compensation, for purposes of applying the annual compensation
limitation described above, of a Participant who is a five percent
owner or one of the ten Highly Compensated Employees receiving the
greatest compensation for the Plan Year, the compensation of the
Participant's spouse and of his lineal descendants who have not
attained age 19 as of the close of the Plan Year shall be included
as compensation of the Participant for the Plan Year. If as a
result of applying the family aggregation rule described in the
preceding sentence the annual compensation limitation would be
exceeded, the limitation shall be prorated among the affected
family members in proportion to each member's compensation as
determined prior to application of the family aggregation rules.
(b) The "determination date" with respect to any Plan Year means the
last day of the preceding Plan Year, except that
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the determination date with respect to the first Plan Year of the
Plan, shall mean the last day of such Plan Year.
(c) A "key employee" means any Employee or former Employee who is a key
employee pursuant to the provisions of Section 416(i)(1) of the
Code and any Beneficiary of such Employee or former Employee.
(d) A "non-key employee" means any Employee who is not a key employee.
(e) A "permissive aggregation group" means those plans included in each
Employer's required aggregation group together with any other plan
or plans of the Employer, so long as the entire group of plans
would continue to meet the requirements of Sections 401(a)(4) and
410 of the Code.
(f) A "required aggregation group" means the group of tax-qualified
plans maintained by an Employer or a Related Company consisting of
each plan in which a key employee participates and each other plan
that enables a plan in which a key employee participates to meet
the requirements of Section 401(a)(4) or Section 410 of the Code,
including any plan that terminated within the five-year period
ending on the relevant determination date.
(g) A "super top-heavy group" with respect to a particular Plan Year
means a required or permissive aggregation group that, as of the
determination date, would qualify as a top-heavy group under the
definition in paragraph (i) of this Section with "90 percent"
substituted for "60 percent" each place where "60 percent" appears
in the definition.
(h) A "super top-heavy plan" with respect to a particular Plan Year
means a plan that, as of the determination date, would qualify as a
top-heavy plan under the definition in paragraph (j) of this
Section with "90 percent" substituted for "60 percent" each place
where "60 percent"appears in the definition. A plan is also a
"super top-heavy plan" if it is part of a super top-heavy group.
(i) A "top-heavy group" with respect to a particular Plan Year means a
required or permissive aggregation group if the sum, as of the
determination date, of the present value of the cumulative accrued
benefits for key employees under all defined benefit plans included
in such group and the aggregate of the account balances of key
employees under all defined contribution plans included in such
group
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exceeds 60 percent of a similar sum determined for all employees
covered by the plans included in such group.
(j) A "top-heavy plan" with respect to a particular Plan Year means
(i), in the case of a defined contribution plan (including any
simplified employee pension plan), a plan for which, as of the
determination date, the aggregate of the accounts (within the
meaning of Section 416(g) of the Code and the regulations and
rulings thereunder) of key employees exceeds 60 percent of the
aggregate of the accounts of all participants under the plan, with
the accounts valued as of the relevant valuation date and increased
for any distribution of an account balance made in the five-year
period ending on the determination date, (ii), in the case of a
defined benefit plan, a plan for which, as of the determination
date, the present value of the cumulative accrued benefits payable
under the plan (within the meaning of Section 416(g) of the Code
and the regulations and rulings thereunder) to key employees
exceeds 60 percent of the present value of the cumulative accrued
benefits under the plan for all employees, with the present value
of accrued benefits to be determined under the accrual method
uniformly used under all plans maintained by an Employer or, if no
such method exists, under the slowest accrual method permitted
under the fractional accrual rate of Section 411(b)(1)(C) of the
Code and including the present value of any part of any accrued
benefits distributed in the five-year period ending on the
determination date, and (iii) any plan (including any simplified
employee pension plan) included in a required aggregation group
that is a top-heavy group. For purposes of this paragraph, the
accounts and accrued benefits of any Employee who has not performed
services for an Employer or a Related Company during the five-year
period ending on the determination date shall be disregarded. For
purposes of this paragraph, the present value of cumulative accrued
benefits under a defined benefit plan for purposes of top-heavy
determinations shall be calculated using the actuarial assumptions
otherwise employed under such plan, except that the same actuarial
assumptions shall be used for all plans within a required or
permissive aggregation group. A Participant's interest in the Plan
attributable to any Rollover Contributions, except Rollover
Contributions made from a plan maintained by an Employer or a
Related Company, shall not be considered in determining whether the
plan is top-heavy. Notwithstanding the foregoing, if a plan is
included in a required or permissive aggregation group that is not
a top-heavy group, such plan shall not be a top-heavy plan.
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(k) The "valuation date" with respect to any determination date means
the most recent Valuation Date occurring within the 12-month period
ending on the determination date.
21.2 APPLICABILITY
Notwithstanding any other provision of the Plan to the contrary, the provisions
of this Article shall be applicable during any Plan Year in which the Plan is
determined to be a top-heavy plan as hereinafter defined.
21.3 MINIMUM EMPLOYER CONTRIBUTION
If the Plan is determined to be a top-heavy plan, the Employer Contributions
allocated to the Separate Account of each non-key employee who is an Eligible
Employee and who is employed by an Employer or a Related Company on the last
day of such top-heavy Plan Year shall be no less than the lesser of (i) three
percent of his compensation or (ii) the largest percentage of compensation that
is allocated as an Employer Contribution and/or Tax-Deferred Contribution for
such Plan Year to the Separate Account of any key employee; except that, in the
event the Plan is part of a required aggregation group, and the Plan enables a
defined benefit plan included in such group to meet the requirements of Section
401(a)(4) or 410 of the Code, the minimum allocation of Employer Contributions
to each such non-key employee shall be three percent of the compensation of
such non-key employee. Any minimum allocation to a non-key employee required
by this Section shall be made without regard to any social security
contribution made on behalf of the non-key employee, his number of hours of
service, his level of compensation, or whether he declined to make elective or
mandatory contributions. Notwithstanding the minimum top-heavy allocation
requirements of this Section, if the Plan is a top-heavy plan, each non-key
employee who is an Eligible Employee and who is employed by an Employer or a
Related Company on the last day of a top-heavy Plan Year and who is also
covered under a top-heavy defined benefit plan maintained by an Employer or a
Related Company will receive the top-heavy benefits provided under the defined
benefit plan in lieu of the minimum top-heavy allocation under the Plan.
21.4 ADJUSTMENTS TO SECTION 415 LIMITATIONS
If the Plan is determined to be a top-heavy plan and an Employer maintains a
defined benefit plan covering some or all of the Employees that are covered by
the Plan, the defined benefit plan fraction and the defined contribution plan
fraction, described in Article VI, shall be determined as provided in Section
415 of the Code by substituting "1.0" for "1.25" each place where "1.25"
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appears, except that such substitutions shall not be applied to the Plan if (i)
the Plan is not a super top-heavy plan, (ii) the Employer Contribution for such
top-heavy Plan Year for each non-key employee who is to receive a minimum
top-heavy benefit hereunder is not less than four percent of such non-key
employee's compensation, and (iii) the minimum annual retirement benefit
accrued by a non-key employee who participates under one or more defined
benefit plans of an Employer or a Related Company for such top-heavy Plan Year
is not less than the lesser of three percent times years of service with an
Employer or a Related Company or thirty percent.
21.5 ACCELERATED VESTING
If the Plan is determined to be a top-heavy plan, a Participant's vested
interest in his Employer Contributions Sub-Account shall be determined no less
rapidly than in accordance with the following vesting schedule:
Years of Vesting Service Vested Interest
------------------------ ---------------
0 or more 100%
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ARTICLE XXII
ROLLOVERS TO ELIGIBLE RETIREMENT PLANS
22.1 ROLLOVER REQUIREMENTS
Notwithstanding any provision of the Plan to the contrary, a distributee may
elect, at the time and in the manner prescribed by the plan administrator, to
have any portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a direct rollover.
22.2 DEFINITIONS
(a) 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).
(b) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section 408(b)
of the Code, an annuity plan described in Section 403(a) of the
Code, or a qualified trust described in Section 401(a) of the Code,
that accepts the distributee's eligible rollover distribution.
However, in the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
(c) 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
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with regard to the interest of the spouse or former spouse.
(d) Direct rollover: A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
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ARTICLE XXIII
MERGER INTO THE PLAN OF THE ARNOLD CORPORATION
PRINTED COMMUNICATIONS FOR BUSINESS
SAVINGS PLAN
23.1. MERGER
Effective as of the close of October 1, 1988, The Arnold Corporation Printed
Communications For Business Savings Plan (the "Arnold Plan") was merged into
and made part of the Plan, and the trust fund maintained in connection with the
Arnold Plan was merged into and made part of the Trust. The assets of the
trust for the Arnold Plan were added to the assets of the Trust Fund to be
disposed of under the terms, conditions, and provisions of the Plan and the
Trust Agreement. On and after October 1, 1988, except as otherwise expressly
provided in this Article XXIII, the general provisions of the Plan shall govern
with respect to the interests under the Arnold Plan of all persons.
23.2. ACCOUNTS
As of October 1, 1988, a Separate Account and Sub-Accounts were established in
accordance with the provisions of Sections 6.4 and 6.5 in the name of each
person who as of October 1, 1988 was a participant or beneficiary with an
interest under the Arnold Plan. In addition to any credits or debits to the
Separate Account and Sub-Accounts of the persons described in the immediately
preceding sentence on or after October 1, 1988 in accordance with the Plan's
general provisions, as of the date the assets of the trust fund for the Arnold
Plan were received by the Trustee and deposited in the Trust there were
credited to such Separate Account and Sub-Accounts the value of such person's
prior account of the corresponding type under the Arnold Plan as certified to
the Committee by the plan administrator of the Arnold Plan; provided, however,
that loans described in the last sentence of this Section 23.2 became an
earmarked investment of the applicable Sub-Account. Such Separate Account and
Sub-Accounts are invested in the Investment Funds in accordance with Article IX
and any rules, regulations, and procedures established by the Committee
regarding the investment of such Separate Account and Sub-Accounts. Loans
outstanding under the Arnold Plan as of October 1, 1988 became loans under the
Plan and are governed by the general provisions of the Plan regarding loans;
provided, however, that such loans shall continue to be repaid under the Plan
in accordance with the general terms on which made under the Arnold Plan.
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23.3. OVERRIDING PROVISIONS
The provisions of this Article XXIII shall apply notwithstanding any other
provision hereof to the contrary.
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ARTICLE XXIV
MERGER INTO THE PLAN OF CERTAIN LIFE INSURANCE POLICIES
HELD UNDER THE NORICK BROTHERS, INC.
SECTION 401(K) SALARY REDUCTION PLAN AND
ADOPTION OF THE PLAN BY NORICK BROTHERS, INC.
24.1. MERGER
Effective as of the close of business on August 31, 1992, that portion of the
Norick Brothers, Inc. Section 401(k) Salary Reduction Plan (the "Norick Plan")
constituting life insurance policies on the lives of participants in the Norick
Plan who are employees of Norick Brothers, Inc. or an Employer on September 1,
1992 was merged into and made a part of the Plan, and the ownership of and
beneficial interest in such life insurance policies (the "Contracts") was
transferred from the trustee of the Norick Plan to the Trustee. On and after
September 1, 1992, except as otherwise expressly provided in this Article XXIV,
the general provisions of the Plan shall govern with respect to such
transferred Contracts, including, without limitation, the provisions of Article
VIII, to the extent not inconsistent with any provision of the Norick Plan that
may not be eliminated under Section 411(d)(6) of the Code.
24.2. ADJUSTMENTS TO LIMITATIONS UNDER SECTION 415 OF THE CODE
Notwithstanding the provisions of Section 6.9 hereof, the annual addition and
"defined contribution plan fraction" with respect to any Participant who was
also a participant in the Norick Plan shall be adjusted as hereinafter provided
with respect to the limitation year of the Plan differing from the limitation
year of the Norick Plan.
(a) For any limitation year of this Plan in which a Participant is
credited with an Annual Addition under this Plan and another plan
of an Employer or a Related Company, the annual addition taken into
account shall be the annual addition allocated to an account of the
Participant under any plan of an Employer or a Related Company
(regardless of the limitation year of such plan) as of any date
within such limitation year.
(b) The "defined contribution plan fraction" shall be computed in
accordance with this Subsection.
(1) The limitation periods included in the computation shall be --
(A) any full limitation year of a plan if
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<PAGE> 81
(i) the Participant's account in that plan
is deemed credited with an annual
addition as of any date within the
limitation year, and
(ii) no annual addition is deemed credited to
an account of the Participant under
another plan of an Employer or a Related
Company in a limitation year having any
days in common with the limitation year,
(B) any full limitation year of any plan of an
Employer or a Related Company which does not
include a day of any other full limitation year in
this Subsection, and
(C) any partial limitation year covering a period not
included in (A) or (B) above, where such partial
years begin on the first day of the limitation
year of one plan in which the Participant is (or
was) a participant and end on the day before the
first day of the next beginning limitation year of
a plan in which the Participant is (or was) a
participant of such one plan.
(2) For any limitation period, the numerator
of the defined contribution plan
fraction shall be the annual addition to
the Participant's accounts as of any
date on or before the close of such
limitation period, and the denominator
shall be the maximum annual addition for
such limitation periods.
(c) The maximum annual addition with respect to a limitation year or
limitation period shall be based on the compensation paid or made available to
a Participant within such limitation year or limitation period. The dollar
limitation with respect to a limitation period shall be the product of (1) the
dollar limitation for the calendar year in which the limitation period ends and
(2) the fraction whose numerator is the number of months (including fractions)
in the limitation period and whose denominator is 12.
24.3. OVERRIDING PROVISIONS
The provisions of this Article 24 shall apply notwithstanding any other
provision hereof to the contrary.
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<PAGE> 82
ARTICLE XXV
MERGER INTO THE PLAN OF THE NORICK BROTHERS, INC.
SECTION 401(K) SALARY REDUCTION PLAN
25.1. MERGER
Effective as of the close of business on February 28, 1993, the Norick
Brothers, Inc. Section 401(k) Salary Reduction Plan (the "Norick Plan") was
merged into and made a part of the Plan, and the trust fund maintained in
connection with the Norick Plan was added to the assets of the Trust to be
disposed of under the terms, conditions, and provisions of the Plan and the
Trust Agreement. On and after March 1, 1993, except as otherwise expressly
provided in this Article XXV, the general provisions of the Plan shall govern
with respect to the interests under the Norick Plan of all persons, to the
extent not inconsistent with any provision of the Norick Plan that may not be
eliminated under Section 411(d)(6) of the Code.
