MICHAELS STORES, INC.
EMPLOYEES 401(K) PLAN
(AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 1, 1994)
TABLE OF CONTENTS
PAGE
P R E A M B L E
ARTICLE 1
DEFINITIONS
1.01 Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Account Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.03 Actual Deferral Percentage. . . . . . . . . . . . . . . . . . . . . . 1
1.04 Adjustment Factor . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.05 Administration Committee or Committee . . . . . . . . . . . . . . . . 1
1.06 Average Actual Deferral Percentage. . . . . . . . . . . . . . . . . . 2
1.07 Average Contribution Percentage . . . . . . . . . . . . . . . . . . . 2
1.08 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.09 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 Contribution Percentage . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 Effective Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.15 Eligibility Qualification Period. . . . . . . . . . . . . . . . . . . 4
1.16 Employee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 Employee Contributions. . . . . . . . . . . . . . . . . . . . . . . . 5
1.18 Employee Contribution Account . . . . . . . . . . . . . . . . . . . . 5
1.19 Employer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.20 Employer Matching Contributions . . . . . . . . . . . . . . . . . . . 6
1.21 Employer Matching Contribution Account. . . . . . . . . . . . . . . . 6
1.22 Employment Commencement Date. . . . . . . . . . . . . . . . . . . . . 6
1.23 Entry Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.24 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.25 Excess Aggregate Contributions. . . . . . . . . . . . . . . . . . . . 6
1.26 Excess Contributions. . . . . . . . . . . . . . . . . . . . . . . . . 7
1.27 Excess Deferrals. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.28 Family Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.29 Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.30 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . 7
1.31 Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.32 Investment Committee. . . . . . . . . . . . . . . . . . . . . . . . . 9
1.33 Leave of Absence. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.34 Limitation Year . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.35 Normal Retirement Date. . . . . . . . . . . . . . . . . . . . . . . . 10
1.36 Nonhighly Compensated Employee. . . . . . . . . . . . . . . . . . . . 10
1.37 One-Year Break in Service . . . . . . . . . . . . . . . . . . . . . . 10
1.38 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.39 Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.40 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.41 Prior Plan Account. . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.42 Rollover Contributions. . . . . . . . . . . . . . . . . . . . . . . . 11
1.43 Rollover Contribution Account . . . . . . . . . . . . . . . . . . . . 11
1.44 Salary Reduction Election . . . . . . . . . . . . . . . . . . . . . . 11
1.45 Salary Reduction Contribution Account . . . . . . . . . . . . . . . . 11
1.46 Salary Reduction Contribution . . . . . . . . . . . . . . . . . . . . 11
1.47 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.48 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
1.49 Valuation Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.50 Vesting Computation Period. . . . . . . . . . . . . . . . . . . . . . 12
1.51 Year of Eligibility Service . . . . . . . . . . . . . . . . . . . . . 12
1.52 Year of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.53 Year of Vesting Service . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
2.01 Plan Entry Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.02 Participation Requirement(s). . . . . . . . . . . . . . . . . . . . . 12
2.03 Termination of Service. . . . . . . . . . . . . . . . . . . . . . . . 12
2.04 Rehired Employee. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.05 Loss of Participant Status. . . . . . . . . . . . . . . . . . . . . . 13
2.06 Suspension of Participation . . . . . . . . . . . . . . . . . . . . . 13
2.07 Vesting Service . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.08 Notice of Participation . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 3
SALARY REDUCTION CONTRIBUTIONS
3.01 Salary Reduction Contributions. . . . . . . . . . . . . . . . . . . . 13
3.02 Salary Reduction Contribution Election. . . . . . . . . . . . . . . . 15
3.03 Suspension of, or Change in, Salary Reduction Contribution Election . 15
3.04 Deferral Percentage Limitation. . . . . . . . . . . . . . . . . . . . 16
3.05 Special Rules on Deferral Percentage Limitations. . . . . . . . . . . 16
3.06 Adjustment of Deferrals . . . . . . . . . . . . . . . . . . . . . . . 17
3.07 Aggregate Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.08 Return of Contributions Above the Aggregate Limit . . . . . . . . . . 19
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ARTICLE 4
EMPLOYER AND EMPLOYEE CONTRIBUTIONS
4.01 Employer Matching Contributions . . . . . . . . . . . . . . . . . . . 20
4.02 Timing of Employer Matching Contributions . . . . . . . . . . . . . . 20
4.03 Employee Contributions. . . . . . . . . . . . . . . . . . . . . . . . 20
4.04 Percentage Limitation on Employer Matching Contributions. . . . . . . 21
4.05 Special Rules for Contribution Percentage Limit Testing . . . . . . . 21
4.06 Adjustments To Contributions. . . . . . . . . . . . . . . . . . . . . 22
4.07 Overall Limitation on Annual Additions. . . . . . . . . . . . . . . . 23
4.08 Special Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.09 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.10 Reversion of Employer Matching Contributions. . . . . . . . . . . . . 26
ARTICLE 5
PARTICIPANTS' ACCOUNTS
5.01 Separate Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.02 Valuation of Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.03 Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 6
INVESTMENT OF FUNDS
6.01 Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.02 Authorized Investments and Investment Control . . . . . . . . . . . . 27
6.03 Assumption of Risk by Participants. . . . . . . . . . . . . . . . . . 28
6.04 General Provisions Regarding Investment Direction . . . . . . . . . . 28
6.05 Independent Qualified Public Accountant . . . . . . . . . . . . . . . 30
ARTICLE 7
DEATH BENEFITS AND BENEFICIARY DESIGNATIONS
7.01 Distribution Upon Death . . . . . . . . . . . . . . . . . . . . . . . 30
7.02 Designation of Beneficiary. . . . . . . . . . . . . . . . . . . . . . 30
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ARTICLE 8
VESTING AND TERMINATION OF EMPLOYMENT
8.01 Vesting in Salary Reduction, Employee, and Rollover Contributions . . 32
8.02 Vesting in Employer Matching Contributions. . . . . . . . . . . . . . 32
8.03 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.04 Distribution of Vested Benefits . . . . . . . . . . . . . . . . . . . 33
8.05 Forfeiture for Cause. . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 9
DISTRIBUTION OF BENEFITS
9.01 Normal Form of Benefit. . . . . . . . . . . . . . . . . . . . . . . . 33
9.02 Time of Distribution. . . . . . . . . . . . . . . . . . . . . . . . . 33
9.03 Investment of Account Balance of Terminated Participant . . . . . . . 34
9.04 Latest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.05 Mandated Commencement of Benefits . . . . . . . . . . . . . . . . . . 35
9.06 Direct Rollovers. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
9.07 Waiver of 30-Day Notice . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 10
WITHDRAWALS WHILE EMPLOYED
10.01 Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.02 Hardship Withdrawals. . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 11
LOANS
11.01 Overall Limitations . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.02 Terms of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.03 Source of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.04 Withholding and Application of Loan Payments. . . . . . . . . . . . . 40
11.05 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.06 Administrative Rules and Procedures . . . . . . . . . . . . . . . . . 40
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ARTICLE 12
FIDUCIARIES' DUTIES
12.01 Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.02 Allocation of Responsibilities. . . . . . . . . . . . . . . . . . . . 41
12.03 Procedures for Delegation and Allocation of Responsibilities. . . . . 41
12.04 General Fiduciary Standards . . . . . . . . . . . . . . . . . . . . . 42
12.05 Liability Among Co-Fiduciaries. . . . . . . . . . . . . . . . . . . . 42
ARTICLE 13
EMPLOYER ADMINISTRATION PROVISIONS
13.01 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.02 No Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.03 Employer Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.04 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.05 Amendment to Vesting Schedule . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 14
COMMITTEES - ADMINISTRATION AND INVESTMENT PROVISIONS
14.01 Appointment of Committees . . . . . . . . . . . . . . . . . . . . . . 45
14.02 Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
14.03 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
14.04 Power of Administration Committee . . . . . . . . . . . . . . . . . . 46
14.05 Power of Investment Committee . . . . . . . . . . . . . . . . . . . . 47
14.06 Manner of Action. . . . . . . . . . . . . . . . . . . . . . . . . . . 48
14.07 Authorized Representative . . . . . . . . . . . . . . . . . . . . . . 48
14.08 Nondiscrimination . . . . . . . . . . . . . . . . . . . . . . . . . . 48
14.09 Interested Member . . . . . . . . . . . . . . . . . . . . . . . . . . 48
14.10 Funding Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
14.11 Individual Statement. . . . . . . . . . . . . . . . . . . . . . . . . 48
14.12 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 15
THE TRUST
15.01 Purpose of the Trust Fund.. . . . . . . . . . . . . . . . . . . . . . 49
15.02 Appointment of Trustee. . . . . . . . . . . . . . . . . . . . . . . . 49
15.03 Exclusive Benefit of Participants . . . . . . . . . . . . . . . . . . 49
v
15.04 Benefits Supported Only By the Trust Fund . . . . . . . . . . . . . . 49
ARTICLE 16
PARTICIPANT ADMINISTRATIVE PROVISIONS
16.01 Beneficiary Designation . . . . . . . . . . . . . . . . . . . . . . . 49
16.02 No Beneficiary Designation. . . . . . . . . . . . . . . . . . . . . . 50
16.03 Personal Data to Administration Committee . . . . . . . . . . . . . . 50
16.04 Address for Notification. . . . . . . . . . . . . . . . . . . . . . . 50
16.05 Alienation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
16.06 Litigation Against the Trust. . . . . . . . . . . . . . . . . . . . . 50
16.07 Information Available . . . . . . . . . . . . . . . . . . . . . . . . 51
16.08 Beneficiary's Right to Information. . . . . . . . . . . . . . . . . . 51
16.09 Claims Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
16.10 Appeal Procedure for Denial of Benefits . . . . . . . . . . . . . . . 51
16.11 Place of Payment and Proof of Continued Eligibility . . . . . . . . . 52
16.12 No Rights Implied . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 17
AMENDMENT OR TERMINATION
17.01 Right to Amend. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
17.02 Right to Terminate Plan . . . . . . . . . . . . . . . . . . . . . . . 53
17.03 Obligations Upon Merger, Consolidation or Transfer. . . . . . . . . . 54
17.04 Obligations Upon Termination, Partial Termination or Discontinuance . 54
17.05 Continued Funding After Plan Termination. . . . . . . . . . . . . . . 54
17.06 Distribution Upon Disposition of Assets or Subsidiary . . . . . . . . 54
ARTICLE 18
GENERAL PROVISIONS
18.01 No Contract of Employment . . . . . . . . . . . . . . . . . . . . . . 55
18.02 No Alienation of Benefits . . . . . . . . . . . . . . . . . . . . . . 55
18.03 Incapacity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
18.04 Sole Source of Benefits . . . . . . . . . . . . . . . . . . . . . . . 56
18.05 Address of Payee Unknown. . . . . . . . . . . . . . . . . . . . . . . 56
18.06 Service in More Than One Plan Capacity. . . . . . . . . . . . . . . . 56
18.07 Intent to Qualify . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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ARTICLE 19
ROLLOVER CONTRIBUTIONS AND TRANSFERS
19.01 Rollover of Funds From Other Plans. . . . . . . . . . . . . . . . . . 56
19.02 Rollover of Funds From Conduit Individual Retirement Account (IRA). . 57
19.03 Transfers Directly from Other Plans . . . . . . . . . . . . . . . . . 58
19.04 Mistaken Rollover . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE 20
TOP-HEAVY PROVISIONS
20.01 Top-Heavy Plan Defined. . . . . . . . . . . . . . . . . . . . . . . . 58
20.02 Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 59
20.03 Top-Heavy Contributions . . . . . . . . . . . . . . . . . . . . . . . 60
20.04 Adjustment to Limitation on Annual Additions. . . . . . . . . . . . . 61
ARTICLE 21
QUALIFIED DOMESTIC RELATIONS ORDERS (QDROs)
21.01 Terms of QDRO . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
21.02 QDRO Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 62
21.03 Payments Prior to Separation from Employment. . . . . . . . . . . . . 63
21.04 Treatment of Former Spouse. . . . . . . . . . . . . . . . . . . . . . 63
21.05 Notification of Receipt of Order. . . . . . . . . . . . . . . . . . . 63
21.06 Separate Accounting . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE 22
EMPLOYER PARTICIPATION
22.01 Adoption by Employers . . . . . . . . . . . . . . . . . . . . . . . . 64
22.02 Withdrawal by Employer. . . . . . . . . . . . . . . . . . . . . . . . 65
22.03 Adoption Contingent Upon Initial and Continued Qualification. . . . . 65
22.04 No Joint Venture Implied. . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE 23
MISCELLANEOUS
23.01 Execution of Receipts and Releases. . . . . . . . . . . . . . . . . . 66
23.02 No Guarantee of Interest. . . . . . . . . . . . . . . . . . . . . . . 66
vii
23.03 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 66
23.04 Employer Records. . . . . . . . . . . . . . . . . . . . . . . . . . . 66
23.05 Interpretations and Adjustments . . . . . . . . . . . . . . . . . . . 66
23.06 Uniform Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
23.07 Evidence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
23.08 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
23.09 Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
23.10 Waiver of Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . 67
23.11 Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
23.12 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
23.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
APPENDIX I
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P R E A M B L E
The Michaels Stores, Inc. Inc. Employees 401(k) Plan (As Amended and
Restated Effective February 1, 1994) (the "Plan") is designed to provide
eligible employees and their beneficiaries with the opportunity to accumulate
capital for their future economic security, to encourage eligible employees to
remain in the service of the employer, and to provide additional incentive for
employee performance on behalf of the employer. The Plan was originally adopted
effective as of February 1, 1987 and was most recently amended and restated
effective May 1, 1992. This instrument contains all amendments to the Plan
through the date of execution hereof.
The Plan is intended to be a profit sharing plan qualifying under Section
401(a) of the Code with a cash or deferred arrangement qualifying under Section
401(k) of the Code. The Plan is intended to comply with the requirements of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the
regulations issued thereunder; the provisions of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations issued thereunder; and other
appropriate Federal laws and regulations.
ARTICLE 1
DEFINITIONS
The following words and phrases as used herein shall have the following
meanings and the masculine, feminine and neuter gender shall be deemed to
include the others, unless a different meaning is plainly required by the
context:
1.01 ACCOUNT shall mean, to the extent applicable to a Participant, the total
of the separate accounts that are maintained for a Participant under the Plan.
1.02 ACCOUNT BALANCE shall mean the sum of the amounts credited to the
Participant's Accounts as of any date.
1.03 ACTUAL DEFERRAL PERCENTAGE shall mean the ratio (expressed as a
percentage) of the Salary Reduction Contributions made on behalf of the
Participant for the Plan Year to the Participant's Compensation for the Plan
Year.
1.04 ADJUSTMENT FACTOR shall mean the cost of living adjustment factor
prescribed by the Secretary of the Treasury under Section 415(d) of the Code, as
applied to such items and in such manner as the Secretary shall provide.
1.05 ADMINISTRATION COMMITTEE OR COMMITTEE shall mean the person(s), described
in Article 14, who are responsible for the administration of the Plan.
1
1.06 AVERAGE ACTUAL DEFERRAL PERCENTAGE shall mean the average (expressed as a
percentage) of the Actual Deferral Percentages of the Participants in a group.
1.07 AVERAGE CONTRIBUTION PERCENTAGE shall mean the average (expressed as a
percentage) of the Contribution Percentages of the Participants in a group.
1.08 BENEFICIARY shall mean the person, persons or entity designated in
writing by a Participant, or otherwise determined in accordance with Section
7.02 of the Plan, entitled to receive any death benefit which may be, or may
become, payable under the Plan.
1.09 BOARD shall mean the Board of Directors of Michaels Stores, Inc., as
constituted from time to time.
1.10 CODE shall mean the Internal Revenue Code of 1986, as amended from time
to time.
1.11 COMPANY shall mean Michaels Stores, Inc., and its divisions, affiliates
and subsidiaries as from time to time constituted, which are making
contributions to the Fund, including all entities that are part of an affiliated
group or are related as described in Sections 414(b), (c), and (m) of the Code.
1.12 COMPENSATION shall have the following meanings for specific purposes
under the Plan:
a. For purposes of the limitations imposed by Section 415 of the
Code and the Top-Heavy plan minimum contribution requirements of Section
416 of the Code, "Compensation" shall mean the total compensation
received from the Employer for personal services rendered by an eligible
Employee to the Employer during the Plan Year as reported on the
Participant's Federal Income Tax Withholding Statement (Form W-2; Box 10)
including base salary, bonuses, commissions, incentive pay, and overtime.
