-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C1JmcxEYeLsmdWzKxuSSnb6YGKJF3Z9S/SfTMutffkH+aE8x7inlBq6DjURgCTBF utUimyVJz8SaOjx4KDdvPg== 0000950130-99-005507.txt : 20000211 0000950130-99-005507.hdr.sgml : 20000211 ACCESSION NUMBER: 0000950130-99-005507 CONFORMED SUBMISSION TYPE: S-8 POS PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19990929 EFFECTIVENESS DATE: 19990929 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GLOBAL CROSSING LTD CENTRAL INDEX KEY: 0001061322 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 980189783 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 POS SEC ACT: SEC FILE NUMBER: 333-86693 FILM NUMBER: 99719424 BUSINESS ADDRESS: STREET 1: WESSEX HOUSE 45 REID STREET STREET 2: HAMILTON HM12 CITY: BERMUDA BUSINESS PHONE: 4412968600 MAIL ADDRESS: STREET 1: WESSEX HOUSE 45 REID STREET STREET 2: HAMILTON HM12 CITY: BERMUDA S-8 POS 1 POST EFFECTIVE AMENDMENT NO 1 ON FORM S-8 As Filed with the Securities and Exchange Commission on September 29, 1999 Registration No. 333-86693 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________ POST-EFFECTIVE AMENDMENT NO. 1 ON FORM S-8 TO THE REGISTRATION STATEMENT ON FORM S-4 UNDER THE SECURITIES ACT OF 1933 _______________ GLOBAL CROSSING LTD. (Exact name of Registrant as specified in its charter) Bermuda 98-0189783 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) Wessex House 45 Reid Street Hamilton HM12, Bermuda (441) 296-8600 (Address, including zip code, of Registrant's principal executive office) Frontier Corporation Employees' Stock Option Plan Frontier Corporation Management Stock Incentive Plan Frontier Corporation Supplemental Retirement Savings Plan Frontier Corporation Directors Stock Incentive Plan Frontier Corporation Omnibus Incentive Plan Frontier Group Employees' Retirement Savings Plan Frontier Group Bargaining Unit Employees' Retirement Savings Plan Upstate Cellular Network Employees' Retirement Savings Plan Globalcenter, Inc. Amended and Restated 1997 Stock Plan Primenet Services for the Internet, Inc. 1995 Stock Option Plan ALC Communications Corporation 1986 Stock Option Plan ALC Communications Corporation 1990 Stock Option Plan ALC Communications Corporation 1994 Non-Employee Directors Stock Option Plan (Full titles of the Plans) CT Corporation 1633 Broadway, 23rd Floor New York, New York 10019 (212) 479-8200 (Name, address, including zip code and telephone number, including area code, of agent for service) Copies to: D. Rhett Brandon, Esq. James C. Gorton, Esq. Simpson Thacher & Bartlett Global Crossing Ltd. 425 Lexington Avenue 150 El Camino Drive, Suite 204 New York, New York 10017-3954 Beverly Hills, California 90212 (212) 455-2000 (310) 385-5200 _______________ This Post-Effective Amendment covers shares of Common Stock, par value $.01 per share, of the Registrant originally registered on the Registration Statement on Form S-4 (the "Registration Statement") to which this Post-Effective Amendment is an amendment. The registration fees in respect of the securities registered hereby were paid at the time of the original filing of the Registration Statement. PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS Item 1. Plan Information Not required to be filed with this Post-Effective Amendment. Item 2. Registrant Information and Employee Plan Annual Information Not required to be filed with this Post-Effective Amendment. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference The following documents filed by Global Crossing Ltd. (the "Company" or the "Registrant") with the Securities and Exchange Commission (the "Commission") are hereby incorporated herein by reference: (a) The Company's Registration Statement on Form S-4 (Registration No. 333- 86693); (b) The Company's Current Report on Form 8-K dated September 8, 1999; and (c) The description of the Company's common stock, par value $.01 per share, set forth in the Company's registration statement filed pursuant to Section 12 of the Exchange Act, and any amendment or report filed for the purpose of updating such description. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") after the date of this Registration Statement and prior to the filing of a post- effective amendment to this Registration Statement indicating that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference into this Registration Statement and to be part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. Item 4. Description of Securities Not required. Item 5. Interests of Named Experts and Counsel Not required. Item 6. Indemnification of Directors and Officers No provision is made in Bermuda statutory law for indemnification of officers and directors. The Bye-Laws of the Registrant provide for indemnification of the Registrant's officers and directors against all liabilities, loss, damage or expense incurred or suffered by such party as an officer or director of the Registrant; provided that such indemnification shall not extend to any other matter which would render it void pursuant to the Companies Acts as in effect from time to time in Bermuda. The directors and officers of the Company are covered by directors' and officers' insurance policies maintained by the Company. Item 7. Exemption from Registration Claimed Not applicable. Item 8. Exhibits The following exhibits are filed as part of this Registration Statement:
Exhibit Exhibit Number ------- - ------ 3.1 Memorandum of Association of Global Crossing Ltd., dated March 5, 1998 (incorporated herein by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (Registration No. 333-53393) filed on May 22, 1998, as amended) 3.2 Amended and Restated Bye-Laws of Global Crossing Ltd. (incorporated herein by reference to Exhibit 3.4 to the Company's Registration Statement on Form S-4 (Registration No. 333-61457) filed on August 14, 1998, as amended) 4.1 Amendment No. 2 to Frontier Corporation Supplemental Retirement Savings Plan 4.2 Restated Frontier Group Employees' Retirement Savings Plan 4.3 Restated Frontier Group Bargaining Unit Employees' Retirement Savings Plan 4.4 Restated Upstate Cellular Network Employees' Retirement Savings Plan 5.1 Opinion of Appleby, Spurling & Kempe 23.1 Consent of Arthur Andersen & Co. 23.2 Consent of PricewaterhouseCoopers LLP 23.3 Consent of KPMG Audit Plc 23.4 Consent of Appleby, Spurling & Kempe (included in Exhibit 5.1) 24.1 Power of Attorney (incorporated herein by reference to Exhibit 24.1 to the Company's Registration Statement on Form S-4 (Registration No. 333-86693) filed on September 8, 1999)
Item 9. Undertakings The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post- effective amendment to this Registration Statement; (i) to include any prospectus required by Section 10(a)(3) of the Act; (ii) to reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement (except to the extent the information required to be included by clauses (i) or (ii) is contained in periodic reports filed by the Company pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by reference into this Registration Statement); (iii) to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement. (2) That, for the purposes of determining any liability under the Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for purposes of determining any liability under the Act, each filing of the Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) Insofar as indemnification for liabilities arising under the Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this post-effective amendment to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Los Angeles, State of California, on this 29th day of September, 1999. Global Crossing Ltd. (Registrant) By /s/ Robert Annunziata ------------------------------------------- Name: Robert Annunziata Title: Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this post-effective amendment has been signed on September 29th, 1999 by or on behalf of the following persons in the capacities indicated with the registrant.
Signature Title --------- ----- /*/ Chairman of the Board and Director - --------------------------------------- Gary Winnick Co-Chairman of the Board, Deputy Chairman of the /*/ Board and Director - --------------------------------------- Lodwrick Cook /*/ Managing Director, Vice-Chairman of the Board - --------------------------------------- and Director Thomas J. Casey /*/ Vice Chairman of the Board and Director - --------------------------------------- John M. Scanlon /s/ Robert Annunziata Chief Executive Officer and Director - --------------------------------------- Robert Annunziata /*/ President, Chief Operating Officer and Director - --------------------------------------- David Lee
/*/ Senior Vice President and Director - --------------------------------------- Barry Porter Senior Vice President and Director /*/ - --------------------------------------- Abbott Brown /*/ Senior Vice President and Chief Financial - --------------------------------------- Officer (principal financial officer and Dan J. Cohrs principal accounting officer) /*/ Director - --------------------------------------- Jay Bloom /*/ Director - --------------------------------------- William E. Conway /*/ Director - --------------------------------------- Dean Kehler /*/ Director - --------------------------------------- Geoffrey J.W. Kent /*/ Director - --------------------------------------- Bruce Raben /*/ Director - --------------------------------------- Michael Steed /*/ Director - --------------------------------------- Hillel Weinberger * By Power of Attorney /s/ Robert Annunziata Attorney-in-Fact - --------------------------------------- Robert Annunziata
INDEX TO EXHIBITS
Exhibit Exhibit Number ------- - ------ 3.1 Memorandum of Association of Global Crossing Ltd., dated March 5, 1998 (incorporated herein by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (Registration No. 333-53393) filed on May 22, 1998, as amended) 3.2 Amended and Restated Bye-Laws of Global Crossing Ltd. (incorporated herein by reference to Exhibit 3.4 to the Company's Registration Statement on Form S-4 (Registration No. 333-61457) filed on August 14, 1998, as amended) 4.1 Amendment No. 2 to Frontier Corporation Supplemental Retirement Savings Plan 4.2 Restated Frontier Group Employees' Retirement Savings Plan 4.3 Restated Frontier Group Bargaining Unit Employees' Retirement Savings Plan 4.4 Restated Upstate Cellular Network Employees' Retirement Savings Plan 5.1 Opinion of Appleby, Spurling & Kempe 23.1 Consent of Arthur Andersen & Co. 23.2 Consent of PricewaterhouseCoopers LLP 23.3 Consent of KPMG Audit Plc 23.4 Consent of Appleby, Spurling & Kempe (included in Exhibit 5.1) 24.1 Power of Attorney (incorporated herein by reference to Exhibit 24.1 to the Company's Registration Statement on Form S-4 (Registration No. 333-86693) filed on September 8, 1999)
EX-4.1 2 AMENDMENT #2 TO FRONTIER RETIREMENT PLAN EXHIBIT 4.1 FRONTIER CORPORATION SUPPLEMENTAL RETIREMENT SAVINGS PLAN Amendment No. 2 Pursuant to Article Eight, the Plan is amended, effective as soon as administratively practicable following the closing date of the acquisition of Frontier Corporation by Global Crossing Ltd., by deleting the first sentence of the second paragraph of Section 5.1 and substituting the following in its place: All participating Company contributions and the earnings on them that would have been invested in Global Crossing Ltd. Common stock under ERSP shall be invested in Global Crossing Common stock until the fifth anniversary of the date of investment (the "Restricted Stock"). IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this amendment on its behalf this 21st day of September, 1999. FRONTIER CORPORATION By: /s/ Barbara J. LaVerdi ------------------------ Title: Assistant Secretary EX-4.2 3 RESTATED FRONTIER GROUP EMPLOYEE RETIREMENT PLAN EXHIBIT 4.2 [9/1/99] FRONTIER GROUP EMPLOYEES' RETIREMENT SAVINGS PLAN TABLE OF CONTENTS Page INTRODUCTION ............................................... 1 ARTICLE I - Definitions.................................... 2 ARTICLE II - Eligibility.................................... 8 ARTICLE III - Participation and Participant Contributions.... 8 ARTICLE IV - Participating Company Contributions............ 12 ARTICLE V - Investment of Contributions.................... 25 ARTICLE VI - Participant Accounts........................... 27 ARTICLE VII - Retirement or Other Termination of Employment.................................. 29 ARTICLE VIII - Death.......................................... 30 ARTICLE IX - Payment of Benefits............................ 31 ARTICLE X - Withdrawal and Loans During Employment......... 41 ARTICLE XI - Plan Administration............................ 40 ARTICLE XII - Amendment and Termination...................... 44 ARTICLE XIII - Top-Heavy Provisions........................... 45 ARTICLE XIV - General Provisions............................. 49 Appendix A - Participating Companies Appendix B - Plan Features Unique to Participating Companies Appendix C - Additional Payment Options INTRODUCTION This Employees' Retirement Savings Plan was established, effective as of March 1, 1994, by the merger of several defined contribution plans within the Frontier Group of companies. Since March 1, 1994, several other plans have been merged into the Plan and it is anticipated that in the future other Frontier Group defined contribution plans will be merged into this Plan. The Plan is hereby amended, continued and restated effective January 1, 1999 to provide easier administration and to comply with recent legislation, except that provisions specifically setting forth other effective dates shall be effective on such dates. All Participants in this Plan are subject to identical terms and conditions of participation except as set forth in Appendix B, with respect to each Participating Company. The merger of any plan into this Plan shall not reduce any Participant's accrued benefit in effect immediately preceding the merger. This Plan is intended to qualify as a profit sharing plan pursuant to the provisions of Code sections 401(a) and 401(k). -2- ARTICLE I Definitions 1.1 "Affiliated Company" means Frontier Corporation (the "Company") and (a) any other company which is included within a "controlled group of corporations" within which the Company is also included, as determined under Section l563 of the Code without regard to subsections (a)(4) and (e)(3)(C) of said Section l563; or (b) any other trades or businesses (whether or not incorporated) with which the Company is affiliated which, based on principles similar to those defining a "controlled group of corporations" for the purposes of (a) above, are under common control; or (c) any other entities required to be aggregated with the Company pursuant to Code Section 414. 1.2 "Basic Contributions" means a Participant's contributions to the Plan in accordance with Section 3.2 in any whole percentage of Compensation up to a maximum of 3 percent of Compensation. 1.3 "Beneficiary" means the Participant's surviving spouse or, in the event there is no surviving spouse or the surviving spouse elects in writing not to receive any death benefits under the Plan, the person or persons (including a trust) designated by a Participant to receive any death benefit which shall be payable under this Plan. 1.4 "Board" means the Board of Directors of the Company or any committee of the Board of Directors authorized to act on behalf of the Board. Any such Board committee shall be composed of at least three members of the Board of Directors. As used in this Plan the term "Board- appointed committee" means the Committee and any other committee appointed by the Board which need not be comprised of at least three Board members but may include or consist entirely of management personnel who are not members of the Board. 1.5 "Code" means the Internal Revenue Code of 1986, as amended. -3- 1.6 "Committee" means the Employees' Benefit Committee appointed pursuant to Article XI to administer the Plan. 1.7 "Company" means Frontier Corporation, a New York corporation, its predecessor or its successor. 1.8 "Company Profit Sharing Contributions" means any contribution made by a Participating Company in addition to Company Fixed Contributions and Company Matching Contributions, as specified in Section 4.1(c). Profit Sharing contributions may or may not be contingent on contributions made by a Participant. 1.9 "Company Fixed Contributions" means a contribution by a Participating Company as specified in Section 4.1(a). These contributions are not contingent on the level of Participant contributions. 1.10 "Company Matching Contributions" means the contributions of a Participating Company that are contingent upon a Participant's Basic Contributions in an amount specified in Section 4.1(b). 1.11 "Company Stock" means Frontier Corporation common stock. Effective as soon as administratively practicable following the closing date of the acquisition of the Company by Global Crossing Ltd., "Company Stock" means Global Crossing Ltd. common stock. 1.12 "Compensation" means a Participant's total compensation as defined in Code Section 415(c)(3) including salary, bonuses, commissions, premium pay, overtime, Pre-Tax Contributions to this Plan pursuant to Section 3.7 and salary reduction contributions to any cafeteria plan under Code Section 125, but excluding deferred compensation and all annual remuneration in excess of $160,000 (adjusted for cost of living increases as permitted under the Code). For any Participant receiving disability pay (which term does not include disability pension or workers' compensation benefits) from a Participating Company during a payroll period, the term "Compensation" means such disability pay. 1.13 "Effective Date" means March 1, 1994. The effective date of this restatement is January 1, 1999, provided that provisions having other effective dates shall be -4- effective as may be expressly provided by such provisions. 1.14 "Election Period" means the period of time during which a Participant can elect, with the consent of his spouse, to waive the Qualified Joint and Survivor Annuity or the Qualified Pre-Retirement Survivor Annuity or can elect to revoke such a waiver. In the case of a Qualified Joint and Survivor Annuity, the Election Period is the 90 day period preceding the annuity starting date. In the case of a Qualified Pre-Retirement Survivor Annuity, the Election Period begins on the first day of the Plan Year in which a Participant attains age 35 and ends on the date of the Participant's death, provided that if a Participant terminates employment prior to age 35, his Election Period shall begin on his termination date. 1.15 "Employee" means any individual who is employed by a Participating Company. 1.16 "ERISA" means the Employee Retirement Income Security Act of l974, as amended from time to time, and any regulations issued pursuant thereto. 1.17 "Highly Compensated Employee" means, effective January 1, 1997, any Employee who: (a) was a "five percent owner", as defined in Section 416(i)(1) of the Code, during the current or preceding Plan Year; or (b) received Compensation from a Participating Company or an Affiliated Company which, in total, exceeded $80,000 for the preceding Plan Year, and, if the Company so elects, was in the top-paid group for the preceding Plan Year. The $80,000 dollar amount shall be adjusted for cost of living increases as provided under the Code. The determination of whether an Employee is a Highly Compensated Employee will be made in accordance with Code section 414(q) and the rules and regulations promulgated thereunder. 1.18 "Investment Manager" means any individual or corporation selected by the Board or by any Board-appointed committee having the authority to select such person who (i) is registered as an investment adviser -5- under the Investment Advisers Act of 1940; or (ii) is a bank, as defined in that Act; or (iii) is an insurance company qualified to manage, acquire or dispose of plan assets under the laws of more than one state and each individual or corporation acknowledges in writing that he or the corporation, as the case may be, is a fiduciary with respect to the Plan. 1.19 "Leased Employee" means any person who is not otherwise an Employee and who, pursuant to an agreement between a Participating Company and any other person or organization, has performed services for the Participating Company, or for the Participating Company and related persons (determined in accordance with Section 414(n)(6) of the Code), on a basis whereby if such person were an Employee, such person would have become an eligible Employee hereunder either in the initial eligibility computation period or any Plan Year thereafter, and, effective January 1, 1997, such services are performed under the primary direction or control of the Participating Company, provided that a person shall not be treated as a Leased Employee for any Plan Year if, during such Plan Year: (i) such person is covered by a money purchase pension plan described in Section 414(n)(5)(B) of the Code, and (ii) not more than 20% of the Employees who are not Highly Compensated Employees are Leased Employees. Once a person is classified as a Leased Employee, such person shall remain a Leased Employee for every Plan Year for which the person completes at least 1000 Hours of Service. 1.20 "Non-Highly Compensated Employee" means an Employee who is not a Highly Compensated Employee. 1.21 "Normal Retirement Age" means age 65. 1.22 "Participant" means an Employee who meets the eligibility requirements set forth in Section 2.l and Appendix B. 1.23 "Participant Account" means, as of any Valuation Date, the then amount of a Participant's contributions and the Participating Company's contributions allocated on behalf of the Participant adjusted to reflect any investment earnings and losses attributable to such contributions, withdrawals and distributions, at the then market value of the Trust. Where appropriate a -6- Participant Account shall have the following subaccounts: a Restricted Company Contribution Account to record Company Contributions that must be invested in Company Stock, an Unrestricted Company Contribution Account to record Company Contributions which are no longer restricted to investment in Company Stock, a Participant Pre-Tax Contribution Account to record Pre-Tax Contributions, a Participant Post-Tax Contribution Account to record Post-Tax Contributions and a Rollover Account to record rollover contributions. Earnings associated with each type of contribution shall be allocated to the account to which the associated contributions are allocated. 1.24 "Participating Company" means the Company and each Affiliated Company that has adopted this Plan for the benefit of its eligible Employees. Participating Companies are listed in Appendix A. 1.25 "Plan" means this Frontier Group Employees' Retirement Savings Plan as set forth herein and as it may be amended from time to time. 1.26 "Plan Year" means the calendar year. The Plan Year shall be the limitation year as this term is used in ERISA. 1.27 "Post-Tax Contributions" means a Participant's contributions which are non-deductible for income tax purposes at the time they are made. 1.28 "Predecessor Company" means any organization which was acquired by the Company or an Affiliated Company. 1.29 "Pre-Tax Contributions" means a Participant's contributions which are not included in his income for income tax purposes at the time they are made. 1.30 "Qualified Joint and Survivor Annuity" means an annuity for the life of the Participant with a survivor annuity for the life of the Participant's spouse which is 50 percent of the amount which is payable during the joint lives of the Participant and the Participant's spouse and which is purchased from an insurance company with the Participant's account balance. 1.31 "Qualified Pre-Retirement Survivor Annuity" means a life annuity payable to the surviving spouse of a deceased Participant which is purchased from an -7- insurance company with the Participant's account balance. 1.32 "Restricted Stock" means Company Stock that has been allocated to a Participant's Restricted Company Contribution Account and may not be invested in any other investment fund until the investment restrictions have been lifted in accordance with Section 5.2. 1.33 "Supplemental Contributions" means a Participant's contributions to the Plan in excess of his Basic Contributions in accordance with Section 3.2. 1.34 "Trust" or "Trust Fund" means the amounts held in trust in accordance with this Plan and consists of such investment options as from time to time may be designated by a Board-appointed Committee. 1.35 "Trust Agreement" means any agreement entered into between the Company and any Trustee to carry out the purposes of the Plan, which agreement shall constitute a part of this Plan. 1.36 "Trustee" means any bank or trust company selected by the Board or a Board committee to serve as Trustee pursuant to the provisions of the Trust Agreement. 1.37 "Valuation Date" means the last day the Trust may have been valued provided that the Trust shall be valued no less frequently than on the last day of each calendar quarter. -8- ARTICLE II Eligibility 2.1 Eligibility Requirements. An Employee who fits within the eligible class set forth in Appendix B for his Participating Company and who is not excluded pursuant to the following sentence is eligible to become a Participant on the first day of the month on or after the day which is 30 days after the Employee's date of hire with a Participating Company. An Employee is not eligible to participate in this Plan if (1) the Employee is in a unit of employees covered by a collective bargaining agreement in which retirement benefits were the subject of good faith bargaining unless such collective bargaining agreement expressly provides for participation in this Plan; (2) the Employee is a temporary or summer employee; (3) the Employee is a Leased Employee; or (4) the Employee is an independent contractor (or a person who is treated by a Participating Company as an independent contractor or who is otherwise classified as not being an employee of a Participating Company, regardless of his actual status). In the discretion of the Committee, an eligible Employee of a Participating Company that has adopted this Plan who is transferred to an Affiliated Company that has not adopted this Plan may participate in the Plan under such arrangements as the Committee may prescribe. 2.2 Reemployment. If an Employee terminates employment and is subsequently reemployed by a Participating Company, he will be eligible to begin participation in this Plan on the first day of the month following completion of one month of service measured from his reemployment date. ARTICLE III Participation and Participant Contributions 3.1 Participation. An eligible Employee may become a Participant by filing a written application with the Committee, or by telephonic or electronic processing, as the Committee shall determine. The application shall indicate the amount of his initial Basic and Supplemental Contributions and whether he intends to have such Contributions made as Post-Tax Contributions -9- or as Pre-Tax Contributions. Except as the Committee in its discretion may otherwise determine, participation will commence with the first payroll period as is administratively practicable to meet following the date such election is received by the Committee, or its designee. Participation shall thereafter continue until all amounts in the Participant's Account have been distributed even though current contributions may be suspended. 3.2 Amount of Contributions. Contributions may be made by any Participant who has enough Compensation during any payroll period to make a contribution by payroll deduction. Each Participant may contribute, at his option, Basic Contributions in any whole percentage of his Compensation during a payroll period with a minimum contribution of 1 percent of Compensation and a maximum contribution of 3 percent of Compensation. If a Participant is making Basic Contributions at the maximum rate of 3 percent of his Compensation, he may also elect to make Supplemental Contributions of any whole percentage from l to l3 percent of his Compensation during a payroll period. All Participant contributions will be in cash in the form of Employee-authorized payroll deductions on either a post-tax basis or, pursuant to Section 3.7, on a pre-tax basis. Notwithstanding any provision of this Plan to the contrary, effective December 12, 1994, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Code. 3.3 Change in Amount of Contributions. The percentage, or percentages if more than one, of Compensation designated by the Participant as his contribution rate will continue in effect, notwithstanding any change in his Compensation, until he elects to change such percentage. A Participant, by filing a written election form furnished by the Committee or by telephonic or electronic processing, as the Committee shall determine, may change his percentage of contributions as frequently during the Plan Year and pursuant to such rules as the Committee may prescribe. Any such change will become effective on the first payroll period as is administratively practicable to meet after the date such election is received by the Committee, or its designee. If a Participant's total -10- contribution rate is in excess of 3 percent of his Compensation, any such change will first be applied to adjust the amount of his Supplemental Contributions and then, if necessary, to adjust the amount of his Basic Contributions. If a Participant's total contribution rate is less than 3 percent of his Compensation, any such change will first be applied to adjust the amount of his Basic Contributions and then, if necessary, to provide for Supplemental Contributions. 3.4 Suspension of Participant Contributions. A Participant, by filing a written election with the Committee or by telephonic or electronic processing as the Committee shall determine, may elect to suspend either his Basic or his Supplemental Contributions, or both, at any time. Any such suspension will become effective with the first payroll period as is administratively practicable to meet after the date such election is received by the Committee, or its designee. A suspension of all Basic Contributions will automatically suspend all Supplemental Contributions. In order to resume making contributions, the Participant must follow the procedure outlined in Section 3.l as though he were a new Participant. A Participant will not be permitted to make up suspended contributions. Participant contributions will be suspended automatically for any payroll period in which the Participant is not in receipt of Compensation. Such automatic suspension shall be lifted beginning with the next payroll period that the Participant receives Compensation. The suspension of Supplemental Contributions, in the absence of an election to the contrary, will not affect Basic Contributions. 3.5 Remittance of Participant Contributions to the Trustee. Participant contributions will be remitted as soon as administratively practicable to the Trustee. 3.6 Termination of Participant Contributions. A Participant's contributions will terminate effective with the payroll period that ends or includes the date the Participant terminates employment for any reason, including retirement or death. 3.7 Pre-Tax Contributions Option. A Participant shall have the option of having his Basic and Supplemental Contributions to the Plan made on a tax-deferred basis pursuant to the terms of this Section. Basic and -11- Supplemental Pre-Tax Contributions may be made solely pursuant to a salary reduction agreement between an individual Participant and his employer. Under this agreement the Participant agrees to reduce his Compensation by a specified percentage (as outlined in Section 3.2) and the Participating Company agrees to contribute to the Plan the identical amount on behalf of the Participant. The agreement shall be in such form and subject to such rules as the Committee may prescribe. The Committee, in its sole discretion, may limit the number of salary reduction agreements a Participant may make during a Plan Year, except that an agreement may be terminated at any time, in which event the Participant shall specify whether all of his contributions shall cease or continue to be made as Post-Tax Contributions. 3.8 Rollovers to This Plan. Notwithstanding the limitations on contributions set forth in the preceding Sections of this Article III, any active Employee may make rollover contributions (as defined in sections 402(c)(4), 403(a)(4) and 408(d)(3) of the Code) to the extent the Committee in its discretion may permit and in accordance with rules it shall establish. In addition, the Committee in its sole discretion may arrange for a Participant's account in any other tax- qualified plan to be transferred directly to this Plan. No rollover contribution or transfer shall be permitted if it could adversely affect the tax qualification of this Plan. All rollovers and transfers to this Plan shall be credited to a Participant's Rollover Account. 3.9 Coordination with the Company's Supplemental Retirement Savings Plan ("SRSP"). Notwithstanding the other contribution provisions of this Article III, in order to satisfy statutory contribution limits and anti-discrimination tests while permitting Highly Compensated Employees to maximize their contributions to this Plan, the Committee may prescribe certain IRS-required contribution rules that shall apply to all or to a Committee-specified portion of Highly Compensated Employees. Under such rules, the affected Highly Compensated Employees will be required to make their contribution elections to this Plan and to the Supplemental Retirement Savings Plan prior to the beginning of each calendar year. There shall be two such elections and both shall be irrevocable. The first shall be an election of the aggregate -12- contributions that the Highly Compensated Employee wishes to make to both plans in the aggregate (maximum of the maximum percentage of Compensation under this Plan without regard to the $150,000 salary cap, as adjusted for cost of living increases as permitted under the Code, or the dollar maximums under Code Sections 402(g) or 415). During the Plan Year all such contributions shall be made to SRSP and none to this Plan. All Company Matching Contributions related to the Participant's contributions shall also be contributed to SRSP. The second election an affected Highly Compensated Employee shall make prior to the beginning of the Plan Year is whether the maximum amounts that can be contributed to this Plan for the Plan Year will be transferred from SRSP to this Plan or paid out to the employee in cash. If contributions initially made to SRSP will be transferred to this Plan, the amount to be transferred shall be the lesser of the amounts actually contributed to SRSP for the Plan Year or the maximum amount permitted in accordance with all applicable contribution limits and anti-discrimination rules. As soon after the end of the Plan Year as is administratively practicable, but no latter than the January 31, following the close of the Plan Year, the Committee shall determine the maximum contribution that each affected Highly Compensated Employee can contribute to the Plan. By the March 31 following the end of the Plan Year the Committee shall cause this amount to be either transferred to this Plan or paid in cash in accordance with the Participant's second election. If amounts are transferred to this Plan, all related Participating Company matching contributions shall also be transferred to the Plan by the March 31 date. All other contributions and all earnings on all contributions shall remain in SRSP and be subject to rules of that plan. ARTICLE IV Participating Company Contributions 4.1 Company Contributions. Subject to the limitations of Section 4.4, each Participating Company shall contribute to the Plan as follows: -13- (a) Company Fixed Contributions. Each payroll period a Participating Company shall contribute one-half of one percent (0.5%) of the payroll period Compensation for each of its employees who is a Participant in the Plan. (b) Company Matching Contributions. Each payroll period a Participating Company shall contribute 100 percent of the amount contributed by each of its Employees who is a Participant in the Plan up to a maximum of 3 percent of the Participant's Compensation during the payroll period. (c) Company Profit Sharing Contributions. Each Plan Year a Participating Company may make a Profit Sharing contribution in addition to the amounts it contributes under subsections (a) and (b) above. Any such contribution shall be made in such amount, if any, under such conditions as may be specified in the sole discretion of the Committee. Profit Sharing contributions shall be allocated to Participant Accounts pro rata in the proportion that each Participant's Compensation for the Plan Year bears to the total Participant Compensation of all Participants for the Plan Year. All Participating Company contributions will be made in cash or in Company Common Stock, and will be invested in accordance with Article V. 4.2 Remittance of Company Contributions. Company Fixed and Matching Contributions shall be remitted to the Trustee on a regular and periodic basis as soon as administratively practicable following the payroll period to which they relate but in no event shall they be made less frequently than quarterly. Company Profit Sharing Contributions for a Plan Year shall be remitted to the Trustee by a Participating Company no later than the date the Participating Company's tax return is due for the year within which ends the Plan Year to which the contributions relate. 4.3 Effect of Suspension of Participant Contributions on Company Contributions. During any period in which a Participant's Basic Contributions are suspended, Company Matching Contributions on his behalf will also be suspended. Company Fixed Contributions and Company Profit Sharing Contributions shall continue to be made -14- regardless of any suspension in Participant contributions. 4.4 Maximum Contributions. Notwithstanding the contribution levels specified in Article III and the preceding Sections of this Article IV, no contributions will be permitted in excess of the limits set forth below: (a) Code Section 402(g) Limits. A Participant's Pre-Tax Contributions to this Plan and any tax-deferred contributions under any other 401(k) plan in which he may participate shall not exceed $10,000 (adjusted for cost of living increases for years after 1999 as provided under the Code) in any taxable year of the Participant. To meet this limit, no contribution to this Plan in excess of $10,000 (as adjusted) shall be accepted on behalf of any Participant during a calendar year. If a Participant participates in more than one plan, he shall notify the Committee of any excess contribution in a calendar year by March 1 of the following year. The Committee shall then cause the portion of such excess allocated to this Plan to be returned to the Participant by April 15 following the calendar year to which the excess contribution relates. (b) Code Section 401(k) Limits. The Actual Deferral Percentage, or ADP, for Participants who are Highly Compensated Employees for each Plan Year and the ADP for Participants who are Non-highly Compensated Employees for the same Plan Year must satisfy one of the following tests: (1) The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-highly Compensated Employees for the same Plan Year multiplied by 1.25; or (2) The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-highly Compensated Employees for the same Plan Year multiplied by 2.0, provided that the ADP -15- for Participants who are Highly Compensated Employees does not exceed the ADP for Participants who are Non-highly Compensated Employees by more than two percentage points. In applying these tests, the actual deferral percentage for the Highly Compensated Employees for a Plan Year shall be the average of the percentages, calculated separately, for each eligible Employee in the group, obtained by dividing the sum of the Employee's tax-deferred contributions pursuant to Section 3.2 by the Employee's Compensation for the Plan Year. The actual deferral percentage for the Non-Highly Compensated Employees for a Plan Year shall be calculated in the same manner as for the Highly Compensated Employees, except that tax-deferred contributions and Compensation used in the calculating the percentages shall be those of the preceding Plan Year. If an Employee was not eligible to participate for the entire Plan Year, the Compensation taken into account for purposes of these tests shall be his Compensation for the period he was eligible to participate. The ADP for any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have elective deferrals (and qualified non-elective contributions, if treated as elective deferrals for purposes of the ADP test) allocated to his accounts under two or more arrangements described in Section 401(k) of the Code, that are maintained by the Company, shall be determined as if such elective deferrals (and, if applicable, such qualified non-elective contributions) were made under a single arrangement. