Exhibit 10.30
ESI PENSION PLAN
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ARTICLE I GENERAL PROVISIONS
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1
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Section 1.01. Designation and
Purpose
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1
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Section 1.02. Trust
Agreement
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1
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ARTICLE II DEFINITIONS
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1
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Section 2.01. Terms
Defined
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1
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Section 2.02. Rules of
Construction
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12
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ARTICLE III MEMBERSHIP
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13
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Section 3.01. Date of
Membership
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13
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Section 3.02. Cessation of
Membership
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14
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Section 3.03. Transfers of
Employment
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14
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ARTICLE IV FUNDING OF BENEFITS
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14
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Section 4.01. Funding Policy and
Method
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14
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Section 4.02. Actuarial
Valuations
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14
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Section 4.03. Funding Standard
Account
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14
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Section 4.04. Nondiversion and
Exclusive Benefit
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14
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ARTICLE V VESTING
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15
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Section 5.01.
Nonforfeitability
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15
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Section 5.02. Vesting of
Member’s Benefit
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15
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Section 5.03. Deemed
Distributions
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16
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ARTICLE VI MEMBER BENEFITS
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16
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Section 6.01. Cash Balance
Accounts
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16
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Section 6.02. Standard Pay
Credits
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16
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Section 6.03. Transition Member Pay
Credits
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17
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Section 6.04. Interest
Credits
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18
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Section 6.05. Frozen
Benefits
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19
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ARTICLE VII PAYMENT OF BENEFITS
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19
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Section 7.01. Normal Retirement
Benefits
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19
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Section 7.02. Disability Retirement
Benefits
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21
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Section 7.03. Other Termination
Benefits
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22
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Section 7.04. Death
Benefits
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23
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Section 7.05. Equivalent Benefits
and Present Value
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25
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Section 7.06. Written Explanation of
Benefits
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25
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Section 7.07. Purchase of Annuity
Contracts
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26
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Section 7.08. Top-Heavy
Benefits
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26
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Section 7.09. Other Distribution
Rules Imposed by Federal Law
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26
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Section 7.10. Effect of Government
Regulation on Payment of Benefits
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27
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Section 7.11. Inalienability of
Benefits
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27
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Section 7.12. Payments for Benefit
of Incompetents
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27
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Section 7.13. Qualified Domestic
Relations Orders
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27
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Section 7.14. Direct
Rollovers
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27
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Section 7.15.
Beneficiaries
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27
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Section 7.16. Annual Determination
of Cash Balance Accounts
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28
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ARTICLE VIII ADMINISTRATION
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28
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Section 8.01.
Administrator
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28
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Section 8.02. Removal and
Replacement of Committee Members
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28
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Section 8.03. Resignation
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28
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Section 8.04. Chairman, Services,
and Counsel
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28
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Section 8.05. Meetings
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29
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Section 8.06. Quorum
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29
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Section 8.07. Action Without
Meeting
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29
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Section 8.08. Notice to Trustee of
Changes in Membership
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29
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Section 8.09. Correction of
Defects
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29
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Section 8.10. Reliance Upon Legal
Counsel
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29
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Section 8.11. Expenses
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29
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Section 8.12.
Indemnification
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29
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Section 8.13. Powers and Duties of
Committee
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29
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Section 8.14. Matters Specifically
Excluded from Jurisdiction
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30
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Section 8.15. Investment
Manager
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30
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ARTICLE IX CLAIMS PROCEDURES
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31
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Section 9.01. Presentation of
Claims
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31
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Section 9.02. General Claims
Procedures (Claims Not Requiring a
Determination of Disability by the
Plan)
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31
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Section 9.03. Disability Claims
Procedures
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32
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ARTICLE X LIMITATIONS ON RIGHTS OF EMPLOYEES AND
OTHER PERSONS
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34
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Section 10.01. In General
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34
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Section 10.02. No Increase or
Impairment of Other Rights
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35
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Section 10.03. Trust Sole Source of
Benefits
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35
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Section 10.04. Other Limitations of
Liability
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35
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ARTICLE XI PROVISIONS DESIGNED TO
COMPLY WITH LIMITATIONS ON
BENEFITS AND OTHER
ADDITIONS
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35
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Section 11.01. Purpose and
Construction of This Article
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35
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Section 11.02. General Statement of
Limitation
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35
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ARTICLE XII AMENDMENT, MERGER AND
TERMINATION
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37
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Section 12.01. Amendment of
Plan
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37
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Section 12.02. Amendments Necessary
to Bring Plan into Compliance with the
Code and ERISA
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37
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Section 12.03. Amendments to Vesting
Provisions
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37
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Section 12.04. Merger or
Consolidation
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38
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Section 12.05. Termination of
Plan
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38
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Section 12.06. Limitation Concerning
25 Highest Paid Employees
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38
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ARTICLE XIII PROVISIONS RELATING TO TOP-HEAVY
PLAN
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39
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Section 13.01. Construction of this
Article
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39
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Section 13.02. Top-Heavy
Determination
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39
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Section 13.03. Special Rules
Relating to Determination of Top-Heavy Status
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40
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ARTICLE XIV MISCELLANEOUS PROVISIONS
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41
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Section 14.01. No Duplication of
Benefits
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41
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Section 14.02. Named
Fiduciaries
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41
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Section 14.03. Bonding
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41
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Section 14.04. Qualified Military
Service
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41
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ARTICLE XV MINIMUM DISTRIBUTION
REQUIREMENTS
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41
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Section 15.01. Time and Manner of
Distributions
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41
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Section 15.02. Determination of
Amount to be Distributed Each Year
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42
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Section 15.03. Requirements For
Annuity Distributions That Commence During
Member’s Lifetime
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44
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Section 15.04. Requirements For
Minimum Distributions Where Member Dies
Before Date Distributions
Begin
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44
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Section 15.05. Election of Five-Year
Rule
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45
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Section 15.06.