For purposes of this subsection, 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 a company provided automobile or excess group-term life insurance
coverage. Compensation shall not include, however, any amounts realized
from the exercise of a non-qualified stock option, or when restricted
stock (or property) held by an employee either becomes freely
transferable or is no longer subject to a substantial risk 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 Regulation Section 1.415-2(d)(3).
b. For purposes of determining the amount of Salary Reduction
Contributions made on behalf of a Participant pursuant to Section 3.01
and the amount of Employer Matching Contributions on behalf of a
Participant pursuant to Section 4.01, "Compensation" shall mean
"Compensation" as defined in a. above; including, however, any amounts
attributable to an election by an Employee to reduce his Compensation
2
pursuant to this Plan or any other plan under Section 125 or 401(k) of
the Code sponsored by the Company shall be disregarded. For purposes of
this subsection, Compensation shall not 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 a company provided
automobile or excess group-term life insurance coverage. In addition,
Compensation shall not include any amounts realized from the exercise of
a non-qualified stock option, or when restricted stock (or property) held
by an employee either becomes freely transferable or is no longer subject
to a substantial risk 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. This definition of
"Compensation" shall be interpreted and construed in a manner consistent
with the safe harbor definition contained in Section 1.414(s)-1(c)(3) of
the Treasury Regulations.
c. For purposes of defining "Key Employee" under Section 416 of
the Code, "Compensation" shall mean Compensation as defined in paragraph
a. above. determined without regard to elections under Internal Revenue
Code sections 125 (cafeteria plans) and 402(a)(8) (cash or deferred
arrangements).
d. The annual Compensation taken into account under the Plan for
any 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. The
Compensation of a Participant who is a 5% owner (as defined in Code
Section 416(i)(1)) or one of the 10 Employees who are highly compensated
employees (as defined in Code Section 414(q)) 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 an individual is a member of the family (as
defined in Code Section 414(q)(6)) of a Participant who is a 5% owner (as
defined in Code Section 416(i)(1)) or one of the 10 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% owner or highly compensated employee.
If, as a result of the application of these rules, the adjusted $200,000
limitation is exceeded, then the limitation shall be applied in a pro
rata manner among the affected
3
individuals in proportion to each such individual's Compensation as
determined under this Section prior to the application of this
limitation. This paragraph shall be construed in a manner consistent
with Code Section 401(a)(17) and Code Section 414(q)(6). This paragraph
shall not apply for the purposes of determining the limitations imposed
by Code Section 415 and for purposes of defining "Key Employee" under
Code Section 416.
1.13 CONTRIBUTION PERCENTAGE shall mean the ratio (expressed as a percentage)
of the Employer Matching Contributions made under the Plan on behalf of the
Participant and the Employee Contributions made by the Participant for the Plan
Year to the Participant's Compensation for the Plan Year.
1.14 EFFECTIVE DATE shall mean February 1, 1994, the effective date of this
amendment and restatement of this Plan, except as otherwise provided herein and
except as follows:
a. The following provisions shall be effective for Plan Years beginning
on or after December 31, 1986: Article 3, Article 4, Article 11, and
Section 1.16.
b. The following Section shall be effective for Plan Years beginning
after December 31, 1987: 3.07.
c. The following Sections shall be effective for Plan Years beginning
after December 31, 1988: 1.12 and 8.02.
d. The following Article shall be effective after April 30, 1992:
Article 6.
e. The following Section shall be effective for Plan Years beginning
after December 31, 1992: 9.06.
1.15 ELIGIBILITY QUALIFICATION PERIOD shall mean the 12 consecutive month
period beginning on the date the Employee is first credited with an Hour of
Service and each anniversary thereof.
1.16 EMPLOYEE shall mean any person who is receiving remuneration for personal
services rendered in the employment of the Employer including any officer or
director of the Company so employed; including any leased employee deemed to be
an employee of the Employer as provided in Section 414(n) or (o) of the Code;
and including any person who would be receiving such remuneration except for an
authorized Leave of Absence, except that the term "Employee" shall not include
the following:
a. Employees included in a unit of employees covered by a
collective bargaining agreement between the Employer and employee
representatives, if retirement benefits were the subject of good faith
bargaining and if two percent or less of the employees who are covered
pursuant to that agreement are professionals as defined in Section
1.410(b)-9 of the Treasury Regulations. For this purpose, the term
"employee
4
representatives" does not include any organization more than half of
whose members are employees who are owners, officers, or executives of
the Employer;
b. Employees who are nonresident aliens (within the meaning of
Section 7701(b)(1)(B) of the Code) and who receive no earned income
(within the meaning of Section 911(d)(2) of the Code) from the Employer
which constitutes income from sources within the United States (within
the meaning of section 861(a)(3) of the Code); and
c. any person receiving payments as a consultant, independent
contractor, or other arrangement excluded from the common law definition
of the term "employee".
The term Employee shall not include any person not classified by the Company 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 the Company after the date of
such determination.
SPECIAL PROVISIONS FOR LEASED EMPLOYEES. The term "leased employee"
means any person (other than an employee of the recipient) who pursuant
to an agreement between the recipient and any other person (a "leasing
organization") has performed services for the recipient (or for the
recipient and related persons determined in accordance with Section
414(n)(6) of the Code) on a substantially full time basis for a period of
at least one year, and such services are of a type historically performed
by employees in the business field of the recipient employer.
Contributions or benefits provided a leased employee by the leasing
organization which are attributable to services performed for the
recipient employer shall be treated as provided by the recipient
employer.
A leased employee shall not be considered an employee of the recipient
if: (i) such employee is covered by a money purchase pension plan
providing: (1) a nonintegrated employer contribution rate of at least 10
percent of compensation, as defined in Section 415(c)(3) of the code, but
including amounts contributed pursuant to a salary reduction agreement
which are excludable from the employee's gross income under Section 125,
402(e)(3), 402(h)(1)(B), or 403(b) of the Code, (2) immediate
participation, and (3) full and immediate vesting; and (ii) leased
employees do not constitute more than 20 percent of the recipient's
nonhighly compensated workforce.
1.17 EMPLOYEE CONTRIBUTIONS shall mean the amounts contributed by a
Participant pursuant to Section 4.03.
1.18 EMPLOYEE CONTRIBUTION ACCOUNT shall mean the account into which Employee
Contributions made on behalf of a Participant and earnings on those
contributions shall be credited.
5
1.19 EMPLOYER shall mean the Company and any subsidiary or affiliated company
which shall ratify and adopt this Plan in a manner satisfactory to the Board.
In determining Hours of Service for the purposes of determining an Employee's
eligibility to participate in the Plan and the vesting of benefits, in
determining the special rules on deferral percentage limitations under Section
3.05 and the special rules for contribution percentage limit testing under
Article 20, in determining whether the Plan is top-heavy under Section 416 of
Code, and in determining the limitations on annual additions under Section 415
of the Code, the term "Employer" shall include any other corporation or other
business entity which must be aggregated with the Employer under Section 414(b),
(c), (m) or (o) of the Code, but only for such periods of time when the Employer
and such other corporation or other business entity must be aggregated as
aforesaid. For purposes of the determination of the limitations on annual
additions, such definition of "Employer" shall be modified by Section 415(h) of
the Code.
1.20 EMPLOYER MATCHING CONTRIBUTIONS shall mean the amounts contributed on
behalf of a Participant pursuant to Article 4.
1.21 EMPLOYER MATCHING CONTRIBUTION ACCOUNT shall mean the account into which
Employer Matching Contributions made on behalf of a Participant and earnings on
those contributions shall be credited.
1.22 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. For eligibility and vesting purposes, the Employment Commencement
Date of an Employee who was employed immediately prior to commencing the
performance of services with the Employer by one of the entities listed in
Appendix I (as from time to time amended or supplemented by the Administrator)
on or before the Divestiture Date for such entity, shall be the first day of
such Employee's performance of service for such entity; except that, if such
Employee's service for such entity was interrupted by a break in service of one
year or more, the Employment Commencement Date for such Employee shall be the
first day of the Employee's performance of service for such entity following the
break in service. The term "Divestiture Date" shall mean, for an entity listed
on Appendix I, the date shown on Appendix I after which hours of service
performed for the entity do not count for eligibility and/or vesting purposes
under the Plan.
1.23 ENTRY DATE shall mean February 1 and August 1 of each Plan Year.
1.24 ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
1.25 EXCESS AGGREGATE CONTRIBUTIONS shall mean Employer Matching Contributions
in excess of the Contribution Percentage limit, as described in Section
401(m)(6)(B) of the Code.
6
1.26 EXCESS CONTRIBUTIONS shall mean Salary Reduction Contributions in excess
of the Actual Deferral Percentage limit, as described in Section 401(k)(8)(B) of
the Code.
1.27 EXCESS DEFERRALS shall mean Salary Reduction Contributions in excess of
the limits imposed by Section 402(g) of the Code.
1.28 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 Section 414(q)(6) of the Code.
1.29 FUND shall mean the aggregate of all assets held in various investment
funds by the Trustee to provide the benefits under the Plan.
1.30 HIGHLY COMPENSATED EMPLOYEE shall mean any Employee who performs service
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 Section 415(b)(1)(A) of the Code.
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% owners at any time during the look-back
year or determination year.
If no officer has satisfied the compensation requirement of paragraph 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 3 Employees or 10% of the Employees)
shall be treated as officers.
For this purpose, the determination year shall be the Plan Year. The look-back
year shall be the 12 month period immediately preceding the determination year.
7
If an Employee is, during a determination year or look-back year, a Family
Member of either a 5% owner who is an active or former Employee or a Highly
Compensated Employee who is one of the 10 most highly compensated Employees
ranked on the basis of Compensation paid by the Employer during such year, then
the Family Member and the 5% owner or top 10 highly compensated Employee shall
be aggregated. In such case, the Family Member and 5% owner or top 10 highly
compensated Employee shall be treated as a single Employee receiving
Compensation and contributions or benefits of the Family Member and 5% owner or
top 10 highly compensated Employee.
The determination of who is a Highly Compensated Employee, including the
determinations 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, will be made in accordance with Section 414(q)
of the Code and the regulations thereunder.
1.31 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;
these 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;
Hours credited under this paragraph b. shall be credited to the
computation period(s) 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 the Employer.
These hours shall be
8
credited to the computation period(s) 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
paragraph b. above are applicable and that an Employee shall not be
entitled to additional Hours of Service under this paragraph c. for the
same Hours of Service credited under paragraphs a. or b. above.
Hours of Service hereunder 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 hereunder.
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 the Employee's pregnancy, the birth of the Employee's
child, the placement of a child with the Employee in connection with the
adoption of such child by such Employee, or the need to care for such Employee's
child during the period immediately following such child's birth or placement,
then the following hours shall be considered as Hours of Service for purposes of
this Section.
a. the Hours of Service which otherwise would normally have been
credited to such Employee but for such absence, or
b. in any case in which the Administration Committee is unable to
determine the number of hours described in the foregoing clause a., 8
Hours of Service per day of absence,
provided that no more than 501 Hours of Service need be credited under this
paragraph to an Employee because of such pregnancy or placement.
The Hours of Service described in the foregoing paragraph shall be treated as
Hours of Service only in the Eligibility Qualification 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 paragraph a. or b. of the foregoing
subsection. In any other case, such Hours of Service shall be considered as
Hours of Service in the immediately following Eligibility Qualification Period.
Hours of Service shall not be credited to an Employee on account of pregnancy or
placement as hereinabove provided, unless such Employee furnishes to the
Administration Committee such timely information as the Administration Committee
may require to establish that the absence from employment is for the reasons
described above and to establish the number of days for which there was such an
absence.
1.32 INVESTMENT COMMITTEE shall mean the person(s), described in Article 14,
who are responsible for the administration of the investments of the Plan.
9
1.33 LEAVE OF ABSENCE shall mean an absence authorized by the Employer under
its standard personnel practices as applied in a uniform and non-discriminatory
manner to all persons similarly situated, provided the Employee resumes service
with the 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 12 consecutive months.
Notwithstanding the foregoing, service in the Armed Forces of the United States
of America shall constitute an authorized leave of absence and shall be credited
as employment for purposes of determining a Participant's Years of Service
provided that:
a. the Employee leaves the employ of the Employer to enter the
service of the Armed Forces of the United States of America through the
operation of any law; and
b. the Employee returns to the employ of the Employer within the
period provided by law for the protection of his reemployment rights.
1.34 LIMITATION YEAR shall mean the Plan Year.
1.35 NORMAL RETIREMENT DATE shall mean the date that a Participant attains age
65.
1.36 NONHIGHLY COMPENSATED EMPLOYEE shall mean an Employee who is neither a
Highly Compensated Employee nor a Family Member.
1.37 ONE-YEAR BREAK IN SERVICE shall mean a 12 consecutive month period
beginning with or following an Employee's Employment Commencement Date, in which
the Employee is credited with fewer than 501 Hours of Service with an Employer.
1.38 PARTICIPANT shall mean any Employee who has satisfied the requirements
for participation under this Plan and has agreed to make (or has made) salary
deferral contributions under the terms and conditions of the Plan. For purposes
of the Plan other than Articles 3 (Salary Reduction Contributions); 4 (Employer
and Employee Contributions); and 11 (Loans), the term "Participant" shall also
include:
a. individuals who have terminated employment with the Employer
but who retain an interest in the Plan;
b. retired Employees who are receiving installment payments from
the Plan; and
c. Employees not otherwise eligible to participate in the Plan who
establish Rollover Contribution Accounts as permitted by Article 19 of
the Plan.
10
1.39 PLAN shall mean the Michaels Stores, Inc. Employees 401(k) Plan (As
Amended and Restated Effective May 1, 1992), as herein set forth, and as it may
hereafter be amended from time to time.
1.40 PLAN YEAR shall mean the twelve consecutive month period beginning on
February 1st and ending on the immediately following January 31.
1.41 PRIOR PLAN ACCOUNT shall mean the accounts held in the Plan, other than
Participants' Rollover Contribution Accounts, resulting from a merger into this
Plan of any tax-qualified plan previously sponsored by the Company or any of its
affiliates. The Administration Committee may establish one or more Prior Plan
Accounts, and each Prior Plan Account may be subdivided into such sub-accounts
as the Administration Committee determines is necessary in connection with the
administration of the Plan.
1.42 ROLLOVER CONTRIBUTIONS shall mean the amounts transferred to the Plan by
a Participant pursuant to Article 19. Rollover Contributions may include
amounts transferred to this Plan by Participants from a Plan previously
sponsored by the Company, any of its affiliates, or any of its predecessors;
provided, however, that Rollover Contributions shall not include any amounts
merged into this Plan by action of the Company.
1.43 ROLLOVER CONTRIBUTION ACCOUNT shall mean the account into which Rollover
Contributions made by a Participant and earnings on those contributions shall be
credited.
1.44 SALARY REDUCTION ELECTION shall mean the portion of the enrollment
application on which a Participant authorizes and elects the percentage of his
Compensation to be withheld by the Employer and contributed on behalf of the
Participant to his Salary Reduction Contribution Account.
1.45 SALARY REDUCTION CONTRIBUTION ACCOUNT shall mean the account into which
Salary Reduction Contributions made on behalf of a Participant pursuant to
Article 3, and earnings on those contributions, shall be credited.
1.46 SALARY REDUCTION CONTRIBUTIONS shall mean the amounts withheld from the
Compensation of a Participant and contributed by the Employer on behalf of a
Participant pursuant to Section 3.01.
1.47 TRUST shall mean the trust agreement between the Company and the Trustee
established for the purpose of funding benefits under the Plan, or any successor
trust agreement or agreements.
1.48 TRUSTEE shall mean the trustee or trustees of the Trust, or any successor
or successors to said trustee.
11
1.49 VALUATION DATE shall mean the last day of January, April, July and
October of each Plan Year, or such other dates as the Administration Committee
may from time to time determine.
1.50 VESTING COMPUTATION PERIOD shall mean the 12 month period beginning with
the Employment Commencement Date or the anniversary thereof.
1.51 YEAR OF ELIGIBILITY SERVICE shall mean an Eligibility Qualification
Period in which an Employee is credited with at least 1,000 Hours of Service.
1.52 YEAR OF SERVICE shall mean each 12 month period beginning on an
Employee's Employment Commencement Date during which an Employee completes 1,000
or more Hours of Service.
1.53 YEAR OF VESTING SERVICE shall mean a Vesting Computation Period in which
an Employee is credited with at least 1,000 Hours of Service.
Words importing the singular shall include the plural and the plural the
singular whenever the context shall require.
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
2.01 PLAN ENTRY DATE. Each Employee (other than leased employees, defined in
Section 1.16) who has satisfied the requirements specified in Section 2.02 prior
to or on the Effective Date shall be eligible to participate in the Plan on the
Effective Date. Each other Employee who satisfies the requirements specified in
Section 2.02 after the Effective Date shall be eligible to participate on the
Entry Date coincident with or next following the date on which he satisfied such
requirements. An eligible Employee must agree to make a Salary Reduction
Contribution to become a Participant in the Plan.
2.02 PARTICIPATION REQUIREMENT(S). An Employee must complete a Year of
Eligibility Service and attain age twenty-one to be eligible to become a
Participant in the Plan.
2.03 TERMINATION OF SERVICE. A Participant's service for purposes of the Plan
shall terminate upon his resignation from or discharge by the Employer,
retirement, or death.
2.04 REHIRED EMPLOYEE. A Participant who ceases to be an Employee and who is
reemployed in a class of Employees otherwise eligible to participate in the Plan
shall be eligible to become a Participant in the Plan as of the day he performs
his first Hour of Service after his re-employment. Salary Reduction
Contributions on behalf of such an individual shall begin as soon as
administratively practicable after the Participant files a new Salary Reduction
Contribution election with the Administration Committee. Each other Employee
who is reemployed shall be
12
eligible to become a Participant on a date determined in accordance with Section
2.01 and Section 2.02.
2.05 LOSS OF PARTICIPANT STATUS. An Employee who becomes a Participant shall
continue to be a Participant in the Plan, whether or not he continues to make
Salary Reduction Contributions, until there are no longer any benefits remaining
payable to him.
