<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 8, 1995
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
TELE-COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4841 84-1260157
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) (PRIMARY STANDARD INDUSTRIAL CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
TERRACE TOWER II
5619 DTC PARKWAY
ENGLEWOOD, COLORADO 80111-3000
(303) 267-5500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
TELE-COMMUNICATIONS, INC.
EMPLOYEE STOCK PURCHASE PLAN
(FULL TITLE OF THE PLAN)
---------------
STEPHEN M. BRETT, ESQ.
TELE-COMMUNICATIONS, INC.
TERRACE TOWER II
5619 DTC PARKWAY
ENGLEWOOD, COLORADO 80111-3000
(303) 267-5500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPY TO:
JAMES F. WOOD, ESQ.
SHERMAN & HOWARD L.L.C.
3000 FIRST INTERSTATE TOWER NORTH
633 SEVENTEENTH STREET
DENVER, COLORADO 80202
(303) 298-0940
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Proposed Proposed
Maximum Maximum Amount of
Title of Securities to be Amount to be Offering Price Aggregate Registration
Registered Registered Per Share Offering Price Fee (1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock par 5,000,000 Shares $21.81 $109,050,000 $37,603.45
value $1.00 per share(2)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Determined pursuant to Rule 457(h)(1) of the Securities Act of 1933, based
upon the average high and low prices reported on February 6, 1995.
(2) In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this registration statement also covers an indeterminate amount of
interested to be offered or sold pursuant to the employee benefit plan
described herein.
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<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
Note: The document(s) containing the employee benefit plan
information required by Item 1 of this Form and the statement of availability
of registrant information and other information required by Item 2 of this Form
will be sent or given to participants as specified by Rule 428(b)(1) under the
Securities Act of 1933, as amended (the "Securities Act"). In accordance with
Rule 428(a) and the requirements of Part I of Form S-8, such documents are not
being filed with the Securities and Exchange Commission (the "Commission")
either as part of this Registration Statement or as a prospectuses or
prospectus supplements pursuant to Rule 424 under the Securities Act. The
Registrant shall maintain a file of such documents in accordance with the
provisions of Rule 428(a)(2) under the Securities Act. Upon request, the
Registrant shall furnish to the Commission or its staff a copy or copies of all
the documents included in such file.
The Registrant was incorporated in 1994 under the name "TCI/Liberty
Holding Company" for the purpose of combining the Registrant's predecessor
Tele-Communications, Inc. (renamed "TCI Communications, Inc." and referred to
herein as "TCIC"), and Liberty Media Corporation ("Liberty"). On August 4,
1994, the mergers (the "TCI/Liberty Combination") of TCIC and Liberty with
separate wholly-owned subsidiaries of the Registrant were consummated and each
of TCIC and Liberty became wholly-owned subsidiaries of the Registrant. In
connection with the TCI/Liberty Combination, the Registrant changed its name to
Tele-Communications, Inc. and TCIC changed its name to TCI Communications, Inc.
Unless the context indicates otherwise, as used in this Prospectus the terms
"Registrant" or "Company" mean, on and after August 4, 1994,
Tele-Communications, Inc. (formerly named "TCI/Liberty Holding Company") and,
before August 4, 1994, TCIC (formerly named "Tele-Communications, Inc."), and
their respective consolidated subsidiaries.
1
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by Tele-Communications, Inc. (the
"Registrant") with the Commission pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act"), are incorporated herein by reference:
(a) (1) The latest annual report filed pursuant to Section
13(a) or 15(d) of the Exchange Act by the Tele-Communications,
Inc. Employee Stock Purchase Plan (the "Plan"); and
(2) The Company's latest annual report filed pursuant to
Section 13(a) or 15(d) of the Exchange Act; or
(3) The latest prospectus filed pursuant to Rule 424(b)
under the Securities Act that contains audited financial
statements for the Company's latest fiscal year for which such
statements have been filed.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by
the registrant document referred to in (a) above.
(c) The description of the common stock, no par value, of the
Company contained in a registration statement filed under
Section 12 of the Exchange Act, including any amendments or
reports filed for the purpose of updating such description.
ITEM 4. DESCRIPTION OF SECURITIES.
All of the securities being registered are either registered under
Section 12 of the Exchange Act or are plan interests.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides,
generally, that a corporation shall have the power to indemnify any person who
was or is a party or is threatened to be made a party to any action, suit or
proceeding (except actions by or in the right of the corporation) by reason of
the fact that such person is or was a director or officer of the corporation
against all expenses, judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. A corporation may similarly indemnify such person for
expenses actually and reasonably incurred
2
<PAGE> 4
by him in connection with the defense or settlement of any action or suit by or
in the right of the corporation, provided such person acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, in the case of claims, issues and matters as
to which such person shall have been adjudged liable to the corporation,
provided that a court shall have determined, upon application, that, despite
the adjudication of liability but in view of all of the circumstances of the
case, such person is fairly and reasonably entitled to indemnify for such
expenses which such court shall deem proper.
Section 102(b)(7) of the Delaware General Corporation Law provides,
generally, that the certificate of incorporation may contain a provision
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provision may not eliminate or limit the liability
of a director (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
under section 174 of Title 8, or (iv) for any transaction from which the
director derived an improper personal benefit. No such provision may eliminate
or limit the liability of a director for any act or omission occurring prior to
the date when such provision becomes effective.
Article V, Section E of the Company's Amended and Restated
Certification of Incorporation provides as follows:
1. Limitation on Liability.
To the fullest extent permitted by the Delaware General
Corporation Law as the same exists or may hereafter be
amended, a director of the Corporation shall not be liable to
the Corporation or any of its stockholders for monetary
damages for breach of fiduciary duty as a director. Any
repeal or modification of this paragraph 1 shall be
prospective only and shall not adversely affect any
limitation, right or protection of a director of the
Corporation existing at the time of such repeal or
modification.
2. Indemnification.
(a) RIGHT TO INDEMNIFICATION. The Corporation shall
indemnify and hold harmless, to the fullest extent permitted
by applicable law as it presently exists or may hereafter be
amended, any person who was or is made or is threatened to be
made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or
investigative (a "proceeding") by reason of the fact that he,
or a person for whom he is the legal representative, is or was
a director or officer of the Corporation or is or was serving
at the request of the Corporation as a director, officer,
employee or agent of another corporation or of a partnership,
joint venture, trust, enterprise or nonprofit entity,
including service with respect to employee benefit plans,
against all liability and loss suffered and expenses
(including attorneys' fees) reasonably incurred by such
person. Such right of indemnification shall inure whether or
not the claim asserted is based on matters which antedate the
adoption of this Section E. The Corporation shall be required
to indemnify a person in connection with a proceeding (or part
thereof) initiated by such person only if the proceeding (or
part thereof) was authorized by the Board of Directors of the
Corporation.
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<PAGE> 5
(b) PREPAYMENT OF EXPENSES. The Corporation shall pay
the expenses (including attorneys' fees) incurred in defending
any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a director
or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking
by the director or officer to repay all amounts advanced if it
should be ultimately determined that the director or officer
is not entitled to be indemnified under this paragraph or
otherwise.
(c) CLAIMS. If a claim for indemnification or payment of
expenses under this paragraph is not paid in full within 60
days after a written claim therefor has been received by the
Corporation, the claimant may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part,
shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the
burden of proving that the claimant was not entitled to the
requested indemnification or payment of expenses under
applicable law.
(d) NON-EXCLUSIVITY OF RIGHTS. The rights conferred on
any person by this paragraph shall not be exclusive of any
other rights which such person may [have] or hereafter acquire
under any statute, provision of this Certificate, the Bylaws,
agreement, vote of stockholders or disinterested directors or
otherwise.
(e) OTHER INDEMNIFICATION. The Corporation's obligation,
if any, to indemnify any person who was or is serving at its
request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, enterprise or
nonprofit entity shall be reduced by any amount such person
may collect as indemnification from such other corporation,
partnership, joint venture, trust, enterprise or nonprofit
entity.
Article II, Section 2.9 of the Company's Bylaws also contains an
indemnity provision, requiring the Company to indemnify members of the Board of
Directors and officers of the Company and their respective heirs, personal
representatives and successors in interest for or on account of any action
performed on behalf of the Company, to the extent provided by the Delaware
corporation laws and the Company's Certificate of Incorporation, as then or
thereafter in effect.
The Company has also entered into indemnification agreements with each
of its directors (each director, an "indemnitee"). The indemnification
agreements provide (i) for the prompt indemnification to the fullest extent
permitted by law against any and all expenses, including attorneys' fees and
all other costs, expenses and obligations paid or incurred in connection with
investigating, defending, being a witness or participating in (including on
appeal), or in preparing for ("Expenses"), any threatened, pending or completed
action, suit or proceeding, or any inquiry or investigation ("Claim"), related
to the fact that such indemnitee is or was a director, officer, employee, agent
or fiduciary of the Company or is or was serving at the Company's request as a
director, officer, employee, trustee, agent or fiduciary of another
corporation, partnership, joint venture, employee benefit plan, trust or other
enterprise, or by reason of anything done or not done by a director or officer
in any such capacity, and against any and all judgments, fines, penalties and
amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection therewith) of any Claim, unless the
Reviewing Party (one or more members of the Board of Directors or other person
appointed by the Board of Directors, who is not a party to the particular
claim, or independent legal counsel) determines that such indemnification is
not permitted under
4
<PAGE> 6
applicable law and (ii) for the prompt advancement of Expenses, and for
reimbursement to the Company if the Reviewing Party determines that such
indemnitee is not entitled to such indemnification under applicable law. In
addition, the indemnification agreements provide (i) a mechanism through which
an indemnitee may seek court relief in the event the Reviewing Party determines
that the indemnitee would not be permitted to be indemnified under applicable
law (and therefore is not entitled to indemnification or expense advancement
under the indemnification agreement) and (ii) indemnification against all
expenses (including attorneys' fees), and advancement thereof if requested,
incurred by the indemnitee in seeking to collect an indemnity claim or
advancement of expenses from the Company or incurred in seeking to recover
under a directors' and officers' liability insurance policy, regardless of
whether successful or not. Furthermore, the indemnification agreements provide
that after there has been a "change in control" in the Company (as defined in
the indemnification agreements), other than a change in control approved by a
majority of directors who were directors prior to such change, then, with
respect to all determinations regarding a right to indemnity and the right to
advancement of Expenses, the Company will seek legal advice only from
independent legal counsel selected by the indemnitee and approved by the
Company.
The indemnification agreements impose upon the Company the burden of
proving that an indemnitee is not entitled to indemnification in any particular
case and negate certain presumptions that may otherwise be drawn against an
indemnitee seeking indemnification in connection with the termination of
actions in certain circumstances. Indemnitees' rights under the
indemnification agreements are not exclusive of any other rights they may have
under Delaware law, the Company's Bylaws or otherwise. Although not requiring
the maintenance of directors' and officers' liability insurance, the
indemnification agreements require that indemnitees be provided with the
maximum coverage available for any Company director or officer if there is such
a policy.
The Company may purchase liability insurance policies covering its
directors and officers.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See Exhibit Index and Exhibits at the end of this Registration
Statement.
The Registrant hereby undertakes that it will submit or has
submitted the Plan and any amendment thereto to the Internal
Revenue Service ("IRS") in a timely manner and has made or
will make all changes required by the IRS in order to qualify
the plan under Section 401 of the Internal Revenue Code.
ITEM 9. UNDERTAKINGS.
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:
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<PAGE> 7
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change
in the information set forth in the registration
statement;
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if 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 Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post- effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, 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 Registration Statement on Form S-8 to be signed on its behalf by the
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undersigned, thereunto duly authorized, in the City of Greenwood Village, State
of Colorado, on January 31, 1995.
TELE-COMMUNICATIONS, INC.
By: -/Stephen M. Brett/-
----------------------------
Stephen M. Brett,
Executive Vice President
and Secretary
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Brendan R. Clouston and Stephen M.
Brett, and each of them, his true and lawful attorneys-in-fact and agents, each
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including pre-effective and 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 said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to
the requirements of the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities and on the dates
indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
-/Bob Magness/- Chairman of the Board January 31, 1995
--------------- and Director
(Bob Magness)
-/John C. Malone/- President and Director January 31, 1995
------------------ (Principal Executive Officer)
(John C. Malone)
-/Donne F. Fisher/- Executive Vice President and January 31, 1995
------------------- Director (Principal Financial and
(Donne F. Fisher) Accounting Officer)
-/John W. Gallivan/- Director January 31, 1995
--------------------
(John W. Gallivan)
-/Kim Magness/- Director January 31, 1995
---------------
(Kim Magness)
-/Robert A. Naify/- Director January 31, 1995
-------------------
(Robert A. Naify)
</TABLE>
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<TABLE>
<S> <C> <C>
-/Jerome H. Kern/- Director January 31, 1995
------------------
(Jerome H. Kern)
-/Tony Coelho/- Director January 31, 1995
---------------
(Tony Coelho)
-/R.E. Turner/- Director January 31, 1995
---------------
(R.E. Turner)
</TABLE>
THE PLAN. Pursuant to the requirements of the Securities Act of 1933, the
persons who administer the Plan have duly caused this registration statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Greenwood Village, State of Colorado, on January 31, 1995.
By: -/Gary Bracken/-
---------------------------------
Gary Bracken, Plan Administrator
8
<PAGE> 10
EXHIBIT INDEX
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<CAPTION>
SEQUENTIAL
EXHIBITS PAGE NO.
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4.1 Agreement and Plan of Merger, dated as of January 27, 1994, by and among the Company,
Liberty, Old TCI, TCI Mergerco, Inc. and Liberty Mergerco, Inc. (incorporated herein
by reference to Old TCI's Current Report on Form 8-K, dated February 15, 1994
(Commission File No. 0-5550)).
4.2 Amendment No. 1, dated as of March 30, 1994, to Agreement and Plan of Merger, dated as
of January 27, 1994, by and among the Company, Liberty, Old TCI, TCI Mergerco, Inc.
and Liberty Mergerco, Inc. (incorporated herein by reference to Old TCI's Current
Report on Form 8-K dated April 6, 1994 (Commission File No. 0-5550)).
4.3 Amendment No. 2, dated as of August 4, 1994, to Agreement and Plan of Merger, dated as
of January 27, 1994, by and among the Company, Liberty, Old TCI, TCI Mergerco, Inc.
and Liberty Mergerco, Inc. (incorporated herein by reference to the Company's and Old
TCI's Current Report on Form 8-K jointly filed on August 18, 1994) (Commission File
Nos. 0-20421 and 0-5550)).
4.4 Agreement and Plan of Merger, dated as of June 6, 1991, between UAE and Old TCI
(incorporated herein by reference to Old TCI's Current Report on Form 8-K, dated June
12, 1991 (Commission File No. 0-5550)).
4.5 First Amendment to Agreement and Plan of Merger, dated as of June 6, 1991, between UAE
and Old TCI (incorporated herein by reference to Old TCI's Current Report on Form 8-K,
dated December 12, 1991, as amended by Form 8 amendment dated January 28, 1992
(Commission File No. 0-5550)).
4.6 Amended and Restated Employee Stock Purchase Plan
4.7 Summary Plan Description
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Price Waterhouse LLP.
</TABLE>
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<PAGE> 1
EXHIBIT 4.6
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
OF
TELE-COMMUNICATIONS, INC.
February 7, 1995
<PAGE> 2
I N D E X
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Page
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<S> <C> <C>
ARTICLE I NAME AND PURPOSE OF PLAN AND TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE IV CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE V DETERMINATION AND VESTING OF PARTICIPANTS'
ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VI RETIREMENT DATE--DESIGNATION OF BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VII DISTRIBUTION FROM TRUST FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VIII FIDUCIARY OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE IX PLAN ADMINISTRATOR AND PLAN COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE X POWERS AND DUTIES OF THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE XI CONTINUANCE, TERMINATION, AND AMENDMENT OF PLAN
AND TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE XII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
<PAGE> 3
ARTICLE I
NAME AND PURPOSE OF PLAN AND TRUST
The company, by execution of this agreement, establishes a
qualified stock purchase plan, to be known as the Tele-Communications, Inc.,
Employee Stock Purchase Plan, to afford its employees a convenient means for
regular and systematic purchases of common stock of the company and to instill
a proprietary interest in the company. The plan and trust fund are created for
the exclusive benefit of employee-participants and their beneficiaries. The
plan is intended to qualify under Section 401(a) of the Code, and the trust
created under the plan is intended to be exempt under Section 501(a) of the
Code.
<PAGE> 4
ARTICLE II
DEFINITIONS
When used herein, the following words shall have the following
meanings, unless the context clearly indicates otherwise:
2.1 "Account," unless otherwise indicated, means a participant's entire
interest in company stock and any other assets in the trust fund created by his
employer's contributions and his own contributions, and the income, expenses,
gains, and losses attributable to such stock and assets.
2.2 "Anniversary date" means the first day of each plan year.
2.3 "Associated company" means any corporation which is deemed to be a
member of the group of corporations under common control of the company and
which adopts this plan and trust with the consent of the company. Any such
company which subsequently is no longer a member of the controlled group shall
be deemed to have terminated this plan and trust immediately upon such failure
to be a member of the controlled group.
2.4 "Beneficiary" means the person who, under this plan, becomes entitled
to receive a participant's Account upon his death.
2.5 "Board of directors" means the board of directors of the company.
2.6 "Break in service" for purposes of eligibility to participate means
any 12-month period, measured from the employee's employment or reemployment
commencement date in which the employee has completed no more than 500 hours of
service. "One-year break in service" for vesting and all other purposes means
any plan year in which the employee has completed no more than 500 hours of
service. For purposes of this definition, hours of service shall include
service as an employee in any capacity.
2.7 "Code" means the Internal Revenue Code of 1986, as amended, as it
presently is constituted, as it may be amended, or any successor statute of
similar purposes.
-2-
<PAGE> 5
2.8 "Company" means Tele-Communications, Inc., a corporation with its
principal place of business at Denver, Colorado, or any successor in interest
to it resulting from merger, consolidation, or transfer of substantially all of
its assets, which expressly may agree in writing to continue this plan.
2.9 "Compensation" means a participant's wages, salaries, fees for
professional services, and other amounts received for personal services
actually rendered in the course of employment with the employer including, but
not limited to, commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums, tips, and
bonuses. Compensation also shall include [a] amounts paid or reimbursed by the
employer for moving expenses incurred by the employee, but only to the extent
that these amounts are not deductible by the employee under Code Section 217,
[b] amounts described in Code Sections 104(a)(3), 105(a) and 105(h), but only
to the extent that these amounts are includable in the employee's gross income
and only to the extent such amounts are not covered by the application of Code
Section 125, [c] amounts described in Code Section 105(d), whether or not
includable in the employee's gross income, [d] amounts contributed to a
cafeteria plan that are not includable in gross income because of the
application of Code Section 125, [e] amounts includable in the gross income of
the employee as a result of the grant of a non-qualified stock option to the
employee or as a result of the employee making an election described in Code
Section 83(b), and [f] amounts deferred upon the employee's election pursuant
to a plan or arrangement qualified under Code Section 401(k) and maintained by
the employer. Compensation shall not include [i] employer contributions to a
deferred compensation plan that are not includable in the employee's gross
income in the year in which contributed, [ii] employer contributions to a
simplified employee pension plan described under Code Section 408(k) to the
extent such contributions are deductible by the employee, [iii] any
distributions from a deferred compensation plan, other than amounts received
from an unfunded non-qualified plan, [iv] amounts realized from the exercise of
a non-qualified stock option or when restricted stock (or property) held by the
employee either becomes freely transferable or is no longer subject to
substantial risk of forfeiture, [v] amounts realized from the sale, exchange,
or other disposition of stock acquired under a qualified stock option, or [vi]
other amounts which receive special tax benefits, or employer contributions to
purchase an annuity contract described in Code Section 403(b), whether or not
under a salary reduction agreement and whether or not the amounts actually are
excludable from the gross income of the employee.