25.2. ACCOUNTS
As of March 1, 1993, a Separate Account and Sub-Accounts were established in
accordance with the provisions of Sections 6.4 and 6.5 in the name of each
person who as of the close of business on February 28, 1993 was a participant
or beneficiary with an interest under the Norick Plan. In addition to any
credits or debits to the Separate Account and Sub-Accounts of the persons
described in the immediately preceding sentence on or after March 1, 1993 in
accordance with the Plan's general provisions, as of the date the assets of the
trust fund for the Norick Plan were received by the Trustee and deposited in
the Trust there were credited to such Separate Account and Sub-Accounts the
value of such person's prior account of the corresponding type and any
additional types of accounts under the Norick Plan as certified to the
Committee by the plan administrator of the Norick Plan. Such Separate Account
and Sub-Accounts shall be invested in the Investment Funds in accordance with
Article IX and any rules, regulations, and procedures established by the
Committee regarding the investment of such Separate Account and Sub-Accounts.
25.3. OVERRIDING PROVISIONS
The provisions of this Article XXV shall apply notwithstanding any other
provision hereof the contrary.
-75-
<PAGE> 83
ARTICLE XXVI
MERGER INTO THE PLAN OF THE COIN SYSTEMS, INC.
PROFIT SHARING PLAN
26.1. MERGER
Effective as of the close of business on December 31, 1993, the Coin Systems,
Inc. Profit Sharing Plan (the "Coin Plan") was merged into and made a part of
the Plan, and the trust fund maintained in connection with the Coin Plan was
added to the assets of the Trust to be disposed of under the terms, conditions
and provisions of the Plan and the Trust Agreement. On and after January 1,
1994, except as otherwise expressly provided in this Article XXVI, the general
provisions of the Plan shall govern with respect to the interests under the
Coin Plan of all persons, to the extent not inconsistent with any provision of
the Coin Plan that may not be eliminated under Section 411(d)(6) of the Code.
26.2. ACCOUNTS
As of January 1, 1994, a Separate Account and Sub-Accounts were established in
accordance with the provisions of Sections 6.4 and 6.5 in the name of each
person who as of the close of business on December 31, 1993 was a participant
or beneficiary with an interest under the Coin Plan. In addition to any
credits or debits to the Separate Account or Sub-Accounts of the persons
described in the immediately preceding sentence on or after January 1, 1994 in
accordance with the Plan's general provisions, as of the date the assets of the
trust fund for the Coin Plan were received by the Trustee and deposited in the
Trust there were credited to each such Separate Account or Sub-Accounts the
value of such person's prior account of the corresponding type under the Coin
Plan as certified to the Committee by the plan administrator of the Coin Plan.
Such Accounts shall be invested under the Investment Options in accordance with
Article IX and any rules, regulations and procedures established by the
Committee regarding the investment of such Separate Account or Sub-Accounts.
26.3. ADJUSTMENTS TO LIMITATIONS UNDER SECTION 415 OF THE CODE
Notwithstanding the provisions of Section 6.9 hereof, the annual addition and
"defined contribution plan fraction" with respect to any Participant who was
also a participant in the Coin Plan shall be adjusted as hereinafter provided
with respect to the limitation year of the Plan differing from the limitation
year of the Coin Plan.
-76-
<PAGE> 84
(a) For any limitation year of this Plan in which a Participant is
credited with an annual addition under this Plan and another plan
of an Employer or a Related Company, the annual addition taken into
account shall be the annual addition allocated to an account of the
Participant under any plan of an Employer or a Related Company
(regardless of the limitation year of such plan) as of any date
within such limitation year.
(b) The "defined contribution plan fraction" shall be computed in
accordance with this Subsection.
(1) The limitation periods included in the computation shall be -
(A) any full limitation year of a plan if
(i) the Participant's account in that plan
is deemed credited with an annual
addition as of any date within the
limitation year, and
(ii) no annual addition is deemed credited to
an account of the Participant under
another plan of an Employer or a Related
Company in a limitation year having any
days in common with the limitation year,
(B) any full limitation year of any plan of an
Employer or a Related Company which does not
include a day of any other full limitation year in
this Subsection, and
(C) any partial limitation year covering a period not
included in (A) or (B) above, where such partial
years begin on the first day of the limitation
year of one plan in which the Participant is (or
was) a participant and end on the day before the
first day of the next beginning limitation year of
a plan in which the Participant is (or was) a
participant of such one plan.
(2) For any limitation period, the numerator of the
defined contribution plan fraction shall be the
annual addition to the Participant's accounts as
of any date on or before the close of such
limitation period, and the denominator shall be
the maximum annual addition for such limitation
periods.
-77-
<PAGE> 85
(c) The maximum annual addition with respect to a limitation year or
limitation period shall be based on the compensation paid or made available to
a Participant within such limitation year or limitation period. The dollar
limitation with respect to a limitation period shall be the product of (1) the
dollar limitation for the calendar year in which the limitation period ends and
(2) the fraction whose numerator is the number of months (including fractions)
in the limitation period and whose denominator is 12.
26.4. OVERRIDING PROVISIONS
The provisions of this Article XXVI shall apply notwithstanding any other
provision hereof to the contrary.
-78-
<PAGE> 86
ARTICLE XXVII
MERGER INTO THE PLAN OF THE
MCS-ONE TOUCH 401(K) RETIREMENT PLAN
27.1. MERGER
Effective as of the close of business on September 30, 1994, the MCS-One Touch
401(k) Retirement Plan (the "MCS Plan") shall be merged into and made a part of
the Plan, and the trust fund maintained in connection with the MCS Plan shall
be added to the assets of the Trust to be disposed of under the terms,
conditions and provisions of the Plan and the Trust Agreement. On and after
September 30, 1994, except as otherwise expressly provided in this Article
XXVII, the general provisions of the Plan shall govern with respect to the
interests under the MCS Plan of all persons, to the extent not inconsistent
with any provision of the MCS Plan that may not be eliminated under Section
411(d)(6) of the Code.
27.2. ACCOUNTS
As of September 30, 1994, Separate Account and Sub-Accounts shall be
established in accordance with the provisions of Sections 6.4 and 6.5 in the
name of each person who as of the close of business on May 9, 1994, was a
participant or beneficiary with an interest under the MCS Plan. In addition to
any credits or debits to the Separate Account and Sub-Accounts of the persons
described in the immediately preceding sentence on or after September 30, 1994,
in accordance with the Plan's general provisions, as of the date the assets of
the trust fund for the MCS Plan are received by the Trustee and deposited in
the Trust there shall be credited to each such Separate Account and
Sub-Accounts the value of such person's prior account of the corresponding type
under the MCS Plan as certified to the Committee by the plan administrator of
the MCS Plan. Such Separate Account and Sub-Accounts shall be invested under
the Investment Funds in accordance with Article IX and any rules, regulations
and procedures established by the Committee regarding the investment of such
Separate Account and Sub-Accounts.
27.3. OVERRIDING PROVISIONS
The provisions of this Article XXVII shall apply notwithstanding any other
provision hereof to the contrary.
-79-
<PAGE> 87
ARTICLE XXVIII
EFFECTIVE DATE
28.1 EFFECTIVE DATE OF AMENDMENT AND RESTATEMENT
Except as otherwise provided in the Plan, this amendment and restatement is
effective beginning January 1, 1994, and in no event shall this amendment and
restatement have any effect on contributions made to the Plan or any
predecessor plan with respect to any Plan Year or other period ending before
January 1, 1994, except as otherwise required by any provision of this Article
XXVIII below.
Unless otherwise specifically provided by the terms of the Plan, this amendment
and restatement is effective with respect to each change made to satisfy the
provisions of (i) the Tax Reform Act of 1986 ("TRA '86"), (ii) any other change
in the Code or ERISA, or (iii) regulations, rulings, or other published
guidance issued under the Code, ERISA, or TRA '86, the first day of the first
period (which may or may not be the first day of a Plan Year) with respect to
which such change became required because of such provision (including any day
that became such as a result of an election or waiver by an Employee or a
waiver or exemption issued under the Code, ERISA, or TRA '86), and to the
extent required with respect to any predecessor plan, but, unless otherwise
specifically indicated, with respect only to employees who retire, die, or
otherwise terminate their employment on or after said date, including, but not
limited to, the following:
(a) the following changes are effective for Plan Years beginning after
12/31/86, unless a delayed effective date applies because the Plan
is collectively-bargained or because of an applicable exemption or
waiver:
(1) the addition in Article I of the Plan of a
defined term "Highly Compensated Employee",
changes to the 401(k) discrimination test
in Article VI of the Plan, addition of the
401(m) discrimination test in Article VI of
the Plan, addition of the aggregate
deferral limit under Section 402(g) of the
Code in Article VI of the Plan, and
compliance with the 414(s) compensation
definition requirements in Article VI of
the Plan;
(2) changes in the definition of "leased
employee" in Section 20.16 of the Plan to
reflect changes in the safe harbor
exclusion;
-80-
<PAGE> 88
(3) changes in the top-heavy provisions of
Article XXI of the Plan, if applicable, to
provide for ratable accrual; and
(4) changes in the loan provisions of Article
XI of the Plan, if applicable, to reflect
new dollar limitations, repayment
requirements, and restrictions applicable
to Highly Compensated Employees under
Section 72(p) of the Code.
(b) Changes in the 415 limitations in Article VI of the
Plan are effective for limitation years beginning after
12/31/86, unless a delayed effective date applies
because the Plan is collectively-bargained or because
of an applicable waiver or exemption.
(c) Changes required to provide that allocations shall not
be decreased or discontinued because of attainment of
any age, if any, are effective for Plan Years beginning
after 12/31/87, unless a delayed effective date applies
because the Plan is collectively-bargained or because
of an applicable waiver or exemption.
(d) The following changes are effective for Plan Years
beginning after 12/31/88, unless a delayed effective
date applies because the Plan is collectively-bargained
or because of an applicable waiver or exemption:
(1) the addition of the $200,000 compensation
limitation in the definition of
"Compensation" in Article I of the Plan,
"test compensation" in Article VI of the
Plan, and "compensation" in Article XXI of
the Plan; and
(2) age 70 1/2 in service distribution
requirements and incidental death benefit
rules under Section 401(a)(9) of the Code
in Articles XIV and XV of the Plan.
Notwithstanding the foregoing and subject to applicable law, with respect to
Plan Years beginning after 12/31/86 and before the date of this restatement of
the Plan, the Sponsor may elect to operate the Plan in accordance with any
transitional rule published by the Internal Revenue Service or a reasonable,
good faith interpretation of TRA' 86 and related applicable law, in which event
such transitional rule or good faith interpretation
-81-
<PAGE> 89
shall prevail over the provisions in this restatement of the Plan with respect
to such Plan Year.
* * *
EXECUTED AT Dayton, Ohio, this 22nd day of December, 1994.
THE REYNOLDS AND REYNOLDS COMPANY
By: _________________________________
Title: General Counsel & Secretary
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<PAGE> 90
SCHEDULE TO
THE REYNOLDS AND REYNOLDS COMPANY
401(K) SAVINGS PLAN
REGARDING EMPLOYEES COVERED BY A
COLLECTIVE BARGAINING AGREEMENT
PART 1 - APPLICABILITY
Pursuant to Section 20.17 of the Plan, the provisions of this Schedule shall
apply notwithstanding any other provision of the Plan to the contrary. The
special overriding provisions specified in Part 2 of this Schedule shall apply
with respect to Employees who are covered by a collective bargaining agreement
between an Employer and:
The Graphic Communications Union, Local No. 754-S, Subordinate to
The Graphic Communications International Union;
The Graphic Communications International Union, Local 508 OKI,
AFL/CIO; or
International Union, United Automobile, Aerospace and Agricultural
Implement Workers of America, UAW, and Its Local Union No. 2295.
and the corresponding provisions set forth in the body of the Plan shall not
apply with respect to such Employees.
PART 2 - SPECIAL OVERRIDING PROVISIONS
SECTION 5.5. MATCHING CONTRIBUTIONS
Each Employer shall make a matching contribution to the Plan for the
Contribution Period in an amount equal to 20 percent of the "eligible
Tax-Deferred Contributions" made on behalf of each such Eligible Employee for
the Contribution Period. For purposes of this Section and Section 5.6,
"eligible Tax-Deferred Contributions" with respect to an Eligible Employee
means the Tax-Deferred Contributions made on his behalf for the Contribution
Period, in an amount up to, but not exceeding, three percent of such Eligible
Employee's Compensation for the Contribution Period.
-83-
<PAGE> 1
FIRST AMENDMENT TO
THE REYNOLDS AND REYNOLDS COMPANY
401(K) SAVINGS PLAN
(JANUARY 1, 1994 RESTATEMENT)
-----------------------------
The Reynolds and Reynolds Company hereby amends The
Reynolds and Reynolds Company (401(k) Savings Plan (January 1, 1994
Restatement) (the "Plan") as follows:
Effective as if originally included in the January 1,
1994 Restatement of The Reynolds and Reynolds Company 401(k) Savings Plan, the
Plan is amended by inserting the words "or whose Settlement Date occurs by
reason of disability" immediately following the word "Employer" in Section 15.1
of the Plan.
* * *
IN WITNESS WHEREOF, The Reynolds and Reynolds Company
has caused this Amendment to be executed by its duly authorized officer on this
21 day of March , 1995.
- ----- ------------
ATTEST: THE REYNOLDS AND REYNOLDS COMPANY
????????????????? BY:??????????????????????????
- --------------------------- -------------------------------
Title: V. P. Corp. H. R.
