<PAGE> 1
Registration No. 333-
As filed with the Securities and Exchange Commission on January 13, 1999
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
COMPUWARE CORPORATION
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2007430
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
31440 NORTHWESTERN HIGHWAY 48334
FARMINGTON HILLS, MICHIGAN (Zip Code)
(Address of Principal Executive Offices)
COMPUWARE CORPORATION
EMPLOYEES' STOCK OWNERSHIP PLAN AND 401(K) SALARY REDUCTION ARRANGEMENT
(Full title of the plan)
PETER KARMANOS, JR., CHAIRMAN
COMPUWARE CORPORATION
31440 NORTHWESTERN HIGHWAY
FARMINGTON HILLS, MI 48334
(Name and address of agent for service)
(248) 737-7300
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================
Title of Proposed Proposed
securities Amount maximum maximum Amount of
to be to be offering price aggregate registration
registered registered per share offering price fee
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock (1)(2) 3,000,000 shares $70.03 (3) $210,090,000 (3) $58,405.02
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) $.01 par value per share (the "Common Stock").
(2) This Registration Statement shall also cover any additional shares of
Common Stock which become available for grant under the Plan by reason of
any stock dividend, stock split, recapitalization or similar transaction
effected without receipt of consideration which results in an increase in
the number of outstanding shares of Common Stock.
(3) Calculated pursuant to Rule 457(c) and (h)(1) and (2) under the Securities
Act, solely for the purpose of computing the registration fee and, based on
the average of the high and low prices of the Common Stock as quoted on the
Nasdaq Stock Market on January 12, 1999.
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this Registration Statement in accordance with Rule
428 of the Securities Act and the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed in (a) through (c) below are incorporated
by reference in this Registration Statement on Form S-8. In addition, all
documents subsequently filed by the Registrant pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), prior to the filing of a post-effective amendment that
indicates that all securities have been sold or that deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be part hereof from the date of filing of such
documents:
(a) Registrant's Annual Report on Form 10-K for the
fiscal year ended March 31, 1998;
(b) Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998; and
(c) The description of Registrant's Common Stock
contained in Registrant's Registration Statement on
Form S-1, filed with the Securities and Exchange
Commission on October 23, 1992 (Commission File No.
33-53652), including any amendment or report filed
for the purpose of updating such description.
Any statement contained in a document incorporated or deemed
to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein by reference modifies or supersedes such prior
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Registration
Statement.
-2-
<PAGE> 3
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
None.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Sections 561-571 of the Michigan Business Corporation
Act, directors and officers of a Michigan corporation may be entitled to
indemnification by the corporation against judgments, expenses, fines and
amounts paid by the director or officer in settlement of claims brought against
them by third persons or by or in the right of the corporation if those
directors and officers acted in good faith and in a manner reasonably believed
to be in, or not opposed to, the best interests of the corporation and its
shareholders.
The Registrant is obligated under its Bylaws to indemnify a
present or former director or executive officer of the Registrant, and may
indemnify any other person, to the fullest extent now or hereafter authorized or
permitted by law in connection with any actual or threatened civil, criminal,
administrative or investigative action, suit or proceeding arising out of his or
her past or future service to the Registrant, or to another corporation at the
request of the Registrant. In addition, the Articles of Incorporation of the
Registrant limit certain personal liabilities of directors of the Registrant;
provided, however, that the Articles of Incorporation do not eliminate or limit
the liability of a director for any of the following: (i) a breach of the
director's duty of loyalty to the corporation or its shareholders; (ii) acts or
omissions not in good faith or that involve intentional misconduct or knowing
violation of law; (iii) a violation of Section 551(1) of the Michigan Business
Corporation Act; (iv) a transaction from which the director derived an improper
personal benefit; or (v) an act or omission occurring before the effective date
of the Article.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
-3-
<PAGE> 4
ITEM 8. EXHIBITS.
4.1 Compuware Corporation Employees' Stock Ownership Plan and
401(k) Salary Reduction Arrangement, as amended.
4.2 Registrant's Restated Articles of Incorporation (incorporated
by reference to Exhibit 3.1 to Registrant's Registration
Statement on Form S-1, as amended, Registration No. 33-53652).
4.3 Registrant's Amendment to Restated Articles of Incorporation
(incorporated by reference to Exhibit 3.1 to Registrant's
Registration Statement on Form S-4, as amended, Registration
No. 33-78822).
4.4 Registrant's Certificate of Amendment to Restated Articles of
Incorporation (incorporated by reference to Exhibit 3.2 to
Registrant's Registration Statement on Form S-4, as amended,
Registration No. 33-78822).
4.5 Registrant's Correction to Restated Articles of Incorporation
(incorporated by reference to Exhibit 3.3 to Registrant's
Registration Statement on Form S-4, as amended, Registration
No. 33-78822).
4.6 Registrant's Certificate of Amendment to Restated Articles of
Incorporation (incorporated by reference to Exhibit 4.7 to
Registrant's Registration Statement on Form S-8, filed October
14, 1997, Registration No. 33-37873).
4.7 Registrant's Restated Bylaws, as amended (incorporated by
reference to Exhibit 3.3 to Registrant's Registration
Statement on Form S-1, as amended, Registration No. 33-53652).
23.1 Consent of Deloitte & Touche LLP.
24 Power of Attorney (included on the signature page of this
Registration Statement).
The undersigned Registrant hereby undertakes that it has submitted or will
submit the Plan and any amendment thereto to the Internal Revenue Service
("IRS") in a timely manner and has made or will make all changes by the IRS in
order to qualify the Plan.
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers
or sales are being made, a post-effective
amendment to this Registration Statement:
(i) to include any prospectus required
by Section 10(a)(3) of the
Securities Act;
-4-
<PAGE> 5
(ii) to reflect in the Prospectus any
facts or events arising after the
effective date of this Registration
Statement (or the most recent
post-effective amendment thereof)
which, individually or in the
aggregate, represent a fundamental
change in the information set forth
in this Registration Statement;
(iii) to include any material information
with respect to the plan of
distribution not previously
disclosed in this Registration
Statement or any material change to
such information in this
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the Registration Statement
is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any
liability under the Securities Act, each
such post-effective amendment shall be
deemed to be a new registration statement
relating to the securities offered therein,
and the offering of such securities at that
time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the
securities being registered that remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that,
for purposes of determining any liability under the
Securities Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act that is incorporated by
reference in this Registration Statement shall be
deemed to be a new registration statement relating to
the securities offered therein, and the offering of
such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to
directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange
Commission, such indemnification is against public
policy as expressed in the Securities Act and is,
therefore, unenforceable. In the
-5-
<PAGE> 6
event that a claim for indemnification against such
liabilities (other than the payment by the Registrant
of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the
successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling
person in connection with the securities being
registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such
indemnification by it is against public policy as
expressed in the Securities Act and will be governed
by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8, and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Farmington Hills, State of Michigan, on January 13,
1999.
COMPUWARE CORPORATION
By: /s/ Joseph A. Nathan
------------------------------------------------
Joseph A. Nathan, President,
Chief Operating Officer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Joseph A. Nathan and Peter
Karmanos, Jr. or either of them, his/her true and lawful attorneys-in-fact and
agents, each with full power of substitution for him/her and in his/her name,
place and stead, in any and all capacities, to sign any or all amendments
(including without limitation post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto each of said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he/she might or
could do in person, hereby ratifying and confirming all that any said
attorneys-in-fact and agents, or his/her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
-6-
<PAGE> 7
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Date Capacity
- --------- ---- --------
<S> <C> <C>
/s/ Peter Karmanos, Jr. January 13, 1999 Chairman of the Board, Chief
- -------------------------------------- Executive Officer and Director
Peter Karmanos, Jr. (Principal Executive Officer)
/s/ Thomas Thewes January 13, 1999 Vice Chairman of the Board
- -------------------------------------- and Director
Thomas Thewes
/s/ W. James Prowse January 13, 1999 Director
- --------------------------------------
W. James Prowse
/s/ Joseph A. Nathan January 13, 1999 President, Chief Operating
- -------------------------------------- Officer and Director
Joseph A. Nathan
/s/ Laura L. Fournier January 13, 1999 Senior Vice President, Chief
- -------------------------------------- Financial Officer, Treasurer
Laura L. Fournier (Principal Financial Officer and
Principal Accounting Officer)
/s/ William O. Grabe January 13, 1999 Director
- --------------------------------------
William O. Grabe
/s/ Bernard M. Goldsmith January 13, 1999 Director
- --------------------------------------
Bernard M. Goldsmith
/s/ G. Scott Romney January 13, 1999 Director
- --------------------------------------
G. Scott Romney
/s/ Elizabeth Chappel January 13, 1999 Director
- --------------------------------------
Elizabeth Chappel
/s/ Dr. Elaine Didier January 13, 1999 Director
- --------------------------------------
Elaine Didier
/s/ William Halling January 13, 1999 Director
- --------------------------------------
William Halling
/s/ Lowell Weicker January 13, 1999 Director
- --------------------------------------
Lowell Weicker
</TABLE>
-7-
<PAGE> 8
Pursuant to the requirements of the Securities Act of 1933, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Farmington Hills, State
of Michigan, on January 13, 1999.
COMPUWARE CORPORATION
EMPLOYEES' STOCK OWNERSHIP
PLAN AND 401(K) SALARY
REDUCTION ARRANGEMENT
By: /s/ Joseph Schuster
--------------------------------
Joseph Schuster
Plan Administrator
-8-
<PAGE> 9
INDEX TO EXHIBITS
-----------------
Exhibit
Number Exhibit
- ------ -------
4.1 Compuware Corporation Employees' Stock Ownership Plan and
401(k) Salary Reduction Arrangement, as amended.
4.2 Registrant's Restated Articles of Incorporation (incorporated
by reference to Exhibit 3.1 to Registrant's Registration
Statement on Form S-1, as amended, Registration No. 33-53652).
4.3 Registrant's Amendment to Restated Articles of Incorporation
(incorporated by reference to Exhibit 3.1 to Registrant's
Registration Statement on Form S-4, as amended, Registration
No. 33-78822) .
4.4 Registrant's Certificate of Amendment to Restated Articles of
Incorporation (incorporated by reference to Exhibit 3.2 to
Registrant's Registration Statement on Form S-4, as amended,
Registration No. 33-78822).
4.5 Registrant's Correction to Restated Articles of Incorporation
(incorporated by reference to Exhibit 3.3 to Registrant's
Registration Statement on Form S-4, as amended, Registration
No. 33-78822).
4.6 Registrant's Certificate of Amendment to Restated Articles of
Incorporation (incorporated by reference to Exhibit 4.7 to
Registrant's Registration Statement on Form S-8, filed
October 14, 1997, Registration No. 33-37873).
4.7 Registrant's Restated Bylaws, as amended (incorporated by
reference to Exhibit 3.3 to Registrant's Registration
Statement on Form S-1, as amended, Registration No. 33-53652).
23.1 Consent of Deloitte & Touche LLP.
24 Power of Attorney (included on the signature page of this
Registration Statement).
-9-
<PAGE> 1
EXHIBIT 4.1
COMPUWARE CORPORATION EMPLOYEES' STOCK OWNERSHIP PLAN
AND 401(k) SALARY REDUCTION ARRANGEMENT
AS AMENDED AND RESTATED EFFECTIVE AS OF FEBRUARY 1, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PREAMBLE..................................................................................................................1
ARTICLE I.................................................................................................................2
1.1 Definitions.................................................................................................2
1.2 Compliance with the Act and the Code.......................................................................26
1.3 Governing Law and Rules of Construction....................................................................26
1.4 Power to Interpret.........................................................................................27
1.5 Terminated Employees.......................................................................................27
1.6 Profit Sharing Plan........................................................................................27
1.7 Employee Stock Ownership Plan..............................................................................27
ARTICLE II...............................................................................................................28
2.1 Eligibility For Participation..............................................................................28
(a) General Rule..................................................................................28
(b) No Application Required.......................................................................28
(c) Prior Plan Participants.......................................................................28
2.2 Participation Agreements...................................................................................29
(a) Description...................................................................................29
(b) Limits on Compensation Reduction Elections....................................................29
2.3 Duration of Participation; Participation After Break in Service or Termination of
Employment.............................................................................................30
(a) General Rule..................................................................................30
(b) Transfer to Noncovered Status.................................................................30
(c) Participation After Termination of Employment.................................................30
(d) Treatment of Account..........................................................................30
(e) Participation After a Break in Service........................................................31
ARTICLE III..............................................................................................................32
3.1 Time and Amount............................................................................................32
(a) Types and Amounts of Contributions............................................................32
(b) Time for Making Basic Contributions...........................................................33
(c) Time for Making Contributions (Other Than Basic Contributions)................................33
(d) Form of Contributions.........................................................................33
(e) No Employee Contributions.....................................................................34
3.2 Contributions Conditioned Upon Deductibility...............................................................34
(a) Treatment of Nondeductible Contributions......................................................34
(b) Mistake of Fact...............................................................................34
3.3 Contributions to One or More Qualified Pension or Annuity Plans............................................35
</TABLE>
<PAGE> 3
TABLE OF CONTENTS - CONT.
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV...............................................................................................................36
4.1 Participants' Shares of Contributions......................................................................36
(a) Allocation of Basic Contributions.............................................................36
(b) Allocation of Company Contributions...........................................................36
(c) Allocation of ESOP Contributions and Company Contributions made in Company
Stock.........................................................................................37
(d) Limit on Compensation Considered..............................................................39
(e) Merged Plan...................................................................................39
4.2 Limitations on Allocations.................................................................................40
(a) Limitations on Allocations of Basic Contributions.............................................40
(b) Order of Applying Limits......................................................................44
4.3 Limitations on Annual Contributions and Additions..........................................................44
(a) Maximum Annual Addition.......................................................................44
(b) Treatment of Excess...........................................................................45
(c) Coordination with Other Defined Contribution Plans............................................46
(d) Coordination with Defined Benefit Plans.......................................................46
(e) Compliance with Applicable Law................................................................46
4.4 Periodic Adjustments to Accounts...........................................................................46
(a) Distributions and Expenses....................................................................46
(b) Gains and Losses..............................................................................47
4.5 Expenses and Remuneration..................................................................................47
(a) Remuneration..................................................................................47
(b) Expenses......................................................................................48
4.6 Fixed Accounts.............................................................................................48
(a) Date of Fixing................................................................................48
(b) Investment....................................................................................49
(c) Adjustments...................................................................................49
(d) Forfeitures...................................................................................50
(e) Reinstatement of Account......................................................................51
4.7 Separate Accounting........................................................................................51
ARTICLE V................................................................................................................52
5.1 Retirement, Death and Disability Benefits..................................................................52
(a) Normal Retirement Benefit.....................................................................52
(b) Death Benefit.................................................................................52
(c) Disability Benefit............................................................................52
5.2 Termination Benefit........................................................................................52
(a) Vesting.......................................................................................52
(b) Change in Vesting Schedules...................................................................53
(c) Service Counting..............................................................................53
(d) Treatment of Nonvested Amounts................................................................54
5.3 Loans to Participants..................................................................................54
(a) General Rules.................................................................................54
(b) Requirements..................................................................................54
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS - CONT.
<TABLE>
<CAPTION>
Page
----
<S> <C>
5.4 Payment of Benefits........................................................................................58
(a) Application...................................................................................58
(b) Payment of Benefits Other Than Death Benefits.................................................59
(c) Payment of Death Benefits.....................................................................61
(d) Spouse Consent................................................................................63
(e) Required Distributions........................................................................64
(f) Permanent Elections...........................................................................65
(g) Unclaimed Benefits............................................................................65
(h) Small Benefits................................................................................66
(i) Deadline for Benefits.........................................................................66
(j) Direct Rollovers..............................................................................67
5.5 Other Distributions and Payments...........................................................................67
(a) Withdrawals...................................................................................67
(b) Occurrence of Certain Events..................................................................69
(c) Hardship......................................................................................69
5.6 Benefit Recipients.........................................................................................71
(a) Distributions to Participants.................................................................71
(b) Distributions to Minors and Incompetent Individuals...........................................72
5.7 Special Distribution Rules.................................................................................72
(a) Form..........................................................................................72
(b) Put Option....................................................................................72
(c) Right of First Refusal........................................................................74
(d) Dividends.....................................................................................74
(e) After Age Fifty-Five (55).....................................................................75
5.8 Payment in Cash or in Kind.................................................................................76
5.9 Distribution of Excess Deferrals...........................................................................76
(a) Notification to Committee.....................................................................76
(b) Timing of Distribution........................................................................76
5.10 Payments Pursuant to a Qualified Domestic Relations Order..................................................77
ARTICLE VI...............................................................................................................78
6.1 Applicability..............................................................................................78
6.2 Determination of Top Heavy Status..........................................................................78
(a) General Rule..................................................................................78
(b) Required Aggregation..........................................................................78
(c) Optional Aggregation..........................................................................78
(d) Aggregation Rule..............................................................................79
(e) Special Computation Rules.....................................................................79
6.3 Top Heavy Restrictions.....................................................................................81
(a) Minimum Vesting...............................................................................81
(b) Minimum Required Allocation For Non-Key Employees.............................................81
(c) Adjustments to Limitations on Annual Additions and Benefits...................................83
</TABLE>
iii
<PAGE> 5
TABLE OF CONTENTS - CONT.
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VII..............................................................................................................84
7.1 Dissolution................................................................................................84
7.2 Termination in Other Circumstances.........................................................................84
7.3 Temporary Absence and Military Service.....................................................................84
(a) Leaves, Illness, Layoffs......................................................................84
(b) Armed Forces..................................................................................85
(c) Inactive Status...............................................................................85
(d) Short Absences................................................................................85
(e) Corrective Actions............................................................................85
(f) Mutual Agreement..............................................................................85
7.4 No Longer Covered Employee.................................................................................85
ARTICLE VIII.............................................................................................................87
8.1 Composition of Committee...................................................................................87
(a) Appointment of Members........................................................................87
(b) Plan Administrator............................................................................87
8.2 Removal and Resignation....................................................................................87
8.3 Actions....................................................................................................87
8.4 Officers...................................................................................................87
8.5 Duties of Employer.........................................................................................88
(a) Provide Notification..........................................................................88
(b) Maintain Records..............................................................................88
(c) Furnish Information...........................................................................88
(d) Furnish Lists and Data........................................................................88
(e) Make Available Materials......................................................................88
8.6 Duties of Committee........................................................................................89
(a) Maintain Data.................................................................................89
(b) Make Records Available........................................................................89
(c) Provide Forms.................................................................................89
(d) Accept/Reject Forms...........................................................................89
(e) Furnish Allocation Information................................................................89
(f) Furnish Participant Information...............................................................89
(g) Establish and Administer Investment Funds.....................................................90
8.7 Duties of the Plan Administrator...........................................................................90
(a) Establish Procedures for Benefit Claims.......................................................90
(b) Establish Rules for Participation Agreements..................................................90
(c) Establish Procedures for Domestic Relations Orders............................................90
8.8 Claims Procedure...........................................................................................90
(a) Written Notice................................................................................90
(b) Appeals.......................................................................................91
8.9 Powers.....................................................................................................92
8.10 Discretion; Nondiscrimination.............................................................................92
8.11 No Separate Committee.....................................................................................93
</TABLE>
iv
<PAGE> 6
TABLE OF CONTENTS - CONT.
<TABLE>
<CAPTION>
Page
----
<S> <C>
8.12 Fiduciaries and Named Fiduciaries.........................................................................93
(a) Identity......................................................................................93
(b) Responsibility................................................................................93
(c) Prior Actions.................................................................................94
(d) Allocation of Responsibility..................................................................94
(e) Multiple Capacities...........................................................................94
(f) No Relief for Fraud...........................................................................94
ARTICLE IX...............................................................................................................95
9.1 The Trustee................................................................................................95
9.2 Form and Terms of the Trust Agreement......................................................................95
9.3 Fiduciary of Trust Fund....................................................................................95
9.4 Transfer of Investment Authority...........................................................................95
(a) Transfer to Investment Manager....................................................................95
(b) Transfer to Participants...................................................................................96
9.5 Bonding....................................................................................................96
9.6 Investment in Employer Securities..........................................................................96
9.7 Funding Policy.............................................................................................96
9.8 Acquisition Loan...........................................................................................97
(a) Terms.........................................................................................97
(b) Creation of Suspense Account..................................................................97
(c) Repayment of Acquisition Loan.................................................................97
9.9 Voting of Company Stock....................................................................................98
(a) Participant Voting............................................................................98
(b) Other Direction...............................................................................98
9.10 Valuation of Company Stock................................................................................98
9.11 Investment Funds..........................................................................................98
(a) Participants' Interests in Investment Funds...................................................98
(b) Addition or Deletion of Funds.................................................................99
(c) Implementation................................................................................99
ARTICLE X...............................................................................................................100
10.1 Termination of Plan......................................................................................100
10.2 Liquidation of Trust.....................................................................................101
10.3 Termination of Trust.....................................................................................101
10.4 Amendment................................................................................................101
(a) No Increase in Liabilities.......................................................................101
(b) Retroactivity Allowed............................................................................102
(c) Benefits Preserved...............................................................................102
(d) Vesting Changes..................................................................................102
</TABLE>
v
<PAGE> 7
TABLE OF CONTENTS - CONT.
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE XI..............................................................................................................104
11.1 No Reversions............................................................................................104
11.2 Nonforfeitability........................................................................................104
11.3 Merger, Consolidation, Etc...............................................................................104
11.4 Spendthrift Provision....................................................................................104
(a) No Assignment Permitted......................................................................104
(b) Qualified Domestic Relations Orders..........................................................105
11.5 Participant Protections..................................................................................105
11.6 Execution of Instruments.................................................................................105
11.7 Company Actions..........................................................................................106
11.8 Successors, Etc..........................................................................................106
11.9 Miscellaneous Protective Provisions......................................................................106
11.10 Common Control and Successorship Situations.............................................................107
(a) Predecessor Employers............................................................................107
(b) Transfers Within Employer Group..................................................................107
(c) Multiple Employers...............................................................................108
11.11 Indemnification by Company..............................................................................108
11.12 Employment Rights Not Enlarged..........................................................................108
11.13 Correction of Errors and Recoupment.....................................................................108
11.14 Effect of Participant's Acceptance of Payments..........................................................108
11.15 Notification of Address.................................................................................109
11.16 Source of Benefit Payments..............................................................................109
11.17 Nonterminable Protections and Rights....................................................................109
ARTICLE XII.............................................................................................................110
12.1 Right to Transfer........................................................................................110
12.2 Accounting...............................................................................................110
12.3 Nonforfeitability........................................................................................110
12.4 Distribution of Transferred Assets.......................................................................110
(a) General Rule.....................................................................................110
(b) Protected Benefits...............................................................................110
FIRST AMENDMENT.........................................................................................................113
SECOND AMENDMENT........................................................................................................116
THIRD AMENDMENT.........................................................................................................120
FOURTH AMENDMENT........................................................................................................122
FIFTH AMENDMENT.........................................................................................................125
</TABLE>
vi
<PAGE> 8
PREAMBLE
Compuware Corporation has established and maintains the Compuware
Corporation Employees' Stock Ownership Plan and 401(k) Salary Reduction
Arrangement, originally effective April 1, 1986, as thereafter amended and
restated effective April 1, 1988, and as thereafter amended from time to time.
The provisions of this amended and restated Plan are effective as of April
1, 1995, unless otherwise provided elsewhere in this document. Employees who
terminated their employment before the effective date of this amendment and
restatement shall, unless otherwise specified in this document, be subject to
the terms of the Plan as in effect on the date of their termination of
employment.
<PAGE> 9
ARTICLE I
DEFINITIONS; INTERPRETATION
1.1 Definitions. The following words and phrases, wherever capitalized, shall
have the following respective meanings, unless the context otherwise requires:
(a) "ACCOUNT" means one (1) or more accounts maintained to record the
interest of a Participant in the Plan, including the aggregate of the
Participant's Company Stock Account, Other Investments Account, Basic
Contribution Account, Transferred Assets Account and Merged Plan Account, if
any, and any earnings thereon.
(b) "ACQUISITION LOAN" means any loan or other extension of credit which
meets the requirements of Section 9.8 (Acquisition Loan) and which is used by
the Trust to finance the acquisition of Company Stock or to finance the
repayment of a prior Acquisition Loan.
(c) "ACT" means those provisions of the Employee Retirement Income
Security Act of 1974, as amended, not included within the Code, and any
successor laws.
(d) "ADMINISTRATIVE PARTIES" means and includes the Employer, the Trustee,
and the Committee.
(e) "ANNIVERSARY DATE" means the last day of March of each year.
(f) "ANNUAL ADDITION" means, with respect to any Participant (for any
Limitation Year), the sum of:
(i) That part of any Company Contributions or Basic Contributions
allocated to the Participant's Account with respect to that
Limitation Year.
(ii) The forfeitures, if any, allocated to the Participant's Account
with respect to that Limitation Year.
2
<PAGE> 10
(iii) Amounts allocated after March 31, 1984 on behalf of the
Participant during the Limitation Year to an individual medical
account, within the meaning of Section 415(l)(2) of the Code,
which is part of a pension or annuity plan of the Employer Group.
(iv) If the Participant is or ever has been a Key Employee, amounts
allocated after December 31, 1985 to any separate account (within
the meaning of Section 419A(d)(3) of the Code) in a welfare
benefit fund (within the meaning of Section 419(e) of the Code)
during the Limitation Year for provision of post-retirement
medical benefits for the Participant.
(g) "ANNUITY STARTING DATE" means the first day of the first period for
which an amount is payable as an annuity, or, in the case of a benefit not
payable in the form of an annuity, the first day on which all events have
occurred which entitle the Participant to that benefit.
(h) "ATTAINED AGE" means a Participant's chronological age (not his age on
his nearest birthday).
(i) "BASIC CONTRIBUTIONS" means Company Contributions described in Section
3.1(a)(iii) (Basic Contributions) made to the Plan pursuant to a Participant's
Participation Agreement.
(j) "BASIC CONTRIBUTION ACCOUNT" means the account established for a
Participant pursuant to Section 4.1(a) (Allocation of Basic Contributions) to
hold Basic Contributions made on his behalf.
(k) "BENEFICIARY" means the person or persons designated by a Participant in
accordance with Section 5.4(c)(iv) (Designation of Beneficiary) to receive
payments under the Plan in the event of the Participant's death.
3
<PAGE> 11
(l) "BREAK IN SERVICE" means (and occurs at the beginning of) each Plan Year
in which an Employee has not completed more than five hundred (500) Hours of
Service; provided, however, that any period of FMLA leave will be treated as
continued service for purposes of determining whether a Break in Service has
occurred and no Break in Service shall occur solely as a result of an absence
which qualifies under the FMLA (if its provisions are applicable to the
Company). For purposes of determining whether an Employee, other than an
Employee who is classified by the Company as part-time, has incurred a Break in
Service, the Employee shall be credited with one hundred ninety (190) Hours of
Service for each month in which the Employee has one (1) or more Hours of
Service. If the month in which such Employee has one (1) or more Hours of
Service extends into more than one (1) Plan Year, the Hours of Service shall be
allocated between the periods on a pro rata basis.
(m) "CODE" means the Internal Revenue Code of 1986, as amended, and any
successor laws.
(n) "COMMITTEE" means the administrative committee appointed pursuant to
Section 8.1 (Composition of Committee).
(o) "COMPANY" means the Employer and any of its subsidiaries or affiliates,
if any, which, with the approval of the Board of Directors of the Employer,
adopt the Plan.
(p) "COMPANY CONTRIBUTIONS" means the amounts contributed to the Plan by the
Company pursuant to Section 3.1(a)(ii) (Company Contributions).
(q) "COMPANY STOCK" means shares of common stock or noncallable preferred
stock of Compuware Corporation or its subsidiaries which satisfy the
requirements of Section 409(l) of the Code.