Definitions
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45
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ARTICLE I
GENERAL PROVISIONS
Section 1.01
. Designation and Purpose . This Plan is a continuation and complete
restatement of the ESI Pension Plan originally effective June 9,
1998. The effective date of the Plan, as restated, is January 1,
2006, except as otherwise provided. The Plan is a cash balance
defined benefit plan. The Plan's purpose is to provide retirement
income for Eligible Employees, and the Plan is designed to meet the
requirements of Code subsections 401(a) and 501(a) and
the requirements of ERISA. The Plan is frozen with respect to
Employees who first complete an Hour of Service on or after
June 2, 2003 and certain other employees, and frozen with
respect to accruals after March 31, 2006.
Section 1.02
. Trust Agreement . Effective as of the date of its execution, ESI
entered into a Trust Agreement with Bank One Trust Company, N.A.,
providing for a trust to support and implement the operation of the
Plan. The Trust Agreement, as amended from time to time, is part of
this Plan.
ARTICLE II
DEFINITIONS
Section 2.01
. Terms Defined . As used in the Plan, the following words and
phrases, when capitalized, will have the following meanings, unless
a different meaning is plainly required by the context.
"Actuarial Equivalent" means, with
respect to a benefit, another benefit that has the same
actuarially-determined value. The determination of an Actuarial
Equivalent benefit will be computed using the mortality table as
prescribed from time-to-time by the Secretary pursuant to Code
subclause 417(e)(3)(A)(ii)(I), and an interest rate equal to an
Applicable Percentage for that Plan Year. For purposes of
distributions with Annuity Starting Dates on or after December 31,
2007, and notwithstanding any other Plan provisions to the
contrary, the applicable mortality table used for purposes of
adjusting any benefit or limitation under Code subparagraphs
415(b)(2)(B), (C) or (D) as set forth in Section 11.02 of the Plan
and the applicable mortality table used for purposes of satisfying
the requirements of Code subsection 417(e) as set forth in Section
7.05 of the Plan is the table prescribed in Code
subsection 417(e).
"Aggregation Group" means either a
Required Aggregation Group or a Permissive Aggregation
Group.
"Annual Addition" means, with
respect to a Member for a Plan Year, the following amounts credited
to a Member's accounts in any qualified defined contribution plan
maintained by the Employer or a Related Employer for the Plan Year:
employer contributions, employee contributions (other than rollover
contributions); forfeitures; amounts allocated, after
March 31, 1984, to an individual medical account, as defined
in Code paragraph 415(l)(2), that is part of a pension or
annuity plan maintained by the Employer or a Related Employer; and
amounts derived from contributions paid or accrued after
March 31, 1984, that are attributable to post-retirement
medical benefits,
allocated to the separate account of
a Key Employee, under a welfare benefit fund, as defined in Code
subsection 419(e), maintained by the Employer or a Related
Employer.
"Annuity Starting Date" means, with
respect to a Member, the first day of the first period for which a
Plan benefit is paid as an annuity or, in the case of a benefit not
paid in the form of an annuity, the first day on which all events
have occurred that entitle the Member to the benefit.
"Applicable Election Period" means,
in the case of an election to waive a Qualified Joint and Survivor
Annuity or Life Annuity (a) the 90-day period ending on the
Annuity Starting Date or (b) the 30-day period beginning on
the date the Committee provides the Member with the written
explanation described in Section 7.06, whichever ends later.
In the case of an election to waive the Qualified Preretirement
Survivor Annuity, "Applicable Election Period" means (a) the
period that begins on the first day of the Plan Year in which the
Member reaches age 35 and ends on the date of the Member's death or
(b) if a Member's employment is earlier terminated, with
respect to benefits accrued before the termination, the period that
begins no later than the date of the termination and ends on the
date of the Member's death.
"Applicable Percentage" means, with
respect to a Plan Year, the annual rate of interest on 30-year
Treasury securities for November of the year preceding that Plan
Year, as specified by the Commissioner of Internal
Revenue.
"Beneficiary" means the person or
persons designated pursuant to Section 7.15 to receive benefits
under the Plan after a Member's death.
"Board of Directors" means the Board
of Directors of ESI.
"Break in Service" means a Plan Year
during which an Employee completes 500 or fewer Hours of
Service.
"Cash Balance Account" means a
bookkeeping account maintained for a Member pursuant to
Section 6.01.
"Code" means the Internal Revenue
Code of 1986, as amended from time to time, and interpretive
rulings and regulations.
"Committee" means the Plan Committee
established pursuant to Article VIII.
"Compensation" means, with respect
to an Employee for a Plan Year, the Employee's wages, salaries,
fees for professional services, and other amounts received for
personal services actually rendered in the course of employment
with the Employer to the extent that the amounts are included in
gross income. For purposes of Sections 6.02 and 6.03, an
Employee's salary specifically includes retention bonuses and lump
sum vacation pay that, effective January 1, 2008, are paid by
the later of the date that is 2½ months after the
Employee Separates from Service or the last day of the Plan Year
during which the Employee Separates from Service, and specifically
excludes curriculum development pay, settlement agreement pay, lieu
of notice pay, short term disability pay and severance pay.
Compensation also includes amounts contributed by the
Employer
pursuant to a salary reduction
agreement that are not includable in the gross income of the Member
under Code section 125 or 457, subsection 402(h) or
403(b), or paragraph 132(f)(4) or 402(e)(3); and Employee
contributions described in Code paragraph 414(h)(2) that are
treated as Employer contributions. Compensation does not include,
whether or not included in gross income, reimbursements or other
expense allowances; fringe benefits (cash and non-cash); moving
expenses (including settling in allowances); nonqualified deferred
compensation; welfare benefits; amounts realized from the exercise
of a nonqualified stock option or when restricted stock (or
property) held by an employee either becomes freely transferable or
is no longer subject to a substantial risk of forfeiture. Except as
permitted by the Code for purposes of Section 7.08 and
Article XIII, an Employee's Compensation will not exceed
$200,000, as adjusted for cost-of-living increases in accordance
with Code subparagraph 401(a)(17)(B).