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different Plan Years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. For purposes of the ADP test, compensation means compensation as defined in Section 414(s) of the Code. The period during which compensation is determined for a Plan Year shall be either the Plan Year or the calendar year ending with or within the Plan Year as determined by the -16- Committee. The period selected shall be applied uniformly to all eligible employees. In the event that this Plan satisfies the requirements of sections 401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such sections of the Code only if aggregated with this Plan, then this Section shall be applied by determining the ADP of employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(k) of the Code only if they have the same Plan Year. For purposes of determining the ADP test, elective deferrals and qualified non-elective contributions must be made before the last day of the twelve-month period immediately following the Plan Year to which the contributions relate. The Company shall maintain records sufficient to demonstrate satisfaction of the ADP test and the amount of qualified non- elective contributions used in such test. The determination and treatment of the ADP amounts of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. (c) Code Section 401(m) Limits. The Average Contribution Percentage, or ACP, for Participants who are Highly Compensated Employees for each Plan Year and the ACP for Participants who are Non-highly Compensated Employees for the same Plan Year must satisfy one of the following tests: (1) The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-highly Compensated Employees for the same Plan Year multiplied by 1.25; or (2) The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are -17- Non-highly Compensated Employees for the same Plan Year multiplied by two, provided that the ACP for Participants who are Highly Compensated Employees does not exceed the ACP for Participants who are Non-highly Compensated Employees by more than two percentage points. In applying these tests, the actual contribution percentage for the Highly Compensated Employees for a Plan Year shall be the average of the percentages, calculated separately, for each eligible Employee in the group, obtained by dividing the sum of the Employee's Post-Tax Contributions if applicable under Section 3.2 and the Employer's matching contributions under Section 4.1 by the Employee's Compensation for the Plan Year. The actual deferral percentage for the Non-Highly Compensated Employees for a Plan Year shall be calculated in the same manner as for the Highly Compensated Employees, except that Post-Tax Contributions, matching contributions and Compensation used in the calculating the percentages shall be those of the preceding Plan Year. If an Employee was not eligible to participate for the entire Plan Year, the Compensation taken into account for purposes of these tests shall be his Compensation for the period he was eligible to participate. If one or more Highly Compensated Employees participate in both a cash or deferred arrangement as defined in Section 401(k) of the Code and a plan subject to the ACP test maintained by the Company and the sum of the ADP and ACP of those Highly Compensated Employees subject to either or both tests exceeds the aggregate limit, then the ADP of those Highly Compensated Employees who also participate in the plan subject to the ACP test will be reduced (beginning with the Highly Compensated Employee whose ADP is the highest) so that the limit is not exceeded. The amount by which each Highly Compensated Employee's Actual Deferral Percentage is reduced shall be treated as an excess contribution. If reduction of the ADPs of Highly Compensated Employees fails to result in the Plan's satisfying the aggregate limit, then the ACP of those Highly Compensated Employees who -18- also participate in the cash or deferred arrangement will next be reduced (beginning with the Highly Compensated Employee whose ACP is the highest) so that the limit is not exceeded. The amount by which each Highly Compensated Employee's contribution percentage amounts is reduced shall be treated as an excess aggregate contribution. The ADP and ACP of the Highly Compensated Employees are determined after any corrections required to meet the ADP and ACP tests. Multiple use does not occur if both the ADP and ACP of the Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP of the Non-highly Compensated Employees. For purposes of this Section, the contribution percentage for any Participant who is a Highly Compensated Employee and who is eligible to have contribution percentage amounts allocated to his account under two or more plans described in Section 401(a) of the Code, or arrangements described in Section 401(k) of the Code that are maintained by the Employer, shall be determined as if the total of such contribution percentage amounts was made under each plan. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different Plan Years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. In the event that this Plan satisfies the requirements of sections 401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such sections of the Code only if aggregated with this Plan, then this Section shall be applied by determining the contribution percentages of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(m) of the Code only if they have the same Plan Year. For purposes of determining the contribution percentage test, Company Matching Contributions and qualified non-elective contributions will be considered made for a Plan Year if made no later -19- than the end of the twelve-month period beginning on the day after the close of the Plan Year. The Company shall maintain records sufficient to demonstrate satisfaction of the ACP test and the amount of qualified non- elective contributions used in such test. The Committee shall have the responsibility for monitoring compliance with this test and shall have the power to take any steps it deems appropriate to ensure compliance, including requiring Highly Compensated Employees to coordinate contributions with SRSP as outlined in Section 3.9, limiting the amount of salary reduction permitted by the Highly Compensated Employees or requiring that the contributions for the Highly Compensated Employees be delayed or held in escrow before being paid over to the Trustee until such time as the Committee determines that contributions can be made on behalf of the Highly Compensated Employees without violating the requirements of Code Section 401(k). Within two and one-half months following the end of a Plan Year the Committee shall distribute such contributions (and earnings attributable thereto) as may be in excess of the amounts required to satisfy the special nondiscrimination test under this Section, or shall make such additional contributions under Sections 3.4 and 3.5 as are necessary to satisfy the test. The determination and treatment of the contribution percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. (d) Distribution of Excess Contributions. Notwithstanding any other provision of this Plan, excess contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each Plan Year to Participants to whose accounts such excess contributions were allocated for the preceding Plan Year. If such excess amounts are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a ten percent excise tax will be imposed on the -20- Company with respect to such amounts. Such distributions shall be made to Highly Compensated Employees on the basis of the respective dollar amounts of elective deferrals made, with those making the highest deferrals taking distributions first. Excess contributions shall be adjusted for any income or loss up to the date of distribution. The income or loss allocable to excess contributions is the sum of: (1) income or loss allocable to the Participant's elective deferral account (and, if applicable, the qualified non-elective contribution account) for the Plan Year multiplied by a fraction, the numerator of which is such Participant's excess contributions for the Year and the denominator of which is the Participant's account balance attributable to elective deferrals (and qualified non-elective contributions, if any of such contributions are included in the ADP test) without regard to any income or loss occurring during such Plan Year; and (2) ten percent of the amount determined under (1) multiplied by the number of whole calendar months between the end of the Plan Year and the date of distribution, counting the month of distribution if distribution occurs after the 15th of such month. Excess contributions shall be distributed from the Participant's elective deferral account (if applicable) in proportion to the Participant's elective deferrals (to the extent used in the ADP test) for the Plan Year. excess contributions shall be distributed from the Participant's qualified non-elective contribution account only to the extent that such excess contributions exceed the balance in the Participant's elective deferral account. (e) Distribution of Excess Aggregate Contributions. Notwithstanding any other provision of this Plan, excess aggregate contributions, plus any income and minus any loss allocable thereto, shall be forfeited, if forfeitable, or if not forfeitable, distributed, no later than the last day of each Plan Year to Participants to whose accounts such excess aggregate Contributions were allocated for -21- the preceding Plan Year. If such excess aggregate contributions are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a ten percent excise tax will be imposed on the Company with respect to those amounts. Excess aggregate contributions shall be treated as annual additions under the Plan. Excess aggregate contributions shall be adjusted for any income or loss up to the date of distribution. The income or loss allocable to excess aggregate contributions is the sum of: (1) income or loss allocable to the Participant's matching contribution account (if any, and if all amounts therein are not used in the ADP test) and, if applicable, qualified non-elective contribution account and elective deferral account for the Plan Year multiplied by a fraction, the numerator of which is such Participant's excess aggregate contributions for the Year and the denominator of which is the Participant's account balance attributable to contribution percentage amounts without regard to any income or loss occurring during such Plan Year; and (2) ten percent of the amount determined under (1) multiplied by the number of whole calendar months between the end of the Plan Year and the date of distribution, counting the month of distribution if distribution occurs after the 15th of such month. Forfeitures of excess aggregate contributions shall be reallocated to the accounts of Non-highly Compensated Employees. Excess aggregate contributions shall be forfeited, if forfeitable or distributed on a pro-rata basis from the Participant's matching contribution account (and, if applicable, the Participant's qualified non-elective contribution account or elective deferral account, or both). (f) Code Section 415 Limits. Pursuant to Code Section 415, the total of the Employee and Participating Company contributions on behalf of a Participant for each Plan Year (his "annual additions") shall not exceed the lesser of $30,000 (or such larger amounts as reflect cost of living -22- increases pursuant to Section 415 of the Code) or 25 percent of the Participant's total compensation for such Plan Year. For purposes of this Section, the term "annual additions" means the total each Plan Year of a Participating Company's contributions and the Employee's contributions. Rollover contributions and loan repayments are not annual additions for this purpose. For purposes of applying these limitations, the term "compensation" shall have the meaning ascribed to it in regulations under Code Section 415. In general, these regulations define compensation to mean an Employee's W-2 compensation from a Participating Company but excluding income derived from the exercise of stock options, from the disqualification of an incentive stock option, from restricted stock or from income imputed from the payment of life insurance premiums, and shall include, effective January 1, 1998, any elective deferral (as defined in Code Section 402(g)(3)), and any amount which is contributed or deferred by the Employer at the election of the Participant and which is not includable in the gross income of the Participant by reason of Code Sections 125 or 457. In addition to the amounts calculated under this Plan, annual additions shall include such amounts, similarly calculated, that are contributed with respect to the Participant to any other defined contribution plan maintained by a Participating Company or by any Affiliated Company and Participating Company contributions to an individual medical account as described in Code sections 415(1) and 419A(d)(2). In determining whether a corporation is an Affiliated Company for this purpose only, the percentage control test set forth in Section 1563(a) of the Code shall be a 50 percent test in place of the 80 percent test each place the 80 percent test appears in said Code section. If Plan contributions exceed the limits of this Section, first the Participant's contributions shall be reduced, as necessary, to eliminate the excess, in the following order of priority: Post-Tax Supplemental Contributions; Post-Tax Basic Contributions; Pre-Tax Supplemental Contributions; -23- and Pre-Tax Basic Contributions. Post-Tax and Pre-Tax Contributions by a Participant which cause the excess, plus the earnings attributable to such contributions may be returned to the Participant in the event the excess is caused by a reasonable error in estimating a Participant's annual compensation or any other cause which is acceptable under Treasury Regulation Section 1.415-6(b)(6). If an excess still exists, the Participating Company's contribution shall be reduced as necessary. The provisions of this paragraph are effective for Plan Years beginning prior to January 1, 2000. For Plan Years beginning on and after January 1, 2000, these provisions shall not longer be applicable. If a person participates at any time in both a defined benefit plan and a defined contribution plan maintained by a Participating Company or an Affiliated Company, the sum of the defined benefit plan fraction and the defined contribution plan fraction for any Plan Year may not exceed l.0. For purposes of this Section, the defined contribution plan fraction for any Plan Year is a fraction the numerator of which is the person's annual additions in such Plan Year and all prior years of employment, as determined above, and the denominator of which is the lesser of the following amounts for such Year and for each prior Year: (a) l.25 times the dollar limitation of Code Section 4l5(c)(l)(A) for the pertinent Year or (b) l.4 times the amount that could be taken into account under the limitation of Code Section 4l5(c)(l)(B) for the Participant. The defined benefit plan fraction for any Plan Year is a fraction the numerator of which is the Participant's projected annual benefit under all plans maintained by a Participating Company or an Affiliated Company and the denominator of which is the lesser of the following amounts for such Year: (a) l.25 times the dollar limitation of Code Section 4l5(b)(l)(A) for such Year or (b) l.4 times the amount that could be taken into account under the percentage limitation of Code Section 4l5(b)(l)(B) for the Participant for such Year. -24- The Committee shall monitor the contributions and benefits with respect to each Participant under all plans maintained by a Participating Company and any Affiliated Company. The Committee, in its sole discretion, shall reduce any such contributions or benefits to prevent the combined fractions from exceeding 1.0. -25- ARTICLE V Investment of Contributions 5.1 Investment Funds. The Trustee shall establish a Company Stock fund and such other investment funds as shall be designated from time to time by any Board-appointed committee authorized to select investment funds. 5.2 Investment of Company Contributions. All Participating Company contributions and the earnings thereon shall be invested initially in Company Stock. All amounts required to be invested initially in Company Stock shall remain in the Company Stock fund until the fifth calendar year following the year of investment or, if earlier, the Participant's termination of employment from the Frontier Group (the "Restricted Period"). At the earlier of (a) termination of employment or (b) the expiration of the five year period, the Restricted Stock, including the reinvested earnings on the initial contributions, in a Participant's Account shall lose its investment restriction and may, as of the next following window period, be invested by the Participant, pursuant to Section 5.5 and any rules established thereunder by the Committee, in any other fund option or left in the Company Stock fund. To implement the reinvestment of assets no longer subject to restriction, the Committee shall in its sole discretion establish one or more window periods during a Plan Year when Company Stock no longer subject to restriction may be liquidated and the proceeds reinvested in other funds. 5.3 Investment of Participant Contributions. Each Participant will direct, at the time he elects to become a Participant under the Plan, that his Participant contributions be invested in one or more available fund options in accordance with any rules the Committee in its discretion may establish. In the event no election is made, all contributions will be invested in a fixed income fund option designated by the Committee for this purpose. 5.4 Changing the Current Investment Election. A Participant's investment election for his Participant contributions will continue in effect until changed by the Participant. A Participant may change his current investment election as to his future Participant -26- contributions effective no later than the first payroll period as is administratively practicable after the date such election to change is received by the Committee or its designee. Such changes may be made only as frequently as the Committee in its sole discretion may permit and in accordance with any rules the Committee in its discretion may establish. 5.5 Changing the Investment of Accumulated Contributions. A Participant may change his investment election as to some or all of his entire Participant Account balance except for the Restricted Stock. Such changes may be elected only as frequently as the Committee in its sole discretion may permit and in accordance with any rules the Committee in its discretion may establish. 5.6 Voting Rights with Respect to Company Stock. Each Participant shall have the right to vote all shares of Company Stock held in the Participant's Account. Each Participant shall also have the right to direct the Trustee whether to tender such shares of Company Stock in the event an offer is made by any person other than the Company to purchase such shares. The Committee shall make any such arrangements with the Trustee as may be appropriate to pass such voting or tender offer rights through to a Participant. In the event a Participant fails to vote his shares or fails to indicate his preference with respect to a tender offer, the Trustee shall vote the Participant's shares or tender his shares in the same proportions as those Plan Participants who did respond, cast their votes or tendered their shares. -27- ARTICLE VI Participant Accounts 6.1 Individual Accounts. The Committee shall create and maintain (or direct to be created and maintained) individual accounts as records for disclosing the interest in the Trust of each Participant, former Participant and Beneficiary. Such accounts shall record credits and charges in the manner herein described. When appropriate, a Participant shall have five separate accounts, a Restricted Company Contribution Account, an Unrestricted Company Contribution Account, a Participant Pre-Tax Contribution Account, a Participant Post-Tax Contribution Account and a Rollover Account. The maintenance of individual accounts is only for accounting purposes, and a segregation of the assets of the Trust to each account shall not be required. 6.2 Account Adjustments. Participant Accounts shall be adjusted as follows: (a) Earnings: The earnings (including losses as well as gains) of the Trust shall be allocated to the Participant Accounts of Participants who have balances in their Accounts on each Valuation Date. The allocation shall be made in the proportion that the amounts in each Participant Account bear to the total amounts in all of the Participant Accounts similarly invested. In determining the value of Plan assets, each valuation shall be based on the fair market value of assets in the Trust on the Valuation Date. Notwithstanding the foregoing paragraph or any other provision of the Plan, to the extent that Participants' Accounts are invested in mutual funds or other assets for which daily pricing is available ("Daily Pricing Media"), all amounts contributed to the Trust Fund will be invested at the time of their actual receipt by the Daily Pricing Media, and the balance of each Account shall reflect the results of such daily pricing from the time of actual receipt until the time of distribution. Investment elections and changes pursuant to Article V shall be effective upon receipt by the Daily Pricing Media. References elsewhere in the Plan to the investment of -28- contributions "as of" a date other than that described in this Section 6.2(a) shall apply only to the extent, if any, that assets of the Trust Fund are not invested in Daily Pricing Media. (b) Participating Company contributions: If Daily Pricing Media is in effect as described in Section 6.2(a) Company Fixed, Matching and Profit Sharing Contributions will be invested at the time of actual receipt by the Daily Pricing Media. If Daily Pricing Media is not in effect, as of the end of each month the Company Fixed, Matching and Profit Sharing Contributions on behalf of a Participant during the month shall be allocated to the Participant's Restricted Company Contribution Account. (c) Participant contributions: If Daily Pricing Media is in effect as described in Section 6.2(a), a Participant's contributions will be invested at the time of actual receipt by the Daily Pricing Media. If Daily Pricing Media is not in effect, a Participant's contributions made during a month shall be allocated to his Pre-Tax or Post-Tax Contribution Account, as the case may be, as of the end of each month. (d) Distributions and withdrawals: Distributions and withdrawals from a Participant's Account shall be charged to the Account as of the date paid. 6.3 Statements to Participants. On a periodic basis, but no less frequently than once during each Plan Year, the Committee (or its designee) will provide each Participant with a statement showing his interests in the Plan's various investment funds. The statement may show a Participant's interest in the Company Stock fund in terms of the number of shares of Company Stock, their dollar value, or both. As an alternative to showing the dollar or stock value of each Account, the Committee in its discretion may express each Participant's interest in terms of units. 6.4 Transfer of Accounts Among Related Company Plans. If a Participant ceases to be within an eligible class of Participants under this Plan but becomes covered by a substantially similar 401(k) plan sponsored by Frontier Corporation or any corporation or business entity in -29- which it has a 50 percent or more ownership or profits interest, the Committee may in its sole discretion transfer the Participant's accounts to the other 401(k) plan without the Participant's consent. Similarly, if a Participant in this Plan previously participated in another such 401(k) plan, the Participant's accounts in the other 401(k) plan may be transferred to this Plan without the Participant's consent. In any event, the value of the Participant's accounts subject to the any such transfer shall be the same immediately following the transfer as they were immediately prior to the transfer and any other benefits, rights and features of the transferor plan which are "protected benefits" within the meaning of Code section 411(d)(6) shall continue to apply to the transferred funds within the transferee plan. The timing and the mechanics of any transfer shall be within the sole discretion of the Committee. ARTICLE VII Retirement or Other Termination of Employment All Participant Accounts under this Plan, whether derived from Participant or Participating Company contributions, are 100 percent vested at all times. If a Participant's employment with a Participating Company is terminated for any reason, he shall be entitled to receive the entire balance of such accounts in accordance with the provisions of Article IX. Notwithstanding the foregoing, any benefit that is currently payable from the Plan to a recipient who cannot be located despite reasonable efforts to do so, shall be forfeited. All forfeitures with respect to lost Participants and Beneficiaries shall be used to reduce a Participating Company's current or next succeeding contributions to the Plan. In the event the lost Participant or Beneficiary subsequently makes a claim for the forfeited benefits, the Participating Company shall restore to the Plan the forfeited benefit plus earnings based on returns from the Plan's fixed income investment option from the date of forfeiture to the date the forfeited benefit is restored. -30- ARTICLE VIII Death 8.1 Death While Actively Employed. If a Participant dies while actively employed, the Participant's Beneficiary will be entitled to receive l00 percent of the value of his Participant Account. This amount shall consist of the Account's value as of the distribution date. 8.2 Death After Retirement. If a Participant dies after retirement, any benefit payable to the Participant's Beneficiary will depend upon the method that has been employed to distribute the value of his Participant Account in accordance with Article IX. 8.3 Beneficiary. If a Participant is married, his Beneficiary shall be his spouse who shall be entitled to receive his remaining account balance, upon the Participant's death. Upon the written election of the Participant, with his spouse's written consent, a Participant may designate another Beneficiary. This election and spousal consent must either be notarized or be witnessed by a Plan representative and returned to the Committee. If such election has been made or if the Participant is not married, the Participant will designate the Beneficiary (along with alternate Beneficiaries) to whom, in the event of his death, any benefit is payable hereunder. Each Participant has the right, subject to the spousal consent requirement noted above, to change any designation of Beneficiary. A designation or change of Beneficiary must be in writing on forms supplied by the Committee and any change of Beneficiary will not become effective until such change of Beneficiary is filed with the Committee, whether or not the Participant is alive at the time of such filing; provided, however, that any such change will not be effective with respect to any payments made by the Trustee in accordance with the Participant's last designation and prior to the time such change was received by the Committee. The interest of any Beneficiary who dies before the Participant will terminate unless otherwise provided. If a Beneficiary is not validly designated, or is not living or cannot be found at the date of payment, any amount payable pursuant to this Plan will be paid to the spouse of the Participant if living at the time of payment, otherwise in equal shares to such children of the Participant as may be living at the time of payment; provided, -31- however, that if there is no surviving spouse or child at the time of payment, such payment will be made to the estate of the Participant. ARTICLE IX Payment of Benefits 9.1 Form of Payment. Except as may be restricted by Sections 9.2 and 9.3, any Participant or, if the choice is his, any Beneficiary who is entitled to receive benefits under Articles VII or VIII may elect to receive the amount in the Participant Account in accordance with one of the following elections, all of which shall be actuarial equivalents: OPTION A: A lump sum. OPTION B: Periodic payments of substantially equal amounts for a specified number of years not in excess of twenty. Such periodic payments shall be made at least annually. In the event periodic payments are elected, the Participant shall direct how the remaining balance of his account is to be invested. OPTION C: Any option set forth in Appendix C as such Appendix may be revised from time to time to add options available in plans that are subsequently merged into this Plan. 9.2 Option C Requirements for Married Participants. If a married Participant elects an annuity under Option C, unless he makes a written election, as outlined below, to the contrary his form of benefit shall be a Qualified Joint and Survivor Annuity. If benefits become payable on account of the death of a married Participant to whom an annuity option is available under Option C, the normal form of benefit shall be a Qualified Pre-Retirement Survivor Annuity. These benefits shall become automatically payable unless the Participant or his spouse, as the case may be, makes a written election within the Election Period to receive one of the alternate forms of benefits specified in Section 9.1 or Appendix C. An election by the Participant must be consented to by his spouse in writing. The spouse's consent shall acknowledge the -32- effect of the election and shall be either notarized or witnessed by a Plan representative. Failure to obtain the spouse's consent or the revocation of a previously designated optional method of payment shall result in payment of benefits in the form of a Qualified Joint and Survivor Annuity or a Qualified Pre-Retirement Survivor Annuity, as the case may be, unless another election is made. To assist the Participant and his spouse in making any election with respect to waiving the Qualified Joint and Survivor Annuity, the Committee shall provide the Participant, not less than 30 nor more than 90 days before the annuity starting date a retirement application form describing the normal and optional forms of benefit payments, including their relative financial effects in terms of dollars per annuity payment on the Participant and his spouse. This form shall provide a place for the Participant to indicate his annuity starting date and the form of benefit he desires. A Participant may elect (with the consent of his or her spouse where spousal consent is required) to waive the requirement that a written explanation of certain payment options be provided at least 30 days before the annuity starting date (and the 30 day applicable election period for making certain elections) if the actual distribution commences more than seven days after the written explanation is provided. In the case of a Qualified Pre-Retirement Survivor Annuity, a substantially similar notice shall be provided to the Participant during the period beginning on the first day of the Plan Year in which the Participant attains age 32 and ending on the last day of the Plan Year preceding the Plan Year in which the Participant attains age 35. 9.3 Payments from Company Stock Fund. If a recipient elects a lump sum payment under Option A of Section 9.l or installment payments under Option B of Section 9.l, payment from the Participant's Company Stock fund account may be made either in cash or in Company Stock. If a person elects, or pursuant to Section 9.2 is required, to receive any annuity option under Section 9.2 or Option C, the amounts in his Company Stock fund shall be liquidated and combined with his -33- amounts in all other investment funds to purchase an annuity contract pursuant to which only cash benefits will be paid. 9.4 Time of Payment. A Participant or Beneficiary who becomes entitled to receive a benefit at any time when the Participant Account is $5,000 or less will be cashed out in a lump sum for the full amount of the account balance as soon as administratively practicable. If the account balance is in excess of $5,000 it shall be paid prior to Normal Retirement Age only with the written consent of the Participant and, if married, with the consent of the Participant's spouse in a writing which acknowledges the effect of such consent and which is witnessed by a Plan representative or is notarized. In the case of death, the written consent of the Participant's Beneficiary shall be required for amounts in excess of $5,000. Benefit payments shall normally begin not later than the April l following the calendar year during which the event giving rise to the eligibility for payment shall have occurred. In no event shall benefits begin later than sixty days after the close of the Plan Year in which the latest of the following occurs: (1) the Participant's attainment of age 65; (2) the 10th anniversary of the year in which the Participant commenced participation in this Plan; (3) the termination of the Participant's service with a Participating Company; or (4) the date specified in writing to the Committee by the Participant (but not later than the year in which he attains age 70 1/2). Distributions shall commence no later than the April 1 of the calendar year following the later of the calendar year in which the Participant attains age seventy and one-half (70-1/2) or the calendar year in which the Participant terminates employment with the Company. Notwithstanding the foregoing, a 5 percent owner of the Company shall commence receipt of benefits no later than the April 1 of the calendar year following the year he reaches age 70-1/2 even if he remains in the active employ of the Company. Notwithstanding any direction by the Participant to the contrary, all payments must be payable pursuant to a schedule whereby the entire amount in the Participant's Account is paid over a period that does not extend -34- beyond the life of the Participant or over the joint lives of the Participant and any individual he has designated as his Beneficiary (or over the joint life expectancies of the Participant and his designated individual Beneficiary). In addition, unless the benefit is payable as a Qualified Joint and Survivor Annuity, the payment method selected must provide that more than 50 percent of the present value of the payments projected to be paid to the Participant and his Beneficiary will be paid to the Participant during his life expectancy. In the event of the death of a Participant, former Participant or Beneficiary while benefits are being paid under a schedule which meets the requirements of the preceding paragraph, payments shall continue pursuant to a schedule which is at least as rapid as the period selected. In the event of the death of a Participant or former Participant before benefit payments have commenced, any death benefit shall be distributed within five years of death unless the following conditions are met: (a) payments are made to an individual Beneficiary designated by the Participant; (b) payments are made for the life of such individual Beneficiary or over a period not extending beyond his life expectancy; and (c) payments commence within one year of death. If the designated Beneficiary is the Participant's spouse, payments will be paid within a reasonable period of time after the Participant's death, but may be delayed until the date the Participant would have attained age 70 1/2, if the Beneficiary so elects. If the spouse dies before payments begin, the rules of this paragraph shall be applied as if the spouse were the Participant. Notwithstanding the provisions of this Section, the distribution requirements of Code Section 401(a)(9) and the regulations thereunder are hereby incorporated by this reference and shall supersede any conflicting Plan provisions. 9.5 Death of Participant Prior to Receiving Full Distribution. Except as provided in Section 8.2, if a Participant dies after having terminated employment and -35- prior to receiving a distribution of his Participant Account, then the payments that would otherwise have been made to the Participant will be made to his Beneficiary. 9.6 QDROs. Benefits shall be payable under this Plan to an alternate payee pursuant to the terms of any qualified domestic relations order. The Committee has the responsibility for determining if a domestic relations order is qualified and whether its payment terms are consistent with the terms of the Plan. If appropriate, the amounts subject to a QDRO may be segregated from the Participant's Account and placed in a separate account for the benefit of the alternate payee who shall thereupon be treated for Plan purposes as a Participant. Any amounts payable to an alternate payee may, at the alternate payee's request, be paid from the Plan immediately pursuant to the terms of the QDRO and this Plan. 9.7 Direct Rollovers from this Plan. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Participant's election under this Section, a Participant may elect, at the time and in the manner prescribed by the Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the Participant in a direct rollover. An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the Participant except that an eligible rollover distribution does not include 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 Participant or the joint lives (or joint life expectancies) of the Participant and the Participant's designated Beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; 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 Company securities); and any withdrawal on account of hardship described in Code section 401(k)(2)(B)(i)(IV). An eligible retirement plan is an individual retirement account described in Section 408(a) of the Code, an -36- individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code, that accepts the Participant's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. For these purposes, a Participant includes an Employee or former Employee who has an account balance in the Plan. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are Participants with respect the interest of the spouse or former spouse. A direct rollover is a payment by the Plan to the eligible retirement plan specified by the Participant. ARTICLE X Withdrawals and Loans During Employment 10.1 Age 59 1/2 Withdrawals. A Participant who has reached age 59 1/2 but who has not yet terminated employment may withdraw all or a portion of his accumulated account balance under the Plan subject to the limitations specified in Section 10.4. 