EXHIBIT 10C
CONTINENTAL MATERIALS CORPORATION
EMPLOYEES PROFIT SHARING RETIREMENT PLAN
_____________________________
_____________________________________
Amended and Restated Generally Effective January 1, 1989
WHEREAS, Continental Materials Corporation, a Delaware
corporation (the "Company"), adopted on January 22, 1965, a profit sharing plan
and trust; and
WHEREAS, said plan and trust has from time to time been amended;
and
WHEREAS, said plan and trust is now being further amended;
NOW, THEREFORE, the Continental Materials Corporation Employees Profit
Sharing Retirement Plan is hereby amended and restated in its entirety,
effective as of January 1, 1989, as follows:
ARTICLE I.
DEFINITIONS
Whenever used herein with the initial letter capitalized, words and
phrases shall have the meanings stated below unless a different meaning is
plainly required by context. For purposes of construction of this Plan, the
masculine term shall include the feminine and the singular shall include the
plural in all cases in which they could thus be applied.
ACCOUNT(S) means the separate account or accounts which are
maintained for the benefit of each Participant.
ACCOUNT BALANCE means, for each Participant, the total balance
standing to his Account or Accounts under the date of reference determined in
accordance with the valuation procedures described herein.
AFFILIATE means any corporation or other business entity which
is part of the same controlled group as an Employer determined under the rules
of Section 414(b), (c) and (m) of the Code.
AFTER-TAX SAVINGS CONTRIBUTION ACCOUNT means the separate Account
which shall be maintained by the Trustee for each Participant to reflect (a) all
of his After-Tax Savings Contributions and any earnings or losses thereon, and
(b) in the case of a Participant who participated before 1985, all of his pre-
1985 employee contributions and any earnings or losses thereon.
AFTER-TAX SAVINGS CONTRIBUTIONS means the after tax contributions made
by the Participant, as described in Section 3.03(b), and, in the case of a
Participant who participated in the Plan before 1985, his employee contributions
made before 1985.
APPROVED ABSENCE means an absence from work approved by the Employer
under uniform rules and conditions for all Employees, and shall include a
military leave.
BENEFICIARY means the person or persons, estate, trust or organization
designated by a Participant to receive any benefits under the Plan which may be
due upon the Participant's death.
BREAK IN SERVICE or ONE-YEAR BREAK IN SERVICE means a Plan Year during
which an Employee completes five hundred (500) or fewer Hours of Service.
CODE means the Internal Revenue Code of 1986, as amended from time to
time.
COMPANY means the Continental Materials Corporation, a Delaware
corporation, and any predecessor or successor to it.
COMPENSATION means the total amount of cash compensation paid to an
Employee in a Plan Year as calculated by the Employer for Federal income tax
purposes including salary, wages, commissions, overtime payments, bonuses and
amounts, if any, deferred under a salary reduction agreement in accordance with
Section 401(k) of the Code. If an Employee becomes a Participant during a Plan
Year, his Compensation in such Plan Year for purposes of determining the amount
of the Employer contribution contributed on his behalf shall be his Compensation
earned while he is a Participant. Notwithstanding the foregoing, Compensation
in excess of the Annual Compensation Limitation shall be disregarded. The
"Annual Compensation Limitation" shall be $200,000 ($150,000 as of January 1,
1994) or such other amount determined under Code Section 401(a)(17).
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For purposes of applying the Annual Compensation Limitation an Employee
who is a Family Member (as defined below) of either:
(a) a 5 percent owner (or deemed a 5 percent owner by application of
Section 318 of the Code); or
(b) a highly compensated Employee who is one of the ten most highly
compensated Employees
will not be treated as a separate Employee. In such a case, the
Family Aggregation Rules shall be applied.
If, as a result of applying the Family Aggregation Rules the Annual
Compensation Limitation is exceeded, the Annual Compensation
Limitation shall be prorated among the individuals in the Family
Aggregation Group in proportion to each such individual's Compensation
as determined under this section prior to application of the Annual
Compensation Limitation.
If Compensation for any prior Plan Year is taken into account in
determining a Participant's allocations or benefits for the current
Plan Year, the Compensation for such prior Plan Year is subject to the
applicable Annual Compensation Limitation in effect for that prior
Plan Year if less than the current year's Compensation limitation.
COVERED EMPLOYEE means an Employee employed by an Employer at a
location and/or in a job classification which has been designated by the Company
as being a location and/or classification of Employees which may become eligible
to participate in the Plan. Those locations and classifications are listed in
Exhibit A hereto.
EFFECTIVE DATE OF AMENDMENT means January 1, 1989, the date on which
the provisions of this amended and restated Plan became effective except as
specially provided herein.
EMPLOYEE means a person employed by the Employer and shall not include
an independent contractor.
EMPLOYER means the Company and each Affiliate which has adopted this
Plan with the consent of the Company. The Employers are listed in Exhibit A
hereto. If the Effective Date of an Employer's adoption of this Plan is
different from the general Effective Date of Amendment, it will be set forth in
Exhibit A hereto. The terms hereof shall apply to all Employers except to the
extent that any differences are set forth in Exhibit A hereto in which event the
terms set forth in Exhibit A shall govern.
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EMPLOYER CONTRIBUTION ACCOUNT means the separate Account which shall
be maintained by the Trustee for each Participant with respect to each Employer
of such Participant to reflect all Employer contributions made on behalf of such
Participant by each Employer, and any Forfeitures allocated thereto and any
earnings thereon.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
FAMILY AGGREGATION RULES means the rules described below:
(1) These Family Aggregation Rules are applied to Participants who are
Family Members of either:
(a) a 5 percent owner (or deemed a 5 percent owner by application of
Section 318 of the Code) (hereafter "5 Percent Owner"); or
(b) a highly compensated Participant (as defined in this Article) who
is one of the ten most highly compensated Participants.
(2) Any compensation paid to the Family Member and any applicable Plan
contribution or benefit accrued on behalf of such Family Member shall
be treated as if it were paid to (or on behalf of) the 5 Percent Owner
or one of the ten most highly compensated Participants. For these
purposes, a Family Member is the spouse or a lineal descendant (who
has not reached age 19 before the close of the Plan Year) of any 5
Percent Owner or highly compensated Participant. A group of Family
Members shall be called collectively a "Family Aggregation Group".
(3) For purposes of these Family Aggregation Rules, compensation is
defined as all compensation paid to the Participant for the Plan Year
and currently includible in gross income, including bonuses and
commissions ("FAR Compensation"). If the period for determining FAR
Compensation used in calculating an Employee's allocation for a Plan
Year is a short Plan Year (i.e. shorter than 12 months) the Annual
Compensation Limitation is an amount equal to the otherwise applicable
Annual Compensation Limitation multiplied by the fraction, the
numerator of which is the number of days in the short Plan Year and
the denominator of which is 365.
FISCAL YEAR means the taxable year used by the Company for Federal
income tax purposes.
FORFEITURE means the portion of a Participant's Employer Contribution
Account to which he is not entitled, as determined under Section 5.03.
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HOUR OF SERVICE means:
(1) Each hour for which an Employee is paid, or entitled to payment, for
the performance of duties for an Employer. These hours shall be
credited to the Employee for the computation period in which the
duties are performed.
(2) Each hour for which an Employee is paid, or entitled to payment, by an
Employer 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 (including
disability), layoff, jury duty, military duty (to the extent required
by federal law) or leave of absence. No more than five hundred one
(501) Hours of Service shall be credited under this paragraph (2) for
any single continuous period (whether or not such period occurs in a
single computation period) except as required by applicable federal
law. Hours of Service under this paragraph (2) shall be calculated
and credited pursuant to Section 2530.200b 2 of the Department of
Labor Regulations, which are incorporated herein by this reference.
(3) Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by an Employer. The same Hours of
Service shall not be credited both under paragraph (1) or paragraph
(2) as the case may be, and under this paragraph (3). These hours
shall be credited to the Employee for the period to which the award or
agreement pertains rather than the period in which the award,
agreement or payment is made.
(4) In accordance with Department of Labor Regulation 2530.200b-3(e), each
Employee shall be credited with forty five (45) Hours of Service per
week for each week in which he would be credited with service pursuant
to the foregoing if adequate records of his Hours of Service are not
available.
(5) Hours of Service shall be credited for employment with any Affiliate.
(6) Solely for purposes of determining whether a Break in Service for
participation and vesting purposes has occurred, an Employee who is
absent from work for maternity or paternity reasons shall receive
credit for the Hours of Service which would otherwise have been
credited to him but for such absence, or in any case in which such
Hours of Service cannot be determined, eight (8) Hours of Service per
day of such absence. For purposes of this paragraph (6), an absence
from work for maternity or paternity reasons means an absence:
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(a) by reason of the pregnancy of the Employee,
(b) by reason of a birth of a child of the Employee,
(c) by reason of the placement of a child with the Employee in
connection with the adoption of such child by such individual, or
(d) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
The Hours of Service credited under this paragraph (6) shall be
credited in the computation period in which the absence begins if the
crediting is necessary to prevent a Break in Service in that period,
or in all other cases, in the immediately following computation
period.
Notwithstanding the preceding, no credit shall be given for Hours of
Service applicable to maternity or paternity leave unless the Employee
furnishes the Plan Administrator such timely information as the Plan
Administrator may reasonably require to establish that the absence
from work is because of maternity or paternity leave and the number of
days for which there was such an absence.
PARTICIPANT means an Employee who fulfills the eligibility
requirements as provided in Article II, who makes the contributions required by
Section 3.03(a) and who continues to qualify as a Participant. A Participant
becomes a former Participant when he terminates employment.
PLAN means the Continental Materials Corporation Employees Profit
Sharing Retirement Plan, as amended from time to time.
PLAN ADMINISTRATOR means the person or persons who may be appointed by
the Company. In the absence of such appointment, the Plan Administrator shall
be the Company. The Plan Administrator shall serve pursuant to the terms of
Article VIII.
PLAN YEAR means the calendar year.
PRE TAX SAVINGS CONTRIBUTION ACCOUNT means the separate Account which
shall be maintained by the Trustee for each Participant to reflect all of his
Pre-Tax Savings Contributions and any earnings thereon.
PRE TAX SAVINGS CONTRIBUTIONS means the contributions made by an
Employer that are attributable to the reduction in Compensation a Participant
agrees to accept from an Employer each Plan Year, as described in Section
3.03(a) of the Plan.
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QUALIFIED DOMESTIC RELATIONS ORDER means any judgment, decree or order
(including approval of a property settlement agreement) that 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 Payee and is
made pursuant to a state domestic relations law, including a community property
law that creates, recognizes or assigns to such person the right to receive all
or a portion of a Participant's benefits payable hereunder, and meets the
requirements of Section 414(p) of the Code.
ROLLOVER CONTRIBUTION ACCOUNT means the separate Account which shall
be maintained by the Trustee for each Employee to reflect any Rollover
Contributions made by him and any earnings thereon.
