20TH CENTURY INDUSTRIES
SAVINGS AND SECURITY PLAN
AMENDMENT AND RESTATEMENT
TABLE OF CONTENTS
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ARTICLE I GENERAL ....................................................... 1
1.1 Plan Name and Purpose ......................................... 1
1.2 Effective Date................................................. 1
ARTICLE II DEFINITIONS..................................................... 2
2.1 Accounts....................................................... 2
2.2 Affiliated Company............................................. 2
2.3 Beneficiary.................................................... 3
2.4 Board of Directors............................................. 3
2.5 Code........................................................... 3
2.6 Committee...................................................... 3
2.7 Company........................................................ 3
2.8 Company Stock.................................................. 3
2.9 Compensation................................................... 3
2.10 Compensation Deferral Contributions............................ 5
2.11 Deferral Limitation............................................ 5
2.12 Distributable Benefit.......................................... 6
2.13 Effective Date................................................. 6
2.14 Eligible Employee.............................................. 6
2.15 Employee....................................................... 6
2.16 Employment Commencement Date................................... 7
2.17 ERISA.......................................................... 7
2.18 Hardship....................................................... 7
2.19 Highly Compensated Employee.................................... 8
2.20 Hour of Service................................................ 10
2.21 Investment Fund................................................ 10
2.22 Investment Manager............................................. 11
2.23 Leave of Absence............................................... 11
2.24 Matching Contributions......................................... 11
2.25 Normal Retirement.............................................. 11
2.26 Normal Retirement Date......................................... 11
2.27 Participant.................................................... 11
2.28 Participant Voluntary Contributions............................ 11
2.29 Participation Commencement Date................................ 11
2.30 Participating Employer......................................... 11
2.31 Period of Service.............................................. 12
2.32 Period of Severance............................................ 13
2.33 Plan........................................................... 13
2.34 Plan Administrator............................................. 14
2.35 Plan Year...................................................... 14
2.36 Policy......................................................... 14
2.37 Policyholder................................................... 14
2.38 Postponed Retirement Date...................................... 14
2.39 Spouse ........................................................ 14
2.40 Total and Permanent Disability................................. 14
2.41 Trust and Trust Fund........................................... 14
2.42 Trust Agreement................................................ 15
2.43 Trustee ....................................................... 15
2.44 Valuation Date................................................. 15
2.45 Vested Interest ............................................... 15
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ARTICLE III ELIGIBILITY AND PARTICIPATION.................................. 16
3.1 Eligibility to Participate...................................... 16
3.2 Date of Commencement of Participation........................... 16
3.3 Termination of Participation.................................... 16
ARTICLE IV TRUST FUND...................................................... 17
4.1 Trust Fund...................................................... 17
4.2 Contributions to the Trust Fund................................. 17
4.3 Investments..................................................... 17
4.4 Company, Committee and Trustee Not Responsible for Adequacy
of Trust Fund................................................ 17
ARTICLE V EMPLOYEE CONTRIBUTIONS........................................... 18
5.1 Employee Compensation Deferral Agreement........................ 18
5.2 Participant Voluntary Contributions............................. 18
5.3 Changes in Compensation Deferral Agreement and Participant
Voluntary Contributions...................................... 19
5.4 Character of Amounts Contributed as Compensation Deferrals...... 19
5.5 Amount Subject to Deferral...................................... 19
5.6 Limitation on Compensation Deferral Contributions............... 19
5.7 Provisions for Return of Annual Compensation Deferral
Contributions in Excess of the Deferral Limitation........... 22
5.8 Provision for Return of Excess Deferrals by Highly Compensated
Employees.................................................... 23
5.9 Limitations on Participant Voluntary Contributions and Matching
Contributions................................................ 24
5.10 Provision for Disposition of Excess Participant Voluntary
Contributions or Matching Company Contributions on Behalf
of Highly Compensated Employees.............................. 26
5.11 Forfeiture of Matching Contributions Attributable to Excess
Deferrals or Contributions................................... 28
5.12 Participant Rollover/Transfer Contributions..................... 28
ARTICLE VI COMPANY CONTRIBUTIONS........................................... 30
6.1 Amount of Contributions......................................... 30
6.2 Insufficient Profits............................................ 30
6.3 Time of Contribution............................................ 31
6.4 Irrevocability.................................................. 31
ARTICLE VII PARTICIPANT ACCOUNTS AND ALLOCATIONS........................... 32
7.1 General......................................................... 32
7.2 Allocation of Participating Employer Contributions.............. 32
7.3 Investment Funds................................................ 32
7.4 Allocation of Contributions to Investment Funds................. 33
7.5 Treatment of Accounts Upon Termination of Employment............ 35
7.6 Accounting Procedures........................................... 35
ARTICLE VIII SPECIAL PROVISIONS CONCERNING COMPANY
STOCK EFFECTIVE AS OF JULY 1, 1993........................................ 36
8.1 Securities Transactions......................................... 36
8.2 Valuation of Company Securities................................. 36
8.3 Allocation of Stock Dividends and Splits........................ 36
8.4 Reinvestment of Dividends....................................... 37
8.5 Voting of Company Stock......................................... 37
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8.6 Certain Offers for Company Stock................................. 38
8.7 Confidentiality Procedures....................................... 40
8.8 Securities Law Limitation........................................ 40
ARTICLE IX VESTING; PAYMENT OF PLAN BENEFITS............................... 41
9.1 Vesting.......................................................... 41
9.2 Distribution Upon Retirement..................................... 41
9.3 Distribution Upon Death Prior to Commencement of Benefits........ 42
9.4 Distribution Upon Death After Commencement of Benefits........... 42
9.5 Distribution Upon Disability Prior to Retirement Date............ 43
9.6 Termination of Employment Prior to Normal Retirement Date........ 43
9.7 Forms and Methods of Distributions............................... 44
9.8 Election for Direct Rollover of Vested Interest to Eligible
Retirement Plan............................................... 45
9.9 Forfeitures/Repayment............................................ 47
9.10 Withdrawals...................................................... 47
9.11 Designation of Beneficiary....................................... 48
9.12 Facility of Payment.............................................. 50
9.13 Payee Consent.................................................... 50
9.14 Additional Documents............................................. 50
9.15 Loans............................................................ 51
ARTICLE X VALUATION OF ACCOUNTS............................................ 54
ARTICLE XI OPERATION AND ADMINISTRATION OF THE PLAN........................ 56
11.1 Plan Administration.............................................. 56
11.2 Committee Powers................................................. 56
11.3 Investment Manager............................................... 57
11.4 Periodic Review.................................................. 58