Pursuant to Code Section 401(a)(17), compensation taken into account for all
purposes under this plan shall not exceed [A] $200,000 (as adjusted by the
Secretary of the Treasury for cost of living increases each year) for any plan
year for plan years ending prior to January 1, 1994, and [B] $150,000 (as
adjusted by the Secretary of the Treasury for cost of living increases each
year) for any plan year for plan years beginning on or after January 1, 1994.
In determining the compensation of a participant for purposes of the Code
Section 401(a)(17) limitation, the rules of Code Section 414(q)(6) will apply,
except that the term "family" will include only the spouse of the participant
and any lineal descendants of the participant who have not attained age 19
before the close of the year. If as a result of the application of the rules
of Code Section 414(q)(6), the Code Section 401(a)(17)
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limitation is exceeded, then the limitation shall be prorated among the
affected individuals in proportion to each such individual's compensation, as
determined above prior to the application of the Code Section 401(a)(17)
limitation.
2.10 "Effective date" of this restated plan means January 1, 1994, except
as otherwise expressly provided in the plan or under the requirements of law.
For any associated company which is not participating on the restated effective
date, effective date means that date designated by the associated company.
2.11 "Employee" means any person, whether male or female, now or hereafter
in the employ of the employer, including officers of the employer, but
excluding [a] directors who are not in the employer's employ in any other
capacity; [b] independent contractors; and [c] any employee who is included in
a unit of employees covered by a collective bargaining agreement between
employee representatives and the company, any associated company, or any
predecessor company, which agreement does not provide for participation in the
plan and provided further that retirement benefits were the subject of good
faith bargaining between such employee representatives and the company, any
associated company, or any predecessor company. For purposes of the exclusion
under subparagraph [c], employees included in a unit of employees covered under
such a collective bargaining agreement will remain excluded from the definition
of "Employee" under this section following the expiration of such collective
bargaining agreement and during the period between the expiration of such
collective bargaining agreement and the effective date of any successor
collective bargaining agreement covering such employees.
2.12 "Employer" means the company and any associated company which has
adopted the plan and trust.
2.13 "Employment commencement date" means the date on which an employee
first performs an hour of service for the employer.
2.14 "Fiduciary" means a person who [a] exercises any discretionary
authority or discretionary control respecting management of the plan or
exercises any authority or control respecting management or disposition of its
assets, [b] renders investment advice for a fee or other compensation, direct
or indirect, with respect to any moneys or other property of the plan, or has
any authority or responsibility to do so, or [c] has any discretionary
authority or discretionary responsibility in the administration of the plan.
Such term includes any person designated under section 8.2. If any money or
other property of the plan is invested in securities issued by an investment
company registered under the Investment Company Act of 1940, such investment by
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itself shall not cause such investment company or such investment company's
investment adviser or principal underwriter to be deemed to be a fiduciary or a
party in interest.
2.15 "Highly compensated employee" means any employee or former employee
who, during the plan year or the preceding plan year was:
[a] at any time a five percent owner;
[b] received annual compensation from the employer in excess of $75,000,
as adjusted for increases in the cost of living;
[c] received annual compensation from the employer in excess of $50,000,
as adjusted for increases in the cost of living, and was in the
top-paid group of employees for the plan year. An employee is in the
top-paid group of employees for any plan year if such employee is in
the group consisting of the top twenty percent (20%) of the employees
when ranked on the basis of compensation paid during the plan year; or
[d] was at any time an officer and received compensation greater than 150%
of the $30,000 annual additional limitation, as adjusted for increases
in the cost of living.
In determining which employees are highly compensated employees, an employee
not described in paragraphs [b], [c] or [d] above for the preceding year will
not be treated as falling under the categories described in paragraphs [b], [c]
or [d] for the current year unless such employee is in the group consisting of
the 100 employees with the highest compensation from the employer in the
current year. In determining an individual's compensation under this section,
compensation from each employer required to be aggregated under Code Sections
414(b), (c), and (m) shall be taken into account. For purposes of this
section, the determination of compensation shall be made without regard to Code
Sections 125, 402(a)(8), 402(h)(1)(B) and, in the case of employer
contributions made pursuant to a salary reduction agreement, without regard to
Code Section 403(b).
2.16 "Hour of service" means:
[a] Each hour for which an employee is paid or is entitled to payment, for
the performance of duties for his employer during the applicable
computation period; and
[b] Each hour for which an employee is paid or is entitled to payment, by
his employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship is
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty, or leave of absence;
and
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[c] Each hour for which back pay, irrespective of mitigation of damages,
either was awarded or agreed to by the employer.
For purposes of section 2.16[b] the following rules shall apply:
[1] No more than 501 hours will be credited to any employee on
account of a single continuous period during which the
employee performs no duties;
[2] An hour shall not be credited on account of a period during
which no duties are performed if the payment for such hour is
made or due under a plan maintained solely for the purpose of
complying with applicable workmen's compensation, or
unemployment compensation or disability insurance laws;
[3] Hours shall not be credited for payments which reimburse an
employee solely for medical or medically related expenses
incurred by the employee; and
[4] A payment shall be deemed to be made by or due from the
employer regardless of whether such payment is made by or due
from the employer directly, or indirectly through, among
others, a trust fund, or insurer, to which the employer
contributes or pays premiums.
These rules also shall apply to the extent that any back pay is agreed
to or awarded for a period of time during which an employee did not or
would not have performed duties.
For purposes of this section 2.16, the same hours of service shall not be
credited under both section 2.16[a] or [b] and also under 2.16[c]. Each hour
of service shall be credited under this section 2.16 in accordance with 29
C.F.R. Section 2530.200b-2(b) and (c). Each employee shall receive credit for
hours of service with any affiliated corporation within the meaning of Code
Section 1563(a), determined without regard to Sections 1563(a)(4) or
1563(e)(3)(c) of the Code, but each such employee must be employed by the
employer to participate in this plan. An affiliated company within the meaning
of Code Section 1563(a) generally means any member of a controlled group of
corporations.
For purposes of determining whether an employee has experienced a break in
service, hours of service shall include each hour for which an employee is
absent from work for any period:
[A] by reason of the pregnancy of the employee;
[B] by reason of the birth of a child of the employee;
[C] by reason of the placement of a child with the employee in connection
with the adoption of such child by such employee; or
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[D] for purposes of caring for such child for a period beginning
immediately following such birth or placement.
The hours described in the preceding sentence shall be treated as hours of
service in the year in which the absence from work begins if the participant
would be prevented from incurring a one-year break in service as a result of
such treatment or, in any other case, the hours shall be treated as hours of
service in the immediately following year. The hours described in the two
preceding sentences shall be the hours of service which otherwise would
normally have been credited to such participant but for such absence, or in any
case in which the plan is unable to determine such hours, eight hours of
service per work day of such absence. No credit will be given pursuant to this
paragraph unless the participant furnishes to the Plan Administrator such
timely information as the plan may require to establish that the absence from
work is for reasons described above and to establish the number of days for
which there was such an absence.
2.17 "Key employee" means any employee of an employer who, at any time
during the plan year or any of the four preceding plan years, is:
[a] an officer of an employer having annual compensation greater than 150
percent of the $30,000 annual addition limitation as adjusted for
increases in the cost of living for the plan year;
[b] one of the ten employees having annual compensation from an employer
of more than the $30,000 annual addition limitation as adjusted for
increases in the cost of living and owning both more than one-half
percent interest and the largest interests of the employer;
[c] five percent owner of the employer; or
[d] a one percent owner of the employer having annual compensation from
the employer of more than $150,000.
For purposes of paragraph [a], no more than 50 employees (or, if lesser, the
greater of 3 employees or 10 percent of the employees) shall be treated as
officers. For purposes of paragraph [b], if two employees have the same
interest in an employer, the employee having greater annual compensation from
the employer shall be treated as having a larger interest. This paragraph
shall be interpreted to conform with Code Section 416. For purposes of this
definition, "employee" shall have the same meaning as it does under Code
Section 416(i)(1). Any beneficiary of a key employee shall be treated as a key
employee.
2.18 "Named fiduciary" means any fiduciary who is named in this plan, or
who, pursuant to a procedure specified in the plan, is identified as a
fiduciary to the plan by the company. Such named
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fiduciaries include, but are not limited to, the Trustee, the Plan Committee,
and the Plan Administrator.
2.19 "Normal retirement age" means the date a participant attains age 65.
2.20 "Participant" means any employee (as defined in section 2.11) who has
become a participant under Article III of this plan. Participation shall cease
upon the later of [a] distribution of a participant's entire vested Account and
forfeiture of a participant's entire nonvested Account or [b] termination of
employment.
2.21 "Plan" and "plan and trust" mean the employee stock purchase plan and
trust set forth in and by this document and all subsequent amendments to it.
2.22 "Plan Administrator" means the person appointed by the board of
directors whose duties are provided in this plan and trust.
2.23 "Plan Committee" means the committee appointed by the board of
directors whose duties are provided in this plan and trust.
2.24 "Plan year" means the company's fiscal (taxable) year, as presently
established, and this shall be the fiscal (taxable) year of the trust
established under this plan. If there is a change in the company's fiscal
year, then "plan year" shall mean the company's new fiscal year, and any short
fiscal year resulting from such change shall be considered a full year for all
purposes of this plan. The "plan year" shall not change without approval of
the Internal Revenue Service.
2.25 "Qualifying employer security" means the common stock of
Tele-Communications, Inc. Upon the effective date of the Agreement and Plan of
Merger, dated as of January 27, 1994, among Tele-Communications, Inc., Liberty
Media Corporation, TCI/Liberty Holding Company, TCI Mergeco, Inc., and Liberty
Mergeco, Inc., no further purchases of the common stock of Tele-Communications,
Inc. will be effected under this plan. At and after such effective time,
"qualifying employer security" shall mean the common stock of TCI/Liberty
Holding Company (as it shall be renamed Tele- Communications, Inc.), or any
affiliated company, as permitted under ERISA Section 407(d)(5).
2.26 "Quarterly anniversary date" means January 1, April 1, July 1, or
October 1 of each plan year.
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2.27 "Reemployment commencement date" means the first date after a break in
service on which an employee performs an hour of service for the employer.
2.28 "Super Top Heavy Plan" means a plan in which the aggregate of the
accounts of key employees under the plan exceeds 90 percent of the aggregate of
the accounts of all participants under the plan (as of the determination date
for the plan year), excluding former key employees. The accounts of
participants shall be increased by the aggregate distributions made with
respect to such participants during the five year period ending on the
determination date. "Determination date" means, with respect to any plan year,
the last day of the preceding plan year (or in the case of the first plan year,
the last day of such plan year). This paragraph shall be interpreted to
conform with Code Section 416.
2.29 "Termination of employment" means the termination of a person's status
as an employee as defined in section 2.11 or as an employee covered by a
collective bargaining agreement as described in section 2.11.
2.30 "Top Heavy Plan" means a plan in which the aggregate of the accounts
of key employees under the plan exceeds 60 percent of the aggregate of the
accounts of all participants under the plan (as of the determination date for
the plan year), excluding former key employees. The accounts of participants
shall be increased by the aggregate distributions made with respect to such
participants during the five year period ending on the determination date.
"Determination date" means, with respect to any plan year, the last day of the
preceding plan year (or in the case of the first plan year, the last day of
such plan year). This paragraph shall be interpreted to conform with Code
Section 416. For purposes of determining whether this and any aggregated plans
are top heavy or super top heavy, all defined benefit and defined contribution
plans (including any simplified employee pension plan) maintained or ever
maintained by the employer in which a key employee participates or on which any
plan in which a key employee participates depends for qualification under Code
Sections 401(a)(4) or 410 must be aggregated. Other plans maintained or ever
maintained by the employer may be aggregated if, when considered as a group
with the plans that must be aggregated, they would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410. Notwithstanding the above, if
a participant or former participant has not performed any services with the
employer at any time during the five-year period ending on the determination
date, the account of such participant or former participant shall not be taken
into account in determining whether the plan is top heavy or super top heavy.
2.31 "Total disability" means a disability that permanently renders a
participant unable to perform satisfactorily the usual duties of his employment
with his employer, as determined by a physician selected by the Plan Committee
or its delegatee, and which results in his termination of active employment
with the employer.
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2.32 "Trustee" means the person or persons appointed as trustee of the
trust fund established by this plan and trust and any duly appointed and
qualified successor trustee.
2.33 "Trustee responsibility" means any responsibility provided in the plan
to manage or control the assets of this plan.
2.34 "Trust fund" means the assets of the trust established by this plan
and trust from which the benefits under this plan shall be paid and shall
include all income of any nature earned by the fund and all changes in fair
market value.
2.35 "Year of service" for purposes of eligibility to participate means any
12-month period, measured from the employee's employment or reemployment
commencement date, in which the employee completes 1,000 or more hours of
service. "Year of service" for vesting and all other purposes means any plan
year in which the employee completes 1,000 or more hours of service. For
purposes of this definition, hours of service shall include service as an
employee in any capacity including commissioned salesman and shall include
service as an employee of an employer under common control with the company as
defined in Code Section 1563(a) and the regulations thereunder, or any other
company designated by the Plan Committee from time to time. Year of service
also shall include service with any company that is acquired directly or
indirectly by any employer participating in this plan whether by acquisition of
stock or assets if such company becomes part of the controlled group of
corporations as defined in Code Section 1563(a) and the regulations thereunder,
of which Tele-Communications, Inc., is a part.
2.36 The masculine gender shall include the feminine, and the singular
shall include the plural.
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ARTICLE III
PARTICIPATION
3.1 WHO MAY BECOME A PARTICIPANT: Any employee who is a participant on
the effective date of this restated plan or who has completed one year of
service on the effective date of this restated plan may participate in this
restated plan. Any other or new employee (as defined in section 2.11) of an
employer who has attained age 21 and who has completed one year of service may
become a participant on any quarterly anniversary date of the plan following
his having attained age 21 and completed one year of service, provided such
employee must be an employee of the employer when he becomes a participant.
3.2 AGREEMENT TO PARTICIPATE: An employee who has become eligible to
participate in the plan will commence participation in the plan under
procedures promulgated by the Plan Committee from time to time. By electing to
participate in the plan, an employee agrees to the following:
[a] His acceptance of participation in the plan;
[b] His consent to make contributions to the trust fund under section 4.1;
[c] His consent that his contributions be withheld from his compensation;
and
[d] His consent to be bound by the terms and conditions of the plan and
all its amendments.
The failure to enroll as a participant in the plan under the enrollment
procedures promulgated by the Plan Committee will be deemed to be an election
not to become a participant. An employee may revoke this election and become a
participant by enrolling as a participant in the plan under the enrollment
procedures promulgated by the Plan Committee before a subsequent quarterly
anniversary date of the plan, if he otherwise is eligible.
3.3 PARTICIPATION UPON REEMPLOYMENT: An employee who has satisfied the
age and service requirements under section 3.1 by reason of years of service
prior to a break in service of one year or longer may become a participant
immediately upon his reemployment. However, an employee who becomes a
participant under this section may not commence contributions until the first
quarterly anniversary date occurring after reemployment pursuant to section
4.1.
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ARTICLE IV
CONTRIBUTIONS
4.1 CONTRIBUTIONS BY PARTICIPANTS: Each participant shall make
contributions to the trust fund only by means of regular payroll deductions or
by salary reductions. Participant after-tax contributions by payroll deduction
shall be referred to as voluntary contributions or after-tax contributions and
participant pre-tax contributions shall be known as salary reductions or
pre-tax contributions. Subject to the limitations of section 4.11, each
participant shall designate as a voluntary contribution or salary reduction an
amount in percentages or even dollars up to 10% of his compensation in each
payroll period, until changed by the participant. A participant may change his
designation prospectively but not retroactively effective for any payroll
period by providing notice to the Plan Committee prior to the last two weeks of
the calendar quarter immediately preceding the quarter for which it is to be
effective. A participant may suspend his contributions to the plan for any
quarter by providing notice of suspension with the Plan Committee at any time
prior to the last two weeks of the calendar quarter immediately preceding the
calendar quarter in which it is to be effective. Such notice shall remain
effective until the participant elects to make further participant
contributions, and no employer contributions shall be made on behalf of the
participant with respect to such suspension period. A participant may
authorize resumption of participant contributions by providing a new
contribution designation to the Plan Committee at any time prior to the last
two weeks of the calendar quarter immediately preceding the calendar quarter in
which it is to be effective. Notwithstanding the above, no election to resume
Participant contributions by a Participant who is subject to the provisions of
Section 16 of the Securities Exchange Act of 1934 will be effective until the
first calendar quarter commencing six months after the end of the last calendar
quarter for which the Participant elected to suspend his or her contributions
to the Plan. The Plan Committee will promulgate procedures from time to time
for the designation, change, suspension, or resumption of participant
contributions.
4.2 DETERMINATION OF CONTRIBUTION BY THE EMPLOYER: The Plan Committee on
behalf of each employer shall pay into the trust fund at least annually an
amount up to 100% of each participant's contributions to the plan, as the board
of directors of the company shall determine by resolution. In such case, the
employer's contribution on behalf of each participant shall be equal to a
stated and nondiscriminatory percentage of each participant's contributions
(both voluntary contributions and salary reductions) under section 4.1 during
the plan year, except as provided in section 5.1. Any amounts forfeited under
section 7.3 shall be used first to pay plan expenses under section 8.6 and any
remaining forfeitures after the payment of plan expenses will be used to reduce
the employer's contribution under this section. Except as provided in section
7.3, the amount of the employer's contribution shall not exceed 10% of the
aggregate compensation of all participants under this plan in the year for
which the contribution is being determined.
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4.3 TIME AND METHOD OF PAYMENT OF CONTRIBUTION BY THE EMPLOYER: The Plan
Committee on behalf of the employer may make payment of its contribution for
any plan year in installments on any date or dates it elects, provided that the
amount of its contribution for any year shall be paid in full within the time
prescribed in order to qualify such payment as an income tax deduction for such
year under the Code or any other provisions of law. Such contribution may be
made in cash, in qualifying employer securities (as determined by the company),
or in property of the character in which the Trustee is authorized to invest
the trust fund. Contributions of property other than cash or qualifying
employer securities shall be subject to the approval of the Trustee and the
Plan Committee.
4.4 TO WHOM CONTRIBUTIONS ARE TO BE PAID: The employer's contributions
for any plan year shall be paid to the Trustee and shall become a part of the
trust fund. The employer shall pay the salary reductions and voluntary
contributions elected by the participants to the Trustee at the earliest
reasonable time but no later than 90 days after the date on which the
participants would have received the funds but for the participants' salary
reduction or payroll deduction election.
4.5 RETURN OF EMPLOYER CONTRIBUTIONS: A contribution by the employer to
the plan shall be returned to the company, at the employer's discretion, under
any of the following circumstances:
[a] if a contribution is made by the employer by a mistake of fact,
including a mistaken excess contribution, within one year of its
payment to the plan;
[b] if initial qualification of the plan is denied, within one year after
the date of denial of initial qualification of the plan; or
[c] if all or any part of the deduction of the contribution is disallowed,
to the extent of the disallowance, within one year after the
disallowance of the deduction.