(r) "COMPANY STOCK ACCOUNT" means the account established for a Participant
pursuant to Section 4.1(a) (Participants' Shares of Contributions) to hold
Company Stock.
4
<PAGE> 12
(s) "COVERED EMPLOYEE" means any Employee other than:
(i) An Employee who is laid off, on leave of absence or on active
duty in the armed forces of any nation or international body
(other than as a member of the Armed Forces of the United States
of America).
(ii) An Employee who is covered by a collective bargaining agreement
entered into by the Company unless the agreement, by specific
reference to the Plan, provides for coverage under the Plan, if
there is evidence that retirement benefits were the subject of
good faith bargaining.
(iii) A Leased Employee.
(iv) Effective April 1, 1994, an Employee classified by the Company as
"full time hourly."
(v) An Employee of a subsidiary or affiliate of the Company which has
not adopted the Plan.
(vi) An Employee who is a non-resident alien and who receives no
United States source earned income.
(vii) An Employee who is on loan to the Company from one of the
Company's foreign subsidiaries.
(viii)Effective April 1, 1994, an Employee classified by the Company
as "temporary salaried."
(ix) An Employee who, immediately prior to his becoming an Employee of
the Company, was employed by an entity that was acquired by or
merged with the Company, except as provided below:
5
<PAGE> 13
(A) Effective April 1, 1995, any former employee of Computer
People Unlimited, Inc. who was then an Employee of the
Company shall be eligible to participate in the Plan in
accordance with the provisions of Section 2.1 (Eligibility
for Participation).
Notwithstanding the foregoing, effective October 1, 1995, an Employee classified
by the Company as "full time hourly" or "temporary salaried" shall be considered
a Covered Employee for purposes of the elective deferral provisions of the Plan.
(t) "CREDITABLE COMPENSATION" means amounts paid to a Participant or Covered
Employee by the Company in the Plan Year in question for services actually
performed and which includes all wages, salaries, fees for professional services
and other amounts for personal services actually rendered in the course of
employment with the Employer (including, but not limited to, commissions paid
salesmen, commissions, tips, bonuses, fringe benefits, and reimbursements or
other expense allowances under a nonaccountable plan (as described in Treas.
Reg. Section 1.62-2(c)) plus elective contributions to any Qualified plan,
cafeteria plan, 403(b) annuity plan or other plan of the Employer Group on
behalf of the Participant which are not includable in income under Sections 125,
402(a)(8), 402(h), 403(b), 457(b), or 414(h)(2) of the Code, and excluding:
(i) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the
Employee becomes freely transferable or is no longer subject to a
substantial risk of forfeiture.
(ii) Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option.
(iii) Amounts which receive special tax benefits, such as premiums for
group term life insurance (to the extent not includable in gross
income) or contributions made toward the purchase of an annuity
contract described in Section 403(b) of the Code.
6
<PAGE> 14
(iv) The Company's contributions to any pension, profit sharing or
other plan of deferred compensation (as described in Treas. Reg.
Section 1.415-2(d)(3)(i)) to the extent such contributions are
not includable in the Employee's gross income for the taxable
year in which contributed.
Creditable Compensation taken into account for any Plan Year beginning after
December 31, 1988 shall be limited to the amount set forth in Section 401(a)(17)
of the Code (Two Hundred Thousand Dollars ($200,000) for years beginning in
1989), as adjusted for the cost of living by the Secretary of the Treasury, and
for purposes of Section 4.1(d) (Limit on Compensation Considered), prorated to
correspond only to the period of the Employee's period of Plan participation.
With respect to Employees who are five percent (5%) owners or among the ten (10)
most Highly Compensated Employees for a Plan Year, the Creditable Compensation
of their "family members," as described in Section 1.1(nn)(viii), shall be
aggregated with that of the Employee, except that for purposes of this Section
1.1(t), family members shall include only the Employee's Spouse and lineal
descendants who have not reached an Attained Age of nineteen (19) before the end
of the Plan Year. If, as a result of the application of these family aggregation
rules, the Code Section 401(a)(17) limitation, as adjusted, would be exceeded,
then the limitation shall be prorated among the affected individuals in
proportion to each such individual's Creditable Compensation, as determined
under this Section 1.1(t), prior to application of the limitation.
In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual Creditable Compensation taken
into account under the Plan for any Participant shall not exceed the "OBRA '93
Annual Compensation Limit." The OBRA '93 Annual Compensation Limit is One
Hundred Fifty Thousand Dollars ($150,000), as adjusted by the Commissioner for
increases in the cost of living in accordance with Code Section 401(a)(17)(B).
The cost-of-living adjustment in effect for a calendar year applies to any
period, not exceeding twelve (12) months, over which Creditable Compensation is
determined (the "Determination Period") beginning in such calendar year. If a
Determination Period consists of fewer than twelve (12) months, the OBRA '93
Annual Compensation Limit will be multiplied by a fraction, the numerator of
which
7
<PAGE> 15
is the number of months in the Determination Period, and the denominator
of which is twelve (12).
For Plan Years beginning on or after January 1, 1994, any reference in the
Plan to the limitation under Section 401(a)(17) of the Code shall mean the OBRA
'93 Annual Compensation Limit set forth in this Section 1.1(t).
(u) "CURRENT OBLIGATION" means, for any Plan Year, that portion of an
Acquisition Loan (including interest) which is payable in cash during the one
(1) year period beginning on the most recent Anniversary Date.
(v) "DEATH BENEFIT" means the benefit payable on the death of the
Participant pursuant to Section 5.1(b) (Death Benefit).
(w) "DEFINED BENEFIT PLAN FRACTION" means, with respect to a Participant,
the following fraction. The numerator of the fraction is the Participant's
projected annual benefit under all defined benefit plans maintained by the
Employer Group (determined as of the close of the Limitation Year). The
denominator of the fraction is the lesser of the following amounts determined
for such Limitation Year: (i) 1.25 times the dollar limitation in effect under
Code Section 415(b)(1)(A) for the Limitation Year, or (ii) 1.4 times the amount
which can be taken into account for the Participant under Code Section
415(b)(1)(B) for the Limitation Year.
(x) "DEFINED CONTRIBUTION PLAN FRACTION" means, with respect to a
Participant, the following fraction. The numerator of the fraction is the sum of
the Annual Additions allocated to the accounts of the Participant under all
defined contribution plans (including the Plan) maintained by the Employer
Group, determined as of the close of the Limitation Year. The denominator of the
fraction is the sum, as of the end of the Limitation Year, of the lesser of (i)
or (ii) for each of the Participant's years of service, where (i) is 1.25 times
the dollar limitation in effect under Code Section 415(c)(1)(A) (determined
without regard to transition rules otherwise available under Code Section 415),
and (ii) is 1.4 times the amount which may be taken into account with respect to
the Participant under Code Section 415(c)(1)(B).
8
<PAGE> 16
(y) "DETERMINATION DATE" means, for any Plan Year, the last day of the
preceding Plan Year; provided, however, that the first Determination Date shall
be the last day of the Plan's first Plan Year.
(z) "DIRECT ROLLOVER" means a payment by the Plan to the Eligible Retirement
Plan specified by the Distributee.
(aa) "DISCRETION" means sole, absolute and uncontrolled discretion.
(bb) "DISTRIBUTEE" means a Participant or former Participant, a Surviving
Spouse, or a Spouse or former Spouse who is an alternate payee under a qualified
domestic relations order, as defined in Section 414(p) of the Code.
(cc) "EFFECTIVE DATE" means April 1, 1995.
(dd) "ELIGIBLE RETIREMENT PLAN" means, in the case of a Distributee other
than a Surviving Spouse, an individual retirement account described in Section
408(a) of the Code, an individual retirement annuity described in Section 408(b)
of the Code, an annuity plan described in Section 403(a) of the Code, or a
Qualified plan that accepts the Distributee's Eligible Rollover Distribution. In
the case of a Distributee who is a Surviving Spouse, an Eligible Retirement Plan
is an individual retirement account or individual retirement annuity.
(ee) "ELIGIBLE ROLLOVER DISTRIBUTION" means any distribution of all or any
portion of the balance to the credit of a Distributee, except:
(i) any distribution that is one of a series of substantially equal
periodic payments (paid 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,
9
<PAGE> 17
(ii) any distribution that is one of a series of distributions paid to
the Distributee and his designated Beneficiary over a specified
period of ten years or more,
(iii) any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code, and
(iv) the portion of any distribution that is not includable in gross
income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
(ff) "EMPLOYEE" means a person who receives Total Compensation, within the
meaning of Section 1.1(rrr) (Total Compensation), excluding any individual who
is an independent contractor or consultant, but including any person who is a
Leased Employee.
(gg) "EMPLOYER" means Compuware Corporation.
(hh) "EMPLOYER GROUP" means the Employer and any subsidiary or affiliated
entity which, with the Employer, constitutes a controlled group of corporations
or other entities or an affiliated service group within the meaning of
subsections (b), (c), (m) or (o) of Section 414 of the Code. For purposes of
Section 4.3 (Limitations on Annual Contributions and Additions), the definition
of Employer Group shall be modified as required by Section 415(h) of the Code.
(ii) "ENTRY DATE" means, for the employee stock ownership portion of the
Plan, the first day of each Plan Year (the "ESOP Entry Date"); and for the
401(k) portion of the Plan each April 1 or October 1 (the "401(k) Entry Date")
occurring on or after the Effective Date.
(jj) "ESOP CONTRIBUTIONS" means contributions made by the Company pursuant
to Section 3.1(a)(i) (ESOP Contributions).
10
<PAGE> 18
(kk) "EXCESS DEFERRALS" means any elective contributions made by a
Participant during a calendar year in excess of Seven Thousand Dollars ($7,000),
as adjusted for cost of living by the Secretary of the Treasury pursuant to
Section 402(g) of the Code (which constitute excess deferrals within the meaning
of Section 402(g)(2) of the Code).
(ll) "FMLA" means the Family and Medical Leave Act of 1993, as amended.
(mm) "FIXED ACCOUNT" means an Account which has become fixed, vested, and
set apart pursuant to Section 4.6 (Fixed Accounts), regardless of whether the
assets of the Account are commingled with any other Account.
(nn) "HIGHLY COMPENSATED EMPLOYEE" means any Employee who, during the Plan
Year or the Look Back Year:
(i) Owned at any time more than five percent (5%) of the outstanding
stock of the Company or stock which has more than five percent
(5%) of the total combined voting power of all stock of the
Company;
(ii) Received Total Compensation in excess of Seventy-Five Thousand
Dollars ($75,000);
(iii) Was in the top one-fifth (1/5) of all Employees, when ranked on
the basis of compensation, and received Total Compensation of
more than Fifty Thousand Dollars ($50,000); or
(iv) Was at any time an officer of the Company and received Total
Compensation greater than fifty percent (50%) of the amount in
effect under Section 415(b)(1)(A) of the Code for such Plan Year
or Look Back Year. No more than fifty (50) individuals (or, if
less, the greater of ten percent (10%) of Employees or three (3)
Employees) shall be considered Highly Compensated Employees under
this subparagraph (iv). If no
11
<PAGE> 19
officer satisfies the compensation requirement of this
subparagraph (iv), then the officer with the highest Total
Compensation shall be considered a Highly Compensated Employee.
Provided, however, that the following additional rules shall
apply:
(v) Employees who did not meet any of the conditions specified in
subparagraphs (ii), (iii) or (iv) in the Look Back Year will not
be considered Highly Compensated Employees unless they are among
the one hundred (100) Employees paid the greatest Total
Compensation in the Plan Year being tested.
(vi) The dollar thresholds set forth in subparagraphs (ii) and (iii)
shall be increased to reflect any cost of living adjustments
implemented by the Secretary of the Treasury pursuant to Section
415(d) of the Code. The applicable dollar amount shall be the
dollar amount for the calendar year in which the relevant Plan
Year or Look Back Year begins.
(vii) Former Employees who were Highly Compensated Employees either
when they separated from service (or have a deemed separation
within the meaning of regulations promulgated under Section
414(q) of the Code) or at any time after reaching an Attained Age
of fifty-five (55) shall always be considered Highly Compensated
Employees ("Highly Compensated Former Employees"). Highly
Compensated Former Employees who terminated employment with the
Employer Group before January 1, 1987 will be identified using
the special election provided in regulations under Code Section
414(q). Highly Compensated Former Employees shall not be included
for the purpose of determining the number of Employees in the top
one-fifth (1/5) group, pursuant to subparagraph (iii), or in
applying subparagraphs (iii), (iv) and (v) to active Employees.
12
<PAGE> 20
(viii)If any Employee is a member of the family of a five percent (5%)
owner (as described in subparagraph (i)) or of one of the ten
(10) Highly Compensated Employees with the greatest Total
Compensation during the Plan Year or the Look Back Year, then
that Employee shall not be considered a separate Employee for
purposes of any Plan provision which refers to Highly Compensated
Employees. Any compensation paid to (or amounts contributed on
behalf of) that Employee shall be treated as if it were paid to
(or contributed for) the related five percent (5%) owner or
Highly Compensated Employee. For purposes of the preceding
sentence, the term "family" means the Employee's Spouse and
lineal ascendants or descendants and the Spouses of those lineal
ascendants or descendants. The determination of which Employees
are Highly Compensated Employees under subparagraphs (i) through
(v) shall be made prior to the application of this subparagraph
(viii).
(ix) The Look Back Year is the calendar year ending with or within the
Plan Year being tested.
(x) For purposes of determining the number of Employees in the top
one-fifth (1/5) of all Employees under subparagraph (iii), the
following Employees shall not be considered:
(A) Non-resident aliens with no United States source income.
(B) Employees who have not completed six (6) months of service
by the end of the Plan Year.
(C) Employees who normally work less than seventeen and
one-half (17-1/2) hours per week for any member of the
Employer Group.
13
<PAGE> 21
(D) Employees who have not yet completed their probationary
period of employment.
(E) Seasonal Employees.
(F) Employees who have not reached an Attained Age of
twenty-one (21).
These Employees shall nevertheless be considered in determining the identity
of the Highly Compensated Employees and are subject to aggregation with other
family members as required under subparagraph (viii).
(xi) At the Company's election, Leased Employees who are covered by a
"safe harbor" plan and who are not participants in any Qualified
plan of the Employer Group may be included as Employees for
purposes of subparagraph (iii).
(xii) With respect to any Plan Year, the Company may elect to use the
simplified method for determining the identity of Highly
Compensated Employees available under Section 414(q)(12) of the
Code; provided, however, that, at all times during such Plan
Year, the Company maintains significant business activities (and
employs Employees) in at least two (2) significantly separate
geographic areas and satisfies such other requirements as may be
determined by the Secretary of the Treasury.
(xiii)With respect to any Plan Year, the Company may elect to use the
following alternative simplified method for determining the
identity of Highly Compensated Employees. A Highly Compensated
Employee is an Employee who, for a Plan Year:
(A) is a five percent (5%) owner;
14
<PAGE> 22
(B) has compensation for the Plan Year which exceeds the limit
described in paragraph (ii), as adjusted;
(C) has compensation for the Plan Year which exceeds the limit
described in paragraph (iii) above, as adjusted, and who
is in the most highly compensated one fifth (1/5) of all
Employees; or
(D) is an officer described in paragraph (iv).
Provided, however, that the compensation used to determine whether an
Employee satisfies the compensation requirements described in subparagraphs (B),
(C), and (D) above must reasonably approximate the Employee's Total Compensation
for the Plan Year and the lookback provisions shall not apply. Provided,
further, that the Company may elect to determine the identity of Highly
Compensated Employees under this paragraph (xiii) on the basis of data collected
with respect to a "snapshot day".
(oo) "HOURS OF SERVICE" means:
(i) The total of paragraphs (A), (B) and (C) as follows:
(A) Each hour for which an Employee is paid, or entitled to
payment, by the Company for the performance of duties.
Those hours shall be credited during the Plan Year in
which the duties were performed.
(B) Each hour for which back pay, irrespective of mitigation
of damages, has been either awarded or agreed to by the
Company. Those hours shall be credited to the Plan Year to
which the award or agreement pertains; provided, however,
that an Employee shall not be credited with more than one
(1) Hour of Service under Section 1.1(oo)(i)(A) or Section
1.1(oo)(i)(C) and this
15
<PAGE> 23
Section 1.1(oo)(i)(B) with respect to the same hour nor
shall an Employee be credited with more than five hundred
one (501) Hours of Service under this Section
1.1(oo)(i)(B) on account of any single continuous period
during which the Employee did not or would not have
performed duties for the Company (whether or not the
period occurs in a single Plan Year.
(C) Each hour for which an Employee is directly or indirectly
paid, or entitled to payment, by the Company for reasons
(such as vacation, sickness or disability) other than for
the performance of duties (irrespective of whether the
employment relationship with the Company has terminated).
These hours shall be credited in the Plan Year in which
payment is actually made or amounts payable become due,
whichever is earlier; provided, however, that an Employee
shall not be credited with more than five hundred one
(501) Hours of Service under this Section 1.1(oo)(i)(C) on
account of any single continuous period during which the
Employee performs no duties for the Company (whether or
not such period occurs in a single Plan Year. Hours under
this Section 1.1(oo)(i) shall be calculated and credited
pursuant to Sections 2530.200b-2(b) and (c) of the
Department of Labor Regulations, which are incorporated
herein by this reference.
(ii) Solely for purposes of determining whether a Break in Service has
occurred, in the case of an Employee who is absent from work
because of the pregnancy of the Employee, the birth of a child of
the Employee, the placement of a child with the Employee in
connection with the adoption of that child by the Employee, or
for purposes of caring for that child for a period beginning
immediately following such birth or placement, and provided the
absence commences on or after the first day of the first Plan
Year beginning on or after January 1, 1985, such Employee's Hours
of
16
<PAGE> 24
Service shall be deemed to include all hours described in
subparagraph (i) which would have been credited to the Employee
but for such absence or, if those hours cannot be determined,
eight (8) hours for each day of the absence. The Committee may
require Employee to certify that his absence is due to a reason
described in this subparagraph and to certify the number of days
during the absence which were due to that cause. The total number
of hours deemed to be Hours of Service under this subparagraph
shall not exceed five hundred and one (501). These hours shall be
allocated to the Plan Year in which the Employee's absence
begins, but only if that allocation would, solely because of
hours which are deemed Hours of Service under this subparagraph
(ii), prevent the Employee from incurring a Break in Service for
the Plan Year. In any other case, these Hours of Service shall be
allocated to the next Plan Year.
(iii) Service with any member of the Employer Group shall be treated as
Hours of Service to the extent provided in Section 11.10(b)
(Transfers Within Employer Group).
(pp) "INVESTMENT FUND" means one or more funds, comprising the Trust Fund,
in which Plan assets may be invested. Investment Funds may include such funds as
may be established from time to time by the Committee in its Discretion.
(qq) "INVESTMENT MANAGER" means a person, firm or entity which:
(i) Is either (A) registered as an investment adviser under the
Investment Advisers Act of 1940, (B) a bank, as defined in the
Investment Advisers Act of 1940, or (C) an insurance company
qualified to manage, acquire and dispose of the assets of
Qualified plans under the laws of more than one (1) state,
17
<PAGE> 25
(ii) Has acknowledged in writing that it is a fiduciary with respect
to the Plan, and
(iii) Has been granted the authority and duty to direct the investment
of all or part of the Trust Fund pursuant to Section 9.4
(Transfer of Investment Authority).
(rr) "KEY EMPLOYEE" means any individual described in (i) or (ii) below:
(i) Any Employee or former Employee who, at any time during the Plan
Year containing the Determination Date or during any of the four
(4) preceding Plan Years, is or was:
(A) An officer of the Company or of any member of the Employer
Group whose annual Total Compensation is more than fifty
percent (50%) of the dollar limit under Section
415(b)(1)(A) of the Code in effect on the first day of the
calendar year in which falls the Determination Date;
provided, however, that no more than fifty (50) Employees,
or if less, the greater of three (3) or ten percent (10%)
of all Employees, shall be considered to be Key Employees
under this paragraph 1.1(rr)(i)(A); or
(B) One of the ten (10) Employees owning the largest interests
in the Company whose annual Total Compensation is more
than the limitation in Section 415(c)(1)(A) of the Code in
effect on the first day of the calendar year in which
falls the Determination Date; provided, however, that if
two (2) or more Employees have the same interest in the
Company, the Employee having the greater annual Total
Compensation shall be treated as having the larger
interest; or
18
<PAGE> 26
(C) A person owning more than five percent (5%) of the
outstanding stock of the Company or stock which has more
than five percent (5%) of the combined voting power of all
stock of the Company; or
(D) A person whose annual Total Compensation from the Employer
Group is more than One Hundred Fifty Thousand Dollars
($150,000) and who owns more than one percent (1%) of the
outstanding stock of the Company or stock which has more
than one percent (1%) of the combined voting power of all
stock of the Company.
For purposes of determining ownership under paragraphs (B), (C), and (D)
above, the constructive ownership provisions of Section 318 of the Code shall
apply, except that (I) five percent (5%) or one percent (1%), as the case may
be, shall be substituted for fifty percent (50%) in Section 318(a)(2), and (II)
the rules of subsections (b), (c) and (m) of Code Section 414 shall not apply.
The dollar amounts referred to in paragraphs (A), (B), and (D) above shall be
adjusted as described in Section 415(d) of the Code.
(ii) The Beneficiary of a person described in (i).
(ss) "LEASED EMPLOYEE" means a person who is not an Employee, but who
provides services to the Employer Group which are pursuant to an agreement
between a member of the Employer Group and a leasing organization or between a
member of the Employer Group and such person and the person has performed
services of a type historically performed by Employees (in the business field of
the recipient) for the Employer Group on a substantially full-time basis for a
period of at least one (1) year. A person who would otherwise be treated as a
Leased Employee pursuant to this Section 1.1(ss) shall not be so treated if the
person is covered by a Qualified plan maintained by the leasing organization
which is a nonintegrated money purchase pension plan with at least a ten percent
(10%) employer contribution rate, and which provides for full and immediate
vesting and immediate participation; provided, however,
19
<PAGE> 27
that this sentence shall not apply if Leased Employees comprise more than twenty
percent (20%) of the Employer Group's Employees who are not Highly Compensated
Employees.
(tt) "LIMITATION YEAR" means the Plan Year.
(uu) "MERGED PLAN" means any Qualified Plan which, upon authorization of the
Board of Directors of the Employer, is merged into this Plan. The following
plans are Merged Plans: the XA Systems Corporation Savings and Investment Plan
and effective June 1, 1996, the CoroNet Systems Inc. 401(k) Plan.
(vv) "MERGED PLAN ACCOUNT" means the account established for a Participant
to hold, on his behalf, his share of assets from a Merged Plan.
(ww) "NONFORFEITABLE," when used with respect to a benefit or right under
this Plan, means vested and unconditional.
(xx) "NON-KEY EMPLOYEE" means:
(i) a Participant or former Participant who is not and has never been
a Key Employee; and
(ii) the Beneficiary of a person described in (i).
(yy) "NORMAL RETIREMENT AGE" means the date a Participant reaches an
Attained Age of sixty-five (65).
(zz) "NORMAL RETIREMENT DATE" means the first day of the month coincident
with or next following the later of the date the Participant reaches his Normal
Retirement Age or the fifth (5th) anniversary of his participation in the Plan.
20
<PAGE> 28
(aaa) "ORIGINAL EFFECTIVE DATE" means the date on which the Prior Plan was
originally established, April 1, 1986.
(bbb) "OTHER INVESTMENTS ACCOUNT" means the account established for a
Participant attributable to ESOP Contributions which is invested in other than
Company Stock.
(ccc) "PARTICIPANT" means a Covered Employee who is eligible, and has
qualified, to participate in the Plan in accordance with Article II
(Participation).
(ddd) "PARTICIPATION AGREEMENT" means the document by which a Participant
agrees to reduce his Creditable Compensation as described in Section 2.2
(Participation Agreements).
(eee) "PERMANENT AND TOTAL DISABILITY" means a physical or mental condition
of the Participant which qualifies him for disability benefits under the Social
Security Act.
(fff) "PLAN" means the Compuware Corporation Employees' Stock Ownership Plan
and 401(k) Salary Reduction Arrangement as herein set forth or as from time to
time amended.
(ggg) "PLAN ADMINISTRATOR" means the Committee or such other person as may
be designated in Section 8.1(b) (Plan Administrator) to perform the functions of
a plan administrator as described in Section 3(14) of the Act.
(hhh) "PLAN YEAR" means the twelve (12) consecutive month period beginning
on each April 1 and ending on the following March 31.
(iii) "PRINCIPAL" means the original amount of an Acquisition Loan.
(jjj) "PRIOR PLAN" means the Compuware Corporation Employees' Stock
Ownership Plan and 401(k) Salary Reduction Arrangement, as in effect from April
1, 1988 through March 31, 1989, and any predecessor retirement plan superseded
thereby.
21
<PAGE> 29
(kkk) "PRIOR PLAN PARTICIPANT" means any Employee who was a participant
under the Prior Plan as of March 31, 1989.
(lll) "PROPER" means necessary, advisable, desirable, expedient or
convenient.
(mmm) "QUALIFIED," where used with reference to a plan or trust, has the
same meaning as in Section 401(a) of the Code, and when used with reference to
an annuity plan, means a plan which meets the requirements of Section 404(a)(2)
of the Code.
(nnn) "SPOUSE" or "SURVIVING SPOUSE" means the person legally married to the
Participant. The Spouse shall be the person to whom the Participant is legally
married on the Annuity Starting Date. For purposes of determining benefit
recipients upon the death of the Participant, the Surviving Spouse shall be the
person to whom the Participant is legally married the date of the Participant's
death.
(ooo) "SUPER TOP HEAVY" describes the Plan if it would be Top Heavy under
Section 6.2 (Determination of Top Heavy Status) if ninety percent (90%) were
substituted for sixty percent (60%) in each place where sixty percent (60%)
appears in that Section.
(ppp) "SUSPENSE ACCOUNT" means the account established pursuant to Section
9.8(b) (Creation of Suspense Account) to receive Company Stock acquired with an
Acquisition Loan.
(qqq) "TERMINATION BENEFIT" means the benefit payable to a Participant as a
result of his termination of employment with the Company, as described in
Section 5.2 (Termination Benefit).
(rrr) "TESTING COMPENSATION" means compensation, as defined in any manner
permitted by Section 414(s) of the Code and regulations promulgated thereunder,
including Treas. Reg. Section 1.414(s)-1T, paid during the Plan Year by the
Employer or by any member of the Employer Group to a Participant, while he is a
Participant, for services actually performed. Compensation taken into account
for any Plan Year beginning after December 31, 1988 shall be
22
<PAGE> 30
limited as described in Code Section 401(a)(17), as adjusted for cost of living
by the Secretary of the Treasury. In applying this limitation, the Testing
Compensation of the "family members," within the meaning of Section 1.1(nn)
(Highly Compensated Employee), of any Employee who is a "five percent owner" or
among the ten (10) most "highly compensated employees" (within the meaning of
Section 414(q) of the Code) for a Plan Year shall be aggregated with that of the
Employee as described in Section 414 (q)(6) of the Code, except that for
purposes of this Section 1.1(rrr), family members shall include only the
Employee's Spouse and lineal descendants who have not reached an Attained Age of
nineteen (19) before the end of the Plan Year. If, as a result of the
application of these family aggregation rules, the Code Section 401(a)(17)
limitation, as adjusted, would be exceeded, then the limitation shall be
prorated among the affected individuals in proportion to each such individual's
Testing Compensation, as determined under this Section 1.1(rrr), prior to
application of the limitation.
(sss) "TOP HEAVY" describes the Plan if it meets the conditions described in
Section 6.2 (Determination of Top Heavy Status).