11.5 Committee Procedure.............................................. 58
11.6 Compensation of Committee........................................ 58
11.7 Resignation and Removal of Members............................... 59
11.8 Appointment of Successors........................................ 59
11.9 Records.......................................................... 59
11.10 Reliance Upon Documents and Opinions............................. 59
11.11 Requirement of Proof............................................. 60
11.12 Reliance on Committee Memorandum................................. 60
11.13 Multiple Fiduciary Capacity...................................... 60
11.14 Limitation on Liability.......................................... 60
11.15 Indemnification.................................................. 60
11.16 Bonding.......................................................... 61
11.17 Prohibition Against Certain Actions.............................. 61
11.18 Plan Expenses.................................................... 61
ARTICLE XII MERGER OF COMPANY; MERGER OF PLAN.............................. 62
12.1 Effect of Reorganization or Transfer of Assets................... 62
12.2 Merger Restriction............................................... 62
ARTICLE XIII PLAN TERMINATION AND DISCONTINUANCE OF
CONTRIBUTIONS............................................................. 63
13.1 Plan Termination................................................. 63
13.2 Discontinuance of Contributions.................................. 63
13.3 Rights Of Participants........................................... 64
13.4 Trustee's Duties on Termination.................................. 64
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13.5 Partial Termination.............................................. 64
13.6 Failure to Contribute............................................ 65
13.7 Distributions Upon Sale of Assets or Sale of Subsidiary.......... 65
ARTICLE XIV APPLICATION FOR BENEFITS....................................... 66
14.1 Application for Benefits......................................... 66
14.2 Action on Application............................................ 66
14.3 Appeals.......................................................... 66
ARTICLE XV LIMITATIONS ON CONTRIBUTIONS.................................... 68
15.1 General Rule..................................................... 68
15.2 Annual Additions................................................. 68
15.3 Other Defined Contribution Plans................................. 69
15.4 Combined Plan Limitation (Defined Benefit Plan).................. 69
15.5 Adjustments for Excess Annual Additions.......................... 70
15.6 Disposition of Excess Company Contribution Amounts............... 71
15.7 Affiliated Company............................................... 71
ARTICLE XVI RESTRICTION ON ALIENATION...................................... 72
16.1 General Restrictions Against Alienation.......................... 72
16.2 Nonconforming Distributions Under Court Order.................... 72
ARTICLE XVII PLAN AMENDMENTS............................................... 74
17.2 Retroactive Amendments........................................... 74
17.3 Amendment of Vesting Provisions.................................. 74
ARTICLE XVIII MISCELLANEOUS................................................ 75
18.1 No Enlargement of Employee Rights................................ 75
18.2 Mailing of Payments; Lapsed Benefits............................. 75
18.3 Addresses........................................................ 76
18.4 Notices and Communications....................................... 76
18.5 Reporting and Disclosure......................................... 76
18.6 Governing Law.................................................... 77
18.7 Interpretation................................................... 77
18.8 Withholding for Taxes............................................ 77
18.9 Limitation on Company; Committee and Trustee Liability........... 77
18.10 Successors and Assigns........................................... 77
18.11 Counterparts..................................................... 77
ARTICLE XIX TOP-HEAVY PLAN RULES........................................... 78
19.1 Applicability.................................................... 78
19.2 Definitions...................................................... 78
19.3 Top-Heavy Status................................................. 79
19.4 Minimum Contributions............................................ 81
19.5 Maximum Annual Addition.......................................... 82
19.6 Vesting Rules.................................................... 82
19.7 Non-Eligible Employees........................................... 82
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AMENDMENT AND RESTATEMENT OF
20TH CENTURY INDUSTRIES
SAVINGS AND SECURITY PLAN
ARTICLE I
GENERAL
1.1 PLAN NAME AND PURPOSE.
The name of this Plan is the "20th Century Industries Savings and
Security Plan" (the "Plan"). The purpose of this instrument is to amend and
restate the Plan in its entirety.
This Plan is intended to qualify under Code Section 401(a) as a
profit sharing plan and, with respect to the portion hereof intended to qualify
as a qualified cash or deferred arrangement, to satisfy the requirements of Code
Section 401(k).
1.2 EFFECTIVE DATE.
(a) The general effective date of this amendment and
restatement of the Plan shall be January 1, 1989, except as otherwise
expressly provided herein.
(b) The provisions of this amendment and restatement of
the Plan relating to the investment of Participant contributions under the
Plan in Company Stock shall be effective as of July 1, 1993.
ARTICLE II
DEFINITIONS
2.1 ACCOUNTS.
"Accounts" or "Participant's Accounts" means the following Plan
accounts maintained by the Committee for each Participant as required by
Article VII:
(a) "Compensation Deferral Account" shall mean the account
established and maintained for each Participant under Article VII for
purposes of holding and accounting for amounts held in the Trust Fund which
are attributable to Compensation Deferral Contributions made in accordance
with Section 5.1(a) hereof.
(b) "Participant Voluntary Contribution Account" shall
mean the account established and maintained for each Participant under
Article VII for purposes of holding and accounting for amounts held in the
Trust Fund which are attributable to Participant Voluntary Contributions
in accordance with Section 5.8 hereof.
(c) "Company Contribution Account" shall mean the account
established and maintained for each Participant under Article VII for
purposes of holding and accounting for amounts held in the Trust Fund which
are attributable to Matching Contributions made under Sections 6.1(b) and
(c) hereof and any discretionary contributions made under Section 6.1(d)
hereof.
(d) "Rollover/Transfer Account" shall mean the account
established and maintained under Article V for a Participant to reflect
amounts held in the Trust Fund which are attributable to Participant
rollover or transfer contributions under Section 5.12.
2.2 AFFILIATED COMPANY.
"Affiliated Company" shall mean:
(a) Any corporation that is included in a controlled group
of corporations, within the meaning of Section 414(b) of the Code, that
includes the Company,
(b) Any trade or business that is under common control
with the Company within the meaning of Section 414(c) of the Code,
(c) Any member of an affiliated service group, within the
meaning of Section 414(m) of the Code, that includes the Company, and
(d) Any other entity required to be aggregated with the
Company pursuant to regulations under Section 414(o) of the Code.
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2.3 BENEFICIARY.
"Beneficiary" or "Beneficiaries" means the person or persons last
designated by a Participant as set forth in Section 8.10 or, if there is no
designated Beneficiary or surviving Beneficiary, the person or persons
designated in Section 8.10 to receive the interest of a deceased Participant
in such event.
2.4 BOARD OF DIRECTORS.
"Board of Directors" shall mean the Board of Directors of 20th
Century Industries as it may from time to time be constituted or the Executive
Committee of the Board of Directors (if duly authorized to act for and in place
of the Board of Directors).
2.5 CODE
"Code" shall mean the Internal Revenue Code of 1986, as in effect
on the date of execution of this Plan document and as thereafter amended from
time to time.
2.6 COMMITTEE.
"Committee" shall mean the Committee described in Article X
hereof.
2.7 COMPANY.
"Company" shall mean 20th Century Industries.
2.8 COMPANY STOCK.
"Company Stock" shall mean whichever of the following is
applicable:
(a) So long as the Company has only one class of stock,
that class of stock.
(b) In the event the Company at any time has more than
one class of stock, the class (or classes) of the Company's stock
constituting "employer securities" as that term is defined in
Section 409A(1) of the Code.
