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Exhibit 10.1
MICHAELS STORES, INC.
EMPLOYEES 401(K) PLAN
(AS AMENDED AND RESTATED EFFECTIVE AUGUST 1, 1999)
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TABLE OF CONTENTS
P R E A M B L E
ARTICLE 1
DEFINITIONS
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1.1 Account..................................................................................................2
1.2 Account Balance..........................................................................................2
1.3 Actual Deferral Percentage...............................................................................2
1.4 Adjustment Factor........................................................................................2
1.5 Administration Committee.................................................................................2
1.6 Average Actual Deferral Percentage.......................................................................2
1.7 Average Contribution Percentage..........................................................................2
1.8 Beneficiary..............................................................................................2
1.9 Board....................................................................................................2
1.10 Code.....................................................................................................2
1.11 Company..................................................................................................3
1.12 Compensation.............................................................................................3
1.13 Contribution Percentage..................................................................................4
1.14 Effective Date...........................................................................................4
1.15 Employee.................................................................................................4
1.16 Employee Contributions...................................................................................6
1.17 Employee Contribution Account............................................................................6
1.18 Employer.................................................................................................6
1.19 Employer Matching Contributions..........................................................................6
1.20 Employer Matching Contribution Account...................................................................6
1.21 Employment Commencement Date.............................................................................6
1.22 ERISA....................................................................................................6
1.23 Excess Aggregate Contributions...........................................................................6
1.24 Excess Contributions.....................................................................................6
1.25 Excess Deferrals.........................................................................................6
1.26 Family Member............................................................................................7
1.27 Highly Compensated Employee..............................................................................7
1.28 Hour of Service..........................................................................................8
1.29 Investment Committee....................................................................................10
1.30 Leave of Absence........................................................................................10
1.31 Limitation Year.........................................................................................10
1.32 Normal Retirement Date..................................................................................10
1.33 Nonhighly Compensated Employee..........................................................................10
1.34 One-Year Break in Service...............................................................................10
1.35 Participant.............................................................................................11
1.36 Period of Absence.......................................................................................11
1.37 Plan....................................................................................................11
1.38 Plan Year...............................................................................................11
1.39 Prior Plan Account......................................................................................11
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1.40 Rollover Contributions..................................................................................11
1.41 Rollover Contribution Account...........................................................................11
1.42 Salary Reduction Contribution Election..................................................................11
1.43 Salary Reduction Contribution Account...................................................................11
1.44 Salary Reduction Contributions..........................................................................11
1.45 Termination Date........................................................................................11
1.46 Trust or Trust Fund.....................................................................................12
1.47 Trust Agreement.........................................................................................12
1.48 Trustee.................................................................................................12
1.49 Valuation Date..........................................................................................12
1.50 Vesting Service.........................................................................................12
1.51 Year of Vesting Service.................................................................................12
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
2.1 Commencement of Plan Participation......................................................................13
2.2 Participation Requirements..............................................................................13
2.3 Termination of Employment...............................................................................13
2.4 Rehired Employee........................................................................................13
2.5 Loss of Participant Status..............................................................................13
2.6 Suspension of Participation.............................................................................13
2.7 Reemployment; Vesting Service...........................................................................14
2.8 Notice of Participation.................................................................................14
2.9 Veterans' Reemployment Rights...........................................................................14
ARTICLE 3
SALARY REDUCTION CONTRIBUTIONS
3.1 Salary Reduction Contributions..........................................................................15
3.2 Salary Reduction Contribution Election..................................................................16
3.3 Suspension of, or Change in, Salary Reduction Contribution Election.....................................16
3.4 Deferral Percentage Limitation..........................................................................16
3.5 Special Rules on Deferral Percentage Limitations........................................................17
3.6 Adjustment of Salary Reduction Contributions............................................................18
3.7 Aggregate Limit.........................................................................................19
3.8 Return of Contributions Above the Aggregate Limit.......................................................20
ARTICLE 4
EMPLOYER MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS
4.1 Employer Matching Contributions.........................................................................21
4.2 Timing of Employer Matching Contributions...............................................................21
4.3 Employee Contributions..................................................................................21
4.4 Percentage Limitation on Employer Matching Contributions and
Employee Contributions..................................................................................22
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4.5 Special Rules for Contribution Percentage Limit Testing.................................................23
4.6 Adjustments To Contributions............................................................................23
4.7 Overall Limitation on Annual Additions..................................................................24
4.8 Special Rules...........................................................................................25
4.9 Definitions.............................................................................................26
4.10 Reversion of Employer Matching Contributions............................................................27
ARTICLE 5
PARTICIPANT ACCOUNTS
5.1 Separate Subaccounts....................................................................................28
5.2 Valuation of Trust Fund.................................................................................28
5.3 Statements..............................................................................................28
ARTICLE 6
INVESTMENTS
6.1 Trust Fund..............................................................................................29
6.2 Authorized Investments and Investment Control...........................................................29
6.3 Assumption of Risk by Participants......................................................................30
6.4 General Provisions Regarding Investment Direction.......................................................30
ARTICLE 7
DEATH BENEFITS AND BENEFICIARY DESIGNATIONS
7.1 Distribution Due To Death...............................................................................32
7.2 Beneficiary Designation.................................................................................32
ARTICLE 8
VESTING AND TERMINATION OF EMPLOYMENT
8.1 Vesting in Salary Reduction, Employee and Rollover Contributions........................................34
8.2 Vesting in Employer Matching Contributions..............................................................34
8.3 Forfeitures.............................................................................................35
8.4 Distribution of Vested Benefits.........................................................................35
ARTICLE 9
DISTRIBUTION OF BENEFITS
9.1 Normal Form of Benefit..................................................................................36
9.2 Time of Distribution....................................................................................36
9.3 Investment of Account Balance of Terminated Participant.................................................37
9.4 Latest Distribution Date................................................................................37
9.5 Mandated Commencement of Benefits.......................................................................37
9.6 Direct Rollovers........................................................................................37
9.7 Waiver of 30 Day Notice.................................................................................38
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ARTICLE 10
IN-SERVICE WITHDRAWALS
10.1 In-Service Withdrawals Permitted........................................................................39
10.2 In-Service Withdrawal Application and Notice............................................................39
10.3 Spousal Consent.........................................................................................39
10.4 In-Service Withdrawal Approval..........................................................................39
10.5 Payment Form and Medium.................................................................................39
10.6 Source and Timing of In-Service Withdrawal Funding......................................................39
10.7 Withdrawals from Rollover Contributions Account and Employee
Contributions Account...................................................................................40
10.8 Hardship Withdrawals....................................................................................40
10.9 Over Age 59 1/2 Withdrawals.............................................................................41
ARTICLE 11
LOANS
11.1 Overall Limitations.....................................................................................42
11.2 Terms of Loan...........................................................................................42
11.3 Source of Loans.........................................................................................43
11.4 Withholding and Application of Loan Payments............................................................43
11.5 Default.................................................................................................43
ARTICLE 12
PLAN FIDUCIARIES
12.1 Fiduciaries.............................................................................................45
12.2 Allocation of Responsibilities..........................................................................45
12.3 Procedures for Delegation and Allocation of Responsibilities............................................46
12.4 General Fiduciary Standards.............................................................................46
12.5 Liability Among Co-Fiduciaries..........................................................................47
ARTICLE 13
COMPANY AND EMPLOYER ADMINISTRATION PROVISIONS
13.1 Information.............................................................................................49
13.2 No Liability............................................................................................49
13.3 Company and Employer Action.............................................................................49
13.4 Indemnity...............................................................................................49
13.5 Amendment to Vesting Schedule...........................................................................49
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ARTICLE 14
COMMITTEE ADMINISTRATION PROVISIONS
14.1 Appointment of Committees...............................................................................51
14.2 Term....................................................................................................51
14.3 Compensation............................................................................................51
14.4 Power of Administration Committee.......................................................................51
14.5 Power of Investment Committee...........................................................................52
14.6 Manner of Action........................................................................................53
14.7 Authorized Representative...............................................................................53
14.8 Nondiscrimination.......................................................................................53
14.9 Interested Member.......................................................................................53
14.10 Books and Records.......................................................................................53
ARTICLE 15
THE TRUST
15.1 Purpose of the Trust Fund...............................................................................54
15.2 Appointment of Trustee..................................................................................54
15.3 Exclusive Benefit of Participants.......................................................................54
15.4 Benefits Limited to the Trust Fund......................................................................54
ARTICLE 16
PARTICIPANT ADMINISTRATION PROVISIONS
16.1 Personal Data to Administration Committee...............................................................55
16.2 Address for Notification................................................................................55
16.3 Information Available...................................................................................55
16.4 Claims Procedure........................................................................................55
16.5 Appeal Procedure for Denial of Benefits.................................................................55
ARTICLE 17
AMENDMENT OR TERMINATION
17.1 Right to Amend..........................................................................................57
17.2 Right to Terminate Plan.................................................................................57
17.3 Obligations Upon Merger, Consolidation or Transfer......................................................57
17.4 Obligations Upon Termination, Partial Termination or Discontinuance.....................................57
17.5 Continued Funding After Plan Termination................................................................58
17.6 Distribution Upon Disposition of Assets or Subsidiary...................................................58
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ARTICLE 18
GENERAL PROVISIONS
18.1 No Contract of Employment; No Rights Implied............................................................59
18.2 Nonalienation...........................................................................................59
18.3 Incapacity..............................................................................................59
18.4 Service in More Than One Capacity.......................................................................60
18.5 Intent to Qualify.......................................................................................60
ARTICLE 19
ROLLOVER CONTRIBUTIONS AND TRANSFERS
19.1 Rollover From Other Plans...............................................................................61
19.2 Rollover From Conduit Individual Retirement Arrangement.................................................61
19.3 Transfers Directly from Other Plans.....................................................................61
19.4 Mistaken Rollover.......................................................................................62
ARTICLE 20
TOP-HEAVY PROVISIONS
20.1 Top-Heavy Plan Defined..................................................................................63
20.2 Other Definitions.......................................................................................64
20.3 Top-Heavy Contributions.................................................................................64
20.4 Adjustment to Limitation on Annual Additions............................................................65
ARTICLE 21
QUALIFIED DOMESTIC RELATIONS ORDERS
21.1 Terms of QDRO...........................................................................................66
21.2 QDRO Definitions........................................................................................66
21.3 Distribution Before Termination of Employment...........................................................67
21.4 Treatment of Former Spouse..............................................................................67
21.5 Notification of Receipt of Order........................................................................68
21.6 Separate Accounting.....................................................................................68
ARTICLE 22
EMPLOYER PARTICIPATION
22.1 Adoption by Employers...................................................................................69
22.2 Withdrawal by Employer..................................................................................69
22.3 Adoption Contingent Upon Initial and Continued Qualification............................................69
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ARTICLE 23
MISCELLANEOUS
23.1 Receipts................................................................................................71
23.2 No Guarantee of Interest................................................................................71
23.3 Payment of Expenses.....................................................................................71
23.4 Records.................................................................................................71
23.5 Interpretations and Adjustments.........................................................................71
23.6 Evidence................................................................................................71
23.7 Severability............................................................................................71
23.8 Notice..................................................................................................71
23.9 Successors..............................................................................................72
23.10 Headings................................................................................................72
23.11 Governing Law...........................................................................................72
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MICHAELS STORES, INC.
EMPLOYEES 401(K) PLAN
(AS AMENDED AND RESTATED EFFECTIVE AUGUST 1, 1999)
PREAMBLE
Michaels Stores, Inc., a Delaware corporation, amends and restates the Michaels
Stores, Inc. Employees 401(k) Plan (the "Plan") generally effective as of August
1, 1999. Except as otherwise provided in the Plan, the provisions of the Plan
will apply to each Participant who completes an Hour of Service with an Employer
after August 31, 1999, and to distributions made after August 31, 1999, to both
active Participants and to Participants who terminated employment at any time.
The Plan is designed to provide Eligible Employees and Beneficiaries with the
opportunity to accumulate capital for their future economic security, to
encourage Eligible Employees to remain in the service of the Employers and to
provide additional incentives for Employee performance on behalf of the
Employer. The Plan was originally adopted effective as of February 1, 1987;
amended and restated effective May 1, 1992; amended and restated effective
February 1, 1994; and amended and restated effective October 1, 1996.
The Plan is intended to be a profit sharing plan qualifying under Section 401(a)
of the Internal Revenue Code of 1986, as amended, with a cash or deferred
arrangement qualifying under Section 401(k) of such Code. The Plan is intended
to comply with the requirements of the Employee Retirement Income Security Act
of 1974, as amended, and the regulations promulgated thereunder; the provisions
of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations
promulgated thereunder; and other applicable Federal laws and regulations.
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ARTICLE 1
DEFINITIONS
The following words and phrases when used with an initial capital letter shall
have the meanings set out in this Article 1; the masculine, feminine and neuter
gender shall include the others unless a different meaning is plainly required
by the context; and words importing the singular shall include the plural and
the plural the singular whenever the context requires.
1.1 ACCOUNT shall mean the record of each Participant's and
Beneficiary's Plan interest and changes thereto as reflected in the Plan's
books and records. The Administration Committee may cause subaccounts to be
maintained for each Participant as necessary to reflect different types of
Plan contributions allocated on behalf of each Participant.
1.2 ACCOUNT BALANCE shall mean the sum of the amounts credited to a
Participant's Account as of any Valuation Date.
1.3 ACTUAL DEFERRAL PERCENTAGE shall mean the ratio (expressed as a
percentage) of the Salary Reduction Contributions made on behalf of each
Eligible Employee for the Plan Year to the Eligible Employee's Compensation
for the Plan Year. If an Eligible Employee makes no Salary Reduction
Contributions, the Actual Deferral Percentage with respect to such person
shall be zero. The Actual Deferral Percentage of each Eligible Employee shall
be calculated to the nearest hundredth of a percentage point.
1.4 ADJUSTMENT FACTOR shall mean the cost of living adjustment factor
prescribed by the Secretary of the Treasury under Code Section 415(d) as
applied to such items and in such manner as the Secretary shall provide.
1.5 ADMINISTRATION COMMITTEE shall mean the persons appointed pursuant
to Article 14 who are responsible for Plan administration.
1.6 AVERAGE ACTUAL DEFERRAL PERCENTAGE shall mean the average of the
Actual Deferral Percentages of the Eligible Employees in a group.
1.7 AVERAGE CONTRIBUTION PERCENTAGE shall mean the average of the
Contribution Percentages of the Eligible Employees in a group.
1.8 BENEFICIARY shall mean the person or entity designated in writing by
a Participant, or otherwise determined in accordance with Section 7.2, to
receive a Participant's Account Balance in the event of the Participant's
death.
1.9 BOARD shall mean the Board of Directors of the Company, as constituted
from time to time.
1.10 CODE shall mean the Internal Revenue Code of 1986, as amended from
time to time.
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1.11 COMPANY shall mean Michaels Stores, Inc., a Delaware corporation.
1.12 COMPENSATION shall have the following meanings for specific purposes
of the Plan:
(a) For purposes of the limitations imposed by Code Section 415 and the
Top-Heavy plan minimum contribution requirements of Code Section 416,
"Compensation" shall mean the total compensation received by an
Eligible Employee from all Employers for personal services rendered to
the Employers during the Plan Year as reported on the Participant's
Federal Income Tax Withholding Statement (Form W-2; Box 10, or
substantially similar equivalent form) including base salary, bonuses,
commissions, incentive pay and overtime. For purposes of this
subsection, the term "Compensation" shall also include severance
allowances, prizes or awards, amounts representing reimbursement for
travel or other expense or mileage allowances, moving expense
reimbursement, gift certificates, the imputed fair market value of an
Employer provided automobile and excess group term life insurance
coverage. In addition, the term "Compensation" shall not include any
amounts realized from the exercise of nonqualified stock options or any
amounts included in taxable income when restricted stock (or other
property) held by an Employee either becomes freely transferable or is
no longer subject to a substantial risk of forfeiture. The term
"Compensation" shall be interpreted and construed in accordance with
Treasury Regulation Section 1.415-2(d)(2), exclusive of amounts listed
in Treasury Regulation Section 1.415-2(d)(3). Notwithstanding any
provisions of the foregoing description to the contrary, for Plan Years
beginning after December 31, 1997, "Compensation" shall include an
Employee's Salary Reduction Contributions and elective or salary
reduction contributions pursuant to a cafeteria plan under Code Section
125 or a tax-sheltered annuity under Code Section 403(b).
(b) For purposes of determining the amount of Salary Reduction
Contributions and Employer Matching Contributions, the term
"Compensation" shall have the same meaning as in the preceding
subsection; provided that any amounts attributable to an election by an
Eligible Employee to reduce such person's Compensation pursuant to the
Plan or any other plan under Code Sections 125 or 401(k) sponsored by
an Employer shall be disregarded. For purposes of this subsection, the
term "Compensation" shall not include severance allowances, prizes,
awards, amounts representing reimbursement for travel or other expense
or mileage allowances, moving expense reimbursement, gift certificates,
the imputed fair market value of an Employer provided automobile or
excess group term life insurance coverage. In addition, the term
"Compensation" shall not include any amounts realized from the exercise
of nonqualified stock options or any amounts included in taxable income
when restricted stock (or other property) held by an Employee either
becomes freely transferable or is no longer subject to a substantial
risk of forfeiture. Any Compensation paid or payable by reason of
services performed before the date an Employee is eligible to
participate in the Plan shall also be disregarded. Notwithstanding any
Plan provision to the contrary, the term "Compensation" shall be
interpreted and construed in a manner consistent with the safe harbor
definition contained in Treasury Regulation Section 1.414(s)-1(c)(3).
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(c) For purposes of identifying a "Key Employee" under Code Section
416, the term "Compensation" shall have the same meaning as in
subsection (a) above, determined without regard to elections under Code
Sections 125 and 401(k) for Plan Years beginning before January 1,
1998.
(d) The annual Compensation taken into account under the Plan for any
Plan Year shall not exceed $150,000 as adjusted by the Adjustment
Factor for Plan Years beginning on or after February 1, 1994. For Plan
Years beginning on or after February 1, 1989 and ending on or before
January 31, 1994, the annual Compensation taken into account under the
Plan shall not exceed $200,000 as adjusted by the Adjustment Factor.
For Plan Years beginning before January 1, 1997, the Compensation of a
Participant who is a 5-percent owner (as defined in Code Section
416(i)(1)) or one of the ten Highly Compensated Employees paid the
greatest amount of Compensation during the Plan Year shall be
aggregated with the Compensation of such Participant's spouse or lineal
descendants under the age of 19 as of the close of the Plan Year to the
extent required by Code Section 401(a)(17). In addition, and only to
the extent required by Code Section 414(q)(6), if a person is a Family
Member of a Participant who is a 5-percent owner (as defined in Code
Section 416(i)(1)) or one of the ten Highly Compensated Employees paid
the greatest amount of Compensation, then:
(1) such Family Member shall not be considered a
separate Employee, and
(2) any Compensation paid to such Family Member and any
benefit on behalf of such Family Member shall be treated as if
paid to or on behalf of the 5-percent owner or Highly
Compensated Employee.