(ttt) "TOTAL COMPENSATION" means all amounts paid during the Limitation Year
or other relevant period to an individual by any member of the Employer Group
for services actually performed which includes all wages, salaries, fees for
professional services and other amounts for personal services actually rendered
in the course of employment with the Employer (including, but not limited to,
commissions paid salesmen, commissions, tips, bonuses, fringe benefits, and
reimbursements or other expense allowances under a nonaccountable plan (as
described in Treas. Reg. Section 1.62-2(c)) plus amounts described in Sections
104(a)(3), 105(a) and 105(h) of the Code, to the extent includable in gross
income, amounts paid or reimbursed by the Employer for moving expenses (to the
extent not deductible by the individual under Section 217 of the Code), the
value of any non-qualified stock option to the extent includable in gross
income, and amounts includable in gross income as a result of making an election
under Section 83(b) of the Code, but excluding:
23
<PAGE> 31
(i) contributions made by the Employer to a plan of deferred
compensation to the extent that, before the application of the
limits of Section 415 of the Code, the contributions are not
includable in the gross income of the individual for the taxable
year in which contributed,
(ii) contributions made by the Employer to a plan of deferred
compensation to the extent that all or a portion of them are
recharacterized as voluntary employee contributions,
(iii) contributions made on behalf of the individual to a simplified
employee pension plan described in Section 408(k) of the Code to
the extent the contributions are excludable from the individual's
gross income,
(iv) distributions from a plan of deferred compensation regardless of
whether the amounts are includable in the gross income of the
individual when distributed (except amounts received pursuant to
an unfunded non-Qualified plan to the extent the amounts are
includable in the gross income of the individual),
(v) amounts realized from the exercise of a non-qualified stock
option or when restricted stock (or property) held by the
individual either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture,
(vi) amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option, and
(vii) 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 includable in the gross income of the
individual), or contributions made by the Employer (whether or
not under a salary reduction agreement) towards
24
<PAGE> 32
the purchase of any annuity contract described in Section 403(b)
of the Code (whether or not the contributions are excludable from
the gross income of the individual).
There shall be excluded from Total Compensation any amounts that would
otherwise be excluded from gross income by reason of the application of Sections
125, 402(a)(8), 402(h)(1)(B) and 403(b) of the Code, except that for purposes of
Section 1.1(nn) (Highly Compensated Employee) and Section 1.1(rr) (Key Employee)
such amounts shall be included.
(uuu) "TRANSFERRED ASSETS" means those funds which constitute rollover
amounts within the meaning of Section 402(a)(5) of the Code transferred from a
Qualified trust to the Trust Fund by the trustee of that Qualified trust on
behalf of a Participant; or distributed from a Qualified trust to a Participant
and transferred by the Participant to the Trust Fund; or distributed from a
Qualified trust to a Participant and transferred by the Participant to an
individual retirement account (within the meaning of Section 408 of the Code)
and then to the Trust Fund.
(vvv) "TRANSFERRED ASSETS ACCOUNT" means the account established for a
Participant pursuant to Section 12.1 (Right to Transfer) to hold Transferred
Assets received by the Plan on his behalf.
(www) "TRUST" and "TRUST FUND" mean the trust and trust fund established
pursuant to the Plan as a medium for funding the Plan.
(xxx) "TRUST AGREEMENT" means the agreement entered into between the
Employer and the Trustee which governs the management and control of Plan
assets.
(yyy) "TRUSTEE" means one (1) or more individuals or corporations (including
banks or trust companies) designated by the Employer to be the trustee for the
Trust and Trust Fund.
(zzz) "VALUATION DATE" means the date on which the value of the Trust Fund
is determined and includes each Anniversary Date and any other appraisal dates
that may be
25
<PAGE> 33
designated by the Committee.
(aaaa) "YEAR OF SERVICE" means a Plan Year during which an Employee has
completed at least one thousand (1,000) Hours of Service; provided, however,
that an Employee other than an Employee who is classified by the Company as
part-time, shall be credited with one hundred ninety (190) Hours of Service for
each month in which the Employee has one (1) or more Hours of Service in
determining whether or not such Employee has completed a Year of Service. If the
month in which such Employee has one (1) or more Hours of Service extends into
more than one (1) Plan Year, the one hundred ninety (190) Hours of Service shall
be allocated between the Plan Years on a pro rata basis. An Employee shall not
be credited with more than one (1) Year of Service for any Plan Year.
1.2 Compliance with the Act and the Code. This Plan shall be interpreted and
effectuated to comply with the applicable requirements of the Act and the Code.
Accordingly, the Plan shall be operated so as not to discriminate in favor of
Highly Compensated Employees in the provision of benefits or contributions.
1.3 Governing Law and Rules of Construction. This Plan shall be governed in all
respects, whether as to construction, capacity, validity, performance or
otherwise, by the laws of the United States and, to the extent not superseded by
the laws of the United States, by the laws of the State of Michigan. Wherever
reasonably necessary, pronouns of any gender shall be deemed synonymous, as
shall singular and plural pronouns. The Table of Contents of the Plan and the
headings to the Articles and Sections of the Plan are included solely for
convenience and shall in no event affect, or be used in connection with, the
interpretation of the Plan. Each provision of the Plan shall be treated as
severable and if any provision is declared illegal, invalid or unenforceable,
the Plan shall be interpreted, and shall remain in full force and effect, as
though that provision had never been contained in this Plan.
26
<PAGE> 34
1.4 Power to Interpret. Subject to Section 1.2 (Compliance with the Act and the
Code) and in addition to the obligations imposed on it under Section 8.10
(Discretion; Nondiscrimination) and elsewhere in the Plan, the Committee shall
have the power and Discretion to construe this Plan, to determine entitlement to
benefits, to correct any defect, supply any omission, or reconcile any
inconsistencies in the manner and to the extent the Committee considers Proper
to carry the Plan into effect.
1.5 Terminated Employees. The provisions of the Plan shall not apply to
Employees who participated under the Prior Plan and whose employment with the
Company terminated before the Effective Date (except as provided in Sections 2.3
(Duration of Participation; Participation After Termination of Employment) and
7.4 (No Longer Covered Employee)). The benefits for such former Employees shall
instead be determined pursuant to the terms of the Plan as in effect at the time
of their termination of Company employment.
1.6 Profit Sharing Plan. A portion of this Plan is intended to be a profit
sharing plan and, specifically, not a plan to which Section 412 of the Code
applies. This portion of the Plan also contains cash or deferred features and is
intended to comply with the provisions of Section 401(k) of the Code.
1.7 Employee Stock Ownership Plan. A portion of this Plan is designed to invest
primarily in employer securities as defined in Section 409(l) of the Code and is
intended to be an employee stock ownership plan (within the meaning of Section
4975(e)(7) of the Code) and, specifically, not a plan to which Section 412 of
the Code applies.
27
<PAGE> 35
ARTICLE II
PARTICIPATION
2.1 Eligibility For Participation.
(a) General Rule. Any Covered Employee who has (i) reached an Attained Age
of Twenty One (21) years or more, (ii) completed six (6) months of service or
more following the date on which he first performed an Hour of Service
(determined without regard to any interruptions in the employment of the Covered
Employee by the Company occurring during the twelve (12) month period beginning
with the date on which he first performed an Hour of Service) and (iii)
completed at least five hundred (500) Hours of Service during any consecutive
six (6) month period shall be eligible to become a Participant as provided in
this Section 2.1(a). A Covered Employee who has satisfied such conditions shall
become a Participant in the employee stock ownership portion of the Plan as of
the ESOP Entry Date occurring in the Plan Year in which the Employee meets those
conditions, if such conditions are met during the first six (6) months of the
Plan Year, or the next subsequent ESOP Entry Date, if those conditions are met
during the last six (6) months of the Plan Year. A Covered Employee who has
satisfied the eligibility requirements shall become a Participant in the 401(k)
portion of the Plan on the 401(k) Entry Date coincident with or next following
the date the conditions are fulfilled. An Employee who has fulfilled the
eligibility conditions of this Section 2.1(a), but who is not a Covered Employee
on the date he would otherwise become a Participant, shall become a Participant
on the date he becomes a Covered Employee.
(b) No Application Required. An eligible Covered Employee shall
automatically become a Participant without filing an application or notice with
the Committee. A Covered Employee may not waive participation in the Plan.
(c) Prior Plan Participants. Notwithstanding the foregoing provisions of
this Section 2.1, any Covered Employee who was a Prior Plan Participant or would
have been eligible to participate in the Prior Plan as of March 31, 1989, shall
be eligible to participate in the Plan as of the Effective Date.
28
<PAGE> 36
2.2 Participation Agreements. A Participant shall not be entitled to receive an
allocation of Basic Contributions until and unless he shall have filed with the
Committee a Participation Agreement.
(a) Description. The term "Participation Agreement" means the document by
which a Participant elects to reduce his Creditable Compensation by a designated
amount. A Participant's initial Participation Agreement shall be effective on
his initial date of participation or, if later, the first day of the Plan Year
or next semi-annual anniversary thereof (or such other date or dates as the
Committee in its Discretion may determine) on or after thirty (30) days (or such
other period as the Committee in its Discretion may determine) after a signed
Participation Agreement is received by the Committee. An amendment of a
Participation Agreement shall be effective on the date on or after thirty (30)
days (or such other period as the Committee in its Discretion may determine)
after a signed copy is received by the Committee. A Participation Agreement may
be revoked at any time, effective as of the beginning of the payroll period
after the Committee receives a signed revocation. After a revocation, a new
Participation Agreement shall be effective no earlier than the semi-annual date
after the date on which the revocation is effective (or such other date as the
Committee in its Discretion may determine). A Participation Agreement shall
apply to all amounts received each pay period and shall remain in effect until
revoked or amended, except that the Committee may temporarily suspend a
Participation Agreement to the extent necessary to limit a Participant's Basic
Contributions as provided in Section 4.2(a) (Limitations on Allocations of Basic
Contributions).
(b) Limits on Compensation Reduction Elections. A Participant's election to
reduce his Creditable Compensation pursuant to a Participation Agreement may be
made in one percent (1%) increments (or such other increments as the Committee,
in its Discretion, may permit) up to a maximum of fifteen percent (15%) of
Creditable Compensation, but not to exceed Seven Thousand Dollars ($7,000) (or
such greater amount as may be permitted under Section 402(g) of the Code as a
result of adjustments made by the Secretary of the Treasury for the cost of
living) in any calendar year. The limitation set forth in the preceding sentence
shall apply to all elective deferrals, within the meaning of Section 402(g)(3)
of the Code, made to all plans of the
29
<PAGE> 37
Employer in which such elective deferrals are permitted. An election must be
made before the beginning of the period to which it relates.
2.3 Duration of Participation; Participation After Break in Service or
Termination of Employment.
(a) General Rule. A Covered Employee who becomes a Participant shall
continue to be a Participant through the Anniversary Date coincident with or
next succeeding the date on which his employment with the Employer Group
terminates for any reason; provided, however, that, to the extent required by
the Code or the Act, he shall be considered a Participant until the date he is
no longer entitled to receive any benefits from the Plan.
(b) Transfer to Noncovered Status. A Participant who is transferred to
employment with the Employer Group such that he is no longer a Covered Employee
shall not, for such period that he is not a Covered Employee, be entitled to
reduce his Creditable Compensation pursuant to Section 2.2 (Participation
Agreements), shall not be considered for purposes of performing the testing
described in Section 4.2 (Limitations on Allocations), and shall not be entitled
to an allocation under Section 4.1 (Participants' Shares of Contributions).
(c) Participation After Termination of Employment. A former Participant
whose employment with the Company has terminated or whose employment is deemed
to have terminated, and who is later reemployed by the Company, shall again
become eligible to participate in the Plan as of the date on which he again
performs an Hour of Service as a Covered Employee.
(d) Treatment of Account. If a former Participant, whose Fixed Account has
not been fully distributed to him, again becomes a Participant, his Account
shall be restored and shall no longer be subject to the requirements of Section
4.6(b) (Investment).
30
<PAGE> 38
(e) Participation After a Break in Service. All Hours of Service and Years
of Service shall be taken into account, except that in the case of an Employee
who previously incurred a Break in Service, if at the time of his prior Break in
Service an Employee either did not have any Account under the Plan or did not
have any Nonforfeitable right to any portion of his Account derived from Company
Contributions, his Years of Service before his Break in Service shall not be
taken into account if the number of his consecutive Breaks in Service equals or
exceeds the greater of five (5) or the number of his Years of Service earned
prior to the Break in Service. The Employee's Years of Service before his Break
in Service shall not include Years of Service excluded by reason of one (1) or
more prior Breaks in Service.
31
<PAGE> 39
ARTICLE III
CONTRIBUTIONS
3.1 Time and Amount.
(a) Types and Amounts of Contributions. So long as the Plan is in effect but
subject to Article X (Termination and Amendment) and Section 3.1(a)(i)(B)
(Reduction of Company Contribution), the Company shall, for each Plan Year,
contribute to the Plan as follows:
(i) ESOP Contributions.
(A) Amount. The Company shall, for each Plan Year, contribute
to the Trust an amount determined by the Company which is
not less than the amount necessary to meet the Plan's
Current Obligation.
(B) Reduction of ESOP Contribution. Payments to satisfy the
Current Obligation may not exceed an amount equal to the
sum of Company's ESOP Contributions used to satisfy
Current Obligations (and earnings on the Company Stock
released thereby pursuant to Section 4.1(c)(i) (Release
From Suspense Account)) for the Plan Year and all prior
Plan Years, less Current Obligations paid in prior Plan
Years. If the Company so directs, dividends paid during
any Plan Year on Company Stock purchased with the proceeds
of an Acquisition Loan shall be used to reduce the
Company's ESOP Contribution required to satisfy the
Current Obligation (to the extent the dividends are not
paid to Participants pursuant to Section 5.7(d)(ii) (Paid
to Participants)).
32
<PAGE> 40
(ii) Company Contributions. The Company shall contribute to the Plan
amounts required pursuant to Section 6.3(b) (Minimum Required
Allocation for Non-Key Employees), if any. In addition, the
Company may contribute to the Plan a Company Contribution
(determined without regard to the Company's actual profits) in
such amount, if any, as may be determined in the Discretion of
the Company.
(iii) Basic Contributions. The Company shall contribute to the Plan an
amount equal to the amount by which Participants have reduced
their annual Creditable Compensation during such Plan Year
pursuant to Participation Agreements (the "Basic Contributions").
Notwithstanding the foregoing, the total amount of all of the Company's
Contributions for its taxable year ending with or within the Plan Year, shall
not exceed the amount allowable as a deduction to the Company under Section 404
of the Code.
(b) Time for Making Basic Contributions. All Basic Contributions shall be
made to the Plan by the Company as soon as administratively feasible following
the payroll period to which a salary reduction pursuant to a Participation
Agreement applies (but not later than ninety (90) days following such payroll
period).
(c) Time for Making Contributions (Other Than Basic Contributions). All
contributions to the Plan for a taxable year of the Company shall be made within
the time prescribed by law for the filing of the Company's federal income tax
return (including extensions) for that taxable year.
(d) Form of Contributions. All Basic Contributions made to the Plan shall be
in cash. Contributions other than Basic Contributions shall be made in cash or
other property acceptable to the Trustee as a Trust investment, except that to
the extent the Company's contribution is applied to meet the Plan's Current
Obligations, contributions shall be made only in cash.
33
<PAGE> 41
(e) No Employee Contributions. All contributions under the Plan shall be
made by the Company and no contributions shall be required or permitted to be
made by a Participant.
3.2 Contributions Conditioned Upon Deductibility.
(a) Treatment of Nondeductible Contributions. All Company Contributions are
conditioned on their being deductible under Section 404 of the Code. If the
deduction for any Company Contribution for any taxable year shall be disallowed,
the contribution (to the extent of the disallowance) shall be returned to the
Company within one (1) year following the date of the disallowance. Amounts to
be returned to the Company shall not exceed the excess of the amount contributed
over the amount that would have been contributed had the contribution been
limited to the amount deductible after any disallowance by the Internal Revenue
Service. Earnings attributable to the excess contribution may not be returned to
the Company, but losses attributable thereto must reduce the amount to be so
returned. In addition, the amount returned to the Company must be limited so as
to ensure that no Participant's Account balance will be reduced below the
balance which would have been in his Account had the nondeductible amount not
been contributed.
(b) Mistake of Fact. If and to the extent that a Company Contribution to the
Trust is made by or under a mistake of fact, it shall be repaid to the Company
upon demand, to the extent of the mistake, within one (1) year after the
contribution was paid, pursuant to rules and regulations promulgated by the
Internal Revenue Service and the Department of Labor. Amounts returned to the
Company shall not exceed the excess of the amount contributed over the amount
that would have been contributed had no mistake of fact occurred. Earnings
attributable to the excess contribution may not be returned to the Company, but
losses attributable thereto must reduce the amount to be so returned. In
addition, the amount returned to the Company must be limited so as to ensure
that no Participant's Account balance will be reduced below the balance which
would have been in his Account had the mistaken amount not been contributed.
34
<PAGE> 42
3.3 Contributions to One or More Qualified Pension or Annuity Plans. If the
Company makes contributions for a taxable year to one or more Qualified plans
(within the meaning of Section 404(a)(7) of the Code) whose participants include
one or more Participants in this Plan, the total amount contributed by the
Company to those Qualified plans for the taxable year, together with its
contribution for the taxable year under Section 3.1 (Time and Amount), shall not
exceed the greater of:
(a) Twenty-five percent (25%) of the compensation otherwise paid during the
taxable year to the participants in the Qualified pension or annuity plans and
the Participants in this Plan, and
(b) The amount of Company Contributions necessary to avoid an accumulated
funding deficiency (within the meaning of Section 402(a) of the Code) with
respect to the plan years of those Qualified pension or annuity plans which end
with or within the taxable year;
provided, however, that if this limitation would otherwise be exceeded, the
Company Contributions under the Plan for the taxable year shall be reduced by an
amount equal to the excess.
35
<PAGE> 43
ARTICLE IV
ALLOCATIONS AND ACCOUNTS
4.1 Participants' Shares of Contributions. The Committee shall establish and
maintain records of a "Basic Contribution Account", an "Other Investments
Account," and a "Company Stock Account" for each Participant. After taking into
account amounts, if any, treated as forfeited pursuant to Section 5.4(g)
(Unclaimed Benefits), the Company's contributions, and, as applicable,
forfeitures, for a Plan Year shall be allocated to Participants' Accounts as
follows:
(a) Allocation of Basic Contributions. Basic Contributions described in
Section 3.1(a)(iii) (Basic Contributions) shall be allocated as of the date of
receipt by the Trustee to the Basic Contribution Accounts of the Participants on
behalf of whom the Basic Contributions were made.
(b) Allocation of Company Contributions. Company Contributions not in the
form of Company Stock shall be allocated as follows.
(i) Top Heavy Contributions. Contributions made pursuant to Section
3.1(a)(ii) (Company Contributions) which are required to be made
pursuant to Section 6.3(b) (Minimum Required Allocation for
Non-Key Employees) shall be allocated as of the last day of the
Plan Year among the Other Investments Accounts of all
Participants who are Non-Key Employees and who are Employees at
the end of that Plan Year in the ratio which the Creditable
Compensation of each such Participant bears to the Creditable
Compensation of all such Participants.
(ii) Discretionary Contributions. Company Contributions made pursuant
to Section 3.1(a)(ii) (Company Contributions) and which are not
required to be made pursuant to Section 6.3(b) (Minimum Required
Allocation for Non-Key Employees), plus forfeitures other than
Company Stock, shall be allocated as of the last day of the Plan
Year among the Other Investments
36
<PAGE> 44
Accounts of the Participants who have completed a Year of
Service during the Plan Year then ended and who are Employees at
the end of that Plan Year, (unless his employment shall have
terminated because of the Participant's death, Permanent and
Total Disability, or after reaching an Attained Age of
sixty-five (65)) ("Eligible Participants"). The Committee shall
allocate to the Other Investments Account of each Eligible
Participant that portion of the Company Contributions which
bears the same ratio to the total of the Company Contributions
that each Eligible Participant's Creditable Compensation for the
Plan Year bears to the total Creditable Compensation of all
Eligible Participants for the Plan Year. Notwithstanding the
foregoing, if a Participant shall be absent on the last day of
the Plan Year for reasons which qualify under FMLA and the
Participant returns to work with the Company for a period of at
least thirty (30) days following the expiration of such absence,
he shall be deemed to be actively employed on the last day of
the Plan Year for purposes of this Section 4.1(b)(ii).
(c) Allocation of ESOP Contributions and Company Contributions made in
Company Stock. ESOP Contributions described in Section 3.1(a)(i)(A) (ESOP
Contributions) shall be allocated to Participant's Accounts in accordance with
the following rules:
(i) Release From Suspense Account. To the extent the ESOP
Contributions for any Plan Year are used to repay Principal,
Company Stock shall be released from the Suspense Account in the
same ratio which the Principal and interest repaid with the
contribution bears to the sum of the Principal and interest
repaid for the Plan Year plus the Principal and interest to be
repaid for all future Plan Years.
37
<PAGE> 45
(ii) Eligibility for Allocation. ESOP Contributions, Company Stock
released from the Suspense Account pursuant to Section 4.1(c)(i)
(Release From Suspense Account), plus forfeitures of Company
Stock and any Company Contributions made under Section
3.1(a)(ii) (Company Contributions) in the form of Company Stock
shall be allocated as of the last day of the Plan Year among the
Accounts of Eligible Participants.
(iii) Ineligibility for Allocation. No portion of the assets of the
Plan attributable to Company Stock acquired by the Plan in a
transaction to which Section 1042 of the Code applies shall be
allocated to the following persons:
(A) Nonallocation Period. During the period beginning on the
date of the sale of the Company Stock to the Plan to
which Section 1042 of the Code applies and ending on the
later of the tenth (10th) anniversary of the date of such
sale or the date of the Plan allocation attributable to
the final payment of the Acquisition Loan incurred in
connection with the sale to which Section 1042 of the
Code applies, allocations under Section 4.2(c)(ii)
(Eligibility for Allocation) shall be prohibited for any
Participant who makes an election under Section 1042(a)
of the Code with respect to Company Stock and any
individual who is related to that Participant (within the
meaning of Section 267(b) of the Code).
(B) Substantial Owners. Allocations shall not be made under
Section 4.1(c)(ii) (Eligibility for Allocation) for the
benefit of any person who owns (after application of
Section 318(a) of the Code) more than twenty-five percent
(25%) of all Company Stock (considering all stock of
members of the Employer Group as Company Stock). For
purposes of this paragraph, a person shall be considered
a twenty-five percent (25%) shareholder if the person
owns
38
<PAGE> 46
twenty-five percent (25%) of all Company Stock at any
time during the one year period ending on the date of the
sale of Company Stock to the Plan in a transaction to
which Section 1042 of the Code applies or on the date as
of which Company Stock to which Section 1042 of the Code
applies is allocated to Participants.
(iv) Allocation. Allocation amounts for each Participant shall be
determined by multiplying the total amount of the ESOP
Contribution or Company Contribution made in Company Stock to be
allocated by the ratio that each Eligible Participant's
Creditable Compensation bears to the total of the Creditable
Compensation of all Eligible Participants. Such amounts shall be
allocated to each Eligible Participant's Company Stock Account,
together with Company Stock which is released pursuant to
Section 4.1(c)(i) (Release From Suspense Account).
(d) Limit on Compensation Considered. For purposes of this Section 4.1,
there shall be taken into account only such Creditable Compensation as is paid
to a Participant while he is a Participant.
(e) Merged Plan. Assets received by the Plan from one or more Merged Plans
shall be held in a Merged Plan Account for each Participant as to whom assets
were received from the Merged Plan. Merged Plan Accounts shall not receive
allocations of any Company Contributions.
39
<PAGE> 47
4.2 Limitations on Allocations. For Plan Years beginning after December 31,
1986, the following allocation limitations shall apply.
(a) Limitations on Allocations of Basic Contributions.
(i) Limit for Highly Compensated Employees. Allocations of Basic
Contributions to the Accounts of Participants who are Highly
Compensated Employees shall be limited to an Average Deferral
Percentage (as defined in Section 4.2(a)(ii) (Average Deferral
Percentage)) which does not exceed the greater of:
(A) The Average Deferral Percentage for Participants who are
not Highly Compensated Employees, times 1.25, or
(B) The lesser of (I) the Average Deferral Percentage for
Participants who are not Highly Compensated Employees
multiplied by 2.00, or (II) the Average Deferral
Percentage for Participants who are not Highly
Compensated Employees plus two (2) percentage points.
(ii) Average Deferral Percentage. The "Average Deferral Percentage"
for the group of Participants who are Highly Compensated
Employees and the group of Participants who are not Highly
Compensated Employees, for a Plan Year, shall be the average of
the "Actual Deferral Ratios" of the members in the applicable
group. The "Actual Deferral Ratio" of a Participant shall mean
the amount of Basic Contributions actually made to the Plan on
behalf of that Participant for the Plan Year, expressed as a
percentage of his Testing Compensation for that Plan Year. The
"Actual Deferral Ratio" of a five percent (5%) owner as defined
in Section 1.1(nn)(i) or an individual who is one of the ten
(10) most Highly Compensated Employees shall be the greater of
(A) the Actual Deferral
40
<PAGE> 48
Ratio computed solely with respect to his Testing Compensation
and Basic Contributions (ignoring those of any family members)
or (B) the Actual Deferral Ratio computed after aggregating the
Testing Compensation and Basic Contributions of family members
described in Section 1.1(nn)(viii) with those of the
Participant.
(iii) Aggregation of Deferrals. For purposes of Section 4.2(a)(ii)
(Average Deferral Percentage), the following salary deferrals
made by a Participant to another plan of the Employer Group
shall be aggregated with his Basic Contributions.
(A) If the Plan and one or more other plans maintained by any
member of the Employer Group which include cash or
deferred arrangements (as defined in Section 401(k)(2) of
the Code) are considered as one plan for purposes of
Sections 401(a)(4) and 410(b) of the Code, all salary
deferrals by the Participant under such other plan or
plans, if any, during the Plan Year shall be aggregated
with his Basic Contributions.
(B) If a Participant who is a Highly Compensated Employee is
also a participant in one or more plans maintained by any
member of the Employer Group, other than the Plan, which
contain cash or deferred arrangements (as defined in
Section 401(k)(2) of the Code), all salary deferrals by
the Participant under such other plan or plans, if any,
during the Plan Year shall be aggregated with his Basic
Contributions.
41
<PAGE> 49
(iv) Treatment of Excess Basic Contributions. The amount by which the
limit set forth in Section 4.2(a)(i) (Limit for Highly
Compensated Employees) is exceeded shall be referred to as
"Excess Basic Contributions". Excess Basic Contributions, and
income attributable thereto, shall first be reduced by any
Excess Deferrals previously distributed to the relevant Highly
Compensated Employee pursuant to Section 5.9 (Distribution of
Excess Deferrals) for the taxable year ending in the Plan Year
in which the Excess Basic Contributions are made. Any remaining
Excess Basic Contributions, and income attributable thereto,
shall be returned to the relevant Highly Compensated Employees
(and, if applicable, to their family members within the meaning
of Section 1.1(nn)(viii), proportionately to their relative
Basic Contributions) not later than the end of the Plan Year
immediately following the Plan Year in which the Excess Basic
Contributions are made.
(A) Determination of Excess. Excess Basic Contributions, with
respect to a Highly Compensated Employee, shall be
determined as follows:
(1) Highly Compensated Employees shall be ranked in
descending order according to their Actual Deferral
Ratios.
(2) The Basic Contributions of the Highly Compensated
Employee with the highest Actual Deferral Ratio
shall be reduced to a percentage equal to the
Actual Deferral Ratio of the Highly Compensated
Employee with the next highest Actual Deferral
Ratio (or to such greater percentage as may be
permitted to reduce the Average Deferral Percentage
for Highly Compensated Employees to the highest
permitted Average Deferral Percentage under Section
4.2(a)(i) (Limit for Highly Compensated
Employees)). This procedure
42
<PAGE> 50
shall be repeated to the extent necessary to reduce
the Average Deferral Percentage for Highly
Compensated Employees to the highest Average
Deferral Percentage permitted within the limits of
Section 4.2(a)(i) (Limit for Highly Compensated
Employees).