The employer shall state by written request to the Trustee the amount of the
contribution to be returned and the reason for such return. Such amount shall
not include any earnings attributable to the contribution and shall be reduced
by any losses attributable to the contribution. Upon sending such request to
the Trustee, the employer simultaneously shall send to the Plan Committee a
copy of the request. The Trustee shall return such contribution to the
employer immediately upon receipt of the written request by the employer. All
contributions by the employer to the plan are declared to be conditioned upon
both the qualification of the plan under Code Section 401 and the deductibility
of such contributions under Code Section 404.
4.6 EMPLOYER'S OBLIGATIONS: The adoption and continuance of the plan
shall not be deemed to constitute a contract between the employer and any
employee or participant, nor to be
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consideration for, or an inducement or condition of, the employment of any
person. Nothing in this plan shall be deemed to give any employee or
participant the right to be retained in the employ of the employer, or to
interfere with the right of the employer to discharge any employee or
participant at any time, nor shall it be deemed to give the employer the right
to require the employee or participant to remain in its employ, nor shall it
interfere with the right of any employee or participant to terminate his
employment at any time.
4.7 ROLLOVER CONTRIBUTIONS AND TRANSFERS:
[a] General Rules: Notwithstanding the limits imposed upon participant
contributions, an employee may contribute any amount of funds (in the
form of cash or check) to the plan in any year if such contribution
satisfies the requirements under law for rollover contributions and if
the Plan Committee agrees in writing to accept such contribution on
behalf of the plan and the employer. Subject to the direction of the
Plan Committee, the Trustee is authorized to receive and add to the
trust fund as a direct transfer assets attributable to the vested
interest of any participant in a retirement plan qualified under Code
Section 401(a) if such individual is a participant in this plan except
that a direct transfer from a qualified plan subject to Code Section
417 shall not be permitted. The employer shall not be required to
make any matching contributions under section 4.2 for such rollover
contributions or transfers. Rollover contributions and transfers
shall be added to a separate account for such participant, shall be
nonforfeitable, and shall be distributable under Article VII.
[b] Transfer From UAE ESOP: Upon the direction of the Plan Committee, the
Trustee shall accept as a direct transfer that portion of the total
account (whether or not vested) of each participant who has an account
in the United Artists Entertainment Company Employee Stock Ownership
Plan (the "UAE ESOP"), to the extent such participant's UAE ESOP
account is invested in common stock of Tele-Communications, Inc. The
common stock so transferred shall be the number of shares of common
stock of Tele-Communications, Inc. that is allocated to the UAE ESOP
account of the participant as of the valuation date immediately
preceding the date of such transfer. Such transferred accounts will
remain part of the assets of this plan until distributable pursuant to
Article VII. Upon such transferred assets becoming distributable
under Article VII, the participant may elect to receive a distribution
of such transferred amounts in the form of cash or shares of common
stock of Tele-Communications, Inc. and such distribution will be made
pursuant to the distribution terms of Article VII of the UAE ESOP in
effect on the date of such transfer.
4.8 LIMITATION ON ANNUAL ADDITION: For purposes of this section, annual
addition includes employer contributions, forfeitures, and participant
contributions. Annual addition shall not include any direct transfer or any
contribution made by a participant which qualifies under law as a rollover
contribution. The annual limitation year shall be the plan year. If the
annual addition to the Account of any participant, attributable to all defined
contribution plans (including money
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purchase pension plans and profit-sharing plans of the employer), would exceed
either [a] the greater of $30,000 (as adjusted for cost of living increases by
the Secretary of the Treasury as of each January 1 for any limitation year
ending during such calendar year) or 25% of the dollar limitation in effect
under Code Section 415(b)(1)(A), or [b] 25% of such participant's compensation,
the excess amount shall be disposed of as follows:
[1] Any participant contributions to the extent that the return would
reduce the excess amount, shall be returned to the participant.
[2] The amount of such excess attributable to employer contributions and
any forfeitures shall be allocated and reallocated to other
participants' Accounts in accordance with Article V to the extent that
such allocations do not cause the additions to any such participant's
Account to exceed the lesser of the maximum permissible amount or any
other limitation provided in the plan.
[3] To the extent that the excess amounts described in paragraph [b] above
cannot be allocated to other participants' Accounts, such excess
amounts shall be allocated to the suspense account in accordance with
Article V and allocated to participants under the provisions of
Article V.
4.9 LIMITATION ON COMBINED BENEFITS AND CONTRIBUTIONS OF ALL DEFINED
BENEFIT AND DEFINED CONTRIBUTION PLANS OF THE EMPLOYER: In any year if the
employer makes contributions to a defined benefit plan on behalf of an employee
who also is a participant in this plan, then the sum of the defined benefit
plan fraction and the defined contribution plan fraction (both as prescribed by
law and as defined below) for such employee for such year shall not exceed 1.0.
In any year if the sum of the defined benefit plan fraction and the defined
contribution plan fraction on behalf of an employee does exceed 1.0, then the
employer's contribution on behalf of such participant to this defined
contribution plan of the employer shall be reduced to the extent necessary to
prevent the sum of the defined contribution plan fraction and the defined
benefit plan fraction from exceeding 1.0. The employer's contribution on
behalf of such participant to this plan may be reallocated to other
participants under Article V to the extent necessary to prevent the sum of the
defined contribution plan fraction and the defined benefit plan fraction from
exceeding 1.0. If any amount cannot be allocated or reallocated without
exceeding the limits provided in this Article, such amount may be allocated to
the suspense account established under Article V and allocated to the
participants in accordance with the provisions of Article V. For purposes of
this section the limitation year shall be the plan year.
[a] Defined Benefit Plan Fraction: The defined benefit plan fraction is a
fraction the numerator of which is the projected annual benefit of the
participant under the plan (determined as of the close of the year)
and the denominator of which is the lesser of the following amounts
determined for such year and for each prior year of service with the
employer:
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[1] the product of 1.25 times the maximum benefit dollar
limitation in effect for the limitation year; or
[2] the product of 1.4 times 100% of the participant's average
compensation for his high three consecutive calendar years.
[b] Defined Contribution Plan Fraction: The defined contribution plan
fraction is a fraction the numerator of which is the sum of the annual
additions to the participant's Account under all defined contribution
plans of the employer as of the close of the limitation year and the
denominator of which is the sum of the lesser of the following amounts
determined for such year and for each prior year of service with the
employer:
[1] the product of 1.25 times the dollar limitations in effect
under Code Section 415(c)(1)(A) for the limitation year
(without regard to Code Section 415(c)(6)); or
[2] the product of 1.4 times an amount equal to 25% of the
participant's compensation for the limitation year.
[c] Transition Rules: The Plan Committee, in its discretion, may elect to
use the transition rules for calculating the defined contribution plan
fraction as provided in Code Sections 415(e)(4) and 415(e)(6).
4.10 TOP HEAVY PLAN PROVISIONS: The provisions of this section shall have
effect for any plan years beginning after December 31, 1983, in which the plan
is top heavy.
[a] Minimum Contribution: If no other qualified plan maintained by the
employer provides the minimum benefit or contribution for participants
as required under Code Section 416(c) for a year that the plan is top
heavy, this plan shall provide a minimum allocation (which may include
forfeitures otherwise allocable) for such plan year for each
participant who is a non-key employee in an amount equal to at least
three percent of such participant's compensation for such plan year.
Notwithstanding the preceding sentence, the minimum allocation
required under this paragraph shall in no event exceed the percentage
of contributions made under the plan for such year for the key
employee for whom such percentage is the highest for such year. If
employees who are participants in this plan also participate in a
defined benefit plan maintained by the employer and both plans are top
heavy in any year, the employer may elect to satisfy the minimum
contribution requirements of Code Section 416(c) and the regulations
thereunder by providing a minimum allocation (which may include
forfeitures otherwise allocable) for such plan year for each
participant (for purposes of Code Section 416(c) and the regulations
thereunder) who is a non-key employee in an amount equal to at least
5% of such participant's compensation for such plan year. For
purposes of this section, participants who must be considered
participants to satisfy the coverage requirements of Code Section
410(b) in accordance with Code Section 401(a)(5) and who have not
separated from service
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<PAGE> 19
at the end of the plan year shall be eligible to share this minimum
contribution including participants who have failed to complete 1,000
or more hours of service, who have declined to make mandatory
contributions to the plan or who have been excluded because such
participant's compensation is less than a stated amount.
[b] Modification Of Plan Fractions: The 1.25 factor in the defined
benefit plan fraction and defined contribution plan fraction (as such
fractions are defined in the preceding section) shall be reduced to
1.0 for any year that the plan is top heavy or super top heavy.
4.11 SALARY REDUCTION RULES:
[a] Election To Reduce Salary: Subject to the rules of section 4.1, an
employee eligible to participate in this plan may elect to reduce his
compensation by an amount determined at his discretion but which
amount may not exceed $7,000 (as adjusted for increases in the cost of
living) in each calendar year. A participant must make this election
according to the procedure prescribed by the Plan Committee.
[b] Nondiscriminatory Benefits: Subject to the limitations of paragraph
[a], all participants in this plan are eligible to defer identical
percentages of their compensation, regardless of the amount of such
compensation.
[c] Nonforfeitability Of Elective Contributions: All salary reduction
contributions made on behalf of participants to this plan shall be
vested immediately.
[d] Distributions Restriction: Salary reductions shall be subject to the
restrictions on withdrawals under section 7.6.
[e] Limit On Actual Deferral Percentage: The actual deferral percentage
for highly compensated employees for each plan year must be no greater
than either [1] 1.25 times the actual deferral percentage for all
other employees for such plan year, or [2] 2.0 times the actual
deferral percentage for all other employees for such plan year if the
actual deferral percentage for highly compensated employees is not
more than two percentage points higher than the actual deferral
percentage for all other employees for such plan year.
[f] Adjustments to Actual Deferral Percentage: In the event that the
limitations set forth in paragraphs [a] or [e] are not met, the Plan
Committee shall adjust either the salary reductions or the employer
contributions pursuant to one or more of the options set forth below,
as determined by the company:
[1] On or before the 15th day of the third month following the end
of each plan year, but in no event later than the close of the
following plan year, each highly compensated employee,
beginning with the employee having the highest "actual
deferral
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<PAGE> 20
percentage", shall have his or her portion of the excess
deferral or the excess employer contribution (and any income
allocable to such portion as determined below) distributed to
him or her until the limitations set forth in paragraphs [a]
and [e] are satisfied. Generally, income and losses
attributable to excess elective deferrals shall be determined
by multiplying the income (or loss) for the plan year
allocable to elective deferrals by a fraction, the numerator
of which is the excess elective deferrals on behalf of the
employee for such plan year and the denominator of which is
the total Account balance of the employee attributable to
elective deferrals, adjusted for gains and losses allocable to
such total Account balance for the plan year. Notwithstanding
the above, for plan years beginning on or after January 1,
1992, income or losses attributable to excess elective
deferrals will be determined under any reasonable method used
by the plan to allocate income and losses on plan assets. In
determining the income or loss attributable to excess employer
contributions, the term "elective deferral" in the preceding
sentences shall be replaced with "employer contribution."
Effective only for the plan years beginning January 1, 1989,
January 1, 1990, and January 1, 1991, income on excess
elective contributions or excess employer contributions
attributable to the period between the end of the plan year in
which the excess deferral or excess employer contribution
occurred and the date such excess is distributed shall be
determined in accordance with the safe harbor gap period
income and loss allocation provisions prescribed in the
Treasury regulations and releases issued under Code Section
401(k). To the extent any such excess elective deferrals or
excess employer contributions have been applied to the
purchase of qualifying employer securities, any distributions
under this paragraph will be made in whole shares of such
qualifying employer securities and fractional shares shall be
distributed in cash.
[2] A participant may elect to treat his or her excess elective
deferrals or excess employer contributions as an amount
distributed to the participant and then contributed by the
participant to the plan as a voluntary after-tax contribution,
to the extent such recharacterized excess contributions in
combination with other participant contributions made under
the plan do not exceed the limitations on participant
contributions provided in the plan, including the average
contribution percentage limitation. Recharacterized
contributions will be nonforfeitable and will be subject to
the distribution and withdrawal provisions applicable to
salary reduction contributions. Recharacterization must occur
within two and one-half months after the close of the plan
year in which the excess contributions arose and
recharacterization is deemed to occur no earlier than the date
the last highly compensated employee is provided with
notification of the amount recharacterized and the
consequences of such recharacterization. Recharacterized
amounts will be taxable to the participant in the
participant's taxable year in which the participant would have
received such amounts in cash but for the salary reduction
election.
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<PAGE> 21
[3] Within 30 days after the end of the plan year, the employer
shall make a contribution on behalf of nonhighly compensated
employees in an amount sufficient to satisfy the limitations
set forth in paragraph [e]. Such contribution shall be
allocated to the Account of each non-highly compensated
employee in the same proportion that each non-highly
compensated employee's deferred compensation for the year
bears to the total deferred compensation of all nonhighly
compensated employees.
[4] Any matching employer contribution that is attributable to
excess elective deferrals distributed to a participant under
paragraph [1] above will be forfeited as of the distribution
date of the excess deferrals and such forfeited amount will be
used to reduce the employer contribution to this plan under
section 4.2 for the plan year in which such forfeiture occurs.
[5] A participant may assign to this plan any elective deferrals
exceeding the limitations set forth in Code Section 402(g), as
described in section 4.11[a] above, by notifying the Plan
Committee on or before the March 15 of the year following the
participant's fiscal year in which such excess was
contributed. A participant is deemed to have notified the
Plan Committee of any excess elective deferrals that arise
taking into account only those elective deferrals made to this
plan and any other plan maintained by the company.
[g] Definitions:
[1] The "actual deferral percentage" for a specified group of
employees for a plan year shall be the average of the ratios
(calculated separately for each employee in such group) of the
amount of compensation deferred under the plan on behalf of
each such employee for the plan year to the employee's
compensation for such plan year. For purposes of determining
the actual deferral percentage, salary reduction contributions
shall be considered, and the Plan Committee shall determine
whether vested employer contributions shall be considered.
[2] "Salary reductions" are those reductions in salary that each
participant elects to defer.
4.12 NONDISCRIMINATION REQUIREMENTS FOR EMPLOYEE AND MATCHING EMPLOYER
CONTRIBUTIONS:
[a] Limit on Average Contribution Percentage: The average contribution
percentage for highly compensated employees shall not exceed the
greater of [1] 1.25 times the average contribution percentage for all
other employees, or [2] the lesser of 2.0 times the average
contribution percentage for all other employees or the average
contribution percentage for all other employees plus two percentage
points.
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<PAGE> 22
[b] Adjustments to Average Contribution Percentage: In the event that the
average contribution percentage test set forth in paragraph [a] above
is not met, on or before the 15th day of the third month following the
end of each plan year, but in no event later than the close of the
following plan year, each highly compensated employee, beginning with
the employee having the highest contribution percentage, shall have
his or her portion of the excess aggregate contribution (and any
income allocable to such portion as determined below) distributed to
him or her until the test set forth in paragraph [a] is satisfied.
Income and losses attributable to such excess aggregate contributions
shall be determined by multiplying the income (or loss) for the plan
year allocable to the matching or employee contributions by a
fraction, the numerator of which is the excess aggregate contribution
made on behalf of the employee for such plan year and the denominator
of which is the total Account balance of the employee attributable to
matching and employee contributions, adjusted for gains and losses
allocable to such total Account balance for the plan year. Effective
for the plan years beginning January 1, 1989, January 1, 1990, and
January 1, 1991, income on excess aggregate contributions attributable
to the period between the end of the plan year in which the excess
aggregate contribution occurred and the date such excess is
distributed shall be determined in accordance with the safe harbor gap
period income and loss allocation provisions prescribed in the
Treasury regulations and releases issued under Code Section 401(m).
Notwithstanding the above, for plan years beginning on or after
January 1, 1992, income or losses attributable to excess aggregate
contributions will be determined under any reasonable method used by
the plan to allocate income and losses on plan assets. To the extent
any such excess aggregate contributions have been applied to the
purchase of qualifying employer securities, any distributions under
this paragraph will be made in whole shares of such qualifying
employer securities and fractional shares shall be distributed in
cash.
[c] Average Contribution Percentage: The "average contribution
percentage" for a specified group of employees for a plan year shall
be the average of the ratios (calculated separately for each employee
in such group) of the sum of the matching employer contributions and
the participant voluntary after-tax contributions made on behalf of
each such employee for the plan year to the employee's compensation
for such plan year. For purposes of determining the contribution
percentage, the Plan Committee may elect to treat salary reduction
contributions as company matching contributions.
[d] Multiple Use: If the sum of the average contribution percentage and
the actual deferral percentage for highly compensated employees
exceeds the aggregate limit described below, such excess amount will
be treated as an excess employer contribution or an excess aggregate
contribution, as determined by the Plan Committee, and such excess
contributions will be distributed to highly compensated employees,
beginning with the highly compensated employee with the highest actual
deferral percentage or the highest contribution percentage,
respectively, in the same manner as excess employer contributions and
excess aggregate contributions are distributed as provided in section
4.11[f] or in paragraph [b] above. The aggregate limit is the greater
of [1] the sum of [A] 1.25 times the greater of the actual
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<PAGE> 23
deferral percentage for non-highly compensated employees or the
average contribution percentage for nonhighly compensated employees
for the plan year plus [B] the lesser of two times or two plus the
lesser of such actual deferral percentage or average contribution
percentage; or [2] the sum of [A] 1.25 times the lesser of the actual
deferral percentage for nonhighly compensated employees or the average
contribution percentage for nonhighly compensated employees for the
plan year plus [B] the lesser of two times or two plus the greater of
such actual deferral percentage or average contribution percentage.
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<PAGE> 24
ARTICLE V
DETERMINATION AND VESTING OF PARTICIPANTS' ACCOUNTS
5.1 DETERMINATION OF PARTICIPANTS' ACCOUNTS:
[a] Allocation Of Contributions: As of the last day of each calendar
quarter the Plan Committee shall allocate to the Account of each
participant any amounts contributed by the employer to the trust on
behalf of such participant under section 4.2 for the calendar quarter
then ended. Forfeitures remaining after the payment of plan expenses
under section 8.6 will be used to reduce employer contributions and
shall be allocated during the first calendar quarter after the end of
the year in which the forfeitures occur, along with employer
contributions made during that quarter. Voluntary contributions and
salary reductions under section 4.1 shall be allocated to the Account
of the participant making such contribution.
[b] Allocation Of Earnings, Losses And Changes In Fair Market Value Of The
Net Assets Of The Trust Fund; Allocation Of Qualifying Employer
Securities: Qualifying employer securities shall be allocated to the
Accounts of participants as of the end of each calendar quarter after
acquired by the trust fund in the ratio that contributions under
section 4.1 made to each Account in the calendar quarter bear to the
total contributions under section 4.1 made to all Accounts for the
calendar quarter. Any dividends, cash or stock, paid on qualifying
employer securities shall be allocated along with the qualifying
employer securities on which they are paid. Once qualifying employer
securities are allocated to a participant's Accounts, any dividends,
cash, or stock paid on such allocated securities shall be allocated
directly to such Accounts. Earnings and losses of the trust fund
(other than on qualifying employer securities) shall be computed and
allocated to the participants in the ratio which the total dollar
value of the Account (whether or not vested and excluding qualifying
employer securities) of each participant in the trust fund bears to
the aggregate dollar value of the Accounts (whether or not vested and
excluding qualifying employer securities) of all participants as of
the annual computation date. Only participants in the plan on the
last day of the plan year shall share in the allocation of earnings,
losses and changes in fair market value of the net assets of the trust
fund (other than qualifying employer securities) for that year.