2.9 COMPENSATION.
(a) "Compensation" shall mean any cash compensation paid by
the Company during a Plan Year by reason of services performed by an
Employee, including overtime pay, bonuses, and special allowances and
compensation, subject, however, to the following special rules and to the
provisions of Subsections 2.9(b) and (c). The following shall not be taken
into account in determining Compensation:
(i) Fringe benefits, and contributions by the Company
to and benefits under any employee benefit plan;
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(ii) Amounts paid or payable by reason of services
performed during any period in which an Employee is not a Participant
under this Plan;
(iii) Amounts included in any Employee's gross income
with respect to life insurance as provided by Code Section 79;
(iv) Amounts paid to Employees as special remuneration
based on profits, discretionary judgment bonuses, severance pay or
other special payments;
(b) Solely for purposes of Article XV (relating to certain
limitations on certain annual additions to or benefits from employee
pension benefit plans) and Article XIX of this Plan (relating to special
rules applicable to certain Top-Heavy plans), the term "Compensation"
shall mean
(i) To the extent required under Treas. Reg. Section
1.415-2(d)(2), all of the following:
(A) The Employee's wages, salaries, and fees for
professional services and other amounts includible in the
Employee's gross income during the Plan Year (without regard to
whether or not an amount is received in cash), which amounts
are received for personal services actually rendered in the
course of employment with a Participating Employer (including,
but not limited to commissions paid salespersons, compensation
for services on the basis of a percentage of profits,
commissions on insurance premiums, tips, bonuses, fringe
benefits, reimbursements, and expense allowances under a
nonaccountable plan (as described in Treas. Reg.
Section 1.61-2(c)).
(B) In the case of an Employee who is an Employee
within the meaning of Code Section 401(c)(1) and the regulations
thereunder, the Employee's earned income (as described in Code
Section 401(c)(2) and the regulations thereunder).
(C) Amounts described in Code Sections 104(a)(3),
105(a), and 105(h), but only to the extent that these amounts
are includible in the gross income of the Employee.
(D) Amounts paid or reimbursed by the Employer for
moving expenses incurred by an Employee, but only to the extent
that at the time of the payment it is reasonable to believe that
these amounts are not deductible by the Employee under
Code Section 217.
(E) The value of a non-qualified stock option
granted to an Employee by the Participating Employer, but only
to the extent that the value of the option is includible in the
gross income of the Employee for the taxable year in which
granted.
(F) The amount includible in the gross income
of an Employee upon making the election described in
Code Section 83(b).
(ii) To the extent required by Treas. Reg.
Section 1.415-2(d)(3), none of the following:
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(A) Participating Employer contributions to a plan
of deferred compensation which are not includible in the
Employee's gross income for the taxable year in which
contributed, or Participating Employer contributions under a
simplified employee pension plan to the extent such
contributions are deductible by the Employee, or any
distributions from a plan of deferred compensation;
(B) Amounts realized from the exercise of a
non-qualified stock option, or when restricted stock (or
property) held by the Employee either becomes freely
transferable or is no longer subject to a substantial risk
of forfeiture;
(C) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock
option; and
(D) Other amounts which received special tax
benefits, or contributions made by a Participating Employer
(whether or not under a salary reduction agreement) towards the
purchase of an annuity described in Code Section 403(b)
(whether or not the amounts are actually excludable from
the gross income of the Employee).
For Limitation Years beginning after December 31, 1991, for purposes of
applying the limitations of Article XV, Compensation for a Limitation Year
is the Compensation actually paid or includible in gross income during such
Limitation Year.
(c) Solely for purposes of Sections 5.4 and 5.8
Compensation for any Plan Year is the compensation actually paid or
includible in the Participant's gross income during such year plus salary
deferral contributions for such year.
(d) Effective for Plan Years commencing on and after
January 1, 1989, the "Compensation" of any Employee taken into account
under the Plan for any Plan Year shall not exceed $200,000, as that amount
is adjusted each year by the Secretary of the Treasury at the same time
and in the same manner as under Code Section 415(d). In determining the
Compensation of a Participant for purposes of this limitation, the rules
of Section 414(q)(6) of the Code shall apply, except in applying such
rules, the term "family" shall include only the Spouse of the Participant
and any lineal descendants of the Participant who have not attained age 19
before the close of the year. If, as a result of the application of such
rules the adjusted $200,000 limitation is exceeded, then, the limitation
shall be prorated among the affected individuals in proportion to each
such individual's Compensation as determined under this Subsection (d)
prior to the application of this limitation.
2.10 COMPENSATION DEFERRAL CONTRIBUTIONS.
"Compensation Deferral Contributions" shall mean contributions
described in Section 5.1(a).
2.11 DEFERRAL LIMITATION.
"Deferral Limitation" shall mean the dollar limitation on the
exclusion of elective deferrals from a Participant's gross income under
Section 402(g) of the Code, as in effect with respect to the taxable year of the
Participant.
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2.12 DISTRIBUTABLE BENEFIT.
"Distributable Benefit" shall mean the Vested Interest of a
Participant in this Plan which is determined and distributable to the
Participant upon termination of the Participant's employment in accordance with
the provisions of Articles IX and X.
2.13 EFFECTIVE DATE.
"Effective Date" shall mean the effective date of this amendment
and restatement which is January 1, 1989, except as otherwise expressly
provided herein.
2.14 ELIGIBLE EMPLOYEE.
"Eligible Employee" shall include any Employee who is employed by
a Participating Employer excluding, however,
(a) any such Employee with respect to any period of time
during which a Participating Employer is obligated to contribute to any
other employee pension benefit plan with respect to such Employee as a
result of a collective bargaining agreement,
(b) any Employee who is covered by a collective bargaining
agreement to which a Participating Company is a party if there is
evidence that retirement benefits were the subject of good faith
bargaining between the Participating Employer and the collective
bargaining representative, unless the collective bargaining agreement
provides for coverage under this Plan, or
(c) any Employee who is a "leased employee," within the
meaning of Code Section 414(n).
2.15 EMPLOYEE.
(a) "Employee" shall mean each person currently employed in
any capacity by the Company or an Affiliated Company, any portion of
whose Compensation paid by the Company or an Affiliated Company is
subject to withholding of income tax and/or for whom Social Security
contributions are made by the Company or an Affiliated Company;
(b) In addition, "Employee" shall mean "leased employees"
within the meaning of Section 414(n)(2) of the Code. Notwithstanding
the foregoing, if such leased employees constitute less than twenty
percent of the Company's non-highly compensated work force within
the meaning of Section 414(n)(5)(C)(ii) of the Code, the term
"Employee" shall not include those leased employees covered by a plan
described in Section 414(n)(5) of the Code unless otherwise provided by
the terms of this Plan.
(c) Although Eligible Employees are the only class of
Employees eligible to participate in this Plan, the term "Employee" is
used to refer to persons employed in a non-Eligible Employee capacity
as well as Eligible Employee category.
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Thus, those provisions of this Plan that are not limited to Eligible
Employees, such as those relating to Hours of Service, apply to both
Eligible and non-Eligible Employees.
2.16 EMPLOYMENT COMMENCEMENT DATE.
"Employment Commencement Date" shall mean each of the following:
(a) The date on which an Employee first performs an Hour of
Service in any capacity for the Company or an Affiliated Company with
respect to which the Employee is compensated or is entitled to cash
remuneration by the Company or the Affiliated Company.
(b) In the case of an Employee whose employment is
terminated and who is reemployed by the Company or an Affiliated Company
after he/she incurs a Period of Severance, the term "Employment
Commencement Date" shall also mean the first day following the termination
of employment on which the Employee performs an Hour of Service for the
Company or an Affiliated Company with respect to which he/she is
compensated or entitled to cash remuneration by the Company or an
Affiliated Company.
