Exhibit 4.1
COMPOSITE COPY
OF
MORGAN STANLEY & CO. INCORPORATED
DEFERRED PROFIT SHARING PLAN
(EFFECTIVE AS OF SEPTEMBER 1, 1993,
INCLUDING ALL AMENDMENTS THROUGH DECEMBER 31, 2000)
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS............................................. 1
1.1. "Above-Base Compensation"............................... 1
1.2. "Administrative Agent".................................. 1
1.3. "Administrative Committee".............................. 1
1.4. "Affiliate"............................................. 1
1.5. "Authorized Absence".................................... 2
1.6. "Base Salary"........................................... 2
1.7. "Before-Tax Savings".................................... 2
1.8. "Beneficiary"........................................... 2
1.9. "Board of Directors".................................... 3
1.10. "Compensation".......................................... 3
1.11. "Corporation"........................................... 4
1.12. "Department"............................................ 4
1.13. "Early Retirement"...................................... 4
1.14. "Effective Date"........................................ 4
1.15. "Employee".............................................. 4
1.16. "Employer".............................................. 5
1.17. "Employer Contribution"................................. 5
1.18. "Employment Commencement Date".......................... 5
1.19. "ERISA"................................................. 5
1.20. "ESOP".................................................. 6
1.21. "ESOP Diversification Transfer"......................... 6
1.22. "Fiduciary Responsibility".............................. 6
1.23. "Firm Contribution"..................................... 6
1.24. "Flexible Benefit Credit Contribution".................. 6
1.25. "Foreign Subsidiary".................................... 6
1.26. "Former Participant".................................... 6
1.27. "Full-time Employee".................................... 7
1.28. "Highly Compensated Employee"........................... 7
1.29. "Hour of Service"....................................... 9
1.30. "Internal Revenue Code"................................. 11
1.31. "Investment Committee".................................. 12
1.32. "Investment Fund"....................................... 11
1.33. "Member"................................................ 11
1.34. "New Plan".............................................. 12
1.35. "Participant"........................................... 12
1.36. "Part-time Employee".................................... 12
1.37. "Period of Service"..................................... 12
1.38. "Plan".................................................. 12
1.39. "Plan Year"............................................. 12
1.40. "Pre-Tax Deferral Contributions"........................ 12
1.41. "Prior Plan"............................................ 12
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1.43. "Rollover Contribution"................................. 13
1.44. "Section 402(g) Limit".................................. 13
1.45. "Service"............................................... 13
1.46. "Tax Deductible Contributions".......................... 14
1.47. "Transferred Amounts"................................... 14
1.48. "Trust Agreement"....................................... 14
1.49. "Trust Fund"............................................ 14
1.50. "Trustee"............................................... 14
1.51. "Valuation Date"........................................ 14
1.52. "Value"................................................. 16
1.53. "Voluntary Contribution"................................ 16
1.54. "Year".................................................. 16
1.55. "Year of Service"....................................... 16
ARTICLE 2 ELIGIBILITY AND MEMBERSHIP IN THE PLAN.................. 17
2.1. Eligibility for Participation........................... 17
2.2. Membership.............................................. 18
ARTICLE 3 EMPLOYER CONTRIBUTIONS.................................. 19
3.1. Amount of Firm Contributions............................ 19
3.2. Automatic Deferral...................................... 19
3.3. Optional Deferral....................................... 20
3.4. Deferral of Compensation................................ 21
3.5. Deferral Contribution Limitations....................... 22
3.6. Contributions to Come Out of Profits.................... 26
3.7. Contributions to Be Non-Forfeitable..................... 26
3.8. Contributions to Be Deductible.......................... 27
ARTICLE 4 ALLOCATION OF FIRM CONTRIBUTIONS........................ 27
4.1. Allocation Among Members................................ 27
4.2. Termination of Employment............................... 27
4.3. Immediate Cash Payments................................. 28
4.4. Payment of Deferred Amounts to Trustee.................. 28
ARTICLE 5 EMPLOYEE CONTRIBUTIONS.................................. 29
5.1. Rollover Contributions.................................. 29
5.2. ESOP Diversification Transfers.......................... 29
5.3. Contribution to Be Non-Forfeitable...................... 29
ARTICLE 6 IN-SERVICE WITHDRAWALS AND LOANS........................ 30
6.1. Withdrawals in Respect of Voluntary Contributions....... 30
6.2. Withdrawals in Respect of Tax Deductible Contributions.. 30
6.3. Other In-Service Withdrawals............................ 30
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6.4. Payments in Cases of Hardship........................... 31
6.5. Plan Loans.............................................. 37
ARTICLE 7 INVESTMENT AND VALUATION OF THE TRUST FUND.............. 39
7.1. The Trust Agreement..................................... 40
7.2. Investment of Trust Fund................................ 40
7.3. Valuation of the Trust Fund............................. 45
7.4. Investment Option Elections and Voting.................. 45
7.5. Investment Committee.................................... 46
ARTICLE 8 LIMITATIONS ON BENEFITS AND CONTRIBUTIONS............... 49
ARTICLE 9 TOP-HEAVY PLAN YEARS.................................... 51
ARTICLE 10 DISTRIBUTIONS FROM THE TRUST FUND....................... 57
10.1. Payments upon Retirement................................ 57
10.2. Payments upon Death..................................... 59
10.3. Payments on Other Termination of Employment............. 60
10.4. Lump-Sum Payment........................................ 61
10.5. Liquidation of Interest................................. 61
10.6. Latest Commencement of Benefits......................... 61
10.7. Payment of Eligible Rollover Distributions.............. 63
10.8. Elections............................................... 64
ARTICLE 11 ADMINISTRATION OF THE PLAN.............................. 64
11.1. General................................................. 65
11.2. Quorum.................................................. 65
11.3. Rules and Regulations................................... 65
11.4. Procedure and Performance of Fiduciary Duties........... 65
11.5. Power to Interpret...................................... 66
11.6. Accounts................................................ 67
11.7. Conversion of Amounts of Base Salary.................... 68
11.8. Indemnification......................................... 68
11.9. Action Without Meeting.................................. 68
11.10. Meeting by Telephone Conference......................... 69
11.11. Claims Procedure; Hearing Panel......................... 69
ARTICLE 12 AMENDMENT, SUSPENSION AND TERMINATION AND MERGER,
CONSOLIDATION OR TRANSFER............................... 72
12.1. Amendment............................................... 72
12.2. Suspension and Termination.............................. 73
12.3. Merger, Consolidation or Transfer....................... 74
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ARTICLE 13 MISCELLANEOUS........................................... 74
13.1. Benefits Payable from Trust Fund........................ 74
13.2. Designation of Beneficiary.............................. 75
13.3. Elections............................................... 75
13.4. No Right to Continued Employment........................ 76
13.5. Inalienability of Rights and Interests.................. 76
13.6. Qualified Domestic Relations Order...................... 77
13.7. Payments Due Infants or Incompetents.................... 77
13.8. Payments for Exclusive Benefit of Participants.......... 78
13.9. Expense of Administration............................... 78
13.10. Profit Sharing or Bonus Payments Outside of the Plan.... 78
13.11. New York Law to Govern.................................. 79
13.12. Treatment of Qualified Military Service................. 79
APPENDIX A A-1
MORGAN STANLEY & CO. INCORPORATED
DEFERRED PROFIT SHARING PLAN
---------------------------------
ARTICLE 1
DEFINITIONS
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The following words and phrases as used herein shall have the
following meanings unless a different meaning is plainly required by the
context:
1.1. "Above-Base Compensation" shall mean:
(a) Discretionary Bonuses (in the year paid); and
(b) Monthly Commissions (in the year paid).
1.2. "Administrative Agent" shall mean the third party administrator
appointed by the Administrative Committee to whom, by so appointing, the
Administrative Committee has delegated its responsibilities to receive, cumulate
and communicate to the Trustee investment and distribution instructions
(including requests for loans and hardship withdrawals from the Plan) received
from Participants.
1.3. "Administrative Committee" or "Committee" shall mean the Deferred
Profit Sharing Plan Administrative Committee established to administer the Plan
in accordance with Article 11. Other than in Section 7.2, the term "Committee"
as used in this Plan shall refer to the Administrative Committee.
1.4. "Affiliate" shall mean any corporation or unincorporated business
controlled by, or under common control with, an Employer within the meaning of
Sections 414(b) and (c) of the Code.
2
1.5. "Authorized Absence" shall mean an absence authorized by the
Employer without loss of employment status, including absence on account of
parental leave, family leave, illness, business of the Employer, vacation, jury
duty and military or governmental service, whether or not salary shall be paid
during such absence.
1.6. "Base Salary" shall mean regular bi-weekly base compensation,
including short-term disability benefit payments, received by an Employee during
any year from an Employer or Affiliate and including, with respect to
Participants or Members of the Plan who are paid by commission, periodic cash
drawings against commissions in accordance with procedures established from time
to time by the Committee for this purpose. If any person should receive Base
Salary during the same payroll period from an Employer and also from a Foreign
Subsidiary and if such person is, pursuant to the last sentence of Section 1.15,
considered an Employee of the Corporation, the aggregate amount so received
shall be treated as his Base Salary.
1.7. "Before-Tax Savings" shall mean the amount of a Member's Pre-Tax
Deferral Contribution and, for Plan Years beginning prior to January 1, 1995,
that portion of the Firm Contribution that such Member elects to defer pursuant
to Section 3.3(a) which is allocated to his account pursuant to Section 4.1.
Subject to Section 6.3 (relating to limitations in respect of hardship
distributions), a Member's Before-Tax Savings in a calendar year shall not
exceed the Section 402(g) Limit.
1.8. "Beneficiary" shall mean such person or persons as are designated
pursuant to Section 13.2(a) or (b) to receive, upon such Participant's death,
all or a portion of such Participant's interest in the Trust Fund.
3
1.9. "Board of Directors" shall mean the Board of Directors of the
Corporation, or any committee of such Board of Directors to the extent expressly
authorized by resolutions of the Board of Directors to exercise the powers of
the Board of Directors in respect of the Plan.
1.10. "Compensation" shall mean for any year the sum of the
Participant's Base Salary earned for such year, whether or not paid in such
year, and the Participant's Above-Base Compensation paid in such year, but
excluding any expatriate allowances, expense reimbursements, Employer
Contributions to the Plan and benefits paid under this Plan or a Prior Plan.
Compensation for a year shall not exceed $235,840, as adjusted in accordance
with applicable adjustments prescribed by the Secretary of the Treasury pursuant
to Section 416(d)(2) of the Internal Revenue Code. Effective January 1, 1994,
such amount shall not exceed $150,000, as adjusted in accordance with applicable
cost-of-living adjustments prescribed by the Secretary of the Treasury pursuant
to Section 416(d)(2) of the Internal Revenue Code.
For Plan Years beginning before January 1, 1997, in applying the
limitation of Section 401(a)(17) of the Internal Revenue Code, the family group
of a highly compensated Member who is subject to the family aggregation rules of
Section 414(q)(6) of the Internal Revenue Code because such highly compensated
Member is either a five percent (5%) owner of the Employer or one of the ten
(10) most highly compensated Employees during the year, shall be treated as a
single Member, except for this purpose, the term "family" shall include only the
Spouse of the Member and any lineal descendants of the Member who have not
attained age nineteen (19) before the close of the year. If, as a result of the
application of the family aggregation rules, the limitations of this section are
exceeded, then the limitation shall be prorated
4
among the affected individuals in proportion to each such individual's
compensation as determined under this section prior to the application of this
limitation.
1.11. "Corporation" shall mean Morgan Stanley & Co. Incorporated and
any successor by merger, consolidation, purchase or otherwise which adopts the
Plan.
1.12. "Department" shall mean the Human Resources Department of the
Corporation.
1.13. "Early Retirement" for a Member shall mean retirement pursuant
to Section 4.4 (or any successor provision thereto) of the Retirement Plan.
1.14. "Effective Date" of this Amended and Restated Plan shall mean
September 1, 1993.
1.15. "Employee" shall mean any person employed by an Employer who
receives regular and stated compensation other than a pension, retainer or
remuneration in the nature of a consulting fee, excluding any person who is (i)
classified by an Employer as a "leased employee" of any Employer (including,
without limitation, a leased employee as defined in Section 414(n) of the Code),
an independent contractor or a consultant; (ii) a provider of services to an
Employer pursuant to a contractual arrangement, such as a "PAL", either with
that person or with a third party, other than one specifically providing for an
employment relationship with the Employer, (iii) a non-resident alien and who
receives no earned income from an Employer which constitutes U.S. source income
(within the meaning of Section 861(a)(3) of the Code); or (iv) classified by an
Employer as an intern or a summer associate. If any person excluded as an
Employee pursuant to the preceding clauses (i) and (ii) shall be determined by a
court or a federal, state or local regulatory or administrative authority to
have served as a common law employee of the Employer,
5
such determination shall not alter this exclusion as an Employee for purposes of
this Plan. The Committee may, in its sole discretion and on the basis of uniform
rules applicable to all persons in similar circumstances, consider as an
Employee of the Corporation any person who is a United States citizen and who is
employed outside the continental limits of the United States by a Foreign
Subsidiary.
1.16. "Employer" shall mean the Corporation, with respect to its
Employees, and each Affiliate which has adopted the Plan with the consent of the
Board of Directors, with respect to its Employees. A list of participating
Employers, and the dates of their respective adoption of the Plan, is annexed
hereto as Appendix A.
1.17. "Employer Contribution" shall mean a contribution made under the
Plan pursuant to Article 3.
1.18. "Employment Commencement Date" means (a) the first day in
respect of which an Employee is entitled to be credited with an Hour of Service
for the performance of services for an Employer or Affiliate, or (b) in the case
of a former Employee who returns to the employ of an Employer or Affiliate after
a period of absence which is not included in his Period of Service, the first
day in respect of which, after such period of absence, he is entitled to be
credited with an Hour of Service for the performance of services for an Employer
or Affiliate.
1.19. "ERISA" shall mean the provisions of the Employee Retirement
Income Security Act of 1974, as it (or the provisions of the United States Code
in which such provisions appear) may be amended from time to time, or any
successor legislation adopted in lieu thereof, and references herein to any
specific provision of ERISA shall be deemed also to refer to any successor
provision thereof or as it may hereafter be so amended or replaced.
6
1.20. "ESOP" shall mean the Morgan Stanley Group Inc. and Subsidiaries
Employee Stock Ownership Plan, as amended from time to time.
1.21. "ESOP Diversification Transfer" shall mean amounts transferred
to the Plan from the ESOP in order to satisfy the investment diversification
requirements of Section 401(a)(28) of the Internal Revenue Code, or any
successor provision.
1.22. "Fiduciary Responsibility" shall mean those operational and
administrative duties required to be performed by fiduciaries pursuant to the
provisions of Part 4 of Title I of ERISA.
1.23. "Firm Contribution" shall mean a contribution made to the plan
by an Employer pursuant to Section 3.1.
1.24. "Flexible Benefit Credit Contribution" shall mean, with respect
to an Employee, any amount contributed to the Plan from the Morgan Stanley & Co.
Incorporated Flexible Benefit Program during the period January 1, 1982 through
June 30, 1988, under the terms of the Plan as in effect during such period.
1.25. "Foreign Subsidiary" shall mean a foreign affiliate (as defined
in Section 3121(1)(6) of the Internal Revenue Code) of the Corporation if the
Corporation has entered into an agreement under Section 3121(l) of the Internal
Revenue Code (relating to Social Security Taxes) which applies to such foreign
affiliate.
1.26. "Former Participant" shall mean any individual who has retained
an interest in the Trust Fund as a consequence of an effective election pursuant
to Subsection 10.1(b), (c), or (d) hereof to defer receipt of his distribution
or to receive the value of his interest under the Plan
7
in installments, until the date as of which such deferred distribution is made
or the last such installment is distributable.
1.27. "Full-time Employee" means any Employee who is not a Part-time
Employee.
1.28. "Highly Compensated Employee" For Plan Years beginning before
December 31, 1996, "Highly Compensated Employee" shall mean a "Highly
Compensated Employee" as defined under the Plan as in effect for such Plan Year.