10.2 Participant Post-Tax Contributions. A Participant may, by filing a request with the Committee, signed by the Participant and the Participant's spouse, elect to withdraw amounts in his Participant Post-Tax Contribution Account as follows: (a) Contributions. A withdrawal of up to l00 percent of Participant Post-Tax Contributions or, if less, l00 percent of the then value of such contributions may be made from the Plan. (b) Earnings. A withdrawal of up to l00 percent of the earnings on Post-Tax Contributions may be made by a Participant from the Plan. -37- 10.3 Participant Pre-Tax Contributions. No earnings in a Participant's Pre- Tax Contribution Account may be withdrawn prior to age 59 1/2. A Participant may withdraw his Pre-Tax Contributions from his Participant Pre-Tax Contribution Account prior to age 59 1/2 only if the withdrawal is made on account of an immediate and heavy financial need of the Participant that cannot be satisfied from other resources available to the Participant. For purposes of this Section an immediate and heavy financial need shall mean (1) expenses incurred for medical care or necessary to obtain medical care for a Participant, a Participant's spouse or a Participant's dependent; (2) the purchase of a Participant's principal residence; (3) tuition and related educational fees for post-secondary education but only for the next 12 months for a Participant, a Participant's spouse or a Participant's dependent, or remedial school tuition; (4) prevention of eviction or mortgage foreclosure; (5) expenses arising from the death of a spouse or dependent; (6) financial loss due to a sudden catastrophe; (7) extraordinary legal expenses; (8) adoption expenses; or (9) any other need recognized by the IRS in documents of general applicability. A Participant will be deemed to lack other resources if all of the following conditions are satisfied: (1) the Participant must have obtained all distributions (except hardship) and all nontaxable loans available from all plans of any Participating Company; (2) the Participant may not make any contributions to any plan of any Participating Company for at least 12 months following the hardship withdrawal and (3) the dollar limit on pre-tax contributions ($10,000 as indexed for inflation after 1999) for the calendar year following the hardship shall be reduced by the amount of the hardship withdrawal. If the foregoing conditions are not satisfied, the Committee may reasonably rely on statements and representations made by the Participant with respect to his lack of other financial resources. The amount of the withdrawal cannot exceed the amount required to relieve the financial need (including any amounts necessary to pay federal, state or local income taxes or penalties reasonably anticipated to result from the distribution). 10.4 Limitations on In-Service Withdrawals. -38- (a) No more than two in-service withdrawals are permitted in any one Plan Year. (b) No withdrawal will be permitted under this Article unless the amount to be withdrawn is at least $500 or l00% of the aggregate value of the Participant's relevant account from which withdrawals are being requested if such value is less than $500. (c) Unless otherwise specified by the Participant, any withdrawal of Participant contributions from his Participant Post-Tax Contribution Account will be satisfied first by a withdrawal of his pre-1987 contributions, if any, and then by a withdrawal of his post-1986 contributions and/or earnings on contributions. (d) Any withdrawal from a Participant's Post-Tax Contribution Account will result in an automatic suspension of the Participant's right to make future Plan contributions for a period of six months from the date of the withdrawal. During the period of suspension, Company Matching Contributions will also be suspended. Finally, after the Participant resumes making contributions to the Plan, no make-up contributions will be permitted for the period of the suspension. 10.5 Fund to be Charged with Withdrawal. A Participant may specify the investment fund or combination of funds to which a withdrawal is to be charged. If the Participant fails to make any designation, a distribution will be made out of the Participant's interest in each of the funds in proportion to the Participant's share in these funds. 10.6 Loans to Participants. The Trustee shall, if the Committee directs, make a loan to a Participant from any or all of the Participant's accounts subject to such rules as the Committee may prescribe and subject to the following conditions: (a) An application for a loan by a Participant shall be made in writing to the Committee, or through telephonic or electronic processing, as the Committee may determine; -39- (b) Loans will be granted only to active Participants; (c) A loan must be for a minimum of $500, only two loans (only one for the purchase of a principal residence) may be outstanding at any one time, and no loan refinancings will be permitted; (d) No loan shall be made to the extent that such loan when added to all other loans to the Participant would exceed the lesser of (1) 50 percent of the amounts in all of the Participant's accounts under the Plan or (2) $50,000 reduced by the excess, if any, of the highest outstanding balance of loans during the one year period ending on the day before the loan is made over the outstanding balance of loans to the Participant on the date the loan is made. In determining whether the foregoing loan limits are satisfied all loans from all plans of a Participating Company and of any Affiliated Company shall be aggregated. (e) The period of repayment for any loan shall be arrived at by mutual agreement between the Committee and the borrower, but such period in no event shall exceed five years except that a loan may be granted for a period not to exceed 25 years if the proceeds are used to purchase the Participant's principal residence; (f) All loans must be repaid under a substantially level amortization period with payments being made at least quarterly; (g) Each loan shall be made against collateral being the assignment of 50 percent of the borrower's entire right, title and interest in and to the Trust Fund, supported by the borrower's collateral promissory note for the amount of the loan, including interest, payable to the order of the Trustee and/or such other collateral as the Committee may require; (h) Each loan shall bear interest at a rate fixed by the Committee. The rate shall be commensurate with the rates charged by persons in the business of lending money for loans which would be made under similar circumstances. Interest rates granted at different times and to Participants in -40- differing circumstances may vary depending on such differences; (i) A loan shall be treated as a directed investment by the borrower with respect to his accounts. The interest paid on the loan shall be credited to the borrower's accounts and he shall not share in the earnings of the Plan's assets with respect to the amounts borrowed and not yet repaid; (j) A loan to a married Participant requires the written, notarized consent of the Participant's spouse; (k) No distribution shall be made to any Participant, former Participant or Beneficiary unless and until all unpaid loans, including accrued interest thereon, have been liquidated or offset against the account; (l) The Committee may, in its discretion, charge a fee to process and maintain Plan loans, which shall be deducted from the accounts of Participants who take loans. The amounts of such fees shall be determined from time to time by the Committee; and (m) Loan repayments will be suspended under this Plan as permitted under Section 414(u)(4) of the Code. ARTICLE XI Plan Administration 11.1 Appointment of Committee. The Board shall appoint an Employees' Benefit Committee to administer the Plan. Any person, including an officer or other employee of a Participating Company, is eligible for appointment as a member of the Committee. Such members shall serve at the pleasure of the Board. Any member may resign by delivering his written resignation to the Board. Vacancies in the Committee shall be filled by the Board. 11.2 Named Fiduciary and Plan Administrator. The Committee shall be the Named Fiduciary and Plan Administrator as these terms are used in ERISA. The Committee shall -41- appoint a Secretary who shall also be the agent for the service of legal process. 11.3 Powers and Duties of Committee. The Committee shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan, except such powers as are specifically reserved to the Board or some other person. The Committee's powers include the power to make and publish such rules and regulations as it may deem necessary to carry out the provisions of the Plan. The Committee shall interpret the Plan and shall determine all questions arising in the administration, interpretation, and application of the Plan. The Committee shall notify the Trustee of the liquidity and other requirements of the Plan from time to time. 11.4 Operation of Committee. The Committee shall act by a majority of its members at the time in office, and such action may be taken either by a vote at a meeting or without a meeting. Any action taken without a meeting shall be reflected in a written instrument signed by a majority of the members of the Committee. A member of the Committee who is also a Participant shall not vote on any question relating specifically to himself. Any such question shall be decided by the majority of the remaining members of the Committee. The Committee may authorize any one or more of its members to execute any document on behalf of the Committee, in which event the Committee shall notify the Trustee in writing of such action and the name or names of its member or members so designated. The Trustee thereafter shall accept and rely upon any document executed by such member or members as representing action by the Committee until the Committee shall file with the Trustee a written revocation of such designation. The Committee may adopt such by-laws or regulations as it deems desirable for the conduct of its affairs. The Committee shall keep a record of all its proceedings and acts and shall keep all such books of account, records, and other data as may be necessary for the proper administration of the Plan. 11.5 Power to Appoint Advisers. The Committee may appoint such actuaries, accountants, attorneys, consultants, other specialists and such other persons as it deems -42- necessary or desirable in connection with the administration of this Plan. Such persons may, but need not, be performing services for a Participating Company. The Committee shall be entitled to rely upon any opinions or reports which shall be furnished to it by any such actuary, accountant, attorney, consultant or other specialist. 11.6 Expenses of Plan Administration. The members of the Committee shall serve without compensation for their services as such, but their reasonable expenses shall be paid by the Company. To the extent not paid from Fund assets, as determined from time to time by any Board- appointed committee, all reasonable expenses of administering the Plan shall be paid by the Company, including, but not limited to, fees of the Trustee, accountants, attorneys, consultants, and other specialists. 11.7 Duties of Fiduciaries. All fiduciaries under the Plan and Trust shall act solely in the interests of the Participants and their Beneficiaries and in accordance with the terms and provisions of the Plan and Trust Agreement insofar as such documents are consistent with ERISA, and with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. Any person may serve in more than one fiduciary capacity with respect to the Plan and Trust. 11.8 Liability of Members. No member of the Committee shall incur any liability for any action or failure to act, excepting only liability for his own breach of fiduciary duty. To the extent not covered by insurance, the Company shall indemnify each member of the Committee and any Board-appointed committee and any employee acting on their behalf against any and all claims, loss, damages, expense and liability arising from any action or failure to act. 11.9 Allocation of Responsibility. The Board, Trustee, Investment Manager and the committees established to administer the Plan possess certain specified powers, duties, responsibilities and obligations under the Plan and Trust. It is intended under this Plan that each be solely responsible for the proper exercise of its own -43- functions and that each shall not be responsible for any act or failure to act of another, unless otherwise responsible as a breach of its own fiduciary duty. (a) Generally, the Board shall be responsible for appointing the members of the committees it may establish to administer this Plan. If this Plan shall at any time permit employees to invest any portion of Plan assets in Company securities, the Board shall have sole authority to terminate this Plan and to make any discretionary amendments, while any Board-appointed committee given such authority shall have authority for making non- discretionary amendments and for recommending to the Board any other Plan amendments it deems appropriate. (b) The Board-appointed committees so authorized shall have the responsibilities of making Plan amendments not specifically reserved to the Board in the preceding subsection, including sole discretion to amend the Plan if employees are not authorized to invest Plan assets in Company securities, to select Investment Managers, to direct the Trustee and the Investment Managers with respect to all matters relating to the investment of Plan assets, to review and report to the Board on the investment policy and performance of Plan assets and generally to administer the Plan according to its terms. (c) The Trustee or the Investment Manager, as the case may be, is responsible for the management and control of the Plan's assets as specifically provided in the Trust Agreement or investment manager agreement. (d) The Board may dissolve any committee it appoints or reserve to itself any of its powers previously delegated to a Board- appointed committee. In addition, the Board may reorganize the committees it establishes from time to time and reallocate their responsibilities among them or assign them to other persons or committees provided that the Employees' Benefit Committee shall at all times continue as plan administrator and named fiduciary as these terms are defined in ERISA unless the Board formally amends the Plan to reallocate these -44- responsibilities. The Board and the various committees may designate persons, including committees, other than named fiduciaries to carry out their responsibilities (other than trustee responsibilities) under the Plan. 11.10 Claims Review Procedure. The Committee shall maintain a procedure under which any Participant or Beneficiary may assert a claim for benefits under the Plan. Any such claim shall be submitted in writing to the Committee within such reasonable period as the rules of the Committee may provide. The Committee shall take action on the claim within 60 days following its receipt and if it is denied shall at such time give the claimant written notice which clearly sets forth the specific reason or reasons for such denial, the specific Plan provision or provisions on which the denial is based, any additional information necessary for the claimant to perfect the claim, if possible, an explanation of why such additional information is needed, and an explanation of the Plan's claims review procedure. The review procedure shall allow a claimant at least 60 days after receipt of the written notice of denial to request a review of such denied claim, and the Committee shall make its decision based on such review within 60 days (l20 days if special circumstances require more time) of its receipt of the request for review. The decision on review shall be in writing and shall clearly describe the reasons for the Committee's decision. ARTICLE XII Amendment and Termination 12.1 Right to Amend or Terminate. Any amendment may be made to this Plan which does not cause any part of the Plan's assets to be used for, or diverted to, any purpose other than the exclusive benefit of Participants, former Participants, or Beneficiaries, provided however, that any amendment may be made, with or without retroactive effect, if such amendment is necessary or desirable to comply with applicable law. Except in the case where approved by the Secretary of Labor because of substantial business hardship, as provided in Section 412(c)(8) of the Code, no amendment shall be made to the Plan if it would decrease the accrued benefit of any Participant, eliminate or reduce an early retirement benefit or eliminate an optional form of benefit as may be provided in regulations under Code Section 411(d)(6). If any provisions of this Plan relating to the percentage of a Participant's -45- accrued benefit that is vested are changed, any Participant with at least three years of service may elect, by filing a written request with the Committee within 60 days after the later of (1) the date the amendment was adopted, (2) the date the amendment was effective, or (3) the date the Participant received written notice of such amendment, to have his vested interest computed under the provisions of this Plan as in effect immediately prior to such amendment. 12.2 Full Vesting Upon Termination of Plan. Upon full or partial termination of the Plan or upon complete discontinuance of Participating Company contributions, each affected Participant will remain l00 percent vested in the value of his Participant Account as of the Valuation Date next following such termination or discontinuance. ARTICLE XIII Top-Heavy Provisions 13.1 Rules to Apply if Plan is Top-Heavy. Notwithstanding any other relevant provision of this Plan to the contrary, the following rules will apply for any Plan Year that the Plan becomes "top-heavy" (as defined in Section 13.2): (a) Vesting. Vesting will remain 100 percent at all times. (b) Minimum Contributions. For each top-heavy Plan Year the minimum contribution allocated to the Participant Account of each non-key employee shall be equal to or greater than the lesser of the following amounts: (1) 3 percent of such non-key employee's compensation; or (2) the highest percentage-of-compensation allocation made to the Participant Account of any key employee. -46- If the highest rate allocated to a key employee is less than 3% of compensation, amounts contributed as a result of a salary reduction agreement shall be included in determining the rate of contribution on behalf of key employees. For purposes of this subsection, "compensation" shall have the same meaning as in Section 4.4. Minimum contributions will be made to Participant's Account without regard to his level of compensation or his hours of service during a Plan Year. (c) Limitation on Benefits. In applying the dollar limitations under Section 415(e) of the Code, the 1.25 limitation shall be supplanted by a 1.0 limitation for each year during which the Plan is top-heavy. (d) Maximum Compensation. The maximum annual compensation of each employee that may be taken into account under the Plan shall not exceed $160,000 (or such larger amount based on cost of living adjustments as may be permitted under the Code). 13.2 Top-Heavy Definition. For purposes of this Section, the Plan will be considered "top-heavy" if on any given determination date (the last day of the preceding Plan Year or, in the case of the Plan's first year, the last day of such Year) the sum of the account balances for key employees is more than 60 percent of the sum of the account balances of all employees, excluding former key employees. The account balances shall include distributions made during any given Plan Year containing the determination date and the preceding four Plan Years but shall not include the account balances for any person who has not received any compensation from any Participating Company at any time during the five-year period ending on the determination date. The method of determining the top-heavy ratio shall be made in accordance with Code Section 4l6. In making the top-heavy calculation, (a) all the Company's plans in which a key employee participates shall be aggregated with all other Participating Company plans which enable a plan in which a key employee participates to satisfy the Code's non-discrimination requirements; and (b) all Participating Company plans not included in subparagraph (a), above, -47- may be aggregated with the Participating Company's plans included in subparagraph (a), above, if all of the aggregated plans would be comparable and satisfy the Code's non-discrimination requirements. 13.3 Key Employee Definition. A key employee will be, for the purpose of this Article, any employee or former employee who at any time during the Plan Year containing the determination date or the four preceding Plan Years is such within the meaning of Code Section 416. As of the effective date, the term key employee includes the following individuals: (a) an officer (but not more than 50 persons or, if lesser, the greater of 3 or 10 percent of employees) having an annual compensation greater than 50 percent of the dollar limit for benefits payable from a defined benefit plan under Code Section 415(b)(1)(A); (b) one of 10 employees who has annual compensation from the Participating Company of more than the amount in effect under Code Section 415(c)(1)(A) owning the largest interests of the Participating Company. The employee having the greater annual compensation from the Participating Company shall be considered to own the larger interest in the Participating Company if two or more employees had the same ownership interest in the Participating Company; (c) a five-percent owner of the Participating Company; and (d) a one-percent owner of the Participating Company whose annual compensation from the Participating Company exceeds $l60,000. 13.4 Relationship of the Normal and the Top-Heavy Vesting Schedules. If the Plan's top-heavy status changes and this change alters the Plan's normal vesting schedule, no Participant's vested accrued benefit immediately prior to such change in status shall be diminished on account of the change in the vesting schedule. In addition, the vesting for each Participant in the Plan at the time of the change in status shall be determined under whichever schedule provides the greatest vested benefit at any particular point in time. -48- 13.5 Participation in Other Plans. A non-key employee who participates in both a defined contribution plan and a defined benefit plan of the Participating Company shall not be entitled to receive minimum benefits and/or minimum contributions under all such plans. Instead, the employee shall receive a minimum benefit equal to the lesser of 20 percent of such non-key employee's average compensation or 2 percent of his average compensation multiplied by his number of Years of Service, as set forth in such defined benefit plan. -49- ARTICLE XIV General Provisions 14.1 Employment Relationship. Nothing contained herein will be deemed to give any Employee the right to be retained in the service of a Participating Company or to interfere with the rights of a Participating Company to discharge any Employee at any time. 14.2 Non-Alienation of Benefits. Except as provided in Section 9.6, benefits payable under this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any such liability which arises from the Participant's bankruptcy, prior to actually being received by the person entitled to the benefit under the terms of the Plan; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder, shall be void. The Trust shall not in any manner be liable for, or subject to the debts, contracts, liabilities, engagements or torts of any person entitled to benefits hereunder. Nothing in this Section shall preclude payment of Plan benefits pursuant to a qualified domestic relations order pursuant to Section 9.6. 14.3 Use of Masculine and Feminine; Singular and Plural. Wherever used in this Plan, the masculine gender will include the feminine gender and the singular will include the plural, unless the context indicates otherwise. 14.4 Plan for Exclusive Benefit of Employees. No part of the corpus or income of the Trust will be used for, or diverted to, purposes other than the exclusive benefit of Participants and their Beneficiaries. Anything in the foregoing to the contrary notwithstanding, the Plan and Trust are established on the express condition that they will be considered, by the Internal Revenue Service, as initially qualifying under the provisions of the Internal Revenue Code. In the event that the Internal Revenue Service issues an unfavorable determination with respect to a timely request for a determination that the amended and restated Plan and Trust qualify under the Internal Revenue Code, the Plan -50- and Trust will be of no effect and the value of all contributions made by a Participating Company and Participants since the amendment and restatement will be returned to the Participating Company and Participants, respectively, within one year from the date of the denial of the determination request. Furthermore, if, or to the extent that, a Participating Company's tax deduction for contributions made to the Plan is disallowed, the Participating Company will have the right to obtain the return of any such contributions (to the extent disallowed) for a period of one year from the date of disallowance. All Participating Company contributions to this Plan are contingent upon their deductibility under the Code. Finally, if a Participating Company's contribution to the Plan is made by a mistake in fact, the Participating Company will have the right to obtain the return of such contribution for a period of one year from the date the contribution was made. 14.5 Merger or Consolidation of Plan. There will be no merger or consolidation with, or transfer of any assets or liabilities to, any other plan, unless each Participant will be entitled to receive a benefit immediately after such merger, consolidation, or transfer as if this Plan were then terminated which is at least equal to the benefit he would have been entitled to receive immediately before such merger, consolidation, or transfer as if this Plan had been terminated. 14.6 Payments to Minors and Incompetents. If a Participant or Beneficiary entitled to receive any benefits hereunder is a minor or is deemed by the Committee, or is adjudged to be, legally incapable of giving valid receipt and discharge for such benefits, they will be paid to such persons as the Committee might designate or to the duly appointed guardian. 14.7 Governing Law. To the extent that New York law has not been preempted by ERISA, the provisions of the Plan will be construed in accordance with the laws of the State of New York. -51- IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Plan document on its behalf this 21st day of September, 1999. FRONTIER CORPORATION By: /s/ Barbara J. LaVerdi ------------------------- Its: Assistant Secretary --------------------- APPENDIX A Participating Companies Effective Date Name of Company of Participation Frontier Communications of Alabama, Inc. 10/1/94 Frontier Communications of AuSable Valley, Inc. 3/1/94 Frontier Communications of Breezewood, Inc. 3/1/94 Frontier Communications of Canton, Inc. 3/1/94 Frontier Communications of DePue, Inc. 1/1/95 Frontier Communications of Fairmount, Inc. 3/1/94 Frontier Communications of Georgia, Inc. 1/1/96 Frontier Communications of Illinois, Inc. 3/1/94 Frontier Communications of Indiana, Inc. 3/1/94 Frontier Communications of Iowa, Inc. 3/1/94 Frontier Communications of Lakeside, Inc. 1/1/95 Frontier Communications of Lakewood, Inc. 3/1/94 Frontier Communications of Lamar County, Inc. 3/1/94 Frontier Communications of Michigan, Inc. 7/1/95 Frontier Communications - Midland, Inc. 1/1/95 Frontier Communications of Minnesota, Inc. 3/1/94 Frontier Communications of Mississippi, Inc. 3/1/94 Frontier Communications of Mondovi, Inc. 1/1/96 Frontier Communications of Mt. Pulaski, Inc. 1/1/95 Frontier Communications of New York, Inc. 3/1/94 Frontier Communications of Orion, Inc. 1/1/95 Frontier Communications of Oswayo River, Inc. 3/1/94 -2- Frontier Communications of Pennsylvania, Inc. 3/1/94 Frontier Communications - Prairie, Inc. 1/1/95 Frontier Communications - Schuyler, Inc. 1/1/96 Frontier Communications of Seneca-Gorham, Inc. 3/1/94 Frontier Communications of the South, Inc. 1/1/95 Frontier Communications - St. Croix, Inc. 3/1/94 Frontier Communications of Sylvan Lake, Inc. 3/1/94 Frontier Communications of Thorntown, Inc. 3/1/94 Frontier Communications of Viroqua, Inc. 3/1/94 Frontier Communications of Wisconsin, Inc. 3/1/94 Frontier Corporation 3/1/94 Frontier Information Technologies Inc. 3/1/94 Frontier Telephone of Rochester, Inc. 1/1/95 Frontier Communication Services, Inc. 1/1/96 Frontier Advanced Service Technologies Inc. 1/1/96 Frontier International Management Corp. 1/1/99 Frontier GlobalCenter, Inc. 7/1/98 APPENDIX B Plan Features Unique to Participating Companies Class of Eligible Employees Name of Company ((S) 2.1) Fron. Alabama All Employees Fron. AuSable Management Fron. Breezewood Management Fron. Breezewood Nonmanagement Fron. Canton Management Fron. Canton Nonmanagement Fron. Corp. All Employees Fron. DePue All Employees Fron. Fairmount All Employees Fron. Georgia All Employees Fron. Illinois Management Fron. Indiana Management Fron. Indiana Nonmanagement Fron. Info. Tech. All Employees Fron. Iowa Management Fron. Lakeside Management Fron. Lakewood Management Fron. Lakewood Nonmanagement Fron. Lamar All Employees Fron. Michigan Management Fron. Midland Management Fron. Minnesota Management Fron. Mississippi All Employees Fron. Mondovi All Employees Fron. Mt. Pulaski Management Fron. New York Management Fron. Orion Management Fron. Oswayo Management Fron. Oswayo Nonmanagement Fron. Pennsylvania Management Fron. Pennsylvania Nonmanagement Fron. Prairie Management Fron. Telephone of Rochester Management Fron. Schuyler All Employee Fron. Seneca-Gorham Management Fron. Seneca-Gorham Nonmanagement Fron. of the South All Employees Fron. St. Croix All Employees Fron. Sylvan Lake Management Fron. Thorntown Management Fron. Thorntown Nonmanagement -2- Fron. Viroqua All Employees Fron. Wisconsin All Employees Frontier Communication Services, Inc. All Employees Frontier GlobalCenter, Inc. All Employees Frontier Advanced Service Technologies, Inc. All Employees Frontier International Management, Inc. All Employees APPENDIX C Additional Payment Options ((S) 9.1) The following additional payment options are available to a Participant under Option C in Section 9.1: . A straight life annuity. . A reduced retirement income payable monthly during his life with the provision that in the event of his death prior to receiving one hundred twenty (120) monthly installments, the remainder thereof shall be paid to his beneficiary. . A reduced retirement income, payable during his life, with the provision that after his death such reduced income shall be continued during the life of, and shall be paid to, a contingent annuitant. . A reduced retirement income, payable during his life, with the provision that after his death an income at 3/4 the rate of his reduced income shall be continued during the life of, and shall be paid to, a contingent annuitant. . A reduced retirement income payable during his life with the provision that after his death an income at 1/2 the rate of his reduced income shall be continued during the life of, and shall be paid to, a contingent annuitant. . Installments over any period up to the joint life expectancies of the Participant and any designated beneficiary. . A joint and survivor annuity with any designated beneficiary. . Any combination of a lump sum amount and any of the foregoing options listed in this Appendix C. EX-4.3 4 RESTATED FRONTIER GROUP BARGAINING RETIREMENT PLAN EXHIBIT 4.3 FRONTIER GROUP BARGAINING UNIT EMPLOYEES' RETIREMENT SAVINGS PLAN TABLE OF CONTENTS Page ---- INTRODUCTION ..................................................... 1 Article I Definitions.......................................... 2 Article II Eligibility.......................................... 7 Article III Participation and Participant Contributions........................................ 8 Article IV Participating Company Contributions.................. 11 Article V Investment of Contributions.......................... 21 Article VI Participant Accounts................................. 22 Article VII Retirement or Other Termination of Employment........................................ 25 Article VIII Death................................................ 27 Article IX Payment of Benefits.................................. 28 Article X Withdrawals and Loans During Employment.............. 33 Article XI Plan Administration.................................. 37 Article XII Amendment and Termination............................ 41 Article XIII Top-Heavy Provisions................................. 42 Article XIV General Provisions................................... 44 Appendix A Participating Companies Appendix B Plan Features Unique to Participating Companies - i - INTRODUCTION This Bargaining Unit Employees' Retirement Savings Plan was established, effective as of March 1, 1994, by the merger of several bargaining unit defined contribution plans within the Frontier Group of companies. Since March 1, 1994, several other plans have been merged into the Plan and it is anticipated that in the future other 401(k) and savings plans within the Frontier Group will be merged into this Plan. The Plan is hereby amended, continued and restated effective January 1, 1999 to provide easier administration and to comply with recent legislation, except that provisions specifically setting forth other effective dates shall be effective on such dates. All Participants in this Plan are subject to identical terms and conditions of participation except as set forth in Appendix B, with respect to each Participating Company. The merger of any plan into this Plan shall not reduce any Participant's accrued benefit in effect immediately preceding the merger. This Plan is intended to qualify as a profit sharing plan pursuant to the provisions of Code sections 401(a) and 401(k). - 2 - Article I Definitions ----------- l.1 "Affiliated Company" means Frontier Corporation (the "Company") and (a) any other company which is included within a "controlled group of corporations" within which the Company is also included, as determined under section l563 of the Code without regard to subsections (a)(4) and (e)(3)(C) of said section l563; or (b) any other trades or businesses (whether or not incorporated) with which the Company is affiliated which, based on principles similar to those defining a "controlled group of corporations" for the purposes of (a) above, are under common control; or (c) any other entities required to be aggregated with the Company pursuant to Code section 414. l.2 "Basic Contributions" means a Participant's contributions to the Plan in any whole percentage of Compensation up to a 3 percent of Compensation maximum in accordance with Section 3.2 and, where applicable, Appendix B. 1.3 "Beneficiary" means the Participant's surviving spouse or, in the event there is no surviving spouse or the surviving spouse elects in writing not to receive any death benefits under the Plan, the person or persons (including a trust) designated by a Participant to receive any death benefit which shall be payable under this Plan. l.4 "Board" means the Board of Directors of the Company or any committee of the Board of Directors authorized to act on behalf of the Board. Any such Board committee shall be composed of at least three members of the Board of Directors. As used in this Plan the term "Board-appointed committee" means the Committee and any other committee appointed by the Board which need not be comprised of at least three Board members but may include or consist entirely of management personnel who are not members of the Board. 1.5 "Code" means the Internal Revenue Code of 1986, as amended. - 3 - l.6 "Committee" means the Employees' Benefit Committee appointed pursuant to Article XI to administer the Plan. l.7 "Company" means Frontier Corporation, a New York corporation, its predecessor or its successor. 1.8 "Company Fixed Contributions" means a contribution by a Participating Company as specified in Section 4.1 and Appendix B. These contributions are not contingent on the level of Participant contributions. 1.9 "Company Profit Sharing Contributions" means the contributions of a Participating Company that are not contingent on the level of Participant contributions and are specified, if any, in Appendix B for each Participating Company. 1.10 "Company Matching Contributions" means the contributions of a Participating Company that are contingent upon a Participant's Basic Contributions in an amount specified for the Participating Company in Appendix B. 1.11 "Company Stock" means Frontier Corporation common stock. Effective as soon as administratively practicable following the closing date of the acquisition of the Company by Global Crossing Ltd., "Company Stock" means Global Crossing Ltd. common stock. l.12 "Compensation" means the total of a Participant's basic salary or wages, bonuses, overtime and commissions paid by a Participating Company for services actually rendered by the Participant to a Participating Company. A Participant's Compensation shall not include imputed long term disability premiums, pension payments or any other form of extra remuneration of whatever nature except bonuses and commissions included under the preceding sentence, nor any annual remuneration in excess of $160,000 (adjusted for cost of living increases as permitted under the Code). For any Participant receiving disability pay from a Participating Company during a payroll period (other than a disability pension), the term "Compensation" means such disability pay. For any Employee who is making Pre-Tax Contributions pursuant to Section 3.7, or pre-tax contributions under a Participating Company's cafeteria (section 125) plan, the term Compensation shall be based on his wages, salary, - 4 - commissions and bonuses, all as defined above, prior to any salary reduction. Notwithstanding the foregoing, if a particular collective bargaining agreement requires a modification of the term "Compensation" as set forth above, the modification shall be set forth in the appropriate Appendix B and shall be used with respect to any Participant whose Plan participation is governed by such Appendix B. 1.13 "Early Retirement Age" means age 55. l.14 "Effective Date" means March 1, 1994. The effective date of this restatement is January 1, 1999, provided that provisions having other effective dates shall be effective as may be expressly provided by such provisions. 1.15 "Election Period" means the period of time during which a Participant can elect, with the consent of his spouse, to waive the Qualified Joint and Survivor Annuity or the Qualified Pre-Retirement Survivor Annuity or can elect to revoke such a waiver. In the case of a Qualified Joint and Survivor Annuity, the Election Period is the 90 day period preceding the annuity starting date. In the case of a Qualified Pre- Retirement Survivor Annuity, the Election Period begins on the first day of the Plan Year in which a Participant attains age 35 and ends on the date of the Participant's death, provided that if a Participant terminates employment prior to age 35, his Election Period shall begin on his termination date. 1.16 "Employee" means any individual who is employed by a Participating Company. 1.17 "ERISA" means the Employee Retirement Income Security Act of l974, as amended from time to time, and any regulations issued pursuant thereto. 1.18 "Forfeiture" means that portion of a Participant's Restricted Company Contribution Account which is forfeited before full vesting. 1.19 "Highly Compensated Employee" means, effective January 1, 1997, any Employee who: (a) was a "five percent owner", as defined in Section 416(i)(l) of the Code, during the current or preceding Plan Year; or - 5 - (b) received Compensation from a Participating Company or an Affiliated Company which, in total, exceeded $80,000 for the preceding Plan Year, and, if the Company so elects, was in the top-paid group for the preceding Plan Year. The $80,000 dollar amount shall be adjusted for cost of living increases as provided under the Code. The determination of whether an Employee is a Highly Compensated Employee will be made in accordance with Code section 414(q) and the rules and regulations promulgated thereunder. 1.20 "Investment Manager" means any individual or corporation selected by the Board or by any Board-appointed committee having the authority to select such person who (i) is registered as an investment adviser under the Investment Advisers Act of 1940; or (ii) is a bank, as defined in that Act; or (iii) is an insurance company qualified to manage, acquire or dispose of plan assets under the laws of more than one state and each individual or corporation acknowledges in writing that he or the corporation, as the case may be, is a fiduciary with respect to the Plan. 1.21 "Leased Employee" means any person who is not otherwise an Employee and who, pursuant to an agreement between a Participating Company and any other person or organization, has performed services for the Participating Company, or for the Participating Company and related persons (determined in accordance with section 414(n)(6) of the Code), on a basis whereby if such person were an Employee, such person would have become an eligible Employee hereunder either in the initial eligibility computation period or any Plan Year thereafter, and, effective January 1, 1997, such services are performed under the primary direction or control of the Participating Company, provided, that a person shall not be treated as a Leased Employee for any Plan Year if, during such Plan Year: (i) such person is covered by a money purchase pension plan described in section 414(n)(5)(B) of the Code, and (ii) not more than 20% of the Employees who are not Highly Compensated Employees are Leased Employees. Once a person is classified as a Leased Employee, such person shall remain a Leased Employee for every Plan Year for which the person completes at least 1000 Hours of Service. - 6 - 1.22 "Non-Highly Compensated Employee" means an Employee who is not a Highly Compensated Employee. 