FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
AND TRUST AGREEMENT
-----------------------------------------
ORIGINALLY EFFECTIVE OCTOBER 1, 1986
AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1999
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
AND TRUST AGREEMENT
(AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1999)
TABLE OF CONTENTS
PAGE NO.
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ALPHABETICAL LISTING OF DEFINITIONS vi-vii
ARTICLE I - DEFINITIONS 1
1.01 PLAN......................................................................1
1.02 EMPLOYER..................................................................1
1.03 TRUSTEE...................................................................1
1.04 PLAN ADMINISTRATOR........................................................1
1.05 ADVISORY COMMITTEE........................................................1
1.06 EMPLOYEE..................................................................1
1.07 HIGHLY COMPENSATED EMPLOYEE...............................................1
1.08 PARTICIPANT...............................................................2
1.09 BENEFICIARY...............................................................2
1.10 COMPENSATION DEFINITIONS..................................................2
1.11 ACCOUNT...................................................................2
1.12 ACCRUED BENEFIT...........................................................3
1.13 NONFORFEITABLE............................................................3
1.14 PLAN YEAR.................................................................3
1.15 EFFECTIVE DATE............................................................3
1.16 PLAN ENTRY DATE...........................................................3
1.17 ACCOUNTING DATE...........................................................3
1.18 TRUST.....................................................................3
1.19 TRUST FUND................................................................3
1.20 NONTRANSFERABLE ANNUITY...................................................3
1.21 ERISA.....................................................................3
1.22 CODE......................................................................3
1.23 SERVICE...................................................................3
1.24 HOUR OF SERVICE...........................................................3
1.25 DISABILITY................................................................4
1.26 SERVICE FOR PREDECESSOR EMPLOYER..........................................4
1.27 RELATED EMPLOYER..........................................................4
1.28 LEASED EMPLOYEES..........................................................4
1.29 DETERMINATION OF TOP HEAVY STATUS.........................................5
1.30 "EMPLOYER STOCK\..........................................................6
1.31 "EMPLOYER STOCK FUND\.....................................................6
1.32 PLAN MAINTAINED BY MORE THAN ONE EMPLOYER.................................6
ARTICLE II - EMPLOYEE PARTICIPANTS 7
2.01 ELIGIBILITY...............................................................7
2.02 YEAR OF SERVICE - PARTICIPATION...........................................7
2.03 BREAK IN SERVICE - PARTICIPATION..........................................7
2.04 PARTICIPATION UPON RE-EMPLOYMENT..........................................7
ARTICLE III EMPLOYER CONTRIBUTIONS AND FORFEITURES 8
3.01 AMOUNT....................................................................8
3.02 DETERMINATION OF CONTRIBUTION.............................................8
3.03 TIME OF PAYMENT OF CONTRIBUTION...........................................8
3.04 CONTRIBUTION ALLOCATION...................................................8
3.05 FORFEITURE ALLOCATION.....................................................10
3.06 ACCRUAL OF BENEFIT........................................................10
3.07 LIMITATIONS ON ALLOCATIONS TO PARTICIPANTS' ACCOUNTS......................11
3.08 DEFINITIONS - ARTICLE III.................................................12
ARTICLE IV - PARTICIPANT CONTRIBUTIONS 13
4.01 PARTICIPANT VOLUNTARY CONTRIBUTIONS.......................................13
4.02 [Reserved]................................................................13
4.03 PARTICIPANT ROLLOVER CONTRIBUTIONS........................................13
4.04 PARTICIPANT CONTRIBUTION - FORFEITABILITY.................................13
4.05 PARTICIPANT CONTRIBUTION WITHDRAWAL/ DISTRIBUTION.........................13
4.06 PARTICIPANT CONTRIBUTION - ACCRUED BENEFIT................................13
ARTICLE V - TERMINATION OF SERVICE - PARTICIPANT VESTING 14
5.01 NORMAL RETIREMENT AGE.....................................................14
5.02 PARTICIPANT DISABILITY OR DEATH...........................................14
5.03 VESTING SCHEDULE..........................................................14
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION
OF FORFEITED ACCRUED BENEFIT..............................................14
5.05 ACCOUNTING FOR REPAID AMOUNT..............................................15
5.06 YEAR OF SERVICE - VESTING.................................................15
5.07 BREAK IN SERVICE - VESTING................................................15
5.08 INCLUDED YEARS OF SERVICE - VESTING.......................................15
5.09 FORFEITURE OCCURS.........................................................15
ARTICLE VI - TIME AND METHOD OF PAYMENT OF BENEFITS 17
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT........................................17
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT......................................18
6.03 BENEFIT PAYMENT ELECTIONS.................................................19
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES...............21
6.05 WAIVER ELECTION - QUALIFIED JOINT AND SURVIVOR ANNUITY....................22
6.06 WAIVER ELECTION - PRERETIREMENT SURVIVOR ANNUITY.........................22
6.07 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS.............................23
ARTICLE VII - EMPLOYER ADMINISTRATIVE PROVISIONS 24
7.01 INFORMATION TO COMMITTEE..................................................24
7.02 NO LIABILITY..............................................................24
7.03 INDEMNITY OF COMMITTEE....................................................24
7.04 EMPLOYER DIRECTION OF INVESTMENT..........................................24
7.05 AMENDMENT TO VESTING SCHEDULE.............................................24
ii
ARTICLE VIII PARTICIPANT ADMINISTRATIVE PROVISIONS 25
8.01 BENEFICIARY DESIGNATION...................................................25
8.02 NO BENEFICIARY DESIGNATION................................................25
8.03 PERSONAL DATA TO COMMITTEE................................................25
8.04 ADDRESS FOR NOTIFICATION..................................................25
8.05 ASSIGNMENT OR ALIENATION..................................................25
8.06 NOTICE OF CHANGE IN TERMS.................................................25
8.07 LITIGATION AGAINST THE TRUST..............................................25
8.08 INFORMATION AVAILABLE.....................................................25
8.09 APPEAL PROCEDURE FOR DENIAL OF BENEFITS...................................26
8.10 PARTICIPANT DIRECTION OF INVESTMENT.......................................26
ARTICLE IX - ADVISORY COMMITTEE-DUTIES WITH RESPECT TO PARTICIPANTS'
ACCOUNTS.......................................................28
9.01 MEMBERS' COMPENSATION, EXPENSES...........................................28
9.02 TERM......................................................................28
9.03 POWERS....................................................................28
9.04 GENERAL...................................................................28
9.05 FUNDING POLICY............................................................28
9.06 MANNER OF ACTION..........................................................28
9.07 AUTHORIZED REPRESENTATIVE.................................................28
9.08 INTERESTED MEMBER.........................................................28
9.09 INDIVIDUAL ACCOUNTS.......................................................29
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT....................................29
9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS....................29
9.12 INDIVIDUAL STATEMENT......................................................29
9.13 ACCOUNT CHARGED...........................................................30
9.14 UNCLAIMED ACCOUNT PROCEDURE...............................................30
ARTICLE X TRUSTEE, POWERS AND DUTIES 31
10.01 ACCEPTANCE...............................................................31
10.02 RECEIPT OF CONTRIBUTIONS.................................................31
10.03 INVESTMENT POWERS........................................................31
10.04 RECORDS AND STATEMENTS...................................................32
10.05 FEES AND EXPENSES FROM FUND..............................................32
10.06 PARTIES TO LITIGATION....................................................32
10.07 PROFESSIONAL AGENTS......................................................32
10.08 DISTRIBUTION OF CASH OR PROPERTY.........................................33
10.09 DISTRIBUTION DIRECTIONS..................................................33
10.10 THIRD PARTY..............................................................33
10.11 RESIGNATION..............................................................33
10.12 REMOVAL..................................................................33
10.13 INTERIM DUTIES AND SUCCESSOR TRUSTEE.....................................33
10.14 VALUATION OF TRUST.......................................................33
10.15 LIMITATION ON LIABILITY - IF INVESTMENT MANAGER APPOINTED................33
10.16 INVESTMENT IN GROUP TRUST FUND...........................................33
iii
10.17 DUTIES PERTAINING TO THE EMPLOYER STOCK FUND.............................34
ARTICLE XI - PROVISIONS RELATING TO INSURANCE & INSURANCE COMPANY 36
11.01 INSURANCE BENEFIT........................................................36
11.02 LIMITATION ON LIFE INSURANCE PROTECTION..................................36
11.03 DEFINITIONS..............................................................36
11.04 DIVIDEND PLAN............................................................37
11.05 INSURANCE COMPANY NOT A PARTY TO AGREEMENT...............................37
11.06 INSURANCE COMPANY NOT RESPONSIBLE FOR TRUSTEE'S ACTIONS..................37
11.07 INSURANCE COMPANY RELIANCE ON TRUSTEE'S SIGNATURE........................37
11.08 ACQUITTANCE..............................................................37
11.09 DUTIES OF INSURANCE COMPANY..............................................37
ARTICLE XII - MISCELLANEOUS 38
12.01 EVIDENCE.................................................................38
12.02 NO RESPONSIBILITY FOR EMPLOYER ACTION....................................38
12.03 FIDUCIARIES NOT INSURERS.................................................38
12.04 WAIVER OF NOTICE.........................................................38
12.05 SUCCESSORS...............................................................38
12.06 WORD USAGE...............................................................38
12.07 STATE LAW................................................................38
12.08 EMPLOYMENT NOT GUARANTEED................................................38
ARTICLE XIII - EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION 39
13.01 EXCLUSIVE BENEFIT........................................................39
13.02 AMENDMENT BY EMPLOYER....................................................39
13.03 DISCONTINUANCE...........................................................39
13.04 FULL VESTING ON TERMINATION..............................................39
13.05 MERGER/DIRECT TRANSFER...................................................39
13.06 TERMINATION..............................................................40
13.07 TRANSFER OF ASSETS FROM THE TRUSTEE OF THE FLOW INTERNATIONAL
CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN................................41
ARTICLE XIV - PROVISIONS RELATING TO THE CODE SECTION 401(k) ARRANGEMENT 42
14.01 401(k) ARRANGEMENT.......................................................42
14.02 DEFINITIONS..............................................................42
14.03 ANNUAL ELECTIVE DEFERRAL LIMITATION......................................43
14.04 ACTUAL DEFERRAL PERCENTAGE ("ADP") TEST..................................44
14.05 NONDISCRIMINATION RULES FOR EMPLOYER MATCHING CONTRIBUTIONS/EMPLOYEE
CONTRIBUTIONS............................................................45
14.06 MULTIPLE USE LIMITATION..................................................46
ARTICLE XV - DIRECT ROLLOVERS 48
15.01 APPLICATION..............................................................48
15.02 DEFINITIONS..............................................................48
APPENDIX A - ACCOUNTS TRANSFERRED FROM SPIDER STAGING CORPORATION 401(k)
PLAN AND CERTAIN EMPLOYEES OF SPIDER STAGING CORPORATION 49
1.01 DEFINITIONS...............................................................49
iv
1.02 CONTINUING PARTICIPANTS...................................................49
1.03 ELIGIBILITY COMPUTATION PERIOD............................................49
1.04 CREDITING SERVICE FOR ELIGIBILITY.........................................49
1.05 VESTING CREDIT............................................................49
1.06 DISTRIBUTIONS TO VESTED PARTICIPANTS UNDER SPIDER STAGING CORPORATION
401(k) PLAN OTHER THAN 1992 SPIDER STAGING EMPLOYEES......................49
1.07 VALUATION AND TRANSFER OF ACCOUNTS UNDER THE SPIDER STAGING CORPORATION
401(k) SAVINGS PLAN.......................................................49
1.08. PROTECTED BENEFITS........................................................49
1.09. FORFEITURES...............................................................49
1.10. SEPARATE ACCOUNTS.........................................................49
1.11. DEFAULT ON A LOAN MADE UNDER SPIDER STAGING PLAN..........................49
1.12 PARTICIPANT-DIRECTED INVESTMENT...........................................50
1.13 EFFECTIVE DATE............................................................50
APPENDIX B - CERTAIN EMPLOYEES OF ASI ROBOTIC SYSTEMS DIVISION OF CARGILL
DETROIT CORPORATION 51
1.01 DEFINITIONS...............................................................51
1.02 CREDITING SERVICE FOR ELIGIBILITY.........................................51
1.03 PLAN ENTRY DATE...........................................................51
1.04 CREDITING SERVICE FOR VESTING.............................................51
1.13 EFFECTIVE DATE............................................................51
APPENDIX C - CERTAIN EMPLOYEES OF FLOW AUTOMATION SYSTEMS CORPORATION 52
1.01 DEFINITIONS...............................................................52
1.02 CREDITING SERVICE FOR ELIGIBILITY.........................................52
1.03 CREDITING SERVICE FOR VESTING.............................................52
1.04 EFFECTIVE DATE............................................................52
APPENDIX D - FORMER CIS ROBOTICS EMPLOYEES 53
1.01 DEFINITIONS...............................................................53
1.02 CREDITING SERVICE FOR ELIGIBILITY.........................................53
1.03 VESTING CREDIT............................................................53
1.04 TRANSFERRED ACCOUNTS......................................................53
1.05 EFFECTIVE DATE............................................................53
EXECUTION PAGE 54
v
ALPHABETICAL LISTING OF DEFINITIONS
PLAN DEFINITION SECTION REFERENCE
Account.....................................................................1.11
Accounting Date.............................................................1.17
Accrued Benefit.............................................................1.12
Actual Contribution Percentage (ACP) Test...................................14.05
Actual Deferral Percentage (ADP)) Test......................................14.03
Advisory Committee..........................................................1.05
Annual Addition.............................................................3.08(a)
Annuity Starting Date.......................................................6.01
Beneficiary.................................................................1.09
Break in Service for Eligibility Purposes...................................2.03
Break in Service for Vesting Purposes.......................................5.07
Cash-out Distribution.......................................................5.04
Code........................................................................1.22
Code Section 411(d)(6) Protected Benefits...................................13.02
Compensation................................................................1.10
Compensation for Code Section 415 Purposes..................................3.08(b)
Compensation for Top Heavy Purposes.........................................1.29(c)
Deemed Cash-out Rule........................................................5.04(C)
Deferral Contributions......................................................3.01(A)
Deferral Contributions Account..............................................3.04
Defined Contribution Plan...................................................3.08(g)
Defined Benefit Plan........................................................3.08(h)
Determination Date..........................................................1.29(g)
Disability..................................................................1.25
Distribution Date...........................................................6.01
Effective Date..............................................................1.15
Elective Transfer...........................................................13.05
Employee....................................................................1.06
Employer....................................................................1.02
Employer for Code Section 415 Purposes......................................3.08(d)
Employer for Top Heavy Purposes.............................................1.29(f)
Employer Contribution Account...............................................3.04
Employment Commencement Date................................................2.02
ERISA.......................................................................1.21
Excess Amount...............................................................3.08(e)
Forfeiture Break in Service.................................................5.08
Group Trust Fund............................................................10.16
Highly Compensated Employee.................................................1.07
Hour of Service.............................................................1.24
Investment Manager..........................................................9.04(i)
Joint and Survivor Annuity..................................................6.04(A)
Key Employee................................................................1.29(a)
vi
Leased Employees............................................................1.28
Limitation Year.............................................................3.08(f)
Loan Policy.................................................................9.04(j),10.03(e)
Matching Contributions......................................................3.01(A)
Maximum Permissible Amount..................................................3.08(c)
Non-Key Employee............................................................1.29(b)
Nonforfeitable..............................................................1.13
Nontransferable Annuity.....................................................1.20
Normal Retirement Age.......................................................5.01
Participant.................................................................1.08
Participant Forfeiture......................................................3.05
Participant Loans...........................................................9.04(j), 10.03(e)
Participant Voluntary Contributions.........................................4.01
Permissive Aggregation Group................................................1.29(e)
Plan........................................................................1.01
Plan Entry Date.............................................................1.16
Plan Administrator..........................................................1.04
Plan Year...................................................................1.14
Predecessor Employer........................................................1.26
Preretirement Survivor Annuity..............................................6.04(B)
Qualified Domestic Relations Order..........................................6.07
Related Employers...........................................................1.27
Required Aggregation Group..................................................1.29(d)
Required Beginning Date.....................................................6.01(B)
Rollover Contributions......................................................4.03
Salary Reduction Agreement..................................................3.01A
Service.....................................................................1.23
Top Heavy Minimum Allocation................................................3.04(B)
Top Heavy Ratio.............................................................1.29
Trust.......................................................................1.18
Trustee.....................................................................1.03
Trustee Powers..............................................................10.03
Trust Fund..................................................................1.19
Valuation Date..............................................................10.14
Year of Service for Eligibility Purposes....................................2.02
Year of Service for Vesting Purposes........................................5.06
vii
FLOW INTERNATIONAL CORPORATION
VOLUNTARY PENSION AND SALARY DEFERRAL PLAN
AND TRUST AGREEMENT
(AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1999)
Flow International Corporation (the "Employer"), a corporation
organized under the laws of the State Delaware, makes this Agreement with
Northwestern Trust and Investors Advisory Company as Trustee.
WITNESSETH
The Flow International Corporation Voluntary Pension and Salary
Deferral Plan, originally adopted effective October 1, 1986 by Flow Systems,
Inc. (now Flow International Corporation, a Washington corporation), for the
benefit of its Employees, is hereby amended and restated by Flow International
Corporation, effective January 1, 1999 to read in its entirety as set forth in
this Agreement between the Employer and the Trustee with regard to the Trust
Fund under the Plan. The provisions of the Plan as amended and restated in this
document shall apply solely to an Employee whose employment with the Employer
terminates on or after January 1, 1999.
The Employer intends that the Plan as so amended and restated shall
continue to be maintained exclusively for the purpose of providing benefits to
the Plan Participants and their beneficiaries and for defraying the reasonable
expenses of administering the Plan. The Employer further intends that the Plan
shall at all times be qualified under Section 401(a) of the Code and that the
Plan shall meet the special requirements of Sections 401(k) and 401(m) of the
Code and that the Trust, which also constitutes a part of the Plan, shall at all
times be a trust exempt from taxation under Section 501(a) of the Code.
Now, therefore, in consideration of their mutual covenants, the
Employer and the Trustee agree as follows:
ARTICLE I
DEFINITIONS
1.01 "PLAN" means the Flow International Corporation Voluntary Pension
and Salary Deferral Plan established and continued by the Employer in the form
of this Agreement, as it may be amended from time to time.
1.02 "EMPLOYER" means Flow International Corporation and its
successors, or any other employer who with the written consent of Flow
International Corporation adopts this Plan. As of January 1, 1993, Spider
Staging Corporation has adopted this Plan with the written consent of Flow
International Corporation.
1.03 "TRUSTEE" means Northwestern Trust and Investors Advisory Company
or any successor in office who in writing accepts the position of Trustee.
1.04 "PLAN ADMINISTRATOR" means Flow International Corporation unless
Flow International Corporation designates another person to hold the position of
Plan Administrator. In addition to his other duties, the Plan Administrator has
full responsibility for compliance with the reporting and disclosure rules under
ERISA as respects this Agreement.
1.05 "ADVISORY COMMITTEE" means the Employer's Advisory Committee as
from time to time constituted.
1.06 "EMPLOYEE" means any common-law employee of the Employer.
1.07 "HIGHLY COMPENSATED EMPLOYEE" means an Employee who, during the
Plan Year or during the preceding Plan Year is a more than 5% owner of the
Employer (applying the constructive ownership rules of Code Section 318, and
applying the principles of Code Section 318, for an unincorporated entity); or
who, during the preceding Plan Year has Compensation in excess of $80,000 (as
adjusted by the Commissioner of Internal Revenue for the relevant year) and, if
the Employer elects, was part of the top-paid 20% group of Employees (based on
Compensation for the preceding Plan Year).
For purposes of this Section 1.07, "Compensation" means the general
definition of Compensation as defined in Section 1.10(A), increased for elective
contributions. "Elective contributions" are amounts excludible from the
Employee's gross income under Code Sections 125, 402(e)(3), 402(h), 403(b) or
408(p), and contributed by the Employer, at the Employee's election, to a Code
Section 401(k) arrangement, a Simplified Employee Pension, a SIMPLE plan, a
cafeteria plan or tax-sheltered annuity.
The Advisory Committee must make the determination of who is a Highly
Compensated Employee, including the determinations of the number and identity of
the top paid 20% group, consistent with Code Section 414(q) and regulations
issued under that Code section. The Employer may make a calendar year data
election to determine the Highly Compensated Employees for the Plan Year, as
prescribed by Treasury regulations or by other guidance published in the
Internal Revenue Bulletin. A calendar year data election must apply to all plans
of the Employer which reference the highly compensated employee definition in
Code Section 414(q).
The term "Highly Compensated Employee" also includes any former
Employee who separated from Service (or has a deemed Separation from Service, as
determined under Treasury regulations) prior to the Plan Year, performs no
Service for the Employer during the Plan Year, and was a Highly Compensated
Employee either for the separation year or for any Plan Year ending on or after
his 55th birthday. If the former Employee's Separation from Service occurred
prior to January 1, 1987, he is a Highly Compensated Employee only if he
satisfied clause (a) of this Section 1.07 [as in effect before 1997] or received
Compensation in excess of $50,000 during: (1) the year of his Separation from
Service (or the prior year); or (2) any year ending after his 54th birthday.
1.08 "PARTICIPANT" is an Employee who is eligible to be and becomes a
Participant in accordance with the provisions of Section 2.01.
1.09 "BENEFICIARY" is a person designated by a Participant under
Article VIII who is or may become entitled to a benefit under the Plan. A
Beneficiary who becomes entitled to a benefit under the Plan remains a
Beneficiary under the Plan until the Trustee has fully distributed his benefit
to him. A Beneficiary's right to (and the Plan Administrator's, the Advisory
Committee's or Trustee's duty to provide to the Beneficiary) information or data
concerning the Plan does not arise until he first becomes entitled to receive a
benefit under the Plan.
1.10 COMPENSATION DEFINITIONS. Any reference in this Plan to
Compensation is a reference to the definition in this Section 1.10, unless the
Plan reference specifies a modification to this definition. The Advisory
Committee will take into account only Compensation actually paid for the
relevant period.
(A) GENERAL DEFINITION OF COMPENSATION.
All wages, salaries, fees for professional service and other amounts
(whether or not paid in cash) for personal services actually rendered in the
course of employment with the Employer maintaining the plan, but only to the
extent includible in gross income. This definition of Compensation includes, but
is not limited to, commissions paid salesmen, compensation for services on the
basis of a percentage of profits, commissions on insurance premiums, tips,
fringe benefits reimbursements, expense allowances and bonuses). This definition
of "Compensation" does not include:
(a) Employer contributions to a plan of deferred compensation to the
extent the contributions are not included in the gross income of the
Employee for the taxable year in which contributed, Employer
contributions on behalf of an Employee to a Simplified Employee Pension
Plan to the extent such contributions are excludible from the
Employee's gross income, and any distributions from a plan of deferred
compensation, regardless of whether such amounts are includible in the
gross income of the Employee when distributed.
(b) Amounts realized from the exercise of a non-qualified stock option,
or when restricted stock (or property) held by an Employee either
becomes freely transferable or is no longer subject to a substantial
risk or forfeiture.
(c) Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option described in Part II,
Subchapter D, Chapter 1 of the Code.
(d) Other amounts which receive special tax benefits, such as premiums
for group term life insurance (but only to the extent that the premiums
are not includible in the gross income of the Employee).
(B) DEFINITION OF COMPENSATION FOR ALLOCATION PURPOSES.
To determine a Participant's contribution allocation under Section
3.04(A), Compensation means the general definition of Compensation described in
Section 1.10(A), but excluding reimbursements or other expense allowances,
fringe benefits (cash and noncash), moving expenses, deferred compensation and
welfare benefits, and including elective contributions (as defined in Section
1.07).
(C) COMPENSATION DOLLAR LIMITATION.
For any Plan Year, the Advisory Committee shall not take into account
more than $150,000 (or such larger or smaller amount as the Commissioner of
Internal Revenue may prescribe) of any Participant's Compensation.
(D) SPECIAL DEFINITION FOR SALARY REDUCTION CONTRIBUTIONS.
For purposes of determining the Employee's salary reduction
contributions under a salary reduction agreement, "Compensation" means the
definition of Compensation for allocation purposes, as defined in Section
1.10(B), determined prior to the reduction authorized by that salary reduction
agreement.
1.11 "ACCOUNT" means the following separate account(s) which the
Advisory Committee or the Trustee maintains for a Participant under the Plan:
TYPE OF CONTRIBUTIONS NAME OF ACCOUNT
--------------------- ---------------
Salary Deferral Contributions Deferral Contributions Account
Employer Matching Contributions Regular Matching Contributions Account
2
Nonelective Employer Contributions Employer Contributions Account
Participant Rollover Contributions Rollover Account
Qualified Nonelective Contributions Qualified Nonelective Contributions Account
Qualified Matching Contributions Qualified Matching Contributions Account
1.12 "ACCRUED BENEFIT" means the amount standing in a Participant's
Account(s) as of any date derived from both Employer contributions and Employee
contributions, if any.
1.13 "NONFORFEITABLE" means a Participant's or Beneficiary's
unconditional claim, legally enforceable against the Plan, to the Participant's
Accrued Benefit.
1.14 "PLAN YEAR" means the Plan's accounting year, a 12 consecutive
month period ending every December 31.
1.15 "EFFECTIVE DATE" of this restated Plan means January 1, 1999. The
original effective date of the Plan was October 1, 1986.
1.16 "PLAN ENTRY DATE" means every January 1, April 1, July 1, and
October 1.
1.17 "ACCOUNTING DATE" is the last day of the Plan Year. Unless
otherwise specified in the Plan, the Advisory Committee will make all Plan
allocations for a particular Plan Year as of the Accounting Date of that Plan
Year.
1.18 "TRUST" means the separate Trust created under the Plan.
1.19 "TRUST FUND" means all property of every kind held or acquired by
the Trustee under the Plan, other than incidental benefit insurance contracts.
This Plan creates a single Trust for all Employers participating under the Plan.
However, the Trustee will maintain separate records of account in order to
reflect properly each Participant's Accrued Benefit derived from each
participating Employer.
1.20 "NONTRANSFERABLE ANNUITY" means an annuity which by its terms
provides that it may not be sold, assigned, discounted, pledged as collateral
for a loan or security for the performance of an obligation or for any purpose
to any person other than the insurance company. If the Trustee distributes an
annuity contract, the contract must be a Nontransferable Annuity.