If, as a result of the foregoing rules, the adjusted annual
compensation limitation is exceeded, then the limitation shall be
applied in a pro rata manner among the affected persons in proportion
to each such person's Compensation as determined under this Section
prior to the application of this limitation. This subsection shall be
construed and applied in a manner consistent with Code Sections
401(a)(17) and 414(q)(6).
1.13 CONTRIBUTION PERCENTAGE shall mean the ratio of the Employer
Matching Contributions on behalf of each Eligible Employee and the Employee
Contributions made by the Eligible Employee for the Plan Year to such
person's Compensation for the Plan Year. If an Eligible Employee does not
receive an allocation of Employer Matching Contributions and makes no
Employee Contributions, the Actual Contribution Percentage with respect to
such person shall be zero. The Actual Contribution Percentage of each
Eligible Employee shall be calculated to the nearest hundredth of a
percentage point.
1.14 EFFECTIVE DATE shall mean August 1, 1999.
1.15 EMPLOYEE shall mean any person who is receiving remuneration for
personal services rendered in the employment of an Employer (or in the
employment of any other entity required to be aggregated with an Employer
under Code Section 414(b), (c), (m) or (o)) including any
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officer or director of the Company so employed, including any leased employee
deemed to be an employee of an Employer as provided in Code Section 414(n) or
(o), except as provided below in this Section; and including any person who
would be receiving such remuneration except for an authorized Leave of Absence.
Notwithstanding the foregoing, the term "Employee" shall not include any person
not classified by an Employer as an Employee, notwithstanding a final
determination by any governmental agency that such person, in fact, is (or was)
an Employee; provided that this exclusion shall not apply prospectively from the
date of such determination with respect to any person who remains in the
employment of an Employer after the date of such determination.
The term "ELIGIBLE EMPLOYEE" shall mean all Employees of an Employer, except the
following:
(a) Employees included in a unit of Employees covered by a collective
bargaining agreement between an Employer and employee representatives
if retirement benefits were the subject of good faith bargaining and if
2% or fewer of the Employees who are covered pursuant to that agreement
are professionals as defined in Treasury Regulation Section 1.410(b)-9.
The term "employee representatives" does not include any organization
more than half of whose members are Employees who are owners, officers
or executives of an Employer,
(b) Employees who are nonresident aliens (within the meaning of Code
Section 7701(b)(1)(B)) and who receive no earned income (within the
meaning of Code Section 911(d)(2)) from an Employer that constitutes
income from sources within the United States (within the meaning of
Code Section 861(a)(3)),
(c) any person receiving payments as a consultant, independent
contractor or other arrangement excluded from the common law definition
of the term "Employee",
(d) all leased employees as defined below in this Section, and
(e) Employees of any employer that has not adopted the Plan.
Notwithstanding any Plan provision to the contrary, service performed by
Employees excluded from eligibility for participation pursuant to Sections
1.15(a) and 1.15(e) shall be considered for purposes of crediting Years of
Vesting Service.
SPECIAL PROVISIONS FOR LEASED EMPLOYEES
The term "LEASED EMPLOYEE" shall mean any person (other than an
Employee) who pursuant to an agreement between an Employer and any
other person (a "leasing organization") has performed services for an
Employer (or for an Employer and related persons determined in
accordance with Code Section 414(n)(6)) on a substantially full time
basis for a period of at least one year and (i) for periods prior to
January 1, 1997, such services are of a type historically performed by
employees in the business field of the Employers; (ii) for periods
after January 1, 1997, such services are performed under the primary
direction or control of the Employers. Contributions or benefits
provided to
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Leased Employees by the leasing organization that are attributable to
services performed for an Employer shall be treated as provided by the
Employer.
Leased Employees shall not be considered as Employees if: (i) such
person is covered by a money purchase pension plan providing: (1) a
nonintegrated employer contribution rate of at least 10% of
compensation (as defined in Code Section 415(c)(3)) but including
amounts contributed pursuant to a salary reduction agreement that are
excludable from such person's gross income under Code Sections 125,
402(e)(3), 402(h)(1)(B) or 403(b); (2) immediate participation; and (3)
full and immediate vesting; and (ii) Leased Employees do not constitute
more than 20% of the Nonhighly Compensated Employees of all Employers.
1.16 EMPLOYEE CONTRIBUTIONS shall mean the amounts contributed by an
Eligible Employee pursuant to Section 4.3.
1.17 EMPLOYEE CONTRIBUTION ACCOUNT shall mean the subaccount into which
Employee Contributions and investment earnings on those contributions shall
be credited.
1.18 EMPLOYER shall mean the Company and any subsidiary or other
affiliate of the Company that adopts the Plan in a manner satisfactory to the
Board.
1.19 EMPLOYER MATCHING CONTRIBUTIONS shall mean the amounts contributed
pursuant to Article 4.
1.20 EMPLOYER MATCHING CONTRIBUTION ACCOUNT shall mean the subaccount
into which Employer Matching Contributions and investment earnings on those
contributions shall be credited.
1.21 EMPLOYMENT COMMENCEMENT DATE shall mean the date on which an
Employee is first credited with an Hour of Service for the performance of
duties for an Employer. The Administration Committee may cause service with
unrelated entities to be recognized for eligibility and/or vesting purposes
of the Plan; provided that any such action by the Administration Committee
shall be by written resolution.
1.22 ERISA shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
1.23 EXCESS AGGREGATE CONTRIBUTIONS shall mean Employer Matching
Contributions and Employee Contributions in excess of the Contribution
Percentage limit as described in Code Section 401(m)(6)(B).
1.24 EXCESS CONTRIBUTIONS shall mean Salary Reduction Contributions in
excess of the Actual Deferral Percentage limit as described in Code Section
401(k)(8)(B).
1.25 EXCESS DEFERRALS shall mean Salary Reduction Contributions in excess
of the limits imposed by Code Section 402(g).
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1.26 FAMILY MEMBER shall mean an Employee, such Employee's spouse, lineal
ascendants and descendants and the spouses of such lineal ascendants and
descendants as described in Code Section 414(q)(6).
1.27 HIGHLY COMPENSATED EMPLOYEE shall mean any Employee who performs
services for an Employer during the determination year and who, during the
look-back year:
(a) received Compensation from an Employer in excess of $75,000
multiplied by the Adjustment Factor,
(b) received Compensation from an Employer in excess of $50,000
multiplied by the Adjustment Factor and was a member of the top-paid
group for such year, or
(c) was an officer of an Employer and received Compensation during such
year that is greater than 50% of the dollar limitation in effect under
Code Section 415(b)(1)(A).
The term "HIGHLY COMPENSATED EMPLOYEE" also includes:
(d) Employees who are both described in the preceding sentence if the
term "determination year" is substituted for the term "look-back year"
and the Employee is one of the 100 Employees who received the most
Compensation from an Employer during the determination year, and
(e) Employees who are 5-percent owners at any time during the
look-back year or determination year.
If no officer has satisfied the Compensation requirement of subsection (c) above
during either a determination year or look-back year, the highest paid officer
for such year shall be treated as a Highly Compensated Employee. No more than 50
Employees (or if lesser, the greater of three Employees or 10% of the Employees)
shall be treated as officers.
The determination year shall be the Plan Year. For Plan Years beginning after
December 31, 1996, the look-back year shall be the determination year.
If an Employee is, during a determination year or look-back year, a Family
Member of either a 5- percent owner who is an active or former Employee or a
Highly Compensated Employee who is one of the ten most Highly Compensated
Employees ranked on the basis of Compensation paid by an Employer during such
year, then the Family Member and the 5-percent owner or top ten Highly
Compensated Employee shall be aggregated. In such case, the Family Member and 5-
percent owner or top ten Highly Compensated Employee shall be treated as a
single Employee receiving Compensation and contributions or benefits of the
Family Member and 5-percent owner or top ten Highly Compensated Employee.
Effective for Plan Years beginning after December 31, 1996, "Highly Compensated
Employee" shall mean any Employee who (i) during the current or the preceding
Plan Year, was at any time a 5-percent owner (as such term is defined in Code
Section 416(i)(1)), or (ii) for the preceding
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Plan Year, received Compensation from an Employer (and any other entity required
to be aggregated with an Employer under Code Section 414(b), (c), (m) or (o)) in
excess of the amount in effect for such Plan Year under Code Section
414(q)(1)(B).
"Highly Compensated Employee" shall include a former Employee whose termination
of employment occurred prior to the Plan Year and who was a Highly Compensated
Employee for the Plan Year in which his termination of employment occurred or
for any Plan Year ending on or after his 55th birthday.
For purposes of this Section 1.27, the term "Compensation" shall mean (i) for
the period prior to January 1, 1998, the sum of an Employee's Compensation under
Section 1.12(a) and the Employee's Salary Reduction Contributions and elective
or salary reduction contributions pursuant to a cafeteria plan under Code
Section 125 or a tax-sheltered annuity under Code Section 403(b), and (ii) for
the period commencing on and after January 1, 1998, an Employee's Compensation
under Section 1.12(a), and shall be subject to the limitation described in
Section 1.12(d).
The determination of who is a Highly Compensated Employee, including the
determination of the number and identity of Employees in the top-paid group, the
top 100 Employees, the number of Employees treated as officers and the
Compensation that is considered shall be made in accordance with Code Section
414(q) and the Treasury Regulations promulgated thereunder.
1.28 HOUR OF SERVICE shall mean:
(a) each hour for which an Employee is directly or indirectly paid or
entitled to payment for the performance of duties for an Employer; such
hours shall be credited to the computation period in which the duties
are performed, and
(b) each hour for which an Employee is directly or indirectly entitled
to payment on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity, disability,
layoff, jury duty, military duty or leave of absence; except that:
(1) not more than 501 Hours of Service shall be credited in
each single computation period during which the Employee
performs no duties, and
(2) Hours of Service shall not be counted where such
payment is made or is due:
(A) under a plan maintained solely for the purpose of
complying with applicable worker's compensation,
unemployment or disability insurance laws, or
(B) solely to reimburse an Employee for medical or
medically related expenses,
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Hours credited under this subsection (b) shall be credited to the
computation period in which the period during which no duties were
performed occurred, and
(c) each hour for which back pay, irrespective of payment due to
mitigation of damages, is either awarded or agreed to by an Employer.
Such hours shall be credited to the computation period to which the
award or agreement for back pay pertains rather than to the computation
period in which the award, agreement or payment is made; provided, that
the limits under subsection (b) above are applicable and that an
Employee shall not be entitled to additional Hours of Service under
this subsection (c) for the same Hours of Service credited under
subsections (a) or (b).
Hours of Service shall be calculated and credited in a manner consistent with
Department of Labor Regulation Sections 2530.200b-2(b) and (c), which are
incorporated by reference in the Plan.
Hours shall be credited on an equivalency basis pursuant to which an Employee
shall be credited with 190 Hours of Service for each month he performs an Hour
of Service for the Employer.
In determining Hours of Service for the purpose of determining whether an
Employee has incurred a One-Year Break In Service, if such Employee is absent
from employment because of (i) the Employee's pregnancy, (ii) the birth of the
Employee's child, (iii) the placement of a child with the Employee in connection
with the adoption of such child by such Employee or (iv) the need to care for
such Employee's child during the period immediately after such child's birth or
placement, then the following hours shall be considered as Hours of Service:
(d) the Hours of Service that otherwise would normally have been
credited to such Employee but for such absence, or
(e) in any case in which the Administration Committee is unable to
determine the number of hours described in subsection (d) above,
eight Hours of Service per day of absence,
provided that no more than 501 Hours of Service need be credited to an Employee
because of such pregnancy or placement.
The Hours of Service described in the preceding paragraph shall be treated as
Hours of Service only in the period in which the absence from employment begins
if an Employee would be prevented from incurring a One-Year Break in Service in
such year solely because the period of absence is considered as Hours of Service
under subsection (d) or (e). In any other case, such Hours of Service shall be
considered as Hours of Service in the immediately succeeding period.
Hours of Service shall not be credited to an Employee on account of pregnancy or
placement of a child for adoption as described above unless such Employee
furnishes to the Administration Committee such timely information as the
Administration Committee may require to establish (i) that the absence from
employment is for the reasons described above and (ii) to establish the number
of days for which there was such an absence.
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1.29 INVESTMENT COMMITTEE shall mean the persons appointed pursuant to
Article 14 who are responsible for Plan investments, except as otherwise
provided in the Plan.
1.30 LEAVE OF ABSENCE shall mean an absence authorized by an Employer
under its personnel practices provided that the Employee resumes service with
an Employer within the period specified in the authorization for the Leave of
Absence.
For purposes of determining an Employee's termination of employment date, a
Leave of Absence shall not exceed a period of 365 consecutive days.
Notwithstanding the foregoing, service in the United States Armed Forces shall
constitute an authorized Leave of Absence and shall be credited as employment
for purposes of determining a Participant's Years of Vesting Service provided
that:
(a) the Employee leaves the employ of an Employer to enter the
service of the Armed Forces through the operation of any law, and
(b) the Employee returns to the employ of an Employer within the
period provided by law for the protection of the Employee's
reemployment rights.
1.31 LIMITATION YEAR shall mean the Plan Year; provided that the
Limitation Year for the period beginning on February 1, 1996 shall be a short
period ending on December 31, 1996. The adjustments described in Section
1.415-2(b)(4)(iii) of the Treasury Regulations shall be applied with respect
to such short Limitation Year (or limitation period).
1.32 NORMAL RETIREMENT DATE shall mean the date that a Participant attains
age 65.
1.33 NONHIGHLY COMPENSATED EMPLOYEE shall mean an Employee who is neither
a Highly Compensated Employee nor, for Plan Years beginning before January 1,
1997, a Family Member of a Highly Compensated Employee.
1.34 ONE-YEAR BREAK IN SERVICE shall mean a Period of Absence of at least
365 consecutive days. A One-Year Break in Service shall commence on the first
day of an Employee's Period of Absence and shall end on the day on which the
Employee again performs an Hour of Service.
If any Employee who is absent from employment because of (i) the Employee's
pregnancy, (ii) the birth of the Employee's child, (iii) the placement of a
child with the Employee in connection with the Employee's adoption of the child,
or (iv) the need to care for such child immediately following such birth or
placement, will be absent for such reason beyond the first anniversary of the
first date of absence, the Employee's Period of Absence, solely for purposes of
preventing a One-Year Break in Service, shall commence on the second anniversary
of the first day of absence from employment. The period of absence from
employment between the first and second anniversaries of the first date of
absence from employment shall not be counted as a Period of Absence or for
purposes of determining Years of Vesting Service. The provisions of this
paragraph shall not apply to an Employee unless the Employee furnishes to the
Administration Committee such timely information that the Administration
Committee may
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reasonably require to establish (i) that the absence from employment is for one
of the reasons specified in this paragraph and (ii) the number of days for which
there was such an absence.
1.35 PARTICIPANT shall mean any Employee or former Employee who has an
Account Balance.
1.36 PERIOD OF ABSENCE shall mean the period of time beginning on an
Employee's Termination Date and ending on the date he again performs an Hour
of Service.
1.37 PLAN shall mean the Michaels Stores, Inc. Employees 401(k) Plan (As
Amended and Restated Effective August 1, 1999).
1.38 PLAN YEAR shall mean (i) for the period beginning on February 1,
1996, the eleven month period ending December 31, 1996 and (ii) for all
periods after December 31, 1996, the twelve month period beginning January 1
and ending December 31.
1.39 PRIOR PLAN ACCOUNT shall mean the subaccounts, other than
Participants' Rollover Contribution Accounts, resulting from a merger into
the Plan of any tax-qualified plan previously sponsored by the Company or one
of its subsidiaries or other affiliates. The Administration Committee may
establish one or more Prior Plan Accounts, and each Prior Plan Account may be
subdivided into such subaccounts as the Administration Committee determines
is necessary in connection with the Plan administration.
1.40 ROLLOVER CONTRIBUTIONS shall mean the amounts transferred to the
Plan by a Participant pursuant to Article 19. Rollover Contributions may
include amounts transferred to the Plan by Participants from a plan
previously sponsored by the Company or one of its subsidiaries or other
affiliates or any of their predecessors; provided, however, that Rollover
Contributions shall not include any amounts merged into the Plan by action of
the Company or any other Employer.
1.41 ROLLOVER CONTRIBUTION ACCOUNT shall mean the subaccount into which
Rollover Contributions and investment earnings on those contributions shall
be credited.
1.42 SALARY REDUCTION CONTRIBUTION ELECTION shall mean the means by which
an Eligible Employee authorizes and elects the percentage of such person's
Compensation to be withheld and contributed to the such person's Salary
Reduction Contribution Account.
1.43 SALARY REDUCTION CONTRIBUTION ACCOUNT shall mean the subaccount into
which Salary Reduction Contributions and investment earnings on those
contributions shall be credited.
1.44 SALARY REDUCTION CONTRIBUTIONS shall mean the amounts withheld from
an Eligible Employee's Compensation and contributed to the Plan by an
Employer pursuant to Section 3.1.
1.45 TERMINATION DATE shall mean the earlier of the date on which an
Employee quits, retires, is discharged or dies, or the first anniversary of
the date on which the Employee is absent from service with an Employer (and
other entities required to be aggregated with an Employer under Code Section
414(b), (c), (m) or (o)) for any other reason, such as vacation, holiday,
sickness, disability, leave of absence or layoff.
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1.46 TRUST or TRUST FUND shall mean the legal entity created by agreement
between the Company and Trustee for the purpose of managing and investing
assets accumulated pursuant to the Plan.
1.47 TRUST AGREEMENT shall mean the agreement entered into between the
Company and the Trustee that governs the management and administration of the
Trust.
1.48 TRUSTEE shall mean the entity appointed under the Trust Agreement to
serve as the trustee of the Trust.
1.49 VALUATION DATE shall mean each business day on which the New York
Stock Exchange is open for trading and which is not a bank holiday in the
United States.
1.50 VESTING SERVICE shall mean the period of time beginning on the date
an Employee is first credited with an Hour of Service (or is again credited
with an Hour of Service following his reemployment) and ending on the
Employee's Termination Date. An Employee's Vesting Service shall also include
each Period of Absence of less than 365 days and any periods during which he
is in the service of the armed forces of the United States and his
reemployment rights are guaranteed by law, provided he returns to employment
within the time such rights are guaranteed.
1.51 YEAR OF VESTING SERVICE shall mean each period of 365 days in an
Employee's period of Vesting Service, determined by aggregating periods of
Vesting Service that are not consecutive.
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ARTICLE 2
ELIGIBILITY AND PARTICIPATION
2.1 COMMENCEMENT OF PLAN PARTICIPATION. Each Eligible Employee who has
satisfied the requirements of Section 2.2 prior to or on the Effective Date
may participate in the Plan on the Effective Date. Each other Employee who
satisfies the requirements of Section 2.2 after the Effective Date may become
a Participant in the Plan as soon as administratively feasible following the
date on which such person satisfies such requirements. An Eligible Employee
must agree to make Salary Reduction Contributions to become a Participant.
2.2 PARTICIPATION REQUIREMENTS. An Eligible Employee may become a
Participant as soon as administratively feasible after (i) attainment of age
21, and (ii) completion of either a six month eligibility period in which
such person is credited with at least 500 Hours of Service or a 12 month
eligibility period in which such person is credited with at least 1,000 Hours
of Service. The initial eligibility period begins on the date an Eligible
Employee first performs an Hour of Service. Subsequent eligibility periods
begin with the start of each half of the Plan Year beginning after the first
Hour of Service is performed.