[c] Participants' Accounts: The Plan Committee shall maintain an Account
for each participant showing the number of shares allocated to his
Account in the trust fund as of the last previous computation date
attributable to any contributions made by the employer, including any
employer contributions for the year ending on such date. This Account
shall be known as the employer contributions Account. Separate
Accounts also shall be kept, known as the employee contributions
Account, showing the voluntary and salary reduction contributions of
each participant, shares allocated, and the earnings, losses and
changes in fair market value thereof. The employer contributions
Account and the employee contributions Account
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<PAGE> 25
for participants shall be considered separate contracts for purposes
of Code Section 72(e). The Plan Committee shall distribute, or cause
to be distributed, to each participant at least annually a written
statement setting forth the value of such participant's Accounts as of
the last day of the plan year, and such other information as the Plan
Committee shall determine.
[d] Valuation Dates: The valuation date of the trust fund shall be the
last day of each plan year, at which time the Plan Committee shall
determine the value of the net assets of the trust fund (i.e., the
value of all the assets of the trust fund at their then current fair
market value, less all liabilities) and the value of contributions by
each employer and all participants for such year. Qualifying employer
securities shall be valued at the closing dealer "bid" price of the
stock in the over-the-counter market as reported by the National
Association of Securities Dealers, Inc., or National Quotation Bureau,
Inc.
[e] Computation Dates: The Plan Committee shall compute the value of each
participant's Account at least annually on the last day of each plan
year and shall base such computations on the value of the assets in
the trust fund on the valuation date coincident with such date. Upon
any direct distribution or withdrawal under Article VII, the Plan
Committee shall make a special computation by which it shall adjust
the value of such participant's Account to reflect the value of such
Account determined as of the most recent quarterly anniversary date
prior to the occurrence of such direct distribution or withdrawal.
For distribution or withdrawal purposes, the value of the
participant's Account will equal the number of shares of qualifying
employer securities allocated to the participant's Account as of the
last day of the plan quarter plus the dollar value of the any assets
other than qualifying employer securities which are allocated to the
participant's Account as of the last day of the plan quarter. If a
participant who attains normal retirement age, suffers total
disability, terminates his employment for any other reason, or
otherwise is entitled to a distribution or withdrawal from the plan,
is to receive a distribution of his vested Account in the form of
qualifying employer securities pursuant to Article VII, the
participant will receive his vested Account computed as described
above as of the last day of the plan quarter immediately preceding the
distribution or withdrawal from the participant's Account. If a
participant is entitled to receive any distribution or withdrawal in
cash, as expressly provided under Article VII, the participant will
receive the proceeds from the sale of the qualifying employer
securities allocated to his vested Account, plus the value of any
assets other than qualifying employer securities allocated to his
Account valued as described above as of the last day of the plan
quarter immediately preceding the distribution or withdrawal from the
participant's Account. The sale of qualifying employer securities
pursuant to this section 5.1[e] will be made within a reasonable
period of time after the Plan Administrator receives the participant's
request for a distribution or withdrawal in cash, as expressly
provided under Article VII. Effective June 1, 1994, the valuation of
each participant's Account under this section 5.1[e] will be made as
of the close of each bi-weekly payroll period.
[f] Suspense Account For Unallocated Amounts: If the amount to be
allocated to any participant's Account would exceed the contribution
limitations of sections 4.8 or 4.9, a
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<PAGE> 26
separate suspense account shall be established to hold such
unallocated amounts for any year or years provided that:
[1] no employer contributions may be made at any time when their
allocations would be precluded by Section 415 of the Code;
[2] investment gains and losses and other income are not allocated
to the suspense account; and
[3] the amounts in the suspense account are allocated under
section 5.1[a] as of each allocation date on which such
amounts may be allocated until the suspense account is
exhausted.
In the event of plan termination, the balance of such suspense account
may revert to the company, subject to regulations governing such
reversion.
[g] Allocation Of Employer Contributions For Payroll Period Of Withdrawal
Or Termination Of Employment: Any participant who withdraws all or
any part of his own contributions under section 7.6 shall receive an
allocation of employer contributions for the bi-weekly payroll period
of his withdrawal, if he is otherwise entitled to a contribution. Any
participant who terminates employment for any reason shall receive an
allocation of employer contributions for the bi-weekly payroll period
of his termination if he is otherwise entitled to a contribution.
5.2 VESTING OF PARTICIPANTS' ACCOUNTS:
[a] General Rules: If any participant reaches his or her normal
retirement age, dies, or suffers total disability while employed with
the employer, the participant's entire Account shall become fully
vested without regard to the number of years of service such
participant has had with the employer. Any Account, whether vested or
forfeitable, shall become payable to a participant or his or her
beneficiaries only to the extent provided in this plan. A participant
or former participant who has designated a beneficiary and who dies
shall cease to have any interest in this plan or in his or her
Account, and his or her beneficiary shall become entitled to
distribution of the participant's Account under this plan and not as a
result of any transfer of the interest or Account. A participant's
Account attributable to his or her own contributions or attributable
to a rollover contribution shall be fully vested at all times.
[b] Vesting Schedule: A participant shall have a vested interest in the
portion of his Account attributable to employer contributions, in
accordance with the following schedule:
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<PAGE> 27
<TABLE>
<CAPTION>
Percentage of Account
Years of Service Which Is Vested
---------------- ---------------------
<S> <C>
Fewer than 1 0
1 or more but fewer than 2 20
2 or more but fewer than 3 30
3 or more but fewer than 4 45
4 or more but fewer than 5 60
5 or more but fewer than 6 80
6 or more 100
</TABLE>
5.3 FULL VESTING UPON TERMINATION OR PARTIAL TERMINATION OF PLAN OR UPON
COMPLETE DISCONTINUANCE OF EMPLOYER CONTRIBUTIONS: Upon the termination or
partial termination of this plan or upon complete discontinuance of employer
contributions, the Accounts of all participants affected, as of the date such
termination, partial termination, or complete discontinuance of employer
contributions occurred, shall be fully vested.
5.4 SERVICE INCLUDED IN DETERMINATION OF VESTED ACCOUNTS: All years of
service with the company and any associated company shall be included for the
purpose of determining a participant's vested Account under section 5.2, except
years of service excluded by reason of a break in service under section 5.5.
5.5 EFFECT OF BREAK IN SERVICE ON VESTING: With respect to a participant
who has five or more consecutive one-year breaks in service, years of service
after such break in service shall not be taken into account for purposes of
computing the participant's vested Account balance attributable to employer
contributions made before such five or more year period.
5.6 EFFECT OF CERTAIN DISTRIBUTIONS: The provisions of this section shall
not apply to any participant contributions (including salary reductions) or
rollover contributions.
[a] Repayment Of Distribution: A participant who terminates participation
for any reason prior to attainment of normal retirement age,
disability, or death while any portion of his Account in the trust
fund is forfeitable and who receives a distribution of his vested
Account attributable to employer contributions not later than the
close of the second plan year following the plan year in which such
termination of participation occurs, shall have the right to pay back
such distribution to the plan. Such repayment may be made [1] only if
the participant has returned to the employ of the company or any
associated company at the time of such repayment, and [2] in the case
of a distribution upon termination of employment, before the earlier
of the date on which the participant experiences five consecutive
one-year
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<PAGE> 28
breaks in service or five years from the date of reemployment with the
company or any associated company, or, in the case of any other
distribution, five years from the date of distribution. Repayment of
a participant's Account attributable to his salary reduction
contributions or his voluntary contributions, if any, shall not be
permitted under this section. A participant who desires to make
repayment of a distribution under this paragraph [a] shall make
repayment directly to the Plan Committee. If a participant repays a
distribution under this section, the value of his Account shall be the
amount of his Account prior to distribution, unadjusted for any
subsequent gains or losses. The amount of the participant's Account
that was forfeited previously shall be restored from one or more of
the following sources, at the discretion of the Plan Committee: income
or gain to the plan, forfeitures or employer contributions.
[b] Forfeiture Of Account When Repayment Of Distribution Is Not Made: If
distribution is made to a participant and he does not repay such
distribution under the terms of paragraph [a] when the time limit for
repayment expires under paragraph [a] above, the participant shall
forfeit the entire portion of his nonvested Account (as adjusted for
gains and losses) which was not distributed to him. The Account shall
be unadjusted for any increase in vesting for service completed during
the repayment period.
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<PAGE> 29
ARTICLE VI
RETIREMENT DATE--DESIGNATION OF BENEFICIARY
6.1 NORMAL RETIREMENT DATE: A participant shall be entitled to retire
voluntarily, for purposes of this plan, on the last date of the quarter in
which a participant attains his normal retirement age. At any time thereafter
such participant may retire. Until retirement, a participant shall continue to
participate in the plan unless he elects otherwise.
6.2 DESIGNATION OF BENEFICIARY: A participant's full vested Account
balance shall be payable, on the death of the participant, to the participant's
surviving spouse or to his designated beneficiary if there is no surviving
spouse or if the spouse consents to such beneficiary designation in writing.
This spousal consent shall acknowledge the effect of such consent and shall be
witnessed by a Plan Committee member or a notary public. If there is no
surviving spouse or in the case of a spousal election not to receive the
Account, a participant shall designate a beneficiary to receive his Account in
the trust fund upon his death on the form prescribed by and delivered to the
Plan Committee. The participant shall have the right to change or revoke a
designation at any time by filing a new designation or notice of revocation
with the Plan Administrator. No notice to any beneficiary other than the spouse
nor consent by any beneficiary other than the spouse shall be required to
effect any change of designation or revocation. If a participant fails to
designate a beneficiary before his death, or if no designated beneficiary
survives the participant, the Plan Committee shall direct the Trustee to pay
his Account in the trust fund to his surviving spouse, or if none, to his
personal representative. If no personal representative has been appointed, and
if the benefit payable does not exceed the minimum amount for which an estate
or inheritance tax release is required under applicable state law, or for which
a personal representative must be appointed under applicable state law, the
Plan Committee may direct the Trustee to pay the benefit to the person or
persons entitled to it under the laws of the state where such participant was
domiciled at the date of his death. In such case, the Plan Committee may
require such proof of right or identity from such person as the Plan Committee
may deem necessary. If the benefit exceeds the minimum amount for which an
estate or inheritance tax release or the appointment of a personal
representative is required under applicable state law, the Plan Committee may
direct the Trustee to hold the benefit in a segregated account until a personal
representative has been appointed.
6.3 PARTICIPANT OR BENEFICIARY WHOSE WHEREABOUTS ARE UNKNOWN: In the case
of any participant or beneficiary whose whereabouts are unknown, the Plan
Committee shall notify such participant or beneficiary at his last known
address by certified mail with return receipt requested advising him of his
right to a pending distribution. If the participant or beneficiary cannot be
located in this manner, the Plan Committee may direct the Trustee to establish
a custodial account for such participant or beneficiary for the purpose of
holding the participant's Account until it is claimed by the participant or
beneficiary or until proof of death satisfactory to the Plan Committee
-27-
<PAGE> 30
is received by the Plan Committee. If such proof of death is received, the
Plan Committee shall direct the Trustee to distribute the participant's Account
in accordance with the provisions of section 6.2. Any Trustee fees or other
administrative expenses attributable to a custodial account established and
maintained under this section shall be charged against such account.
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<PAGE> 31
ARTICLE VII
DISTRIBUTION FROM TRUST FUND
7.1 WHEN ACCOUNTS BECOME DISTRIBUTABLE AND EFFECT OF DISTRIBUTION: If a
participant dies, suffers total disability, retires, or terminates his
employment for any other reason, the portion of his vested Account attributable
to employer contributions, to participant contributions, and to any rollover
contributions shall be distributable under section 7.2. When his Account
becomes distributable, such participant shall cease to have any further
interest or participation in the trust fund or any subsequent accruals or
contributions to the trust fund except as provided below:
[a] a participant shall retain the right to receive distribution of his
Account as determined at the last prior regular computation or upon
the special computation as determined under section 5.1; and
[b] except as provided in section 5.1, a participant who makes
contributions during any quarter shall retain the right to receive his
share in the employer's contribution allocated to his Account for such
quarter.
7.2 DISTRIBUTION OF ACCOUNTS:
[a] Notification Of Trustee And Nature Of Distribution: Quarterly after a
participant's vested Account becomes distributable, the Plan Committee
shall notify the Trustee in writing of the participant's name and
address, the amount of his vested Account which is distributable and
the reason for its being distributable. A participant's Account shall
be distributed in whole shares of qualifying employer securities, and
cash will be distributed in lieu of fractional shares.
[a] Distribution Upon Retirement And Upon Total Disability: If a
participant's Account becomes distributable upon his termination of
active employment with the employer because such participant has
attained retirement age or because of his total disability, the
Trustee shall distribute to the participant his vested Account balance
in a lump sum within a reasonable time after the close of the quarter
in which such termination of employment occurred or, in the discretion
of the participant, at the close of any later quarter. If the
participant dies before receiving his vested Account, the remaining
Account balance shall be paid to his beneficiary under this section.
Any payments received as disability benefits under this plan are
intended to qualify as distributions from an accident and health plan
as described in the Code.
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<PAGE> 32
[b] Distribution Upon Death: If a participant's Account becomes
distributable because of his death, the Trustee shall distribute to
the participant's beneficiary the total Account balance in a lump sum
within a reasonable time after the close of the quarter in which the
participant died or, in the discretion of the beneficiary, at the
close of any later quarter. If the beneficiary dies before receiving
the participant's vested Account, the Account balance shall be made to
the contingent beneficiary, if any. If the participant has not
designated a beneficiary, or if he has designated a beneficiary who
dies and the participant has not designated a contingent beneficiary,
the participant's vested Account shall be paid in a lump sum under
section 6.2.
[c] Distribution Upon Other Termination Of Employment: If a participant's
Account becomes distributable upon his termination of employment for
any reason other than retirement, disability, or death, the Trustee
shall distribute to the participant his vested Account balance in a
lump sum within a reasonable time after the close of the quarter in
which such termination of employment occurred or, in the discretion of
the participant, at the close of any later quarter. If the
participant dies prior to receiving his vested Account, the Account
balance shall be distributed to his beneficiary under this section. A
participant shall be considered to have terminated employment for
purposes of this section on the date the company disposes of
substantially all of the assets used by the company in a trade or
business if such participant continues employment with the entity
acquiring such assets. For purposes of this section, if the company
disposes of its interest in a subsidiary of the company, a participant
who continues employment with such subsidiary shall be treated as if
he terminated employment with the company on the date the company
disposed of its interest in the subsidiary.
7.3 DISPOSITION OF FORFEITABLE ACCOUNT ON TERMINATION OF EMPLOYMENT: If a
participant's employment is terminated for any reason prior to attainment of
normal retirement age, death, or total disability, while any part of his
Account in the trust fund is forfeitable, then that portion of his Account
which is forfeitable shall be forfeited by him on the earlier of the date the
participant receives a distribution of his Account or the date on which he
experiences five or more consecutive one-year breaks in service. Any amount
forfeited by a participant shall reduce the contribution of his employer for
the first quarter of the plan year after it is forfeited, as provided under
section 4.2. If any such participant returns to the employment of the employer
and has not incurred five or more consecutive one-year breaks in service, the
employer shall restore to the participant's Account out of its next
contribution the exact number of shares of qualifying employer securities plus
any other amounts that he forfeited, if the participant repays the distributed
amount pursuant to section 5.6.
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7.4 ASSIGNMENT OF BENEFITS:
[a] General Rules: Except as provided below, all amounts payable by the
Trustee shall be paid only to the person entitled to them, and all
such payments shall be paid directly to such person and not to any
other person or corporation. Such payments shall not be subject to
the claim of any creditor of a participant, nor shall such payments be
taken in execution by attachment or garnishment or by any other legal
or equitable proceedings. No person shall have any right to alienate,
anticipate, commute, pledge, encumber, or assign any payments or
benefits which he may expect to receive, contingently or otherwise,
under this plan, except the right to designate a beneficiary or
beneficiaries; provided, that this section shall not affect, restrict,
or abridge any right of setoff or lien which the trust may have by
law.
[b] Qualified Domestic Relations Orders: Paragraph [a] shall not apply
with respect to payments in accordance with the requirements of a
qualified domestic relations order. A qualified domestic relations
order creates or recognizes the existence of an alternate payee's
right to, or assigns to an alternate payee the right to, receive all
or a portion of the benefits otherwise payable to a participant under
the plan. A domestic relations order means any judgment, decree, or
order (including approval of a property settlement agreement) that
relates to the provision of child support, alimony payments, or
marital property rights to a spouse, former spouse, child, or other
dependent of a participant, and is made pursuant to a state domestic
relations law (including a community property law). To qualify, the
domestic relations order must:
[1] clearly state the name and last known mailing address of the
participant and the name and mailing address of each alternate
payee covered by the order;
[2] clearly state the amount or percentage of the participant's
benefits to be paid by the plan to each alternate payee, or
the manner in which the amount or percentage is to be
determined;
[3] clearly state the number of payments or period to which the
order applies;
[4] identify each plan to which the order applies;
[5] not require the plan to provide any type or form of benefits,
or any option, not otherwise provided under the plan;
[6] not require the plan to provide increased benefits (determined
on the basis of actuarial value); and
[7] not require the payment of benefits to an alternate payee that
are required to be paid to another alternate payee under
another order previously determined to be a qualified domestic
relations order.
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In the case of any distribution before a participant has separated
from service, a qualified domestic relations order shall not fail to
meet the requirements of section 7.4[b][5] solely because such order
requires that payment of benefits be made to an alternate payee [A] on
or after the date the participant attains the earliest retirement age,
[B] as if the participant had retired on the date on which such
payment is to begin under such order, and [C] in any form in which
benefits may be paid under the plan to the participant (other than in
the form of a qualified joint and survivor annuity with respect to the
alternate payee and his subsequent spouse). Payment of benefits
before termination of employment solely by reason of payments to an
alternate payee under a qualified domestic relations order shall not
be deemed to be a violation of Code Section 401(a) or (k).
Notwithstanding any other provision of this plan, payments to an
alternate payee pursuant to a qualified domestic relations order may
be made at any time prescribed by such order without violating the
terms of this plan or the Code.
[c] Definitions:
[1] "Alternate payee" means any spouse, former spouse, child, or
other dependent of a participant who is recognized by a
qualified domestic relations order as having a right to
receive all, or a portion of, the benefits payable under a
plan with respect to such participant.
[2] "Earliest retirement age" means the earliest of the date on
which the participant's account becomes distributable or the
date the participant attains age 50.
7.5 OTHER RULES FOR DISTRIBUTION OF FUND: Notwithstanding any other
provision in this plan, any vested Account which becomes distributable for any
reason shall be distributed pursuant to section 7.2; provided that no amount
(taking into consideration both employer and employee contributions) may be
distributed to a participant prior to the later of normal retirement age or age
62 unless the amount is distributed in a lump sum of $3,500 or less or the
participant consents to the distribution. Notwithstanding any other provisions
of this plan, the following distribution rules shall apply (unless a different
method of distribution applies under section 242(b) of the Tax Equity and
Fiscal Responsibility Act of 1982):
[a] Before Death: The entire Account of each participant will be
distributed to him not later than the required beginning date.