"Compensation Limit" means the
limitation on annual benefits described with reference to a
Member's average Compensation at
Subsection 11.02(a).
"Continuous Service" means the
aggregate period of time during which the employment relationship
exists between an Employee and the Employer, determined as
follows:
(1) The
period of time beginning on the date an Employee first performs an
Hour of Service and ending on the Employee's Severance from Service
date.
(2) Any
Period of Severance by reason of a quit, discharge or retirement,
of less than 12 months; provided, however, that if an Employee is
absent from service for a reason other than a quit, discharge, or
retirement and subsequently incurs a Severance from Service as a
result of a quit, discharge, or retirement, the Period of Severance
shall be credited only if the Employee returns to the Employer's
service on or before the first anniversary of the date the Employee
was first absent from service.
(3) Any
period of time beginning on the date the Employee first performs an
Hour of Service after a Period of Severance and ending on the date
the Employee again incurs a Severance from Service.
(4) For
purposes of aggregating periods of Continuous Service,
12 months of completed service shall equal one year of
Continuous Service, and 30 days of completed service shall
equal one month of Continuous Service.
"Determination Date" means, for
purposes of determining whether the Plan is a Top-Heavy Plan for
any Plan Year, the last day of the preceding Plan Year; for the
first Plan Year, the last day of the Plan Year.
"Direct Rollover" means a payment by
the Plan to the Eligible Retirement Plan specified by the
Distributee.
"Disability" means a total
disability within the meaning of ESI's long-term disability
insurance plan, as amended from time to time, whether or not the
Member actually participates in ESI's long-term disability
insurance plan.
"Disability Date" means, with
respect to a Member, the date the Member is first determined by the
Committee to have a Disability.
"Distributee" means an Employee or
former Employee. In addition, the Employee's or former Employee's
surviving Spouse and the Employee's or former Employee's Spouse or
former Spouse who is the alternate payee under a Qualified Domestic
Relations Order are Distributees with regard to the interest of the
Spouse or former Spouse.
"Dollar Limit" means the limitation
on annual benefits described with reference to $160,000 at
Subsection 11.02(a).
"Effective Date" means June 9,
1998.
"Eligible Employee" means an
Employee other than (a) a federal work study student;
(b) a non-resident alien; (c) a Leased Employee;
(d) an Employee who is covered by a collective bargaining
agreement that does not provide for Plan membership; (e) an
Employee accruing benefits for current service under any other
qualified defined benefit plan or qualified defined contribution
plan maintained by the Employer or a Related Employer (other than
the ESI 401(k) Plan); (f) an Employee who first completes
an Hour of Service on or after June 2, 2003; or (g) an
Employee who first completes an Hour of Service before June 2,
2003, but terminates employment with the Employer before completing
a Year of Eligibility Service or a year of Continuous Service and
returns after incurring a one-year Break in Service or a one-year
Period of Severance.
"Eligible Retirement Plan" means any
of the following that accepts the Distributee's Eligible Rollover
Distribution: an individual retirement account described in Code
subsection 408(a); an individual retirement annuity described
in Code subsection 408(b); an annuity plan described in Code
subsection 403(a); a qualified trust described in Code
subsection 401(a); an annuity contract described in Code
subsection 403(b); and an eligible plan under Code
subsection 457(b), which is maintained by a state, political
subdivision of a state, or any agency or instrumentality of a state
or political subdivision of a state and which agrees to separately
account for amounts transferred into such plan from this
Plan.
"Eligible Rollover Distribution"
means any distribution of all or a portion of the balance to the
credit of the Distributee, except that an Eligible Rollover
Distribution does not include any distribution that is one of a
series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of
the Distributee or the joint lives (or joint life expectancies) of
the Distributee and the Distributee's Beneficiary, or for a
specified period of ten years or more; any distribution to the
extent that the distribution is required under Code
paragraph 401(a)(9); and the portion of any distribution that
is not includable in gross income (determined without
regard to the exclusion for net
unrealized appreciation with respect to employer
securities).
"Employee" means any person employed
by the Employer as a salaried employee, who is paid from a payroll
maintained in the United States, and who receives compensation that
the Employer initially reports on a federal wage and tax statement
(Form W-2). For purposes of crediting Years of Eligibility
Service or Years of Vesting Service and, except as otherwise
provided, for purposes of Articles XI and XIII, the term
"Employee" includes a Leased Employee.
"Employer" means ESI and any Related
Employer that adopts the Plan. For purposes of crediting service
for eligibility to participate and, except as otherwise provided,
for purposes of the rules set out in Articles XI
and XIII, the term "Employer" includes any Related
Employer.
"Entry Date" means the first day of
each calendar month.
"ERISA" means the Employee
Retirement Income Security Act of 1974, as amended from time to
time, and interpretive rulings and regulations.
"ESI" means ITT Educational
Services, Inc., and any corporation that succeeds to its business
and adopts the Plan.
"Final Quarter" means the period
beginning January 1, 2006 and ending March 31,
2006.
"Full-Time Employee" means an
Employee who regularly works at least 40 hours per
week.
“Freeze Date” means
March 31, 2006. The Freeze Date is the date as of which benefit
accruals cease under the Plan.
"Highly Compensated Member" means a
highly compensated active Employee or a highly compensated former
Employee.
(a) With
respect to a Plan Year, a highly compensated active Employee
includes any Employee who performs service for the Employer during
the Plan Year and who (1) is a 5% owner for that Plan Year or
was a 5% owner for the prior Plan Year or (2) for the prior
Plan Year received Compensation from the Employer in excess of
$80,000 (as adjusted pursuant to Code subsection 415(d)). The
Employer does not elect to require that a highly compensated active
employee must be a member of the Employer's top-paid group for the
preceding Plan Year.