2.06 SUSPENSION OF PARTICIPATION. A Participant who, for any reason, becomes
ineligible to make contributions under the Plan but remains an Employee shall
have his Salary Reduction Contributions and Employer Matching Contributions
suspended. During the period of suspension, the suspended Participant's service
shall continue to be considered for vesting purposes and investment gains and
losses shall continue to accrue with respect to any portion of the Participant's
Account which remains in the Plan. The suspension shall be removed and the
individual shall again become eligible to elect to have Salary Reduction
Contributions made on his behalf and to receive Employer Matching Contributions
when he reenters a class of Employees otherwise eligible to participate in the
Plan. Such individual must execute a new Salary Reduction Contribution election
in order to elect to have his Employer make Salary Reduction Contributions on
his behalf.
2.07 VESTING SERVICE. A reemployed Participant shall be credited with his
prior Years of Vesting Service after completing a Year of Vesting Service after
his reemployment; provided, however, that a Participant's prior Years of Vesting
Service shall be disregarded if more than five consecutive One Year Breaks in
Service occur between the date the Participant receives a distribution of his
Accounts and the date of the Participant's reemployment.
2.08 NOTICE OF PARTICIPATION. Within a reasonable time following the date
upon which an Employee becomes eligible to become a Participant, but prior to
his Entry Date, the Administration Committee shall give such Employee reasonable
notice of his pending commencement of participation in the Plan. Such notice
shall include a summary description of the Plan as well as forms on which the
Employee may make the election provided in Section 3.01 of this Plan. By his
participation, a Participant shall be deemed to have agreed to abide by the
provisions of the Plan. A Participant is treated as benefiting under the Plan
for any Plan Year during which the Participant received or is deemed to receive
an allocation in accordance with Section 1.410(b)-3(a) of the Treasury
Regulations.
ARTICLE 3
SALARY REDUCTION CONTRIBUTIONS
3.01 SALARY REDUCTION CONTRIBUTIONS.
a. Subject to the limitations established by this Article and
Article 4, each Participant shall be eligible to elect to have his
Employer contribute a percentage of his
13
Compensation (in whole number amounts of not less than 1% nor more than
15%) directly into the Plan instead of paying such amount to the
Participant. Once each Plan Year a Participant may elect to defer a
portion of his annual bonus, if any, to become payable by the Employer.
Unless the Participant elects otherwise by written notice delivered to
the Administration Committee on or before thirty days immediately
preceding payment of the bonus, the amount of the bonus deferral shall be
an amount equal to the bonus multiplied by a fraction equal to the
fraction of the Participant's Compensation that is being deferred on a
pay period basis. Contributions made in this manner shall be called
Salary Reduction Contributions. A Participant's Salary Reduction
Contributions shall be credited to his Salary Reduction Contribution
Account.
b. For Federal tax purposes (and wherever permitted, for state tax
purposes), Salary Reduction Contributions made pursuant to this section
shall be deemed Employer contributions to the Plan and are intended to
qualify as elective contributions made pursuant to Section 401(k) of the
Code. A Participant's election to enroll in the Plan shall constitute an
election to have his Compensation reduced by the amount of all such
deferrals.
c. All Salary Reduction Contributions shall be forwarded by the
Employer to the Trustee as soon as administratively practicable after the
contributions have been withheld.
d. Notwithstanding the foregoing, no Participant shall be
permitted to make Salary Reduction Contributions under this Plan during
any calendar year in excess of $7,000 or such other amount as may be
determined by multiplying the cap on elective deferrals set by Section
402(g) of the Code by the Adjustment Factor as provided under rules
published by the Secretary of the Treasury. The limitation set by this
paragraph d. applies on an individual basis to all elective deferrals
(within the meaning of Section 401(k) of the Code) made by each
Participant during a calendar year under this or any other similar
qualified plan of the Employer.
e. It shall be the responsibility of each Participant to
coordinate his or her salary deferrals as needed to meet this limit in
connection with any other plan or plans not sponsored by the Employer.
The Company will not take account of deferrals made to any other plan not
sponsored by the Employer. Notwithstanding any other provision of the
Plan, the Participant may state a claim for the return of Excess
Deferrals and such Excess Deferrals and the income allocable thereto
shall be distributed if administratively practicable no later than the
April 15 following the calendar year for which such allocable Excess
Deferrals are made. The Participant's claim shall be in writing; shall
be submitted to the Administration Committee no later than March 1; shall
specify the Participant's Excess Deferrals for the preceding calendar
year; and shall be accompanied by the Participant's written statement
that if such amounts are not distributed, such Excess Deferrals, when
added to amounts deferred under other plans or arrangements
14
described in Sections 401(k), 408(k) or 403(b) of the Code, exceed the
limit imposed on the Participant by Section 402(g) of the Code 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 Participant's Salary
Reduction Contributions for the Plan Year by a fraction, the numerator of
which is the Excess Deferrals 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 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
regulations and other official pronouncements from the Secretary of the
Treasury.
3.02 SALARY REDUCTION CONTRIBUTION ELECTION. Each Participant may deliver to
the Administration Committee a written direction in a form to be prescribed by
the Administration Committee, directing his Employer to reduce his Compensation
within the limits set forth in Section 3.01. Such election shall become
effective as of a date agreed upon between the Administration Committee and the
Participant provided that such date shall be subsequent to receipt of the Salary
Reduction Contribution election by the Administration Committee.
3.03 SUSPENSION OF, OR CHANGE IN, SALARY REDUCTION CONTRIBUTION ELECTION.
a. SUSPENSION: A Participant may elect to suspend all Salary
Reduction Contributions at any time by giving written notice to the
Administration Committee on forms prescribed for that purpose by the
Administration Committee. Any such election shall be effective as soon
as administratively practicable following the date such suspension notice
is received by the Administration Committee. A Participant who has
suspended all Salary Reduction Contributions may resume such
contributions as soon as administratively practicable following receipt
of such notice by the Administration Committee.
b. CHANGE OF DEFERRAL PERCENTAGE: A Participant may elect to
change the amount of his Salary Reduction Contribution effective February
1, May 1, August 1, or November 1 of each Plan Year by giving at least
thirty days' written notice to the Administration Committee on a form
prescribed for that purpose by the Administration Committee. Any such
election shall be effective as soon as administratively practicable
following the date such change is received by the Administration
Committee.
c. SPECIAL RULE: Notwithstanding the foregoing provisions of
subsections a and b above, the provisions of this subsection c shall
apply to suspension and change
15
elections, in the circumstances specified herein, if the Participant is
subject to the requirements of Section 16(b) of the Securities Exchange
Act of 1934. If, at the time of the suspension or change election, the
Participant's investment mix election provides for the investment of all
or any portion of the Participant's future Salary Reduction Contributions
in the Employer common stock investment fund and if the Participant
suspends or reduces to a nominal amount his Salary Reduction
Contributions, then the Participant may not resume Salary Reduction
Contributions or Employee Contributions to the Plan for a period of 6
months from the date of the suspension or change election or until such
time as no portion of the Participant's future Salary Reduction
Contributions are allocated to the Employer common stock investment fund,
if earlier.
3.04 DEFERRAL PERCENTAGE LIMITATION. Subject to the special rules of Section
3.05, and at such intervals as it shall deem proper, the Administration
Committee shall review each Participant's Deferral Election in order to
determine that the Salary Reduction Contributions with respect to all
Participants satisfy one of the following tests:
a. the Average Actual Deferral Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the
Average Actual Deferral Percentage for Participants who are Nonhighly
Compensated Employees for the Plan Year multiplied by 1.25; or
b. the Average Actual Deferral Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the
Average Actual Deferral Percentage for Participants who are Nonhighly
Compensated Employees for the Plan Year multiplied by 2, provided that
the Average Actual Deferral Percentage for Participants who are Highly
Compensated Employees does not exceed the Average Actual Deferral
Percentage for Participants who are Nonhighly Compensated Employees by
more than 2 percentage points. Notwithstanding the foregoing, the limit
set forth in this subsection b. shall be adjusted in accordance with
Section 3.07.
3.05 SPECIAL RULES ON DEFERRAL PERCENTAGE LIMITATIONS.
a. For purposes of this Article 3, the Actual Deferral Percentage
for any Participant who is a Highly Compensated Employee for the Plan
Year and who is eligible to have Salary Reduction Contributions allocated
to his account under two or more plans or arrangements described in
Section 401(k) of the Code 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 2
or more plans or arrangements described in Section 401(k) of the Code
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 purposes of determining the Actual Deferral Percentage of a
Participant who is a 5% owner or one of the 10 most highly paid Highly
Compensated
16
Employees, the Salary Reduction Contributions and Compensation of such
Participant 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
Participants who are Non-Highly Compensated Employees and for
Participants who are Highly Compensated Employees.
c. In the event that this Plan satisfies the requirements of
Sections 401(k), 401(a)(4), or 410(b) of the Code only if aggregated with
one or more other plans, or if one or more plans satisfy the requirements
of such sections of the Code only if aggregated with this Plan, then this
section shall be applied by determining the Actual Deferral Percentage of
Employees as if all such plans were a single plan. Plans may be
aggregated in order to satisfy Section 401(k) of the Code only if they
have the same plan year.
d. For purposes of determining the Actual Deferral Percentage,
Salary Reduction Contributions must be made before the last day of the 12
month period immediately following the Plan Year to which those
contributions relate.
e. The determination and treatment of the Actual Deferral
Percentage of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
3.06 ADJUSTMENT OF DEFERRALS.
a. In the event the Administration Committee determines that one
of the tests set forth in Section 3.04 is not satisfied at the time of
its review hereunder, it may require that one or more Participants adjust
their Salary Reduction Contribution election as of the first pay period
in the month next following receipt of the test results, in order that
one of the tests set forth in Section 3.04 is thereafter 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 following the Plan Year for which the Excess
Contributions were made, solely to the extent necessary to satisfy one of
the tests set forth in Section 3.04.
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
17
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 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
Regulations and other official pronouncements from the Secretary of the
Treasury.
c. Excess Contributions shall be returned in accordance with the
following procedure. The Actual Deferral Percentage of the Highly
Compensated Employee with the highest Actual Deferral Percentage is
reduced to the extent required to (i) enable the arrangement to satisfy
the test described in Section 3.04, 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
elective contributions of each Family Member that are combined to
determine the Actual Deferral Percentage. This procedure shall be
repeated until the Plan satisfies the test described in Section 3.04.
Excess Contributions for Family Members shall be reduced according to
procedures established by Section 401(k)(8) of the Code and the
regulations thereunder.
3.07 AGGREGATE LIMIT. Notwithstanding the foregoing, if the Plan does not
satisfy the test set forth in subsection 3.04(a) and the Plan does not satisfy
the test provided in Section 4.02(a), then the sum of the Average Actual
Deferral Percentage for Participants who are Highly Compensated Employees for
the Plan Year, plus the Average Contribution Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall be adjusted, if necessary,
in accordance with Section 3.08 so that the Aggregate Limit, as hereinafter
defined, is not exceeded. The Aggregate Limit is 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 Participants
who are Nonhighly Compensated Employees for the Plan Year, plus
2. 2 percentage points plus the lesser of the Average Actual
Deferral Percentage or the Average Contribution Percentage for
Participants who are Nonhighly Compensated Employees for the Plan
Year. In no event, however, shall the amount calculated pursuant to
this subparagraph a., 2. exceed the product of 2 times the lesser of
the Average Actual Deferral Percentage or the Average Contribution
Percentage for Participants who are Nonhighly Compensated Employees
for the Plan Year; or
b. the sum of:
18
1. 1.25 times the lesser of the Average Actual Deferral
Percentage or the Average Contribution Percentage or the Average
Contribution Percentage for Participants who are Nonhighly
Compensated Employees for the Plan Year, plus
2. 2 percentage points plus the greater of the Average Actual
Deferral Percentage or the Average Contribution Percentage for
Participants who are Nonhighly Compensated Employees for the Plan
Year. In no event, however, shall the amount calculated pursuant to
this subparagraph b., 2. exceed the product of 2 times the greater
of the Average Actual Deferral Percentage or the Average
Contribution Percentage for Participants who are Nonhighly
Compensated Employees for the Plan Year.
For purposes of this Section 3.07, the Average Actual Deferral Percentage and
the Average Contribution Percentage for Participants who are Highly Compensated
Employees shall be determined after any corrective distribution of Excess
Deferrals pursuant to Section 3.06, Excess Contributions pursuant to Section
3.06 c., and Excess Aggregate Contributions pursuant to Section 4.06.
3.08 RETURN OF CONTRIBUTIONS ABOVE THE AGGREGATE LIMIT. If the Aggregate
Limit, as defined in Section 3.07, is exceeded pursuant to Section 3.07, the
Plan shall reduce the Average Actual Deferral Percentage and the Average
Contribution Percentage for Participants who are Highly Compensated Employees
who are eligible to make Salary Reduction Contributions and to receive Employer
Matching Contributions as follows:
a. by first returning Excess Contributions in the same manner as
described in Section 3.06, until the Actual Deferral Percentage of a
Highly Compensated Employee is reduced to 3%, 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 3.06 and by simultaneously returning Attributable
Employer Matching Contributions to the extent necessary to enable the
arrangement to satisfy the Aggregate Limit. For purposes of this
subsection b., Attributable Employer Matching Contributions shall mean
those Employer Matching Contributions that were made pursuant to Section
4.01 to match the Excess Contributions returned pursuant to this
subsection b.
19
ARTICLE 4
EMPLOYER AND EMPLOYEE CONTRIBUTIONS
4.01 EMPLOYER MATCHING CONTRIBUTIONS.
a. For each three month period in a Plan Year during which a
Participant makes a Salary Reduction Contribution, the Employer shall
contribute to the Plan, on behalf of Participants who have elected to
make Salary Reduction Contributions and who are employed by the Employer
on the last day of the quarter, an Employer Matching Contribution amount.
The aggregate amount of the Employer Matching Contribution made pursuant
to this subsection 4.01 a. shall be equal to 50% of the Salary Reduction
Contributions made by Participants up to a maximum of 6% of each
Participant's Compensation with respect to such calendar quarter.
Notwithstanding the foregoing, following the end of each Plan Year, the
Employer shall make an additional contribution, if necessary, to the Plan
with respect to Participants employed on the last day of such Plan Year.
The additional contribution shall be of such additional amount as is
necessary to provide each such Participant with an aggregate Employer
Matching Contribution for the prior Plan Year equal to 100% of the
Participant's annual Salary Reduction Contributions, up to a maximum of
3% of the Participant's annual Compensation for such prior Plan Year;
provided, however, that for purposes of determining the amount of the
additional contribution under the preceding sentence, Compensation earned
by a Participant prior to the commencement of Salary Reduction
Contributions shall be disregarded.
b. Subject to the limitations otherwise contained in this Article,
Employer Matching Contributions made pursuant to this Section shall be
allocated as of the last day of each three month period to the Employer
Matching Contribution Accounts of each Participant who made Salary
Reduction Contributions during the period since the last such allocation;
provided that no such allocation shall be made to the Employer Matching
Contribution Accounts of Participants who are not employed by the
Employer as of such allocation date.
4.02 TIMING OF EMPLOYER MATCHING CONTRIBUTIONS. The Employer shall forward
Employer Matching Contributions to the Trustee for investment in the Trust Fund
at such times as the Employer shall determine, but not later than the due date
(including extensions) for filing the Employer's federal income tax return for
the year to which such Employer Matching Contributions relate.
4.03 EMPLOYEE CONTRIBUTIONS. Subject to the provisions of this Plan relating
to Participants who are subject to the requirements of Section 16(b) of the
Securities Exchange Act of 1934, each Participant may elect to make voluntary,
after-tax contributions to his Employee Contribution Account for each month
prior to his Retirement Date, subject to the following provisions and
limitations:
20
a. no Participant shall be required to make Employee
Contributions;
b. Employee Contributions shall be subject to the limitations of
Section 4.04;
c. a Participant may not make Employee Contributions in an amount
less than 1%, nor more than 10% of his Compensation during each pay
period. All Employee Contributions shall be fully vested and non-
forfeitable at all times;
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. A Participant may elect to
commence or cease making Employee Contributions at any time;
e. a Participant may not make Employee Contributions to the Plan
during any period in which he is not accruing Hours of Service with the
Employer;
4.04 PERCENTAGE LIMITATION ON EMPLOYER MATCHING CONTRIBUTIONS. At such
intervals as it shall deem proper, the Administration Committee shall review the
Employer Matching Contributions and Employee Contributions made for or by
Participants in order to determine that such contributions, with respect to all
Participants, satisfy one of the following tests:
a. the Average Contribution Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the
Average Contribution Percentage for Participants who are Nonhighly
Compensated Employees for the Plan Year multiplied by 1.25; or
b. the Average Contribution Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the
Average Contribution Percentage for Participants who are Nonhighly
Compensated Employees for the Plan Year multiplied by 2, provided that
the Average Contribution Percentage for Participants who are Highly
Compensated Employees does not exceed the Average Contribution Percentage
for Participants who are Nonhighly Compensated Employees by more than 2
percentage points. Notwithstanding the foregoing, the limit set forth in
this subsection b. shall be adjusted in accordance with Section 3.07.