<PAGE> 1
SECOND AMENDMENT TO
THE REYNOLDS AND REYNOLDS COMPANY
401(K) SAVINGS PLAN
(JANUARY 1, 1994 RESTATEMENT)
-----------------------------
The Reynolds and Reynolds Company hereby amends The
Reynolds and Reynolds Company 401(k) Savings Plan (January 1, 1994 Restatement)
(the "Plan") as follows:
1. Effective as of the date of execution of this
amendment, Article V of the Plan is amended by adding at the end thereof a new
Section 5.12 to provide as follows:
5.12 OTHER EMPLOYER CONTRIBUTION
The Sponsor, in its capacity as an Employer, may make
a contribution to the Plan for the Contribution Period in an amount
determined by the Sponsor, in its discretion. Any such contribution
shall be allocated only among the Eligible Employees listed on
Schedule A of the Plan. The allocable share of each such Eligible
Employee shall be the allocation percentage listed for such Eligible
Employee in Schedule A of the Plan. For purposes of Section 6.9 only,
any contribution made pursuant to this Section 5.12 shall be treated
as a Qualified Nonelective Contribution. For all other purposes under
the Plan, except Sections 6.5, 6.6, 6.7, and 6.8, any contribution
made pursuant to this Section 5.12 shall be treated as an Employer
Contribution. Each Eligible Employee's allocable share of any
contribution made pursuant to this Section 5.12 shall be credited to
the
<PAGE> 2
Employer Contributions Sub-Account of such Eligible Employee. For
purposes of this Section 5.12 only, the term "Contribution Period"
shall mean any calendar month beginning after February 28, 1995 and
ending before January 1, 1996.
2. Effective as of the date of execution of this
amendment, the Plan is amended by adding at the end thereof Schedule A,
attached hereto.
* * *
IN WITNESS WHEREOF, The Reynolds and Reynolds Company
has caused this Amendment to be executed by its duly authorized officer on this
31 day of March , 1995.
- ---- ----------
ATTEST: THE REYNOLDS AND REYNOLDS COMPANY
????????????????????
- ----------------------- By: ???????????????????????
-----------------------------------
Title: V.P. Corp. H.R.
<PAGE> 3
SCHEDULE A
TO
THE REYNOLDS AND REYNOLDS COMPANY
401(K) SAVINGS PLAN
(January 1, 1994 Restatement)
<TABLE>
<S> <C> <C>
ELIGIBLE EMPLOYEE SOCIAL SECURITY NUMBER ALLOCATION PERCENTAGE
AHLQUIST, MURRAY C. ######### 2.9033%
ALLEN, JR., WILLIAM H. ######### 2.7161%
BACKMAN, THOMAS E. ######### 0.0294%
BLAIR, KRISTINA M. ######### 0.7485%
BOLLINGER, JOHN ######### 0.2224%
CARLSON, CHARLES R. ######### 1.4122%
CLARK, PAULA M. ######### 6.3625%
CRAWFORD, SHARON M. ######### 0.0531%
DAVIS, LAWRENCE ALLEN ######### 3.9357%
DONALDSON, LINDA K. ######### 12.4186%
ELAM, KIRA OLSON ######### 0.0275%
FIELDER, PAMELA A. ######### 0.0368%
FIGENBAUM, VIRGINIA ######### 0.7491%
FITZHUGH, LUE ANNE ######### 1.7980%
FRANZWA, MICHELLE ######### 0.0122%
FREEMAN, KIMBERLY R. ######### 0.2350%
HART, CHARLES D. ######### 0.3117%
ISAAC, J. RONALD ######### 6.5657%
ISAAC, JASON L. ######### 1.1384%
KELLY, GERALD ######### 0.1469%
KEOUGH, GEORGE DOUGLAS ######### 2.0645%
KUBACK, MARILYN LOU ######### 0.0115%
MCCORMICK, ANTHONY D. ######### 0.8223%
MCSHANE, MAUREEN ######### 6.3349%
MORRIS, KATHLEEN FAYE ######### 1.4156%
NORMAN, RAYMOND R. ######### 0.7396%
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
ELIGIBLE EMPLOYEE SOCIAL SECURITY NUMBER ALLOCATION PERCENTAGE
PECHMAN, NANCY K. ######### 0.7937%
RAYMOND, GARY L. ######### 2.97905%
RODGERS, DEBBIE M. ######### 5.2122%
SHELDON, JONATHAN ######### 0.7871%
SIMONSON, TERRI ######### 1.3791%
SMITH, WILLIAM T. ######### 0.0396%
SNYDER, KATHY L. ######### 1.3099%
SONNTAG, JENNIFER E. ######### 0.0157%
TAYLOR, JANICE G. ######### 3.19195%
THOMPSON, VIRGINIA L. ######### 0.3811%
TRACY, ROBERT E. ######### 1.0635%
VAKARCS, PATRICIA A. ######### 1.0739%
VASCHE, CHERYL L. ######### 8.5922%
WEINGARD, ALLAN ######### 18.5202%
</TABLE>
<PAGE> 1
EXHIBIT A
THIRD AMENDMENT TO
THE REYNOLDS AND REYNOLDS COMPANY
401(K) SAVINGS PLAN
(JANUARY 1, 1994 RESTATEMENT)
-----------------------------
The Reynolds and Reynolds Company hereby amends The Reynolds and Reynolds
Company 401(k) Savings Plan (January 1, 1994 Restatement) (the "Plan") as
follows:
Effective as of July 1, 1995, the definition of "Enrollment Date" in
Section 1.1 of the Plan is amended by adding as a new sentence at the end
thereof the following:
Notwithstanding the foregoing, with respect to persons who were
employees of The Nickelsen Group on June 30, 1995 and became Employees
on July 1, 1995, July 1, 1995 shall be an Enrollment Date.
* * *
IN WITNESS WHEREOF, The Reynolds and Reynolds Company
has caused this Amendment to be executed by its duly authorized officer on this
____ day of __________________, 1995.
ATTEST: THE REYNOLDS AND REYNOLDS COMPANY
_______________________ By:______________________________
Title:
-35-
<PAGE> 1
EXHIBIT B
FOURTH AMENDMENT TO
THE REYNOLDS AND REYNOLDS COMPANY
401(K) SAVINGS PLAN
(JANUARY 1, 1994 RESTATEMENT)
-----------------------------
The Reynolds and Reynolds Company hereby amends The
Reynolds and Reynolds Company 401(k) Savings Plan (January 1, 1994 Restatement)
(the "Plan") as follows:
Effective as of October 1, 1995, the definition of
"Enrollment Date" in Section 1.1 of the Plan is amended by adding as a new
sentence at the end thereof the following:
Notwithstanding the foregoing, with respect to persons who were
employees of Salcris Corporation on May 11, 1995 and became
Employees on May 12, 1995, October 1, 1995 shall be an Enrollment
Date.
* * *
IN WITNESS WHEREOF, The Reynolds and Reynolds Company
has caused this Amendment to be executed by its duly authorized officer on this
____ day of __________________, 1995.
ATTEST: THE REYNOLDS AND REYNOLDS COMPANY
_______________________ By:______________________________
Title:
-36-
<PAGE> 1
EXHIBIT (10)(oo)
THE REYNOLDS AND REYNOLDS COMPANY
RETIREE MEDICAL SAVINGS ACCOUNT PLAN
<PAGE> 2
TABLE OF CONTENTS
PREAMBLE
<TABLE>
ARTICLE I
DEFINITIONS
<S> <C> <C>
1.1 PLAN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
SERVICE
2.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 CREDITING OF HOURS OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 CREDITING OF CONTINUOUS SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 ELIGIBILITY SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 VESTING SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
ELIGIBILITY
3.1 ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 EMPLOYMENT CLASSIFICATION REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 TRANSFERS OF EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 REEMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 NOTIFICATION CONCERNING NEW ELIGIBLE EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 BINDING EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
EMPLOYER CONTRIBUTIONS
4.1 CONTRIBUTION PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.3 ALLOCATION OF EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 VERIFICATION OF AMOUNT OF EMPLOYER CONTRIBUTIONS BY THE ADMINISTRATOR . . . . . . . . . . . . . . . . 10
4.5 PAYMENT OF EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.6 ELIGIBILITY TO PARTICIPATE IN ALLOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.7 VESTING OF EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.8 ELECTION OF FORMER VESTING SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.9 VESTING AFTER A CHANGE OF CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.10 FORFEITURES TO REDUCE EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
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<TABLE>
ARTICLE V
LIMITATIONS ON CONTRIBUTIONS
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5.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 CODE SECTION 415 LIMITATIONS ON CREDITING OF CONTRIBUTIONS AND FORFEITURES . . . . . . . . . . . . . . 13
5.3 COVERAGE UNDER OTHER QUALIFIED DEFINED CONTRIBUTION PLAN . . . . . . . . . . . . . . . . . . . . . . . 14
5.4 COVERAGE UNDER QUALIFIED DEFINED BENEFIT PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.5 SCOPE OF LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VI
TRUST FUNDS AND SEPARATE ACCOUNTS
6.1 GENERAL FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.2 APPOINTMENT OF INVESTMENT MANAGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.3 INCOME ON TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.4 SEPARATE ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VII
DEPOSIT AND INVESTMENT OF CONTRIBUTIONS
7.1 DEPOSIT OF CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII
CREDITING AND VALUING SEPARATE ACCOUNTS
8.1 CREDITING SEPARATE ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 VALUING SEPARATE ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.3 PLAN VALUATION PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.4 FINALITY OF DETERMINATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.5 NOTIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IX
TERMINATION OF EMPLOYMENT AND SETTLEMENT DATE
9.1 TERMINATION OF EMPLOYMENT AND SETTLEMENT DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.2 SEPARATE ACCOUNTING FOR NON-VESTED AMOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.3 DISPOSITION OF NON-VESTED AMOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
9.4 RECREDITING OF FORFEITED AMOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE X
DISTRIBUTIONS
10.1 DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.2 DISTRIBUTIONS TO BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.3 CASH OUTS AND PARTICIPANT CONSENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.4 REQUIRED COMMENCEMENT OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.5 REEMPLOYMENT OF A PARTICIPANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
10.6 RESTRICTIONS ON ALIENATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
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<TABLE>
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10.7 FACILITY OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
10.8 INABILITY TO LOCATE PAYEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE XI
FORM OF PAYMENT
11.1 FORM OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE XII
BENEFICIARIES
12.1 DESIGNATION OF BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
12.2 SPOUSAL CONSENT REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE XIII
ADMINISTRATION
13.1 AUTHORITY OF THE COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.2 ACTION OF THE COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.3 CLAIMS REVIEW PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.4 QUALIFIED DOMESTIC RELATIONS ORDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.5 RESPONSIBILITIES OF THE SPONSOR, THE COMMITTEE, AND THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.6 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13.7 ACTIONS BINDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE XIV
AMENDMENT AND TERMINATION
14.1 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
14.2 LIMITATION ON AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
14.3 LIMITATION ON AMENDMENT FOLLOWING A CHANGE OF CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
14.4 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
14.5 DEFINITION OF CHANGE IN CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
14.6 REORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
14.7 WITHDRAWAL OF AN EMPLOYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE XV
ADOPTION BY OTHER ENTITIES
15.1 ADOPTION BY RELATED COMPANIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
15.2 EXTENSION OF COVERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
15.3 EFFECTIVE PLAN PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.1 NO COMMITMENT AS TO EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
16.2 BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
16.3 NO GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
16.4 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
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<TABLE>
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16.5 PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
16.6 DUTY TO FURNISH INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
16.7 WITHHOLDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
16.8 MERGER, CONSOLIDATION, OR TRANSFER OF PLAN ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
16.9 BACK PAY AWARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
16.10 CONDITION ON EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
16.11 RETURN OF CONTRIBUTIONS TO AN EMPLOYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
16.12 VALIDITY OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
16.13 TRUST AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
16.14 PARTIES BOUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
16.15 APPLICATION OF CERTAIN PLAN PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
16.16 LEASED EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
16.17 TRANSFERRED FUNDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE XVII
TOP-HEAVY PROVISIONS
17.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
17.2 APPLICABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
17.3 MINIMUM EMPLOYER CONTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
17.4 ADJUSTMENTS TO SECTION 415 LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
17.5 ACCELERATED VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE XVIII
ROLLOVERS
18.1 ROLLOVER REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
18.2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE XIX
EFFECTIVE DATE
19.1 EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
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PREAMBLE
The Plan established hereunder, to be known as The Reynolds and Reynolds
Company Retiree Medical Savings Account Plan, is intended to qualify as a
profit-sharing plan under Section 401(a) of the Code. The Plan is intended to
be and shall be a profit-sharing plan for all purposes under the Code and under
ERISA notwithstanding the fact that there is no requirements that an Employer
have profits or current or accumulated net earnings for any Plan Year or
Contribution Period in order to make an Employer Contribution to the Plan for
such Plan Year or Contribution Period. The Plan is established and maintained
for the exclusive benefit of eligible Employees and their beneficiaries.
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<PAGE> 7
ARTICLE I
DEFINITIONS
1.1 PLAN DEFINITIONS
As used herein, the following words and phrases have the meanings hereinafter
set forth, unless a different meaning is plainly required by the context:
The "ADMINISTRATOR" means the Committee, but in the event there is no
Committee, the "Administrator" means the Sponsor.
The "BENEFICIARY" of a Participant means the person or persons entitled under
the provisions of the Plan to receive distribution hereunder in the event the
Participant dies before receiving distribution of his entire interest under the
Plan.
The "CODE" means the Internal Revenue Code of 1986, as amended from time to
time. Reference to a section of the Code includes such section and any
comparable section or sections of any future legislation that amends,
supplements, or supersedes such section.
The "COMMITTEE" means The Reynolds and Reynolds Company Retiree Medical Savings
Account Plan Committee, as described in Article XIII, which shall consist of
those persons who from time to time constitute the persons serving on The
Reynolds and Reynolds Company 401(k) Savings Plan Committee, aka The Reynolds
and Reynolds Company Tax Deferred Savings and Protection Plan Committee, unless
the Sponsor appoints a different group of persons to serve as the Committee.
A "CONTRIBUTION PERIOD" means the period specified in Article IV for which
Employer Contributions shall be made.
A "DISABLED EMPLOYEE" means any person (a) who is receiving long term
disability benefits from an Employer, and (b)(i) who was an Eligible Employee
as of the date he last performed services for an Employer, or (ii) who last
performed services for an Employer prior to the effective date of this Plan (or
prior to the date such Employer adopted the Plan, if later), but would have
been considered an Eligible Employee if the Plan had first become effective (or
his Employer had first adopted the Plan) on the date he last performed services
for an Employer, determined without regard to such Employee's or Former
Employee's Eligibility Service.
An "ELIGIBLE EMPLOYEE" means any Employee or any Disabled Employee who has met
the eligibility requirements of Article III.
The "ELIGIBILITY SERVICE" of an Employee or a Disabled Employee means the
period or periods of service credited to him under the
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<PAGE> 8
provisions of Article II for purposes of determining his eligibility to
participate in the Plan as may be required under Article III.