2.3 TERMINATION OF EMPLOYMENT. A Participant's employment for purposes
of the Plan shall terminate upon the Participant's death, retirement or other
cessation of employment with all Employers under the Plan. The phrases
"terminates employment," "terminated employment" and "termination of
employment" when used with respect to an Employee will refer to an event that
causes the date on which the event occurs to constitute the Employee's
Termination Date.
2.4 REHIRED EMPLOYEE. A Participant who ceases to be an Eligible
Employee and who is reemployed in a class of Eligible Employees shall be
eligible to again become a Participant as of the first day that he performs
an Hour of Service. Salary Reduction Contributions on behalf of such person
shall begin as soon as administratively feasible after the Participant makes
a new Salary Reduction Contribution. Each other Eligible Employee who is
reemployed shall be eligible to become a Participant on a date determined in
accordance with Sections 2.1 and 2.2.
2.5 LOSS OF PARTICIPANT STATUS. An Eligible Employee who becomes a
Participant shall continue to be a Participant, whether or not such person
continues to make Salary Reduction Contributions, until such person's Account
Balance has been fully distributed from the Plan.
2.6 SUSPENSION OF PARTICIPATION. A person who for any reason ceases to
be an Eligible Employee but remains an Employee shall not be permitted to
have Salary Reduction Contributions and Employer Matching Contributions
allocated on such person's behalf. During the period of such suspension, such
person's service with the Employers shall continue to be considered for
vesting purposes, and such person's Account shall continue to be adjusted for
investment gains and losses. The suspension shall be removed and such person
may have Salary Reduction Contributions and Employer Matching Contributions
allocated on such person's behalf when such person becomes an Eligible
Employee and makes a new Salary Reduction Contribution Election.
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2.7 REEMPLOYMENT; VESTING SERVICE. If an Employee has five consecutive
One-Year Breaks in Service, all Years of Vesting Service after such One-Year
Breaks in Service shall be disregarded for the purpose of vesting such
person's Employer Matching Contributions that were made to the Plan before
such breaks, but both pre-break and post-break service shall count for the
purposes of vesting contributions to such person's Employer Matching
Contribution Account that are made after such breaks. In the case of an
Employee who does not have five consecutive One-Year Breaks in Service, both
the pre-break and post-break service shall count in vesting both the
pre-break and post-break Employer Matching Contributions for such person.
2.8 NOTICE OF PARTICIPATION. The Administration Committee shall provide
each Eligible Employee reasonable notice of eligibility to commence
participation, including without limitation such forms and other
documentation that the Administration Committee determines to be necessary or
appropriate for the administration of the Plan.
2.9 VETERANS' REEMPLOYMENT RIGHTS. Notwithstanding any provisions of the
Plan to the contrary, contributions, benefits and service credit with respect
to qualified military service will be provided in accordance with Code
Section 414(u). "Qualified military service" means any service in the
uniformed services (as defined in Chapter 43 of Title 38 of the United States
Code) by any individual if such individual is entitled to reemployment rights
under such chapter with respect to such service.
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ARTICLE 3
SALARY REDUCTION CONTRIBUTIONS
3.1 SALARY REDUCTION CONTRIBUTIONS.
(a) Each Eligible Employee may elect to have a percentage of
Compensation (in whole amounts of not less than 1% but not more than
15%) during each pay period contributed by such person's Employer
directly into the Plan instead of paid as cash Compensation. Once each
Plan Year, each Eligible Employee may elect to have a percentage of
such person's annual bonus, if any, that would otherwise become payable
contributed by such person's Employer directly into the Plan instead of
paid in cash to such person. Unless the Eligible Employee elects
otherwise by notice given in a manner prescribed by the Administration
Committee on or before 30 days immediately preceding payment of the
bonus, the amount of the bonus that will be contributed to the Plan
shall be an amount equal to the total bonus multiplied by the
Participant's Salary Reduction Contribution Election percentage in
effect at the time the bonus is paid.
(b) For Federal tax purposes (and wherever permitted, for state tax
purposes), Salary Reduction Contributions shall be deemed to be
Employer contributions and are intended to qualify as elective
contributions made pursuant to Code Section 401(k).
(c) All Salary Reduction Contributions shall be forwarded by the
Employer to the Trustee as soon as administratively feasible after the
contributions have been withheld from the Eligible Employee's
Compensation.
(d) No Eligible Employee shall be permitted to make Salary Reduction
Contributions during any calendar year in excess of $7,000 as adjusted
by the Adjustment Factor. The limitation described in this Section
3.1(d) applies on an individual basis to all elective deferrals (within
the meaning of Code Section 401(k)) made by each Eligible Employee
during a calendar year under this or any other similar tax-qualified
plan of the Employers.
(e) Each Eligible Employee must coordinate such person's Salary
Reduction Contributions as needed to meet the limitation described
above in connection with any other plan or plans not sponsored by the
Employers. The Employers shall not take account of elective deferrals
made to any other plan not sponsored by the Employers. Notwithstanding
any Plan provision to the contrary, the Eligible Employee may apply to
the Administration Committee for the return of Excess Deferrals and
such Excess Deferrals and the income allocable thereto shall be
distributed if administratively feasible no later than April 15 after
the calendar year for which such Excess Deferrals are made. The
Eligible Employee's application shall be in writing; shall be submitted
to the Administration Committee no later than March 1; shall specify
the Eligible Employee's Excess Deferrals for the preceding calendar
year; and shall be accompanied by the Eligible Employee's statement
that if such amounts are not distributed, such Excess Deferrals, when
added to amounts deferred under other plans or arrangements described
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in Code Sections 401(k), 408(k) or 403(b), exceed the limit imposed on
the Eligible Employee by Code Section 402(g) for the year in which the
deferral occurred.
The Excess Deferrals shall be adjusted for income or loss. The income
or loss allocable to Excess Deferrals for the Plan Year shall be
determined by multiplying the income or loss allocable to the Eligible
Employee's Salary Reduction Contributions for the Plan Year by a
fraction, the numerator of which is the Excess Deferrals on behalf of
the Eligible Employee for the Plan Year and the denominator of which is
the Eligible Employee's Account Balance attributable to Salary
Reduction Contributions on the last day of the Plan Year reduced by the
gain allocable to such total amount for the Plan Year and increased by
the loss allocable to such total amount for the Plan Year.
The Administration Committee may determine that the income allocable to
Excess Deferrals for the period between the end of the Plan Year and
the date of the corrective distribution may be disregarded or
calculated under any method permissible in accordance with the Treasury
Regulations and other official pronouncements of the Secretary of the
Treasury.
(f) The Administration Committee may review Salary Reduction
Contributions from time to time. If the Administration Committee
determines that an Eligible Employee's Salary Reduction Contributions
are likely to exceed the limitations imposed by any Plan provision, the
Administration Committee may require such Eligible Employee to reduce
the amount of any such Salary Reduction Contributions or may require
the suspension of any future Salary Reduction Contributions. In the
event that the Administration Committee requires that an Eligible
Employee's Salary Reduction Contributions be reduced or suspended, the
Administration Committee shall notify the affected Eligible Employee
and such person's Employer as soon as administratively feasible.
3.2 SALARY REDUCTION CONTRIBUTION ELECTION. Each Eligible Employee who is
(or has agreed to become) a Participant may make a Salary Reduction Contribution
Election in accordance with procedures established by the Administration
Committee.
3.3 SUSPENSION OF, OR CHANGE IN, SALARY REDUCTION CONTRIBUTION ELECTION.
A Participant may elect to suspend or change all Salary Reduction
Contributions at any time by complying with procedures established by the
Administration Committee. Any such suspension or change election shall be
effective as soon as administratively feasible after the date such election
is received by the Administration Committee. A Participant who has suspended
or changed a Salary Reduction Contribution Election may make a new Salary
Reduction Contribution Election in accordance with procedures established by
the Administration Committee.
3.4 DEFERRAL PERCENTAGE LIMITATION. At such times as it deems
appropriate, the Administration Committee shall review all Salary Reduction
Contributions to determine that all Salary Reduction Contributions satisfy one
of the tests below:
(a) the Average Actual Deferral Percentage for Highly Compensated
Employees for the Plan Year shall not exceed the Average Actual
Deferral Percentage for Nonhighly
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Compensated Employees for the preceding Plan Year (or, for Plan Years
beginning before January 1, 1997, the Average Actual Deferral
Percentage for Nonhighly Compensated Employees for the current Plan
Year) multiplied by 1.25, or
(b) the Average Actual Deferral Percentage for Highly Compensated
Employees for the Plan Year shall not exceed the Average Actual
Deferral Percentage for Nonhighly Compensated Employees for the
preceding Plan Year (or, for Plan Years beginning before January 1,
1997, the Average Actual Deferral Percentage for Nonhighly Compensated
Employees for the current Plan Year) multiplied by two, provided that
the Average Actual Deferral Percentage for Highly Compensated Employees
does not exceed the Average Actual Deferral Percentage for Nonhighly
Compensated Employees by more than two percentage points.
Notwithstanding the foregoing, the limit set forth in this Section
3.4(b) shall be adjusted in accordance with Section 3.7.
3.5 SPECIAL RULES ON DEFERRAL PERCENTAGE LIMITATIONS.
(a) The Actual Deferral Percentage for any Highly Compensated Employee
for the Plan Year who is eligible to have Salary Reduction
Contributions allocated to such person's account under two or more
plans or arrangements described in Code Section 401(k) that are
maintained by an Employer shall be determined as if all such Salary
Reduction Contributions were made under a single arrangement. If a
Highly Compensated Employee participates in two or more plans or
arrangements described in Code Section 401(k) that have different plan
years, all such arrangements ending with or within the same calendar
year shall be treated as a single arrangement.
(b) For Plan Years beginning before January 1, 1997, for purposes of
determining the Actual Deferral Percentage of an Eligible Employee who
is a 5- percent owner or one of the ten most highly paid Highly
Compensated Employees, the Salary Reduction Contributions and
Compensation of such person shall include Salary Reduction
Contributions and Compensation of the Family Members for the Plan Year.
Family Members with respect to such Highly Compensated Employees shall
be disregarded as separate Employees in determining the Average Actual
Deferral Percentage both for Nonhighly Compensated Employees and Highly
Compensated Employees.
(c) In the event that the Plan satisfies the requirements of Code
Sections 401(k), 401(a)(4) or 410(b) only if aggregated with one or
more other plans or if one or more plans satisfy the requirements of
such Sections of the Code only if aggregated with the Plan, then this
Section shall be applied by determining the Actual Deferral Percentage
as if all such plans were a single plan. Plans may be aggregated in
order to satisfy Code Section 401(k) only if they have the same plan
year.
(d) In determining the Actual Deferral Percentage, Salary Reduction
Contributions must be made before the last day of the 12 month period
immediately after the Plan Year to which those contributions relate.
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(e) The determination and treatment of the Actual Deferral Percentage
shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
(f) Salary Reduction Contributions shall be taken into account under
the Actual Deferral Percentage test for a Plan Year only if such
contributions relate to Compensation that either would have been
received by the Eligible Employee in the Plan Year (but for the Salary
Reduction Contribution Election) or is attributable to services
performed by the Eligible Employee in the Plan Year and would have been
received by the Eligible Employee within 2-1/2 months after the close
of the Plan Year.
(g) For purposes of determining whether the Plan satisfies the
requirements of Section 3.4, Salary Reduction Contributions shall be
taken into account only if such contributions are allocated as of a
date within that Plan Year. For this purpose, Salary Reduction
Contributions are considered allocated as of a date within a Plan Year
if the allocations are not contingent on participation or performance
of services after such date and the Salary Reduction Contributions are
actually paid to the Trust as provided in Section 3.5(d).
3.6 ADJUSTMENT OF SALARY REDUCTION CONTRIBUTIONS.
(a) In the event the Administration Committee determines that one of
the tests in Section 3.4 is not satisfied at the time of its review,
the Administration Committee may require that one or more Participants
adjust their Salary Reduction Contribution Election as of the first pay
period after receipt of the test results in order that one of the tests
in Section 3.4 will be satisfied, or, to the extent permitted by law,
the Administration Committee shall have the power and authority to
return all or any part of the Salary Reduction Contributions of one or
more Participants in cash within 2-1/2 months after the end of the Plan
Year but in no instance later than the last day of the Plan Year after
the Plan Year for which the Excess Contributions were made, solely to
the extent necessary to satisfy one of the tests in Section 3.4.
(b) The Excess Contributions shall be adjusted for income or loss. The
income or loss allocable to Excess Contributions for the Plan Year
shall be determined by multiplying the income or loss allocable to the
Participant's Salary Reduction Contributions for the Plan Year by a
fraction, the numerator of which is the Excess Contributions on behalf
of the Participant for the Plan Year and the denominator of which is
the Participant's Account Balance attributable to Salary Reduction
Contributions on the last day of the Plan Year reduced by the gain
allocable to such total amount for the Plan Year and increased by the
loss allocable to such total amount for the Plan Year. The
Administration Committee may determine that the income allocable to
Excess Contributions for the period between the end of the Plan Year
and the date of the corrective distribution may be disregarded or
calculated under any method permissible in accordance with the Treasury
Regulations and other official pronouncements from the Secretary of the
Treasury.
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(c) Excess Contributions shall be returned in accordance with the
procedure in this Section 3.6. Prior to January 1, 1997, the Actual
Deferral Percentage of the Highly Compensated Employee with the highest
Actual Deferral Percentage shall be reduced to the extent required to
(i) enable the arrangement to satisfy the test in Section 3.4, or (ii)
cause such Highly Compensated Employee's Actual Deferral Percentage to
equal the ratio of the Highly Compensated Employee with the next
highest Actual Deferral Percentage and the excess is allocated among
Family Members in proportion to the Salary Reduction Contributions of
each Family Member that are combined to determine the Actual Deferral
Percentage. The foregoing procedure shall be repeated until the Plan
satisfies the test in Section 3.4. Excess Contributions for Family
Members shall be reduced according to procedures described in Code
Section 401(k)(8) and the Treasury Regulations promulgated thereunder.
Effective January 1, 1997, Excess Contributions shall be distributed to
the Highly Compensated Employees on the basis of the respective
portions of the Excess Contributions attributable to each such
Employee, determined by reducing the Salary Reduction Contributions
made on behalf of Highly Compensated Employees beginning with the
Highly Compensated Employee with the highest dollar amount of Salary
Reduction Contributions.
Employer Matching Contributions made with respect to a Participant's
Excess Contributions shall be forfeited and applied as provided in
Section 8.3.
(d) The amount of Excess Contributions to be distributed or
recharacterized shall be reduced by the amount of Excess Deferrals
previously distributed for the taxable year ending in the same Plan
Year, and Excess Deferrals to be distributed for a taxable year shall
be reduced by Excess Contributions previously distributed or
recharacterized for the Plan Year beginning in such taxable year.
3.7 AGGREGATE LIMIT. Notwithstanding the foregoing, if the Plan does not
satisfy the tests in Sections 3.4(a) and 4.4(a), then the sum of the Average
Actual Deferral Percentage for Highly Compensated Employees for the Plan Year
plus the Average Contribution Percentage for Highly Compensated Employees for
the Plan Year shall be adjusted, if necessary, in accordance with Section 3.8
so that the Aggregate Limit is not exceeded. The term "Aggregate Limit" shall
mean the greater of:
(a) the sum of:
(1) 1.25 times the greater of the Average Actual Deferral
Percentage or the Average Contribution Percentage for Nonhighly
Compensated Employees for the preceding Plan Year, plus
(2) two percentage points plus the lesser of the Average Actual
Deferral Percentage or the Average Contribution Percentage for
Nonhighly Compensated Employees for the preceding Plan Year. In
no event, however, shall the amount calculated pursuant to this
Section 3.7(a)(2) exceed the product of two times the
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lesser of the Average Actual Deferral Percentage or the Average
Contribution Percentage for Nonhighly Compensated Employees for
the preceding Plan Year, or
(b) the sum of:
(1) 1.25 times the lesser of the Average Actual Deferral
Percentage or the Average Contribution Percentage for
Nonhighly Compensated Employees for the preceding Plan Year,
plus
(2) two percentage points plus the greater of the Average
Actual Deferral Percentage or the Average Contribution
Percentage for Nonhighly Compensated Employees for the
preceding Plan Year. In no event, however, shall the amount
calculated pursuant to this Section 3.7(b)(2) exceed the
product of two times the greater of the Average Actual
Deferral Percentage or the Average Contribution Percentage for
Nonhighly Compensated Employees for the preceding Plan Year.
For Plan Years beginning before January 1, 1997, the Aggregate Limit shall be
determined as described above, but shall be based on the Average Actual Deferral
Percentage or the Average Contribution Percentage for Nonhighly Compensated
Employees for the current Plan Year rather than for the preceding Plan Year.
The Average Actual Deferral Percentage and the Average Contribution Percentage
for Highly Compensated Employees shall be determined after any corrective
distribution of Excess Deferrals pursuant to Section 3.1(e), Excess
Contributions pursuant to Section 3.6(c) and Excess Aggregate Contributions
pursuant to Section 4.6.
3.8 RETURN OF CONTRIBUTIONS ABOVE THE AGGREGATE LIMIT. If the Aggregate
Limit is exceeded, the Average Actual Deferral Percentage and the Average
Contribution Percentage for Highly Compensated Employees shall be reduced in
accordance with the following procedures:
(a) first, by returning Excess Contributions in the same manner as
described in Section 3.6 until the Actual Deferral Percentage of a
Highly Compensated Employee is reduced to 6% or until the arrangement
satisfies the Aggregate Limit, whichever first occurs, and then
(b) by returning Excess Contributions in the same manner as described
in Section 3.6 and by simultaneously forfeiting Attributable Employer
Matching Contributions to the extent necessary to enable the
arrangement to satisfy the Aggregate Limit. The term "Attributable
Employer Matching Contributions" shall mean those Employer Matching
Contributions that were made pursuant to Section 4.1 to match the
Excess Contributions returned pursuant to this Section 3.8(b).
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ARTICLE 4
EMPLOYER MATCHING CONTRIBUTIONS AND EMPLOYEE CONTRIBUTIONS
4.1 EMPLOYER MATCHING CONTRIBUTIONS.
(a) As soon as administratively feasible after the end of each pay
period, each Employer shall make an Employer Matching Contribution on
behalf of Participants who made Salary Reduction Contributions during
the preceding pay period. The aggregate amount of the Employer Matching
Contribution shall be equal to 50% of each Participant's Salary
Reduction Contributions that do not exceed 6% of the Participant's
Compensation in such pay period. Compensation earned by a Participant
prior to the Participant's eligibility for Plan participation shall be
disregarded. Employer Matching Contributions shall be allocated to each
Participant's Employer Matching Contribution Account at the time such
contribution is made.
(b) Following the end of each Plan Year, each Employer shall make an
additional Employer Matching Contribution with respect to each
Participant employed on the last day of such Plan Year whose Salary
Reduction Contributions for such Plan Year were equal to the Code
Section 402(g)(3) limit set forth in Section 3.1(d) to the extent
necessary to cause the Employer Matching Contributions for such
Participant for the Plan Year to be equal to the amount required by
Section 4.1(a) calculated on the basis of the Participant's Salary
Reduction Contributions and Compensation for the entire Plan Year.