2.17 ERISA.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
2.18 HARDSHIP.
"Hardship" shall be determined in accordance with regulations
promulgated under Section 401(k) of the Code. "Hardship" shall be deemed to
exist with respect to a distribution necessary to meet the immediate and heavy
financial needs of the Participant, if the amount required to meet such
financial needs is not readily available to the Participant from other
resources, including a distribution for:
(a) expenses for medical care described in Code Section 213(d) of
Participant and his/her Spouse or dependents,
(b) payment of tuition, fees and other expenses for college or
graduate school education of the Participant or his/her Spouse or
dependents for the next twelve (12) months, or
(c) costs directly related for the purchase of a primary
residence by a Participant or for major alterations to a primary residence
already owned by him.
(d) payments necessary to prevent the eviction of the Participant
from the Participants' principal residence or foreclosure on the mortgage
of such residence.
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The existence of a Participant's financial hardship and the amount required to
meet the need created by the hardship shall be determined by the Committee in
accordance with Section 9.10 and rules of uniform application which the
Committee may from time to time prescribe.
2.19 HIGHLY COMPENSATED EMPLOYEE.
(a) "Highly Compensated Employee" shall mean any Employee who,
during the Plan Year, or the preceding Plan Year,
(i) was at any time a Five Percent Owner,
(ii) received Compensation from a Participating Employer in
excess of $75,000, as adjusted by the Secretary of the Treasury at the
same time and in the same manner as under Code Section 415(d),
(iii) received Compensation from a Participating Employer in
excess of $50,000, as adjusted by the Secretary of the Treasury at the
same time and in the same manner as under Code Section 415(d), and was
in the top-paid group of Employees for such Plan Year, or
(iv) was at any time an officer and received Compensation
greater than fifty percent (50%) of the amount in effect under
Section 415(b)(l)(A) of the Code for such Plan Year.
(b) Determination of a Highly Compensated Employee shall be in
accordance with the following special rules:
(i) In the case of the Plan Year for which the relevant
determination is being made, an Employee not described in Paragraph
(ii), (iii), or (iv) of (a) above for the preceding Plan Year
(without regard to Paragraph (i)) shall not be treated as described
in Paragraph (ii), (iii), or (iv) of (a) above unless such Employee
is a member of the group consisting of the 100 Employees paid the
greatest Compensation during the Plan Year for which such
determination is being made.
(ii) An Employee shall be treated as a Five Percent Owner
for any Plan Year if at any time during such Plan Year such Employee
was a Five Percent Owner (as defined in Section 19.2(b)).
(iii) An Employee is in the top-paid group of Employees for
any Plan Year if such Employee is in the group consisting of the top
twenty percent (20%) of the Employees when ranked on the basis of
Compensation paid during such Plan Year.
(iv) For purposes of Paragraph (iv) of Subsection (a) above,
no more than fifty (50) Employees (or, if lesser, the greater of three
(3) Employees or ten percent (10%) of the Employees) shall be treated
as officers. To the extent required by Code Section 414(q), if for
any Plan Year no officer of the Participating Employer is described in
Paragraph (iv) of Subsection (a) above, the highest paid officer of
the Employer for such year shall be treated as described in that
section.
(v) If any individual is a "family member" with respect to a
Five Percent Owner or of a Highly Compensated Employee in the group
consisting of
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the ten (10) Highly Compensated Employees paid the greatest
Compensation during the Plan Year, then
(A) such individual shall not be considered a separate
Employee, and
(B) any Compensation paid to such individual (and any
applicable contribution or benefit on behalf of such individual)
shall be treated as if it were paid to (or on behalf of) the Five
Percent Owner or Highly Compensated Employee.
For purposes of this Paragraph (v), the term "family member" means, with
respect to any Employee, such Employee's Spouse and lineal ascendants or
descendants and the spouses of such lineal ascendants or descendants.
(vi) For purposes of this Section, the term "Compensation" means
Compensation as set forth in Section 2.9(b)(i), without regard to the
limitations of Section 2.9(b)(ii); provided, however, the determination
under this Paragraph (vi) shall be made without regard to Sections 125,
402(a)(8), and 401(h)(1)(B), and in the case of Employer contributions
made pursuant to a salary reduction agreement, without regard to
Section 403(b).
(vii) For purposes of determining the number of Employees in the
top-paid group under Paragraph (iii) of Subsection (a) above, the
following Employees shall be excluded:
(A) Employees who have not completed six (6) months of
Service,
(B) Employees who normally work less than 17-1/2 hours
per week,
(C) Employees who normally work not more than six (6)
months during any Plan Year,
(D) Employees who have not attained age 21,
(E) Except to the extent provided in Treasury Regulations,
Employees who are included in a unit of employees covered by an
agreement which the Secretary of Labor finds to be a collective
bargaining agreement between Employee representatives and Employer, and
(F) Employees who are nonresident aliens and who receive
no earned income (within the meaning of Section 911(d)(2) from the
Employer which constitutes income from sources within the United
States (within the meaning of Section 861(a)(3)).
A Participating Employer may elect to apply Subparagraphs (A) through (D)
above by substituting a shorter period of Service, smaller number of hours
or months, or lower age for the period of service, number of hours or
months, or (as the case may be) than as specified in such Subparagraphs.
(viii) A former Employee shall be treated as a Highly Compensated
Employee if:
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(A) such Employee was a Highly Compensated Employee when
such Employee incurred a Severance, or
(B) such Employee was a Highly Compensated Employee at any
time after attaining age fifty-five (55).
(ix) Code Sections 414(b), (c), (m), (n), and (o) shall be applied
before the application of this Section 2.19.
(c) To the extent permissible under Code Section 414(q), the Committee
may determine which Employees shall be categorized as Highly Compensated
Employees by applying a simplified method and calendar year election
prescribed by the Internal Revenue Service.
2.20 HOUR OF SERVICE.
(a) "Hour of Service" of an Employee shall mean the following:
(i) Each hour for which the Employee is paid by the
Participating Employer or an Affiliated Company or entitled to payment for
the performance of services as an Employee.
(ii) Each hour in or attributable to a period of time during
which the Employee performs no duties (irrespective of whether he has
terminated his Employment) due to a vacation, holiday, illness, incapacity
{including pregnancy or disability), layoff, jury duty, military duty or a
Leave of Absence, for which he is so paid or so entitled to payment,
whether direct or indirect. However, no such hours shall be credited to an
Employee if such Employee is directly or indirectly paid or entitled to
payment for such hours and if such payment or entitlement is made or due
under a plan maintained solely for the purpose of complying with applicable
workmen's compensation, unemployment compensation or disability insurance
laws or is a payment which solely reimburses the Employee for medical or
medically related expenses incurred by him.
(iii) Each hour for which he is entitled to back pay,
irrespective of mitigation of damages, whether awarded or agreed to by the
Participating Employer or an Affiliated Company, provided that such
Employee has not previously been credited with an Hour of Service with
respect to such hour under paragraphs (i) or (ii) above.
(b) Hours of Service under Subsections (a)(ii) and (a)(iii) shall
be calculated in accordance with Department of Labor Regulation 29 C.F.R.