An "EMPLOYEE" means any common law employee of an Employer or of a Related
Company or a person who is a "leased-employee" as defined in Section 16.16.
An "EMPLOYER" means the Sponsor and any entity which has adopted the Plan as
may be provided under Article XV.
An "EMPLOYER CONTRIBUTION" means the amount that an Employer contributes to the
Plan in accordance with Article IV.
An "ENROLLMENT DATE" means the first day of each Plan Year.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time. Reference to a section of ERISA includes such section and
any comparable section or sections of any future legislation that amends,
supplements, or supersedes such section.
The "GENERAL FUND" means a Trust Fund established by the Trustee as required to
hold and administer any assets of the Trust.
An "HOUR OF SERVICE" with respect to an Employee or a Disabled Employee means
each hour, if any, that may be credited to him in accordance with the
provisions of Article II.
The "NORMAL RETIREMENT DATE" of an Employee or a Disabled Employee means the
date he attains age 65.
A "PARTICIPANT" means any Employee, former Employee, Disabled Employee, or
former Disabled Employee who has a Separate Account in the Trust.
The "PLAN" means The Reynolds and Reynolds Company Retiree Medical Savings
Account Plan, as from time to time in effect.
A "PLAN YEAR" means the 12-consecutive-month period ending September 30, 1994
and each 12-consecutive-month period thereafter.
A "RELATED COMPANY" means any corporation or business, other than an Employer,
which would be aggregated with an Employer for a relevant purpose under Section
414 of the Code, but only with respect to the period during which it would be
aggregated.
A "SEPARATE ACCOUNT" means the account maintained by the Trustee in the name of
a Participant that reflects his interest in the Trust, as provided in Article
VI.
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<PAGE> 9
The "SETTLEMENT DATE" of a Participant means the date on which a Participant's
interest under the Plan becomes distributable in accordance with Article X.
The "SPONSOR" means The Reynolds and Reynolds Company, and any successor
thereto.
The "TRUST" means the trust maintained by the Trustee under the Trust
Agreement.
The "TRUST AGREEMENT" means the agreement entered into between the Sponsor and
the Trustee relating to the holding, investment, and reinvestment of the assets
of the Plan, together with all amendments thereto and shall include any
agreement establishing a custodial account, an annuity contract, or an
insurance contract (other than a life, health or accident, property, casualty,
or liability insurance contract) for the investment of assets if the custodial
account or contract would, except for the fact that it is not a trust,
constitute a qualified trust under Section 401 of the Code.
The "TRUSTEE" means the trustee or any successor trustee which at the time
shall be designated, qualified, and acting under the Trust Agreement and shall
include any insurance company that issues an annuity or insurance contract
pursuant to the Trust Agreement or any person holding assets in a custodial
account pursuant to the Trust Agreement.
A "TRUST FUND" means any fund established under the Trust by the Trustee.
A "VALUATION DATE" means the last day of each Plan Year and any other date or
dates designated by the Administrator and communicated in writing to the
Trustee for the purpose of valuing the General Fund and adjusting Separate
Accounts hereunder.
The "VESTING SERVICE" of an Employee or a Disabled Employee means the period or
periods of service credited to him under the provisions of Article II for
purposes of determining his vested interest in his Separate Account.
1.2 INTERPRETATION
Where required by the context, the noun, verb, adjective, and adverb forms of
each defined term shall include any of its other forms. Wherever used herein,
the masculine pronoun shall include the feminine, the singular shall include
the plural, and the plural shall include the singular.
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<PAGE> 10
ARTICLE II
SERVICE
2.1 DEFINITIONS
For purposes of this Article, the following terms have the following meanings:
(a) The "continuous service" of an Employee or a Disabled Employee
means the service credited to him in accordance with the provisions
of Section 2.3 of the Plan.
(b) The "employment commencement date" of an Employee or a Disabled
Employee means the date he first completes an Hour of Service.
(c) A "maternity/paternity absence" means a person's absence from
employment with an Employer or a Related Company because of the
person's pregnancy, the birth of the person's child, the placement
of a child with the person in connection with the person's adoption
of the child, or the caring for the person's child immediately
following the child's birth or adoption. A person's absence from
employment will not be considered a maternity/paternity absence
unless the person furnishes the Administrator such timely
information as may reasonably be required by the Administrator to
establish that the absence was for one of the purposes enumerated
in this paragraph and to establish the number of days of absence
attributable to such purpose.
(d) The "reemployment commencement date" of an Employee or a Disabled
Employee means the first date following a severance date on which
he again completes an Hour of Service.
(e) The "severance date" of an Employee means the earlier of (i) the
date on which he retires, dies, or his employment with an Employer
and all Related Companies is otherwise terminated, or (ii) the
first anniversary of the first date of a period during which he is
absent from work with an Employer and all Related Companies for any
other reason; provided, however, that if he terminates employment
with or is absent from work with an Employer and all Related
Companies on account of service with the armed forces of the United
States, he shall not incur a severance date if he returns to
employment with an Employer or a Related Company within the period
during which he retains employment rights pursuant to Federal law.
The "severance date" of a Disabled Employee means the date he
ceases to be paid long term disability
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<PAGE> 11
benefits from an Employer and he does not return to employment with
an Employer or any Related Company.
2.2 CREDITING OF HOURS OF SERVICE
An Employee or a Disabled Employee shall be credited with an Hour of Service
for each hour for which he is paid, or entitled to payment, for the performance
of duties for an Employer or any Related Company.
2.3 CREDITING OF CONTINUOUS SERVICE
An Employee or a Disabled Employee shall be credited with continuous service
for the aggregate of the periods of time between his employment commencement
date or any reemployment commencement date and the severance date that next
follows such employment commencement date or reemployment commencement date;
provided, however, that an Employee or a Disabled Employee who has a
reemployment commencement date within the 12-consecutive-month period following
the earlier of the first date of his absence or his severance date shall be
credited with continuous service for the period between such severance date and
reemployment commencement date.
2.4 ELIGIBILITY SERVICE
Eligibility Service shall be determined in accordance with the following
provisions:
(a) An Employee or a Disabled Employee shall be credited with
Eligibility Service equal to his period of continuous service.
(b) Notwithstanding the provisions of paragraph (a), continuous service
completed by an Employee or a Disabled Employee prior to a
severance date shall not be included in determining the Employee's
or a Disabled Employee's Eligibility Service unless (1) the
Employee or a Disabled Employee has a reemployment commencement
date within the 12-consecutive-month period following the severance
date, (2) the Employee or Disabled Employee had a nonforfeitable
right to any portion of his Separate Account as of the severance
date, or (3) the period of time between the severance date and the
Employee's or a Disabled Employee's reemployment commencement date
is less than the greater of five years or his period of continuous
service determined as of the severance date; provided, however,
that solely for purposes of applying this paragraph, if a person is
on a maternity/paternity absence beyond the first anniversary of
the first day of such absence, his severance date shall be the
second anniversary of the first day of such maternity/paternity
absence.
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(c) For purposes of determining Eligibility Service only, an Employee's
employment with Coin, Inc. shall be treated as continuous service
with an Employer to the extent such employment with Coin, Inc.
would have been continuous service under the Plan had it been
employment with an Employer.
2.5 VESTING SERVICE
Years of Vesting Service shall be determined in accordance with the following
provisions:
(a) An Employee or a Disabled Employee shall be credited with years of
Vesting Service equal to his period of continuous service.
(b) Notwithstanding the provisions of paragraph (a), the following
periods of continuous service shall not be included in determining
an Employee's or a Disabled Employee's years of Vesting Service:
(i) continuous service completed by the Employee or the
Disabled Employee prior to a severance date unless (1)
the Employee or the Disabled Employee has a
reemployment commencement date within the
12-consecutive-month period following the severance
date, (2) the Employee or the Disabled Employee had a
nonforfeitable right to any portion of his Separate
Account as of the severance date, or (3) the period of
time between the severance date and his reemployment
commencement date is less than the greater of five
years or his period of continuous service determined as
of the severance date; provided, however, that solely
for purposes of applying this subparagraph, if a person
is on a maternity/paternity absence beyond the first
anniversary of the first day of such absence, his
severance date shall be the second anniversary of the
first day of such maternity/paternity absence; and
(ii) continuous service completed by an Employee or a
Disabled Employee prior to October 1, 1993.
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<PAGE> 13
ARTICLE III
ELIGIBILITY
3.1 ELIGIBILITY
Each person who is an Employee or a Disabled Employee, has attained age 20 1/2,
has completed six full calendar months of Eligibility Service, and meets the
employment classification requirements set forth in Section 3.2 on October 1,
1993 shall become an Eligible Employee as of October 1, 1993. Each other
Employee or Disabled Employee shall become an Eligible Employee as of the
Enrollment Date next following the date on which he has attained age 20 1/2 and
completed six full calendar months of Eligibility Service, provided that he
meets the employment classification requirements set forth in Section 3.2 as of
such Enrollment Date.
3.2 EMPLOYMENT CLASSIFICATION REQUIREMENTS
An Employee or a Disabled Employee is in an eligible employment classification
unless he is:
(a) A nonresident alien who receives no earned income
from an Employer or a Related Company (within the meaning of
section 911(b) of the Code) that constitutes income from sources
within the United States (within the meaning of section 861(a)(3)
of the Code);
(b) A person who is not covered by The Reynolds and
Reynolds Flexible Benefits Plan;
(c) An Employee hired for a specific project of
limited duration.
(d) An Employee of a Related Company, or a Disabled
Employee who last performed services for a Related Company;
(e) An Employee of an Employer at a plant, division,
or other business operation to which coverage has not been extended
by such Employer;
(f) A Disabled Employee who last performed services
for an Employer at a plant, division, or other business operation
to which coverage has not been extended by such Employer; or
(g) A leased employee.
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3.3 TRANSFERS OF EMPLOYMENT
If a person is transferred directly from employment with an Employer or with a
Related Company in a capacity other than as an Eligible Employee to employment
as an Eligible Employee, he shall become an Eligible Employee beginning
effective as of the date he is so transferred if prior to an Enrollment Date
preceding such transfer date he has met the minimum age (20 1/2 years) and
service (six months) requirements of Section 3.1. Otherwise, the eligibility
of a person who is so transferred shall be determined in accordance with
Sections 3.1 and 3.2.
3.4 REEMPLOYMENT
If an Employer reemploys a person who previously experienced a termination of
employment with an Employer and all Related Companies and who had been an
Eligible Employee prior to his termination of employment, such person shall
again become an Eligible Employee on the date he is reemployed despite not
having satisfied the minimum service (six months) requirement of Section 3.1,
provided that all other requirements of Sections 3.1 and 3.2 are satisfied.
Otherwise, the eligibility of a person who previously experienced a termination
of employment with an Employer and all Related Companies and who is reemployed
by an Employer or a Related Company shall be determined in accordance with
Sections 3.1 and 3.2 (or Section 3.3 if applicable).
3.5 NOTIFICATION CONCERNING NEW ELIGIBLE EMPLOYEES
Each Employer shall notify the Administrator as soon as practicable of persons
becoming Eligible Employees as of any date.
3.6 BINDING EFFECT
Each Employee and Disabled Employee shall be bound by all the terms and
conditions of the Plan and the Trust Agreement.
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ARTICLE IV
EMPLOYER CONTRIBUTIONS
4.1 CONTRIBUTION PERIOD
The Contribution Period for Employer Contributions under the Plan shall be each
Plan Year.
4.2 EMPLOYER CONTRIBUTIONS
Each Employer may, in its discretion, make an Employer Contribution to the Plan
for the Contribution Period in an amount determined by the Employer. Employer
Contributions shall be reduced to the extent that the amount that would be
allocated to any Participant's Separate Account for the Contribution Period if
the limitations set forth in Section 5.2 of the Plan were not in effect exceeds
the amount that may be allocated to such Participant's Separate Account after
application of the limitations set forth in Section 5.2. The amount of any
Employer Contribution to the Plan for a Contribution Period shall in no event
exceed the amount that would be deductible in the Employer's taxable year that
corresponds to such Contribution Period for purposes of federal taxes on income
under Section 404 of the Code, and all Employer Contributions contributed shall
be conditioned upon such deductibility.
4.3 ALLOCATION OF EMPLOYER CONTRIBUTIONS
Any Employer Contribution made by an Employer for a Contribution Period shall
be allocated in equal shares (per capita) among all Eligible Employees during
the Contribution Period who are eligible to participate in the allocation of
Employer Contributions for the Contribution Period, as determined under Section
4.6. Notwithstanding the above, no allocation shall be made to a Participant's
Separate Account in excess of the annual addition limitation described in
Section 5.2.
4.4 VERIFICATION OF AMOUNT OF EMPLOYER CONTRIBUTIONS BY THE
ADMINISTRATOR
The Administrator shall verify the amount of Employer Contributions to be made
by each Employer in accordance with the provisions of the Plan.
4.5 PAYMENT OF EMPLOYER CONTRIBUTIONS
Employer Contributions made for a Contribution Period shall be paid in cash to
the Trustee within the period of time required under the Code in order for the
contribution to be deductible by the Employer in determining its Federal income
taxes for its taxable year which corresponds to the Plan Year.
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4.6 ELIGIBILITY TO PARTICIPATE IN ALLOCATION
Each person who is an Eligible Employee at any time during the Contribution
Period shall be eligible to participate in the allocation of Employer
Contributions for the Contribution Period if he is an Eligible Employee on the
last day of the Contribution Period; provided, however, that a person who is on
a leave of absence on the last day of the Contribution Period from an Employer
shall be considered to be an Eligible Employee on the last day of the
Contribution Period if he was an Eligible Employee on the date he last
performed services for an Employer, he last performed services for an Employer
within six months prior to the last day of the Contribution Period, and his
Employer approved of such leave of absence in writing for a period which
includes the last day of the Contribution Period.
4.7 VESTING OF EMPLOYER CONTRIBUTIONS
A Participant's vested interest in his Separate Account shall be zero percent
until the Participant has completed five years of Vesting Service at which time
his vested interest in his Separate Account shall be 100 percent.
Notwithstanding the foregoing, if a Participant is an Employee or a Disabled
Employee on his Normal Retirement Date or on the date he attains age 55 and is
credited under The Reynolds and Reynolds Company Retirement Plan as in effect
from time to time with 15 or more years of Service (as defined in The Reynolds
and Reynolds Company Retirement Plan as in effect from time to time), his
vested interest in his Separate Account shall be 100 percent.