1.21 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.22 "CODE" means the Internal Revenue Code of 1986, as amended.
1.23 "SERVICE" means any period of time the Employee is in the employ
of the Employer, including any period the Employee is on an unpaid leave of
absence authorized by the Employer under a uniform, nondiscriminatory policy
applicable to all Employees if the Employee returns to work within the period
specified thereunder. "Separation from Service" means a separation from Service
with the Employer maintaining this Plan. For purposes of eligibility to
participate (Section 2.01) and determining vesting (Section 5.03), "Service"
also includes service on or before December 1, 1998, with any of the following
affiliated employers: FlowDrill Corporation; Flow Research, Inc.; and FlowMole
Corporation.
1.24 "HOUR OF SERVICE" means:
(a) Each Hour of Service for which the Employer, either directly or
indirectly, pays an Employee, or for which the Employee is entitled to
payment, for the performance of duties. The Advisory Committee credits
Hours of Service under this paragraph (a) to the Employee for the
computation period in which the Employee performs the duties,
irrespective of when paid;
(b) Each Hour of Service for back pay, irrespective of mitigation of
damages, to which the Employer has agreed or for which the Employee has
received an award. The Advisory Committee credits Hours of Service
under this paragraph (b) to the Employee for the computation period(s)
to which the award or the agreement pertains rather than for the
computation period in which the award, agreement or payment is made;
and
(c) Each Hour of Service for which the Employer, either directly or
indirectly, pays an Employee, or for which the Employee is entitled to
payment (irrespective of whether the employment relationship is
terminated), for reasons other than for the performance of duties
during a computation period, such as leave off absence, vacation,
holiday, sick leave, illness, incapacity (including disability),
layoff, jury duty or military duty. The Advisory Committee will credit
no more than 501 Hours of Service under this paragraph (c) to an
Employee on account of any single continuous period during which the
Employee does not perform any duties (whether or not such period occurs
during a single computation period). The Advisory Committee credits
Hours of Service under this paragraph (c) in accordance with the rules
of paragraphs (b) and (c) of Labor Reg. Section2530.200b-2, which the
Plan, by this reference, specifically incorporates in full within this
paragraph (c).
3
(d) Hour of Service also includes any Service the Plan must credit in
order to satisfy the crediting of Service requirements of Code
Section 414(u).
The Advisory Committee will not credit an Hour of Service under more
than one of the above paragraphs. A computation period for purposes of this
Section 1.24 is the Plan Year, Year of Service period, Break in Service period
or other period, as determined under the Plan provision for which the Advisory
Committee is measuring an Employee's Hours of Service. The Advisory Committee
will resolve any ambiguity with respect to the crediting of an Hour of Service
in favor of the Employee.
Hours of Service shall be credited on the basis of actual hours for
which an Employee is paid or entitled to payment to the extent the Employer's
payroll or accounting records reflect such hours. Otherwise, Employees shall be
credited with 190 Hours of Service per month, 95 hours per semimonthly pay
period, 45 hours per week or 10 hours per day, depending on the pay period
applicable to such Employee for any such pay period in which the Employee has
one Hour of Service.
Solely for purposes of determining whether the Employee incurs a Break
in Service under any provision of this Plan, the Advisory Committee must credit
Hours of Service during an Employee's unpaid absence period due to maternity or
paternity leave. The Advisory Committee considers an Employee on maternity or
paternity leave if the Employee's absence is due to the Employee's pregnancy,
the birth of the Employee's child, the placement with the Employee of an adopted
child, or the care of the Employee's child immediately following the child's
birth or placement. The Advisory Committee credits Hours of Service under this
paragraph on the basis of the number of Hours of Service the Employee would
receive if he were paid during the absence period or, if the Advisory Committee
cannot determine the number of Hours of Service the Employee would receive, on
the basis of 8 hours per day during the absence period. The Advisory Committee
will credit only the number (not exceeding 501) of Hours of Service necessary to
prevent an Employee's Break in Service. The Advisory Committee credits all Hours
of Service described in this paragraph to the computation period in which the
absence period begins or, if the Employee does not need these Hours of Service
to prevent a Break in Service in the computation period in which his absence
period begins, the Advisory Committee credits these Hours of Service to the
immediately following computation period.
1.25 "DISABILITY" means the Participant, because of a physical or
mental disability, will be unable to perform the duties of his customary
position of employment (or is unable to engage in any substantial gainful
activity) for an indefinite period which the Advisory Committee considers will
be of long continued duration. A Participant also is disabled if he incurs the
permanent loss or loss of use of a member or function of the body, or is
permanently disfigured, and incurs a separation from Service. The Plan considers
a Participant disabled on the date the Advisory Committee determines the
Participant satisfies the definition of disability. The Advisory Committee may
require a Participant to submit to a physical examination in order to confirm
disability. The Advisory Committee will apply the provisions of this Section
1.25 in a nondiscriminatory, consistent and uniform manner.
1.26 "SERVICE FOR PREDECESSOR EMPLOYER" If the Employer maintains the
plan of a predecessor employer, the Plan treats service of the Employee with the
predecessor employer as service with the Employer.
1.27 "RELATED EMPLOYER" A related group is a controlled group of
corporations (as defined in Code Section 414(b)), trades or businesses
(whether or not incorporated) which are under common control (as defined in
Code Section 414(c)) or an affiliated service group (as defined in Code
Section 414(m) or in Code Section 414(o)). If the Employer is a member of a
related group, the term "Employer" includes the related group members for
purposes of crediting Hours of Service, determining Years of Service and
Breaks in Service under Articles II and V, applying the limitations on
allocations in Part 2 of Article III, applying the top heavy rules and the
minimum allocation requirements of Article III, the definitions of Employee,
Highly Compensated Employee, Compensation and Leased Employee, and for any
other purpose required by the applicable Code section or by a Plan provision.
However, only an Employer described in Section 1.02 may contribute to the
Plan and only an Employee employed by an Employer described in Section 1.02
is eligible to participate in this Plan. For Plan allocation purposes,
"Compensation" does not include Compensation received from a related employer
that is not participating in this Plan.
1.28 "LEASED EMPLOYEES" The Plan treats a Leased Employee as an
Employee of the Employer. A Leased Employee is an individual (who otherwise is
not an Employee of the Employer) who, pursuant to a leasing agreement between
the Employer and any other person, has performed services for the Employer (or
for the Employer and any persons related to the Employer within the meaning of
Code Section 144(a)(3)) on a substantially full time basis for at least one year
and who performs such services under primary direction or control of the
Employer. If a Leased Employee is treated as an Employee by reason of this
Section 1.28, "Compensation" includes Compensation from the leasing organization
which is attributable to services performed for the Employer.
4
SAFE HARBOR PLAN EXCEPTION. The Plan does not treat a Leased Employee
as an Employee if the leasing organization covers the employee in a safe harbor
plan and, prior to application of this safe harbor plan exception, 20% or less
of the Employer's Employees (other than Highly Compensated Employees) are Leased
Employees. A safe harbor plan is a money purchase pension plan providing
immediate participation, full and immediate vesting, and a nonintegrated
contribution formula equal to at least 10% of the employee's compensation
without regard to employment by the leasing organization on a specified date.
The safe harbor plan must determine the 10% contribution on the basis of
compensation as defined in Code Section 415(c)(3) plus elective contributions (
as defined in Section 1.10).
OTHER REQUIREMENTS. The Advisory Committee must apply this Section 1.28
in a manner consistent with Code Sections 414(n) and 414(o) and the regulations
issued under those Code sections.
1.29 "DETERMINATION OF TOP HEAVY STATUS" If this Plan is the only
qualified plan maintained by the Employer, the Plan is top heavy for a Plan
Year if the top heavy ratio as of the Determination Date exceeds 60%. The top
heavy ratio is a fraction, the numerator of which is the sum of the present
value of Accrued Benefits of all Key Employees as of the Determination Date
and the denominator of which is a similar sum determined for all Employees.
The Advisory Committee must include in the top heavy ratio, as part of the
present value of Accrued Benefits, any contribution not made as of the
Determination Date but includible under Code Section 416 and the applicable
Treasury regulations, and distributions made within the Determination Period.
The Advisory Committee must calculate the top heavy ratio by disregarding the
Accrued Benefit (and distributions, if any, of the Accrued Benefit) of any
Non-Key Employee who was formerly a Key Employee, and by disregarding the
Accrued Benefit (including distributions, if any, of the Accrued Benefit) of
an individual who has not received credit for at least one Hour of Service
with the Employer during the Determination Period. The Advisory Committee
must calculate the top heavy ratio, including the extent to which it must
take into account distributions, rollovers and transfers, in accordance with
Code Section 416 and the regulations under that Code section.
If the Employer maintains other qualified plans (including a simplified
employee pension plan), or maintained another such plan which now is terminated,
this Plan is top heavy only if it is part of the Required Aggregation Group, and
the top heavy ratio for the Required Aggregation Group and for the Permissive
Aggregation Group, if any, each exceeds 60%. The Advisory Committee will
calculate the top heavy ratio in the same manner as required by the first
paragraph of this Section 1.29, taking into account all plans within the
Aggregation Group. To the extent the Advisory Committee must take into account
distributions to a Participant, the Advisory Committee must include
distributions from a terminated plan which would have been part of the Required
Aggregation Group if it were in existence on the Determination Date. The
Advisory Committee will calculate the present value of Accrued Benefits under
defined benefit plans or simplified employee pension plans included within the
group in accordance with the terms of those plans, Code Section 416 and the
regulations under that Code section. If a Participant in a defined benefit plan
is a Non-Key Employee, the Advisory Committee will determine his Accrued Benefit
under the accrual method, if any, which is applicable uniformly to all defined
benefit plans maintained by the Employer or, if there is no uniform method, in
accordance with the slowest accrual rate permitted under the fractional rule
accrual method described in Code Section 411(b)(1)(C). To calculate the present
value of benefits from a defined benefit plan, the Advisory Committee will use
the actuarial assumptions (interest and mortality only) prescribed by the
defined benefit plan(s) to value benefits for top heavy purposes. If an
aggregated plan does not have a valuation date coinciding with the Determination
Date, the Advisory Committee must value the Accrued Benefits in the aggregated
plan as of the most recent valuation date falling within the twelve-month period
ending on the Determination Date, except as Code Section 416 and applicable
Treasury regulations require for the first and second plan year of a defined
benefit plan. The Advisory Committee will calculate the top heavy ratio with
reference to the Determination Dates that fall within the same calendar year.
DEFINITIONS. For purposes of applying the provisions of this
Section 1.29:
(a) "Key Employee" means, as of any Determination Date, any Employee or
former Employee (or Beneficiary of such Employee) who, for any Plan
Year in the Determination Period: (i) has Compensation in excess of 50%
of the dollar amount prescribed in Code Section 415(b)(1)(A) (relating
to defined benefit plans) and is an officer of the Employer; (ii) has
Compensation in excess of the dollar amount prescribed in Code
Section 415(c)(1)(A) (relating to defined contribution plans) and is
one of the Employees owning the ten largest interests in the Employer;
(iii) is a more than 5% owner of the Employer; or (iv) is a more than
1% owner of the Employer and has Compensation of more than $150,000.
The constructive ownership rules of Code Section 318 (or the principles
of that section, in the case of an unincorporated Employer) will apply
to determine ownership in the Employer. The number of officers taken
into account under clause (i) will not exceed the greater of 3 or 10%
of the total number (after application of the Code Section 414(q)(8)
exclusions) of Employees, but no more than 50 officers. The Advisory
Committee will make the determination of who is a Key Employee in
accordance with Code Section 416(i)(1) and the regulations under that
Code section.
5
(b) "Non-Key Employee" is an employee who does not meet the definition
of Key Employee.
(c) "Compensation" means the general definition of Compensation in
Section 1.10(A), increased for elective contributions (as defined in
Section 1.07).
(d) "Required Aggregation Group" means: (1) each qualified plan of the
Employer in which at least one Key Employee participates at any time
during the Determination Period; and (2) any other qualified plan of
the Employer which enables a plan described in clause (1) to meet the
requirements of Code Section 401(a)(4) or Code Section 410.
(e) "Permissive Aggregation Group" is the Required Aggregation Group
plus any other qualified plans maintained by the Employer, but only if
such group would satisfy in the aggregate the requirements of Code
Section 401(a)(4) and Code Section 410. The Advisory Committee will
determine the Permissive Aggregation Group.
(f) "Employer" means the Employer that adopts this Plan and any related
employers described in Section 1.27.
(g) "Determination Date" for any Plan Year is the Accounting Date of
the preceding Plan Year or, in the case of the first Plan Year of the
Plan, the Accounting Date of that Plan Year. The "Determination Period"
is the 5 year period ending on the Determination Date
1.30 "EMPLOYER STOCK" means common stock of Flow International
Corporation.
1.31 "EMPLOYER STOCK FUND" means a pooled investment account limited to
shares of Employer Stock.
1.32 PLAN MAINTAINED BY MORE THAN ONE EMPLOYER. If more than one
employer maintains this Plan, then for purposes of determining Service and Hours
of Service, the Advisory Committee will treat all Employers maintaining this
Plan as a single employer.
PLAN ALLOCATIONS. The Advisory Committee must allocate all Employer
contributions and forfeitures to each Participant in the Plan, in accordance
with Article III and Section 9.11, without regard to which contributing Employer
employs the Participant. A Participant's Compensation includes Compensation from
all participating Employers, irrespective of which Employers are contributing to
the Plan.
6
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY. Each Employee (other than an Excluded Employee)
becomes a Participant in the Plan on the Plan Entry Date (if employed on that
date) coincident with or immediately following the date on which he completes
one Year of Service. Each Employee who was a participant in the Plan on the day
before the Effective Date of this restated Plan Section 2.01 continues as a
Participant in the Plan.
SPECIAL ELIGIBILITY RULE FOR CODE SECTION 401(k) ARRANGEMENT. In
lieu of the eligibility requirements in the preceding paragraph, each
Employee (other than an Excluded Employee) becomes a participant in the Code
Section 401(k) arrangement on the Plan Entry Date (if employed on that date)
immediately following the Employee's Employment Commencement Date. If, for a
Plan Year, an Employee is a Participant solely in the 401(k) arrangement, the
Employee does not share in the allocation of any Employer contributions other
than deferral contributions, as described in Article III, nor in the
allocation of any forfeitures.
An Employee is an Excluded Employee if he is:
(a) a temporary or casual Employee, as defined under the Employer's
normal payroll practices;
(b) a nonresident alien who receives no U.S.
source earned income;
(c) a Leased Employee treated as an Employee under Section 1.28; or
(d) a member of a collective bargaining unit, unless the collective
bargaining agreement provides otherwise. An Employee is a member of a
collective bargaining unit if he is included in a unit of employees
covered by an agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and
one or more employers if there is evidence that retirement benefits
were the subject of good faith bargaining between such employee
representatives and such employer or employers. The term "employee
representatives" does not include an organization more than one half
the members of which are owners, officers or executives of the
Employer.
If a Participant has not incurred a Separation from Service but becomes
an Excluded Employee, then during the period such a Participant is an Excluded
Employee, the Advisory Committee will limit that Participant's sharing in the
allocation of Employer contributions and Participant forfeitures, if any, under
the Plan by disregarding his Compensation paid by the Employer for services
rendered in his capacity as an Excluded Employee. However, during such period of
exclusion, the Participant, without regard to employment classification,
continues to receive credit for vesting under Article V for each included Year
of Service and the Participant's Account continues to share fully in Trust Fund
allocations under Section 9.11.
If an Excluded Employee who is not a Participant becomes eligible to
participate in the Plan by reason of a change in employment classification, he
will participate in the Plan immediately if he has satisfied the eligibility
conditions of Section 2.01 and would have been a Participant had he not been an
Excluded Employee during his period of Service. Furthermore, the Plan takes into
account all of the Participant's included Years of Service with the Employer as
an Excluded Employee for purposes of vesting credit under Article V.
2.02 YEAR OF SERVICE - PARTICIPATION. For purposes of an Employee's
participation in the Plan under Section 2.01, the Plan takes into account all of
his Years of Service with the Employer, except as provided in Section 2.03.
"Year of Service" means a 12 consecutive month period during which the Employee
completes not less than 1000 Hours of Service, measuring the beginning of the
first 12 month period from the Employment Commencement Date. If the Employee
does not complete 1000 Hours of Service during the 12 month period commencing
with the Employment Commencement Date, the Plan measures the second 12 month
period by reference to the Plan Year which includes the first anniversary of the
Employee's Employment Commencement Date. The Plan measures any subsequent 12
month period necessary for a determination of Year of Service for participation
by reference to succeeding Plan Years. "Employment Commencement Date" means the
date on which the Employee first performs an Hour of Service for the Employer.
2.03 BREAK IN SERVICE - PARTICIPATION. For purposes of participation in
the Plan, the Plan does not apply any Break in Service rule.
2.04 PARTICIPATION UPON RE-EMPLOYMENT. A Participant whose employment
terminates re-enters the Plan as a Participant on the date of his re-employment.
An Employee who satisfies the Plan's eligibility conditions but who terminates
employment prior to becoming a Participant becomes a Participant in the Plan on
the later of the Entry Date on which he would have entered the Plan had he not
terminated employment or the date of his reemployment. Any Employee who
terminates employment prior to satisfying the Plan's eligibility conditions
becomes a Participant in accordance with the provisions of Section 2.01.
7
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
PART 1. AMOUNT OF EMPLOYER CONTRIBUTIONS AND PLAN ALLOCATIONS: SECTIONS 3.01
THROUGH 3.06
3.01 AMOUNT.
(A) CONTRIBUTION FORMULA.
For each Plan Year, the Employer will contribute to the Trust the
following amounts:
DEFERRAL CONTRIBUTIONS. The amount by which the Participants have
elected to reduce their Compensation for the Plan Year under their salary
reduction agreements on file with the Advisory Committee.
EMPLOYER MATCHING CONTRIBUTIONS. An amount equal to 50% of each
Participant's eligible contributions. For Participants with five or more years
of vesting service (see Article V), the matching contribution will be 75%
instead of 50%. The Employer also may contribute an additional amount, equal to
a percentage the Employer from time to time may deem advisable of each
Participant's eligible contributions. The Employer will determine the amount of
its matching contribution by disregarding Participants not entitled to an
allocation of Employer matching contributions. See Sections 3.04 and 3.06.
QUALIFIED NONELECTIVE CONTRIBUTIONS. The amount the Employer, in its
sole discretion, designates as qualified nonelective contributions.
NONELECTIVE CONTRIBUTIONS. Any additional amount the Employer may from
time to time deem advisable.
RESTRICTIONS ON CONTRIBUTIONS. The Employer will make its contribution
under the Plan, irrespective of whether it has net profits. Although, the
Employer may contribute to this Plan irrespective of whether it has net profits,
the Employer intends this Plan to be a profit sharing plan for all purposes
under the Code. The Employer will not make a contribution to the Trust for any
Plan Year to the extent the contribution would exceed the Participants' Maximum
Permissible Amounts. See Part 2 of this Article III.
ELIGIBLE CONTRIBUTIONS. Under the matching contribution formula, a
Participant's "eligible contributions" are the deferral contributions allocated
to the Participant for the Plan Year not in excess of 6% of the Participant's
Compensation for the Plan Year. Eligible contributions do not include deferral
contributions attributable to Compensation for any period when the Participant
is not eligible to participate in the allocation of matching contributions.
Eligible contributions do not include deferral contributions that are excess
deferrals under Section 14.03. For this purpose: (a) excess deferrals relate
first to deferral contributions for the Plan Year not otherwise eligible for a
matching contribution; and (2) if the Plan Year is not a calendar year, the
excess deferrals for a Plan Year are the last deferrals made for a calendar
year.
Notwithstanding any provision in this Article III to the contrary, the
Plan will provide contributions and Service credit with respect to qualified
military service in accordance with Code Section 414(u).
(B) RETURN OF CONTRIBUTIONS.
The Trustee, upon written request from the Employer, must return to the
Employer the amount of the Employer's contribution made by the Employer by
mistake of fact or the amount of the Employer's contribution disallowed as a
deduction under Code Section 404. The Trustee will not return any portion of the
Employer's contribution under the provisions of this paragraph more than one
year after:
(a) The Employer made the contribution by mistake of fact; or
(b) The disallowance of the contribution as a deduction, and then, only
to the extent of the disallowance.
The Trustee will not increase the amount of the Employer
contribution returnable under this Section 3.01 for any earnings attributable
to the contribution, but the Trustee will decrease the Employer contribution
returnable for any losses attributable to it. The Trustee may require the
Employer to furnish it whatever evidence the Trustee deems necessary to
enable the Trustee to confirm the amount the Employer has requested be
returned is properly returnable under ERISA.
3.02 DETERMINATION OF CONTRIBUTION. The Employer, from its records,
determines the amount of any contributions to be made by it to the Trust under
the terms of the Plan.
3.03 TIME OF PAYMENT OF CONTRIBUTION. The Employer may pay its
contribution for each Plan Year in one or more installments without interest.
The Employer must make its contribution to the Trustee within the time
prescribed by the Code or applicable federal regulations. Deferral contributions
are Employer contributions for all purposes under this Plan, except to the
extent the Code or Treasury regulations prohibit the use of these contributions
to satisfy the qualification requirements of the Code.
3.04 CONTRIBUTION ALLOCATION.
8
(A) METHOD OF ALLOCATION. To make allocations under the Plan, the Advisory
Committee must establish a Deferral Contributions Account, a Regular Matching
Contributions Account, a Qualified Matching Contributions Account, a Qualified
Nonelective Contributions Account and an Employer Contributions Account for each
Participant.
DEFERRAL CONTRIBUTIONS. The Advisory Committee will allocate to each
Participant's Deferral Contributions Account the deferral contributions the
Employer makes to the Trust on behalf of the Participant. The Advisory Committee
will make this allocation of deferral contributions as of the date they actually
are paid to the Trust.
MATCHING CONTRIBUTIONS. The Advisory Committee will allocate matching
contributions as of the date the corresponding deferral contributions actually
are paid to the Trust. The Advisory Committee will allocate the matching
contributions to the Regular Matching Contributions Account of the Participant
on whose behalf the Employer makes that contribution.
The Employer, at the time of contribution, must designate which
portion, if any, of its discretionary matching contribution is allocable to the
Qualified Matching Contributions Accounts of the Participants and which portion,
if any, of its discretionary matching contributions is allocable to the Regular
Matching Contributions Accounts of the Participants. The allocation of
discretionary matching contributions to a Participant's Account is in the same
proportion that each Participant's eligible contributions (as defined in Section
3.01) bears to the total eligible contributions of all Participants, taking into
account only the eligible contributions subject to the matching contribution
formula.
QUALIFIED NONELECTIVE CONTRIBUTIONS. If the Employer, at the time of
contribution, designates a contribution to be a qualified nonelective
contribution for the Plan Year, the Advisory Committee will allocate that
qualified nonelective contribution to the Qualified Nonelective Contributions
Account of each Participant eligible for an allocation of qualified nonelective
contributions. The Advisory Committee will make the allocation to each eligible
Participant's Account in the same ratio that the Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for the Plan
Year. For purposes of allocating the qualified nonelective contributions, the
term "Participant" means any Participant who satisfies the conditions of Section
3.06.
NONELECTIVE CONTRIBUTIONS. Subject to any restoration allocation
required under Section 5.04, the Advisory Committee will allocate and credit
each annual Employer nonelective contribution, if any (and Participant
forfeitures, if any), to the Employer Contributions Account of each Participant
who satisfies the conditions of Section 3.06. The Advisory Committee will make
this allocation in the same ratio that each Participant's Compensation for the
Plan Year for which the Employer makes the contribution bears to the total
Compensation of all Participants for the Plan Year.
(B) TOP HEAVY MINIMUM ALLOCATION.
(1) MINIMUM ALLOCATION. If the Plan is top heavy in any Plan Year:
(a) Each Non-Key Employee (as defined in Section 1.29) who is
a Participant and is employed by the Employer on the last day
of the Plan Year will receive a top heavy minimum allocation
for that Plan Year, irrespective of whether he satisfies the
Hours of Service condition under Section 3.06; and
(b) The top heavy minimum allocation is the lesser of 3% of
the Non-Key Employee's Compensation for the Plan Year or the
highest contribution rate for the Plan Year made on behalf of
any Key Employee (as defined in Section 1.29). However, if a
defined benefit plan maintained by the Employer which benefits
a Key Employee depends on this Plan to satisfy the
antidiscrimination rules of Code Section 401(a)(4) or the
coverage rules of Code Section 410 (or another plan benefiting
the Key Employee so depends on such defined benefit plan), the
top heavy minimum allocation is 3% of the Non-Key Employee's
Compensation regardless of the contribution rate for the Key
Employees.
(2) SPECIAL DEFINITIONS. For purposes of this Section 3.04(B), the term
"Participant" includes any Employee otherwise eligible to participate in the
Plan but who is not a Participant because of his failure to make elective
deferrals under a Code Section 401(k) arrangement or because of his failure to
make mandatory employee contributions. For purposes of clause (b),
"Compensation" means the general definition of Compensation in Section 1.10(A).
(3) DETERMINING CONTRIBUTION RATES. For purposes of this Section
3.04(B), a Participant's contribution rate is the sum of Employer contributions
(not including Employer contributions to Social Security) and forfeitures
allocated to the Participant's Account for the Plan Year divided by his
Compensation for the entire Plan Year. However, for Plan Years beginning after
December 31, 1988, a Non-Key Employee's contribution rate does not include any
elective contributions under a Code Section 401(k) arrangement nor any Employer
matching contributions necessary to satisfy the nondiscrimination requirements
of Code Section 401(k) or of Code Section 401(m). To determine a Participant's
contribution rate, the Advisory Committee must treat all qualified top heavy
defined contribution plans maintained by the Employer (or by any related
Employers described in Section 1.27) as a single plan.
9
(4) NO ALLOCATIONS. If, for a Plan Year, there are no allocations of
Employer contributions or forfeitures for any Key Employee, the Plan does not
require any top heavy minimum allocation for the Plan Year, unless a top heavy
minimum allocation applies because of the maintenance by the Employer of more
than one plan.