1.23 "Normal Retirement Age" means age 65. 1.24 "Participant" means an Employee who meets the eligibility requirements set forth in Section 2.l. 1.25 "Participant Account" means, as of any Valuation Date, the then amount of a Participant's contributions and the Participating Company's contributions allocated on behalf of the Participant adjusted to reflect any investment earnings and losses attributable to such contributions, withdrawals and distributions, at the then market value of the Trust. Where appropriate, a Participant Account shall have the following subaccounts: a Restricted Company Contribution Account to record Company contributions that must be invested in Company Stock, an Unrestricted Company Contribution Account to record Company contributions which are no longer restricted to investment in Company Stock, a Participant Pre-Tax Contribution Account to record Pre-Tax Contributions, a Participant Post-Tax Contribution Account to record Post-Tax Contributions and a Rollover Account to record rollover contributions. Earnings associated with each type of contribution shall be allocated to the account to which the associated contributions are allocated. 1.26 "Participating Company" means the Company and each Affiliated Company that has adopted this Plan for the benefit of its eligible Employees. Participating Companies are listed in Appendix A. 1.27 "Plan" means this Frontier Group Bargaining Unit Employees' Retirement Savings Plan as set forth herein and as it may be amended from time to time. 1.28 "Plan Year" means the calendar year. The Plan Year shall be the limitation year as this term is used in ERISA. 1.29 "Post-Tax Contributions" means a Participant's contributions which are non-deductible for income tax purposes at the time they are made. 1.30 "Predecessor Company" means any organization which was acquired by the Company or an Affiliated Company. - 7 - 1.31 "Pre-Tax Contributions" means a Participant's contributions which are not included in his income for income tax purposes at the time they are made. 1.32 "Qualified Joint and Survivor Annuity" means an annuity for the life of the Participant with a survivor annuity for the life of the Participant's spouse which is 50 percent of the amount which is payable during the joint lives of the Participant and the Participant's spouse and which is purchased from an insurance company with the Participant's account balance. 1.33 "Qualified Pre-Retirement Survivor Annuity" means a life annuity payable to the surviving spouse of a deceased Participant which is purchased from an insurance company with the Participant's account balance. 1.34 "Restricted Stock" means Company Stock that has been allocated to a Participant's Restricted Company Contribution Account for a period of less than five years from the date of the initial allocation. 1.35 "Supplemental Contributions" means a Participant's contributions to the Plan in excess of his Basic Contributions in accordance with Section 3.2. 1.36 "Trust" or "Trust Fund" means the amounts held in trust in accordance with this Plan and consists of such investment options as from time to time may be designated by a Board-appointed Committee. 1.37 "Trust Agreement" means any agreement entered into between the Company and any Trustee to carry out the purposes of the Plan, which agreement shall constitute a part of this Plan. 1.38 "Trustee" means any bank or trust company selected by the Board or a Board committee to serve as Trustee pursuant to the provisions of the Trust Agreement. 1.39 "Valuation Date" means the last day the Trust may have been valued provided that the Trust shall be valued no less frequently than on the last day of each calendar quarter. Article II Eligibility ----------- - 8 - 2.1 Eligibility Requirements. An Employee who fits within the ------------------------ eligible class set forth in Appendix B for his Participating Company and who is not excluded pursuant to the following sentence is eligible to become a Participant in accordance with the provisions set forth in Appendix B. An Employee is not eligible to participate in this Plan if (1) the Employee is a temporary or summer employee; (2) the Employee is a Leased Employee; (3) the Employee is eligible to be an active participant in the Frontier Group Employees' Retirement Savings Plan; or (4) the Employee is an independent contractor (or a person who is treated by a Participating Company as an independent contractor or who is otherwise classified as not being an employee of the Company, regardless of his actual status). In the discretion of the Committee, an eligible Employee of a Participating Company that has adopted this Plan who is transferred to an Affiliated Company that has not adopted this Plan may participate in the Plan under such arrangements as the Committee may prescribe. 2.1 2.2 Reemployment. If an Employee terminates employment and is ------------ subsequently reemployed by a Participating Company, he will be eligible to begin participation in this Plan on the first day of the month following completion of one month of service measured from his reemployment date. All service of such an Employee with a Participating Company or any Affiliated Company prior to termination of employment shall be credited to such Employee for purposes of the vesting provisions of Section 7.2. Article III Participation and Participant Contributions ------------------------------------------- 3.l Participation. An eligible Employee may become a Participant by filing ------------- a written application with the Committee, or by telephonic or electronic processing, as the Committee shall determine. The application shall indicate the amount of his initial Basic and Supplemental Contributions and whether he intends to have such Contributions made as Post-Tax Contributions or as Pre-Tax Contributions. Except as the Committee in its discretion may otherwise determine, participation will commence with the first payroll period as is administratively practicable to meet following the date such election is received by the - 9 - Committee or its designee. Participation shall thereafter continue until all amounts in the Participant's Account have been distributed even though current contributions may be suspended. 3.2 Amount of Contributions. Contributions may be made by any Participant ----------------------- who has enough Compensation during any payroll period to make a contribution by payroll deduction. Each Participant may contribute, at his option, Basic Contributions in any whole percentage of his Compensation during a payroll period with a minimum contribution of 1 percent of Compensation and a maximum contribution of 3 percent of Compensation. If a Participant is making Basic Contributions at the maximum rate of 3 percent of his Compensation, he may also elect to make Supplemental Contributions of any whole percentage from l to l3 percent of his Compensation during a payroll period. All Participant contributions will be in cash in the form of Employee-authorized payroll deductions on either a post-tax basis or, pursuant to Section 3.7, on a pre-tax basis. Notwithstanding any provision of this Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Code. 3.3 Change in Amount of Contributions. The percentage, or percentages if --------------------------------- more than one, of Compensation designated by the Participant as his contribution rate will continue in effect, notwithstanding any change in his Compensation, until he elects to change such percentage. A Participant, by filing a written election form furnished by the Committee, or by telephonic or electronic processing, as the Committee shall determine, may change his percentage of contributions as frequently during the Plan Year and pursuant to such rules as the Committee may prescribe. Any such change will become effective on the first payroll period as is administratively practicable to meet after the date such election is received by the Committee or its designee. If a Participant's total contribution rate is in excess of 3 percent of his Compensation, any such change will first be applied to adjust the amount of his Supplemental Contributions and then, if necessary, to adjust the amount of his Basic Contributions. If a Participant's total contribution rate is less than 3 percent of his Compensation, any such change will first be applied to adjust the amount of his Basic Contributions and then, if necessary, to provide for Supplemental Contributions. - 10 - 3.4 Suspension of Participant Contributions. A Participant, by filing a --------------------------------------- written election with the Committee, or by telephonic or electronic processing, as the Committee shall determine, may elect to suspend either his Basic or Supplemental Contributions, or both, at any time. Any such suspension will become effective with the first payroll period as is administratively practicable to meet after the date such election is received by the Committee or its designee. A suspension of all Basic Contributions will automatically suspend all Supplemental Contributions. In order to resume making contributions, the Participant must follow the procedure outlined in Section 3.l as though he were a new Participant. A Participant will not be permitted to make up suspended contributions. Participant contributions will be suspended automatically for any payroll period in which the Participant is not in receipt of Compensation. Such automatic suspension shall be lifted beginning with the next payroll period that the Participant receives Compensation. The suspension of Supplemental Contributions, in the absence of an election to the contrary, will not affect Basic Contributions. 3.5 Remittance of Participant Contributions to the Trustee. Participant ------------------------------------------------------ contributions will be remitted as soon as administratively practicable to the Trustee. 3.6 Termination of Participant Contributions. A Participant's ---------------------------------------- contributions will terminate effective with the payroll period that ends or includes the date the Participant terminates employment for any reason, including retirement or death. 3.7 Pre-Tax Contributions Option. A Participant shall have the option of ---------------------------- having his Basic and Supplemental Contributions to the Plan made on a tax-deferred basis pursuant to the terms of this Section. Basic and Supplemental Pre-Tax Contributions may be made solely pursuant to a salary reduction agreement between an individual Participant and his employer. Under this agreement the Participant agrees to reduce his Compensation by a specified percentage (as outlined in Section 3.2) and the Participating Company agrees to contribute to the Plan the identical amount on behalf of the Participant. The agreement shall be in such form and subject to such rules as the Committee may prescribe. The Committee, in its sole discretion, may limit the number of salary reduction agreements a Participant may make during a Plan Year, except that an - 11 - agreement may be terminated at any time, in which event the Participant shall specify whether all of his contributions shall cease or continue to be made as Post-Tax Contributions. 3.8 Rollovers to This Plan. Notwithstanding the limitations on contributions set forth in the preceding Sections of this Article III, any active Employee may make rollover contributions (as defined in sections 402(c)(4), 403(a)(4) and 408(d)(3) of the Code) to the extent the Committee in its discretion may permit and in accordance with rules it shall establish. In addition, the Committee in its sole discretion may arrange for a Participant's account in any other tax-qualified plan to be transferred directly to this Plan. No rollover contribution or transfer shall be permitted if it could adversely affect the tax qualification of this Plan. All rollovers and transfers to this Plan shall be credited to a Participant's Rollover Account. Article IV Participating Company Contributions ----------------------------------- 4.1 Company Contributions. Subject to the limitations of Section 4.4, --------------------- each Participating Company shall contribute Company Fixed Contributions, Company Matching Contributions or Company Profit Sharing Contributions as specified in Appendix B for such Participating Company. All Participating Company contributions shall be made in cash or in Company Common Stock, and will be invested in accordance with Article V. 4.2 Remittance of Company Contributions. Company Matching Contributions ----------------------------------- shall be remitted to the Trustee on a regular and periodic basis following the payroll period to which they relate but in no event shall they be made less frequently than quarterly. Company Profit Sharing Contributions for a Plan Year shall be remitted to the Trustee by a Participating Company no later than the date the Participating Company's tax return is due for the year within which ends the Plan Year to which the contributions relate. 4.3 Effect of Suspension of Participant Contributions on Company ------------------------------------------------------------ Contributions. During any period in which a Participant's Basic ------------- Contributions are suspended, - 12 - Company Matching Contributions on his behalf will also be suspended. 4.4 Maximum Contributions. Notwithstanding the contribution levels --------------------- specified in Article III and the preceding Sections of this Article IV, no contributions will be permitted in excess of the limits set forth below: 1. Code Section 402(g) Limits. A Participant's Pre-Tax Contributions -------------------------- to this Plan and any tax-deferred contributions under any other 401(k) plan in which he may participate shall not exceed $10,000 (adjusted for cost of living increases for years after 1999 as provided under the Code) in any taxable year of the Participant. To meet this limit, no contribution to this Plan in excess of $10,000 (as adjusted) shall be accepted on behalf of any Participant during a calendar year. If a Participant participates in more than one plan, he shall notify the Committee of any excess contribution in a calendar year by March 1 of the following year. The Committee shall then cause the portion of such excess allocated to this Plan to be returned to the Participant by April 15 following the calendar year to which the excess contribution relates. 2. Code Section 401(k) Limits. The Actual Deferral Percentage, or -------------------------- ADP, for Participants who are Highly Compensated Employees for each Plan Year and the ADP for Participants who are Non-highly Compensated Employees for the same Plan Year must satisfy one of the following tests: (a) The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-highly Compensated Employees for the same Plan Year multiplied by 1.25; or (b) The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-highly Compensated Employees for the same Plan Year multiplied by 2.0, provided that the ADP for Participants who are Highly Compensated Employees does not exceed the ADP for Participants who are Non-highly Compensated Employees by more than two percentage points. - 13 - In applying these tests, the actual deferral percentage for the Highly Compensated Employees for a Plan Year shall be the average of the percentages, calculated separately, for each eligible Employee in the group, obtained by dividing the sum of the Employee's tax-deferred contributions pursuant to Section 3.2 by the Employee's Compensation for the Plan Year. The actual deferral percentage for the Non-Highly Compensated Employees for a Plan Year shall be calculated in the same manner as for the Highly Compensated Employees, except that tax- deferred contributions and Compensation used in the calculating the percentages shall be those of the preceding Plan Year. If an Employee was not eligible to participate for the entire Plan Year, the Compensation taken into account for purposes of these tests shall be his Compensation for the period he was eligible to participate. The ADP for any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Elective Deferrals (and Qualified Non-elective Contributions, if treated as Elective Deferrals for purposes of the ADP test) allocated to his accounts under two or more arrangements described in Section 401(k) of the Code, that are maintained by the Employer, shall be determined as if such Elective Deferrals (and, if applicable, such Qualified Non-elective Contributions) were made under a single arrangement. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different Plan Years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. For purposes of the ADP Test, compensation means compensation as defined in Section 414(s) of the Code. The period during which compensation is determined for a Plan Year shall be either the Plan Year or the calendar year ending with or within the Plan Year as determined by the Committee. The period selected shall be applied uniformly to all eligible Employees. In the event that this Plan satisfies the requirements of Sections 401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Sections of the Code only if aggregated with this Plan, then this Section shall be applied by determining the ADP of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, - 14 - 1989, plans may be aggregated in order to satisfy Section 401(k) of the Code only if they have the same Plan Year. For purposes of determining the ADP test, Elective Deferrals, Qualified Non-elective Contributions must be made before the last day of the twelve-month period immediately following the Plan Year to which the contributions relate. The Employer shall maintain records sufficient to demonstrate satisfaction of the ADP test and the amount of Qualified Non-elective Contributions used in such test. The determination and treatment of the ADP amounts of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. 3. Code Section 401(m) Limits. The Average Contribution Percentage, -------------------------- or ACP, for Participants who are Highly Compensated Employees for each Plan Year and the ACP for Participants who are Non-highly Compensated Employees for the same Plan Year must satisfy one of the following tests: (a) The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-highly Compensated Employees for the same Plan Year multiplied by 1.25; or (b) The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-highly Compensated Employees for the same Plan Year multiplied by two, provided that the ACP for Participants who are Highly Compensated Employees does not exceed the ACP for Participants who are Non-highly Compensated Employees by more than two percentage points. In applying these tests, the actual contribution percentage for the Highly Compensated Employees for a Plan Year shall be the average of the percentages, calculated separately, for each eligible Employee in the group, obtained by dividing the sum of the Employee's Post-Tax Contributions if applicable under Section 3.2 and the Employer's matching contributions under Section 4.1 by the Employee's Compensation for - 15 - the Plan Year. The actual deferral percentage for the Non-Highly Compensated Employees for a Plan Year shall be calculated in the same manner as for the Highly Compensated Employees, except that Post-Tax Contributions, matching contributions and Compensation used in the calculating the percentages shall be those of the preceding Plan Year. If an Employee was not eligible to participate for the entire Plan Year, the Compensation taken into account for purposes of these tests shall be his Compensation for the period he was eligible to participate. If one or more Highly Compensated Employees participate in both a cash or deferred arrangement as defined in Section 401(k) of the Code and a plan subject to the ACP test maintained by the Employer and the sum of the ADP and ACP of those Highly Compensated Employees subject to either or both tests exceeds the Aggregate Limit, then the ADP of those Highly Compensated Employees who also participate in the plan subject to the ACP test will be reduced (beginning with the Highly Compensated Employee whose ADP is the highest) so that the limit is not exceeded. The amount by which each Highly Compensated Employee's Actual Deferral Percentages is reduced shall be treated as an Excess Contribution. If reduction of the ADP's of Highly Compensated Employees fails to result in the Plan's satisfying the Aggregate Limit, then the ACP of those Highly Compensated Employees who also participate in the cash or deferred arrangement will next be reduced (beginning with the Highly Compensated Employee whose ACP is the highest) so that the limit is not exceeded. The amount by which each Highly Compensated Employee's Contribution Percentage Amounts is reduced shall be treated as an Excess Aggregate Contribution. The ADP and ACP of the Highly Compensated Employees are determined after any corrections required to meet the ADP and ACP tests. Multiple use does not occur if both the ADP and ACP of the Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP of the Non-highly Compensated Employees. For purposes of this Section, the Contribution Percentage for any Participant who is a Highly Compensated Employee and who is eligible to have Contribution Percentage Amounts allocated to his account under two or more plans described in Section 401(a) of the Code, or arrangements described in Section 401(k) of the Code that are maintained by the Employer, shall be determined as if the total of - 16 - such Contribution Percentage Amounts was made under each plan. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different Plan Years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. In the event that this Plan satisfies the requirements of Sections 401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Sections of the Code only if aggregated with this Plan, then this Section shall be applied by determining the Contribution Percentages of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(m) of the Code only if they have the same Plan Year. For purposes of determining the Contribution Percentage of a Participant who is a Five Percent Owner or one of the ten most highly- paid Highly Compensated Employees, the Contribution Percentage Amount and Compensation of such Participant shall include the Contribution Percentage Amounts and Compensation for the Plan Year of family members (as defined in Section 414(g)(6) of the Code). Family members, with respect to Highly Compensated Employees, shall be disregarded as separate employees in determining the Contribution Percentages both for Participants who are Non-highly Compensated Employees and for Participants who are Highly Compensated Employees. For purposes of determining the Contribution Percentage test, Matching Contributions and Qualified Non-elective Contributions will be considered made for a Plan Year if made no later than the end of the twelve-month period beginning on the day after the close of the Plan Year. The Employer shall maintain records sufficient to demonstrate satisfaction of the ACP test and the amount of Qualified Non-elective Contributions used in such test. The Committee shall have the responsibility for monitoring compliance with this test and shall have the power to take any steps it deems appropriate to ensure compliance, including limiting the amount of salary reduction permitted by the Highly Compensated Employees - 17 - or requiring that the contributions for the Highly Compensated Employees be delayed or held in escrow before being paid over to the Trustee until such time as the Committee determines that contributions can be made on behalf of the Highly Compensated Employees without violating the requirements of Code section 401(k). Within two and one-half months following the end of a Plan Year the Committee shall distribute such contributions (and earnings attributable thereto) as may be in excess of the amounts required to satisfy the special nondiscrimination test under this Section, or shall make such additional contributions under Sections 3.4 and 3.5 as necessary to satisfy the test. The determination and treatment of the Contribution Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. 4. Distribution of Excess Contributions. Notwithstanding any other ------------------------------------ provision of this Plan, Excess Contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each Plan Year to Participants to whose accounts such Excess Contributions were allocated for the preceding Plan Year. If such excess amounts are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a ten percent excise tax will be imposed on the Employer maintaining the Plan with respect to such amounts. Such distributions shall be made to Highly Compensated Employees on the basis of the respective portions of the Excess Contributions attributable to each of such Employees. Excess Contributions shall be adjusted for any income or loss up to the date of distribution. The income or loss allocable to Excess Contributions is the sum of: (1) income or loss allocable to the Participant's Elective Deferral Account (and, if applicable, the Qualified Non-elective Contribution Account) for the Plan Year multiplied by a fraction, the numerator of which is such Participant's Excess Contributions for the Year and the denominator of which is the Participant's account balance attributable to Elective Deferrals (and Qualified Non-elective Contributions, if any of such contributions are included in the ADP test) without regard to any income or loss occurring during such Plan Year; and (2) ten percent of the amount - 18 - determined under (1) multiplied by the number of whole calendar months between the end of the Plan Year and the date of distribution, counting the month of distribution if distribution occurs after the 15th of such month. Excess Contributions shall be distributed from the Participant's Elective Deferral Account (if applicable) in proportion to the Participant's Elective Deferrals (to the extent used in the ADP test) for the Plan Year. Excess Contributions shall be distributed from the Participant's Qualified Non-elective Contribution Account only to the extent that such Excess Contributions exceed the balance in the Participant's Elective Deferral Account. 5. Distribution of Excess Aggregate Contributions. Notwithstanding ---------------------------------------------- any other provision of this Plan, Excess Aggregate Contributions, plus any income and minus any loss allocable thereto, shall be forfeited, if forfeitable, or if not forfeitable, distributed, no later than the last day of each Plan Year to Participants to whose accounts such Excess Aggregate Contributions were allocated for the preceding Plan Year. If such Excess Aggregate Contributions are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a ten percent excise tax will be imposed on the Employer maintaining the Plan with respect to those amounts. Excess aggregate contributions shall be treated as annual additions under the Plan. Excess Aggregate Contributions shall be adjusted for any income or loss up to the date of distribution. The income or loss allocable to Excess Aggregate Contributions is the sum of: (1) income or loss allocable to the Participant's Matching Contribution Account (if any, and if all amounts therein are not used in the ADP test) and, if applicable, Qualified Non-elective Contribution Account and Elective Deferral Account for the Plan Year multiplied by a fraction, the numerator of which is such Participant's Excess Aggregate Contributions for the Year and the denominator of which is the Participant's account balance attributable to Contribution Percentage Amounts without regard to any income or loss occurring during such Plan Year; and (2) ten percent of the amount determined under (1) multiplied by the number of whole calendar months between the end of the Plan Year and the date of distribution, counting the month of - 19 - distribution if distribution occurs after the 15th of such month. Forfeitures of Excess Aggregate Contributions may either be reallocated to the accounts of Non-highly Compensated Employees or applied to reduce Employer contributions, as elected by the Employer in the Adoption Agreement. Excess Aggregate Contributions shall be forfeited, if forfeitable or distributed on a pro-rata basis from the Participant's Matching Contribution Account (and, if applicable, the Participant's Qualified Non-elective Contribution Account or Elective Deferral Account, or both). 6. Code Section 415 Limits. Pursuant to Code section 415, the total ----------------------- of the Employee and Participating Company contributions on behalf of a Participant for each Plan Year (his "annual additions") shall not exceed the lesser of $30,000 (or such larger amounts as reflect cost of living increases pursuant to section 415 of the Code) or 25 percent of the Participant's total compensation for such Plan Year. For purposes of this Section, the term "annual additions" means the total each Plan Year of a Participating Company's contributions, the Employee's contributions and Forfeitures. Rollover contributions and loan repayments are not annual additions for this purpose. For purposes of applying these limitations, the term "compensation" shall have the meaning ascribed to it in regulations under Code section 415. In general, these regulations define compensation to mean an Employee's W-2 compensation from a Participating Company but excluding income derived from the exercise of stock options, from the disqualification of an incentive stock option, from restricted stock or from income imputed from the payment of life insurance premiums, and shall include, effective January 1, 1998, any elective deferral (as defined in Code Section 402(g)(3)), and any amount which is contributed or deferred by the Employer at the election of the Participant and which is not includible in the gross income of the Participant by reason of Code Sections 125 or 457. In addition to the amounts calculated under this Plan, annual additions shall include such amounts, similarly calculated, that are contributed with respect to the Participant to any other defined contribution plan - 20 - maintained by a Participating Company or by any Affiliated Company and Participating Company contributions to an individual medical account as described in Code sections 415(1) and 419A(d)(2). In determining whether a corporation is an Affiliated Company for this purpose only, the percentage control test set forth in section 1563(a) of the Code shall be a 50 percent test in place of the 80 percent test each place the 80 percent test appears in said Code section. If Plan contributions exceed the limits of this Section, first the Participant's contributions shall be reduced, as necessary, to eliminate the excess, in the following order of priority: Post-Tax Supplemental Contributions; Post-Tax Basic Contributions; Pre-Tax Supplemental Contributions; and Pre-Tax Basic Contributions. Post-Tax and Pre-Tax Contributions by a Participant which cause the excess, plus the earnings attributable to such contributions may be returned to the Participant in the event the excess is caused by a reasonable error in estimating a Participant's annual compensation or any other cause which is acceptable under Treasury Regulation section 1.415- 6(b)(6). If an excess still exists, the Participating Company's contribution shall be reduced as necessary. The provisions of this paragraph are effective for Plan Years beginning prior to January 1, 2000. For Plan Years beginning on and after January 1, 2000, these provisions shall no longer be applicable. If a person participates at any time in both a defined benefit plan and a defined contribution plan maintained by a Participating Company or an Affiliated Company, the sum of the defined benefit plan fraction and the defined contribution plan fraction for any Plan Year may not exceed l.0. For purposes of this Section, the defined contribution plan fraction for any Plan Year is a fraction the numerator of which is the person's annual additions in such Plan Year and all prior years of employment, as determined above, and the denominator of which is the lesser of the following amounts for such Year and for each prior Year: (a) l.25 times the dollar limitation of Code section 4l5(c)(l)(A) for the pertinent Year or (b) l.4 times the amount that could be taken into account under the limitation of Code section 4l5(c)(l)(B) for the Participant. The defined benefit plan fraction for any Plan Year is a fraction the numerator of which is the Participant's projected annual benefit under all plans maintained by a Participating Company or an Affiliated Company and the - 21 - denominator of which is the lesser of the following amounts for such Year: (a) l.25 times the dollar limitation of Code section 4l5(b)(l)(A) for such Year or (b) l.4 times the amount that could be taken into account under the percentage limitation of Code section 4l5(b)(l)(B) for the Participant for such Year. The Committee shall monitor the contributions and benefits with respect to each Participant under all plans maintained by a Participating Company and any Affiliated Company. The Committee, in its sole discretion, shall reduce any such contributions or benefits to prevent the combined fractions from exceeding 1.0. Article V Investment of Contributions --------------------------- 5.1 Investment Funds. The Trustee shall establish a Company Stock fund ---------------- and such other investment funds as shall be designated from time to time by any Board-appointed committee authorized to select investment funds. 5.2 Investment of Company Contributions. All Participating Company ----------------------------------- contributions and the earnings thereon shall be invested initially in Company Stock. All Company Stock so invested shall remain in the Company Stock fund until the fifth anniversary of the date of investment (the "Restricted Stock"). At the expiration of the five year period the Restricted Stock in a Participant's Account shall lose its investment restriction and may be invested by the Participant, pursuant to Section 5.5 and any rules established by the Committee thereunder, in any other fund option or left in the Company Stock fund. 5.3 Investment of Participant Contributions. Each Participant will --------------------------------------- direct, at the time he elects to become a Participant under the Plan, that his Participant contributions be invested in one or more available fund options in accordance with any rules the Committee in its discretion may establish. In the event no election is made, all contributions will be invested in a fixed income fund option designated by the Committee for this purpose. 5.4 Changing the Current Investment Election. A Participant's investment ---------------------------------------- election for his Participant contributions will continue in effect until changed by - 22 - the Participant. A Participant may change his current investment election as to his future Participant contributions effective no later than the first payroll period as is administratively practicable after the date such election to change is received by the Committee or its designee. Such changes may be made only as frequently as the Committee in its sole discretion may permit and in accordance with any rules the Committee in its discretion may establish. 5.5 Changing the Investment of Accumulated Contributions. A Participant ---------------------------------------------------- may change his investment election as to some or all of his entire Participant Account balance except for the Restricted Stock. Such changes may be elected only as frequently as the Committee in its sole discretion may permit and in accordance with any rules the Committee in its discretion may establish. 5.6 Voting Rights with Respect to Company Stock. Each Participant shall ------------------------------------------- have the right to vote all shares of Company Stock held in the Participant's Account. Each Participant shall also have the right to direct the Trustee whether to tender such shares of Company Stock in the event an offer is made by any person other than the Company to purchase such shares. The Committee shall make any such arrangements with the Trustee as may be appropriate to pass such voting or tender offer rights through to a Participant. In the event a Participant fails to vote his shares or fails to indicate his preference with respect to a tender offer, the Trustee shall vote the Participant's shares or tender his shares in the same proportions as those Plan Participants who did respond, cast their votes or tendered their shares. Article VI Participant Accounts -------------------- 6.l Individual Accounts. The Committee shall create and maintain (or ------------------- direct to be created and maintained) individual accounts as records for disclosing the interest in the Trust of each Participant, former Participant and Beneficiary. Such accounts shall record credits and charges in the manner herein described. When appropriate, a Participant shall have five separate accounts, a Restricted Company Contribution Account, an Unrestricted Company Contribution Account, a Participant Pre-Tax Contribution Account, a Participant Post-Tax - 23 - Contribution Account and a Rollover Account. The maintenance of individual accounts is only for accounting purposes, and a segregation of the assets of the Trust to each account shall not be required. 6.2 Account Adjustments. Participant Accounts shall be adjusted as ------------------- follows: (a) Earnings: The earnings (including losses as well as gains) of -------- the Trust shall be allocated to the Participant Accounts of Participants who have balances in their Accounts on each Valuation Date. The allocation shall be made in the proportion that the amounts in each Participant Account bear to the total amounts in all of the Participant Accounts similarly invested. In determining the value of Plan assets, each valuation shall be based on the fair market value of assets in the Trust on the Valuation Date. Notwithstanding the foregoing paragraph or any other provision of the Plan, to the extent that Participants' Accounts are invested in mutual funds or other assets for which daily pricing is available ("Daily Pricing Media"), all amounts contributed to the Trust Fund will be invested at the time of their actual receipt by the Daily Pricing Media, and the balance of each Account shall reflect the results of such daily pricing from the time of actual receipt until the time of distribution. Investment elections and changes pursuant to Article V shall be effective upon receipt by the Daily Pricing Media. References elsewhere in the Plan to the investment of contributions "as of" a date other than that described in this Section 6.2(a) shall apply only to the extent, if any, that assets of the Trust Fund are not invested in Daily Pricing Media. (b) Participating Company contributions: If Daily Pricing Media is ----------------------------------- in effect as described in Section 6.2(a) Company Fixed, Matching and Profit Sharing Contributions will be invested at the time of actual receipt by the Daily Pricing Media. If Daily Pricing Media is not in effect, as of the end of each month the Company Fixed, Matching and Profit Sharing Contributions on behalf of a Participant during the month shall be allocated to the Participant's Restricted Company Contribution Account. - 24 - (c) Participant contributions: If Daily Pricing Media is in effect ------------------------- as described in Section 6.2(a) a Participant's contributions will be invested at the time of actual receipt by the Daily Pricing Media. If Daily Pricing Media is not in effect, a Participant's contributions made during a month shall be allocated to his Pre- Tax or Post-Tax Contribution Account, as the case may be, as of the end of each month. (d) Distributions and withdrawals: Distributions and withdrawals ----------------------------- from a Participant's Account shall be charged to the Account as of the date paid. (e) Forfeitures: As of the end of each Plan Year, Forfeitures which ----------- have become available during such Plan Year and are not required for allocation under Section 6.2(f) below shall be used to reduce the Participating Company's current or its next succeeding contributions to the Plan. (f) Forfeiture Account: In the event a Participant is entitled to ------------------ receive a vested benefit pursuant to the terms of Section 7.2 but later returns to the service of a Participating Company prior to incurring five consecutive one year breaks in service, the nonforfeitable amount in his pre-termination Restricted Company Contribution Account plus the amount of his Forfeiture at the time of termination shall be credited to a separate account as of the end of the Plan Year when he returns. The restoration of the Forfeiture shall be made, first, from any other Forfeitures arising in such Year prior to disposition under Section 6.2(e) and, if not available from such Forfeitures, from Participating Company contributions for the Year. At any relevant time, the Participant's nonforfeitable portion of the separate account will be equal to an amount ("X") determined by the formula: X = P(AB + (R x D)) - (R x D) For purposes of applying this formula: P is the nonforfeitable percentage at the relevant time; AB is the account balance at the relevant time; D is the amount of the distribution; and R is the ratio of the account balance at the relevant time to the account balance after distribution. - 25 - The separate account need not be maintained after a Participant has incurred five consecutive one year breaks in service after the distribution of benefits to him. For purposes of this Section a one year break in service means a Plan Year during which an Employee performs no services for a Participating Company or an Affiliated Company. 