4.8 ELECTION OF FORMER VESTING SCHEDULE
If the Sponsor adopts an amendment to the Plan that directly or indirectly
affects the computation of a Participant's vested interest in his Separate
Account, any Participant with three or more years of Vesting Service shall have
a right to have his vested interest in his Separate Account continue to be
determined under the vesting provisions in effect prior to the amendment rather
than under the new vesting provisions, unless the vested interest of the
Participant in his Separate Account under the Plan as amended is not at any
time less than such vested interest determined without regard to the amendment.
A Participant shall exercise his right under this Section by giving written
notice of his exercise thereof to the Administrator within 60 days after the
latest of (i) the date he receives notice of the amendment from the
Administrator, (ii) the effective date of the amendment, or (iii) the date the
amendment is adopted. Notwithstanding the foregoing, a Participant's vested
interest in his Separate Account on the effective date of such an amendment
shall not be less than his vested interest in his Separate Account immediately
prior to the effective date of the amendment.
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4.9 VESTING AFTER A CHANGE OF CONTROL
In the event of a "Change of Control of the Sponsor" (as defined in Section
14.5 hereof) occurring after the date of execution of this Plan, the vested
interest in his Separate Account of each Participant who is then an Employee or
Disabled Employee shall be 100 percent effective as of the date upon which such
Change of Control of the Sponsor occurred.
4.10 FORFEITURES TO REDUCE EMPLOYER CONTRIBUTIONS
Notwithstanding any other provision of the Plan to the contrary, the amount of
the Employer Contribution required under this Article for a Plan Year shall be
reduced by the amount of any forfeitures occurring during the Plan Year as
provided in Article IX.
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ARTICLE V
LIMITATIONS ON CONTRIBUTIONS
5.1 DEFINITIONS
For purposes of this Article, the following terms have the following meanings:
(a) The "annual addition" with respect to a Participant for a
limitation year means the sum of the Employer Contributions and
forfeitures allocated to his Separate Account for the limitation
year (including any excess contributions that are distributed
pursuant to this Article), the employer contributions, employee
contributions, and forfeitures allocated to his accounts for the
limitation year under any other qualified defined contribution plan
(whether or not terminated) maintained by an Employer or a Related
Company concurrently with the Plan, and amounts described in
Sections 415(1)(2) and 419A(d)(2) of the Code allocated to his
account for the limitation year.
(b) A "limitation year" means the calendar year.
5.2 CODE SECTION 415 LIMITATIONS ON CREDITING OF CONTRIBUTIONS AND
FORFEITURES
Notwithstanding any other provision of the Plan to the contrary, the annual
addition with respect to a Participant for a limitation year shall in no event
exceed the lesser of (i) the greater of $30,000 or 25 percent of the defined
benefit dollar limitation set forth in Section 415(b)(1) of the Code in effect
for the limitation year or (ii) 25 percent of the Participant's compensation,
as defined in Section 415(c)(3) of the Code and regulations issued thereunder.
If the annual addition to the Separate Account of a Participant in any
limitation year would otherwise exceed the amount that may be applied for his
benefit under the limitation contained in this Section, the amount of the
annual addition shall be reduced to the extent necessary by reducing Employer
Contributions and forfeitures otherwise allocable to the Participant's Separate
Account for the limitation year.
No allocation shall be made to a Participant's Separate Account in excess of
the annual addition limitation described above.
The amount of forfeitures that cannot be allocated for a limitation year
because of the limitation of this Section shall be held unallocated in a
suspense account established for the limitation year and shall be applied as an
Employer Contribution for the next following limitation year (and succeeding
limitation
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<PAGE> 19
years, as necessary). If a suspense account is in existence at any time during
a limitation year, all amounts in the suspense account must be allocated to
Participants' Separate Accounts (subject to the limitations contained herein)
before any further Employer Contributions may be made to the Plan. No suspense
account established hereunder shall share in any increase or decrease in the
net worth of the Trust. For purposes of this Article, excesses shall result
only from the allocation of forfeitures, a reasonable error in estimating a
Participant's annual compensation (as defined in Section 415(c)(3) of the Code
and regulations issued thereunder), a reasonable error in determining the
amount of elective deferrals (within the meaning of Section 402(g)(3) of the
Code) that may be made with respect to any Participant under the limits of
Section 415 of the Code, or other limited facts and circumstances that justify
the availability of the provisions set forth above.
5.3 COVERAGE UNDER OTHER QUALIFIED DEFINED CONTRIBUTION PLAN
If a Participant is covered by any other qualified defined contribution plan
(whether or not terminated) maintained by an Employer or a Related Company
concurrently with the Plan, and if the annual addition for the limitation year
would otherwise exceed the amount that may be applied for the Participant's
benefit under the limitation contained in Section 5.2, adjustments to the
contributions to this Plan and any other defined contribution plan shall be
made in the following order: first, such excess shall be reduced by adjusting
the employee contributions made by the Participant for the limitation year
under all of the defined contribution plans and the income attributable
thereto; next, the excess shall be reduced by adjusting the employer
contributions made under any defined contribution plan other than the Plan;
lastly, adjustments shall be made under this Plan.
Notwithstanding the above, in the event that any other defined contribution
plan maintained by an Employer or a Related Company specifically provides that
adjustments are to be made to the Plan prior to making adjustments to such
other defined contribution plan, then the terms of such other defined
contribution plan shall control with respect to the order of making such
adjustments.
5.4 COVERAGE UNDER QUALIFIED DEFINED BENEFIT PLAN
If a Participant in the Plan is also covered by a qualified defined benefit
plan (whether or not terminated) maintained by an Employer or a Related
Company, in no event shall the sum of the defined benefit plan fraction (as
defined in Section 415(e)(2) of the Code) and the defined contribution plan
fraction (as defined in Section 415(e)(3) of the Code) exceed 1.0 in any
limitation year. If, before October 3, 1973, the Participant was an active
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<PAGE> 20
participant in a qualified defined benefit plan maintained by an Employer or a
Related Company and otherwise satisfies the requirements of Section 2004(d)(2)
of ERISA, then for purposes of applying this Section, the defined benefit plan
fraction shall not exceed 1.0. In the event the special limitation contained
in this Section is exceeded, the benefits otherwise payable to the Participant
under any such qualified defined benefit plan shall be reduced to the extent
necessary to meet such limitation.
5.5 SCOPE OF LIMITATIONS
The limitations contained in Sections 5.2, 5.3, and 5.4 shall be applicable
only with respect to benefits provided pursuant to defined contribution plans
and defined benefit plans described in Section 415(k) of the Code.
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ARTICLE VI
TRUST FUNDS AND SEPARATE ACCOUNTS
6.1 GENERAL FUND
The Trustee shall establish a General Fund to hold and administer all of the
assets of the Trust. The General Fund shall be held and administered as a
separate common trust fund. The interest of each Participant or Beneficiary
under the Plan in the General Fund shall be an undivided interest.
6.2 APPOINTMENT OF INVESTMENT MANAGERS
As provided in the Trust Agreement, one or more investment managers (as defined
in Section 3(38) of ERISA) or another named fiduciary with respect to
investment of assets of the Trust Fund may be appointed with respect to any
portion of the General Fund.
6.3 INCOME ON TRUST
Any dividends, interest, distributions, or other income received by the Trustee
with respect to the General Fund established hereunder shall be allocated by
the Trustee to the General Fund.
6.4 SEPARATE ACCOUNTS
As of the first date a contribution is made by or on behalf of an Employee,
there shall be established a Separate Account in his name reflecting his
interest in the Trust. Each Separate Account shall be maintained and
administered for each Participant and Beneficiary in accordance with the
provisions of the Plan. The balance of each Separate Account shall be the
balance of the account after all credits and charges thereto, for and as of
such date, have been made as provided herein.
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ARTICLE VII
DEPOSIT AND INVESTMENT OF CONTRIBUTIONS
7.1 DEPOSIT OF CONTRIBUTIONS
All Employer Contributions shall be deposited in the Trust and allocated to the
General Fund. The Trustee shall invest the assets of the Trust in accordance
with the terms of the Plan and the Trust Agreement.
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ARTICLE VIII
CREDITING AND VALUING SEPARATE ACCOUNTS
8.1 CREDITING SEPARATE ACCOUNTS
All contributions made under the provisions of the Plan shall be credited to
Separate Accounts in the Trust Fund in accordance with procedures established
by the Administrator as of the Valuation Date immediately preceding receipt
thereof by the Trustee after adjustment of Separate Accounts has been completed
as of such Valuation Date as provided in Section 8.3.
8.2 VALUING SEPARATE ACCOUNTS
Separate Accounts in the Trust Fund shall be valued on each Valuation Date, in
accordance with procedures established by the Administrator in the manner set
forth in Section 8.3 as Plan valuation procedures.
8.3 PLAN VALUATION PROCEDURES
As of each Valuation Date hereunder, the portion of any Separate Accounts in
the Trust Fund shall be adjusted to reflect any increase or decrease in the
value of the Trust Fund for the period of time occurring since the immediately
preceding Valuation Date for the Trust Fund (the "valuation period") in the
following manner:
(a) First, the value of the Trust Fund shall be determined by the
Trustee by valuing all of the assets of the Trust Fund at fair
market value.
(b) Next, the net increase or decrease in the value of the Trust Fund
attributable to net income and all profits and losses, realized and
unrealized, during the valuation period shall be determined on the
basis of the valuation under paragraph (a) taking into account
appropriate adjustments for contributions, transfers to and
distributions, and transfers from such Trust Fund during the
valuation period.
(c) Finally, the net increase or decrease in the value of the Trust
Fund shall be allocated in equal shares among the Separate Accounts
in the Trust Fund, and each Separate Account in the Trust Fund
shall be credited or charged with the amount of its equal allocated
share.
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8.4 FINALITY OF DETERMINATIONS
The Trustee shall have exclusive responsibility for determining the value of
the Trust Fund, and the Trustee's determinations thereof shall be conclusive
upon all interested parties. Except as provided in the immediately preceding
sentence, the Administrator shall have the exclusive responsibility for
determining the balance of each Separate Account maintained hereunder, and the
Administrator's determinations thereof shall be conclusive upon all interested
parties.
8.5 NOTIFICATION
Within a reasonable period of time after the end of each Plan Year, the
Administrator shall notify each Participant and Beneficiary of the balances of
his Separate Account as of the last day of such Plan Year.
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ARTICLE IX
TERMINATION OF EMPLOYMENT AND SETTLEMENT DATE
9.1 TERMINATION OF EMPLOYMENT AND SETTLEMENT DATE
A Participant's Settlement Date shall occur on the date his employment
terminates with an Employer and all Related Companies because of death,
retirement, or any other reason. Notwithstanding the above, with respect to
any Participant that is a Disabled Employee, such Participant's Settlement Date
shall occur on the date he ceases to receive long term disability benefits from
his Employer and he does not return to employment with an Employer or any
Related Company.
9.2 SEPARATE ACCOUNTING FOR NON-VESTED AMOUNTS
If as of a Participant's Settlement Date the Participant's vested interest in
his Separate Account is less than 100 percent, that portion of his Separate
Account that is not vested shall be accounted for separately from the vested
portion and shall be disposed of as provided in Section 9.3.
9.3 DISPOSITION OF NON-VESTED AMOUNTS
That portion of a Participant's Separate Account that is not vested upon the
occurrence of his Settlement Date shall be disposed of as follows:
(a) If the Participant has no vested interest in his Separate Account
upon the occurrence of his Settlement Date or if the Participant
receives full payment of his vested interest in his Separate
Account, the non-vested balance remaining in the Participant's
Separate Account will be forfeited and his Separate Account closed
as of (i) the date on which the Participant's Settlement Date
occurs, if the Participant has no vested interest in his Separate
Account, or (ii) in which the full payment occurs, provided that
such distribution occurs prior to the end of the second Plan Year
beginning on or after the Participant's Settlement Date.
(b) If paragraph (a) does not apply, the non-vested portion of the
Participant's Separate Account will continue to be held in such
Separate Account and will not be forfeited until the end of the
five-year period beginning on his Settlement Date.
Whenever the non-vested portion of a Participant's Separate Account is
forfeited under the provisions of the Plan with respect to a Plan Year, the
amount of such forfeiture, as of the last day of the Plan Year, shall be
applied against the Employer
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<PAGE> 26
Contributions for the Plan Year. Notwithstanding the foregoing, however,
should the amount of all such forfeitures for any Plan Year exceed the amount
of Employer Contributions for the Plan Year, the excess amount of such
forfeitures shall be treated as an Employer Contribution for the Plan Year.
9.4 RECREDITING OF FORFEITED AMOUNTS
A former Participant who forfeited the non-vested portion of his Separate
Account in accordance with the provisions of Section 9.3 and who is reemployed
by an Employer or a Related Company shall have such forfeited amounts
recredited to a new Separate Account in his name, without adjustment for
interim gains or losses experienced by the Trust, if:
(a) he returns to employment with an Employer or a Related Company
before the end of the five-year period beginning on the later of
his Settlement Date or the date he received distribution of his
vested interest in his Separate Account;
(b) he resumes employment covered under the Plan before the end of the
five-year period beginning on the date he is reemployed; and
(c) if he received distribution of his vested interest in his Separate
Account, he repays to the Plan the full amount of such distribution
before the end of the five-year period beginning on the date he is
reemployed.
Funds needed in any Plan Year to recredit the Separate Account of a Participant
with the amounts of prior forfeitures in accordance with the preceding sentence
shall come first from forfeitures that arise during such Plan Year, and then by
way of a separate Employer Contribution, and shall finally be provided from
Trust income earned in such Plan Year.
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ARTICLE X
DISTRIBUTIONS
10.1 DISTRIBUTIONS
A Participant whose Settlement Date occurs shall receive distribution of his
vested interest in his Separate Account in the form provided under Article XI
beginning as soon as reasonably practicable following his Settlement Date or
the date his application for distribution is filed with the Administrator, if
later.
10.2 DISTRIBUTIONS TO BENEFICIARIES
If a Participant dies prior to the date distribution of his vested interest in
his Separate Account begins under this Article, his Beneficiary shall receive
distribution of the Participant's vested interest in his Separate Account in
the form provided under Article XI as soon as reasonably practicable following
the date his application for distribution is filed with the Administrator.