4.05 SPECIAL RULES FOR CONTRIBUTION PERCENTAGE LIMIT TESTING.
a. For purposes of this Section 4.05, the Average Contribution
Percentage for any Participant who is a Highly Compensated Employee for
the Plan Year and who is eligible to receive Employer Matching
Contributions or to make Employee Contributions allocated to his account
under two or more plans described in Section 401(a) of the Code that are
maintained by an Employer shall be determined as if all such
contributions were made under a single plan.
21
b. In the event that this Plan satisfies the requirements of
Sections 401(m), 401(a)(4) and 410(b) of the Code only if aggregated with
one or more other plans, or if one or more other plans satisfy the
requirements of such sections of the Code only if aggregated with this
Plan, then this Section shall be applied by determining the Average
Contribution Percentages of Participants as if all such plans were a
single plan.
c. For purposes of determining the Contribution Percentage of a
Participant who is a 5% owner or one of the 10 most highly paid Highly
Compensated Employees, the Employer and Employee Contributions and
Compensation of such Participant shall include the Employer and 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 Participants who are Non-highly Compensated Employees
and Participants who are Highly Compensated Employees.
d. For purposes of determining the test described in Section 4.04,
Employer Contributions and Employee Contributions must be made before the
last day of the 12 month period immediately following the Plan Year to
which those contributions relate.
e. The determination and treatment of the Average Contribution
Percentage of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
4.06 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
following 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 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
attributable to Employer and Employee Contributions 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 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 Regulations and other official
pronouncements from the Secretary of the Treasury.
22
c. Excess Aggregate Contributions shall be returned in accordance
with the following procedure. The Contribution Percentage of the Highly
Compensated Employee with the highest Contribution Percentage is reduced
to the extent required to (i) enable the arrangement to satisfy the test
described in Section 4.02, or (ii) 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 is allocated among Family Members in proportion to the
Employer and Employee Contributions made on behalf of each Family Member
that are combined to determine the Contribution Percentage. This
procedure shall be repeated until the Plan satisfies the test described
in Section 4.02. Excess Aggregate Contributions for Family Members shall
be reduced according to procedures established by Section 401(m)(6) of
the Code and the regulations thereunder.
4.07 OVERALL LIMITATION ON ANNUAL ADDITIONS. Any other provision of this Plan
notwithstanding, in no event shall the annual additions allocated to a
Participant's Accounts under the Plan for any Limitation Year, exceed the lesser
of:
a. 25% of the Participant's Compensation for the Limitation Year,
or
b. $30,000 (or, if greater, 1/2 of the amount in effect under
Section 415(b)(1)(A) of the Code) for such Limitation Year.
c. The compensation limitation referred to in paragraph a. shall
not apply to:
1. Any contribution for medical benefits (within the meaning
of Section 419A(f)(2) of the Code) after separation from service
which is otherwise treated as an annual addition, or
2. Any amount otherwise treated as an annual addition under
Section 415(1)(1) of the Code.
If, as of the last day of the Plan Year, the annual addition for a Participant
would exceed the amount provided for in this Section as a result of a reasonable
error in estimating a Participant's Compensation or under other limited facts
and circumstances which the Commissioner of Internal Revenue finds justifies
this method of allocation, the excess amount shall be determined and
administered in accordance with the following:
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 3.01 a.;
b. next, the excess shall be refunded to the Participant from the
Participant's Employee Contribution Account (adjusted for earnings and
losses thereon);
23
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 Participant's
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, the excess, if any remains, shall be refunded to the
Participant from the Participant's Salary Reduction Contribution Account
(adjusted for earnings and losses thereon).
4.08 SPECIAL RULES.
a. PARTICIPATION IN ANOTHER DEFINED CONTRIBUTION PLAN. The
limitation of Section 4.07 with respect to any Participant who at any
time has participated in any other qualified defined contribution plan
maintained by the 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 ANOTHER DEFINED BENEFIT PLAN. If a
Participant has at any time been a participant in a qualified defined
benefit plan maintained by the Employer, the sum of the Participant's
Defined Benefit Plan Fraction and Defined Contribution Plan Fraction (as
hereinafter defined) for any year shall not exceed one (1.0). In the
event said sum of the Defined Benefit Plan Fraction and the Defined
Contribution Plan Fraction would otherwise exceed 1.0 for any Plan Year,
the projected annual retirement income benefit under the
Employer-sponsored defined benefit plan shall be limited, to the extent
necessary, to reduce said Defined Benefit Plan Fraction so that the sum
of the two fractions hereunder does not exceed the foregoing 1.0
limitation.
For purposes of the foregoing paragraph only:
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 Employer, determined as of the end of the
Limitation Year, and the denominator of which is the lesser of:
A. the product of 1.25 multiplied by $90,000, as
adjusted by the Adjustment Factor;
B. the product of 1.4 multiplied by 100% of the
Participant's average annual Compensation for the 3 consecutive
calendar years during which his Compensation was the highest.
24
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 following amounts, 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 (as
adjusted pursuant to Section 415(d)(1)(B) of the Code);
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
10 years of participation in the Plan, the limitation set forth in
paragraph 4.08(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 10.
2. If a Participant has completed less than 10 years of
service with an Employer, the limitation set forth in paragraph
4.08(b)(1)(B) shall be adjusted by multiplying such amounts 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
10.
d. Notwithstanding any provisions of the Plan to the contrary,
Sections 4.07, 4.08 and 4.09 shall be construed in a manner which is
consistent with Section 415 of the Code (which, to the extent necessary,
is hereby incorporated herein) and rulings and regulations issued
thereunder.
4.09 DEFINITIONS. For purposes of Section 4.07 and 4.08, the following
definitions shall apply:
a. "annual addition" shall mean the amount allocated to a
Participant's Account during the Limitation Year that constitutes:
1. Salary Reduction Contributions,
2. Employer Matching Contributions,
3. Employee Contributions, (if any)
25
4. forfeitures, and
5. amounts described in Section 415(1)(1) and 419A(d)(2) of
the Code.
4.10 REVERSION OF EMPLOYER MATCHING CONTRIBUTIONS. Except as provided in the
following paragraphs a., b., and c., the assets of the Plan shall never inure to
the benefit of any Employer, and shall be held for the exclusive purposes of
providing benefits to Participants and/or their Beneficiaries, and for defraying
the expenses of administering the Plan.
a. In the case of an Employer Matching Contribution which is made
by virtue of a mistake of fact, this Section shall not prohibit the
return of such contribution to the Employer within 1 year after the
payment of the contribution.
b. If an Employer Matching Contribution is conditioned upon
initial qualification of the Plan under Section 401(a) of the Code, and
if the Plan receives an adverse determination with respect to its initial
qualification, then this Section shall not prohibit the return of such
contribution to the Employer within 1 year after such determination, if
application for the determination is made by the time prescribed by law
for filing the Employer's Federal tax return for the taxable year in
which such plan was adopted, or such later date as the Secretary of the
Treasury may prescribe.
c. In the case of an Employer Matching Contribution which is
determined to be not deductible under Section 404 of the Code, or any
successor provision thereto, then such contribution (to the extent
permissible under the Code) shall be returned to the Employer within 1
year after such disallowance of the deduction.
ARTICLE 5
PARTICIPANTS' ACCOUNTS
5.01 SEPARATE ACCOUNTS. The Administration Committee shall maintain or cause
to be maintained, a separate account for each Participant which shall consist of
his Salary Reduction Contribution Account, Employer Matching Contribution
Account, Employee Contribution Account, and Rollover Account and Prior Plan
Account.
5.02 VALUATION OF FUND. There shall be determined as of each Valuation Date
the fair market value of all assets of the Trust Fund. Such valuation shall be
determined in accordance with the principles of Section 3(26) of ERISA and the
regulations thereunder and shall give effect to brokerage fees, transfer taxes,
contributions, earnings, gains and losses, forfeitures, expenses, disbursements,
and all other transactions during the valuation period since the preceding
Valuation Date. In making such determinations and in crediting net appreciation
or depreciation to the Participant's Accounts, the Administration Committee may
employ such accounting
26
methods as the Administration Committee may deem appropriate in order to fairly
reflect the fair market value of each Participants' Account. For this purpose
the Administration Committee may rely upon information provided by the Trustee,
the investment manager, or other persons believed by the Administration
Committee to be competent.
5.03 STATEMENTS. The Administration Committee shall cause to be furnished to
each Participant a statement showing the value of his Account as of the most
recent Valuation Date.
ARTICLE 6
INVESTMENT OF FUNDS
6.01 TRUST FUND. All contributions made pursuant to the provisions of the
Plan shall be paid into the Fund maintained in connection with the Trust. All
such payments and increments thereon shall be held and disbursed in accordance
with the provisions of the Plan and the Trust, as each shall be applicable under
the circumstances. No person shall have any interest in, or right to, any part
of the funds so held, except as expressly provided in the Plan or Trust
Agreement.
6.02 AUTHORIZED INVESTMENTS AND INVESTMENT CONTROL. Notwithstanding the
foregoing provisions of Section 6.01, the Trustee shall be subject to the
following in connection with the administration of the assets of the Plan:
a. EMPLOYER MATCHING CONTRIBUTIONS--INVESTMENT IN EMPLOYER STOCK.
The Employer Matching Contribution described in Section 4.01 shall be
invested primarily in the common stock of the Employer, provided that the
Administration Committee may direct the Trustee to adjust that amount, if
necessary, to the extent necessary to maintain sufficient liquid assets
for payment of Plan expenses and cash distributions.
The common stock to be held by the Trustee may be contributed, in kind,
to the Plan by the Employer or may be acquired by the Trustee following
the contribution, in cash, of the Employer Matching Contribution amount
determined under Section 4.01. Each Employer Matching Contribution that
is allocated to common stock of the Employer shall be invested in the
common stock of the Employer and shall remain invested in such common
stock as long as the Plan remains in existence, except as it shall be
necessary to convert any shares of such stock into cash as set forth
above. The acquisition, investment, and holding of Plan assets in the
common stock of the Employer is expressly authorized by the Plan and
shall not be subject to any limitations on amount, to the fullest extent
permitted by ERISA.
b. OTHER INVESTMENTS. Except as provided by subsection a. above,
Participants and Beneficiaries may direct the Trustee with respect to the
investment of the funds in their Accounts. Such investments, if made,
shall be made among various
27
pooled investment fund alternatives that represent varying degrees of
risk and potential investment return. The Trustee (or an investment
committee, if designated by the Board) shall establish the availability
of the various investment fund alternatives within the Trust. The
Trustee (or the investment committee, if designated by the Board)
reserves the right, at anytime and from time to time, to alter any or all
pooled investment funds under the Plan; provided that the Administration
Committee shall provide reasonable advance notice to affected
Participants and Beneficiaries of the discontinuance of a specific
investment fund. The Trustee (or the investment committee, if designated
by the Board) reserves the right to revoke all such pooled investment
funds and invest all assets of the Trust for the general benefit of
Participants and Beneficiaries.
If a Participant or Beneficiary does not indicate his investment mix in
writing on a form provided by the Administration Committee, then the
Administration Committee shall cause the amounts held in such
Participant's or Beneficiary's Accounts to be invested in the currently
available intermediate investment fund offered under the Trust, until
such time as the Participant's or Beneficiary's written instructions are
received by the Administration Committee. Participants and Beneficiaries
may change their investment mix no more than 4 times within each Plan
Year. A Participant's new or changed investment mix shall become
effective as of the first day of February, May, August, or November next
following receipt of written instructions from the Participant by the
Administration Committee or such other person designated by the
Administration Committee to receive such instructions.
Notwithstanding the foregoing, an investment mix election or change
election for a Participant who is subject to the requirements of Section
16(b) of the Securities Exchange Act of 1934 must be delivered to the
Administration Committee at least 6 months prior to the effective date of
such election if the change will affect the amount of the Participant's
Account or future contributions thereto that are allocated to the
Employer common stock investment fund. During the 6 month period in
which the election is on file with the Administration Committee prior to
the effective date of the election, the election will be irrevocable. In
addition, if a Participant's changes his investment mix to decrease the
amount of his account balance invested in the Employer common stock
investment fund, then no portion of the future additions to the
Participants accounts (other than Employer Contributions) may be
allocated to the Employer common stock investment fund for a period of 6
months following the date of such change.
6.03 ASSUMPTION OF RISK BY PARTICIPANTS. Each Participant (or Beneficiary)
assumes the risk in connection with any decrease in value of his separate
Account, and there shall be no liability to a Participant (or Beneficiary) under
the Plan in excess of the value of his Account.
6.04 GENERAL PROVISIONS REGARDING INVESTMENT DIRECTION. The provisions of
this Section shall apply to all investment directions by Participants under the
Plan:
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a. The Committee shall be responsible for providing information to, and
responding to requests from, Participants concerning investment
directions under the Plan.
b. The Committee shall provide Participants with the following
information, which may be contained in the summary plan description for
the Plan or in other Plan-related materials:
i. An explanation that the Plan is intended to constitute a plan
described in Section 404(c) of ERISA and the Department of Labor
regulations promulgated thereunder;
ii. A statement that the fiduciaries of the Plan may be relieved of
liability for any losses that are the direct and necessary result of
investment directions given by a Participant or Beneficiary;
iii. A description of the investment funds available under the Plan
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;
iv. An explanation of the circumstances under which Participants
and Beneficiaries may give investment directions and an explanation
of any specific limitations on such directions under the terms of
the Plan, including any restrictions on transfers to or from a
designated investment fund;
v. 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 investments funds (for
example, commissions, sales loads, deferred sales charges, and
redemption or exchanges fees); and
vi. In the case of an investment funds which is subject to the
Securities Act of 1933, and in which the Participant or Beneficiary
has no assets invested, immediately following the Participant's or
Beneficiary's initial investment, a copy of the most recent
prospectus provided to the Plan.
c. The Committee shall provide the following information upon request
by a Participant or Beneficiary:
i. A description of the annual operating expenses of each
designated investment fund (for example, investment management fees,
administrative fees, 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;
29
ii. Copies of any prospectuses, financial statements and reports, and
of any other materials relating to the investment funds available
under the Plan, to the extent such information is provided to the
Plan;
iii. Information concerning the value of shares or units in the
designated investment funds available to Participants and
Beneficiaries under the Plan, as well as the past and current
investment performance of such alternatives, determined net of
expenses on a reasonable and consistent basis; and
iv. Information concerning the value of shares or units in the
designated investment funds held in the Accounts of the Participant or
Beneficiary.
6.05 INDEPENDENT QUALIFIED PUBLIC ACCOUNTANT. The Company shall engage an
independent qualified public accountant to conduct such examinations and to
render such opinions as may be required by Section 103(a)(3) of ERISA. The
Company, in its discretion, may remove and discharge the person so engaged, but
in such case it shall first appoint a successor independent qualified public
accountant to perform such examinations and render such opinions.
ARTICLE 7
DEATH BENEFITS AND BENEFICIARY DESIGNATIONS
7.01 DISTRIBUTION UPON DEATH. If a Participant dies, while an Employee, all
amounts standing to such deceased Participant's credit in his Account, if any,
shall be 100% vested and nonforfeitable. In such case, the Participant's
Account shall be liquidated as of the Valuation Date coincident with or next
following his death, and the value of such Account (determined as of such
Valuation Date) shall be paid in a lump sum in cash as soon as administratively
feasible to his duly designated Beneficiary, but not later than 6 months
following such Valuation Date.
7.02 DESIGNATION OF BENEFICIARY.
a. Each Participant may, at or after the time he becomes a
Participant, designate one or more persons as Beneficiary of his Account
not otherwise to be distributed to his surviving spouse. If more than one
Beneficiary is named, the Participant may specify the sequence and/or
proportion in which payments shall be made to each Beneficiary. The
designation shall be made on the form prescribed by the Administration
Committee and shall, subject to the provisions of paragraph b., become
effective when filed with the Administration Committee. A Participant may,
from time to time, and subject to the provisions of paragraph b. change his
Beneficiary by filing a new Beneficiary designation form with the
Administration Committee. Any change in designation shall be in favor of
the current spouse unless said spouse of the Participant consents in
writing to the designation of a different Beneficiary. Prior to the death
of
30
the Participant, no designated Beneficiary shall acquire any interest in
any amounts held in the Participant's Account.
b. Should the Participant designate a person other than (or in
addition to) the Participant's spouse as Beneficiary, then such designation
shall not be effective unless the spouse executes a written consent to such
designation. The consent of the spouse (i) must be in writing, (ii) must
acknowledge the effect of the consent, (iii) must acknowledge the election
of a specific Beneficiary and (iv) must be witnessed by a notary public or,
if permitted by the Administration Committee, a representative of the Plan.