(5) METHOD OF COMPLIANCE. The Plan will satisfy the top heavy minimum
allocation in accordance with this Section 3.04(B)(5). The Employer guarantees
the top heavy minimum allocation in the employee stock ownership plan it
maintains. This Plan does not provide the top heavy minimum allocation. However,
the Employer will contribute an additional amount for the Account of any
Participant who is entitled under this Section 3.04(B) to a top heavy minimum
allocation but who is not a Participant in the employee stock ownership plan, if
that Participant's contribution rate for the Plan Year is less than the top
heavy minimum allocation. The additional amount is the amount necessary to
increase the Participant's contribution rate to the top heavy minimum
allocation. The Advisory Committee will allocate the additional contribution to
the Account of the Participant on whose behalf the Employer makes the
contribution.
3.05 FORFEITURE ALLOCATION. The amount of a Participant's Accrued
Benefit forfeited under the Plan is a Participant forfeiture. Subject to any
restoration allocation required under Sections 5.04 or 9.14 and the special
forfeiture allocation for certain excess aggregate contributions described in
Section 14.05, the Advisory Committee will allocate the amount of a Participant
forfeiture in accordance with Section 3.04, to reduce the Employer matching
contribution contributions and nonelective contributions for the Plan Year in
which the forfeiture occurs. The Advisory Committee will continue to hold the
undistributed, non-vested portion of a terminated Participant's Accrued Benefit
in his Account solely for his benefit until a forfeiture occurs at the time
specified in Section 5.09, or, if applicable, until the time specified in
Section 9.14. Except as provided under Section 5.04, a Participant will not
share in the allocation of a forfeiture of any portion of his Accrued Benefit.
FORFEITURE OF CERTAIN MATCHING CONTRIBUTIONS. A Participant will
forfeit any matching contributions allocated with respect to excess deferrals,
excess contributions or excess aggregate contributions, as determined under
Article XIV. The Advisory Committee will allocate these forfeited amounts in
accordance with this Section 3.05.
3.06 ACCRUAL OF BENEFIT. The Advisory Committee will determine the
accrual of benefit (Employer contributions and Participant forfeitures) on the
basis of the Plan Year.
(A) COMPENSATION TAKEN INTO ACCOUNT. In allocating an Employer qualified
nonelective contribution or nonelective contribution to a Participant's Account,
the Advisory Committee, except for purposes of determining the top heavy minimum
contribution under Section 3.04(B), will take into account only the Compensation
determined for the portion of the Plan Year in which the Employee actually is a
Participant.
(B) HOURS OF SERVICE REQUIREMENT. Subject to the top heavy minimum allocation
requirement of Section 3.04(B), the Advisory Committee will not allocate any
portion of an Employer contribution for a Plan Year to any Participant's Account
if the Participant does not complete a minimum of 1,000 Hours of Service during
the Plan Year, unless the Participant terminates employment during the Plan Year
because of death or disability or because of the attainment of Normal
Requirement Age in the current Plan Year or in a prior Plan Year. The 1,000
Hours of Service requirement does not apply to an allocation of deferral
contributions or matching contributions.
(C) EMPLOYMENT REQUIREMENT. A Participant who, during a particular Plan Year,
completes the Hours of Service requirement under Section 3.06(B) will not share
in the allocation of Employer contributions and Participant forfeitures, if any,
for that Plan Year unless he is employed by the Employer on the Accounting Date
of that Plan Year. This employment requirement does not apply if the Participant
terminates employment during the Plan Year because of death or disability or
because of attainment of Normal Retirement Age in the current Plan Year or in a
prior Plan Year. This employment requirement will not apply to an allocation of
matching contributions or deferral contributions..
(D) SUSPENSION OF ACCRUAL REQUIREMENTS. The Plan suspends the accrual
requirements under Sections 3.06(B) and (C) if the Plan fails to satisfy the
Coverage Test. A Plan satisfies the Coverage Test if for the Plan Year, the
number of Nonhighly Compensated Employees who benefit under the Plan is at least
equal to 70% of the total number of Includible Nonhighly Compensated Employees
as of such day. "Includible" Employees are all Employees other than: (1) those
Employees excluded from participating in the Plan for the entire Plan Year by
reason of the collective bargaining unit exclusion or the nonresident alien
exclusion described in the Code or by reason of the age and service requirements
of Article II; and (2) any Employee who incurs a Separation from Service during
the Plan Year and fails to complete at least 501 Hours of Service for the Plan
Year. A "Nonhighly Compensated Employee" is an Employee who is not a Highly
Compensated Employee. For purposes of the Coverage Test, an Employee is
benefiting under the Plan for a Plan Year if, under Section 3.04, he is entitled
to an allocation for the Plan Year.
If this Section 3.06(D) applies for a Plan Year, the Advisory Committee
will suspend the accrual requirements for the Includible Employees who are
Participants, beginning first with the Includible Employee(s) employed with the
Employer on the last day of the Plan Year, then the Includible Employee(s) who
have the latest Separation from Service
10
during the Plan Year, and continuing to suspend the accrual requirements for
each Includible Employee who incurred an earlier Separation from Service, from
the latest to the earliest Separation from Service date, until the Plan
satisfies the Coverage Test for the Plan Year. If two or more Includible
Employees have a Separation from Service on the same day, the Advisory
Committee will suspend the accrual requirements for all such Includible
Employees, irrespective of whether the Plan can satisfy the Coverage Test by
accruing benefits for fewer than all such Includible Employees. If the Plan
suspends the accrual requirements for an Includible Employee, that Employee
will share in the allocation of Employer contributions and Participant
forfeitures, if any, without regard to the number of Hours of Service he has
earned for the Plan Year and without regard to whether he is employed by the
Employer on the last day of the Plan Year.
PART 2. LIMITATIONS ON ALLOCATIONS: SECTIONS 3.07 AND 3.08
3.07 LIMITATIONS ON ALLOCATIONS TO PARTICIPANTS' ACCOUNTS. The amount
of Annual Additions which the Advisory Committee may allocate under this Plan on
a Participant's behalf for a Limitation Year may not exceed the Maximum
Permissible Amount. If the amount the Employer otherwise would contribute to the
Participant's Account would cause the Annual Additions for the Limitation Year
to exceed the Maximum Permissible Amount, the Employer will reduce the amount of
its contribution so the Annual Additions for the Limitation Year will equal the
Maximum Permissible Amount. If an allocation of Employer contributions, pursuant
to Section 3.04, would result in an Excess Amount (other than an Excess Amount
resulting from the circumstances described in Section 3.07(B)) to the
Participant's Account, the Advisory Committee will reallocate the Excess Amount
to the remaining Participants who are eligible for an allocation of Employer
contributions for the Plan Year in which the Limitation Year ends. The Advisory
Committee will make this reallocation on the basis of the allocation method
under the Plan as if the Participant whose Account otherwise would receive the
Excess Amount is not eligible for an allocation of Employer contributions.
(A) ESTIMATION OF COMPENSATION. Prior to the determination of the Participant's
actual Compensation for a Limitation Year, the Advisory Committee may determine
the Maximum Permissible Amount on the basis of the Participant's estimated
annual Compensation for such Limitation Year. The Advisory Committee must make
this determination on a reasonable and uniform basis for all Participants
similarly situated. The Advisory Committee must reduce any Employer
contributions (including any allocation of forfeitures) based on estimated
annual Compensation by any Excess Amount carried over from prior years. As soon
as is administratively feasible after the end of the Limitation Year, the
Advisory Committee will determine the Maximum Permissible Amount for such
Limitation Year on the basis of the Participant's actual Compensation for the
Limitation Year.
(B) DISPOSITION OF EXCESS AMOUNT. If, pursuant to Section 3.07(A), or because of
the allocation of forfeitures, there is an Excess Amount with respect to a
Participant for a Limitation Year, the Advisory Committee shall dispose of such
Excess Amount as follows:
(1) The Advisory Committee will return any nondeductible voluntary
Employee contributions to the Participant to the extent that the return
would reduce the Excess Amount.
(2) If, after the application of paragraph (1), an Excess Amount still
exists, and the Plan covers the Participant at the end of the
Limitation Year, then the Advisory Committee will use the Excess
Amount(s) to reduce future Employer contributions (including any
allocation of forfeitures) under the Plan for the next Limitation Year
and for each succeeding Limitation Year, as is necessary, for the
Participant.
(3) If, after the application of paragraph (1), an Excess Amount still
exists, and the Plan does not cover the Participant at the end of the
Limitation Year, then the Advisory Committee will hold the Excess
Amount unallocated in a suspense account. The Advisory Committee will
apply the suspense account to reduce Employer Contributions (including
allocation of forfeitures) for all remaining Participants in the next
Limitation Year, and in each succeeding Limitation Year if necessary.
(4) The Advisory Committee will not distribute any Excess Amount(s) to
Participants or to former Participants.
(5) If, as a result of a reasonable error in determining the amount of
elective deferrals an Employee may make without violating the
limitations of Part 2 of Article III, an Excess Amount results, the
Advisory Committee will return the Excess Amount (as adjusted for
allocable income) attributable to the elective deferrals. The Advisory
Committee will make this distribution before taking any corrective
steps in the prior paragraphs of this Section 3.07(B). The Advisory
Committee will disregard any elective deferrals returned under this
paragraph for purposes of Article XIV.
(C) MORE THAN ONE PLAN. If the Advisory Committee allocated an Excess Amount to
a Participant's Account on an allocation date of this Plan which coincides with
an allocation date of another defined contribution plan maintained by the
Employer, the Advisory Committee will attribute the total Excess Amount
allocated as of such date to such other plan.
11
(D) DEFINED BENEFIT PLAN LIMITATION. The Employer does not maintain and never
has maintained a defined benefit plan covering any Participant in this Plan.
Accordingly, no special defined benefit plan limitation applies under this Plan.
3.08 DEFINITIONS - ARTICLE III. For purposes of Part 2 Article III, the
following terms mean:
(a) "ANNUAL ADDITION" - The sum of the following amounts allocated on
behalf of a Participant for a Limitation Year, of (i) all Employer
contributions; (ii) all forfeitures; and (iii) all Employee
contributions. Except to the extent provided in Treasury regulations,
Annual Additions include excess contributions described in Code
Section 401(k) and excess aggregate contributions described in Code
Section 401(m) irrespective of whether the plan distributes or forfeits
such excess amounts. Excess deferrals under Code Section 402(g) are not
Annual Additions unless distributed after the correction period
described in Code Section 402(g). Annual Additions also include Excess
Amounts reapplied to reduce Employer contributions under Section 3.07.
Amounts allocated after March 31, 1984, to an individual medical
account (as defined in Code Section415(1)(2)) included as part of a
defined benefit plan maintained by the Employer are Annual Additions.
Furthermore, Annual Additions include contributions paid or accrued
after December 31, 1985, for taxable years ending after December 31,
1985, attributable to post-retirement medical benefits allocated to the
separate account of a key employee (as defined in Codes
Section 419A(d)(3) under a welfare benefit fund (as defined in Code
Section 419(e)) maintained by the Employer, but only for purposes of
the dollar limitation applicable to the Maximum Permissible Amount.
(b) "COMPENSATION" - Compensation as determined under the general
definition in Section 1.10(A).
(c) "MAXIMUM PERMISSIBLE AMOUNT" - The lesser of (i) $30,000 (or, if
greater, the $30,000 amount as adjusted under Code Section 415(d)), or
(ii) 25% of the Participant's Compensation for the Limitation Year. If
there is a short Limitation Year because of a change in Limitation
Year, the Advisory Committee will multiply the $30,000 limitation (or
larger limitation) by the following fraction:
NUMBER OF MONTHS IN THE SHORT LIMITATION YEAR
12
(d) "EMPLOYER" - The Employer that adopts this Plan and any related
employers described in Section 1.27. Solely for purposes of applying
the limitations of Part 2 of this Article III, the Advisory Committee
will determine related employers described in Section 1.27 by modifying
Code Sections 414(b) and (c) in accordance with Code Section 415(h).
(e) "EXCESS AMOUNT" - The excess of the Participant's Annual Additions
for the Limitation Year over the Maximum Permissible Amount.
(f) "LIMITATION YEAR" - The Plan Year. If the Employer amends the
Limitation Year to a different 12 consecutive month period, the new
Limitation Year must begin on a date within the Limitation Year for
which the Employer makes the amendment, creating a short Limitation
Year.
(g) "DEFINED CONTRIBUTION PLAN" - A retirement plan which provides
for an individual account for each participant and for benefits
based solely on the amount contributed to the participant's account,
and any income, expenses, gains and losses, and any forfeitures of
accounts of other participants which the plan may allocate to such
participant's account. The Advisory Committee must treat all defined
contribution plans (whether or not terminated) maintained by the
Employer as a single plan. For purposes of the limitations of Part 2
of this Article III , the Advisory Committee will treat employee
contributions made to a defined benefit plan maintained by the
Employer as a separate defined contribution plan. The Advisory
Committee also will treat as a defined contribution plan an
individual medical account (as defined in Code Section 415(1)(2))
included as part of a defined benefit plan maintained by the
Employer and, for taxable years ending after December 31, 1985, a
welfare benefit fund under Code Section 419(e) maintained by the
Employer to the extent there are post-retirement medical benefits
allocated to the separate account of a key employee (as defined in
Code Section 419A(d)(3)).
(h) "DEFINED BENEFIT PLAN" - A retirement plan which does not provide
for individual accounts for Employer contributions. The Advisory
Committee must treat all defined benefit plans (whether or not
terminated) maintained by the Employer as a single plan.
12
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT VOLUNTARY CONTRIBUTIONS. The Plan does not permit nor
require Participant voluntary contributions.
4.02 [Reserved]
4.03 PARTICIPANT ROLLOVER CONTRIBUTIONS. Any Participant, with the
Employer's written consent and after filing with the Trustee the form prescribed
by the Advisory Committee, may contribute cash or Flow ESOP Stock to the Trust
other than as a voluntary contribution if the contribution is a "rollover
contribution" which the Code permits an employee to transfer either directly or
indirectly from one qualified plan to another qualified plan. Before accepting a
rollover contribution, the Trustee may require an Employee to furnish
satisfactory evidence that the proposed transfer is in fact a "rollover
contribution" which the Code permits an employee to make to a qualified plan. A
rollover contribution is not an Annual Addition under Part 2 of Article III.
"Flow ESOP Stock" is stock in Flow International Corporation received by a
participant in the Flow International Corporation Employee Stock Ownership Plan
(or by a participant's beneficiary) in a distribution after March 31, 1998, on
account of the termination of the Flow International Corporation Employee Stock
Ownership Plan.
If the Participant makes a rollover contribution to the Trust Fund,
such amount shall be subject to the Participant's direction of investment in
accordance with Section 8.10. Rollover contributions will be credited to the
Participant's "Rollover Account." The Trustee shall hold, administer and
distribute a rollover contribution in the same manner as any Employer
discretionary contribution made to the Trust, except that distributions of a
rollover contribution that consists of Flow ESOP Stock shall be only in lump
sum.
4.04 PARTICIPANT CONTRIBUTION - FORFEITABILITY. A Participant's Accrued
Benefit is, at all times, 100% Nonforfeitable to the extent the value of his
Accrued Benefit is derived from Participant contributions made by him to the
Trust for his own benefit.
4.05 PARTICIPANT CONTRIBUTION WITHDRAWAL/ DISTRIBUTION. A Participant,
by giving prior written notice to the Trustee, may withdraw all or any part of
the value of his Accrued Benefit derived from his Participant contributions
described in this Article IV. A distribution of Participant contributions must
comply with the joint and survivor requirements described in Article VI, if
those requirements apply to the Participant. A Participant may not exercise his
right to withdraw the value of his Accrued Benefit derived from his Participant
contributions more than once during any Plan Year. The Trustee, in accordance
with the direction of the Advisory Committee, will distribute a Participant's
unwithdrawn Accrued Benefit attributable to his Participant contributions in
accordance with the provisions of Article VI applicable to the distribution of
the Participant's Nonforfeitable Accrued Benefit.
4.06 PARTICIPANT CONTRIBUTION - ACCRUED BENEFIT. The Advisory Committee
must maintain, or must direct the Trustee to maintain, a separate Account(s) in
the name of each Participant to reflect the Participant's Accrued Benefit under
the Plan derived from his Participant contributions. A Participant's Accrued
Benefit derived from his Participant contributions as of any applicable date is
the balance of his separate Participant contribution Account(s).
13
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT AGE. A Participant's Normal Retirement Age is 65
years of age. A Participant who remains in the employ of the Employer after
attaining Normal Retirement Age will continue to participate in Employer
contributions. A Participant's Accrued Benefit derived from Employer
contributions is 100% Nonforfeitable upon and after his attaining Normal
Retirement Age (if employed by the Employer on or after that date).
5.02 PARTICIPANT DISABILITY OR DEATH. If a Participant's employment
with the Employer terminates as a result of death or disability, the
Participant's Accrued Benefit derived from Employer contributions will be 100%
Nonforfeitable.
5.03 VESTING SCHEDULE. A Participant has a 100% Nonforfeitable interest
at all times in his Deferral Contributions Account, Qualified Matching
Contributions Account, and Qualified Nonelective Contributions Account . Except
as provided in Sections 5.01 and 5.02, for each Year of Service, a Participant's
Nonforfeitable percentage of his Regular Matching Contributions Account and
Employer Contributions Account equals the percentage in the following vesting
schedule:
Percent of
Years of Service Nonforfeitable
with the Employer Accrued Benefit
----------------- ---------------
Less than 1 None
1 20%
2 40%
3 60%
4 80%
5 or more 100%
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED
PARTICIPANTS/RESTORATION OF FORFEITED ACCRUED BENEFIT. If pursuant to Article
VI, a partially-vested Participant receives a cash-out distribution before he
incurs a Forfeiture Break in Service (as defined in Section 5.08), the cash-out
distribution will result in an immediate forfeiture of the nonvested portion of
the Participant's Accrued Benefit derived from Employer contributions. See
Section 5.09. A partially-vested Participant is a Participant whose
Nonforfeitable Percentage determined under Section 5.03 is less than 100%. A
cash-out distribution is a distribution of the entire present value of the
Participant's Nonforfeitable Accrued Benefit.
(A) RESTORATION AND CONDITIONS UPON RESTORATION. A partially-vested Participant
who is re-employed by the Employer after receiving a cash-out distribution of
the Nonforfeitable percentage of his Accrued Benefit may repay the Trustee the
amount of the cash-out distribution attributable to Employer contributions,
unless the Participant no longer has a right to restoration under the
requirements of this Section 5.04. If a partially-vested Participant makes the
cash-out distribution repayment, the Advisory Committee, subject to the
conditions of this paragraph (A), must restore his Accrued Benefit attributable
to Employer contributions to the same dollar amount as the dollar amount of his
Accrued Benefit on the Accounting Date, or other valuation date, immediately
preceding the cash-out distribution date, unadjusted for any gains or losses
occurring subsequent to that Accounting Date, or other valuation date.
Restoration of the Participant's Accrued Benefit shall include restoration of
all Code Section 411(d)(6) protected benefits with respect to that restored
Accrued Benefit, in accordance with applicable Treasury regulations. The
Advisory Committee shall not restore a re-employed Participant's Accrued Benefit
under this paragraph if:
(1) 5 years have elapsed since the Participant's first re-employment
date following the cash-out distribution; or
(2) The Participant incurred a Forfeiture Break in Service (as defined
in Section 5.08). This condition also applies if the Participant makes
repayment within the Plan Year in which he incurs the Forfeiture Break
in Service and that Forfeiture Break in Service would result in a
complete forfeiture of the amount the Advisory Committee otherwise
would restore.
(B) TIME AND METHOD OF RESTORATION. If neither of the two conditions preventing
restoration of the Participant's Accrued Benefit applies, the Advisory Committee
will restore the Participant's Accrued Benefit as of the Plan Year Accounting
Date coincident with or immediately following the repayment. To restore the
Participant's Accrued Benefit, the Advisory Committee, to the extent necessary,
will allocate to the Participant's Account:
(1) First, the amount, if any, of Participant forfeitures the Advisory
Committee would otherwise allocate under Section 3.05;
14
(2) Second, the amount, if any, of the Trust Fund net income or gain
for the Plan Year; and
(3) Third, the Employer contribution for the Plan Year to the extent
made under a discretionary formula.
To the extent the amounts described in clauses (1), (2) and (3) are
insufficient to enable the Advisory Committee to make the required restoration,
the Employer must contribute, without regard to any requirement or condition of
Section 3.01, the additional amount as is necessary to enable the Advisory
Committee to make the required restoration. If, for a particular Plan Year, the
Advisory Committee must restore the Accrued Benefit of more than one re-employed
Participant, then the Advisory Committee will make the restoration allocation(s)
to each such Participant's Account in the same proportion that a Participant's
restored amount for the Plan Year bears to the restored amount for the Plan Year
of all re-employed Participants. The Advisory Committee will not take into
account the allocation under this Section 5.04 in applying the limitation on
allocations under Part 2 of Article III.
(C) 0% VESTED PARTICIPANT. The deemed cash-out rule applies to a
0% vested Participant. A 0% vested Participant is a Participant whose Accrued
Benefit derived from Employer contributions is entirely forfeitable at the time
of his Separation from Service. Under the deemed cash-out rule, the Advisory
Committee will treat the 0% vested Participant as having received a cash-out
distribution on the date of the Participant's Separation from Service or, if the
Participant's Account is entitled to an allocation of Employer contributions for
the Plan Year in which he separates from Service, on the last day of that Plan
Year. For purposes of applying the restoration provisions of this Section 5.04,
the Advisory Committee will treat the 0% vested Participant as repaying his
cash-out "distribution" on the first date of his re-employment with the
Employer.
5.05 ACCOUNTING FOR REPAID AMOUNT. Until the Advisory Committee
restores the Participant's Accrued Benefit, as described in Section 5.04, the
Trustee will invest the cash-out amount the Participant has repaid in the same
manner that salary deferral contributions for such Participant would be
invested. Unless the repayment qualifies as a rollover contribution, the
Advisory Committee will direct the Trustee to repay to the Participant as soon
as is administratively practicable the full amount of the Participant's
repayment (with earnings or losses as determined under a weighting method
similar to that described under Section 9.11) if the Advisory Committee
determines either of the conditions of Section 5.04(A) prevents restoration as
of the applicable Accounting Date, notwithstanding the Participant's repayments.
5.06 YEAR OF SERVICE - VESTING. For purposes of vesting under Section
5.03, Year of Service means the following:
(a) Vesting Service from May 1, 1986 to April 30, 1988: any Plan
Year (based on the prior plan year, which was the 12 consecutive month
period ending every April 30) during which the Employee completes not
less than 1,000 Hours of Service with the Employer, including Plan
Years prior to the Effective Date of the Plan.
(b) Vesting Service from May 1, 1988 to December 31, 1989: There
shall be special vesting computation periods of May 1, 1988 to
April 30, 1989 and January 1, 1989 to December 31, 1989. A Participant
who is credited with at least 1,000 hours of service in any such
computation period shall be credited with a year of Vesting Service for
such period. Any employee who is credited with at least 1,000 hours of
service in both computation periods shall be credited with two years of
Vesting Service for such periods.
(c) Vesting Service from and after January 1, 1990: any Plan Year
(based on the Plan Year, which is the 12 consecutive month period
ending every December 31) during which the Employee completes not less
than 1,000 Hours of Service with the Employer.
5.07 BREAK IN SERVICE - VESTING. For purposes of this Article V, a
Participant shall incur a "Break in Service" if, during any Plan Year, he does
not complete more than 500 Hours of Service with the Employer.
5.08 INCLUDED YEARS OF SERVICE - VESTING. For purposes of determining
"Years of Service" under Section 5.06, the Plan takes into account all Years of
Service an Employee completes with the Employer, except any Year of Service
before the Plan Year in which the Participant attained the age of 18. For the
sole purpose of determining a Participant's Nonforfeitable percentage of his
Accrued Benefit derived from Employer contributions which accrued for his
benefit prior to a Forfeiture Break in Service, the Plan disregards any Year of
Service after the Participant first incurs a Forfeiture Break in Service. The
Participant incurs a Forfeiture Break in Service when he incurs 5 consecutive
Breaks in Service.
5.09 FORFEITURE OCCURS. A Participant's forfeiture, if any, of his
Accrued Benefit derived from Employer contributions occurs under the Plan on the
earlier of:
(a) The last day of the Plan Year in which the Participant first incurs
a Forfeiture Break in Service; or,
(b) The date the Participant receives a cash-out distribution.
15
The Advisory Committee determines the percentage of a Participant's
Accrued Benefit forfeiture, if any, under this Section 5.09 solely by reference
to the vesting schedule of Section 5.03. A Participant will not forfeit any
portion of his Accrued Benefit for any other reason or cause except as expressly
provided by this Section 5.09 or as provided under Section 9.14.
16
ARTICLE VI
TIME AND METHOD OF PAYMENT OF BENEFITS
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT. Unless the Participant or the
Beneficiary elects in writing to a different time of payment, the Advisory
Committee will direct the Trustee to commence distribution of a Participant's
Nonforfeitable Accrued Benefit in accordance with this Section 6.01. A
Participant must consent, in writing, to any distribution required under this
Section 6.01 if the present value of the Participant's Nonforfeitable Accrued
Benefit, at the time of the distribution to the Participant, exceeds $5,000 and
the Participant has not attained the later of Normal Retirement Age or age 62.
Furthermore, the Participant's spouse also must consent, in writing, to any
distribution, for which Section 6.04 requires the spouse's consent. For all
purposes of this Article VI, the term "annuity starting date" shall mean the
date on which the Plan pays a distribution as an annuity or in any other form
but in no event is the "annuity starting date" earlier than a Participant's
Separation from Service with the Employer.
A distribution date under this Article VI, unless otherwise specified
within the Plan, is each March 1, June 1, September 1, or December 1, or as soon
as administratively practicable following such dates. For purposes of the
consent requirements under this Article VI, if the present value of the
Participant's Nonforfeitable Accrued Benefit, at the time of any distribution,
exceeds $5,000, the Advisory Committee must treat that present value as
exceeding $5,000 for purposes of all subsequent Plan distributions to the
Participant.
(A) SEPARATION FROM SERVICE FOR A REASON OTHER THAN DEATH.
For a Participant who incurs a Separation from Service for a reason
other than death, the Advisory Committee will direct the Trustee to commence
distribution of the Participant's Accrued Benefit, as follows:
(1) PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT NOT EXCEEDING $5,000.
In a lump sum, on the first distribution date after the close of the quarter
Plan Year in which the Participant separates from Service with the Employer, but
in no event later than the 60th day following the close of the Plan Year in
which the Participant attains Normal Retirement Age.