4.2 TIMING OF EMPLOYER MATCHING CONTRIBUTIONS. Each Employer shall
forward Employer Matching Contributions to the Trustee for investment in the
Trust Fund as soon as administratively feasible after the amount of the
Employer Matching Contribution for the applicable pay period has been
determined.
4.3 EMPLOYEE CONTRIBUTIONS. Each Eligible Employee may elect to make
voluntary, after-tax contributions to the Participant's Employee Contribution
Account for each pay period prior to the Participant's termination of
employment under the Plan, subject to the provisions and limitations below:
(a) no Eligible Employee shall be required to make Employee
Contributions,
(b) Employee Contributions shall be subject to the limitations of
Section 4.4,
(c) an Eligible Employee may not make Employee Contributions in an
amount less than 1% nor more than 10% of such person's Compensation
during each pay period (or, in the case of a lump sum deposit, in any
amount that, when added to any Employee Contributions made for the
Eligible Employee during the Plan Year, is less than 1% nor more than
10% of such person's Compensation for the Plan Year), and all Employee
Contributions shall be fully vested at all times,
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(d) Employee Contributions may be made by either payroll deduction or
by a lump sum deposit with the Administration Committee within the
month preceding the end of the Plan Year. An Eligible Employee may
elect to commence or cease making Employee Contributions at any time,
(e) All Employee Contributions shall be forwarded by the Employer to
the Trustee as soon as administratively feasible after the
contributions have been withheld from the Eligible Employee's
Compensation.
(f) an Eligible Employee may not make Employee Contributions during
any period in which such person is not accruing Hours of Service with
an Employer, and
(g) from time to time, the Administration Committee may review the
Employee Contributions made by Participants. If the Administration
Committee determines that the Employee Contributions of any Participant
are likely to exceed the limitations imposed by any provision of the
Plan, the Administration Committee may require such Participant to
reduce the amount of any such Employee Contributions or may require the
suspension of any future Employee Contributions. In the event that the
Administration Committee requires that a Participant's Employee
Contributions be reduced or suspended, the Administration Committee
shall notify the affected Participant and such person's Employer as
soon as administratively feasible.
4.4 PERCENTAGE LIMITATION ON EMPLOYER MATCHING CONTRIBUTIONS AND
EMPLOYEE CONTRIBUTIONS. At such intervals as it shall deem proper, the
Administration Committee shall review Employer Matching Contributions and
Employee Contributions in order to determine that such contributions satisfy
one of the tests below:
(a) the Average Contribution Percentage for Highly Compensated
Employees for the Plan Year shall not exceed the Average Contribution
Percentage for Nonhighly Compensated Employees for the preceding Plan
Year (or, for Plan Years beginning before January 1, 1997, the Average
Contribution Percentage for Nonhighly Compensated Employees for the
current Plan Year) multiplied by 1.25, or
(b) the Average Contribution Percentage for Highly Compensated
Employees for the Plan Year shall not exceed the Average Contribution
Percentage for Nonhighly Compensated Employees for the preceding Plan
Year (or, for Plan Years beginning before January 1, 1997, the Average
Contribution Percentage for Nonhighly Compensated Employees for the
current Plan Year) multiplied by two, provided that the Average
Contribution Percentage for Highly Compensated Employees does not
exceed the Average Contribution Percentage for Nonhighly Compensated
Employees by more than two percentage points. Notwithstanding the
foregoing, the limit set forth in this Section 4.4(b) shall be adjusted
in accordance with Section 3.7.
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4.5 SPECIAL RULES FOR CONTRIBUTION PERCENTAGE LIMIT TESTING.
(a) The Average Contribution Percentage for any Highly Compensated
Employee for the Plan Year who is eligible to receive Employer Matching
Contributions or to make Employee Contributions under two or more plans
described in Code Section 401(a) that are maintained by an Employer
shall be determined as if all such contributions were made under a
single plan.
(b) In the event that the Plan satisfies the requirements of Code
Sections 401(m), 401(a)(4) and 410(b) only if aggregated with one or
more other plans or if one or more other plans satisfy the requirements
of such Code Sections only if aggregated with the Plan, then this
Section 4.5(b) shall be applied by determining the Average Contribution
Percentages as if all such plans were a single plan.
(c) For Plan Years beginning before January 1, 1997, for purposes of
determining the Contribution Percentage of an Eligible Employee who is
a 5-percent owner or one of the ten most highly paid Highly Compensated
Employees, Employer Matching Contributions, Employee Contributions and
Compensation of such person shall include the Employer Matching
Contributions, Employee Contributions and Compensation of Family
Members for the Plan Year. Family Members with respect to Highly
Compensated Employees shall be disregarded as separate Employees in
determining the Average Contribution Percentage both for Nonhighly
Compensated Employees and Highly Compensated Employees.
(d) For purposes of determining the test described in Section 4.4,
Employer Matching Contributions and Employee Contributions must be made
before the last day of the 12 month period immediately after the Plan
Year to which those contributions relate.
(e) The determination and treatment of the Average Contribution
Percentage shall satisfy such other requirements as may be prescribed
by the Secretary of the Treasury.
4.6 ADJUSTMENTS TO CONTRIBUTIONS.
(a) Excess Aggregate Contributions plus any income and minus any loss
allocable thereto until the date of distribution shall be forfeited if
forfeitable or if not forfeitable shall be distributed in cash to
Highly Compensated Employees within 2-1/2 months after the end of the
Plan Year but in no instance later than the last day of the Plan Year
after the Plan Year for which the Excess Aggregate Contributions were
made.
(b) The Excess Aggregate Contributions shall be adjusted for income or
loss. The income or loss allocable to Excess Aggregate Contributions
for the Plan Year shall be determined by multiplying the income or loss
allocable to the Participant's Employer Matching Contributions and
Employee Contributions for the Plan Year by a fraction, the numerator
of which is the Excess Aggregate Contributions on behalf of the
Participant for the Plan Year and the denominator of which is the sum
of the Participant's Account Balance attributable to Employer Matching
Contributions and Employee Contributions
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on the last day of the Plan Year reduced by the gain allocable to such
amount for the Plan Year and increased by the loss allocable to such
amount for the Plan Year. The Administration Committee may determine
that the income allocable to Excess Aggregate Contributions for the
period between the end of the Plan Year and the date of the corrective
distribution may be disregarded or calculated under any method
permissible in accordance with the Treasury Regulations and other
official pronouncements from the Secretary of the Treasury.
(c) Excess Aggregate Contributions shall be returned in accordance with
the procedure in this Section 4.6(c). The Contribution Percentage of
the Highly Compensated Employee with the highest Contribution
Percentage shall be reduced to the extent required to enable the
arrangement to satisfy the test described in Section 4.4 or cause such
Highly Compensated Employee's Contribution Percentage to equal the
ratio of the Highly Compensated Employee with the next highest
Contribution Percentage and the excess shall be allocated among Family
Members in proportion to the Employer Matching Contributions and
Employee Contributions made on behalf of each Family Member that are
combined to determine the Contribution Percentage. The foregoing
procedure shall be repeated until the Plan satisfies the test described
in Section 4.4. Excess Aggregate Contributions for Family Members shall
be reduced according to procedures established by Code Section
401(m)(6) and the Treasury Regulations promulgated thereunder.
Effective January 1, 1997, Excess Aggregate Contributions shall be
returned to the Highly Compensated Employees on the basis of the
respective portions of the Excess Aggregate Contributions attributable
to each such Employee, determined by reducing Employer Matching
Contributions and Employee Contributions made by or on behalf of Highly
Compensated Employees beginning with the Highly Compensated Employee
with the highest dollar amount of Employer Matching Contributions and
Employee Contributions.
4.7 OVERALL LIMITATION ON ANNUAL ADDITIONS. Notwithstanding any Plan
provision to the contrary, in no event shall the annual additions allocated to a
Participant's Account for any Limitation Year exceed the lesser of:
(a) 25% of the Participant's Compensation for the Limitation Year, or
(b) $30,000 (as adjusted by the Adjustment Factor).
The Compensation limitation referred to in Section 4.7(a) shall not apply to:
(c) any contribution for medical benefits (within the meaning of Code
Section 419A(f)(2)) after separation from service that is otherwise
treated as an annual addition, or
(d) any amount otherwise treated as an annual addition under Code
Section 415(l)(l).
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If, as of the last day of the Plan Year, a Participant's annual additions would
exceed the amount provided for in this Section as a result of a reasonable error
in estimating the Participant's Compensation or under other limited facts and
circumstances that the Commissioner of the Internal Revenue Service determines
to be appropriate, the excess amount shall be computed and administered in
accordance with the following procedures:
(a) the excess shall be refunded to the Participant from the
Participant's Salary Reduction Contribution Account adjusted for
earnings and losses thereon to the extent the excess results from a
mistaken application of the limitations of Section 3.1(a).
(b) next, the excess shall be refunded to the Participant from the
Participant's Employee Contribution Account adjusted for earnings
and losses thereon,
(c) next, the excess shall be forfeited from the Participant's Employer
Matching Contribution Account adjusted for earnings and losses thereon
and the total amount of such forfeitures for all Participants shall be
held in a suspense account the balance of which shall be used to offset
the amount of additional Employer Matching Contributions, and
(d) finally, any remaining excess shall be refunded to the Participant
from the Participant's Salary Reduction Contribution Account adjusted
for earnings and losses thereon.
4.8 SPECIAL RULES.
(a) PARTICIPATION IN ANOTHER DEFINED CONTRIBUTION PLAN. The limitations
in Section 4.7 with respect to any Participant who at any time has
participated in any other tax-qualified defined contribution plan
maintained by an Employer shall apply as if the total contributions
allocated under all such defined contribution plans in which the
Participant has participated were allocated under one plan.
(b) PARTICIPATION IN A DEFINED BENEFIT PLAN. This Section 4.8(b) shall
apply only for Limitation Years beginning before January 1, 2000. If a
Participant has at any time been a participant in a tax-qualified
defined benefit plan maintained by an Employer, the sum of the
Participant's Defined Benefit Plan Fraction and Defined Contribution
Plan Fraction (as those terms are defined below) for any year shall not
exceed one. In the event the sum of the Defined Benefit Plan Fraction
and Defined Contribution Plan Fraction would otherwise exceed one for
any Plan Year, the projected annual retirement income benefit under an
Employer sponsored defined benefit plan shall be limited to the extent
necessary to reduce the Defined Benefit Plan Fraction so that the sum
of the two fractions does not exceed one.
(1) The "DEFINED BENEFIT PLAN FRACTION" for any Limitation
Year is a fraction the numerator of which is the Participant's
projected annual retirement income benefit under all defined
benefit plans maintained by the Employers determined as of the
end of the Limitation Year and the denominator of which is the
lesser of:
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(A) the product of 1.25 multiplied by $90,000
adjusted by the Adjustment Factor, and
(B) the product of 1.4 multiplied by 100% of the
Participant's average annual Compensation for the
three consecutive calendar years during which the
Participant's Compensation was the highest.
(2) The "DEFINED CONTRIBUTION PLAN FRACTION" for any
Limitation Year is a fraction the numerator of which is the
sum of the annual additions to the accounts of the Participant
in all defined contribution plans maintained by the Employer
as of the end of the Limitation Year for that Limitation Year
and all preceding Limitation Years and the denominator of
which is the sum of the lesser of the amounts below determined
for such Limitation Year and for each prior Limitation Year of
service with the Employer:
(A) the product of 1.25 multiplied by $30,000
adjusted by the Adjustment Factor, and
(B) the product of 1.4 multiplied by 25% of the
Participant's Compensation for such Limitation Year.
(c) ADJUSTMENT OF LIMITATION FOR YEARS OF SERVICE OR PARTICIPATION.
(1) In the case of a Participant who has completed less than
ten years of participation in the Plan, the limitation set
forth in Section 4.8(b)(1)(A) above shall be adjusted by
multiplying such amount by a fraction the numerator of which
is the Participant's number of years (or part thereof) of
participation in the Plan and the denominator of which is ten.
(2) If a Participant has completed less than ten years of
service with the Employers, the limitation set forth in
Section 4.8(b)(1)(B) shall be adjusted by multiplying such
amount by a fraction the numerator of which is the
Participant's number of years of service (or part thereof) and
the denominator of which is ten.
(d) Notwithstanding any Plan provision to the contrary, Sections 4.7,
4.8 and 4.9 shall be construed in a manner that is consistent with Code
Section 415 and the Treasury Regulations and other rulings promulgated
thereunder, all of which to the extent necessary are incorporated by
this reference and made a part of the Plan.
4.9 DEFINITIONS. As used in Sections 4.7 and 4.8, the term "annual
addition" shall mean the amount allocated to a Participant's Account during
the Limitation Year attributable to:
(a) Salary Reduction Contributions,
(b) Employer Matching Contributions,
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(c) Employee Contributions,
(d) allocated forfeitures, and
(e) amounts described in Code Sections 415(1)(1) and 419A(d)(2).
4.10 REVERSION OF EMPLOYER MATCHING CONTRIBUTIONS. Except as provided in
this Section 4.10 and in Section 15.3, Plan assets shall never be returned to
the Employers.
(a) In the case of an Employer Matching Contribution that is made as a
result of a mistake of fact, such contribution may be returned to the
Employer within one year after the payment of the contribution.
(b) If an Employer Matching Contribution is conditioned upon initial
qualification of the Plan under Code Section 401(a) and if the Plan
receives an adverse determination with respect to its initial
qualification, then such contribution may be returned to the Employers
within one year after such determination if application for
determination is made by the time prescribed by law for filing the
Company's Federal tax return for the taxable year in which the Plan was
adopted or such later date as the Secretary of the Treasury may
prescribe.
(c) In the case of an Employer Matching Contribution that is determined
to be not deductible under Code Section 404, then such contribution
shall be returned to the Employers within one year after such
disallowance of the deduction.
With respect to Sections 4.10(a) and 4.10(c), investment earnings attributable
to such returned amounts shall not be returned to the Employers, and investment
losses attributable to such returned amounts shall reduce the amount eligible to
be returned.
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ARTICLE 5
PARTICIPANT ACCOUNTS
5.1 SEPARATE SUBACCOUNTS. The Administration Committee shall maintain or
cause to be maintained a separate Account for each Participant that shall
consist of the Participant's Salary Reduction Contribution Account, Employer
Matching Contribution Account, Employee Contribution Account, Rollover
Contribution Account and Prior Plan Account.
5.2 VALUATION OF TRUST FUND. The fair market value of all assets
comprising the Trust Fund shall be determined as of each Valuation Date in
accordance with procedures approved by the Administration Committee.
5.3 STATEMENTS. From time to time the Administration Committee shall
cause to be furnished to each Participant and Beneficiary of deceased
Participants a statement showing the value of such persons' Accounts.
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ARTICLE 6
INVESTMENTS
6.1 TRUST FUND. All Plan contributions shall be paid into the Trust
Fund. All such amounts shall be held and disbursed in accordance with the
provisions of the Plan and Trust Agreement. No person shall have any interest
in or right to any part of the Trust Fund except as expressly provided in the
Plan or Trust Agreement.
6.2 AUTHORIZED INVESTMENTS AND INVESTMENT CONTROL. The Investment
Committee and Trustee shall be subject to the following requirements in
connection with the management and investment of Plan assets. Participants
and Beneficiaries shall direct the Trustee with respect to the investment of
their Account Balances. Such investments shall be made among various
investment fund alternatives that represent varying degrees of risk and
potential investment return. The Investment Committee shall be responsible
for the selection and retention of the various investment funds available in
the Trust. The Investment Committee may add to or replace any investment fund
at any time and for any reason; provided that the Administration Committee
shall provide reasonable advance notice to affected Participants and
Beneficiaries of the addition or discontinuation of a specific investment
fund. The Investment Committee reserves the right to terminate all investment
funds and invest all assets of the Trust Fund for the general benefit of
Participants and Beneficiaries and to temporarily suspend Participant and
Beneficiary investment directions in connection with any event or transaction
in which the Investment Committee determines such suspension is necessary or
appropriate, including without limitation a merger of the Plan with another
plan, a transfer of assets from the Plan to another plan or from another plan
to the Plan, a change in administrative services provided to the Plan or a
change in the investment options to be offered to Participants and
Beneficiaries. Such temporary suspension will apply to those Participants and
Beneficiaries designated by the Investment Committee for such periods of time
as the Investment Committee determines in its discretion.
If a Participant or Beneficiary does not indicate such person's investment fund
election, then the Administration Committee shall cause the amounts held in such
Participant's or Beneficiary's Account to be invested in the currently available
intermediate investment fund available in the Trust until such time as the
Participant's or Beneficiary's instructions are made in accordance with
procedures established by the Administration Committee. The Administration
Committee shall establish such rules as it deems necessary or appropriate
respecting investment elections.
One of the investment fund alternatives shall be a fund designed to invest
primarily in the common stock of the Company. The Company common stock to be
held by the Trustee may be contributed or sold to the Plan by the Company or may
be acquired on the market. The acquisition, investment and holding of Plan
assets in the Company common stock investment fund is expressly authorized by
the Plan and shall not be subject to any other limitations or restrictions to
the fullest extent permitted by ERISA.
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Participants may allocate their Account Balance among the investment funds
available under the Plan in whole percentages of not less than 1%. Participants
may change their investment fund allocations on a daily basis, but not more
frequently than one time per day.
6.3 ASSUMPTION OF RISK BY PARTICIPANTS. Each Participant and Beneficiary
assumes the investment risk in connection with the investment of such
person's Account Balance, and neither the Company, any Employer, any
Administration Committee member, any Investment Committee member nor the
Trustee shall have any liability to any person with respect to any such
investment allocation decision.
6.4 GENERAL PROVISIONS REGARDING INVESTMENT DIRECTION. Participant
investment directions are subject to the following provisions:
(a) The Administration Committee shall be responsible for providing
information to and responding to requests from Participants concerning
investment directions.
(b) The Administration Committee shall provide Participants with the
information listed below which may be contained in the Plan's summary
plan description or in other Plan related materials:
(1) an explanation that the Plan is intended to constitute
a plan described in ERISA Section 404(c) and the Department
of Labor regulations promulgated thereunder,
(2) a statement that the Plan fiduciaries may be relieved of
liability for any losses that are the direct and necessary
result of investment directions given by Participants or
Beneficiaries,
(3) a description of the investment funds available under the
Trust and with respect to each designated investment fund a
general description of the investment objective including
information relating to the type and diversification of assets
comprising the portfolio of the designated investment fund,
(4) an explanation of the circumstances under which
Participants and Beneficiaries may give investment directions
and an explanation of any specific Plan limitations on such
directions including any restrictions on transfers to or from
a designated investment fund,
(5) a description of any transaction fees and expenses that
affect the Participant's or Beneficiary's Account Balance in
connection with purchases or sales of interests in the
investment funds (for example, commissions, sales loads,
deferred sales charges and redemption or exchanges fees), and
(6) in the case of an investment fund that is subject to the
Securities Act of 1933 and in which the Participant or
Beneficiary has no assets invested
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immediately after the Participant's or Beneficiary's initial
investment a copy of the most recent prospectus provided to
the Plan.