[b] After Death: If a participant dies before distribution of the
participant's Account has been made, the total vested Account balance
of the participant shall be distributed within five years after the
death of the participant. If the designated beneficiary is the
surviving spouse of the participant, the date on which the
distributions are required shall not be earlier than the date on which
the participant would have attained age 70-1/2, and if the surviving
spouse
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dies before the distribution to such spouse, distributions shall be
made as if the surviving spouse were the participant.
[c] Required Beginning Date: Required beginning date means April 1 of the
calendar year following the calendar year in which the participant
attains age 70-1/2.
[d] Designated Beneficiary: Designated beneficiary means any individual
designated as a beneficiary by the participant.
[e] Treatment Of Payments To Children: Under regulations prescribed by
the Secretary of Treasury, any amount paid to a child shall be treated
as if it had been paid to the surviving spouse if such amount will
become payable to the surviving spouse upon such child reaching
majority (or such other designated event permitted under regulations).
[f] Spouse, Trust For Benefit Of Spouse, Or Estate As Beneficiary: If
distribution prior to a participant's death has not commenced and if
the participant designates his spouse, a trust for the benefit of his
spouse, or his estate as his beneficiary, the provisions of this
paragraph shall apply (subject to the limitations in this section):
[1] Spouse As Beneficiary: If a participant designates his spouse
as his beneficiary, upon the death of the participant the
spouse shall receive the entire Account of the participant in
a lump sum distribution.
[2] QTIP Trust As Beneficiary: If a participant designates as his
beneficiary a qualified terminable interest property (QTIP)
trust for the benefit of his spouse, upon the death of the
participant the trustee of the QTIP trust shall receive the
entire Account of the participant in a lump sum distribution.
[3] General Power Of Appointment Trust As Beneficiary: If the
participant designates as his beneficiary a trust over which
his spouse has a general power of appointment, upon the death
of the participant the spouse shall receive the entire Account
of the participant in a lump sum distribution.
[4] Estate As Beneficiary: If the participant designates his
estate as his beneficiary with a specific bequest of his
income in respect of decedent to his spouse, upon the death of
the participant the personal representative of the participant
(or the successor of the personal representative) shall
receive the entire Account of the participant in a lump sum
distribution.
7.6 WITHDRAWALS:
[a] Employer Contributions: Effective October 1, 1991, a participant may
withdraw all or any part of his or her Account attributable to
employer contributions, including any earnings,
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losses, and changes in fair market value of such contributions, upon
attaining age 59 1/2, but only if the participant is 100% vested in
his or her total account balance. Such withdrawal upon attaining age
59 1/2 may be made only once in each plan year and such withdrawal
upon age 59 1/2 may be made without any suspension of plan
participation as a result of such withdrawal.
[b] Voluntary Contributions: A participant may request withdrawal of all
or any part of his or her Account attributable to voluntary after-tax
contributions effective at the end of any plan quarter and such
withdrawal will be distributed within a reasonable period of time
after the end of the plan quarter if the participant files a written
request with the Plan Committee at least two weeks before the end of
the plan quarter. In the event the withdrawal is a result of a
serious financial hardship, as defined in section 7.6[c][1] below, the
Plan Committee, in its discretion, may direct that such withdrawal be
made prior to the end of the plan quarter. A participant who has not
attained age 59 1/2 and who makes withdrawal of any portion of his or
her voluntary after-tax contributions under this paragraph [b],
including any hardship withdrawal, may not again contribute to the
trust fund under section 4.1 until the first calendar quarter
commencing six months after the withdrawal is made, but such
participant shall receive an allocation of employer contributions for
the calendar quarter of his or her withdrawal date. Any expenses
attributable to any withdrawal under this section 7.6[b] may be
charged to the Account of the participant requesting the withdrawal.
Vested benefits under the plan may not be forfeited because a
participant withdraws his or her voluntary after-tax contributions.
[c] Salary Reductions: Salary reduction contributions may be
withdrawn in the following circumstances:
[1] A participant may withdraw his or her salary reduction
contributions to this plan, excluding any earnings on such
contributions, upon serious financial hardship. Serious
financial hardship means an immediate and heavy financial need
of the participant on account of medical expenses of the
participant or the participant's dependents, the purchase or
preservation from foreclosure of the participant's principal
residence (excluding normal mortgage payments), the prevention
of the eviction of the participant from his or her principal
residence, the payment of the next twelve months of post-
secondary tuition and related educational expenses for the
participant or the participant's dependents, or the occurrence
of any other event deemed by the Secretary of the Treasury to
create an immediate and heavy financial need under Income Tax
Regulation Section 1.401(k)-1(d)(2)(iv)(C). No other event
shall be considered a serious financial hardship under the
terms of the plan. A hardship distribution cannot exceed the
amount required to meet the immediate financial need and
cannot be reasonably available to the participant from other
resources, including insurance reimbursement, reasonable asset
liquidation, cessation of participant contributions to this
plan, or borrowing from commercial sources on reasonable
terms. The company adopts the deemed hardship standards of
Income
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Tax Regulation Sections 1.401(k)-1(d)(2)(iv), as described
above, as the sole means of hardship withdrawal of salary
reduction contributions. If the Plan Committee determines in
accordance with a uniform and nondiscriminatory policy that
serious financial hardship exists, it may direct the Trustee
to distribute the amount requested to the participant. A
participant who makes a hardship withdrawal under this section
may not contribute to the trust fund under section 4.1 until
the first calendar quarter commencing twelve months after such
hardship withdrawal, but shall receive an allocation of
employer contributions for the calendar quarter of his or her
withdrawal date. A participant who makes a hardship
withdrawal in a plan year under this section may not make
salary reduction contributions in the next succeeding year in
excess of the maximum deferral amounts provided in section
4.11[a] less the salary reductions made in the year of the
hardship withdrawal. Any expenses attributable to the
hardship withdrawal may be charged to the Account of the
participant requesting the withdrawal. Effective January 1,
1993, a participant requesting a hardship withdrawal under
this paragraph [1] may elect to receive such withdrawal in
cash. In the event of a cash withdrawal election, the Plan
Committee will direct the Trustee to sell the number of shares
attributable to the participant's salary reduction
contributions that will satisfy the hardship withdrawal and
the participant will receive the cash proceeds from such sale
as a hardship withdrawal.
[2] Effective October 1, 1991, a participant may withdraw all or
any part of his or her salary reduction contributions,
including any earnings, losses, and changes in fair market
value of such contributions, upon attaining age 59 1/2, but
only if the participant is 100% vested in his or her total
account balance. Such withdrawal upon attaining age 59 1/2
will be distributed as of the end of any plan quarter if a
request to receive the withdrawal is filed with the Plan
Committee at least two weeks prior to the end of the plan
quarter. A withdrawal upon attaining age 59 1/2 may be made
only once in each plan year and such withdrawal upon age 59
1/2 may be made without any suspension of plan participation
as a result of such withdrawal.
[d] Withdrawals From Other Plans: Any withdrawal from any plan maintained
by any company which is a member of a group of corporations or trades
or businesses under common control with the company will be deemed to
be a withdrawal from this Plan for purposes of applying the withdrawal
limitations and suspension of plan participation provisions of this
section 7.6. Common control will be determined pursuant to Code
Section 414(b) and the regulations thereunder.
7.7 ELIGIBLE ROLLOVER DISTRIBUTIONS:
[a] General Rule: This section applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of the plan to the
contrary that otherwise would limit a participant's distribution
election under this Article, a participant may elect, at the time and
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in the manner prescribed by the Plan Committee, to have any portion of
an eligible rollover distribution paid directly to an eligible
retirement plan specified by the participant in a direct rollover.
[b] Limitations on Direct Rollover Distributions: This Plan will not be
required to make any direct rollover distribution if the total amount
to be distributed to the participant during the plan year is less than
$200. If the amount of the distribution is $500 or less, any direct
rollover distribution must consist of the entire distribution amount.
The participant may elect only one eligible retirement plan to which a
direct rollover distribution will be made.
[c] Definitions:
[1] An "eligible rollover distribution" is any distribution of all
or any portion of the balance to the credit of the
participant, except that an eligible rollover distribution
does not include [A] any distribution that is one of a series
of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of
the distributee and the distributee's designated beneficiary,
or for a specified period of ten years or more; [B] any
distribution to the extent such distribution is required under
Code Section 401(a)(9); and [C] the portion of any
distribution that is not includible in gross income
(determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
[2] An "eligible retirement plan" is an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a qualified
trust described in Code Section 401(a), that accepts the
distributee's eligible rollover distribution. However, in the
case of an eligible rollover distribution to a surviving
spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
[3] A "distributee" includes a participant or former participant.
In addition, the participant's or former participant's
surviving spouse and the participant's or former participant's
spouse or former spouse who is the alternate payee under a
qualified domestic relations order, as defined in Code Section
414(p), are distributees with regard to the interest of the
spouse or former spouse.
[4] A "direct rollover" is a payment by the Plan to the eligible
retirement plan specified by the distributee.
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ARTICLE VIII
FIDUCIARY OBLIGATIONS
8.1 GENERAL FIDUCIARY DUTIES: A fiduciary shall discharge his duties
under the plan solely in the interest of the participants and the beneficiaries
and for the exclusive purpose of providing benefits to participants and to
their beneficiaries and defraying reasonable expenses of administering the
plan. All fiduciaries shall act with the care, skill, prudence, and diligence
under the circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. Except as authorized by
regulations of the Secretary of Labor, no fiduciary may maintain the indicia of
ownership of any assets of the plan outside the jurisdiction of the district
courts of the United States. A fiduciary shall act in accordance with the
documents and instruments governing the plan to the extent such documents and
instruments are consistent with the requirements of law.
8.2 ALLOCATION OF FIDUCIARY RESPONSIBILITY: A named fiduciary may
designate persons other than named fiduciaries to carry out fiduciary
responsibilities (other than Trustee responsibilities) under the plan.
8.3 LIABILITY OF FIDUCIARIES:
[a] Extent Of Liability: A fiduciary who breaches any of the
responsibilities, obligations, or duties imposed upon him by this plan
or by the requirements of law shall be personally liable only [1] to
make good to the plan any losses resulting from his breach [2] to
restore to the plan any profits the fiduciary has made through the use
of plan assets for his personal account, and [3] to pay those
penalties prescribed by law arising from his breach. A fiduciary
shall be subject to such other equitable or remedial relief as a court
of law may deem appropriate, including removal of the fiduciary. A
fiduciary also may be removed for a violation of section 8.8
(prohibition against certain persons holding certain positions). No
fiduciary shall be liable with respect to the breach of a fiduciary
duty if such breach was committed before he became a fiduciary or
after he ceased to be a fiduciary.
[b] Liability Of Fiduciary For Breach By Co-Fiduciary: A fiduciary shall
be liable for a breach of fiduciary responsibility of another
fiduciary of this plan, only if he [1] participates knowingly in, or
knowingly undertakes to conceal, an act or omission of the other
fiduciary, and knows such act or omission by the other fiduciary is a
breach of the other fiduciary's duties, [2] enables another fiduciary
to commit a breach, by his failure to comply with section 8.1 in the
administration of the specific responsibilities which give rise to his
status as a fiduciary, or [3] has knowledge of a breach of another
fiduciary and does not make reasonable efforts under the circumstances
to remedy the breach.
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[c] Liability For Improper Delegation Of Fiduciary Responsibility: A
named fiduciary who allocates any of his fiduciary responsibilities to
any person or designates any person to carry out any of his fiduciary
responsibilities shall be liable for the act or omission of such
person in carrying out the responsibility only to the extent that the
named fiduciary fails to satisfy his general fiduciary duties of
section 8.1 with respect to the allocation or designation, with
respect to the establishment or implementation of the procedure by
which he allocates the responsibilities, or in continuing the
allocation or designation. Nothing in this paragraph shall prevent a
named fiduciary from being liable if he otherwise would be liable for
an act or omission under paragraph [b].
[d] Fiduciary To Whom Responsibilities Are Allocated: Any person who has
been designated to carry out fiduciary responsibilities under section
8.2 shall be liable for such responsibilities under this section to
the same extent as any named fiduciary.
[e] Liability Insurance And Indemnification: Nothing in this plan shall
preclude a fiduciary from purchasing insurance to cover liability from
and for his own account. The company may purchase insurance to cover
potential liability of those persons who serve in a fiduciary capacity
with regard to the plan or may indemnify a fiduciary against liability
and expenses reasonably incurred by him in connection with any action
to which such fiduciary may be made a party by reason of his being or
having been a fiduciary.
8.4 PROHIBITED TRANSACTIONS: No fiduciary shall cause the plan to engage
in a transaction if the fiduciary knows or should know that the transaction
constitutes a prohibited transaction under law. No disqualified person under
law (other than a fiduciary acting only as such) shall engage in a prohibited
transaction as prescribed by law.
8.5 RECEIPTS OF BENEFITS BY FIDUCIARIES: Nothing shall prohibit any
fiduciary from receiving any benefit to which he may be entitled as a
participant or beneficiary in the plan, if such benefit is computed and paid on
a basis which is consistent with the terms of the plan as applied to all other
participants and beneficiaries. The determination of any matters affecting the
payment of benefits to any fiduciary other than the Plan Committee shall be
determined by the Plan Committee. If the Plan Committee is an individual, the
determination of any matters affecting the payment of benefits to the Plan
Committee shall be made by a temporary Plan Committee who shall be appointed by
the board of directors for such purpose. If the Plan Committee is a group of
individuals, the determination of any matters affecting the payment of benefits
to any individual Plan Committee member shall be made by the remaining Plan
Committee members without the vote of such individual Plan Committee member.
If the remaining Plan Committee members are unable to agree on any matter
affecting the payment of such benefits, the board of directors shall appoint a
temporary Plan Committee to decide the matter.
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8.6 COMPENSATION AND EXPENSES OF FIDUCIARIES:
[a] General Rules: A fiduciary shall be entitled to receive any
reasonable compensation for services rendered or for the reimbursement
of expenses properly and actually incurred in the performance of his
duties under the plan. However, no fiduciary who already receives
full-time pay from an employer shall receive compensation from the
plan, except for reimbursement of expenses properly and actually
incurred. All compensation and expenses shall be paid by the plan,
unless the company, in its discretion, elects to pay all or any part
of such compensation and expenses. In its discretion, the Plan
Committee may direct that all such compensation and expenses be paid
from forfeitures under the plan or from general plan assets.
[b] Compensation Of Plan Committee And Plan Administrator: A Plan
Administrator who is not a full-time employee of an employer shall be
entitled to such reasonable compensation as the Plan Committee and the
Plan Administrator mutually shall determine. A Plan Committee member
who is not a full-time employee of an employer shall be entitled to
such reasonable compensation as the company and the Plan Committee
mutually shall determine. Any expenses properly and actually incurred
by the Plan Committee or the Plan Administrator due to a request by a
participant shall be charged to the Account of the participant on
whose behalf such expenses are incurred.
[c] Compensation Of Trustee: A Trustee who is not a full-time employee of
an employer shall be entitled to such reasonable compensation for its
services as the Plan Committee and the Trustee mutually shall
determine.
[d] Compensation Of Persons Retained Or Employed By Named Fiduciary: The
compensation of all agents, counsel, or other persons retained or
employed by a named fiduciary shall be determined by the named
fiduciary employing such person, with the Plan Committee's approval,
provided that a person who is a full-time employee of an employer
shall receive no compensation from the plan.
8.7 SERVICE BY FIDUCIARIES AND DISQUALIFIED PERSONS: Nothing in this plan
shall prohibit anyone from serving as a fiduciary in addition to being an
officer, employee, agent, or other representative of a disqualified person as
defined in the Code.
8.8 PROHIBITION AGAINST CERTAIN PERSONS HOLDING CERTAIN POSITIONS: No
person who has been convicted of a felony shall be permitted to serve as an
administrator, fiduciary, officer, trustee, custodian, counsel, agent, or
employee of this plan, or as a consultant to this plan, unless permitted under
law. The Plan Committee shall ascertain to the extent practical that no
violation of this section occurs. In any event, no person knowingly shall
permit any other person to serve in any capacity which would violate this
section.
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ARTICLE IX
PLAN ADMINISTRATOR AND PLAN COMMITTEE
9.1 APPOINTMENT OF PLAN ADMINISTRATOR AND PLAN COMMITTEE: The board of
directors by resolution shall appoint a Plan Administrator and Plan Committee,
both of whom shall hold office until resignation, death, or removal by the
board of directors. If the board of directors fails to appoint the Plan
Committee or Plan Administrator, or both, the board of directors shall be the
Plan Committee, the Plan Administrator, or both. Any person may serve in more
than one fiduciary capacity, including service as Plan Administrator and Plan
Committee member. Any group of persons appointed by the board of directors may
serve in the capacity of Plan Committee, Plan Administrator, or both.
9.2 ORGANIZATION AND OPERATION OF OFFICES OF PLAN ADMINISTRATOR AND PLAN
COMMITTEE: The Plan Administrator and Plan Committee may adopt such procedures
as each deems desirable for the conduct of his respective affairs and may
appoint or employ a secretary or other agents, any of whom may be, but need not
be, an officer or employee of the company or any associated company. Any agent
may be removed at any time by the person appointing or employing him.
9.3 INFORMATION TO BE MADE AVAILABLE TO PLAN COMMITTEE AND PLAN
ADMINISTRATOR: To enable the Plan Committee and the Plan Administrator to
perform all of their respective duties under the plan, each employer shall
provide the Plan Committee and the Plan Administrator with access to the
following information for each employee: [a] name and address, [b] social
security number, [c] birthdate, [d] dates of commencement and termination of
employment, [e] reason for termination of employment, [f] hours worked during
each year,[g] annual compensation, [h] employer contributions, and such other
information as the Plan Committee or the Plan Administrator may require. To
the extent the information is available in employer records, an employer shall
provide the Plan Committee and Plan Administrator with access to information
relating to each employee's participant contributions, benefits received under
the plan, and marital status. If such information is not available from the
employer records, the Plan Committee shall obtain such information from the
participants. The Plan Committee, the Plan Administrator and the employer may
rely on and shall not be liable because of any information which an employee
provides, either directly or indirectly. As soon as possible following any
participant's death, total disability, retirement, or other termination of
employment, his employer shall certify in writing to the Plan Committee and
Plan Administrator such participant's name and the date and reason for his
termination of employment.
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9.4 RESIGNATION AND REMOVAL OF PLAN ADMINISTRATOR OR PLAN COMMITTEE
MEMBER; APPOINTMENT OF SUCCESSORS: Any Plan Administrator or Plan Committee
member may resign at any time by giving written notice to the board of
directors, effective as stated in such notice, otherwise upon receipt of such
notice. At any time the Plan Administrator or any Plan Committee member may be
removed by the board of directors without cause. As soon as practical,
following the death, resignation, or removal of any Plan Administrator or Plan
Committee member, the board of directors shall appoint a successor by
resolution. Written notice of the appointment of a successor Plan
Administrator or successor Plan Committee member shall be given by the company
to the Trustee. Until receipt by the Trustee of such written notice, the
Trustee shall not be charged with knowledge or notice of such change.
9.5 DUTIES AND POWERS OF PLAN ADMINISTRATOR--REPORTING AND DISCLOSURE:
[a] General Requirements: The Plan Administrator shall be responsible for
all applicable reporting and disclosure requirements of law. The Plan
Administrator shall prepare, file with the Secretary of Labor, the
Secretary of the Treasury, or the Pension Benefit Guaranty
Corporation, when applicable, and furnish to plan participants and
beneficiaries, when applicable, the following:
[1] summary plan description;
[2] description of modifications and changes;
[3] annual report;
[4] terminal and supplementary reports;
[5] registration statement; and
[6] any other return, report, or document required by law.