(2) PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT EXCEEDS $5,000. In a
form and at a time elected by the Participant, pursuant to Section 6.03. In the
absence of an election by the Participant, the Advisory Committee will direct
the Trustee to distribute the Participant's Nonforfeitable Accrued Benefit in a
lump sum (or, if applicable, the normal annuity form of distribution required
under Section 6.04) on the 60th day following the close of the Plan Year in
which the latest of the following events occurs: (a) the Participant attains
Normal Retirement Age; (b) the Participant attains age 62; or (c) the
Participant's Separation from Service.
(B) REQUIRED BEGINNING DATE.
(1) TIMING OF REQUIRED DISTRIBUTIONS. If any distribution commencement
date described under Paragraph (A) of this Section 6.01, either by Plan
provision or by Participant election (or nonelection), is later than the
Participant's Required Beginning Date, the Advisory Committee instead must
direct the Trustee to make distribution to the Participant on the Participant's
Required Beginning Date. A Participant's Required Beginning Date is the April 1
following the close of the calendar year in which the Participant attains age 70
1/2 if the Participant is a more than 5% owner with respect to the Plan Year
ending in that calendar year. For any other Participant, the Required Beginning
Date is the April 1 following the close of the calendar year in which the
Participant separates from Service or, if later, the April 1 following the close
of the calendar year in which the Participant attains age 70 1/2. A mandatory
distribution at the Participant's Required Beginning Date will be in lump sum
(or, if applicable, the normal annuity form of distribution required under
Section 6.04) unless the Participant, pursuant to the provisions of this Article
VI, makes a valid election to receive an alternative form of payment.
(2) PARTICIPANT ELECTION UPON ATTAINING AGE 70 1/2. A Participant upon
attaining age 70 1/2, until he retires, has a continuing election to receive all
or any portion of his Accrued Benefit. A Participant only may make one
withdrawal per Plan Year. The Trustee, as directed by the Advisory Committee,
will distribute the amount(s) withdrawn by a Participant in single sum.
A Participant must make an election under this Section 6.01(B)(2) on a
form prescribed by the Advisory Committee at any time during the Plan Year for
which his election is to be effective. In his written election, the Participant
must specify the percentage or dollar amount of his Accrued Benefit he wishes
the Trustee to distribute to him. The Participant's election relates solely to
the percentage or dollar amount specified in his election form and his right to
elect to receive an amount, if any, for a particular Plan year greater than the
percentage or dollar amount specified in his election form terminates on the
Accounting Date of that Plan Year. The Trustee must make a distribution to a
Participant in accordance with his election under this Section 6.01(B)(2) as
soon as administratively practicable after the Participant files his written
election with the Advisory Committee. The Trustee will distribute the balance of
the Participant's Accrued Benefit not distributed pursuant to his election(s) in
accordance with the other distribution provisions of this Plan.
17
(C) DEATH OF THE PARTICIPANT. The Advisory Committee will direct the Trustee, in
accordance with this Section 6.01(C) to distribute to the Participant's
Beneficiary the Participant's Nonforfeitable Accrued Benefit remaining in the
Trust at the time of the Participant's death. Subject to the requirements of
Section 6.04, the Advisory Committee will determine the death benefit by
reducing the Participant's Nonforfeitable Accrued Benefit, by any security
interest the Plan has against that Nonforfeitable Accrued Benefit by reason of
an outstanding Participant loan.
(1) DECEASED PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT DOES NOT
EXCEED $5,000. The Advisory Committee, subject to the requirements of Section
6.04, must direct the Trustee to pay the deceased Participant's Nonforfeitable
Accrued Benefit in a single cash sum, on the first distribution date after, but
valued as of, the close of the quarter Plan Year in which the Participant's
death occurs or, if later, on the first distribution date after the close of the
quarter Plan Year in which the Advisory Committee receives notification of or
otherwise confirms the Participant's death.
(2) DECEASED PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT EXCEEDS
$5,000. Subject to the requirements of Section 6.04, the Advisory Committee will
direct the Trustee to distribute the Participant's undistributed Nonforfeitable
Accrued Benefit in a lump sum on the first distribution date after, but valued
as of, the close of the quarter Plan Year in which the Participant's death
occurs or, if later, on the first distribution date after the close of the
quarter Plan Year in which the Advisory Committee receives notification of or
otherwise confirms the Participant's death.
If the death benefit is payable to the Participant's surviving spouse
in full, the surviving spouse may elect distribution at any time or in any form
(other than the joint and survivor annuity) this Article VI would permit for a
Participant.
(D) DEFAULT ON A LOAN. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan treats the default as a distributable event. The Trustee, at the
time of the default, will reduce the Participant's Nonforfeitable Accrued
Benefit by the less of the amount in default (plus accrued interest) or the
Plan's security interest in that Nonforfeitable Accrued Benefit. To the extent
the loan is attributable to the Participant's Deferral Contributions Account,
Qualified Matching Contributions Account or Qualified Nonelective Contributions
Account, the Trustee will not reduce the Participant's Nonforfeitable Accrued
Benefit unless the Participant has separated from Service or unless the
Participant has attained age 59 1/2.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. Subject to the annuity
distribution requirements, if any, prescribed by Section 6.04, and any
restrictions prescribed by Section 6.03, a Participant or Beneficiary may elect
distribution under one, or any combination, of the following methods: (a) by
payment in a lump sum; (b) by payment in monthly, quarterly or annual
installments over a fixed reasonable period of time, not exceeding the life
expectancy of the Participant, or the joint life and last survivor expectancy of
the Participant and his Beneficiary; or (c) by payment in the form of the
following types of annuity: straight life annuity, single life annuity with
certain periods of five, ten or fifteen years or installment refund,
survivorship life annuities with survivorship percentages of 50, 66-2/3 or 100
percent (as those types of annuity are described in the Spider Staging
Corporation 401(k) Savings Plan in effect on December 31, 1992).
The distribution options permitted under this Section 6.02 are
available only if the present value of the Participant Nonforfeitable Accrued
Benefit, at the time of the distribution to the Participant, exceeds $5,000. To
facilitate installment payments under this Article VI, the Advisory Committee
may direct the Trustee to segregate all or any part of the Participant's Accrued
Benefit in a separate Account. The Trustee will invest the Participant's
segregated Account in Federally insured interest bearing savings account(s) or
time deposit(s) (or a combination of both), or in other fixed income
investments. A segregated Account remains a part of the Trust, but it alone
shares in any income it earns, and it alone bears any expense or loss it incurs.
A Participant or Beneficiary may elect to receive an installment distribution in
the form of a Nontransferable Annuity Contract. Under an installment
distribution, the Participant or Beneficiary, at any time, may elect to
accelerate the payment of all, or any portion, of the Participant's unpaid
Nonforfeitable Accrued Benefit, subject to the requirements of Section 6.04.
(A) MINIMUM DISTRIBUTION REQUIREMENTS FOR PARTICIPANTS. The Advisory
Committee may not direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit, nor may the Participant elect to have the
Trustee distribute his Nonforfeitable Accrued Benefit, under a method of
payment which, as of the Required Beginning Date, does not satisfy the
minimum distribution requirements under Code Section 401(a)(9) and the
applicable Treasury regulations. The minimum distribution for a calendar year
equals the Participant's Nonforfeitable Accrued Benefit as of the latest
valuation date preceding the beginning of the calendar year divided by the
Participant's life expectancy or, if applicable, the joint and last survivor
expectancy of the Participant and his designated Beneficiary (as determined
under Article VIII, subject to the requirements of the Code Section 401(a)(9)
regulations). The Advisory Committee will increase the Participant's
Nonforfeitable Accrued Benefit, as determined on the relevant valuation date,
for contributions or forfeitures allocated after the valuation date and by
December 31 of the valuation calendar year, and will decrease the valuation
by distributions made after the valuation date and by December 31 of the
valuation calendar year. For purposes of this valuation, the Advisory
Committee
18
will treat any portion of the minimum distribution for the first distribution
calendar year made after the close of that year as a distribution occurring
in that first distribution calendar year. In computing a minimum distribution
the Advisory Committee must use the unisex life expectancy multiples under
Treas. Reg. Section 1.72-9. The Advisory Committee, only upon the
Participant's written request, may compute the minimum distribution for a
calendar year subsequent to the first calendar year for which the Plan
requires a minimum distribution by redetermining the applicable life
expectancy. However, the Advisory Committee may not redetermine the joint
life and last survivor expectancy of the Participant and a nonspouse
designated Beneficiary in a manner which takes into account any adjustment to
a life expectancy other than the Participant's life expectancy.
If the Participant's spouse is not his designated Beneficiary, a method
of payment to the Participant (whether by Participant election or by Advisory
Committee direction) may not provide more than incidental benefits to the
Beneficiary. For Plan Years beginning after December 31, 1988, the Plan must
satisfy the minimum distribution incidental benefit ("MDIB") requirement in the
Treasury regulations issued under Code Section 401(a)(9) for distributions made
on or after the Participant's Required Beginning Date and before the
Participant's death. To satisfy the MDIB requirement, the Advisory Committee
will compute the minimum distribution required by this Section 6.02(A) by
substituting the applicable MDIB divisor for the applicable life expectancy
factor, if the MDIB divisor is a lessor number. Following the Participant's
death, the Advisory Committee will compute the minimum distribution required by
this Section 6.02(A) solely on the basis of the applicable life expectancy
factor and will disregard the MDIB factor. For Plan Years beginning prior to
January 1, 1989, the Plan satisfies the incidental benefits requirement if the
distributions to the Participant satisfied the MDIB requirement or if the
present value of the retirement benefits payable solely to the Participant is
greater than 50% of the present value of the total benefits payable to the
Participant and his Beneficiaries. The Advisory Committee must determine whether
benefits to the Beneficiary are incidental as of the date the Trustee is to
commence payment of the retirement benefits to the Participant, or as of any
date the payment period to the Participant is redetermined.
The minimum distribution for the first distribution calendar year is
due by the Participant's Required Beginning Date. The minimum distribution for
each subsequent distribution calendar year, including the calendar year in which
the Participant's Required Beginning Date falls, is due by December 31 of that
year. If the Participant receives distribution in the form of a Nontransferable
Annuity Contract, the distribution satisfies this Section 6.02(A) if the
contract complies with the requirements of Code Section 401(a)(9) and the
applicable Treasury regulations.
(B) MINIMUM DISTRIBUTION REQUIREMENTS FOR BENEFICIARIES. The method of
distribution to the Participant's Beneficiary must satisfy Code Section
401(a)(9) and the applicable Treasury regulations. If the Participant's death
occurs after his Required Beginning Date or, if earlier, the date the
Participant commences an irrevocable annuity pursuant to Section 6.04, the
method of payment to the Beneficiary must provide for completion of payment
over a period which does not exceed the payment period which had commenced
for the Participant. If the Participant's death occurs prior to his Required
Beginning Date, and the Participant had not commenced an irrevocable annuity
pursuant to Section 6.04, the method of payment to the Beneficiary, subject
to Section 6.04, must provide for completion of payment to the Beneficiary
over a period not exceeding: (i) 5 years after the date of the Participant's
death; or (ii) if the Beneficiary is a designated Beneficiary, the designated
Beneficiary's life expectancy. The Advisory Committee may not direct payment
of the Participant's Nonforfeitable Accrued Benefit over a period described
in clause (ii) unless the Trustee will commence payment to the designated
Beneficiary no later than the December 31 following the close of the calendar
year in which the Participant's death occurred or, if later, and the
designated Beneficiary is the Participant's surviving spouse, December 31 of
the calendar year in which the Participant would have attained age 70 1/2. If
the Trustee will make distribution in accordance with clause (ii), the
minimum distribution for a calendar year equals the Participant's
Nonforfeitable Accrued Benefit as of the latest valuation date preceding the
beginning of the calendar year divided by the designated Beneficiary's life
expectancy. The Advisory Committee must use the unisex life expectancy
multiples under Treas. Reg. Section 1.72-9 for purposes of applying this
paragraph. The Advisory Committee, only upon the written request of the
Participant or of the Participant's surviving spouse, may recalculate the
life expectancy of the Participant's surviving spouse not more frequently
than annually, but may not recalculate the life expectancy of a nonspouse
designated Beneficiary after the Trustee commences payment to the designated
Beneficiary. The Advisory Committee will apply this paragraph by treating any
amount paid to the Participant's child, which becomes payable to the
Participant's surviving spouse. Upon the Beneficiary's written request, the
Advisory Committee must direct the Trustee to accelerate payment of all, or
any portion, of the Participant's unpaid Accrued Benefit, as soon as
administratively practicable following the effective date of that request.
6.03 BENEFIT PAYMENT ELECTIONS. Not earlier than 90 days, but not later
than 30 days, before the Participant's annuity starting date, the Plan
Administrator must provide a benefit notice to a Participant who is eligible to
make an election under this Section 6.03. The benefit notice must explain the
optional forms of benefits in the Plan, including the material features and
relative values of those options, and, if applicable, the Participant's right to
defer distribution until he attains the later of Normal Retirement Age or age
62.
19
If a Participant or Beneficiary makes an election prescribed by this
Section 6.03, the Advisory Committee will direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit in accordance with that election.
Any election under this Section 6.03 is subject to the requirements of Section
6.02 and of Section 6.04. The Participant or Beneficiary must make an election
under this Section 6.03 by filing his election form with the Advisory Committee
at any time before the Trustee otherwise would commence to pay a Participant's
Accrued Benefit in accordance with the requirements of Article VI.
(A) PARTICIPANT ELECTIONS AFTER SEPARATION FROM SERVICE. If the present value of
a Participant's Nonforfeitable Accrued Benefit exceeds $5,000, he may elect to
have the Trustee commence distribution as of any distribution date. The
Participant may reconsider an election at any time prior to the annuity starting
date and elect to commence distribution as of any other distribution date.
(B) PARTICIPANT ELECTIONS PRIOR TO SEPARATION FROM SERVICE.
(1) DEFERRAL CONTRIBUTIONS ACCOUNT AND QUALIFIED NONELECTIVE
CONTRIBUTIONS ACCOUNT. The Participant, until he retires, has a continuing
election to receive a distribution from his Deferral Contributions Account and
Qualified Nonelective Contributions Account if: he has attained age 59 1/2; or,
in the case of his Deferral Contributions Account, he satisfies the conditions
for a hardship, as described in paragraph (4). A hardship distribution option
may not apply to the Participants Qualified Nonelective Contributions Accounts,
except as provided in paragraph (5). If the Employer sells substantially all of
the assets (within the meaning of Code Section 409(d)(2)) used in a trade or
business or sells a subsidiary (within the meaning of Code Section 409(d)(3)), a
Participant who continues employment with the acquiring corporation is eligible
for distribution from these Accounts as if he has a Separation from Service.
After March 31, 1988, a distribution authorized solely by reason of the prior
sentence must constitute a lump sum distribution, determined in a manner
consistent with Code Section 401(k)(10) and the applicable Treasury regulations.
(2) QUALIFIED MATCHING CONTRIBUTIONS ACCOUNT. The Participant, until he
retires, has a continuing election to receive all or any portion of his
Qualified Matching Contributions Account if he has attained age 59 1/2.
(3) PROCEDURE. A Participant must make an election under this Section
6.03(B) on a form prescribed by the Advisory Committee at any time during the
Plan Year for which his election is to be effective. In his written election,
the Participant must specify the percentage or dollar amount he wishes the
Trustee to distribute to him. The Participant's election relates solely to the
percentage or dollar amount specified in his election form and his right to
elect to receive an amount, if any, for a particular Plan Year greater than the
dollar amount or percentage specified in his election form terminates on the
Accounting Date. The Trustee must make a distribution to a Participant in
accordance with his election under this Section 6.03(B) within the 90-day period
(or as administratively practicable) after the Participant files his written
election with the Trustee. The Trustee will distribute the balance of the
Participant's Accrued Benefit not distributed pursuant to his election(s) in
accordance with the other distribution provisions of this Plan.
(4) DEFINITION OF HARDSHIP. For purposes of this Section 6.03(B), a
hardship distribution, must be on account of one or more of the following
immediate and heavy financial needs: (1) medical expenses described in Code
Section 213(d) incurred by the Participant, by the Participant's spouse, or by
any of the Participant's dependents (as defined in Code Section 152), or
necessary for these persons to obtain such medical care; (2) costs directly
related to the purchase (excluding mortgage payments) of a principal residence
for the Participant; (3) the payment of post-secondary education tuition and
related educational fees, for the next 12 months, for the Participant, for the
Participant's spouse, or for any of the Participant's dependents (as defined in
Code Section 152); or (4) to prevent the eviction of the Participant from his
principal residence or the foreclosure on the mortgage of the Participant's
principal residence. The amount of a Participant's immediate and heavy financial
need may include amounts necessary to pay any Federal, State, or local income
taxes or penalties reasonably anticipated to result from the hardship
distribution.
(5) DISTRIBUTABLE AMOUNT FOR HARDSHIP DISTRIBUTIONS. For Plan Years
beginning after December 31, 1988, a hardship distribution may not include
earnings on an Employee's elective deferrals credited after December 31, 1988.
Qualified matching contributions and qualified nonelective contributions, and
earnings on such contributions, are not subject to hardship withdrawal unless
credited by December 31, 1988.
(6) EMPLOYEE REPRESENTATION. No hardship distribution may be made to a
Participant unless the Participant represents, and the Advisory Committee
determines under the facts and circumstances it is reasonable to rely on that
representation, that he is not able to relieve his immediate and heavy financial
need:
(a) Through reimbursement or compensation by insurance or otherwise;
(b) By reasonable liquidation of the Participant's assets, to the
extent such liquidation would not itself cause an immediate and heavy
financial need (including those assets of the Participant's spouse or
of the Participant's minor children, if those assets are reasonably
available to the Participant.);
20
(c) By cessation of elective deferrals or employee contributions
under the Plan; or
(d) By other distributions or nontaxable (at the time of the loan)
loans from this Plan or any other qualified plan maintained by the
Employer or by any other employer; or
(e) By borrowing from commercial sources on reasonable commercial
terms.
(7) DESIGNATION OF DIRECTED INVESTMENT FUND. As part of any hardship
withdrawal request, a Participant may designate the directed investment fund or
funds that his withdrawal will be charged against. If the amount invested in
such designated fund or funds is not sufficient, the withdrawal will be charged
against each other fund on a prorata basis. If no designation is made, the
withdrawal will be charged against each fund on a prorata basis.
(C) DEATH BENEFIT ELECTIONS. If the present value of the deceased Participant's
Nonforfeitable Accrued Benefit exceeds $5,000, and if the death benefit is
payable to the Participant's surviving spouse in full, the surviving spouse may
elect to have the Trustee distribute the Participant's Nonforfeitable Accrued
Benefit in a form and within a period this Article VI would permit for a
Participant.
(D) [RESERVED]
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES.
(A) JOINT AND SURVIVOR ANNUITY. The Advisory Committee must direct the Trustee
to distribute a married or unmarried Participant's Nonforfeitable Accrued
Benefit in the form of a qualified joint and survivor annuity, unless the
Participant makes a valid waiver election as (and within the period) described
in Section 6.05. If, as of the annuity starting date, the Participant is
married, a qualified joint and survivor annuity is an immediate annuity which is
purchasable with the Participant's Nonforfeitable Accrued Benefit and which
prides a life annuity for the Participant and a survivor annuity payable for the
remaining life of the Participant's surviving spouse equal to 50% of the amount
of the annuity payable during the life of the Participant. If, as of the annuity
starting date, the Participant is not married, a qualified joint and survivor
annuity is an immediate life annuity for the Participant which is purchasable
with the Participant's Nonforfeitable Accrued Benefit. Upon a Participant's
separation from service, the Advisory Committee, without Participant or spousal
consent, must direct the Trustee to pay the Participant's Nonforfeitable Accrued
Benefit in a lump sum, in lieu of a qualified joint and survivor annuity, in
accordance with Section 6.01, if the Participant's Nonforfeitable Accrued
Benefit is not greater than $5,000.
(B) PRERETIREMENT SURVIVOR ANNUITY. If a married Participant dies prior to his
annuity starting date, the Advisory Committee will direct the Trustee to
distribute a portion of the Participant's Nonforfeitable Accrued Benefit to the
Participant's surviving spouse in the form of a preretirement survivor annuity,
unless the Participant has a valid waiver election (as described in Section
6.06) in effect, or unless the Participant and his spouse were not married
throughout the one year period ending on the date of his death. A preretirement
survivor annuity is an annuity which is purchasable with 50% of the
Participant's Nonforfeitable Accrued Benefit (determined as of the date of the
Participant's death) and which is payable for the life of the Participant's
surviving spouse. The value of the preretirement survivor annuity is
attributable to Employer contributions and to Employee contributions in the same
proportion as the Participant's Nonforfeitable Accrued Benefit is attributable
to those contributions. The portion of the Participant's Nonforfeitable Accrued
Benefit not payable under this paragraph is payable to the Participant's
Nonforfeitable Accrued Benefit not payable under this paragraph is payable to
the Participant's Beneficiary, in accordance with the other provisions of this
Article VI. If the present value of the preretirement survivor annuity does not
exceed $5,000, the Advisory Committee, on or before the annuity starting date
(as determined under Section 6.01(C)), must direct the Trustee to make a lump
sum distribution to the Participant's surviving spouse, in lieu of a
preretirement survivor annuity.
(C) SURVIVING SPOUSE ELECTIONS. If the present value of the preretirement
survivor annuity exceeds $5,000, the Participant's surviving spouse may elect to
have the Trustee commence payment of the preretirement survivor annuity at any
time following the date of the Participant's death, but not later than the
mandatory distribution periods described in Section 6.02, and may elect either
or any combination of the two forms of payment described in Section 6.02, in
lieu of the preretirement survivor annuity. In the absence of an election by the
surviving spouse, the Advisory Committee must direct the Trustee to distribute
the preretirement survivor annuity on the first distribution date following the
close of the Plan Year in which the latest of the following events occurs: (i)
the Participant's death; (ii) the date the Advisory Committee receives
notification of or otherwise confirms the Participant's death; (iii) the date
the Participant would have attained Normal Retirement Age; or (iv) the date the
Participant would have attained age 62.
(D) SPECIAL RULES. If the Participant has in effect a valid waiver election
regarding the qualified joint and survivor annuity or the preretirement
survivor annuity, the Advisory Committee must direct the Trustee to
distribute the Participant's Nonforfeitable Accrued Benefit in accordance
with Sections 6.01, 6.02 and 6.03. The Advisory Committee will reduce the
Participant's Nonforfeitable Accrued Benefit by any security interest
(pursuant to any offset rights authorized by Section
21
10.03[B]) held by the Plan by reason of a Participant loan to determine the
value of the Participant's Nonforfeitable Accrued Benefit distributable in
the form of a qualified joint and survivor annuity or preretirement survivor
annuity, provided any post - August 18, 1985, loan satisfied the spousal
consent requirement described in Section 10.03[B] of the Plan. For purposes
of applying this Article VI, the Advisory Committee treats a former spouse as
the Participant's spouse or surviving spouse to the extent provided under a
qualified domestic relations order described in Section 6.07. The provisions
of this Section 6.04, and of Sections 6.05 and 6.06, apply separately to the
portion of the Participant's Nonforfeitable Accrued Benefit subject to the
qualified domestic relations order and to the portion of the Participant's
Nonforfeitable Accrued Benefit not subject to that order.
6.05 WAIVER ELECTION - QUALIFIED JOINT AND SURVIVOR ANNUITY.At least 30
days (but not earlier than 90 days), before the Participant's annuity starting
date, the Plan Administrator must provide the Participant a written explanation
of the terms and conditions of the qualified joint and survivor annuity, the
Participant's right to make, and the effect of, an election to waive the joint
and survivor form of benefit, the rights of the Participant's spouse regarding
the waiver election and the Participant's right to make, and the effect of, a
revocation of a waiver election. The Plan does not limit the number of times the
Participant may revoke a waiver of the qualified joint and survivor annuity or
make a new waiver during the election period. The Participant (and his spouse,
if the Participant is married), may revoke an election to receive a particular
form of benefit at any time until the annuity starting date. The Participant
(and his spouse, if applicable) may waive the 30-day election period if the
distribution of the elected form of benefit commences more than 7 days after the
Plan Administrator provides the Participant (and his spouse, if applicable) the
written explanation.
A married Participant's waiver election is not valid unless (a) the
Participant's spouse (to whom the survivor annuity is payable under the
qualified joint and survivor annuity) has consented in writing to the waiver
election, the spouse's consent acknowledges the effect of the election, and a
notary public or the Plan Administrator (or his representative) witnesses the
spouse's consent, (b) the spouse consents to the alternate form of payment
designated by the Participant or to any change in the designated form of
payment, and (c) unless the spouse is the Participant's sole primary
Beneficiary, the spouse consents to the Participant's Beneficiary designation or
to any change in the Participant's Beneficiary designation. The spouse's consent
to a waiver of the qualified joint and survivor annuity is irrevocable, unless
the Participant revokes the waiver election. The spouse may execute a blanket
consent to any form of payment designation or to any Beneficiary designation
made by the Participant, if the spouse acknowledges the right to limit that
consent to a specific designation but, in writing, waives that right. The
consent requirements of this Section 6.05 apply to a former spouse of the
Participant, to the extent required under a qualified domestic relations order
described in Section 6.07.
The Plan Administrator will accept as valid a waiver election which
does not satisfy the spousal consent requirements if the Plan Administrator
establishes the Participant does not have a spouse, the Plan Administrator is
not able to locate the Participant's spouse, the Participant is legally
separated or has been abandoned (within the meaning of State law) the
Participant has a court order to that effect, or other circumstances exist under
which the Secretary of the Treasury will excuse the consent requirement. If the
Participant's spouse is legally incompetent to give consent, the spouse's legal
guardian (even if the guardian is the Participant) may give consent.