For Plan Years beginning after December 31, 1996 and prior to December 31, 1999,
"Highly Compensated Employee" shall mean any Employee who (i) was a 5% owner (as
defined in Code section 416(i)(1)) during the Plan Year or the preceding Plan
Year or (ii) for the preceding Plan Year had compensation (within the meaning of
Code section 414(q) as in effect for the Plan Year of determination) from the
Employer or an Affiliate in excess of $80,000, as adjusted by the Secretary of
the Treasury or a delegate thereof in accordance with Code section 414(q). For
Plan Years beginning after December 31, 1999, "Highly Compensated Employee"
shall mean any Employee who (i) was a 5% owner (as defined in Code section
416(i)(1)) during the Plan Year or the preceding Plan Year or (ii) for the
preceding Plan Year had compensation (within the meaning of Code section 414(q)
as in effect for the Plan Year of determination) from the Employer or an
Affiliate in excess of $80,000, as adjusted by the Secretary of the Treasury or
a delegate thereof in accordance with Code section 414(q), and was in the
Top-Paid Group of Employees for such preceding Plan Year.
For Plan Years beginning after December 31, 1996, a former Employee
shall be treated as a Highly Compensated Employee if such Employee was a Highly
Compensated Employee at the time of his Severance Date or such Employee was a
Highly Compensated
8
Employee at any time after attaining age 55. Notwithstanding anything contained
herein to the contrary, solely for the purpose of determining the Employees who
are Highly Compensated Employees for the 1997 Plan Year, the definition of
Highly Compensated Employee in effect for the 1997 Plan Year will be treated as
having been in effect for the 1996 Plan Year.
For purposes of the definition of "Highly Compensated Employee," "Top-
Paid Group" of Employees means those Employees who are included in the group
consisting of the top 20% of the employees of the Employer and its Affiliates
when ranked on the basis of compensation paid during the Plan Year, as
determined in accordance with Code section 414(q)(3).
For purposes of the definition of "Highly Compensated Employee," (i)
"Severance Date" means the date the Employee separates from service within the
meaning of Code section 414(q)(6)(A); (ii) employees of an Affiliate shall
include employees of any entity that would be taken into account pursuant to
Code section 414(q)(7); (iii) Employee shall not include a non-resident alien
who receives no earned income from sources within the United States; and (iv)
the number of employees in the Top Paid Group of Employees shall be determined
by excluding a person who has not completed at least six months of service,
normally works less than 17 1/2 hours each week, normally works less than six
months during a Plan Year, has not attained age 21, is a non-resident alien and
receives no earned income from sources within the United States, or except to
the extent required to be included by Code section 414(q), employees who are
included in a unit of employees covered by a collective bargaining agreement.
9
1.29. (a) "Hour of Service" shall mean
(1) each hour for which an Employee is paid, or entitled to payment,
for the performance of services for an Employer or Affiliate, credited for the
Plan Year in which such services were performed;
(2) each hour of a period during which no duties are performed due to
holiday, incapacity, layoff, or Authorized Absence, determined in accordance
with the following rules:
(A) if the Employee is directly or indirectly paid, or entitled
to payment, by an Employer or Affiliate on account of such period of
absence -
(i) he shall be credited with Hours of Service during the
entire period of absence in accordance with Subsections (b) and
(c), if he returns to the employ of an Employer or Affiliate at
the conclusion of such period; and
(ii) he shall be credited with Hours of Service in
accordance with Subsections (b) and (c) up to a maximum of five
hundred one (501) Hours of Service in each such period of
absence, if he does not return to the employ of an Employer or
Affiliate at the conclusion of such period;
(B) if the Employee is not paid, or entitled to payment, by an
Employer or Affiliate on account of such period of absence -
(i) he shall be credited with forty (40) Hours of Service
for each week, or eight (8) Hours of Service for each week day,
of the period
10
of absence, if he returns to the employ of an Employer or
Affiliate at the conclusion of such period; and
(ii) he shall be credited with no Hours of Service in
respect of such period of absence, if he does not return to the
employ of an Employer or Affiliate at the conclusion of such
period;
(3) each hour during the Employee's period of service in the Armed
Forces of the United States, credited on the basis of forty (40) Hours of
Service for each week, or eight (8) Hours of Service for each week day, of
such service, if the Employee retains re-employment rights under the
Military Selective Service Act (or similar legislation) and is re-employed
by an Employer or Affiliate within the period provided by such Act (or
legislation); and
(4) each hour for which an Employee has been awarded, or is otherwise
entitled to, back pay from an Employer or Affiliate, irrespective of
mitigation of damages, if he is not entitled to credit for such hour under
any other Paragraph of this Subsection (a).
(b) The number of an Employee's Hours of Service and the Plan Year or
other computation period to which they are to be credited shall be determined in
accordance with Section 2530.200b-2 of the Rules and Regulations for Minimum
Standards for Employee Pension Benefit Plans, which Section and any successor
thereto is hereby incorporated by reference into this Plan.
(c) In the case of an Employee whose compensation is not determined on
the basis of certain amounts for each hour worked, such Employee's Hours of
Service need not be
11
determined from employment records, and such Employee may, in accordance with
uniform and nondiscriminatory rules adopted by the Administrative Committee, be
credited with forty-five (45) Hours of Service for each week in which he would
be credited with any Hours of Service under the provisions of Subsection (a) or
(b).
1.30. "Internal Revenue Code" or "Code" shall mean the Internal
Revenue Code of 1986, as it may be amended from time to time, or any successor
revenue code which may hereafter be adopted in lieu thereof, and references
herein to any specific provisions of the Internal Revenue Code or the Code shall
be deemed also to refer to the corresponding provisions of the Internal Revenue
Code or the Code as it may hereafter be so amended or replaced.
1.31. "Investment Committee" shall mean the Deferred Profit Sharing
Plan Investment Committee appointed from time to time by, and serving at the
pleasure of, the Board of Directors, which committee is responsible for the
management of the Plan's Investment Funds in accordance with Section 7.2. The
Investment Committee shall consist of no fewer than three persons, each of whom
shall be either an Employee or an Advisory Director of the Corporation, and
shall act in a manner consistent with the provisions of Article 11 hereof
applicable to actions taken by the Administrative Committee, and shall likewise
be indemnified in the manner set forth in Section 11.8. The term "Committee" as
used in Section 7.2 shall refer to the Investment Committee.
1.32. "Investment Fund" shall mean an investment fund established in
accordance with Section 7.2.
1.33. "Member" shall mean any Employee who has become a Member of the
Plan in accordance with Article 2.
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1.34. "New Plan" shall mean any trust or plan with respect to which
all or any portion of the assets and liabilities of the Trust Fund is merged,
consolidated or transferred pursuant to Section 12.3.
1.35. "Participant" shall mean any Employee for whom an account is
maintained under the Plan.
1.36. "Part-time Employee" means an Employee who is either (i)
compensated on an hourly basis or (ii) regularly scheduled to work less than a
standard forty-hour week.
1.37. (a) "Period of Service" shall mean the period beginning on an
Employee's most recent Employment Commencement Date and ending on the date the
Employee terminates Service.
(b) For the purpose of determining the length of an Employee's Period
of Service, all nonsuccessive Periods of Service shall be aggregated.
(c) A Period of Service shall include the period commencing on the
date an Employee terminates Service and ending on the date he returns to
Service, but only if such period does not exceed twelve (12) months.
1.38. "Plan" shall mean this Deferred Profit Sharing Plan, as amended
from time to time.
1.39. "Plan Year" shall mean the calendar year.
1.40. "Pre-Tax Deferral Contributions" shall mean that portion of
Compensation which an Employee elects to contribute to the Plan pursuant to
Section 3.4.
1.41. "Prior Plan" shall mean the Deferred Profit Sharing Plan of the
Corporation, as amended from time to time on or before December 31, 1975.
13
1.42. "Retirement Plan" shall mean the Morgan Stanley & Co.
Incorporated Pension Plan, as amended from time to time.
1.43. "Rollover Contribution" shall mean any rollover contribution
defined in (i) Internal Revenue Code Section 402(c) or 403(a)(4), relating to
certain distributions from an employees' trust or employee annuity described in
Internal Revenue Code Section 401(a) or 403(a), respectively; or (ii) Internal
Revenue Code Section 408(d)(3), relating to certain distributions from an
individual retirement account or an individual retirement annuity.
1.44. "Section 402(g) Limit" shall mean the limit on elective
deferrals under Section 402(g) of the Internal Revenue Code (as adjusted by the
cost-of-living factor prescribed by the Secretary of the Treasury under Section
415(d) of the Internal Revenue Code).
1.45. "Service" shall mean employment by the Corporation and any
predecessor thereto, and by the Employer, including periods of employment with a
Foreign Subsidiary which are considered, pursuant to the last sentence of
Section 1.15, service as an Employee of the Corporation. "Service" shall also
include employment with any Affiliate and employment with any parent or
subsidiary of the Corporation, or any subsidiary of any parent, to the extent
recognized by the Board of Directors, in its sole discretion, on the basis of
uniform rules applicable to all persons in similar circumstances.
Effective as of the date (the "Merger Date") of the merger of the
Morgan Stanley Group Inc., a Delaware corporation, with and into Dean Witter,
Discover & Co., a Delaware corporation ("DWD"), the term "Service" shall include
all service with DWD and its subsidiaries on, prior to or after the Merger Date.
14
1.46. "Tax Deductible Contributions" shall mean, with respect to an
Employee, the tax-deductible, individual retirement-type contributions made by
Employees to the Plan during the period January 1, 1982 through December 31,
1986 under the terms of the Plan as in effect during such period.
1.47. "Transferred Amounts" shall mean amounts transferred to the
Trustee from the trustee of another trust pursuant to Section 5.3 and credited
to the account of a Participant.
1.48. "Trust Agreement" shall mean the agreement and declaration of
trust entered into in accordance with Section 7.1.
1.49. "Trust Fund" shall mean the fund held by the Trustee under the
Trust Agreement in accordance with Article 7.
1.50. "Trustee" shall mean any trustee acting in such capacity under
the Trust Agreement.
1.51. "Valuation Date" shall mean any date specified by the Committee
or, if the Committee does not so specify, shall mean:
(a) with respect to withdrawals of Voluntary Contributions pursuant to
Section 6.1 hereof, Tax Deductible Contributions pursuant to Section 6.2
hereof, and Plan loans (other than loans for the purpose of purchasing a
primary residence) pursuant to Section 6.4 hereof, the first business day
of the week following the date upon which the Participant requests such
withdrawal or loan;
(b) with respect to withdrawals in the case of hardship pursuant to
Section 6.3 hereof and Plan loans for the purpose of purchasing a primary
residence pursuant to
15
Section 6.4 hereof, the first business day of the week following the date
upon which such withdrawal or loan is approved;
(c) with respect to payments upon retirement, death or other
termination of employment pursuant to Article 10 hereof, the first business
day of the week following the date of such retirement, death or termination
or the date a Former Participant elects to have his deferred accounts paid
to him pursuant to Section 10.3, provided, however, that the Valuation Date
with respect to any payments which qualify as eligible rollover
distributions pursuant to Section 10.7 shall be delayed by such waiting
period as may apply by law or regulation to such distributions;
(d) with respect to accounts where payment has been deferred at the
election of the Participant pursuant to Subsection 10.1(d) or Section 10.3,
the first business day of the week following the date the Former
Participant elects to commence receiving payment of such deferred accounts,
provided, however, that the Valuation Date with respect to any payments
which qualify as eligible rollover distributions pursuant to Section 10.7
shall be delayed by such waiting period as may apply by law or regulation
to such distributions;
(e) with respect to any annual installment payments pursuant to
Article 10 (after the first such payment), the first business day of the
week coincident with or next following the anniversary of the Valuation
Date determined pursuant to paragraph (c) or (d) above;
(f) with respect to any inter-Investment Fund transfer pursuant to
Section 7.4(b) hereof, as of the close of the first business day coincident
with or immediately following the date the Participant requests such
transfer; and
16
(g) with respect to elections made pursuant to Section 10.1(d) of the
Plan, the first business day of the week following the date the Former
Participant elects to receive such lump sum payment, provided, however,
that the Valuation Date with respect to any payments which qualify as
eligible rollover distributions pursuant to Section 10.7 shall be delayed
by such waiting period as may apply by law or regulation to such
distributions.
(h) with respect to distributions made pursuant to Section 10.4, the
last business day of a month following the Participant's termination from
Service on which the Value of a Participant's account does not exceed the
amount set forth in Code section 411(a)(11) as of such date.
1.52. "Value" shall mean, when used to refer to the interest of a
Participant in the Trust Fund on any date, the value thereof determined as of
such date in accordance with Sections 7.3 and 10.4.
1.53. "Voluntary Contribution" shall mean the voluntary revocable
contributions of no more than 10% of annual Compensation made (or recontributed
subsequent to withdrawal) to the Plan prior to January 1, 1988 under the terms
of the Plan as in effect prior to such date.
1.54. "Year" shall mean a calendar year.
1.55. "Year of Service" shall mean a period of 12 consecutive months
during which an Employee completes 1,000 Hours of Service; provided that,
effective January 1, 2000, in the case of a Full-time Employee "Year of Service"
shall mean a Period of Service of one year. Full-time Employees who performed
Service prior to January 1, 2000 shall receive credit for a Period of Service
consisting of: (a) for Plan Years beginning prior to January 1, 2000, a number
of years equal to the number of Years of Service credited to the Employee before
January 1,
17
2000, under the method of crediting service in effect under the Plan prior to
January 1, 2000; (b) for the Plan Year beginning January 1, 2000, the greater of
(i) the period of time credited for such year under the Plan rules in effect as
of January 1, 2000 and (ii) the period of time that would have been credited for
such year under the Plan rules in effect prior to January 1, 2000; and (c) for
Plan Years beginning on or after January 1, 2001, the Employee's Period of
Service after December 31, 2000. For purposes of the previous sentence, "Hour of
Service" shall include such hours as the Administrative Committee determines are
required to be taken into account for eligibility and vesting purposes in order
to comply with Code section 414(n).
ARTICLE 2
ELIGIBILITY AND MEMBERSHIP IN THE PLAN
--------------------------------------
2.1. Eligibility for Participation.
-----------------------------
(a) Previous Participation. Each Employee who was a Participant under
----------------------
the terms of the Plan on August 31, 1993 shall continue as a Participant of this
Plan.
(b) Pre-Tax Deferral Contributions. Each person who was an Employee
------------------------------
under the terms of the Plan on August 31, 1993 shall continue to be eligible to
participate and to make Pre-Tax Deferral Contributions under this Plan. Any
other Full-Time Employee and any Part-Time Employee who is regularly scheduled
to work more than 20 hours per week will be eligible to participate and to make
Pre-Tax Deferral Contributions as soon as administratively feasible following
his date of hire. Any Part-Time Employee who is not regularly scheduled to work
more than 20 hours per week shall be eligible to participate and to make a Pre-
Tax Deferral Contribution as of the first day of the first calendar month
following the date on which he has completed a Year of Service.
18
(c) Rollover Contributions. Each person who was an Employee under the
----------------------
terms of the Plan on August 31, 1993 shall continue to be eligible to
participate and to make Rollover Contributions under this Plan. Any other
Employee shall be eligible to participate and to make Rollover Contributions as
soon as administratively feasible following his date of hire.
2.2. Membership.
----------
(a) Each Employee who was a Participant under the terms of the Plan on
August 31, 1993 shall continue as a Member of this Plan.
(b) Any other Full-time Employee shall become a Member as of the first
day of the month following the date on which he has completed one Year of
Service, provided he is employed on such date. Any other Part-time Employee
shall become a Member as of the first day of the month following his completion
of one Year of Service either during the 12-month period commencing on his
earliest Employment Commencement Date or during any calendar year commencing
after such date, provided he is employed on such date.
(c) A Member who is a Full-time Employee who becomes ineligible to
receive Firm Contributions in accordance with Section 4.2 (relating to
termination of employment) shall again become eligible to receive Firm
Contributions on the first day he returns to Service. A Member who is a Part-
time Employee shall be ineligible to receive Firm Contributions as of the first
day of any calendar year during which he fails to complete a Year of Service,
and shall again become eligible to receive Firm Contributions, subject to
Section 4.2, as of the first day of the first subsequent calendar year during
which he completes a Year of Service.