Notwithstanding this spousal consent requirement, such consent shall not be
required if it is established to the satisfaction of a Plan representative
that the required 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 shall be valid only with respect to the spouse who signs the
consent. An election made by a Participant and consented to by his spouse
may be revoked by the Participant, in writing, without the consent of the
spouse, any time prior to the commencement of benefits. Any new election
must comply with the requirements of this Section.
c. Should the Participant designate a person other than (or in
addition to) his spouse as Beneficiary and not obtain the spousal consent
to such designation as required under paragraph b., then any benefits
payable under the Plan upon the Participant's death shall be paid entirely
to the Participant's surviving spouse unless the surviving spouse then
consents to such other or additional designation in the manner consistent
with that provided in paragraph b. of this section.
d. If there is no designated Beneficiary when a death benefit
becomes payable, the benefit shall be paid to the estate of the
Participant. If a primary Beneficiary dies before receiving death benefits
to which he is entitled, the balance of such payments shall be paid to the
contingent Beneficiary. Neither the Employer nor the Trustee (in its
capacity as such) shall be named as Beneficiary.
e. If there is doubt as to the right of any Beneficiary to receive
any amount, the Trustee, on instructions of the Administration Committee,
may retain such amount until the rights hereto are determined, or it may
pay such amount into any court of appropriate jurisdiction. In either of
such events, neither the Plan, Employer, Administration Committee or
Trustee shall be under any other liability to any person with respect to
such disputed amount.
f. The death of any duly designated individual Beneficiary prior to
the death of the Participant shall void the designation as to such
Beneficiary, but in the event of the death of any duly designated
Beneficiary, subsequent to the death of the Participant, the right to
receive amounts included in the designation shall (unless the Participant
shall otherwise have instructed the Administration Committee in writing)
pass under such duly
31
designated Beneficiary's will, or by the laws of descent and distribution
applicable to such Beneficiary.
g. The marriage of a Participant shall void the current designation
of a Beneficiary and benefits shall be subject to distribution in
accordance with the Beneficiary election restrictions of Section 7.02. If
the Participant shall again become an unmarried Participant, through
divorce or death of a spouse, the Participant shall again be entitled to
make a Beneficiary designation pursuant to this Section.
ARTICLE 8
VESTING AND TERMINATION OF EMPLOYMENT
8.01 VESTING IN SALARY REDUCTION, EMPLOYEE, AND ROLLOVER CONTRIBUTIONS. A
Participant shall at all times have a 100% vested and nonforfeitable interest in
his Salary Reduction Contribution Account, Employee Contribution Account, and
Rollover Contribution Account.
8.02 VESTING IN EMPLOYER MATCHING CONTRIBUTIONS. A Participant whose employment
is terminated prior to his Normal Retirement Date (and for any reason other than
death), shall have a vested and nonforfeitable right in his Employer Matching
Contribution Account, and any earnings or losses attributable thereto, in
accordance with the following schedule:
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%
Notwithstanding the foregoing, Participants employed by the Employer before May
1, 1992, shall have a 100% vested and nonforfeitable percentage upon the
completion of 5 Years of Vesting Service rather than 6 Years of Vesting Service.
For all such Participants, vesting for service of less than 5 years shall be in
accordance with the foregoing vesting schedule.
8.03 FORFEITURES. If a Participant's employment is terminated, any portion of
his Account in which the Participant does not have a nonforfeitable interest
shall be provisionally forfeited as of his date of termination. A terminating
Participant who does not have any nonforfeitable interest in the Plan shall be
deemed to receive a distribution of $0 on his date of termination.
a. If a Participant who has had a provisional forfeiture shall again
become an Employee prior to incurring 5 consecutive One-Year Breaks in
Service, the Employer
32
shall reinstate (as of the first day of the month following the Employee's
reemployment), the dollar amount of his Account forfeited, unadjusted for
any gains or losses which occurred during said One-Year Breaks in Service.
If such a Participant received a distribution upon termination of
employment, reinstatement of the prior forfeited amounts will be provided
automatically without requiring repayment of the amount of any prior
distribution.
b. If the Participant is not rehired before incurring 5 consecutive
One-Year Breaks in Service, the amount of his provisional forfeiture shall
be forfeited permanently.
Any provisional forfeitures resulting from the operation of this Section shall
be held until the last business day of the calendar quarter in which the
Participant's termination of employment occurred. Provisional forfeitures shall
be used as of the next payment period to reduce Employer Matching Contributions
that are due or may become due under the Plan or to pay expenses incurred in the
administration of the Plan, as determined by the Administration Committee.
8.04 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 with a vested benefit.
8.05 FORFEITURE FOR CAUSE. Notwithstanding any other provisions of this Article
8, in no event shall the Plan permit any Participant's Account Balance under the
Plan to be forfeited for misfeasance, malfeasance or any other cause not
specifically stated in the Plan.
ARTICLE 9
DISTRIBUTION OF BENEFITS
9.01 NORMAL FORM OF BENEFIT. Subject to the limitations of Article 8, and the
provisions of this Article, all distributions of amounts in a Participant's
Account shall be made in the form of a single lump sum payment in cash equal to
the vested balance credited to the Participant's Account as of the Valuation
Date following his Normal Retirement Date or date of termination, as
appropriate.
9.02 TIME OF DISTRIBUTION. Except as otherwise provided in this Article,
distribution of a Participant's vested Account shall be made in accordance with
the following:
a. If a Participant's nonforfeitable interest in his Account is
greater than $3,500, but such Participant and his spouse do not consent to
an immediate distribution, all of the Participant's Account shall be
retained in the Plan until:
33
1. distributed pursuant to this Article as soon as
administratively practicable following the Valuation Date coincident
with or next following the occurrence of the earlier of (a) the
Participant's request for distribution following attainment of Normal
Retirement Age under the Plan, or (b) the date the Participant and his
spouse consent to the payment of an immediate distribution; or
2. distributed pursuant to subsection c. prior to the
Participant's Normal Retirement Date, as of a Valuation Date following
a written request by the Participant and consent of the Participant's
spouse, if necessary.
b. If, on termination of employment, the value of the Participant's
Account (determined as of the Valuation Date immediately preceding the date
of termination of employment) in which the Participant has a nonforfeitable
interest is not greater than $3,500, all nonforfeitable amounts in the
Participant's Account shall be canceled as of such Valuation Date, and the
value thereof paid to the Participant as a single sum distribution.
c. If a Participant's nonforfeitable interest in his Account is
greater than $3,500, then the Participant may elect, in lieu of a single
lump sum payment, to receive his Account in substantially equal monthly
installments, payable on the first day of each month, over a period of at
60, 120, or 180 consecutive months (as selected by the Participant or
Beneficiary). Any such election must be in writing on forms provided for
such purpose by the Administration Committee. In no event, however, shall
the period of payment exceed the Participant's life expectancy. If the
Participant dies after the commencement date but before the number of
certain payments has been made to him, the monthly payments shall continue
to the Beneficiary until the total number of designated certain payments
has been made.
If a distribution to a Participant is made in installments pursuant to this
subsection, the undistributed balance of such Participant's Account shall be
held in the Trust until the last installment is paid. The aggregate of such
installment payments of such Participant may be more than or less than the value
of his Account at his retirement or death, depending on the earnings, losses,
expenses in appreciation and depreciation in value of the Trust Fund during the
period over which such installments are paid from the Trust Fund. In the event
of the death of the Participant prior to his entire Account being distributed,
any amount of his Account not previously distributed shall be canceled and
distributed in a single sum to his Beneficiary in accordance with Article 7.
9.03 INVESTMENT OF ACCOUNT BALANCE OF TERMINATED PARTICIPANT. In the event a
Participant's employment with the Employer is terminated and the Participant
fails to consent to an immediate distribution of his Account, such Account shall
continue to be invested pursuant to provisions of the Plan.
34
9.04 LATEST PAYMENT DATE. Nothing in the Plan shall be construed to permit
payments to a Participant of his Account balance to begin later than the 60th
day after the close of the Plan Year in which the latest of the following events
occurs: (1) the date on which the Participant attains Normal Retirement Age, (2)
the 10th anniversary of the year in which the Participant commenced
participation in the Plan, or (3) the date the Participant terminates his
service with the Employer.
9.05 MANDATED COMMENCEMENT OF BENEFITS. Notwithstanding any other provision of
the Plan to the contrary, payment of the Account balance of any Participant
shall commence not later than April 1 of the calendar year following the
calendar year in which he attains age 70-1/2. Notwithstanding any other
provision of the Plan to the contrary, distributions from the Plan will be made
in accordance with Code Section 401(a)(9) (which is hereby incorporated herein)
and the Treasury Regulations issued thereunder, including Section 1.401(a)(9)-2.
Any Plan provision reflecting Code Section 401(a)(9) shall override any Plan
provision inconsistent with Code Section 401(a)(9).
9.06 DIRECT ROLLOVERS. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a distributee's election under this Section,
a distributee may elect, at the time and in the manner prescribed by the
Committee, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover.
a. An eligible rollover distribution is any distribution of all or
any portion of the balance to the credit of the distributee, except that an
eligible rollover distribution does not include: any distribution that is
one of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) 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 section 401(a)(9) of the Code; and 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).
b. An eligible retirement plan is an individual retirement account
described in section 408(a) of the Code, an individual retirement annuity
described in section 408(b) of the Code, an annuity plan described in
section 403(a) of the Code, or a qualified trust described in section
401(a) of the Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover distribution to
the surviving spouse, an eligible retirement plan is an individual
retirement account or individual retirement annuity.
c. A distributee includes an employee or former employee. In
addition, the employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is the
alternate payee under a qualified
35
domestic relations order, as defined in section 414(p) of the Code, are
distributees with regard to the interest of the spouse or former spouse.
d. A direct rollover is a payment by the Plan to the eligible
retirement plan specified by the distributee.
9.07 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 Section 1.411(a)-11(c) of the Treasury
Regulations is given, provided that:
a. the 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, if
applicable, a particular distribution option); and
b. the Participant, after receiving the notice, affirmatively elects to
receive a distribution and waives the remainder of the 30 day period.
ARTICLE 10
WITHDRAWALS WHILE EMPLOYED
10.01 WITHDRAWALS.
a. A Participant may withdraw all or any part of the funds held for
his benefit in his Salary Reduction Contribution Account, Employee
Contribution Account and his Rollover Account. Notwithstanding the
foregoing, withdrawals from a Participant's Salary Reduction Contribution
Account shall be subject to the requirements of Section 10.02. A
Participant may not receive any withdrawal from his Employer Matching
Contribution Account or his Prior Plan Account. Withdrawals may be
requested by filing a written request with the Administration Committee on
a form provided for that purpose.
b. Notwithstanding the foregoing, a Participant who is subject to
Section 16(b) of the Securities Exchange Act of 1934 must comply with the
provisions of this subsection 10.01(b) with respect to any withdrawals from
the Plan. Unless specifically designated in writing by the Participant,
the amount of any withdrawal shall be paid from the Participant's Accounts
invested in funds other than the Employer common stock investment fund. If
all or any portion of the withdrawal is paid from the Participant's Account
invested in the Employer common stock investment fund, the Participant must
suspend future Salary Reduction Contributions and Employee Contributions
(to the extent invested in the Employer common stock investment fund) for a
period of 6 months from the date of the withdrawal or until such time as no
portion of the Participant's future
36
Salary Reduction Contributions are allocated to the Employer common stock
investment fund, if earlier.
10.02 HARDSHIP WITHDRAWALS. A Participant may withdraw all or any part of
the funds (exclusive of earnings thereon) held in his Salary Reduction
Contribution Account, subject to the requirements of this Section 10.02, only on
account of a hardship. For purposes of this Section, a withdrawal will be on
account of hardship only if the withdrawal:
a. is made on account of an immediate and heavy financial need of
the Participant, limited to
1. medical expenses (as described in Section 213(d) of the
Code) incurred by the Participant, the Participant's spouse or any
dependent of the Participant;
2. purchase (excluding mortgage payments) of a principal
residence for the Participant;
3. payment of tuition for the next 12 months of post-secondary
education for the Participant or the Participant's spouse, children or
dependents;
4. the need to prevent eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence; or
5. such other immediate and heavy financial needs as determined
by the Commissioner of the Internal Revenue Service and announced by
publication of revenue rulings, notices and other documents of general
applicability;
b. is necessary to satisfy such immediate and heavy financial need
and does not exceed the amount required to relieve such need and is not
reasonably available from other resources of the Participant. A
distribution will be necessary to satisfy the immediate and heavy financial
need of the Participant if the Administration Committee reasonably relies
upon the Participant's representation that the need cannot be relieved:
1. through reimbursement or compensation by insurance or
otherwise;
2. by reasonable liquidation of the Participant's assets, to
the extent such liquidation would not itself cause an immediate and
heavy financial need;
3. by cessation of Salary Reduction Contributions under the
Plan; or
37
4. by other distributions or nontaxable (at the time of the
loan) loans from plans maintained by the Employer or by any other
employer, or by borrowing from commercial sources on reasonable
commercial terms.
For purposes of this paragraph b., the Participant's resources shall be
deemed to include those assets of the Participant's spouse and minor
children that are reasonably available to the Participant.
The Administration Committee may require the submission of such evidence as it
may reasonably deem necessary to confirm the existence of such a hardship. A
request for withdrawal pursuant to this section shall be approved or denied by
the Administration Committee as soon as reasonably practicable following the
date of the Participant's request. If the request is approved, the distribution
shall be made as soon as reasonable practicable thereafter from the
Participant's Salary Reduction Contribution Account; provided, that under no
circumstance may earnings on the Participant's Salary Reduction Contributions be
distributed pursuant to this Section at any time.
ARTICLE 11
LOANS
11.01 OVERALL LIMITATIONS. The Trustee may make loans to any Participant,
as that term is defined and limited in Section 1.38. Each loan shall be made
upon written application of the Participant and shall be subject to the approval
of the Administration Committee in accordance with uniform and nondiscriminatory
standards adopted by the Administration Committee. The Participant shall be
permitted no more than one outstanding loan at any time. Notwithstanding the
foregoing, a Participant who is not accruing Hours of Service shall not be
permitted to obtain a loan from the Plan.
No loan shall be granted under the Plan to the extent it would cause the
aggregate balance of all loans which a Participant has outstanding under this
Plan and under any other qualified plan maintained by the Employer (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 1 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. 1/2 of an amount equal to the vested portion of the Participant's
Accounts.
38
The "Loan Determination Date" for purposes of determining the value of a
Participant's maximum loan hereunder and the outstanding balance of any loan
shall be the first Valuation Date preceding the date as of which the loan is
granted, as reflected on the reports available to the Administration Committee
at that time. In applying for a loan, a Participant must consent on the
application form to the repayment of the loan through periodic payroll
withholding, whenever possible, as described in Section 11.04. In applying for a
loan, a Participant must consent on the loan application form to the payment of
any outstanding balance of the loan from the Participant's loan account in the
event of a default, as determined in accordance with Section 11.05, at the time
when the Participant is first eligible to receive a distribution of his Account.
11.02 TERMS OF LOAN. All loans shall be on such terms and conditions as the
Plan Administration Committee may determine, provided that all loans shall:
a. be made pursuant to a promissory note which is subject to default
rules which are not inconsistent with those described in 11.05 and which is
secured by the Participant's Account;
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 which may be a fluctuating
rate, which shall be based on the prime rate as of the date the loan is
made;
d. provide for repayment in full on or before the earlier of (1) 5
years after the date when the loan is made (10 years after the date the
loan is made if the loan is used to acquire a dwelling which, within a
reasonable period of time, is to be used as the principal residence of the
Participant) or (2) the date of distribution of the Participant's Account
Balance; and
e. be in an amount not less than $1000 or such other amount
determined from time to time by the Administration Committee and
communicated to Participants.
11.03 SOURCE OF LOANS. A loan account shall be established for each
Participant who receives a loan from the Plan. The Administration Committee
shall develop such rules as may be necessary to govern the transfer from the
Participant's Accounts to the Participant's loan account. Such rules shall be
administered in a uniform and non-discriminatory manner. Notwithstanding the
foregoing, if all or any portion of the loan is paid from the Participant's
Account invested in the Employer common stock investment fund, the Participant
must suspend future Salary Reduction Contributions and Employee Contributions
(to the extent invested in the Employer common stock investment fund) for a
period of 6 months from the date of the loan or until such time as no portion of
the Participant's future Salary Reduction Contributions are allocated to the
Employer common stock investment fund, if earlier.
39
11.04 WITHHOLDING AND APPLICATION OF LOAN PAYMENTS. Principal and interest
payments shall be made through periodic payroll deductions from the
Participant's compensation from the Employer. 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 account) and shall then
be transferred to the Participant's Accounts (in the ratio in which such
Accounts provided funding for the loan) to be invested as otherwise provided in
the Plan.
11.05 DEFAULT. Prior to repayment, a promissory note shall be considered in
default in the event the borrower dies or terminates his or her participation in
the Plan, a payment is not made when due, the borrower files for relief under
the United States Bankruptcy Code or the Plan is terminated. In the event a
default occurs and is not cured within any grace period set forth in the
promissory note, the full amount due under the note shall become immediately due
and payable. In such event, the Administration Committee shall take such
actions as it deems necessary or appropriate to cause the Plan to realize on its
security for the loan. These actions may include (without limitation) repaying
the loan out of any Plan benefit then distributable or repaying the loan out of
the proceeds of an involuntary withdrawal from the Participant's Accounts,
whether or not the withdrawal would be permitted under the Plan on a voluntary
basis; provided that an involuntary withdrawal from the Participant's Salary
Reduction Contribution Account shall be made only in circumstances under which a
withdrawal would not cause the Plan to violate the requirements of Section
401(a) or 401(k) of the Code.
11.06 ADMINISTRATIVE RULES AND PROCEDURES. The Administration Committee may
adopt such written administrative rules and procedures applicable to the
administration of this Section as it may deem necessary or appropriate. Such
rules and procedures may be more restrictive than the provisions of this Section
provided that these rules and procedures are nondiscriminatory in effect,
prospectively applied and permitted under the Code and regulations thereunder.