(3) The amount by which a Highly Compensated Employee's
Basic Contributions is reduced under this Section
4.2(a)(iv), if any, shall constitute that Highly
Compensated Employee's Excess Basic Contributions.
(4) The Excess Basic Contributions of a family group
whose Testing Compensation and Basic Contributions
are required to be aggregated as described in
Section 4.2(a)(ii) (Average Deferral Percentage)
shall be allocated in proportion to the Basic
Contributions of each family member that are
combined to determine the Actual Deferral Ratio of
the family group.
(B) Determination of Income. Income allocable to Excess Basic
Contributions required to be returned to the Participant
under this Section 4.2(a)(iv) may be calculated as
follows (or under any other permissible method):
(1) General Rule. The income allocable to Excess Basic
Contributions is equal to the allocable gain or
loss for the Plan Year in which the Excess Basic
Contributions were made. Income includes all
earnings and appreciation, including such items as
interest, dividends, gains from the sale of
property, and appreciation in the value of stock
and
43
<PAGE> 51
life insurance contracts, without regard to whether
such appreciation has been realized.
(2) For the Plan Year. The income allocable to Excess
Basic Contributions for the Plan Year in which the
Excess Basic Contributions were made is determined
by multiplying the income for that Plan Year by a
fraction, the numerator of which is the
Participant's Excess Basic Contributions and the
denominator of which is the Participant's Account
balance, reduced by the gain for the Plan Year and
increased by the loss for the Plan Year.
(b) Order of Applying Limits. Notwithstanding anything in this Section 4.2
or Section 2.2(b) (Limits on Compensation Reduction Elections) to the contrary,
the provisions of Section 4.3 (Limitations on Annual Contributions and
Additions) shall be applied before application of the provisions of either this
Section 4.2 or Section 2.2(b) (Limits on Compensation Reduction Elections).
4.3 Limitations on Annual Contributions and Additions. The provisions of this
Section 4.3 shall be effective on the first day of the first Plan Year beginning
after December 31, 1986.
(a) Maximum Annual Addition. The Annual Additions to a Participant's
Account for any Limitation Year shall in no event exceed the lesser of:
(i) Thirty Thousand Dollars ($30,000), or, if greater, one fourth
(1/4) of the dollar limitation in effect under Section
415(b)(1)(A) of the Code, or
(ii) Twenty-five percent (25%) of the Participant's Total
Compensation received from the Employer Group for that
Limitation Year.
44
<PAGE> 52
If not more than one-third (1/3) of the Company Contributions for a Plan Year
which are used by the Trust to repay Principal and interest on an Acquisition
Loan are allocated to the Accounts of Highly Compensated Employees, then
forfeitures of Company Stock, if any, and Company Contributions used by the
Trust to repay interest on an Acquisition Loan shall not count toward the limits
described in this Section 4.3.
(b) Treatment of Excess. If, because of allocation of forfeitures or a
reasonable error in estimating a Participant's Creditable Compensation, or under
other circumstances which may be permitted under Section 415 of the Code, the
limitation set forth in Section 4.3(a) (Maximum Annual Addition) would otherwise
be exceeded with respect to a Participant for a Limitation Year, the
Participant's Basic Contributions for the Limitation Year shall be distributed
to such Participant to the extent that the distribution reduces the excess
amounts in the Participant's Account. Any remaining excess shall be held
unallocated in a separate suspense account, which shall not share in the
allocation of income or losses of the Trust Fund. If the Participant is an
Employee at the end of the Plan Year next following the Limitation Year with
respect to which the limitation set forth in Section 4.3(a) (Maximum Annual
Addition) would otherwise be exceeded, the amount in the suspense account shall
be used to reduce Company Contributions for such Participant for that next Plan
Year. This process shall be repeated for succeeding Plan Years, as necessary to
exhaust the suspense account, so long as the Participant is an Employee at the
end of such succeeding Plan Year. If the Participant is not an Employee at the
end of such succeeding Plan Year, the amount in the suspense account shall be
allocated and reallocated in that Plan Year (and succeeding Plan Years, as
necessary to exhaust the suspense account) to all of the remaining Participants'
Company Contribution Accounts, as a Company Contribution, pursuant to Section
4.1 (Participants' Shares of Contributions), before the Company may make
contributions under Section 3.1 (Time and Amount) for such next following Plan
Year (or such succeeding Plan Year) and shall reduce the Company Contributions
in such year accordingly. If, before the suspense account has been exhausted,
the Plan is terminated, amounts remaining in the suspense account shall be
returned to the Company.
45
<PAGE> 53
(c) Coordination with Other Defined Contribution Plans. If a Participant
also participates in a defined contribution plan (within the meaning of Section
415(k) of the Code) maintained by any member of the Employer Group, other than
the Plan, the limitation set forth in Section 4.3(a) (Maximum Annual Addition)
shall apply to the aggregate of the Annual Additions to the Plan and to such
other plan. If the limitation set forth in Section 4.3(a) (Maximum Annual
Addition) would otherwise be exceeded when taking into account such combination
of plans the amount to be allocated to such Participant under this Plan shall be
reduced or eliminated pursuant to Section 4.3(b) (Treatment of Excess) prior to
making any adjustments under the other plan.
(d) Coordination with Defined Benefit Plans. If the Participant also
participates in a defined benefit plan (within the meaning of Section 415(k) of
the Code) maintained by any member of the Employer Group, the sum of his Defined
Benefit Plan Fraction and his Defined Contribution Plan Fraction shall not
exceed 1.0 for any Limitation Year. If the limitation set forth in this Section
4.3(d) would otherwise be exceeded, the benefit under the other plan shall be
reduced or eliminated prior to making any adjustments under this Plan.
(e) Compliance with Applicable Law. The limitations described in this
Section 4.3 shall be determined and applied in accordance with the provisions of
Section 415 of the Code and regulations promulgated thereunder, which are
incorporated herein by this reference.
4.4 Periodic Adjustments to Accounts. Adjustments shall from time to time be
made to each Participant's Account as follows:
(a) Distributions and Expenses. The Committee shall direct the Trustee to
debit each Account currently in respect of any distributions of benefits
therefrom and any special expenses chargeable thereto under Section 4.5
(Expenses and Remuneration).
46
<PAGE> 54
(b) Gains and Losses. As of each Valuation Date, the Trustee shall compute
the profit or loss of the Trust Fund and each Investment Fund since the last
Valuation Date, using a method of accounting selected by the Trustee, after
giving recognition to the appreciation or depreciation of assets as determined
pursuant to the terms of the Trust Agreement. The profit or loss so computed
shall be credited or debited to the Participants' Accounts (other than Fixed
Accounts) invested in each Investment Fund in the ratio which each portion of an
Account invested in each Investment Fund on the prior Valuation Date bears to
the aggregate of all portions of Participants' Accounts invested in that
Investment Fund on that Valuation Date. In determining the Account balances on
any Valuation Date, there shall be included any Company Contributions allocable
thereto as of that Valuation Date. Upon agreement between the Trustee and the
Committee, any other reasonable method for allocating profits and losses among
Participants' Accounts may be used. For purposes of this paragraph, gains and
losses shall not include any dividends on Company Stock which are paid to
Participants pursuant to Section 5.7(d) (Dividends). Any determination of gain
and loss with respect to Company Stock shall be based on a valuation of the
Company Stock made in good faith based upon all relevant factors for determining
the fair market value of the Company Stock. A determination of fair market value
based on an annual independent appraisal performed by a person who customarily
makes such appraisals and who meets requirements similar to the requirements of
Treasury Regulations prescribed under Section 170(a)(1) of the Code shall be
deemed to be a good faith determination of value.
4.5 Expenses and Remuneration.
(a) Remuneration. Members of the Committee shall serve without remuneration
but the Trustee shall be paid fees in an amount and manner mutually agreed upon
in writing between the Trustee and the Employer; provided, however, that no fees
(except for reimbursement of expenses Properly and actually incurred) shall be
paid to a Trustee for any period during which that person received full time pay
from any member of the Employer Group and also served as Trustee.
47
<PAGE> 55
(b) Expenses. The expenses of the Trustee and Committee, including but not
limited to the Trustee's fees, shall (unless the Company shall in its Discretion
elect to pay them) be paid and accounted for as follows:
(i) All such expenses shall be debited to the several Participants'
Other Investments Accounts (other than Fixed Accounts) (and then
to their Company Stock Accounts, if necessary) as part of, or in
conjunction with, the posting of profits and losses under
Section 4.4(b) (Gains and Losses).
(ii) Any expenses which the Trustee or Committee may incur with
special reference to any Participant or his Account (including
any Fixed Account) shall first be charged against his Account to
the extent that the Account is sufficient for that purpose. The
remaining balance of the special expenses, if any, shall then be
charged among the other Accounts pursuant to paragraph (i)
above, but shall if possible be later reimbursed to the other
Accounts out of future credits to the relevant Participant's
Account.
4.6 Fixed Accounts. After a Participant's employment with the Company
terminates, whether due to his retirement, death, or any other cause, he shall
cease to be a Participant as of the Anniversary Date coincident with or next
succeeding the date of that event and, except for benefits payable or
distributable under this Plan, shall cease to have any further right, title or
interest in the Plan or Trust Fund. The Participant's Account shall thereafter
be subject to the following rules.
(a) Date of Fixing. His Account shall become fixed at its balance as of the
Anniversary Date coincident with or next succeeding the date on which his
participation ceases, and his Account as so fixed and Nonforfeitable shall be
his Fixed Account. Thereafter no further credits or debits shall be made to said
Account, except for:
(i) Distributions therefrom.
48
<PAGE> 56
(ii) Special expenses chargeable thereto under Section 4.5(b)(ii).
(iii) Matters mentioned in Section 4.6(b) (Investment) and Section
4.6(c) (Adjustments).
(b) Investment. The Trustee shall promptly segregate and set apart cash and
other assets of the Trust Fund having an aggregate fair market value on the
relevant Valuation Date equal to the balance of the Fixed Account in question,
determined as described in this Section 4.6. Thereafter, unless that Fixed
Account shall have been distributed in full, the Trustee shall maintain it as a
fixed and segregated Account but may commingle the assets thereof with any one
or more other Fixed Accounts; provided, however, that if the Participant's
Account is not paid to him in full within six (6) months after the date it
becomes a Fixed Account:
(i) The balance of the Fixed Account, other than the portion
representing his Company Stock Account, whether segregated or
commingled, shall be held and invested only in the form of cash,
savings or checking accounts, financial instruments whose
principal is guaranteed, direct obligations of the United States
government, or obligations the principal and interest of which
are unconditionally guaranteed by such government.
(ii) To the extent that the Participant (or, if deceased, his
Beneficiary) shall authorize in writing, and if the Committee
shall so approve, the Fixed Account may be invested and
reinvested in any manner allowed by the provisions of the Trust
Agreement.
(c) Adjustments. If investments are made out of a commingled pool of
Fixed Accounts, as provided in Section 4.6(b) (Investment), each Fixed Account
shall be credited or debited from time to time with its allocable share of the
profits and losses of the commingled fund (after including Trustee fees and
expenses of the Trustee and Committee chargeable to the fund) according to such
reasonable and uniform practice as the Trustee adopts and the Committee
approves.
49
<PAGE> 57
(d) Forfeitures. All funds forfeitable pursuant to Section 5.2(d)
(Treatment of Nonvested Amounts) shall remain credited to the Participant's
Account and shall be forfeited and allocated as described in Section 4.1
(Participants' Shares of Contributions) as of the Anniversary Date coincident
with or next succeeding the earlier of: the date on which a Participant has
incurred five (5) consecutive Breaks in Service or the date on which he shall
have received a distribution of his entire Fixed Account. If the Participant has
received a distribution of less than his entire Fixed Account, however, the
amount to be so forfeited and allocated shall be limited to an amount determined
by multiplying the forfeitable portion of the Participant's Account balance as
of the date immediately preceding the distribution by a fraction, the numerator
of which is the total of all distributions from his Fixed Account representing
Company contributions occurring after his termination of employment and the
denominator of which is the amount of his Fixed Account representing Company
contributions at the time of his termination of employment. If the Participant
is reemployed by the Employer Group prior to incurring five (5) consecutive
Breaks in Service, then the following rules shall apply:
(i) No Distribution. If such Participant has not received a
distribution from his Fixed Account by reason of his prior
termination of employment, the funds in his Account which became
forfeitable by reason of his prior termination of employment
shall no longer be forfeitable.
(ii) Prior Distribution. If the Participant has received a total or
partial distribution of his Fixed Account by reason of his prior
termination of employment and he repays to the Plan the entire
amount distributed to him from the Plan before five (5) years
have elapsed after the date of his reemployment, the forfeitable
portion of his Account which was forfeited and allocated as a
result of the application of this Section 4.6(d) shall be
restored to his Account and shall no longer be forfeitable.
50
<PAGE> 58
(iii) Deemed Distribution. For purposes of this Section 4.6(d), a
Participant shall be deemed to have received a distribution of
the entire balance of his Fixed Account if, at the time of his
termination of employment with the Employer Group, he either has
no Nonforfeitable interest in his Plan Account or he has no
Account under the Plan.
(e) Reinstatement of Account. Subject to Section 4.6(d) (Forfeitures), in
the case of a former Participant whose Account has been restored or whose
Account becomes no longer forfeitable pursuant to Section 4.6(d) (Forfeitures),
the balance of his Fixed Account will no longer be subject to the limitations of
Sections 4.6(a) (Date of Fixing) and 4.6(b) (Investment) and his Account shall
be Nonforfeitable to the same extent as at the time his Account became a Fixed
Account. Any amounts required to be restored to a Participant's Account pursuant
to Section 4.6(d) (Forfeitures) shall be obtained either from Fund earnings,
forfeitures, or from additional Company contributions.
4.7 Separate Accounting. The provisions of this Article IV shall be so applied
and interpreted as to provide separate accounting within the meaning of Section
204(b)(3)(B) of the Act for each Participant's interest under the Plan. The fact
that an individual account is established for each Participant shall not be
construed to give such Participant any interest in such account except as
provided in Article V (Benefits) and elsewhere in the Plan.
51
<PAGE> 59
ARTICLE V
BENEFITS
5.1 Retirement, Death and Disability Benefits. A Participant whose employment
terminates by reason of his death, Permanent and Total Disability, or who
becomes eligible for a Normal Retirement Benefit shall have a one hundred
percent (100%) Nonforfeitable interest in the balance of his Fixed Account
computed pursuant to Section 4.6 (Fixed Accounts).
(a) Normal Retirement Benefit. A Participant becomes eligible for a Normal
Retirement Benefit if his employment with the Employer Group terminates on or
after his Normal Retirement Date.
(b) Death Benefit. A Participant who dies prior to the date his Account is
distributed, whether or not his employment with the Company or Employer Group
has theretofore terminated, shall be eligible for a Death Benefit.
(c) Disability Benefit. A Participant whose employment with the Employer
Group terminates on account of his Permanent and Total Disability shall be
eligible for a Disability Benefit.
5.2 Termination Benefit.
(a) Vesting. The Fixed Account of a Participant whose employment with the
Company terminates for reasons other than his death or Permanent and Total
Disability and who is not eligible for a Normal Retirement Benefit shall be the
sum of the following:
(i) The balance in his Basic Contributions Account.
(ii) The balance in his Transferred Assets Account.
(iii) The balance in his Merged Plan Account.
52
<PAGE> 60
(iv) Amounts, if any, recredited to his Account pursuant to Section
4.7(d)(ii) (Prior Distribution).
(v) The Nonforfeitable percentage of the balance in his Company
Stock Account and his Other Investments Account based upon the
number of his Years of Service as follows:
<TABLE>
<CAPTION>
Nonforfeitable
Years of Service Percentage
---------------- ----------
<S> <C>
Less than 3 0%
3 but less than 4 20%
4 but less than 5 40%
5 but less than 6 60%
6 but less than 7 80%
7 or more 100%
</TABLE>
(b) Change in Vesting Schedules. In the event that the vesting schedule
described above represents a change from that which existed under the provisions
of the Plan prior to the Effective Date or if there is a future change in the
vesting schedule described above, the Nonforfeitable portion of the Account of
each Participant who has, as of the date of the change, accumulated at least
three (3) Years of Service shall be determined in accordance with whichever of
the vesting schedules is designated by the Participant. Each such Participant
shall be permitted to elect, within a reasonable period following the effective
date of the change, to continue under the vesting schedule as it existed prior
to the change. Notwithstanding the preceding portion of this paragraph (b), the
Nonforfeitable portion of a Participant's Account shall not be less than it was
immediately prior to the effective date of a change in vesting schedules,
determined pursuant to the prior schedule. Future changes to the vesting
schedule shall be in accordance with the provision of Section 10.4(d) (Vesting
Changes).
(c) Service Counting. In computing a Participant's period of service for
purposes of Section 5.2(a) (Vesting) all his Years of Service shall be counted
including Years of Service with the Company before it became a member of the
Employer Group.
53
<PAGE> 61
(d) Treatment of Nonvested Amounts. The portion of a Participant's Account
which does not become part of his Fixed Account shall be held in accordance with
Section 4.6(d) (Forfeitures) and allocated to Participant's Accounts in
accordance with Section 4.1 (Participants' Shares of Contributions). Forfeitures
shall be deemed taken first from a Participant's Other Investments Account,
until depleted, and then from his Company Stock Account.
5.3 Loans to Participants.
(a) General Rules. Pursuant to uniform rules consistently applied, the
Committee may, upon the written request of a Participant who is an active
Employee, but not a former Employee, Beneficiary or Alternate Payee, direct the
Trustee to make a loan or loans to such Participant with the consent of his
Spouse (which shall be obtained in accordance with Section 5.4(d) (Spouse
Consent)). The Committee is responsible for administering all loans and shall
make available to Participants written information describing the rules and
procedures for applying for loans. The procedures shall be in written form and
shall comprise the written document forming part of the Plan within the meaning
of Department of Labor Regulations Section 2550.408b-1. The procedures set forth
in that document may be revised at any time by the Committee, without requiring
an amendment to this Plan document, even if the procedures, as revised, differ
in certain respects from the specifications set forth below.
(b) Requirements. The Committee shall, in its Discretion, determine the
amount, terms and conditions of any loan. All loans to Participants shall be
made only from a Participant's Basic Contributions Account and Company Stock
Account and shall be subject to the following further limitations:
(i) Maximum Amount. Any loan to a Participant, when added to the
unpaid balance of any outstanding loans, if any, made to him
pursuant to this Section 5.3, shall not exceed the lesser of:
54
<PAGE> 62
(A) Fifty Thousand Dollars ($50,000) reduced by the excess
(if any) of the Participant's highest outstanding balance
of loans from the Plan during the one-year period ending
on the day before the date on which the loan was made,
over the outstanding balance of his loans from the Plan
on the date on which the new loan is to be made; or
(B) One-half (1/2) of the balance of the Nonforfeitable
portion of the Participant's Account as of the Valuation
Date immediately preceding the date of the loan;
provided, however, that in determining the maximum amount of any loan to be made
under this Section 5.3, all Qualified plans maintained by any member of the
Employer Group shall be treated as one plan.
(ii) One Loan. A Participant is permitted to have only one (1) loan
from his Basic Contribution Account and one (1) loan outstanding
from his Company Stock Account outstanding at any time.
(iii) Minimum Loan Amount. The minimum loan amount shall be One
Thousand Dollars ($1,000).
(iv) Term. Any loan must have a specified repayment date, which may
in no event extend or be extended beyond the earlier of
Participant's Normal Retirement Date or five (5) years from the
date the loan is made; provided, however, if the proceeds of the
loan are to be used to acquire a dwelling unit which within a
reasonable time (determined by the Committee in its Discretion)
is to be used (determined by the Committee at the time the loan
is made) as the principal residence of the Participant, the
repayment date of the loan may extend beyond five (5) years from
the date the loan is made (but not beyond his Normal Retirement
Date).
55
<PAGE> 63
(v) Interest; Security. Each loan shall bear interest at such
reasonable rate as may be in effect at the time the loan is
made, as determined by the Committee in the manner described in
written rules established by the Committee and which are made
available to Participants. All loans shall be adequately
secured. The Committee shall require the Participant to assign
to the Trustee that portion of the Nonforfeitable balance of his
Basic Contributions Account, but not more than fifty percent
(50%) of the Nonforfeitable portion of his Account, necessary to
secure the loan.
(vi) Amortization. Except as determined by the Committee in
accordance with regulations promulgated by the Secretary of
Treasury pursuant to Section 72(p) of the Code, any loan granted
hereunder shall be amortized on a substantially level basis over
its term and payments shall be required to be made not less
frequently than quarterly.
(vii) Repayment. Repayment of a loan made pursuant to this Section
5.3(a) shall be by payroll deduction wherever possible.
Repayment of a loan by a Participant who is not actively
employed shall be by monthly check sent to the Trustee. If a
loan is repaid in full prior to its specified repayment date,
the Participant may not obtain a new loan until at least twelve
(12) months have elapsed after the date of complete repayment.
(viii)Loan Processing Fee. The Trustee may charge a one-time loan
processing fee and/or other reasonable fee to each Participant
who is granted a loan. The Committee shall inform the
Participant of the amount of any fees at the time his loan is
made.
(ix) Disclosure Statement. Each Participant who receives a loan shall
also receive a clear statement of the charges involved in such
loan transaction, including the dollar amount and annual rate of
finance charge.
56
<PAGE> 64
(x) Effect on Investment Funds. The amount of any loan made pursuant
to this Section 5.3(a) shall reduce the Participant's interest
in the Investment Funds pro rata. Notwithstanding the preceding
rule, Investment Funds may be reduced in such other manner as
the Committee, in its Discretion, may determine and make part of
the written procedures governing loans to Participants.
(xi) Allocation of Interest. The unpaid balance of any loan, whether
or not yet due, shall be deducted from the amount standing to
the credit of the Participant in his Account for purposes of
Section 4.4 (Periodic Adjustments to Accounts); provided,
however, that interest paid by the Participant into the Trust
Fund with respect to any such loan shall be allocated directly
to the Participant's Account.
(xii) Effect on Distributions. No payment out of the Trust Fund shall
be made to or in respect of a Participant or his Beneficiary
(except under this Section 5.3) unless and until all unpaid
loans to such Participant have been satisfied in full. Loans in
default under a note executed by a Participant pursuant to the
rules and procedures governing Participant loans will be
satisfied on the date the Trustee forecloses upon that portion
of the Participant's Account which is used as security for the
loan. The Trustee will foreclose upon that portion of the
Participant's Account which is used as security for the loan
when both the loan is in default and the Participant incurs an
event which would permit him to receive a distribution under
another provision of the Plan (other than pursuant to Section
5.5 (Other Distributions and Payments)). The foregoing
provisions shall not prevent the Trustee from reporting a loan
in default as income to the Participant at any time permitted or
required by Section 72(p) of the Code.
57
<PAGE> 65
5.4 Payment of Benefits.
(a) Application. Except as provided in Section 5.4(e) (Required
Distributions) and Section 5.4(h) (Small Benefits), Participants, Beneficiaries
and other persons eligible for benefits under the Plan shall make application
for benefits on forms provided by the Committee and must consent, in writing, to
a distribution from the Plan of benefits to which he is entitled.
Notwithstanding anything herein to the contrary, no benefits shall be payable
under the Plan with respect to any period which is before the date on which
application for those benefits is received by the Committee in accordance with
procedures established by it, unless the Committee determines that the delay was
not due to negligence on the part of the Participant, Beneficiary or other
person applying for benefits hereunder. The Committee may require any
Participant, Beneficiary or other person applying for benefits to furnish to it
any information reasonably necessary for the Proper administration of the Plan
and if the applicant shall fail to furnish that information, the Committee may
compute his benefits, if any, on any basis it deems reasonable. No benefits
shall be paid unless proof satisfactory to the Committee evidencing entitlement
to those benefits is presented to the Committee by the person or persons
claiming the benefits.
At least thirty (30), but not more than ninety (90) days before the
Participant's Annuity Starting Date, the Plan Administrator shall notify the
Participant of the benefits available to him, the optional forms for payment, if
any, and, if the benefit is immediately distributable, his right, if any, to
defer receipt of the distribution. Such notice shall be given in accordance with
Section 1.411(a)-11(c) of the Income Tax Regulations. The Participant's consent
to the distribution may not be made before the Participant receives the notice
and may not be made more than ninety (90) days before his Annuity Starting Date.
If a distribution is one to which Sections 401(a)(11) and 417 of the Code
do not apply, such distribution may commence less than thirty (30) days after
the notice required under Section 1.411(a)-11(c) of the Income Tax Regulations
is given, provided that:
58
<PAGE> 66
(i) the Plan Administrator clearly informs the Participant that the
Participant has a right to a period of at least thirty (30) days
after receiving the notice to consider the decision of whether
or not to elect a distribution (and, if applicable, a particular
distribution option), and
(ii) the Participant, after receiving the notice, affirmatively
elects a distribution.
(b) Payment of Benefits Other Than Death Benefits. Subject to Sections
5.4(a) (Application), 5.4(e) (Required Distributions), 5.4(i) (Deadline for
Benefits), 5.7 (Special Distribution Rules), and 12.4 (Distribution of
Transferred Assets), the Committee shall direct the Trustee to pay or arrange
for payment of the benefits for which a Participant is eligible (except Death
Benefits), using the Participant's entire Fixed Account (reduced by any prior
distributions), as soon as administratively feasible after the end of the Plan
Year in which the Participant becomes eligible for a benefit under Section 5.2
(Termination Benefit); provided, however, that if a Participant becomes eligible
for benefits under Section 5.1(a) (Normal Retirement Benefit) or Section 5.1(c)
(Disability Benefit), or such Participant has reached an Attained Age of sixty
(60) and has completed five (5) Years of Service at the time of his termination
of employment with the Employer Group, payment shall be available within thirty
(30) days following the date the Participant satisfied such conditions, based
upon the Valuation Date coincident with or next preceding the later of the date
the Participant's employment with the Employer Group terminated or the date he
files an application with the Committee, pursuant to Section 5.4(a)
(Application). Benefits may be paid as follows:
(i) Normal Form. If the Participant shall fail timely to elect to
have his benefits payable in accordance with Section 5.4(b)(ii)
(Optional Forms), the balance of the Participant's Fixed Account
shall be paid to him in a single lump sum.
59
<PAGE> 67
(ii) Optional Forms. If the Participant shall elect by written notice
delivered to the Committee, at any time within the ninety (90)
day period immediately preceding the Annuity Starting Date, the
balance of his Fixed Account shall be paid to him in one of the
methods described below. Any election under this paragraph (ii)
may be revoked and a new election made during such ninety (90)
day period.
(A) Lump Sum. In a single lump sum.
(B) Installments. In approximately equal regular installments
not less frequently than annually over a period to be
selected by the Participant but not to exceed a period
extending beyond the lesser of his life expectancy or ten
(10) years. For purposes of this paragraph, a
Participant's life expectancy shall be determined in
accordance with regulations promulgated under Section 72
of the Code. The Participant's life expectancy shall be
determined at the time benefit payments are to commence
and shall not be recomputed during the installment payout
period.
(iii) Payment Forms for Merged Plan Accounts. In addition to the
normal form for payment described in Section 5.4(b)(i) (Normal
Form) and the optional forms for payment described in Section
5.4(b)(ii) (Optional Forms), amounts held for a Participant in
his Merged Plan Account shall be payable in such other form(s)
as were permitted under the terms of the Merged Plan from which
they were transferred. For this purpose, the terms of the Merged
Plan as in effect on the date immediately preceding the date the
Merged Plan's assets were received by the Plan shall apply in
determining the availability of payment forms and timing of
payments from the Merged Plan Account, including all
restrictions, terms, conditions, and notice requirements
applicable to electing or receiving payment in such forms.