ROLLOVER CONTRIBUTIONS means the contributions made by an Employee
pursuant to Section 3.04 of the Plan.
SHARE means a share of common stock of the Company, which is a
qualifying employer security as defined in Section 407(d)(5) of ERISA and
Section 409(1) of the Code.
TOTAL AND PERMANENT DISABILITY means a participant is unable for the
foreseeable future to perform his normal work for an Employer or any other work
for which he is qualified by reason of education, training or experience as
determined by a competent physician chosen by the Company. Uniform standards
shall apply to Participants in similar conditions.
TRUST AGREEMENT or TRUST means, respectively, the trust agreement
establishing the Continental Materials Corporation Employees Profit Sharing
Retirement Plan Trust as amended from time to time, and the trust established
thereunder.
TRUST FUND means all cash, securities, real estate, Shares or any
other property held by the Trustee pursuant to the terms of the Trust Agreement,
together with the income therefrom.
TRUSTEE means the person or persons appointed by the Company as
provided under Section 7.01 of the Plan to act as Trustee of the Trust,
including any Limited Co-Trustee which may be appointed pursuant to the
provisions of the Trust Agreement.
VALUATION DATE means the last day of the sixth month of each Plan Year
and the last day of each Plan Year. In addition, the Company may adopt more
frequent Valuation Dates for purposes of allocating earnings if the Company
deems it appropriate in order to allocate earnings more equitably among
Participants.
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YEAR OF SERVICE means a Plan Year during which an Employee completes
at least one thousand (1,000) Hours of Service, including years prior to the
Effective Date of Amendment of the Plan. A Plan Year during which an Employee
completes less than one thousand (1,000) Hours of Service but more than five
hundred (500) Hours of Service shall be a substandard Year of Service. A
substandard Year of Service shall neither be considered a One Year Break in
Service nor be counted as a Year of Service.
ARTICLE II.
Eligibility and Participation
2.01 ELIGIBILITY
(a) Each Employee included under the provisions of the Plan prior to
this restatement shall continue to participate in accordance with
the provisions of this Plan, provided that he continues to make
the contributions required by Section 3.03(a).
(b) Each other Employee who is a Covered Employee shall be eligible
to make the contributions required by Section 3.03(a) and to
participate in the Plan on the later of the Effective Date of
Amendment or the first day of any calendar month coincident with
or immediately following his completion of a 12-month period
commencing (i) on his date of employment; or (ii) on the first
day of any Plan Year beginning after his date of employment,
during which he has completed at least one thousand (1,000) Hours
of Service.
(c) Any Employee who does not choose to make the required
contributions required under Section 3.03(a) and to participate
in the Plan on the date when he is eligible may elect to make the
required contributions and to participate on the first day of any
calendar month immediately following his election to participate,
if then otherwise eligible.
(d) For purposes of eligibility for participation, the initial
computation period shall begin with the date on which the
Employee first performs an Hour of Service. The participation
computation period shall shift to the Plan Year which includes
the anniversary of the date on which the Employee first performed
an Hour of Service if he does not render one thousand (1,000)
Hours of Service in the twelve month period commencing on his
date of employment.
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2.02 ENROLLMENT FORMS
An Employee who elects to become a Participant in the Plan shall
complete a Designation of Beneficiary in the form prescribed by the
Company. In addition, an Employee shall complete a salary reduction
agreement and an Authorization of Payroll Deductions pursuant to
Section 3.03 in the forms prescribed by the Company, and shall deliver
them to his Employer at least ten (10) days prior to the first day of
the month on which he elects his participation to become effective.
Each eligible Employee shall furnish the Company with such information
concerning his age or other data necessary or appropriate for the
administration of the Plan as the Company may require.
2.03 TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS AND REHIRING
(a) A Participant who terminates employment and is subsequently
rehired shall be eligible to again participate immediately if
then otherwise eligible.
(b) A Participant who voluntarily discontinues his Pre-Tax Savings
Contributions may rejoin the Plan as of the first January 1 or
July 1 which is at least six (6) months after the date he
discontinued such contributions, provided that such Participant
has notified the Company in writing of his desire to enter the
Plan, if then otherwise eligible.
(c) An Employee who terminates employment before becoming a
Participant and is reemployed before incurring a One-Year Break
in Service shall be eligible to become a Participant when he
meets the eligibility requirements of Section 2.01, based on his
original date of employment.
(d) An Employee who terminates employment before becoming a
Participant and is reemployed after incurring a One-Year Break in
Service shall be eligible to become a Participant when he meets
the eligibility requirements of Section 2.01, based on his date
of reemployment.
(e) A Participant shall not suffer a One-Year Break in Service during
such period in which his performance of service for an Employer
has been interrupted on account of layoff, sickness, accident,
vacation, Approved Leave or entry into the armed forces of the
United States in time of war, during such times as
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state or Federal legislation requires military conscription or on
a voluntary basis, provided that he resumes the performance of
his services for an Employer within five (5) days after such
period of layoff, sickness, accident, vacation or Approved Leave,
or the later of ninety (90) days after the discharge from such
armed forces or such time as required by Federal law. If such
Participant shall not return to work at the expiration of said
period, then such Participant shall be deemed to have terminated
his employment with his Employer on the date of the expiration of
such leave of absence and his rights under the Plan shall
thereupon be determined in accordance with the provisions of
Article V. All Employees shall be treated alike under similar
circumstances.
ARTICLE III.
CONTRIBUTIONS
3.01 COMPANY CONTRIBUTIONS
(a) Employer contributions to the Trust Fund for each Plan Year shall
be in such amount as the Employer, in its sole discretion, shall
determine; provided, however, that the total of such contribution
for any Plan Year shall not exceed the maximum amount deductible
for such Fiscal Year for Federal income tax purposes. Employer
contributions may be made in cash or in Shares valued at the fair
market value thereof at the time such Employer contribution is
made. The Employer may earmark cash contributions as being
allocable to the Stock Contribution Fund described in Article
XIII.
(b) In order to meet the non-discrimination requirements of Section
401(k) and 401(m) of the Code, as set forth in Sections 4.09 and
4.10 hereof, the Company may, in its discretion, establish a
special rate of Employer contributions applicable only to those
Participants who earn less than a specified level of Compensation
or such other class of Participants as the Company may determine.
Contributions made under this paragraph (b) shall be deemed, for
all Plan purposes, to be Pre-Tax Savings Contributions.
3.02 WHEN CONTRIBUTIONS DUE
The contribution of each Employer under the Plan for any Plan Year
shall be due on the last day of that Plan Year and shall be paid over
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to the Trustee not later than the time prescribed by law for filing
such Employer's Federal income tax return for such Fiscal Year
(including any extensions).
3.03 EMPLOYEE CONTRIBUTIONS
(a) Each Participant shall have the option to enter into a salary
reduction agreement with his Employer to provide that the
Participant agrees to accept a reduction in salary from the
Employer equal to from one percent (1%) to ten percent (10%) of
his Compensation, in whole percentages. Effective January 1,
1995, the 10% limit in the preceding sentence shall be replaced
by a 12% limit.
The salary reduction amounts shall be called the Pre-Tax Savings
Contributions.
An Employer may amend or revoke any salary reduction agreement
entered into by a Participant if the Employer determines that
such a revocation or amendment is necessary to ensure that the
additions to a Participant's Accounts for any Plan Year will not
exceed the limitations set forth in Article IV of the Plan.
Effective for the period November 16, 1994 through December 31,
1994, the ten percent limitation on Pre-Tax Savings Contributions
shall be replaced by a ninety-six percent (96%) limitation.
However, Notwithstanding the preceding sentence, a Participant's
salary reduction percentage shall be limited to that percentage
which results in his aggregate salary reduction percentage for
1994 being no greater than 12%.
(b) Subject to the limitations set forth in Article IV of the Plan, a
Participant may elect to make After-Tax Savings Contributions to
the Trust Fund in any Plan Year during which he is a Participant
in an amount equal to between one percent (1%) and ten percent
(10%) of his Compensation, in whole percentages. These
contributions shall be deducted from the Participant's
Compensation each pay period. In addition, a Participant may
contribute in any Plan Year an amount which, together with all
other contributions made by that Participant in prior Plan Years,
will cause his total contribution not to exceed ten percent (10%)
of the Compensation received by him during all Plan Years that he
has been a Participant in the Plan. This amount shall be paid by
the Participant either as a payroll deduction as specified in
writing by the Participant in a form approved by the Company or
by a cash payment to the
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Trustee. A Participant who elects to make additional
contributions by payroll deduction shall complete an
Authorization of Payroll Deduction Form as prescribed by the
Company. As soon as practicable, the Company shall pay the
amounts so paid or deducted to the Trustee to be held and
administered in trust pursuant to the Trust Agreement.
(c) The Company shall direct the Trustee to establish and maintain a
Pre-Tax Savings Contribution Account and an After-Tax Savings
Contribution Account in the name of each Participant who elects
to make Pre-Tax Savings Contributions and After-Tax Savings
Contributions.
(d) A Participant may change the amount or percentage of his Pre-Tax
Savings Contributions or his After-Tax Savings Contributions at
any time, but effective with the next subsequent pay period, by
filing another authorization form with the Company at least two
weeks prior to the effective date of the change.
(e) A Participant may elect in writing to discontinue his Pre-Tax
Savings Contributions or his After-Tax Savings Contributions by
notifying the Company at least two weeks before the end of any
pay period. In the event of a discontinuance of his Pre-Tax
Savings Contributions he shall cease to be a Participant. An
Employee may resume making Pre-Tax Savings Contributions only
after the expiration of a waiting period following the date of
discontinuance, as specified in Section 2.03(b).
(f) Distribution of a Participant's Pre-Tax Savings Contribution
Account shall not commence prior to the earlier of his death,
Total and Permanent Disability or termination of employment,
except upon demonstration of hardship, as described in Article
XI of the Plan or pursuant to a qualified domestic relations
order described in Section 6.13.
3.04 ROLLOVER CONTRIBUTIONS
An Employee shall be entitled to contribute to the Plan all or any
part of the property he has received from any trust which forms a
part of a trust described in Section 401(a) of the Code, which is
exempt from tax under Section 501(a) of the Code, or from an employee
annuity plan described in Section 403(a)(1) of the Code, or from an
individual retirement account described in Section 408(a) of the Code
(if the entire amount received represents the entire amount
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in the account or the entire value of the annuity, and the entire
amount is solely attributable to rollover contributions from an
employee trust 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 any earnings on such
sum), which is paid or distributed to the Employee in one or more
distributions which constitute all or part of the balance in his
account distributed as a result of a termination of a plan or a
discontinuance of contributions to a profit sharing or stock bonus
plan or lump sum distribution within the meaning of Section
402(e)(4)(A) of the Code (determined without reference to Section
402(e)(4)(B) of the Code). This paragraph is effective for
contributions prior to January 1, 1993.