(c) The Administration Committee shall provide the information
listed below upon request by a Participant or Beneficiary:
(1) a description of the annual operating expenses of each
designated investment fund (for example, investment management
fees, administrative fees and transaction costs) that reduce
the rate of return to Participants and Beneficiaries and the
aggregate amount of such expenses expressed as a percentage of
average net assets of the designated investment fund,
(2) copies of any prospectuses, financial statements, reports
and of any other materials relating to the investment funds
available under the Trust to the extent such information is
provided to the Plan,
(3) information concerning the value of shares or units in the
designated investment funds in the Trust as well as the past
and current investment performance of such alternatives
determined net of expenses on a reasonable and consistent
basis, and
(4) information concerning the value of shares or units in the
designated investment funds in which the Accounts of
Participants and Beneficiaries are invested.
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ARTICLE 7
DEATH BENEFITS AND BENEFICIARY DESIGNATIONS
7.1 DISTRIBUTION DUE TO DEATH. If a Participant dies while employed under the
Plan, all amounts in such deceased Participant's Account shall be fully vested.
In such case, the deceased Participant's Account Balance, determined as soon as
administratively feasible after the Participant's death, shall be paid in a lump
sum in cash, in kind, or part in cash and part in kind to the deceased
Participant's Beneficiary.
7.2 BENEFICIARY DESIGNATION.
(a) Each Participant may designate one or more persons as Beneficiary
of the Participant's Account not otherwise to be distributed to the
Participant's surviving spouse in the event of the Participant's death.
If more than one Beneficiary is designated, the Participant may specify
the sequence and/or proportion in which distributions shall be made to
each Beneficiary. The designation shall be made on a form acceptable to
the Administration Committee and shall become effective when filed with
the Administration Committee. Each Participant may change the
Beneficiary designation from time to time by filing a new designation
form with the Administration Committee. Prior to the death of the
Participant, no designated Beneficiary shall have any interest in any
amounts held in the Participant's Account. Participants may not
designate the Company, any Employer or a Plan fiduciary in their
respective capacities as such as Beneficiary.
(b) If a married Participant designates a person other than or in
addition to the Participant's spouse as Beneficiary, then such
designation shall not be effective unless the Participant's spouse
executes a written consent to such designation. The consent of the
spouse must be in writing, must acknowledge the effect of the consent,
must acknowledge the designation of a specific Beneficiary and must be
witnessed by a notary public or, if permitted by the Administration
Committee, a Plan representative. Notwithstanding the spousal consent
requirement, such consent shall not be required if it is established to
the satisfaction of the Administration Committee that the consent
cannot be obtained because there is no spouse, the spouse cannot be
located or such other circumstances as may be prescribed by applicable
Treasury Regulations. Any consent under this Section 7.2(b) shall be
valid only with respect to the spouse who signs the consent. A
designation made by a Participant and consented to by the Participant's
spouse may be revoked by the Participant in writing without the consent
of the spouse anytime prior to the commencement of distributions from
the Participant's Account. Any new designation of a nonspousal
Beneficiary must comply with the requirements of this Section 7.2(b).
(c) If a married Participant designates a person other than or in
addition to the married Participant's spouse as Beneficiary and does
not obtain the spousal consent to such designation as required by
Section 7.2(b), then all of the Participant's remaining Account Balance
shall be paid to the Participant's surviving spouse in the event of the
Participant's death.
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(d) If no designated Beneficiary exists upon the death of a
Participant, then the deceased Participant's Account Balance shall be
paid to the deceased Participant's estate. If, however, a married
Participant fails to designate a Beneficiary, the deceased
Participant's surviving spouse shall be the Beneficiary of the deceased
Participant's entire Account Balance.
(e) If any doubt exists as to the right of any person to receive any
distribution from the Plan with respect to a deceased Participant, the
Trustee on instructions from the Administration Committee may retain
the deceased Participant's entire Account Balance until the rights
thereto are determined or the Administration Committee may direct the
Trustee to pay such Account Balance into any court of competent
jurisdiction. In either of such events, neither the Company, any of the
Employers, nor any Plan fiduciary shall have any obligations to any
claimant of the deceased Participant's Account Balance.
(f) The Administration Committee may adopt such rules and develop such
forms and other procedures as it determines are necessary or
appropriate for the administration of the Plan's Beneficiary
designation provisions.
(g) A Participant's Beneficiary designation shall be void in the event
of the Participant's marriage, and the newly married Participant must
comply with the foregoing provisions to designate a Beneficiary other
than the Participant's spouse.
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ARTICLE 8
VESTING AND TERMINATION OF EMPLOYMENT
8.1 VESTING IN SALARY REDUCTION, EMPLOYEE AND ROLLOVER CONTRIBUTIONS. Each
Participant's Salary Reduction Contribution Account, Employee Contribution
Account and Rollover Contribution Account shall be fully vested at all times.
8.2 VESTING IN EMPLOYER MATCHING CONTRIBUTIONS.
(a) A Participant whose employment under the Plan is terminated prior
to the Participant's Normal Retirement Date for any reason other than
death shall have a vested interest in the Participant's Employer
Matching Contribution Account and any earnings or losses attributable
thereto determined as follows:
<Table>
<Caption>
Years of Vesting Service Percentage Vested
------------------------ -----------------
less than 2.............................................0%
2 but less than 3......................................20%
3 but less than 4......................................40%
4 but less than 5......................................60%
5 but less than 6......................................80%
6 or more.............................................100%
</Table>
Participants employed by an Employer before May 1, 1992, shall have a
fully vested interest upon the completion of five Years of Vesting
Service rather than six Years of Vesting Service. For all such
Participants, vesting for service of less than five years shall be in
accordance with the foregoing vesting schedule.
Notwithstanding the foregoing, a Participant whose employment under the
Plan is terminated on or after the Effective Date and prior to the
Participant's Normal Retirement Date for any reason other than death
shall have a vested interest in the Participant's Employer Matching
Contribution Account and any earnings or losses attributable thereto
determined as follows:
<Table>
<Caption>
Years of Vesting Service Percentage Vested
------------------------ -----------------
less than 1.................................................0%
1 but less than 2..........................................33%
2 but less than 3..........................................67%
3 or more.................................................100%
</Table>
(b) If a Participant attains his Normal Retirement Date while employed
under the Plan, all amounts in such Participant's Account shall be
fully vested.
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8.3 FORFEITURES.
(a) If a Participant terminates employment under the Plan and the value
of the Participant's vested Account Balance derived from Employer
Matching Contributions and Employee Contributions is not greater than
$5,000 ($3,500, for Plan Years beginning before January 1, 1998), the
Participant shall receive a distribution of the value of the entire
vested Account Balance and the nonvested portion shall be treated
immediately as a forfeiture. For purposes of this Section 8.3(a), if
the value of a Participant's vested Account Balance is zero, the
Participant shall be deemed to have received a distribution of such
vested Account Balance at the time of such termination of employment.
(b) If a Participant terminates employment under the Plan and elects in
accordance with the requirements of Section 9.2 to receive a
distribution of the value of the Participant's vested Account Balance,
the nonvested portion shall be treated immediately as a forfeiture. A
Participant may not elect to take less than the entire portion of such
Participant's vested Account Balance as a distribution from the Plan.
(c) If a Participant receives or is deemed to receive a distribution
pursuant to this Section and the Participant resumes employment covered
under the Plan, the Participant's previously forfeited Account Balance
shall be restored to the amount on the date of distribution if the
Participant is reemployed before the date the Participant incurs five
consecutive One-Year Breaks in Service following the date of the
distribution. A reemployed Participant shall have no obligation to
repay a previous distribution from the Plan as a condition to
restoration of his previously forfeited Account Balance.
(d) If a Participant does not receive or is not deemed to receive a
distribution pursuant to this Section and the Participant does not
resume covered employment under the Plan, the nonvested portion of the
Participant's Account Balance shall become a permanent forfeiture after
the Participant incurs five consecutive One-Year Breaks in Service.
(e) Forfeitures arising under the Plan shall be used to reduce future
Employer Matching Contributions under the Plan.
8.4 DISTRIBUTION OF VESTED BENEFITS. Benefits payable in the case of a
Participant whose employment is terminated shall be paid in accordance with
Article 7 in the case of death or Article 9 in the case of a Participant who
retires or otherwise terminates employment under the Plan with a vested
Account Balance.
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ARTICLE 9
DISTRIBUTION OF BENEFITS
9.1 NORMAL FORM OF BENEFIT. Subject to the limitations of Article 8, all
Plan distributions shall be paid in a single sum in cash, in kind or part in
cash and part in kind in an amount equal to the value of the Participant's
vested Account Balance determined at the time of the distribution.
9.2 TIME OF DISTRIBUTION. Distribution of a Participant's vested Account
Balance shall be made in accordance with the following provisions:
(a) If a Participant's vested Account Balance is greater than $5,000
($3,500, for Plan Years beginning before January 1, 1998), but the
Participant and the Participant's spouse do not consent to an immediate
distribution, the Participant's Account Balance shall be retained
until:
(1) distributed as soon as administratively feasible after the
earlier of the Participant's request for distribution after
the Participant's Normal Retirement Date or the date the
Participant and the Participant's spouse consent to an
immediate distribution, or
(2) distributed pursuant to Section 9.2(c) prior to the
Participant's Normal Retirement Date after a written request
by the Participant and consent of the Participant's spouse if
necessary.
(b) If on termination of a Participant's employment under the Plan the
value of the Participant's vested Account Balance is not greater than
$5,000 ($3,500, for Plan Years beginning before January 1, 1998), the
entire Account Balance may be distributed as soon as administratively
feasible to the Participant in a single sum distribution.
(c) If on termination of a Participant's employment under the Plan the
value of the Participant's vested Account Balance is greater than
$5,000 ($3,500, for Plan Years beginning before January 1, 1998), then
the Participant may elect to receive the Participant's Account Balance
in substantially equal monthly installments payable on the first day of
each month over a period of 60, 120 or 180 consecutive months in lieu
of a single sum distribution. Any such election must be in a manner
acceptable to the Administration Committee. In no event, however, shall
the period of distribution exceed the Participant's life expectancy. If
the Participant dies after the distribution commencement date but
before the number of certain payments has been made, the monthly
payments shall continue to be made to the deceased Participant's
Beneficiary until the total number of payments has been made unless the
deceased Participant's Beneficiary elects in accordance with the
provisions of Article 7 to receive the remaining Account Balance in a
single sum distribution.
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If a distribution is made in installments, the Participant's undistributed
Account Balance shall be held in the Trust until the last installment is paid.
The aggregate of such installment payments of such Participant may be more or
less than the value of the Participant's Account Balance at the Participant's
retirement or death depending on the investment performance of, and expenses
allocated to, the Trust Fund during the period over which such installments are
paid from the Trust Fund.
9.3 INVESTMENT OF ACCOUNT BALANCE OF TERMINATED PARTICIPANT. In the
event a Participant's employment under the Plan is terminated and the
Participant does not consent to an immediate distribution of the
Participant's Account Balance, such Account Balance shall continue to be
invested as if the terminated Participant's employment under the Plan
continued.
9.4 LATEST DISTRIBUTION DATE. Nothing in the Plan shall be construed to permit
distribution of a Participant's Account Balance to begin later than the 60th day
after the close of the Plan Year in which occurs (a) the date on which the
Participant reaches the Normal Retirement Date, (b) the tenth anniversary of the
year in which the Participant commenced Plan participation, or (c) the date the
Participant terminates employment under the Plan, whichever is latest.
9.5 MANDATED COMMENCEMENT OF BENEFITS.
(a) Notwithstanding any other provision of the Plan, to the extent
required under Code Section 401(a)(9), distribution of the vested
Account Balance of a Participant who is a 5% owner (as defined in Code
Section 416) or who attains age 70 1/2 prior to January 1, 1999, shall
commence not later than April 1 of the calendar year following the
calendar year in which he attains age 70 1/2 and, with respect to such
Participants who are Employees, on December 31 of such year and each
succeeding year. In addition, the vested Account Balance of any other
Participant must be distributed or commence to be distributed not later
than the April 1 of the calendar year following the later of (i) the
calendar year in which he attains age 70 1/2 or (ii) the calendar year
in which he terminates employment.
(b) Notwithstanding the foregoing, distributions under this Section
shall be made in accordance with the provisions of Code Section
401(a)(9) and Treasury Regulations issued thereunder, including
Treasury Regulation Section 1.401(a)(9)-(2), which provisions are
hereby incorporated herein by reference, provided that such provisions
shall override the other distribution provisions of the Plan only to
the extent that such other Plan provisions provide for distribution
that is less rapid than required under such provisions of the Code and
Regulations. Nothing contained in this Section shall be construed as
providing any optional form of payment that is not available under the
other distribution provisions of the Plan.
9.6 DIRECT ROLLOVERS. A distributee may elect at the time and in the
manner prescribed by the Administration Committee to have any portion of an
eligible rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover.
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(a) The term "eligible rollover distribution" shall mean any
distribution of all or any portion of the balance to the credit of the
distributee except that an eligible rollover distribution shall not
include any distribution that is one of a series of substantially equal
periodic payments not less frequently than annually made for the life
or life expectancy of the distributee or the joint lives or joint life
expectancies of the distributee and the distributee's 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); the portion of any distribution that is not
includible in gross income determined without regard to the exclusion
for net unrealized appreciation with respect to employer securities;
or, for distributions after December 31, 1998, any "hardship"
distribution described in Section 10.8.
(b) The term "eligible retirement plan" shall mean 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 an exempt 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 Participant's surviving spouse, the term "eligible retirement
plan" shall mean an individual retirement account or individual
retirement annuity.
(c) The term "distributee" shall include 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 Section 21.2) are distributees with regard to the
interest of the spouse or former spouse.
(d) The term "direct rollover" shall mean a payment by the Plan to the
eligible retirement plan specified by the distributee.
9.7 WAIVER OF 30 DAY NOTICE. If a distribution is one to which Code
Sections 401(a)(11) and 417 do not apply, such distribution may commence less
than 30 days after the notice required under Treasury Regulation Section
1.411(a)(11)(c) is given provided that:
(a) the Administration Committee clearly informs the Participant that
the Participant has a right to a period of at least 30 days after
receiving the notice to consider the decision of whether or not to
elect a distribution and the available distribution options, and
(b) the Participant after receiving the notice affirmatively elects
to receive a distribution and waives the remainder of the 30 day
period.
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ARTICLE 10
IN-SERVICE WITHDRAWALS
10.1 IN-SERVICE WITHDRAWALS PERMITTED. In-service withdrawals to a
Participant who is an Employee are permitted pursuant to the terms and
conditions set forth in this Article.
10.2 IN-SERVICE WITHDRAWAL APPLICATION AND NOTICE. A Participant shall
apply for any in-service withdrawal in such manner and with such advance
notice as prescribed by the Administration Committee. The minimum in-service
withdrawal amount under this Article 10 shall be $500 or such other amount as
may be approved by the Administration Committee in accordance with uniform
and nondiscriminatory standards. There shall be no restriction on the number
of in-service withdrawals granted to any Participant.
The Participant shall be provided the notice prescribed by Code Section 402(f)
to the extent required by law. Code Sections 401(a)(11) and 417 do not apply to
in-service withdrawals under the Plan as described in this Article. An
in-service withdrawal may commence less than 30 days after the aforementioned
notice is provided, if:
(a) the Participant is clearly informed that the Participant has the
right to a period of at least 30 days after receipt of such notice to
consider the option to elect or not elect a Direct Rollover for all or
a portion, if any, of the in-service withdrawal which constitutes an
Eligible Rollover Distribution; and
(b) the Participant after receiving such notice, affirmatively elects a
Direct Rollover for all or a portion, if any, of the in-service
withdrawal which constitutes an Eligible Rollover Distribution or
alternatively elects to have all or a portion made payable directly to
the Participant, thereby not electing a Direct Rollover for all or a
portion thereof.
10.3 SPOUSAL CONSENT. A Participant is not required to obtain spousal
consent in order to receive an in-service withdrawal under the Plan.
10.4 IN-SERVICE WITHDRAWAL APPROVAL. The Administration Committee is
responsible for determining whether an in-service withdrawal request conforms
to the requirements described in this Article and granting such request.
10.5 PAYMENT FORM AND MEDIUM. The form of payment for an in-service
withdrawal shall be a single lump sum and payment shall be made in cash. With
regard to the portion of an in-service withdrawal representing an Eligible
Rollover Distribution, a Participant may elect a Direct Rollover for all or a
portion of such amount.
10.6 SOURCE AND TIMING OF IN-SERVICE WITHDRAWAL FUNDING. An in-service
withdrawal to a Participant shall be made solely from the Participant's own
Account and shall be based on the Account values as of the date the
in-service withdrawal is processed. The available assets shall be determined
first by Account and then within each Account used for funding an in-service
withdrawal, amounts shall be taken from each investment fund in direct
proportion to the market
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value of the Participant's interest in each investment fund (which excludes his
or her loan account balance) as of the date on which the in-service withdrawal
is processed. The in-service withdrawal shall be funded and paid as soon as
administratively feasible after the date as of which the in-service withdrawal
is processed.
10.7 WITHDRAWALS FROM ROLLOVER CONTRIBUTIONS ACCOUNT AND EMPLOYEE
CONTRIBUTIONS ACCOUNT. A Participant who is an Employee may request the
withdrawal of all or any portion of his Rollover Contribution Account and/or
his Employee Contribution Account at any time while participating in the
Plan. A withdrawal made pursuant to this Section 10.7 shall not affect a
Participant's ability to make or be eligible to receive further contributions
under the Plan.
10.8 HARDSHIP WITHDRAWALS.
(a) REQUIREMENTS. A Participant who is an Employee may request the
withdrawal of up to the amount necessary to satisfy a financial need
including amounts necessary to pay any federal, state or local income
taxes or penalties reasonably anticipated to result from the
withdrawal. Only requests for withdrawals (1) on account of a
Participant's "Deemed Financial Need" and (2) which are "Deemed
Necessary" to satisfy the financial need shall be approved. Following
receipt of the hardship withdrawal, the Participant shall cease all
elective deferrals and/or voluntary contributions under the Plan, and
any other plans maintained by the Employer, for a period of twelve
months. Further, the amount of elective deferrals that may be made by
the Participant in the taxable year immediately following receipt of
the hardship withdrawals shall be limited to the applicable limit under
Code Section 402(g) for such next taxable year less the amount of the
Participant's elective deferrals made to the Plan during the taxable
year in which the hardship withdrawal was taken.
(b) "DEEMED FINANCIAL NEED" shall mean an immediate and heavy
financial need relating to:
1. the payment of unreimbursed medical care expenses
(described under Code Section 213(d)) incurred (or to be
incurred) by the Employee, the Employee's spouse or dependents
(as defined in Code Section 152);
2. the purchase (excluding mortgage payments) of the
Employee's principal residence;
3. the payment of unreimbursed tuition, related
educational fees and room and board for up to the next 12
months of post-secondary education for the Employee, the
Employee's spouse or dependents (as defined in Code Section
152);
4. the payment of amounts necessary for the Employee to
prevent losing the Employee's principal residence through
eviction or foreclosure on the mortgage; or
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5. any other circumstance specifically permitted under
Code Section 401(k)(2)(B)(i)(IV).