6.3 Statements to Participants. On a periodic basis, but no less -------------------------- frequently than once during each Plan Year, the Committee (or its designee) will provide each Participant with a statement showing his interests in the Plan's various investment funds. The statement may show a Participant's interest in the Company Stock fund in terms of the number of shares of Company Stock, their dollar value, or both. As an alternative to showing the dollar or stock value of each Account, the Committee in its discretion may express each Participant's interest in terms of units. 6.4. Transfer of Accounts Among Related Company Plans. If a Participant ------------------------------------------------ ceases to be within an eligible class of Participants under this Plan but becomes covered by a substantially similar 401(k) plan sponsored by Frontier Corporation or any corporation or business entity in which it has a 50 percent or more ownership or profits interest, the Committee may in its sole discretion transfer the Participant's accounts to the other 401(k) plan without the Participant's consent. Similarly, if a Participant in this Plan previously participated in another such 401(k) plan, the Participant's accounts in the other 401(k) plan may be transferred to this Plan without the Participant's consent. In any event, the value of the Participant's accounts subject to any such transfer shall be the same immediately following the transfer as they were immediately prior to the transfer and any other benefits, rights and features of the transferor plan which are "protected benefits" within the meaning of Code section 411(d)(6) shall continue to apply to the transferred funds within the transferee plan. The timing and the mechanics of any transfer shall be within the sole discretion of the Committee. Article VII Retirement or Other Termination of Employment --------------------------------------------- 7.1 Retirement or Disability. If a Participant's employment with a ------------------------ Participating Company is terminated - 26 - (i) at or after his Normal Retirement Age, (ii) at or after his Early Retirement Age, or (iii) at an earlier age because of disability, the Participant's accounts shall all be fully vested and he shall be entitled to receive the entire balance of such accounts in accordance with the provisions of Article IX. For purposes of this Section 7.1 the term "disability" means a physical or mental condition which, in the judgment of the Committee, based on medical reports and other evidence satisfactory to the Committee, will permanently prevent an Employee from satisfactorily performing his usual duties for a Participating Company and which entitle the Employee to receive Social Security disability benefits. If a Participant terminates employment, whether voluntarily or involuntarily, prior to suffering a disability or prior to age 55, he shall receive only that portion of his accounts that have become vested under Section 7.2. 7.2 Vested Benefits. If a Participant terminates employment with a --------------- Participating Company before he reaches age 55 or suffers a disability, he shall be entitled to receive the entire amount credited to his Participant Pre-Tax Contribution Account, his Participant Post- Tax Contribution Account and his Rollover Account plus the amount in his Restricted Company Contribution Account which has become vested. The vested amount in the Restricted Company Contribution Account shall be determined in accordance with the provisions of Appendix B. If any Plan amendment changes the Plan's vesting schedule, each Participant in the Plan as of the date the new schedule is adopted shall have his vested percentage determined under the vesting schedule which provides him with the greatest vested benefit at any particular point in time. Any Forfeiture that may arise by virtue of the application of this Section shall be treated in accordance with the provisions of Section 6.2(e). Notwithstanding the foregoing, any benefit that is currently payable from the Plan to a recipient who cannot be located despite reasonable efforts to do so, shall be forfeited. All forfeitures with respect to lost Participants and Beneficiaries shall be used to reduce a Participating Company's current or next - 27 - succeeding contributions to the Plan. In the event the lost Participant or Beneficiary subsequently makes a claim for the forfeited benefits, the Participating Company shall restore to the Plan the forfeited benefit plus earnings based on returns from the Plan's fixed income investment option from the date of forfeiture to the date the forfeited benefit is restored. Article VIII Death ----- 8.l Death While Actively Employed. If a Participant dies while actively ----------------------------- employed, the Participant's Beneficiary will be entitled to receive l00 percent of the value of his Participant Account. This amount shall consist of the Account's value as of the distribution date. 8.2 Death After Retirement. If a Participant dies after retirement, any ---------------------- benefit payable to the Participant's Beneficiary will depend upon the method that has been employed to distribute the value of his Participant Account in accordance with Article IX. 8.3 Beneficiary. If a Participant is married, his Beneficiary shall be ----------- his spouse who shall be entitled to receive his remaining account balance, upon the Participant's death. Upon the written election of the Participant, with his spouse's written consent, a Participant may designate another Beneficiary. This election and spousal consent must either be notarized or be witnessed by a Plan representative and returned to the Committee. If such election has been made or if the Participant is not married, the Participant will designate the Beneficiary (along with alternate Beneficiaries) to whom, in the event of his death, any benefit is payable hereunder. Each Participant has the right, subject to the spousal consent requirement noted above, to change any designation of Beneficiary. A designation or change of Beneficiary must be in writing on forms supplied by the Committee and any change of Beneficiary will not become effective until such change of Beneficiary is filed with the Committee, whether or not the Participant is alive at the time of such filing; provided, however, that any such change will not be effective with respect to any payments made by the Trustee in accordance with the Participant's last designation and prior to the time such change was received by the Committee. The interest of any - 28 - Beneficiary who dies before the Participant will terminate unless otherwise provided. If a Beneficiary is not validly designated, or is not living or cannot be found at the date of payment, any amount payable pursuant to this Plan will be paid to the spouse of the Participant if living at the time of payment, otherwise in equal shares to such children of the Participant as may be living at the time of payment; provided, however, that if there is no surviving spouse or child at the time of payment, such payment will be made to the estate of the Participant. Article IX Payment of Benefits ------------------- 9.l Form of Payment. Except as may be restricted by Sections 9.2 and 9.3, --------------- any Participant or, if the choice is his, any Beneficiary who is entitled to receive benefits under Articles VII or VIII may elect to receive the amount in the Participant Account in accordance with one of the following elections, all of which shall be actuarial equivalents: OPTION A: A lump sum. OPTION B: Periodic payments of substantially equal amounts for a specified number of years not in excess of twenty. Such periodic payments shall be made at least annually. In the event periodic payments are elected, the Participant shall direct how the remaining balance of his account is to be invested. OPTION C: For any amounts transferred to this Plan from another plan containing payment options in addition to Options A & B, any option available under the other plan as set forth in Appendix B. Payments under this Option C shall be available only with respect to the transferred funds. Amounts allocated to a Participant Account after the transfer date shall be paid out only under Option A or Option B. 9.2 Option C Requirements for Married Participants. If a married ---------------------------------------------- Participant elects an annuity under Option C, unless he makes a written election, as outlined below, to the contrary his form of benefit shall be a Qualified Joint and Survivor Annuity. If benefits become payable on account of the death of a married Participant to whom an annuity option is available - 29 - under Option C, the normal form of benefit shall be a Qualified Pre- Retirement Survivor Annuity. These benefits shall become automatically payable unless the Participant or his spouse, as the case may be, makes a written election within the Election Period to receive one of the alternate forms of benefits specified in Section 9.1 or Appendix B. An election by the Participant must be consented to by his spouse in writing. The spouse's consent shall acknowledge the effect of the election and shall be either notarized or witnessed by a Plan representative. Failure to obtain the spouse's consent or the revocation of a previously designated optional method of payment shall result in payment of benefits in the form of a Qualified Joint and Survivor Annuity or a Qualified Pre-Retirement Survivor Annuity, as the case may be, unless another election is made. To assist the Participant and his spouse in making any election with respect to waiving the Qualified Joint and Survivor Annuity, the Committee shall provide the Participant, not less than 30 nor more than 90 days before his 55th birthday a retirement application form describing the normal and optional forms of benefit payments, including their relative financial effects in terms of dollars per annuity payment on the Participant and his spouse. This form shall provide a place for the Participant to indicate his annuity starting date and the form of benefit he desires. A Participant may elect (with the consent of his or her spouse where spousal consent is required) to waive the requirement that a written explanation of certain payment options be provided at least 30 days before the annuity starting date (and the 30 day applicable election period for making certain elections) if the actual distribution commences more than seven days after the written explanation is provided. In the case of a Qualified Pre-Retirement Survivor Annuity, a substantially similar notice shall be provided to the Participant during the period beginning on the first day of the Plan Year in which the Participant attains age 32 and ending on the last day of the Plan Year preceding the Plan Year in which the Participant attains age 35. 9.3 Payments from Company Stock Fund. If a recipient elects a lump sum -------------------------------- payment under Option A of Section 9.l - 30 - or installment payments under Option B of Section 9.l, payment from the Participant's Company Stock fund account may be made either in cash or in Company Stock. If a person elects, or pursuant to Section 9.2 is required, to receive any annuity option under Section 9.2 or Option C, the amounts in his Company Stock fund shall be liquidated and combined with his amounts in all other investment funds to purchase an annuity contract pursuant to which only cash benefits will be paid. 9.4 Time of Payment. A Participant or Beneficiary who becomes entitled to --------------- receive a benefit at any time when the Participant Account is $5,000 or less will be cashed out for the full amount of the account balance as soon as administratively practicable. If the account balance is in excess of $5,000 it shall be paid prior to Normal Retirement Age only with the written consent of the Participant and, if married, with the consent of the Participant's spouse in a writing which acknowledges the effect of such consent and which is witnessed by a Plan representative or is notarized. In the case of death, the written consent of the Participant's Beneficiary shall be required for amounts in excess of $5,000. Benefit payments shall normally begin not later than the April l following the calendar year during which the event giving rise to the eligibility for payment shall have occurred. In no event shall benefits begin later than sixty days after the close of the Plan Year in which the latest of the following occurs: (1) the Participant's attainment of age 65; (2) the 10th anniversary of the year in which the Participant commenced participation in this Plan; (3) the termination of the Participant's service with a Participating Company; or (4) the date specified in writing to the Committee by the Participant (but not later than the year in which he attains age 70 1/2). Distributions shall commence no later than the April 1 of the calendar year following the later of the calendar year in which the Participant attains age seventy and one-half (70-1/2) or the calendar year in which the Participant terminates employment with the Company. Notwithstanding the foregoing, a 5 percent owner of the Company shall commence receipt of benefits no later than the April 1 of the calendar year following the year he reaches age 70-1/2 even if he remains in the active employ of the Company. - 31 - Notwithstanding any direction by the Participant to the contrary, all payments must be payable pursuant to a schedule whereby the entire amount in the Participant's Account is paid over a period that does not extend beyond the life of the Participant or over the lives of the Participant and any individual he has designated as his Beneficiary (or over the life expectancies of the Participant and his designated individual Beneficiary). In addition, unless the benefit is payable as a Qualified Joint and Survivor Annuity, the payment method selected must provide that more than 50 percent of the present value of the payments projected to be paid to the Participant and his Beneficiary will be paid to the Participant during his life expectancy. In the event of the death of a Participant, former Participant or Beneficiary while benefits are being paid under a schedule which meets the requirements of the preceding paragraph, payments shall continue pursuant to a schedule which is at least as rapid as the period selected. In the event of the death of a Participant or former Participant before benefit payments have commenced, any death benefit shall be distributed within five years of death unless the following conditions are met: (i) payments are made to an individual Beneficiary designated by the Participant; (ii) payments are made for the life of such individual Beneficiary or over a period not extending beyond his life expectancy; and (iii) payments commence within one year of death. If the designated Beneficiary is the Participant's spouse, payments will be paid within a reasonable period of time after the Participant's death, but may be delayed until the date the Participant would have attained age 70 1/2, if the Beneficiary so elects. If the spouse dies before payments begin, the rules of this paragraph shall be applied as if the spouse were the Participant. Notwithstanding the provisions of this Section the distribution requirements of Code section 401(a)(9) and the regulations thereunder are hereby incorporated by this reference and shall supersede any conflicting Plan provisions. 9.5 Death of Participant Prior to Receiving Full Distribution. Except as --------------------------------------------------------- provided in Section 8.2, if a - 32 - Participant dies after having terminated employment and prior to receiving a distribution of his Participant Account, then the payments that would otherwise have been made to the Participant will be made to his Beneficiary, or, in the absence of a Beneficiary, to his estate in accordance with applicable state law. 9.6 QDROs. Benefits shall be payable under this Plan to an alternate ----- payee pursuant to the terms of any qualified domestic relations order. The Committee has the responsibility for determining if a domestic relations order is qualified and whether its payment terms are consistent with the terms of the Plan. If appropriate, the amounts subject to a QDRO may be segregated from the Participant's Account and placed in a separate account for the benefit of the alternate payee who shall thereupon be treated for Plan purposes as a Participant. Any amounts payable to an alternate payee may, at the alternate payee's request, be paid from the Plan immediately pursuant to the terms of the QDRO and this Plan. 9.7 Direct Rollovers from this Plan. Notwithstanding any provision of the ------------------------------- Plan to the contrary that would otherwise limit a Participant's election under this Section, a Participant may elect, at the time and in the manner prescribed by the Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the Participant in a direct rollover. An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the Participant except that an eligible rollover distribution does not include 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 Participant or the joint lives (or joint life expectancies) of the Participant and the Participant's designated Beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under section 401(a)(9) of the Code; the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to Company securities); and any withdrawal on account of hardship as described in Code section 401(k)(2)(B)(i)(IV). An eligible retirement plan is an individual retirement account described in section 408(a) of the Code, an - 33 - individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code, that accepts the Participant's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. For these purposes, a Participant includes an Employee or former Employee who has an account balance in the Plan. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in section 414(p) of the Code, are Participants with respect the interest of the spouse or former spouse. A direct rollover is a payment by the Plan to the eligible retirement plan specified by the Participant. Article X Withdrawals and Loans During Employment --------------------------------------- 10.1 Age 59 1/2 Withdrawals. A Participant who has reached age 59 1/2 but ---------------------- who has not yet terminated employment may withdraw all or a portion of his vested accumulated account balance under the Plan subject to the limitations specified in Section 10.4. 10.2 Participant Post-Tax Contributions. A Participant may, by filing a ---------------------------------- request with the Committee, signed by the Participant and the Participant's spouse, elect to withdraw amounts in his Participant Post-Tax Contribution Account as follows: (a) Contributions. A withdrawal of up to l00 percent of Participant ------------- Post-Tax Contributions or, if less, l00 percent of the then value of such contributions may be made from the Plan. (b) Earnings. A withdrawal of up to l00 percent of the earnings on -------- Post-Tax Contributions may be made by a Participant from the Plan. 10.3 Participant Pre-Tax Contributions. No earnings in a Participant's --------------------------------- Pre-Tax Contribution Account may be - 34 - withdrawn prior to age 59 1/2. A Participant may withdraw his Pre-Tax Contributions from his Participant Pre-Tax Contribution Account prior to age 59 1/2 only if the withdrawal is made on account of an immediate and heavy financial need of the Participant that cannot be satisfied from other resources available to the Participant. For purposes of this Section an immediate and heavy financial need shall mean (1) expenses incurred for medical care or necessary to obtain medical care for a Participant, a Participant's spouse or a Participant's dependent; (2) the purchase of a Participant's principal residence; (3) tuition and related educational fees for post-secondary education but only for the next 12 months for a Participant, a Participant's spouse or a Participant's dependent, or remedial school tuition; (4) prevention of eviction or mortgage foreclosure; (5) expenses arising from the death of a spouse or dependent; (6) financial loss due to a sudden catastrophe; (7) extraordinary legal expenses; (8) adoption expenses; or (9) any other need recognized by the IRS in documents of general applicability. A Participant will be deemed to lack other resources if all of the following conditions are satisfied: (1) the Participant must have obtained all distributions (except hardship) and all nontaxable loans available from all plans of any Participating Company; (2) the Participant may not make any contributions to any plan of any Participating Company for at least 12 months following the hardship withdrawal and (3) the dollar limit on pre-tax contributions ($10,000 as indexed for inflation after 1999) for the calendar year following the hardship shall be reduced by the amount of the hardship withdrawal. If the foregoing conditions are not satisfied, the Committee may reasonably rely on statements and representations made by the Participant with respect to his lack of other financial resources. The amount of the withdrawal cannot exceed the amount required to relieve the financial need (including any amounts necessary to pay federal, state or local income taxes or penalties reasonably anticipated to result from the distribution). l0.4 Limitations on In-Service Withdrawals. ------------------------------------- (a) No more than two in-service withdrawals are permitted in any one Plan Year. (b) No withdrawal will be permitted under this Article unless the amount to be withdrawn is at - 35 - least $200 or l00% of the aggregate value of the Participant's relevant account from which withdrawals are being requested if such value is less than $200. (c) Unless otherwise specified by the Participant, any withdrawal of Participant contributions from his Participant Post-Tax Contribution Account will be satisfied first by a withdrawal of his pre-1987 contributions, if any, and then by a withdrawal of his post-1986 contributions and/or earnings on contributions. (d) Any withdrawal from a Participant's Post-Tax Contribution Account will result in an automatic suspension of the Participant's right to make future Plan contributions for a period of six months from the date of the withdrawal. During the period of suspension, Company Matching Contributions will also be suspended. Finally, after the Participant resumes making contributions to the Plan, no make-up contributions will be permitted for the period of the suspension. 10.5 Fund to be Charged with Withdrawal. A Participant may specify the ---------------------------------- investment fund or combination of funds to which a withdrawal is to be charged. If the Participant fails to make any designation, a distribution will be made out of the Participant's interest in each of the funds in proportion to the Participant's share in these funds. 10.6 Loans to Participants. The Trustee shall, if the Committee directs, --------------------- make a loan to a Participant from any or all of the Participant's accounts subject to such rules as the Committee may prescribe and subject to the following conditions: (a) An application for a loan by a Participant shall be made in writing to the Committee, or through telephonic or electronic processing, as the Committee may determine; (b) Loans will be granted only to active Participants; (c) A loan must be for a minimum of $500, only two loans (only one for the purchase of a principal residence) may be outstanding at any one time, and no refinancings will be permitted except as may be specifically permitted by the Committee; - 36 - (d) No loan shall be made to the extent that such loan when added to all other loans to the Participant would exceed the lesser of (1) 50 percent of the vested amounts in all of the Participant's accounts under the Plan or (2) $50,000 reduced by the excess, if any, of the highest outstanding balance of loans during the one year period ending on the day before the loan is made over the outstanding balance of loans to the Participant on the date the loan is made. In determining whether the foregoing loan limits are satisfied all loans from all plans of a Participating Company and of any Affiliated Company shall be aggregated. (e) The period of repayment for any loan shall be arrived at by mutual agreement between the Committee and the borrower, but such period in no event shall exceed five years except that a loan may be granted for a period not to exceed 25 years if the proceeds are used to purchase the Participant's principal residence; (f) All loans must be repaid under a substantially level amortization period with payments being made at least quarterly; (g) Each loan shall be made against collateral being the assignment of 50 percent of the borrower's entire right, title and interest in and to the Trust Fund, supported by the borrower's collateral promissory note for the amount of the loan, including interest, payable to the order of the Trustee and/or such other collateral as the Committee may require; (h) Each loan shall bear interest at a rate fixed by the Committee. The rate shall be commensurate with the rates charged by persons in the business of lending money for loans which would be made under similar circumstances. Interest rates granted at different times and to Participants in differing circumstances may vary depending on such differences; (i) A loan shall be treated as a directed investment by the borrower with respect to his accounts. The interest paid on the loan shall be credited to the borrower's accounts and he shall not share in the earnings of the Plan's assets with respect to the amounts borrowed and not yet repaid; - 37 - (j) A loan to a married Participant requires the written, notarized consent of the Participant's spouse; (k) No distribution shall be made to any Participant, former Participant or Beneficiary unless and until all unpaid loans, including accrued interest thereon, have been liquidated or offset against the account; (l) The Committee may, in its discretion, charge a fee to process and maintain Plan loans, which shall be deducted from the accounts of Participants who take loans. The amounts of such fees shall be determined from time to time by the Committee; and (m) Loan repayments will be suspended under this Plan as permitted under Section 414(u)(4) of the Code. Article XI Plan Administration ------------------- 11.1 Appointment of Committee. The Board shall appoint an Employees' ------------------------ Benefit Committee to administer the Plan. Any person, including an officer or other employee of a Participating Company, is eligible for appointment as a member of the Committee. Such members shall serve at the pleasure of the Board. Any member may resign by delivering his written resignation to the Board. Vacancies in the Committee shall be filled by the Board. 11.2 Named Fiduciary and Plan Administrator. The Committee shall be the -------------------------------------- Named Fiduciary and Plan Administrator as these terms are used in ERISA. The Committee shall appoint a Secretary who shall also be the agent for the service of legal process. 11.3 Powers and Duties of Committee. The Committee shall administer the ------------------------------ Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan, except such powers as are specifically reserved to the Board or some other person. The Committee's powers include the power to make and publish such rules and regulations as it may deem necessary to carry out the provisions of the Plan. The Committee shall interpret the Plan and shall - 38 - determine all questions arising in the administration, interpretation, and application of the Plan. The Committee shall notify the Trustee of the liquidity and other requirements of the Plan from time to time. 11.4 Operation of Committee. The Committee shall act by a majority of its ---------------------- members at the time in office, and such action may be taken either by a vote at a meeting or without a meeting. Any action taken without a meeting shall be reflected in a written instrument signed by a majority of the members of the Committee. A member of the Committee who is also a Participant shall not vote on any question relating specifically to himself. Any such question shall be decided by the majority of the remaining members of the Committee. The Committee may authorize any one or more of its members to execute any document on behalf of the Committee, in which event the Committee shall notify the Trustee in writing of such action and the name or names of its member or members so designated. The Trustee thereafter shall accept and rely upon any document executed by such member or members as representing action by the Committee until the Committee shall file with the Trustee a written revocation of such designation. The Committee may adopt such by-laws or regulations as it deems desirable for the conduct of its affairs. The Committee shall keep a record of all its proceedings and acts and shall keep all such books of account, records, and other data as may be necessary for the proper administration of the Plan. 11.5 Power to Appoint Advisers. The Committee may appoint such actuaries, ------------------------- accountants, attorneys, consultants, other specialists and such other persons as it deems necessary or desirable in connection with the administration of this Plan. Such persons may, but need not, be performing services for a Participating Company. The Committee shall be entitled to rely upon any opinions or reports which shall be furnished to it by any such actuary, accountant, attorney, consultant or other specialist. 11.6 Expenses of Plan Administration. The members of the Committee shall ------------------------------- serve without compensation for their services as such, but their reasonable expenses shall be paid by the Company. To the extent not paid from Fund assets, as determined from time to time by any Board- appointed committee, all reasonable expenses of - 39 - administering the Plan shall be paid by the Company, including, but not limited to, fees of the Trustee, accountants, attorneys, consultants, and other specialists. 11.7 Duties of Fiduciaries. All fiduciaries under the Plan and Trust shall --------------------- act solely in the interests of the Participants and their Beneficiaries and in accordance with the terms and provisions of the Plan and Trust Agreement insofar as such documents are consistent with ERISA, and with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. Any person may serve in more than one fiduciary capacity with respect to the Plan and Trust. 11.8 Liability of Members. No member of the Committee shall incur any -------------------- liability for any action or failure to act, excepting only liability for his own breach of fiduciary duty. To the extent not covered by insurance, the Company shall indemnify each member of the Committee and any Board-appointed committee and any employee acting on their behalf against any and all claims, loss, damages, expense and liability arising from any action or failure to act. 11.9 Allocation of Responsibility. The Board, Trustee, Investment Manager ---------------------------- and the committees established to administer the Plan possess certain specified powers, duties, responsibilities and obligations under the Plan and Trust. It is intended under this Plan that each be solely responsible for the proper exercise of its own functions and that each shall not be responsible for any act or failure to act of another, unless otherwise responsible as a breach of its own fiduciary duty. (a) Generally, the Board shall be responsible for appointing the members of the committees it may establish to administer this Plan. If this Plan shall at any time permit employees to invest any portion of Plan assets in Company securities, the Board shall have sole authority to terminate this Plan and to make any discretionary amendments, while any Board-appointed committee given such authority shall have authority for making non- discretionary amendments and for recommending to the Board any other Plan amendments it deems appropriate. - 40 - (b) The Board-appointed committees so authorized shall have the responsibilities of making Plan amendments not specifically reserved to the Board in the preceding subsection, including sole discretion to amend the Plan if employees are not authorized to invest Plan assets in Company securities, to select Investment Managers, to direct the Trustee and the Investment Managers with respect to all matters relating to the investment of Plan assets, to review and report to the Board on the investment policy and performance of Plan assets and generally to administer the Plan according to its terms. (c) The Trustee or the Investment Manager, as the case may be, is responsible for the management and control of the Plan's assets as specifically provided in the Trust Agreement or investment manager agreement. (d) The Board may dissolve any committee it appoints or reserve to itself any of its powers previously delegated to a Board- appointed committee. In addition, the Board may reorganize the committees it establishes from time to time and reallocate their responsibilities among them or assign them to other persons or committees provided that the Employees' Benefit Committee shall at all times continue as plan administrator and named fiduciary as these terms are defined in ERISA unless the Board formally amends the Plan to reallocate these responsibilities. The Board and the various committees may designate persons, including committees, other than named fiduciaries to carry out their responsibilities (other than trustee responsibilities) under the Plan. 11.10 Claims Review Procedure. The Committee shall maintain a procedure ----------------------- under which any Participant or Beneficiary may assert a claim for benefits under the Plan. Any such claim shall be submitted in writing to the Committee within such reasonable period as the rules of the Committee may provide. The Committee shall take action on the claim within 60 days following its receipt and if it is denied shall at such time give the claimant written notice which clearly sets forth the specific reason or reasons for such denial, the specific Plan provision or provisions on which the denial is based, any additional information necessary for the claimant to perfect the claim, if possible, an - 41 - explanation of why such additional information is needed, and an explanation of the Plan's claims review procedure. The review procedure shall allow a claimant at least 60 days after receipt of the written notice of denial to request a review of such denied claim, and the Committee shall make its decision based on such review within 60 days (l20 days if special circumstances require more time) of its receipt of the request for review. The decision on review shall be in writing and shall clearly describe the reasons for the Committee's decision. Article XII Amendment and Termination ------------------------- 12.1 Right to Amend or Terminate. Any amendment may be made to this Plan --------------------------- which does not cause any part of the Plan's assets to be used for, or diverted to, any purpose other than the exclusive benefit of Participants, former Participants, or Beneficiaries, provided however, that any amendment may be made, with or without retroactive effect, if such amendment is necessary or desirable to comply with applicable law and provided further that any amendment shall be consistent with the terms and conditions of any relevant collective bargaining agreement whose terms and conditions are not in conflict with applicable law. Except in the case where approved by the Secretary of Labor because of substantial business hardship, as provided in section 412(c)(8) of the Code, no amendment shall be made to the Plan if it would decrease the accrued benefit of any Participant, eliminate or reduce an early retirement benefit or eliminate an optional form of benefit as may be provided in regulations under Code section 411(d)(6). If any provisions of this Plan relating to the percentage of a Participant's accrued benefit that is vested are changed, any Participant with at least three years of service may elect, by filing a written request with the Committee within 60 days after the later of (1) the date the amendment was adopted, (2) the date the amendment was effective, or (3) the date the Participant received written notice of such amendment, to have his vested interest computed under the provisions of this Plan as in effect immediately prior to such amendment. 12.2 Full Vesting Upon Termination of Plan. Upon full or partial ------------------------------------- termination of the Plan or upon complete discontinuance of Participating Company contributions, each affected Participant will become l00 percent - 42 - vested in the value of his Participant Account as of the Valuation Date next following such termination or discontinuance. Article XIII Top-Heavy Provisions -------------------- 13.1 Rules to Apply if Plan is Top-Heavy. Notwithstanding any other ----------------------------------- relevant provision of this Plan to the contrary, the following rules will apply for any Plan Year that the Plan becomes "top-heavy" (as defined in Section 13.2): (a) Vesting. Vesting will remain 100 percent at all times after ------- completion of six months' service. (b) Minimum Contributions. For each top-heavy Plan Year the minimum --------------------- contribution allocated to the Participant Account of each non-key employee shall be equal to or greater than the lesser of the following amounts: (i) 3 percent of such non-key employee's compensation; or (ii) the highest percentage-of-compensation allocation made to the Participant Account of any key employee. If the highest rate allocated to a key employee is less than 3% of compensation, amounts contributed as a result of a salary reduction agreement shall be included in determining the rate of contribution on behalf of key employees. For purposes of this subsection, "compensation" shall have the same meaning as in Section 4.4. Minimum contributions will be made to Participant's Account without regard to his level of compensation or his hours of service during a Plan Year. (c) Limitation on Benefits. In applying the dollar limitations under ---------------------- section 415(e) of the Code, the 1.25 limitation shall be supplanted by a 1.0 limitation for each year during which the Plan is top-heavy. (d) Maximum Compensation. The maximum annual compensation of each -------------------- employee that may be taken - 43 - into account under the Plan shall not exceed $160,000 (or such larger amount based on cost of living adjustments as may be permitted under the Code). 