60
<PAGE> 68
(c) Payment of Death Benefits. Upon the death of a Participant, the
Committee shall (except as otherwise provided in Section 5.4(a) (Application))
direct the Trustee to pay or arrange as promptly as possible to pay, in the
manner described below, the balance of such Participant's Fixed Account (reduced
by any prior distributions) to his Surviving Spouse or, if there is no Surviving
Spouse or if the Surviving Spouse has consented in the manner described in
Section 5.4(d) (Spouse Consent), to his Beneficiary.
(i) Form for Payment. If benefits have begun to be paid to the
Participant prior to his death in a form which would continue
payments to his Beneficiary after his death, then such payments
shall continue according to the method for payment selected by
the Participant. If benefit payments have not begun to be made
to the Participant prior to his death, Death Benefits shall be
payable in any of the following methods, at the election of the
Participant.
(A) Lump Sum. The Participant's Fixed Account shall be paid
in a single lump sum payment.
(B) Installments. The Participant's Fixed Account shall be
paid in substantially equal annual installments (as
selected by either the Participant or the Beneficiary)
over a period to be selected by the Participant, but not
to exceed a period extending beyond the lesser of the
life expectancy of the Beneficiary or five (5) years.
(C) Other Forms for Merged Plan Accounts. In addition to the
forms for payment of death benefits described in Section
5.4(c)(i)(A) (Lump Sum) and Section 5.4(c)(i)(B)
(Installments), Death Benefits attributable to amounts
held in a Participant's Merged Plan Account shall be
payable in any form permitted under the terms of the
Merged Plan from which they were transferred as in effect
on the date immediately preceding the date the Merged
Plan's assets were received by the Plan, including all
restrictions,
61
<PAGE> 69
terms, conditions, and notice requirements applicable to
electing or receiving payment in such forms.
(ii) Elections. A Participant may, at any time prior to his death,
elect, on forms prescribed by the Committee, and with the
consent of his Spouse, if required, the manner in which Death
Benefits will be paid.
(iii) Time for Payment. Payments under this Section 5.4(c) shall be
made (or begin) within one (1) year following the date of the
Participant's death, based upon the Participant's Fixed Account,
determined as of the Valuation Date immediately preceding the
later of the Participant's date of death or the date the
Beneficiary applies pursuant to Section 5.4(a) (Application),
except that a Surviving Spouse may elect to delay receipt of
such payment until the date on which the Participant would have
reached an Attained Age of seventy and one-half (70-1/2).
(iv) Designation of Beneficiary. A Participant shall have the right
to file with the Committee, at any time after his Plan
participation commences, a written designation of Beneficiary,
which designation may at any time be amended or revoked;
provided, however, that:
(A) No designation, and no amendment or revocation thereof,
shall become effective if filed after such Participant's
death.
(B) In the case of a married Participant, his designation of
any Beneficiary other than his Spouse must be consented
to by such Spouse in writing in accordance with the
requirements of Section 5.4(d) (Spouse Consent).
62
<PAGE> 70
(C) In the absence of an effective designation of
Beneficiary, or if the Beneficiary shall not survive the
Participant, then his Death Benefits shall be paid to his
Spouse, or, if there is no Surviving Spouse, to the
Participant's estate.
(d) Spouse Consent. Whenever the consent of a Spouse is required with
respect to any election, revocation of election, or designation of Beneficiary
under Section 5.3 (Loans), Section 5.4(b) (Payment of Benefits Other Than Death
Benefits), or 5.4(c) (Payment of Death Benefits), such consent shall be in
writing, shall acknowledge the effect of the election, revocation or
designation, and shall be witnessed by a notary public or by a Plan
representative. There shall be no need to obtain the Spouse consent described in
this Section 5.4(d), however, if the Participant establishes to the satisfaction
of the Committee that the required consent may not be obtained because there is
no Spouse, or because the Spouse cannot be located, or because of such other
reasons as may be permitted by regulations promulgated by the Secretary of the
Treasury. For purposes of this paragraph, Section 5.4(b) (Payment of Benefits
Other Than Death Benefits), and Section 5.4(c) (Payment of Death Benefits), a
former Spouse shall be treated as a Spouse to the extent specified in a
"qualified domestic relations order" within the meaning of Section 414(p) of the
Code. A Spouse's consent hereunder is irrevocable unless the Participant changes
his election and shall be limited to the Beneficiary and form of payment
designated. The Spouse may, nevertheless, be permitted to consent generally to
future Beneficiary changes by the Participant and alternate selections of forms
of payment by the Participant without the need to obtain additional consent from
the Spouse, provided that the general consent acknowledges that the Spouse has
the right to limit consent to a specific Beneficiary and specific form of
benefit, where applicable, and that the Spouse voluntarily relinquishes both
rights. A Spouse's general consent is irrevocable, except that it must be given
whenever a Participant's election is required to be given in order to be or to
continue to be effective.
63
<PAGE> 71
(e) Required Distributions. Notwithstanding any other provisions of the
Plan to the contrary, payment of the Plan benefits of any Participant shall
commence not later than the April 1 following the calendar year in which he
reaches an Attained Age of seventy and one-half (70-1/2), for any Participant
who is a person described in 1.1(rr)(i)(C), and, for Plan Years beginning on or
after January 1, 1989, for any Participant.
(i) Form and Amount. The payments may be made in any form permitted
under Section 5.4(b) (Payment of Benefits Other Than Death
Benefits), as elected by the Participant, or, if none is
elected, in the normal form for payment of benefits under the
Plan, as described in Section 5.4(b)(i) (Normal Form), but shall
not be in an amount less than the amount required to be
distributed to such Participant pursuant to Section 401(a)(9) of
the Code and regulations promulgated thereunder. All
distributions under this Section 5.4(e) shall be determined and
made in accordance with such regulations, including the
incidental benefit requirements of Prop. Treas. Reg. Section
1.401(a)(9)-2.
(ii) Duration of Benefits and Life Expectancy Determinations.
Notwithstanding any election to the contrary, benefits payable
under this Section 5.4(e) shall continue for a period not
exceeding the life or, if applicable, the joint lives of the
Participant and his Beneficiary, or over the life expectancy of
the Participant and his Beneficiary. In determining the duration
of payments and thus the amount which must be distributed under
this Section 5.4(e), unless otherwise elected by the Participant
by the time distributions are required to begin, life
expectancies shall be recalculated annually. Any election by the
Participant to the contrary shall be irrevocable and shall apply
to all subsequent years. In the event of the Participant's
death, the life expectancy of a Surviving Spouse designated as
his Beneficiary may be substituted for that of the Participant
and the Surviving Spouse shall have the right to elect not to
have her life expectancy recalculated annually.
64
<PAGE> 72
Any such election by a Surviving Spouse shall be irrevocable and
shall apply to all subsequent years. The life expectancy of a
non-Spouse Beneficiary may not be recalculated. "Life
expectancy" shall mean the life expectancy (or joint and last
survivor expectancy) calculated using the Attained Age of the
Participant (or designated Beneficiary) as of the Participant's
(or designated Beneficiary's) birthday in the applicable
calendar year. The applicable calendar year shall be the first
distribution calendar year. If annuity payments commence before
the required beginning date, the applicable calendar year is the
year such payments commence. Life expectancy and joint and last
survivor expectancy are computed by use of the expected return
multiples in Tables V and VI of Section 1.72-9 of the Treasury
Regulations.
(f) Permanent Elections. Once benefit payments have commenced under any
provision of this Plan, neither the Participant nor his Beneficiary may change
his election of payment method, except to the extent specifically permitted
under the particular payment method selected. If the Participant dies after his
Annuity Starting Date, the benefit shall be paid as elected by the Participant
in accordance with Section 5.4(b) (Payment of Benefits Other Than Death
Benefits). In any other case, the benefit payable with respect to a deceased
Participant shall be a Death Benefit, subject to the provisions of Section
5.4(c) (Payment of Death Benefits).
(g) Unclaimed Benefits. To the extent not inconsistent with applicable
state law, in the event any benefit payment is unclaimed and the Committee is
unable to determine the whereabouts of a Participant, Beneficiary or other
person whose benefits from the Plan are due and owing within three (3) years
from the date the benefit would otherwise be payable (which date shall be
determined, in the event an application for benefits pursuant to Section 5.4(a)
(Application) shall not have been filed, as if such application had been filed
on the date the Participant's benefits under the Plan would have been required
to commence pursuant to Section 5.4(e) (Required Distributions)), the right to
the benefit shall be forfeited and revert to and become a part of the Trust Fund
(to be used to reduce any Company Contribution which coincides with or follows
the date such amount is treated as forfeited); provided, however, that
65
<PAGE> 73
the amount forfeited pursuant to this Section 5.4(g) shall be reinstated
(initially from current contributions and forfeitures) if the person to whom the
benefit is due and owing subsequently makes written application therefor to the
Committee. The effective date for reinstatement of the benefit shall be the date
that the written application for benefits is received by the Committee.
(h) Small Benefits. Notwithstanding anything herein to the contrary, if the
aggregate balance in a Participant's Fixed Account does not at the time of any
distribution (including at the time of any previous distribution) exceed Three
Thousand Five Hundred Dollars ($3,500), then upon the Participant's becoming
entitled to payment of his benefits as a result of his death, retirement, or
termination of employment, the Committee shall direct the Trustee to pay his
benefit to him or to his Beneficiary, as the case may be, in a single lump sum
payment as soon as administratively feasible thereafter but not later than the
end of the second Plan Year following the termination of the Participant's
employment with the Employer Group, regardless of whether the Participant or
Beneficiary has applied therefor in accordance with Section 5.4(a) (Application)
or whether the Participant's Spouse has consented thereto. In determining the
balance of a Participant's Fixed Account for purposes of this Section 5.4(h)
only, there shall be aggregated with the final balance all in-service
distributions previously made from the Plan to the Participant.
(i) Deadline for Benefits. Except as provided in Sections 5.4(a)
(Application) and 5.4(e) (Required Distributions), which may require payments to
begin earlier than required by this Section 5.4(i), or unless the Participant
elects otherwise (which election shall be presumed absent an application for
benefit commencement submitted by the Participant in accordance with Section
5.4(a) (Application)), the payment of benefits under the Plan to such
Participant shall begin not later than the sixtieth (60th) day after the close
of the Plan Year in which occurs the latest of the following:
(i) His reaching an Attained Age of sixty-five (65).
(ii) The tenth (10th) anniversary of the date he commenced
participation in the Plan.
66
<PAGE> 74
(iii) The termination of his employment with the Employer Group.
Notwithstanding the foregoing, if the amount of the payment required to commence
on the date determined pursuant to this Section 5.4(i) cannot be ascertained by
such date or if the Committee has been unable to locate the Participant after
making reasonable efforts to do so, a payment retroactive to such date may be
made no later than sixty (60) days after the earliest date on which the amount
of such payment can be ascertained under the Plan or the date on which the
Participant is located (whichever is applicable). In addition, with respect to
Company Stock acquired by the Plan after December 31, 1986, unless the
Participant elects a later date (which election shall be presumed from a
Participant's failure to apply for benefits as required by Section 5.4(a)
(Application)), benefits attributable to such Company Stock shall be paid or
commence to be paid not later than one (1) year after the close of the Plan Year
(A) in which the Participant retires on or after his Normal Retirement Date,
separates from service by reason of disability, or dies, or (B) which is the
fifth (5th) Plan Year following the Plan Year in which the Participant otherwise
separates from service (unless he is reemployed by the Employer Group before
such date).
(j) Direct Rollovers. With respect to distributions made on or after
January 1, 1993, 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.
5.5 Other Distributions and Payments.
(a) Withdrawals. In addition to withdrawals that may be available to a
Participant with respect to his Transferred Assets under Section 12.4
(Distribution of Transferred Assets), distributions or payments shall be
available in the following circumstances:
67
<PAGE> 75
(i) From Company Stock Account After Age Fifty-Five (55).
Distributions shall be available from the Nonforfeitable portion
of the balance in his Company Stock Account as described in
Section 5.7(e) (After Age Fifty-Five (55)).
(ii) From Company Stock Account As In-Service Distribution. A
Participant may apply to the Committee to receive payment of a
single lump sum distribution of shares from the Nonforfeitable
portion of the balance in his Company Stock Account, subject to
the following rules:
(A) The distribution must consist of at least fifty (50)
shares of Company Stock.
(B) The distribution may include only those amounts in the
Participant's Company Stock Account which have been
allocated to his Company Stock Account under the Plan for
a period of at least two (2) Plan Years.
(C) Once a Participant has received a distribution under this
Section 5.5(a)(ii), he shall be ineligible to receive a
distribution under this Section 5.5(a)(ii) again until at
least thirty-six (36) months have elapsed since the date
of the prior distribution.
(D) The Spouse of a married Participant must consent to the
Participant's election of a distribution under this
Section 5.5(a)(ii) during the period which is not less
than thirty (30) nor more than ninety (90) days
immediately preceding the date of the distribution. The
Spouse's consent must be in writing, must acknowledge the
effect of the Spouse's consent to the distribution, and
must be witnessed by a Plan representative or a notary
public. A Spouse's
68
<PAGE> 76
consent to a distribution under this Section 5.5(a)(i)
shall be irrevocable.
(b) Occurrence of Certain Events. In the event the Company disposes of
substantially all of the assets of a trade or business or disposes of its
interest in a subsidiary, then any Participant who continues employment with the
corporation or other entity acquiring such assets or who continues employment
with the subsidiary shall be entitled to receive a lump sum distribution of his
interest in his Plan Account by reason of such event. In the event the Company
terminates the Plan without establishing a successor defined contribution plan
(within the meaning of Section 401(k)(10) of the Code), then Participants shall
be entitled to receive lump sum distributions of the interests in their Plan
Accounts on account of such termination. The provisions of this Section 5.5(b)
shall supersede all other provisions of the Plan with respect to benefit payment
methods and timing.
(c) Hardship. A Participant who experiences a Financial Hardship, as
defined in paragraph (iii) below, shall be eligible to receive a distribution
from his Basic Contribution Account (taken from the Investment Funds as
instructed by the Participant or, if no instruction is given, pro rata to the
extent necessary to relieve that Financial Hardship (which may include amounts
necessary to pay any federal, state, or local income taxes or penalties
reasonably anticipated to result from the distribution), subject to the
restrictions set forth below.
(i) Amount. The amount available for distribution to a Participant
as a Hardship Distribution under this Section 5.5(c) shall be
limited to the amount of the Basic Contributions made on behalf
of the Participant, plus earnings on Basic Contributions
credited prior to January 1, 1989.
(ii) Alternate Fund Sources Exhausted. A Participant may request a
Hardship Distribution only if he has obtained all distributions,
other than hardship distributions, and all nontaxable loans
available to him as of the date of his request under all
Qualified plans maintained by the Employer Group.
69
<PAGE> 77
(iii) Financial Hardship. For purposes of this Section 5.5(c), a
Financial Hardship shall be deemed to exist if the Participant
represents to the Committee that the proposed distribution is
necessary because the Participant has experienced one (1) or
more of the following circumstances:
(A) Unreimbursed expenses for medical care (as defined in
Code Section 213(d) incurred by the Participant or by the
Participant's Spouse or dependents (as defined in Code
Section 152) or necessary for these persons to obtain
medical care described in Code Section 213(d);
(B) Costs directly related to the purchase (excluding
mortgage payments) of the Participant's principal
residence;
(C) Payment of tuition, related educational fees and room and
board expenses for the next twelve (12) months of
post-secondary education for the Participant or for the
Participant's Spouse, children or dependents (as defined
in Code Section 152);
(D) Payments necessary to prevent the Participant's eviction
from his principal residence or foreclosure of the
mortgage on that residence;
(E) Such other circumstances as may from time to time be
deemed to constitute financial hardship by the
Commissioner of the Internal Revenue Service.
(iv) Limitation on Future Deferrals. A Participant who receives a
distribution under this Section 5.5(c) shall be subject to the
following restrictions concerning future salary deferrals.
70
<PAGE> 78
(A) He shall be prohibited from reducing his Creditable
Compensation pursuant to a Participation Agreement and
from making elective contributions to any Qualified or
nonqualified plan or 403(b) annuity program of the
Employer Group for the period beginning on the date of
the distribution and ending on the first anniversary
thereof.
(B) Any Creditable Compensation reductions pursuant to a
Participation Agreement during the Participant's taxable
year immediately following the taxable year in which he
received the distribution shall be limited to Seven
Thousand Dollars ($7,000), as adjusted for such next
taxable year, less the amount by which the Participant
reduced his Creditable Compensation during his taxable
year in which he received the distribution.
5.6 Benefit Recipients.
(a) Distributions to Participants. Payment of Plan benefits shall be made
only to the Participant or, if applicable, to his Beneficiary; provided,
however, that the entire balance of a Participant's Account may, at the election
of the Participant, be transferred directly to the trustee of another Qualified
plan if the other plan provides for receipt of such transfers and advises the
Committee in writing that it will accept the transfer or to the trustee or
custodian of an Individual Retirement Account (as described in Section 219 of
the Code). A Participant's Account for purposes of such transfer shall be valued
as of the Valuation Date on or immediately preceding the date of such transfer,
and shall include any Basic Contributions made subsequent to that Valuation
Date.
71
<PAGE> 79
(b) Distributions to Minors and Incompetent Individuals. If an individual to
whom benefits shall be distributable hereunder shall be a minor or adjudged
mentally incompetent, the Committee may in its Discretion direct the Trustee to
distribute all or part of such benefits by one or more of the following methods:
(i) Directly to such minor or incompetent individual;
(ii) To the legal guardian of such individual; or
(iii) To another person for the use or benefit of such individual, but
only if pursuant to an order of a court of competent
jurisdiction.
Neither the Committee nor the Trustee shall be required to see to the
application of any such distributions. Distributions made pursuant to this
Section 5.6 shall operate as a complete discharge of the Committee, Trustee, the
Company and the Trust Fund.
5.7 Special Distribution Rules.
(a) Form. Benefits payable from a Participant's Company Stock Account shall,
to the extent possible or to the extent not limited by restrictions described in
Section 409(h)(2) of the Code, be distributed in full shares of Company Stock;
benefits payable from a Participant's Other Investments Account and the value of
any fractional shares of Company Stock shall be paid in cash.
(b) Put Option.
(i) Availability. In the event Company Stock is not readily tradable on
an established market at the time a distribution is to be made to a Participant
or Beneficiary, the Company shall issue a Put Option to the Participant or
Beneficiary receiving a distribution of Company Stock. The Put Option shall
permit the Participant or Beneficiary to sell the Company Stock to the Company
(or to the Trustee, if the Committee shall so direct in accordance with Section
5.7(b)(ii) (Exercise)). The Put Option shall provide for a period of exercise
extending
72
<PAGE> 80
for a sixty (60) day period beginning with the date of the distribution and a
second period of sixty (60) days (applicable only if the Put Option described in
this Section 5.7(b) is not exercised in the first sixty (60) day period) in the
Plan Year following the Plan Year during which the distribution occurred during
which the Participant or Beneficiary (or a donee of the Participant) may require
the Company or Trustee, as the case may be, to purchase the distributed Company
Stock at its fair market value as determined on the next preceding Valuation
Date. If, however, the Participant or Beneficiary (or donee of the Participant)
is a "disqualified person" within the meaning of Section 4975(e)(2) of the Code,
the fair market value of any distributed Company Stock purchased with the
proceeds of an Acquisition Loan shall be determined as of the date of the
exercise of the Put Option. The period during which a Put Option is exercisable
shall not include any period when the Participant or Beneficiary (or donee of
the Participant) is unable to exercise it because the party bound by the Put
Option is prohibited from honoring it by applicable federal or state law.
(ii) Exercise. A Put Option may be exercised only if the Participant
or Beneficiary (or donee of the Participant) notifies the Company
in writing of his desire to do so during the period of
availability.
(iii) Payment. Payment for Company Stock sold pursuant to a Put Option
shall be made within the following time limits:
(A) Distribution as Lump Sum. In the event the Company is
required to repurchase Company Stock which was distributed
to the Participant as part of a total distribution (a
distribution within one taxable year of the recipient of
the balance to the credit of the recipient's Account), the
Company shall make its payment in substantially equal
periodic payments (not less frequently than annually) over
a period beginning not later than thirty (30) days after
the exercise of the Put Option and not exceeding five (5)
years. The Company shall provide adequate security for its
obligation to make the payments and shall pay interest at
a rate
73
<PAGE> 81
equal to that applicable to loans of the same duration
under Section 1274 of the Code (the "applicable Federal
rate") as in effect thirty (30) days after the exercise of
the Put Option.
(B) Distribution in Installments. If the Company is required
to repurchase Company Stock as part of an installment
distribution, the Company shall make its payments no later
than thirty (30) days after the exercise of the Put
Option.
(c) Right of First Refusal. Shares of Company Stock distributed by the
Trustee shall be subject to a Right of First Refusal if the Company Stock is not
publicly traded at the time the Participant exercises his duties under this
Section 5.7(c). The Right of First Refusal shall provide that prior to any
subsequent transfer, the Company Stock must first be offered in writing to the
Company, and then, if refused by the Company, to the Trust, at its fair market
value as of the preceding Valuation Date (or, if the former Participant (or his
Beneficiary) is a "disqualified person" (as that term is defined in Section
4975(e)(2) of the Code), the fair market value of the Company Stock purchased
with an Acquisition Loan shall be determined as of the date of the transaction).
A bona fide written offer from an independent prospective buyer, if greater than
the then fair market value, shall be deemed to be the fair market value of the
Company Stock for this purpose. The Company, or the Committee on behalf of the
Trust, shall have a total of fourteen (14) days from the date the Company
receives the offer to exercise the Right of First Refusal on the same terms
offered by the prospective buyer. A Participant or Beneficiary entitled to a
distribution of Company Stock may be required to execute an appropriate stock
transfer agreement, evidencing the Right of First Refusal, prior to receiving a
certificate for the Company Stock.
(d) Dividends. To the extent that the Company shall so direct, cash
dividends on Company Stock may be applied as follows.
74
<PAGE> 82
(i) Allocated to Accounts. They may be allocated to Participants'
Other Investments Accounts on the basis of their respective
Company Stock Account balances.
(ii) Paid to Participants. They may be paid directly to Participants
by the Company or, if they are paid first to the Trustee, they
may be paid to Participants by the Trustee, in either case within
ninety (90) days after the close of the Plan Year in which paid
by the Company and in either case based upon the number of shares
of Company Stock allocated to each Participant's Company Stock
Account as of the record date.
(iii) Repay Acquisition Loan. They may be used by the Trustee to repay
a portion of the Acquisition Loan, provided that the number of
shares of Company Stock released and allocated to Participants
for the Plan Year is sufficient to permit each Participant to
receive an allocation of Company Stock with a fair market value
at least equal to the amount of the dividend to which he would
have been entitled if the dividends had been allocated to
Participants' Accounts.
(e) After Age Fifty-Five (55). With respect to Company Stock acquired by the
Plan after December 31, 1986, Participants shall have the following distribution
rights applicable to the Nonforfeitable portion of his Company Stock Account.
During the ninety (90) day period after the close of the Plan Year in which the
Participant both reaches an Attained Age of fifty-five (55) and has completed at
least ten (10) years of participation in the Plan and within ninety (90) days
after the close of the next three (3) Plan Years, the Participant shall be
entitled to elect to receive a distribution of twenty-five percent (25%) of that
portion of his Company Stock Account consisting of Company Stock acquired by the
Plan after December 31, 1986. During the ninety (90) days after the close of the
fifth (5th) Plan Year after the Plan Year in which the Participant both reaches
an Attained Age of fifty-five (55) and has completed at least ten (10) years of
participation in the Plan, the Participant shall be entitled to elect to receive
a distribution of fifty percent (50%) of his Company Stock Account consisting of
Company Stock
75
<PAGE> 83
acquired by the Plan after December 31, 1986. Distributions under this paragraph
shall be in the form of Company Stock and shall be made within ninety (90) days
after the end of the period during which the election may be made by the
affected Participant.
5.8 Payment in Cash or in Kind. Benefits payable pursuant to the Plan shall be
paid either in cash or, to the extent of a Participant's Company Stock Account,
in shares of Company Stock, as elected by the Participant or Beneficiary. If
paid in kind, the assets distributed shall be valued in the manner described in
the Trust Agreement.
5.9 Distribution of Excess Deferrals. A Participant who determines that he has
made Excess Deferrals under this Plan or a combination of this Plan and other
retirement plans in which he may participate shall have the right to notify the
Committee of the Excess Deferrals and receive a distribution of those Excess
Deferrals attributable to the Plan in accordance with this Section 5.9.
(a) Notification to Committee. The Participant may notify the Committee in
writing not later than the March 1st next following the calendar year in which
such Excess Deferrals were made that he has allocated all or a portion of his
Excess Deferrals to the Plan; provided, however, that a Participant is deemed to
have notified the Plan of Excess Deferrals to the extent that the Excess
Deferrals arise by taking into account only his Basic Contributions to this
Plan.
(b) Timing of Distribution. If a Participant notifies the Committee of
Excess Deferrals allocable to the Plan in accordance with Section 5.9(a)
(Notification to Committee), the Committee shall distribute the portion of the
Excess Deferrals which the Participant has allocated to the Plan, along with any
income attributable to such amount, to that Participant not later than the April
15th next following the calendar year in which such Excess Deferrals were made.
Income attributable to Excess Deferrals shall be calculated under any method
permitted under Section 4.2(a)(iv)(B) (Determination of Income).
76
<PAGE> 84
5.10 Payments Pursuant to a Qualified Domestic Relations Order. Notwithstanding
any other provision of the Plan to the contrary, the Committee may make payments
to an alternate payee, pursuant to the terms of a qualified domestic relations
order (within the meaning of Section 414(p) of the Code), at a time when
distributions may not otherwise be permitted under the Plan.
77
<PAGE> 85
ARTICLE VI
TOP HEAVY REQUIREMENTS
6.1 Applicability. For each Plan Year in which the Plan is Top Heavy within the
meaning of Section 6.2 (Determination of Top Heavy Status), the restrictions set
forth in Section 6.3 (Top Heavy Restrictions) shall apply.
6.2 Determination of Top Heavy Status. For any Plan Year, the determination as
to whether the Plan is Top Heavy shall be made in accordance with the following
rules:
(a) General Rule. The Plan shall be determined to be Top Heavy if, as of the
Determination Date, the sum of the Account balances of all Participants who are
Key Employees exceeds sixty percent (60%) of the sum of the Account balances of
all Key Employees and Non-Key Employees.
(b) Required Aggregation. Notwithstanding Section 6.2(a) (General Rule),
however, there shall be aggregated with the Plan, for purposes of determining
the Plan's Top Heavy status, each other plan of the Company (and of any member
of the Employer Group):
(i) in which a Key Employee is a participant, or
(ii) which enables either the Plan or any plan described in (i) above
to meet the requirements of Section 401(a)(4) or 410(b) of the
Code.
(c) Optional Aggregation. Notwithstanding Section 6.2(a) (General Rule) or
Section 6.2(b) (Required Aggregation), any plan of the Company or of any member
of the Employer Group, other than those which are described in Section 6.2(b)
(Required Aggregation), may, at the election of the Plan Administrator, be
considered with the Plan for the purpose of determining the existence of Top
Heavy status, so long as the aggregated plans, considered as a group, would
satisfy the requirements of Sections 401(a)(4) and 410(b) of the Code.
78
<PAGE> 86
(d) Aggregation Rule. In the event any other plan is considered with the
Plan for purposes of determining the existence of Top Heavy status whether
pursuant to Section 6.2(b) (Required Aggregation) or 6.2(c) (Optional
Aggregation), the Plan shall be considered Top Heavy only if the sum of (i) and
(ii) below exceeds sixty percent (60%) of (iii), where
(i) is the sum of the account balances (within the meaning of Section
416(g) of the Code) of all Key Employees under all of the defined
contribution plans which are being aggregated;
(ii) is the sum of the present values of the accrued benefits (within
the meaning of Section 416(g)(4)(F) of the Code) for Key
Employees under all of the defined benefit plans which are being
aggregated; and
(iii) is the sum of the account balances and present values of accrued
benefits (within the meaning of Section 416(g) of the Code) for
all Key Employees and Non-Key Employees under all plans which are
being aggregated.