[b] Statement Of Benefits Accrued And Vested: The Plan Administrator is
to furnish any plan participant or beneficiary who so requests in
writing, a statement indicating, on the basis of the latest available
information, the total benefits accrued and the vested benefits, if
any, which have accrued, or the earliest date on which benefits will
become vested. The Plan Administrator shall furnish a written
statement to any participant who terminates employment during the plan
year and is entitled to a deferred vested benefit under the plan as of
the end of the plan year, if no retirement benefits have been paid
with respect to such participant during the plan year. The statement
shall be an individual statement and shall contain the information
required in the annual registration statement which the Plan
Administrator is required to file with the Secretary of the Treasury.
The Plan Administrator
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shall furnish the individual statement to the participant before the
expiration of the time prescribed for filing the annual registration
statement with the Secretary of the Treasury.
[c] Inspection Of Documents: The Plan Administrator is to make available
for inspection copies of the plan description and the latest annual
report and the agreements under which the plan was established or is
operated. Such documents shall be available for examination by any
participant or beneficiary in the principal office of the Plan
Administrator and in such other places as may be necessary to make
available all pertinent information to all participants. Upon written
request by any participant or beneficiary, the Plan Administrator is
to furnish a copy of the latest updated summary plan description, plan
description, and the latest annual report, any terminal report, and
any agreements under which the plan is established or operated. In
addition, the Plan Administrator is to comply with every other
requirement imposed on him by law.
[d] Employment Of Advisers And Persons To Carry Out Responsibilities: The
Plan Administrator may appoint one or more persons to render advice
with regard to any responsibility the Plan Administrator has under the
plan and may employ one or more persons (other than a named fiduciary)
to carry out any of his responsibilities under the plan.
9.6 DUTIES AND POWERS OF PLAN COMMITTEE--IN GENERAL: The Plan Committee
shall decide all questions arising in the administration, interpretation, and
application of the plan and trust, including all questions relating to
eligibility, vesting, and distribution, except as may be reserved under this
plan to the company, its board of directors or any associated company. The Plan
Committee may designate any person (other than the Plan Administrator or
Trustee) to carry out any of the Plan Committee's fiduciary responsibilities
under the plan (other than a trustee responsibility) and may appoint one or
more persons to render advice with regard to any responsibility the Plan
Committee has under the plan. The Plan Committee from time to time shall
direct the Trustee concerning the payments to be made out of the trust fund
pursuant to this plan. All notices, directions, information, and other
communications from the Plan Committee shall be in writing.
9.7 DUTIES AND POWERS OF PLAN COMMITTEE--KEEPING OF RECORDS: The Plan
Committee shall keep a record of all the Plan Committee's proceedings and shall
keep all such books of account, records, and other data as may be necessary or
advisable in its judgment for the administration of this plan and trust,
including records to reflect the affairs of this plan, to determine the amount
of vested and/or forfeitable interests of the respective participants in the
trust fund, and to determine the amount of all benefits payable under this
plan. The Plan Committee shall maintain separate accounts for each participant
as provided under section 5.1. Subject to the requirements of law, any person
dealing with the Plan Committee may rely on, and shall incur no liability in
relying on, a certificate or memorandum in writing signed by the Plan Committee
as evidence of any action taken or resolution adopted by the Plan Committee.
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9.8 DUTIES AND POWERS OF PLAN COMMITTEE--CLAIMS PROCEDURE:
[a] Filing And Initial Determination Of Claim: Any participant,
beneficiary or his duly authorized representative may file a claim for
a plan benefit to which the claimant believes that he is entitled.
Such a claim must be in writing and delivered to the Plan Committee in
person or by certified mail, postage prepaid. Within 90 days after
receipt of such claim, the Plan Committee shall send to the claimant
by certified mail, postage prepaid, notice of the granting or denying,
in whole or in part, of such claim unless special circumstances
require an extension of time for processing the claim. In no event
may the extension exceed 90 days from the end of the initial period.
If such extension is necessary the claimant will receive a written
notice to this effect prior to the expiration of the initial 90-day
period. The Plan Committee shall have full discretion pursuant to the
plan to deny or grant a claim in whole or in part. If notice of the
denial of a claim is not furnished in accordance with this paragraph
[a], the claim shall be deemed denied and the claimant shall be
permitted to exercise his right of review pursuant to paragraphs [c]
and [d] of this section.
[b] Duty Of Plan Committee Upon Denial Of Claim: The Plan Committee shall
provide to every claimant who is denied a claim for benefits written
notice setting forth in a manner calculated to be understood by the
claimant:
[1] the specific reason or reasons for the denial;
[2] specific reference to pertinent plan provisions on which the
denial is based;
[3] a description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation of why such material is necessary; and
[4] an explanation of the plan's claim review procedure.
[c] Request For Review Of Claim Denial: Within 60 days after receipt by
the claimant of written notification of the denial in whole or in part
of his claim, the claimant or his duly authorized representative, upon
written application to the Plan Committee in person or by certified
mail, postage prepaid, may request a review of such denial, may review
pertinent documents and may submit issues and comments in writing.
Upon its receipt of the request for review, the Plan Committee shall
notify the board of directors of the request.
[d] Claims Reviewer: Upon its receipt of notice of a request for review,
the board of directors shall appoint a person other than a Plan
Committee member to be the claims reviewer. The Plan Committee shall
deliver to the claims reviewer all documents submitted by the claimant
and all other documents pertinent to the review. The claims reviewer
shall make a prompt decision on the review. The decision on review
shall be written in a manner calculated to be understood by the
claimant, and shall include specific reasons for the decision and
specific references to the pertinent plan provisions on which the
decision is based. The decision on
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review shall be made not later than 60 days after the Plan Committee's
receipt of a request for a review, unless special circumstances
require an extension of time for processing, in which case a decision
shall be rendered not later than 120 days after receipt of a request
for review. If such extension is necessary the claimant shall be
given written notice of the extension prior to the expiration of the
initial 60-day period. If notice of the decision on review is not
furnished in accordance with this paragraph [d], the claim shall be
deemed denied and the claimant shall be permitted to exercise his
right to legal remedy pursuant to paragraph [e] of this section.
[e] Legal Remedy: After exhaustion of the claims procedure as provided
under this plan, nothing shall prevent any person from pursuing any
other legal remedy.
9.9 DUTIES AND POWERS OF PLAN COMMITTEE--FUNDING POLICY: The policy of
each employer is that this plan shall be funded with employer contributions and
participant contributions. The Plan Committee shall determine the plan's
short- run and long-run financial needs and regularly communicate these
requirements to the appropriate persons. The Plan Committee will determine
whether the plan has a short-run need for liquidity, (e.g., to pay benefits) or
whether liquidity is a long-run goal and investment growth is a more current
need. The Plan Committee shall communicate such information to the Trustee so
that investment policy can be coordinated appropriately with plan needs.
9.10 DUTIES AND POWERS OF PLAN COMMITTEE--BONDING OF FIDUCIARIES AND PLAN
OFFICIALS: The Plan Committee shall procure bonds for every fiduciary of the
plan and every Plan Official, if he handles funds of the plan, in an amount not
less than 10% of the amount of funds handled and in no event less than $1,000,
except the Plan Committee shall not be required to procure such bonds if:
[a] the person is excepted from the bonding requirement by law, or
[b] the Secretary of Labor exempts the plan from the bonding requirements.
The bonds shall conform to the requirements of law.
9.11 DUTIES AND POWERS OF PLAN COMMITTEE--QUALIFIED DOMESTIC RELATIONS
ORDERS: The Plan Committee shall establish reasonable procedures for
determining the qualification status of a domestic relations order. Such
procedures:
[a] shall be in writing;
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[b] shall provide to each person specified in a domestic relations order
as entitled to payment of plan benefits notification of such
procedures promptly upon receipt by the plan of the order; and
[c] shall permit an alternate payee to designate a representative for
receipt of copies of notices that are sent to the alternate payee.
Within a reasonable period of time after receipt of such order, the Plan
Committee shall determine whether such order is a qualified domestic relations
order and notify the participant and each alternate payee of such
determination. During any period in which the issue of whether a qualified
domestic relations order is a qualified domestic relations order is being
determined, the Plan Committee shall segregate in a separate account the
amounts which would have been payable to the alternate payee during such period
if the order had been determined to be a qualified domestic relations order.
If, within 18 months the order is determined not to be a qualified domestic
relations order or the issue as to whether such order is a qualified domestic
relations order is not resolved, then the Plan Committee shall pay under the
terms of the plan the segregated amounts to the person or persons who would
have been entitled to such amounts if there had been no order. If a plan
fiduciary acts in accordance with the fiduciary responsibility provisions of
ERISA, then the plan's obligation to the participant and each alternate payee
shall be discharged to the extent of any payment made.
9.12 ADVICE TO DESIGNATED FIDUCIARIES: Any fiduciary designated by the
Plan Committee or Plan Administrator may appoint with the consent of the Plan
Committee or Plan Administrator, respectively, one or more persons to render
advice with regard to any responsibility such designated fiduciary has under
the plan.
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ARTICLE X
POWERS AND DUTIES OF THE TRUSTEE
10.1 INVESTMENT OF TRUST FUND:
[a] Duties of Trustee: The duty of the Trustee is to hold in trust the
funds it receives. The Trustee shall have exclusive authority and
discretion to manage and control the assets of the plan and to manage,
invest, and reinvest the trust fund and the income from it under this
article, without distinction between principal and income, and shall
be responsible only for such sums that it actually receives as
Trustee. The Trustee shall have no duty to collect any sums from the
Plan Committee.
[b] Powers of Trustee: The Trustee shall apply the funds it receives
primarily to purchase shares of qualifying employer securities, and
the Trustee may invest in qualifying employer securities, up to 100%
of the value of plan assets, without regard to the diversification
requirement or the prudence requirement to the extent it requires
diversification. Purchases of stock may be made by the Trustee in the
open market or by private purchase, or, if available, from the
company, or as the Trustee may determine in its sole discretion,
provided only that no private purchase or purchase from the company
may be made at a price greater than the current market price for
qualifying employer securities on the day of such purchase. The
Trustee also may purchase stock from participants who receive
distributions from this trust, provided that all such purchases shall
be made at the current market price on the day of such purchase. The
Trustee also shall have the power to invest and/or reinvest any and
all money or property of any description at any time held by it and
constituting a part of the trust fund, without previous application
to, or subsequent ratification of, any court, tribunal, or commission,
or any federal or state governmental agency and may invest in real
property and all interests in real property, in bonds, notes,
debentures, mortgages, commercial paper, preferred stocks, common
stocks, or other securities, rights, obligations, or property, real or
personal, including shares or certificates of participation issued by
regulated investment companies or regulated investment trusts, shares
or units of participation in qualified common trust funds, in
qualified pooled funds, or in pooled investment funds of an insurance
company qualified to do business in the state. If the Trustee is a
bank or similar financial institution supervised by the United States
or a state, it may invest plan assets in its own deposits (savings
accounts and certificates of deposit) if such deposits bear a
reasonable rate of interest.
[c] Diversification and Prudence Requirements: Except to the extent the
Trustee invests in the qualifying employer securities, the Trustee
shall diversify the investments of the plan to minimize the risk of
large losses, unless under the circumstances it is clearly prudent not
to do so. The Trustee shall act with the care skill, prudence, and
diligence under the
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circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims.
10.2 ADMINISTRATIVE POWERS OF THE TRUSTEE: Subject to the requirements
imposed by law, the Trustee shall have all powers necessary or advisable to
carry out the provisions of this plan and trust and all inherent, implied, and
statutory powers now or subsequently provided by law, including specifically
the power to do any of the following:
[a] to cause any securities or other property to be registered and held in
its name as Trustee, or in the name of one or more of its nominees,
without disclosing the fiduciary capacity, or to keep the same in
unregistered form payable to bearer;
[b] to sell, grant options to sell, exchange, pledge, encumber, mortgage,
deed in trust, or use any other form of hypothecation, or otherwise
dispose of the whole or any part of the trust fund on such terms and
for such property or cash, or part cash and credit, as it may deem
best; to retain, hold, maintain, or continue any securities or
investments which it may hold as part of the trust fund for such
length of time as it may deem advisable; and generally, in all
respects, to do all things and exercise each and every right, power,
and privilege in connection with and in relation to the trust fund as
could be done, exercised, or executed by an individual holding and
owning such property in absolute and unconditional ownership;
[c] to abandon, compromise, contest, and arbitrate claims and demands; to
institute, compromise, and defend actions at law (but without
obligation to do so); in connection with such powers, to employ
counsel as the Trustee shall deem advisable and as approved by the
Plan Committee; and to exercise such powers all at the risk and
expense of the trust fund;
[d] to borrow money for this trust upon such terms and conditions as the
Trustee shall deem advisable, and to secure the repayment of such by
the mortgage or pledge of any assets of the trust fund, provided that
the Trustee may not borrow money to purchase qualifying employer
securities;
[e] to vote in person or by proxy any shares of stock or rights held in
the trust fund as directed by the Plan Committee; to participate in
and to exchange securities or other property in reorganization,
liquidation, or dissolution of any corporation, the securities of
which are held in the trust fund; and
[f] to pay any amount due on any loan or advance made to the trust fund,
to charge against and pay from the trust fund all taxes of any nature
levied, assessed, or imposed upon the trust fund, and to pay all
reasonable expenses and attorney fees necessarily incurred by the
Trustee and approved by the Plan Committee with respect to any of the
foregoing matters.
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10.3 ADVICE OF COUNSEL: The Trustee may consult with legal counsel, who
may be counsel for the company or any associated company, or Trustee's own
counsel, with respect to the meaning or construction of the plan and trust or
Trustee's obligations or duties. The Trustee shall be protected from any
responsibility with respect to any action taken or omitted by it in good faith
pursuant to the advice of such counsel, to the extent permitted by law.
10.4 RECORDS AND ACCOUNTS OF THE TRUSTEE: The Trustee shall keep all such
records and accounts which may be necessary in the administration and conduct
of this trust. The Trustee's records and accounts shall be open to inspection
by the company, any associated company, the Plan Committee, and the Plan
Administrator, at all reasonable times during business hours. All income,
profits, recoveries, contributions, forfeitures, and any and all moneys,
securities, and properties of any kind at any time received or held by the
Trustee shall be held for investment purposes as a commingled trust fund.
Separate accounts or records may be maintained for operational and accounting
purposes, but no such account or record shall be considered as segregating any
funds or property from any other funds or property contained in the commingled
fund, except as otherwise provided. After the close of each year of the trust,
the Trustee shall render to the company and the Plan Committee a statement of
assets and liabilities of the trust fund for such year.
10.5 APPOINTMENT, RESIGNATION, REMOVAL, AND SUBSTITUTION OF TRUSTEE: The
board of directors by resolution shall appoint a Trustee or Trustees, each of
which shall hold office until resignation or removal by the board of directors.
The Trustee may resign at any time upon 30 days' written notice to the company.
The Trustee may be removed at any time by the company upon written notice to
the Trustee with or without cause. Upon resignation or removal of the Trustee,
the company, by action of its board of directors, shall appoint a successor
trustee which shall have the same powers and duties as are conferred upon the
Trustee appointed under this plan. The resigning or removed Trustee shall
deliver to its successor trustee all property of the trust fund, less a
reasonable amount necessary to provide for its compensation, expenses, and any
taxes or advances chargeable or payable out of the trust fund. If the Trustee
is an individual, death shall be treated as a resignation, effective
immediately. If any corporate Trustee at any time shall be merged, or
consolidated with, or shall sell or transfer substantially all of its assets
and business to another corporation, whether state or federal, or shall be
reorganized or reincorporated in any manner, then the resulting or acquiring
corporation shall be substituted for such corporate Trustee without the
execution of any instrument and without any action upon the part of the
company, any participant or beneficiary, or any other person having or claiming
to have an interest in the trust fund or under the plan.
10.6 APPOINTMENT OF TRUSTEE--ACCEPTANCE IN WRITING: The Trustee shall
accept its appointment as soon as practical by executing this plan or by
delivering a signed document to the company, a copy of which shall be sent to
the Plan Committee by the Trustee. The board of directors shall appoint a new
Trustee if the Trustee fails to accept its appointment in writing.
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ARTICLE XI
CONTINUANCE, TERMINATION, AND AMENDMENT OF PLAN AND TRUST
11.1 TERMINATION OF PLAN: The expectation of each employer is to continue
this plan indefinitely, but the continuance of the plan is not assumed as a
contractual obligation by the employer and the right is reserved to each
employer, by action of its board of directors, to terminate this plan in whole
or in part at any time. The termination of this plan by an employer in no
event shall have the effect of revesting any part of the trust fund in the
employer. The plan created by execution of this agreement with respect to any
employer shall be terminated automatically in the event of the dissolution,
consolidation, or merger of such employer or the sale by such employer of
substantially all of its assets, if the resulting successor corporation or
business entity shall fail to adopt the plan and trust under section 11.3. If
this plan is disqualified, the board of directors of the company, in its
discretion, may terminate this plan.
11.2 TERMINATION OF TRUST: The trust created by execution of this
agreement shall continue in full force and effect for such time as may be
necessary to accomplish the purposes for which it is created, unless sooner
terminated and discontinued by the company's board of directors. Notice of
such termination shall be given to the Trustee by the Plan Committee in the
form of an instrument in writing executed by the company pursuant to the action
of its board of directors, together with a certified copy of the resolution of
the board of directors to that effect. In its discretion the Plan Committee
may receive a favorable determination letter from the Internal Revenue Service
stating that the prior qualified status of the plan has not been affected by
such termination. Such termination shall take effect as of the date of the
delivery of the notice of termination and favorable determination letter, if
obtained, to the Trustee. The Plan Administrator shall file such terminal
reports as are required in Article IX.
11.3 CONTINUANCE OF PLAN AND TRUST BY SUCCESSOR BUSINESS: With the
approval of the company, a successor business may continue this plan and trust
by proper action of the proprietor or partners, if not a corporation, and, if a
corporation, by resolution of its board of directors, and by executing a proper
supplemental agreement to this plan and trust with the Trustee. Within 90 days
from the effective date of such dissolution, consolidation, merger, or sale of
assets of a employer, if such successor business does not adopt and continue
this plan and trust, this plan shall be terminated automatically as of the end
of such 90-day period.
11.4 MERGER, CONSOLIDATION, OR TRANSFER OF ASSETS OR LIABILITIES OF THE
PLAN: The board of directors of the company may merge or consolidate this plan
with any other plan or may transfer the assets or liabilities of the plan to
any other plan if each participant in the plan (if the plan then terminated)
would receive a benefit immediately after the merger,
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consolidation, or transfer which is equal to or greater than the benefit he
would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the plan had then terminated). If any merger,
consolidation, or transfer of assets or liabilities occurs, the Plan
Administrator shall file such reports as are required in Article IX.
11.5 DISTRIBUTION OF TRUST FUND ON TERMINATION OF TRUST: If the trust is
terminated under this article, the Trustee shall determine the value of the
trust fund and of the respective interests of the participants and
beneficiaries under Article V as of the business day next following the date of
such termination. The value of the Account of each respective participant or
beneficiary in the trust fund shall be vested in its entirety as of the date of
the termination of the plan. The Trustee then shall transfer to each
participant or beneficiary the net balance of the participant's Account unless
the Plan Committee directs the Trustee to retain the assets and pay them under
the terms of this plan as if no termination had occurred.