13.2 Top-Heavy Definition. For purposes of this Section, the Plan will be -------------------- considered "top-heavy" if on any given determination date (the last day of the preceding Plan Year or, in the case of the Plan's first year, the last day of such Year) the sum of the account balances for key employees is more than 60 percent of the sum of the account balances of all employees, excluding former key employees. The account balances shall include distributions made during any given Plan Year containing the determination date and the preceding four Plan Years but shall not include the account balances for any person who has not received any compensation from any Participating Company at any time during the five-year period ending on the determination date. The method of determining the top-heavy ratio shall be made in accordance with Code section 4l6. In making the top-heavy calculation, (a) all the Company's plans in which a key employee participates shall be aggregated with all other Participating Company plans which enable a plan in which a key employee participates to satisfy the Code's non-discrimination requirements; and (b) all Participating Company plans not included in subparagraph (a), above, may be aggregated with the Participating Company's plans included in subparagraph (a), above, if all of the aggregated plans would be comparable and satisfy the Code's non- discrimination requirements. 13.3 Key Employee Definition. A key employee will be, for the purpose of ----------------------- this Article, any employee or former employee who at any time during the Plan Year containing the determination date or the four preceding Plan Years is such within the meaning of Code section 416. As of the effective date, the term key employee includes the following individuals: (a) an officer (but not more than 50 persons or, if lesser, the greater of 3 or 10 percent of employees) having an annual compensation greater than 50 percent of the dollar limit for benefits payable from a defined benefit plan under Code section 415(b)(1)(A); - 44 - (b) one of 10 employees who has annual compensation from the Participating Company of more than the amount in effect under Code section 415(c)(1)(A) owning the largest interests of the Participating Company. The employee having the greater annual compensation from the Participating Company shall be considered to own the larger interest in the Participating Company if two or more employees had the same ownership interest in the Participating Company; (c) a five-percent owner of the Participating Company; and (d) a one-percent owner of the Participating Company whose annual compensation from the Participating Company exceeds $l60,000. 13.4 Relationship of the Normal and the Top-Heavy Vesting Schedules. If -------------------------------------------------------------- the Plan's top-heavy status changes and this change alters the Plan's normal vesting schedule, no Participant's vested accrued benefit immediately prior to such change in status shall be diminished on account of the change in the vesting schedule. In addition, the vesting for each Participant in the Plan at the time of the change in status shall be determined under whichever schedule provides the greatest vested benefit at any particular point in time. 13.5 Participation in Other Plans. A non-key employee who participates in ---------------------------- both a defined contribution plan and a defined benefit plan of the Participating Company shall not be entitled to receive minimum benefits and/or minimum contributions under all such plans. Instead, the employee shall receive a minimum benefit equal to the lesser of 20 percent of such non-key employee's average compensation or 2 percent of his average compensation multiplied by his number of Years of Service, as set forth in such defined benefit plan. Article XIV General Provisions ------------------ 14.1 Employment Relationship. Nothing contained herein will be deemed to ----------------------- give any Employee the right to be retained in the service of a Participating Company or to interfere with the rights of a Participating Company to discharge any Employee at any time. - 45 - 14.2 Non-Alienation of Benefits. Except as provided in Section 9.6, -------------------------- benefits payable under this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any such liability which arises from the Participant's bankruptcy, prior to actually being received by the person entitled to the benefit under the terms of the Plan; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder, shall be void. The Trust shall not in any manner be liable for, or subject to the debts, contracts, liabilities, engagements or torts of any person entitled to benefits hereunder. Nothing in this Section shall preclude payment of Plan benefits pursuant to a qualified domestic relations order pursuant to Section 9.6. 14.3 Use of Masculine and Feminine; Singular and Plural. Wherever used in -------------------------------------------------- this Plan, the masculine gender will include the feminine gender and the singular will include the plural, unless the context indicates otherwise. 14.4 Plan for Exclusive Benefit of Employees. No part of the corpus or --------------------------------------- income of the Trust will be used for, or diverted to, purposes other than the exclusive benefit of Participants and their Beneficiaries. Anything in the foregoing to the contrary notwithstanding, the Plan and Trust are established on the express condition that they will be considered, by the Internal Revenue Service, as initially qualifying under the provisions of the Internal Revenue Code. In the event that the Internal Revenue Service issues an unfavorable determination with respect to a timely request for a determination that the amended and restated Plan and Trust qualify under the Internal Revenue Code, the Plan and Trust will be of no effect and the value of all contributions made by a Participating Company and Participants since the amendment and restatement will be returned to the Participating Company and Participants, respectively, within one year from the date of the denial of the determination request. Furthermore, if, or to the extent that, a Participating Company's tax deduction for contributions made to the Plan is disallowed, the Participating Company will have the right to obtain the return of any such contributions (to the extent disallowed) for a period - 46 - of one year from the date of disallowance. All Participating Company contributions to this Plan are contingent upon their deductibility under the Code. Finally, if a Participating Company's contribution to the Plan is made by a mistake in fact, the Participating Company will have the right to obtain the return of such contribution for a period of one year from the date the contribution was made. 14.5 Merger or Consolidation of Plan. There will be no merger or ------------------------------- consolidation with, or transfer of any assets or liabilities to, any other plan, unless each Participant will be entitled to receive a benefit immediately after such merger, consolidation, or transfer as if this Plan were then terminated which is at least equal to the benefit he would have been entitled to receive immediately before such merger, consolidation, or transfer as if this Plan had been terminated. 14.6 Payments to Minors and Incompetents. If a Participant or Beneficiary ----------------------------------- entitled to receive any benefits hereunder is a minor or is deemed by the Committee, or is adjudged to be, legally incapable of giving valid receipt and discharge for such benefits, they will be paid to such persons as the Committee might designate or to the duly appointed guardian. 14.7 Governing Law. To the extent that New York law has not been preempted ------------- by ERISA, the provisions of the Plan will be construed in accordance with the laws of the State of New York. IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Plan document on its behalf this 21st day of September, 1999. FRONTIER CORPORATION By: /s/ Barbara J. LaVerdi ------------------------ Its: Assistant Secretary --------------------- APPENDIX A Participating Companies Effective Date of Name of Company Participation - --------------- ------------------ Frontier Communications of AuSable Valley, Inc. 3/1/94 Frontier Communications of Illinois, Inc. 7/1/95 Frontier Communications of Iowa, Inc. 3/1/94 Frontier Communications of Lakeside, Inc. 1/1/95 Frontier Communications of Michigan, Inc. 7/1/95 Frontier Communications - Midland, Inc. 1/1/95 Frontier Communications of Minnesota, Inc. 3/1/94 Frontier Communications of Mt. Pulaski, Inc. 1/1/95 Frontier Communications of New York, Inc. 1/1/98 Frontier Communications - Prairie, Inc. 1/1/95 Frontier Communications of Sylvan Lake, Inc. 3/1/94 Frontier Telephone of Rochester, Inc. 1/1/95 [1/1/98] APPENDIX B SCHEDULE B(1) FRONTIER COMMUNICATIONS OF AUSABLE VALLEY, INC. Class of Eligible Employees: Employees must be within a unit covered by a collective bargaining agreement that provides for coverage of such employees by this Plan. Eligibility: An eligible Employee will begin participation in the Plan on the first day of the month coincident with or next following his completion of 30 days of employment. Fixed Contributions (Company): 2000: 3 percent of compensation 2001: 3 percent of compensation Matching Contributions: Effective May 7, 1998, Frontier Communications of AuSable Valley, Inc.'s matching contribution will be equal to 100% of the first 3% of a Participant's compensation that he elects to contribute to the Plan. Discretionary Contributions: None. Form of Company Contributions: Effective May 7, 1998, all company contributions will be made in Restricted Stock. Vesting Schedule: 100% immediately. Payment Option C: A straight life annuity on the life of the Participant is the only Option C benefit available. [1/1/98] SCHEDULE B(2) FRONTIER COMMUNICATIONS OF ILLINOIS, INC. Class of Eligible Employees: Those employees who are represented by the Local 51 of the International Brotherhood of Electrical Workers bargaining unit are eligible to participate in this Plan. Eligibility: An eligible Employee will begin participation in the Plan on the first day of the month coincident with or next following his completion of 30 days of employment. Fixed Contributions (Company): 1997: $3,000 1998: 3 percent of Compensation 1999: 3 percent of Compensation 2000: 3 percent of Compensation Matching Contributions: The matching contribution will be equal to 100% of the first 3% of a Participant's compensation that he elects to contribute to the Plan. Profit Sharing Contributions: The Company shall contribute such contributions depending on the attainment of financial objectives in accordance with the terms of the relevant collective bargaining agreement. Vesting Schedule: 100% immediately. Payment Option C: The following additional options apply to account balances as of December 31, 1994: . Installments over any period up to the joint life expectancies of the Participant and any designated beneficiary. . A straight life annuity for unmarried Participants. . A qualified joint and 50% survivor annuity for married Participants with the Participant's spouse as the contingent annuitant. [1/1/98] SCHEDULE B(3) FRONTIER COMMUNICATIONS OF IOWA, INC. Class of Eligible Employees: Those employees who are represented by the CWA Local 7171 bargaining unit are eligible to participate in this Plan. Eligibility: An eligible Employee will begin participation in the Plan on the first day of the month coincident with or next following his completion of 30 days of employment. Fixed Contributions: Each payroll period the Company shall contribute one-half of one percent (0.5%) of the payroll period Compensation of each of its employees in the class of eligible employees. Matching Contributions: Effective January 1, 1997, Frontier Communications of Iowa, Inc.'s matching contribution will be equal to 100% of the first 3% of a Participant's compensation that he elects to contribute to the Plan. Profit Sharing Contributions: To the extent required or permitted in a relevant collective bargaining agreement, effective January 1, 1997, Frontier Communications of Iowa, Inc. may contribute each year in its discretion the same flat dollar amount or percentage of compensation for each of its eligible employees. Vesting Schedule: 100% immediately. Payment Option C: None. [1/1/98] SCHEDULE B(4) FRONTIER COMMUNICATIONS OF LAKESIDE, INC. Class of Eligible Employees: Those employees who are represented by the Local 51 of the International Brotherhood of Electrical Workers bargaining unit are eligible to participate in this Plan. Eligibility: An eligible Employee will begin participation in the Plan on the first day of the month coincident with or next following his completion of 30 days of employment. Fixed Contributions (Company): 1997: $3,000 1998: 3 percent of Compensation 1999: 3 percent of Compensation 2000: 3 percent of Compensation Matching Contributions: The matching contribution will be equal to 100% of the first 3% of a Participant's compensation that he elects to contribute to the Plan. Profit Sharing Contributions: The Company shall contribute such contributions depending on the attainment of financial objectives in accordance with the terms of the relevant collective bargaining agreement. Vesting Schedule: 100% immediately. Payment Option C: The following additional options apply to account balances as of December 31, 1994: . Installments over any period up to the joint life expectancies of the Participant and any designated beneficiary. . A straight life annuity for unmarried Participants. . A qualified joint and 50% survivor annuity for married Participants with the Participant's spouse as the contingent annuitant. [1/1/98] SCHEDULE B(5) FRONTIER COMMUNICATIONS OF MICHIGAN, INC. Class of Eligible Employees: Those employees who are represented by Local 1106 of the International Brotherhood of Electrical Workers bargaining unit are eligible to participate in this Plan. Eligibility: A eligible Employee will begin participation in the Plan on the first day of the month coincident with or next following his completion of 30 days of employment. Fixed Contributions (Company): 1997: $750 1998: 3 percent of Compensation 1999: 3 percent of Compensation 2000: 3 percent of Compensation Matching Contributions: Effective January 1, 1998, Frontier Communications of Michigan, Inc.'s matching contribution will be equal to 100% of the first 3% of Compensation. Profit Sharing Contributions: The Company shall contribute such contributions depending on the attainment of financial objectives in accordance with the terms of the relevant collective bargaining agreement. Vesting Schedule: 100% immediately. Payment Option C: None. [1/1/98] SCHEDULE B(6) FRONTIER COMMUNICATIONS - MIDLAND, INC. Class of Eligible Employees: Those employees who are represented by the Local 51 of the International Brotherhood of Electrical Workers bargaining unit are eligible to participate in this Plan. Eligibility: A eligible Employee will begin participation in the Plan on the first day of the month coincident with or next following his completion of 30 days of employment. Fixed Contributions (Company): 1997: $3,000 1998: 3 percent of Compensation 1999: 3 percent of Compensation 2000: 3 percent of Compensation Matching Contributions: The matching contribution will be equal to 100% of the first 3% of a Participant's compensation that he elects to contribute to the Plan. Profit Sharing Contributions: The Company shall contribute such contributions depending on the attainment of financial objectives in accordance with the terms of the relevant collective bargaining agreement. Vesting Schedule: 100% immediately. Payment Option C: The following additional options apply to account balances as of December 31, 1994: . Installments over any period up to the joint life expectancies of the Participant and any designated beneficiary. . A straight life annuity for unmarried Participants. . A qualified joint and 50% survivor annuity for married Participants with the Participant's spouse as the contingent annuitant. [1/1/98] SCHEDULE B(7) FRONTIER COMMUNICATIONS OF MINNESOTA, INC. Class of Eligible Employees: Those employees who are represented by the CWA Local 7270 bargaining unit are eligible to participate in this Plan. Eligibility: An eligible Employee will begin participation in the Plan on the first day of the month coincident with or next following his completion of 30 days of employment. Fixed Contributions: Each payroll period the Company shall contribute one-half of one percent (0.5%) of the payroll period Compensation of each of its employees in the class of eligible employees. Matching Contributions: Effective January 1, 1997, Frontier Communications of Minnesota, Inc.'s matching contribution will be equal to 100% of the first 3% of a Participant's compensation that he elects to contribute to the Plan. Profit Sharing Contributions: To the extent required or permitted in a relevant collective bargaining agreement, effective January 1, 1997, Frontier Communications of Minnesota, Inc. may contribute each year in its discretion the same flat dollar amount or percentage of compensation for each of its eligible employees. Vesting Schedule: 100% immediately. Payment Option C: None. [1/1/98] SCHEDULE B(8) FRONTIER COMMUNICATIONS OF MT. PULASKI, INC. Class of Eligible Employees: Employees must be within a unit covered by a collective bargaining agreement that provides for coverage of such employees by this Plan. Eligibility: An eligible Employee will begin participation in the Plan on the first day of the month coincident with or next following his completion of 30 days of employment. Fixed Contributions (Company): 1997: $3,000 1998: 3 percent of Compensation 1999: 3 percent of Compensation 2000: 3 percent of Compensation Matching Contributions: The matching contribution will be equal to 100% of the first 3% of a Participant's compensation that he elects to contribute to the Plan. Profit Sharing Contributions: The Company shall contribute such contributions depending on the attainment of financial objectives in accordance with the terms of the relevant collective bargaining agreement. Vesting Schedule: 100% immediately. Payment Option C: The following additional options apply to account balances as of December 31, 1994: . Installments over any period up to the joint life expectancies of the Participant and any designated beneficiary. . A straight life annuity for unmarried Participants. . A qualified joint and 50% survivor annuity for married Participants with the Participant's spouse as the contingent annuitant. [1/1/98] SCHEDULE B(9) FRONTIER COMMUNICATIONS OF NEW YORK, INC. Class of Eligible Employees: Those employees who are represented by the Local 503 International Brotherhood of Electrical Workers bargaining unit are eligible to participate in this Plan. Eligibility: An eligible Employee will begin participation in the Plan on the first day of the month coincident with or next following his completion of 30 days of employment. Fixed Contributions (Company): 1998: None 1999: 3 percent of Compensation 2000: 3 percent of Compensation Matching Contributions (Company): Effective January 1, 1998, Frontier Communications of New York, Inc.'s matching contribution will be equal to 100% of the first 3% of a Participant's compensation that he elects to contribute to the Plan. Profit Sharing Contributions (Company): None Vesting Schedule: 100% immediately. Payment Option C: With respect to account balances transferred to this Plan from the Frontier Communications of New York, Inc. Employee Savings and 401(k) Plan, periodic partial distributions are available prior to termination of employment as follows: c. Periodic Partial Distributions. If an Employee so elects during ------------------------------ the month of November of the fourth Plan Year in which he has been a Participant, or during the month of November of any Plan Year thereafter, there shall be distributed to him all the fully vested amounts in all accounts as of December 31, 1997 other than, if he has not reached age 59- 1/2, his Tax-Deferred Contribution Account attributable to the Plan Year ending three years prior to the end of the Plan Year in which such election is made. Such an election shall be made on a form provided for this purpose and shall be signed by the Employee and delivered to the Committee. For purposes of determining the amount of the - 2 - distribution, all valuations shall be made as of the last Valuation Date in the Plan Year in which the election is made. Such distribution will involve no forfeiture by the Employee and will not affect his withdrawal rights under other provisions of the Plan. [1/1/98] SCHEDULE B(10) FRONTIER COMMUNICATIONS - PRAIRIE, INC. Class of Eligible Employees: Those employees who are represented by the Local 51 of the International Brotherhood of Electrical Workers bargaining unit are eligible to participate in this Plan. Eligibility: An eligible Employee will begin participation in the Plan on the first day of the month coincident with or next following his completion of 30 days of employment. Fixed Contributions (Company): 1997: $3,000 1998: 3 percent of Compensation 1999: 3 percent of Compensation 2000: 3 percent of Compensation Matching Contributions: The matching contribution will be equal to 100% of the first 3% of a Participant's compensation that he elects to contribute to the Plan. Profit Sharing Contributions: The Company shall contribute such contributions depending on the attainment of financial objectives in accordance with the terms of the relevant collective bargaining agreement. Vesting Schedule: 100% immediately. Payment Option C: The following additional options apply to account balances as of December 31, 1994: . Installments over any period up to the joint life expectancies of the Participant and any designated beneficiary. . A straight life annuity for unmarried Participants. . A qualified joint and 50% survivor annuity for married Participants with the Participant's spouse as the contingent annuitant. [1/1/98] SCHEDULE B(11) FRONTIER COMMUNICATIONS OF SYLVAN LAKE, INC. Class of Eligible Employees: Those employees who are represented by the Local 320 International Brotherhood of Electrical Workers bargaining unit are eligible to participate in this Plan. Eligibility: An eligible Employee will begin participation in the Plan on the first day of the month coincident with or next following his completion of 30 days of employment. Fixed Contributions (Company): 1998: None 1999: 3 percent of Compensation 2000: 3 percent of Compensation Matching Contributions (Company): Effective January 1, 1998, Frontier Communications of Sylvan Lake, Inc.'s matching contribution will be equal to 100% of the first 3% of a Participant's compensation that he elects to contribute to the Plan. Profit Sharing Contributions (Company): None Vesting Schedule: 100% immediately. Payment Option C: A straight life annuity on the life of the Participant is the only Option C benefit available. [6/1/98] SCHEDULE B(12) FRONTIER TELEPHONE OF ROCHESTER, INC./CWA Class of Eligible Employees: Those employees who are represented by the CWA Local 1170 bargaining unit are eligible to participate in this Plan. Eligibility: An eligible Employee will begin participation in the Plan on the first day of the month coincident with or next following his completion of 30 days of employment. Fixed Contributions: Each payroll period the Company shall contribute one-half of one percent (0.5%) of the payroll period Compensation of each of its employees in the class of eligible employees. Matching Contributions: Each payroll period the Company shall contribute for each of its employees in the class of eligible employees 100% of such employee's contribution up to the first 3% of Compensation. Profit Sharing Contributions: The Company shall contribute such contributions depending on the attainment of financial objectives in accordance with the terms of the relevant collective bargaining agreement. Vesting Schedule: 100% immediately. Payment Option C: The following additional payment options are available to a Participant under Option C: . A straight life annuity. . A reduced retirement income payable monthly during his life with the provision that in the event of his death prior to receiving one hundred twenty (120) monthly installments, the remainder thereof shall be paid to his beneficiary. . For married Participants, a reduced retirement income, payable during his life, with the provision that after his death such reduced income shall be continued during the life of, and shall be paid to, the Participant's spouse. This revised schedule is effective as of April 9, 1996. [6/1/98] SCHEDULE B(13) FRONTIER TELEPHONE OF ROCHESTER, INC./RTWA Class of Eligible Employees: Those employees who are represented by the RTWA bargaining unit are eligible to participate in this Plan. Eligibility: Eligible Employees will begin participation in the Plan on their employment date. Fixed Contributions: Each payroll period the Company shall contribute one-half of one percent (0.5%) of the payroll period Compensation of each of its employees in the class of eligible employees. Matching Contributions: Each payroll period the Company shall contribute for each of its employees in the class of eligible employees 100% of such employee's contribution up to the first 3% of Compensation, and 50% of such employee's contributions up to the next 2% of Compensation. Profit Sharing Contributions: The Company shall contribute such contributions depending on the attainment of financial objectives in accordance with the terms of the relevant collective bargaining agreement. Vesting Schedule: 100% immediately. Payment Option C: The following additional payment options are available to a Participant under Option C: . A straight life annuity. . A reduced retirement income payable monthly during his life with the provision that in the event of his death prior to receiving one hundred twenty (120) monthly installments, the remainder thereof shall be paid to his beneficiary. . For married Participants, a reduced retirement income, payable during his life, with the provision that after his death such reduced income shall be continued during the life of, and shall be paid to, the Participant's spouse. This revised schedule is effective January 1, 1998. EX-4.4 5 RESTATED UPSTATE CELL NETWORK EMPLOYEE RETIRE PLAN EXHIBIT 4.4 [9/1/99] UPSTATE CELLULAR NETWORK EMPLOYEES' RETIREMENT SAVINGS PLAN TABLE OF CONTENTS Page ---- INTRODUCTION........................................................... 1 ARTICLE I Definitions............................................ 2 ARTICLE II Eligibility............................................ 6 ARTICLE III Participation and Participant Contributions............ 7 ARTICLE IV Participating Company Contributions.................... 10 ARTICLE V Investment of Contributions............................ 15 ARTICLE VI Participant Accounts................................... 16 ARTICLE VII Retirement or Other Termination of Employment.......... 19 ARTICLE VIII Death.................................................. 21 ARTICLE IX Payment of Benefits.................................... 22 ARTICLE X Withdrawals and Loans During Employment................ 24 ARTICLE XI Plan Administration.................................... 27 ARTICLE XII Amendment and Termination.............................. 30 ARTICLE XIII Top-Heavy Provisions................................... 31 ARTICLE XIV General Provisions..................................... 33 - i - INTRODUCTION This Employees' Retirement Savings Plan was originally established, effective as of July 1, 1994, for the benefit of eligible Employees of Upstate Cellular Network and of any Affiliated Company that may adopt the Plan. This Plan is intended to qualify as a profit sharing plan pursuant to the provisions of Code sections 401(a) and 401(k). The Plan is hereby amended and restated to incorporate legislative changes and administrative changes effective January 1, 1999, except that any provision specifically setting forth another effective date shall be effective on such date. In addition, effective one day prior to the closing date of the sale of Frontier Corporation's partnership interest in Upstate Cellular Network, Frontier Corporation will assume sponsorship of this Plan. - 2 - ARTICLE I Definitions ----------- 1.1 "Affiliated Company" means Upstate Cellular Network up to the Effective Date of the UCN Transaction and Frontier Corporation on and after that date (the "Company") and (a) any other company which is included within a "controlled group of corporations" within which the Company is also included, as determined under section 1563 of the Internal Revenue Code of 1986, as amended from time to time, without regard to subsections (a)(4) and (e)(3)(C) of said section 1563; or (b) any other trades or businesses (whether or not incorporated) with which the Company is affiliated which, based on principles similar to those defining a "controlled group of corporations" for the purposes of (a) above, are under common control; or (c) any other entities required to be aggregated with the Company pursuant to Internal Revenue Code section 414. l.2 "Basic Contributions" means a Participant's contributions to the Plan in any whole percentage of Compensation up to a 3 percent of Compensation maximum in accordance with Section 3.2. 1.3 "Beneficiary" means the Participant's surviving spouse or, in the event there is no surviving spouse or the surviving spouse elects in writing not to receive any death benefits under the Plan, the person or persons (including a trust) designated by a Participant to receive any death benefit which shall be payable under this Plan. l.4 "Board" means the committee established by the Partners to serve as the principal governing body of the Company. Effective one day prior to the Effective Date of the UCN Transaction, "Board" shall mean the Board of Directors of Frontier Corporation. 1.5 "Code" means the Internal Revenue Code of 1986, as amended. l.6 "Committee" means the Employees' Benefit Committee appointed pursuant to Article XI to administer the Plan. l.7 "Company" means Upstate Cellular Network or its successor up to the Effective Date of the UCN Transaction, and Frontier Corporation on and after that date. 1.8 "Company Profit Sharing Contributions" means the contributions of a Participating Company that are not contingent on the level of Participant contributions as specified in Section 4.1. 1.9 "Company Matching Contributions" means the contributions of a Participating Company that are contingent upon a Participant's Basic Contributions as specified in Section 4.1. - 3 - 1.10 "Compensation" means the total of a Participant's salary or wages, including bonuses, overtime and commissions paid by a Participating Company for services actually rendered by the Participant to a Participating Company. A Participant's Compensation shall not include pension payments nor any annual remuneration in excess of $160,000 (adjusted for cost of living increases as permitted under the Code). For any Participant receiving disability pay from a Participating Company during a payroll period (other than a disability pension), the term "Compensation" means such disability pay. For any Employee who is making Pre-Tax Contributions pursuant to Section 3.7, or pre-tax contributions under a Participating Company's cafeteria (section 125) plan, the term Compensation shall be based on his wages, salary, commissions and bonuses, all as defined above, prior to any salary reduction. 1.11 "Early Retirement Age" means age 55. l.12 "Effective Date" means July 1, 1994. "Effective Date of the UCN Transaction" means the closing date of the sale of Frontier Corporation's interest in Upstate Cellular Network to Bell Atlantic Mobile of Upstate New York, Inc. The effective date of this amendment and restatement is January 1, 1999, except that any provision which specifically states a different effective date shall be effective on such date. 1.13 "Employee" means any individual who is employed by Upstate Cellular Network prior to the Effective Date of the UCN Transaction, and any individual on and after such date who remains employed by Frontier Corporation or an Affiliated Company, and is performing services for a business unit that was a part of Upstate Cellular Network prior to the Effective Date of the UCN Transaction. 1.14 "ERISA" means the Employee Retirement Income Security Act of l974, as amended from time to time, and any regulations issued pursuant thereto. 1.15 "Forfeiture" means that portion of a Participant's Company Contribution Accounts which is forfeited before full vesting. 1.16 "Highly Compensated Employee" means, effective January 1, 1997, any Employee who: (a) was a "five percent owner", as defined in Section 416(i)(1) of the Code, during the current or preceding Plan Year; or (b) received Compensation from a Participating Company or an Affiliated Company which, in total, exceeded $80,000 for the preceding Plan Year, and, if the Company so elects, was in the top-paid group for the preceding Plan Year. The $80,000 dollar amount shall be adjusted for cost of living increases as provided under the Code. The determination of whether an Employee is a Highly Compensated Employee will be made in accordance with Code section 414(q) and the rules and regulations promulgated thereunder. - 4 - 1.17 "Investment Manager" means any individual or corporation selected by the Board or by any Board-appointed committee having the authority to select such person who (i) is registered as an investment adviser under the Investment Advisers Act of 1940; or (ii) is a bank, as defined in that Act; or (iii) is an insurance company qualified to manage, acquire or dispose of plan assets under the laws of more than one state and each individual or corporation acknowledges in writing that he or the corporation, as the case may be, is a fiduciary with respect to the Plan. 1.18 "Leased Employee" means any person who is not otherwise an Employee and who, pursuant to an agreement between a Participating Company and any other person or organization, has performed services for the Participating Company, or for the Participating Company and related persons (determined in accordance with section 414(n)(6) of the Code), on a basis whereby if such person were an Employee, such person would have become an eligible Employee hereunder either in the initial eligibility computation period or any Plan Year thereafter, and, effective January 1, 1997, such services are performed under the primary direction or control of the Participating Company, provided, that a person shall not be treated as a Leased Employee for any Plan Year if, during such Plan Year: (i) such person is covered by a money purchase pension plan described in section 414(n)(5)(B) of the Code, and (ii) not more than 20% of the Employees who are not Highly Compensated Employees are Leased Employees. Once a person is classified as a Leased Employee, such person shall remain a Leased Employee for every Plan Year for which the person completes at least 1000 Hours of Service. 1.19 "Non-Highly Compensated Employee" means an Employee who is not a Highly Compensated Employee. 1.20 "Normal Retirement Age" means age 65. 1.21 "Participant" means an Employee who meets the eligibility requirements set forth in Section 2.l and who elects to participate in the Plan. 1.22 "Participant Account" means, as of any Valuation Date, the then amount of a Participant's contributions and the Participating Company's contributions allocated on behalf of the Participant adjusted to reflect any investment earnings and losses attributable to such contributions, withdrawals and distributions, at the then market value of the Trust. Where appropriate a Participant Account shall have the following subaccounts: a Company Contribution Account to record Company Matching and Profit Sharing Contributions, a Participant Pre-Tax Contribution Account to record Pre-Tax Contributions, a Participant Post-Tax Contribution Account to record Post-Tax Contributions and a Rollover Account to record rollover contributions. Earnings associated with each type of contribution shall be allocated to the account with which the contributions are associated. 1.23 "Participating Company" means the Company and each Affiliated Company that has adopted this Plan for the benefit of its eligible Employees. - 5 - 1.24 "Partner" means RTMC Holding, Inc. and Bell Atlantic Mobile of Upstate New York, Inc., and any other entity that may hereafter become a partner in the Company. Effective one day prior to the Effective Date of the UCN Transaction, "Partner" shall mean Frontier Corporation. 1.25 "Partner Plan" means any defined contribution plan maintained by one or more of the Company's Partners. 1.26 "Partner Stock" means the common stock of Frontier Corporation. Effective as soon as administratively practicable following the closing date of the acquisition of Frontier Corporation by Global Crossing Ltd., "Partner Stock" means Global Crossing Ltd. common stock. 1.27 "Plan" means this Upstate Cellular Network Employees' Retirement Savings Plan as set forth herein and as it may be amended from time to time. 1.28 "Plan Year" means the calendar year. The Plan Year shall be the limitation year as this term is used in ERISA. 1.29 "Post-Tax Contributions" means a Participant's contributions which are non-deductible for income tax purposes at the time they are made. 1.30 "Pre-Tax Contributions" means a Participant's contributions which are not included in his income for income tax purposes at the time they are made. 1.31 "Supplemental Contributions" means a Participant's contributions to the Plan in excess of his Basic Contributions in accordance with Section 3.2. 1.32 "Trust" or "Trust Fund" means the amounts held in trust in accordance with this Plan and consists of such investment options as from time to time may be designated by a Board-appointed Committee. 1.33 "Trust Agreement" means any agreement entered into between the Company and any Trustee to carry out the purposes of the Plan, which agreement shall constitute a part of this Plan. 1.34 "Trustee" means any bank or trust company selected by the Board or a Board committee to serve as Trustee pursuant to the provisions of the Trust Agreement. 1.35 "Valuation Date" means the last day the Trust may have been valued provided that the Trust shall be valued no less frequently than on the last day of each calendar quarter. - 6 - ARTICLE II Eligibility ----------- 2.1 Eligibility Requirements. Every Employee of a Participating Company ------------------------ who is not excluded pursuant to the following sentence is eligible to become a Participant on the 30th day following his date of employment. An Employee is not eligible to participate in this Plan if (1) the Employee is in a unit of employees covered by a collective bargaining agreement in which retirement benefits were the subject of good faith bargaining unless such collective bargaining agreement expressly provides for participation in this Plan; (2) the Employee is a temporary or summer employee; (3) the Employee is a Leased Employee; or (4) the Employee is an independent contractor (or a person who is treated by a Participating Company as an independent contractor or who is otherwise classified as not being an employee of a Participating Company, regardless of his actual status). In the discretion of the Committee, an eligible Employee of a Participating Company that has adopted this Plan who is transferred to an Affiliated Company that has not adopted this Plan may participate in the Plan under such arrangements as the Committee may prescribe. 2.2 Reemployment. If an Employee terminates employment and is subsequently ------------ reemployed by a Participating Company, he will be eligible to begin participation in this Plan on the first day of the month following completion of one month of service measured from his reemployment date. All service of such an Employee with a Participating Company or any Affiliated Company prior to termination of employment shall be credited to such Employee for purposes of the vesting provisions of Section 7.2. - 7 - ARTICLE III Participation and Participant Contributions ------------------------------------------- 3.l Participation. An eligible Employee may become a Participant on the ------------- first day of the month following his completion of 30 days of employment by filing a written application with the Committee, or by telephonic or electronic processing, as the Committee shall determine. The application shall indicate the amount of his initial Basic and Supplemental Contributions and whether he intends to have such Contributions made as Post-Tax Contributions or as Pre-Tax Contributions. Except as the Committee in its discretion may otherwise determine, participation will commence with the first payroll period as is administratively practicable to meet following the date such election is received by the Committee, or its designee. Participation shall thereafter continue until all amounts in the Participant's Account have been distributed even though current contributions may be suspended. 