6.06 WAIVER ELECTION - PRERETIREMENT SURVIVOR ANNUITY. The Plan
Administrator must provide a written explanation of the preretirement survivor
annuity to each married Participant, within the following period which ends
last: (1) the period beginning on the first day of the Plan Year in which the
Participant attains age 32 and ending of the last day of the Plan Year in which
the Participant attains age 34; (2) a reasonable period after an Employee
becomes a Participant; (3) a reasonable period after the joint and survivor
rules become applicable to the Participant; or (4) a reasonable period after a
fully subsidized preretirement survivor annuity no longer satisfies the
requirements for a fully subsidized benefit. A reasonable period described in
clauses (2), (3) and (4) is the period beginning one year before and ending one
year after the applicable event. If the Participant separates from Service
before attaining age 35, clauses (1), (2), (3) and (4) do not apply and the Plan
Administrator must provide the written explanation within the period beginning
one year before and ending one year after the Separation from Service. The
written explanation must describe, in a manner consistent with Treasury
regulations, the terms and conditions of the preretirement survivor annuity
comparable to the explanation of the qualified joint and survivor annuity
required under Section 6.05. The Plan does not limit the number of times the
Participant may revoke a waiver of the preretirement survivor annuity or make a
new waiver during the election period. The election period for waiver of the
preretirement survivor annuity ends on the date of the Participant's death.
A Participant's waiver election of the preretirement survivor annuity
is not valid unless (a) the Participant makes the waiver election no earlier
than the first day of the Plan Year in which he attains age 35 and (b) the
Participant's spouse (to whom the preretirement survivor annuity is payable)
satisfies the consent requirements described in Section 6.05, except the spouse
need not consent to the form of benefit payable to the designated Beneficiary.
The spouse's consent to the waiver of the preretirement survivor annuity is
irrevocable, unless the Participant revokes the waiver election. Irrespective of
the time of election requirement described in clause (a), if the Participant
separates from Service prior to the first day of
22
the Plan Year in which he attains age 35, the Plan Administrator will accept
a waiver election as respects the Participant's Accrued Benefit attributable
to his Service prior to his Separation from Service. Furthermore, if a
requirement of clause (a), the Plan Administrator will accept that election
as valid, but only until the first day of the Plan Year in which the
Participant attains age 35.
6.07 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS. Nothing contained
in this Plan prevents the Trustee, in accordance with the direction of the
Advisory Committee, from complying with the provisions of a qualified domestic
relations order (as defined in Code Section 414(p)). This Plan specifically
permits distribution to an alternate payee under a qualified domestic relations
order at any time, irrespective of whether the Participant has attained his
earliest retirement age (as defined under Code Section 414(p)) under the Plan. A
distribution to an alternate payee prior to the Participant's attainment of
earliest retirement age is available only if: (1) the order specifies
distribution at that time or permits an agreement between the Plan and the
alternate payee to authorize an earlier distribution; and (2) if the present
value of the alternate payee's benefits under the Plan exceeds $5,000, and the
order requires, the alternate payee consents to any distribution occurring prior
to the Participant's attainment of earliest retirement age. Nothing in this
Section 6.07 permits a Participant a right to receive distribution at a time
otherwise not permitted under the Plan nor does it permit the alternate payee to
receive a form of payment not permitted under the Plan.
The Plan Administrator must establish reasonable procedures to
determine the qualified status of a domestic relations order. Upon receiving a
domestic relations order, the Plan Administrator promptly will notify the
Participant and any alternate payee named in the order, in writing, of the
receipt of the order and the Plan's procedures for determining the qualified
status of the order. Within a reasonable period of time after receiving the
domestic relations order, the Plan Administrator must determine the qualified
status of the order and must notify the Participant and each alternate payee, in
writing, of its determination. The Plan Administrator must provide notice under
this paragraph by mailing to the individual's address specified in the domestic
relations order, or in a manner consistent with Department of Labor regulations.
If any portion of the Participant's Nonforfeitable Accrued Benefit is
payable during the period the Plan Administrator is making its determination of
the qualified status of the domestic relations order, the Advisory Committee
must provide for a separate accounting of the amounts payable. If the Plan
Administrator determines the order is qualified domestic relations order within
18 months of the date amounts first are payable following receipt of the order,
the Advisory Committee will direct the Trustee to distribute the payable amounts
in accordance with the order. If the Plan Administrator does not make its
determination of the qualified status of the order within the 18 month
determination period, the Advisory Committee will direct the Trustee to
distribute the payable amounts in the manner the Plan would distribute if the
order did not exist and will apply the order prospectively if the Plan
Administrator later determines the order is qualified domestic relations order.
The Trustee will make any payments or distributions required under this
Section 6.07 by separate benefit checks or other separate distribution to the
alternate payee(s).
23
ARTICLE VII
EMPLOYER ADMINISTRATIVE PROVISIONS
7.01 INFORMATION TO COMMITTEE. The Employer must supply current
information to the Advisory Committee as to the name, date of birth, date of
employment, annual compensation, leaves of absence, Years of Service and date of
termination of employment of each Employee who is, or who will be eligible to
become, a Participant under the Plan, together with any other information which
the Advisory Committee considers necessary. The Employer's records as to the
current information the Employer furnishes to the Advisory Committee are
conclusive as to all persons.
7.02 NO LIABILITY. The Employer assumes no obligation or responsibility
to any of its Employees, Participants or Beneficiaries for any act of, or
failure to act, on the part of its Advisory Committee (unless the Employer is
the Advisory Committee), the Trustee or the Plan Administrator (unless the
Employer is the Plan Administrator).
7.03 INDEMNITY OF COMMITTEE. The Employer indemnifies and saves
harmless the members of the Advisory Committee, and each of them, from and
against any and all loss resulting from liability to which the Advisory
Committee, or the members of the Advisory Committee, may be subjected by reason
of any act or conduct (except willful misconduct or gross negligence) in their
official capacities in the administration of this Trust or Plan or both,
including all expenses reasonably incurred in their defense, in case the
Employer fails to provide such defense. The indemnification provisions of this
Section 7.03 do not relieve any Advisory Committee member from any liability he
may have under ERISA for breach of a fiduciary duty. Furthermore, the Advisory
Committee members and the Employer may execute a letter agreement further
delineating the indemnification agreement of this Section 7.03, provided the
letter agreement must be consistent with and must not violate ERISA. The
indemnification provisions of this Section 7.03 extend to the Trustee solely to
the extent provided by a letter agreement executed by the Trustee and the
Employer, except that such indemnification provisions shall automatically apply
to a trustee who is also an Employee.
7.04 EMPLOYER DIRECTION OF INVESTMENT. The Employer and Advisory
Committee has the right to direct the Trustee with respect to the investment and
re-investment of assets comprising the Trust Fund. Any such direction must be in
writing. To the extent the Employer directs the Trustee, the Employer
indemnifies and saves harmless the Trustee from and against any and all loss
resulting from liability to which the Trustee may be subjected by reason of any
act or conduct (except the Trustee's misconduct or negligence) in its official
capacity in the administration and investment of the Trust Fund, including all
expenses reasonably incurred in its defense, in case the Employer fails to
provide such defense. Notwithstanding the foregoing, the indemnification
provisions of this Section 7.04 do not indemnify or relieve the Trustee from any
liability it may have under ERISA for breach of a fiduciary duty.
7.05 AMENDMENT TO VESTING SCHEDULE. Though the Employer reserves the
right to amend the vesting schedule at any time, the Advisory Committee will not
apply the amended vesting schedule to reduce the Nonforfeitable percentage of
any Participant's Accrued Benefit derived from Employer contributions
(determined as of the later of the date the Employer adopts the amendment, or
the date the amendment becomes effective) to a percentage less than the
Nonforfeitable percentage computed under the Plan without regard to the
amendment.
If the Employer makes a permissible amendment to the vesting schedule,
each Participant having at least 3 Years of Service with the Employer may elect
to have the percentage of his Nonforfeitable Accrued Benefit computed under the
Plan without regard to the amendment. The Participant must file his election
with the Plan Administrator within 60 days of the latest of (a) the Employer's
adoption of the amendment; (b) the effective date of the amendment; or (c) his
receipt of a copy of the amendment. The Plan Administrator, as soon as
practicable, must forward a true copy of any amendment to the vesting schedule
to each affected Participant, together with an explanation of the effect of this
amendment, the appropriate form upon which the Participant may make an election
to remain under the vesting schedule provided under the Plan prior to the
amendment and notice of the time within which the Participant must make an
election to remain under the prior vesting schedule. For purposes of this
Section 7.05, an amendment to the vesting schedule includes any Plan amendment
which directly or indirectly affects the computation of the Nonforfeitable
percentage of an Employee's rights to his Employer derived Accrued Benefit.
24
ARTICLE VIII
PARTICIPANT ADMINISTRATIVE PROVISIONS
8.01 BENEFICIARY DESIGNATION. Any Participant may from time to time
designate, in writing, any person or persons, contingently or successively, to
whom the Trustee shall pay his Accrued Benefit (including any life insurance
proceeds payable to the Participant's Account) on event of his death. The
Advisory Committee will prescribe the form for the written designation of
Beneficiary and, upon the Participant's filing the form with the Advisory
Committee, the form effectively revokes all designations filed prior to that
date by the same Participant.
A married Participant's Beneficiary designation is not valid unless the
Participant's spouse consents, in writing, to the Beneficiary designation. The
spouse's consent must acknowledge the effect of that consent and a notary public
or the Plan Administrator (or his representative) must witness that consent. The
spousal consent requirements of this paragraph do not apply if: (1) the
Participant and his spouse are not married throughout the one year period ending
on the date of the Participant's death; (2) the Participant's spouse is the
Participant's sole primary beneficiary; (3) the Plan Administrator is not able
to locate the Participant's spouse; (4) the Participant is legally separated or
has been abandoned (within the meaning of State law) and the Participant has a
court order to that effect; or (5) other circumstances exist under which the
Secretary of the Treasury will excuse the consent requirement. If the
Participant's spouse is legally incompetent to give consent, the spouse's legal
guardian (even if the guardian is the Participant) may give consent.
8.02 NO BENEFICIARY DESIGNATION. If a Participant fails to name a
Beneficiary in accordance with Section 8.01, or if the Beneficiary named by a
Participant predeceases him or dies before complete distribution of the
Participant's Accrued Benefit, then the Trustee will pay the Participant's
Accrued Benefit in accordance with Section 6.02 in the following order of
priority to:
(a) The Participant's surviving spouse;
(b) The Participant's surviving children, including adopted children,
in equal shares;
(c) The Participant's surviving parents, in equal shares; or
(d) The legal representative of the estate of the last to die of the
Participant and his Beneficiary.
The Advisory Committee will direct the Trustee as to the method and to
whom the Trustee will make payment under this Section 8.02.
8.03 PERSONAL DATA TO COMMITTEE. Each Participant and each Beneficiary
of a deceased Participant must furnish to the Advisory Committee such evidence,
data or information as the Advisory Committee considers necessary or desirable
for the purpose of administering the Plan. The provisions of this Plan are
effective for the benefit of each Participant upon the condition precedent that
each Participant will furnish promptly full, true and complete evidence, data
and information when requested by the Advisory Committee, provided the Advisory
Committee advises each Participant of the effect of his failure to comply with
its request.
8.04 ADDRESS FOR NOTIFICATION. Each Participant and each Beneficiary of
a deceased Participant must file with the Advisory Committee from time to time,
in writing, his post office address and any change of post office address. Any
communication, statement or notice addressed to a Participant, or Beneficiary,
at his last post office address filed with the Advisory Committee, or as shown
on the records of the Employer, binds the Participant, or Beneficiary, for all
purpose of this Plan.
8.05 ASSIGNMENT OR ALIENATION. Subject to Code Section 414(p) relating
to qualified domestic relations orders, neither a Participant nor a Beneficiary
may anticipate, assign or alienate (either at law or in equity) any benefit
provided under the Plan, and the Trustee will not recognize any such
anticipation, assignment or alienation. Furthermore, a benefit under the Plan is
not subject to attachment, garnishment, levy, execution or other legal or
equitable process.
8.06 NOTICE OF CHANGE IN TERMS. The Plan Administrator, within the time
prescribed by ERISA and the applicable regulations, must furnish all
Participants and Beneficiaries a summary description of any material amendment
to the Plan or notice of discontinuance of the Plan and all other information
required by ERISA to be furnished without charge.
8.07 LITIGATION AGAINST THE TRUST. A court of competent jurisdiction
may authorize any appropriate equitable relief to redress violations of ERISA or
to enforce any provisions of ERISA or the terms of the Plan. A fiduciary may
receive reimbursement of expenses properly and actually incurred in the
performance of his duties with the Plan.
8.08 INFORMATION AVAILABLE. Any Participant in the Plan or any
Beneficiary may examine copies of the summary Plan description, latest annual
report, any bargaining agreement, this Plan and Trust, contract or any other
instrument under which the Plan was established or is operated. The Plan
Administrator will maintain all of the items listed in this Section 8.08 in his
office, or in such other place or places as he may designate from time to time
in order to comply
25
with the regulations issued under ERISA, for examination during reasonable
business hours. Upon the written request of a Participant or Beneficiary the
Plan Administrator will furnish him with a copy of any item listed in this
Section 8.08. The Plan Administrator may make a reasonable charge to the
requesting person for the copy so furnished.
8.09 APPEAL PROCEDURE FOR DENIAL OF BENEFITS. The Plan Administrator
will provide adequate notice in writing to any Participant or to any Beneficiary
("Claimant") whose claim for benefits under the Plan the Advisory Committee has
denied. The Plan Administrator's notice to the Claimant must set forth:
(a) The specific reason for the denial;
(b) Specific references to pertinent Plan provisions on which the
Advisory Committee based its denial;
(c) A description of any additional material and information needed for
the Claimant to perfect his claim and an explanation of why the
material or information is needed; and
(d) That any appeal the Claimant wishes to make of the adverse
determination must be in writing to the Advisory Committee within 75
days after receipt of the Plan Administrator's notice of denial of
benefits. The Plan Administrator's notice must further advise the
Claimant that his failure to appeal the action to the Advisory
Committee in writing within the 75 day period will render the Advisory
Committee's determination final, binding and conclusive.
If the Claimant should appeal to the Advisory Committee, he, or his
duly authorized representative, may submit, in writing, whatever issues and
comments he, or his duly authorized representative, feels are pertinent. The
Claimant, or his duly authorized representative, may review pertinent Plan
documents. The Advisory Committee will re-examine all facts related to the
appeal and make a final determination as to whether the denial of benefits is
justified under the circumstances. The Advisory Committee must advise the
Claimant of its decision within 60 days of the Claimant's written request for
review, unless special circumstances (such as a hearing) would make the
rendering of a decision within the 60 day limit unfeasible, but in no event may
the Advisory Committee render a decision respecting a denial for a claim for
benefits later than 120 days after its receipt of a request for review.
The Plan Administrator's notice of denial of benefits must identify the
name of each member of the Advisory Committee and the name and address of the
Advisory Committee member to whom the Claimant may forward his appeal.
8.10 PARTICIPANT DIRECTION OF INVESTMENT. A Participant has the right
to direct the investment or re-investment of the assets comprising the
Participant's individual Account from among the investment choices designated by
the Advisory Committee from time to time. As of October 1, 1992, the investment
choices include the Employer Stock Fund. To effect Participant direction of
investment, a Participant will follow such methods as the Advisory Committee
shall from time-to-time prescribe, which may include telephone voice-response
systems with subsequent written confirmation to the Participant. The Advisory
Committee will separately account for participants' investments, and will direct
the Trustee as to the overall investment of the Trust Fund pursuant to Section
7.04.
Each Participant's investment election shall be in multiples of five
percent (5%) or in any other multiple as prescribed by the Advisory Committee.
Each Participant will be permitted to change his or her election of the
percentage to be allocated to each investment choice out of future contributions
and/or prior contributions at such times as the Advisory Committee prescribes.
The requested change in investments will be processed and become effective on
the first business day after it is received by the Plan's recordkeeper, or as
soon as administratively practicable thereafter.
Each Participant shall be solely responsible for the selection of his
investments as allowed under the Plan. The fact that an investment is available
to a Participant for investment under the Plan shall not be construed as a
recommendation to invest in that particular investment.
A Participant may not direct that more than 25% of future contributions
be invested in the Employer Stock Fund. A Participant may not change the
percentage allocation of his existing Account balances to be invested in the
Employer Stock Fund to exceed 25% (calculating the percentage by using existing
Account balances as of the most recent valuation date preceding the
Participant's requested investment direction). If, due to market gains or losses
or for any other reason, the Employer Stock Fund comprise 25% or more of the
value of the Participant's Account balances (calculating the percentage by using
existing Account balances as of the most recent valuation date preceding the
Participant's requested investment direction), the Participant will not be
required to move assets out of Employer Securities and into other funds in order
to keep the percentage invested the Employer Stock Fund below 25%, and such
Participant may continue to direct that up to 25% of future contributions be
invested in the Employer Stock Fund.
Because the Employer Stock Fund is a pooled account consisting of
shares of Employer Stock, a Participant's investment in the Employer Stock Fund
is an interest in the Employer Stock Fund. No shares of Employer Stock are
actually allocated to a Participant's Account on account of investment in the
Employer Stock Fund.
26
Participants who direct investment of their Accounts into the Employer
Stock Fund have voting and similar rights with respect to the underlying
Employer Stock as described in Sections 10.17[A] and 10.17[B]. When exercising
those rights, a Participant who is allocated voting or similar rights acts as a
"named fiduciary" within the meaning of ERISA Section 403(a)(1) with respect to
the shares of Employer Stock effectively allocated to the Participant.
27
ARTICLE IX
ADVISORY COMMITTEE-DUTIES WITH RESPECT TO PARTICIPANTS'
ACCOUNTS
9.01 MEMBERS' COMPENSATION, EXPENSES. The employer must appoint an
Advisory Committee to administer the Plan, the members of which may or may not
be Participants in the Plan, or which may be the Plan Administrator acting
alone. The members of the Advisory Committee shall serve without compensation
for services as such, but the Employer will pay all expenses of the Advisory
Committee, including the expense for any bond required under ERISA.
9.02 TERM. Each member of the Advisory Committee serves until the
appointment of his successor.
9.03 POWERS. In case of a vacancy in the membership of the Advisory
Committee, the remaining members of the Advisory Committee may exercise any and
all of the powers, authority, duties and discretion conferred upon the Advisory
Committee pending the filling of the vacancy.
9.04 GENERAL. The Advisory Committee has the following powers and
duties:
(a) To select a Secretary, who need not be a member of the Advisory
Committee;
(b) To determine the rights of eligibility of an Employee to
participate in the Plan, the value of the Participant's Accrued Benefit
and the Nonforfeitable percentage of each Participant's Accrued
Benefit;
(c) To adopt rules of procedure and regulations necessary for the
proper and efficient administration of the Plan provided the rules are
not inconsistent with the terms of this Agreement;
(d) To enforce the terms of the Plan and the rules and regulations it
adopts;
(e) To direct the Trustee, in writing, as respects the investment and
distribution of the Trust;
(f) To review and render decisions respecting a claim for (or denial of
a claim for) a benefit under the Plan and to exercise discretionary
authority to determine eligibility for benefits or to construe the
terms of the Plan;
(g) To furnish the Employer with information which the Employer may
require for tax or other purposes;
(h) To engage the service of agents whom it may deem advisable to
assist it with the performance of its duties;
(i) To engage the services of an Investment Manager or Managers (as
defined in ERISA Section 3(38)), each of whom will have full power and
authority to manage, acquire or dispose (or direct the Trustee, in
writing, with respect to acquisition or disposition) of any Plan asset
under its control;
(j) To establish a nondiscriminatory policy which the Trustee must
observe in making loans, if any, to Participants; and
(k) To establish and maintain a funding standard account and to make
credits and charges to the account to the extent required by and in
accordance with the provisions of the Code.
The Advisory Committee must exercise all of its powers, duties and
discretion under the Plan in a uniform and nondiscriminatory manner.
LOAN POLICY. A loan policy described in paragraph (j) must be a written
document and must include: (1) the identity of the person or positions
authorized to administer the participant loan program; (2) a procedure for
applying for the loan; (3) the criteria for approving or denying a loan; (4) the
limitations, if any, on the types and amounts of loans available; (5) the
procedure for determining a reasonable rate of interest; (6) the types of
collateral which may secure the loan; and (7) the events constituting default
and the steps the Plan will take to preserve plan assets in the event of
default.
9.05 FUNDING POLICY. The Advisory Committee will review, not less often
than annually, all pertinent Employee information and Plan data in order to
establish the funding policy of the Plan and to determine the appropriate
methods of carrying out the Plan's objectives. The Advisory Committee must
communicate periodically, as it deems appropriate, to the Trustee and to any
Plan Investment Manager the Plan's short-term and long-term financial needs so
investment policy can be coordinated with Plan financial requirements.
9.06 MANNER OF ACTION. The decision of a majority of members appointed
and qualified controls.
9.07 AUTHORIZED REPRESENTATIVE. The Advisory Committee may authorize
any one of its members, or its Secretary, to sign on its behalf any notices,
directions, applications, certificates, consents, approvals, waivers, letters or
other documents. The Advisory Committee must evidence this authority by an
instrument signed by all members and filed with the Trustee.
9.08 INTERESTED MEMBER. No member of the Advisory Committee may decide
or determine any matter concerning the distribution, nature or method of
settlement of his own benefits under the Plan, except in exercising an
28
election available to that member in his capacity as a Participant, unless
the Plan Administrator is acting alone in the capacity of the Advisory
Committee.
9.09 INDIVIDUAL ACCOUNTS. The Advisory Committee will maintain a
separate Account, or multiple Accounts, in the name of each Participant to
reflect the Participant's Accrued Benefit under the Plan. If a Participant
re-enters the Plan subsequent to his having a Forfeiture Break in Service (as
defined in Section 5.08), the Advisory Committee must maintain a separate
Account for the Participant's pre-Forfeiture Break in Service Accrued Benefit
and a separate Account for his post-Forfeiture Break in Service Accrued Benefit
unless the Participant's entire Accrued Benefit under the Plan is 100%
Nonforfeitable.
The Advisory Committee will make its allocations to the Accounts of the
Participants in accordance with the provisions of Section 9.11. The Advisory
Committee may direct the Trustee to maintain a temporary segregated investment
Account in the name of a Participant to prevent a distortion of income, gain or
loss allocations under Section 9.11. The Advisory Committee must maintain
records of its activities.
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. The value of each
Participant's Accrued Benefit consists of that proportion of the net worth (at
fair market value) of the Employer's Trust Fund which the net credit balance in
his Account (exclusive of the cash value of incidental benefit insurance
contracts) bears to the total net credit balance in the Accounts (exclusive of
the cash value of incidental benefit insurance contracts) of all Participants
plus the cash surrender value of any incidental benefit insurance contracts held
by the Trustee on the Participant's life.
For purposes of a distribution under the Plan, the value of a
Participant's Accrued Benefit is its value as of the valuation date that
coincides with the date on which the assets allocated to the Participant's
Account are liquidated by the Plan's recordkeeper (or if there is no valuation
date on the liquidation date, the valuation date immediately preceding the
liquidation date).
9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. A
"valuation date" under this Plan is each Accounting Date and each interim
valuation date determined under Section 10.14. As of each valuation date the
Advisory Committee must adjust Accounts to reflect net income, gain or loss
since the last valuation date. The valuation period is the period beginning the
day after the last valuation date and ending on the current valuation date.
TRUST FUND ACCOUNTS. The allocation provisions of this paragraph apply
to all Participant Accounts other than segregated investment Accounts. The
Advisory Committee first will adjust the Participant Accounts, as those Accounts
stood at the beginning of the current valuation period, by reducing the Accounts
for any forfeitures arising under Section 5.09 or under Section 9.14, for
amounts charged during the valuation period to the Accounts in accordance with
Section 9.13 (relating to distributions), for the cash value of incidental
benefit insurance contracts and for the amount of any Account which the Trustee
has fully distributed since the immediately preceding valuation date. The
Advisory Committee then, subject to the restoration allocation requirements of
Section 5.04 or of Section 9.14, will allocate the net income, gain or loss pro
rata to the adjusted Participant Accounts. The allocable net income, gain or
loss is the net income (or net loss), including the increase or decrease in the
fair market value of assets, since the last valuation date.
To the extent there is Participant direction of investment under
Section 8.10, the net income, gain or loss will be allocated to Participant
Accounts according to the amount each Participant has invested in each
investment.
The net income, gain or loss on salary deferral contributions and
matching contributions will be credited according to a "weighted average
allocation" method, which will treat a portion of the applicable contributions
actually paid to the Trust during the valuation period as if includible in the
Participant's Account as of the beginning of the valuation period. The method of
fixing such portion will be determined in a nondiscriminatory and uniform manner
by the Advisory Committee.
SEGREGATED INVESTMENT ACCOUNTS. A segregated investment Account
receives all income it earns and bears all expense or loss it incurs. As of the
valuation date, the Advisory Committee must reduce a segregated Account for any
forfeiture arising under Section 5.09 after the Advisory Committee has made all
other allocations, changes or adjustments to the Account for the Plan Year.
ADDITIONAL RULES. An Excess Amount or suspense account described in
Part 2 of Article III does not share in the allocation of net income, gain or
loss described in this Section 9.11. This Section 9.11 applies solely to the
allocation of net income, gain or loss of the Trust. The Advisory Committee will
allocate the Employer contributions and Participant forfeitures, if any in
accordance with Article III.
9.12 INDIVIDUAL STATEMENT. As soon as practicable after the Accounting
Date of each Plan Year but within the time prescribed by ERISA and the
regulations under ERISA, the Plan Administrator will deliver to each Participant
a statement reflecting the condition of his Accrued Benefit in the Trust as of
that date and such other
29
information ERISA requires be furnished the Participant or Beneficiary. No
Participant, except a member of the Advisory Committee, has the right to
inspect the records reflecting the Account of any other Participant.
9.13 ACCOUNT CHARGED. The Advisory Committee will charge all
distributions made to a Participant or to his Beneficiary from his Account
against the Account of the Participant when made.