(c) "DEEMED NECESSARY." A withdrawal is "Deemed Necessary" to
satisfy the financial need only if the withdrawal amount does not
exceed the financial need and all of these conditions are met:
1. the Employee has obtained all possible withdrawals (other
than hardship withdrawals) and nontaxable loans available from
the Plan and all other plans maintained by the Employer and
any other employer required to be aggregated with the Employer
under Code Sections 414(b), (c), (m) or (o) ("related
employers");
2. the Administration Committee shall suspend the Employee
from making any contributions to the Plan and all other
qualified and nonqualified plans of deferred compensation and
all stock option or stock purchase plans maintained by the
Employer and related employers for 12 months from the date the
withdrawal payment is made; and
3. the Administration Committee shall reduce the contribution
dollar limit set forth in Section 3.1(d) for the Employee with
regard to the Plan and all other plans maintained by related
employers for the calendar year next following the calendar
year of the withdrawal by the amount of the Employee's Salary
Reduction Contributions for the calendar year of the
withdrawal.
(d) ACCOUNT SOURCES AND FUNDING ORDER. The withdrawal shall come from
the Participant's Salary Reduction Contribution Account determined
without regard to investment earnings after December 31, 1988 on that
account.
10.9 OVER AGE 59 1/2 WITHDRAWALS.
(a) REQUIREMENTS. A Participant who is an Employee and over age 59 1/2
may make an Over Age 59 1/2 withdrawal. An Over Age 59 1/2 withdrawal
shall not affect a Participant's ability to make or be eligible to
receive further contributions under the Plan.
(b) ACCOUNT SOURCES AND FUNDING ORDER. An Over Age 59 1/2 withdrawal
shall come from the following of the Participant's fully vested
Accounts, in the priority order as follows:
Rollover Contribution Account
Salary Reduction Contribution Account
Prior Plan Account
Employer Matching Contribution Account
Employee Contribution Account
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ARTICLE 11
LOANS
11.1 OVERALL LIMITATIONS. The Trustee may make loans from the Trust Fund
to any Participant who is an Eligible Employee at the time such loan is made.
Each loan shall be made upon application of the Participant in a manner
prescribed by the Administration Committee. A Participant shall not be
allowed to have more than two outstanding loans at any time. A Participant
who is not accruing Hours of Service shall not be permitted to obtain a Plan
loan.
No loan shall be granted to the extent it would cause the aggregate balance of
all loans that a Participant has outstanding from the Plan and from any other
tax-qualified plan maintained by the Employers (an "Other Plan") to exceed an
amount equal to the lesser of:
(a) $50,000 reduced by the excess if any of:
(1) the highest outstanding balance of all loans from the Plan
and all Other Plans during the one year period ending on the
loan Determination Date, over
(2) the outstanding balance of all loans from the Plan and all
Other Plans on the date the loan is made, or
(b) one-half of the Participant's vested Account Balance.
The "LOAN DETERMINATION DATE" for purposes of determining a Participant's
maximum loan hereunder and the outstanding balance of any loan shall be the date
on which the Participant's loan application is made. A Participant must consent
to the repayment of any outstanding loan balance from the Participant's Account
Balance in the event of a default as determined in accordance with Section 11.5
at the time when the Participant is first eligible to receive a distribution of
the Participant's Account Balance.
11.2 TERMS OF LOAN. All loans shall be on such terms and conditions as the
Administration Committee may determine provided that all loans shall:
(a) be made pursuant to a promissory note that is subject to default
rules that are not inconsistent with those described in Section 11.5
and that is secured by the Participant's Account Balance as provided by
ERISA,
(b) be amortized on a substantially level basis with payments to
be made from payroll deductions except as otherwise permitted by the
Administration Committee,
(c) bear a reasonable rate of interest that may be a fluctuating
rate that shall be based on the prime rate,
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(d) be adequately secured by a pledge of not more than 50% of the
Participant's vested account balance; provided that consent of the
Participant's spouse is not required as a condition to such pledge,
(e) provide for repayment in full on or before the earlier of five
years after the date on which the loan is made (ten years after the
date the loan is made if the loan if the loan proceeds will be used to
acquire a dwelling that within a reasonable period of time is to be
used as the principal residence of the Participant) or the date of
distribution of the Participant's Account Balance,
(f) be in an amount not less than $1,000 or such other amount
determined from time to time by the Administration Committee.
11.3 SOURCE OF LOANS. A loan account shall be established for each
Participant who receives a Plan loan. The Administration Committee shall
develop such rules as may be necessary to govern the transfer from the
Participant's account to the Participant's loan account.
11.4 WITHHOLDING AND APPLICATION OF LOAN PAYMENTS. Principal and interest
payments shall be made through periodic payroll deduction. Principal and
interest payments first shall be credited to the Participant's loan account
and any loss caused by nonpayment of such loan shall be borne solely by such
Participant's loan account and shall then be transferred to the Participant's
Account in the ratio in which such Account provided funding for the original
loan proceeds to be invested in accordance with the Participant's investment
instructions in effect at the time of such repayment.
11.5 DEFAULT.
(a) A Participant's loan shall be considered in default if the
Participant fails to make any required payment under the loan or the
Plan is terminated. A loan that is in default shall become due and
payable 90 days after the Participant terminates employment or, if the
default occurs while the Participant is an Employee, 90 days after the
date of the default. In the event a default occurs and is not cured
within any grace period set forth in the promissory note or otherwise
allowed by the Administration Committee, the final amount due under the
promissory note shall become immediately due and payable.
(b) The Administration Committee, in its sole discretion, may take such
action as it may deem appropriate to enforce payment of any loan,
including, without limitation, the execution by the Plan upon its
security interest in the Participant's Account Balance and outstanding
loan balance; provided, however, that the Plan shall not levy against
the Account Balance of the Participant until such time that a
distribution from the Account would otherwise be available under the
Plan including, if applicable, a hardship withdrawal under Section
10.8. If the entire balance and accrued interest on the loan in default
cannot be discharged as set forth in the preceding provisions of this
Section, the remaining amount may be collected by the Administration
Committee using appropriate legal remedies and, until collected in
full, shall be deducted from any subsequent withdrawals and
distributions from the Plan. Nothing in this Section shall affect the
right
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of the Administration Committee to retain the security in any part of
the Participant's Account Balance that is not available for withdrawal
at the time that any other remedies are available to the Administration
Committee.
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ARTICLE 12
PLAN FIDUCIARIES
12.1 FIDUCIARIES. The Plan's named fiduciaries are as follows:
(a) the Company,
(b) the Administration Committee,
(c) the Investment Committee,
(d) the Trustee and
(e) such other persons that are designated to carry out Plan fiduciary
responsibilities in accordance with Section 12.3(b).
Any person may serve in more than one fiduciary capacity with respect to the
Plan. A fiduciary may employ one or more persons to render advice with regard to
any responsibility such fiduciary has under the Plan.
12.2 ALLOCATION OF RESPONSIBILITIES. The powers and responsibilities of
the Plan fiduciaries are allocated in the following manner:
(a) COMPANY. The Company shall be responsible for all functions
assigned or reserved to it in the Plan and Trust Agreement. Any
authority assigned or reserved to the Company in the Plan and Trust
Agreement shall be exercised by the Board.
(b) ADMINISTRATION COMMITTEE. The Administration Committee shall have
the responsibility and authority to control the operation and
administration of the Plan in accordance with the terms of the Plan and
Trust except with respect to duties and responsibilities specifically
allocated to other fiduciaries. The Administration Committee shall have
the authority to issue directions to the Trustee to the extent provided
in the Trust Agreement. The Trustee shall follow the Administration
Committee's directions unless the actions to be taken in furtherance of
such directions would violate ERISA fiduciary standards or would be
contrary to the terms of the Plan or Trust Agreement.
(c) INVESTMENT COMMITTEE. The Investment Committee shall have the
responsibility and authority to control the investment of the Trust
Fund in accordance with the terms of the Plan and Trust except with
respect to duties and responsibilities specifically allocated to other
Plan fiduciaries or to Participants and Beneficiaries. The Investment
Committee shall have the authority to issue directions to the Trustee
to the extent provided in the Trust Agreement. The Trustee shall follow
the Investment Committee's directions unless the actions to be taken in
furtherance of such directions would violate ERISA fiduciary standards
or would be contrary to the terms of the Plan or Trust Agreement.
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(d) TRUSTEE. The Trustee shall have the duty and responsibility
provided in the Trust Agreement subject to direction by the
Administration Committee or Investment Committees as also provided in
the Trust Agreement.
Powers and responsibilities of Plan fiduciaries may be allocated to other Plan
fiduciaries in accordance with Section 12.3 or as otherwise provided in the Plan
or Trust Agreement. Article 12 allocates to each named fiduciary the
responsibility for the prudent execution of the functions assigned to it, and
none of such responsibilities or any other responsibility shall be shared by
more than one of such named fiduciaries unless such sharing shall be provided by
a specified provision of the Plan or Trust Agreement.
12.3 PROCEDURES FOR DELEGATION AND ALLOCATION OF RESPONSIBILITIES.
Fiduciary responsibilities may be allocated as follows:
(a) The Administration Committee and/or the Investment Committee may
specifically allocate responsibilities to a specified member of each
such committee.
(b) The Administration Committee and/or the Investment Committee may
designate a person other than a fiduciary to carry out Plan fiduciary
responsibilities; provided that such authority shall not cause any
person employed to perform ministerial acts and services for the Plan
to be deemed a Plan fiduciary.
(c) The Administration Committee or the Investment Committee may
appoint an investment manager to manage the Plan's assets or a portion
thereof.
(d) If at any time there are multiple Trustees serving under the Trust
Agreement, such Trustees may allocate specific responsibilities,
obligations or duties among themselves in such manner as they shall
agree.
Any allocation of responsibilities shall be made by filing a notice thereof with
such committee or the Trustee (as applicable) specifically designating the
person to whom such responsibilities or duties are allocated and specifically
setting out the particular duties and responsibilities with respect to which the
allocation or designation is made.
12.4 GENERAL FIDUCIARY STANDARDS. Subject to Section 12.5 hereof, a Plan
fiduciary shall discharge such person's Plan duties solely in the interest of
Participants and Beneficiaries and
(a) for the exclusive purpose of providing benefits to
Participants and Beneficiaries and defraying reasonable expenses of
Plan administration,
(b) with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims,
(c) by diversifying the Plan's investments so as to minimize the risk
of large losses unless under the circumstances it would be clearly
prudent not to do so, and
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(d) in accordance with the documents and instruments governing the Plan
insofar as such documents and instruments are consistent with the
provisions of Title I of ERISA.
12.5 LIABILITY AMONG CO-FIDUCIARIES.
(a) GENERAL. Except for any liability that a person may have under
ERISA, a Plan fiduciary shall not be liable for the breach of a
fiduciary duty by another Plan fiduciary except in the following
circumstances:
(1) the Plan fiduciary participates knowingly in or knowingly
undertakes to conceal an act or omission of such other Plan
fiduciary knowing such act or omission is a breach,
(2) by the Plan fiduciary's failure to comply with the general
fiduciary standards set out in Section 12.4 in the
administration of such fiduciary's specific responsibilities
that give rise to such person's status as a Plan fiduciary,
the Plan fiduciary has enabled such other fiduciary to commit
a breach, or
(3) the Plan fiduciary has knowledge of a breach by such other
Plan fiduciary and the Plan fiduciary does not undertake
reasonable efforts under the circumstances to remedy the
breach.
(b) CO-TRUSTEES. In the event that there are multiple Trustees serving
under the Trust Agreement, each co-Trustee shall use reasonable care to
prevent a co-Trustee from committing a breach of fiduciary
responsibility, and all co-Trustees shall jointly manage and control
Plan assets, except that in the event of an allocation of
responsibilities, obligations or duties, a co-Trustee to whom such
responsibilities, obligations or duties have not been allocated shall
not be liable to any person by reason of this Section 12.5, either
individually or as a co-Trustee, for any loss resulting to the Plan
arising from the acts or omissions on the part of the co-Trustee to
whom such responsibilities, obligations or duties have been allocated.
(c) LIABILITY WHERE ALLOCATION IS IN EFFECT. To the extent that
fiduciary responsibilities are specifically allocated by a fiduciary or
pursuant to the express terms of the Plan to any person, then such Plan
fiduciary shall not be liable for any act or omission of such person in
carrying out such responsibility except to the extent that the Plan
fiduciary violated Section 12.4:
(1) with respect to such allocation or designation,
(2) with respect to the establishment or implementation of
the procedure for making such an allocation or designation,
(3) in continuing the allocation or designation, or
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(4) the Plan fiduciary would otherwise be liable in
accordance with this Section 12.5.
(d) LIABILITY OF TRUSTEE FOLLOWING COMMITTEE DIRECTIONS. No
Trustee shall be liable for following directions of the Administration
Committee given pursuant to Section 12.2(b) and the Investment
Committee given pursuant to Section 12.2(c).
(e) NO RESPONSIBILITY FOR EMPLOYER ACTION. Neither the Trustee,
Administration Committee nor Investment Committee shall have any
obligation or responsibility with respect to any act or omission of the
Employers or any other person; neither the Trustee, Administration
Committee nor Investment Committee shall have any obligation or
responsibility with respect to the collection of any contributions
required by the Plan or with respect to the determination of the
correctness of the amount of any Employer contribution.
(f) NO DUTY TO INQUIRE. Neither the Trustee, the Administration
Committee nor the Investment Committee shall have any obligation to
inquire into or be responsible for any act or failure to act on the
part of the others.
(g) LIABILITY WHERE INVESTMENT MANAGER APPOINTED. If an investment
manager has been appointed pursuant to Section 12.3(c), then neither
the Trustee nor the Investment Committee shall be liable for the acts
or omissions of such investment manager or be under any obligation to
invest or otherwise manage any Plan assets that are subject to the
management of such investment manager.
(h) SUCCESSOR FIDUCIARY. No Plan fiduciary shall be liable with respect
to any breach of an ERISA fiduciary duty if such breach was committed
before such person became a Plan fiduciary or after such person ceased
to be a Plan fiduciary.
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ARTICLE 13
COMPANY AND EMPLOYER ADMINISTRATION PROVISIONS
13.1 INFORMATION. The Employers shall upon request or as may be
specifically required in the Plan furnish or cause to be furnished all of the
information or documentation that is necessary or required by the
Administration Committee, Investment Committee and Trustee to perform their
respective Plan duties and functions.
13.2 NO LIABILITY. Neither the Company nor any Employer assumes any
obligation or responsibility to any Employees, Participants or Beneficiaries for
any act of, or failure to act, on the part of the Administration Committee,
Investment Committee or Trustee.
13.3 COMPANY AND EMPLOYER ACTION. Any action required by the Company or
any Employer shall be by resolution of its respective board of directors or by a
person duly authorized to act on behalf of such board of directors.
13.4 INDEMNITY. The Company and each Employer indemnify and hold harmless
the members of their respective boards of directors, non-corporate Plan
Trustees, Administration Committee members and Investment Committee members
from and against any and all loss resulting from liability to which any such
persons may be subjected by reason of any act or conduct except willful or
reckless misconduct in their official capacities in the administration of the
Plan or the Trust or both including all expenses reasonably incurred in their
legal defense in case the Company or the Employers fail to provide such legal
defense. The foregoing indemnification provisions shall not relieve such
persons from any liability that they may incur individually or collectively
under ERISA for breach of a fiduciary duty imposed by ERISA.
13.5 AMENDMENT TO VESTING SCHEDULE. Although the Company reserves the
right to amend the vesting schedule in Section 8.2 at any time, the Company
shall not amend the vesting schedule and no amendment shall be effective if
the amendment would reduce the vested percentage of any Participant's Account
derived from Employer Matching Contributions determined as of the later of
the date the amendment is adopted or the date the amendment becomes effective
to a percentage less than the vested percentage determined without regard to
the amendment.
In the event the vesting schedule is amended, any Participant who has completed
at least three Years of Vesting Service may elect to have the vesting of such
Participant's Account determined without regard to such amendment by notifying
the Administration Committee in writing during the election period described
below. The election period shall begin on the date such amendment is adopted and
shall end no earlier than the latest of the date that is 60 days after the date
(a) such amendment is adopted; (b) such amendment becomes effective; or (c) the
Participant is given notice of such amendment by the Administration Committee.
Any election made pursuant to the foregoing shall be irrevocable. The
Administration Committee shall forward a copy of any vesting schedule amendment
as soon as administratively feasible to each affected Participant
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together with an explanation of the effect of the amendment, the appropriate
form upon which the Participant may make an election to remain under the vesting
schedule provided in 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.
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ARTICLE 14
COMMITTEE ADMINISTRATION PROVISIONS
14.1 APPOINTMENT OF COMMITTEES. The Board shall appoint an Administration
Committee to administer the Plan and an Investment Committee to be
responsible for the investment of Plan assets. The persons selected to serve
on such committees may or may not be Participants.
14.2 TERM. Each committee member shall serve until such person's
successor is appointed by the Board. Any committee member may be removed by
the Board with or without cause, and the Board shall have the power to fill
any vacancy that may occur. A committee member may resign upon notice to the
Board. A committee member who is an Employee shall cease to be a committee
member upon such person's termination of employment under the Plan unless
expressly provided to the contrary in writing at the time of such termination.
14.3 COMPENSATION. The committee members shall serve without compensation
for services as such, but the Employers shall pay all expenses of the
committees including the expenses for any bond required by ERISA. To the
extent such expenses are not paid by the Employers, such expenses shall be
paid from the Trust Fund.
14.4 POWER OF ADMINISTRATION COMMITTEE. The Administration Committee
shall have the powers and duties set out below:
(a) to direct all aspects of the administration of the Plan,
(b) to adopt rules of procedure and regulations necessary for the
administration of the Plan provided that such rules are not
inconsistent with the Plan's terms,
(c) to determine all questions with regard to rights of Employees,
Participants and Beneficiaries including but not limited to rights of
eligibility of an Employee to participate in the Plan, the computation
of the value of a Participant's Account Balance and the computation of
the vesting of a Participant's Account Balance,
(d) to enforce the Plan document and the rules and regulations
adopted by the Administration Committee,
(e) to direct the Trustee as respects the Trust and all other matters
within its discretion as provided in the Trust Agreement,
(f) to review and render decisions respecting a claim for or denial
of a claim for any benefit or the exercise of any right in the Plan,
(g) to furnish the Employers with information that the Employers may
require for tax or other purposes,
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(h) to engage the service of legal counsel, who may be legal
counsel for an Employer, and agents that it deems advisable to assist
it with the performance of its duties,
(i) to prescribe procedures to be followed by Participants and
Beneficiaries in obtaining benefits,
(j) to receive from the Employers and Employees such information
as shall be necessary for the Plan's administration,
(k) to receive and review reports of the financial condition and
of the receipts and disbursements of the Trust Fund from the Trustee,
(l) to maintain or cause to be maintained separate accounts in
the name of each Participant and Beneficiary to reflect such person's
Account Balance,
(m) to select a secretary who need not be an Administration
Committee member, and
(n) to interpret and construe the Plan and to determine any and
all other questions arising wider the Plan.