ARTICLE 12
FIDUCIARIES' DUTIES
12.01 FIDUCIARIES. The "fiduciaries" of the Plan shall be the following:
a. the Employer;
b. the Administration Committee;
c. the Investment Committee;
d. the Trustee; and
e. such other person or persons that are designated to carry out
fiduciary responsibilities under the Plan in accordance with Section 12.03
b. hereof.
40
Any person or group of persons 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.
12.02 ALLOCATION OF RESPONSIBILITIES. The powers and responsibilities of
the fiduciaries are allocated as indicated below:
a. Employer: The Employer shall be responsible for all functions
assigned or reserved to it under the Plan and Trust. Any authority
assigned or reserved to the Employer under the Plan and the Trust shall be
exercised by resolution of the Employer's Board of Directors.
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 the
Trust, except with respect to duties and responsibilities specifically
allocated to other fiduciaries. The Administration Committee shall have
the authority to issue written directions to the Trustee to the extent
provided in the Trust. The Trustee shall follow the Administration
Committee's directions unless it is clear that the actions to be taken
under those directions would be violations of applicable 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 the Trust, except with respect to
duties, responsibilities specifically allocated to other fiduciaries. The
Investment Committee shall have the authority to issue written directions
to the Trustee to the extent provided in the Trust. The Trustee shall
follow the Investment Committee's directions, unless it is clear that the
actions to be taken under those directions would be violations of
applicable fiduciary standards or would be contrary to the terms of the
Plan or the Trust.
d. Trustee: The Trustee shall have the duty and responsibilities
set out in the Trust, subject, however, to direction by the Administration
and/or Investment Committees as set out in the Trust.
Powers and responsibilities of fiduciaries may be allocated to other fiduciaries
in accordance with Section 12.03, or as otherwise provided in the Plan or Trust.
This Article is intended to allocate to each fiduciary the individual
responsibility for the prudent execution of the functions assigned to it, and
none of such responsibilities or any other responsibility shall be shared by two
or more of such fiduciaries unless such sharing shall be provided by a specified
provision of the Plan or the Trust.
12.03 PROCEDURES FOR DELEGATION AND ALLOCATION OF RESPONSIBILITIES.
Fiduciary responsibilities may be allocated as follows:
41
a. Each Committee may specifically allocate responsibilities to a
specified member or members of the Committee.
b. Each Committee may designate a person or persons other than a
fiduciary to carry out fiduciary responsibilities under the Plan (this
authority shall not cause any person or persons employed to perform
ministerial acts and services for the Plan to be deemed fiduciaries of the
Plan).
c. The Investment Committee may appoint an Investment Manager or
managers to manage (including the power to acquire and dispose of) the
assets of the Plan (or a portion thereof).
d. If at any time there be more than one Trustee serving under the
Trust, such Trustees may allocate specific responsibilities, obligations,
or duties among themselves in such manner as they shall agree.
Any allocation of responsibilities pursuant to this Section shall be made by
filing a written notice thereof with the Administration Committee specifically
designating the person or persons 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.
12.04 GENERAL FIDUCIARY STANDARDS. Subject to Section 12.05 hereof, a
fiduciary shall discharge his duties with respect to the Plan solely in the
interest of the Participants and their beneficiaries and
a. for the exclusive purpose of providing benefits to Participants
and their beneficiaries and defraying reasonable expenses of administering
the Plan;
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 investments of the Plan so as to minimize the
risk of large losses, unless under the circumstances it is clearly prudent
not to do so; and
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.
12.05 LIABILITY AMONG CO-FIDUCIARIES.
a. General. Except for any liability which he may have under ERISA,
a fiduciary shall not be liable for the breach of a fiduciary duty or
responsibility by another fiduciary of the Plan except in the following
circumstances:
42
1. he participates knowingly in, or knowingly undertakes to
conceal, an act or omission of such other fiduciary, knowing such act
or omission is a breach;
2. by his failure to comply with the general fiduciary
standards set out in Section 12.04 of the Plan in the administration
of his specific responsibilities which give rise to his status as a
fiduciary, he has enabled such other fiduciary to commit a breach; or
3. he has knowledge of a breach by such other fiduciary and he
does not undertake reasonable efforts under the circumstances to
remedy the breach.
b. Co-Trustees. In the event that there are two or more Trustees
serving under the Trust, each should use reasonable care to prevent a co--
Trustee from committing a breach of fiduciary responsibility and they shall
jointly manage and control assets of the Plan, except that in the event of
an allocation of responsibilities, obligations, or duties, a Trustee to
whom such responsibilities, obligations, or duties have not been allocated
shall not be liable to any person by reason of this Section 12.05, either
individually or as a Trustee, for any loss resulting to the Plan arising
from the acts or omissions on the part of the 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 or persons, then
such fiduciary shall not be liable for any act or omission of such person
in carrying out such responsibility except to the extent that the fiduciary
violated Section 12.04 of the Plan:
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
4. the fiduciary would otherwise be liable in accordance with
this Section 12.05.
d. Liability of Trustee Following Committee Directions. No Trustee
shall be liable for following instructions of the Committees given pursuant
to Section 12.02(b) and (c) of the Plan.
e. No Responsibility for Employer Action. Neither the Trustee, nor
the Committees, shall have any obligation nor responsibility with respect
to any action
43
required by the Plan to be taken by the Employer, any Participant or
eligible Employee, nor for the failure of any of the above person to act or
make any payment or contribution, or to otherwise provide any benefit
contemplated under this Plan, nor shall the Trustee, nor the Committees be
required to collect any contribution required under the Plan, or determine
the correctness of the amount of any Employer contribution.
f. No Duty to Inquire. Neither the Trustee, nor the Committees
shall have any obligation to inquire into or be responsible for any action
or failure to act on the part of the others.
g. Liability of Trustee Where Investment Manager Appointed. If an
Investment Manager has been appointed pursuant to Section 12.03(c) of the
Plan, 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 assets of the Plan which are
subject to the management of such Investment Manager.
h. Successor Fiduciary. No fiduciary shall be liable with respect
to any breach of fiduciary duty if such breach was committed before he
became a fiduciary or after he ceased to be a fiduciary.
ARTICLE 13
EMPLOYER ADMINISTRATION PROVISIONS
13.01 INFORMATION. The Employer shall, upon request or as may be
specifically required under the Plan, furnish or cause to be furnished, all of
the information or documentation which is necessary or required by the
Committees and Trustee to perform their respective duties and functions under
the Plan. The Employer's records as to the current information the Employer
furnishes to the Committees and Trustee shall be conclusive as to all persons.
13.02 NO LIABILITY. Subject to Article 16, the Employer assumes no
obligation or responsibility to any of the Employees, Participants, or
Beneficiaries for any act of, or failure to act, on the part of the Committees
or the Trustee.
13.03 EMPLOYER ACTION. Any action required of the Employer shall be by
resolution of its Board of Directors or by a person authorized to act by Board
resolution.
13.04 INDEMNITY. The Employer indemnifies and saves harmless the Board of
Directors, individual Trustee(s), and the members of the Committees, and each of
them, from and against any and all loss resulting from liability to which the
Board of Directors, individual Trustee(s), and the Committees, or the members of
the Board of Directors and Committees, may be subjected by reason of any act or
conduct (except willful or reckless misconduct) in their official capacities in
the administration of this Plan or the Trust or both including all expenses
44
reasonably incurred in their defense, in case the Employer fails to provide such
defense. The indemnification provisions of this Section 13.04 shall not relieve
the Board of Directors, individual Trustee(s), or any members of the Committees
from any liability he may have under ERISA for breach of a fiduciary duty.
13.05 AMENDMENT TO VESTING SCHEDULE. Although the Employer reserves the
right to amend the vesting schedule set out in Section 8.02 at any time, the
Employer shall not amend the vesting schedule (and no amendment shall be
effective) if the amendment would reduce the nonforfeitable percentage of any
Participant's Accounts derived from Employer Matching Contributions (determined
as of the later of the date the Employer adopts the amendment or the date the
amendment becomes effective) to a percentage less than the nonforfeitable
percentage computed under the Plan without regard to the amendment.
In the event the vesting schedule of this Plan is amended, any Participant who
has completed at least five Years of Vesting Service may elect to have his
Vested Account balance computed under the Plan 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 following dates:
a. the date that is sixty days after the day such amendment is
adopted;
b. the date that is sixty days after the day such amendment becomes
effective; or
c. the date that is sixty days after the day the Participant is
given written notice of such amendment by the Administration Committee.
Any election made pursuant to this Section 13.05 shall be irrevocable. The
Administration Committee, as soon as practicable, shall forward a true copy of
any amendment to the vesting schedule to each affected Participant, 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 under the Plan prior to the amendment, and notice of the time within
which the Participant must make an election to remain under the prior vesting
schedule.
ARTICLE 14
COMMITTEES - ADMINISTRATION AND INVESTMENT PROVISIONS
14.01 APPOINTMENT OF COMMITTEES. The Employer shall appoint an
Administration Committee to administer the Plan, and an Investment Committee to
direct Plan investments, the members of which may or may not be Participants in
the Plan.
45
14.02 TERM. Each member of each Committee shall serve until his successor
appointed. Any member of each Committee may be removed by the Board of
Directors, with or without cause, which shall have the power to fill any vacancy
which may occur. A Committee member may resign upon written notice to the
Employer. A member of each Committee who is an employee of the Employer shall
cease to be a member of the Committee upon his resignation or termination of
employment with the Employer.
14.03 COMPENSATION. The members of the Committees shall serve without
compensation for services as such, but the Employer shall pay all expenses of
both Committees, including the expenses for any bond required under ERISA. To
the extent such expenses are not paid by the Employer, they shall be paid by the
Trustee from the Trust Fund.
14.04 POWER OF ADMINISTRATION COMMITTEE Subject to Article 12 of the Plan,
the Committee shall have the following powers and duties:
a. to direct the administration of the Plan in accordance with the
provisions set forth below;
b. to adopt rules of procedure and regulations necessary for the
administration of the Plan provided the rules are not inconsistent with the
terms of the Plan;
c. to determine all questions with regard to rights of Employees,
Participants, and beneficiaries under the Plan, including but not limited
to rights of eligibility of an Employee to participate in the Plan, the
value of a participant's Accounts, and the vested Account balance of each
Participant;
d. to enforce the terms of the Plan and the rules and regulations it
adopts;
e. to direct the Trustee as respects the crediting and distribution
of the Trust and all other matters within its discretion as provided in the
Trust;
f. to review and render decisions respecting a claim for (or denial
of a claim for) a benefit under the Plan;
g. to furnish the Employer with information which the Employer may
require for tax or other purposes;
h. to engage the service of counsel (who may, if appropriate, be
counsel for the Employer) and agents whom it may deem advisable to assist
it with the performance of its duties;
i. to prescribe procedures to be followed by distributees in
obtaining benefits;
46
j. to receive from the Employer and from Employees such information
as shall be necessary for the proper administration of the Plan;
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 to reflect the Participant's Account balance under
the Plan;
m. to select a secretary, who need not be a member of the
Administration Committee; and
n. to interpret and construe the Plan and to determine benefit
eligibility under the Plan.
14.05 POWER OF INVESTMENT COMMITTEE. The Investment Committee shall have
the following powers and duties:
a. to direct the Trustee in the investment, reinvestment, and
disposition of the Trust Fund as provided in the Trust;
b. to furnish the Employer with information that the Employer may
require for tax or other purposes;
c. to engage the service of counsel (who may, if appropriate, be
counsel for the Employer) and agents whom it may deem advisable to assist
with the performance of its duties;
d. to receive and review reports of the financial condition and of
the receipts and disbursements of the Trust Fund from the Trustee;
e. to engage the services of an Investment Manager or Managers (as
defined in ERISA Section 3(38)), each of whom shall have full power and
authority to manage, acquire or dispose (or direct the Trustee with respect
to acquisition or disposition) of any Plan asset under its control;
f. to select a secretary, who need not be a member of the Investment
Committee; and
g. to exercise the voting rights with respect to the common stock of
the Employer held in the Trust as a result of Employer Matching
Contributions, except in shareholder decisions involving corporate
takeovers, mergers, or dissolutions of the Employer or its affiliates.
Such voting rights shall be exercised by proxy individually issued to
Participants having shares in their Employer Matching Contribution
Accounts.
47
The Investment Committee may instruct the Trustee to pass the voting rights
through to Participants having a vested interest in such stock in any
situation in which a potential conflict of interest may arise between any
fiduciary and the Participants in the exercise of such voting rights.
h. to interpret and construe the Plan with respect to the
investment, reinvestment and disposition of Plan assets.
14.06 MANNER OF ACTION. The decision of a majority of the members of each
Committee appointed and qualified shall control. In case of a vacancy in the
membership of the Committees, the remaining members of the respective Committee
may exercise any and all of the powers, authorities, duties, and rights
conferred upon such Committee pending the filling of the vacancy. The
Committees may, but need not, call or hold formal meetings. Any decisions made
or action taken pursuant to written approval of a majority of the then members
shall be sufficient. Each Committee shall maintain adequate records of its
decisions.
14.07 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 this authority by an instrument signed
by all its respective members and filed with the Trustee.
14.08 NONDISCRIMINATION. The Administration Committee shall administer the
Plan in a uniform, nondiscriminatory manner for the exclusive benefit of the
Participants and their beneficiaries.
14.09 INTERESTED MEMBER. No member of the Administration Committee may
decide or determine any matter concerning the distribution, nature, or method of
settlement of his own benefits under the Plan unless there is only one person
acting alone in the capacity as the Investment Committee.
14.10 FUNDING POLICY. The Investment Committee shall review, not less often
than annually, all pertinent Employee information and Plan data in order to
establish the funding policy of the Plan and to determine the appropriate
methods of carrying out the Plan's objectives. The Investment Committee shall
communicate annually to the Trustee and to any Plan Investment Manager, if any,
the Plan's short-term and long-term financial needs so investment policy can be
coordinated with Plan financial requirements.
14.11 INDIVIDUAL STATEMENT. As soon as practicable after each Valuation
Date, the Administration Committee shall deliver to each Participant (and to
each Beneficiary) a statement reflecting the condition of his Accounts in the
Trust as of that date and such other information as may be required under ERISA.
No Participant, except a member of the Administration or Investment Committee,
shall have the right to inspect the records reflecting the Account of any other
Participant.
48
14.12 BOOKS AND RECORDS. The Administration Committee shall maintain, or
cause to be maintained, records which will adequately disclose at all times the
state of the Trust Fund and of each separate interest therein. The books,
forms, and methods of accounting shall be the responsibility of the
Administration Committee.
ARTICLE 15
THE TRUST
15.01 PURPOSE OF THE TRUST FUND.. A Trust Fund, including various subfunds
as determined by the Investment Committee shall be created and 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. All contributions will be paid into the
Trust Fund, and all benefits under the Plan will be paid from the Trust Fund.
15.02 APPOINTMENT OF TRUSTEE. The Trustee(s) shall be appointed by the
Board of Directors to administer the Trust Fund. The Trustee's obligations,
duties, and responsibilities shall be governed solely by the terms of the Trust
agreement.
15.03 EXCLUSIVE BENEFIT OF PARTICIPANTS. Subject to other applicable
provisions of the Plan, the Trust Fund will be used and applied only in
accordance with the provisions of the Plan to provide benefits to Plan
Participants and their beneficiaries and 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 the Participants and their beneficiaries and with respect
to expenses of administration of the Plan. Notwithstanding any provision of the
Plan to the contrary, the Employer reserves the right to recover any amounts
held in a suspense account at the termination of the Trust Fund that cannot be
allocated to the accounts of Participants and their beneficiaries in the year of
termination of the Plan because of the limitations contained in Section 415 of
the Code.
15.04 BENEFITS SUPPORTED ONLY BY THE TRUST FUND. Any person having any
claim under the Plan must look solely to the assets of the Trust Fund for
satisfaction.
ARTICLE 16
PARTICIPANT ADMINISTRATIVE PROVISIONS
16.01 BENEFICIARY DESIGNATION. Each Participant may, from time to time,
designate, in writing, a Beneficiary to whom the Trustee shall pay his Accounts
in the Trust Fund in the event of his death. The Administration Committee shall
prescribe the form for the written designation of Beneficiary and, upon the
Participant's filing the form with the Administration Committee, it effectively
shall revoke all designations filed prior to that date by the same Participant.
As a condition to any married Participant designating a Beneficiary other than
his spouse, the
49
Administration Committee shall require the spouse's written and notarized
consent, as required by the Code.
16.02 NO BENEFICIARY DESIGNATION. If a Participant fails to name a
Beneficiary in accordance with Section 16.01, or if the Beneficiary named by a
Participant predeceases him, then the Trustee shall pay the Participant's
Accounts in lump sum to the legal representative or representatives of the
estate of the Participant. The Administration Committee, in its sole
discretion, shall direct the Trustee as to whom the Trustee shall make payment
under this Section.
16.03 PERSONAL DATA TO ADMINISTRATION COMMITTEE. Each Participant and
Beneficiary must furnish to the Administration Committee such evidence, data, or
information as the Administration Committee considers necessary or desirable for
the purpose of administering the Plan. The provisions of the Plan are effective
for the benefit of each Participant upon the condition precedent that each
Participant will furnish promptly full, true, and complete evidence, data, and
information when requested by the Administration Committee, provided the
Administration Committee shall advise each Participant of the effect of his
failure to comply with its request.