Effective January 1, 1993, an Employee shall be entitled to contribute
to the Plan all or any part of the property he has received from any
trust which forms a part of a trust described in Section 401(a) of the
Code, which is exempt from tax under Section 501(a) of the Code, or
from an employee annuity plan described in Section 403(a)(1) of the
Code so long as such contribution is non-taxable under Code Section
402(c) or 402(e)(6).
The right of contribution shall extend only from the date of such
receipt for a period of sixty (60) calendar days. The Trustee shall
create a separate Rollover Contribution Account for the Employee to
which shall be credited his Rollover Contributions. The Rollover
Contribution Account shall be invested with the other assets of the
Plan in the investment fund or funds selected by the Employee in
accordance with the rules stated herein and the Employee at all times
shall be fully vested in his Rollover Contribution Account. An
Employee may withdraw all or a portion of the value of his Rollover
Contribution Account, but not less than one hundred dollars ($100),
per withdrawal. Such election must be in writing and must be submitted
at least thirty (30) days prior to the effective date of the
withdrawal and must be in a form approved by the Company.
ARTICLE IV.
ALLOCATIONS, ACCOUNTING AND ADJUSTMENTS
4.01 COMPOSITION OF TRUST FUND
All amounts contributed to the Plan, as increased or decreased by
income, expenditure, appreciation and depreciation, shall constitute a
single fund known as the Trust Fund. The Trust Fund shall consist of
an investment fund or funds established by the Company. A separate
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Employer Contribution Account shall be maintained for each Participant
with respect to each Employer of such Participant. A Pre-Tax Savings
Contribution Account and an After-Tax Savings Contribution Account
shall be maintained for each Participant with respect to each Employer
of such Participant. A Rollover Contribution Account shall be
maintained for each Employee who elects to make Rollover
Contributions. Each Participant's Accounts shall be further subdivided
into one, two or more sub accounts to reflect the percentage of the
contributions which are invested in the various investment funds
described above, as appropriate.
4.02 ALLOCATION OF EMPLOYEE CONTRIBUTIONS
As of each Valuation Date, the Pre-Tax Savings Contributions and the
After-Tax Savings Contributions made to the Plan during such Plan Year
by each Participant shall be credited to the Pre-Tax Savings
Contribution Account or the After-Tax Savings Contribution Account of
each Participant, as appropriate.
4.03 ALLOCATION OF EARNINGS AND DISTRIBUTIONS TO ACCOUNTS
The increase or decrease in the net worth of each investment fund
shall be allocated among the accounts of Participants who have a
portion of their Account Balances invested in that investment fund on
the Valuation Date in accordance with such rules as the Trustee shall
determine.
4.04 ALLOCATION OF EMPLOYER CONTRIBUTIONS
Upon actual contribution of the Employer's contribution for each Plan
Year, and effective as of the last day of each Plan Year, and after
the allocation of earnings, the Employer contribution for such Plan
Year shall be allocated to the Employer Contribution Accounts of all
Participants who are Employees of the Employer who make contributions
pursuant to Section 3.03(a) and are either (a) actively employed by
such Employer on the last day of such Plan Year and have completed at
least one thousand (1,000) Hours of Service during such Plan Year, or
(b) terminate employment during the Plan Year on account of retirement
on or after age sixty (60), Total and Permanent Disability or death,
in the proportion that such Participant's Compensation for such Plan
Year bears to the total Compensation of all such Participants for such
Plan Year. When all or a portion of the Employer contribution is made
in the form of Shares, the allocation of Shares to Participants'
Accounts shall be
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made as though cash had been contributed in an amount equal to the
fair market value of the stock at the time such contribution is made.
4.05 ALLOCATION OF FORFEITURES
Upon actual contribution of the Employer's contribution for each Plan
Year, and effective as of the last day of each Plan Year, after the
allocation of earnings, any Forfeitures which have become available
during such Plan Year due to the former Participants who had been in
the employ of the Employer shall be allocated to the Employer
Contribution Accounts of all Participants employed by that Employer
who make the contributions required by Section 3.03(a) and are either
(a) actively employed by such Employer on the last day of such Plan
Year and have completed at least one thousand (1,000) Hours of Service
during such Plan Year, or (b) terminate employment during the Plan
Year on account of retirement on or after age sixty (60), Total and
Permanent Disability or death, in the proportion that such
Participant's Compensation for such Plan Year bears to the total
Compensation of all such Participants for such Plan Year. When a
Participant forfeits an interest in the Stock Contribution Fund, the
Shares which are a component of the Forfeiture will be allocated to
Participant's Accounts in the same manner as the remainder of the
Forfeiture.
4.06 MAXIMUM ANNUAL ADDITIONS
(a) The sum of the following additions to a Participant's Accounts in
any Plan Year shall not exceed the lesser of (1) thirty thousand
dollars ($30,000), or such other amount as may be established by
the Secretary of the Treasury pursuant to Section 415 of the
Code, or (2) twenty five percent (25%) of the Participant's
Compensation (minus 401(k) salary deferral contributions) for
such Plan Year:
(i) The Employer contributions.
(ii) The Pre-Tax Savings Contributions.
(iii) The Participant's After-Tax Savings Contributions.
(iv) The Forfeitures.
(b) In the event that such additions to a Participant's Accounts in
any Plan Year would, in the absence of these rules, be in excess
of the maximum annual limits, the following
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adjustments shall be made, in the order listed, to the extent
necessary to bring the additions within the required limits:
(i) Any After-Tax Savings Contributions shall be returned to him
together with earnings thereon if any.
(ii) A portion of the Participant's Pre-Tax Savings Contribution
shall be returned to him together with earnings thereon if
any; provided, that, in the event that such a return would
reduce his Pre-Tax Savings Contributions below the minimum
amount required to be a Participant he shall nevertheless be
treated as making minimum Pre-Tax Savings Contributions
hereunder for the Plan Year.
(iii) The Employer contributions, if any, otherwise allocable to
the Participant's Employer Contribution Account shall be
reduced, and the amount of such reduction shall be credited
to a suspense account (which shall not share in the
allocation of earnings) and shall be applied to reduce
Employer contributions in the succeeding Plan Year.
(c) To the extent not expressly set forth herein, the rules of Code
Section 415 are hereby incorporated by reference.
4.07 DEFINED BENEFIT AND DEFINED CONTRIBUTION PLANS
If it is determined that, as a result of the limitations of Section
415(e), there must be a reduction in the Participant's combined
benefits, then the Employer shall make any necessary reduction under
the defined benefit plan.
4.08 PARTICIPANT ELECTION OF INVESTMENT FUNDS
Each Participant in the Plan may select the investment fund or funds
in which his Accounts shall be invested. Each such initial election
shall be made in writing on forms to be furnished by the Plan
Administrator and shall specify that portion of the Participant's
existing Account Balance on the date of such election to be invested
in the investment fund or funds established by the Company, based upon
a percentage increment, as established by the Company, of the
Participant's Account Balance. Each of the Participant's Accounts
shall be invested in the same proportions in each such fund. Changes
in the Account Balances invested in the specified funds due to
Employer or Employee contributions, Forfeitures and earnings and
-16-
losses shall not require reallocation of the Account Balances in the
specified proportions unless subsequently elected by the Participant.
The Participant may also elect the portion of the future Employer
contributions, Pre-Tax Savings Contributions and After-Tax Savings
Contributions and Forfeitures to be invested in the investment fund or
funds established by the Company, based upon a percentage increment,
as established by the Company, of such contributions or Forfeitures.
A Participant may change his investment fund elections by informing
the Plan Administrator either in writing or by phone, in a manner
established by the Company. The frequency that a Participant may
change such elections shall be established by the Company.
If no election form has been executed by the Participant and submitted
to the Trustee by the Plan Administrator, the entire Account Balance
shall be invested one or more investment funds as determined by the
Company.
4.08A CMC STOCK FUND
Effective with the effectiveness of a Registration Statement filed
with the Securities and Exchange Commission regarding the Plan, the
Company may maintain an investment fund to be called the CMC Stock
Fund, which shall be separate from the Stock Contribution Fund
described in Article XIII hereto, but which shall be invested in
Shares and cash and cash equivalents pending the purchase of Shares,
and the purchase of Shares shall subject to the rules stated below, be
purchased as soon as practical after the receipt of contributions or
transferred amounts.
Except as hereafter set forth in this Section 4.08A, the rules set
forth in Section 4.08 applicable to investment funds generally shall
apply to the CMC Stock Fund. However, in no event may a Participant
direct that more than 25% of his Account Balance exclusive of that
portion of his Account Balance in the Stock Contribution Fund
(determined immediately after the effectiveness of said direction) be
invested in the CMC Stock Fund.
The purchase of Shares by and for the CMC Stock Fund shall be
suspended whenever the Trustee shall determine that Shares are not
then readily available or whenever the Company shall direct the
Trustee to suspend such purchases because, in the Company's sole
judgment, the purchase of additional Shares at such time is not in the
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best interests of the Participants or might adversely affect the
status of the Plan under Section 401(a) of the Code.
Brokerage commissions, transfer taxes and other charges and expenses
incurred by the Plan in connection with the CMC Stock Fund shall be
charged to that fund to the extent such amounts are not paid by the
Company.
The Trustee may establish uniform guidelines for minimum amounts of
Shares which may be purchased at any one time, and other similar
guidelines for purposes of administrative convenience. The rules of
Sections 13.011, 13.012 and 13.02 13.05 hereof shall apply to the CMC
Stock Fund in a manner similar to their application to the Stock
Contribution Fund.
4.09 401(k) DISCRIMINATION LIMITATIONS
In no event shall any Employer make Pre-Tax Savings Contributions for
any Plan Year that would result in the actual deferral percentage of
the highly compensated employees who are Participants, as defined
below, exceeding the actual deferral percentage of the group of all
other Participants by the amount and/or proportion permitted under the
rule of (a) or (b) below whichever would allow the actual deferral
percentage of the highly compensated Participants to be larger.
(a) The actual deferral percentage for the highly compensated
Participants is not more than the actual deferral percentage of
all other Participants multiplied by 1.25; or
(b) The excess of the actual deferral percentage for the highly
compensated Participants over the actual deferral percentage of
all other Participants is not more than two percentage points,
and the actual deferral percentage for the highly compensated
Participants is not more than the actual deferral percentage of
the other Participants multiplied by 2.
The actual deferral percentage of each group of Participants for any
Plan Year shall be the average of the ratios (calculated separately
for each Participant in each group) of (A) the Pre-Tax Savings
Contributions made on behalf of each Participant for such Plan Year,
to (B) such Participant's Compensation for such Plan Year. To the
extent necessary to conform to such limitation, the Plan Administrator
shall reduce Pre-Tax Savings Contributions made on behalf of the
highly compensated Participants in the following manner: First, the
Pre-Tax Savings Contribution made on behalf of the Participant who
elected 12 percent during such Plan Year shall be
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reduced to 11 percent on a pro rata basis (i.e., a specified
percentage of each dollar in this category shall not be allocated to
or remain in such Participant's Pre-Tax Savings Contribution Account);
second, the Pre-Tax Savings Contribution made on behalf of each
Participant who elected 11 percent during such Plan Year shall be
reduced to 10 percent. This process shall be continued until such
limitation is met. Any such reduction in the Pre-Tax Savings
Contribution made on behalf of such Participant shall be refunded to
him together with any income allocable to such Pre-Tax Savings
Contributions as soon as administratively possible but in no event
later than March 15 of the immediately succeeding Plan Year.