Section 2530.200b-2(b). Hours of Service shall be credited to the
appropriate computation period according to the Department of Labor
Regulation Section 2530.200b-2(c). However, an Employee will not be
considered as being entitled to payment until the date when the
Participating Employer or the Affiliated Company would normally make
payment to the Employee for such Hour of Service.
2.21 INVESTMENT FUND.
"Investment Fund" shall mean any of the separate Investment Funds
established by the Committee for purposes of the investment of amounts
contributed to this Plan, as provided in Section 7.3.
10
2.22 INVESTMENT MANAGER.
"Investment Manager" means the one or more Investment Managers, if
any, that are appointed pursuant to Section 11.3.
2.23 LEAVE OF ABSENCE.
"Leave of Absence" shall mean any absence without pay authorized by
the Company or an Affiliated Company which employs an Employee under the
standard personnel practices of such Company or Affiliated Company. All
persons under similar circumstances shall be treated alike in the granting of
such Leaves of Absence.
2.24 MATCHING CONTRIBUTIONS.
"Matching Contributions" shall mean contributions described in
Sections 6.1(b) and (c).
2.25 NORMAL RETIREMENT.
"Normal Retirement" shall mean a Participant's termination of
employment on or after attaining the Plan's Normal Retirement Date (other
than by reason of death or Total and Permanent Disability).
2.26 NORMAL RETIREMENT DATE.
"Normal Retirement Date" shall be the first day of the month
coinciding with or next following the Participant s sixty-fifth birthday.
2.27 PARTICIPANT.
"Participant" shall mean any Eligible Employee who has satisfied the
participation requirements set forth in Article III and has begun
participation in this Plan.
2.28 PARTICIPANT VOLUNTARY CONTRIBUTIONS.
"Participant Voluntary Contributions" are after-tax contributions made
pursuant to Section 5.2.
2.29 PARTICIPATION COMMENCEMENT DATE.
"Participation Commencement Date" shall mean the day on which an
Employee's participation in this Plan may commence in accordance with the
provisions of Article III.
2.30 PARTICIPATING EMPLOYER.
"Participating Employer" shall mean each unit, division or other
segment of 20th Century Industries to which this Plan is extended by action
of the Board of Directors, and each unit, division or other segment of an
Affiliated Company (or similar entity), which unit, division or segment has
been granted permission by the Board of Directors to participate in this Plan,
11
provided contributions are being made hereunder for Eligible Employees of
such Participating Employer. This permission shall be granted under such
conditions and upon such conditions as the Board of Directors deems
appropriate.
2.31 PERIOD OF SERVICE.
"Period of Service" shall mean a period of time computed under an
"elapsed time" method, as follows:
(a) An Employee shall be credited with a Period of Service equal
to the elapsed time between his/her Employment Commencement Date and the
date on which he/she commences a Period of Severance.
(b) If an Employee incurs a Period of Severance and is subsequently
reemployed by a Participating Employer, he/she shall be credited with a
Period of Service pursuant to the following rules:
(i) An Employee shall receive credit for a Period of Severance
as if it were a Period of Service if such Period of Severance commences
by reason of a quit, discharge or retirement and the Participant is
reemployed by a Participating Employer within 12 months after the
commencement of such Period of Severance.
(ii) An Employee shall receive credit for a Period of Severance
as if it were a Period of Service if such Period of Severance commences
by reason of a quit, discharge or retirement during a time in which such
Employee is absent from service for a reason other than quit, discharge
or retirement and the Employee is reemployed by a Participating Employer
within 12 months after his/her initial absence from service.
(iii) Except as provided in Paragraphs 2.31(b)(i) and (ii)
hereof, the Period of Severance shall not be included in the Employee's
Period of Service and, subject to Subsection 2.31(c) hereof, all of an
Employee's Periods of Service shall be aggregated for purposes of the
Plan.
(c) If an Employee who has earned no vested interest in his/her
Accounts has a Period of Severance equal to the greater of (i) five years,
or (ii) the aggregate number of years of his/her Period of Service
before such Period of Severance, then his/her prior Periods of Service
shall be disregarded for all purposes of the Plan. Otherwise an Employee's
total Period of Service shall be determined by aggregating all of the
Employee's individual Periods of Service; however, no Periods of Service
shall be included that are not required to be taken into account under Code
Section 411(a)(6).
(d) Notwithstanding any other provision of this Plan, service
performed by Employees for an Affiliated Company (or a unit or division of
such company or the Company) prior to the date as of which such entity
becomes an Affiliated Company (or a unit or division of such company or the
Company) shall not be taken into account in
12
computing Periods of Service for any purpose of this Plan, except to the
extent and in the manner determined by resolution of the Board of Directors.
2.32 PERIOD OF SEVERANCE.
"Period of Severance" means:
(a) The period of time commencing on the earlier of
(i) the date on which an Employee quits, retires, is discharged,
or dies; or
(ii) the first anniversary of the first date of a period in which
an Employee remains absent from service (with or without pay) with the
Company and all Affiliated Companies for any reason other than quit,
retirement, discharge or death (such as vacation, holiday, sickness,
disability, leave of absence or layoff), and continuing until the first
day, if any, on which the Participant completes one or more hours of
service for which he/she is directly or indirectly paid by the Company or
an Affiliated Company for the performance of duties as an Employee.
(b) In the case of an Employee who is absent from work for maternity
or paternity reasons, no Period of Severance shall commence until the second
anniversary of the first date of such leave of absence. The period between
the date of commencement of an absence for maternity or paternity reasons
and the first anniversary thereof shall be considered a Period of Service;
the period between the first and second anniversaries of the commencement
of such absence shall be considered neither a Period of Service nor a Period
of Severance. For purposes of this Subsection 2.32(b), an absence from work
for maternity or paternity reasons means an absence
(i) By reason of pregnancy of the Employee,
(ii) By reason of the birth of a child of the Employee,
(iii) By reason of the placement of a child with the employee
in connection with the adoption of such child by such employee or
(iv) For purposes of caring for such child for a period beginning
immediately following such birth or placement.
2.33 PLAN.
"Plan" shall mean the 20th Century Industries Savings and Security
Plan herein set forth, and as it may be amended from time to time.
13
2.34 PLAN ADMINISTRATOR.
"Plan Administrator" shall mean the administrator of the Plan, within
the meaning of Section 3(16)(A) of ERISA. The Plan Administrator shall be
20th Century Industries.
2.35 PLAN YEAR.
"Plan Year" shall mean the twelve month period beginning each January
1 and ending on the following December 31.
2.36 POLICY.
"Policy" shall mean the group investment contract issued by an
insurance company in which the assets of the Plan are invested.
2.37 POLICYHOLDER.
"Policyholder" shall mean the Company or Affiliated Company to whom
the Policy is issued.
2.38 POSTPONED RETIREMENT DATE.
"Postponed Retirement Date" shall mean the first day of any month
following a Participant's Normal Retirement Date on which such Participant's
termination of employment occurs.
2.39 SPOUSE.
"Spouse" shall mean the person to whom a Participant is legally
married as of the date of the payment of all or a portion of the
Participant's Distributable Benefit, or in the case of a payment after the
Participant's death, the person to whom the Participant is legally married as
of the date of the Participant's death. To the extent required under a
qualified domestic relations order, a former spouse shall be treated as a
Spouse.