(d) Notwithstanding any other provision of the Plan to the contrary,
any Employee who is (i) classified by an Employer as a "leased employee" who
provides services to
19
any Employer (including, without limitation, a leased employee as defined in
Code section 414(n)), an independent contractor or a consultant or (ii) a
provider of services to an Employer pursuant to a contractual arrangement, such
as a "PAL", either with that person or with a third party, other than one
specifically providing for an employment relationship with the Employer, shall
not be eligible to become a Member until the later of the date, if any, on which
he becomes an Employee who is not classified as a leased employee, independent
contractor, consultant or a provider of services to any Employer and is employed
in a job classification that is eligible for membership under the Plan as
determined by such Employer. If any person excluded as an Employee pursuant to
the preceding clauses (i) and (ii) shall be determined by a court or a federal,
state or local regulatory or administrative authority to have served as a common
law employee of the Employer, such determination shall not alter this exclusion
as an Employee for purposes of this Plan.
ARTICLE 3
EMPLOYER CONTRIBUTIONS
----------------------
3.1. Amount of Firm Contributions. The amount of the Firm
----------------------------
Contribution to be made by each Employer under the Plan for each year commencing
with 1976 shall be equal to such amount as may, subject to the limitations
contained in this Article 3 and in Article 8 of the Plan, be determined by
action of the Board of Directors before the end of each year.
3.2. Automatic Deferral. For Plan Years beginning prior to January 1,
------------------
1995, subject to Section 6.3 (relating to limitations in respect of hardship
distributions), one hundred percent (100%) of the amount of the Firm
Contribution allocated to each Member over $1,000 pursuant to Section 4.1 shall
be deferred. For Plan Years beginning after December 31, 1994,
20
subject to Section 6.3 (relating to limitations in respect of hardship
distributions), one hundred percent (100%) of the amount of the Firm
Contribution allocated to each Member pursuant to Section 4.1 shall be deferred.
3.3. Optional Deferral.
-----------------
(a) For Plan Years beginning prior to January 1, 1995, subject to
subparagraph (b) of this Section 3.3, Section 6.3 and to the limitations
expressed in Section 3.5, each Member shall have the right to elect with respect
to each Firm Contribution to defer the total amount (100%) of such Firm
Contribution allocated to him which is not deferred pursuant to Section 3.2;
provided that the amount of such optional deferral, when aggregated with the
amount deferred pursuant to Section 3.2 for such Plan Year, does not exceed the
limitation on Annual Additions contained in Section 8.1(c) for such Plan Year.
The amount of any such optional deferral shall be contributed to his account
under the Plan. The Member will receive payment in cash of the balance of the
Firm Contribution which is not deferred, less the amount of any applicable taxes
imposed thereon under the Federal Insurance Contributions Act or the Federal
Unemployment Contributions Act.
To be effective any such election must be made one month before the
end of such Year (or such other period as Committee may determine) and, if so
made, shall be irrevocable with respect to the Firm Contribution for the Year
for which the election is made but such election shall otherwise remain
effective until changed. For Plan Years beginning prior to January 1, 1995,
subject to subsection (b) of this Section 3.3, in the event that a Member shall
fail to make an election with respect to that part of the Firm Contribution
allocated to him which is not
21
deferred pursuant to Section 3.2, the entire amount of the Firm Contribution
allocated to him for such Year shall be deferred.
(b) For Plan Years beginning prior to January 1, 1995, in the case of
a Member who dies or whose Service terminates at or after retirement pursuant to
the Retirement Plan on or before the last day of the Year, and who will receive
or who has received a distribution of the entire Value of his interest, if any,
in the Trust Fund, the entire amount of the Firm Contribution allocated to such
Member for such Year shall be payable in cash. However, for Plan Years beginning
prior to January 1, 1995, in the case of any Member who has elected distribution
in accordance with Subsection 10.1(b), or who has elected to defer payment of
his interest pursuant to Subsection 10.1(d), the provisions of Section 3.2 and
of Subsection (a) of this Section 3.3 shall apply.
3.4. Deferral of Compensation.
------------------------
(a) Subject to Section 6.3 and the limitations expressed in Section
3.5 hereof, any Employee receiving Compensation may elect to defer receipt of up
to 20% of his base salary, discretionary bonus and/or commissions, not to exceed
20% in total of his Compensation, which shall be designated as his "Pre-Tax
Deferral Contribution," and to have that amount contributed to his separate
account as an Employer Contribution; provided, however, that the amount so
contributed, when aggregated with any Firm Contributions allocated to such
Employee's account pursuant to Sections 3.2 and 3.3, does not exceed the
limitations on Annual Additions contained in Subsection 8.1(c) for such Plan
Year. Such deferral election may be made from time to time on a revocable
basis, in accordance with procedures prescribed by the Committee, commencing at
any time during the year.
22
(b) The Pre-Tax Deferral contribution of each Employee shall be paid
over to the Trustee to be held in Trust, periodically or as directed by the
Committee, subject to the provisions of the Plan and of the Trust Agreement, for
the account of such Participant, to be invested in accordance with the election
of such Participant pursuant to Section 7.4. Pre-Tax Deferral Contributions
shall be made, in any event, no later than thirty (30) days after the last day
of the Plan Year.
3.5. Deferral Contribution Limitations.
---------------------------------
(a) If the sum of such Before-Tax Savings in respect of any
Participant would otherwise exceed the limit stated in Section 1.7, it shall be
limited to such amount by first limiting any Pre-Tax Deferral Contribution
elected by the Participant pursuant to Section 3.4, and second limiting any
optional deferral of the Firm Contributions elected by the Participant pursuant
to Section 3.3.
(b) If, prior to March 1 in any Year, a Participant who first became
an Employee in the previous Year notifies the Plan Committee in writing that the
sum of his Before-Tax Savings under this Plan and his elective deferrals (as
defined in Section 402(g) of the Internal Revenue Code) under all other plans
for the previous Year exceeds the limit stated in Section 1.7 and requests that
such excess be distributed to him, the amount of such excess, adjusted for
income or loss allocable thereto (and any taxes required to be withheld
thereon), shall be distributed to him no later than the following April 15.
Such distribution shall be paid first out of any Pre-Tax Deferral Contribution
elected by the Participant pursuant to Section 3.4, and second, any optional
deferral of the Firm Contribution elected by the Participant pursuant to Section
3.3. In the event that a Participant's Before-Tax Savings and his elective
deferrals (as defined in Code
23
section 402(g)) to all plans other than the DPSP exceed the Section 402(g) Limit
for the Year and the Plan Administrator cannot reasonably distribute such excess
amounts prior to the April 15th following the end of such Year, then such excess
amounts shall remain in the Trust and continue to be considered Pre-Tax
Deferrals.
(c) Effective January 1, 1997, with respect to each Plan Year, the
Actual Deferral Percentage (as defined in Subsection (d)(1)) for the Plan Year
for all eligible Highly Compensated Employees for such Plan Year shall not
exceed the Actual Deferral Percentage for the prior Plan Year for all eligible
non-Highly Compensated Employees (as defined in Subsection (d)(3)) for the prior
Plan Year multiplied by 1.25). If the Actual Deferral Percentage for the Plan
Year for eligible Highly Compensated Employees for such Plan Year exceeds the
Actual Deferral Percentage for the prior Plan Year for eligible non-Highly
Compensated Employees for the prior Plan Year by no more than 2 percentage
points, the 1.25 multiplier in the preceding sentence shall be replaced by 2.0.
Notwithstanding the foregoing, with respect to a Plan Year commencing before
January 1, 2000, the limitations of the preceding sentences shall be applied by
comparing the current Plan Year's Actual Deferral Percentage for all eligible
Highly Compensated Employees for such Plan Year with the current Plan Year's
Actual Deferral Percentage for all eligible non-Highly Compensated Employees for
such Plan Year.
(d) For purposes of this Section:
(1) "Actual Deferral Percentage" shall mean with respect to a
specified group of Employees for a Plan Year, the average of the Ratios
(calculated separately for each Employee) for the Plan Year. The "Ratio,"
with respect to any Employee, shall be a fraction having:
24
(A) A numerator consisting of the Participant's Before-Tax
Savings.
(B) A denominator consisting of his compensation as reflected on
his W-2 for such Year, and including amounts that are contributed by
the Employer or an Affiliate with respect to the Participant for such
Year pursuant to a salary reduction arrangement and that are not
includible in the Participant's gross income under Code section 125,
402(e)(3), 402(h) or 403(b), but not to exceed the dollar limit of
Code section 401(a)(17), as adjusted by the Secretary of the Treasury
to reflect cost-of-living increases.
Notwithstanding the foregoing, effective as of January 1, 2000, the Actual
Deferral Percentage for a prior Plan Year for eligible non-Highly
Compensated Employees for a prior Plan Year shall be determined in
accordance with applicable rules and regulations issued by the Secretary of
the Treasury under Code section 401(k).
(2) An Employee is an "eligible Highly Compensated Employee" for a
particular Plan Year if the Employee is a Highly Compensated Employee under
the definition in effect in Section 1.28 for such Plan Year and is eligible
to make Pre-Tax Deferral Contributions under Section 2.1(b) in such Plan
Year.
(3) An Employee is an eligible "non-Highly Compensated Employee" for a
particular Plan Year if the Employee is not a Highly Compensated Employee
under the definition in effect in Section 1.28 for such Plan Year and is
eligible to make Pre-Tax Deferral Contributions under Section 2.1(b) in
such Plan Year.
(e) Effective January 1, 1997, Before-Tax Savings of Participants who
are Highly Compensated Employees shall be maintained within the limit of
Subsection (c) by reducing
25
the Before-Tax Savings of such Participants to avoid or eliminate any excess
amounts. For these purposes, excess Before-Tax Savings shall equal the excess of
the aggregate amount of Before-Tax Savings of Highly Compensated Employees for
the Plan Year over the maximum amount of Before-Tax Savings permitted under
Subsection (c) (determined by hypothetically reducing contributions made on
behalf of Highly Compensated Employees in order of their Ratios beginning with
the highest such Ratios). If there are excess Before-Tax Savings of Highly
Compensated Employees at the end of a Plan Year, the excess shall be allocated
to Participants who are Highly Compensated Employees in accordance with Code
section 401(k)(8)(C), on the basis of the largest dollar amounts of Before-Tax
Savings for the Plan Year, beginning with the highest such dollar amounts. The
amount of excess Before-Tax Savings so allocated to a Participant, adjusted for
income or loss allocable thereto, and reduced, but not below zero, by the amount
of any distribution made or to be made to the Participant pursuant to Subsection
(b) shall be distributed to the Participant no later than the end of 12 months
following the Plan Year for which such excess Before-Tax Savings were
contributed to the Plan on his behalf. Such distribution shall be paid first out
of any Pre-Tax Deferral Contribution of Compensation elected by the Participant
pursuant to Section 3.4, and second, any optional deferral of the Firm
Contribution elected by the Participant pursuant to Section 3.3.
(f) The Actual Deferral Percentage for the family members (who are
treated as one Highly Compensated Employee) is the Actual Deferral Percentage
determined by combining all contributions and compensation of all eligible
family members. Except to the extent taken into account in the preceding
sentence, the deferrals and compensation of all family members are disregarded
in determining the Actual Deferral Percentages for the groups of Highly
Compensated
26
Employees and non-Highly Compensated Employees. In the case of a Highly
Compensated Employee whose Actual Deferral Percentage is determined under the
family aggregation rules, the determination of the amount of excess aggregate
contributions shall be made as follows: the Actual Deferral Percentage is
reduced in accordance with the "leveling" method described in Section
1.401(k)-1(f)(2) of the regulations and the excess aggregate contributions are
allocated among the family members in proportion to the deferrals of each family
member that have combined. The provisions of this Section 3.5(f) shall not apply
to Plan Years beginning on or after January 1, 1997.
3.6. Contributions to Come Out of Profits. All Employer Contributions
------------------------------------
made pursuant to this Article 3 shall be made out of the respective Employer's
current profits or accumulated earned surplus; provided, however, that if any
Employer is prevented from making a contribution which it would otherwise have
made under the Plan by reason of having insufficient current profits or
accumulated earned surplus, then the amount which would otherwise be contributed
by any such Employer may be contributed by another Employer or Employers out of
their current profits or accumulated earned surplus. "Current profits" and
"accumulated earned surplus" will refer to the figures appearing in the
financial statements prepared by the auditors of the respective Employer.
3.7. Contributions to Be Non-Forfeitable. The interest of any
-----------------------------------
Participant in the Trust Fund attributable to any Employer Contribution
allocated to him for any year shall be non-forfeitable at all times.
27
3.8. Contributions to Be Deductible. Employer Contributions to the
------------------------------
Plan shall be made on the express condition that such contributions are
deductible by the Employer in the taxable year in respect of which they are
made.
ARTICLE 4
ALLOCATION OF FIRM CONTRIBUTIONS
--------------------------------
4.1. Allocation Among Members. The Firm Contribution for each Year
------------------------
shall be allocated among all eligible (in accordance with Section 2.2) Members
in Service (including those on Authorized Absence) on December 31 of such Year
and those Members whose employment terminated during that Year (a) upon
retirement pursuant to the Retirement Plan, or (b) by reason of death. The share
of the Firm Contribution for any Year allocable to any such Member shall be that
amount which bears the same relationship to the Firm Contribution for such Year
as the Base Salary received during such Year by such Member (in respect of
Service as an eligible Member) bears to the aggregate of Base Salaries received
during such Year by all such Members (in respect of Service as eligible
Members), disregarding for this purpose Base Salaries of Members who, pursuant
to Section 4.2, are not entitled to a share of the Firm Contribution for such
Year. Any amount so allocable to a Member who has died shall be paid to the
persons designated pursuant to Section 10.2.
4.2. Termination of Employment. No portion of the Firm Contribution
-------------------------
for any Year shall be allocated to any Member whose employment terminates during
such Year for any reason other than death or retirement pursuant to the
Retirement Plan and who is not an Employee on December 31 of such Year.
28
4.3. Immediate Cash Payments. For Plan Years beginning prior to
-----------------------
January 1, 1995, as soon as practicable following the allocation of the Firm
Contribution among eligible Members pursuant to Section 4.1, the Employer shall
pay in cash to each Member such portion of the amount so allocated to him as he
has elected to receive in cash or as is payable to him in cash pursuant to
Section 3.3(b). Any amount so payable to a Member who has died shall be paid to
the persons designated pursuant to Section 10.2.
4.4. Payment of Deferred Amounts to Trustee. As soon as
--------------------------------------
administratively possible after the end of the Plan Year, there shall be paid
over to the Trustee the aggregate amount allocated to members which has been
deferred pursuant to Sections 3.2 (relating to the automatic deferral of Firm
Contributions) and 3.3(a) (relating to the optional deferral of Firm
Contributions) with directions to the Trustee as to the amounts to be deposited
in the respective Investment Funds.
29
ARTICLE 5
EMPLOYEE CONTRIBUTIONS
----------------------
5.1. Rollover Contributions. Any Employee may at any time make a
----------------------
Rollover Contribution to the Trust Fund if he provides satisfactory evidence to
the Committee that the amount to be contributed qualifies as a "Rollover
Contribution" as defined in Section 1.43 hereof and the Committee determines
that such Rollover Contribution will not impose a substantial administrative
burden on the Trust Fund or the Plan.
A former Employee who has not elected a distribution under Article 10,
who has not received a distribution under Section 10, and who has a positive
account balance under the Plan may make a Rollover Contribution from any other
U.S. tax qualified plan sponsored by the Corporation or an Affiliate.
5.2. ESOP Diversification Transfers. To the extent permitted by the
------------------------------
ESOP, any ESOP participant may elect to transfer to the Trust Fund an ESOP
Diversification Transfer. Any such ESOP Diversification Transfer shall be
credited to an account of such Employee and shall be treated in the same manner
as any other account established under the Plan; provided, however, that the
portion of a Participant's account attributable to an ESOP Diversification
Transfer shall not be available for any withdrawal or loan pursuant to Article 6
hereof. Such funds so transferred shall be allocated to one or more of the
Investment Funds in accordance with Section 7.4(a).
5.3. Contribution to Be Non-Forfeitable. An Employee's interest in all
----------------------------------
contributions made by him to the Plan pursuant to this Article 5 shall be
non-forfeitable at all times.
30
ARTICLE 6
IN-SERVICE WITHDRAWALS AND LOANS
--------------------------------
6.1. Withdrawals in Respect of Voluntary Contributions. Each
-------------------------------------------------
Participant or Former Participant shall be entitled to elect to withdraw as of
any Valuation Date, a specified amount of cash in respect of his Voluntary
Contributions, which shall not be less than $500 or, if less, the total value of
such account. Withdrawals in respect of Voluntary Contributions, when aggregated
with all other withdrawals under Sections 6.2 and 6.3, shall be limited to two
per calendar year.