4.10 401(m) LIMITATIONS
In no event shall any Employer make Employer contributions for any
Plan Year that would result in the contribution percentage of the
highly compensated employees who are Participants, as defined below,
exceeding the contribution percentage of the group of all other
Participants by the amount and/or proportion permitted under the rule
of (a) or (b) below whichever would allow the contribution percentage
of the highly compensated Participants to be larger.
(a) The contribution percentage for the highly compensated
Participants is not more than the contribution percentage of all
other Participants multiplied by 1.25; or
(b) The excess of the contribution percentage for the highly
compensated Participants over the contribution percentage of all
other Participants is not more than two percentage points, and
the contribution percentage for the highly compensated
Participants is not more than the contribution percentage of the
other Participants multiplied by 2.
The percentage of each group of Participants for any Plan Year shall
be the average of the ratios (calculated separately for each
Participant in each group) of (A) After-Tax Savings Contributions,
Employer contributions and, if the Plan Administrator so elects, the
Pre-Tax Savings contributions made on behalf of each Participant for
such Plan Year, to (B) such participant's compensation for such Plan
Year. To the extent necessary to conform to such limitation, the Plan
Administrator shall first refund After-Tax Savings Contributions and
thereafter reduce Employer contributions allocated to the highly
compensated Participants pro rata to the allocations made.
Any such reduction in the Employer contribution allocated to such
Participant together with any income allocable to such contributions
-19-
shall be distributed to the Participant as soon as administratively
possible but in no event later than March 15 of the immediately
succeeding Plan Year.
4.11 DEFINITIONS APPLICABLE TO SECTIONS 4.09 AND 4.10
For purposes of Section 4.09 and 4.10, the term "Participant" includes
all Covered Employees who have met the service requirements of Section
2.01 and who continue to be employed regardless of whether they have
filed an election to reduce Compensation as provided for in Section
3.03.
4.12 $7,000 LIMITATION
In no event shall any Participant's Pre-Tax Savings Contributions for
any Plan Year exceed $7,000 or such higher amount as may be permitted
under Code Section 402(g). In the event that any Pre-Tax Savings
Contributions in excess of that amount are in fact, made, such excess
shall be returned to the Participant no later than April 15 in the
year following the Plan Year in which such excess Pre-Tax Savings
Contributions were made.
4.13 401(k) TESTING RULES
For purposes of determining whether the actual deferral percentage
test of Code Section 401(k) is satisfied, the rules below will apply:
(a) If two or more Employer plans are aggregated in accordance with
the Plan Aggregation Rules, all Pre-Tax Contributions and
Employer contributions ("Elective Contributions") are to be
treated as made under a single plan.
(b) The actual deferral percentage of a highly compensated
Participant (as defined below) is determined by treating all cash
or deferred arrangements for which the highly compensated
Participant is eligible (other than those plans which are
Permissive Aggregation Groups) as a single arrangement.
(c) The actual deferral percentage for a group or individuals subject
to the Family Aggregation Rules is determined by combining Pre-
Tax Contributions, Compensation, and amounts treated as Pre-Tax
Contributions of all eligible Family Members. Except to the
extent taken into account in the preceding sentence, the
Compensation, and amounts treated as Pre-Tax Contributions of all
Family Members are disregarded
-20-
in determining the actual deferral percentages for the groups of
highly compensated Participants and nonhighly compensated
Participants.
4.14 401(m) TESTING RULES
For purposes of determining whether the Plan satisfies the actual
contribution percentage test of Code Section 401(m), the following
rules shall apply.
(a) For purposes of determining the actual contribution percentage,
if an individual is subject to the Family Aggregation Rules, the
contribution percentage shall be calculated as if the Family
Aggregation Group is one individual. Further, if Employer
contributions are treated as a Pre-Tax Contribution to satisfy
the actual deferral percentage test described in Code section
401(k)(3), those Employer contributions shall not be taken into
account to satisfy the requirements of the actual contribution
percentage test under Code section 401(m)(2).
(b) All Pre-Tax Contributions and Employer contributions that are
made under two or more plans which are aggregated in accordance
with the Plan Aggregation Rules shall be treated as under a
single plan.
(c) The actual contribution percentage of a highly compensated
Participant (as defined herein) will be determined by treating
all plans as a single plan provided the plans are subject to
section 401(a), highly compensated Participants are eligible for
the plans, and the plans are part of a Required Aggregation
Group.
(d) For a highly compensated Participant or 5 Percent Owner who is
subject to the Family Aggregation Rules, the actual contribution
percentage for the Family Aggregation Group (which is treated as
one highly compensated Participant) is the ratio determined by
combining the Pre-Tax Contributions, Employer contributions and
Compensation of all eligible Family Members. Except to the extent
taken into account in the preceding sentence, the contributions
and Compensation of all Family Members are disregarded in
determining the actual contribution percentages for the groups of
highly compensated Participants and nonhighly compensated
Participants.
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(e) For a highly compensated Participant whose actual
contribution percentage is determined under the Family
Aggregation Rules, the determination of the amount of
excess aggregate contributions shall be made by reducing
the excess aggregate contributions which are allocated
among the Family Members in proportion to the
contributions of each Family Member that have been
combined.
4.15 NON-DISCRIMINATION TESTING RULES
For purposes of the actual deferral percentage test in Section 4.09
and the actual contribution percentage test in Section 4.10 the
following rules and definitions shall apply:
(a) For purposes of determining who is a highly compensated
Participant for a particular Plan Year the following rules shall
be applied:
(i) For purposes of determining the group of highly
compensated Participants for a "Determination Year",
the Determination Year shall be the Plan Year.
(ii) For purposes of any "Look-Back Year" calculation
in determining the group of highly compensated
Participants, the Look-Back Year shall be the
twelve month period immediately preceding the
Determination Year.
(iii) For these purposes, the "Top Paid Group" is the
group consisting of the top 20 percent of the
Employees when ranked on the basis of
Compensation paid for services during such Plan
Year. For these purposes, Compensation is the
same as defined in Section 4.15(b).
(b) A "highly compensated Participant" shall mean any Participant
who, during the year or the preceding year:
(i) was at any time a 5 Percent Owner;
(ii) received Compensation from the Employer in
excess of $75,000 (or such other amount as
determined when cost-of-living adjustments are
made under Section 415(d));
(iii) received Compensation from the Employer in excess of
$50,000 (or such other amount as provided by the
-22-
Code) and was in the Top-Paid Group of Employees for
such year; or
(iv) was at any time an officer and received Compensation
greater than 50 percent of the amount in effect under
Section 415(b)(1)(A) for such year.
(c) A "5 Percent Owner" is any person who owns (or is
considered as owning within the meaning of Section 318 of
the Code) more than 5 percent of the outstanding stock of
the corporation or stock possessing more than 5 percent of
the total combined voting power of all stock of the
corporation.
(d) For purposes of this Section, "Compensation" shall be construed
in accordance with Code Section 414(q)(7).
4.16 DUAL LIMITATION
To the extent required by applicable law, in no event will the sum of
the actual deferral percentage as described in Section 4.09 and the
contribution percentage as described in Section 4.10 for
highly compensated employees who are Participants
exceed the sum of:
(i) 125% of the greater of
(a) the actual deferral percentage of all other
Participants, or
(b) the contribution percentage of all other
Participants; and
(ii) Two plus the lesser of
(a) the actual deferral percentage of all other
Participants, or
(b) the contribution percentage of all other
Participants, but in no event shall this
amount exceed 200% of the lesser of
those two amounts.
If this aggregate limitation would otherwise be exceeded,
the Plan Administrator shall determine whether to distribute excess
Pre-Tax Savings Contributions or distribute excess After-Tax Savings
-23-
Contributions or Employer contributions to highly-
compensated employees who are Participants, and the generally
applicable rules will be followed for the distribution of the type of
contribution chosen.
ARTICLE V.
Vesting
5.01 EMPLOYEE CONTRIBUTION ACCOUNTS AND ROLLOVER CONTRIBUTION ACCOUNT
A Participant (or Employee with respect to his Rollover Contribution
Account who is not a Participant) shall at all times have a fully
vested, nonforfeitable interest in his Pre-Tax Savings Contribution
Account, his After-Tax Savings Contribution Account and his
Rollover Contribution Account.
5.02 EMPLOYER CONTRIBUTION ACCOUNT
A Participant shall have a fully vested, nonforfeitable interest in
his Employer Contribution Account on the first to occur of the
follow ing events:
(a) his sixtieth (60th) birthday,
(b) the date on which he shall be determined to have a Total and
Permanent disability,
(c) the date of his death, or
(d) his completion of six (6) Years of Service.
5.03 TERMINATION OF EMPLOYMENT
(a) If a Participant withdraws from Plan participation or terminates
employment for any reason other than Total and Permanent
Disability or death and before the completion of six (6) Years
of Service or before his sixtieth (60th) birthday, he shall be
vested in the percentage of his Employer Contribution Account set
forth in the following table:
-24-
Completed Years
of Service Vested Percentage
--------------- -----------------
less than 1 0%
1 20%
2 30%
3 40%
4 60%
5 80%
6 or more 100%
(b) The portion of the Participant's Employer Contribution
Account in which he is not vested at his termination of
employment shall be declared a Forfeiture on the last day of
the Plan Year in which his termination of employment occurred.
The Forfeiture shall be taken from the investment funds in
which his Account was invested pro rata to the value of his
Account's interest in the investment funds. Such Forfeiture
shall be reallocated among the remaining Participants
employed by the Employer who employed the former Employee
as described above.
(c) If a Participant returns to the employ of an Employer and
rejoins the Plan before he incurs five (5) consecutive One-Year
Breaks in Service, the portion of his Employer Contribution
Account that had been forfeited shall be reinstated to his
Employer Contribution Account in full, unadjusted by any
gains or losses occurring subsequent to the Valuation Date
preceding his termination of employment, by using the
Forfeitures for the Plan Year in which his reemployment
occurred. If the Forfeitures are insufficient to restore the
forfeited amount in the year of reemployment, the remainder
shall be restored by the earnings of the Trust Fund. If the
earnings of the Trust Fund are insufficient to restore the
forfeited amount in the year of reemployment, the remainder
shall be restored by an Employer contribution. If a Participant
who is reemployed shall again incur a termination of
employment or a withdrawal from Plan participation under
circumstances in which he is not fully vested in his Employer
Contribution Account, the portion of his Employer
Contribution Account in which he is vested shall be
determined by adding to the amount actually held by the
Trustee any amount previously distributed to him, the vested
percentage shall be applied to this total, the amount of the
previous distribution shall be subtracted, and the remaining
amount shall be his vested balance. The non-vested
percentage of a Participant's Employer Contribution Account
shall not share in the earnings or losses of the Trust Fund
during his absence from the Employer.