14.5 POWER OF INVESTMENT COMMITTEE. The Investment Committee shall have
the powers and duties set out below:
(a) to direct the Trustee in the Investment, reinvestment and
disposition of the Trust Fund as provided in the Trust Agreement,
subject, however, to the right granted in the Plan to each Participant
to direct the investment of such person's Account Balance among the
investment funds selected by the Investment Committee,
(b) to make decisions regarding the selection, retention and
replacement of investment funds to be made available to Participants
under the Plan,
(c) to furnish the Employers with information that the Employers
may require for tax or other purposes,
(d) to engage the service of legal counsel, who may be legal
counsel for an Employer, and agents that it deems advisable to assist
with the performance of its duties,
(e) to receive and review reports of the financial condition and
of the receipts and disbursements of the Trust Fund from the Trustee,
(f) to engage the services of an investment manager who shall have full
power and authority to manage, acquire or dispose (or direct the
Trustee with respect to acquisition or disposition) of any asset under
its control,
(g) to select a secretary who need not be an Investment Committee
member,
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(h) to adopt such rules as it deems necessary or appropriate to
implement voting with respect to securities held in the Trust,
including pass through voting to Participants if appropriate, and
(i) to interpret and construe the Plan and Trust with respect to
the investment, reinvestment and disposition of Plan assets.
14.6 MANNER OF ACTION. With respect to each committee, the decision of a
majority of the committee members appointed and qualified to serve shall
control. In case of a vacancy in the committee membership, the remaining
members of each respective committee may exercise any and all of the powers,
authorities, duties and rights conferred upon such committee pending the
filling of such vacancy by the Board. The committees may but need not call or
hold formal meetings. Any decisions made or actions taken pursuant to
approval of a majority of the then serving committee members shall be
sufficient. Each committee shall maintain adequate records of its decisions.
14.7 AUTHORIZED REPRESENTATIVE. Each 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. Each committee must evidence such authority by an instrument
signed by all its respective members and filed with the Trustee.
14.8 NONDISCRIMINATION. The Administration Committee shall administer the
Plan in a uniform and nondiscriminatory manner for the exclusive benefit of
Participants and Beneficiaries.
14.9 INTERESTED MEMBER. No Administration Committee member may decide or
determine any matter concerning the distribution, nature or method of settlement
of such person's own Plan benefits.
14.10 BOOKS AND RECORDS. The Administration Committee shall maintain or
cause to be maintained records that adequately disclose at all times the
financial condition of the Trust Fund and of each Participant's and
Beneficiary's interest therein. The books, forms and methods of accounting
for the Plan and Trust shall be the responsibility of the Administration
Committee.
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ARTICLE 15
THE TRUST
15.1 PURPOSE OF THE TRUST FUND. A Trust Fund, including various subfunds
(as determined by the Investment Committee) shall be maintained for the
purposes of the Plan, and the assets of the Trust Fund shall be invested in
accordance with the terms of the Trust Agreement. All contributions shall be
paid into the Trust Fund, and all benefits shall be paid from the Trust Fund.
15.2 APPOINTMENT OF TRUSTEE. The Trustees shall be appointed by the Board.
The Trustees' obligations, duties and responsibilities shall be governed by the
Trust Agreement.
15.3 EXCLUSIVE BENEFIT OF PARTICIPANTS. Except as expressly provided to
the contrary in the Plan, the Trust Fund shall be used and applied in
accordance with the Plan's provisions to provide benefits to Participants and
Beneficiaries; no part of the corpus or income of the Trust Fund shall be
used for or diverted to purposes other than for the exclusive benefit of
Participants and Beneficiaries and for the payment of the Plan's
administration expenses. The Company expressly reserves the right to recover
any amounts held in a suspense account upon the Plan's termination but only
to the extent of such amount that cannot be allocated to the Accounts of
Participants in the year of the Plan's termination due to the limitations of
Code Section 415.
15.4 BENEFITS LIMITED TO THE TRUST FUND. A Participant's or Beneficiary's
interest in the Plan shall be limited to the amount of such person's Account
Balance as adjusted from time to time.
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ARTICLE 16
PARTICIPANT ADMINISTRATION PROVISIONS
16.1 PERSONAL DATA TO ADMINISTRATION COMMITTEE. Each Participant and
Beneficiary must furnish to the Administration Committee such information as the
Administration Committee considers necessary or desirable for the Plan's
administration.
16.2 ADDRESS FOR NOTIFICATION. Each Participant and each Beneficiary of a
deceased Participant shall file with the Administration Committee notice of
such person's post office address and each subsequent change of such post
office address. Any Plan payment or distribution and any communication
addressed to a distributee at the last address filed with the Administration
Committee (or if no such address has been filed, then the last address
indicated on the records of the Employers) shall be deemed to have been
delivered to the distributee on the date that such distribution or
communication is deposited in the United States mail.
If a distribution or payment, including without limitation a distributee's
entire Account Balance, cannot be made because the location of the distributee
is unknown, such distribution and all subsequent distributions otherwise due to
such distributee shall be forfeited 24 months after the date such distribution
first became due; provided, that such distribution and any subsequent
distributions shall be reinstated retroactively, no later than 60 days after the
Participant is located. The Administration Committee shall have no obligation to
locate a missing distributee other than by attempting delivery of a
communication to the missing distributee's last known address via United States
mail, return receipt requested.
16.3 INFORMATION AVAILABLE. All Participants and Beneficiaries of
deceased Participants may examine copies of the Plan, summary plan
description, Trust Agreement and latest annual report of the Plan. The
Administration Committee shall maintain all of such items in its office or in
such other places as it may designate for examination during reasonable
business hours. Upon the written request of a Participant or Beneficiary, the
Administration Committee shall furnish copies of any such document described
in this Section 16.3. The Administration Committee may assess a reasonable
charge to the requesting person for the copies so furnished.
16.4 CLAIMS PROCEDURE. A Participant or Beneficiary (a "claimant") shall
file a claim with the Administration Committee if the claimant believes that
such person is entitled to exercise a right or receive a benefit under the
Plan. The Administration Committee shall act upon such claims in accordance
with the provisions of this Section 16.
16.5 APPEAL PROCEDURE FOR DENIAL OF BENEFITS. The Administration
Committee shall provide adequate notice in writing to any claimant whose
claim under the Plan has been denied. Such notice must be sent within 90 days
after the date the claim is received by the Administration Committee unless
special circumstances require an extension of time for processing the claim.
Such extension shall not exceed 90 days, and no extension shall be allowed
unless, within the initial 90 day period, the claimant is sent an extension
notice indicating the special circumstances requiring the extension and
specifying a date by which the Administration Committee expects to
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render its final decision. The Administration Committee's notice of denial to
the claimant shall set forth:
(a) the specific reason for the denial,
(b) specific references to pertinent Plan provisions on which the
denial is based,
(c) a description of any additional material and information needed for
the claimant to perfect the claim and an explanation of why the
material or information is needed,
(d) a statement that the claimant may:
(1) request a review upon written application to the
Administration Committee,
(2) review pertinent Plan documents, and
(3) submit issues and comments in writing, and
(e) that any appeal the claimant wishes to make of the adverse
determination must be made in writing to the Administration Committee
within 60 days after receipt of the Administration Committee's notice
of denial. The Administration Committee's notice must further advise
the claimant that a failure to appeal the action to the Administration
Committee in writing within the 60 day period shall render the
Administration Committee's determination final, binding and conclusive.
If the claimant appeals to the Administration Committee, the claimant or the
claimant's duly authorized representative may submit in writing issues and
comments that such person determines to be pertinent. The Administration
Committee shall reexamine all facts related to the appeal and make a final
determination as to whether the denial was justified under the circumstances.
The Administration Committee shall advise the claimant in writing of its
decision on the appeal, the specific reasons for the decision and the specific
Plan provisions on which the decision is based. The notice of the decision shall
be given within 60 days after 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 period infeasible, but in no event shall the Administration
Committee render a decision on appeal later than 120 days after its receipt of
an appeal request. If an extension of time for review on appeal is required
because of special circumstances, written notice of the extension shall be
furnished to the claimant prior to the date the extension period commences. The
Administration Committee's notice of denial shall identify the name of the
Administration Committee representative and address to which the claimant may
forward the appeal.
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ARTICLE 17
AMENDMENT OR TERMINATION
17.1 RIGHT TO AMEND.
(a) The Board reserves the right at any time and from time to time (and
retroactively if deemed necessary or appropriate to meet the
requirements of ERISA and Code Section 401(a)) to modify or amend, in
whole or in part, any or all of the Plan's provisions.
(b) No such modification or amendment shall make it possible for any
part of the corpus or income of the Trust Fund to be used for or
diverted to purposes other than for the exclusive benefit of
Participants and Beneficiaries prior to the satisfaction of all
liabilities with respect thereto. Moreover, no modification or
amendment shall make it possible to deprive any Participant of a
previously accrued benefit (including an optional form of benefit)
within the meaning of Code Section 411(d)(6).
(c) The Administration Committee may adopt amendments that do not
significantly affect the cost of the Plan and that may be necessary or
appropriate to qualify or maintain the Plan and Trust as a plan and
trust meeting the requirements of ERISA and of Code Sections 401(a) and
501(a).
17.2 RIGHT TO TERMINATE PLAN. The Board reserves the right to terminate
the Plan at any time with respect to any or all Employers. Unless the Plan is
sooner terminated, a successor to the business or any portion thereof of an
Employer, by whatever form or manner resulting, with the written consent of
the Company, may continue the Plan and become a party to the Trust Agreement
by executing appropriate supplemental agreements and other documents, and
such successor shall succeed to all applicable rights, powers and duties of
such Employer with respect thereto. Any Participant's employment who is
continued in the employ of such successor shall not be deemed to have been
terminated or severed for any purpose of the Plan.
17.3 OBLIGATIONS UPON MERGER, CONSOLIDATION OR TRANSFER. In the event of
any merger or consolidation with, or transfer of assets and liabilities to,
any other plan, each Participant shall be entitled to receive a benefit if
the Plan were to terminate immediately after the merger, consolidation or
transfer, that is not less than the benefit that such person would have been
entitled to receive if the Plan had terminated immediately before the merger,
consolidation or transfer.
17.4 OBLIGATIONS UPON TERMINATION, PARTIAL TERMINATION OR DISCONTINUANCE.
While the Company intends to continue the Plan indefinitely, the Company
assumes no obligation as to the Plan's continuance. Upon termination or
partial termination of the Plan and Trust Agreement by formal action or for
any other reason, or if Plan contributions by the Employers are permanently
discontinued for any reason, the Account Balances of all Participants
directly affected by such action shall be fully vested and distributed to
such Participants in cash, in kind, or part in cash and part in kind as soon
as administratively feasible in connection with the liquidation of the assets
of the Trust. Notwithstanding the foregoing, an amount may only be
distributed if the
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Employers do not maintain or establish another defined contribution plan at the
time the Plan is terminated or within the 12 month period ending after
distribution of all assets from the Plan, other than an employee stock ownership
plan (as defined in Code Section 4975(e) or Code Section 409), a simplified
employee pension plan (as defined in Code Section 408(k)) or a defined
contribution plan if fewer than 2% of the Employees who are eligible under the
Plan at the time of termination are or were eligible under such other defined
contribution plan at any time during the 24 month period beginning 12 months
before the Plan's termination. In addition, distributions made after March 31,
1988, on account of the Plan's termination must be made in a lump sum in
accordance with Treasury Regulation Section 1.401(k)-1(d)(5).
17.5 CONTINUED FUNDING AFTER PLAN TERMINATION. Notwithstanding any Plan
provision to the contrary, no Employer upon any termination or partial
termination of the Plan shall have any obligation or liability whatsoever to
make any further contributions for the benefit of Participants (including all
or any part of any contributions payable prior to any Plan termination) to
the Trust Fund. No person, committee or board shall have any right to compel
an Employer to make any Plan contribution after the termination or partial
termination of the Plan.
17.6 DISTRIBUTION UPON DISPOSITION OF ASSETS OR SUBSIDIARY.
Notwithstanding any Plan provision to the contrary and in accordance with the
provisions of Code Section 401(k)(2)(B)(i)(II), a Participant's Account may
be distributed to the Participant as soon as administratively feasible after
the sale or other disposition of substantially all of the assets used by the
Participant's Employer in the trade or business in which the Participant is
employed if the Participant is no longer employed by the Company or one of
its subsidiaries or other affiliates that has adopted the Plan and the assets
were not sold to a related employer. The Account of a Participant employed by
the Company or one of its subsidiaries or other affiliates may be distributed
to the Participant as soon as administratively feasible after the sale or
other disposition of the Employer's interest in the subsidiary or other
affiliate to an entity that is not a related Employer as long as the
Participant continues employment with such other entity.
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ARTICLE 18
GENERAL PROVISIONS
18.1 NO CONTRACT OF EMPLOYMENT; NO RIGHTS IMPLIED. The Plan shall not be
deemed to constitute a contract between the Company or any Employer and any
Employee. It is not a promise of continued employment by the Company or any
Employer or of continued benefits as an Employee. Employees are employed "at
will." Each Employer has and shall continue to have the absolute right and
authority to dismiss any Employee at any time, with or without cause, without
regard to the effect that such action may have upon an Employee as a
Participant. Nothing in the Plan or Trust Agreement shall give any Employee,
Participant, Beneficiary or any other person any legal or equitable right
against the Trustee or its agents or employees, except as expressly provided
by the Plan, the Trust or ERISA.
18.2 NONALIENATION. No portion of a Participant's or Beneficiary's
Account Balance, including without limitation a distribution or payment
therefrom, shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, whether voluntary or
involuntary, and any attempt to so anticipate, alienate, sell, transfer,
assign, pledge, encumber or charge the same shall be void; nor shall any such
distribution or payment be in any way liable for or subject to the debts,
contracts, liabilities, engagements or torts of any person entitled to such
distribution or payment. If any Participant or Beneficiary is adjudicated
bankrupt or purports to anticipate, alienate, sell, transfer, assign, pledge,
encumber or charge any such distribution or payment voluntarily or
involuntarily, the Administration Committee in its sole discretion may hold
or cause to be held or applied such distribution or payment or any part
thereof to or for the benefit of such Participant or Beneficiary in such
manner as the Administration Committee shall direct. Notwithstanding the
foregoing, (i) the right to a benefit payable with respect to a Participant
pursuant to a Qualified Domestic Relations Order (as defined in Section 21.2)
may be credited, assigned or recognized and (ii) the Plan shall honor a
judgment, order, decree or settlement providing for the offset of all or a
part of a Participant's benefit under the Plan, to the extent permitted under
Code Section 401(a)(13)(C); provided that the requirements of Code Section
401(a)(13)(C)(iii) relating to the protection of the Participant's spouse (if
any) are satisfied.
18.3 INCAPACITY. If any person entitled to receive any distribution or
payment from the Plan is a minor or is legally, physically or mentally
incapable of personally receiving and receipting for any such distribution or
payment, the Administration Committee may instruct the Trustee to make such
distribution or payment to such other person or institution then maintaining
or in custody of such person. As a condition to the issuance of such
instruction for the distribution or payment to such other person or
institution, the Administration Committee may require such person or
institution to secure an order, decree or judgment of a court of competent
jurisdiction with respect to the incapacity of the person who would otherwise
be entitled to receive the distribution or payment. Distributions and
payments made pursuant to the foregoing shall completely discharge the
Company, all Employers and Plan fiduciaries of any further liability with
respect to such distribution or payment.
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18.4 SERVICE IN MORE THAN ONE CAPACITY. Any person may serve in more than
one fiduciary capacity with respect to the Plan and Trust.
18.5 INTENT TO QUALIFY. The Company intends that the Plan shall be a
tax-qualified profit sharing plan and that the Trust shall be a tax-exempt
trust within the meaning of Code Sections 401(a) and 501(a), respectively,
and the Treasury Regulations promulgated thereunder. In the event that any
question of interpretation arises in connection with the administration of
the Plan, such question shall be resolved in a manner that will not
jeopardize the continued tax qualification of the Plan or the tax-exemption
of the Trust.
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ARTICLE 19
ROLLOVER CONTRIBUTIONS AND TRANSFERS
19.1 ROLLOVER FROM OTHER PLANS. In the event that an Eligible Employee:
(a) becomes a Participant in the Plan, has not satisfied the
eligibility requirements of Article 2, or does not elect to make Salary
Reduction Contributions,
(b) was a participant in another employer's tax-qualified plan,
(c) received from such plan a distribution that qualifies for
rollover treatment in accordance with the Code, and
(d) such distribution consists of money or other property, but only
if the other property has been sold and converted to money after the
distribution,
then, the Eligible Employee may transfer any portion of the distribution to the
Plan on or before the 60th day after the day on which the Eligible Employee
received such property, and upon receipt by the Plan, such amount shall be
credited to the Eligible Employee's Rollover Contribution Account. The Eligible
Employee shall have a fully vested interest in all amounts credited to such
Eligible Employee's Rollover Contribution Account as a result of such transfer.
19.2 ROLLOVER FROM CONDUIT INDIVIDUAL RETIREMENT ARRANGEMENT. In the event
that an Eligible Employee:
(a) becomes a Participant in the Plan, has not satisfied the
eligibility requirements of Article 2, or does not elect to make Salary
Reduction Contributions,
(b) established an individual retirement account or individual
retirement annuity (an "IRA") described in Code Sections 408(a) and
408(b), respectively, that is comprised solely of amounts constituting
a rollover contribution of a distribution from a previous employer's
tax-qualified plan, and
(c) received from such IRA the entire amount of the account or the
entire value of the annuity, including any earnings on such account or
annuity, pursuant to Code Section 408(d)(3)(A)(ii),
then, the Eligible Employee may transfer any portion of the distribution to the
Plan on or before the 60th day after the day on which the Eligible Employee
received such distribution, and upon receipt by the Plan, such amount shall be
credited to the Eligible Employee's Rollover Contribution Account. The Eligible
Employee shall have a fully vested interest in all amounts credited to such
Eligible Employee's Rollover Contribution Account as a result of such transfer.
19.3 TRANSFERS DIRECTLY FROM OTHER PLANS. An Eligible Employee who is not
eligible to participate in the Plan solely because such Employee has not
satisfied the eligibility requirements
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of Article 2 or does not elect to make Salary Reduction Contributions may
arrange with the Administration Committee to transfer an amount to the Plan
directly from the trustee of any other tax-qualified plan; provided that such
transfer satisfies the requirements of Code Section 411(d)(6). A separate
subaccount shall be established for the transferred assets allocable to each
Employee. Notwithstanding the foregoing, an Eligible Employee may not transfer
any amount to the Plan that if transferred would cause the Plan to be a direct
or indirect transferee plan (within the meaning of Code Section
401(a)(11)(B)(iii)(III) and the Treasury Regulations promulgated thereunder) of
a plan described in Code Section 401(a)(11)(B)(i) or (ii).
19.4 MISTAKEN ROLLOVER. If an Eligible Employee's Rollover Contribution
fails to qualify under the Code as a tax-free rollover, then as soon as
administratively feasible the balance in the Eligible Employee's Rollover
Contribution Account shall be:
(a) segregated from all other Plan assets,
(b) treated as a nonqualified trust established by and for the
benefit of the Eligible Employee, and
(c) distributed to the Eligible Employee.
Such a mistaken Rollover Contribution shall be deemed never to have been a part
of the Plan and shall not adversely affect the Plan's tax-qualification.