6.2. Withdrawals in Respect of Tax Deductible Contributions. Each
------------------------------------------------------
Participant or Former Participant shall be entitled to elect to withdraw as of
any Valuation Date, a specified amount of cash in respect of his Tax Deductible
Contributions, which shall not be less than $500 or, if less, the total value of
such account. Withdrawals in respect of Tax Deductible Contributions, when
aggregated with all other withdrawals under Sections 6.1 and 6.3, shall be
limited to two per calendar year.
6.3. Other In-Service Withdrawals. Effective January 1, 1997, each
----------------------------
Participant or Former Participant who has attained age 591/2 shall be entitled
to elect to withdraw as of any Valuation Date, a specified amount of cash in
respect of any of his contribution accounts, which shall not be less than $500
or, if less, the total value of such account. Withdrawals under this Section
6.3, when aggregated with all other withdrawals under Sections 6.1 and 6.2,
shall be limited to two per calendar year.
In the case of a withdrawal under this Section, the Plan Administrator
shall withdraw assets from the Participant's accounts in the following order:
31
(1) Voluntary Pre-87 After-Tax Account;
(2) Voluntary Post-86 After-Tax Account;
(3) IRA Contribution Account;
(4) Rollover Contribution Account;
(5) Pre-Tax Deferral Contribution Account;
(6) DPSP Match Account for former Van Kampen employees;
(7) Non-Elective Firm Contribution Account;
(8) Firm Elective Deferral Contribution Account;
(9) ESOP Firm Account (diversified); and
(10) ESOP Match Account (diversified).
The amount requested shall, upon the Participant's or Former Participant's
request and in accordance with procedures adopted by the Plan Administrator, be
increased by the amount of federal, state and local income taxes reasonably
anticipated to result from the distribution, based on the amount of withholding
requested by the Participant or Former Participant.
6.4. Payments in Cases of Hardship.
-----------------------------
(a) In case of hardship, a Participant or Former Participant may apply
at any time for the immediate payment of all or any part of the Value of his
non-forfeitable interest in the Trust Fund attributable to that portion of Firm
Contributions the Participant has elected to defer pursuant to Section 3.3 and
to his Pre-Tax Deferral Contributions, determined as of the Valuation Date.
There may be paid to such Participant or Former Participant such portion or all
of the Value of his non-forfeitable interest in the Trust Fund as the Committee
may determine is necessary to alleviate such hardship; provided, however, that
-------- -------
such Participant has previously
32
withdrawn or simultaneously withdraws his entire account balance, if any,
attributable to his Voluntary Contributions and Tax Deductible Contributions
pursuant to Sections 6.1 and 6.2, and has outstanding the maximum available loan
from the Plan pursuant to Section 6.4 (to the extent required by law). In case
of hardship, a Participant or Former Participant may apply at any time for the
immediate payment of all or any part of the Value of his non-forfeitable
interest in the Trust Fund, determined as of the Valuation Date, in the order
specified below as follows; provided that the foregoing conditions have been
--------
met:
(i) with respect to distributions prior to January 1, 2000, those
amounts, if any, attributable to;
(A) that portion of Firm Contributions the Participant has
elected to defer pursuant to Section 3.3; and
(B) Pre-Tax Deferral Contributions;
(ii) with respect to distributions on or after January 1, 2000 and
prior to March 1, 2001, those amounts, if any, attributable to;
(A) DPSP Match Account for former Van Kampen employees;
(B) Voluntary Pre-87 After-Tax Account;
(C) Voluntary Post-86 After-Tax Account;
(D) IRA Contribution Account;
(E) Pre-Tax Deferral Contribution Account; and
(F) Firm Elective Deferral Contribution Account;
33
(iii) with respect to distributions on or after March 1, 2001, those
amounts, if any, attributable to the accounts specified in Section 6.3 in
the order specified in that Section.
(b) In making such determination, the Committee shall apply the
following rules on a uniform and non-discriminatory basis to all Participants or
Former Participants eligible for such hardship distributions:
(1) All requests for such payments must be made to the Committee,
through the Department or in such other manner as the Committee shall
designate.
(2) All such requests must be accompanied by such documentation as
the Committee or Department may require.
(3) The Department will review all requests and will make a
recommendation in writing to the Committee as to whether the request should
be approved or rejected. In making its recommendation, the Department
shall review all documentation and shall conduct such further review or
investigation as may be necessary.
(4) The Committee will consider the facts relevant to each
requested hardship distribution, subject to appropriate regulations.
(c) For the purposes of this Section 6.4, a distribution will be on
account of "hardship" if the distribution is necessary in light of immediate and
heavy financial needs of the Participant including one or more of the following:
(i) Purchase of a Participant's or Former Participant's primary
residence;
(ii) The need to prevent the eviction of the Participant or Former
Participant from his primary residence or foreclosure on the mortgage of
his primary residence;
34
(iii) Expenses for medical care described in Code Section 213(d)
previously incurred by or necessary to obtain such medical care for a
Participant or Former Participant, the Participant or Former Participant's
spouse, or any dependents of the Participant or Former Participant (as
defined in Code Section 152) which expenses are not covered by a medical
benefit plan covering such individual;
(iv) Tuition expenses and related educational fees for the next
twelve (12) months of post-secondary education of the Participant or Former
Participant, or the Participant's or Former Participant's spouse, children
or dependents (as defined in Code Section 152);
(v) For hardship distributions occurring prior to March 1, 2001,
expenses for the care of an aged or handicapped dependent of a Participant
or Former Participant (as defined in Code Section 152); or
(vi) For hardship distributions occurring prior to March 1, 2001,
expenses for other hardships of a Participant or Former Participant that
are essentially equivalent to those listed in (i) through (v).
A distribution based upon financial hardship cannot exceed the amount
required to meet the immediate financial need created by the hardship and not
reasonably available from other sources of the applicant. The amount necessary
to satisfy an immediate and heavy financial need shall, upon the Participant's
or Former Participant's request, be increased by the amount of federal, state
and local income taxes reasonably anticipated to result from the distribution,
based on the amount of withholding requested by the Participant or Former
Participant.
35
(d) No optional deferral of the Firm Contribution pursuant to Section
3.3 or Pre-Tax Deferral Contribution pursuant to Section 3.4 will be made on
behalf of a Participant who makes a withdrawal on account of hardship pursuant
to Subsection (a) until the first day of the calendar quarter following the
twelve-month period commencing on the day the hardship withdrawal is distributed
to the Participant.
(e) During the Year following the Year in which a Participant has
received distribution of a hardship withdrawal, the deferral contribution
limitation otherwise applicable pursuant to Section 3.5 shall be reduced by the
sum of his or her Before-Tax Savings for the Year of the hardship distribution.
6.5. Plan Loans.
----------
(a) A Participant who is a "party in interest" within the meaning of
Section 3(14) of ERISA (other than a Participant who is employed outside the
continental limits of the United States by a Foreign Subsidiary), and who has
executed a loan signature form supplied to the Participant by the Administrative
Committee or Administrative Agent and completed such other documentation as the
Administrative Committee shall require, may request a loan from the Plan in the
manner prescribed by the Committee and communicated to the Participants. The
loan request shall specify the desired amount and term of the loan and any other
information the Administrative Committee may require.
(b) As soon as practicable after receipt of a loan request containing
all required information, such loan shall be granted; provided, however, that
(i) the amount of any loan to a Participant (when added to the
outstanding balance of all other loans to the Participant from the Plan),
may not exceed the lesser of
36
(A) one-half of the sum of the balance in his accounts consisting of
Employer Contributions and Rollover Contributions, determined as of the
most recent Valuation Date or (B) $50,000 reduced by the excess, if any, of
the greatest outstanding balance of loans from the Plan during the one-year
period ending on the date such loan was made over the outstanding balance
of loans from the Plan on the date such loan was made;
(ii) subject to the limitations in subparagraph (i) above, the
minimum amount of any loan granted to a Participant shall be $500;
(iii) the repayment period of any loan to a Participant shall be one
(1) to five (5) years from the date the loan is made; provided, however,
that a maximum fifteen (15) year repayment period shall apply to any loan
to acquire a dwelling unit which within a reasonable time is to be used as
a principal residence of the Participant (determined at the time of loan
application) and for which the Participant has provided documentation
satisfactory to the Committee that the proceeds thereof will be used in
such manner;
(iv) each loan shall bear interest in a fixed amount equal to the
Prime Rate as released by the Board of Governors of the Federal Reserve in
statistical release H.15 using the last release of the most recently
preceding quarter; provided that the use of such rate shall be periodically
reviewed by the Department and adjusted if necessary to provide the Plan
with a return commensurate with the interest rates charged by persons in
the business of lending money for loans under similar circumstances;
(v) no more than one loan per Participant may be made in any
calendar year; prior to March 1, 2001, no more than two loans to a
Participant may be
37
outstanding at any time; and, effective March 1, 2001, no more than one
loan to a Participant may be outstanding at any time, except that, in the
case of a Participant who had two loans outstanding as of February 28,
2001, such two loans may continue to be outstanding at the same time.
(c) The Department shall make loans available to all Participants on a
reasonably equivalent and nondiscriminatory basis and in accordance with Section
408(b)(1) of ERISA; and any Participant to whom such loan is made agrees to such
changes in the terms of the loan as may be required by changes in the applicable
law or regulations.
(d) The entire principal amount of a loan may be prepaid at any time,
without premium or penalty, together with accrued or unpaid interest on the
amount as of the date of prepayment. For loans made prior to September 1, 1993,
partial prepayments of principal and interest are permitted, provided that, in
the case of a prepayment of less than the entire principal amount of a loan, the
amount of such prepayment shall be not less than $500.
(e) Principal and interest with respect to any loan to a Participant
shall be repaid bi-weekly by payroll deduction, in level installments, in
amounts sufficient to liquidate the loan over its remaining term, which shall be
subject to adjustment on a quarterly basis, effective as of the first pay period
in such quarter, in accordance with changes in the "discounted rate" determined
in the previous calendar quarter as described in subparagraph (b)(iv) above. In
the event that a payroll deduction cannot be made in full for any reason other
than an Authorized Absence or separation from Service, the Participant shall pay
directly to the Plan the full amount that would have been due, with such payment
to be made by the last business day of the calendar quarter which includes such
payment date. In the Event that a payroll deduction cannot be made in full due
to an Authorized Absence, if the Participant does not elect to have his loan
reamortized
38
over its remaining term upon his return to active Service, he shall make such
payments as described in the preceding sentence.
(f) Upon a Participant's separation from Service, or upon any
termination of the Plan pursuant to Section 12.2, the outstanding principal
amount of each loan together with all accrued and unpaid interest shall become
immediately due and payable.
(g) A Participant to whom a loan is granted shall indicate, on a
dollar or percentage basis, the account or accounts against which any loan shall
be charged and if any account is invested in more than one Investment Fund, the
Investment Fund against which such loan shall be charged and may indicate, at
any time, the account or Investment Fund to which repayments of a loan shall be
credited.
(h) Repayments shall be credited to the accounts in the same
proportions that the loan was charged to the account and unless a Participant
otherwise indicates, shall be invested in accordance with Section 7.4. That
portion of any account that remains charged by reason of a loan to a Participant
shall not share in any income, expense, gain or loss realized by the remainder
of the Trust Fund and shall not be available for any in-service withdrawal or
distribution provisions under the Plan.
(i) Each Participant to whom a loan is made agrees, by endorsement of
the check representing the proceeds of the loan, (i) that such loan shall be
secured by fifty percent (50%) of his account balance, (ii) to repay such loan
as provided herein by payroll deduction or otherwise and (iii) that he accepts
the terms and conditions of such loan as set forth herein and/or as disclosed by
the Administrative Committee or the Administrative Agent. If, within three (3)
days after receipt of the check representing the proceeds of the loan the
Participant decides not to
39
enter into such loan, he shall return the proceeds of the plan loan to the
Trustee, such loan shall be immediately canceled, and the funds segregated for
such loan shall be reinvested as soon as practicable in the Investment Funds
from which such funds were withdrawn for the purpose of making such loan.
(j) If a Participant fails to pay in full the principal amount of or
the interest due and payable on his loan upon his separation from Service or
otherwise or if he fails to pay in full the principal amount of or the interest
due and payable on his loan within five (5) years of the date the loan is made
fifteen (15) years in the case of a primary residence loan (in either case the
"Due Date"), the balance of each of his accounts that have been charged by
reason of the loan shall be reduced in the same proportions that such loan was
charged to such accounts and any interest due on the loan shall be charged to
each such account in the same proportion as the unpaid principal amount of the
loan charged to such account bears to the total unpaid principal amount. If the
balance of an account is less than the amount by which such balance is to be
reduced, the excess shall be applied to further reduce the balances of the other
accounts of the Participant in accordance with uniform and nondiscriminatory
rules established by the Department. The amount by which a Participant's
accounts are reduced pursuant to this paragraph (j) shall be deemed a
distribution for tax purposes as of the Due Date. Any distribution to a
Participant pursuant to any other provision of the Plan on or after such deemed
distribution shall be limited to the amount of his account balances less the
amount by which his accounts have been reduced pursuant to this paragraph (j).
ARTICLE 7
INVESTMENT AND VALUATION OF THE TRUST FUND
------------------------------------------
40
7.1. The Trust Agreement. The Corporation shall enter into an
-------------------
agreement and declaration of trust (the "Trust Agreement") which shall contain
such provisions as shall render it impossible for any part of the corpus of the
trust or income therefrom to be at any time used for, or diverted to, purposes
other than for the exclusive benefit of Participants. Any or all rights or
benefits accruing to any person under the Plan with respect to any contributions
deposited under the Trust Agreement shall be subject to all the terms and
provisions of the Trust Agreement.
7.2. Investment of Trust Fund.
------------------------
(a) All of the assets of the Trust Fund shall be invested in the
Investment Funds as described below (each, an "Investment Fund"). The
Investment Funds shall consist of the Morgan Stanley Dean Witter Stock Fund and
such other investment options as shall be designated by the Investment Committee
from time to time. The Investment Committee may, from time to time, establish
additional Investment Funds, liquidate or remove existing Investment Funds,
limit the amounts or contributions that may be made to an existing Investment
Fund, change the permissible investment of or investment guidelines applicable
to an Investment Fund or reopen a restricted Investment Fund to new investments
by Participants. The Morgan Stanley Dean Witter Stock Fund may be removed as an
Investment Fund only by amendment to the Plan adopted in accordance with Section
12.1. The Morgan Stanley Dean Witter Stock Fund shall be a fund established to
invest primarily in shares of common stock, par value $0.01 per share, of Morgan
Stanley Dean Witter & Co., a Delaware corporation ("MWD Stock"). A portion of
the assets of such Fund may be invested in cash or cash equivalents to the
extent that the Investment Committee considers necessary or advisable for the
administration and management of such Fund.
41
(1) Money Market Fund. The Trustee shall invest and reinvest any
-----------------
moneys at any time forming any part of the Money Market Fund and income
thereon in marketable short and medium-term fixed income securities, demand
and short-term notes (including those commonly known as "Master Notes"),
United States Treasury Bills, other short-term government obligations,
commercial paper, other money market instruments, and registered investment
companies and commingled funds described in paragraph (c) hereof, invested
primarily in the types of investments permitted under this subparagraph
(1).
(2) S&P 500 Index Fund. The Trustee shall invest and reinvest any
------------------
moneys at any time forming any part of the S&P 500 Index Fund and the
income thereon in common stocks which are included in the S&P 500 Index,
and registered investment companies and commingled funds described in
paragraph (c) hereof, invested primarily in the types of securities
permitted under this subparagraph (2).
(3) Equity Growth Portfolio. The Trustee shall invest and reinvest
-----------------------
any moneys at any time forming a part of the Equity Growth Portfolio and
the income thereon primarily in growth-oriented common stocks of medium and
large-sized domestic corporations, and registered investment companies and
commingled funds described in paragraph (c) hereof, invested primarily in
the types of securities permitted under this subparagraph (3).