3.2 Amount of Contributions. Contributions may be made by any Participant ----------------------- who has enough Compensation during any payroll period to make a contribution by payroll deduction. Each Participant may contribute, at his option, Basic Contributions in any whole percentage of his Compensation during a payroll period with a minimum contribution of 1 percent of Compensation and a maximum contribution of 3 percent of Compensation. If a Participant is making Basic Contributions at the maximum rate of 3 percent of his Compensation, he may also elect to make Supplemental Contributions of any whole percentage of from 1 to 13 percent of his Compensation during a payroll period. All Participant contributions will be in cash in the form of Employee-authorized payroll deductions on either a post-tax basis or, pursuant to Section 3.7, on a pre-tax basis. Notwithstanding any provision of this Plan to the contrary, effective December 12, 1994, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with section 414(u) of the Code. 3.3 Change in Amount of Contributions. The percentage, or percentages if --------------------------------- more than one, of Compensation designated by the Participant as his contribution rate will continue in effect, notwithstanding any change in his Compensation, until he elects to change such percentage. A Participant, by filing a written election form furnished by the Committee, or by telephonic or electronic processing, as the Committee shall determine, may change his percentage of contributions as frequently during the Plan Year and pursuant to such rules as the Committee may prescribe. Any such change will become effective on the first payroll period as is administratively practicable to meet after the date such election is received by the Committee, or its designee. If a Participant's total contribution rate is in excess of 3 percent of his Compensation, any such change will first be applied to adjust the amount of his Supplemental Contributions and then, if necessary, to adjust the amount of his Basic Contributions. If a Participant's total contribution rate is less than 6 percent of his Compensation, any such change will first be applied to adjust the amount - 8 - of his Basic Contributions and then, if necessary, to provide for Supplemental Contributions. 3.4 Suspension of Participant Contributions. A Participant, by filing a --------------------------------------- written election with the Committee, or by telephonic or electronic processing as the Committee shall determine, may elect to suspend either his Basic or Supplemental Contributions, or both, at any time. Any such suspension will become effective with the first payroll period as is administratively practicable to meet after the date such election is received by the Committee, or its designee. A suspension of all Basic Contributions will automatically suspend all Supplemental Contributions. In order to resume making contributions, the Participant must follow the procedure outlined in Section 3.l as though he were a new Participant. A Participant will not be permitted to make up suspended contributions. Participant contributions will be suspended automatically for any payroll period in which the Participant is not in receipt of Compensation. Such automatic suspension shall be lifted beginning with the next payroll period that the Participant receives Compensation. The suspension of Supplemental Contributions, in the absence of an election to the contrary, will not affect Basic Contributions. 3.5 Remittance of Participant Contributions to the Trustee. Participant ------------------------------------------------------ contributions will be remitted as soon as administratively practicable to the Trustee. 3.6 Termination of Participant Contributions. A Participant's contributions ---------------------------------------- will terminate effective with the payroll period that ends or includes the date the Participant terminates employment for any reason, including retirement or death. 3.7 Pre-Tax Contributions Option. A Participant shall have the option of ---------------------------- having his Basic and Supplemental Contributions to the Plan made on a tax- deferred basis pursuant to the terms of this Section. Basic and Supplemental Pre-Tax Contributions may be made solely pursuant to a salary reduction agreement between an individual Participant and his employer. Under this agreement the Participant agrees to reduce his Compensation by a specified percentage (as outlined in Section 3.2) and the Participating Company agrees to contribute to the Plan the identical amount on behalf of the Participant. The agreement shall be in such form and subject to such rules as the Committee may prescribe. The Committee, in its sole discretion, may limit the number of salary reduction agreements a Participant may make during a Plan Year, except that an agreement may be terminated at any time, in which event the Participant shall specify whether all of his contributions shall cease or continue to be made as Post-Tax Contributions. 3.8 Rollovers to This Plan. Notwithstanding the limitations on contributions ---------------------- set forth in the preceding Sections of this Article III, any active employee may make rollover contributions (as defined in sections 402(c)(4), 403(a)(4) and 408(d)(3) of the Code) to the extent the Committee in its discretion may permit and in accordance with rules it shall establish. In addition, the Committee in its sole discretion may arrange for a Participant's account in any other tax-qualified plan to be transferred directly to this Plan. No rollover contribution or transfer shall be permitted if it could adversely affect the tax qualification - 9 - of this Plan. All rollovers and transfers to this Plan shall be credited to a Participant's Rollover Account. 3.9 Direct Rollovers from this Plan. Notwithstanding any provision of ------------------------------- the Plan to the contrary that would otherwise limit a Participant's election under this Section, a Participant may elect, at the time and in the manner prescribed by the Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the Participant in a direct rollover. An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the Participant except that an eligible rollover distribution does not include 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 Participant or the joint lives (or joint life expectancies) of the Participant and the Participant's designated Beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under section 401(a)(9) of the Code; and the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to Company securities); and any withdrawal on account of hardship described in Code section 401(k)(2)(B)(i)(IV). An eligible retirement plan is an individual retirement account described in section 408(a) of the Code, an individual retirement annuity described in section 408(b) of the Code, an annuity plan described in section 403(a) of the Code, or a qualified trust described in section 401(a) of the Code, that accepts the Participant's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. For these purposes, a Participant includes an Employee or former Employee who has an account balance in the Plan. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in section 414(p) of the Code, are Participants with respect the interest of the spouse or former spouse. A direct rollover is a payment by the Plan to the eligible retirement plan specified by the Participant. - 10 - ARTICLE IV Participating Company Contributions ----------------------------------- 4.l Company Contributions. Subject to the limitations of Section 4.4, --------------------- each Participating Company shall contribute to the Plan as follows: (a) Company Fixed Contributions. Each payroll period a Participating --------------------------- Company shall contribute one-half of one percent (0.5%) of the payroll period Compensation for each of its employees who is a Participant in the Plan. (b) Company Matching Contributions. Each payroll period a Participating ------------------------------ Company shall contribute 100 percent of the amount contributed by each of its Employees who is a Participant in the Plan up to a maximum equal to 3 percent of the Participant's Compensation during the payroll period. Any dollar limitation shall be determined prior to the beginning of the Plan Year and communicated to Participants. Notwithstanding the foregoing, no Company Matching Contributions will be made with respect to lump sum contributions made under Section 3.8. (c) Company Profit Sharing Contributions. Each Plan Year a Participating ------------------------------------ Company may make a Profit Sharing contribution in addition to the amounts it contributes under subsections (a) and (b) above. Any such contribution shall be made in such amount, if any, under such conditions as may be specified in the sole discretion of the Committee. Profit Sharing contributions shall be allocated to Participant Accounts pro rata in the proportion that each Participant's Compensation for the Plan Year bears to the total Participant Compensation of all Participants for the Plan Year. 4.2 Remittance of Company Contributions. Company Matching Contributions ----------------------------------- shall be remitted to the Trustee on a regular and periodic basis following the payroll period to which they relate but in no event shall they be made less frequently than quarterly. Company Profit Sharing Contributions for a Plan Year shall be remitted to the Trustee by a Participating Company no later than the date the Participating Company's tax return is due for the year within which ends the Plan Year to which the contributions relate. 4.3 Effect of Suspension of Participant Contributions on Company Contributions. -------------------------------------------------------------------------- During any period in which a Participant's Basic Contributions are suspended, Company Matching Contributions on his behalf will also be suspended. 4.4 Maximum Contributions. Notwithstanding the contribution levels specified --------------------- in Article III and the preceding Sections of this Article IV, no contributions will be permitted in excess of the limits set forth below: (a) Code Section 402(g) Limits. A Participant's Pre-Tax Contributions to -------------------------- this Plan and any tax-deferred contributions under any other 401(k) plan in which he may participate shall not exceed $10,000 (adjusted for cost of living increases for years - 11 - after 1999 as provided under the Code) in any taxable year of the Participant. To meet this limit, no Pre-Tax Contribution to this Plan in excess of $10,000 (as adjusted) shall be accepted on behalf of any Participant during a calendar year. If a Participant participates in more than one plan, he shall notify the Committee of any excess contribution in a calendar year by March 1 of the following year. The Committee shall then cause the portion of such excess allocated to this Plan to be returned to the Participant by April 15 following the calendar year to which the excess contribution relates. (b) Code Section 401(k) Limits. In addition to the individual limits, the -------------------------- Plan's contributions shall, if necessary, also be limited so as to meet one of the following tests: (1) For each Plan Year, the actual deferral percentage for the Highly Compensated Employees may not be more than the actual deferral percentage for the Non-Highly Compensated Employees multiplied by 1.25; or (2) For each Plan Year, the excess of the actual deferral percentage for the Highly Compensated Employees over the actual deferral percentage for the Non-Highly Compensated Employees may not be more than two percentage points and the actual deferral percentage for the Highly Compensated Employees may not be more than the actual deferral percentage for the Non-Highly Compensated Employees multiplied by 2.0. In applying these tests, the actual deferral percentage for the Highly Compensated Employees for a Plan Year shall be the average of the percentages, calculated separately, for each eligible Employee in the group, obtained by dividing the sum of the Employee's tax-deferred contributions pursuant to Section 3.2 by the Employee's Compensation for the Plan Year. The actual deferral percentage for the Non-Highly Compensated Employees for a Plan Year shall be calculated in the same manner as for the Highly Compensated Employees, except that tax- deferred contributions and Compensation used in the calculating the percentages shall be those of the preceding Plan Year. If an Employee was not eligible to participate for the entire Plan Year, the Compensation taken into account for purposes of these tests shall be his Compensation for the period he was eligible to participate. The Committee shall have the responsibility for monitoring compliance with these tests and shall have the power to take any steps it deems appropriate to ensure compliance, including limiting the amount of salary reduction permitted by the Highly Compensated Employees or requiring that the contributions for the Highly Compensated Employees be delayed or held in escrow before being paid over to the Trustee until such time as the Committee determines that contributions can be - 12 - made on behalf of the Highly Compensated Employees without violating the requirements of Code section 401(k). Within two and one-half months (otherwise within 12 months) following the end of a Plan Year the Committee shall distribute to Highly Compensated Employees such contributions (and earnings thereon) as may be in excess of the amounts required to satisfy the special nondiscrimination tests. (c) Code Section 401(m) Limits. Pursuant to Internal Revenue Code section -------------------------- 401(m) the combination of Employee Post-Tax Contributions and Company Matching Contributions shall, if necessary, be limited so as to ensure that in each Plan Year the actual contribution percentage for eligible Highly Compensated Employees does not exceed the greater of: (1) 125 percent of the contribution percentage of all eligible Non- Highly Compensated Employees; or (2) the lesser of twice the contribution percentage of eligible Non- Highly Compensated Employees or the contribution percentage of eligible Non-Highly Compensated Employees plus two percentage points. In applying these tests, the actual contribution percentage for the Highly Compensated Employees for a Plan Year shall be the average of the percentages, calculated separately, for each eligible Employee in the group, obtained by dividing the sum of the Employee's Post-Tax Contributions if applicable under Section 3.2 and the Employer's matching contributions under Section 4.1 by the Employee's Compensation for the Plan Year. The actual deferral percentage for the Non-Highly Compensated Employees for a Plan Year shall be calculated in the same manner as for the Highly Compensated Employees, except that Post-Tax Contributions, matching contributions and Compensation used in the calculating the percentages shall be those of the preceding Plan Year. If an Employee was not eligible to participate for the entire Plan Year, the Compensation taken into account for purposes of these tests shall be his Compensation for the period he was eligible to participate. If the foregoing test is not satisfied for any Plan Year, the Committee shall direct the excess aggregate contributions which cause the failure to be distributed to the Highly Compensated Employees. Such distributions shall be made in accordance with the provisions of Code section 401(m) prior to the end of the Plan Year following the Plan Year in which occurred the failure to satisfy the test. (d) Code Section 415 Limits. Pursuant to Code section 415, the total of ----------------------- the Employee and Participating Company contributions on behalf of a Participant for each Plan Year (his "annual additions") shall not exceed the lesser of $30,000 (or such larger amounts as reflect cost of living increases pursuant to section 415 of the Code) or 25 percent of the Participant's total compensation for such Plan - 13 - Year. For purposes of this Section, the term "annual additions" means the total each Plan Year of a Participating Company's contributions, the Employee's contributions and Forfeitures. Rollover contributions and loan repayments are not annual additions for this purpose. For purposes of applying these limitations, the term "compensation" shall have the meaning ascribed to it in regulations under Code section 415. In general, these regulations define compensation to mean an Employee's W-2 compensation from a Participating Company but excluding income derived from the exercise of stock options, from the disqualification of an incentive stock option, from restricted stock or from income imputed from the payment of life insurance premiums, and shall include, effective January 1, 1998, any elective deferral (as defined in Code Section 402(g)(3)), and any amount which is contributed or deferred by the Employer at the election of the Participant and which is not includable in the gross income of the Participant by reason of Code Sections 125 or 457. In addition to the amounts calculated under this Plan, annual additions shall include such amounts, similarly calculated, that are contributed with respect to the Participant to any other defined contribution plan maintained by a Participating Company or by any Affiliated Company and Participating Company contributions to an individual medical account as described in Code sections 415(1) and 419A(d)(2). In determining whether a corporation is an Affiliated Company for this purpose only, the percentage control test set forth in section 1563(a) of the Code shall be a 50 percent test in place of the 80 percent test each place the 80 percent test appears in said Code section. If Plan contributions exceed the limits of this Section, first the Participant's contributions shall be reduced, as necessary, to eliminate the excess, in the following order of priority: Post-Tax Supplemental Contributions; Post-Tax Basic Contributions; Pre-Tax Supplemental Contributions; and Pre-Tax Basic Contributions. Post-Tax and Pre-Tax Contributions which cause the excess, plus the earnings attributable to the contributions may be returned to the Participant in the event the excess is caused by a reasonable error in estimating a Participant's annual compensation or any other cause which is acceptable under Treasury Regulation section 1.415-6(b)(6). If an excess still exists, the Participating Company's contribution shall be reduced as necessary. The provisions of this paragraph are effective for Plan Years beginning prior to January 1, 2000. For Plan Years beginning on or after January 1, 2000, these provisions shall no longer be applicable. If a person participates at any time in both a defined benefit plan and a defined contribution plan maintained by a Participating Company or an Affiliated Company, the sum of the defined benefit plan fraction and the defined contribution plan fraction for any Plan Year may not exceed 1.0. For purposes of this Section, the defined contribution plan fraction for any Plan Year is a fraction the numerator of which is the person's annual additions in such Plan Year and all prior years of employment, as determined - 14 - above, and the denominator of which is the lesser of the following amounts for such Year and for each prior Year: (a) 1.25 times the dollar limitation of Code section 415(c)(1)(A) for the pertinent Year or (b) l.4 times the amount that could be taken into account under the limitation of Code section 415(c)(l)(B) for the Participant. The defined benefit plan fraction for any Plan Year is a fraction the numerator of which is the Participant's projected annual benefit under all plans maintained by a Participating Company or an Affiliated Company and the denominator of which is the lesser of the following amounts for such Year: (a) 1.25 times the dollar limitation of Code section 415(b)(1)(A) for such Year or (b) 1.4 times the amount that could be taken into account under the percentage limitation of Code section 415(b)(1)(B) for the Participant for such Year. The Committee shall monitor the contributions and benefits with respect to each Participant under all plans maintained by a Participating Company and any Affiliated Company. The Committee, in its sole discretion, shall reduce any such contributions or benefits to prevent the combined fractions from exceeding 1.0. - 15 - ARTICLE V Investment of Contributions 5.1 Investment Funds. The Trustee shall establish a Partner Stock fund ---------------- and such other investment funds as shall be designated from time to time by any Board-appointed committee authorized to select investment funds. 5.2 Investment of Contributions. Each Participant will direct, at the --------------------------- time he elects to become a Participant under the Plan, that his Participant and Company contributions be invested in one or more available fund options in accordance with any rules the Committee in its discretion may establish. In the event no election is made, all contributions will be invested in a fixed income fund option designated by the Committee for this purpose. 5.3 Changing the Current Investment Election. A Participant's investment ---------------------------------------- election for accounts will continue in effect until changed by the Participant. A Participant, by filing a written election with the Committee, may change his current investment election as to his future contributions effective no later than the first payroll period as is administratively practicable after the date such written election to change is received by the Committee. Such changes may be made only as frequently as the Committee in its sole discretion may permit and in accordance with any rules the Committee in its discretion may establish. 5.4 Changing the Investment of Accumulated Contributions. A Participant ---------------------------------------------------- may, by filing a written election with the Committee, change his investment election as to all of his account balances. Such changes may be elected only as frequently as the Committee in its sole discretion may permit and in accordance with any rules the Committee in its discretion may establish. 5.5 Voting Rights with Respect to Partner Stock. Each Participant shall ------------------------------------------- have the right to vote all shares of Partner Stock held in his accounts. Each Participant shall also have the right to direct the Trustee whether to tender such shares of Partner Stock in the event an offer is made by any person other than the Company to purchase such shares. The Committee shall make any such arrangements with the Trustee as may be appropriate to pass such voting or tender offer rights through to a Participant. In the event a Participant fails to vote his shares or fails to indicate his preference with respect to a tender offer, the Trustee shall vote the Participant's shares or tender his shares in the same proportions as those Plan Participants who did respond, cast their votes or tendered their shares. - 16 - ARTICLE VI Participant Accounts -------------------- 6.l Individual Accounts. The Committee shall create and maintain (or direct ------------------- to be created and maintained) individual accounts as records for disclosing the interest in the Trust of each Participant, former Participant and Beneficiary. Such accounts shall record credits and charges in the manner herein described. When appropriate, a Participant shall have four separate accounts, a Company Contribution Account, a Participant Pre-Tax Contribution Account, a Participant Post-Tax Contribution Account and a Rollover Account. The maintenance of individual accounts is only for accounting purposes, and a segregation of the assets of the Trust to each account shall not be required. 6.2 Account Adjustments. Participant Accounts shall be adjusted as follows: ------------------- (a) Earnings: The earnings (including losses as well as gains) of the -------- Trust shall be allocated to the Participant Accounts of Participants who have balances in their Accounts on each Valuation Date. The allocation shall be made in the proportion that the amounts in each Participant Account bear to the total amounts in all of the Accounts similarly invested. In determining the value of Plan assets, each valuation shall be based on the fair market value of assets in the Trust on the Valuation Date. Notwithstanding the foregoing paragraph or any other provision of the Plan, to the extent that Participants' Accounts are invested in mutual funds or other assets for which daily pricing is available ("Daily Pricing Media"), all amounts contributed to the Trust Fund will be invested at the time of their actual receipt by the Daily Pricing Media, and the balance of each Account shall reflect the results of such daily pricing from the time of actual receipt until the time of distribution. Investment elections and changes pursuant to Article V shall be effective upon receipt by the Daily Pricing Media. References elsewhere in the Plan to the investment of contributions "as of" a date other than that described in this Section 6.2(a) shall apply only to the extent, if any, that assets of the Trust Fund are not invested in Daily Pricing Media. (b) Participating Company contributions: If Daily Pricing Media is in ----------------------------------- effect as described in Section 6.2(a) Company Matching, Fixed and Profit Sharing Contributions will be invested at the time of actual receipt by the Daily Pricing Media. If Daily Pricing Media is not in effect as of the end of each month the Company Matching and Profit Sharing Contributions on behalf of a Participant during the month shall be allocated to the Participant's Company Contribution Account. (c) Participant contributions: If Daily Pricing Media is in effect as ------------------------- described in Section 6.2(a) a Participant's contributions will be invested at the time of actual receipt by the Daily Pricing Media. If Daily Pricing Media is not in effect a - 17 - Participant's contributions made during a month shall be allocated to his Pre-Tax or Post-Tax Contribution Account, as the case may be, as of the end of each month. (d) Distributions and withdrawals: Distributions and withdrawals from a ----------------------------- Participant's Account shall be charged to the Account as of the date paid. (e) Forfeitures: As of the end of each Plan Year, Forfeitures which have ----------- become available during such Plan Year and are not required for allocation under Section 6.2(f) below shall be used to reduce the Participating Company's current or its next succeeding contributions to the Plan. (f) Forfeiture Account: In the event a Participant is entitled to receive ------------------ a vested benefit pursuant to the terms of Section 7.2 but later returns to the service of a Participating Company prior to incurring five consecutive one year breaks in service, the nonforfeitable amount in his pre-termination Company Contribution Account plus the amount of his Forfeiture at the time of termination shall be credited to a separate account as of the end of the Plan Year when he returns. The restoration of the Forfeiture shall be made, first, from any other Forfeitures arising in such Year prior to disposition under Section 6.2(e) and, if not available from such Forfeitures, from Participating Company contributions for the Year. At any relevant time, the Participant's nonforfeitable portion of the separate account will be equal to an amount ("X") determined by the formula: X = P(AB + (R x D)) - (R x D) For purposes of applying this formula: P is the nonforfeitable percentage at the relevant time; AB is the account balance at the relevant time; D is the amount of the distribution; and R is the ratio of the account balance at the relevant time to the account balance after distribution. The separate account need not be maintained after a Participant has incurred five consecutive one year breaks in service after the distribution of benefits to him. For purposes of this Section or one year break in service means a Plan Year during which an Employee performs no services for a Participating Company or an Affiliated Company. 6.3 Statements to Participants. On a periodic basis, but no less frequently -------------------------- than once during each Plan Year, the Committee (or its designee) will provide each Participant with a statement showing his interests in the Plan's various investment funds. The statement may show a Participant's interest in the Partner Stock fund in terms of the number of shares of Partner Stock, their dollar value, or both. As an alternative to showing the dollar or stock value of each Account, the Committee in its discretion may express each Participant's interest in terms of units. - 18 - 6.4 Transfer of Accounts Among Related Company Plans. If a Participant ceases ------------------------------------------------ to be within an eligible class of Participants under this Plan but becomes covered by a substantially similar 401(k) plan sponsored by Frontier Corporation or any corporation or business entity in which it has a 50 percent or more ownership or profits interest, the Committee may in its sole discretion transfer the Participant's accounts to the other 401(k) plan without the Participant's consent. Similarly, if a Participant in this Plan previously participated in another such 401(k) plan, the Participant's accounts in the other 401(k) plan may be transferred to this Plan without the Participant's consent. In any event, the value of the Participant's accounts subject to the any such transfer shall be the same immediately following the transfer as they were immediately prior to the transfer and any other benefits, rights and features of the transferor plan which are "protected benefits" within the meaning of Code section 411(d)(6) shall continue to apply to the transferred funds within the transferee plan. The timing and the mechanics of any transfer shall be within the sole discretion of the Committee. - 19 - ARTICLE VII Retirement or Other Termination of Employment --------------------------------------------- 7.1 Retirement or Disability. If a Participant's employment with a ------------------------ Participating Company is terminated (i) at or after his Normal Retirement Age, (ii) at or after his Early Retirement Age, or (iii) at an earlier age because of disability, the Participant's accounts shall all be fully vested and he shall be entitled to receive the entire balance of such accounts in accordance with the provisions of Article IX. For purposes of this Section 7.1 the term "disability" means a physical or mental condition which, in the judgment of the Committee, based on medical reports and other evidence satisfactory to the Committee, will permanently prevent an Employee from satisfactorily performing his usual duties for a Participating Company and which entitle the Employee to receive Social Security disability benefits. 7.2 Vested Benefits. Those Participants who were hired prior to July 1, 1997 --------------- shall be 100% vested at all times in all of their accounts. If a Participant who was hired on or after July 1, 1997 terminates employment with a Participating Company before he reaches age 55 or suffers a disability, he shall be entitled to receive the entire amount credited to his Participant Pre-Tax Contribution Account, his Participant Post-Tax Contribution Account and his Rollover Account plus the amount in his Restricted Company Contribution Account which has become vested. The vested amount in the Restricted Company Contribution Account shall be determined in accordance with the following schedule: Length of Percent of Percent of Service Account Vested Account Forfeited ------- -------------- ------------------ less than 6 months 0% 100% 6 months or more 100% 0% Effective as of the Effective Date of the UCN Transaction, all Participants shall be 100% vested in their account balances. If any Plan amendment changes the Plan's vesting schedule, each Participant in the Plan as of the date the new schedule is adopted shall have his vested percentage determined under the vesting schedule which provides him with the greatest vested benefit at any particular point in time. Any Forfeiture that may arise by virtue of the application of this Section shall be treated in accordance with the provisions of Section 6.2(e). Notwithstanding the foregoing, any benefit that is currently payable from the Plan to a recipient who cannot be located despite reasonable efforts to do so, shall be forfeited. All forfeitures with respect to lost Participants and Beneficiaries shall be used to reduce a - 20 - Participating Company's current or next succeeding contributions to the Plan. In the event the lost Participant or Beneficiary subsequently makes a claim for the forfeited benefits, the Participating Company shall restore to the Plan the forfeited benefit plus earnings based on returns from the Plan's fixed income investment option from the date of forfeiture to the date the forfeited benefit is restored. - 21 - ARTICLE VIII Death ----- 8.l Death While Actively Employed. If a Participant dies while actively ----------------------------- employed, the Participant's Beneficiary will be entitled to receive 100 percent of the value of his Participant Account. This amount shall consist of the Account's value as of the distribution date. 8.2 Death After Retirement. If a Participant dies after retirement, any ---------------------- benefit payable to the Participant's Beneficiary will depend upon the method that has been employed to distribute the value of his Participant Account in accordance with Article IX. 8.3 Beneficiary. If a Participant is married, his Beneficiary shall be his ----------- spouse who shall be entitled to receive his remaining account balance, upon the Participant's death. Upon the written election of the Participant, with his spouse's written consent, a Participant may designate another Beneficiary. This election and spousal consent must either be notarized or be witnessed by a Plan representative and returned to the Committee. If such election has been made or if the Participant is not married, the Participant will designate the Beneficiary (along with alternate Beneficiaries) to whom, in the event of his death, any benefit is payable hereunder. Each Participant has the right, subject to the spousal consent requirement noted above, to change any designation of Beneficiary. A designation or change of Beneficiary must be in writing on forms supplied by the Committee and any change of Beneficiary will not become effective until such change of Beneficiary is filed with the Committee, whether or not the Participant is alive at the time of such filing; provided, however, that any such change will not be effective with respect to any payments made by the Trustee in accordance with the Participant's last designation and prior to the time such change was received by the Committee. The interest of any Beneficiary who dies before the Participant will terminate unless otherwise provided. If a Beneficiary is not validly designated, or is not living or cannot be found at the date of payment, any amount payable pursuant to this Plan will be paid to the spouse of the Participant if living at the time of payment, otherwise in equal shares to such children of the Participant as may be living at the time of payment; provided, however, that if there is no surviving spouse or child at the time of payment, such payment will be made to the estate of the Participant. - 22 - ARTICLE IX Payment of Benefits ------------------- 9.l Form of Payment. Any Participant or, if the choice is his, any Beneficiary --------------- who is entitled to receive benefits under Articles VII or VIII may elect to receive the amount in the Participant Account in accordance with one of the following elections: OPTION A: A lump sum. OPTION B: Periodic payments of substantially equal amounts for a specified number of years not in excess of twenty. Such periodic payments shall be made at least annually. In the event periodic payments are elected, the Participant shall direct how the remaining balance of his account is to be invested. 9.2 Payments from Partner Stock Fund. Payment from the Participant's Partner -------------------------------- Stock fund account may be made either in cash or in Partner Stock as elected by the Participant. Payments from other funds shall be made only in cash. 9.3 Time of Payment. A Participant or Beneficiary who becomes entitled to --------------- receive a benefit at any time when the Participant Account is $5,000 or less will be cashed out for the full amount of the account balance as soon as administratively practicable. If the account balance is in excess of $5,000 it shall be paid prior to Normal Retirement Age only with the written consent of the Participant and, if married, with the consent of the Participant's spouse in a writing which acknowledges the effect of such consent and which is witnessed by a Plan representative or is notarized. In the case of death, the written consent of the Participant's Beneficiary shall be required for amounts in excess of $5,000. Benefit payments shall normally begin not later than the April 1 following the calendar year during which the event giving rise to the eligibility for payment shall have occurred. In no event shall benefits begin later than sixty days after the close of the Plan Year in which the latest of the following occurs: (1) the Participant's attainment of age 65; (2) the 10th anniversary of the year in which the Participant commenced participation in this Plan; (3) the termination of the Participant's service with a Participating Company; or (4) the date specified in writing to the Committee by the Participant (but not later than the year in which he attains age 70 1/2). In no event, however, shall benefit payments commence later than the April 1 of the calendar year following the later of the calendar year in which the Participant attains age 70 1/2 or the calendar year in which the Participant terminates employment with a Participating Company. Notwithstanding the foregoing, a 5 percent owner of a Participating Company shall commence receipt of benefits no later than the April 1 of the calendar year following the year he reaches age 70 1/2 even if he remains in the active employ of a Participating Company. Notwithstanding any direction by the Participant to the contrary, all payments must be payable pursuant to a schedule whereby the entire amount in the Participant's Account is paid over a period that does not extend beyond the life of the Participant or over the lives of the Participant and any individual he has designated as his Beneficiary (or over the life - 23 - expectancies of the Participant and his designated individual Beneficiary). In addition, the payment method selected must provide that more than 50 percent of the present value of the payments projected to be paid to the Participant and his Beneficiary will be paid to the Participant during his life expectancy. In the event of the death of a Participant, former Participant or Beneficiary while benefits are being paid under a schedule which meets the requirements of the preceding paragraph, payments shall continue pursuant to a schedule which is at least as rapid as the period selected. In the event of the death of a Participant or former Participant before benefit payments have commenced, any death benefit shall be distributed within five years of death unless the following conditions are met: (i) payments are made to an individual Beneficiary designated by the Participant; (ii) payments are made for the life of such individual Beneficiary or over a period not extending beyond his life expectancy; and (iii) payments commence within one year of death. If the designated Beneficiary is the Participant's spouse, payments will be paid within a reasonable period of time after the Participant's death, but may be delayed until the date the Participant would have attained age 70 1/2 , if the Beneficiary so elects. If the spouse dies before payments begin, the rules of this paragraph shall be applied as if the spouse were the Participant. Notwithstanding the provisions of this Section the distribution requirements of Code section 401(a)(9) and the regulations thereunder are hereby incorporated by this reference and shall supersede any conflicting Plan provisions. 