11.6 AMENDMENTS TO PLAN AND TRUST: At any time the company may amend this
plan and trust by action of its board of directors, provided that no amendment
shall cause the trust fund to be diverted to purposes other than for the
exclusive benefit of the participants and their beneficiaries and provided
further that the provisions of the plan that satisfy the requirements of
subparagraph (C)(2)(ii)(A) under Rule 16b-3 promulgated under Section 16 of the
Securities Exchange Act of 1934, as amended, shall not be amended more
frequently than once every six months, unless otherwise necessary to comply
with changes in the Code, ERISA, or the rules and regulations promulgated
thereunder. No amendment shall decrease the vested interest of any participant
nor shall any amendment increase the contribution of any employer or
participant to the plan. If an amended vesting schedule is adopted, any
participant who has three or more years of service at the later of the date the
amendment is adopted or becomes effective and who is disadvantaged by the
amendment, may elect to remain under the plan's prior vesting schedule. Such
election must be made within a period established by the Plan Committee, in
accordance with applicable regulations, and on a form provided by and delivered
to the Plan Committee. No amendment to the plan (including a change in the
actuarial basis for determining optional benefits) shall be effective to the
extent that it has the effect of decreasing a participant's accrued benefit.
For purposes of this paragraph, a plan amendment that has the effect of [a]
eliminating or reducing an early retirement benefit or a retirement-type
subsidy, or [b] eliminating an optional form of benefit, with respect to
benefits attributable to service before the amendment will be treated as
reducing accrued benefits. No amendment shall discriminate in favor of
employees who are officers, shareholders, or highly compensated employees.
Notwithstanding anything in this plan and trust to the contrary, the plan and
trust may be amended at any time to conform to the provisions and requirements
of federal and state law with respect to employees' trusts or any amendments to
such laws or regulations or rulings issued pursuant to them. No such amendment
shall be considered prejudicial to the interest of any participant or
beneficiary under this plan.
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ARTICLE XII
MISCELLANEOUS
12.1 BENEFITS TO BE PROVIDED SOLELY FROM THE TRUST FUND: All benefits
payable under this plan shall be paid or provided solely from the trust fund,
and no employer assumes liability or responsibility for payment of benefits.
12.2 NOTICES FROM PARTICIPANTS TO BE FILED WITH PLAN COMMITTEE: Whenever
provision is made in the plan that a participant may exercise any option or
election or designate any beneficiary, the action of each participant shall be
evidenced pursuant to procedures promulgated by the Plan Committee. If a form
is furnished by the Plan Committee any for such purpose, a participant shall
give written notice of his exercise of any option or election or of his
designation of any beneficiary on the form provided for such purpose. Written
notice shall not be effective until received by the Plan Committee.
12.3 TEXT TO CONTROL: The headings of articles and sections are included
solely for convenience of reference. If any conflict between any heading and
the text of this plan and trust exists, the text shall control.
12.4 SEVERABILITY: If any provision of this plan and trust is illegal or
invalid for any reason, such illegality or invalidity shall not affect the
remaining provisions. On the contrary, such remaining provisions shall be
fully severable, and this plan and trust shall be construed and enforced as if
such illegal or invalid provisions never had been inserted in the agreement.
12.5 JURISDICTION: This plan shall be construed and administered under the
laws of the State of Colorado when the laws of that jurisdiction are not in
conflict with federal substantive law.
12.6 PLAN FOR EXCLUSIVE BENEFIT OF PARTICIPANTS; REVERSION PROHIBITED:
This plan and trust has been established for the exclusive benefit of the
participants and their beneficiaries. Under no circumstances shall any funds
contributed to or held by the Trustee at any time revert to or be used by or
enjoyed by an employer except to the extent permitted by Article IV.
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This plan and trust has been approved by the Board of Directors of the
Company and is accepted by the Plan Administrator and the Trustees as of the
dates indicated below.
----------------------------------------------
Gary K. Bracken, Plan Administrator
Date:
COLORADO NATIONAL BANK OF DENVER
By:
Date:
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EXHIBIT 4.7
QUESTIONS AND ANSWERS ABOUT
THE QUALIFIED EMPLOYEE STOCK PURCHASE PLAN OF
TELE-COMMUNICATIONS, INC.
(For Employees of Tele-Communications, Inc.
and Participating Employers)
_____________________
Effective Date of Summary Plan Description:
January 1, 1994
_____________________
THIS DOCUMENT CONSTITUTES A PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
_____________________
<PAGE> 2
QUESTIONS AND ANSWERS ABOUT
THE QUALIFIED EMPLOYEE STOCK PURCHASE PLAN OF
TELE-COMMUNICATIONS, INC.
Tele-Communications, Inc. (TCI) maintains an employee stock purchase
plan with a 401(k) option for the exclusive benefit of its employees. This
summary plan description is provided to acquaint you with the major provisions
of the Plan, which are summarized in question and answer format below.
Throughout this summary, the terms "Plan" and "ESPP" mean the
Tele-Communications, Inc. Employee Stock Purchase Plan, and the term "Company"
means Tele-Communications, Inc. and all other participating employers that have
adopted the Plan.
If, after reading this summary, you have any questions about the Plan,
please contact the Plan Administrator at the address on the last page of this
summary for additional information. You also may review the Plan and Trust
Agreement itself, which describes the Plan in greater detail, at the office of
the Plan Administrator. The actual text of the Plan and Trust will govern all
matters.
1. WHAT IS THE PURPOSE OF THE TCI ESPP?
The purpose of the TCI ESPP is to enable participating employees to
acquire a proprietary interest in Tele- Communications, Inc. and to provide
benefits upon retirement. The Plan is designed to provide eligible employees
with a voluntary and convenient means for regular and systematic purchases of
common stock of TCI. The 401(k) option enables you to participate using
pre-tax dollars.
2. WHEN DID THE TCI ESPP GO INTO EFFECT?
The TCI ESPP became effective as of January 13, 1977. This summary
plan description reflects all Plan amendments effective on or before January 1,
1994.
3. WHO IS ELIGIBLE TO PARTICIPATE IN THE TCI ESPP?
Any employee of the Company who is at least 21 years of age (other
than an independent contractor and other than an employee who is covered by a
collective bargaining agreement between employee representatives and the
Company which agreement does not provide for participation in the Plan, and in
which retirement benefits were the subject of good faith bargaining) who has
completed one year of service with the Company is eligible to become a Plan
participant. A "year of service" for eligibility purposes means a 12-month
period in which you are credited with 1,000 or more hours of service. The
12-month period is measured from the date you begin work to the annual
anniversary of that date. If you do not meet the 1,000 hours requirement in
your first year, the Company will begin counting your hours over again on the
anniversary of the date you began work and will count the hours for the next 12
months. For example, if you were hired on July 4, 1992, and are credited with
800 hours of service in your first year of employment (July 4, 1992 to July 3,
1993), you are not yet eligible to become a Plan participant. However, if you
are credited with 1,000 or
<PAGE> 3
more hours of service in your next year (July 4, 1993 to July 3, 1994), you may
become a participant on the next entry date of the Plan (January 1, April 1,
July 1, or October 1) if you are at least age 21.
You will be credited with one "hour of service" for each hour for
which you are paid or entitled to be paid by the Company. This includes
working and non-working hours for which you are paid, such as hours under
overtime, vacation, or sick leave categories. However, you will not be
credited with more than 501 hours for any one continuous non-working period.
4. HOW DO I BECOME A PARTICIPANT?
Once you have completed the eligibility requirements of the Plan, you
may become a participant by filing with the Plan Committee an election to
participate form on which you consent to make contributions to the Plan by
payroll deduction. The election to participate form is enclosed in the packet
provided to all newly eligible employees. This form also is available from the
Plan Committee. Your participation will become effective on the calendar
quarter beginning January 1, April 1, July 1, or October 1, immediately
following the date on which the enrollment form is returned to the Plan
Committee, unless a later effective date is indicated. You must file the
election to participate form at least two weeks prior to the January 1, April
1, July 1, or October 1, on which you wish to begin participation. If your
request is received by the Plan Committee within the last two weeks of a
calendar quarter, processing may be delayed for an additional calendar quarter.
Failure to complete and return the election to participate form will be
considered an election not to become a participant. You may become a
participant on any subsequent January 1, April 1, July 1, or October 1, even if
you elect not to become a participant on the date when you first are eligible,
provided you meet the eligibility requirements on the subsequent date. You
should retain your original package of information and forms for future use
since another mailing will not be made unless you make a special request. You
must file the election to participate form at least two weeks prior to the
January 1, April 1, July 1, or October 1 on which you wish to begin
participation.
5. HOW IS THE TCI ESPP ADMINISTERED?
The TCI ESPP is administered jointly by a Plan Committee and a Plan
Administrator appointed by the Board of Directors of TCI. The Plan Committee
is made up of members that represent the Board of Directors, management, and
personnel. The Plan Committee will assume the major responsibilities for the
day-to-day operation and the interpretation of the TCI ESPP plan and trust
document, including all questions relating to eligibility, vesting, and
distribution. Any information concerning policy questions regarding the Plan
should be requested from the Plan Committee. The Plan Administrator acts as a
Plan manager and will be responsible for the reporting and disclosure
requirements of federal and state law. The stock of TCI and other assets, if
any, of the Plan acquired with Company and participant contributions will be
administered by the Trustee.
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<PAGE> 4
6. WHAT IS THE FISCAL YEAR OF THE TCI ESPP?
The fiscal year of the TCI ESPP begins on January 1 and ends on
December 31. The records of the Plan and Trust are maintained on this year.
7. WHO MAKES CONTRIBUTIONS TO THE TCI ESPP?
Eligible employees may participate in the TCI ESPP by making after-tax
contributions (also known as participant voluntary contributions) or pre-tax
contributions (also known as salary reduction contributions or 401(k)
contributions) to the TCI ESPP. The Company will make matching contributions
to the TCI ESPP for each employee who has made salary reduction contributions
or participant voluntary contributions to the TCI ESPP.
a. Participant Contributions --
All participant contributions to the Plan must be made by payroll
deduction. A participant's total contributions to the Plan (including both
voluntary contributions and salary reduction contributions) are limited to 10%
of the participant's gross compensation for any payroll period. See the
discussion of limits on annual additions below for other limits on
contributions.
You may elect the amount of your voluntary contributions or salary
reduction contributions by completing a contribution election form provided by
the Plan Committee and submitting the completed form to the Plan Committee.
You may specify either a dollar amount or a percentage of your compensation
that you want to contribute to the TCI ESPP. You may change your voluntary
contributions or your salary reduction contributions prospectively (for future
payroll periods) by completing and submitting a contribution change request
form with the Plan Committee at least two weeks prior to the calendar quarter
for which the change is to be effective. You may not make retroactive
contributions to the TCI ESPP. Forms for electing, changing, or suspending
your contributions to the TCI ESPP are available from the Plan Committee.
Special rules that apply to voluntary contributions and salary
reduction contributions are described below.
(i) Salary Reduction Contributions --
By electing to make salary reduction contributions to the TCI ESPP,
you elect to have your pre-tax salary reduced for contribution to the
TCI ESPP in an amount you determine. Your salary reduction
contributions may not exceed $9,240 per calendar year. This amount is
the 1994 limit and will be adjusted for cost-of-living increases for
1995 and subsequent years. In addition, your salareduction
contributions may be limited further in order to comply with the
requirements of the Internal Revenue Code. The Plan Administrator
will try to ensure that the Internal Revenue Code limits are observed
to avoid the necessity of returning any excess amounts to you. Salary
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<PAGE> 5
reduction contributions are subject to special rules on the withdrawal
of those contributions. See Question 14 for more information on these
withdrawal rules.
(ii) Voluntary Contributions --
You may elect to make voluntary contributions to the TCI ESPP in any
amount that you determine so long as your combined salary reduction
contributions and voluntary contributions do not exceed 10% of your
gross compensation. Voluntary contributions are subject to fewer
limitations and withdrawal restrictions than salary reduction
contributions. See Question 14 for more information on the withdrawal
of voluntary contributions.
(b) Company Contributions --
TCI, by its Board of Directors, will determine each year the
percentage of matching contributions that the Company will contribute for each
participant's salary reduction and voluntary contributions. The Company may
decide to contribute up to 100% of each participant's salary reduction and
voluntary contributions to the Plan.
(c) Limits on Annual Additions --
In addition to the limits on participant and Company contributions
discussed above, the "annual additions" to your account in the TCI ESPP may not
exceed the lesser of 25% of your compensation (as defined in the Plan) or
$30,000 (as adjusted for cost-of-living increases) for each year. Your annual
additions include your salary reduction contributions, your voluntary
contributions, and the Company matching contributions. Remember that your
salary reduction contributions plus your voluntary after-tax contributions may
not exceed 10% of your gross compensation. The Plan Administrator will try to
ensure that the annual additions limits are followed in order to avoid the
necessity of returning any excess amounts to you.
8. WHAT HAPPENS TO CONTRIBUTIONS TO THE TCI ESPP?
All contributions to the TCI ESPP are deposited with the Trustee and
held in a Trust Fund. The Trustee will invest primarily in Class A common
stock of TCI ("TCI Stock"), but may make investments in other assets (such as,
but not limited to, certificates of deposit or savings accounts) pending
purchases of TCI Stock. The Trustee may purchase TCI Stock on the open market
or in a private transaction with TCI. The price per share in either case will
be the prevailing market price. At the end of the quarter, all deposits with
the Trustee will be valued to determine the appreciation or depreciation on the
TCI Stock, any other earnings on assets of the Trust Fund, and the value of
your account in the Trust Fund. TCI Stock will be allocated to your account
each calendar quarter at the average cost of the TCI Stock purchased with
contributions for the quarter.
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<PAGE> 6
9. IS THERE ANY COST TO ME WHEN THE ESPP PURCHASES THE TCI STOCK?
Ordinary brokerage house commissions will be considered as part of the
cost of purchase of the stock.
10. WHAT HAPPENS TO THE EARNINGS ON CONTRIBUTIONS?
Any earnings or losses on the TCI Stock allocated to each
participant's account will accrue directly to those shares as the fair market
value of those shares fluctuates. Any earnings on assets other than the TCI
Stock will be divided among all participants based on the ratio of the value of
each participant's account (other than TCI Stock) to the total value of those
assets in the Trust Fund (other than TCI Stock) as of the quarterly computation
date.
11. WHAT RECORDS ARE MAINTAINED FOR MY ACCOUNT?
The Plan Committee will maintain an account in your name, showing the
balance of your share in the Company contributions, the contributions you make,
and the number and value of shares of TCI Stock that are in your account. The
Plan Committee will distribute, or cause to be distributed, to each
participant, at least annually, a written statement setting forth the number of
shares of TCI stock in the participant's account as of the last day of the plan
year, the value of the stock on that date, and such other information as the
Plan Committee determines. For this annual valuation, TCI Stock will be valued
at the closing bid price of the stock in the over-the-counter market as
reported by the National Association of Securities Dealers, Inc. or National
Quotation Bureau, Inc.
12. HOW WILL MY BENEFITS UNDER TCI ESPP BE DETERMINED?
You will be 100% vested in your shares of TCI Stock at your normal
retirement date, your total disability, or your death. This means that your
total interest in TCI Stock will be determined by your total number of shares
when they become distributable for one of the above reasons. If you leave the
Company prior to retirement, total disability, or death, the percentage of your
share in Company contributions that is non-forfeitable (vested) will be
determined by the number of years of service you have with the Company in
accordance with the schedule below. The shares attributable to your
participant contributions always are nonforfeitable. The vesting schedule is
based on your service with the Company, not the number of years that you are a
Plan participant.
-5-
<PAGE> 7
<TABLE>
<CAPTION>
Years of Service Percentage of Vesting
---------------- ---------------------
<S> <C>
Fewer than 1 . . . . . . . . . . . . . . . . . . . . . . 0
1 or more but fewer than 2 . . . . . . . . . . . . . . . 20
2 or more but fewer than 3 . . . . . . . . . . . . . . . 30
3 or more but fewer than 4 . . . . . . . . . . . . . . . 45
4 or more but fewer than 5 . . . . . . . . . . . . . . . 60
5 or more but fewer than 6 . . . . . . . . . . . . . . . 80
6 or more . . . . . . . . . . . . . . . . . . . . . . . 100
</TABLE>
If you terminate employment, you will forfeit any shares attributable
to Company contributions which are not vested and the forfeited shares will be
used to pay the expenses of the plan and, if any forfeitures remain after
paying such expenses they will be used to reduce future Company contributions.
Also, see Question 14(d) for an explanation of the additional 10%
income tax penalty for early withdrawal of Company and 401(k) contributions.
13. HOW IS A YEAR OF SERVICE FOR VESTING PURPOSES DETERMINED?
To determine your place on the vesting schedule, count one year of
service for each plan year (January 1 to December 31) in which you are credited
with 1,000 or more hours of service. During any plan year, your hours of
service with the Company, other participating companies, and other companies
deemed to be part of the same controlled group of corporations as the Company
will be aggregated to determine whether you have completed 1,000 or more hours
of service. Hours of service will include service as an employee of any of the
entities described above. Hours completed during a period when you are
ineligible for participation in the Plan because you are a member of a
collective bargaining unit whose agreement does not provide for participation
in the Plan also will be counted if you become eligible for the Plan. If you
are credited with between 500 and 1,000 hours in any calendar year, you will
receive no vesting credit and you will not be awarded a partial year of
service. This means you will not advance on the vesting schedule even if you
had several calendar years of fewer than 1,000 hours of service.
a. What is a break in service?
For vesting purposes, failure to be credited with more than 500 hours
of service in any plan year is called a "break in service." For purposes of
this definition, hours of service include service as an employee in any
capacity, including hours worked as an employee who is included in a unit of
employees covered by a collective bargaining agreement between employee
representatives and the Company.
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<PAGE> 8
b. What is the effect of a break in service?
A participant who has five or more consecutive one-year breaks in
service will not be credited with additional vesting service for Company
contributions made before such five or more year period.
c. What happens if I leave the employ of the Company
but return to employment?
If you terminate employment with the Company while any portion of your
shares under the Plan is forfeitable and you receive a distribution from the
Plan before the close of the second plan year after your termination, you have
the right to repay that distribution and have the forfeitable portion of your
account restored. Repayment may be made only if you are reemployed by the
Company and the repayment is made prior to the earlier of your experiencing
five consecutive one-year breaks in service or five years from the date of your
reemployment. Repayment of salary reductions is not permitted. If you return
to the employ of the Company but do not repay the distribution, any amount that
was not vested prior to your termination of employment will not be restored to
your account.
14. WHAT ARE THE RULES FOR WITHDRAWING MY SHARES FROM THE TCI ESPP?
As described in Question 8, the contributions to the Plan are used to
purchase shares of TCI Stock. You may request withdrawal of the shares of the
TCI Stock in your account (subject to the rules below) by providing a written
request to the Plan Committee at least two weeks before the end of the calendar
quarter.
a. Salary Reductions:
You may withdraw your salary reduction contributions to the TCI ESPP
upon attaining age 59 1/2 if you are fully vested, upon a serious financial
hardship, or upon termination of employment, as provided below:
(i) Age 59 1/2 and 100% vesting.