(4) Emerging Growth Portfolio. The Trustee shall invest and reinvest
-------------------------
any moneys at any time forming a part of the Emerging Growth Portfolio and
the income thereon primarily in small to medium-sized companies with annual
revenues in the $10
42
million to $500 million range through the purchase of common stock, limited
partnership interests, bonds, notes or other vehicles providing an equity
interest in such companies and registered investment companies and
commingled funds described in paragraph (c) hereof, invested primarily in
the types of securities permitted under this subparagraph (4).
(5) Value Equity Portfolio. The Trustee shall invest and reinvest any
----------------------
moneys at any time forming a part of the Value Equity Portfolio primarily
in common stocks of large-sized companies with annual revenues of at least
$500 million, and registered investment companies and commingled funds
described in paragraph (c) hereof, invested primarily in the types of
securities permitted under this subparagraph (5).
(6) International Equity Portfolio. The Trustee shall invest and
------------------------------
reinvest any moneys at any time forming a part of the International Equity
Portfolio primarily in publicly-traded common stocks of non-United States
companies, and registered investment companies and commingled funds
described in paragraph (c) hereof, invested primarily in the types of
securities permitted under this subparagraph (6).
(7) Emerging Markets Portfolio. The Trustee shall invest and reinvest
--------------------------
any moneys at any time forming a part of the Emerging Markets Portfolio
primarily in common stocks of non-United States companies in developing
countries, and registered investment companies and commingled funds
described in paragraph (c) hereof, invested primarily in the types of
securities permitted under this subparagraph (7).
(8) Fixed Income Portfolio. The Trustee shall invest and reinvest any
----------------------
moneys at any time forming a part of the Fixed Income Portfolio primarily
in fixed income securities issued or guaranteed by the United States
Government or any agency thereof,
43
corporate bonds (including Eurodollar bonds), mortgaged-backed securities
and other fixed income securities including, but not limited to,
certificates of deposit and short-term money market instruments, and
registered investment companies and commingled funds described in paragraph
(c) hereof, invested primarily in the types of securities permitted under
this subparagraph (8).
(9) High Yield Portfolio. The Trustee shall invest and reinvest any
--------------------
moneys at any time forming a part of the High Yield Portfolio primarily in
lower-rated debt instruments offering a yield above the yield generally
available on other debt securities, and registered investment companies and
commingled funds described in paragraph (c) hereof, invested primarily in
the types of securities permitted under this subparagraph (9).
(10) Insurance Company Investment Contracts. The Insurance Company
--------------------------------------
Investment Contracts, together with income earned thereon, is invested in
an insurance contract or contracts with a legal reserve life insurance
company or companies authorized to do business in the State of New York.
As each component insurance contract in this Investment Fund matures, the
proceeds of such insurance contract shall be transferred to the Money
Market Fund. Participants may elect to transfer to other Investment Funds
all or any multiple of 1% of his interest in the Insurance Company
Investment Contracts which is not automatically transferred to the Money
Market Fund in accordance with the preceding sentence each December 31;
provided, however, that such transfers may not be invested in the Money
Market Fund or the Fixed Income Portfolio for a period of six months from
the date of such transfer. Such transfers shall be effectuated by
liquidating, on a pro rata basis, the remaining Insurance Company
Investment Contracts to the extent
44
such contracts so permit. Effective as of May 31, 1992, no Participant
shall be permitted to elect to have new contributions, loan repayments or
transfers allocated to and invested in any Insurance Company Investment
Contract. On December 31, 1995, all remaining Insurance Company Investment
Contracts shall be liquidated and the proceeds thereof, to the extent not
otherwise directed by Participants, shall be transferred to the Money
Market Fund.
(b) Pending investment and reinvestment or pending payments as
provided herein, the Trustee may invest temporarily all or any part of the Trust
Fund comprising any one or more of the Investment Funds, in securities or other
property of a fixed-income nature, including but not limited to commercial paper
and notes of finance companies, or part interest therein, or in obligations
issued or guaranteed as to interest and principal by the United States
Government or any instrumentality or agency thereof, excluding the notes or
other securities of any Employer under the Plan.
(c) The Trustee may invest and reinvest all or any part of the Trust
Fund comprising any one or more of the Investment Funds through the medium of
any one or more common, collective or commingled trust funds maintained by it or
by an investment manager (as defined in Section 3(38) of ERISA) appointed by the
Investment Committee for the purpose, each of which is invested principally in
property of the kind authorized for that Investment Fund, and each of which is
qualified under the provisions of Section 401(a) and exempt under the provisions
of Section 501(a) of the Internal Revenue Code, and during such period of time
as an investment through any such medium exists, the Declaration of Trust of
such trust fund shall constitute a part of the Agreement.
45
(d) All interest, dividends and other income, as well as cash received
from the sale or exchange of securities or other properties produced by each of
the Investment Funds, shall be reinvested in the same Investment Fund which
produced such interest, dividends, other income or cash.
(e) The Trustee shall transfer moneys between Investment Funds in
accordance with the direction of the Committee or its delegate, subject to the
limitations of Section 7.4(b).
(f) The Trustee may retain in cash and keep unproductive of income
such amount of the Trust Fund, or of any Investment Fund as is deemed advisable.
The Trustee shall not be required to pay interest on such cash balances or on
cash pending investment.
(g) The Trustee is specifically authorized to permit assets of the
Trust Fund to be held outside the United States in accordance with Labor
Department Regulation (S) 2550.404b-1.
7.3. Valuation of the Trust Fund. As of the Valuation Date and as of
---------------------------
any other date fixed by the Committee, the Trust Fund shall be valued on the
basis of current market or fair value as determined by the Trustee in accordance
with the provisions of the Trust Agreement.
7.4. Investment Option Elections and Voting.
--------------------------------------
(a) Each Employee who makes or on whose behalf a contribution is made
to the Plan may elect, as to all such contributions, one or more of the
investment options specified under Section 7.2(a). An election made pursuant to
this Subsection 7.4(a) shall direct the Trustee to invest such contributions in
one or more of the Investment Funds in multiples of 1%. Such an election shall
remain in effect and be deemed applicable to all contributions made by or on
behalf of such Employee unless and until a new election is filed. An election
or change of election
46
pursuant to this Subsection 7.4(a) shall be subject to such conditions or
limitations as the Committee shall determine. To the extent the Employee does
not make an election pursuant to this Subsection 7.4(a), contributions made by
or on behalf of such Employee shall be invested in the money market fund or the
money market fund equivalent as determined by the Investment Committee from time
to time.
(b) Each Participant or Former Participant shall have the right to
elect that as of any Valuation Date all or any multiple of 1% of his interest in
any Investment Fund shall be liquidated and the proceeds thereof transferred to
any other Investment Fund, subject to such conditions or limitations as the
Committee shall determine, and further subject to any transfer restrictions with
respect to any of the Investment Funds contained in Subsection 7.2(a).
(c) A Participant shall be entitled to direct the exercise of voting
rights or other rights with respect to MWD Stock held in the Morgan Stanley Dean
Witter Stock Fund on behalf of the Participant in the manner and to the extent
contemplated by the Trust Agreement.
7.5. Investment Committee.
--------------------
(a) The management of the Investment Funds shall be placed in the
Investment Committee. The members of the Committee shall be appointed from time
to time by, and shall serve during the pleasure of, the Board of Directors. The
Committee shall consist of no fewer than three persons, each of whom shall be an
Employee or an Advisory Director of the Corporation.
(1) The Investment Committee shall be a "Named Fiduciary" with respect
to the Plan, as such term is defined in ERISA Section 402(a).
47
(2) Each person who has Fiduciary Responsibilities with respect to the
Plan shall be bonded if and as required by ERISA.
(b) A majority of the members of the Investment Committee at the time
in office shall constitute a quorum for the transaction of its business. All
resolutions or other actions taken by the Investment Committee at any meeting
shall be by the vote of a majority of those present at any such meeting.
(c) (1) The members of the Investment Committee shall elect one of
their number as Chairman and shall elect a Secretary who may, but need not, be a
member of the Investment Committee; may appoint from their number such
subcommittees with such powers as the Investment Committee shall determine; may
authorize one or more of their number or any agent to execute or deliver any
instructions on behalf of the Investment Committee; and may employ such counsel
and agents, and clerical services, as the Investment Committee may require in
carrying out the provisions of the Plan.
(2) The Fiduciary Responsibilities of the Investment Committee may be
allocated among its members or delegated to persons who are not members of the
Investment Committee as the Investment Committee in its sole discretion shall
decide. Upon an allocation or delegation of Fiduciary Responsibilities the
person or persons to whom such Fiduciary Responsibilities are allocated or
delegated shall be solely responsible for the performance of such Fiduciary
Responsibilities, and the members of the Investment Committee to whom such
Fiduciary Responsibilities have not been allocated shall not in any respect be
responsible for the performance of such Fiduciary Responsibilities, except as
provided by law. The Investment
48
Committee shall perform its allocation and delegation functions in the same
manner as it performs all of its other Fiduciary Responsibilities pursuant to
paragraph (3) below.
(3) The Investment Committee shall perform only its Fiduciary
Responsibilities as provided in the Plan except those Fiduciary Responsibilities
which are allocated or delegated pursuant to paragraph (2) above, if any, and
those Fiduciary Responsibilities which are to be performed by the Trustee
pursuant to the Trust Agreement.
(d) To the fullest extent permitted by law, the Corporation will
indemnify and save harmless each member of the Investment Committee and each
other person to whom Fiduciary Responsibilities are delegated under Section
7.5(c)(2) against any cost or expense (including attorneys' fees) or liability
(including any sum paid in settlement of the claim with the approval of the
Employer) arising out of any act or omission to act as a member of the
Investment Committee or as delegate, except in the case of willful misconduct or
lack of good faith. This Subsection (d) shall not supersede any separate
agreement or contract between the Corporation or the Plan and any person to whom
Fiduciary Responsibilities are delegated.
(e) Any action required or permitted to be taken at any meeting of the
Investment Committee may be taken without a meeting if a written consent thereto
is signed by all members of the Investment Committee and such written consent is
filed with the records of the proceedings of the Investment Committee.
(f) Members of the Investment Committee may participate in a meeting
of the Investment Committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Section shall constitute presence in person at such meeting.
49
ARTICLE 8
LIMITATIONS ON BENEFITS AND CONTRIBUTIONS
-----------------------------------------
8.1. (a) In order that the trust to be established pursuant to the
Plan shall at all times continue to qualify under Sections 401(a) and 501(a) of
the Internal Revenue Code or in order that the Employer Contribution for any
year be fully deductible in such year for Federal income tax purposes, the
Committee may reduce or increase proportionately to the extent it deems
necessary the amount of the Firm Contribution for any year which may be deferred
by employees or by higher paid employees.
(b) As used in this Section 8.1:
(1) "Annual Addition," for a Limitation Year, means in the case of
this Plan, the aggregate of Employer Contributions allocated to the
Participant's accounts for the Limitation Year.
(2) "Limitation Year" means the Plan Year.
(3) "Compensation" shall include (i) non-cash compensation, and (ii)
expense reimbursements to the extent such expenses are not deductible by
the Employee under Section 217 of the Code, and (iii) for Plan Years
beginning after December 31, 1997, and for purposes of Code section 415(c),
any elective deferrals or contributions made with respect to an Employee as
described in Code section 415(c)(3)(D).
(c) Notwithstanding anything in this Plan to the contrary, and except
as otherwise provided in this Section 8.1, a Participant's Annual Addition under
this Plan, for a Limitation Year, may not exceed the lesser of --
50
(1) $30,000, or such other amount as may be prescribed pursuant to
415(d) of the Code, or
(2) twenty-five percent (25%) of his compensation for the Limitation
Year.
(d) (i) For Limitation Years beginning prior to January 1, 1995, if
the Annual Additions otherwise made to the accounts of a Participant would cause
the limitations of Section 415 of the Internal Revenue Code that are applicable
to that Participant to be exceeded for the Limitation Year, the amount by which
such limitations are exceeded will be eliminated by reducing the Employer
Contributions made to his account; such excess amounts of Employer Contributions
shall be applied to reduce the Employer Contribution for such Participant for
the next Limitation Year (and succeeding Limitation Years, if necessary).
(ii) For Limitation Years beginning after December 31, 1994, if the
Annual Additions otherwise made to the accounts of a Participant would cause the
limitations of Section 415 of the Internal Revenue Code that are applicable to
that Participant to be exceeded for the Limitation Year, the amount by which
such limitations are exceeded will be eliminated (A) by returning to the
Participant the Participant's Pre-Tax Deferral Contributions for such Limitation
Year, in whole or in part as necessary, in the manner contemplated by Treas.
Reg. Section 1.415-6(b)(6)(iv) and then (B) to the extent necessary, by reducing
the Employer Contributions made to his account in accordance with Section 3.2.
Such excess amounts of Employer Contributions shall be applied to reduce the
Employer Contribution for such Participant for the next Limitation Year (and
succeeding Limitation Years, if necessary).
(iii) Notwithstanding the preceding two paragraphs, if such
Participant is not covered by the Plan as of the end of the Limitation Year as
of which such excess amount arose,
51
the excess amounts shall be held in an unallocated suspense account and
allocated and re-allocated in the next Limitation Year to other Participants in
the Plan. If such allocation or re- allocation will cause the limitations of
Section 415 of the Internal Revenue Code to be exceeded with respect to each
Participant for such following Limitation Year, the excess amount shall be held
unallocated in the suspense account until the next Limitation Year. If the
suspense account is in existence at any time during a particular Limitation
Year, other than the Limitation Year as of which the excess amounts arose, all
amounts in the suspense account must be allocated and re-allocated to other
Participants in the Plan (subject to the limitations of Section 415 of the
Internal Revenue Code) before any Employer Contributions which would constitute
Annual Additions may be made to the Plan for that Limitation Year.
(e) The limitations imposed by this Section 8.1 will be administered
in accordance with the regulations promulgated under Section 415 of the Internal
Revenue Code and any other rulings and regulations issued by the Secretary of
the Treasury under Section 415 of the Internal Revenue Code.
ARTICLE 9
TOP-HEAVY PLAN YEARS
--------------------
9.1. For purposes of this Article 9:
(a) (1) "Key Employee" means any Participant or Former Participant
who, at any time during the Plan Year of any of the four preceding Plan
Years, is --
(i) one of the ten Employees owning the largest interests in
all Employers and Affiliates considered as a unit;
52
(ii) an owner of a 5 percent or greater interest in any Employer
or Affiliate;
(iii) an owner of a greater than one percent interest in any
Employer or Affiliate, whose Section 415 Compensation from all
Employers and Affiliates combined exceeds $150,000;
(iv) an officer of an Employer or Affiliate whose Section 415
Compensation (as defined below) exceeds 150% of the dollar limitation
in effect under Section 415(c)(1)(A) of the Internal Revenue Code for
any such Plan Year.
(2) For purposes of Subsection 9.1(a)(1)(i),
(A) no Employee shall be considered a Key Employee pursuant to
paragraph (1)(i) above if such Employee's Compensation is less than
the amount determined under Section 415(c)(1)(A) of the Internal
Revenue Code (as adjusted pursuant to Section 415(c)(1)(b) of the
Internal Revenue Code), for the calendar year in which falls the
Determination Date (as defined below), and
(B) in any case where two Employees hold the same interest in an
Employer or Affiliate, the Employee having the larger annual
Compensation shall be considered to own the larger interest.
(3) For purposes of Subsection 9.1(a)(1), an Employee shall be
considered as owning all interests in an Employer or Affiliate which he
owns directly or would be deemed to own under the rules contained in
Section 318 of the Internal Revenue Code, except that subparagraph (C) of
Section 318(a)(2) shall be applied by substituting "5%" for "50%."
53
(4) No more than the greater of three Employees (up to a maximum of
50) of all Employers and Affiliates combined shall be considered officers
for purposes of Subsection 9.1(a)(1)(iv), and no Employee of an Employer or
Affiliate which is not a corporation shall be considered an officer. Where
the actual number of such officers exceeds the limit imposed by the
preceding sentence, those Employees will be considered officers having the
highest annual compensation during the five-year period which includes the
Plan Year and the four preceding Plan Years.
(b) "Determination Date" means, with respect to each Plan Year, the
last day of the immediately preceding Plan Year.