For purposes of this Section 6.2(d), the values of account balances and present
values of accrued benefits for plans being aggregated with the Plan shall be
determined as of the determination date of such plan(s) which falls within the
same calendar year as the Determination Date for the Plan.
(e) Special Computation Rules. The following rules shall be applied in
determining the Top Heavy status of the Plan under this Section 6.2 and for
purposes of aggregating the Plan with another plan of the Company (or Employer
Group) in order to evaluate the Top Heavy status of such other plan.
(i) The value of an Account for purposes of this Section 6.2 shall
mean its balance as of the Valuation Date coincident with or next
preceding the Determination Date, including Company
contributions, if any, actually made after the Valuation Date but
on or before the Determination Date.
79
<PAGE> 87
(ii) The value of an Employee's (or former Employee's) Account shall
be increased by the value of all distributions to that Employee
(or former Employee) from the Plan, and from any terminated plan
which, had it not been terminated, would have been required to be
aggregated with the Plan under Section 6.2(b) (Required
Aggregation), including any direct transfers to the trustee of
another plan, but excluding distributions which are rolled over
or transferred by the Employee to another plan maintained by a
member of the Employer Group, occurring during the five (5) year
period ending on the Determination Date unless already included
in the value of the Account under (i).
(iii) If an Employee has not performed any services for the Employer
Group during the five (5) year period ending on the Determination
Date, his Account shall not be considered.
(iv) The value of an Account shall include the allocable portion of
any contribution which is required to be made under Code Section
412 to any plan which is aggregated with the Plan pursuant to
Section 6.2(b) (Required Aggregation) or Section 6.2(c) (Optional
Aggregation), and which would be allocated as of any date not
later than the Determination Date, whether or not such
contribution has been made or is due as of the date of
computation.
(v) Transferred Assets shall be excluded in determining the value of
an Employee's (or former Employee's) Account for purposes of this
Section 6.2 if the transfer occurred at the initiation of the
Employee (or former Employee) and did not include funds
distributed from a plan maintained by any member of the Employer
Group.
80
<PAGE> 88
(vi) The Account of any individual who is a Non-Key Employee, but who
was a Key Employee for any prior Plan Year, shall not be taken
into account.
6.3 Top Heavy Restrictions. For each Plan Year in which the Plan is determined
to be Top Heavy, the following requirements shall become effective, superseding,
for that Plan Year, any other provisions of the Plan to the contrary.
(a) Minimum Vesting. Each Participant's interest in his Plan Account shall
be determined in accordance with the following schedule:
Vested
Years of Service Percentage
---------------- ----------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
In any subsequent year in which the Plan is determined not to be Top Heavy,
however, the provisions of Section 5.2(a) (Vesting) shall be reinstated, with
the proviso that all amounts vested under this Section 6.3(a) as of the date of
such reinstatement shall remain vested and each Participant who, as of the date
of such reinstatement, had completed at least three (3) Years of Service, shall
be permitted to select the vesting schedule under which he will be governed from
among the provisions of this Section 6.3(a) and those of Section 5.2(a)
(Vesting).
(b) Minimum Required Allocation For Non-Key Employees.
(i) General. Prior to performing an allocation of Company
Contributions (and forfeitures, if applicable) for the
Plan Year pursuant to Section 4.1 (Participants' Shares of
Contributions), the Committee shall allocate to the Account of
each Participant who is a Non-Key Employee, whether or not that
Participant is otherwise entitled to an allocation pursuant to
81
<PAGE> 89
Section 4.1 (Participants' Shares of Contributions), an amount
from Company Contributions and forfeitures equal to three percent
(3%) of such Participant's Total Compensation. The balance, if
any, of Company Contributions and forfeitures for the Plan Year
shall then continue to be allocated in accordance with the
provisions of Section 4.1 (Participants' Shares of
Contributions).
(ii) Adjustment for Small Contributions. Notwithstanding the
provisions of Section 6.3(b)(i) (General), the amount which is
required to be allocated to the Accounts of Participants who are
Non-Key Employees need not be greater than the largest allocation
to the Account of a Key Employee Participant, expressed as a
percentage of that Key Employee's Total Compensation, as limited
by Code Section 401(a)(17). In determining the largest allocation
to a Key Employee, Basic Contributions made on behalf of Key
Employee Participants shall be included. Basic Contributions made
on behalf of Non-Key Employee Participants, however, shall not be
taken into account for purposes of this Section 6.3(b).
(iii) Alternative Method for Satisfying the Minimum Allocation
Requirement. In the event a Participant who is a Non-Key Employee
(who is entitled to a minimum allocation pursuant to Section
6.3(b)(i) (General)) participates both in this Plan and another
Qualified plan of the Employer Group, then:
(A) If the other plan is a defined contribution plan, any
Company contributions made for the Participant to the
other plan may be considered contributions made toward the
minimum required allocation for the Participant under this
Plan.
82
<PAGE> 90
(B) In the event the other plan is a defined benefit plan, the
minimum allocation required to be provided to the
Participant under this Plan shall be an amount determined
by substituting five percent (5%) in each place where
three percent (3%) appears in Section 6.3(b)(i) (General)
and Section 6.3(b)(ii) (Adjustment for Small
Contributions) shall not apply.
(c) Adjustments to Limitations on Annual Additions and Benefits. The
formulas set forth in Section 1.1(x) (Defined Contribution Plan Fraction) and
Section 1.1(w) (Defined Benefit Plan Fraction) shall be modified by the
substitution of 1.00 in place of 1.25 wherever 1.25 appears in those formulas;
provided, however, that 1.0 shall not be substituted in place of 1.25 in the
formulas if the Plan is not Super Top Heavy and if a minimum allocation in an
amount equal to that determined by substituting four percent (4%) for three
percent (3%) in each place where three percent (3%) appears in Section 6.3(b)(i)
(General) is provided or is satisfied by provision of benefits as described in
Section 6.3(b)(iii) (Alternative Method for Satisfying the Minimum Allocation
Requirement) (in an amount determined by substituting seven and one-half percent
(7-1/2%) in Section 6.3(b)(iii)(B) wherever five percent (5%) appears therein).
83
<PAGE> 91
ARTICLE VII
TERMINATION OF EMPLOYMENT
7.1 Dissolution. If a Participant's employment with the Company terminates by
reason of complete or partial liquidation or dissolution of the Company, then
the Participant's employment shall be deemed to have terminated under Section
5.1(a) (Normal Retirement Benefit) or Section 5.2 (Termination Benefit), as the
case may be, as of the effective date of the liquidation or dissolution.
7.2 Termination in Other Circumstances. If a Participant's employment terminates
for any reason other than the liquidation or dissolution of the Company under
Section 7.1 (Dissolution), he shall be entitled to only such benefits as are
provided by Article V (Benefits).
7.3 Temporary Absence and Military Service. Any absence from active employment,
other than during vacations, holidays and nonbusiness hours, constitutes the
termination of employment, except as follows:
(a) Leaves, Illness, Layoffs. Absence for less than one (1) year on account
of (i) illness, (ii) mental or physical disability, (iii) leave of absence
granted in accordance with uniform rules so that all Employees in similar
circumstances are treated alike (including a FMLA leave), or (iv) temporary
layoff (whether or not of indefinite duration). If, however, a Participant does
not resume active employment within thirty (30) days from the expiration of the
illness, disability or leave of absence, or if he fails to return to and remain
in active employment with the Company for at least thirty (30) days following a
leave of absence to which the provisions of FMLA apply, or if he fails promptly
to report for work upon being recalled from the layoff, his employment or
participation, as the case may be, shall terminate upon his recovery from
illness or disability or the expiration of his leave of absence or his being
recalled from temporary layoff, as the case may be.
84
<PAGE> 92
(b) Armed Forces. Absence for the purpose of becoming a member of the Armed
Forces of the United States; provided, however, that if he does not resume
active employment within the period during which he has reemployment rights
under the Vietnam Era Veterans' Readjustment Act of 1974, as amended or
superseded, his employment shall be deemed to have terminated on the date his
absence began.
(c) Inactive Status. During any period when a Participant or other Employee
is not in fact actively employed by the Company, he shall not be regarded as
receiving any Creditable Compensation except that which the Company actually
pays to him during the period.
(d) Short Absences. An absence not exceeding twenty (20) working days shall
not constitute a termination of employment if employment is immediately
thereafter resumed and the Committee shall determine in its Discretion that the
Participant in question had a satisfactory excuse for the absence.
(e) Corrective Actions. If contributions or other credit or debit items are
allocated to a Participant's Account due to the provisions of Section 7.3(a)
(Leaves, Illness, Layoffs) or 7.3(b) (Armed Forces), and it is later determined
that the Participant's employment should have terminated, then the Trustee upon
notification thereof shall treat such allocations as erroneous and shall, within
the limits of practicality, endeavor to undo the effects of the allocation.
(f) Mutual Agreement. The foregoing provisions of this Section 7.3 shall not
prevent the Company and the Participant or other Employee in question from
mutually determining that his status as an Employee shall terminate at any
designated time, either with or without cause.
7.4 No Longer Covered Employee. During any Plan Year in which a Participant
has at no time been a Covered Employee, he shall not be deemed a Participant
for purposes of allocations under Section 4.1 (Participants' Shares of
Contributions) even though he may for other purposes still be
85
<PAGE> 93
a Participant; provided, however, that if such failure is due to absences which
are counted as periods of employment under Section 7.3 (Temporary Absence and
Military Service), then Section 7.3 (Temporary Absence and Military Service)
shall be controlling rather than this
Section 7.4.
86
<PAGE> 94
ARTICLE VIII
COMMITTEE AND COMPANY
8.1 Composition of Committee.
(a) Appointment of Members. The Plan shall be administered by a Committee of
three (3) or more Employees (or other individuals familiar with the affairs and
personnel of the Company) who shall be appointed by, and hold office at the
pleasure of, the Board of Directors of Compuware Corporation. Vacancies in the
Committee resulting from death, resignation, removal or otherwise shall be
promptly filled by the Board of Directors of Compuware Corporation, but the
Committee may exercise its powers and authority notwithstanding the existence of
vacancies. At any time that there are no current members of the Committee,
Compuware Corporation shall perform the functions of the Committee.
(b) Plan Administrator. Whosoever performs the functions of the Committee
shall be the Plan Administrator as defined in the Act.
8.2 Removal and Resignation. A member of the Committee may resign at any time
upon not less than ten (10) days' written notice to the Board of Directors of
Compuware Corporation specifying the effective date of the resignation. A member
may be removed or appointed by such Board for any reason or for no reason and at
any meeting of the Board, whether or not called for that purpose.
8.3 Actions. The Committee shall act by a majority of its members at the time in
office, and such action may be taken either by vote at a meeting or in writing
without a meeting. A member of the Committee shall not vote or act on any matter
relating solely to himself.
8.4 Officers. The Committee may appoint from among its number a Chairman to
preside at its meetings and a Secretary, who need not be a member, to keep
records of its meetings and activities and to perform other duties and functions
that the Committee may prescribe. It may in like manner designate any one or
more of its members or its Secretary to execute any instrument
87
<PAGE> 95
or document upon its behalf, and the action of that person shall have the same
force and effect as if taken by the entire Committee. In the event of such
authorization, the Committee shall in writing notify the other Administrative
Parties of the action, and those parties shall be entitled to rely upon such
notification until the Committee gives written notification to the contrary.
8.5 Duties of Employer. In addition to its other duties and responsibilities set
forth in this Plan, the Employer shall:
(a) Provide Notification. Notify Covered Employees of the Plan and Trust,
including the basic provisions thereof, and keep them and the other
Administrative Parties advised from time to time of any contributions thereto,
any substantial changes therein, and any discontinuance, suspension or
termination thereof, as well as the identities of, and any changes in, the
Committee members and the Trustee.
(b) Maintain Records. Maintain records with respect to each Employee
sufficient to determine the benefits due, or which may become due, to such
Employee under the Plan.
(c) Furnish Information. Furnish the Committee with all information
necessary for the performance of the Committee's duties under this Plan.
(d) Furnish Lists and Data. Promptly after each Anniversary Date, or such
other date or dates as may be necessary to the Proper administration of the
Plan, furnish the Committee and the Trustee with a reasonably detailed list of
all Participants, and of all Covered Employees who are eligible to become
Participants, as of such Anniversary Date (or other date).
(e) Make Available Materials. Make available to the Committee for its
inspection, at all reasonable times, all such books and records of the Company
as may be reasonably necessary for the Committee's performance of its duties
under this Plan, including but not limited to the Company's personnel records,
annual reports and financial statements; provided, however, that the Committee
shall not be required to make such inspection but may in good faith rely upon
any statement or information furnished by or on behalf of the Company.
88
<PAGE> 96
8.6 Duties of Committee. In addition to its other duties and responsibilities
set forth in this Plan, the Committee shall:
(a) Maintain Data. Maintain or cause to be maintained the data and
information necessary for the administration of the Plan, including all
statements, reports and other information furnished to it by the other
Administrative Parties.
(b) Make Records Available. Make available to each Participant, at all
reasonable times during business hours, a copy of this Plan and such of the
Committee's records as pertain to such Participant or his Account.
(c) Provide Forms. Furnish Participants at appropriate times, or upon
request, with forms for designations of Beneficiary and methods of settlement,
as provided in Section 5.4(c) (Payment of Death Benefits) and for election of
distribution options, obtaining Spouse consent, if necessary, explanations of
retirement benefit options and any other form or notice required for the Proper
operation of the Plan.
(d) Accept/Reject Forms. Indicate acceptance or rejection of designations of
Beneficiaries or methods of settlement.
(e) Furnish Allocation Information. Promptly furnish to the Trustee the
information necessary to determine the amount allocable to each Participant's
Account.
(f) Furnish Participant Information. Furnish to the Trustee such other
certificates, information and documents as the Trustee may reasonably require,
relating (but not limited) to such matters as: the identities and addresses of
all Participants and Beneficiaries; the age, compensation, Normal Retirement
Date, and employment record of every Participant; and the date of, and reasons
for, termination of a Participant's employment.
89
<PAGE> 97
(g) Establish and Administer Investment Funds. Establish, from time to time,
Investment Funds consistent with the Plan's funding policy, and establish
procedures by which Participants can elect to invest their Accounts in the
Investment Funds pursuant to Section 9.11 (Investment Funds).
8.7 Duties of the Plan Administrator. In addition to those duties imposed upon
the Plan Administrator by the Act or by other provisions of this Plan, the Plan
Administrator shall:
(a) Establish Procedures for Benefit Claims. Adopt and notify all
Participants of the terms of a uniform claims procedure which provides (i) a
procedure for claiming benefits under the Plan; (ii) adequate written notice to
any Participant or Beneficiary whose claim for benefits under the Plan is
denied, setting forth the reasons for such denial; and (iii) a reasonable
opportunity to any Participant or Beneficiary whose claim for benefits is denied
to obtain full and fair review of the decision of the Plan Administrator denying
such claim.
(b) Establish Rules for Participation Agreements. Establish and communicate
to Covered Employees a procedure for execution and delivery of Participation
Agreements and develop and communicate to Covered Employees administrative rules
concerning designation of participation levels, timing of designations, and
related matters.
(c) Establish Procedures for Domestic Relations Orders. Establish reasonable
procedures for determining the existence of a "qualified domestic relations
order" within the meaning of Section 414(p) of the Code and notify affected
persons of such procedures.
8.8 Claims Procedure.
(a) Written Notice. If a claim for benefits under the Plan is denied, in
whole or in part, the claimant shall be notified in writing of the denial, the
specific reason for the denial and the Plan provisions on which the denial is
based, within ninety (90) days after the claim has been filed with the
Committee. Such claimant shall also be advised whether any additional material
or information is necessary to perfect the claim and shall be provided with an
explanation of the
90
<PAGE> 98
reasons why such material is necessary and with an explanation of the Plan's
claim review procedure under Section 8.8(b) (Appeals).
(b) Appeals. In the event a claim for benefits under the Plan is denied, in
whole or in part:
(i) The claimant (or his duly authorized representative) shall be
entitled to request in writing a review of the denial of his
claim by the Committee within sixty (60) days after the claimant
receives notice of the denial of his claim.
(ii) The claimant (or his duly authorized representative) may review
pertinent Plan documents and submit issues and comments to the
Committee in writing.
(iii) All written claims that are neither granted nor denied in
accordance with Section 8.8(a) (Written Notice) shall be deemed
denied and the claimant shall be deemed to have filed a written
request for review.
(iv) The decision of the Committee on review shall be rendered within
sixty (60) days after the request for review is received by the
Committee unless special circumstances require an extension of
time for processing the claim, in which case a decision shall be
rendered not later than one hundred twenty (120) days after
receipt of a request for review by the Committee.
(v) The claimant shall be furnished with written notice of any such
extension of time prior to the commencement of the extension.
91
<PAGE> 99
(vi) If the decision of the Committee on review is not furnished
within the time specified in paragraph (iv) above, the claim
shall be deemed denied on review.
(vii) The decision of the Committee on review shall be in writing and
shall include specific reasons for the decision and specific
references to the pertinent Plan provisions on which the decision
is based.
(viii)The decision of the Committee on review is final.
8.9 Powers. The Committee shall have any and all powers and authority which
shall be Proper to enable it to carry out its duties under this Plan, including
by way of illustration and not limitation (i) the powers and authority
contemplated by the Act and by the Code with respect to Qualified plans and (ii)
the powers and authority to make rules and regulations in respect of the Plan
not inconsistent with this Plan, the Code or the Act and to determine,
consistently therewith, all questions that may arise as to the status and rights
of Participants and Beneficiaries and any other persons. The Employer shall
likewise have any and all powers and authority which shall be Proper to enable
it to carry out its duties under this Plan. The Committee may retain such
consultants, attorneys, or advisors as it may deem Proper in order to carry out
its duties under the Plan and the fees and expenses for retaining such
attorneys, consultants, or advisors may be charged as an expense of the Plan.
8.10 Discretion; Nondiscrimination. Wherever it is provided in this Plan that
the Committee or its delegee may perform or not perform any act, or permit or
consent to any action, nonaction or procedure, or wherever the Committee is
given discretionary power or authority, the Committee shall have exclusive
Discretion in the premises; provided, however, that the Committee shall not
exercise its Discretion in such a manner as to violate the Code or the Act or
knowingly to discriminate either for or against any Participant, Covered
Employee or Beneficiary or any group of such persons.
92
<PAGE> 100
8.11 No Separate Committee. Notwithstanding the foregoing provisions of this
Article VIII:
(a) If and while there are one (1) or more persons comprising the Committee
and the Trustee who are identical, the separation in this Plan of the
responsibilities, rights, powers, authority, and functions of the Committee and
Trustee respectively shall be disregarded; said persons shall act and serve in
both said capacities combined; and they need not furnish information,
directions, instructions or notices, or make reports or demands, by themselves
in one such capacity to themselves in the other such capacity.
(b) If and while there is no Committee, either because none is designated or
no one (1) or more persons are at the time in question actively serving as
members thereof, the responsibilities, rights, powers, authority, and functions
of the Committee shall be vested in the Employer; and the Employer and Committee
need not furnish information, directions, instructions or notices, or make
reports or demands, one to the other.
8.12 Fiduciaries and Named Fiduciaries.
(a) Identity. The Employer, the Committee and the Trustee shall be named
fiduciaries under the Plan, within the meaning of Section 402(a) of the Act,
solely to the extent of their respective responsibilities specified in the Plan
and the Trust. The Committee shall exercise all discretionary authority and
control which is not specifically granted to the Employer or the Trustee with
respect to management of the Plan.
(b) Responsibility. Each fiduciary (including named fiduciaries) under this
Plan shall be solely responsible for its own acts or omissions. Except to the
extent required by the Act, no fiduciary shall have the duty to question whether
any other fiduciary is fulfilling all of the responsibilities imposed upon such
other fiduciary by Federal or State law. No fiduciary shall have any liability
for a breach of fiduciary responsibility of another fiduciary with respect to
this Plan unless it participates knowingly in such breach, knowingly undertakes
to conceal such breach, has actual knowledge of such breach and fails to take
reasonable remedial action to remedy said breach or, through its negligence in
performing its own specific fiduciary
93
<PAGE> 101
responsibilities which give rise to its status as a fiduciary, it enables such
other fiduciary to commit a breach of the latter's fiduciary responsibility.
(c) Prior Actions. No fiduciary shall be liable with respect to a breach of
fiduciary duty if such breach is committed before it became a fiduciary or after
it ceased to be a fiduciary.
(d) Allocation of Responsibility. The named fiduciaries may allocate their
fiduciary responsibilities (other than trustee responsibility within the meaning
of Section 405(c)(3) of the Act) among themselves and may make provision for the
delegation of fiduciary responsibility (other than trustee responsibility within
the meaning of Section 405(c)(3) of the Act) under the Plan to persons who are
not named fiduciaries of the Plan. Such allocation or delegation shall be
accomplished by a written instrument executed by the named fiduciary or
fiduciaries in question, which instrument may be revoked at any time by the
named fiduciary. If the fiduciary responsibilities (other than trustee
responsibility within the meaning of Section 405(c)(3) of the Act) of a named
fiduciary are allocated or delegated to any other person, the named fiduciary
shall not be liable for the acts or omissions of such person, except to the
extent that the named fiduciary violated Section 404(a)(1) of the Act:
(i) With respect to such allocation or delegation, or
(ii) With respect to the establishment or implementation of the method
for accomplishing such allocation or delegation specified above,
or
(iii) By continuing such allocation or delegation.
(e) Multiple Capacities. Any person or entity may serve in more than one (1)
fiduciary capacity under the Plan, as, for example, serving on the Committee and
as Trustee.
(f) No Relief for Fraud. Nothing in this section shall be deemed to relieve
any person from liability for his own willful misconduct or fraud.
94
<PAGE> 102
ARTICLE IX
THE TRUSTEE AND TRUST AGREEMENT; INVESTMENTS
9.1 The Trustee. The Employer has entered into a Trust Agreement under the terms
of which a Trust Fund has been established to receive and hold contributions
payable by the Company pursuant to the Plan and the Prior Plan. The Trustee may
be removed and replaced by any successor Trustee, from time to time by action of
the Board of Directors of Compuware Corporation.
9.2 Form and Terms of the Trust Agreement. The Employer may from time to time
modify the form and terms of the Trust Agreement to accomplish the purposes of
the Plan.
9.3 Fiduciary of Trust Fund. Except to the extent that such authority and duty
are transferred to Participants, within the meaning of Section 404(c) of the
Act, or an Investment Manager pursuant to the Plan or the Trust Agreement, the
Trustee shall be the fiduciary with respect to the investment, management and
control of the Trust Fund with full Discretion, management and control thereof.
The Employer may transfer to an Investment Manager the authority and duty to
direct the investment of all or part of the Trust Fund. Such transfer shall be
made by written instrument executed on behalf of the Employer and by the party
so appointed, who shall thereby acknowledge that he is a fiduciary under the
Plan with respect to investments of the Plan's assets. Upon any such transfer of
authority and duty, the Investment Manager shall be the fiduciary with respect
to the investment and management of such assets of the Trust Fund, and the
Trustee shall be relieved of all responsibility with respect to the investment
and management thereof.
9.4 Transfer of Investment Authority. In the event that the authority and duty
to direct the investment of all or part of the Trust Fund are transferred to a
party other than the Trustee, the following rules shall apply.
(a) Transfer to Investment Manager. If investment direction is transferred
to an Investment Manager, the Trustee shall not be liable or responsible for any
consequences arising from the Trustee's compliance with investment or management
directions received by the Trustee
95
<PAGE> 103
from the Investment Manager. The Trustee shall be under no duty to question any
directions of the Investment Manager, nor to review in any respect the manner in
which the Investment Manager exercises its authority and discharges its duties
with respect to the assets of the Trust Fund as to which it has been so
appointed.
(b) Transfer to Participants. In the event investment authority has been
transferred to Participants, within the meaning of Section 404(c) of the Act,
the Trustee shall not be liable or responsible for any consequences arising from
the Trustee's compliance with investment instructions received by the Trustee
from the Participants.
9.5 Bonding. Except as otherwise exempted by Section 412 of the Act, every
fiduciary of the Plan, within the meaning of the Act, and every person who
handles funds or other property of the Plan shall be bonded in accordance with
Section 412 of the Act.
9.6 Investment in Employer Securities. Notwithstanding any other provisions of
the Plan or the Trust Agreement to the contrary, the Trustee shall be authorized
to invest an amount not in excess of one hundred percent (100%) of the fair
market value of the assets of the Trust Fund, determined as of the date such
investment is made, in qualifying employer securities (as defined in Section
407(d)(5) of the Act).
9.7 Funding Policy. The portion of the Plan treated as an employee stock
ownership plan (as defined in Section 4975(e)(7) of the Code and regulations
promulgated thereunder), shall invest primarily in Company Stock. Subject to
such purpose, the Committee shall from time to time establish a funding policy
and method consistent with the objectives of the Plan and the requirements of
Title I of the Act. The funding policy and method so established shall be
reviewed by the Committee at least annually. In establishing and reviewing such
funding policy and method, the Committee shall consider the short-term and
long-term investment objectives and financial needs of the Plan, taking into
account the need for liquidity to pay for benefits and the need for investment
growth. All actions of the Committee in accordance with this Section 9.7 shall
be communicated to the Trustee and to the Employer.
96
<PAGE> 104
9.8 Acquisition Loan. The Employer may, from time to time, direct the Trustee to
incur an Acquisition Loan to finance the acquisition of Company Stock by the
Trust or to repay a prior Acquisition Loan. An installment obligation incurred
in connection with the purchase of Company Stock shall constitute an Acquisition
Loan. The following rules shall apply in connection with any Acquisition Loan.
(a) Terms. An Acquisition Loan shall be for a specific term, shall bear a
reasonable rate of interest and shall not be payable on demand except in the
event of default. An Acquisition Loan may be secured by a collateral pledge of
the Company Stock acquired with the proceeds of the Acquisition Loan, but no
other Trust assets may be pledged as collateral for an Acquisition Loan, and no
lender shall have recourse against Trust assets other than any Company Stock
remaining subject to pledge.
(b) Creation of Suspense Account. Upon entering into an Acquisition Loan,
the Trustee shall establish a Suspense Account for the purpose of receiving any
Company Stock purchased with the proceeds of the Acquisition Loan. All Company
Stock purchased with the proceeds of any Acquisition Loan shall be placed in the
Suspense Account. Such Company Stock shall be held in the Suspense Account until
released pursuant to Section 4.1(c)(i) (Release From Suspense Account).
(c) Repayment of Acquisition Loan. Repayment of Principal and interest on
any Acquisition Loan shall be made by the Trustee (as directed by the Employer)
only from (i) Company Contributions paid in cash to enable the Trustee to repay
such Acquisition Loan, (ii) income attributable to Company Stock purchased with
the proceeds of any Acquisition Loan, and (iii) dividends attributable to
Company Stock purchased with the proceeds of any Acquisition Loan.
97
<PAGE> 105
9.9 Voting of Company Stock.
(a) Participant Voting. Company Stock, including fractional shares,
allocated to a Participant's Company Stock Account shall be voted by the Trustee
upon written direction given to the Trustee by the Participant (or his
Beneficiary, if applicable).
(b) Other Direction. All Company Stock held in the Suspense Account shall be
voted by the Trustee in proportion to instructions received from Participants
with respect to allocated Company Stock.