9.14 UNCLAIMED ACCOUNT PROCEDURE. The Plan does not require either the
Trustee or the Advisory Committee to search for, or ascertain the whereabouts
of, any Participant or Beneficiary. At the time the Participant's or
Beneficiary's benefit becomes distributable under Article VI, the Advisory
Committee, by certified or registered mail addressed to his last known address
of record with the Advisory Committee or the Employer, must notify any
Participant, or Beneficiary, that he is entitled to a distribution under this
Plan. The notice must quote the provisions of this Section 9.14 and otherwise
must comply with the notice requirements of Article VI. If the Participant, or
Beneficiary, fails to claim his distributive share or make his whereabouts known
in writing to the Advisory Committee within 6 months from the date of mailing of
the notice, the Advisory Committee will treat the Participant's or Beneficiary's
unclaimed payable Accrued Benefit as forfeited and will reallocate the unclaimed
payable Accrued Benefit in accordance with Section 3.05. Where the benefit is
distributable to the Participant, the forfeiture under this paragraph occurs as
of the last day of the notice period, if the Participant's Nonforfeitable
Accrued Benefit does not exceed $5,000, or as of the first day the benefit is
distributable without the Participant's consent, if the present value of the
Participant's Nonforfeitable Accrued Benefit exceeds $5,000. Where the benefit
is distributable to a Beneficiary, the forfeiture occurs on the date the notice
period ends except, if the Beneficiary is the Participant's spouse and the
Nonforfeitable Accrued Benefit payable to the spouse exceeds $5,000, the
forfeiture occurs as of the first day the benefit is distributable without the
spouse's consent. Pending forfeiture, the Advisory Committee, following the
expiration of the notice period, may direct the Trustee to segregate the
Nonforfeitable Accrued Benefit in a segregated Account and to invest that
segregated Account in Federally insured interest bearing savings accounts or
time deposits (or in a combination of both), or in other fixed income
investments.
If a Participant or Beneficiary who has incurred a forfeiture of his
Accrued Benefit under the provisions of the first paragraph of this Section 9.14
makes a claim, at any time, for his forfeited Accrued Benefit, the Advisory
Committee must restore the Participant's or Beneficiary's forfeited Accrued
Benefit to the same dollar amount as the dollar amount of the Accrued Benefit
forfeited, unadjusted for any gains or losses occurring subsequent to the date
of the forfeiture. The Advisory Committee will make the restoration during the
Plan Year in which the Participant or Beneficiary makes the claim first from the
amount, if any, of Participant forfeitures the Advisory Committee otherwise
would allocate for the Plan Year and then from the amount, or additional amount,
the Employer contributes to enable the Advisory Committee to make the required
restoration. The Advisory Committee will direct the Trustee to distribute the
Participant's or Beneficiary's restored Accrued Benefit to him not later than 60
days after the close of the Plan Year in which the Advisory Committee restores
the forfeited Accrued Benefit. The forfeiture provisions of this Section 9.14
shall apply solely to the Participant's or to the Beneficiary's Accrued Benefit
derived from Employer contributions.
30
ARTICLE X
TRUSTEE, POWERS AND DUTIES
10.01 ACCEPTANCE. The Trustee accepts the Trust created under the Plan
and agrees to perform the obligations imposed. The Trustee must provide bond for
the faithful performance of its duties under the Trust to the extent required by
ERISA.
10.02 RECEIPT OF CONTRIBUTIONS. The Trustee is accountable to the
Employer for the funds contributed to it by the Employer, but does not have any
duty to see that the contributions received comply with the provisions of the
Plan. The Trustee is not obliged to collect any contributions from the Employer,
nor is obliged to see that funds deposited with it are deposited according to
the provisions of the Plan.
10.03 INVESTMENT POWERS.
[A] TRUSTEE POWERS. The Trustee has full discretion and authority with regard to
the investment of the Trust Fund, except with respect to a Plan asset under the
control or direction of a properly appointed Investment Manager or with respect
to a Plan asset subject to Employer, Participant or Advisory Committee direction
of investment (including direction of investment by the Employer as provided in
Section 7.04 and by a Participant as provided in Section 8.10). The Trustee must
coordinate its investment policy with Plan financial needs as communicated to it
by the Advisory Committee. The Trustee is authorized and empowered, but not by
way of limitation, with the following powers, rights and duties:
(a) To invest in Employer Stock (that is, to hold and acquire Employer
Stock) comprising up to 100% of the value of the Trust Fund and to
invest any part or all of the Trust Fund in any common or preferred
stocks, open-end or closed-end mutual funds, put and call options
traded on a national exchange, United States retirement plan bonds,
corporate bonds, debentures, convertible debentures, commercial paper,
U.S. Treasury bills, U.S. Treasury notes and other direct or indirect
obligations of the United States Government or its agencies, improved
or unimproved real estate situated in the United States, limited
partnerships, insurance contracts of any type, mortgages, notes or
other property of any kind, real or personal, and to buy or sell
options on common stock on a nationally recognized exchange with or
without holding the underlying common stock, and to make any other
investments the Trustee deems appropriate, as a prudent man would do
under like circumstances with due regard for the purposes of this Plan.
Any investment made or retained by the Trustee in good faith is proper
but must be of a kind (with the exception of Employer Securities)
constituting a diversification considered by law suitable for trust
investments;
(b) To retain in cash so much of the Trust Fund as it may deem
advisable to satisfy liquidity needs of the Plan and to deposit any
cash held in the Trust Fund in a bank account at reasonable interest.
If the Trustee is a bank or similar financial institution supervised by
the United States or by a State, this paragraph (b) includes specific
authority to invest in any type of deposit of the Trustee (or of a bank
related to the Trustee within the meaning of Code Section 414(b)) at a
reasonable rate of interest or in a common trust fund (the provisions
of which govern the investment of such assets and which the Plan
incorporates by this reference) as described in Code Section 584 which
the Trustee (or its affiliate, as defined in Code Section 1504)
maintains exclusively for the collective investment of money
contributed by the bank (or the affiliate) in its capacity as trustee
and which conforms to the rules of the Comptroller of the Currency;
(c) To manage, sell, contract to sell, grant options to purchase,
convey, exchange, transfer, abandon, improve, repair, insure, lease for
any term even though commencing in the future or extending beyond the
term of the Trust, and otherwise deal with all property, real or
personal, in such manner, for such considerations and on such terms and
conditions as the Trustee decides;
(d) To credit and distribute the Trust as directed by the Advisory
Committee. The Trustee is not obliged to inquire as to whether any
payee or distributee is entitled to any payment or whether the
distribution is proper or within the terms of the Plan, or as to the
manner of making any payment or distribution. The Trustee accountable
only to the Advisory Committee for any payment or distributions made by
it in good faith on the order or direction of the Advisory Committee;
(e) To borrow money, to assume indebtedness, extend mortgages and
encumber by mortgage or pledge;
(f) To compromise, contest, arbitrate or abandon claims and demands, in
its discretion;
(g) To have with respect to the Trust all of the rights of an
individual owner, including the power to give proxies, to participate
in any voting trusts, mergers, consolidations or liquidations, and to
exercise or sell stock subscriptions or conversion rights, subject to
the requirements of Section 10.17;
(h) To lease for oil, gas and other mineral purposes and to create
mineral severances by grant or reservation; to pool or unitize
interests in oil, gas and other minerals; and to enter into operating
agreements and to execute division and transfer orders;
31
(i) To hold any securities or other property in the name of the Trustee
or its nominee, with depositories or agent depositories or in another
form as it may deem best, with or without disclosing the trust
relationship;
(j) To perform any and all other acts in its judgment necessary or
appropriate for the proper and advantageous management, investment and
distribution of the Trust;
(k) To retain any funds or property subject to any dispute without
liability for the payment of interest, and to decline to make payment
or delivery of the funds or property until final adjudication is made
by a court of competent jurisdiction;
(l) To file all tax returns required of the Trustee;
(m) To furnish to the Employer, the Plan Administrator and the Advisory
Committee a quarterly statement of account, within 30 days of the close
of each quarter Plan Year, showing the condition of the Trust Fund and
all investments, receipts, disbursements and other transactions
effected by the Trustee during the Plan Year covered by the statement
and also stating the assets of the Trust held at the end of the Plan
Year, which accounts are conclusive on all persons, including the
Employer, the Plan Administrator and the Advisory Committee, except as
to any act or transaction concerning which the Employer, the Plan
Administrator or the Advisory Committee files with the Trustee written
exceptions or objections within 90 days after the receipt of the
accounts or for which ERISA authorizes a longer period within which to
object.
(n) To begin, maintain or defend any litigation necessary in connection
with the administration of the Plan, except that the Trustee is not
obliged or required to do so unless indemnified to its satisfaction.
[B] PARTICIPANT LOANS. This Section 10.03[B] specifically authorizes the Trustee
to make loans on a nondiscriminatory basis to a Participant in accordance with
the loan policy established by the Advisory Committee, provided: (1) the loan
policy satisfies the requirements of Section 9.04; (2) loans are available to
all Participants on a reasonably equivalent basis and are not available in a
greater amount for Highly Compensated Employees than for other Employees; (3)
any loan is adequately secured and bears a reasonable rate of interest; (4) the
loan provides for repayment within a specified time; (5) the default provisions
of the note prohibit offset of the Participant's Nonforfeitable Accrued Benefit
prior to the time the Trustee otherwise would distribute the Participant's
Nonforfeitable Accrued Benefit; (6) the amount of the loan does not exceed (at
the time the Plan extends the loan) the present value of the Participant's
Nonforfeitable Accrued Benefit; and (7) the loan otherwise conforms to the
exemption provided by Code Section 4975(d)(1). If the joint and survivor
requirements of Article VI apply to the Participant, the Participant may not
pledge any portion of his Accrued Benefit as security for a loan made after
August 18, 1985, unless, within the 90 day period ending on the date the pledge
becomes effective, the Participant's spouse, if any, consents (in a manner
described in Section 6.05 other than the requirement relating to the consent of
a subsequent spouse) to the security or, by separate consent, to an increase in
the amount of security.
10.04 RECORDS AND STATEMENTS. The records of the Trustee pertaining to
the Plan must be open to the inspection of the Plan Administrator, Advisory
Committee and the Employer at all reasonable times and may be audited from time
to time by any person or persons as the Employer, Plan Administrator or Advisory
Committee may specify in writing. The Trustee must furnish the Plan
Administrator or Advisory Committee with whatever information relating to the
Trust Fund the Plan Administrator or Advisory Committee considers necessary.
10.05 FEES AND EXPENSES FROM FUND. The Trustee will receive reasonable
annual compensation as may be agreed upon from time to time between the Employer
and the Trustee. The Trustee will pay all fees and expenses reasonably incurred
for administration of the Plan from the Trust Fund unless the Employer pays the
fees and expenses. The Advisory Committee will not treat any fee or expense
paid, directly or indirectly, by the Employer as an Employer contribution,
provided the fee or expense relates to the ordinary and necessary administration
of the Fund. No person who is receiving full pay from the Employer shall receive
compensation for services as Trustee.
10.06 PARTIES TO LITIGATION. Except as otherwise provided by ERISA,
only the Employer, the Plan Administrator, the Advisory Committee, and the
Trustee are necessary parties to any court proceeding involving the Trustee or
the Trust Fund. No Participant, or Beneficiary, is entitled to any notice of
process unless required by ERISA. Any final judgment entered in any proceeding
will be conclusive upon the Employer, the Plan Administrator, the Advisory
Committee, the Trustee, Participants and Beneficiaries.
10.07 PROFESSIONAL AGENTS. The Trustee may employ and pay from the
Trust Fund reasonable compensation to agents, attorneys, accountants and other
persons to advise the Trustee as in its opinion may be necessary. The Trustee
may delegate to any agent, attorney, accountant or other person selected by it
any non-Trustee power or duty vested in it by the Plan, and the Trustee may act
or refrain from acting on the advice or opinion of any agent, attorney,
accountant or other person so selected.
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10.08 DISTRIBUTION OF CASH OR PROPERTY. The Trustee may make
distribution under the Plan in cash or property, or partly in each, at its fair
market value as determined by the Trustee. For purposes of a distribution to a
Participant or to a Participant's designated Beneficiary or surviving spouse,
"property" includes a Nontransferable Annuity contract, provided the contract
satisfies the requirements of this Plan.
10.09 DISTRIBUTION DIRECTIONS. If no one claims a payment or
distribution made from the Trust, the Trustee shall promptly notify the Advisory
Committee and then dispose of the payment in accordance with the subsequent
direction of the Advisory Committee.
10.10 THIRD PARTY. No person dealing with the Trustee is obligated to
see to the proper application of any money paid or property delivered to the
Trustee, or to inquire whether the Trustee has acted pursuant to any of the
terms of the Plan. Each person dealing with the Trustee may act upon any notice,
request or representation in writing by the Trustee, or by the Trustee's duly
authorized agent, and is not liable to any person whomsoever in so acting. The
certificate of the Trustee that it is acting in accordance with the Plan will be
conclusive in favor of any person relying on the certificate.
If more than two persons act as Trustee, the decision of a majority of
such persons controls with respect to any decision regarding the administration
or investment of the Trust Fund.
10.11 RESIGNATION. The Trustee may resign at any time as Trustee of the
Plan by giving 30 days' written notice in advance to the Employer and to the
Advisory Committee. If the Employer fails to appoint a successor Trustee within
60 days of its receipt of the Trustee's written notice of resignation, the
Trustee will treat the Employer as having appointed itself as Trustee and as
having filed its acceptance of appointment with the former Trustee.
10.12 REMOVAL. The Employer, by giving 30 days' written notice in
advance to the Trustee, may remove any Trustee. In the event of the resignation
or removal of a Trustee, the Employer must appoint a successor Trustee if it
intends to continue the Plan. If two or more persons hold the position of
Trustee, in the event of the removal of one such person, during any period the
selection of a replacement is pending, or during any period such person is
unable to serve for any reason, the remaining person or persons will act as the
Trustee.
10.13 INTERIM DUTIES AND SUCCESSOR TRUSTEE. Each successor Trustee
succeeds to the title to the Trust vested in his predecessor by accepting in
writing his appointment as successor Trustee and filing the acceptance with the
former Trustee and the Advisory Committee without the signing or filing of any
further statement. The resigning or removed Trustee, upon receipt of acceptance
in writing of the Trust by the successor Trustee, must execute all documents and
do all acts necessary to vest the title of record in any successor Trustee. Each
successor Trustee has and enjoys all of the powers, both discretionary and
ministerial, conferred under this Agreement upon his predecessor. A successor
Trustee is not personally liable for any act or failure to act of any
predecessor Trustee, except as required under ERISA. With the approval of the
Employer and the Advisory Committee, a successor Trustee, with respect to the
Plan, may accept the account rendered and the property delivered to it by a
predecessor Trustee without incurring any liability or responsibility for so
doing.
10.14 VALUATION OF TRUST. The Trustee must value the Trust Fund as of
each Accounting Date and each March 31, June 30 and September 30 to determine
the fair market value of the assets in the Trust Fund. The Trustee must also
value the Trust Fund on such other dates as directed in writing by the Advisory
Committee. Effective October 1, 1998, assets of the Trust Fund that (1) are
first contributed to the Trust Fund after September 30, 1998, and (2) are
allocated to Participants' Accounts after September 30, 1998, shall also be
valued as of each business day; and the other assets of the Trust Fund (or any
portion of them) shall also be valued as of each business day, effective,
however, only at a date or dates as determined in writing by the Advisory
Committee. Collectively, all such dates shall be known as the "valuation dates."
10.15 LIMITATION ON LIABILITY - IF INVESTMENT MANAGER APPOINTED. The
Trustee is not liable for the acts or omissions of any Investment Manager or
Managers the Advisory Committee may appoint, nor is the Trustee under any
obligation to invest or otherwise manage any asset of the Plan which is subject
to the management of a properly appointed Investment Manager. The Advisory
Committee, the Trustee and any properly appointed Investment Manager may execute
a letter agreement as a part of this Plan delineating the duties,
responsibilities and liabilities of the Investment Manager with respect to any
part of the Trust Fund under the control of the Investment Manager.
10.16 INVESTMENT IN GROUP TRUST FUND. The Trustee, for collective
investment purposes, may combine into one trust fund the Trust created under
this Plan with the Trust created under any other qualified retirement plan the
Employer maintains. However, separate records of account must be maintained for
the assets of each Trust in order to reflect properly each Participant's Accrued
Benefit under the plan(s) in which he is a Participant.
The Employer specifically authorizes the Trustee to invest all or
any portion of the assets comprising the Trust Fund in any group trust fund
which at the time of the investment provides for the pooling of the assets of
plans qualified under Code Section 401(a). This authorization applies solely
to a group trust fund exempt from taxation under code Section 501(a) and
33
the trust agreement of which satisfies the requirements of Revenue Ruling
81-100. The provisions of the group trust fund agreement, as amended from
time to time, are by this reference incorporated within this Plan and Trust.
The provisions of the group trust fund will govern any investment of Plan
assets in that fund.
10.17 DUTIES PERTAINING TO THE EMPLOYER STOCK FUND.
[A] INVESTMENT. The Trustee will purchase or sell Employer Stock for the
Employer Stock Fund through transactions on the open market. Generally, the
Trustee will purchase or sell Employer Stock for the Employer Stock Fund at
least once each month, unless the Advisory Committee directs the Trustee to
purchase and sell more frequently.
[B] VOTING. Each Participant with an interest in the Employer Stock Fund shall
have the right to participate confidentially in the exercise of voting rights
appurtenant to shares held in the Employer Stock Fund, provided that such person
had an interest in the Employer Stock Fund as of the most recent valuation date
coincident with or preceding the applicable record date for which records are
available. Such participation shall be achieved by completing and filing with
the Trustee (or such other person who shall be independent of the Employer as
the Advisory Committee shall designate), at least 10 days prior to the date of
the meeting of holders of shares at which such voting rights will be exercised,
a written direction in the form and manner prescribed by the Advisory Committee.
The Trustee (or such other person designated by the Advisory Committee) shall
tabulate the directions given on a strictly confidential basis. (If tabulated by
a person other than the Trustee, the results shall be transmitted confidentially
to the Trustee.) The Trustee shall follow the final results of the tabulation as
to the manner in which such voting rights shall be exercised. As to each matter
in which the holders of shares are entitled to vote, the Trustee shall cast
votes described below.
(1) The Trustee shall cast a number of affirmative votes equal to the
product of
(a) the total number of shares held in the Employer Stock
Fund as of the applicable record date; and
(b) a fraction, the numerator of which is the aggregate
value (as of the valuation date coincident with or
immediately preceding the applicable record date) of
the interests in the Employer Stock Fund of all
persons directing that an affirmative vote be cast,
and the denominator of which is the aggregate value
(as of the valuation date coincident with or
immediately preceding the applicable record date) of
the interests in the Employer Stock Fund of all
persons.
(2) The Trustee shall cast a number of negative votes, which shall be
determined in the same manner as the number of affirmative votes to be
cast, as described in (1) above, except that the word "negative" shall
be substituted for the word "affirmative" throughout (1)(b) above.
(3) With respect to stock for which the Trustee is not obligated to
cast either affirmative or negative votes, the Trustee shall cast votes
in such manner as the Trustee, its sole discretion, shall decide.
The Advisory Committee shall furnish, or cause to be furnished, to each person
with an interest in the Employer Stock Fund, all annual reports, proxy materials
and other information known to have been furnished by the issuer of shares or by
any proxy solicitor, to the holder of shares.
[C] TENDER OFFERS. Each person with an interest in the Employer Stock Fund shall
have the right to participate confidentially in the response to a tender offer,
or to any other offer, made to the holders of shares generally, to purchase,
exchange, redeem or otherwise transfer shares; provided that such person had an
interest in the Employer Stock Fund as of the valuation date coincident with or
immediately preceding the first day for delivery shares or otherwise responding
to such tender or other offer. Such participation shall be achieved by
completing and filing with the Trustee (or such other person who shall be
independent of the Employer as the Advisory Committee shall designate), at least
10 days prior to the last day for delivering shares or otherwise responding to
such tender or other offer, a written direction in the form and manner
prescribed by the Advisory Committee. The Trustee (or such person designated by
the Advisory Committee) shall tabulate the directions given on a strictly
confidential basis. (If tabulated by a person other than the Trustee, the final
results of the tabulation shall be transmitted in confidence to the Trustee).
The final results of the tabulation shall be followed by the Trustee as to the
number of shares to be delivered. On the last day for delivering shares or
otherwise responding to such a tender, or other offer, the Trustee shall deliver
or withhold shares as described below.
(1) In response to such tender or offer, the Trustee shall deliver a
number of shares equal to the product of:
(a) the total number of shares then held in the Employer
Stock Fund; and
(b) a fraction, the numerator of which is the aggregate
value (as of the valuation date coincident with or
immediately preceding the first day for delivering
shares or otherwise responding to such tender or
other offer) of the interests in the Employer Stock
Fund of all persons directing that shares be
delivered in response to such tender or other offer,
and the denominator of which is the aggregate value
(as of the valuation date coincident with or
immediately preceding the first day
34
for delivering shares or otherwise responding to
such tender or other offer) of the interests in
the Employer Stock Fund of all persons.
(2) In response to such tender or offer, the Trustee shall withhold a
number of shares, which shall be determined in the same manner as the
number of shares to deliver was determined in (1) above, except that in
(1)(b) the word "withheld" shall be substituted for the word "deliver."
(3) With respect to stock that the Trustee is not obligated to deliver
or withhold, in response to such tender or offer, the Trustee shall
deliver or withhold shares as the Trustee, its sole discretion, shall
decide.
The Advisory Committee shall furnish, or cause to be furnished, to each
Participant whose Account is invested in whole or in part in the Employer Stock
Fund, all information concerning such tender or other offer furnished by the
issuer of shares, or information furnished by or on behalf of the person making
such tender or other offer.
35
ARTICLE XI
PROVISIONS RELATING TO INSURANCE & INSURANCE COMPANY
11.01 INSURANCE BENEFIT. The Employer may elect to provide incidental
life insurance benefits for insurable Participants who consent to life insurance
benefits by signing the appropriate insurance company application form. The
Trustee will not purchase any incidental life insurance benefit for any
Participant prior to the Accounting Date as of which the Advisory Committee
first makes an Employer contribution allocation to the Participant's Account.
The Employer will direct the Trustee as to the insurance company and
insurance agent through which the Trustee is to purchase the insurance
contracts, the amount of the coverage and the applicable dividend plan. Each
application for a policy, and the policies themselves, must designate the
Trustee as sole owner, with the right reserved to the Trustee to exercise any
right or option contained in the policies, subject to the terms and provisions
of this Agreement. The Trustee must be the named beneficiary for the Account of
the insured Participant. Proceeds of insurance contracts paid to the
Participant's Account under this Article XI are subject to the distribution
requirements of Article V and of Article VI. The Trustee will not retain any
such proceeds for the benefit of the Trust.
The Trustee will charge the premiums on any incidental benefit
insurance contract covering the life of a Participant against the Account of
that Participant. The Trustee will hold all incidental benefit insurance
contracts issued under the Plan as assets of the Trust created under the Plan.
INCIDENTAL INSURANCE BENEFITS. The aggregate of life insurance premiums
paid for the benefit of a Participant, at all times, may not exceed the value of
the Participant's Nonforfeitable Accrued Benefit nor the following percentages
of the aggregate of the Employer's contributions allocated to any Participant's
Account: (i) 49% in the case of the purchase of ordinary life insurance
contracts; or (ii) 25% in the case of the purchase of term life insurance
contracts. If the Trustee purchases a combination of ordinary life insurance
contract(s) and term life insurance contract(s), then the sum of one-half of the
premiums paid for the ordinary life insurance contract(s) and the premiums paid
for the term life insurance contract(s) may not exceed 25% of the Employer
contributions allocated to any Participant's Account.
11.02 LIMITATION ON LIFE INSURANCE PROTECTION. The Trustee will not
continue any life insurance protection for any Participant beyond the last of
his termination of employment, his attaining Normal Retirement Age, or
notification from the Advisory Committee of his termination of employment. If
the Trustee holds any incidental benefit insurance contract(s) on the life of a
Participant when he terminates his employment (other than by reason of death),
the Trustee must proceed as follows:
(a) If the entire cash value of the contract(s) is vested in the
terminating Participant, or if the contract(s) will have no cash value
at the end of the policy year in which termination of employment
occurs, the Trustee will transfer the contract(s) to the Participant
endorsed so as to vest in the transferee all right, title and interest
to the contract(s), free and clear of the Trust; subject however, to
restrictions as to surrender or payment of benefits as the issuing
insurance company may permit and as the Advisory Committee directs;
(b) If only part of the cash value of the contract(s) is vested in the
terminating Participant, the Trustee, to the extent the Participant's
interest in the cash value of the contract(s) is not vested, may adjust
the Participant's interest in the value of his Account attributable to
Trust assets other than incidental benefit insurance contracts and
proceed as in (a), or the Trustee must effect a loan from the issuing
insurance company on the sole security of the contract(s) for an amount
equal to the difference between the cash value of the contract(s) at
the end of the policy year in which termination of employment occurs
and the amount of the cash value that is vested in the terminating
Participant, and the Trustee must transfer the contract(s) endorsed so
as to vest in the transferee all right, title and interest to the
contract(s), free and clear of the Trust; subject however, to the
restrictions as to surrender or payment of benefits as the issuing
insurance company may permit and the Advisory Committee directs;
(c) If no part of the cash value of the contract(s) is vested in the
terminating Participant, the Trustee must surrender the contract(s) for
cash proceeds as may be available.
In accordance with the written direction of the Advisory Committee, the
Trustee will make any transfer of contract(s) under this Section 11.02 on the
Participant's annuity starting date (or as soon as administratively practicable
after that date). The Trustee may not transfer any contract under this Section
11.02 which contains a method of payment not specifically authorized by Article
VI or which fails to comply with the joint and survivor annuity requirements, if
applicable, of Article VI. In this regard, the Trustee either must convert such
a contract to cash and distribute the cash instead of the contract, or before
making the transfer, require the issuing company to delete the unauthorized
method of payment option from the contract.
11.03 DEFINITIONS. For purposes of this Article XI:
36
(a) "Policy" means an ordinary life insurance contract or a term life
insurance contract issued by an insurer on the life of a Participant.
(b) "Issuing insurance company" is any life insurance company which has
issued a policy upon application by the Trustee under the terms of this
Agreement.
(c) "Contract" or "Contracts" means a policy of insurance. In the event
of any conflict between the provisions of this Plan and the terms of
any contract or policy of insurance issued in accordance with this
Article XI, the provisions of the Plan control.
(d) "Insurable Participant" means a Participant to whom an insurance
company, upon an application being submitted in accordance with the
Plan, will issue insurance coverage, either as a standard risk or as a
risk in an extra mortality classification.
(e) "Term life insurance contract" includes, in addition to a
traditional term life insurance contract, a universal life insurance
contract and any other life insurance contract which is not an ordinary
life insurance contract.