9.4 Death of Participant Prior to Receiving Full Distribution. Except as --------------------------------------------------------- provided in Section 8.2, if a Participant dies after having terminated employment and prior to receiving a distribution of his Participant Account, then the payments that would otherwise have been made to the Participant will be made to his Beneficiary. 9.5 QDROs. Benefits shall be payable under this Plan to an alternate payee ----- pursuant to the terms of any qualified domestic relations order. The Committee has the responsibility for determining if a domestic relations order is qualified and whether its payment terms are consistent with the terms of the Plan. If appropriate, the amounts subject to a QDRO may be segregated from the Participant's Account and placed in a separate account for the benefit of the alternate payee who shall thereupon be treated for Plan purposes as a Participant. Any amounts payable to an alternate payee may, at the alternate payee's request, be paid from the Plan immediately pursuant to the terms of the QDRO and this Plan. - 24 - ARTICLE X Withdrawals and Loans During Employment --------------------------------------- 10.1 Age 59 1/2 Withdrawals. A Participant who has reached age 59 1/2 but who ---------------------- has not yet terminated employment may withdraw all or a portion of his vested accumulated account balance under the Plan subject to the limitations specified in Section 10.4. 10.2 Participant Post-Tax Contributions. A Participant may, by filing a ---------------------------------- written request with the Committee, signed by the Participant and the Participant's spouse, elect to withdraw amounts in his Participant Post-Tax Contribution Account as follows: (a) Contributions. A withdrawal of up to l00 percent of Participant Post- ------------- Tax Contributions or, if less, l00 percent of the then value of such contributions may be made from the Plan. (b) Earnings. A withdrawal of up to l00 percent of the earnings on Post- -------- Tax Contributions may be made by a Participant from the Plan. 10.3 Participant Pre-Tax Contributions. No earnings in a Participant's Pre-Tax --------------------------------- Contribution Account may be withdrawn prior to age 59 1/2. A Participant may withdraw his Pre-Tax Contributions from his Pre-Tax Contribution Account prior to age 59 1/2 only if the withdrawal is made on account of an immediate and heavy financial need of the Participant that cannot be satisfied from other resources available to the Participant. For purposes of this Section an immediate and heavy financial need shall mean (1) expenses incurred for medical care or necessary to obtain medical care for a Participant, a Participant's spouse or a Participant's dependent; (2) the purchase of a Participant's principal residence; (3) tuition and related educational fees for post-secondary education but only for the next 12 months for a Participant, a Participant's spouse or a Participant's dependent, or remedial school tuition; (4) prevention of eviction or mortgage foreclosure; (5) expenses arising from the death of a spouse or dependent; (6) financial loss due to a sudden catastrophe; (7) extraordinary legal expenses; (8) adoption expenses; or (9) any other need recognized by the IRS in documents of general applicability. A Participant will be deemed to lack other resources if all of the following conditions are satisfied: (1) the Participant must have obtained all distributions (except hardship) and all nontaxable loans available from all plans of any Participating Company; (2) the Participant may not make any contributions to any plan of any Participating Company for at least 12 months following the hardship withdrawal and (3) the dollar limit on pre-tax contributions ($10,000 as indexed for inflation after 1999) for the calendar year following the hardship shall be reduced by the amount of the hardship withdrawal. If the foregoing conditions are not satisfied, the Committee may reasonably rely on statements and representations made by the Participant with respect to his lack of other financial resources. The amount of the withdrawal cannot exceed the amount required to relieve the financial need (including any amounts necessary to pay federal, state or local income taxes or penalties reasonably anticipated to result from the distribution). - 25 - l0.4 Limitations on In-Service Withdrawals. ------------------------------------- (a) No more than two in-service withdrawals are permitted in any one Plan Year. (b) No withdrawal will be permitted under this Article unless the amount to be withdrawn is at least $200 or l00% of the aggregate value of the Participant's relevant account from which withdrawals are being requested if such value is less than $200. (c) Unless otherwise specified by the Participant, any withdrawal of Participant contributions from his Post-Tax Contribution Account will be satisfied first by a withdrawal of his pre-1987 contributions, if any, and then by a withdrawal of his post-1986 contributions and/or earnings on contributions. (d) Any withdrawal from a Participant's Pre-Tax or Post-Tax Contribution Accounts will result in an automatic suspension of the Participant's right to make future Plan contributions for a period of six months from the date of the withdrawal. During the period of suspension, Company matching contributions will also be suspended. Finally, after the Participant resumes making contributions to the Plan, no make-up contributions will be permitted for the period of the suspension. 10.5 Fund to be Charged with Withdrawal. A Participant may specify the ---------------------------------- investment fund or combination of funds to which a withdrawal is to be charged. If the Participant fails to make any designation, a distribution will be made out of the Participant's interest in each of the funds in proportion to the Participant's share in these funds. 10.6 Loans to Participants. The Trustee shall, if the Committee directs, make --------------------- a loan to a Participant from any or all of the Participant's accounts subject to such rules as the Committee may prescribe and subject to the following conditions: (a) An application for a loan by a Participant shall be made in writing to the Committee, which shall thoroughly investigate each application and whose action thereon shall be final, or through telephonic or electronic processing, as the Committee may determine; (b) A loan must be for a minimum of $500, only two loans (only one for the purchase of a principal residence) may be outstanding at any one time, and only one loan refinancing per year will be permitted; (c) No loan shall be made to the extent that such loan when added to all other loans to the Participant would exceed the lesser of (1) 50 percent of the vested amounts in all of the Participant's accounts under the Plan or (2) $50,000 reduced by the excess, if any, of the highest outstanding balance of loans during the one year period ending on the day before the loan is made over the outstanding balance of loans to the Participant on the date the loan is made. In determining whether the - 26 - foregoing loan limits are satisfied all loans from all plans of a Participating Company and of any Affiliated Company shall be aggregated. (d) The period of repayment for any loan shall be arrived at by mutual agreement between the Committee and the borrower, but such period in no event shall exceed five years except that a loan may be granted for a period not to exceed 25 years if the proceeds are used to purchase the Participant's principal residence; (e) All loans must be repaid under a substantially level amortization period with payments being made at least quarterly; (f) Each loan shall be made against collateral being the assignment of 50 percent of the borrower's entire right, title and interest in and to the Trust Fund, supported by the borrower's collateral promissory note for the amount of the loan, including interest, payable to the order of the Trustee and/or such other collateral as the Committee may require; (g) Each loan shall bear interest at a rate fixed by the Committee. The rate shall be commensurate with the rates charged by persons in the business of lending money for loans which would be made under similar circumstances. Interest rates granted at different times and to Participants in differing circumstances may vary depending on such differences; (h) A loan shall be treated as a directed investment by the borrower with respect to his accounts. The interest paid on the loan shall be credited to the borrower's accounts and he shall not share in the earnings of the Plan's assets with respect to the amounts borrowed and not yet repaid; (i) A loan to a married Participant requires the written, notarized consent of the Participant's spouse; (j) No distribution shall be made to any Participant, former Participant or Beneficiary unless and until all unpaid loans, including accrued interest thereon, have been liquidated or offset against the account; (k) A Participant will not be permitted to consolidate existing loans or take out new loans after he has terminated employment; and (l) The Committee may, in its discretion, charge a fee to process and maintain Plan loans, which shall be deducted from the accounts of Participants who take loans. The amounts of such fees shall be determined from time to time by the Committee. - 27 - ARTICLE XI Plan Administration ------------------- 11.1 Appointment of Committee. The Board shall appoint an Employees' Benefit ------------------------ Committee to administer the Plan. Any person, including an officer or other employee of a Participating Company, is eligible for appointment as a member of the Committee. Such members shall serve at the pleasure of the Board. Any member may resign by delivering his written resignation to the Board. Vacancies in the Committee shall be filled by the Board. 11.2 Named Fiduciary and Plan Administrator. The Committee shall be the Named -------------------------------------- Fiduciary and Plan Administrator as these terms are used in ERISA. The Committee shall appoint a Secretary who shall also be the agent for the service of legal process. 11.3 Powers and Duties of Committee. The Committee shall administer the Plan ------------------------------ in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan, except such powers as are specifically reserved to the Board or some other person. The Committee's powers include the power to make and publish such rules and regulations as it may deem necessary to carry out the provisions of the Plan. The Committee shall interpret the Plan and shall determine all questions arising in the administration, interpretation, and application of the Plan. The Committee shall notify the Trustee of the liquidity and other requirements of the Plan from time to time. 11.4 Operation of Committee. The Committee shall act by a majority of its ---------------------- members at the time in office, and such action may be taken either by a vote at a meeting or without a meeting. Any action taken without a meeting shall be reflected in a written instrument signed by a majority of the members of the Committee. A member of the Committee who is also a Participant shall not vote on any question relating specifically to himself. Any such question shall be decided by the majority of the remaining members of the Committee. The Committee may authorize any one or more of its members to execute any document on behalf of the Committee, in which event the Committee shall notify the Trustee in writing of such action and the name or names of its member or members so designated. The Trustee thereafter shall accept and rely upon any document executed by such member or members as representing action by the Committee until the Committee shall file with the Trustee a written revocation of such designation. The Committee may adopt such by-laws or regulations as it deems desirable for the conduct of its affairs. The Committee shall keep a record of all its proceedings and acts and shall keep all such books of account, records, and other data as may be necessary for the proper administration of the Plan. 11.5 Power to Appoint Advisers. The Committee may appoint such actuaries, ------------------------- accountants, attorneys, consultants, other specialists and such other persons as it deems necessary or desirable in connection with the administration of this Plan. Such persons may, but need - 28 - not, be performing services for a Participating Company. The Committee shall be entitled to rely upon any opinions or reports which shall be furnished to it by any such actuary, accountant, attorney, consultant or other specialist. 11.6 Expenses of Plan Administration. The members of the Committee shall serve ------------------------------- without compensation for their services as such, but their reasonable expenses shall be paid by the Company. To the extent not paid from Fund assets, as determined from time to time by any Board-appointed committee, all reasonable expenses of administering the Plan shall be paid by the Company, including, but not limited to, fees of the Trustee, accountants, attorneys, consultants, and other specialists. 11.7 Duties of Fiduciaries. All fiduciaries under the Plan and Trust shall act --------------------- solely in the interests of the Participants and their Beneficiaries and in accordance with the terms and provisions of the Plan and Trust Agreement insofar as such documents are consistent with ERISA, and with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims. Any person may serve in more than one fiduciary capacity with respect to the Plan and Trust. 11.8 Liability of Members. No member of the Committee shall incur any -------------------- liability for any action or failure to act, excepting only liability for his own breach of fiduciary duty. To the extent not covered by insurance, the Company shall indemnify each member of the Committee and any Board- appointed committee and any employee acting on their behalf against any and all claims, loss, damages, expense and liability arising from any action or failure to act. 11.9 Allocation of Responsibility. The Board, Trustee, Investment Manager and ---------------------------- the committees established to administer the Plan possess certain specified powers, duties, responsibilities and obligations under the Plan and Trust. It is intended under this Plan that each be solely responsible for the proper exercise of its own functions and that each shall not be responsible for any act or failure to act of another, unless otherwise responsible as a breach of its own fiduciary duty. (a) Generally, the Board shall be responsible for appointing the members of the committees it may establish to administer this Plan. If this Plan shall at any time permit employees to invest any portion of Plan assets in Company or Partner securities, the Board shall have sole authority to terminate this Plan and to make any discretionary amendments, while any Board-appointed committee given such authority shall have authority for making nondiscretionary amendments and for recommending to the Board any other Plan amendments it deems appropriate. (b) The Board-appointed committees so authorized shall have the responsibilities of making Plan amendments not specifically reserved to the Board in the preceding subsection, including sole discretion to amend the Plan if employees are not authorized to invest Plan assets in Company or Partner securities, to select - 29 - Investment Managers, to direct the Trustee and the Investment Managers with respect to all matters relating to the investment of Plan assets, to review and report to the Board on the investment policy and performance of Plan assets and generally to administer the Plan according to its terms. (c) The Trustee or the Investment Manager, as the case may be, is responsible for the management and control of the Plan's assets as specifically provided in the Trust Agreement or investment manager agreement. (d) The Board may dissolve any committee it appoints or reserve to itself any of its powers previously delegated to a Board-appointed committee. In addition, the Board may reorganize the committees it establishes from time to time and reallocate their responsibilities among them or assign them to other persons or committees provided that the Employees' Benefit Committee shall at all times continue as plan administrator and named fiduciary as these terms are defined in ERISA unless the Board formally amends the Plan to reallocate these responsibilities. The Board and the various committees may designate persons, including committees, other than named fiduciaries to carry out their responsibilities (other than trustee responsibilities) under the Plan. 11.10 Claims Review Procedure. The Committee shall maintain a procedure under ----------------------- which any Participant or Beneficiary may assert a claim for benefits under the Plan. Any such claim shall be submitted in writing to the Committee within such reasonable period as the rules of the Committee may provide. The Committee shall take action on the claim within 60 days following its receipt and if it is denied shall at such time give the claimant written notice which clearly sets forth the specific reason or reasons for such denial, the specific Plan provision or provisions on which the denial is based, any additional information necessary for the claimant to perfect the claim, if possible, an explanation of why such additional information is needed, and an explanation of the Plan's claims review procedure. The review procedure shall allow a claimant at least 60 days after receipt of the written notice of denial to request a review of such denied claim, and the Committee shall make its decision based on such review within 60 days (120 days if special circumstances require more time) of its receipt of the request for review. The decision on review shall be in writing and shall clearly describe the reasons for the Committee's decision. - 30 - ARTICLE XII Amendment and Termination ------------------------- 12.1 Right to Amend or Terminate. Any amendment may be made to this Plan which --------------------------- does not cause any part of the Plan's assets to be used for, or diverted to, any purpose other than the exclusive benefit of Participants, former Participants, or Beneficiaries, provided however, that any amendment may be made, with or without retroactive effect, if such amendment is necessary or desirable to comply with applicable law. Except in the case where approved by the Secretary of Labor because of substantial business hardship, as provided in section 412(c)(8) of the Code, no amendment shall be made to the Plan if it would decrease the accrued benefit of any Participant, eliminate or reduce an early retirement benefit or eliminate an optional form of benefit as may be provided in regulations under Code section 411(d)(6). If any provisions of this Plan relating to the percentage of a Participant's accrued benefit that is vested are changed, any Participant with at least three years of service may elect, by filing a written request with the Committee within 60 days after the later of (1) the date the amendment was adopted, (2) the date the amendment was effective, or (3) the date the Participant received written notice of such amendment, to have his vested interest computed under the provisions of this Plan as in effect immediately prior to such amendment. 12.2 Full Vesting Upon Termination of Plan. Upon full or partial termination ------------------------------------- of the Plan or upon complete discontinuance of Participating Company contributions, each affected Participant will become l00 percent vested in the value of his Participant Account as of the Valuation Date next following such termination or discontinuance. - 31 - ARTICLE XIII Top-Heavy Provisions -------------------- 13.1 Rules to Apply if Plan is Top-Heavy. Notwithstanding any other relevant ----------------------------------- provision of this Plan to the contrary, the following rules will apply for any Plan Year that the Plan becomes "top-heavy" (as defined in Section 13.2): (a) Vesting. Vesting will remain 100 percent at all times after ------- completion of six months' service. (b) Minimum Contributions. For each top-heavy Plan Year the minimum --------------------- contribution allocated to the Participant Account of each non-key employee shall be equal to or greater than the lesser of the following amounts: (i) 3 percent of such non-key employee's compensation; or (ii) the highest percentage-of-compensation allocation made to the Participant Account of any key employee. If the highest rate allocated to a key employee is less than 3% of compensation, amounts contributed as a result of a salary reduction agreement shall be included in determining the rate of contribution on behalf of key employees. For purposes of this subsection, "compensation" shall have the same meaning as in Section 4.4. Minimum contributions will be made to Participant's Account without regard to his level of compensation or his hours of service during a Plan Year. (c) Limitation on Benefits. In applying the dollar limitations under ---------------------- section 415(e) of the Code, the 1.25 limitation shall be supplanted by a 1.0 limitation for each year during which the Plan is top-heavy. (d) Maximum Compensation. The maximum annual compensation of each -------------------- employee that may be taken into account under the Plan shall not exceed $150,000 (or such larger amount based on cost of living adjustments as may be permitted under the Code). 13.2 Top-Heavy Definition. For purposes of this Section, the Plan will be -------------------- considered "top-heavy" if on any given determination date (the last day of the preceding Plan Year or, in the case of the Plan's first year, the last day of such Year) the sum of the account balances for key employees is more than 60 percent of the sum of the account balances of all employees, excluding former key employees. The account balances shall include distributions made during any given Plan Year containing the determination date and the preceding four Plan Years but shall not include the account balances for any person who has not received any compensation from any Participating Company at any time during the five-year period ending on the determination date. The method of determining the top-heavy ratio shall be made in accordance with Code section 4l6. - 32 - In making the top-heavy calculation, (a) all the Company's plans in which a key employee participates shall be aggregated with all other Participating Company plans which enable a plan in which a key employee participates to satisfy the Code's non-discrimination requirements; and (b) all Participating Company plans not included in subparagraph (a), above, may be aggregated with the Participating Company's plans included in subparagraph (a), above, if all of the aggregated plans would be comparable and satisfy the Code's non-discrimination requirements. 13.3 Key Employee Definition. A key employee will be, for the purpose of this ----------------------- Article, any employee or former employee who at any time during the Plan Year containing the determination date or the four preceding Plan Years is such within the meaning of Code section 416. As of the effective date, the term key employee includes the following individuals: (i) an officer (but not more than 50 persons or, if lesser, the greater of 3 or 10 percent of employees and not including persons who earn 150 percent or less of the dollar limitation for contributions to defined contribution plans as specified in Code section 415(c)(l)(A)); (ii) one of 10 employees who has annual compensation from the Participating Company of more than the amount in effect under Code section 415(c)(1)(A) owning the largest interests of the Participating Company. The employee having the greater annual compensation from the Participating Company shall be considered to own the larger interest in the Participating Company if two or more employees had the same ownership interest in the Participating Company; (iii) a five-percent owner of the Participating Company; and (iv) a one-percent owner of the Participating Company whose annual compensation from the Participating Company exceeds $l50,000. 13.4 Relationship of the Normal and the Top-Heavy Vesting Schedules. If the -------------------------------------------------------------- Plan's top-heavy status changes and this change alters the Plan's normal vesting schedule, no Participant's vested accrued benefit immediately prior to such change in status shall be diminished on account of the change in the vesting schedule. In addition, the vesting for each Participant in the Plan at the time of the change in status shall be determined under whichever schedule provides the greatest vested benefit at any particular point in time. 13.5 Participation in Other Plans. A non-key employee who participates in both ---------------------------- a defined contribution plan and a defined benefit plan of the Participating Company shall not be entitled to receive minimum benefits and/or minimum contributions under all such plans. Instead, the employee shall receive a minimum benefit equal to the lesser of 20 percent of such non-key employee's average compensation or 2 percent of his average compensation multiplied by his number of Years of Service, as set forth in such defined benefit plan. - 33 - ARTICLE XIV General Provisions ------------------ 14.1 Employment Relationship. Nothing contained herein will be deemed to give ----------------------- any Employee the right to be retained in the service of a Participating Company or to interfere with the rights of a Participating Company to discharge any Employee at any time. 14.2 Non-Alienation of Benefits. Except as provided in Section 10.6, benefits -------------------------- payable under this Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any kind, either voluntary or involuntary, including any such liability which arises from the Participant's bankruptcy, prior to actually being received by the person entitled to the benefit under the terms of the Plan; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to benefits payable hereunder, shall be void. The Trust shall not in any manner be liable for, or subject to the debts, contracts, liabilities, engagements or torts of any person entitled to benefits hereunder. Nothing in this Section shall preclude payment of Plan benefits pursuant to a qualified domestic relations order pursuant to Section 9.5. 14.3 Use of Masculine and Feminine; Singular and Plural. Wherever used in this -------------------------------------------------- Plan, the masculine gender will include the feminine gender and the singular will include the plural, unless the context indicates otherwise. 14.4 Plan for Exclusive Benefit of Employees. No part of the corpus or income --------------------------------------- of the Trust will be used for, or diverted to, purposes other than the exclusive benefit of Participants and their Beneficiaries. Anything in the foregoing to the contrary notwithstanding, the Plan and Trust are established on the express condition that they will be considered, by the Internal Revenue Service, as initially qualifying under the provisions of the Internal Revenue Code. In the event that the Internal Revenue Service issues an unfavorable determination with respect to a timely request for a determination that the amended and restated Plan and Trust qualify under the Internal Revenue Code, the Plan and Trust will be of no effect and the value of all contributions made by a Participating Company and Participants since the amendment and restatement will be returned to the Participating Company and Participants, respectively, within one year from the date of the denial of the determination request. Furthermore, if, or to the extent that, a Participating Company's tax deduction for contributions made to the Plan is disallowed, the Participating Company will have the right to obtain the return of any such contributions (to the extent disallowed) for a period of one year from the date of disallowance. All Participating Company contributions to this Plan are contingent upon their deductibility under the Code. Finally, if a Participating Company's contribution to the Plan is made by a mistake in fact, the Participating Company will have the right to obtain the return of such contribution for a period of one year from the date the contribution was made. 14.5 Merger or Consolidation of Plan. There will be no merger or consolidation ------------------------------- with, or transfer of any assets or liabilities to, any other plan, unless each Participant will be - 34 - entitled to receive a benefit immediately after such merger, consolidation, or transfer as if this Plan were then terminated which is at least equal to the benefit he would have been entitled to receive immediately before such merger, consolidation, or transfer as if this Plan had been terminated. 14.6 Payments to Minors and Incompetents. If a Participant or Beneficiary ----------------------------------- entitled to receive any benefits hereunder is a minor or is deemed by the Committee, or is adjudged to be, legally incapable of giving valid receipt and discharge for such benefits, they will be paid to such persons as the Committee might designate or to the duly appointed guardian. 14.7 Governing Law. To the extent that New York law has not been preempted by ------------- ERISA, the provisions of the Plan will be construed in accordance with the laws of the State of New York. 14.8 Special Service Rules for Time Warner Cellular Employees. Notwithstanding -------------------------------------------------------- any other provisions of the Plan to the contrary, for purposes of eligibility, participation and vesting, the service taken into account under this Plan with respect to every individual who became a regular Employee of the Company in accordance with the Company's acquisition agreement with Time Warner Cellular shall include all service with Time Warner Cellular. IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Plan document on its behalf this 24th day of September, 1999. UPSTATE CELLULAR NETWORK By:/s/ Barbara J. LaVerdi Title: Assistant Secretary EX-5.1 6 OPINION OF APPLEBY, SPURLING & KEMPE EXHIBIT 5.1 28th September, 1999 Global Crossing Ltd Wessex House 45 Reid Street Hamilton HM 12 Bermuda Dear Sirs, Re: Global Crossing Ltd (the "Company") - ---------------------------------------- We have acted as legal counsel in Bermuda to the Company and this opinion as to Bermuda law is addressed to you in connection with the filing by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), of a Registration Statement and related documents in relation to common shares of the Company of par value US$0.01 (the "Common Shares") which may be issued pursuant to grants of options under the stock option plans of Frontier Corporation (the "Plans") assumed by the Company under the provisions of the Merger Agreement entered into between the Company, Frontier Corporation and GCF Acquisition Corp. dated as of March 16th, 1999 (the "Merger Agreement"). For the purposes of this opinion we have examined and relied upon the documents listed (which in some cases, are also defined in the Schedule to this opinion (the "Documents")). Assumptions - ----------- 2 In stating our opinion we have assumed:- (a) the authenticity, accuracy and completeness of all Documents submitted to us as originals and the conformity to authentic original Documents of all Documents submitted to us as certified, conformed, notarised or photostatic copies; (b) the genuineness of all signatures on the Documents; (c) the authority, capacity and power of natural persons signing and, except for the Company in relation to the Merger Agreement, the parties to the Documents; (d) that any factual statements made in any of the Documents are true, accurate and complete; (e) that each of the Plans constitutes the legal, valid and binding obligation of each of the parties thereto, under the laws of its jurisdiction of incorporation or its jurisdiction of formation; (f) that there are no provisions of the laws or regulations of any jurisdiction other than Bermuda which would have any implication in relation to the opinion expressed herein and that, in so far as any obligation under, or action to be taken under, the Plans is required to be performed or taken in any jurisdiction outside Bermuda, the performance of such obligation or the taking of such action will constitute a valid and binding obligation of each of the parties thereto under the laws of that jurisdiction and will not be illegal by virtue of the laws of that jurisdiction; 3 (g) that the Resolutions are in full force and effect and have not been rescinded, either in whole or in part, and accurately record the resolutions passed by the Board of Directors of the Company in a meeting which was duly convened and at which a duly constituted quorum was present and voting throughout; (h) that each Director of the Company, when the Board of Directors of the Company passed the Resolutions, discharged his fiduciary duty owed to the Company and acted honestly and in good faith with a view to the best interests of the Company; (i) that Frontier Corporation has entered into its obligations under the Plans in good faith for the purpose of carrying on its business and that, at the time it did so, there were reasonable grounds for believing that the transactions contemplated by the Plans would benefit Frontier Corporation; (j) that the Merger Agreement and each of the Plans is valid, binding and enforceable under the laws of the jurisdiction by which it is expressed to be governed; (k) that the adoption of the Plans and the approval of the issues of any awards pursuant to the Plans were duly made under the terms of the Plans, the laws of the jurisdictions by which the Plans are expressed to be governed and the constitutional documents of Frontier and the other companies party to the Plans; (l) that the issue price of any Common Shares to be issued by the Company pursuant to options awarded under the Plans will not be less than the par value of the Common Shares and the Company will have sufficient authorised capital to effect the issue; 4 (m) that the Company has entered into its obligations under the Merger Agreement in good faith for the purpose of carrying on its business and that, at the time it did so, there were reasonable grounds for believing that the transactions contemplated by the Merger Agreement would benefit the Company. Opinion - ------- Based upon and subject to the foregoing and subject to the reservations set out below and to any matters not disclosed to us, we are of the opinion that when duly issued and paid for pursuant to and in accordance with the terms of the Plans and as contemplated by the Registration Statement and the Merger Agreement, the Common Shares will be validly issued, fully paid, non-assessable shares of the Company. Reservations - ------------ We have the following reservations:- (a) We express no opinion as to any law other than Bermuda law and none of the opinions expressed herein relates to compliance with or matters governed by the laws of any jurisdiction except Bermuda. This opinion is limited to Bermuda law as applied by the Courts of Bermuda at the date hereof. 5 b) Any reference in this opinion to shares being "non-assessable" shall mean, in relation to fully-paid shares of the company and subject to any contrary provision in any agreement in writing between such company and the holder of shares, that: no shareholder shall be obliged to contribute further amounts to the capital of the company, either in order to complete payment for their shares, to satisfy claims of creditors of the company, or otherwise; and no shareholder shall be bound by an alteration of the Memorandum of Association or Bye-Laws of the company after the date on which he became a shareholder, if and so far as the alteration requires him to take, or subscribe for additional shares, or in any way increases his liability to contribute to the share capital of, or otherwise to pay money to, the company. Disclosure - ---------- This opinion is addressed to you in connection with the Registration Statement and is not to be made available to, or relied on by any other person or entity, or for any other purpose, without our prior written consent. We consent to the filing of this opinion as an exhibit to the Registration Statement of the Company. This opinion is addressed to you solely for your benefit and is neither to be transmitted to any other person, nor relied upon by any other person or for any other purpose nor quoted or referred to in any public document nor filed with any governmental agency or person, without our prior written consent, except as may be required by law or regulatory authority. Further, this opinion speaks as of its date and is strictly limited to the matters stated herein and we assume no obligation to review or update this opinion if applicable laws or the existing facts or circumstances should change. 6 This opinion is governed by and is to be construed in accordance with Bermuda law. It is given on the basis that it will not give rise to any legal proceedings with respect thereto in any jurisdiction other than Bermuda. Yours faithfully, Appleby, Spurling & Kempe 7 SCHEDULE -------- 1. A faxed copy of an original Registration Statement on Form S-8 with respect to the Common Stock including Exhibits but excluding the documents incorporated by reference. 2. The Merger Agreement. 3. Certified copies of the Minutes of the Meeting of the Board of Directors of the Company held on 6th March and 16th May, 1999, which approved the Merger Agreement (the "Resolutions"). 4. Certified copies of the Certificate of Incorporation, Memorandum of Association and Bye-laws for the Company (collectively referred to as the "Constitutional Documents"). EX-23.1 7 CONSENT OF ARTHUR ANDERSEN & CO. EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT As independent public accountants, we hereby consent to the use of our reports (and to all references to our Firm) included in this Post-Effective Amendment No. 1 on Form S-8 to the registration statement on Form S-4, (Registration No. 333-86693) filed on September 29, 1999. /s/ Arthur Andersen & Co. September 28, 1999 Hamilton, Bermuda EX-23.2 8 CONSENT OF PRICEWATERHOUSECOOPERS LLP EXHIBIT 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in this Post-Effective Amendment No. 1 on Form S-8 to the Registration Statement on Form S-4 (File No. 333-86693) of Global Crossing Ltd. of our report dated January 25, 1999 relating to the financial statements, which appears on page 28 of the 1999 Annual Report to Shareholders of Frontier Corporation, which is incorporated by reference in Frontier Corporation's Annual Report on Form 10-K for the year ended December 31, 1998; and which appears on Page 20 of the Frontier Corporation Current Report on Form 8-K dated January 26, 1999. We also consent to the incorporation by reference of our report dated January 25, 1999 relating to the Financial Statement Schedule, which appears on page 30 of such Annual Report on Form 10-K. We also consent to the reference to us under the headings "Experts" and "Selected Historical Financial Information" in such Registration Statement. /s/ PricewaterhouseCoopers LLP - ---------------------------------- PricewaterhouseCoopers LLP Rochester, New York September 28, 1999 EX-23.3 9 CONSENT OF KPMG AUDIT PLC EXHIBIT 23.3 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Post-Effective Amendment No 1 on Form S-8 to the Registration Statement on Form S-4 (Registration No. 333- 86693) of Global Crossing Limited, of our report dated 26 May 1999 with respect to the balance sheets of Cable & Wireless Global Marine as of 31 March 1999 and 1998 and the results of their operations and cashflows for each of the years in the three-year period ended 31 March 1999. Yours faithfully /s/ KPMG Audit Plc ------------------------------- KPMG Audit Plc Ipswich, England September 28, 1999 -----END PRIVACY-ENHANCED MESSAGE-----