Distribution of the Participant's entire vested interest shall commence no
later than:
(a) If the Beneficiary is not the Participant's spouse, the end of the
first calendar year beginning after the Participant's death; or
(b) If the Beneficiary is the Participant's spouse, the later of (i)
the end of the first calendar year beginning after the
Participant's death or (ii) the end of the calendar year in which
the Participant would have attained age 70 1/2.
If distribution is to be made to a Participant's spouse, it shall be made
available within the 90-day period following the Participant's death.
10.3 CASH OUTS AND PARTICIPANT CONSENT
Notwithstanding any other provision of the Plan to the contrary, if a
Participant's vested interest in his Separate Account does not exceed $3,500,
distribution of such vested interest shall be made to the Participant in a
single sum payment as soon as reasonably practicable following his Settlement
Date. If a Participant's vested interest in the separate account is $0, he
shall be deemed to have received distribution of such vested interest as of his
Settlement Date. If a Participant's vested interest in his Separate Account
exceeds $3,500, distribution shall not commence to such Participant prior to
his Normal Retirement Date without the Participant's written consent.
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10.4 REQUIRED COMMENCEMENT OF DISTRIBUTION
Notwithstanding any other provision of the Plan to the contrary, distribution
of a Participant's vested interest in his Separate Account shall commence to
the Participant no later than the earlier of:
(a) 60 days after the close of the Plan Year in which (i) the
Participant's Normal Retirement Date occurs, (ii) the tenth
anniversary of the year in which he commenced participation in the
Plan occurs, or (iii) the termination of his employment with an
Employer and all Related Companies occurs, whichever is latest; or
(b) the April 1 following the close of the calendar year in which he
attains age 70 1/2, whether or not the termination of his
employment with an Employer and all Related Companies has occurred,
except that if a Participant attained age 70 1/2 prior to January
1, 1988, and was not a five percent owner (as defined in Section
416 of the Code) at any time during the five-Plan-Year period
ending within the calendar year in which he attained age 70 1/2,
distribution of such Participant's vested interest in his Separate
Account shall commence no later than the April 1 following the
close of the calendar year in which he attains age 70 1/2 or
retires, whichever is later.
Distributions required to commence under this Section shall be made in the form
provided under Article XI and in accordance with Section 401(a)(9) of the Code
and regulations issued thereunder, including the minimum distribution
incidental benefit requirements.
10.5 REEMPLOYMENT OF A PARTICIPANT
If a Participant whose Settlement Date has occurred is reemployed by an
Employer or a Related Company, he shall lose his right to any distribution or
further distributions from the Trust arising from his prior Settlement Date and
his interest in the Trust shall thereafter be treated in the same manner as
that of any other Participant whose Settlement Date has not occurred.
10.6 RESTRICTIONS ON ALIENATION
Except as provided in Section 401(a)(13) of the Code relating to qualified
domestic relations orders, no benefit under the Plan at any time shall be
subject in any manner to anticipation, alienation, assignment (either at law or
in equity), encumbrance, garnishment, levy, execution, or other legal or
equitable process; and no person shall have power in any manner to anticipate,
transfer, assign (either at law or in equity),
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<PAGE> 29
alienate or subject to attachment, garnishment, levy, execution, or other legal
or equitable process, or in any way encumber his benefits under the Plan, or
any part thereof, and any attempt to do so shall be void.
10.7 FACILITY OF PAYMENT
If the Administrator finds that any individual to whom an amount is payable
hereunder is incapable of attending to his financial affairs because of any
mental or physical condition, including the infirmities of advanced age, such
amount (unless prior claim therefor shall have been made by a duly qualified
guardian or other legal representative) may, in the discretion of the
Administrator, be paid to another person for the use or benefit of the
individual found incapable of attending to his financial affairs or in
satisfaction of legal obligations incurred by or on behalf of such individual.
The Trustee shall make such payment only upon receipt of written instructions
to such effect from the Administrator. Any such payment shall be charged to
the Separate Account from which any such payment would otherwise have been paid
to the individual found incapable of attending to his financial affairs and
shall be a complete discharge of any liability therefor under the Plan.
10.8 INABILITY TO LOCATE PAYEE
If any benefit becomes payable to any person, or to the executor or
administrator of any deceased person, and if that person or his executor or
administrator does not present himself to the Administrator within five years
after the Administrator mails written notice of his eligibility to receive a
distribution hereunder to his last known address, that benefit will be
forfeited. However, if the payee later files a claim for that benefit, the
benefit will be reinstated.
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ARTICLE XI
FORM OF PAYMENT
11.1 FORM OF PAYMENT
Distribution shall be made to a Participant, or his Beneficiary, if the
Participant has died, in a single sum payment.
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ARTICLE XII
BENEFICIARIES
12.1 DESIGNATION OF BENEFICIARY
A married Participant's Beneficiary shall be his spouse, unless the Participant
designates a person or persons other than his spouse as Beneficiary with his
spouse's written consent. A Participant may designate a Beneficiary on the
form prescribed by the Administrator. If no Beneficiary has been designated
pursuant to the provisions of this Section, or if no Beneficiary survives the
Participant and he has no surviving spouse, then the Beneficiary under the Plan
shall be the Participant's estate. If a Beneficiary dies after becoming
entitled to receive a distribution under the Plan but before distribution is
made to him in full, and if no other Beneficiary has been designated to receive
the balance of the distribution in that event, the estate of the deceased
Beneficiary shall be the Beneficiary as to the balance of the distribution.
12.2 SPOUSAL CONSENT REQUIREMENTS
Any written spousal consent given pursuant to this Article shall acknowledge
the effect of the action taken and shall be witnessed by a Plan representative
or a notary public. Such spousal consent shall be valid only with respect to
the spouse who signs the consent. Notwithstanding any other provision of the
Plan to the contrary, written spousal consent shall not be required if the
Participant establishes to the satisfaction of a Plan representative that such
consent cannot be obtained because the spouse cannot be located or because of
other circumstances set forth in Section 401(a)(11) of the Code and regulations
issued thereunder.
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ARTICLE XIII
ADMINISTRATION
13.1 AUTHORITY OF THE COMMITTEE
The Committee, which shall be the administrator for purposes of ERISA and the
plan administrator for purposes of the Code, shall be responsible for the
administration of the Plan and, subject to the limitations set forth in Section
13.5, in addition to the powers and authorities expressly conferred upon it in
the Plan, shall have all such powers and authorities as may be necessary to
carry out the provisions of the Plan, including the power and authority to
interpret and construe the provisions of the Plan, to make benefit
determinations, and to resolve any disputes which arise under the Plan. The
Committee may employ such attorneys, agents, and accountants as it may deem
necessary or advisable to assist in carrying out its duties hereunder. The
Committee and each member thereof shall be "named fiduciaries" as that term is
defined in Section 402(a)(2) of ERISA. Members of the Committee shall serve
without compensation. The Committee may:
(a) allocate any of the powers, authority, or responsibilities for the
operation and administration of the Plan, which are retained by it
or granted to it by this Article, to the Trustee; and
(b) designate a person or persons other than the Committee to carry out
any of such powers, authority, or responsibilities;
except that no power, authority, or responsibility of the Trustee shall be
subject to the provisions of paragraph (b) of this Section, and except that no
allocation or delegation by the Committee of any of its powers, authority, or
responsibilities to the Trustee shall become effective unless such allocation
or delegation shall first be accepted by the Trustee in a writing signed by it
and delivered to the Committee.
13.2 ACTION OF THE COMMITTEE
Any act authorized, permitted, or required to be taken under the Plan by the
Committee and which has not been delegated in accordance with Section 13.1, may
be taken by a majority of the members of the Committee, either by vote at a
meeting, or in writing without a meeting. All notices, advice, directions,
certifications, approvals, and instructions required or authorized to be given
by the Committee as under the Plan shall be in writing and signed by a majority
of the members of the Committee or by such member or members as may be
designated by an instrument in writing, signed by all the members thereof, as
having authority to execute such documents on its behalf.
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13.3 CLAIMS REVIEW PROCEDURE
Whenever a claim for benefits under the Plan filed by any person (herein
referred to as the "Claimant") is denied, whether in whole or in part, the
Committee shall transmit a written notice of such decision to the Claimant,
which notice shall be written in a manner calculated to be understood by the
Claimant and shall contain a statement of the specific reasons for the denial
of the claim and a statement advising the Claimant that, within 60 days of the
date on which he receives such notice, he may obtain review of such decision in
accordance with the procedures hereinafter set forth. Within such 60-day
period, the Claimant or his authorized representative may request that the
claim denial be reviewed by filing with the Committee a written request
therefor, which request shall contain the following information:
(a) the date on which the Claimant's request was filed with the
Committee; provided, however, that the date on which the Claimant's
request for review was in fact filed with the Committee shall
control in the event that the date of the actual filing is later
than the date stated by the Claimant pursuant to this paragraph;
(b) the specific portions of the denial of his claim which the Claimant
requests the Committee to review;
(c) a statement by the Claimant setting forth the basis upon which he
believes the Sponsor should reverse the previous denial of his
claim for benefits and accept his claim as made; and
(d) any written material (offered as exhibits) which the Claimant
desires the Committee to examine in its consideration of his
position as stated pursuant to paragraph (c) of this Section.
Within 60 days of the date determined pursuant to paragraph (a) of this
Section, the Committee shall conduct a full and fair review of the decision
denying the Claimant's claim for benefits. Within 60 days of the date of such
review, the Committee shall render its written decision on review, written in a
manner calculated to be understood by the Claimant, specifying the reasons and
Plan provisions upon which its decision was based.
13.4 QUALIFIED DOMESTIC RELATIONS ORDERS
The Committee shall establish reasonable procedures to determine the status of
domestic relations orders and to administer distributions under domestic
relations orders which are deemed to be qualified orders. Such procedures
shall be in writing and shall comply with the provisions of Section 414(p) of
the Code and regulations issued thereunder.
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13.5 RESPONSIBILITIES OF THE SPONSOR, THE COMMITTEE, AND THE TRUSTEE
The Sponsor, the Committee, and the Trustee possess certain specified powers,
duties, responsibilities and obligations under the Plan and the Trust
Agreement. It is intended under the Plan and the Trust Agreement that each be
responsible solely for the proper exercise of its own functions and that each
shall not be responsible for any act or failure to act of another, unless
otherwise responsible as a breach of its fiduciary duty or for breach of duty
by another fiduciary under the rules of co-fiduciary responsibility. In
general:
(a) the Sponsor is responsible for appointing and removing the
Committee and for amending and terminating the Plan and the Trust
Agreement;
(b) the Committee is responsible for administering the Plan, for
adopting such rules and regulations as in the opinion of the
Committee are necessary or advisable to implement and administer
the Plan and to transact its business, for approving and amending
the Trust Agreement, and for appointing and removing the Trustee;
and
(c) the Trustee is responsible for the management and control of the
Plan assets to the extent provided in the Trust Agreement.
The Committee shall periodically review the performance of the Trustee and of
all other persons to whom fiduciary duties have been delegated or allocated
pursuant to the provisions of the Plan.
13.6 INDEMNIFICATION
The Sponsor agrees to indemnify and reimburse, to the fullest extent permitted
by law, members of the Committee and Employees acting for the Sponsor, and all
such former members and Employees, for any and all expenses, liabilities, or
losses arising out of any act or omission relating to the rendition of services
for the management and administration of the Plan, except for any such
expenses, liabilities or losses arising out of any such person's gross
negligence or willful misconduct.
13.7 ACTIONS BINDING
Subject to the provisions of Section 13.3, any action taken by the Committee
which is authorized, permitted, or required under the Plan shall be final and
binding upon the Employers, the Trustee, all persons who have or who claim an
interest under the Plan, and all third parties dealing with the Employers or
the Trustee.
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ARTICLE XIV
AMENDMENT AND TERMINATION
14.1 AMENDMENT
Subject to the provisions of Section 14.2 and Section 14.3, the Sponsor may at
any time and from time to time, pursuant to authorization by its board of
directors, amend the Plan, either prospectively or retroactively. Any such
amendment shall be by written instrument executed by an officer of the Sponsor.
Subject to the provisions of Section 14.2 and Section 14.3 any resolution of
the Sponsor's board of directors may provide that one or more appropriate
officers of the Sponsor shall have the power to amend the Plan in such
respects, to such extent, within such parameters, and for so long as authorized
by the board in such resolution (and not rescinded or modified by a subsequent
resolution of the board). Notwithstanding the foregoing provisions of this
paragraph, one or more appropriate officers of the Sponsor shall have the power
to amend the Plan for any of the following purposes: (i) to make any
amendments to the Plan necessary or appropriate in order to retain the
qualification of the Plan and exemption of the Trust under Sections 401(a) and
501(a), respectively, of the Code; (ii) to make any technical, administrative,
or clerical amendments to the Plan as such officer or officers in their
discretion deem necessary or appropriate; or (iii) to make any change to the
Plan that will not substantially increase the cost to the Sponsor of
maintaining the Plan.
14.2 LIMITATION ON AMENDMENT
The Sponsor shall make no amendment to the Plan which shall decrease the
accrued benefit of any Participant or Beneficiary, except that nothing
contained herein shall restrict the right to amend the provisions of the Plan
relating to the administration of the Plan and Trust. Moreover, no such
amendment shall be made hereunder which shall permit any part of the Trust to
revert to an Employer or any Related Company or be used or be diverted to
purposes other than the exclusive benefit of Participants and Beneficiaries.
14.3 LIMITATION ON AMENDMENT FOLLOWING A CHANGE OF CONTROL
Notwithstanding any other provisions of this Plan, for a period of three years
following a Change of Control of the Sponsor (as defined in Section 14.5
hereof), neither Section 4.9 nor any other provision of this Plan may be
amended (except as may be required by law) in any manner which would adversely
affect the rate at which Separate Accounts vest hereunder. Notwithstanding any
other provisions of this Section 14.3, the foregoing
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provisions of this paragraph may not be amended during the three-year period
commencing upon a Change in Control of the Sponsor.
14.4 TERMINATION
The Sponsor reserves the right, by action of its board of directors, to
terminate the Plan as to all Employers at any time (the effective date of such
termination being hereinafter referred to as the "termination date"). Upon any
such termination of the Plan, the following actions shall be taken for the
benefit of Participants and Beneficiaries:
(a) As of the termination date, the General Fund shall be valued and
all Separate Accounts shall be adjusted in the manner provided in
Article VIII, with any unallocated contributions or forfeitures
being allocated as of the termination date in the manner otherwise
provided in the Plan. The termination date shall become a
Valuation Date for purposes of Article VIII. In determining the
net worth of the Trust, there shall be included as a liability such
amounts as shall be necessary to pay all expenses in connection
with the termination of the Trust and the liquidation and
distribution of the property of the Trust, as well as other
expenses, whether or not accrued, and shall include as an asset all
accrued income.