2.40 TOTAL AND PERMANENT DISABILITY.
An individual shall be considered to be suffering from a "Total and
Permanent Disability" if the Committee determines that he/she is unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment. An individual's disabled status
shall be determined by the Committee, based on such evidence as the Committee
determines to be sufficient, including, but not limited to, examination at
the Company's expense by a physician of the Company s choice.
2.41 TRUST AND TRUST FUND.
"Trust" or "Trust Fund" shall mean the assets of the trust established
under the trust agreement pursuant to Article IV.
14
2.42 TRUST AGREEMENt.
"Trust Agreement" shall mean the one or more trust agreements entered
into by the Company in accordance with the provisions of Article IV for the
purpose of holding contributions and earnings under this Plan.
2.43 TRUSTEE.
"Trustee" shall mean the corporation or person or persons duly
appointed pursuant to the terms of the Trust Agreement to act as trustee of
all or a portion of the assets of the Trust Fund.
2.44 VALUATION DATE.
"Valuation Date" shall mean the last day of each month during the Plan
Year, as of which dates the value of the Trust Fund and of Participants'
Accounts shall be determined.
2.45 VESTED INTEREST.
"Vested Interest" or "Vested Right" shall mean the interest of a
Participant in his/her Accounts which is vested and nonforfeitable pursuant
to the provisions of Article IX of this Plan.
15
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY TO PARTICIPATE.
(a) Every Eligible Employee who was a Participant in the Plan on
December 31, 1988 shall automatically continue as a Participant on January
1, 1989, and shall so continue until his/her participation terminates in
accordance with Section 3.3 below.
(b) Every Eligible Employee who is not eligible to participate
in this Plan under Subsection 3.1(a) above shall become eligible to
participate in this Plan on the first day of the month following the later
of (i) the date he/she attains age twenty (20) or (ii) the date he/she
first completes a one year Period of Service.
(c) If an Eligible Employee ceases to be an Eligible Employee
he/she shall again become eligible to participate in the Plan on the
later of (i) the date he/she again becomes an Eligible Employee, or (ii)
the date he/she satisfies the service requirement set forth in Section
3.1(b).
(d) Notwithstanding the preceding rules of this Section 3.1, the
actual date upon which an Employee will commence participation will be
determined pursuant to the rules of Section 3.2 below.
3.2 DATE OF COMMENCEMENT OF PARTICIPATION.
Every Eligible Employee who has satisfied the requirements of Section
3.1 for participation in the Plan shall become a Participant in the Plan by
entering into a Compensation deferral agreement as set forth in Section 5.1.
The Committee may prescribe such rules as it deems appropriate in connection
with such Compensation deferral agreements.
3.3 TERMINATION OF PARTICIPATION.
A vested Participant or a non-vested Participant whose Period of
Service cannot be disregarded under Section 2.32(c) whose employment terminates
and who is reemployed after a Period of Severance shall be eligible to
participate immediately as of his/her subsequent Employment Commencement Date
as an Eligible Employee.
16
ARTICLE IV
TRUST FUND
4.1 TRUST FUND.
To carry out the purposes of this Plan, the Company shall enter into
a Trust Agreement providing that funds received by the Trustee as contributions
under the Plan shall be held for the benefit of Participants or their
Beneficiaries and managed, invested and distributed in accordance with the
Plan. In addition, funds may be held under an insurance company contract that
meets the requirements of Code Section 401(f).
4.2 CONTRIBUTIONS TO THE TRUST FUND.
The Company shall transfer to the Trustee all contributions made
under the terms of this Plan as soon as is practicable after such contributions
are made.
4.3 INVESTMENTS.
The Trust Fund is authorized to invest in Company Stock and such
other assets as the Committee or the Investment Manager (if applicable) may
direct. To the extent provided in Section 7.3, Participants may direct the
investment of the assets in their Accounts in the Trust Fund from among the
Investment Funds which the Committee may from time to time make available.
4.4 COMPANY, COMMITTEE AND TRUSTEE NOT RESPONSIBLE FOR ADEQUACY OF TRUST FUND.
The Company, Committee and Trustee shall not be liable or responsible
for the adequacy of the Trust Fund to meet and discharge any or all payments
and liabilities hereunder. All Plan benefits will be paid only from the Trust
assets, and neither the Company, the Committee nor the Trustee shall have any
duty or liability to furnish the Trust with any funds, securities or other
assets except as expressly provided in the Plan. Except as required under the
Plan or Trust or under Part 4 of Title I of ERISA, the Company shall not be
responsible for any decision, act or omission of the Trustee, the Committee, or
the Investment Manager (if applicable), and shall not be responsible for the
application of any moneys, securities, investments or other property paid or
delivered to the Trustee.
17
ARTICLE V
EMPLOYEE CONTRIBUTIONS
5.1 EMPLOYEE COMPENSATION DEFERRAL AGREEMENT.
(a) Each Employee who is eligible to join the Plan and who
desires to become a Participant shall enter into a Compensation deferral
agreement pursuant to Section 3.2 to have a percentage of his/her
Compensation deferred for each payroll period for which such Compensation
deferral agreement is in effect, except that the Committee shall determine
the frequency of payroll deductions for a Participant whose Compensation
is paid less frequently than monthly. The Participant may defer from one
percent (1%) to twelve percent (12%) of his/her Compensation in whole
multiples of one percent (1%).
(b) The Compensation deferral agreement shall remain in effect
throughout the Plan Year in which it is entered and all subsequent Plan
Years until such agreement is revoked pursuant to Section 5.11 or the
Participant terminates his/her employment; except that no Compensation
deferral will be made for the pay period immediately preceding the date
the Participant's employment with the Company or an Affiliated Company
terminates. A Participant who revokes his/her Compensation deferral
agreement pursuant to Section 5.11 may enter into a new Compensation
deferral agreement in accordance with such rules and procedures as the
Committee may prescribe from time to time. A Compensation deferral
agreement shall be made in such form and manner as the Committee shall
prescribe or approve.
5.2 PARTICIPANT VOLUNTARY CONTRIBUTIONS.
Each Participant may elect to make monthly Participant Voluntary
Contributions to the Plan, subject to the following provisions:
(a) The Participant Voluntary Contribution shall be, in whole
multiples of one percent (1%), a designated amount from one percent (1%)
to five percent (5%) of his/her total Compensation during each pay period,
except that no Participant Voluntary Contribution will be made for the pay
period immediately preceding the date the Participant's employment with
the Company or an Affiliated Company terminates.
(b) In no event may any Participant make monthly Participant
Voluntary Contributions to this Plan which, when aggregated with voluntary
after-tax contributions made by the Participant to any other qualified
plan sponsored by the Company or an Affiliated Company, would exceed five
percent (5%) of the Participant's monthly Compensation.
18
5.3 CHANGES IN COMPENSATION DEFERRAL AGREEMENT AND PARTICIPANT VOLUNTARY
CONTRIBUTIONS.
A Participant may change his/her Compensation deferral agreement and
amount of Participant Voluntary Contributions at any time during the Plan Year,
but not more than twice each Plan Year, by delivering to the Committee written
notice. The Committee may require up to 30 days notice prior to such change.