-25-
5.04 EFFECT OF ONE YEAR BREAK IN SERVICE
If a Participant or Employee incurs a One-Year Break in Service and
is thereafter reemployed by an Employer, he shall regain his Years of
Service earned before such One-Year Break in Service upon such
reemployment and rejoining the Plan.
If a vested or partially-vested Participant or Employee incurs a
One-Year Break in Service and is thereafter reemployed by an
Employer, he shall regain his Years of Service earned before such
One-Year Break in Service upon reemployment with an Employer
and rejoining the Plan.
ARTICLE VI.
Time and Method of Payment
6.01 EVENTS AND MANNER OF PAYMENT
A Participant shall be entitled to receive payment of his benefits
upon his retirement, Total and Permanent Disability or termination of
employment for any other reason. A Participant's Beneficiary shall
be entitled to receive payment of the Participant's benefits upon the
death of the Participant.
Whenever the Plan Administrator shall direct the Trustee to make
payment to a Participant or his Beneficiary, the Plan Administrator
shall direct the Trustee to pay the vested value of the Participant's
Account Balance (determined as of the Valuation Date coincident
with or next following the Participant's termination of employment)
to or for the benefit of the Participant or his Beneficiary as a lump
sum, in cash.
If the distribution is due to the death of the Participant, the
distribution shall be made to the Participant's Beneficiary only if
the Participant was unmarried at death or if the Participant and his
spouse both elected to have the benefit paid to a Beneficiary,
subject to Section 6.04.
Payment to a five percent (5%) owner of an Employer (as described
in Section 416(i) of the Code) shall be made or commenced no later
than the April 1 following the calendar year in which he attains age
seventy and one half (70-1/2), whether or not he has retired.
Effective January 1, 1989, this rule shall apply to all Participants.
-26-
Payment shall be made or commenced as soon as administratively
practical after the close of the Plan Year in which the employment of
the Participant terminates, unless (a) the Participant, or his spouse
in the event of his death, agrees to a later date, but not later than
the April 1 following the calendar year in which he attains or would
have attained age seventy and one half (70-1/2), and (b) the
Company consents to such later date.
6.02 DISTRIBUTION OF UNALLOCATED EMPLOYEE CONTRIBUTIONS
If on the date of termination of a Participant's employment, the
Company shall be holding contributions made by or on behalf of the
Participant but not yet allocated to his Accounts, the Company shall
pay such amounts either directly to the Participant (or his
Beneficiary, as the case may be) or to the Trustee, to be distributed
by the Trustee in accordance with Section 6.01.
6.03 CERTAIN RETROACTIVE PAYMENTS
If the amount of the payment required to commence on the date
determined under Section 6.01 cannot be ascertained by such date, a
payment retroactive to such date may be made no later than sixty
(60) days after the earliest date on which the amount of such
payment can be ascertained under the Plan.
6.04 BENEFICIARY
(a) If a Participant is married on the date of his death, the
Beneficiary of such Participant shall be his spouse, unless the
Participant's spouse consents in writing not to be said
Beneficiary and such written consent is witnessed either by
the Plan Administrator or by a notary public. Notwithstanding
the foregoing, this paragraph (a) shall not apply if it is
established to the Plan Administrator's satisfaction either that
the spouse cannot be located or that other circumstances set
forth in regulations promulgated under Section 417 of the Code
which preclude the necessity of the spouse's consent are
present with respect to the Participant.
(b) Except as otherwise provided in paragraph (a), each Participant
shall have the right to designate, by giving a written
designation to the Plan Administrator, a Beneficiary to receive
any death benefit which may become payable upon the death
of such Participant. Successive designations may be made, and
the last designation received by the Plan Administrator prior to
the death
-27-
of the Participant shall be effective and shall revoke
all prior designations. If a designated Beneficiary shall die
before the Participant, his interest shall terminate, and, unless
otherwise provided in the Participant's designation, such
interest shall be paid in equal shares to those Beneficiaries, if
any, who survive the Participant. Except as otherwise
provided in paragraph (a), the Participant shall have the right
to revoke the designation of any Beneficiary without the
consent of the Beneficiary.
(c) If a Participant shall fail to designate a Beneficiary, if such
designation shall for any reason be illegal or ineffective, or if
no Beneficiary shall survive the Participant, his death benefits
shall be paid:
(i) to his surviving spouse;
(ii) if there is no surviving spouse, to his descendants
(including legally adopted children and their
descendants) PER STIRPES; or
(iii) if there is neither a surviving spouse nor surviving
descendants, to the executor or other personal
representative of the Participant to be distributed in
accordance with the Participant's will or applicable
law.
(d) The Plan Administrator may determine the identity of the
distributees and in so doing may act and rely upon any
information it may deem reliable upon reasonable inquiry, and
upon any affidavit, certificate or other paper believed by it to
be genuine, and upon any evidence believed by it to be
sufficient.
6.05 ADMINISTRATIVE POWERS RELATING TO PAYMENTS
If a Participant or Beneficiary is a minor or is under a legal
disability or, by reason of illness or mental or physical disability,
is unable, in the opinion of the Plan Administrator, to attend
properly to his personal financial matters, the Trustee may make such
payments in such of the following ways as the Plan Administrator shall
direct:
(a) directly to such Participant or Beneficiary;
(b) to the legal representative of such Participant or Beneficiary;
or
(c) to some relative by blood or marriage, or friend, for the benefit
of such Participant or Beneficiary.
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Any payment made pursuant to this Section 6.05 shall be in complete
discharge of the obligation for such payment under the Plan.
6.06 BENEFITS OF PERSONS WHO CANNOT BE LOCATED
If the Plan Administrator notifies a Participant or Beneficiary in
writing at his last known address that he is entitled to benefits
under the Plan and the Participant or Beneficiary fails to claim his
benefits within five (5) calendar years after notification, his
benefits shall be distributed to the person or persons who would have
been entitled to the benefits in the event of the death of the
Participant or Beneficiary whose whereabouts is unknown, assuming that
such death had occurred on the distribution date following the fifth
anniversary of the mailing of the notification.
6.07 ELECTION OF PRE-TEFRA DISTRIBUTION
Anything to the contrary notwithstanding, if any Participant has
delivered to the Plan Administrator, on or before December 31, 1983,
an election as to the form in which his benefits are to be
distributed, which election is qualified under Section 242(b)(2) of
TEFRA, and if such election has not been revoked, the distribution of
his benefits shall be made in accordance with the express terms of
such election.
6.08 RESTRICTIONS ON RECEIPT OF TRANSFER
This Plan shall not accept any involuntary trustee-to-trustee
transfers but may accept rollovers (including direct rollovers) from a
plan which is subject to the minimum funding standards of Section 412
of the Internal Revenue Code.
6.09 DISTRIBUTION UPON SALE OF IMECO, INC.
This Section is effective June 30, 1993. Upon the sale by the
Company of its wholly owned subsidiary, Imeco, Inc., pursuant to
that certain Stock Purchase Agreement, by and between the
Company and York International, Inc., dated ____________, 1993
(the "Stock Purchase Agreement"), each Participant employed by
Imeco, Inc. on the day of the transfer of the Imeco stock pursuant to
the Stock Purchase Agreement shall have a fully vested,
nonforfeitable interest in his Employer Contribution Account. The
Plan Administrator shall direct the Trustee to transfer the Account
Balances of the Participants described in this Section 6.09 to the
York International, Inc. Plan if the Plan Administrator determines
that all the requirements of Section 414 of the Internal Revenue
Code, relating to transfer of plan assets, have been fulfilled.
-29-
6.10 TRANSFER TO OTHER PLAN
This Section is effective June 30, 1993. The Trustee, upon written
direction by the Employer, shall transfer some or all of the assets
held under the Trust to another plan or trust designated by the
Employer meeting the requirements of the Code relating to qualified
plans and trusts, whether such transfer is made pursuant to a merger
or consolidation of this plan with such other plan or trust or for any
other allowable purpose.
6.11 CERTAIN DISTRIBUTIONS
Distributions under this Plan shall generally be made only to the
person who is entitled to the same. However, distributions made in
the circumstances described below shall constitute the discharge of
the Trustree's and Plan Administrator's obligations hereunder.
(a) Pursuant to Section 6.12 below, the Plan Administrator may, at
the request of a Distributee, direct the Trustee to transfer all
or part of such distribution to the trustee or custodian of any
tax qualified plan or individual retirement arrangement,
provided, however, that the Distributee must satisfy the Plan
Administrator that such transfer can be made tax-free.
(b) Distributions to minors or persons under legal disability may be
made in the discretion of the Trustee: (i) directly to such
persons; (ii) to the guardian of such persons; or (iii) by
expending such amounts for the education and/or maintenance of
said persons.
6.12 ROLLOVER DISTRIBUTIONS
Effective January 1, 1993, notwithstanding any provision of the Plan
to the contrary that would otherwise limit a Distributee's election
under this part, a Distributee may elect, at the time and in the
manner prescribed by the Plan Administrator, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible Retirement
Plan specified by the Distributee in a Direct Rollover.
For the purposes of this Section 6.12, the following definitions
apply:
(a) An "Eligible Rollover Distribution" is any distribution of all or
any part 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
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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 Internal
Revenue 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 spouse or former spouse who is the
Alternative Payee under a Qualified Domestic Relations Order,
as defined in section 414(p) of the Code, is a Distributee 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.
6.13 QUALIFIED DOMESTIC RELATIONS ORDER DISTRIBUTION
Notwithstanding any other restriction upon the time when benefits
are to be paid herein, the Plan Administrator may make a lump sum
payment to any Alternate Payee under a Qualified Domestic
Relations Order, as soon as administratively possible after the
receipt and verification of such Order.
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ARTICLE VII.
Management of Funds
7.01 APPOINTMENT OF TRUSTEE
A Trustee shall be appointed by the Company to administer the
Trust Fund. The Trustee shall serve at the pleasure of the
Company, and shall have the rights, powers and duties set forth in
the Trust Agreement. All assets of the Trust Fund shall be held,
invested and reinvested by the Trustee.
7.02 ASSETS OF TRUST
All contributions under this Plan shall be paid to the Trustee and,
except as provided in Section 7.03, all assets of the Trust Fund,
including income from investments and from all other sources, shall
be retained for the exclusive benefit of Participants, spouses, former
Participants and Beneficiaries, and shall be used to pay benefits to
such persons, or to pay expenses of administration of the Plan and
Trust to the extent not paid by the Company.
7.03 REVERSION OF EMPLOYER CONTRIBUTIONS
At no time shall any part of the corpus or income of the Trust Fund
be used for or diverted to purposes other than for the exclusive
benefit of Participants and their Beneficiaries.