16.04 ADDRESS FOR NOTIFICATION. Each Participant and each Beneficiary of a
deceased Participant shall file with the Administration Committee, in writing,
his post office address, and each subsequent change of such post office address.
Any payment or distribution under the Plan and any communication addressed to a
Participant or his Beneficiary 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 Employer) shall be deemed to have been delivered to the
Participant or his Beneficiary on the date that such distribution or
communication is deposited in the United States Mail, postage prepaid.
16.05 ALIENATION. No benefit payable under the Plan shall be subject in any
manner to alienation, sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution, or levy of any kind, either voluntary or involuntary,
except to the extent provided under a qualified domestic relations order, prior
to actually being received by the person entitled to the benefit under the terms
of the Plan. The Trust Fund shall not in any manner be liable for, or subject
to, the debts, contracts, liabilities, engagements, or torts of any person
entitled to benefits hereunder, except to the extent that under a qualified
domestic relations order the Trustee is required to pay over a Participant's
Accounts to an alternate payee. In the event the Employer or the Trustee
receives written notice of an adverse claim to a benefit distributable or being
paid to a Participant, former Participant or Beneficiary, the Trustee may
suspend payment of such benefit until such matter is resolved to the
satisfaction of the Trustee.
16.06 LITIGATION AGAINST THE TRUST. If any legal action filed against the
Trustee, Board of Directors, or the Committees or against any member or members
of the Committee or Board of Directors, by or on behalf of any Participant or
Beneficiary results adversely to the Participant or to the Beneficiary, the
Trustee shall reimburse itself, the Board of Directors,
50
Committee, and any member or members of the Committee or Board of Directors all
costs and fees expended by it or them by surcharging all costs and fees against
the sums payable under the Plan to the Participant or to the Beneficiary but
only to the extent a court of competent jurisdiction specifically authorizes and
directs any such surcharges and only to the extent permitted under Section
401(a)(13) of the Code and the applicable provisions of ERISA.
16.07 INFORMATION AVAILABLE. Any Participant in the Plan or any Beneficiary
may examine copies of the Plan, the Plan description, the Trust Agreement, the
latest annual report, and any bargaining agreement, contract, or any other
instrument under which the Plan was established or is operated. The
Administration Committee will maintain all of the items listed in this Section
in its office, or in such other place or places as it may designate from time to
time in order to comply with the regulations issued under ERISA, for examination
during reasonable business hours. Upon the written request of a Participant or
Beneficiary, the Administration Committee shall furnish him with a copy of any
item listed in this Section. The Administration Committee may make reasonable
charge to the requesting person for the copy so furnished.
16.08 BENEFICIARY'S RIGHT TO INFORMATION. A Beneficiary's right to (and the
Committee's, or a Trustee's duty to provide to the Beneficiary) information or
data concerning the Plan shall not arise until he first becomes entitled to
receive a benefit under the Plan.
16.09 CLAIMS PROCEDURE. Prior to or upon becoming entitled to receive a
benefit under the Plan, a Participant or Beneficiary shall file a claim for such
benefit with the Administration Committee at the time and in the manner
prescribed by the Administration Committee. Notwithstanding the foregoing, the
Administration Committee may direct the Trustee to commence payment of a
Participant's or Beneficiary's benefits without requiring the filing or a claim
if the Administration Committee has knowledge of such Participant's or
Beneficiary's whereabouts.
16.10 APPEAL PROCEDURE FOR DENIAL OF BENEFITS. The Administration Committee
shall provide adequate notice in writing to any Participant or to any
Beneficiary ("claimant") whose claim for benefits under the Plan has been
denied. Such notice must be sent within ninety days of 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
ninety days and no extension shall be allowed unless, within the initial ninety
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 render its final decision. The
Administration Committee's notice of denial to the claimant shall set forth:
a. the specific reason or reasons for the denial;
b. specific references to pertinent Plan provision on which the
Administration Committee based its denial;
51
c. a description of any additional material and information needed
for the claimant to perfect his claim and an explanation of why the
material or information is needed;
d. a statement that the claimant may:
1. request a review upon written application to the 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 in writing to the Administration Committee within
sixty days after receipt of the Administration Committee's notice of denial
of benefits. The Administration Committee's notice must further advise the
claimant that his failure to appeal the action to the Administration
Committee in writing within the sixty day period will render the
Administration Committee's determination final, binding, and conclusive.
If the claimant should appeal to the Administration Committee, he, or his duly
authorized representative, may submit, in writing, whatever issues and comments
he, or his duly authorized representative, feels are pertinent. The
Administration Committee shall reexamine all facts related to the appeal and
make a final determination as to whether the denial of benefits is justified
under the circumstances. The Administration Committee shall advise the claimant
in writing of its decision on his 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 sixty days of the claimant's written request
for review, unless special circumstances (such as a hearing) would make the
rendering of a decision within the sixty day period infeasible, but in no event
shall the Administration Committee render a decision regarding the denial of a
claim for benefits later than 120 days after its receipt of a request for
review. If an extension of time for review 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 of benefits shall identify the
name of each member of the Administration Committee and the name and address of
the Administration Committee member to whom the claimant may forward his appeal.
16.11 PLACE OF PAYMENT AND PROOF OF CONTINUED ELIGIBILITY. As required by
Section 16.04, each Participant and Beneficiary shall file with the
Administration Committee from time to time in writing his post office address
and each change of post office address. Any check representing payment under
the Plan and any communication addressed to a Participant, a former Participant,
or Beneficiary at its last address filed with the Administration Committee, or
if no such address has been filed, then at his last address as indicated on the
records of the Employer, shall be deemed to have been delivered to such person
on the date on which such check or
52
communication is deposited in the United States mail, postage prepaid. If the
Administration Committee, for any reason, is in doubt as to whether payments
under the Plan are being received by the person entitled thereto, it shall, by
certified or registered mail addressed to the person concerned, at his address
last known to the Administration Committee, notify such person that all unmailed
and future Plan benefit payments shall be withheld until he provides the
Administration Committee with evidence of his entitlement to such benefit and
his proper mailing address.
16.12 NO RIGHTS IMPLIED. Nothing contained in this Plan, or with respect to
the establishment of the Trust, or any modification or amendment to the Plan or
Trust, or in the creation of any Account, or the payment of any benefit, shall
give any Employee, Participant, or any Beneficiary any right to continued
employment, any legal or equitable right against the Trustee, or its agents or
employees, except as expressly provided by the Plan, the Trust or ERISA.
ARTICLE 17
AMENDMENT OR TERMINATION
17.01 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 Section 401(a) of the Code and of ERISA, and any similar
provisions of subsequent revenue or other laws, or the rules and
regulations from time to time in effect under any of such laws or to
conform with governmental regulations or other policies), to modify or
amend, in whole or in part, any or all of the provisions of the Plan.
b. No such modification or amendment, however, shall make it
possible for any part of the corpus or income of the fund to be used for,
or diverted to, purposes other than for the exclusive benefit of
Participants and their beneficiaries under the Plan prior to the
satisfaction of all liabilities with respect thereto. Moreover, no
amendment or modification shall make it possible to deprive any Participant
of a previously accrued benefit (including an optional form of benefit).
c. The Administration Committee may adopt amendments which do not
significantly affect the cost of the Plan and which may be necessary or
appropriate to qualify or maintain the Plan and any trust which may form a
part of the Plan as a plan and trust meeting the requirements of Sections
401(a) and 501(a) of the Code.
17.02 RIGHT TO TERMINATE PLAN. The Board reserves the power 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
53
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 relation thereto. The employment of any Participant 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.
17.03 OBLIGATIONS UPON MERGER, CONSOLIDATION OR TRANSFER. In the event of
any merger or consolidation with, or transfer of assets or 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,
which is not less than the benefit he would have been entitled to receive if the
Plan had terminated immediately before the merger, consolidation, or transfer.
17.04 OBLIGATIONS UPON TERMINATION, PARTIAL TERMINATION OR DISCONTINUANCE.
a. While each Employer intends to continue the Plan indefinitely,
nevertheless it assumes no contractual obligation as to the Plan's
continuance. In the case of any termination, partial termination or
complete discontinuance of contributions, each Participant who is then an
Employee and who is affected by the termination, partial termination or
complete discontinuance of contributions shall have a 100% nonforfeitable
interest in the value of all amounts credited to his Participant's Account.
b. At the direction of the Administration Committee after any such
discontinuance, and after payment of, or appropriate reserve for, the
expenses of any such discontinuance the dollar value of each Participant's
Account shall be paid in cash to each Participant, or, if he is then
deceased, to his Beneficiary.
c. Notwithstanding the foregoing, a Participant's Account shall not
be distributed pursuant to a termination, partial termination or complete
discontinuance of contributions if the distribution would be contrary to
the requirements of Section 401(k) of the Code and the applicable Treasury
Regulations thereunder.
17.05 CONTINUED FUNDING AFTER PLAN TERMINATION. Anything in the Plan to the
contrary notwithstanding, no Employer, upon any termination or partial
termination of the Plan, shall have any obligation or liability whatsoever to
make any further payments for the benefit of Participants (including all or any
part of any contributions payable prior to any termination of the Plan), to the
Trustee for benefits under the Plan. Neither the Trustee, the Board, the
Administration Committee, nor any Participant, Employee, nor Beneficiary, shall
have any right to compel an Employer to make any payment after the termination
or partial termination of the Plan.
17.06 DISTRIBUTION UPON DISPOSITION OF ASSETS OR SUBSIDIARY.
Notwithstanding any provision of the Plan to the contrary and in accordance with
the provisions of Section 401(k)(2)(B)(i)(II) of the Code, 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 Employer in the trade or business in which the Participant is
employed if the Participant
54
is no longer employed by the Employer or an affiliated Employer who has adopted
the Plan and the assets were not sold to a related employer. The Account of a
Participant employed by a subsidiary of an Employer 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 to an entity that is
not a related Employer as long as the Participant continues employment with such
subsidiary.
ARTICLE 18
GENERAL PROVISIONS
18.01 NO CONTRACT OF EMPLOYMENT. The Plan shall not be deemed to constitute
a contract between the Employer and any Employee. It is not a promise of
continued employment by the Employer or of continued benefits as an Employee.
Employees are employees "at will," and the Employer remains free to change
benefits under the Plan without being required to consult anyone and without
obtaining anyone's agreement. The 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 which such action may have upon an Employee
as a Participant of the Plan.
18.02 NO ALIENATION OF BENEFITS. Except as may otherwise be provided by
ERISA and the Code, no distribution or payment under the Plan to any
Participant, Beneficiary, or joint or contingent annuitant, 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 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, the right to a benefit payable with respect to a
Participant pursuant to a qualified domestic relations order (as defined in
Section 414(p) of the Code and described in Section 21.02 of the Plan) may be
credited, assigned or recognized. The Administration Committee shall establish
reasonable procedures to determine the qualified status of domestic relations
orders and to administer distributions under such qualified orders in a manner
consistent with Section 414 (p) of the Code.
18.03 INCAPACITY. If any person entitled to receive any benefits hereunder
is a minor, or is in the judgment of the Administration Committee, legally,
physically or mentally incapable of personally receiving and receipting for any
distribution, the Administration Committee may
55
instruct the Trustee to make distribution to such other person, persons or
institutions as, in the judgment of the Administration Committee, are then
maintaining or who have custody of such person. As a condition to the issuance
of such instruction for the distribution to such other person or institution,
the Administration Committee may require such person or institution to exhibit
or 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 benefits. Payments made pursuant to this provision shall completely
discharge the Plan, Administration Committee, and Trustee.
18.04 SOLE SOURCE OF BENEFITS. The Fund shall be the sole source(s) of
benefits under this Plan, and each Employee, Participant, Beneficiary, or any
other person who shall claim the right to any payment or benefit under this Plan
shall be entitled to look only to the Fund for the payment of benefits. Except
as may be otherwise provided by ERISA or other applicable law, the Employer
shall have no liability to make or continue from its own funds the payment of
any benefit under the Plan.
18.05 ADDRESS OF PAYEE UNKNOWN. If the Trustee is unable to make payment to
any Participant or other person to whom a payment is due under the Plan because
it cannot ascertain the identity or whereabouts of such Participant or other
person after reasonable efforts have been made to identify or locate such person
(including a notice of the payment so mailed to the last known address of such
Participant or other person as shown on the records of the Employer), such
payment and all subsequent payments otherwise due to such Participant or other
person shall be forfeited 24 months after the date such payment first became
due; provided, that such payment and any subsequent payments shall be reinstated
retroactively, no later than 60 days after the date on which the Participant or
person is identified or located.
18.06 SERVICE IN MORE THAN ONE PLAN CAPACITY. Any person or group of
persons may serve in more than one fiduciary capacity with respect to the Plan
and any trust agreement which provides for the Fund.
18.07 INTENT TO QUALIFY. The Employer intends that the Plan (including the
trust agreement forming a part thereof) shall be a profit sharing plan of an
employer for the exclusive benefit of its employees or their beneficiaries as
provided for in Section 401(a) of the Code, or as may be provided for in any
similar provisions of subsequent revenue laws, and that the Fund, if any, shall
be a qualified trust and exempt from taxation under Section 501(a) of the Code,
or as may be provided for in any similar provisions of subsequent laws.
ARTICLE 19
ROLLOVER CONTRIBUTIONS AND TRANSFERS
19.01 ROLLOVER OF FUNDS FROM OTHER PLANS. In the event that an individual:
56
a. becomes an Employee (i) eligible to participate in the Plan, or
(ii) not eligible to participate in the Plan solely because he has not yet
completed a Year of Eligibility Service or does not elect to make Salary
Reduction Contributions,
b. shall have been a participant in an employer's plan described in
Section 401(a) of the Code, which is exempt from tax under Section 501(a)
of the Code,
c. received from such trust a distribution which qualifies for
rollover treatment in accordance with the Code, and
d. such distribution consists of (i) money, or (ii) other property,
but only if the other property has been sold and converted to money
following the distribution,
then, the eligible Employee may transfer any portion of the distribution to this
Plan on or before the 60th day after the day on which he received such property,
and upon receipt by the Plan, such amount shall be credited to the Rollover
Contribution Account established under the Plan. The eligible Employee shall
have a 100% vested and nonforfeitable right to all amounts credited to his
Rollover Contribution Account as a result of such transfer.
19.02 ROLLOVER OF FUNDS FROM CONDUIT INDIVIDUAL RETIREMENT ACCOUNT (IRA).
In the event that an individual:
a. becomes an Employee (i) eligible to participate in the Plan, or
(ii) not eligible to participate in the Plan solely because he has not yet
completed a Year of Eligibility Service or does not elect to make Salary
Reduction Contributions,
b. shall have established an individual retirement account or
individual retirement annuity (hereinafter collectively referred to as an
"IRA") described in Sections 408(a) and 408(b), respectively, of the Code,
which IRA is comprised solely of amounts constituting a rollover
contribution of a distribution from an employer's plan described in Section
401(a) of the Code, which is exempt from tax under Section 501(a) of the
Code, or an annuity plan described in Section 403(a) of the Code, and
c. received from such IRA the entire amount of the account or the
entire value of the annuity, including any earnings on such sums, pursuant
to Section 408(d)(3)(A)(ii) of the Code,
then, the eligible Employee may transfer the entire amount received in such
distribution to this Plan (for the benefit of such individual) on or before the
60th day after the day on which he received such payment or distribution, and
upon receipt by the Plan, such amount shall be credited to the Rollover
Contribution Account established under the Plan. The eligible Employee shall
have a 100% vested and nonforfeitable right to all amounts credited to his
Rollover Contribution Account as a result of such IRA rollover.
57
19.03 TRANSFERS DIRECTLY FROM OTHER PLANS. There may be transferred
directly from the trustee of any other qualified plan to the Trustee, subject to
the approval of the Administration Committee and the Trustee, all or any of the
assets, including voluntary contributions, if any, held (whether by trustee,
custodian or otherwise) under the Plan for any eligible Employees who are, or
are about to become, Participants in the Plan; provided, that the transfer
satisfies Section 411(d)(6) of the Code. A separate account shall be
established for such assets for each eligible Employee.
Notwithstanding the foregoing, an eligible Employee may not transfer any amount
which, if transferred into this Plan would cause the Plan to be a direct or
indirect transferee plan, within the meaning of Section 401(a)(11)(B)(iii)(III)
of the Code and any regulations or rulings effective thereunder, of a plan
described in Section 401(a)(11)(B)(i) or (ii) of the Code. Transfers pursuant
to this Section may be made regardless of whether the eligible Employee has
satisfied the service requirement of this Plan.
19.04 MISTAKEN ROLLOVER. If it is determined that a Participant's rollover
contribution did not qualify under the Code as a tax free rollover, then as soon
as reasonably possible the balance in the Participant's Rollover Account shall
be:
a. segregated from all other Plan assets,
b. treated as a non-qualified trust established by and for the
benefit of the Participant, and
c. distributed to the Participant.
Such a mistaken rollover contribution shall be deemed never to have been a part
of the Plan and shall not adversely affect the tax qualification of the Plan
under the Code.
ARTICLE 20
TOP-HEAVY PROVISIONS
20.01 TOP-HEAVY PLAN DEFINED. This Article shall apply if the Plan is a
"Top-Heavy Plan" as hereinafter provided. 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 under 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 this Plan is a part, is Top-Heavy, the
accrued benefit of a Non-Key
58
Employee shall be determined under (a) the method, if any, that uniformly
applies for accrual purposes under all plans maintained by the affiliated
employers, 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 Section 411(b)(1)(C) of the Code.