(b) With
respect to a Plan Year, a highly compensated former Employee
includes any Employee who terminated employment (or was deemed to
have terminated employment) prior to the Plan Year, performs no
service for the Employer during the Plan Year, and was a highly
compensated active Employee
for either the Plan Year during
which he terminated employment or any Plan Year ending on or after
the Employee's 55th birthday.
(c) The
determination of who is a Highly Compensated Member will be made in
accordance with Code subsection 414(q).
"Hour of Service" means each hour
for which an Employee is entitled to credit under this
Subsection.
(a) An
Employee is entitled to credit for each hour for which he is paid,
or entitled to payment, for the performance of duties for the
Employer. Subject to the provisions of Paragraph (f), an Hour
of Service described in this Paragraph will be credited to an
Employee for the computation period in which the duties are
performed.
(b) An
Employee is entitled to credit for each hour for which he is paid,
or entitled to payment, by the Employer on account of a period
during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty,
military duty, or leave of absence; provided, however, that no
Hours of Service will be credited under this Paragraph if payment
is made or due solely to reimburse an Employee for medical or
medically related expenses or solely for the purpose of complying
with applicable workers' compensation, unemployment compensation,
or disability insurance laws. No more than 501 Hours of
Service will be credited to an Employee on account of any single
continuous period during which the Employee performs no duties
(whether or not this period occurs in a single Plan Year) unless
the Hours of Service are credited pursuant to Paragraph (d).
Subject to the provisions of Paragraph (f), an Hour of Service
credited to an Employee pursuant to this Paragraph will be credited
to the computation period or periods during which no duties are
performed.
(c) An
Employee is entitled to credit for each hour for which back pay,
irrespective of mitigation of damages, is either awarded or agreed
to by the Employer. The same Hour of Service will not be credited
under Paragraph (a) or Paragraph (b), as the case may be,
and under this Paragraph. An Hour of Service described in this
Paragraph will be credited to the computation period or periods to
which the award or agreement for back pay pertains, rather than to
the computation period in which the award, agreement, or payment is
made.
(d) For
eligibility and vesting purposes only, "Hours of Service" will be
credited to an Employee for military leave for training or service,
or both, if that Employee is entitled to be credited with service
for his period of military leave upon his reemployment with the
Employer under applicable federal law. An Employee will be credited
with 190 Hours of Service for each month of military
leave.
(e) Solely
for purposes of determining whether a Break in Service has occurred
for eligibility and vesting purposes, an Employee who is absent
from
work for maternity or paternity
reasons will receive credit for the Hours of Service that would
otherwise have been credited to the Employee but for the absence,
or in any case in which those hours cannot be determined,
eight Hours of Service per day of the absence. For purposes of
this Paragraph, an absence from work for maternity or paternity
reasons means an absence (1) by reason of the pregnancy of the
Employee, (2) by reason of a birth of a child of the Employee,
(3) by reason of the placement of a child with the Employee in
connection with the adoption of the child by the Employee, or
(4) for purposes of caring for the child for a period
beginning immediately following its birth or placement. The total
number of hours treated as Hours of Service under this Paragraph by
reason of any absence may not exceed 501. The Hours of Service
credited under this Paragraph will be credited (1) to the
computation period in which the absence begins if the crediting is
necessary to prevent a Break in Service in that period or
(2) in all other cases, to the following computation period.
No Hours of Service will be credited pursuant to this Paragraph
unless the Employee furnishes to the Committee such timely
information as the Committee may reasonably require to establish
(1) that the absence from work is for reasons referred to in
this Paragraph and (2) the number of days of the
absence.
(f) All
regulations promulgated by the U.S. Secretary of Labor or his
delegate applicable to the computation and crediting of Hours of
Service under ERISA, including 29 C.F.R.
§ 2530.200(b)-2, are incorporated as part of the Plan.
The provisions of the Plan are intended to comply with the
regulations and will be construed and applied to effect
compliance.
"ITT Plan" means the ITT Retirement
Plan for Salaried Employees of ITT Corporation, as in effect
immediately prior to June 9, 1998.
"Key Employee" means any Employee or
former Employee (including any deceased Employee) who at any time
during the Plan Year that includes the Determination Date was an
officer of the Employer having annual Compensation greater than
$130,000 (as adjusted under Code paragraph 416(i)(1) for Plan
Years beginning after December 31, 2002), a 5-percent owner of the
Employer, or a 1-percent owner of the Employer having annual
Compensation of more than $150,000.
"Leased Employee" means any person
who performs services for the Employer, but who is not an employee
of the Employer, if the services are provided pursuant to an
agreement between the Employer and any other person, the person has
performed the services for the Employer (or for the Employer and
related persons) on a substantially full-time basis for a period of
at least one year, and the services are performed under the primary
direction or control of the Employer. A person will not be
considered a Leased Employee if:
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(a)
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the person is covered by a money purchase
pension plan providing:
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(1) a
non-integrated employer contribution rate of at least 10% of
compensation, as defined in Code paragraph 415(c)(3), which
includes amounts contributed pursuant to a salary reduction
agreement that are
excludable from the person's gross
income under Code section 125, subsection 402(h)
or 403(b), or paragraph 402(a)(8),
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(2)
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immediate participation, and
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(3)
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full and immediate vesting; and
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(b) the
person, together with all other persons who would otherwise be
considered Leased Employees, do not constitute more than 20% of the
Employer's non-highly compensated workforce.
"Life Annuity" means a level monthly
annuity beginning on the applicable Annuity Starting Date and
continuing for the life of the Member.
"Member" means any Eligible Employee
who has met the eligibility requirements set forth in
Article III and for whom benefits are to be provided under the
Plan.
"Non-Key Employee" means any
Employee (including a Beneficiary of the Employee) who is not a Key
Employee.
"Normal Retirement Date" means, with
respect to each Member, the first day of the month following the
date the Member has both reached age 55 and completed five Years of
Vesting Service.