Notwithstanding the above, in the case of a contribution which is
made by the Employer by a mistake of fact, such contribution may
be returned to such Employer within one (1) year after the payment
of the contribution to the Trust Fund. If a contribution is
conditioned on qualification of the Plan under Section 401 of the
Code, and if the Plan does not qualify, then such contribution may
be returned to such Employer within one (1) year after the date of
denial of qualification of the Plan. If a contribution is conditioned
upon the deductibility of the contribution under Section 404 of the
Code, then, to the extent the deduction is disallowed, such a
contribution may be returned to such Employer within one (1) year
after the disallowance of the deduction.
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ARTICLE VIII.
Administration of Plan
8.01 PLAN ADMINISTRATOR
The Company may appoint a Plan Administrator who shall serve at
the pleasure of the Board. The Plan Administrator shall have the
powers and duties of a plan administrator under ERISA and the
Code, except such powers and duties as may be delegated to the
Trustee or other fiduciaries.
8.02 RIGHTS, POWERS AND DUTIES OF PLAN ADMINISTRATOR
The Plan Administrator shall have such authority as may be
necessary to discharge its responsibilities under the Plan,
including the following rights, powers and duties:
(a) The Plan Administrator shall adopt rules governing its
procedures not inconsistent herewith, and shall keep a
permanent record of its meetings and actions. The Plan
Administrator shall maintain the Accounts of Participants and
Beneficiaries under the Plan or shall cause them to be
maintained under its direction.
(b) The Plan Administrator shall direct the Limited Co-Trustee in
writing to make payments from the Trust Fund to persons
who qualify for such payments hereunder. Such written order
shall specify the name of the person, his address, and the
amount and frequency of such payments. The Plan Administrator
shall be entitled to rely upon a certificate of the Company as to
the service, age, earnings or other pertinent information
regarding a Participant.
(c) The Plan Administrator shall not take action or direct the
Trustee to take any action with respect to any of the benefits
provided hereunder which would be discriminatory in favor of
those Participants or eligible Employees who are officers,
shareholders or highly compensated Employees of an
Employer.
(d) The Plan Administrator shall have the sole responsibility for
the administration of the Plan; and, except as herein expressly
provided, the Plan Administrator shall have the exclusive right
to interpret the provisions of the Plan and to determine any
question arising hereunder or in connection with the
administration of the Plan, including the remedying of any
omission, inconsistency or ambiguity, and its decision or
action in
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respect thereof shall be conclusive and binding upon any and all
Participants, spouses, former Participants, Beneficiaries, heirs,
distributees, executors, administrators and assigns, subject to
the provisions of Article IX.
(e) The Plan Administrator may employ such counsel and agents
in such clerical, medical, accounting and other services as it
may require in carrying out the provisions of the Plan, and to
rely upon any opinions or reports furnished by them.
(f) Participants, spouses, former Participants, or their
Beneficiaries shall be notified by the Plan Administrator of
their right to receive benefits. The Plan Administrator shall
establish a uniform procedure for such notification.
(g) The Plan Administrator shall finally and conclusively decide all
questions, problems, and controversies relating to the
eligibility of Employees, the determination of Years of Service,
Hours of Service and One-Year Breaks in Service. The Plan
Administrator shall keep application and authorization forms of
all Participants and all communications involving the same,
make information available to Participants regarding benefit
payment options, and direct the Trustee regarding payment of
benefits.
(h) The Plan Administrator shall establish reasonable procedures
which a Participant must follow in verifying his absence for
reason of maternity or paternity leave and the length thereof.
8.03 EXERCISE OF PLAN ADMINISTRATOR'S DUTIES
The Plan Administrator shall discharge its duties solely in the
interest of Participants, former Participants and their Beneficiaries:
(a) for the exclusive purposes of providing benefits to such
Participants, former Participants and Beneficiaries and, in the
discretion of the Company, defraying reasonable expenses of
Plan administration, and
(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.
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8.04 INDEMNIFICATION OF FIDUCIARIES
Each Employer shall indemnify all officers and Employees of such
Employer assigned fiduciary responsibility under Federal law to the
extent that such officers or Employees incur loss or damage which
may result from such officers' or Employees' duties, exercise of
discretion under the Plan, or any other act or omission hereunder.
Such duties, exercises of discretion, acts or omissions will not be
indemnified by an Employer in the event that such loss or damage is
judicially determined or agreed by the involved officers or
Employees to be due to their respective gross negligence or willful
misconduct.
8.05 COMPENSATION
Any individual acting as agent of the Plan Administrator shall serve
without compensation for services as such, but all proper expenses
incurred by the individual incident to the functioning of the Plan
shall be paid from the Trust to the extent not paid by the Company.
8.06 BOND
No bond or other security shall be required of the Plan
Administrator for the faithful performance of its duties, except as
may be required by ERISA, the Code or by any other state or Federal
law or regulation.
ARTICLE IX.
Claims Procedures
9.01 INFORMAL REVIEW
A Participant or former Participant shall request the payment of his
benefits under the Plan by completing the appropriate forms upon
his termination of employment for any reason and returning them to
the Plan Administrator. In the event that such Participant's
employment terminates by reason of death, such request shall be
made by his Beneficiary.
Any Participant, former Participant or Beneficiary of either, who
wishes to request an informal review of a claim for benefits or who
wishes an explanation of a benefit or its denial may direct to the
Plan Administrator a written request for an informal review. The Plan
Administrator shall respond to the request by issuing a notice to the
claimant as soon as possible but in no event later than sixty (60)
days
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from the date of the request. This notice furnished by the Plan
Administrator shall be written in a manner calculated to be
understood by the claimant and shall include the following:
(a) The specific reason or reasons for any denial of benefits;
(b) The specific Plan provisions on which any denial is based;
(c) A description of any further material or information which is
necessary for the claimant to perfect his claim and an
explanation of why the material or information is needed; and
(d) An explanation of the Plan's formal claim review procedure.
If the claimant does not respond to the notice, posted by first class
mail to the address of record of the Plan Administrator, within one
hundred and twenty (120) days from the posting of the notice, the
claimant shall be considered satisfied in all respects. If the Plan
Administrator fails to respond to the claimant's written request for
an informal review, the claimant shall be entitled to proceed to the
formal claim review procedure described in Section 9.02. All
decisions by the Plan Administrator are subject to Section 9.02,
final, conclusive and binding with respect to all parties.
9.02 FORMAL REVIEW
In the event that the notice concerning the informal review is
insufficient to satisfy the claimant, the claimant or his duly
authorized representative shall submit to the Plan Administrator
within one hundred and twenty (120) days of the mailing date of the
notice, a written notification of appeal of the claim denial.
The notification of appeal of the claim denial shall permit the
claimant or his duly authorized representative to utilize the
following formal claim review procedures:
(a) to review pertinent documents; and
(b) to submit issues and comments in writing to which the Plan
Administrator shall respond.
The Plan Administrator shall furnish a written decision on formal
review not later than sixty (60) days after receipt of the
notification of appeal, unless special circumstances require an
extension of the time for processing the appeal. In no event, however,
shall the Plan Administrator respond later than one hundred and twenty
(120) days
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after a request for a formal review. The decision on formal
review shall be in writing and shall include specific reasons for the
decision, and shall be written in a manner calculated to be
understood by the claimant and contain specific reference to the
pertinent Plan provisions on which the decision is based.
ARTICLE X.
AMENDMENT AND TERMINATION
10.01 TERMINATION
(a) It is the expectation of the Company that it shall continue this
Plan and the payment of contributions hereunder indefinitely,
but the continuation of the Plan is not assumed as a
contractual obligation of the Company; and the right is
reserved by the Company and each Employer at any time to
permanently discontinue its contributions hereunder. In the
event that the Plan is terminated in whole or in part or if
contributions by the Company or an Employer are completely
discontinued, the interest of all affected Participants shall be
fully vested and nonforfeitable.
(b) This Plan may be terminated by the Company, by action of its
board of directors, at any time. Such termination shall becomes
effective upon written notice to the Trustee. An Employer, by
actions of its board of directors, may terminate the Plan as to
its Employees, at any time, with the consent of the Company.
(c) Upon termination of the Plan, further payment of the Company
contributions to the Trust shall cease. The Trustee shall notify
each Participant of the termination of the Plan.
Each Participant who terminates employment at the time of Plan
termination shall be entitled to receive the entire amount of his
Account balances and the Trustee shall make payment to
each Participant of such amount in cash or in assets of the
Trust Fund, as the Trustee shall determine. If, on termination
of the Plan, a Participant remains an Employee of the
Company, the amount of his benefits shall be retained in the
Trust until after his termination of employment and shall be
paid in accordance with Section 6.01.
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(d) If any Employer other than the Company terminates its
participation in the Plan or completely discontinues its
contribution, the amounts credited to the Participants' Ac
counts of such Employer shall be fully vested and
nonforfeitable, and with respect to each such Participant who
immediately thereafter is employed by another Employer not
terminating its participation or discontinuing its
contributions, the Plan Administrator shall transfer such
amounts to an Account in the Employee's name with such
other Employer. Such Account shall be fully vested and
nonforfeitable.
10.02 RIGHT TO AMEND, MODIFY, CHANGE OR REVISE PLAN
The Company, by action of its board of directors, may at any time and
from time to time amend, modify, change or revise this Plan in whole
or in part, by notice thereof in writing delivered to the Trustee;
provided, however:
(a) That no amendment shall have the effect of vesting in the
Company any interest in or control of any funds, securities or
other property subject to the terms of the Trust;
(b) That no amendment shall authorize or permit at any time any
part of the corpus or income of the Trust Fund to be used or
diverted to purposes other than for the exclusive benefit of
Participants and their Beneficiaries, except as provided in
Section 7.03;
(c) That no amendment shall have any retroactive effect as to
deprive any Participant, former Participant or Beneficiary of
any benefit already accrued; save only that no amendment
made in conformance with the provisions of the Code or any
other statute relating to employees trusts, or of any official
regulation or rulings issues pursuant thereto, shall be
considered prejudicial to the rights of any Participant or
Beneficiary.
10.03 MERGER AND CONSOLIDATION OF PLAN; TRANSFER OF PLAN ASSETS
In the case of any merger or consolidation with, or transfer of assets
and liabilities to, any other plan, provisions shall be made so that
each Participant in the Plan on the date thereof would receive a
benefit immediately after the merger, consolidation or transfer which
is equal to or greater than the benefit he would have been entitled to
receive immediately prior to the merger, consolidation or transfer (if
the Plan had terminated).
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ARTICLE XI.
MISCELLANEOUS
11.01 NO CONTRACT OF EMPLOYMENT; EMPLOYER RECORDS FINAL
Nothing herein contained shall be construed to constitute a contract
of employment between any Employer and any Employee or create
or expand any benefit rights which are not the subject matter of this
Plan. The employment records of an Employer and the
Trustee's records shall be final and binding upon all
Employees as to their rights and participation.