Such change shall remain in effect until subsequently changed pursuant to this
Section 5.3. The Committee may prescribe such rules as it deems necessary or
appropriate to carry out the provisions of this Section 5.3.
A Participant who elects to terminate his/her participation in the
Plan under this agreement may become a Participant again, provided he/she is
otherwise eligible, but subject to the provisions of Article III.
5.4 CHARACTER OF AMOUNTS CONTRIBUTED AS COMPENSATION DEFERRALS.
Amounts deferred pursuant to the Compensation deferral agreement
described above in Section 5.1 (and which qualify for treatment under Code
Section 401(k) and are contributed to the Trust Fund pursuant to Article IV)
shall be treated, for federal and state income tax purposes, as Company
contributions.
5.5 AMOUNT SUBJECT TO DEFERRAL.
(a) Solely for purposes of satisfying one of the tests
prescribed under Section 5.6, the Committee may prescribe such rules as it
deems necessary or appropriate regarding the maximum amount that a
Participant may defer under Section 5.1(a) and the timing of such an
election. These rules may provide that the maximum percentage of
Compensation that a Participant may defer will be a lower percentage of
his/her Compensation above a certain dollar amount of Compensation than
the maximum deferral percentage below that dollar amount of Compensation.
These rules shall apply to all individuals eligible to enter into a
Compensation deferral agreement described in Section 5.1, except to the
extent that the Committee prescribes special or more stringent rules
applicable only to Highly Compensated Employees.
(b) No Participant shall be permitted to make Compensation
Deferral Contributions under this Plan in excess of the Deferral
Limitation. In the event a Participant's Compensation Deferral
Contributions exceed the Deferral Limitation, excess contributions shall
be subject to the provisions of Section 5.7. No Participant shall be
entitled to Matching Contributions attributable to any Compensation
Deferral Contributions in excess of the Deferral Limitation.
5.6 LIMITATION ON COMPENSATION DEFERRAL CONTRIBUTIONS.
With respect to each Plan Year, Participant Compensation Deferral
Contributions under the Plan for the Plan Year shall not exceed the limitations
on contributions by or on behalf of Highly Compensated Employees under Code
Section 401(k), as provided in this Section. In the event that Compensation
Deferral Contributions under this Plan by or on behalf of Highly
19
Compensated Employees for any Plan Year exceed the limitations of this Section
for any reason, such excess contributions and any income allocable thereto
shall be returned to the Participant, as provided in Section 5.8.
(a) The Compensation Deferral Contributions by a Participant for
a Plan Year shall satisfy one of the following tests:
(i) The Compensation Deferral Contributions by a
Participant for a Plan Year shall satisfy the Average Deferral
Percentage test set forth in (i)(A) below, or the alternative Average
Deferral Percentage test set forth in (i)(B) below, and to the extent
required by regulations under Code Section 401(m), also shall satisfy
the test identified in (ii) below:
(i) (A) The "Actual Deferral Percentage" for Eligible
Employees who are Highly Compensated Employees shall not be more
than the "Actual Deferral Percentage" of all other Eligible
Employees multiplied by 1.25, or
(i) (B) The excess of the "Actual Deferral Percentage" for
Eligible Employees who are Highly Compensated Employees over the
"Actual Deferral Percentage" for all other Eligible Employees
shall not be more than two percentage points, and the "Actual
Deferral Percentage" for Highly Compensated Employees shall not
be more than the "Actual Deferral Percentage" of all other
Eligible Employees multiplied by 2.00.
(ii) Average Contribution Percentage for Highly Compensated
Employees eligible to participate in this Plan and a plan of the
Company or an Affiliated Company that is subject to the limitations
of Section 401(m) of the Code including, if applicable, this Plan,
shall be reduced in accordance with Section 6.4, to the extent
necessary to satisfy the requirements of Treasury Regulations Section
1.401(m)-2.
(b) For the purposes of the limitations of this Section 5.6, the
following definitions shall apply:
(i) "Actual Deferral Percentage" means, with respect to
Eligible Employees who are Highly Compensated Employees and all other
Eligible Employees for a Plan Year, the average of the ratios,
calculated separately for each Eligible Employee in such group, of
the amount of Compensation Deferral Contributions under the Plan
allocated to each Eligible Employee for such Plan Year to such
Employee's "Compensation" for such Plan Year. An Eligible Employee's
Compensation Deferral Contributions may be taken into account for
purposes of determining his Actual Deferral Percentage for a
particular Plan Year only if such Compensation Deferral Contributions
are allocated to the Eligible Employee as of a date within that Plan
Year. For purposes of this rule, an Eligible Employee's Compensation
Deferral Contributions shall be considered allocated as of a date
within a Plan Year only if (A) the allocation is not contingent upon
the Eligible Employee's participation in the Plan or performance of
services on any date subsequent to that date, and (B) the
Compensation Deferral Contribution is actually paid to the Trust no
later than the end of the twelve month period immediately following
the Plan Year to which the contribution relates. To the extent
determined by the Committee and in accordance with regulations issued
by the Secretary of the Treasury, contributions on behalf of an
Eligible Employee that
20
satisfy the requirements of Code Section 401(k)(3)(C)(ii) may also be
taken into account for the purpose of determining the Actual Deferral
Percentage of such Eligible Employee.
(ii) "Compensation" means Compensation determined by the
Committee in accordance with the requirements of Section 414(s) of
the Code, including, to the extent elected by the Committee, amounts
deducted from an Employee's wages or salary that are excludable from
income under Sections 125, 129, or 402(a)(8) of the Code.
(c) In the event that as of the last day of a Plan Year this Plan
satisfies the requirements of Section 401(a)(4) or 410(b) of the Code only
if aggregated with one or more other plans which include arrangements
under Code Section 401(k), then this Section 5.6 shall be applied by
determining the Actual Deferral Percentages of Eligible Employees as if
all such plans were a single plan, in accordance with regulations
prescribed by the Secretary of the Treasury under Section 401(k) of the
Code.
(d) For the purposes of this Section, the Actual Deferral Percentage
for any Highly Compensated Employee who is a participant under two or more
Code Section 401(k) arrangements of the Company or an Affiliated Company
shall be determined by taking into account the Highly Compensated
Employee's Compensation under each such arrangement and contributions
under each such arrangement which qualify for treatment under Code Section
401(k), in accordance with regulations prescribed by the Secretary of the
Treasury under Section 401(k) of the Code.
(e) If an Eligible Employee (who is also a Highly Compensated
Employee) is subject to the family aggregation rules in Section
2.19(b)(vi), the combined Actual Deferral Percentage for the family group
(which is treated as one Highly Compensated Employee) shall be the Actual
Deferral Percentage determined by combining the Compensation Deferral
Contributions, amounts treated as Compensation Deferral Contributions
under Code Section 401(k)(3)(D)(ii), and Compensation of all eligible
family members.
(f) For purposes of this Section, the amount of Compensation Deferral
Contributions by a Participant who is not a Highly Compensated Employee
for a Plan Year shall be reduced by any Compensation Deferral
Contributions in excess of the Deferral Limitation which have been
distributed to the Participant under Section 5.8, in accordance with
regulations prescribed by the Secretary of the Treasury under Section
401(k) of the Code.
(g) The determination of the Actual Deferral Percentage of any
Participant shall be made after applying the provisions of Section 14.5
relating to certain limits on Annual Additions under Section 415 of the
Code.