(b) All Separate Accounts shall then be disposed of to or for the
benefit of each Participant or Beneficiary in accordance with the
provisions of Article X as if the termination date were his
Settlement Date; provided, however, that notwithstanding the
provisions of Article X, if the Plan does not offer an annuity
option and if neither his Employer nor a Related Company
establishes or maintains another defined contribution plan (other
than an employee stock ownership plan as defined in Section
4975(e)(7) of the Code), the Participant's written consent to the
commencement of distribution shall not be required regardless of
the value of the vested portions of his Separate Account.
Notwithstanding anything to the contrary contained in the Plan, upon any such
Plan termination, the vested interest of each Participant and Beneficiary in
his Separate Account shall be 100 percent; and, if there is a partial
termination of the Plan, the vested interest of each Participant and
Beneficiary who is affected by the partial termination in his Separate Account
shall be 100 percent. For purposes of the preceding sentence only, the Plan
shall be deemed to terminate automatically if there shall be a complete
discontinuance of contributions hereunder by all Employers.
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14.5 DEFINITION OF CHANGE IN CONTROL
For purposes hereof, a "Change in Control of the Sponsor" shall occur if (a)
any "person," as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (other than
Richard H. Grant, Jr., his children or his grandchildren, the Sponsor, any
trustee or other fiduciary holding securities under an Employee benefit plan of
the Sponsor, or any company owned, directly or indirectly, by the shareholders
of the Sponsor in substantially the same proportions as their ownership of
stock of the Sponsor), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Sponsor representing 50% or more of the combined voting power of the Sponsor's
then outstanding securities; (b) during any period of two consecutive years
(not including any periods prior to the execution of this Plan), individuals
who at the beginning of such period constitute the Sponsor's Board of
Directors, and any new director (other than a director designated by a person
who has entered into an agreement with the Sponsor to effect a transaction
described in clause (a), (c) or (d) of this Section) whose election by the
Sponsor's Board of Directors or nomination for election by the Sponsor's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors at the beginning of the period or whose election or nomination for
election was previously so approved cease for any reason to constitute at least
a majority thereof; (c) the shareholders of the Sponsor approve a merger or
consolidation of the Sponsor with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the Sponsor
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Sponsor or such surviving entity outstanding immediately
after such merger or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of the Sponsor (or similar transaction) in which
no "person" (as hereinafter defined) acquires more than 50% of the combined
voting power of the Sponsor's then outstanding securities; or (d) the
shareholders of the Sponsor approve a plan of liquidation, dissolution or
winding up of the Sponsor or an agreement for the sale or disposition by the
Sponsor of all or substantially all of the Sponsor's assets; provided, however,
that none of the transactions described in clauses (a) - (d), above, shall
constitute a change in control if such transaction is arranged by, or
consummated with the prior approval of, the Sponsor's Board of Directors. The
foregoing provisions of this paragraph may not be amended during the three year
period commencing upon a Change in Control.
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14.6 REORGANIZATION
The merger, consolidation, or liquidation of any Employer with or into any
other Employer or a Related Company shall not constitute a termination of the
Plan as to such Employer.
14.7 WITHDRAWAL OF AN EMPLOYER
An Employer other than the Sponsor, with the consent of the Sponsor, may
withdraw from the Plan at any time upon notice in writing to the Administrator
(the effective date of such withdrawal being hereinafter referred to as the
"withdrawal date"), and shall thereupon cease to be an Employer for all
purposes of the Plan. An Employer shall be deemed automatically to withdraw
from the Plan in the event it ceases to be a Related Company of the Sponsor or
any other Employer.
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ARTICLE XV
ADOPTION BY OTHER ENTITIES
15.1 ADOPTION BY RELATED COMPANIES
A Related Company that is not an Employer may, with the consent of the Sponsor,
adopt the Plan with respect to the entire Related Company or any plant,
division, or other business operation of the Related Company and become an
Employer hereunder by causing an appropriate written instrument evidencing such
adoption to be executed pursuant to the authority of its board of directors.
Any such instrument shall specify the effective date of the adoption and the
plant, division, or other business operation for which coverage is adopted, if
appropriate. For purposes of computing Vesting Service of a person who is an
Employee of such adopting Employer, unless an earlier date is specified in the
adoption instrument, service with such Employer before the effective date of
the adoption shall be treated as service covered under the Plan only for the
period beginning on the later of (i) October 1, 1993, or (ii) the date on which
such Employer first became a Related Company, and ending on the date
immediately preceding the effective date of the adoption.
15.2 EXTENSION OF COVERAGE
An Employer may, with the consent of the Sponsor, extend Plan coverage to any
plant, division, or other business operation that is not already covered under
the Plan by causing an appropriate written instrument evidencing such extension
to be executed pursuant to the authority of its board of directors. Any such
instrument shall specify the effective date of the extension and the plant,
division, or other business operation to which coverage is extended. For
purposes of computing Hours of Service, Eligibility Service, and Vesting
Service of a person who is an Employee of the Employer on the effective date of
the extension, unless an earlier date is specified in the instrument evidencing
such extension, employment with the Employer before the effective date of the
extension shall be treated as employment with an Employer only for the period
beginning on the later of (i) October 1, 1993, or (ii) the date on which such
Employer first become a Related Company, and ending on the date immediately
preceding the effective date of the extension.
15.3 EFFECTIVE PLAN PROVISIONS
An Employer who adopts the Plan shall be bound by the provisions of the Plan in
effect at the time of the adoption and as subsequently in effect because of any
amendment to the Plan.
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ARTICLE XVI
MISCELLANEOUS PROVISIONS
16.1 NO COMMITMENT AS TO EMPLOYMENT
Nothing contained herein shall be construed as a commitment or agreement upon
the part of any person to continue his employment with an Employer or Related
Company, or as a commitment on the part of any Employer or Related Company to
continue the employment, compensation, or benefits of any person for any
period.
16.2 BENEFITS
Nothing in the Plan nor the Trust Agreement shall be construed to confer any
right or claim upon any person, firm, or corporation other than the Employers,
the Trustee, Participants, and Beneficiaries.
16.3 NO GUARANTEES
The Employers, the Administrator, and the Trustee do not guarantee the Trust
from loss or depreciation, nor do they guarantee the payment of any amount
which may become due to any person hereunder.
16.4 EXPENSES
The expenses of administration of the Plan, including the expenses of the
Administrator and fees of the Trustee, shall be paid from the Trust, unless the
Sponsor or an Employer elects to make payment. Notwithstanding the foregoing,
administrative expenses that are allocable to the Separate Account of a
specific Participant shall be paid from that Separate Account, unless the
Sponsor or an Employer elects to make payment.
16.5 PRECEDENT
Except as otherwise specifically provided, no action taken in accordance with
the Plan shall be construed or relied upon as a precedent for similar action
under similar circumstances.
16.6 DUTY TO FURNISH INFORMATION
The Employers, the Administrator, and the Trustee shall furnish to any of the
others any documents, reports, returns, statements, or other information that
the other reasonably deems necessary to perform its duties hereunder or
otherwise imposed by law.
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16.7 WITHHOLDING
The Trustee shall withhold any tax which by any present or future law is
required to be withheld, and which the Administrator notifies the Trustee in
writing is to be so withheld, from any payment to any Participant or
Beneficiary hereunder.
16.8 MERGER, CONSOLIDATION, OR TRANSFER OF PLAN ASSETS
The Plan shall not be merged or consolidated with any other plan, nor shall any
of its assets or liabilities be transferred to another plan, unless,
immediately after such merger, consolidation, or transfer of assets or
liabilities, each Participant in the Plan would receive a benefit under the
Plan which is at least equal to the benefit he would have received immediately
prior to such merger, consolidation, or transfer of assets or liabilities
(assuming in each instance that the Plan had then terminated).
16.9 BACK PAY AWARDS
The provisions of this Section shall apply only to an Employee or former
Employee who becomes entitled to back pay by an award or agreement of an
Employer without regard to mitigation of damages. If a person to whom this
Section applies would have been eligible to participate in the allocation of
Employer Contributions for any prior Plan Year in accordance with the
provisions of Article IV after such back pay award or agreement has been
effected, but did not participate in the allocation for such Plan Year, his
Employer shall make a contribution for the Plan Year in which the back pay
award or agreement is made, in addition to any other Employer Contribution for
such Plan Year, equal to the amount that would have been allocated to such
Participant's Separate Account under Article IV for each such prior Plan Year.
The amounts of such additional contributions shall be credited to the Separate
Account of such Participant. Any additional contributions made by such
Participant and by an Employer pursuant to this Section shall be made in
accordance with, and subject to the limitations of the applicable provisions of
Articles IV and V.
16.10 CONDITION ON EMPLOYER CONTRIBUTIONS
Notwithstanding anything to the contrary contained in the Plan or the Trust
Agreement, any contribution of an Employer hereunder is conditioned upon the
continued qualification of the Plan under Section 401(a) of the Code, the
exempt status of the Trust under Section 501(a) of the Code, and the
deductibility of the contribution under Section 404 of the Code. Except as
otherwise provided in this Section and Section 16.11, however, in no event
shall any portion of the property of the Trust ever revert to or
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otherwise inure to the benefit of an Employer or any Related Company.
16.11 RETURN OF CONTRIBUTIONS TO AN EMPLOYER
Notwithstanding any other provision of the Plan or the Trust Agreement to the
contrary, in the event any contribution of an Employer made hereunder:
(a) is made under a mistake of fact, or
(b) is disallowed as a deduction under Section 404 of the Code,
such contribution may be returned to the Employer within one year after the
payment of the contribution or the disallowance of the deduction to the extent
disallowed, whichever is applicable. In the event the Plan does not initially
qualify under Section 401(a) of the Code, any contribution of an Employer made
hereunder may be returned to the Employer within one year of the date of denial
of the initial qualification of the Plan, but only if an application for
determination was made within the period of time prescribed under Section
403(c)(2)(B) of ERISA.
16.12 VALIDITY OF PLAN
The validity of the Plan shall be determined and the Plan shall be construed
and interpreted in accordance with the laws of the State of Ohio, except as
preempted by applicable Federal law. The invalidity or illegality of any
provision of the Plan shall not affect the legality or validity of any other
part thereof.
16.13 TRUST AGREEMENT
The Trust Agreement and the Trust maintained thereunder shall be deemed to be a
part of the Plan as if fully set forth herein and the provisions of the Trust
Agreement are hereby incorporated by reference into the Plan.
16.14 PARTIES BOUND
The Plan shall be binding upon the Employers, all Participants and
Beneficiaries hereunder, and, as the case may be, the heirs, executors,
administrators, successors, and assigns of each of them.
16.15 APPLICATION OF CERTAIN PLAN PROVISIONS
For purposes of the general administrative provisions and limitations of the
Plan, a Participant's Beneficiary shall be treated as any other person entitled
to receive benefits under the Plan. Upon any termination of the Plan, any such
Beneficiary
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who has an interest under the Plan at the time of such termination, which does
not cease by reason thereof, shall be deemed to be a Participant for all
purposes of the Plan.
16.16 LEASED EMPLOYEES
Any leased employee, other than an excludable leased employee, shall be treated
as an Employee for all purposes of the Plan with respect to the provisions of
Sections 401(a)(3), (4), (7), and (16), and 408(k), 410, 411, 415, and 416 of
the Code; provided, however, that no leased employee shall accrue a benefit
hereunder based on service as a leased employee except as otherwise
specifically provided in the Plan. A "leased employee" means any person who
performs services for an Employer or a Related Company (the "recipient") (other
than an employee of the recipient) pursuant to an agreement between the
recipient and any other person (the "leasing organization") on a substantially
full-time basis for a period of at least one year, provided that such services
are of a type historically performed, in the business field of the recipient,
by employees. An "excludable leased employee" means any leased employee of the
recipient who is covered by a money purchase pension plan maintained by the
leasing organization which provides for (i) a nonintegrated employer
contribution on behalf of each participant in the plan equal to at least ten
percent of compensation, (ii) full and immediate vesting, and (iii) immediate
participation by employees of the leasing organization (other than employees
who perform substantially all of their services for the leasing organization or
whose compensation from the leasing organization in each plan year during the
four-year period ending with the plan year is less than $1,000); provided,
however, that leased employees do not constitute more than 20 percent of the
recipient's nonhighly compensated work force. For purposes of this Section,
contributions or benefits provided to a leased employee by the leasing
organization that are attributable to services performed for the recipient
shall be treated as provided by the recipient.
16.17 TRANSFERRED FUNDS
If funds from another qualified plan are transferred or merged into the Plan,
such funds shall be held and administered in accordance with any restrictions
applicable to them under such other plan to the extent required by law and
shall be accounted for separately to the extent necessary to accomplish the
foregoing.
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ARTICLE XVII
TOP-HEAVY PROVISIONS
17.1 DEFINITIONS
For purposes of this Article, the following terms have the following meanings:
(a) The "compensation" of an Employee means compensation as defined in
Section 415 of the Code and regulations issued thereunder. In no
event, however, shall the compensation of a Participant taken into
account under the Plan for any Plan Year exceed (1) $200,000 for
Plan Years beginning prior to January 1, 1994, or (2) $150,000 for
Plan Years beginning on or after January 1, 1994 (subject to
adjustment annually as provided in Section 401(a)(17)(B) and
Section 415(d) of the Code; provided, however, that the dollar
increase in effect on January 1 of any calendar year, if any, is
effective for Plan Years beginning in such calendar year). If the
compensation of a Participant is determined over a period of time
that contains fewer than 12 calendar months, then the annual
compensation limitation described above shall be adjusted with
respect to that Participant by multiplying the annual compensation
limitation in effect for the Plan Year by a fraction the numerator
of which is the number of full months in the period and the
denominator of which is 12; provided, however, that no proration is
required for a Participant who is covered under the Plan for less
than one full Plan Year if the formula for allocations is based on
Compensation for a period of at least 12 months. In determining
the compensation, for purposes of applying the annual compensation
limitation described above, of a Participant who is a five-percent
owner or one of the ten Highly Compensated Employees receiving the
greatest compensation for the Plan Year, the compensation of the
Participant's spouse and of his lineal descendants who have not
attained age 19 as of the close of the Plan Year shall be included
as compensation of the Participant for the Plan Year. If as a
result of applying the family aggregation rule described in the
preceding sentence the annual compensation limitation would be
exceeded, the limitation shall be prorated among the affected
family members in proportion to each member's compensation as
determined prior to application of the family aggregation rules.