(c) "Aggregation Group" means
(1) each plan of an Employer or Affiliate which--
(i) has one or more participants who are Key Employees,
and/or
(ii) enables any plan described in clause (1) above to meet
the requirements of Section 401(a)(4) or Section 410 of the
Internal Revenue Code, plus, at the election of the Board of
Directors,
(2) any other plan or plans which, when considered together with
the plan or plans described in clause (1) above, satisfies the
requirements of Section 401(a)(4) and/or Section 410 of the Internal
Revenue Code.
(d) "Top-Heavy Plan Year" means any Plan Year with respect to which
the Plan is a Top-Heavy Plan described in Section 9.3, such Section 9.3 to
be read as incorporating the applicable definitions contained in Section
416 of the Internal Revenue
54
Code and the regulations promulgated thereunder, and those of any successor
statute thereto.
(e) "Section 415 Compensation" has the meaning assigned to
"Compensation" in Section 8.1(b)(3).
9.2. To the extent required under Section 401(a)(10)(B) and/or
Section 416 of the Internal Revenue Code, for any Top-Heavy Plan Year, the
provisions of Sections 1.33, 3.1, 4.1, and 10.1(d) shall apply only to the
extent not inconsistent with Sections 9.4 and 9.5.
9.3. (a) Except as provided in Subsection 9.3(a)(3), the Plan is a
Top-Heavy Plan with respect to a Plan Year if, as of the Determination Date of
such Plan Year--
(1) the aggregate of the accounts of Key Employees under the Plan
exceeds 60% of the aggregate of the accounts of all Employees under the
Plan; or
(2) the Plan is a member of an Aggregation Group which is described in
Subsection 9.1(c)(1), and with respect to which the sum of--
(A) (i) the present value of the cumulative accrued benefits for
Key Employees under all defined benefit plans within the Aggregation
Group, and (ii) the aggregate of the accounts of Key Employees under
all defined contribution plans in the Aggregation Group--exceeds 60
percent of the sum of--
(B) (i) the present value of the cumulative accrued benefits of
all Employees under all defined benefit plans included in the
Aggregation Group; and (ii) the aggregate of the accounts of all
Employees under all defined contribution plans within the Aggregation
Group.
55
(3) Notwithstanding Paragraphs (1) and (2) of this Subsection 9.3(a),
the Plan shall not be a Top-Heavy Plan for any Plan Year in which the Plan
is a member of an Aggregation Group with respect to which the amount
described in Subsection 9.3(a)(2)(A) does not exceed 60% of the amount
described in Subsection 9.3(a)(2)(B).
(b) For purposes of this Section 9.3:
(1) the accrued benefit and/or account balance of any Employee who is
not a Key Employee during the Plan Year but who was a Key Employee during
any prior Plan Year shall be disregarded;
(2) the present value of the accrued benefit of an Employee in a
defined benefit plan or the account balance of an Employee in a defined
contribution plan, as of the Determination Date of any Plan Year, includes
any amount distributed with respect to the Employee under the plan within
the 5-year period ending on such Determination Date;
(3) the account balance of a Participant under this Plan as of any
Determination Date shall equal the sum of the Values of such Participant's
accounts determined under Article VII as of such Determination Date,
excluding any portion of a Participant's account attributable to (i) a
transfer or rollover of a Participant's interest in a plan other than a
plan maintained by an Employer or Affiliate, (ii) a Participant's Tax
Deductible Contributions, if any, or (iii) a Participant's ESOP
Diversification Transfer, if any.
(4) for any Plan Year beginning after 1984, the accrued benefit and/or
account balance of any individual who has not received Compensation from an
Employer or an
56
Affiliate during the five-year period ending on the Determination Date of
such Plan Year shall be disregarded; and
(5) the terms "Employee" and "Key Employee" include their
beneficiaries.
9.4. (a) Except as otherwise provided in Subsections (b) and (c),
the amount of the Employer Contribution made on behalf of each Member (including
a Member or former Member who has not completed one thousand Hours of Service in
such Plan Year but who has not separated from service at the end of such Plan
Year), who is not a Key Employee for any Top-Heavy Plan Year shall be at least
equal to the lesser of:
(1) three percent (3%) of such Member's Section 415 Compensation; or
(2) the percentage of Compensation represented by the Employer
Contribution made on behalf of the Key Employee for whom such percentage is
the highest for such Plan Year, determined by dividing the contribution
made on behalf of each such Key Employee by so much of his Compensation as
does not exceed the limitation set forth in Section 1.10.
(b) Where the inclusion of this Plan in an Aggregation Group pursuant
to Subsection 9.1(c)(1) enables a defined benefit plan described in Subsection
9.1(a)(1) to meet the requirements of Section 401(a)(4) or Section 410 of the
Internal Revenue Code, the minimum Employer Contribution required under this
Subsection shall be the amount specified in Subsection 9.4(a)(1).
9.5. The Compensation of a Key Employee which is taken into account
for purposes of Section 4.1 for any Top-Heavy Plan Year shall not exceed the
limitation set forth in Section 1.10.
57
ARTICLE 10
DISTRIBUTIONS FROM THE TRUST FUND
---------------------------------
10.1. Payments upon Retirement.
------------------------
(a) Subject to the further provisions of this Article 10, upon
retirement of a Participant pursuant to the Retirement Plan, the Value of his
interest in the Trust Fund, determined as of the Valuation Date, shall thereupon
become payable to him in the form elected by such Participant pursuant to
Subsections 10.1(b), 10.1(c) or Section 10.7, unless he shall have elected to
defer payment of his interest pursuant to Subsection l0.1(d). Upon retirement
on or after March 1, 2001, a Participant may elect to have the value of his
interest in the Trust Fund, or any portion thereof, payable to him as a lump
sum, in accordance with procedures specified by the Plan Administrator; provided
that a Participant may not receive more than two distributions in any calendar
year under this Section 10.1(a).
(b) With respect to distributions commencing prior to March 1, 2001,
any such Participant may elect to receive the Value of his non-forfeitable
interest in the Trust Fund in not more than 15 annual installments (the first of
which shall be payable as shortly as practicable after the Valuation Date);
provided, however, that the number of such annual installments which may be
elected shall not be such as to extend the period of payments beyond the normal
life expectancy determined pursuant to Treasury Regulation (S) 1.72-9 (as of the
date on which payments to such Participant commence) of the Participant and his
Beneficiary. In the event that such an election is made and becomes effective,
and unless the Participant otherwise elects in accordance with Subsection
10.1(c) below, the amount of any annual installment to be paid to a Participant
making such an election shall be based upon the Value of his interest in the
Trust Fund
58
as of the Valuation Date and shall be determined by multiplying such Value by a
fraction, the numerator of which shall be one and the denominator of which shall
be the number of annual installments elected by such Participant pursuant to
this Subsection 10.1(b) less the number of such annual installments theretofore
paid.
(c) With respect to distributions commencing prior to March 1, 2001,
any such Participant may further elect pursuant to the procedure for election
set forth in the first sentence of Subsection 10.1(b), that the amount of the
first annual installment to be paid to him shall be any portion of the Value of
his interest in the Trust Fund as of the Valuation Date, in which event each
subsequent installment shall be based upon the value of his interest in the
Trust Fund on the Valuation Date coinciding with or next following each
anniversary of the Valuation Date of the first installment and shall be
determined by multiplying such value by a fraction, the numerator of which shall
be one and the denominator of which shall be the number of annual installments
elected by such Participant pursuant to Section 10.1(b) less the number of such
annual installments theretofore paid. Notwithstanding anything to the contrary
contained in this Section 10.1, effective January 1, 1997, a Participant who has
retired pursuant to the Retirement Plan and who has already received at least
one installment payment of his non-forfeitable interest in the Trust Fund
pursuant to an election made pursuant to Subsection 10.1(b) or this Subsection
10.1(c) may make a one-time election to receive a lump sum distribution of all
or any portion of the remainder of the Value of such Participant's non-
forfeitable interest in the Trust Fund at any time, which lump sum shall be
payable as shortly as practicable after the Valuation Date. In the event that a
Participant elects to receive a lump sum distribution of the entire Value of his
non-forfeitable interest in the Trust Fund, all further installment payments to
such Participant shall
59
cease. In the event that a Participant elects to receive a lump sum distribution
of a portion of the remainder of the Value of his non- forfeitable interest in
the Trust Fund, each subsequent installment shall be based upon the Value of his
interest in the Trust Fund on the Valuation Date coinciding with or next
following each anniversary of the Valuation Date of the first installment and
shall be determined by multiplying such Value by a fraction, the numerator of
which shall be one and the denominator of which shall be the number of annual
installments elected by such Participant less the number of such annual
installments theretofore paid.
(d) Notwithstanding anything to the contrary contained in Subsections
(a), (b) or (c) of this Section 10.1, a former Employee who is eligible to
receive a Retirement Allowance under the Retirement Plan may elect in writing to
defer the commencement of receipt of his interest in the Trust Fund until the
time specified in Subsection 10.6(b). Effective January 1, 1997, a former
Employee who has made an election to defer the commencement of receipt of his
interest in the Trust Fund pursuant to this Subsection 10.1(d) may make an
election to receive a lump sum distribution of any portion of the Value of such
Participant's non-forfeitable interest in the Trust Fund at any time, which lump
sum shall be payable as shortly as practicable after the Valuation Date, and
shall continue to defer the commencement of receipt of the remainder of his
interest in the Trust Fund until the time specified in Subsection 10.6(b).
10.2. Payments upon Death.
-------------------
(a) Upon the death of a Participant in Service or following
termination of Service prior to the Participant's annuity starting date (as
defined in Code section 417(f)(2)(A)(ii)), the Value of the Participant's
interest in the Trust Fund shall become payable in one lump sum to the
Participant's Beneficiary or Beneficiaries. Upon the death of a Participant
60
subsequent to the Participant's annuity starting date and while the Participant
is receiving installment payments, the remaining Value of his interest in the
Trust Fund shall become payable in one lump sum to the Participant's Beneficiary
or Beneficiaries.
(b) As to any portion of the interest of a Participant with respect to
which no Beneficiary has been designated either under the terms of the Plan or
by such Participant, or the Beneficiary so designated fails to survive the
Participant, the Value of such portion shall be payable to the executor or
administrator of the Participant's estate or, if the Committee shall so
determine, on a nondiscriminatory basis, to the Participant's spouse, blood
relatives, children or other dependents, or any of them, in such proportion as
the Committee may deem proper.
(c) Any amount distributed pursuant to this Section 10.2 shall be
distributed no later than December 31st of the calendar year which contains the
fifth anniversary of the Participant's death.
10.3. Payments on Other Termination of Employment. Subject to the
-------------------------------------------
further provisions of this Article 10, upon a Participant's termination of
Service for any reason other than retirement or death while in Service, the
Value of his interest in the Trust Fund, determined as of the Valuation Date,
shall be paid to him, or, in the event of his death, to his Beneficiary, in one
lump sum as soon as practicable after the Valuation Date coincident with or next
following the earlier of (1) the date of his death or (2) the date on which he
attains age sixty-five (65). Furthermore, effective March 1, 2001, a former
Employee, including a former Employee who has elected to defer commencement of
his interest in the Trust Fund pursuant to the preceding sentence, may request a
distribution of all or any portion of the Value of his interest in the Trust
Fund, in accordance with procedures specified by the Plan Administrator;
provided that a
--------
61
Participant may not receive more than two distributions in any calendar year
under this Section 10.3. Notwithstanding the foregoing, a former Employee may
elect to defer commencement of receipt of this interest in the Trust Fund until
the time specified in Section 10.6 or to have the total Value of his accounts
under the Plan, determined as of the Valuation Date (i) distributed to him in a
lump-sum or (ii) distributed pursuant to Section 10.6.
10.4. Lump-Sum Payment. Notwithstanding any other provision in the
----------------
Plan to the contrary, if a Participant has terminated from Service and if the
total Value of a Participant's accounts under the Plan, determined as of the
applicable Valuation Date, does not exceed the amount set forth in Code section
411(a)(11) from time to time, the Value of such Participant's accounts shall be
automatically distributed to him in cash in a single lump-sum as soon as
administratively practicable.
10.5. Liquidation of Interest. It is contemplated that whenever all or
-----------------------
any part of the Value of the interest of a Participant or a Former Participant
in any Investment Fund, including the Morgan Stanley Dean Witter Stock Fund,
becomes payable the Committee will, as soon as practicable, direct the Trustee
to set aside and hold in the Trust Fund (separate and apart from the Investment
Funds) an amount in cash to equal the Value of the interest of such Participant
or Former Participant so payable.
10.6. Latest Commencement of Benefits.
--------------------------------
(a) Unless the Participant elects otherwise pursuant to Section
10.1(d) above, the payment of non-forfeitable benefits under the Plan to such
Participant shall commence not later than the 60th day after the latest of the
close of the Plan Year in which:
(i) the Participant attains age 65; or
62
(ii) occurs the 10th anniversary of the year in which the
Participant became a Participant; or
(iii) the Participant terminates employment.
(b) Notwithstanding any other provisions of the Plan:
(i) with respect to a Participant who attained age 70 1/2 prior to
January 1, 1999, payment of the amounts credited to the Participant's
accounts shall commence no later than the April 1st next following the Year
in which the Participant attained (or would have attained, in the case of a
deceased Participant) age 70 1/2, whether or not such Employee has
terminated Service; provided that a Participant who attained age 70 1/2
after December 31, 1995 and prior to January 1, 1999 and who is an Employee
on the April 1st next following the Year in which such Participant
attained age 70 1/2, may make an irrevocable one-time election to defer
receipt of payment of the Participant's Account until the Participant's
termination from Service, but in no event later than the April 1st next
following the Year in which such termination from Service occurs; and
(ii) with respect to a Participant who attains age 70 1/2 on or
after January 1, 1999, payment of the amounts credited to the Participant's
Accounts shall commence on the April 1st next following the later of the
Year in which the Participant (A) attains age 70 1/2, or (B) terminates
from Service.
(c) With respect to a Participant who attains age 70 1/2 on or
after January 1, 2000 and who has separated from Service, the entire Value of a
Participant's interest in the Trust Fund shall be distributed to the Participant
not later than the April 1st next following the Year in which the Participant
attains (or would have attained, in the case of a deceased Participant) age
63
70 1/2, except that a Participant who is receiving minimum required
distributions in a series of payments as set forth in Code section
401(a)(9)(A)(ii) as of March 1, 2001 shall be entitled to continue receiving
such payments.
10.7. Payment of Eligible Rollover Distributions. Any individual who
------------------------------------------
is entitled to receive a distribution of benefits under the Plan (including any
alternate payee under a qualified domestic relations order within the meaning of
Section 414(p) of the Internal Revenue Code) may elect to have the portion of
such benefit distribution that qualifies as an eligible rollover distribution
under Section 402(c)(4) of the Internal Revenue Code paid directly to an
eligible retirement plan specified by such individual. For purposes of this
Section 10.7, an "eligible retirement plan" is an individual retirement account
described in Section 408(a) of the Internal Revenue Code, an individual
retirement annuity described in Section 408(b) of the Internal Revenue Code
(other than an endowment contract), an annuity plan described in Section 403(a)
of the Internal Revenue Code or a plan that is qualified under Section 401(a) of
the Internal Revenue Code, the terms of which permit acceptance of such direct
rollover distributions. Notwithstanding the foregoing, in the case of an
eligible rollover distribution to the surviving spouse of a Participant, an
"eligible retirement plan" is an individual retirement account or individual
retirement annuity. In addition, effective January 1, 1999, a hardship
distribution under Section 6.4 shall not be treated as an eligible rollover
distribution except to the extent permitted under rules and regulations issued
by the Secretary of the Treasury. The Committee shall establish uniform
procedures for making such direct rollover elections, including but not limited
to, any restriction on the Participant's right to split such a direct rollover
distribution to two or
64
more eligible retirement plans and to impose a minimum dollar amount for a
Participant to direct an eligible rollover distribution or to split the eligible
rollover distribution.
10.8. Elections.
---------
(a) Notwithstanding any other provision of this Plan to the contrary,
to the extent permitted by the Code, a Participant may elect a distribution or a
form of distribution permitted under this Article 10 by completing a form
provided for this purpose by the Administrative Committee, which shall be
delivered to the Participant no earlier than 90 days and no later than 30 days
prior to the commencement of a distribution. A distribution to a Participant
will not commence before the expiration of the 30-day period beginning on the
date that the Participant is provided with the written notice and explanation
contemplated by Treasury Regulation Section 1.411(a)-11(c) (the "Notice"),
unless the requirements of Section 10.8(b) are satisfied.