"Period of Severance" means a period
of time that begins on the Severance from Service date and ends on
the date on which an Employee again performs an Hour of
Service.
"Permissive Aggregation Group" means
an Aggregation Group that may include any other plan not required
to be included in the Required Aggregation Group, provided the
resulting group, taken as a whole, would continue to satisfy the
provisions of Code paragraph 401(a)(4) and Code
section 410.
"Plan" means the ESI Pension Plan,
as amended from time to time.
"Plan Year" means the period from
the Effective Date through December 31, 1998 and any
subsequent calendar year.
"Qualified Domestic Relations Order"
means a qualified domestic relations order within the meaning of
Code subsection 414(p).
"Qualified Joint and Survivor
Annuity" means an immediate level monthly annuity beginning on the
applicable Annuity Starting Date and continuing for the life of the
Member, with a survivor annuity to and for the life of his Spouse,
in a monthly amount equal to one-half of the monthly amount payable
during the joint lives of the Member and his Spouse.
"Qualified Preretirement Survivor
Annuity" means a level monthly annuity beginning on the applicable
Annuity Starting Date and continuing for the life of a Member's
Spouse.
"Regular Part-Time Employee" means
an Employee who regularly works at least 20 hours per week,
but less than 40 hours per week.
"Related Employer" means any
employer that, together with the Employer, is under common control
or a member of an affiliated service group, as determined under
Code subsections 414(b), (c), (m), and (o). In determining
whether an Employer is a member of a controlled group for purposes
of Article XI, the rules of Code subsections 414(b)
and (c) will be applied as modified by Code
subsection 415(h).
"Required Aggregation Group" is a
group of Retirement Plans comprising:
(a) each
Retirement Plan of the Employer, including any terminated
Retirement Plan, in which a Key Employee has been a Member in the
Plan Year containing the Determination Date or any of the
four preceding Plan Years; and
(b) each
other Retirement Plan of the Employer that has enabled a Retirement
Plan described in Paragraph (a) to meet the requirements of
Code paragraph 401(a)(4) or Code section 410 during the
period described in Paragraph (a).
"Required Beginning Date" means,
with respect to a Member who is not a 5% owner as described in Code
section 416 and who did not reach age 70½ before
January 1, 1997, April 1 of the calendar year following
the later of (a) the calendar year in which the Member
Separates from Service and (b) the calendar year in which the
Member reaches age 70½. "Required Beginning Date" means,
with respect to a Member who is a 5% owner as described in Code
section 416 or a Member who reached age 70½ before
January 1, 1997, April 1 of the calendar year following
the calendar year in which the Member reaches age
70½.
"Retirement Plan" means a retirement
program of the Employer intended to qualify under Code
subsection 401(a).
"Secretary" means the
U.S. Secretary of Treasury or his delegate.
"Separates from Service" or
"Separation from Service" means any termination of the employment
relationship between an Employee and the Employer; provided,
however, that it does not mean:
(a) temporary
absence of the Employee due to vacation, sickness, strike, seasonal
layoff, or similar cause,
(b) a
leave of absence for any reason approved by the Employer on a
nondiscriminatory basis,
(c) military
leave to the extent that the Employee is credited with Hours of
Service for the leave, or
(d) the
first 12 months of a period of total disability as determined by
the Social Security Administration or the Plan
Committee.
For this purpose, the term
"Employer" includes all Related Employers, and an Employee or
former Employee will not be treated as having incurred a Separation
from Service until the employment relationship between the Employee
and all Related Employers is terminated.
"Severance from Service" occurs on
the earlier of the following two dates:
(1) The
date the Employee quits, is discharged, retires or dies;
or
(A) the
first anniversary of the first day the Employee is absent from the
service of the Employer for a reason not enumerated in
Paragraph (1);
(B) the
expiration of an authorized leave of absence, provided the Employee
does not return to the service of the Employer following the
expiration of the leave of absence;
(C) in
the case of an absence due to maternity or paternity leave for
reason of the birth of a child of the Employee, the placement of a
child with the Employee in connection with the adoption of the
child by the Employee, or the caring for a child for a period
immediately following birth or placement, the second anniversary of
the date the absence commences; or
(D) any
period of military service in the Armed Forces of the United States
required to be credited by law; provided, however, that the
Employee does not return to the service of the Employer within the
period the Employee's reemployment rights are protected by
law.
"Social Security Retirement Age"
means (a) age 65 for a Member born before January 1,
1938, (b) age 66 for a Member born after December 31,
1937, but before January 1, 1955, and (c) age 67 for a
Member born after December 31, 1954.
"Spouse" means, with respect to any
Member, the Member's lawfully married spouse, if any, on the
applicable date. The Plan will not recognize common law marriages
or similar arrangements unless required to do so by federal law. A
former Spouse will also be considered a Spouse to the extent
provided under a Qualified Domestic Relations Order.
"Top-Heavy Group" means an
Aggregation Group described in Section 13.02(b).
"Top-Heavy Plan" means a Retirement
Plan described in Section 13.02(a).
"Transition Member" means a Member
who, as of December 31, 1998, has either (a) reached age 50
and completed 10 Years of Benefit Service, or (b) completed
15 Years of Benefit Service.
"Trust" means the trust established
by the Employer under the Plan.
"Trust Agreement" means the
agreement between the Employer and the Trustee establishing the
Trust to implement and support the operation of the
Plan.
"Trust Assets" means the assets of
the Trust.
"Trustee" means the original trustee
of the Trust and any person becoming successor trustee of the
Trust.