9.10 Valuation of Company Stock. If the Company Stock held by the Plan is not
readily tradable on an established securities market, the Trustee shall engage
an independent appraiser to perform a valuation of Company Stock wherever Plan
provisions require a valuation. Any appraiser selected shall be independent
within the requirements of Treasury Regulations under Section 170(a)(1) of the
Code. In determining the fair market value of Company Stock, the independent
appraiser may use an enterprise basis or any other basis which it deems
appropriate under the circumstances. If the Company Stock is readily tradable on
an established securities market, the value of the Company Stock shall be its
fair market value as evidenced by published reports.
9.11 Investment Funds.
(a) Participants' Interests in Investment Funds. The Trust Fund shall
consist of one or more Investment Funds in which each Participant with any
interest therein shall have an undivided proportionate interest. Each
Participant's undivided proportionate interest in each Investment Fund shall be
determined according to the ratio that the value of the portion of such
Participant's Account which is invested in that Investment Fund bears to the
total value of all Participants' Accounts (or portions of them) invested in that
Investment Fund on the date of determination. Only Basic Contribution Accounts,
Merged Plan Accounts, and Transferred Assets Accounts may be subject to the
investment directions of Participants.
98
<PAGE> 106
(b) Addition or Deletion of Funds. The Committee shall have the right to
establish additional Investment Funds and abolish Investment Funds at any time,
in its Discretion, in furtherance of the funding policy and investment
objectives established by the Committee.
(c) Implementation. The Committee may instruct the Trustee to transfer
amounts among the Investment Funds in order to implement the instructions of
Participants concerning investment of their Accounts.
99
<PAGE> 107
ARTICLE X
TERMINATION AND AMENDMENT
10.1 Termination of Plan. It is the present intention of the Company permanently
to maintain the Plan and continue to make contributions under Section 3.1 (Time
and Amount); provided, however, that subject to the provisions of Section 11.2
(Nonforfeitability) and the requirements of the Act and the Code:
(a) The Board of Directors of Compuware Corporation reserves the right at
any time to revoke or terminate the Plan in its entirety or to partially
terminate the Plan, or to terminate or temporarily or permanently suspend its
liability to make contributions to the Trust. Each Company retains the right to
terminate the Plan to the extent that it relates to that Company and its
Employees.
(b) In the event of any termination, partial termination or suspension under
paragraph (a) above, the Company shall give such timely notice thereof to the
Internal Revenue Service and the Department of Labor as may be required by
provisions of the Act or Code.
(c) In the event of any termination, partial termination or suspension under
paragraph (a) above, and subject to Section 11.2 (Nonforfeitability), the right
of each affected Participant (as to whom the Plan has terminated or with respect
to whom a suspension has occurred) to the amount credited to his Account at the
time of termination, suspension, or partial termination shall immediately be
Nonforfeitable.
(d) Termination of the Plan shall not have the effect of reducing or
eliminating any protected benefit, within the meaning of Section 411(d)(6) of
the Code and regulations promulgated thereunder.
100
<PAGE> 108
10.2 Liquidation of Trust. In the event of termination of the Plan without
establishment of a successor plan, the Trustee shall proceed as promptly as
possible, subject to any directions from the Committee, to liquidate all
investments, and shall thereupon determine the value of each Participant's
Account under Section 4.6 (Fixed Accounts) as of the date of termination. After
each such Account has been appropriately adjusted to cover any expenses of
distribution and final liquidation costs, the Trustee shall pay the balance of
such Account to the Participant (or, if deceased, his Beneficiary) in a lump
sum. For purposes of this Section 10.2, the term "successor plan" means any
other defined contribution plan (other than an employee stock ownership plan)
maintained by the Employer that exists at the time the Plan is terminated or
within the period ending twelve (12) months after distribution of all assets
from the Plan. Such other plan shall not be treated as a successor plan,
however, if fewer than two percent (2%) of the employees who are eligible under
this Plan at the time of its termination are or were eligible under the other
plan at any time during the twenty-four (24) month period beginning twelve (12)
months before the time of the termination.
10.3 Termination of Trust. Notwithstanding termination of the Plan, the Trust
shall terminate when the Trust Fund is entirely paid out and distributed in
accordance with its terms and the terms of this Plan.
10.4 Amendment. The Board of Directors of Compuware Corporation reserves the
right at any time and from time to time, to amend the Plan, without the consent
of any Participant or Beneficiary, or any other Company in any manner which it
deems to be Proper, whether or not (i) for reasons of business necessity or (ii)
for the purpose of causing the Plan and Trust to be Qualified or to continue to
be Qualified. The Board of Directors may delegate to another body, committee,
entity, or person the authority to act on its behalf in amending the Plan.
(a) No Increase in Liabilities. No such amendment, except upon written
consent of the affected person, shall increase the duties or liabilities of the
Trustee or the Committee, or diminish their remuneration.
101
<PAGE> 109
(b) Retroactivity Allowed. Any modification, alteration or amendment may be
made effective retroactively within the limits satisfactory to the Internal
Revenue Service and the Department of Labor.
(c) Benefits Preserved. Notwithstanding anything contained in this Section
10.4 to the contrary, no amendment to the Plan shall decrease the Account
balance of any Participant or have the effect of eliminating or reducing any
protected benefit within the meaning of Section 411(d)(6) of the Code or any
early retirement benefit or retirement-type subsidy or eliminating an optional
form for payment of benefits with respect to benefits attributable to service
accumulated prior to the amendment.
(d) Vesting Changes. In the event the Employer adopts an amendment to the
Plan which changes the Plan's vesting provisions such that the Nonforfeitable
percentage of any Participant, when determined under the Plan as so amended,
would at any time be less than would have been the case absent such amendment,
then the following rules shall apply.
(i) Election. Each Participant who has completed at least three (3)
years of service (within the meaning of Treas. Reg. Section
1.411(a)-8T(b)(3)) shall be permitted to elect, during the
election period described in (ii), to have his Nonforfeitable
percentage determined without regard to such amendment.
(ii) Election Period. The election described in paragraph (i) may be
made during the period which begins not later than the date on
which the Plan amendment is adopted and which ends no earlier
than the latest of the following dates:
(A) The date which is sixty (60) days after the day the Plan
amendment is adopted.
102
<PAGE> 110
(B) The date which is sixty (60) days after the day the Plan
amendment becomes effective.
(C) The date which is sixty (60) days after the day the
Participant is issued written notice of the Plan amendment
by the Employer or Plan Administrator.
103
<PAGE> 111
ARTICLE XI
MISCELLANEOUS
11.1 No Reversions. Except as otherwise provided by Section 3.2 (Contributions
Conditioned Upon Deductibility) or Section 4.3 (Limitations on Annual
Contributions and Additions), the assets of the Trust shall never inure to the
benefit of the Company and shall be held for the exclusive purposes of providing
benefits to Participants and their Beneficiaries and defraying reasonable
expenses of administering the Plan; and the Company shall not be entitled to
receive or recover any part of its contributions to the Trust or the earnings
thereon.
11.2 Nonforfeitability. A Participant's right to his benefits under the Plan
shall be one hundred percent (100%) Nonforfeitable upon his reaching his Normal
Retirement Age.
11.3 Merger, Consolidation, Etc. In no event may the Plan be merged or
consolidated with, or the assets or liabilities of the Trust Fund transferred
to, any other Qualified plan, unless each Participant would (if such other
Qualified plan were terminated after such merger, consolidation or transfer of
assets or liabilities) receive a benefit immediately after such merger,
consolidation or transfer which is not less than the benefit he would have been
entitled to receive (including protected benefits within the meaning of Section
411(d)(6) of the Code and regulations promulgated thereunder) had the Plan been
terminated immediately before such merger, consolidation or transfer.
11.4 Spendthrift Provision.
(a) No Assignment Permitted. To the extent permitted by law, no benefits,
payments, proceeds, claims, rights or interest of any Participant or Beneficiary
in, to or under the Plan, the Trust or any part of the Trust Fund, shall be
liable or subject to the debts, contracts, liabilities, engagements or torts of
any such person, directly or indirectly, or subject to any claim of any creditor
of such person, through legal process or otherwise; nor shall any such
Participant or Beneficiary be able or permitted, voluntarily or involuntarily,
to transfer, encumber, pledge, anticipate, alienate or assign any such benefits,
payments, proceeds, claims, rights or interest,
104
<PAGE> 112
contingent or otherwise, except as provided in Section 5.3(a) (Loans to
Participants) and Section 11.4(b) (Qualified Domestic Relations Orders). It is
the intention and purpose of the parties to this Plan to place the absolute
title to the Trust Fund in the Trustee alone, with power and authority to pay
out the same only as provided in this Plan.
(b) Qualified Domestic Relations Orders. Notwithstanding Section 11.4(a)
(No Assignment Permitted), the Trustee shall honor an assignment to, or an order
to segregate assets for, or instructions to make benefit payments to a person
other than a Participant or Beneficiary if the Committee so directs and the
Committee has determined that there exists either (i) a domestic relations order
entered before January 1, 1985 under which payments are being made or which the
Committee determines should be honored or (ii) a "qualified domestic relations
order", within the meaning of Section 414(p) of the Code, pursuant to which such
assignment, segregation, or payment is required. The Committee shall establish
written procedures for determining the existence of a "qualified domestic
relations order" and for compliance by the Plan with the applicable provisions
thereof.
11.5 Participant Protections. Except as provided in Section 5.7(b) (Put Option)
and Section 5.7(c) (Right of First Refusal), a Participant's Account shall at no
time be subject to a put, call, or other option or buy-sell arrangement.
11.6 Execution of Instruments. Except as otherwise expressly provided in this
Plan, any instrument or document to be delivered or furnished by the Company
shall be sufficiently executed if executed in the name of the Company by any of
its officers; or, where furnished or delivered by the Committee, if executed in
the name of the Committee by any member thereof; or where furnished or delivered
by the Trustee, if executed as follows:
(a) If the Trustee consists of two (2) or more persons, if executed in the
Trustee's name by any such person, and
105
<PAGE> 113
(b) In the case of any corporate Trustee (whether or not the sole Trustee),
if executed as Trustee in the name of such corporation by any of its officers;
provided, further, that any Administrative Party shall be fully protected in
relying upon any instrument or document so executed; and such execution shall be
conclusive proof that any signature is duly authorized and that any information
contained in the instrument or document is true and correct.
11.7 Company Actions. Whenever the Company under this Plan is permitted or
required to do or perform any act or execute any paper or document, it shall be
performed or executed at the direction of the Board of Directors of the Company,
or by duly authorized officers or agents of the Company, and may be evidenced by
resolutions certified by the Secretary of the Company.
11.8 Successors, Etc. This Agreement shall be binding upon, and inure to the
benefit of, the Company and subject to Sections 10.1 (Termination of Plan) and
10.4 (Amendment), its successors, the Trustee and its successors, the Committee
as from time to time constituted, and the Participants and Beneficiaries, their
heirs, personal representatives, successors, and assigns, all in accordance with
and subject to the terms of this Plan.
11.9 Miscellaneous Protective Provisions. Except as otherwise provided in this
Plan or the Act:
(a) Any Administrative Party may request and rely upon an opinion of
counsel, who may or may not be counsel for the Company, and shall be fully
protected for any action taken, suffered or omitted in good faith reliance upon
such opinion.
(b) No recourse under this Plan, or for any action or nonaction hereunder
or for any loss or diminution of the Trust Fund, or for any payment or
nonpayment of benefits, or for any other reason whatsoever relating to the Plan,
shall be had by any person whomsoever against any stockholder, officer, director
or Employee of the Company as such, past, present or future.
106
<PAGE> 114
(c) Where the establishment of any fact is in question, any Administrative
Party may in its Discretion accept as evidence thereof any properly executed
instrument or document furnished by any other Administrative Party or such other
evidence as may seem reasonable in the circumstances.
11.10 Common Control and Successorship Situations. To the extent required by
Section 414 of the Code, the following rules shall apply.
(a) Predecessor Employers. Service with a predecessor employer shall be
treated as service with the Company, and service with the Company shall be
treated as service with a successor employer, if the Plan was taken over from
such predecessor or is taken over by such successor, as the case may be.
(b) Transfers Within Employer Group. For purposes of the participation and
vesting provisions of the Plan, in the event that an employee of a corporation
or other trade or business, whether or not incorporated, which is a member of
the Employer Group is transferred to employment with the Company (or from
employment with the Company to employment with a member of the Employer Group
which has not adopted the Plan), his service with such member or members of the
Employer Group shall be treated as service with the Company. In the event a
Participant is transferred to employment by an employer which is a member of
such Employer Group, the transferred Participant's employment by the Company and
participation in the Plan shall not be deemed terminated by reason of such
transfer, except that such transferred Participant's Account shall not be
credited with any portion of the Company Contributions, Basic Contributions, or
forfeitures arising with respect to a Plan Year ending within a taxable year of
the Company after the taxable year in which such transfer occurred. For purposes
of eligibility for benefits hereunder, a Participant so transferred shall be
deemed to have severed employment with the Company at the time he is no longer
employed by an employer which is a member of the Employer Group.
107
<PAGE> 115
(c) Multiple Employers. If and while the Plan is maintained by more than
one employer, the participation provisions of the Plan shall be applied as if
all employees of each of the employers were employed by a single employer, and
the vesting provisions of the Plan shall be applied as if all such employers
constituted a single employer.
11.11 Indemnification by Company. To the extent permitted by the Act, the
Company shall indemnify and save harmless the Committee members and other
fiduciaries of the Plan (other than the Trustee) who are officers, directors,
shareholders or Employees of the Company against any liabilities incurred by
them in the exercise and performance of their powers and duties under the Plan
to the extent that such protection would be afforded by insurance coverage under
Section 410(b)(3) of the Act.
11.12 Employment Rights Not Enlarged. The Plan as now or may hereafter exist,
shall not be construed as giving any Participant or any other person whomsoever
any legal or equitable right against the Company, or as giving any Participant
the right to be continued in the employ of the Company, and all Employees and
all Participants shall remain subject to discharge to the same extent as if this
Plan had not been adopted.
11.13 Correction of Errors and Recoupment. If any error or change in records
results in any Participant or Beneficiary receiving from the Plan more or less
than the amount to which he would have been entitled to receive had the records
been correct or had the error not been made, the Committee shall correct the
error by adjusting, as far as practicable, the future payments in such a manner
that the benefits to which such person was correctly entitled shall be paid. The
Committee shall be entitled to recoup amounts which are overpaid to a
Participant or Beneficiary and may choose to recoup by requesting repayment from
such person either in addition to or instead of adjusting future benefit
payments to such person.
11.14 Effect of Participant's Acceptance of Payments. Acceptance by any
Participant or Beneficiary of benefit payments from the Plan shall, to the
extent of such payment, constitute a release of the Plan from liability in
connection with such payment.
108
<PAGE> 116
11.15 Notification of Address. Each Participant, former Participant and
Beneficiary shall furnish the Committee with such information as the Committee
may reasonably require. This information shall include written notice of his
current post office address and any change in that address. The Company,
Committee and Trustee shall be entitled to rely upon the last post office
address furnished to the Committee by such person for purposes of providing
notice to such person, payment of benefits or any other purpose.
11.16 Source of Benefit Payments. A Participant, Beneficiary or other person
claiming benefits under the Plan shall be required to look only to the Trust for
payment of his benefits and benefits are payable from the Trust only to the
extent funded through the Trust. Neither the Trustee nor the Company shall have
any liability to provide benefits which cannot be provided with amounts held in
the Trust.
11.17 Nonterminable Protections and Rights. Notwithstanding the fact that an
Acquisition Loan may be repaid or the Plan may cease to be an employee stock
ownership plan (as that term is defined in Section 4975(e)(7) of the Code), the
protections and rights provided to Participants as a consequence of Section
5.7(b) (Put Option) and Section 11.5 (Participant Protections) shall be
nonterminable.
109
<PAGE> 117
ARTICLE XII
TRANSFERRED ASSETS
12.1 Right to Transfer. The Trustee may, in the Discretion of the Committee
(which Discretion shall not be exercised in a discriminatory manner), accept
Transferred Assets on behalf of a Participant; provided, however, that the
Transferred Assets shall be credited to the account established for the
Participant to receive the Transferred Assets (his "Transferred Assets
Account").
12.2 Accounting. Transferred Assets shall be credited to the Participant's
Transferred Assets Account within thirty (30) days after the date they are paid
to and accepted by the Trustee and shall be adjusted for distributions, loans,
expenses, profits and losses (but not forfeitures) in the manner described in
Section 4.4 (Periodic Adjustments to Accounts) as if such transferred portion of
the Account in question were, in fact, a separate account.
12.3 Nonforfeitability. Transferred Assets shall at all times be Nonforfeitable.
In the event of any circumstances giving rise to forfeiture of all or part of a
Participant's Company Contribution Account, then (notwithstanding such
forfeiture) he shall be entitled to receive the full amount of his Transferred
Assets Account.
12.4 Distribution of Transferred Assets.
(a) General Rule. Except as provided below, any balance in a Participant's
Transferred Assets Account shall be distributed to the Participant (or his
Beneficiary) either at the time and in the manner as other benefits payable to
him under the Plan.
(b) Protected Benefits. If the Transferred Assets were received in a direct
transfer from the trustee of another Qualified plan and either Section
401(a)(11)(B) of the Code applied to such other plan or the assets received by
the Plan are as a result of a merger into the Plan of the assets and liabilities
of another Qualified plan, then distributions of such Transferred Assets shall
be made, in accordance with the provisions concerning the time and manner of
payment as
110
<PAGE> 118
applied to the Transferred Assets when they were part of the plan
from which they were transferred.
111
<PAGE> 119
ARTICLE XIII
EXECUTION
IN WITNESS WHEREOF, Compuware Corporation hereby adopts and approves
the Compuware Corporation Employees' Stock Ownership Plan and 401(k)
Arrangement, as amended and restated effective as of April 1, 1995, as set forth
herein, and is executed by its officer duly authorized thereto, this 19th day of
March, 1996.
COMPUWARE CORPORATION
By: /s/ THOMAS COSTELLO, JR.
---------------------------------
Its: Vice President and Secretary
112
<PAGE> 120
FIRST AMENDMENT
TO THE
COMPUWARE CORPORATION EMPLOYEES' STOCK OWNERSHIP PLAN
AND 401(k) SALARY REDUCTION ARRANGEMENT
(As Amended and Restated Effective as of April 1, 1995)
WHEREAS, Compuware Corporation (the "Company") has established and
maintains the Compuware Corporation Employees' Stock Ownership Plan and 401(k)
Salary Reduction Arrangement, originally effective April 1, 1986 and as most
recently amended and restated effective as of April 1, 1995 (the "Plan"); and
WHEREAS, pursuant to Section 10.4 of the Plan, the Company has reserved the
right to amend the Plan at any time; and
WHEREAS, the Company desires to amend the Plan in order to add provisions
regarding former employees of Technalysis Corporation.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES, the Plan is hereby
amended in the following respects:
1. Section 2.1 of the Plan is hereby amended, effective April 30,
1996, to read as follows:
"(a) General Rule. Any Covered Employee who has (i) reached an
Attained Age of Twenty-One (21) years or more, (ii) completed six (6)
months of service or more following the date on which he first
performed an Hour of Service (determined without regard to any
interruptions in the employment of the Covered Employee by the Company
occurring during the twelve (12) month period beginning with the date
on which he first performed an Hour of Service and (iii) completed at
least five hundred (500) Hours of Service during any consecutive six
(6) month period shall be eligible to become a Participant as provided
in this Section 2.1(a). A Covered Employee who has satisfied such
conditions shall become a Participant in the employee stock ownership
portion of the Plan as of the ESOP Entry Date occurring in the Plan
Year in which the Employee meets those conditions, if such conditions
are met during the first six (6) months of the Plan Year, or the next
subsequent ESOP Entry Date, if those conditions are met during the last
six (6) months of the Plan Year. A Covered Employee who has
113
<PAGE> 121
satisfied the eligibility requirements shall be a Participant in the
401(k) portion of the Plan on the 401(k) Entry Date coincident with or
next following the date the conditions are fulfilled. The 401(k) Entry
Date for former employees of Technalysis Corporation shall also
include July 1 and January 1. Former employees of Technalysis
Corporation shall have their service with Technalysis Corporation
considered, for purposes of this Section 2.1(a), as if it were service
for the Company. An Employee who has fulfilled the eligibility
conditions of this Section 2.1(a), but who is not a Covered Employee
on the date he would otherwise become a Participant, shall become a
Participant on the date he becomes a Covered Employee."
2. Section 4.1(b)(ii) is hereby amended effective April 30, 1996, to
read as follows:
"(ii) Discretionary Contributions. Company Contributions made
pursuant to Section 3.1(a)(ii) (Company Contributions) and which
are not required to be made pursuant to Section 6.3(b) (Minimum
Required Allocation for Non-Key Employees), plus forfeitures other
than Company Stock, shall be allocated as of the last day of the
Plan Year among the Other Investments Accounts of the Participants
who have completed a Year of Service during the Plan Year then
ended and who are Employees at the end of that Plan Year, (unless
his employment shall have terminated because of the Participant's
death, Permanent and Total Disability, or after reaching an
Attained Age of sixty-five (65)) ("Eligible Participants").
Effective April 30, 1996, for purposes of determining whether,
under this Section 4.1(b)(ii) a Participant has completed a Year
of Service, a Participant's Hours of Service with an acquired
entity before it was merged with or acquired by the Company shall
be credited to a Participant who was a former employee of that
entity. The Committee shall allocate to the Other Investments
Account of each Eligible Participant that portion of the Company
Contributions which bears the same ratio to the total of the
Company Contributions that each Eligible Participant's Creditable
Compensation for the Plan Year bears to the total Creditable
Compensation of all eligible Participants for the Plan Year.
Notwithstanding the foregoing, if a Participant shall be absent on
the last day of the Plan Year for reasons which qualify under FMLA
and the Participant returns to work with the Company for a period
of at least thirty (30) days following the expiration of such
absence, he shall be deemed to be actively employed on the last
day of the Plan Year for purposes of this Section 4.1(b)(ii)."
114
<PAGE> 122
IN WITNESS WHEREOF, the Company has caused this First Amendment to the
Compuware Corporation Employees' Stock Ownership Plan and 401(k) Salary
Reduction Arrangement (as amended and restated effective as of April 1, 1995) to
be executed by its duly authorized officer this 25th day of April, 1996.
COMPUWARE CORPORATION
By: /s/ THOMAS COSTELLO, JR.
------------------------------------
Its: Vice President and Secretary
115
<PAGE> 123
SECOND AMENDMENT
TO THE
COMPUWARE CORPORATION EMPLOYEES' STOCK
OWNERSHIP PLAN AND 401(k) SALARY REDUCTION
ARRANGEMENT (As Amended and Restated Effective as
of April 1, 1995)
WHEREAS, Compuware Corporation (the "Company") has established and
maintains the Compuware Corporation Employees' Stock Ownership Plan and 401(k)
Salary Reduction Arrangement, originally effective April 1, 1986, and as most
recently amended and restated effective as of April 1, 1995, and thereafter
amended April 25, 1996 (the "Plan"); and
WHEREAS, pursuant to Section 10.4 of the Plan the Company has reserved the
right to amend the Plan at any time; and
WHEREAS, the Company desires to amend the Plan in order to change its
eligibility requirements and to add provisions regarding former employees of
certain acquired entities.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES, the Plan is hereby
amended in the following respects:
1. Section 1.1(ii) of the Plan is hereby amended in its entirety,
effective as of January 1, 1996, reading as follows:
"(ii) `ENTRY DATE' means, for the employee stock ownership
portion of the Plan, the first day of each Plan Year (the `ESOP Entry
Date'); and for the 401(k) portion of the Plan, each April 1 or October
1 (the `401(k) Entry Date') occurring on or after the Effective Date;
provided, however, with regard to employees of Technalysis Corporation,
`Entry Date' shall include June 1, 1996."
2. Effective January 1, 1997, Section 1.1(ii) of the Plan is hereby
deleted and all subsequent paragraphs are hereby renumbered accordingly.
3. Effective January 1, 1997, Section 1.1(uu) of the Plan is hereby
amended to read as follows:
116
<PAGE> 124
"(uu) `MERGED PLAN' means any Qualified Plan which, upon
authorization of the Employer, is merged into this Plan. The following
plans are Merged Plans:
Effective Date Plan Name
-------------- ---------
12/31/94 XA Systems Corporation Savings and
Investment Plan
03/31/96 CoroNet Systems, Inc. 401(k) Plan
04/01/97 Adams & Reynolds & Co. 401(k) Plan
04/01/97 Technalysis Corporation Savings Plan
10/01/97 Computer People Unlimited, Inc. Profit
Sharing Plan
10/01/97 Compuware Corporation Profit Sharing 401(k) Plan
and Trust"
4. Section 2.1(a) of the Plan is hereby amended, effective as of
January 1, 1996, by the addition of the following sentence at the end
thereof, reading as follows:
"Notwithstanding the foregoing, Employees who were participants in the
Technalysis Corporation Savings Plan as of May 31, 1996, shall enter
the Plan on June 1, 1996 and employees of Technalysis Corporation who
were hired on or after October 2, 1995, but before December 31, 1995,
shall enter the Plan on July 1, 1996 provided they have, by such date,
satisfied applicable age and service requirements."
5. Section 2.1(a) of the Plan is hereby amended, effective
January 1, 1997, to read as follows:
"(a) General Rule. Any Covered Employee who has reached an
Attained Age of Twenty One (21) years or more shall be eligible to
become a Participant and shall begin participating in the Plan on the
date on which he first performs an Hour of Service. An Employee who has
fulfilled the eligibility requirements of this Section 2.1(a) but who
is not a Covered Employee on the date he would otherwise become a
Participant, shall become a Participant on the date he becomes a
Covered Employee."
6. Section 4.1(c)(iv) of the Plan is hereby amended, effective as of
January 1, 1996, by the addition of the following sentence at the end
thereof:
117
<PAGE> 125
"With respect to allocations for Participants who were employees of an
acquired entity, the Creditable Compensation of each such Participant
shall include amounts paid by the Company to the Participant during the
relevant Plan Year, from and after the date of acquisition, which would
have been Creditable Compensation but for the fact the person was not
either a Participant or a Covered Employee; provided, however, that
Creditable Compensation of Participants who were employees of Adams &
Reynolds & Co. shall only include amounts paid by the Company to the
Participant from and after January 1, 1997."
7. Section 5.3(b) of the Plan is hereby amended, effective January 1,
1997, to read as follows:
"(b) Requirements. The Committee shall, in its Discretion,
determine the amount, terms and conditions of any loan. All loans
to Participants shall be made only from a Participant's Basic
Contributions Account, Company Stock Account, Transferred Asset
Account and/or Merged Plan Account."
8. Section 5.4(b)(iii) of the Plan is hereby amended in its entirety,
effective April 1, 1997, to read as follows:
"(iii) Payment Forms for Merged Plan Accounts. In addition to
the normal form for payment described in Section 5.4(b)(i)(Normal Form)
and the optional forms for payment described in Section
5.4(b)(ii)(Optional Forms), amounts held for a Participant in his
Merged Plan Account shall be payable in such other form(s) and at such
other time(s) as were permitted under the terms of the Merged Plan from
which they were transferred. For this purpose, the terms of the Merged
Plan is in effect on the date immediately preceding the date the Merged
Plan's assets were received by the Plan shall apply in determining the
availability of payment forms and timing of payments from the Merged
Plan Account, including all restrictions, terms, conditions, and notice
requirements applicable to electing or receiving payment in such
forms."
118
<PAGE> 126
IN WITNESS WHEREOF, the Company has caused this Second Amendment to the
Compuware Corporation Employees' Stock Ownership Plan and 401(k) Salary
Reduction Arrangement (as amended and restated effective as of April 1, 1995) to
be executed by its duly authorized officer this 31st day of December, 1996.
COMPUWARE CORPORATION
By: /s/ THOMAS COSTELLO, JR.