11.04 DIVIDEND PLAN. The dividend plan is premium reduction unless the
Advisory Committee directs the Trustee to the contrary. The Trustee must use all
premiums for a contract to purchase insurance benefits or additional insurance
benefits for the Participant on whose life the insurance company has issued the
contract. Furthermore, the Trustee must arrange, where possible, for all
policies issued on the lives of Participants under the Plan to have the same
premium due date and all ordinary life insurance contracts to contain guaranteed
cash values with as uniform basic options as are possible to obtain. The term
"dividends" includes policy dividends, refunds of premiums and other credits.
11.05 INSURANCE COMPANY NOT A PARTY TO AGREEMENT. No insurance company,
solely in its capacity as an issuing insurance company, is a party to this
Agreement nor is the company responsible for its validity.
11.06 INSURANCE COMPANY NOT RESPONSIBLE FOR TRUSTEE'S ACTIONS. No
insurance company, solely in its capacity as an issuing insurance company, need
examine the terms of this Agreement nor is responsible for any action taken by
the Trustee.
11.07 INSURANCE COMPANY RELIANCE ON TRUSTEE'S SIGNATURE. For the
purpose of making application to an insurance company and in the exercise of any
right or option contained in any policy, the insurance company may rely upon the
signature of the Trustee and is saved harmless and completely discharged in
acting at the direction and authorization of the Trustee.
11.08 ACQUITTANCE. An insurance company is discharged from all
liability for any amount paid to the Trustee or paid in accordance with the
direction of the Trustee, and is not obliged to see to the distribution or
further application of any moneys it so pays.
11.09 DUTIES OF INSURANCE COMPANY. Each insurance company must keep
such records, make such identification of contracts, funds and accounts within
funds, and supply such information as may be necessary for the proper
administration of the Plan under which it is carrying insurance benefits.
37
ARTICLE XII
MISCELLANEOUS
12.01 EVIDENCE. Anyone required to give evidence under the terms of the
Plan may do so by certificate, affidavit, document or other information which
the person to act in reliance may consider pertinent, reliable and genuine, and
to have been signed, made or presented by the proper party or parties. Both the
Advisory Committee and the Trustee are fully protected in acting and relying
upon any evidence described under the immediately preceding sentence.
12.02 NO RESPONSIBILITY FOR EMPLOYER ACTION. Neither the Trustee nor
the Advisory Committee has any obligation nor responsibility with respect to any
action required by the Plan to be taken by the Employer, any Participant or
eligible Employee, or for the failure of any of the above persons to act or make
any payment or contributions, or to otherwise provide any benefit contemplated
under this Plan. Furthermore, the Plan does not require the Trustee or the
Advisory Committee to collect any contribution required under the Plan, or
determine the correctness of the amount of any Employer contribution. Neither
the Trustee nor the Advisory Committee need inquire into or be responsible for
any action or failure to act on the part of the others.
Any action required of a corporate Employer must be by its Board of
Directors, or by any person or persons duly authorized by resolution of said
Board to take such action.
12.03 FIDUCIARIES NOT INSURERS. The Trustee, the Advisory Committee,
the Plan Administrator and the Employer in no way guarantee the Trust Fund from
loss or depreciation. The Employer does not guarantee the payment of any money
which may be or becomes due to any person from the Trust Fund. The liability of
the Advisory Committee and the Trustee to make any payment from the Trust Fund
at any time and all times is limited to the then available assets of the Trust.
12.04 WAIVER OF NOTICE. Any person entitle to notice under the Plan may
waive the notice.
12.05 SUCCESSORS. The Plan is binding upon all persons entitled to
benefits under the Plan, their respective heirs and legal representatives, upon
the Employer, its successors and assigns who so agree in writing, and upon the
Trustee, the Advisory Committee, the Plan Administrator and their successors who
so agree in writing.
12.06 WORD USAGE. Words used in the masculine also apply to the
feminine where applicable, and wherever the context of the Plan dictates, the
plural includes as the singular and the singular includes the plural.
12.07 STATE LAW. Washington law will determine all questions arising
with respect to the provisions of this Agreement except to the extent Federal
statute supersedes Washington law.
12.08 EMPLOYMENT NOT GUARANTEED. Nothing contained in this Plan, or
with respect to the establishment of the Trust, or any modification or amendment
to the Plan or Trust, or in the creation of any Account, or the payment of any
benefit, gives any Employee, Employee-Participant or any Beneficiary any right
to continue employment, any legal or equitable right against the Employer, or
Employee of the Employer, or against the Trustee, or its agents or employees, or
against the Plan Administrator, except as expressly provided by the Plan, the
Trust, ERISA or by a separate agreement.
38
ARTICLE XIII
EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION
13.01 EXCLUSIVE BENEFIT. Except as provided under Article III, the
Employer has no beneficial interest in any asset of the Trust and no part of any
asset in the Trust shall ever revert to or be repaid to an Employer, either
directly or indirectly; nor prior to the satisfaction of all liabilities with
respect to the Participants and their Beneficiaries under the Plan, may any part
of the corpus or income of the Trust Fund, or any asset of the Trust, be (at any
time) used for, or diverted to, purposes other than the exclusive benefit of the
Participants or their Beneficiaries.
13.02 AMENDMENT BY EMPLOYER. The Employer has the right at any time and
from time to time:
(a) To amend this Agreement in any manner it deems necessary or
advisable in order to qualify (or maintain qualification of) this Plan
and the Trust created under it under the appropriate provisions of Code
Section 401(a); and
(b) To amend this Agreement in any other manner.
The Advisory Committee is authorized to make any amendments under
Section 13.02(a). Moreover, the Advisory Committee is authorized to make any
amendments under Section 13.02(b) that are administrative in nature (e.g.,
amendments relating to elections and procedures and the investment, valuation
and distribution of Plan assets).
No amendment may authorize or permit any of the Trust Fund (other than
the part which is required to pay taxes and administration expenses) to be used
for or diverted to purposes other than for the exclusive benefit of the
Participants or their Beneficiaries or estates. No amendment may cause or permit
any portion of the Trust Fund to revert to or become a property of the Employer.
The Employer also may not make any amendment which affects the rights, duties or
responsibilities of the Trustee, the Plan Administrator or the Advisory
Committee without the written consent of the affected Trustee, the Plan
Administrator or the affected member of the Advisory Committee.
CODE SECTION 411(d)(6) PROTECTED BENEFITS. An amendment (including the
adoption of this Plan as a restatement of an existing plan) may not decrease a
Participant's Accrued Benefit, except to the extent permitted under Code
Section 412(c)(8), and may not reduce or eliminate Code Section 411(d)(6)
protected benefits determined immediately prior to the adoption date (or, if
later, the effective date) of the amendment. An amendment reduces or eliminates
Code Section 411(d)(6) protected benefits if the amendment has the effect of
either (1) eliminating or reducing an early retirement benefit or a
retirement-type subsidy (as defined in Treasury regulations), or (2) except as
provided by Treasury regulations, eliminating an optional form of benefit. The
Advisory Committee must disregard an amendment to the extent application of the
amendment would fail to satisfy this paragraph. If the Advisory Committee must
disregard an amendment because the amendment would violate clause (1) or clause
(2), the Advisory Committee must maintain a schedule of the early retirement
option or other optional forms of benefit the Plan must continue for the
affected Participants.
The Employer (or Advisory Committee to the extent authorized in this
Section 13.02) must make all amendments in writing. Each amendment shall state
the date to which it is either retroactively or prospectively effective.
13.03 DISCONTINUANCE. The Employer has the right, at any time, to
suspend or discontinue its contributions under the Plan, and to terminate, at
any time, this Plan and the Trust created under this Agreement. The Plan will
terminate upon the first to occur of the following:
(a) The date terminated by action of the Employer;
(b) The date the Employer shall be judicially declared bankrupt or
insolvent, unless the proceeding authorized continued maintenance of
the Plan;
(c) The dissolution, merger, consolidation or reorganization of the
Employer or the sale by the Employer of all or substantially all of its
assets, unless the successor or purchaser makes provision to continue
the Plan, in which event the successor or purchaser shall substitute
itself as the Employer under this Plan.
13.04 FULL VESTING ON TERMINATION. Upon either full or partial
termination of the Plan, or, if applicable, upon complete discontinuance of
profit sharing plan contributions to the Plan, affected Participant's right to
his Accrued Benefit is 100% Nonforfeitable, irrespective of the Nonforfeitable
percentage which otherwise would apply under Article V.
13.05 MERGER/DIRECT TRANSFER. The Trustee may not consent to, or be a
party to, any merger or consolidation with another plan, or to a transfer of
assets or liabilities to another plan, unless immediately after the merger,
consolidation or transfer, the surviving Plan provides each Participant a
benefit equal to or greater than the benefit each Participant would have
received had the Plan terminated immediately before the merger or consolidation
or transfer. The Trustee possesses the specific authority to enter into merger
agreements or direct transfer of assets agreements with the trustees of other
retirement plans described in Code Section 401(a), including an elective
transfer, and to accept the direct transfer of plan assets, or to transfer plan
assets, as a party to any such agreement.
39
The Trustee may accept a direct transfer of plan assets on behalf of an
Employee prior to the date the Employee satisfies the Plan's eligibility
conditions(s). If the Trustee accepts a direct transfer of plan assets, the
Advisory Committee and Trustee must treat the Employee as a Participant for all
purposes of the Plan except the Employee is not a Participant for purposes of
making voluntary contributions under Article IV or sharing in Employer
contributions or Participant forfeitures under the Plan until he actually
becomes a Participant in the Plan.
The Trustee may not consent to, or be a party to a merger,
consolidation or transfer of assets with a defined benefit plan, except with
respect to an elective transfer. The Trustee will hold, administer and
distribute the transferred assets as a part of the Trust Fund and the Trustee
will maintain a separate Employer contribution Account for the benefit of the
Employee on whose behalf the Trustee accepted the transfer in order to
reflect the value of the transferred assets. Unless a transfer of assets to
this Plan is an elective transfer, the Plan will preserve all Code Section411
(d)(6) protected benefits with respect to those transferred assets, in the
manner described in Section 13.02. A transfer is an elective transfer if: (1)
the transfer satisfies the first paragraph of this Section 13.05; (2) the
transfer is voluntary, under a fully informed election by the Participant;
(3) the Participant has an alternative that retains his Code Section
411(d)(6) protected benefits (including an option to leave his benefit in the
transferor plan, if that plan is not terminating); (4) the transfer satisfies
the applicable spousal consent requirements of the Code; (5) the transferor
plan satisfies the joint and survivor notice requirements of the Code, if the
Participant's transferred benefit is subject to those requirements; (6) the
Participant has a right to immediate distribution from the transferor plan,
in lieu of the elective transfer; (7) the transferred benefit is at least the
greater of the single sum distribution provided by the transferor plan for
which the Participant is eligible or the present value of the Participant's
accrued benefit under the transferor plan payable at that plan's normal
retirement age; (8) the Participant has a 100% Nonforfeitable interest in the
transferred benefit; and (9) the transfer otherwise satisfies applicable
Treasury regulations. An elective transfer may occur between qualified plans
of any type.
DISTRIBUTION RESTRICTIONS UNDER CODE SECTION 401(K). If the Plan
receives a direct transfer (by merger or otherwise) of elective contributions
(or amounts treated as elective contributions) under a Plan with a Code
Section 401(k) arrangement, the distribution restrictions of Code Sections
401(k)(2) and (10) continue to apply to those transferred elective
contributions.
13.06 TERMINATION. Upon termination of the Plan, the distribution
provisions of Article VI shall remain operative except, in lieu of the timing
and form of distribution options available under Article VI, the Advisory
Committee will direct the Trustee to distribute each Participant's
Nonforfeitable Accrued Benefit, in lump sum, as soon as administratively
practicable after the termination of the Plan, irrespective of the present value
of the Participant's Nonforfeitable Accrued Benefit and whether the Participant
consents to that distribution. This paragraph is null and void if, as of the
period between the Plan termination date and the final distribution of assets,
the Employer maintains any other defined contribution plan (other than an ESOP).
If the first paragraph of this Section 13.06 is null and void, the
Advisory Committee will proceed with distribution of the terminated Plan in
accordance with the distribution provisions of Article VI, with the following
exceptions:
(1) if the present value of the Participant's Nonforfeitable Accrued
Benefit does not exceed $5,000, the Advisory Committee will direct the
Trustee to distribute the Participant's Nonforfeitable Accrued Benefit
to him in lump sum as soon as administratively practicable after the
Plan terminates; and
(2) if the present value of the Participant's Nonforfeitable Accrued
Benefit exceeds $5,000, the Participant or the Beneficiary, in addition
to the distribution events permitted under Article VI, may elect to
have the Trustee commence distribution of his Nonforfeitable Accrued
Benefit as soon as administratively practicable after the Plan
terminates. If the Participant fails to make an election under this
paragraph (2), the Advisory Committee, to liquidate the Trust, may
transfer the Participant's Nonforfeitable Accrued Benefit to the other
defined contribution plan maintained by the Employer, or purchase a
deferred annuity contract for each such Participant which protects the
Participant's distribution rights under the Plan.
On each valuation date, the Advisory Committee will credit any part of
a Participant's Accrued Benefit retained in the Trust with its proportionate
share of the Trust's income, expenses, gains and losses, both realized and
unrealized. Upon termination of the Plan, the amount, if any, in a suspense
account under Article III will revert to the Employer, subject to the conditions
of the Treasury regulations permitting such a reversion. A resolution or
amendment to freeze all future benefit accrual but otherwise to continue
maintenance of this Plan, is not a termination for purposes of this Section
13.06.
DISTRIBUTION RESTRICTIONS UNDER CODE SECTION 410(K). The portion of the
Participant's Nonforfeitable Accrued Benefit attributable to elective
contributions under a Code Section 401(k) arrangement (or to amounts treated
under the Code Section 401(k) arrangement as elective contributions) is not
distributable on account of Plan termination, as described in this Section
13.06, unless: (a) the Participant otherwise is entitled to a distribution of
that portion of his Nonforfeitable Accrued Benefit; or (b) the Plan termination
occurs without the establishment of a successor plan. A plan is a successor plan
under clause (b) if: (i) the plan is a defined contribution plan (other than an
ESOP) maintained by the Employer (or by a related employer);
40
(ii) at least 2% of the employees who were eligible under the terminated Code
Section 401(k) arrangement are or were eligible under the terminated Code
Section 401(k) arrangement are or were eligible under the successor plan at
any time within the 24-month period ending after the time of termination; and
(iii) the successor plan is in existence at the time the 401(k) arrangement
terminates or within the 12-month period after final distribution of assets
of the plan which includes the Code Section401(k) arrangement. A distribution
made after March 31, 1988, pursuant to clause (b), must be part of a lump sum
distribution to the Participant of his Nonforfeitable Accrued Benefit.
13.07 TRANSFER OF ASSETS FROM THE TRUSTEE OF THE FLOW INTERNATIONAL
CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN. If the Trustee accepts a transfer of
assets from the trustee of the Flow International Plan Employee Stock Ownership
Plan after March 31, 1998 (whether or not in an elective transfer within the
meaning of Section 13.05), then, in addition to the provisions of Section 13.05,
the following provisions shall also apply:
(a) The assets in the Account the Trustee maintains for the transferred
assets shall be subject to the Participant's (or Participant's
beneficiary's) direction of investment in accordance with Section 8.10.
(b) The assets in the Account the Trustee maintains for the transferred
assets shall be distributed only in a single lump sum (regardless
whether the assets include stock in Flow International Corporation or
cash).
(c) If at the time of distribution the assets in the Account the
Trustee maintains for the transferred assets include stock in Flow
International Corporation, the Participant (or Participant's
beneficiary) may elect to receive the entire distribution in cash.
41
ARTICLE XIV
PROVISIONS RELATING TO THE CODE SECTION 401(K) ARRANGEMENT
14.01 401(k) ARRANGEMENT. The Employer makes the deferral contribution
described in Section 3.01(a) pursuant to a 401(k) arrangement. An Employee who
is eligible to participate in the 401(k) arrangement may file a salary reduction
agreement with the Advisory Committee. The salary reduction agreement may not be
effective earlier than the following date which occurs last: (i) the Employee's
Plan Entry Date (or, in the case of a reemployed Employee, his reparticipation
date under Article II); or (ii) the execution date of the Employee's salary
reduction agreement. A salary reduction agreement must specify the percentage of
Compensation (as defined in Section 1.10) the Employee wishes to defer. The
salary reduction agreement will apply only to Compensation which becomes
currently available to the Employee after the effective date of the salary
reduction agreement. The Employer will apply a reduction election to all
Compensation (and to increases in such Compensation) unless the Employee
specifies in his salary reduction agreement to limit the election to certain
Compensation. The salary reduction agreement form approved by the Advisory
Committee from time to time will specify the minimum and maximum reduction
percentages and the options available for the Employee to so limit his election.
An Employee's salary reduction contributions for the Plan Year, subject
to the elective deferral limitation of Section 14.03, may not exceed 15% of his
Compensation for the entire Plan Year. An Employee may modify his salary
reduction agreement, either to reduce or to increase the amount of deferral
contributions, as of any July 1 or January 1 or any other date established by
the Advisory Committee. The Employee will make this modification by filing a new
salary reduction agreement with the Advisory Committee. An Employee may revoke a
salary reduction agreement at any time, with such revocation to be effective as
soon as practicable thereafter. An Employee who revokes his salary reduction
agreement may file a new salary reduction agreement as of any July 1 or January
1 or any other date established by the Advisory Committee.
The Advisory Committee may amend or revoke its salary reduction
agreement with any Participant, if it determines that such revocation is
necessary, helpful or advisable to satisfy the special rules under Code Sections
401(k), 401(m) or 402(g) (see Sections 14.03, 14.04, 14.05 and 14.06), or the
maximum limitations of Code Section 415 (see Sections 3.07 and 3.08). Moreover,
prior to any July 1 or January 1 the Advisory Committee may establish special
deferral limits for highly compensated employees (as defined in Section 14.02).
14.02 DEFINITIONS.
(a) "Highly Compensated Employee" means an Eligible Employee who
satisfies the definition in Section 1.07 of the Plan.
(b) "Nonhighly Compensated Employee" means an Eligible Employee who is
not a Highly Compensated Employee and who is not a family member
treated as a Highly Compensated Employee.
(c) "Eligible Employee" means, for purposes of the ADP test described
in Section 14.04, an Employee who is eligible to participate in the
Code Section 401(k) arrangement, irrespective of whether the Employer
actually makes deferral contributions on behalf of the Employee. For
purposes of the ACP test described in Section 14.05, an "Eligible
Employee" means a Participant who is eligible to receive an allocation
of Employer matching contributions (or would be eligible if he made the
type of contributions necessary to receive an allocation of matching
contributions) and a Participant who is eligible to make employee
contributions, irrespective of whether he actually makes employee
contributions. An Employee continues to be an Eligible Employee during
a period the Plan suspends the Employee's right to make elective
deferrals or nondeductible contributions following a hardship
distribution.
(d) "Highly Compensated Group" means the group of Eligible Employees
who are Highly Compensated Employees for the Plan Year.
(e) "Nonhighly Compensated Group" means the group of Eligible Employees
who are Nonhighly Compensated Employees for the Plan Year.
(f) "Compensation" means, except as specifically provided under this
Article XIV, Compensation as defined for nondiscrimination purposes in
Code Section 414(s), uniformly applied to all Eligible Employees for
the Plan Year. The Advisory Committee may use the general definition of
Compensation in Section 1.10(A) or may modify that definition
(including "grossing up" that definition for elective contributions, as
defined in Section 1.07) in any manner which satisfies Code
Section 414(s). To compute an Employee's ADP or ACP, the Advisory
Committee may limit Compensation taken into account to Compensation
received only for the portion of the Plan Year in which the Employee
was an Eligible Employee and only for the portion of the Plan Year in
which the Code Section 401(k) arrangement was in effect.
42
(g) "Deferral contributions" means the sum of the deferral
contributions the Employer contributes to the Trust on behalf of an
Eligible Employee, pursuant to Section 3.01.
(h) "Elective deferrals" are the deferral contributions the Employer
contributes to the Trust at the election of an Eligible Employee. If
the Code Section 401(k) arrangement includes a cash or deferred
feature, any portion of a cash or deferred contribution contributed
to the Trust because of the Employee's failure to make a cash
election is an elective deferral, but any portion of a cash or
deferred contribution over which the Employee does not have a cash
election is not an elective deferral. Elective deferrals do not
include amounts which have become currently available to the
Employee prior to the election nor amounts designated as
nondeductible employee contributions at the time of deferral or
contribution.
(i) "Matching contributions" are contributions made by the Employer
on account of elective deferrals under a Code Section 401(k)
arrangement or on account of employee contributions. Matching
contributions also include Participant forfeitures allocated on
account of such elective deferrals or employee contributions.
(j) "Nonelective contributions" are contributions made by the Employer
which are not subject to a deferral election by an Employee and which
are not matching contributions.
(k) "Qualified matching contributions" are matching contributions which
are 100% Nonforfeitable at all times and which are subject to the
distribution restrictions described in paragraph
(m) Matching contributions are not 100% Nonforfeitable at all times if
the Employee has a 100% Nonforfeitable interest because of his Years of
Service taken into account under a vesting schedule.
(l) "Qualified nonelective contributions" are nonelective contributions
which are 100% Nonforfeitable at all times and which are subject to the
distribution restrictions described in paragraph
(m) Nonelective contributions are not 100% Nonforfeitable at all times
if the Employee has a 100% Nonforfeitable interest because of his Years
of Service taken into account under a vesting schedule. Any nonelective
contributions allocated to a Participant's Qualified Nonelective
Contributions Account under the Plan automatically satisfy the
definition of qualified nonelective contributions. (m) "Distribution
restrictions" means the Employee may not receive a distribution of the
specified contributions (nor earnings on those contributions) except in
the event of (1) the Participant's death, disability, termination of
employment, attainment of age 59 1/2, (2) financial hardship satisfying
the requirements of Code Section 401(k) and the applicable Treasury
regulations, (3) plan termination, without establishment of a successor
defined contribution plan (other than an ESOP), (4) a sale of
substantially all of the assets (within the meaning of Code
Section 409(d)(2)) used in a trade or business, but only to an employee
who continues employment with the corporation acquiring those assets,
or (5) a sale by a corporation of its interest in a subsidiary (within
the meaning of Code Section 409(d)(3)), but only to an employee who
continues employment with the subsidiary. For Plan Years beginning
after December 31, 1988, a distribution on account of financial
hardship, as described in clause (2), may not include earnings on
elective deferrals credited as of a date later than December 31, 1988,
and may not include qualified matching contributions and qualified
nonelective contributions, nor any earnings on such contributions,
credited after December 31, 1988. A distribution described in clauses
(3), (4) or (5), if made after March 31, 1988, must be a lump sum
distribution, as required under Code Section 401(k)(10).
(n) "Employee contributions" are contributions made by a Participant on
an after-tax basis, whether voluntary or mandatory, and designated, at
the time of contribution, as an employee (or nondeductible)
contribution. Elective deferrals and deferral contributions are not
employee contributions. Participant nondeductible contributions, made
pursuant to Section 4.01 of the Plan, are employee contributions.
14.03 ANNUAL ELECTIVE DEFERRAL LIMITATION.
ANNUAL ELECTIVE DEFERRAL LIMITATION. An Employee's elective deferrals
for a calendar year beginning after December 31, 1986, may not exceed the 402(g)
limitation. The 402(g) limitation is the greater of $7,000 or the adjusted
amount determined by the Secretary of the Treasury. If the Employer determines
the Employee's elective deferrals to the Plan for a calendar year would exceed
the 402(g) limitation for the calendar year, the Employer will not make any
additional elective deferrals with respect to that Employee for the remainder of
that calendar year, paying in cash to the Employee any amounts which would
result in the Employee's elective deferrals for the calendar year exceeding the
402(g) limitation. If the Advisory Committee determines an Employee's elective
deferrals already contributed to the Plan for a calendar year exceed the 402(g)
limitation, the Advisory Committee will distribute the amount in excess of the
402(g) limitation (the "excess deferral"), as adjusted for allocable income, no
later than April 15 of the following calendar year. If the Advisory Committee
distributes the excess deferral by the appropriate April 15, it may make the
distribution irrespective of any other provision under this Plan or under the
Code. The Advisory Committee will reduce the amount of
43
excess deferrals for a calendar year distributable to the Employee by the
amount of excess contributions (as determined in Section 14.04), if any,
previously distributed to the Employee for the Plan Year beginning in that
calendar year.
If an Employee participates in another plan under which he makes
elective deferrals pursuant to a Code Section 401(k) arrangement, elective
deferrals under a Simplified Employee Pension, or salary reduction contributions
to a tax-sheltered annuity, irrespective of whether the Employer maintains the
other plan, he may provide the Advisory Committee a written claim for excess
deferrals made for a calendar year. The Employee must submit the claim no later
than the March 1 following the close of the particular calendar year and the
claim must specify the amount of the Employee's elective deferrals under this
Plan which are excess deferrals. If the Advisory Committee receives a timely
claim, it will distribute the excess deferral (as adjusted for allocable income)
the Employee has assigned to this Plan, in accordance with the distribution
procedure described in the immediately preceding paragraph.
ALLOCABLE INCOME. For purposes of making a distribution of excess
deferrals, allocable income means net income or net loss allocable to the excess
deferrals for the calendar year in which the Employee made the excess deferral,
determined in a manner which is uniform, nondiscriminatory and reasonably
reflective of the manner used by the Plan to allocate income to Participants'
Accounts.
14.04 ACTUAL DEFERRAL PERCENTAGE ("ADP") TEST. For each Plan Year, the
Advisory Committee must determine whether the Plan's Code Section 401(k)
arrangement satisfies one of the following ADP tests:
(i) The average ADP for the Highly Compensated Group does not exceed
1.25 times the average ADP of the Nonhighly Compensated Group; or
(ii) The average ADP for the Highly Compensated Group does not exceed
the average ADP for the Nonhighly Compensated Group by more than two
percentage points (or the lesser percentage permitted by the multiple
use limitation in Section 14.06) and the average ADP for the Highly
Compensated Group is not more than twice the average ADP for the
Nonhighly Compensated Group.