(b) Notwithstanding Section 10.8(a), if (i) the Administrative
Committee informs the Participant that the Participant has the right to a period
of at least 30 days after receiving the Notice to consider the decision of
whether to elect a distribution and (ii) the Participant, after receiving the
Notice, affirmatively elects in writing, or such other method permitted by the
Code, to receive an immediate distribution and to waive the remainder of the 30-
day period, then a distribution of the Participant's Account may commence at any
time following the expiration of the seven-day period beginning on the date that
the Notice was first delivered to the Participant.
ARTICLE 11
ADMINISTRATION OF THE PLAN
--------------------------
65
11.1. General.
-------
(a) The general administration of the Plan shall be placed in the
Committee. The members of the committee shall be appointed from time to time
by, and shall serve during the pleasure of, the Board of Directors. The
Committee shall consist of no fewer than three persons, each of whom shall be
either an Employee or an Advisory Director of the Corporation.
(b) The Committee shall be a "named fiduciary" with respect to the
Plan, as such term is defined in ERISA Section 402(a).
(c) The Committee shall be the Plan's "administrator," as such term is
defined in ERISA Section 3(16).
(d) Each person who has Fiduciary Responsibilities with respect to the
Plan shall be bonded if and as required by ERISA.
11.2. Quorum. A majority of the members of each committee at the time
------
in office shall constitute a quorum for the transaction of its business. All
resolutions or other actions taken by each Committee at any meeting shall be by
the vote of a majority of those present at any such meeting.
11.3. Rules and Regulations. Subject to the limitations set forth in
---------------------
the Plan, the Committee may from time to time establish such uniform and
nondiscriminatory rules and regulations as it may deem appropriate or necessary
for the transaction of business and for the administration of the Plan.
11.4. Procedure and Performance of Fiduciary Duties.
---------------------------------------------
(a) The members of the Committee shall elect one of their number as
Chairman and shall elect a Secretary who may, but need not, be a member of the
Committee; may appoint
66
from their number such subcommittees with such powers as the Committee shall
determine; may authorize one or more of their number or any agent to execute or
deliver any instructions on behalf of the Committee; and may employ such counsel
and agents, and clerical services, as the Committee may require in carrying out
the provisions of the Plan.
(b) The Fiduciary Responsibilities of the Deferred Profit Sharing Plan
Committee may be allocated among its members or delegated to persons who are not
members of the Committee as the Committee in its sole discretion shall decide.
Upon an allocation or delegation of Fiduciary Responsibilities the person or
persons to whom such Fiduciary Responsibilities are allocated or delegated shall
be solely responsible for the performance of such Fiduciary Responsibilities,
and the members of the Committee to whom such Fiduciary Responsibilities have
not been allocated shall not in any respect be responsible for the performance
of such Fiduciary Responsibilities, except as provided by law. The Committee
shall perform its allocation and delegation functions in the same manner as it
performs all of its other Fiduciary Responsibilities pursuant to paragraph (c)
below.
(c) The Committee shall perform only its Fiduciary Responsibilities as
provided in the Plan except those Fiduciary Responsibilities which are allocated
or delegated pursuant to paragraph (b) above, if any, and those Fiduciary
Responsibilities which are to be performed by the Trustee pursuant to the Trust
Agreement.
11.5. Power to Interpret. Except as otherwise specified in Section
------------------
11.11(g), the Committee shall have the exclusive right to interpret the Plan and
to determine any question arising under or in connection with the administration
of the Plan. Subject to Section 11.11(g),
67
each decision or action in respect thereof shall be conclusive and binding upon
all persons having an interest in the Trust Fund or under the Plan and upon the
Corporation.
11.6. Accounts. The Committee shall cause to be maintained accounts
--------
showing transactions under the Plan and the interests of Participants or Former
Participants in the respective Investment Funds. Separate accounts shall be
maintained by, or at the direction of, the Committee for each Participant and
Former Participant to which there shall be separately credited the amount of all
ESOP Diversification Transfers, Voluntary Contributions, Tax Deductible
Contributions, and Pre-Tax Deferral Contributions for his account showing the
portions to be treated as Voluntary Contributions and the portion to be treated
as Tax Deductible Contributions and to which there shall be charged the amount
of any payments made with respect to his interest. A separate account shall also
be maintained by, or at the direction of, the Committee for each Participant and
Former Participant to which there shall be credited the amount of all deferred
Firm Contributions allocated to him, together with his Flexible Benefit Credit
Contributions and his Rollover Contributions, if any, and to which there shall
be charged the amount of any payments made with respect to his interest. The
accounts of each Participant and each Former Participant shall be credited with
his proportionate share of any net increases, or charged for his proportionate
share of any net decreases, in the value of the Trust Fund based upon the
valuations made pursuant to Section 7.3. At least annually the Committee shall
furnish to each Participant or Former Participant having an interest in the
Trust Fund a summary statement of the transactions of the Trust Fund since the
date of the last previous statement so furnished and of his interest in the
Trust Fund. Any such Participant or Former Participant who does not notify the
Secretary of the Committee as to any objection which he may have with respect to
any such statement within
68
90 days after the date of such distribution thereof shall be conclusively
presumed to have approved the transactions reflected therein.
11.7. Conversion of Amounts of Base Salary. The Committee shall have
------------------------------------
full and final authority with respect to Base Salary paid in a foreign currency
to convert such Base Salary into currency of the United States, in such manner
as the Committee may from time to time determine, for the purposes of Section
4.1.
11.8. Indemnification. To the fullest extent permitted by law, the
---------------
Corporation will indemnify and save harmless each member of the Committee, each
member of the Hearing Panel and each other person to whom Fiduciary
Responsibilities are delegated under the terms of the Plan against any cost or
expense (including attorneys' fees) or liability (including any sum paid in
settlement of a claim with the approval of the Corporation) arising out of any
act or omission to act as a member of the Committee or the Hearing Panel or as a
delegate, except (i) in the case of willful misconduct or lack of good faith or
(ii) with respect to any person who is not an employee, officer or director of
the Corporation or an Affiliate. This Section 11.8 shall not supersede any
separate agreement or contract between the Corporation or an Affiliate or the
Plan and any person to whom Fiduciary Responsibilities are delegated.
11.9. Action Without Meeting. Any action required or permitted to be
----------------------
taken at any meeting of the Committee or the Hearing Panel or by any delegate of
either of them may be taken without a meeting if a written consent thereto is
signed by all members of the Committee or Hearing Panel or by such delegate, as
the case may be, and such written Consent is filed with the records of the
proceedings of the Committee or Hearing Panel or of such delegate, as the case
may be.
69
11.10. Meeting by Telephone Conference. Members of the Committee, the
-------------------------------
Hearing Panel or any delegate of either of them may participate in a meeting of
the Committee, Hearing Panel or such delegate, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this Section shall constitute presence in person at such
meeting.
11.11. Claims Procedure; Hearing Panel.
-------------------------------
(a) Claims and Inquiries. Effective November 1, 2000, this Section
--------------------
11.11 shall provide the exclusive rules relating to claims for benefits under
the Plan. All claims for benefits and all inquiries concerning the Plan shall
be submitted to the Committee at such address as the Committee shall designate
from time to time. Claims for benefits must be in writing on the form
prescribed by the Committee and must be signed by the person or persons
indicated on such form.
(b) Denial of Claims. In the event any claim for benefits is denied,
----------------
in whole or in part, the Committee shall notify the claimant of such denial in
writing and shall advise the claimant of his right to a review thereof. Such
written notice shall set forth, in a manner calculated to be understood by the
claimant, the specific reason or reasons for the denial, specific reference to
the pertinent Plan provisions upon which the denial is based, a description of
any additional information or material that is necessary for the claimant to
perfect his claim for benefits, an explanation of why such information or
material is necessary and an explanation of the Plan's review procedure. Such
written notice shall be furnished to the claimant within 90 days after the
Committee receives the claim, unless special circumstances require an extension
of time for processing the claim. In no event shall such an extension exceed a
period of 90 days from the
70
end of the initial 90-day period; if such an extension is required, written
notice thereof shall be furnished to the claimant before the end of the initial
90-day period. Such notice shall indicate the special circumstances requiring an
extension of time and the date by which the Committee expects to render a
decision. If written notice of the denial of the claim for benefits is not
furnished within the time specified in this Section, the claim shall be deemed
denied and the claimant shall be permitted to appeal such denial in accordance
with the review procedure described in paragraph (d) below.
(c) The Hearing Panel. The Board of Directors shall appoint a
-----------------
"Hearing Panel", which shall consist of three or more individuals who may (but
need not) be employees of the Corporation. The Hearing Panel shall be the named
fiduciary that shall have the authority to act with respect to any appeal from
the denial of a claim for benefits under the Plan. The Hearing Panel may adopt
such rules and procedures, consistent with ERISA and the Plan, as it deems
necessary or appropriate in carrying out its responsibilities under this
Section. The Hearing Panel may delegate some or all of its rights, privileges
and duties to such person(s) as it may choose; to the extent of such a
delegation all references in this Section to the Hearing Panel shall be deemed
to be references to such person(s).
(d) Appeals from Claim Denials. Any person whose claim for benefits
--------------------------
is denied, in whole or in part, or such person's duly authorized representative,
may appeal from such denial by submitting a request for review of the claim to
the Hearing Panel within six months after receiving the written notice of denial
from the Committee (or, in the case of a deemed denial, within six months after
the claim is deemed denied). The Committee shall give the claimant (or his
representative) an opportunity to review pertinent documents (except legally
privileged
71
materials) and to submit issues and comments in writing. A request for review
shall be in writing and shall be submitted to the Hearing Panel at such address
as the Committee shall designate from time to time. The request for review shall
set forth all of the grounds on which it is based, all facts in support thereof
and any other matters that the claimant deems pertinent. The Hearing Panel may
require the claimant (or his representative) to submit such additional facts,
documents or other material as it deems necessary or appropriate in making its
review.
(e) Decision on Review. The Hearing Panel shall act upon a request
------------------
for review within 60 days after receipt thereof, unless special circumstances
require an extension of time for processing, in which event a decision shall be
rendered not more than 120 days after the receipt of the request for review. If
such an extension is required, written notice thereof shall be furnished to the
claimant (or his representative) before the end of the initial 60-day period.
The Hearing Panel shall give written notice of its decision to the claimant (or
his representative) and to the Committee. In the event that the Hearing Panel
confirms the denial of the claim for benefits in whole or in part, such notice
shall set forth, in a manner calculated to be understood by the claimant, the
specific reason or reasons for the denial and specific reference to the
pertinent Plan provisions upon which such denial is based. If written notice of
the Hearing Panel's decision is not given to the claimant (or his
representative) within the time prescribed in this paragraph (e), the claim
shall be deemed denied on review.
(f) Exhaustion of Administrative Remedies. No legal or equitable
-------------------------------------
action for benefits under the Plan shall be brought unless and until the
claimant (i) has submitted a written claim for benefits in accordance with
paragraph (a) of this Section, (ii) has been notified that the claim has been
denied (or the claim is deemed denied as provided in paragraph (b) above), (iii)
has
72
filed a written request for a review of the claim in accordance with paragraph
(d) of this Section and (iv) has been notified in writing that the Hearing Panel
has affirmed the denial of the claim (or the claim is deemed denied on review as
provided in paragraph (e) above). In addition, no legal or equitable action for
benefits under the Plan may be brought after the earliest of (i) six months
after the Hearing Panel has affirmed the denial of the claim (or the claim is
deemed denied on review as provided in paragraph (e) above), (ii) three years
after the claimant's benefits under the Plan have commenced, or (iii) the end of
the otherwise applicable statute of limitations period.
(g) Authority of Hearing Panel. The Hearing Panel, in its capacity as
--------------------------
"named fiduciary," as defined under section 402(a)(1) of ERISA, shall have the
discretionary authority to interpret and construe the terms of the Plan and to
determine eligibility for and entitlement to Plan benefits in accordance with
the terms of the Plan. Any reasonable construction or interpretation of the
Plan's terms or determination made by the Hearing Panel as to eligibility or
entitlements, adopted in good faith, shall be final and binding upon the
Corporation, all participating Employers, Employees, Participants, Spouses,
Surviving Spouses, their affiliates and their heirs, successors and assigns.
ARTICLE 12
AMENDMENT, SUSPENSION AND TERMINATION AND MERGER,
--------------------------------------------------
CONSOLIDATION OR TRANSFER
-------------------------
12.1. Amendment.
---------
(a) The provisions of the Plan may be amended at any time and from
time to time by the Board of Directors (for the Corporation and for the other
Employers), but no such amendment shall have the effect of revesting in the
Corporation any part of the Trust Fund or of
73
diverting any part of the Trust Fund to any purpose other than for the exclusive
benefit of the Participants and the Former Participants or, subject to
Subsection (b) of this Section 12.1, reducing any interest of any Participant or
Former Participant in the Trust Fund which has accrued prior to any such
amendment, or (except as provided in regulations prescribed by the Secretary of
the Treasury) eliminating any optional form of benefit with respect to any
benefit accrued prior to the adoption of such amendment.
(b) Notwithstanding anything to the contrary herein contained, the
Board of Directors may make any and all changes or modifications (retroactively,
if necessary) which in the opinion of the Board of Directors are necessary or
advisable in order to comply with the provisions of the Internal Revenue Code
and ERISA pertaining to profit sharing plans and trusts.
12.2. Suspension and Termination. The Corporation reserves the right,
--------------------------
by action of the Board of Directors prior to the end of any year, to suspend the
operation of the Plan by omitting any Firm Contribution for such year. In the
event that the operation of the Plan is so suspended for any year or years, all
of the provisions of the Plan, other than those relating to the Firm
Contribution for such year or years, shall continue in effect. The Corporation
further reserves the right, by action of its Board of Directors, to terminate
the Plan at any time, but no termination may be made effective as of a prior
year. In the event of termination of the Plan, the Board of Directors may either
continue with the Plan and the Trust Agreement as in effect with respect to the
assets of the Trust Fund, or terminate the Trust Agreement as well as the Plan.
If the Trust Agreement is terminated the assets of the Trust Fund shall be
converted into cash and such cash shall be distributed among the Participants
and the Former Participants (with the interest of any Participant or Former
Participant who has died being distributed among the
74
persons designated pursuant to Section 10.2) in proportion to the respective
interests in the Trust Fund of such Participants and Former Participants.
12.3. Merger, Consolidation or Transfer. In the event of any merger or
---------------------------------
consolidation with, or transfer in whole or in part of the assets and
liabilities of the Trust Fund to a New Plan of deferred compensation maintained
or to be established for the benefit of all or some of the Participants of this
Plan, the assets and liabilities of the Trust Fund applicable to such
Participants shall be transferred to the New Plan only if:
(a) Each such Participant would receive a benefit immediately after
the merger, consolidation or transfer (if the New Plan had then terminated)
which is equal to or greater than the benefit such Participant would have
been entitled to receive immediately before the merger, consolidation or
transfer (if this Plan had then terminated);
(b) Resolutions of the Board of Directors (for the Corporation and for
the other Employers), or of the board of directors of any new or successor
employer of the affected Participants, shall authorize such transfer of
assets; and, in the case of the new or successor employer of the affected
Participants, its resolutions shall include an assumption of liabilities
with respect to such Participants' inclusion in the New Plan; and
(c) The New Plan and Trust, if any, are qualified under the
Internal Revenue Code.
ARTICLE 13
MISCELLANEOUS
-------------
13.1. Benefits Payable from Trust Fund. All persons having any
--------------------------------
interest in the Trust Fund shall look solely to the Trust Fund for any payments
with respect to such interest.
75
13.2. Designation of Beneficiary.
--------------------------
(a) Except as provided in Subsection (b) hereof, each Participant and
Former Participant -may designate a Beneficiary or Beneficiaries and may change
such designation from time to time by signing a written designation of
Beneficiary or Beneficiaries with the Secretary of the Committee in a form to be
prescribed by the Committee, provided that no such designation shall be
effective unless so filed prior to the death of such Participant or Former
Participant.
(b) If the Participant or Former Participant is survived by a spouse
to whom he was married throughout the one-year period ending on the date his
benefits commenced to be distributed to him (whether or not he is still married
to such spouse at the time of his death), or throughout the one-year period
ending on his death if his death occurs prior to the commencement of the
distribution to him or within one year thereafter, such Participant's or Former
Participant's entire Account balance shall be payable to such surviving spouse,
unless such spouse has consented in writing to the designation of a Beneficiary
other than such spouse, and such consent is witnessed by a member of the
Committee or by a notary public.