----------------------------------
Its: Vice President and Secretary
119
<PAGE> 127
THIRD AMENDMENT
TO THE
COMPUWARE CORPORATION EMPLOYEES' STOCK
OWNERSHIP PLAN AND 401(k) SALARY REDUCTION ARRANGEMENT
(As Amended and Restated Effective as of April 1, 1995)
WHEREAS, Compuware Corporation (the "Company") has established and
maintains the Compuware Corporation Employees' Stock Ownership Plan and 401(k)
Salary Reduction Arrangement, originally effective April 1, 1986, as most
recently amended and restated effective as of April 1, 1995, and as thereafter
amended from time to time (the "Plan"); and
WHEREAS, pursuant to Section 10.4 of the Plan the Company has reserved
the right to amend the Plan at any time; and
WHEREAS, the Company desires to amend the Plan in order to modify the
timing of Plan distributions.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES, the Plan is hereby
amended, effective April 1, 1998, in the following respects:
1. The introductory paragraph of Section 4.6 of the Plan is hereby amended
to read as follows:
"4.6 Fixed Accounts. After a Participant's employment with the Company
terminates, whether due to his retirement, death, or any other cause,
he shall cease to be a Participant as of the date of that event and,
except for benefits payable or distributable under this Plan, shall
cease to have any further right, title or interest in the Plan or Trust
Fund. The Participant's Account shall thereafter be subject to the
following rules."
2. Section 4.6(a) of the Plan is hereby amended to read as follows:
"(a) Date of Fixing. His Account shall become fixed at its
balance as of the Valuation Date coincident with or next succeeding the
date on which his participation ceases, and his Account as so fixed and
Nonforfeitable shall be his Fixed Account. Thereafter no further
credits or debits shall be made to said Account, except for:
120
<PAGE> 128
(i) Distributions therefrom.
(ii) Special expenses chargeable thereto under Section
4.5(b)(ii).
(iii) Matters mentioned in Section 4.6(b) (Investment) and
Section 4.6(c)(Adjustments)."
3. The introductory paragraph of Section 5.4(b) of the Plan is hereby
amended to read as follows:
"(b) Payment of Benefits Other Than Death Benefits. Subject to
Sections 5.4(a) (Application), 5.4(e) (Required Distributions), 5.4(i)
(Deadline for Benefits), 5.7 (Special Distribution Rules), and 12.4
(Distribution of Transferred Assets), the Committee shall direct the
Trustee to pay or arrange for payment of the benefits for which a
Participant is eligible (except Death Benefits), using the
Participant's entire Fixed Account (reduced by any prior
distributions), within thirty (30) days following the date in which the
Participant becomes eligible for a benefit, based upon the
Participant's Account balance as of the Valuation Date coincident with
or next succeeding the date the Participant's employment with the
Employer Group terminated. Benefits may be paid as follows:"
IN WITNESS WHEREOF, the Company has caused this Third Amendment to the
Compuware Corporation Employees' Stock Ownership Plan and 401(k) Salary
Reduction Arrangement (as amended and restated effective as of April 1, 1995) to
be executed by its duly authorized officer this 13th day of March, 1998.
COMPUWARE CORPORATION
By: /s/ THOMAS COSTELLO, JR.
-----------------------------------
Its: Vice President and Secretary
121
<PAGE> 129
FOURTH AMENDMENT
TO THE
COMPUWARE CORPORATION EMPLOYEES' STOCK
OWNERSHIP PLAN AND 401(k) SALARY REDUCTION ARRANGEMENT
(As Amended and Restated Effective as of April 1, 1995)
WHEREAS, Compuware Corporation (the "Company") has established and
maintains the Compuware Corporation Employees' Stock Ownership Plan and 401(k)
Salary Reduction Arrangement, originally effective April 1, 1986, as most
recently amended and restated effective as of April 1, 1995, and as thereafter
amended from time to time (the "Plan"); and
WHEREAS, pursuant to Section 10.4 of the Plan the Company has reserved
the right to amend the Plan at any time; and
WHEREAS, the Company desires to amend the Plan in order to add
provisions to account for employee contributions which have been made to plans
some or all of whose assets and liabilities may be merged with the Plan.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES, the Plan is hereby
amended, effective January 1, 1999, in the following respects:
1. A new Section 1.1(gg) is hereby added to the Plan, reading as
follows, and all subsequent paragraphs of Section 1.1 are hereby renumbered
accordingly.
"(gg) `EMPLOYEE CONTRIBUTION ACCOUNT' means the account
established for a Participant pursuant to Article XIII (Employee
Contributions) to hold Employee Contributions previously made by the
Participant, and any earnings thereon."
2. A new Section 1.1(hh) is hereby added to the Plan, reading as follows,
and all subsequent paragraphs of Section 1.1 are hereby renumbered accordingly.
122
<PAGE> 130
"(hh) `EMPLOYEE CONTRIBUTIONS' means voluntary, after-tax
contributions previously made by a Participant pursuant to Article XIII
(Employee Contributions), including, as the context requires,
adjustments as therein described."
3. A new Article XIII is hereby added to the Plan, reading as
follows, and all subsequent Articles are hereby renumbered accordingly.
"ARTICLE XIII
EMPLOYEE CONTRIBUTIONS
12.1 Right to Contribute. No Participant shall have the right to make
Employee Contributions. Employee Contributions previously made shall
nevertheless be subject to the provisions of this Article XIII.
12.2 Accounting. Contributions under this Article XIII shall be
credited to the Employee Contribution Account or Accounts of the
Participants in question within thirty (30) days after the date when
they are paid to and accepted by the Company. It shall be the Company's
responsibility to furnish the appropriate information in this respect
to the Trustee and the Committee. Solely for purposes of adjustments to
a Participant's Employee Contribution Account pursuant to Section 4.4
(Periodic Adjustments to Accounts), all Employee Contributions for a
Plan Year shall be deemed credited to the Participant's Employee
Contribution Account as of the next succeeding Valuation Date (as
provided for in Section 4.4(b) (Gains and Losses)) and all withdrawals
during such Plan Year pursuant to Section 12.4 (Withdrawals While
Employed) shall be deemed withdrawn as of the next preceding Valuation
Date; provided, however, that any other reasonable methodology may be
used by the Trustee for crediting and accounting or Employee
Contributions for purposes of Employee Contribution Account
adjustments, so long as such methodology is used consistently and in a
nondiscriminatory fashion.
12.3 Nonforfeitability. Employee Contributions shall be Nonforfeitable.
In the event of any circumstances giving rise to forfeiture of all or
part of a Participant's Account, then (notwithstanding such forfeiture)
he shall be entitled to receive the full amount of his Employee
Contributions. Any balance in a Participant's Employee Contribution
Account resulting from his own contributions not previously withdrawn
shall be paid to him following his retirement or other termination of
employment, or to his Beneficiary in the event of his death, in the
same manner as other benefits payable to him upon such events.
123
<PAGE> 131
12.4 Withdrawals While Employed. A Participant may withdraw his
Employee Contribution Account at any time upon written request to the
Committee; provided that the aggregate withdrawals by any Participant
prior to the termination of his employment shall at no time exceed the
Employee Contributions credited to his Employee Contribution Account as
of the preceding Valuation Date, adjusted for any prior distributions,
withdrawals, expenses, profits and losses (but not forfeitures) in the
manner described in Section 4.4 (Periodic Adjustments to Accounts) as
if such Employee Contribution Account were, in fact, a separate
account. Any withdrawal shall be taken first from Employee
Contributions made prior to January 1, 1987, if any (excluding any
income earned thereon), until exhausted, and then from Employee
Contributions made after December 31, 1986, plus any income earned
thereon and income earned on Employee Contributions made prior to
January 1, 1987. Withdrawals shall be taken pro rata from the
Investment Funds in which the Employee Contributions are invested."
IN WITNESS WHEREOF, the Company has caused this Fourth Amendment to the
Compuware Corporation Employees' Stock Ownership Plan and 401(k) Salary
Reduction Arrangement (as amended and restated effective as of April 1, 1995) to
be executed by its duly authorized officer this 30th day of December, 1998.
COMPUWARE CORPORATION
By: /s/ THOMAS COSTELLO, JR.
-----------------------------
Its: Secretary
124
<PAGE> 132
FIFTH AMENDMENT
TO THE
COMPUWARE CORPORATION EMPLOYEES' STOCK
OWNERSHIP PLAN AND 401(k) SALARY REDUCTION ARRANGEMENT
(As Amended and Restated Effective as of April 1, 1995)
WHEREAS, Compuware Corporation (the "Company") has established and
maintains the Compuware Corporation Employees' Stock Ownership Plan and 401(k)
Salary Reduction Arrangement, originally effective April 1, 1986, as most
recently amended and restated effective as of April 1, 1995, and as thereafter
amended from time to time (the "Plan"); and
WHEREAS, pursuant to Section 10.4 of the Plan the Company has reserved
the right to amend the Plan at any time; and
WHEREAS, the Company desires to further amend the Plan.
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES, the Plan is hereby
amended, effective February 1, 1999, except as otherwise noted, in the following
respects:
1. Section 1.1(a) of the Plan is hereby amended to read as follows:
"(a) `ACCOUNT' means one (1) or more accounts maintained to
record the interest of a Participant in the Plan, including the
aggregate of the Participant's Company Stock Account, Other Investments
Account, Basic Contribution Account, Employee Contribution Account,
Transferred Asset Account, and Merged Plan Account, if any, and any
earnings thereon."
2. A new paragraph (v) is hereby added to Section 1.1(f) of the Plan,
reading as follows:
"(v) That part of any Employee Contributions allocated to the
Participant's Account with respect to that Limitation Year."
125
<PAGE> 133
3. Section 1.1(gg) of the Plan is hereby amended to read as follows:
"(gg) `EMPLOYEE CONTRIBUTION ACCOUNT' means the account
established for a Participant pursuant to Article XIII (Employee
Contributions) to hold Employee Contributions made by the Participant,
and any earnings thereon."
4. Section 1.1(hh) of the Plan is hereby amended to read as follows:
"(hh) `EMPLOYEE CONTRIBUTIONS' means voluntary, after-tax
contributions made by a Participant either pursuant to Article XIII
(Employee Contributions) or previously to a Merged Plan, including, as
the context requires, adjustments as therein described."
5. The first sentence of Section 5.3(a) (General Rules) of the Plan is
hereby amended to read as follows:
"Pursuant to uniform rules consistently applied, the Committee
may, upon the written request of a Participant who is an active
Employee, but not a former Employee, Beneficiary or Alternate Payee,
direct the Trustee to make a loan or loans to such Participant; the
loan shall not be made from the Participant's Merged Plan Account,
however, without the consent of his Spouse if such consent would be
required for a payment of benefits pursuant to Section 5.4(b)(iii)
(which consent shall be obtained in accordance with Section 5.4(d)
(Spouse Consent)."
6. The second sentence of the introductory paragraph to Section 5.3(b)
(Requirements) of the Plan is hereby amended to read as follows:
"All loans to Participants shall be made only from the Nonforfeitable
portion of the Participant's Account and shall be subject to the
following further limitations:"
7. Section 5.3(b)(vii) of the Plan is hereby amended to read as follows:
"(vii) Repayment. Repayment of a loan made pursuant to
this Section 5.3 shall be by payroll deduction
wherever possible. Repayment of a loan by a
Participant who has terminated employment which is
required to be repaid within the thirty (30) day
period provided under Section 5.3(b)(xiii) shall be
made by check sent to the Trustee within that thirty
(30) day period. Repayment of a loan by a
Participant who is not actively employed but which
is not required to be repaid within thirty (30) day
period provided under Section 5.3(b)(xiii) shall be
made by monthly check
126
<PAGE> 134
sent to the Trustee. If a loan is repaid in full
prior to its specified repayment date, the
Participant may not obtain a new loan until at least
twelve (12) months have elapsed after the date of
complete repayment."
8. A new Section 5.3(b)(xiii) is hereby added to the Plan, reading as
follows:
"(xiii) Acceleration. Notwithstanding anything under
this Section 5.3 to the contrary, the entire
outstanding balance of any loan made after
January 31, 1999, shall become due and
payable thirty (30) days following the
Participant's death, the date any required
payment is due but is not yet paid, or the
termination of employment of a Participant
other than a party in interest (as defined
in Section 3(14) of the Act) with respect to
the Plan."
9. The first sentence of Section 5.4(b) of the Plan is hereby amended to
read as follows:
"Subject to Sections 5.4(e) (Required Distributions), 5.4(i)
(Deadline for Benefits), 5.7 (Special Distribution Rules), and 12.4
(Distribution of Transferred Assets), the Committee shall direct the
Trustee to pay or arrange for payment of the benefits for which a
Participant is eligible (except Death Benefits), using the
Participant's entire Fixed Account (reduced by any prior
distributions), as soon as administratively feasible after the
Participant becomes eligible for a benefit under Section 5.2
(Termination Benefit), Section 5.1(a) (Normal Retirement Benefit) or
Section 5.1(c) (Disability Benefit) and applies for such benefit under
Section 5.4(a) (Application), based upon the Valuation Date coincident
with or next preceding the later of the date the Participant's
employment with the Employer Group terminated or the date he files an
application with the Committee, pursuant to Section 5.4(a)
(Application)."
10. The following sentence is hereby added at the end of Section
5.4(b)(ii)(B) of the Plan:
"This installment option is
available only: (I) to Participants
who terminated employment with the
Employer Group either before
reaching an Attained Age of sixty
(60) or on account of a Permanent
and Total Disability, or (II) with
respect to the amounts in a
Participant's Account as of January
31, 1999, as adjusted for any
earnings or losses thereon."
127
<PAGE> 135
11. Plan Section 5.4(c)(1)(B) (Installments) is hereby amended to read as
follows:
"(B) Installments. The portion of a
Participant's Fixed Account
attributable to the balance of the
Participant's Account as of January
31, 1999, as adjusted for any
earnings or losses thereon, shall be
paid in substantially equal annual
installments (as selected by either
the Participant or the Beneficiary)
over a period to be selected by the
Participant, but not to exceed a
period extending beyond the lesser
of the life expectancy of the
Beneficiary or five (5) years."
12. The introductory paragraph to Section 5.5(a)(ii)of the Plan is hereby
amended to read as follows:
"A Participant may apply to the Committee to
receive payment of a single lump sum
distribution from the Nonforfeitable portion
of the balance in his Company Stock Account,
subject to the following rules:"
13. A new Section 5.5(a)(iii) is hereby added to the Plan, reading as
follows:
"(iii) Attainment of Age Fifty-Five (55) and Ten
(10) Years of Service. A Participant who
reaches an Attained Age of fifty-five (55)
and completed ten (10) Years
of Service shall be entitled to elect to
withdraw all or part of the Nonforfeitable
portion of his Account, whether or not his
Company employment shall have terminated.
Amounts distributed pursuant to this Section
5.5(a)(iii) shall be based upon the
Participant's Account balance as of the
Valuation Date on or immediately following
the date of election and shall be taken from
the Investment Funds as directed by the
Participant or, if no direction is given,
pro rata."
14. A new Section 5.5(a)(iv) is hereby added to the Plan, reading as
follows:
(iv) "Attainment of Age Fifty-Nine and One-Half
(59-1/2). A Participant who has reached an
Attached Age of Fifty-Nine and One-Half
(59-1/2) shall be entitled to
elect to withdraw all or part of the entire
Nonforfeitable portion of his Account,
whether or not his Company employment has
terminated. Amounts distributed pursuant to
this Section 5.5(a)(iv) shall be based upon
the Participant's Account balance as of the
Valuation Date on or immediately
128
<PAGE> 136
following the date of election and shall be
taken from the Investment Funds as directed
by the Participant or, if no direction is
given, pro rata."
15. This introductory paragraphs to Sections 5.5(c) and Section 5.5(c)(i)
of the Plan are hereby amended to read as follows:
"(c) Hardship. A Participant who experiences a Financial
Hardship, as defined in paragraph (iii) below, shall be eligible to
receive a distribution from the Nonforfeitable portion of his Account,
excluding his Company Stock Account, (taken from the Investment Funds
as instructed by the Participant or, if no instruction is given, pro
rata) to the extent necessary to relieve that Financial Hardship (which
may include amounts necessary to pay any federal, state, or local
income taxes or penalties reasonably anticipated to result from the
distribution), subject to the restrictions set forth below:
(i) Amount. The amount available for distribution to a
Participant as a Hardship Distribution under this
Section 5.5(c) shall be limited to the amount of the
Basic Contributions made on behalf of the Participant,
plus earnings on Basic Contributions credited prior to
January 1, 1989, plus the balance in his Transferred
Assets Account and Merged Plan Account (excluding any
earnings on elective deferrals after December 31,
1988)."
16. Section 5.7(a) of the Plan is hereby amended to read as follows:
"(a) Form. Benefits payable from a Participant's Company Stock
Account shall, to the extent possible or to the extent not limited by
restrictions described in Section 409(h)(2) of the Code, be distributed
in full shares of Company Stock or in cash, as elected by the
Participant; benefits payable from a Participant's Other Investments
Account and the value of any fractional shares of Company Stock shall
be paid in cash."
17. Section 5.7(e) of the Plan is hereby deleted.
18. The last sentence of Section 9.11 of the Plan is hereby amended to
read as follows:
129
<PAGE> 137
"Only Basic Contribution Accounts, Merged Plan Accounts, Transferred
Assets Accounts, the portion of Participants' Company Stock Accounts
which could otherwise be distributed to Participants pursuant to
Section 5.5(a)(ii) (From Company Stock as In-Service Distribution) or
5.5(a)(iii) (Attainment of Age Fifty-Five (55) and Ten (10) Years of
Service) may be subject to the investment directions of a Participant."
19. Section 12.4 of the Plan is hereby amended to read as follows:
"12.4 Distribution of Transferred Assets. Any balance in a
Participant's Transferred Assets Account shall be distributed to the
Participant (or his Beneficiary) at any time subject only to Section
5.4(a) (Application)."
20. Article XIII of the Plan is hereby amended to read as follows:
"ARTICLE XIII
EMPLOYEE CONTRIBUTIONS
13.1 Right to Contribute. Effective August 1, 1999, each Participant
shall have the right, at any time and from time to time, while actively
employed by the Company, to make Employee Contributions to the Trust
for crediting to his Account, subject nevertheless to the following
limitations.
(a) Form. Employee Contributions must be in the form of cash
or the equivalent, i.e., not stock, securities or other property.
(b) Frequency. Employee Contributions by any Participant shall
not be made more frequently than once in any calendar month, except to
the extent made by payroll deductions under 13.1(c) (Collection).
(c) Collection. Employee Contributions shall be paid not to
the Trustee but to the Company, which shall act as the collecting agent
and promptly pay them over to the Trustee. No Participant shall make
any Employee Contributions without first giving the Company at least
thirty (30) days' (or such other period as determined by the Committee
in its discretion) written notice, in such reasonable detail as the
Company may require, of his intention to do so. Any such notice may
pertain to a single contribution or to a series or program of
contributions; and it may authorize the Company to collect the
contributions by means of payroll deductions. A Participant shall be
bound by such notice or authorization unless and until he revokes it at
least thirty (30) days (or such other period as determined by the
Committee in its discretion) in advance by a subsequent written notice
to the Company.
130
<PAGE> 138
(d) Time for Depositing Employee Contributions. All Employee
Contributions shall be deposited with the Plan by the Company as soon
as administratively possible following their receipt by the Company,
but not later than the fifteenth (15th) business day after the end of
the month in which such Employee Contributions were collected by the
Company or withheld from the Employee's pay.
13.2 Accounting. Contributions under this Article XIII shall be
credited to the Employee Contribution Account or Accounts of the
Participants in question within thirty (30) days after the date when
they are paid to and accepted by the Company. It shall be the Company's
responsibility to furnish the appropriate information in this respect
to the Trustee and the Committee. Solely for purposes of adjustments to
a Participant's Employee Contribution Account pursuant to Section 4.4
(Periodic Adjustments to Accounts), all Employee Contributions for a
Plan Year shall be deemed credited to the Participant's Employee
Contribution Account as of the next succeeding Valuation Date (as
provided for in Section 4.4(b) (Gains and Losses)) and all withdrawals
during such Plan Year pursuant to Section 13.4 (Withdrawals While
Employed) shall be deemed withdrawn as of the next preceding Valuation
Date; provided, however, that any other reasonable methodology may be
used by the Trustee for crediting and accounting or Employee
Contributions for purposes of Employee Contribution Account
adjustments, so long as such methodology is used consistently and in a
nondiscriminatory fashion.
13.3 Nonforfeitability. Employee Contributions shall be Nonforfeitable.
In the event of any circumstances giving rise to forfeiture of all or
part of a Participant's Account, then (notwithstanding such forfeiture)
he shall be entitled to receive the full amount of his Employee
Contributions. Any balance in a Participant's Employee Contribution
Account resulting from his own contributions not previously withdrawn
shall be paid to him following his retirement or other termination of
employment, or to his Beneficiary in the event of his death, in the
same manner as other benefits payable to him upon such events.
13.4 Withdrawals While Employed. A Participant may withdraw his Employee
Contribution Account at any time upon written request to the Committee;
provided that the aggregate withdrawals by any Participant prior to the
termination of his employment shall at no time exceed the Employee
Contributions credited to his Employee Contribution Account as of the
preceding Valuation Date, adjusted for any prior distributions,
withdrawals, expenses, profits and losses (but not forfeitures) in the
manner described in Section 4.4 (Periodic Adjustments to Accounts) as if
such Employee Contribution Account were, in fact, a separate account. Any
withdrawal shall be taken first from Employee Contributions made prior to
January 1, 1987, if any (excluding any income earned thereon), until
exhausted, and then from Employee Contributions made after December 31,
1986, plus any income earned thereon and income
131
<PAGE> 139
earned on Employee Contributions made prior to January 1, 1987. Withdrawals
shall be taken pro rata from the Investment Funds in which the Employee
Contributions are invested.
13.5 Limitations on Crediting of Employee Contributions. Employee
Contributions credited to a Participant's Account (excluding any
Employee Contributions attributable to any Merged Plan) for any Plan
Year shall be subject to the following limitations.
(a) Limit for Highly Compensated Employees. Employee
Contributions credited to the Accounts of Participants who are Highly
Compensated Employees shall be limited to an Average Contribution
Percentage for the current Plan Year which does not exceed the greater
of:
(i) The Average Contribution Percentage (as
defined in Section 13.5(b) (Average
Contribution Percentage)) for Participants
who are not Highly Compensated Employees,
times 1.25, or
(ii) The Average Contribution Percentage (as defined in
Section 13.5(b) ( Average Contribution Percentage))
for Participants who are not Highly Compensated
Employees, times 2.00; provided, however, that for
purposes of this Section 13.5(a)(ii), the Average
Contribution Percentage for Participants who are
Highly Compensated Employees may not exceed the
Average Contribution Percentage for the preceding
Plan Year for Participants who are not Highly
Compensated Employees by more than two (2) percentage
points.
Provided, further, that if the Average Deferral Percentage is
determined by using the alternative described in Section 4.2(a)(i)(B),
then the Average Contribution Percentage determined under this Section
shall be subject to the multiple use test described in regulations
issued under Section 401(m) of the Code and further limits shall apply
to the crediting of Employee Contributions.
(b) Average Contribution Percentage. The `Average Contribution
Percentage' for the group of Participants who are Highly Compensated
Employees and the group of Participants who are not Highly Compensated
Employees, for a Plan Year, shall be the average of the `Actual
Contribution Ratios' of the members in such group. The `Actual
Contribution Ratio' of a Participant shall mean the amount of Employee
Contributions actually paid to the Plan on behalf of such Participant
for the Plan Year expressed as a percentage of his Testing Compensation
for such Plan Year. Notwithstanding the above, for the first Plan Year
in which Employee Contributions are made to the Plan by Participants,
the Average Contribution Ratio for the group of Participants who are
132
<PAGE> 140
not Highly Compensated Employees shall be the greater of three (3)
percent or their actual Average Contribution Ratio for such first Plan
Year.
(c) Aggregation of Contributions. For purposes of Section
13.5(b) (Average Contribution Percentage), the following amounts
contributed by or on behalf of a Participant under one or more other
Qualified plans maintained by any member of the Employer Group shall be
aggregated with his Employee Contributions under this Plan.
(i) If the Plan or one or more other Qualified
plans maintained by any member of the
Employer Group permit `matching
contributions' or `employee contributions'
(as those terms are defined in Code Section
401(m)(4)) to be allocated to the account of
any Highly Compensated Employee who is a
Participant in this Plan, then those
contributions under this Plan or such other
Qualified plan or plans shall be aggregated
with his Employee Contributions.
(ii) If the Plan and any other Qualified Plan maintained by
any member of the Employer Group to which `matching
contributions,' `employee contributions,' or `elective
deferrals' (as those terms are defined in Code Section
401(m)(4)) are made are considered as one plan for
purposes of Sections 401(a)(4) and 410(b) of the Code,
then such other Qualified plan or plans shall be treated
with this Plan as a single plan for purposes of
compliance with applicable limits on Employee
Contributions.
(d) Treatment of Excess Contributions. The amount by which the
limit set forth in Section 13.5(a) (Limit for Highly Compensated
Employees) is exceeded shall be referred to as `Excess Contributions'.
Excess Contributions and income attributable thereto shall be returned
to the relevant Highly Compensated Employees not later than the end of
the Plan Year immediately following the Plan Year in which the Excess
Contributions are made. To the extent there is a failure of the
multiple use test of Section 401(m)(2) of the Code, then refunds shall
be made only to those Highly Compensated Employees who participate in
the features which caused the failure.
(i) Determination of Excess. Excess Contributions, with
respect to a Highly Compensated Employee, shall be
determined as follows:
133
<PAGE> 141
(A) Highly Compensated Employees who have had Employee
Contributions actually paid to the Plan on their behalf
for the Plan Year shall be ranked in descending order
according to the dollar amounts of their Employee
Contributions.
(B) The Employee Contributions of the Highly Compensated
Employee with the highest dollar amount of Employee
Contributions shall be reduced by the lesser of the
aggregate amount of Excess Contributions or the amount
necessary to cause the dollar amount of that Highly
Compensated Employee's Employee Contribution to equal the
dollar amount of the Employee Contributions of the Highly
Compensated Employee with the next highest dollar amount
of Excess Contributions.
(C) If, after completing the process described in paragraph
(B), the total amount distributed is less than the
aggregate Excess Contributions, the remaining dollar
amount of the Excess Contributions shall be divided
equally to reduce the dollar amount of the Employee
Contributions of the Highly Compensated Employees with
the highest dollar amount of Employee Contributions by
the amount necessary to cause those Highly Compensated
Employees' Employee Contributions to equal the dollar
amount of the Excess Contributions of the Highly
Compensated Employee(s) with the next highest dollar
amount of Excess Contributions. This procedure shall be
repeated to the extent necessary to eliminate the
remaining Excess Contributions.
(D) The amount by which a Highly Compensated Employee's
Employee Contributions is reduced under this Section
13.5(d), if any, shall constitute that Highly Compensated
Employees' Excess Contributions.
(ii) Return of Income. Income allocable to Employee Contributions
required to be returned to a Participant under this Section
13.5(d) shall be determined in the manner described in Section
4.2(a)(iv)(B) (Determination of Income)."
134
<PAGE> 142
IN WITNESS WHEREOF, the Company has caused this Fifth Amendment to the
Compuware Corporation Employees' Stock Ownership Plan and 401(k) Salary
Reduction Arrangement (as amended and restated effective as of April 1, 1995) to
be executed by its duly authorized officer this 30th day of December, 1998.
COMPUWARE CORPORATION
By: /s/ THOMAS COSTELLO, JR.
---------------------------
Its: Secretary
135
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Compuware Corporation on Form S-8 of our reports dated May 4, 1998,
appearing in the Annual Report on Form 10-K of Compuware Corporation for the
year ended March 31, 1998.
/s/ DELOITTE & TOUCHE LLP
Detroit, Michigan
January 7, 1999
- ---------------