11.02 RESTRICTIONS UPON ASSIGNMENTS AND CREDITOR'S CLAIMS
Except as otherwise provided in the Plan, no Participant,
his estate or any Beneficiary shall have any power to
assign, pledge, encumber or transfer any interest in the
Trust Fund while the same shall be in the possession of the
Trustee. Any such attempt at alienation shall be void. No
such interest shall be subject to attachment, garnishment,
execution, levy or any other legal or equitable proceeding
or process and any attempt to so subject such interest
shall be void. The preceding sentences shall also apply to the
creation, assignment or recognition of a right to any benefit payable
with respect to a Participant pursuant to a domestic relations order,
unless such order is determined to be a Qualified Domestic Relations
Order. The Plan Administrator shall establish reasonable
procedures to determine whether a domestic relations order is a
Qualified Domestic Relations Order. Such procedures must be in
writing, must provide for the prompt notification of each person
specified in the order as being entitled to payment of benefitsunder
the Plan, and must permit an alternate payee to designate a
representative for receipt of copies of notices that are sent to the
alternate payee with respect to a domestic relations order.
11.03 RESTRICTION OF CLAIMS AGAINST TRUST
The Trust under this Plan and agreement from its inception shall be
a separate entity aside and apart from the Employers and their
assets. The Trust and the corpus and income thereof shall in no
event and in no manner whatsoever be subject to the rights or
claims of any creditor of any Employer. Neither the establishment of
the Trust, the modification thereof, the creation of any fund or
account, nor the
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payment of any benefits shall be construed as giving any Participant
or any other person whomsoever any legal or equitable rights against
an Employer or the Trustee unless the same shall be specifically
provided for in this Plan.
11.04 BENEFITS PAYABLE BY TRUST
All benefits payable under the Plan shall be paid or provided for
solely from the Trust and the Employers assume no liability or
responsibility therefor.
11.05 SUCCESSOR TO EMPLOYER
In the event that any successor corporation to the Company, by
merger, consolidation, purchase or otherwise, shall elect to adopt
the Plan, such successor corporation shall be substituted hereunder
for the Company upon filing in writing with the Trustees of its
election to do so.
11.06 APPLICABLE LAW
The Plan shall be construed and administered in accordance with
ERISA and with the laws of Illinois, to the extent that such laws are
not preempted by ERISA.
ARTICLE XII.
TOP-HEAVY PROVISIONS
12.01 GENERAL
Notwithstanding anything herein to the contrary, the following
provisions shall apply with respect to any Plan Year in which the
Plan is deemed to be Top-Heavy.
12.02 DEFINITIONS
TOP-HEAVY
The Plan is deemed to be Top-Heavy for any Plan Year if, as of the
Determination Date for such Plan Year, any of the following
conditions exist:
(a) If the Top-Heavy Ratio for the Plan exceeds sixty percent
(60%) and the Plan is not part of a Required Aggregation
Group of plans or a Permissive Aggregation Group of plans;
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(b) If the Plan is part of a Required Aggregation Group of plans
(but is not part of a Permissive Aggregation Group of plans) and
the Top-Heavy Ratio for the group of plans exceeds sixty percent
(60%); or
(c) If the Plan is part of a Required Aggregation Group of plans
and part of a Permissive Aggregation Group of plans and the
Top-Heavy Ratio for the Permissive Aggregation Group of
plans exceeds sixty percent (60%).
DETERMINATION DATE means, with respect to any Plan Year, the
last calendar day of the immediately preceding Plan Year.
KEY EMPLOYEE means any Employee or former Employee (or any
Beneficiary of such Employee) who, at any time during the Plan Year
or any of the four immediately preceding Plan Years, is or was:
(a) an officer of any Employer whose compensation exceeds fifty
percent (50%) of the dollar limitation in effect under Section
415(b)(1)(A) of the Code for such Plan Year;
(b) a shareholder who owns one of the ten largest interests in an
Employer which interest is at least 1/2% if such shareholder's
Compensation exceeds the dollar limitation in effect under
Section 415((c)(1)(A) of the Code;
(c) a shareholder who owns more than five percent (5%) of the
stock of an Employer; or
(d) a shareholder who owns more than one percent (1%) of the
stock of an Employer and whose Compensation for any Plan
Year in which he owns such percentage share exceeds
$150,000.
An officer is defined as the actual officer group of an Employer;
provided, however, that not more than the greater of three (3)
Employees or ten percent (10%) of the Employees (but in no event
more than 50 Employees) shall be considered as officers in
determining whether the Plan is Top-Heavy).
NON-KEY EMPLOYEE means any Employee who is not a Key
Employee.
PERMISSIVE AGGREGATION GROUP means the Required
Aggregation Group of plans plus any other plan or plans of an
Employer which, when considered as a group with the Required
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Aggregation Group, would continue to satisfy the requirements of
Sections 401(a)(4) and 410 of the Code.
REQUIRED AGGREGATION GROUP means the group of:
(a) Each qualified plan of an Employer in which at least one Key
Employee participates; and
(b) Any other qualified plan of an Employer which enables a plan
described in paragraph (a) above to meet the requirements of
Section 401(a)(4) or Section 410 of the Code.
TOP-HEAVY RATIO
(a) If an Employer maintains one or more defined contribution
plans and the Employer has not maintained any defined benefit
plan which during the five (5) Plan Year period ending on the
Determination Date has covered or could cover a Participant in
this Plan, the Top-Heavy Ratio shall be a fraction, the
numerator of which is the sum of the Account Balances of all
Key Employees as of the Determination Date (including any
part of any Account Balance distributed in the five (5) Plan
Year period ending on the Determination Date), and the
denominator of which is the sum of all Account Balances
(including any part of any Account Balance distributed in the
five (5) Plan Year period ending on the Determination Date) of
all Participants as of the Determination Date, both computed in
accordance with Section 416 of the Code. The numerator and
denominator of the Top-Heavy Ratio shall be adjusted to
reflect any contribution which is required to be taken into
account but unpaid as of the Determination Date.
(b) If an Employer maintains one or more defined contribution
plans and the Employer maintains or has maintained one or
more defined benefit plans which during the five (5) Plan Year
period ending on the Determination Date have covered or
could cover a Participant in this Plan, the Top-Heavy Ratio
shall be a fraction, the numerator of which is the sum of
Account Balances under the defined contribution plans for all
Key Employees and the present value of accrued benefits
under the defined benefit plans for all Key Employees, and the
denominator of which is the sum of the Account Balances
under the defined contribution plans for all Participants and
the present value of accrued benefits under the defined benefit
plans for all Participants, determined in accordance with
Section 416 of the Code. The numerator and denominator of
the Top-Heavy Ratio shall be adjusted for any
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distribution of an Account Balance or an accrued benefit made in
the five (5) Plan Year period ending on the Determination Date
and any contribution required to be taken into account but unpaid
as of the Determination Date.
(c) For purposes of paragraphs (a) and (b) above, the value of the
Account Balances and the present value of the accrued
benefits shall be determined as of the most recent
Determination Date. The Account Balances and accrued
benefits of a Participant who (1) is not a Key Employee but
who was a Key Employee in a prior Plan Year, or (2) has not
performed services for an Employer under the Plan at any time
during the five (5) Plan Year period ending on the
Determination Date, shall be disregarded. The calculation of
the Top-Heavy Ratio, and the extent to which distributions,
rollovers and transfers are taken into account, shall be made in
accordance with Section 416 of the Code. When aggregating
plans, the value of Account Balances and accrued benefits
shall be calculated with reference to the Determination Dates
that all within the same calendar year.
12.03 MAXIMUM ANNUAL COMPENSATION
In any Plan Year that the Plan is Top-Heavy, the maximum annual
Compensation which shall be taken into account under this Plan
shall be limited to $200,000, or such other amount as may be
provided from time to time under cost of living or other adjustments
issued by the Secretary of the Treasury pursuant to Section 416 of
the Code. Effective January 1, 1989, that limitation shall apply
regardless of whether the Plan is Top-Heavy. Effective January 1,
1994, this amount is limited to $150,000, or such other amount as may
be provided from time to time under cost of living or other
adjustments issued by the Secretary of the Treasury pursuant to
Section 401(a)(17) of the Code.
12.04 MINIMUM ALLOCATION REQUIREMENTS
In any Plan Year that the Plan is Top-Heavy, the Employer
contribution for each Participant who is a Non-Key Employee shall
not be less than three percent (3%) of such Non-Key Employee's
Compensation; subject, however, to the following special rules:
(a) If the Employer maintains more than one defined contribution
plan, the minimum required contribution under all defined
contribution plans combined for Non-Key Employees shall be
three percent (3%).
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(b) The percent shall be reduced to less than three percent (3%) in
any year in which the highest percentage contribution for a
Key Employee is less than three percent (3%). In any Plan
Year in which the highest percentage contribution for a Key
Employee is less than three percent (3%), the contribution for
Non-Key Employees shall be equal to the highest percentage
contribution for Key Employees.
(c) If the Employer also maintains a defined benefit plan, the
Employer generally will not be required to both contribute a
minimum contribution under this Plan and to provide a
minimum benefit under the defined benefit plan for Non-Key
Employees; subject, however, to the requirements of such
regulations as are issued by the Secretary of the Treasury
pursuant to Section 416 of the Code.
Employees eligible to participate in the Plan who do not
participate because they do not make the contributions
required by Section 3.03 and Participants who do not complete at
least one thousand (1,000) Hours of Service in the Plan Year
shall also receive the above minimum allocation.
12.05 MISCELLANEOUS
(a) In any Plan Year in which the Plan is deemed to be Top-Heavy
and in which an Employer maintains both a defined
contribution plan and a defined benefit plan, the number 1.25
shall be replaced by the number 1.0 for the purpose of
determining the limitations imposed by Section 415 of the Code
to the extend required under Section 416(h) of the Code.
In any Plan Year in which the Plan is Top-Heavy but
the sum of the Key Employees' benefits from all
defined contribution and defined benefit plans does
not exceed ninety percent (90%) of the total for all
Participants, the number 1.25 shall not be replaced by
the number 1.0 for the purpose of determining the
limitations imposed by Section 415 of the Code if the
minimum required contribution for each Participant
who is a Non-Key Employee is not less than four
percent (4%) of such Non-Key Employee's
Compensation.
(b) Distribution made to an Employee in the five (5) Plan Year
period ending on any Determination Date shall be included in
calculating the value of the accrued benefit of an Employee.
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(c) Rollover Contributions or transfers from other non-Employer
sponsored plans after December 31, 1983, shall not be
considered part of an Employee's Accounts for purposes of
determining whether or not the Plan is Top-Heavy.
ARTICLE XIII.
STOCK CONTRIBUTION FUND
13.01 ESTABLISHMENT OF STOCK CONTRIBUTION FUND AND ALLOCATIONS
Shares contributed pursuant to Section 3.01 shall be held in a
separate investment fund called the "Stock Contribution Fund"
together with any cash contributed and earmarked for that Fund and
any income thereon. No Participant may direct that any other
contributions to the Plan or amounts held in any other investment
fund be credited or transferred to the Stock Contribution Fund; nor
may any Participant direct that any amounts to his credit in the
Stock Contribution Fund be transferred to another investment fund.