CALCULATION OF ADP. The average ADP for a group is the average of
the separate ADPs calculated for each Eligible Employee who is a member of
that group. An Eligible Employee's ADP for a Plan Year is the ratio of the
Eligible Employee's deferral contributions for the Plan Year to the
Employee's Compensation for the Plan Year. A Nonhighly Compensated Employee's
ADP does not include elective deferrals made to this Plan or to any other
Plan maintained by the Employer, to the extent such elective deferrals exceed
the 402(g) limitation described in Section 14.03. In determining whether the
Plan's Code Section 401(k) arrangement satisfies either ADP test, the
Advisory Committee will use the average ADP of the Nonhighly Compensated
Group for the Plan Year preceding the Plan Year of the calculation, unless
the Employer elects to use the current Plan Year's average ADP of the
Nonhighly Compensated Group. An Employer may not change an election to use
current average ADP except as the Treasury otherwise may provide.
SPECIAL AGGREGATION RULE FOR HIGHLY COMPENSATED EMPLOYEES. To
determine the ADP of any Highly Compensated Employee, the deferral
contributions taken into account must include any elective deferrals made by
the Highly Compensated Employee under any other Code Section 401(k)
arrangement maintained by the Employer, unless the elective deferrals are to
an ESOP. If the plans containing the Code Section 401(k) arrangements have
different plan years, the Advisory Committee will determine the combined
deferral contributions on the basis of the plan years ending in the same
calendar year.
AGGREGATION OF CERTAIN CODE SECTION 401(k) ARRANGEMENTS. If the
Employer treats two plans as a unit for coverage or nondiscrimination
purposes, the Employer must combine the Code Section 401(k) arrangements
under such plans to determine whether either plan satisfies the ADP test.
This aggregation rule applies to the ADP determination for all Eligible
Employees, irrespective of whether an Eligible Employee is a Highly
Compensated Employee or a Nonhighly Compensated Employee. For Plan Years
beginning after December 31, 1989, an aggregation of Code Section 401(k)
arrangements under this paragraph does not apply to plans which have
different plan years and, for Plan Years beginning after December 31, 1988,
the Advisory Committee may not aggregate an ESOP (or the ESOP portion of a
plan) with a non-ESOP plan (or non-ESOP portion of a plan).
CHARACTERIZATION OF EXCESS CONTRIBUTIONS. If, pursuant to this Section
14.04, the Advisory Committee has elected to include qualified matching
contributions in the average ADP, the Advisory Committee will treat excess
contributions as attributable proportionately to deferral contributions and to
qualified matching contributions allocated on the basis of those deferral
contributions. If the total amount of a Highly Compensated Employee's excess
contributions for the Plan Year exceeds his deferral contributions or qualified
matching contributions for the Plan Year, the Advisory Committee will treat the
remaining portion of his excess contributions as attributable to qualified
nonelective contributions. The Advisory Committee will reduce the amount of
excess contributions for a Plan Year distributable to a Highly Compensated
Employee by the amount of excess deferrals (as defined in Section 14.03), if
any, previously distributed to that Employee for the Employee's taxable year
ending in that Plan Year.
44
DISTRIBUTION OF EXCESS CONTRIBUTIONS. If the Advisory Committee
determines the Plan fails to satisfy the ADP test for a Plan Year, the Trustee,
as directed by the Advisory Committee, must distribute the excess contributions,
as adjusted for allocable income, during the next Plan Year. However, the
Employer will incur an excise tax equal to 10% of the amount of excess
contributions for a Plan Year not distributed to the appropriate Highly
Compensated Employees during the first 2 1/2 months of that next Plan Year. The
excess contributions are the amount of deferral contributions made by the Highly
Compensated Employees which causes the Plan to fail to satisfy the ADP test. The
Advisory Committee will determine the amount of excess contributions by starting
with the Highly Compensated Employee(s) who has the greatest ADP, reducing his
ADP (but not below the next highest ADP), then, if necessary, reducing the ADP
of the Highly Compensated Employee(s) at the next highest ADP including the ADP
of the Highly Compensated Employee(s) whose ADP the Advisory Committee already
has reduced (but not below the next highest ADP), and continuing in this manner
until the average ADP for the Highly Compensated Group satisfies the ADP test.
After the Advisory Committee has determined the excess contribution
amount, the Trustee, as directed by the Advisory Committee, then will distribute
to each Highly Compensated Employee his respective share(s) of the excess
contributions. The Advisory Committee will determine the respective shares(s) of
excess contributions by starting with the Highly Compensated Employee(s) who has
the highest elective contributions, reducing his elective contributions (but not
below the next highest level of elective contributions), then, if necessary,
reducing the elective contributions of the Highly Compensated Employee(s) at the
next highest level of elective contributions including the elective
contributions of the Highly Compensated Employee(s) whose elective contributions
the Advisory Committee already has reduced (but not below the next highest level
of elective contributions), and continuing in this manner until the Trustee has
distributed all excess contributions.
ALLOCABLE INCOME. To determine the amount of the corrective
distribution required under this Section 14.04, the Advisory Committee must
calculate the allocable income for the Plan Year in which the excess
contributions arose. "Allocable income" means net income or net loss. To
calculate allocable income for the Plan Year, the Advisory Committee will use a
uniform and nondiscriminatory method which reasonably reflects the manner used
by the Plan to allocate income to Participants' Accounts.
14.05 NONDISCRIMINATION RULES FOR EMPLOYER MATCHING
CONTRIBUTIONS/EMPLOYEE CONTRIBUTIONS. The Advisory Committee must determine
whether the annual Employer matching contributions (other than qualified
matching contributions used in the ADP test), if any, and the Employee
contributions, if any, satisfy one of the following average contribution
percentage ("ACP") tests:
(i) The ACP for the Highly Compensated Group does not exceed 1.25 times
the ACP of the Nonhighly Compensated Group; or
(ii) The ACP for the Highly Compensated Group does not exceed the ACP
for the Nonhighly Compensated Group by more than two percentage points
(or the lesser percentage permitted by the multiple use limitation in
Section 14.06) and the ACP for the Highly Compensated Group is not more
than twice the ACP for the Nonhighly Compensated Group.
CALCULATION OF ACP. The average contribution percentage for a group is
the average of the separate contribution percentages calculated for each
Eligible Employee who is a member of that group. An Eligible Employee's
contribution percentage for a Plan Year is the ratio of the Eligible Employee's
aggregate contributions for the Plan Year to the Employee's Compensation for the
Plan Year. "Aggregate contributions" are matching contributions (other than
qualified matching contributions used in the ADP test) and Employee
contributions. In determining whether the Plan satisfies either ACP test, the
Advisory Committee will use the ACP of the Nonhighly Compensated Group for the
Plan Year preceding the Plan Year of the calculation, unless the Employer elects
to use the current Plan Year's ACP of the Nonhighly Compensated Group. An
Employer may not change an election to use current ACP except as the Treasury
otherwise may provide.
SPECIAL AGGREGATION RULE FOR HIGHLY COMPENSATED EMPLOYEES. To determine
the contribution percentage of any Highly Compensated Employee, the aggregate
contributions taken into account must include any matching contributions (other
than qualified matching contributions used in the ADP test) and any Employee
contributions made on his behalf to any other plan maintained by the Employer,
unless the other plan is an ESOP. If the plans have different plan years, the
Advisory Committee will determine the combined aggregate contributions on the
basis of the plan years ending in the same calendar year.
AGGREGATION OF CERTAIN PLANS. If the Employer treats two plans as a
unit for coverage or nondiscrimination purposes, the Employer must combine the
plans to determine whether either plan satisfies the ACP test. This aggregation
rule applies to the contribution percentage determination for all Eligible
Employees, irrespective of whether an Eligible Employee is a Highly Compensated
Employee or a Nonhighly Compensated Employee. For Plan Years beginning after
December 31, 1989, an aggregation of plans under this paragraph does not apply
to plans which have different plan years,
45
and for Plan Years beginning after December 31, 1988, the Advisory Committee
may not aggregate an ESOP (or the ESOP portion of a plan) with a non-ESOP
plan (or non-ESOP portion of a plan).
DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS. The Advisory Committee
will determine excess aggregate contributions after determining excess deferrals
under Section 14.03 and excess contributions under Section 14.04. If the
Advisory Committee determines the Plan fails to satisfy the ACP test for a Plan
Year, the Trustee, as directed by the Advisory Committee, must distribute the
excess aggregate contributions, as adjusted for allocable income, during the
next Plan Year. However, the Employer will incur an excise tax equal to 10% of
the amount of excess aggregate contributions for a Plan Year not distributed to
the appropriate Highly Compensated Employees during the first 2 1/2 months of
that next Plan Year. The excess aggregate contributions are the amount of the
aggregate contributions allocated on behalf of the Highly Compensated Employees
which causes the Plan to fail to satisfy the ACP test. The Advisory Committee
will determine the respective shares of excess aggregate contributions by
starting with the Highly Compensated Employee(s) who has the greatest
contribution percentage, reducing his contribution percentage (but not below the
next highest contribution percentage), then, if necessary, reducing the
contribution percentage of the Highly Compensated Employee(s) at the next
highest contribution percentage level including the contribution percentage of
the Highly Compensated Employee(s) whose contribution percentage the Advisory
Committee already has reduced, and continuing in this manner until the ACP for
the Highly Compensated Group satisfies the ACP test.
After the Advisory Committee has determined the excess aggregate
contribution amount, the Trustee, as directed by the Advisory Committee, then
will distribute to each Highly Compensated Employee his respective share(s) of
the excess aggregate contributions. The Advisory Committee will determine the
respective shares(s) of excess aggregate contributions by starting with the
Highly Compensated Employee(s) who has the greatest amount of aggregate
contributions, reducing the amount of his aggregate contributions (but not below
the next highest level of aggregate contributions), then, if necessary, reducing
the amount of aggregate contributions of the Highly Compensated Employee(s) at
the next highest level of aggregate contributions, including the aggregate
contributions of the Highly Compensated Employee(s) whose aggregate
contributions the Advisory Committee already has reduced (but not below the next
highest level of aggregate contributions), and continuing in this manner until
the Trustee has distributed all excess aggregate contributions.
ALLOCABLE INCOME. To determine the amount of the corrective
distribution required under this Section 14.05, the Advisory Committee must
calculate the allocable income for the Plan Year in which the excess aggregate
contributions arose. "Allocable income" means net income or net loss. The
Advisory Committee will determine allocable income in the same manner as
described in Section 14.04 for excess contributions.
CHARACTERIZATION OF EXCESS AGGREGATE CONTRIBUTIONS. The Advisory
Committee will treat a Highly Compensated Employee's allocable share of excess
aggregate contributions in the following priority: (1) first as attributable to
his Employee contributions which are voluntary contributions, if any; (2) then
as matching contributions allocable with respect to excess contributions
determined under the ADP test; (3) then on a pro rata basis to matching
contributions and to the deferral contributions relating to those matching
contributions which the Advisory Committee has included in the ACP test; (4)
then on a pro rate basis to Employee contributions which are mandatory
contributions, if any, and to the matching contributions allocated on the basis
of those mandatory contributions; and (5) last to qualified nonelective
contributions used in the ACP test. To the extent the Highly Compensated
Employee's excess aggregate contributions are attributable to matching
contributions, and he is not 100% vested in his Accrued Benefit attributable to
matching contributions, the Advisory Committee will distribute only the vested
portion and forfeit the nonvested portion. The vested portion of the Highly
Compensated Employee's excess aggregate contributions attributable to Employer
matching contributions is the total amount of such excess aggregate
contributions (as adjusted for allocable income) multiplied by his vested
percentage (determined as of the last day of the Plan Year for which the
Employer made the matching contribution). The Plan will allocate forfeited
excess aggregate contributions to reduce Employer matching contributions for the
Plan Year in which the forfeiture occurs.
14.06 MULTIPLE USE LIMITATION. If at least one Highly Compensated
Employee is includible in the ADP test and in the ACP test, the sum of the
Highly Compensated Group's ADP and ACP may not exceed the multiple use
limitation.
The multiple use limitation is the sum of (i) and (ii):
(i) 125% of the greater of: (a) the ADP of the Nonhighly Compensated
Group under the Code Section 401(k) arrangement; or (b) the ACP of the
Nonhighly Compensated Group for the Plan Year beginning with or within
the Plan Year of the Code Section 401(k) arrangement.
(ii) 2% plus the lesser of (i)(a) or (i)(b), but no more than twice the
lesser of (i)(a) or (i)(b).
46
The Advisory Committee, in lieu of determining the multiple use
limitation as the sum of (i) and (ii), may elect to determine the multiple use
limitation as the sum of (iii) and (iv):
(iii) 125% of the lesser of: (a) the ADP of the Nonhighly Compensated
Group under the Code Section 401(k) arrangement; or (b) the ACP of the
Nonhighly Compensated Group for the Plan Year beginning with or within
the Plan Year of the Code Section 401(k) arrangement.
(iv) 2% plus the greater of (iii)(a) or (iii)(b), but no more than
twice the greater of (iii)(a) or (iii)(b).
This Section 14.06 does not apply unless, prior to application of the multiple
use limitation, the ADP and the ACP of the Highly Compensated Group each exceeds
125% of the respective percentages of the Nonhighly Compensated Group.
The Advisory Committee will determine whether the Plan satisfies the
multiple use limitation after applying the ADP test under Section 14.04 and the
ACP test under Section 14.05 and after making any corrective distributions
required by those Sections. If, after applying this Section 14.06, the Advisory
Committee determines the Plan has failed to satisfy the multiple use limitation,
the Advisory Committee will correct the failure by treating the excess amount as
excess aggregate contributions under Section 14.05.
47
ARTICLE XV
DIRECT ROLLOVERS
15.01 APPLICATION. This Article XV applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of the Plan to the contrary
that would otherwise limit a distributee's election under this Article XV, a
distributee may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover.
15.02 DEFINITIONS.
(a) "Eligible rollover distribution." An eligible rollover distribution
is any distribution of all or any portion of the balance to the credit
of the distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint lives (or
joint life expectancies) or the distributee and the distributee's
designated beneficiary, or for a specified period of ten years or more;
any distribution to the extent such distribution is required under Code
Section 401(a)(9); and the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion
of net unrealized appreciation with respect to employer securities).
(b) "Eligible retirement plan." An eligible retirement plan is an
individual retirement account described in Code Section 408(a), an
individual retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a qualified trust
described in Code Section 403(a), or a qualified trust described in
Code Section 401(a), that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is
an individual retirement account or individual retirement annuity.
(c) "Distributee." A distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's surviving
spouse and the Employee's or former Employee's spouse or former spouse
who is the alternate payee under a qualified domestic relations order,
as defined in Code Section414(p), are distributee with regard to the
interest of the spouse or former spouse.
(d) "Direct rollover." A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.
48
APPENDIX A
ACCOUNTS TRANSFERRED FROM
SPIDER STAGING CORPORATION 401(k) PLAN
AND
CERTAIN EMPLOYEES OF SPIDER STAGING CORPORATION
1.01 DEFINITIONS. "1992 Spider Staging Employee" means an employee of
Spider Staging Corporation who was employed by Spider Staging Corporation on
December 31, 1992. "Spider Staging Plan" means the Spider Staging Corporation
401(k) Savings Plan.
1.02 CONTINUING PARTICIPANTS. Notwithstanding Sections 2.01 and 2.02 of
the Plan, a 1992 Spider Staging Employee who was a participant in the Spider
Staging Plan on December 31, 1992, and is employed by Spider Staging Corporation
on January 1, 1993, shall be a Participant in the Plan on January 1, 1993.
1.03 ELIGIBILITY COMPUTATION PERIOD. If a 1992 Spider Staging Employee
has not satisfied the service requirement for eligibility to participate under
the Spider Staging Plan as of December 31, 1992, he or she may satisfy the
service requirement as provided in Section 2.02 of the Plan, or as modified in
the following sentence, whichever permits earlier participation in the Plan. As
modified for purposes of this Section 1.03, the third and fourth sentences of
Section 2.02 read: "If the Employee does not complete 1000 Hours of Service
during the 12 month period commencing with the Employment Commencement Date, the
Plan measures the subsequent periods as the 12 consecutive month periods
beginning with each anniversary of the Employee's Employment Commencement Date."
1.04 CREDITING SERVICE FOR ELIGIBILITY. For purposes of satisfying
Section 2.02 of the Plan (including as modified under Section 1.03 above of this
Appendix A), a 1992 Spider Staging Employee shall receive credit for a period of
service with Spider Staging Corporation before January 1, 1993, to the extent
that period of service is credited for eligibility purposes under the Spider
Staging Plan.
1.05 VESTING CREDIT. For purposes of vesting under Section 5.03 of
the Plan:
(a) Year of Service includes vesting credit for full years of service
as of December 31, 1992, to the extent credited for vesting purposes
under the Spider Staging Plan as of December 31, 1992; and
(b) A.1992 Spider Staging Employee shall receive vesting credit for his
or her number of Hours of Service with Spider Staging Corporation or
the Employer for the 12 month period beginning in 1992 on the
Employee's Employment Commencement Date with Spider Staging Corporation
(or its anniversary), to the extent credited for vesting purposes under
the Spider Staging Plan as of December 31, 1992.
1.06 DISTRIBUTIONS TO VESTED PARTICIPANTS UNDER SPIDER STAGING
CORPORATION 401(k) PLAN OTHER THAN 1992 SPIDER STAGING EMPLOYEES. With respect
to a participant in the Spider Staging Plan who retired, died or terminated
service with vested accrued benefits under the Spider Staging Plan (regardless
whether benefits have commenced), benefits shall be paid to, or in respect of,
such participant under the applicable sections of the Spider Staging Plan in
accordance with the terms of that plan.
1.07 VALUATION AND TRANSFER OF ACCOUNTS UNDER THE SPIDER STAGING
CORPORATION 401(k) SAVINGS PLAN. The value of the account of each participant
under the Spider Staging Plan shall be determined as of December 31, 1992. The
balance of that account shall be transferred to the trust established under the
Plan as of that date, shall constitute the balance of the Account of that
person.
1.08. PROTECTED BENEFITS. Accounts under the Plan representing accounts
transferred as described in Section 1.07 of this Appendix A shall be subject to
all provisions of the Plan relating to Accounts, provided, however, that Code
Section 411(d)(6) protected benefits pertaining to those accounts shall not be
eliminated (except as Treasury Regulations may permit). This means, for example,
that optional forms of benefits provided under the Spider Staging Plan as of
December 31, 1992, shall not be eliminated with respect to such transferred
accounts. (Benefits accrued under the Plan after December 31, 1992, however,
shall be paid only in one of the forms permitted under Section 6.02 of the
Plan.)
1.09. FORFEITURES. Any amount forfeited under the Spider Staging Plan
after the most recent reallocation of forfeitures and before January 1, 1993,
shall be reallocated under the terms of the Spider Staging Plan as of December
31, 1992.
1.10. SEPARATE ACCOUNTS. The Advisory Committee shall maintain separate
accounts representing accounts transferred as described in Section 1.07 of this
Appendix A.
1.11. DEFAULT ON A LOAN MADE UNDER SPIDER STAGING PLAN. To the extent
the assets in an account transferred as described in Section 1.07 of this
Appendix A consist of loans to the participant for whom the account
49
is maintained, the Plan shall treat a default in the same manner as provided
under the Spider Staging Plan as in effect on December 31, 1992, which
provides, in Section 6.01(k) of the Adoption Agreement:
If a Participant or Beneficiary defaults on a loan . . .the [Spider
Staging] Plan . . .[t]reats the default as a distributable event. The
Trustee, at the time of the default, will reduce the Participant's
Nonforfeitable Accrued Benefit by the lesser of the amount in default
(plus accrued interest) or the Plan's security interest in that
Nonforfeitable Accrued Benefit. To the extent the loan is attributable
to the Participant's Deferral Contributions Account, Qualified Matching
Contributions Account or Qualified Nonelective Contributions Account,
the Trustee will not reduce the Participant's Nonforfeitable Accrued
Benefit unless the Participant has separated from Service or unless the
Participant has attained age 59 1/2.
1.12 PARTICIPANT-DIRECTED INVESTMENT. Notwithstanding Section
10.03[A](a) of the Plan, the investment choices for accounts transferred as
described in Section 1.07 of this Appendix A and for employees of Spider Staging
Corporation shall not include the Employer Stock Fund until so designated by the
Advisory Committee.
1.13 EFFECTIVE DATE. This Appendix A is effective on and after January
1, 1993.
50
APPENDIX B
CERTAIN EMPLOYEES OF
ASI ROBOTIC SYSTEMS DIVISION OF
CARGILL DETROIT CORPORATION
1.01 DEFINITIONS. "1994 ASI Division Employee" means an employee of the
ASI Robotic Systems Division of Cargill Detroit Corporation who, on or before
January 3, 1995, accepts an offer of employment by Flow International
Corporation. The "Business" means the manufacture and sale of high precision
multi-axis gantry and cantilever robotics equipment through the ASI Robotic
Systems Division of Cargill Detroit Corporation.
1.02 CREDITING SERVICE FOR ELIGIBILITY. For purposes of satisfying
Section 2.02 of the Plan, a 1994 ASI Division Employee shall be credited with an
Hour of Service for each hour of service with Cargill Detroit Corporation while
working in the Business before January 3, 1995, as if such service had been
Service with Flow International Corporation.
1.03 PLAN ENTRY DATE. Notwithstanding Sections 1.16 and 2.01 of the
Plan, a 1994 ASI Division Employee who completes a Year of Service (taking into
account Section 1.02 of this Appendix B) on or before January 31, 1995, shall
become a Participant in the Plan on January 31, 1995 (if employed by Flow
International Corporation on that date).
1.04 CREDITING SERVICE FOR VESTING. For purposes of vesting under
Section 5.03 of the Plan, a 1994 ASI Division Employee shall be credited under
Section 5.06 of the Plan (subject to Sections 5.07 and 5.08 of the Plan) with an
Hour of Service for each hour of service with Cargill Detroit Corporation while
working in the Business before January 3, 1995, as if such service had been
Service with Flow International Corporation.
1.05 EFFECTIVE DATE. This Appendix B is effective on and after January
1, 1995.
51
APPENDIX C
CERTAIN EMPLOYEES OF
FLOW AUTOMATION SYSTEMS CORPORATION
1.01 DEFINITIONS. "Automation Employee" means an individual who was an
employee of Flow Automation Systems Corporation, formerly known as Dynovation
Machine Systems, Inc. ("Flow Automation"), on December 15, 1994.
1.02 CREDITING SERVICE FOR ELIGIBILITY. For purposes of satisfying
Section 2.02 of the Plan, an Automation Employee shall be credited with an Hour
of Service for each hour of service with Flow Automation before December 15,
1994, as if such service had been Service with Flow International Corporation.
1.03 CREDITING SERVICE FOR VESTING. For purposes of vesting under
Section 5.03 of the Plan (and for purposes of vesting service described in
Section 3.01(A) for Employer Matching Contributions), a an Automation Employee
shall be credited under Section 5.06 of the Plan (subject to Sections 5.07 and
5.08 of the Plan) with an Hour of Service for each hour of service with Flow
Automation before December 15, 1994, as if such service had been Service with
Flow International Corporation.
1.04 EFFECTIVE DATE. This Appendix C is effective on and after December
15, 1994.
52
APPENDIX D
FORMER CIS ROBOTICS EMPLOYEES
1.01 DEFINITIONS. "CIS Robotics" means CIS Robotics, Inc. "Former CIS
Robotics Employee" means an employee of CIS Robotics who was employed by CIS
Robotics on April 8, 1998. "CIS Robotics Plan" means the CIS Robotics 401(k)
Profit Sharing Plan & Trust. "Transferred Account" means the account of a Former
CIS Employee under the CIS Robotics Plan that is transferred from the CIS
Robotics Plan to the Plan in a trust-to-trust transfer.
1.02 CREDITING SERVICE FOR ELIGIBILITY. For purposes of satisfying
Section 2.02 of the Plan, a Former CIS Employee shall be credited with (1) all
service with which he or she is credited for eligibility purposes under the CIS
Robotics Plan, or (2) shall be credited with an Hour of Service for each hour of
service with CIS Robotics, as if such service had been Service with Flow
International Corporation, whichever method results in the Former CIS Employee
becoming a Participant in the Plan on the earliest Plan Entry Date.
1.03 VESTING CREDIT. For purposes of vesting under Section 5.03 of the
Plan (and for purposes of vesting service described in Section 3.01(A) of the
Plan for Employer Matching Contributions), a Former CIS Robotics Employee shall
be credited under Section 5.06 of the Plan (subject to Sections 5.07 and 5.08 of
the Plan) with all service with which he or she is credited for vesting purposes
under the CIS Robotics Plan.
1.04 TRANSFERRED ACCOUNTS.
(a) A Former CIS Robotics Employee shall be 100% vested in his or her
Transferred Account.
(b) Immediately after the transfer and assignment of a Transferred
Account to the Plan from the CIS Robotics Plan, each Participant shall
have account balances in the Plan equal to the sum of the account
balances each Participant had in the CIS Robotics Plan and in the Plan
immediately prior to the transfer and assignment.
(c) A Transferred Account shall be subject to all provisions of the
Plan relating to Accounts under the Flow Plan, provided, however, that
Code Section 411(d)(6) protected benefits pertaining to a Transferred
Account shall not be eliminated (except as Treasury Regulations may
permit).
(d) If a Transferred Account includes amounts attributable to
contributions other than Code section 401(k) salary deferral
contributions (and the related gains, earnings and losses), then unless
and until the entire account balance under the Flow Plan of the
affected Former CIS Robotics Employee is 100% nonforfeitable, the
Advisory Committee shall maintain separate accounts for that Former CIS
Robotics Employee to reflect properly the different percentages of
vesting he or she may have in the account balance under the Flow Plan.
1.05 EFFECTIVE DATE. This Appendix D is effective on and after April 8,
1998.
53
EXECUTION PAGE
IN WITNESS WHEREOF, Flow International Corporation, the Employer, by
its duly authorized representative, has executed this Flow International
Corporation Voluntary Pension and Salary Deferral Plan and Trust Agreement, and
Northwestern Trust and Investors Advisory Company, the Trustee, by its duly
authorized representative, has accepted its position and agreed to the duties,
obligations and responsibilities under this Flow International Corporation
Voluntary Pension and Salary Deferral Plan and Trust Agreement.
"EMPLOYER" "TRUSTEE"
FLOW INTERNATIONAL CORPORATION NORTHWESTERN TRUST AND INVESTORS
ADVISORY COMPANY
By: [Illegible] By: [Illegible]
-------------------------------- --------------------------------
Title: Secretary Title: Vice President
-------------------------- --------------------------
December 23, 1998 December 28, 1998
54