For this purpose, the present value of an Employee's accrued benefit is equal to
the sum of a. and b. below:
a. the sum of (i) the present value of an Employee's accrued
retirement income in each defined benefit plan which 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
Employee had terminated service as of such valuation date and (ii) the
aggregate distribution made with respect to such Employee during the 5
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 his 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 this 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 his accounts in all
defined contribution plans which 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 Employee during the 5
year period ending on the Determination Date from all defined contribution
plans which are part of the Required Aggregation Group and not reflected in
the value of his account(s) as of the most recent valuation date.
20.02 OTHER DEFINITIONS. For the purposes of this Article, the following
terms shall have the following meanings:
a. "Determination Date" means the last day of the preceding Plan
Year.
b. "Employee" means (i) a current employee or (ii) a former employee
who performed services for the Employer during the Plan Year containing the
Determination Date or any of the 4 preceding Plan Years.
c. "Key Employee" means an Employee, a former Employee, or the
Beneficiary under the Plan of a former Employee who, in the Plan Year
containing the Determination Date, or any of the four preceding Plan Years,
is:
1. an officer of the Employer having an annual Compensation
greater than 50% of the amount in effect under Section 415(b)(1)(A) of
the Code for any
59
such Plan Year. Not more than 50 Employees or, if lesser, the greater
of 3 Employees or 10% of the Employees shall be considered as officers
for purposes of this subparagraph.
2. one of the 10 Employees owning (or considered as owning
within the meaning of Section 318 of the Code) the largest interest in
the Employer, which is more than .5% ownership interest in value, and
whose Compensation equals or exceeds the maximum dollar limitation
under Section 415(c)(1)(A) of the Code as in effect for the calendar
year in which the Determination Date falls.
3. a 5% owner of the Employer.
4. a 1% owner of the Employer having an annual Compensation
from the Employer of more than $150,000.
Whether an Employee is a 5% owner or a 1% owner shall be determined in
accordance with Section 416(i) of the Code.
d. "Non-Key Employee" means an Employee who is not a Key Employee.
e. "Required Aggregation Group" means
1. each stock bonus, pension, or profit sharing plan of the
Employer in which a Key Employee participates and which is intended to
qualify under Section 401(a) of the Code; and
2. each other such stock bonus, pension or profit sharing plan
of an Employer which enables any plan in which a Key Employee
participates to meet the requirements of Section 401(a)(4) or Section
410 of the Code.
20.03 TOP-HEAVY CONTRIBUTIONS. Solely in the event that a Non-Key Employee
is not covered by a defined benefit plan of the Employer which provides the
minimum benefit required by Section 416(c)(1) of the Code during a Plan Year in
which this 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 which is equal to the percentage at 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 subparagraph b. above shall be determined by
dividing the contributions and forfeitures allocated to the Key Employee by such
Employee's Compensation.
60
The Employer shall make such additional contributions to the Plan as shall be
necessary to make the allocation described above. The provisions of this
section apply 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 Employee is also
entitled to an increased benefit in any other Top Heavy plan while it is in the
Aggregation Group with this Plan.
A Non-Key Employee who is otherwise entitled to a minimum contribution under
this Section shall not fail to receive the required minimum contribution because
the Employee is excluded from participation because the Employee failed to make
elective Salary Reduction Contributions under the Plan or because the Employee
failed to accrue 1000 Hours of Service during the Plan Year.
20.04 ADJUSTMENT TO LIMITATION ON ANNUAL ADDITIONS.
a. If the Employer also maintains a qualified defined benefit plan
(as defined in Section 3(35) ERISA and Section 414(j) of the Code) and
which is not part of a floor-offset arrangement (as defined in Section
414(k) of the Code), then the denominator of both the Defined Benefit Plan
Fraction and Defined Contribution Plan Fraction, as set forth in Section
4.08, for the limitation year ending in such Plan Year will be adjusted by
substituting 1 for 1.25 in each place the figure occurs.
b. The adjustments referred to in subparagraph a. are not required
if:
1. the Plan would not be Top Heavy if 90% were substituted for
60% in Section 20.01, and
2. Section 20.03, a. is adjusted by substituting 4% for 3%
where the figure occurs.
c. The adjustments referred to in subparagraph a. above 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 Accounts and the Participant does not accrue any
benefits under any defined benefit plan maintained by the Employer.
ARTICLE 21
QUALIFIED DOMESTIC RELATIONS ORDERS (QDROS)
21.01 TERMS OF QDRO. The provisions of Section 18.02 shall not be
applicable to a Qualified Domestic Relations Order, and payment of benefits
shall be made in accordance with the terms of such order provided that such
order:
61
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 the Account Balance payable to a Participant under the Plan;
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 paid by the Plan to each such 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 option, not otherwise provided under 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 payment of benefits to an Alternate Payee
which are required to be paid to another Alternate Payee under another
order previously determined to be a Qualified Domestic Relations Order.
21.02 QDRO DEFINITIONS. The following terms shall have the following
meanings for purposes of this Article:
a. "Qualified Domestic Relations Order" means any judgment decree or
order (including approval of a property settlement agreement) which:
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
3. which meets the requirements of the foregoing Section 21.01.
62
b. "Alternate Payee" means 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 under the Plan with respect to such Participant.
21.03 PAYMENTS PRIOR TO SEPARATION FROM EMPLOYMENT. In the case of any
payment made before a Participant has separated from the service of the
Employer, a Qualified Domestic Relations Order shall not be considered as
failing to meet the requirements of Section 21.01 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 hereafter defined);
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 value of the Account Balance standing to the Participant's credit on
such date); and
c. in any form in which such distribution may be paid under the Plan
to the Participant.
For purposes of this Section, the term "Earliest Retirement Age" means the
earlier of (i) the date on which the Participant is entitled to a distribution
under 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 under the Plan if he separated from service. Notwithstanding the
foregoing, the Plan specifically permits distribution to an alternate payee
under a Qualified Domestic Relations Order (without regard to whether the
Participant has attained his Earliest Retirement Age) in the same manner that is
provided for a Participant who has separated from service.
21.04 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 Section 401(a)(11)
and 417 of the Code, 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 1 year to the Participant, such former
spouse shall be treated as meeting the requirements of Section 417(d) of
the Code.
21.05 NOTIFICATION OF RECEIPT OF ORDER. The Administration Committee shall
promptly notify a Participant and any other Alternate Payee of the receipt of a
Qualified Domestic Relations Order and of the Plan's procedure for determining
whether the order meets the requirements of a Qualified Domestic Relations Order
under this Article. Within a reasonable period of time after the receipt of such
order, the Administration Committee, in accordance with such
63
procedures as it shall from time to time establish, shall determine whether such
order meets the requirements of a Qualified Domestic Relations Order under this
Article and shall notify the Participant and each Alternate Payee of such
determination.
21.06 SEPARATE ACCOUNTING. During any period of time in which the issue of
whether a domestic relations order meet the requirements of a Qualified Domestic
Relations Order under this Article is being determined by a court of competent
jurisdiction, the Administration Committee shall separately account for the
amounts (hereafter referred to as the "segregated amounts") which would have
been payable to the Alternate Payee during such period if the order had been
determined to be a Qualified Domestic Relations Order under this Article. If
within 18 months such order is determined to be a Qualified Domestic Relations
Order under this Article, the Administration Committee shall pay the segregated
amounts (plus any interest thereon) to the person or persons entitled thereto.
If within 18 months it is determined that such order is not a Qualified Domestic
Relations Order under this Article, or the issue as to whether such order so
qualifies is not resolved, the Administration Committee shall pay the segregated
amount (plus any interest thereon) to the person or persons who would have been
entitled to such amounts if there had been no order. Any determination that an
order is a Qualified Domestic Relations Order under this Article which is made
after the end of the 18 month period, shall be applied prospectively only.
ARTICLE 22
EMPLOYER PARTICIPATION
22.01 ADOPTION BY EMPLOYERS. Subject to the further provisions of this
Article, any corporation with employees, now in existence or hereafter formed or
acquired, which is a member of an affiliated group of corporations (within the
meaning of section 1504(a) of the Code) of which the Company is the common
parent corporation and which is otherwise legally eligible, may, with the
consent and approval of the Board of Directors, by formal resolution and
decision of its own board of directors, adopt the Plan and the Trust, for all or
any classification of its employees and thereby, from and after the specified
effective date of the adoption, become an Employer under this Plan. Such
adoption shall be effectuated by and evidenced by a formal resolution of the
Board of Directors of the Company consenting to and containing or incorporating
by reference such formal 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. It shall not be necessary for the adopting corporation to sign or
execute the Plan document or any amendment thereto. The effective date of the
Plan 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 under the Plan as to its employees. The
administrative powers and control granted to the Company under the Plan, as now
or hereafter provided, including the sole right of amendment of the Plan and
Trust and of appointment and removal of the Administration Committee and its
successors, shall not
64
be diminished by reason of the participation of any such adopting corporation in
the Plan and Trust.
22.02 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 other Employers not withdrawing, by
complying with the provisions of the Plan. 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 this
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 plan and trust
qualified under sections 401(a) and 501(a) of the Code and transfer of such
portion of the Trust assets as the Administration Committee determines are
allocable to the Employer and its Employee-Participants. The Company may, in
its absolute discretion, by resolution of its Board of Directors, terminate an
Employer's participation at any time when the Employer is no longer a member of
the affiliated group which qualifies it to adopt the Plan under Section 22.01 or
when in its judgment such Employer fails or refuses to discharge its obligations
under the Plan following such prior notice and opportunity to cure as may be
appropriate under the circumstances.
22.03 ADOPTION CONTINGENT UPON INITIAL AND CONTINUED QUALIFICATION. The
adoption of the Plan and Trust by a corporation as provided in Section 22.01 is
made contingent and subject to the condition precedent that the adopting
corporation meets all the statutory requirements for qualified plans under the
Code for its employees. The adopting corporation may, or at the request of the
Company shall, request an initial letter of determination from the appropriate
District Director of the Internal Revenue Service to the effect that the Plan
and Trust, as herein set forth or as amended with respect to the adopting
corporation, meet the requirements of the applicable federal statutes for tax
qualification purposes for such adopting corporation and its employees. In the
event the Plan or the Trust in their operation, become disqualified for any
reason as to such adopting corporation and its employees, the portion of the
Trust Fund allocable to them shall be segregated as soon as is administratively
feasible, pending either (1) the prompt requalification of the Plan and Trust as
to such corporation and its employees to the satisfaction of the Internal
Revenue Service, so as not to affect the continued qualified status of the Plan
and Trust as to all other Employee or (2) as provided in Section 22.02 above,
the prompt withdrawal of such corporation from this Plan and Trust and a
continuation by itself or its successor of its plan and trust separate and apart
from this Plan and Trust, or by merger with another existing qualified plan are
trust accompanied by a transfer of its segregated portion of Trust assets, or
(3) the prompt termination of the Plan and Trust as to itself and its Employees.
22.04 NO JOINT VENTURE IMPLIED. The adoption of the Plan by any Employer
shall not create a joint venture or partnership between it and any other
Employer. Any rights, duties, liabilities and obligations assumed or incurred
hereunder by any Employer, or imposed upon any Employer by the provisions or the
Plan, shall relate to and affect such Employer alone.
65
ARTICLE 23
MISCELLANEOUS
23.01 EXECUTION OF RECEIPTS AND RELEASES. Any payment to any Participant,
or to his legal representative or Beneficiary, in accordance with the provisions
of the Plan, shall to the extent thereof be in full satisfaction of all claims
hereunder against the Plan and Trust. The Administration Committee may require
such Participant, legal representative, or Beneficiary, as a condition precedent
to such payment, to execute a receipt and release therefor in such form as it
shall determine.
23.02 NO GUARANTEE OF INTEREST. Neither the Trustee, the Administration
Committee, the Investment Committee, nor the Employer guarantee the Trust Fund
from loss or depreciation. The Employer does not guarantee the payment of any
money which may be or becomes due to any person from the Trust Fund. The
liability of the Administration Committee and the Trustee to make any payment
from the Trust Fund is limited to the then available assets of the Trust.
23.03 PAYMENT OF EXPENSES. All expenses incident to the administration,
termination, protection of the Plan and Trust, including but not limited to
legal, accounting, and Trustee fees, shall be paid by the Employer, except that
in case of failure of Employer to pay the expenses, they will be paid from the
Trust Fund, and until paid, shall constitute a first and prior claim and lien
against the Trust Fund.
23.04 EMPLOYER RECORDS. Records of the Employer as to an Employee's or
Participant's period of employment, termination of employment and the reason
therefor, leaves of absence, re-employment, and Compensation will be conclusive
on all persons, unless determined to be incorrect.
23.05 INTERPRETATIONS AND ADJUSTMENTS. To the extent permitted by law, an
interpretation of the Plan and a decision on any matter within the
Administration Committee's discretion made in good faith is binding on all
persons. A misstatement or other mistake of fact shall be corrected when it
becomes known and the person responsible shall make such adjustment on account
thereof as he considers equitable and practicable.
23.06 UNIFORM RULES. In the administration of the Plan, uniform rules will
be applied to all Participants similarly situated.
23.07 EVIDENCE. Evidence required of anyone under the Plan may be by
certificate, affidavit, document, or other information which the person acting
on it considers pertinent and reliable, and signed, made or presented by the
proper party or parties.
23.08 SEVERABILITY. In the event any provision of the Plan shall be held to
be illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of the Plan,
66
but shall be fully severable and the Plan shall be construed and enforced as if
the illegal or invalid provision had never been included herein.
23.09 NOTICE. Any notice required to be given herein by the Trustee, the
Employer, or the Committees, shall be deemed delivered when (a) personally
delivered, or (b) placed in the United States mails, in an envelope addressed to
the last known address of the person to whom the notice is given.
23.10 WAIVER OF NOTICE. Any person entitled to notice under the Plan may
waive the notice.
23.11 SUCCESSORS. The Plan shall be binding upon all persons entitled to
benefits under the Plan, their respective heirs and legal representatives, upon
the Employer, its successors and assigns, and upon the Trustee, the Committees,
and their successors.
23.12 HEADINGS. The titles and headings of Articles and Sections are
included for convenience or reference only and are not to be considered in
construction of the provisions hereof.
23.13 GOVERNING LAW. All questions arising with respect to the provisions
of this Plan shall be determined by application of the laws of the State of
Texas except to the extent Texas law is preempted by Federal statute.
67
IN WITNESS WHEREOF, MICHAELS STORES, INC. has caused this Plan to be signed
by its duly authorized officer this 18th day of February, 1994.
MICHAELS STORES, INC.
By: /s/ Jack E. Bush
----------------------------------------
Its: President and Chief Operating Officer
----------------------------------------
68
APPENDIX I
Employment by any of the following immediately preceding employment by the
Employer will affect the Employment Commencement Date:
Answer Systems, Inc;
Central Staff, Inc. (formerly Executive Records)
Decision Systems, Inc. and its predecessors
Financial Marketing, Inc.
Fourth Generation Software Services, Inc.
GRI, Inc.
Informatics General Corporation and its predecessors
Informatics General Systems Corporation and its predecessors
Knowledge Systems Concepts, Inc.
Lakestone Systems, Inc.
Management Control Systems, Inc.
Metro-Mark Integrated Systems, Inc.
National Systems Corporation
Net America Corp.
Pacesetter Systems, Inc.
Peoples Restaurants, Inc.
Photomatrix
Restaurant Property Co.
SSI Midlantic Software Services, Inc.
SSI National Software Services, Inc.
SSI New England Software Services, Inc.
SSI Southwest Software Services, Inc.
SSI Western Software Services, Inc.
Sterling Check Liquidation, Inc. (formerly Check Consultants, Inc.) and its
predecessors
Sterling Distribution Services, Inc.
Sterling Legal Information Services, Inc.
Sterling Professional Services, Inc. and its predecessors
Sterling Software, Inc. and its predecessors
Sterling Software (America), Inc. (formerly Ordernet Services, Inc.)
Sterling Software (Midwest), Inc. (formerly Creative Data Systems, Inc.) and its
predecessors
Sterling Software (North America), Inc. (formerly Systems Center, Inc. and
Software Laboratories, Inc.--Communications Division) and their predecessors
Sterling Software (Northern America), Inc. (formerly Directions, Inc.) and its
predecessors
Sterling Software (U.S.), Inc. (formerly Sterling Federal Systems, Inc.)
Sterling Software (U.S.A.), Inc. (formerly Systems Software Marketing, Inc. and
Software Laboratories, Inc.) and their predecessors
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Sterling Software (U.S. of America), Inc. (formerly Systems Center, Inc.--
Systems Management Division) and its predecessors
Sterling Software (United States), Inc. (formerly Dylakor, Inc. and Zanthe
Information, Inc.) and their predecessors
Sterling Software (United States of America), Inc. (formerly Systems Center,
Inc.--VM Software Division) and its predecessors
Sterling ZeroOne, Inc. and its predecessors
Texas Arkansas Petroleum
USA Cafe's Inc.
USA Cafe's Limited Partnership and its predecessors
WylyCollection
ZeroOne Systems, Inc. and its predecessors
DIVESTITURE DATES:
Pacesetter Systems, Inc. - August 13, 1984
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