(b) The "determination date" with respect to any Plan Year means the
last day of the preceding Plan Year, except that the determination
date with respect to the first Plan Year of the Plan, shall mean
the last day of such Plan Year.
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(c) A "key Employee" means any Employee or former Employee who is a key
Employee pursuant to the provisions of Section 416(i)(1) of the
Code and any Beneficiary of such Employee or former Employee.
(d) A "non-key Employee" means any Employee who is not a key Employee.
(e) A "permissive aggregation group" means those plans included in each
Employer's required aggregation group together with any other plan
or plans of the Employer, so long as the entire group of plans
would continue to meet the requirements of Sections 401(a)(4) and
410 of the Code.
(f) A "required aggregation group" means the group of tax-qualified
plans maintained by an Employer or a Related Company consisting of
each plan in which a key Employee participates and each other plan
that enables a plan in which a key Employee participates to meet
the requirements of Section 401(a)(4) or Section 410 of the Code,
including any plan that terminated within the five-year period
ending on the relevant determination date.
(g) A "super top-heavy group" with respect to a particular Plan Year
means a required or permissive aggregation group that, as of the
determination date, would qualify as a top-heavy group under the
definition in paragraph (i) of this Section with "90 percent"
substituted for "60 percent" each place where "60 percent" appears
in the definition.
(h) A "super top-heavy plan" with respect to a particular Plan Year
means a plan that, as of the determination date, would qualify as a
top-heavy plan under the definition in paragraph (j) of this
Section with "90 percent" substituted for "60 percent" each place
where "60 percent" appears in the definition. A plan is also a
"super top-heavy plan" if it is part of a super top-heavy group.
(i) A "top-heavy group" with respect to a particular Plan Year means a
required or permissive aggregation group if the sum, as of the
determination date, of the present value of the cumulative accrued
benefits for key Employees under all defined benefit plans included
in such group and the aggregate of the account balances of key
Employees under all defined contribution plans included in such
group exceeds 60 percent of a similar sum determined for all
Employees covered by the plans included in such group.
(j) A "top-heavy plan" with respect to a particular Plan Year means
(i), in the case of a defined contribution plan
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(including any simplified Employee pension plan), a plan for which,
as of the determination date, the aggregate of the accounts (within
the meaning of Section 416(g) of the Code and the regulations and
rulings thereunder) of key Employees exceeds 60 percent of the
aggregate of the accounts of all participants under the plan, with
the accounts valued as of the relevant valuation date and increased
for any distribution of an account balance made in the five-year
period ending on the determination date, (ii), in the case of a
defined benefit plan, a plan for which, as of the determination
date, the present value of the cumulative accrued benefits payable
under the plan (within the meaning of Section 416(g) of the Code
and the regulations and rulings thereunder) to key Employees
exceeds 60 percent of the present value of the cumulative accrued
benefits under the plan for all Employees, with the present value
of accrued benefits to be determined under the accrual method
uniformly used under all plans maintained by an Employer or, if no
such method exists, under the slowest accrual method permitted
under the fractional accrual rate of Section 411(b)(1)(C) of the
Code and including the present value of any part of any accrued
benefits distributed in the five-year period ending on the
determination date, and (iii) any plan (including any simplified
Employee pension plan) included in a required aggregation group
that is a top-heavy group. For purposes of this paragraph, the
accounts and accrued benefits of any Employee who has not performed
services for an Employer or a Related Company during the five-year
period ending on the determination date shall be disregarded. For
purposes of this paragraph, the present value of cumulative accrued
benefits under a defined benefit plan for purposes of top-heavy
determinations shall be calculated using the actuarial assumptions
otherwise employed under such plan, except that the same actuarial
assumptions shall be used for all plans within a required or
permissive aggregation group. Notwithstanding the foregoing, if a
plan is included in a required or permissive aggregation group that
is not a top-heavy group, such plan shall not be a top-heavy plan.
(k) The "valuation date" with respect to any determination date means
the most recent Valuation Date occurring within the 12-month period
ending on the determination date.
17.2 APPLICABILITY
Notwithstanding any other provision of the Plan to the contrary, the provisions
of this Article shall be applicable during any Plan Year in which the Plan is
determined to be a top-heavy plan as hereinafter defined. If the Plan is
determined to be a top-heavy plan and upon a subsequent determination date is
determined
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no longer to be a top-heavy plan, the vesting provisions of Article IV shall
again become applicable as of such subsequent determination date; provided,
however, that if the prior vesting provisions do again become applicable, any
Employee with three or more years of Vesting Service may elect in accordance
with the provisions of Article IV, to continue to have his vested interest in
his Separate Account determined in accordance with the vesting schedule
specified in Section 17.5.
17.3 MINIMUM EMPLOYER CONTRIBUTION
If the Plan is determined to be a top-heavy plan, the Employer Contributions
and forfeitures allocated to the Separate Account of each non-key Employee who
is an Eligible Employee and who is employed by an Employer or a Related Company
on the last day of such top-heavy Plan Year shall be no less than the lesser of
(i) three percent of his compensation or (ii) the largest percentage of
compensation that is allocated as an Employer Contribution for such Plan Year
to the Separate Account of any key Employee; except that, in the event the Plan
is part of a required aggregation group, and the Plan enables a defined benefit
plan included in such group to meet the requirements of Section 401(a)(4) or
410 of the Code, the minimum allocation of Employer Contributions and
forfeitures to each such non-key Employee shall be three percent of the
compensation of such non-key Employee. Any minimum allocation to a non-key
Employee required by this Section shall be made without regard to any social
security contribution made on behalf of the non-key Employee, his number of
hours of service, his level of compensation, or whether he declined to make
elective or mandatory contributions. Notwithstanding the minimum top-heavy
allocation requirements of this Section, if the Plan is a top-heavy plan, each
non-key Employee who is an Eligible Employee and who is employed by an Employer
or a Related Company on the last day of a top-heavy Plan Year and who is also
covered under any other top-heavy plan or plans of an Employer will receive the
top-heavy benefits provided under such other plan in lieu of the minimum
top-heavy allocation under the Plan.
17.4 ADJUSTMENTS TO SECTION 415 LIMITATIONS
If the Plan is determined to be a top-heavy plan and an Employer maintains a
defined benefit plan covering some or all of the Employees that are covered by
the Plan, the defined benefit plan fraction and the defined contribution plan
fraction, described in Article V, shall be determined as provided in Section
415 of the Code by substituting "1.0" for "1.25" each place where "1.25"
appears.
42
<PAGE> 48
17.5 ACCELERATED VESTING
If the Plan is determined to be a top-heavy plan, a Participant's vested
interest in his Separate Account shall be determined no less rapidly than in
accordance with the following vesting schedule:
<TABLE>
<CAPTION>
Years of Vesting Service Vested Interest
------------------------ ---------------
<S> <C>
less than 3 0%
3 or more 100%
</TABLE>
43
<PAGE> 49
ARTICLE XVIII
ROLLOVERS
18.1 ROLLOVER REQUIREMENTS
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this Addendum, a distributee may elect, at
the time and in the manner prescribed by the plan administrator, to have any
portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
18.2 DEFINITIONS
(a) 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).
(b) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section
408(b) of the Code, an annuity plan described in Section 403(a)
of the Code, or a qualified trust described in Section 401(a) of
the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan
is an individual retirement account or individual retirement
annuity.
(c) 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
44
<PAGE> 50
with regard to the interest of the spouse or former spouse.
(d) Direct rollover: A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.
45
<PAGE> 51
ARTICLE XIX
EFFECTIVE DATE
19.1 EFFECTIVE DATE
The Plan is effective beginning as of October 1, 1993.
* * *
EXECUTED AT ______________________________________,
________________________, this _________ day of ________________, 19__.
THE REYNOLDS AND REYNOLDS COMPANY
By: _________________________________
Title:
46
<PAGE> 1
FIRST AMENDMENT TO
THE REYNOLDS AND REYNOLDS COMPANY
RETIREE MEDICAL SAVINGS ACCOUNT PLAN
The Reynolds and Reynolds Company hereby amends The Reynolds and
Reynolds Company Retiree Medical Savings Account Plan, as follows:
1. Effective as of October 1, 1993, Section 3.3 is amended and
restated in its entirety, as follows:
3.3 Transfers of Employment
If an Employee is transferred from employment with an Employer or with
a Related Company in a capacity other than an eligible employment
classification to employment as an Employee in an eligible employment
classification, he shall become an Eligible Employee beginning
effective as of the date he is so transferred if prior to an
Enrollment Date preceding such transfer date he has met the minimum
age (20 1/2 years) and service (six months) requirements of Section
3.1. Otherwise, the eligibility of an Employee who is so transferred
shall be determined in accordance with Sections 3.1 and 3.2. If an
Eligible Employee becomes employed in a capacity other than in an
eligible employment classification, he shall cease being an Eligible
Employee as of the last day of his employment in an eligible
employment classification. Whether an Employee is in an eligible
employment classification shall be determined in accordance with
Section 3.2.
2. Effective as of October 1, 1993, Section 4.7 is
amended and restated in its entirety, as follows:
4.7 Vesting of Employer Contributions
A Participant's vested interest in his Separate Account shall be zero
percent until the Participant has completed five years of Vesting
Service at which time his vested interest in his Separate Account
shall be 100 percent.
Notwithstanding the foregoing, if a Participant is an Employee or a
Disabled Employee on his Normal Retirement Date or on the date he
attains age 55 and is credited under The Reynolds and Reynolds Company
Retirement Plan as in effect from time to time with 15 or more years
of Service for purposes of eligibility for an Early Retirement Pension
under Section 4.2 (or any successor provision) of The Reynolds and
Reynolds Company Retirement Plan as in effect from time to time, his
vested interest in
40
<PAGE> 2
his Separate Account shall be 100 percent.
3. Effective as of October 1, 1993, Section 15.2 is
amended and restated in its entirety, as follows:
15.2 Extension of Coverage
An Employer may, with the consent of the Sponsor, extend Plan coverage
to any plant, division, or other business operation that is not
already covered under the Plan by causing an appropriate written
instrument evidencing such extension to be executed pursuant to the
authority of its board of directors. Any such instrument, which may
include an amendment to the Plan (including an amendment to Schedule I
hereof), shall specify the effective date of the extension and the
plant, division, or other business operation to which coverage is
extended. For purposes of computing Hours of Service, Eligibility
Service, and Vesting Service of a person who is an Employee of the
Employer on the effective date of the extension, unless an earlier
date is specified in the instrument evidencing such extension,
employment with the Employer before the effective date of the
extension shall be treated as employment with an Employer only for the
period beginning on the later of (i) October 1, 1993, or (ii) the date
on which such Employer first became a Related Company, and ending on
the date immediately preceding the effective date of the extension.
Schedule I hereof shall contain a list of the participating plants,
divisions, and business operations to which coverage under the Plan
has been extended after the effective date of the Plan, and the
effective date of such extension of coverage.
5. Effective as of the date of execution of this
amendment, the Plan is amended by adding the following new Schedule I at the
end thereof:
SCHEDULE I
PARTICIPATING PLANTS, DIVISIONS, AND BUSINESS OPERATIONS
--------------------------------------------------------
This Schedule I lists all participating plants,
divisions, and business operations to which coverage under the Plan has been
extended after the effective date of the Plan, and the effective date of
participation.
41
<PAGE> 3
<TABLE>
<CAPTION>
Plant, Division, or Business Operation Date of Participation
- -------------------------------------- ---------------------
<S> <C>
Business Operations Attributable January 4, 1994
To Asset Acquisition From LAW
Business Operations Attributable June 1, 1994
To Asset Acquisition From Coin,
Inc.
Business Operations Attributable October 1, 1995
To Asset Acquisition From
Management Computer Services, Inc.
Business Operations Attributable October 1, 1995
To Asset Acquisition From Poorman
Douglas
Business Operations Attributable October 1, 1995
To Asset Acquisition From Pioneer
Systems, Incorporated
Business Operations Attributable October 1, 1996
To Asset Acquisition From Salcris
Corporation
Business Operations Attributable October 1, 1996
To Asset Acquisition From D.I.S.C.
Business Operations Attributable October 1, 1996
To Asset Acquisition From The
Nickelsen Group
* * *
IN WITNESS WHEREOF, The Reynolds and Reynolds Company
has caused this Amendment to be executed by its duly authorized officers on
this day of August, 1995.
-----
ATTEST THE REYNOLDS AND REYNOLDS COMPANY
By:
- --------------------- -----------------------------
Title:
</TABLE>
42
<PAGE> 1
EXHIBIT (21)
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
State or Other Jurisdiction of
Name Incorporation or Organization
- --------------------------------------------------------------------------------------
<S> <C>
Dataforms, Inc. Wisconsin
Formcraft, Inc. Texas
Reyna Financial Corporation Ohio
Reyna Leasing Corporation * New York
Reynolds and Reynolds (Canada) Limited Canada
Reynolds Vehicle Registration, Inc. Ohio
Salcris Corporation Alabama
<FN>
* Wholly-owned subsidiary of Reyna Financial Corporation
</TABLE>
49
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<CASH> 18,366
<SECURITIES> 0
<RECEIVABLES> 117,783
<ALLOWANCES> 3,166
<INVENTORY> 37,796
<CURRENT-ASSETS> 188,191
<PP&E> 282,046
<DEPRECIATION> 153,584
<TOTAL-ASSETS> 755,466
<CURRENT-LIABILITIES> 125,833
<BONDS> 133,868
<COMMON> 25,941
0
0
<OTHER-SE> 306,614
<TOTAL-LIABILITY-AND-EQUITY> 755,466
<SALES> 621,909
<TOTAL-REVENUES> 910,891
<CGS> 363,303
<TOTAL-COSTS> 470,645
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,970
<INCOME-PRETAX> 136,755
<INCOME-TAX> 58,161
<INCOME-CONTINUING> 78,594
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 78,594
<EPS-PRIMARY> $1.85
<EPS-DILUTED> $1.85
</TABLE>