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ARTICLE 20
TOP-HEAVY PROVISIONS
20.1 TOP-HEAVY PLAN DEFINED. This Article shall apply if the Plan is a
"Top-Heavy Plan." The Plan shall be a Top-Heavy Plan in a Plan Year if, as of
the Determination Date, the present value of the cumulative accrued benefits
(as calculated below) of all Key Employees exceeds 60% of the present value
of the cumulative accrued benefits in the Plan of all Employees and Key
Employees, but excluding the value of the accrued benefits of former Key
Employees. All plans that are part of the Required Aggregation Group shall be
treated as a single plan.
Solely for the purpose of determining if the Plan, or any other plan included in
a Required Aggregation Group of which the Plan is a part, is a Top-Heavy Plan,
the accrued benefit of a Non-Key Employee shall be determined under (a) the
method, if any, that uniformly applies for accrual purposes under all plans
maintained by the Company and its subsidiaries and other affiliates, or (b) if
there is no such method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional accrual rate of Code Section
411(b)(1)(C).
The present value of an Eligible Employee's accrued benefit shall be equal to
the sum of (a) and (b) below:
(a) the sum of (i) the present value of the Eligible Employee's accrued
retirement income in each defined benefit plan that is included in the
Required Aggregation Group determined as of the most recent valuation
date within the 12 month period ending on the Determination Date and as
if the Eligible Employee had terminated employment with all Employers
as of such valuation date, and (ii) the aggregate distribution made
with respect to such Eligible Employee during the five year period
ending on the Determination Date from all defined benefit plans
included in the Required Aggregation Group and not reflected in the
value of the Eligible Employee's accrued retirement income as of the
most recent valuation date. In determining present value for all plans
in the Required Aggregation Group, the actuarial assumptions set forth
for such purpose in the Employer's defined benefit plan shall be
utilized and the commencement date shall be determined taking any
nonproportional subsidy into account, and
(b) the sum of (i) the aggregate balance of the Eligible Employee's
accounts in all defined contribution plans that are part of the
Required Aggregation Group as of the most recent valuation date within
the 12 month period ending on the Determination Date, (ii) any
contributions allocated to such an account after the valuation date and
on or before the Determination Date and (iii) the aggregate
distributions made with respect to such Eligible Employee during the
five year period ending on the Determination Date from all defined
contribution plans that are part of the Required Aggregation Group and
not reflected in the value of such Eligible Employee's account as of
the most recent valuation date.
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20.2 OTHER DEFINITIONS. Some of the terms used in Article 20 are defined
as follows:
(a) "DETERMINATION DATE" shall mean the last day of the preceding Plan
Year.
(b) "EMPLOYEE" shall mean a current Eligible Employee or a former
Eligible Employee who performed services for any of the Employers
during the Plan Year containing the Determination Date or any of the
four preceding Plan Years.
(c) "KEY EMPLOYEE " shall mean an Eligible Employee, a former Eligible
Employee or the Beneficiary of a deceased Eligible Employee who, in the
Plan Year containing the Determination Date, or any of the four
preceding Plan Years, is:
(1) an officer of an Employer having an annual Compensation
greater than 50% of the amount in effect under Code Section
415(b)(1)(A) for any such Plan Year. Not more than 50 Eligible
Employees or, if lesser, the greater of three Eligible
Employees or 10% of the Eligible Employees shall be considered
as officers.
(2) one of the ten Eligible Employees owning (or considered as
owning within the meaning of Code Section 318) the largest
interests in the Employers, which is more than a .5% ownership
interest in value, and whose Compensation equals or exceeds
the maximum dollar limitation under Code Section 415(c)(1)(A)
as in effect for the calendar year in which the Determination
Date falls.
(3) a 5-percent owner of an Employer.
(4) a 1-percent owner of an Employer having an annual
Compensation from the Employer of more than $150,000.
Whether an Eligible Employee is a 5-percent owner or a 1-percent owner shall be
determined in accordance with Code Section 416(i).
(d) "NON-KEY EMPLOYEE" shall mean an Eligible Employee who is not
a Key Employee.
(e) "REQUIRED AGGREGATION GROUP" shall mean:
(1) each stock bonus, pension or profit sharing plan of the
Employers in which a Key Employee participates and which is
intended to qualify under Code Section 401(a), and
(2) each other such stock bonus, pension or profit sharing
plan of the Employers that enables any plan in which a Key
Employee participates to meet the requirements of Code
Sections 401(a)(4) or 410.
20.3 TOP-HEAVY CONTRIBUTIONS. Solely in the event that a Non-Key Employee
is not covered by a defined benefit plan of an Employer that provides the
minimum benefit required by Code
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Section 416(c)(1) during a Plan Year in which the Plan is a Top-Heavy Plan, the
Employer contributions and forfeitures allocated to each such Non-Key Employee
who has not separated from service by the end of the Plan Year shall be equal to
not less than the lesser of:
(a) 3% of such Participant's Compensation in the Plan Year, or
(b) the percentage of such Participant's Compensation in the Plan Year
that is equal to the percentage of which contributions and forfeitures
are made to the Key Employee for whom such percentage is the highest
for the year.
The percentage referred to in Section 20.3(b) shall be determined by dividing
the contributions and forfeitures allocated to the Key Employee by such Eligible
Employee's Compensation. The Employers shall make such additional contributions
to the Plan as shall be necessary to make the allocation described above. This
Section applies without regard to contributions or benefits under Social
Security or any other Federal or State law. An adjustment may be made to this
Section, as permitted under Treasury Regulations, in the event an Eligible
Employee is also entitled to an increased benefit in any other Top-Heavy Plan
while such plan is in the Aggregation Group with the Plan.
A Non-Key Employee who is otherwise entitled to a minimum contribution shall not
fail to receive the required minimum contribution because the Eligible Employee
is excluded from participation because the Eligible Employee failed to make
Salary Reduction Contributions or because the Eligible Employee failed to accrue
1,000 Hours of Service during the Plan Year.
20.4 ADJUSTMENT TO LIMITATION ON ANNUAL ADDITIONS.
(a) For Limitation Years beginning before January 1, 2000, if an
Employer also maintains a tax-qualified defined benefit plan (as
defined in Section 3(35) ERISA and Code Section 414(j) and which is not
part of a floor offset arrangement (as defined in Code Section 414(k)),
then the denominator of both the Defined Benefit Plan Fraction and
Defined Contribution Plan Fraction, as set forth in Section 4.8, for
the Limitation Year ending in such Plan Year shall be adjusted by
substituting 1 for 1.25 in each place where such figure occurs.
(b) The adjustments referred to in Section 20.4(a) are not required if:
(1) the Plan would not be a Top-Heavy Plan if 90% were
substituted for 60% in Section 20.1, and
(2) Section 20.3(a) is adjusted by substituting 4% for 3% where
such number appears.
(c) The adjustments referred to in Section 20.4(a) do not apply to any
Participant as long as no Employer contributions, forfeitures, salary
deferrals or nondeductible voluntary contributions are allocated to
such Participant's Account, and the Participant does not accrue any
benefits under any defined benefit plan maintained by the Employer.
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ARTICLE 21
QUALIFIED DOMESTIC RELATIONS ORDERS
21.1 TERMS OF QDRO. Section 18.2 shall not apply to a Qualified Domestic
Relations Order if such order:
(a) creates or recognizes the existence of an Alternate Payee's
right to, or assigns to an Alternate Payee the right to, receive all or
a portion of a Participant's Account Balance,
(b) clearly specifies:
(1) the name and the last known mailing address if any of the
Participant and the name and mailing address of each Alternate
Payee covered by the order,
(2) the amount or percentage of the Participant's Account
Balance to be distributed by the Plan to each Alternate Payee
or the manner in which such amount or percentage is to be
determined,
(3) the period to which such order applies, and the Valuation
Date on which the division shall be made, and
(4) the name of the plan to which such order applies,
(c) does not require the Plan to provide any type or form of
distribution or any optional form of payment not provided by
the Plan,
(d) does not require the Plan to provide increased benefits
(other than investment earnings of the Alternate Payee's
separate account), and
(e) does not require the distribution of any portion of an Account
Balance to an Alternate Payee that is required to be paid to another
Alternate Payee under another order previously determined to be a
Qualified Domestic Relations Order.
21.2 QDRO DEFINITIONS. Some of the terms used in Article 21 are defined as
follows:
(a) "QUALIFIED DOMESTIC RELATIONS ORDER" shall mean any judgment,
decree or order (including approval of a property settlement agreement)
that:
(1) relates to the provision of child support, alimony
payments or marital property rights to a spouse, former
spouse, child or other dependent of a Participant,
(2) is made pursuant to a state domestic relations law
(including a community property law), and
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(3) meets the requirements of the foregoing Section 21.1.
(b) "ALTERNATE PAYEE" shall mean any spouse, former spouse, child or
other dependent of a Participant who is recognized by a Qualified
Domestic Relations Order as having a right to receive all or a portion
of the Account Balance payable from the Plan with respect to such
Participant.
21.3 DISTRIBUTION BEFORE TERMINATION OF EMPLOYMENT. In the case of any
distribution made before a Participant has terminated employment under the
Plan, a Qualified Domestic Relations Order shall not be considered as failing
to meet the requirements of Section 21.1 solely because such order requires
that a distribution be made to an Alternate Payee:
(a) on or after the date on which the Participant attains (or would
have attained) the Earliest Retirement Age (as defined below),
(b) as if the Participant had retired on the date on which such
distribution is to be made under such order but taking into account
only the Participant's Account Balance on such date), and
(c) in any form in which such distribution may be paid from the Plan to
the Participant.
The term "EARLIEST RETIREMENT AGE" shall mean the earlier of (i) the date on
which the Participant would be entitled to a distribution from the Plan, or (ii)
the later of (1) the date the Participant attains age 50, or (2) the earliest
date on which the Participant could begin receiving benefits from the Plan if he
separated from service under the Plan.
Notwithstanding the foregoing, the Administration Committee shall comply with
any Qualified Domestic Relations Order that requires distribution to an
Alternate Payee at any time after the Administration Committee accepts the
Qualified Domestic Relations Order, without regard to the continued employment
under the Plan or not of the Participant to whom the Qualified Domestic
Relations Order relates. Furthermore, provided the Qualified Domestic Relations
Order does not specify otherwise, an Alternate Payee's Account Balance shall be
distributed in a single sum as soon as administratively practicable following
the earlier of (i) the date the Participant is entitled to a distribution (other
than a hardship distribution) from the Plan, or (ii) the date the Alternate
Payee's Account Balance is fully vested.
21.4 TREATMENT OF FORMER SPOUSE. To the extent provided in any Qualified
Domestic Relations Order:
(a) the former spouse of a Participant shall be treated as a "surviving
spouse" of such Participant for purposes of Code Sections 401(a)(11)
and 417, and any spouse of the Participant shall not be treated as a
spouse of the Participant for such purposes, and
(b) if married for at least one year to the Participant, such former
spouse shall be treated as meeting the requirements of Code Section
417(d).
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21.5 NOTIFICATION OF RECEIPT OF ORDER. The Administration Committee shall
promptly notify the Participant and Alternate Payee of the receipt of a
proposed Qualified Domestic Relations Order and of the Plan's procedure for
determining whether the proposed Qualified Domestic Relations Order meets the
requirements of a Qualified Domestic Relations Order. Within a reasonable
time after receipt of such proposed Qualified Domestic Relations Order, the
Administration Committee shall determine whether such proposed Qualified
Domestic Relations Order meets the requirements of a Qualified Domestic
Relations Order. The Administration Committee may act in accordance with such
procedures as it shall from time to time establish. The Administration
Committee shall notify the Participant and Alternate Payee of its
determination.
21.6 SEPARATE ACCOUNTING. During any period in which the issue of whether
a proposed Qualified Domestic Relations Order meets the requirements stated
above is being determined, the Administration Committee shall separately
account for the amounts (the "segregated amounts") that would have been
payable to the Alternate Payee during such period if the proposed Qualified
Domestic Relations Order had been determined to be a Qualified Domestic
Relations Order. If, within 18 months, such proposed Qualified Domestic
Relations Order is determined to be a Qualified Domestic Relations Order, the
Administration Committee shall pay the segregated amounts (adjusted for
investment earnings and losses thereon) to the person or persons entitled
thereto. If, within 18 months, such proposed Qualified Domestic Relations
Order is determined not to be a Qualified Domestic Relations Order, or the
issue as to whether such proposed Qualified Domestic Relations Order so
qualifies is not resolved, then the Administration Committee shall pay the
segregated amount (adjusted for investment earnings and losses thereon) to
the person or persons who would have been entitled to such amounts if there
had been no proposed Qualified Domestic Relations Order. Any determination
that a proposed Qualified Domestic Relations Order is a Qualified Domestic
Relations Order that is made after the end of the 18 month period shall be
applied prospectively only.
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ARTICLE 22
EMPLOYER PARTICIPATION
22.1 ADOPTION BY EMPLOYERS. Any corporation with employees that is a
member of an affiliated group of corporations (as defined in Code Section
1504(a)) of which the Company is the common parent corporation and that is
otherwise legally eligible may with the consent and approval of the Board
adopt the Plan and the Trust by formal resolution and decision of its own
board of directors for all or any classification of its employees and thereby
from and after the specified effective date of the adoption become an
Employer. Such adoption shall be evidenced by a resolution of the Board
authorizing, consenting to, containing or incorporating by reference such
resolution or decision of the adopting corporation. The adoption resolution
or decision shall become, as to such adopting corporation and its employees,
a part of the Plan as then or subsequently amended. The adopting corporation
shall not be required or permitted to sign or execute the Plan document or
any amendment thereto. The Plan's effective date for any such adopting
corporation shall be that stated in the resolution or decision of adoption of
the adopting corporation, and from and after such effective date the adopting
corporation shall assume all the rights, obligations and liabilities of the
Employer as to its employees. The administrative powers and control granted
to the Company, including the sole right of amendment of the Plan and Trust
and of appointment and removal of the Administration Committee, the
Investment Committee and their respective successors, shall not be diminished
by reason of the participation of any such adopting employer in the Plan.
22.2 WITHDRAWAL BY EMPLOYER. Any Employer, by action of its board of
directors and upon notice to the Company and the Trustee, may withdraw from
the Plan and Trust at anytime without affecting the other Employers not
withdrawing, by complying with the Plan's provisions. Termination of the Plan
as it relates to any Employer upon its withdrawal shall be governed by the
provisions of Article 17. A withdrawing Employer may arrange for the
continuation of the Plan and Trust by itself or its successor in separate
form for its own Employees, with such amendments, if any, as it may deem
proper or may arrange for continuation of the Plan and Trust by merger with
an existing tax-qualified plan and transfer of such portion of the Trust
assets as the Administration Committee determines are allocable to the
Employees of the withdrawing Employer. The Company may, in its sole
discretion and in any reasonable manner, terminate an Employer's adoption of
the Plan at any time when the Employer is no longer a member of the group
that entitles it to adopt the Plan pursuant to Section 22.1 or when in the
Company's judgment the Employer fails or refuses to discharge its obligations
under the Plan after delivery of such notice and opportunity to cure as may
be appropriate under the circumstances.
22.3 ADOPTION CONTINGENT UPON INITIAL AND CONTINUED QUALIFICATION. The
adoption of the Plan and Trust by an Employer as provided in Section 22.1
shall be contingent upon and subject to the condition that the adoption of
the Plan and Trust by the adopting Employer does not adversely affect the
continued tax qualification of the Plan and Trust as to all Employers. The
Company may request a determination letter from the Internal Revenue Service
with respect to the adopting Employer. In the event the Plan or the Trust
become disqualified for any reason as
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to an adopting Employer, the portion of the Trust Fund allocable to the
Employees of the adopting Employer shall be segregated as soon as
administratively feasible pending the requalification of the Plan and Trust as
to the adopting Employer; the withdrawal of such adopting Employer from the Plan
and Trust; or the termination of the Plan and Trust as to the adopting Employer
and its Employees.
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ARTICLE 23
MISCELLANEOUS
23.1 RECEIPTS. Any payment in accordance with the Plan provisions to any
Participant or to such person's legal representative or a Beneficiary of such
person's entire Account Balance as reflected in the Plan records shall be in
full satisfaction of all claims against the Plan and Trust and their respective
fiduciaries, agents and representatives. The Administration Committee may
require any payee, as a condition precedent to such payment, to execute a
receipt and release therefor in such form as the Administration Committee shall
specify.
23.2 NO GUARANTEE OF INTEREST. Neither the Trustee, the Administration
Committee, the Investment Committee, nor any Employer guarantees the Trust
Fund from loss or depreciation. No Employer guarantees the payment of any
money or other value that may be or become due to any person from the Trust
Fund. The liability of the Administration Committee, the Investment Committee
and the Trustee to make any payment from the Trust Fund is limited to the
then available assets of the Trust Fund.
23.3 PAYMENT OF EXPENSES. All expenses incident to the administration,
termination and protection of the Plan and Trust, including but not limited
to legal, accounting and Trustee fees, shall be paid by the Employers, except
that in case the Employers for any reason do not pay such expenses, the
expenses shall be paid from the Trust Fund and until paid shall constitute a
first and prior claim and lien against the Trust Fund.
23.4 RECORDS. The Employers' records as to any employment data of any
person with respect to the Plan shall be conclusive against all persons and
for all purposes, unless such records are determined by the Administration
Committee to be erroneous.
23.5 INTERPRETATIONS AND ADJUSTMENTS. To the fullest extent permitted by
law, any Plan interpretation or decision on any matter made in good faith by
the Administration Committee within its discretion shall be final, conclusive
and binding on all persons for all purposes. The Administration Committee
shall correct any misstatement or other mistake in such manner as it
determines to be equitable and feasible.
23.6 EVIDENCE. Evidence required of any person in connection with the
Plan may be by certificate, affidavit, document or other form that the person
acting on it considers pertinent and reliable.
23.7 SEVERABILITY. In the event any Plan provision shall be held to be
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining Plan provisions but shall be fully severable, and the
Plan shall be construed and enforced as if the illegal or invalid provision
had never been included in the Plan.
23.8 NOTICE. Any notice required by the Plan shall be deemed delivered
when personally delivered or placed in the United States mail in an envelope
addressed to the last known address
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of the person to whom the notice is to be given. Any person entitled to notice
under the Plan may waive the notice.
23.9 SUCCESSORS. The Plan and Trust shall be binding upon all persons
entitled to any Plan benefits and upon all persons who have received Plan
benefits and their respective heirs and legal representatives; upon each
Employer and their respective successors and assigns; upon the Trustees and
their successors; and upon the committees and their successors.
23.10 HEADINGS. The titles and headings of Articles and Sections are
included for convenience and reference only and are not to be considered in
the construction of the Plan provisions.
23.11 GOVERNING LAW. All questions arising with respect to the Plan's
provisions shall be determined by application of the laws of the State of
Texas except to the extent Texas law is preempted by ERISA or other
applicable Federal law.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, MICHAELS STORES, INC. has caused this instrument to
be executed by its duly authorized officer on this 1st day of August, 1999, but
otherwise effective as stated herein.
MICHAELS STORES, INC.
By: /s/ Bryan M. DeCordova
------------------------------------
Its: Executive Vice President and Chief
Financial Officer
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