(c) A Participant or Former Participant may authorize his Beneficiary,
either with or without the consent of the Committee, as the Participant or
Former Participant may specify, to change, after the Participant's or Former
Participant's death, the manner in which the then balance in the deceased
Participant's or Former Participant's account is invested, in the same manner
and subject to the same conditions as set forth in Section 7.4 as if such
Beneficiary were then a Participant.
13.3. Elections. The elections hereunder shall be made in writing or
---------
in such other manner as prescribed by the Committee for such purposes.
76
13.4. No Right to Continued Employment. Neither the establishment of
--------------------------------
the Plan nor the payment of any benefit thereunder nor any action of the
Employer, the Board of Directors, the Committee or the Trustee shall be held or
construed to confer upon any person a legal right to be continued as the
employee of the Employer, and the Employer expressly reserves the right to
discharge any employee whenever the interest of the Employer in its sole
judgment may so require without liability to the Employer, the Board of
Directors, the Committee or the Trustee except as to any rights which may be
conferred upon such employee under the Plan with respect to his interest in the
Trust Fund.
13.5. Inalienability of Rights and Interests. Except in the case of a
--------------------------------------
qualified domestic relations order described in Section 414(p) of the Internal
Revenue Code or in the case of certain judgments or settlements described in
Code section 401(a)(13)(C), no benefit payable under the Plan or interest in the
Trust Fund shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge or security interest, and any
such attempted action shall be void. No such benefit or interest shall in any
manner be liable for or subject to debts, contracts, liabilities, engagements or
torts of any Participant, Former Participant or Beneficiary. If any Participant,
Former Participant, or Beneficiary shall become bankrupt or shall attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge, or
create a security interest in, any benefit payable under the Plan or interest in
the Trust Fund, then, to the extent provided by law, the Committee in its
discretion may hold or apply such benefit or interest or any part thereof to or
for the benefit of such Participant, Former Participant or his Beneficiary, his
spouse, children, blood relatives or other dependents or any of them in such
manner and in such proportion as the Committee may consider proper.
Notwithstanding the
77
foregoing, any Participant or Former Participant may direct that benefits
payable pursuant to Section 10.2 from the Trust Fund shall be paid to the
trustee of a trust created by him for his own benefit or for the benefit of his
immediate family.
13.6. Qualified Domestic Relations Order. Notwithstanding any
----------------------------------
provision of the Plan to the contrary, all benefits shall be paid under the Plan
which are required to be paid under the terms of a qualified domestic relations
order described in Section 414(p) of the Internal Revenue Code (a "QDRO"), in
such manner and to such person or persons as such order shall specify. Effective
January 1, 1996, the Plan may pay benefits pursuant to a QDRO that provides for
the payment of benefits to an "alternate payee" (as such term is defined in
Section 414(p) of the Internal Revenue Code) prior to the date a Participant or
Former Participant has attained "earliest retirement age" (as such term is
defined in Section 414(p) of the Internal Revenue Code). Unless otherwise
specified in the QDRO, payment shall be made pro rata from each of the
Participant's or Former Participant's accounts and pro rata from the Investment
Funds in which any account is invested.
13.7. Payments Due Infants or Incompetents. If any person to whom a
------------------------------------
benefit is payable hereunder is an infant, or if the Committee determines, in
its sole discretion, that any person to whom a benefit is payable is incapable
by reason of physical or mental disability of taking care of his own affairs,
the Committee shall have power to cause the payments becoming due to such person
to be made to another for his benefit without responsibility of the Committee or
the Trustee to see to the application of such payments. Payments made pursuant
to such power shall operate as a complete discharge of the obligations of the
Employer, the Trust Fund, the Trustee and the Committee to make such payments.
78
13.8. Payments for Exclusive Benefit of Participants.
----------------------------------------------
(a) Payments of benefits in respect of the interest of a Participant
or Former Participant under the Plan to any person other than such Participant
or Former Participant in accordance with the provisions of the Plan shall be
deemed to be for the exclusive benefit of such Participant or Former
Participant.
(b) If any contribution is made to this Plan by an Employer or
Participant by a mistake of fact, such contribution shall be returned to such
Employer or Participant within one year following the date that such
contribution is made.
(c) Each Employer contribution made to this Plan is conditioned upon
its deductibility under Section 404 of the Code. Each contribution shall, to
the extent disallowed as a deduction, be returned to such Employer within one
year following the date of disallowance.
(d) This Plan is established for the exclusive benefit of the
Participants herein and their Beneficiaries. Except as otherwise provided in
Subsections (b) or (c) of this Section 13.8, it shall be impossible for any
assets of the Trust Fund to revert at any time to any Employer.
13.9. Expense of Administration. The expense of administration of the
-------------------------
Plan shall be borne by the Employers.
13.10. Profit Sharing or Bonus Payments Outside of the Plan. The
----------------------------------------------------
adoption of the Plan shall not be construed as limiting the authority of the
Board of Directors to pay bonuses to, and to establish from time to time, and to
amend or discontinue, profit sharing or other supplemental compensation plans
for Employees and to pay bonuses or other supplemental compensation to
Participants, in addition to any amounts allocated to them hereunder, if deemed
advisable by the Board of Directors.
79
13.11. New York Law to Govern. All questions pertaining to the
----------------------
construction, regulation. validity and effect of the provisions of the Plan
shall be determined in accordance with the laws of the State of New York, except
to the extent such law is superseded by ERISA.
13.12. Treatment of Qualified Military Service. Notwithstanding any
---------------------------------------
provision of the Plan to the contrary, contributions, benefits, and service
credit with respect to qualified military service will be provided in accordance
with Code section 414(u).
APPENDIX A
Participating Employer Date of Adoption
---------------------- ----------------
Morgan Stanley & Co. Incorporated 7/1/70
Brooks, Harvey & Co., Inc. 1/20/77
Morgan Stanley Asset Management Inc. 9/18/80
Morgan Stanley International Incorporated 6/1/79
(excluding, effective 1/1/99, MSII employees
primarily servicing business units and/or cost
centers of subsidiaries of the former Dean
Witter, Discover & Co. ("DWD"), determined
immediately prior to DWD's merger with Morgan
Stanley Group Inc., that are not Employers)
MS Securities Services Inc. 7/13/81
Morstan Development Company Inc.
8/11/71
MS Trust Company 1/1/89 - 9/30/98
Miller Anderson & Sherrerd, L.L.P. 1/1/96
VK/AC Holding, Inc. and its Subsidiaries 1/1/97
Each employee and each partner of Miller Anderson & Sherrerd, L.L.P.
("MAS") as of January 1, 1996 will be deemed to have an Employment Commencement
Date as of the date such employee's or partner's service with MAS commenced. As
of January 1, 1996, an Hour of Service as defined in Section 1.29 of the Plan
shall include each hour for which an employee or partner of MAS was paid, or
entitled to payment, for the performance of services for MAS. As of January 1,
1996, the term Service as defined in Section 1.45 of the Plan shall also include
all service with MAS prior to January 1, 1996.
Each former employee of LTCB-MAS Investment Management, Inc. ("LTCB")
who is employed by an Employer on or after January 1, 1996 will be deemed to
have an Employment Commencement Date as of the date such employee's service with
LTCB commenced. As of January 1, 1996, an Hour of Service as defined in Section
1.29 of the Plan shall include each hour for which an employee of LTCB was paid,
or entitled to payment, for the performance of services for LTCB. As of January
1, 1996, the term Service as defined in Section 1.45 of the Plan shall also
include all service with LTCB prior to January 1, 1996.
A-2
With respect to Employees who were formerly employees of VK/AC
Holding, Inc. and its subsidiaries (collectively referred to as "VKAC"),
Employees who were participants in the Van Kampen American Capital, Inc. Profit
Sharing and Savings Plan as of December 31, 1996 will automatically become
Members of the Plan on January 1, 1997. Each former employee of VK/AC Holding,
Inc. and its subsidiaries ("VKAC") as of January 1, 1997 will be deemed to have
an Employment Commencement Date as of the date such employee's service with VKAC
commenced. As of January 1, 1997, an Hour of Service as defined in Section 1.29
of the Plan shall include each hour for which an employee of VKAC was paid, or
entitled to payment, for the performance of services for VKAC. As of January 1,
1997, the term Service as defined in Section 1.45 of the Plan shall also include
all service with VKAC prior to January 1, 1997.
Effective as of January 1, 1997, the Van Kampen American Capital, Inc.
Profit Sharing and Savings Plan (the "VKAC Plan") was merged with and into the
Plan. Prior to January 1, 1997, the contributions, benefits, and other rights
of Participants who were participants in the VKAC Plan were determined under the
terms of the VKAC Plan as in effect immediately prior to its merger into the
Plan. Any person who was covered under the VKAC Plan as in effect on December
31, 1996 and whose service terminated under such plan prior to January 1, 1997
and who was entitled to benefits under the provisions of such plan as in effect
on such dates shall continue to be entitled to the same amount of benefits
without change under this Plan.
In addition, with respect to members in the VKAC Plan whose employment
terminated and who had previously received a distribution of their partially
vested interest in their Employer Profit Sharing and Employer Matching
Contribution Accounts who are reemployed by the Company or any other
Participating Employer before incurring five consecutive One Year Breaks in
Service, the unvested portion of such member's accounts will continue to vest
under the Plan if the member elects to repay all of the amounts previously
distributed to him.
Furthermore, with respect to former employees of VKAC who were
participants in the VKAC Plan, which was merged into the Plan effective as of
January 1, 1997, the following special distribution provisions apply:
In-Kind Mutual Fund Share and Travelers Stock Distributions. A Member
of the Plan who was a Participant in the VKAC Plan and a participant in the
American Capital Management & Research, Inc. Profit Sharing and Savings Plan
(the "American Capital Plan") prior to January 1, 1995 may elect to have
distributions from their accounts that were invested in the American Capital
Mutual Funds or the Travelers Stock Fund on December 31, 1996 made in-kind to
the extent provided herein.
(1) Effective for distributions prior to September 6, 2000, lump sum
distributions of amounts invested in the American Capital
Corporate Bond Fund, Inc., the American Capital Enterprise Fund,
Inc., the American Capital Pace Fund, Inc., or the American
Capital Reserve Fund, Inc. shall
A-3
be paid at the election of the participant or beneficiary in
cash, in shares of such funds, or in some combination thereof.
(2) Effective for distributions prior to March 1, 2001, any
distribution of amounts from the "Travelers Stock Fund"
(maintained pursuant to the American Capital Plan), or the
successor to such fund maintained under the VKAC Plan, shall be
paid at the election of the participant or beneficiary in cash,
in shares of Travelers stock, or some combination thereof.
Notwithstanding any provision of the Plan to the contrary, any
amounts that are held in the Travelers Stock Fund on March 1,
2001 shall be transferred to the Morgan Stanley Dean Witter Stock
Fund as soon as practicable after such date.
(3) Distributions hereunder shall be made in accordance with the
distribution and valuation rules and procedures with respect to
in-kind distributions under the American Capital Plan, as in
effect immediately prior to January 1, 1995.
With respect to Employees who were formerly employees of Kearny Realty
Investors, Inc. or its subsidiaries (collectively, "Kearny"), the following
rules shall apply: As of January 1, 1998, an Hour of Service as defined in
Section 1.29 of the Plan shall include each hour for which such former employee
of Kearny was paid, or entitled to payment, for the performance of services for
Kearny. As of January 1, 1998, the term Service as defined in Section 1.45 of
the Plan shall also include all service with Kearny prior to January 1, 1998;
provided, however, that each former Employee of Kearny shall only be credited
with the lesser of his actual period of service with Kearny or 5 years.
Notwithstanding the foregoing, Employees who were participants in the Kearny
Realty Investors, Inc. 401(k) Profit Sharing Plan (the "Kearny 401(k) Plan") as
of December 31, 1998 will automatically become Members of the Plan on January 1,
1999. Each such former employee of Kearny will be deemed to have an Employment
Commencement Date as of the date such employees service with Kearny commenced.
Effective at the end of December 31, 1998, the Kearny 401(k) Plan and
the Kearny Realty Investors, Inc. Money Purchase Pension Plan (collectively, the
"Kearny Plans") are merged with and into the Plan. Prior to such merger on
December 31, 1998, the contributions, benefits, and other rights of Members who
were participants in the Kearny Plans were determined under the terms of the
Kearny Plans as in effect immediately prior to their merger into the Plan. Any
person who was covered under the Kearny Plans prior to their merger into DPSP as
in effect prior to their merger into the DPSP on December 31, 1998 and who was
entitled to benefits under the provisions of such plans as in effect on December
31, 1998 shall continue to be entitled to the same amount of benefits without
change under this Plan; provided, however, that any amounts from the Kearny
Realty Investors, Inc. Money Purchase Pension Plan that are merged with and into
the Plan will not be eligible for any inservice withdrawal, hardship withdrawal
or loan under the Plan and such other restrictions as may be required by law
shall apply to such amounts.
A-4
Furthermore, a participant in the Kearny Plans prior to their merger
into the DPSP as of December 31, 1998 will be entitled to receive his accrued
benefits under the Kearny Plans as of December 31, 1998 pursuant to any benefit
payment option available under the Kearny Plans prior to their merger into the
DPSP as of December 31, 1998, subject to any spousal consent requirements as may
be required under the Kearny Plans and under the Code; provided, however, that
in the case of a participant in the Kearny 401(k) Plan the only joint and
survivor annuity options available will be a joint and 50% survivor annuity and
a joint and 100% survivor annuity.
Subject to the otherwise applicable limits on contributions and
allocations under the Plan, the amount of Firm Contributions to be allocated in
1999 to each former employee of Kearny who became an employee of an Employer as
of January 1, 1999 shall be equal to the amount of contributions that would have
been allocated to such former employee of Kearny in 1999 under the terms of the
Kearny Plans, as in effect immediately prior to the merger of the Kearny Plans
into the Plan, less the value allocated to each such former employee of Kearny
under the ESOP (other than as Matching Allocations, as such term is defined in
the ESOP). Nothing in this paragraph shall affect the amount to be contributed
on behalf of, or allocated to, any such former Kearny employee in any year other
than 1999.
Each former Member who was an Employee in the Corporation's global
custody or correspondent clearing businesses immediately prior to the date of
the sales of those businesses and who (i) remains an employee of the purchasers
of those businesses (or their successors), as applicable, as of December 31,
1998, or (ii) terminates employment with the Corporation without having received
an offer of employment from the purchasers of those businesses on or before
December 31, 1998 will, to the extent permitted by ERISA and the Internal
Revenue Code, receive a Firm Contribution equal to the amount that would have
been contributed on behalf of such former Member had he remained an Employee as
of December 31, 1998. The Firm Contribution will be based on the Base Salary
paid to such former Member while an Employee for the 1998 Plan Year.
Graystone Partners. Each former employee of Graystone Partners, L.P.
------------------
("Graystone") who is employed by an Employer on or after November 1, 1999 will
be deemed to have an Employment Commencement Date as of the date such employee's
service with Graystone commenced. As of November 1, 1999, an Hour of Service as
defined in Section 1.29 of the Plan shall include each hour for which an
employee of Graystone was paid, or entitled to payment, for the performance of
services for Graystone.
Weyerhaeuser Corporation. Each employee of the Weyerhaeuser
-------------
Corporation ("Weyerhaeuser") who is hired by a Employer as of April 13, 2000 to
work in the business of Morgan Stanley Dean Witter Alternative Investment
Partners will be deemed to have an Employment Commencement Date as of the date
such employee's service with Weyerhaeuser commenced. As of April 13, 2000, an
Hour of Service as defined in Section 1.29 of the Plan shall include each hour
for which an employee of Weyerhaeuser was paid, or entitled to payment, for the
performance of services for Weyerhaeuser.
A-5
Dean Witter Financial Advisors. Notwithstanding any provision of the
------------------------------
DPSP to the contrary, effective January 1, 2000, an Employee shall not include
an employee of Dean Witter Reynolds Inc. who is a Financial Advisor licensed
under state law as a Morgan Stanley & Co. Incorporated employee in order to
provide commercial brokerage mortgage services, regardless of such employee's
classification for other purposes of the Corporation.