A participant may withdraw his or her salary reduction
contributions to the TCI ESPP, including any earnings, losses, and
changes in fair market value of such contributions, upon attaining age
59 1/2, but only if the participant is 100% vested in his or her total
account balance. Withdrawals are permitted on a quarterly basis only
and withdrawal requests must be made in writing at least two weeks
prior to the end of the calendar quarter. A withdrawal of salary
reduction contributions after age 59 1/2 with 100% vesting may be made
only once in each year.
(ii) Hardship Withdrawals.
A participant may withdraw his or her salary reduction
contributions to the TCI ESPP upon serious financial hardship.
Serious financial hardship means an
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<PAGE> 9
immediate and heavy financial need of the participant. A hardship
distribution cannot exceed the amount required to meet the immediate
financial need and cannot be reasonably available to the participant
from other resources, including insurance reimbursement, reasonable
asset liquidation, cessation of participant contributions to this
Plan, or borrowing from commercial sources on reasonable terms.
Only the following events constitute serious financial
hardship: (I) payment of medical expenses of the participant or his or
her dependents; (II) the purchase or preservation from foreclosure of
the participant's principal residence (excluding normal mortgage
payments); (III) payment to prevent the eviction of the participant
from his or her principal residence; (IV) payment of post-secondary
tuition and related expenses for the next 12 months for the
participant or his or her dependents; or (V) the occurrence of any
other event deemed by the Secretary of the Treasury to create an
immediate and heavy financial need under applicable federal
regulations.
If the Plan Committee determines in accordance with a uniform
and non-discriminatory policy that serious financial hardship exists,
it may direct the Trustee to distribute the amount requested to the
participant. A participant who makes a hardship withdrawal may not
contribute to the Plan until the first calendar quarter commencing 12
months after the withdrawal and any expenses attributable to the
hardship withdrawal will be charged to the account of the participant
requesting the withdrawal. In addition, there are limitations on the
maximum salary reduction amounts that may be made in the year
following the year of the hardship withdrawal.
SEE QUESTION NUMBER 14(D) FOR AN EXPLANATION OF THE ADDITIONAL
10% INCOME TAX PENALTY FOR EARLY WITHDRAWAL.
The only amounts available for hardship withdrawals will be
the salary reduction amounts in your account. (Earnings on those
amounts and appreciation on stock purchased with salary reduction
contributions may not be withdrawn because of hardship.) The Company
matching contribution amounts are not available for hardship
withdrawals.
b. Participant After-Tax Voluntary Contributions:
Except for hardship withdrawals, withdrawals of after-tax voluntary
contributions are permitted on a quarterly basis only; requests must be made in
writing at least two weeks prior to the end of the calendar quarter in which
the withdrawal is to be effective. Withdrawals of after-tax voluntary
contributions upon serious financial hardship may be made at any time in the
discretion of the Plan Committee. The Plan Committee will direct the Trustee
to distribute the amount requested to the participant. The Trustee will
distribute the shares of TCI Stock attributable to the participant's voluntary
contributions as soon as reasonably possible after the withdrawal date. A
participant who has not attained age 59 1/2 and who withdraws any portion of
his voluntary contributions may not
-8-
<PAGE> 10
contribute to the Plan until the first calendar quarter commencing six months
after the withdrawal date. Any expenses attributable to any withdrawal will be
charged to the account of the participant requesting the withdrawal.
c. Company Contributions:
Your shares attributable to Company contributions are distributable
only when you reach your normal retirement date, become totally disabled, die,
or otherwise terminate your employment with the Company in accordance with the
terms of the Plan. However, if you have attained age 59 1/2 and are 100%
vested in your total account balance, you may withdraw any portion of your
share of Company contributions even though you do not terminate employment.
Such a withdrawal may be made only once in each plan year.
d. Penalty Tax on Early Withdrawals:
A 10% federal penalty tax may be imposed on early withdrawals from the
TCI ESPP. The tax is 10% of the taxable amount of the distribution.
Exceptions to this rule apply to distributions made on account of the following:
(i) Death of the participant;
(ii) Disability of the participant;
(iii) The participant's attainment of age 55 and
separation from service with the Company;
(iv) Payment of certain medical expenses;
(v) Payment to an alternate payee under a
qualified domestic relations order; and
(vi) The participant's attainment of age 59 1/2.
The penalty tax is due on any portion of the distribution that is
includible in the participant's gross income. Participant after-tax voluntary
contributions already have been taxed and thus already have been included in
gross income. Therefore, these amounts are not subject to the penalty tax on
early withdrawals.
If you terminate employment with the Company prior to retirement,
disability, or death, you may be eligible to transfer shares of TCI Stock
attributable to the Company matching or salary reduction portion of your
account to an IRA or other qualified retirement plan without paying either the
10% penalty tax or income tax. Any other distribution generally will be taxed.
You should
-9-
<PAGE> 11
contact your tax advisor concerning the tax consequences of receiving
distributions or withdrawals from the Plan.
15. MAY I RESELL THE TCI STOCK I HAVE WITHDRAWN?
All participants, except "affiliates" of the Company, may freely trade
their TCI Stock acquired from the TCI ESPP. An affiliate is a person who
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the Company. "Control" as used
above means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of the Company, whether through
the ownership of voting securities, by contract, or otherwise. If you are an
affiliate of the Company, you may resell your shares only in compliance with
Rule 144 of the Securities Act of 1933 or upon the filing by the Company of a
reoffer prospectus with the Securities and Exchange Commission. The Company
has not yet filed a reoffer prospectus, but may elect to do so in the future.
16. WHEN ARE THE TCI ESPP BENEFITS PAYABLE?
Subject to the following paragraph, your vested interest in the TCI
ESPP may be retained and kept invested in the Trust Fund until you retire,
become totally disabled, die, or otherwise terminate your employment with the
Company. Distribution will be made in whole shares of TCI Stock, with cash
distributed in lieu of fractional shares, plus any dividend shares received as
a result of TCI Stock ownership. Distribution of your account will be made as
soon as possible after the close of the calendar quarter in which you terminate
employment and return a distribution election form to the Plan Committee, or
after any subsequent calendar quarter, at your election. If you die while a
participant, your interest under the Plan will be distributed to your
beneficiary in the same manner as a retirement distribution under the Plan
would have been made to you.
You must begin to withdraw your benefits no later than April 1 of the
calendar year following the calendar year in which you attain age 70 1/2
without regard to your actual date of retirement. If you terminate employment
prior to attainment of normal retirement age (age 65), you have the right to
defer distribution of your account until your attainment of normal retirement
age.
a. What is my retirement date?
Your normal retirement date will be the last day of the calendar
quarter in which you reach age 65.
b. What is total disability?
Total disability means a disability that permanently renders a
participant unable to perform satisfactorily the usual duties of his employment
with the Company, as determined by a physician selected by or approved by the
Plan Committee, and that results in his termination of employment with the
Company.
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<PAGE> 12
17. HOW DO I DESIGNATE A BENEFICIARY?
To designate a beneficiary, you must file a beneficiary designation
form with the Plan Committee. If you are married and you wish to designate a
beneficiary other than your spouse, your spouse must sign a special consent
form in order for benefits to be paid to a nonspouse beneficiary. Both the
beneficiary form and the special consent form are available from the Plan
Committee.
It is important to keep a current beneficiary designation form on file
at all times so that this important asset will be handled according to your
wishes. The form may be changed at any time, but if you change nonspouse
beneficiaries, you will again need to obtain consent of your spouse. If you
fail to designate a beneficiary or if beneficiaries you have designated die
before you do and your spouse has pre-deceased you, your interest in the Plan
will be paid to the personal representative of your estate.
18. MAY I ASSIGN MY INTEREST IN THE TCI ESPP?
You cannot assign or encumber any of the benefits that you may expect
to receive under the Plan, nor can any of your share in Company contributions
be made subject to the claim of any creditor, except for payment to an
alternate payee under a qualified domestic relations order.
19. WHAT IS THE EXPECTED DURATION OF THE TCI ESPP?
The Company expects to continue the TCI ESPP indefinitely. However,
to protect the Company against unforeseen conditions, it reserves the right to
reduce contributions or to amend or terminate the TCI ESPP in whole or in part
at any time. If the Plan is terminated, the balance of your account
attributable to Company contributions will become 100% vested (nonforfeitable).
20. WHAT ARE THE TAX ADVANTAGES TO ME AS A PARTICIPANT?
The TCI ESPP is qualified under Section 401(a) of the Internal Revenue
Code and so offers substantial tax advantages to you as a participant. Even
though your share in the Company's contributions may be partially or fully
vested, you pay no income tax on such contributions until your shares of TCI
Stock are distributed to you. The 401(k) option allows you to contribute to
the TCI ESPP on a tax-deferred basis. No federal income tax will be paid on
your 401(k) contributions to the TCI ESPP until you withdraw the TCI Stock.
The shares of TCI Stock that you receive that are attributable to your own
after-tax voluntary contributions to the Plan will be distributed to you tax
free because they are purchased with after-tax dollars. The appreciation on
all TCI Stock generally is not taxed until the shares are sold by you if you
receive the TCI Stock in a lump sum (as defined in the Internal Revenue Code).
Income and profits on investments in the Trust Fund usually are tax exempt to
the Trust Fund. Thus, the Plan provides tax deferment to the participant on
401(k) contributions, the Company's contributions, and on the income and
profits earned by the contributions of both the Company and participants.
-11-
<PAGE> 13
Under the Tax Reform Act of 1986, an individual may be eligible for a
deduction of up to $2,000 for contributions made to Individual Retirement
Accounts (IRAs) if neither the taxpayer nor the taxpayer's spouse is an active
participant in an employer-sponsored qualified retirement plan for any part of
a plan year ending with or within a taxable year. The TCI ESPP is an
employer-sponsored qualified retirement plan. If either the taxpayer or the
spouse is an active participant in a qualified retirement plan for any part of
a plan year ending with or within a taxable year, the $2,000 limit on
deductible contributions to IRAs may be reduced. This maximum $2,000 deduction
amount will be phased out where adjusted gross income (before the IRA
deduction) is over $40,000 on a joint return or $25,000 for an unmarried
individual. The deduction will be eliminated when adjusted gross income
reaches $50,000 on a joint return or $35,000 for an unmarried person.
An active participant in the Plan is an employee who participates in
the Plan by making contributions to the TCI ESPP or who has Company
contributions made on his or her behalf during the Plan year.
21. WHAT ARE THE TAX EFFECTS OF THE TCI ESPP ON THE COMPANY?
The Company receives a deduction on its income tax return for the year
for contributions made for such year.
22. WHAT REMEDY DO I HAVE IF MY BENEFITS UNDER THE TCI ESPP ARE DENIED?
A claim for benefits may be filed with the Plan Committee by you, by
your duly authorized representative, or by your beneficiary. The Plan
Committee will review your claim and will notify you whether such claim has
been granted or denied within 90 days after its receipt of the claim unless
special circumstances require an extension of time for processing the claim.
If an extension is required, you will be notified in writing before expiration
of the initial 90- day period. If your claim is denied, you will receive a
written notice explaining the denial in detail. You or your duly authorized
representative may file with the Plan Committee a written request for review of
the claim within 60 days after you are notified of the denial. When you file a
request for review, the Company will appoint a claims reviewer who will make
and explain his decision on the claim to you within 60 days of receipt of your
request unless special circumstances requires an extension of time for
processing. In this case, a decision will be made not later than 120 days
after receipt of your request. If an extension is necessary, you will receive
written notice of the extension prior to the expiration of the 60-day period
after the first denial.
23. WHAT OTHER RIGHTS DO I HAVE UNDER THE LAW?
The TCI ESPP is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"). ERISA provides that all Plan
participants shall be entitled to:
a. Examine, without charge, at the Plan Administrator's
office and at other specified locations, all Plan and
Trust Fund documents and copies of all
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<PAGE> 14
documents filed by the Plan with the U.S. Department
of Labor, such as detailed annual reports and Plan
and Trust Fund descriptions.
b. Obtain copies of all Plan and Trust Fund documents
and other Plan information upon written request to
the Plan Administrator. The Administrator may charge
you a reasonable amount for the copies.
c. Receive a summary of the Plan's annual financial
report. The Plan Administrator is required by law to
furnish each participant with a copy of this summary
report.
d. Obtain a statement telling you whether you have a
right to receive a benefit at normal retirement age
(age 65) and if so, what your benefits would be at
normal retirement age if you stop working under the
Plan now. If you do not have a right to a benefit,
the statement must be requested in writing and is not
required to be given more than once a year. The Plan
Committee must provide the statement free of charge.
In addition to creating rights for Plan participants, ERISA imposes
duties upon the people who are responsible for the operation of the employee
benefit plan. The people who operate the Plan, called "fiduciaries" of the
Plan, have a duty to do so prudently and in the interest of you and other Plan
participants and beneficiaries. No one, including your employer, or any other
person, may fire you or otherwise discriminate against you in any way to
prevent you from obtaining a benefit or exercising your rights under ERISA.
If your claim for a benefit is denied in whole or in part, you must
receive a written explanation of the reason for the denial. You have the right
to have the Plan Committee review and reconsider your claim. Under ERISA,
there are steps you can take to enforce the above rights. For instance, if you
request materials from the Plan Committee and do not receive them within 30
days, you may file suit in a federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to $100
a day until you receive the materials, unless the materials were not sent
because of reasons beyond the control of the Plan Administrator. If you have a
claim for benefits that is denied or ignored, in whole or in part, you may file
suit in a state or federal court.
If it should happen that Plan fiduciaries misuse the Plan's money, or
if you are discriminated against for asserting your rights, you may seek
assistance from the U.S. Department of Labor, or you may file suit in a federal
court. The court will decide who should pay court costs and legal fees. If
you are successful, the court may order the person you have sued to pay these
costs and fees. If you lose, the court may order you to pay these costs and
fees, for example, if it finds your claim is frivolous.
24. WHAT OTHER PROVISIONS ARE IMPORTANT TO ME?
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<PAGE> 15
a. The Plan Committee must be able to locate you or your
beneficiary when your interest under the Plan becomes distributable. When you
terminate employment, it is important to keep the Plan Committee informed of
your current address.
b. Participation in the Plan does not confer upon you
any right of continued employment.
c. Benefits under the Plan are not insured by the
Pension Benefit Guaranty Corporation because the Plan is an individual account
plan not covered by the statutory insurance provisions.
25. IS ANY OTHER INFORMATION AVAILABLE?
TCI will provide, without charge, to each participant, upon the
participants' written or oral request, a copy of the following:
a. (i) All information that has been incorporated by
reference pursuant to Item 3 of Part II of the Registration
Statement (not including exhibits to the information unless
such exhibits are specifically incorporated by reference
therein), consisting of the following:
(A) TCI's latest annual report filed with the
Commission pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act");
or
(B) TCI's latest prospectus filed with the
Commission pursuant to Rule 424(b) under the
Securities Act that contains audited financial
statements for TCI's latest fiscal year for which
said statements have been filed; or
(C) TCI's effective registration statement on
Form 10 or 20-F filed with the Commission under the
Exchange Act containing audited financial statements
for TCI's latest fiscal year.
(ii) All other reports filed with the Commission pursuant
to Section 13(a) or 15(d) of the Exchange Act since the end of
the fiscal year covered by the applicable document referred to
in (i) above.
(iii) The description of the Common Stock of TCI contained
in a registration statement filed with the Commission under
Section 12 of the Exchange Act, including any amendments or
reports filed for the purpose of updating such description.
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<PAGE> 16
(iv) All other documents which TCI files with the
Commission pursuant to Section 13(a), 13(c), 14 and 15(d) of
the Exchange Act after the date of the Registration Statement.
The foregoing also are incorporated by reference in the Section 10(a)
Prospectus under the Registration Statement, of which this document is a part.
b. Other documents required to be delivered to employees pursuant
to Rule 428(b) of the Securities Act.
Such requests, as well as any requests for additional
information about the TCI ESPP and its administrators, should be directed to
the Plan Committee of the ESPP.
If you have any questions about the Plan, you should contact
the Plan Administrator or Plan Secretary at the addresses on the last page of
this summary. If you have any questions about this summary or about your
rights under ERISA, you should contact the nearest area office of the U.S.
Labor-Management Services Administration, Department of Labor.
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<PAGE> 17
IMPORTANT NAMES, ADDRESSES, AND OTHER INFORMATION
<TABLE>
<S> <C> <C> <C>
1. Plan Administrator: Gary K. Bracken
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111
Business Phone: (303) 267-5500
2. Plan Committee: Names: Gary K. Bracken
Stephen M. Brett
Bob Magness
Monica Payne
Bernard W. Schotters
Address: Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111
Business Phone: (303) 267-5500
3. Plan Assistant: John Barker
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111
Business Phone: (303) 267-5029
4. Trustee: Colorado National Bank
of Denver
17th & Champa Streets
Denver, CO 80202
5. Agent for Legal Process: Stephen Brett
(The Trustee and Plan Tele-Communications, Inc.
Administrator also may Terrace Tower II
be served.) 5619 DTC Parkway
Englewood, Colorado 80111
6. Company whose employees Tele-Communications, Inc.
are covered by the Plan:
Federal Tax ID Number: 84-0588868
Federal Plan ID Number: 001
</TABLE>
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<PAGE> 18
<TABLE>
<S> <C> <C>
7. Request for information Plan Committee of the
or forms regarding Plan: Employee Stock Purchase Plan
Terrace Tower II
5619 DTC Parkway
Englewood, Colorado 80111
(303) 267-5029
</TABLE>
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<PAGE> 1
EXHIBIT 23.1
Consent of Independent Auditors
The Board of Directors and Stockholders
Liberty Media Corporation:
We consent to the incorporation by reference in the registration statement on
Form S-8 of Tele-Communications, Inc. of our reports dated March 21, 1994,
relating to the consolidated balance sheets of TCI Communications, Inc.
(formerly Tele-Communications, Inc.) and subsidiaries as of December 31, 1993
and 1992, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1993, and all related schedules, which reports appear in the
December 31, 1993 Annual Report on Form 10-K, as amended, of TCI
Communications, Inc. Our reports refer to a change in the method of accounting
for income taxes in 1993.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
February 7, 1995
<PAGE> 1
EXHIBIT 23.2
Consent of Independent Auditors
The Board of Directors and Stockholders
Liberty Media Corporation:
We consent to the incorporation by reference in the registration statement on
Form S-8 of Tele-Communications, Inc. of our report, dated March 18, 1994,
relating to the consolidated balance sheets of Liberty Media Corporation and
subsidiaries (Successor) as of December 31, 1993 and 1992, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years ended December 31, 1993 and 1992 and the period from April 1, 1991 to
December 31, 1991 (Successor Periods) and the consolidated statements of
operations, stockholders' equity, and cash flows of Liberty Media (a
combination of certain programming interests and cable television assets of TCI
Communications, Inc. (formerly Tele-Communications, Inc.)) (Predecessor) for
the period from January 1, 1991 to March 31, 1991 (Predecessor Period), which
report appears in the Form 8-K of TCI Communications, Inc. dated April 6, 1994.
Our report refers to a change in the method of accounting for income taxes in
1993.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Denver, Colorado
February 7, 1995
<PAGE> 1
EXHIBIT 23.3
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of Tele-Communications, Inc. of our report dated February
4, 1994, related to the consolidated financial statements of TeleCable
Corporation and subsidiaries, which appears on page 12 of the TCI
Communications, Inc. and Tele-Communications, Inc. Current Report on Form 8-K
dated August 26, 1994.
Price Waterhouse LLP
Norfolk Virginia
February 7, 1995