13.011 Within 60 days after each Valuation Date, the
Company shall deliver to the Trustee a certificate
stating the value of a Share as of the Valuation Date.
The Trustee shall determine fair market value of the
Stock Contribution Fund as of that Valuation Date on
the basis of such certificate. For purposes of
reporting Account balances to Participants and
Beneficiaries, the value of Shares rather than the
number of Shares allocated to a Participant's Account
may be shown.
13.012 As of each Valuation Date, the Plan Administrator
shall allocate the income of the Stock Contribution
Fund for that period in accordance with the following.
Any income of the Fund other than dividends
received on Shares shall be allocated among the
Accounts of all Participants a portion of whose
Accounts is in the Stock Contribution Fund on the
valuation date in proportion to the ratio that each said
Participant's interest in the Stock Contribution Fund
bears to the total of all such Participants, measured as
of the last preceding Valuation Date.
There shall be credited to the Account of each
Participant to which Shares have been allocated, any
Shares or other property distributed as a dividend
with respect to Shares
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previously allocated or credited to the Participant's
account.
13.02 DISTRIBUTIONS
The portion of a Participant's Account attributable to the Stock
Contribution Fund may be distributed only in cash and no
Participant or Beneficiary shall have the right to demand that Shares
be distributed. The Trustee shall use cash contributions earmarked
for the Stock Contribution Fund to make such distributions. To the
extent that any cash contributions are used to make distributions
they will be deemed to have been used to purchase Shares from the
Accounts of Participants and Beneficiaries entitled to the
distributions which Shares are then allocated to the Accounts of
Participants who retain an interest in the Stock Contribution Fund in
the manner provided for the allocation of Employer contributions
generally.
13.03 ACQUISITION OF SHARES AND PAYMENT OF EXPENSES
The Trustee shall invest the Stock Contribution Fund in Shares and
cash and cash equivalents pending investment in Shares. The
Trustee may purchase Shares from any person or entity, in its
individual or other capacity, including the Company. The
administrative expenses of the Stock Contribution Fund including
brokerage commissions, transfer taxes and other charges and
expenses not paid by an Employer shall be borne by that Fund. The
Trustee may use cash contributions earmarked for the Stock
Contribution Fund to defray administrative expenses of that Fund.
13.04 VOTING OF SHARES
The Trustee shall, except as specifically provided below, have the
right to vote the Shares held by The Stock Contribution Fund on
each matter brought before an annual or special stockholders'
meeting of the Company. Each Participant (or, in the event of his
death, his Beneficiary) shall have the right, to the extent of Shares
allocated to his account, to direct the Trustee in writing as to the
manner in which to respond to a tender or exchange offer with
respect to Shares, and the Trustee shall respond in accordance with
the instructions so receive. The Plan Administrator shall utilize its
best efforts to timely distribute or cause to be distributed to each
participant (or Beneficiary) copies of all materials distributed to
stockholders of the Company in connection with any such tender or
exchange offer, together with a form requesting confidential
instructions on whether or not such Shares will be tendered or
exchanged. Such instructions shall be forwarded by Participants
and
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Beneficiaries to the outside firm of certified public accountants
regularly used by the Company, and the accounting firm shall inform
the Trustee only of the aggregate number of Shares to be tendered
or exchanged. If the accounting firm shall not receive timely
direction from a Participant (or Beneficiary) has the right of
direction, shall be tendered or exchanged. The instructions received
by the accounting firm from Participants and Beneficiaries shall be
held in confidence and shall not be divulged or released to any
person, including officers or employees of the Company or any
Affiliate.
13.05 SALES OF SHARES AND COMPANY'S RIGHTS OF FIRST REFUSAL
Subject to the rules provided above with respect to responding to a
tender or exchange offer, the Trustee may sell or otherwise dispose
of the Shares held in the Stock Contribution Fund; however, such
Shares are subject to the prior rights to purchase by the Company
described below and the certificates representing such Shares shall
bear a legend stating that any person accepting the Shares
evidenced by such certificates agrees to be bound by such prior
rights to purchase unless the Company shall have forfeited such
rights in the manner described below.
If the Trustee intends to transfer Shares held in the Stock
Contribution Fund to any person other than the Company, he shall
give 60 days' written notice to the Company of his intention so to
transfer. The notice, in addition to stating the fact of the
intention to transfer Shares, shall state (i) the number of Shares to
be transferred, (ii) the name, business and residence address of the
proposed transferee, and (iii) the amount of the consideration and the
other terms of the sale.
Within 30 days of the Company's receipt of the notice of intent to
transfer, the Company may exercise an option to purchase all of the
Shares proposed to be transferred or forfeit its option.
The purchase price of Shares as to which an option granted to the
Company hereby is exercised shall be the fair market value of the
Shares on the date the written notice of exercise is received by the
Trustee; provided, that the purchase price shall not be less than the
price offered to the Trustee by the transferee named in the notice of
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intent to transfer if such offer represents a bona fide offer to
purchase. The purchase price shall be paid by the Company in cash
within a reasonable time from the date the written notice of exercise
is received by the Trustee.
ARTICLE XIV.
LOANS AND WITHDRAWALS
14.01 LOANS TO PARTICIPANTS
The Trustee may lend a Participant an amount that does not exceed
the lesser of:
$50,000; or
fifty percent (50%) of the Participant's nonforfeitable interest
in his Account Balance (but not less than $10,000) if he had
ceased to be a Participant on the date such loan was made.
All loans shall be of a minimum amount of $1,000 of such other
amount as prescribed in writing by the Plan Administrator. All loans
shall be made only at the request of the Participant and upon the
approval of the Plan Administrator, which shall follow a uniform,
nondiscriminatory policy in reviewing loan requests.
In addition to such rules and regulations as the Plan Administrator
may adopt, all loans shall comply with the following terms and
conditions:
(a) An application for a loan by a Participant shall be made in
writing to the Plan Administrator, whose action thereon shall
be final. The Plan Administrator shall specify the form of the
application and any supporting data required.
(b) The period of repayment for any loan shall be five (5) years
from the first day of the month following the date the loan is
processed. Any loan used to acquire a dwelling unit which will
be used as the principal residence of the Participant, does not
have to be repaid within five (5) years, but shall be paid in a
time agreed by the Plan Administrator and the Participant.
Loans shall be repayable in substantially equal installments
including interest payable monthly, beginning on the first day
of the month following the date the loan is approved. The
loan shall be considered an investment of such Participant's
Accounts, and the
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interest paid on the loan shall be credited to the Accounts of
the Participant. The amount of the outstanding loan shall not
share in the allocation of earnings of the Trust Fund. In the
event of retirement, Total and Permanent Disability, death or
termination of employment while any loan is outstanding, the
unpaid balance and any interest due shall immediately become due
and payable (which may be paid by check) and upon default shall
be charged against the amounts which are to be paid or set aside
for such Participant or Beneficiary.
(c) Each loan shall be permitted only to the extent necessary to
allow the Participant to purchase or make a major improvement
to his principal residence, to pay the post-secondary education
expense of a member of his household, to meet the cost of
unused medical expenses borne by the Participant or to meet
any other BONA FIDE financial emergency as determined by the
Plan Administrator.
(d) Each loan shall only be permitted to the extent the Participant
certifies or demonstrates to the satisfaction of the Plan
Administrator that the purpose described in paragraph (c)
above imposes an immediate and heavy financial need upon
the Participant.
(e) Each loan shall bear interest at a rate which is not less than
the current rate paid by three year Treasury notes as
of the date of the loan.
(f) Each loan shall be supported by collateral as determined by the
Company. A loan shall also be supported by the Participant's
promissory note including a pledge of interest as collateral for
the amount of the loan, including interest, payable to the order
of the Trustee. The promissory note shall require that the
unpaid principal and interest will (at the Plan Administrator's
option) become due and payable if a loan payment is not made
within thirty (30) days after the due date of any installment.
In the event of default, foreclosure on the note and attachment
of security will not occur until a distributable event occurs in
the Plan.
(g) If a Participant borrows amounts under more than one qualified
plan maintained by an Employer, all the plans are treated as
one plan for purposes of the borrowing restrictions outlined.
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(h) Subject to the preceding limitations, a Participant may elect the
percentage of the loan to be withdrawn from each of his vested
Accounts.
14.02 WITHDRAWAL OF ROLLOVER CONTRIBUTION ACCOUNT
A Participant (or Employee if not a Participant) may elect in writing
to withdraw part or all of the value of his Rollover Contrition
Account, subject to the requirements of Section 3.05. Such
withdrawal shall be subject to the rules and procedures established
by the Plan Administrator.
14.03 WITHDRAWAL OF AFTER-TAX SAVINGS CONTRIBUTIONS
A Participant may elect in writing to withdraw any whole percentage,
up to one hundred percent (100%), of the value of his After-Tax
Savings Contributions at any time after two (2) years of Plan
participation, subject to the following conditions:
(a) Any request for a withdrawal must be submitted at least thirty
(30) days prior to the effective date of the withdrawal and must
be in a form approved by the Company.
(b) Such a withdrawal shall be permitted only to the extent
necessary to allow the Participant to purchase or make a major
improvement in his principal residence, to pay the post-secondary
education expense of a member of his household, to
meet the cost of unusual medical expenses borne by the
Participant or to meet any other BONA FIDE financial emergency
as determined by the Plan Administrator. The Plan
Administrator shall administer this Article XI in accordance
with the applicable Treasury Regulations as in effect from time
to time.
(c) Such a withdrawal shall only be permitted to the extent the
Participant certifies or demonstrates to the satisfaction of the
Plan Administrator that the purpose described in paragraph (b)
imposes an immediate and heavy financial need upon the
Participant.
(d) The minimum withdrawal shall be $500.
(e) A withdrawal may be made twice a year, on January 1st or July
1st.
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14.10 WITHDRAWAL OF PRE TAX SAVINGS CONTRIBUTIONS
If the value of a Participant's Rollover Contribution Account and
After-Tax Savings Contribution Account is not sufficient to meet
the financial needs of the Participant, a Participant may elect in
writing to withdraw his Pre-Tax Savings Contributions but not any
earnings thereon, in whole percentages up to one hundred percent
(100%), subject to the restrictions in Section 14.09 and applicable
regulations promulgated under Section 401(k) of the Code.
14.11 WITHDRAWAL OF EMPLOYER CONTRIBUTIONS
If the value of a Participant's Rollover Contribution Account,
After-Tax Savings Contribution Account, and Pre-Tax Savings
Contribution Account to the extent is not sufficient to meet the
financial needs of the Participant, a Participant may elect in
writing to withdraw vested Employer contributions, in whole
percentages up to one hundred percent (100%), subject to the
restrictions in Section 14.10.
IN WITNESS WHEREOF, the Company has caused this instrument
to be executed by its duly authorized officers on December 30, 1994, and
effective as provided herein.
CONTINENTAL MATERIALS CORPORATION
By: /s/ Joseph J. Sum
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Its: Vice President
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Dated: December 30, 1994
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