"Year of Benefit Service" means, for
any Employee, a Plan Year ending before January 1, 2006 during
which the Employee has completed at least 1,000 Hours of Service. A
Year of Benefit Service will always be measured in whole years, and
any Plan Year during which an Employee has completed less than
1,000 Hours of Service will be disregarded in determining the
number of the Employee's Years of Benefit Service. If an Employee
Separates from Service and is subsequently reemployed by an
Employer, his benefit service accrued prior to his Separation from
Service will be restored to him immediately, and he will
immediately begin accruing benefit service for the period of his
reemployment occurring prior to January 1, 2006. For purposes
of this Subsection, any benefit service with ITT Corporation or any
of its affiliated companies that was credited to an Employee under
the ITT Plan as of the Effective Date will be treated as benefit
service with the Employer under this Plan. Notwithstanding the
preceding provisions, an Employee will receive credit for a partial
Year of Benefit Service as provided in
Section 6.05.
"Year of Eligibility Service" means
an eligibility computation period during which an Employee
completes at least 1,000 Hours of Service. The first eligibility
computation period is the 12-month period beginning on the date the
Employee first completes an Hour of Service. Thereafter, the
Employee's eligibility computation period is the Plan Year,
beginning with the first Plan Year that begins after the date on
which the Employee's employment began. If an Employee Separates
from Service before completing a Year of Eligibility Service,
thereafter incurs a Break in Service, and is later reemployed, his
eligibility computation period for the period after his
reemployment will be recalculated as if he had not been previously
employed. Years of Eligibility Service before five or more
consecutive Breaks in Service will not be considered Years of
Eligibility Service if the number of consecutive Breaks in Service
equals or exceeds the Years of Vesting Service credited to the
Employee and the Employee was not vested in any portion of his Plan
benefit at the time the Breaks in Service occurred, unless the
Employee completes a period of eligibility service with the
Employer after the Break in Service equal to the lesser of (1) the
number of the Employee's consecutive Breaks in Service or (2) 10
Years of Eligibility Service.
For purposes of this Subsection, any
eligibility service with ITT Corporation or any of its affiliated
companies that was credited to an Employee under the ITT Plan as of
the Effective Date will be treated as eligibility service with the
Employer under this Plan.
"Year of Vesting Service" means, for
any Employee, a Plan Year during which the Employee has completed
not fewer than 1,000 Hours of Service; provided, however, that the
following shall not be considered Years of Vesting
Service:
(a) For
purposes of determining the vested percentage of a Member's benefit
that accrued before five or more consecutive Breaks in Service,
Years of Vesting Service occurring after the Breaks in Service;
and
(b) For
purposes of determining the vested percentage of a Member's benefit
for a Member who is not vested in any portion of his Plan benefit
at the time the Breaks in Service occurred, Years of Vesting
Service before five or more consecutive Breaks in Service, if the
number of the consecutive Breaks in Service equals or exceeds the
Years of Vesting Service credited to the Employee before the Breaks
in Service occurred, unless the Member completes a period of
eligibility service with the Employer after the Breaks in Service
equal to the lesser of (1) the number of his consecutive Breaks in
Service or (2) 10 Years of Eligibility Service.
For purposes of this Subsection, any
vesting service with ITT Corporation or any of its affiliated
companies that was credited to an Employee under the ITT Plan as of
the Effective Date will be treated as vesting service with the
Employer under this Plan.
Section 2.02
. Rules of Construction . The following rules of construction will
govern in interpreting the Plan:
(a) In
resolving any conflict between provisions of this Plan and any
other uncertainty as to the meaning or intention of any provision
of this Plan, the interpretation that will prevail is the
interpretation that (1) causes the Plan to constitute a
qualified plan under the provisions of Code section 401, with
the contributions of the Employer to the Trust as items deductible
by the Employer from net income for federal income tax purposes and
(2) causes the Plan to comply with all applicable requirements
of ERISA.
(b) Other
than as specified in Subsection (a), the provisions of this
Plan will be construed and governed in all respects under and by
the internal laws of the State of Indiana.
(c) Words
used in the masculine gender will be construed to include the
feminine gender, where appropriate.
(d) Words
used in the singular will be construed to include the plural, where
appropriate, and vice versa.
(e) The
headings and subheadings in the Plan are inserted for convenience
of reference only and are not to be considered in the construction
of any provision of the Plan.
(f) If
any provision of this Plan is held to violate the Code or ERISA or
to be illegal or invalid for any other reason, that provision will
be deemed to be null and void, but the invalidation of that
provision will not otherwise impair or affect the Plan.
ARTICLE III
MEMBERSHIP
Section 3.01
. Date of Membership . Each Eligible Employee who was a Member on
December 31, 2005, will remain a Member on January 1,
2006, subject to the terms of the Plan in effect on and after that
date. Each Eligible Employee who was not a Member on
December 31, 2005, but who is credited with an Hour of Service
on or after January 1, 2006, will become a Member in accordance
with the provisions of this Section.
(a) Each
Eligible Employee who is not a Full-Time Employee or a Regular
Part-Time Employee will become a Member on the first Entry Date
that occurs on or after the date he has both reached age 21 and has
completed one Year of Eligibility Service. A former Eligible
Employee who has previously completed one Year of Eligibility
Service, but who has not become a Member, will become a Member as
of the first Entry Date on or after he has both reached age 21 and
has completed an Hour of Service upon his reemployment as an
Eligible Employee. An Eligible Employee who becomes a Member and
Separates from Service will again become a Member on the date he
first completes an Hour of Service after his reemployment as an
Eligible Employee.
(b) Each
Eligible Employee who is a Full-Time Employee or a Regular
Part-Time Employee will become a Member on the First Entry Date
that occurs on or after the date he has both reached age 21 and has
completed one year of Continuous Service. If an Employee incurs a
Severance from Service before completing a year of Continuous
Service, thereafter incurs at least a 12-month Period of Severance
and is then reemployed, his Period of Severance will not be counted
as Continuous Service in determining the date he completes a year
of Continuous Service after his reemployment. If an Employee incurs
a Severance from Service before completing a year of Continuous
Service, thereafter incurs a Period of Severance of less than 12
months and is then reemployed, his Period of Severance will be
counted as Continuous Service in determining the date he completes
a year of Continuous Service after his reemployment. A former
Eligible Employee who has previously completed one year of
Continuous Service, but who has not become a Member, will become a
Member as of the first Entry Date on or after he has both reached
age 21 and has completed an Hour of Service upon his reemployment
as an Eligible Employee. An Eligible Employee who becomes a Member
and then incurs a 12-month period of Severance will again become a
Member on the date he first completes an Hour of Service after his
reemployment as an Eligible Employee.
(c) Notwithstanding
the preceding Paragraphs, the period of an Employee's employment
prior to January 1, 2001 that was recognized as eligibility
service under the terms of the Plan then in effect will be
recognized as
eligibility service on
January 1, 2001. Recognition of service will be in accordance
with the transition rules set forth in Treasury Regulation
§ 1.410(a)-7(f) and (g).
Section 3.02
. Cessation of Membership . A Member will cease to be a Member on the date
as of which (a) he is no longer an Eligible Employee and
(b) all of his Plan benefits have been distributed.
Section 3.03
. Transfers of Employment . If a Member transfers from one Employer to
another Employer and remains an Eligible Employee, his membership
in the Plan will continue as if no transfer occurred. If a Member
transfers from an Employer to a Related Employer that does not
participate in the Plan, or if a Member transfers to another
Employer and is no longer considered an Eligible Employee, the
following will occur:
(a) The
Member's benefit will remain in the Plan, and the Member's Cash
Balance Account will continue to be credited with interest pursuant
to Section 6.04;
(b) The
Member will continue to accrue Continuous Service, Years of
Eligibility Service and Years of Vesting Service; and
(c) The
Member will not continue to accrue Years of Benefit Service, and no
further pay credits will be allocated to the Member's Cash Balance
Account pursuant to Section 6.02 or 6.03.
ARTICLE IV
FUNDING OF
BENEFITS
Section 4.01
. Funding Policy and Method
. Each Plan Year, the Employer will
pay to the Trust an amount sufficient to fund the benefits provided
under the Plan pursuant to the requirements of Code section 412 and
ERISA.
Section 4.02
. Actuarial Valuations . The Employer or the Committee will designate
an actuary for the Plan. The actuary will periodically (at least
annually) perform an actuarial valuation of the Plan and Trust and
will certify to the Employer or the Committee in writing the
results of each valuation. Each actuarial valuation will include a
valuation of the assets and liabilities of the Plan. The actuary
will apply all gains and forfeitures arising in the operation of
the Plan to reduce the Employer's contributions, all in accordance
with the actuarial methods, factors, and assumptions then employed
by the actuary in accordance with the Plan and ERISA. The actuarial
valuation used for computing Plan costs for minimum funding for a
year will be the same valuation used for the purpose of the
top-heavy determination under Section 13.02 for the
year.
Section 4.03
. Funding Standard Account . The Committee will cause the actuary to
establish and maintain a funding standard account for the Plan for
purposes of measuring and determining compliance with the minimum
funding standards imposed by ERISA.
Section 4.04
. Nondiversion and Exclusive Benefit
. Except as expressly provided in
this Section, the Trust Assets will not revert to the Employer and
will be devoted exclusively
to the payment of benefits to Members,
Beneficiaries, and other persons and for payment of reasonable
administration expenses as provided in the Plan and Trust
Agreement. The Trustee will, however, return to the Employer a
contribution to the Plan under the following
circumstances:
(a) If
the Plan receives an adverse determination letter from the Internal
Revenue Service regarding initial qualification of the Plan under
Code subsection 401(a), and an Employer requests in writing that
its prior contributions be returned, the Trustee will comply with
the Employer's request; provided, however, that no contribution
will be returned to an Employer pursuant to this Subsection more
than one year after receipt of the determination and, provided
further, that the Employer filed a complete application for
determination within the time prescribed by law for filing its
return for the taxable year in which the Plan was adopted or any
later date prescribed by the Secretary.
(b) If
any contribution is made to the Plan by mistake of fact and the
Employer requests in writing that the contribution be returned, the
Trustee will comply with the Employer's request; provided, however,
that no contribution may be returned to the Employer pursuant to
this Subsection more than one year after the date on which the
contribution is made.
(c) To
the extent that the deduction for a contribution made by the
Employer is disallowed, the contribution will be returned to the
Employer (to the extent disallowed) within one year after the
disallowance of the deduction, if the Employer so requests in
writing.
(d) To
the extent provided for under the terms of the Plan and applicable
law, as certified to the Trustee in writing by the Company, upon
termination of the Plan and after provision for the satisfaction of
all liabilities of the Plan to persons entitled to benefits under
the Plan, any amounts remaining in the Trust because of erroneous
actuarial computation will revert to and be returned to the
Employer.
ARTICLE V
VESTING
Section 5.01
. Nonforfeitability . For all purposes of the Plan, a "vested"
interest is an interest that is nonforfeitable in the sense that it
constitutes a claim that is unconditional and legally enforceable
against the Plan.
Section 5.02
. Vesting of Member's Benefit
. A Member's interest in his Plan
benefit will be forfeitable, except as that interest becomes vested
under this Section.
(a) A
Member's interest in his Plan benefit will be 100% vested upon the
occurrence of any of the following events:
|
(1)
|
his Normal Retirement Date;
|
|
(2)
|
his death or Disability while an
Employee;
|
(3) partial
termination of the Plan (within the meaning of the Code), to the
extent funded;
|
(4)
|
termination of the Plan, to the extent funded;
or
|
|
(5)
|
completion of five Years of Vesting
Service.
|
(b) Notwithstanding
any other provision of this Section, for the first Plan Year in
which the Plan is a Top-Heavy Plan and for all subsequent Plan
Years in which the Plan is a Top-Heavy Plan, the interest of a
Member in his Plan benefit will become 100% vested upon the
Member's completion of three Years of Vesting Service. If the Plan
ceases to be a Top-Heavy Plan, the following will apply:
(1) A
Member with at least three Years of Vesting Service as of the
beginning of the first Plan Year that succeeds a Top-Heavy Plan
Year will remain vested in his Plan benefit in accordance with the
Top-Heavy Plan vesting schedule;
(2) Any
other Member will, as of the beginning of the first Plan Year that
succeeds a Top-Heavy Plan Year, again be subject to the provisions
of Subsection (a) with respect to all of his interest in the
Plan.
Section 5.03
. Deemed Distributions . If upon a Separation from Service, a Member is
0% vested in his Plan benefit, the vested portion of his Plan
benefit will be deemed distributed to him as of his Separation from
Service. No amount or benefit forfeited or lost in any manner under
the provisions of the Plan will be applied to increase the benefits
of any Employee, Member, or other person entitled to benefits under
the Plan.
ARTICLE VI
MEMBER BENEFITS
Section 6.01
. Cash Balance Accounts . The Committee will maintain a separate Cash
Balance Account for each Member. A Cash Balance Account is a
bookkeeping account used to determine the amount of a Member's
benefit payable under the Plan. A Member will have neither an
actual account nor any interest in particular Trust
Assets.
Section 6.02
. Standard Pay Credits . Subject to Sections 6.03 and 6.05, pay credits
will be credited to a Member's Cash Balance Account as
follows:
(a) Until
he Separates from Service, a Member's Cash Balance Account will be
credited each Plan Year with a pay credit equal to a points-related
percentage of the Member's Compensation for that Plan Year. A
Member's points for a Plan Year will be equal to the sum of the
Member's age and Years of Benefit Service as of the last day of the
Plan Year. For this purpose, the Plan will count only whole years
of age and Years of Benefit Service and will disregard periods of
less than a whole year. Pay credits will be allocated as of the
last day of the Plan Year based on the following
schedule:
|
Points
|
Standard Schedule
Percentage of
Compensation
|
|
1-29
|
2.5
|
|
30-34
|
2.5
|
|
35-39
|
3.0
|
|
40-44
|
3.5
|
|
45-49
|
4.0
|
|
50-54
|
4.5
|
|
55-59
|
5.5
|
|
60-64
|
6.5
|
|
65-69
|
7.5
|
|
70-74
|
9.0
|
|
75-79
|
10.5
|
|
80+
|
12.0
|
(b) In
the event a Member Separates from Service before the last day of a
Plan Year, he will not receive an allocation for that Plan Year if
he has completed less than 1,000 Hours of Service during that Plan
Year. If a Member completes 1,000 or more Hours of Service during
that Plan Year, he will receive a pay credit for that Plan Year
based on his age and Years of Benefit Service as of the date he
Separates from Service and the Compensation he earned during the
Plan Year up to the date of his Separation from Service.
Section 6.03
. Transition Member Pay Credits
. Subject to Section 6.05, if a
Member is a Transition Member, his Cash Balance Account will not be
credited under Section 6.02 but his Cash Balance Account will
instead be credited with pay credits under this Section as
follows:
(a) A
Transition Member's Cash Balance Account will be credited each Plan
Year with a pay credit equal to a points-related percentage of his
Compensation for that Plan Year. A Transition Member's points will
be determined in accordance with Section 6.02. A Transition
Member's pay credits will be allocated as of the last day of the
Plan Year based on the following schedule:
|
Points
|
Transition Schedule
Percentage of
Compensation
|
|
1-54
|
8.0
|
|
55-59
|
8.0
|
|
60-64
|
8.0
|
|
65-69
|
8.5
|
|
70-74
|
10.5
|
|
75-79
|
13.0
|
|
80+
|
16.0
|
(b) In
the event a Transition Member Separates from Service before the
last day of a Plan Year, he will not receive an allocation for that
Plan Year if he has completed less than 1,000 Hours of Service
during that Plan Year. If a Transition Member completes 1,000 or
more Hours of Service during that Plan Year, he will receive a pay
credit for the Plan Year based on his age and Years of Benefit
Service as of the date he Separates from Service and the
Compensation he earned during the Plan Year up to the date of his
Separation from Service.
Section 6.04
. Interest Credits
.
(a) Until
his Annuity Starting Date, for the balance of the Member's Cash
Balance Account that is attributable to amounts credited as of
December 31, 2001 ("Pre-2002 Balance"), a Member's Cash
Balance Account will be credited each Plan Year with an interest
credit of 8% of the Member's Pre-2002 balance as of the last day of
the prior Plan Year. Interest credits under this Subsection will be
credited as of the last day of the Plan Year, except that if a
Member's Annuity Starting Date is other than the last day of a Plan
Year, the Member's interest credit for the Plan Year in which his
Annuity Starting Date occurs (1) will be credited to his Cash
Balance Account on or before his Annuity Starting Date and (2) will
be equal to 8%, reduced as described in the following sentence, of
the Member's Pre-2002 Balance as of the last day of the prior Plan
Year. A Member's reduced interest credit will be equal to 8%
multiplied by a fraction, the numerator of which is the number of
calendar months in the Plan Year up to but not including the month
in which his Annuity Starting Date occurs and the denominator of
which is 12.
(b) Until
his Annuity Starting Date, for that portion of a Member's Cash
Balance Account that is attributable to amounts credited after
December 31, 2001 ("Post-2002 Balance"), a Member's Cash
Balance Account will be credited each Plan Year with an interest
credit equal to the average of the 30-year U.S. Treasury rates, as
of March 31, June 30, and September 30 of the
preceding Plan Year, rounded to the nearest one-tenth (1/10) of one
percent (1%), multiplied by the Member's Post-2002 Balance as of
the last day of the prior Plan Year. If no 30-year U.S. Treasury
rate is issued for an applicable date, the Plan will substitute the
applicable interest rate specified by Code paragraph 417(e)(3) or
its interpretive regulations. The minimum rate of interest credit
under this Subsection will be 6% and the maximum rate will be 12%.
Interest credits under this Subsection will be credited as of the
last day of the Plan Year, except that if a Member's Ann