(h) The determination and treatment of Compensation Deferral
Contributions and the Actual Deferral Percentage of any Participant shall
satisfy such other requirements as may be prescribed by the Secretary of
the Treasury.
(i) The Committee shall keep or cause to have kept such records as
are necessary to demonstrate that the Plan satisfies the requirements of
Code Section 401(k) and the regulations thereunder, in accordance with
regulations prescribed by the Secretary of the Treasury.
21
5.7 PROVISIONS FOR RETURN OF ANNUAL COMPENSATION DEFERRAL CONTRIBUTIONS IN
EXCESS OF THE DEFERRAL LIMITATION.
(a) In the event that due to error or otherwise, a Participant's
Compensation Deferral Contributions under this Plan exceed the Deferral
Limitation for any calendar year (but without regard to amounts of
compensation deferred under any other plan), the excess Compensation
Deferral Contributions for the Plan Year, if any, together with income
allocable to such amount shall be distributed to the Participant on or
before the first April 15 following the close of the calendar year in
which such excess contribution is made. The amount of excess Compensation
Deferral Contributions that may be distributed to a Participant under this
Section for any taxable year shall be reduced by any excess Compensation
Deferral Contributions previously distributed in accordance with Section
5.6 for the Plan Year beginning with or within such taxable year.
(b) Income allocable to a Participant's excess Compensation Deferral
Contributions shall be determined in accordance with any reasonable method
used by the Plan for allocating income to Participant Accounts, provided
such method does not discriminate in favor of Highly Compensated Employees
and is consistently applied to all Participants for all corrective
distributions under the Plan for a Plan Year. The Committee shall not be
liable to any Participant (or his Beneficiary, if applicable) for any
losses caused by misestimating the amount of any Compensation Deferral
Contributions in excess of the limitations of this Article V and any
income allocable to such excess.
(c) If in any calendar year a Participant makes Compensation Deferral
Contributions under this Plan and additional elective deferrals, within
the meaning of Code Section 402(g)(3), under any other plan maintained by
the Company or an Affiliated Company, and the total amount of the
Participant's elective deferrals under this Plan and all such other plans
exceed the Deferral Limitation, the Company and each Affiliated Company
maintaining a plan under which the Participant made any elective deferrals
shall notify the affected plans in writing, and corrective distributions
of the excess elective deferrals, and any income allocable thereto, shall
be made from one or more such plans, to the extent determined by the
Company and each Affiliated Company. The determination of the amount of a
Participant's elective deferrals for any calendar year shall be made after
applying the provisions of Section 15.5 relating to certain limits on
Annual Additions under Section 415 of the Code. All corrective
distributions of excess elective deferrals shall be made on or before the
first April 15 following the close of the calendar year in which the
excess elective deferrals were made.
(d) In accordance with rules and procedures as may be established by
the Committee, a Participant may submit a claim to the Committee in which
he certifies in writing the specific amount of his Compensation Deferral
Contributions for the preceding calendar year which, when added to amounts
deferred for such calendar year under any other plans or arrangements
described in Section 401(k), 408(k) or 403(b) of the Code (other than a
plan maintained by the Company or an Affiliated Company), will cause the
Participant to exceed the Deferral Limitation for the calendar year in
which the deferral occurred. Any such claim must be submitted to the
Committee no later than the March 1 of the calendar year following the
calendar year of deferral. To the extent the amount specified by the
Participant does not exceed the amount of the Participant's Compensation
Deferral Contributions under the Plan for the applicable calendar year,
the Committee shall treat the amount specified by the Participant in his
claim as a Compensation Deferral Contribution in excess of the Deferral
Limitation for such calendar year and return such excess and any income
allocable thereto to the Participant, as provided in (a) above. In the
event that for any reason such Participant's Compensation Deferral
Contributions in excess of the Deferral Limitation for any calendar year
are not distributed to the Participant by the
22
time prescribed in (a) above, such excess shall be held in the
Participant's Compensation Deferral Contribution Account until
distribution can be made in accordance with the provisions of this Plan.
(e) To the extent required by regulations under Section 402(g) or 415
of the Code, Compensation Deferral Contributions with respect to a
Participant in excess of the Deferral Limitation shall be treated as
Annual Additions under Article XV for the Plan Year for which the excess
contributions were made, notwithstanding the distribution of such excess
in accordance with the provisions of this Section.
5.8 PROVISION FOR RETURN OF EXCESS DEFERRALS BY HIGHLY COMPENSATED EMPLOYEES.
The provisions of this Section 5.8 shall be applied after implementation
of the provisions of Section 5.7.
(a) The Committee shall determine in accordance with the procedures
set forth in Section 5.6, as soon as is reasonably possible prior to the
close of each Plan Year, the extent (if any) to which deferral treatment
under Code Section 401(k) may not be available for Compensation Deferral
Contributions on behalf of any Highly Compensated Employee. If, pursuant
to these determinations by the Committee, a Highly Compensated Employee's
Compensation Deferral Contributions may not be eligible for deferral
treatment, then any excess deferrals together with income allocable to
such amount (or income reasonably estimated to be allocable to such
amount) shall be returned to the Highly Compensated Employee (after
withholding applicable federal, state, and local taxes due on such
amounts). Such return shall be made within the first two and one-half
(2-1/2) months following the Plan Year for which such excess deferrals
were made, provided however, that if any excess deferrals or income
thereon is, due to error or otherwise, not returned by such date, such
amounts as are required to be returned shall be returned not later than
the end of the first Plan Year following the Plan Year for which such
excess deferrals were made.
(b) For purposes of this Section, the amount of excess Compensation
Deferral Contributions to be distributed to a Participant for a Plan Year
shall be reduced by the amount of any Compensation Deferral Contributions
in excess of the Deferral Limitation (for the Participant's taxable year
that ends with or within the Plan Year) which have been distributed to the
Participant under Section 5.7, in accordance with regulations prescribed
by the Secretary of the Treasury under Section 401(k) of the Code.
(c) The Committee shall determine the amount of any excess
Compensation Deferral Contributions by Highly Compensated Employees for a
Plan Year by application of the leveling method set forth in Treasury
Regulation Section 1.401(k)-1(f)(2) under which the Deferral Percentage of
the Highly Compensated Employee who has the highest such percentage for
such Plan Year is reduced to the extent required (i) to enable the Plan to
satisfy the Actual Deferral Percentage test, or (ii) to cause such Highly
Compensated Employee's Deferral Percentage to equal the Deferral
Percentage of the Highly Compensated Employee with the next highest
Deferral Percentage. This process shall be repeated until the Plan
satisfies the Actual Deferral Percentage test. For each Highly Compensated
Employee, the amount of excess Compensation Deferral Contributions shall
be equal to the total Compensation Deferral Contributions (plus any
amounts treated as Compensation Deferral Contributions) made or deemed to
be made by
23
such Highly Compensated Employee (determined prior to the application of
the foregoing provisions of this Subsection (c)) minus the amount
determined by multiplying the Highly Compensated Employee's Deferral
Percentage (determined after application of the foregoing provisions of
this Subsection (c)) by his Compensation.
(d) The determination and correction of excess Compensation Deferral
Contributions of a Highly Compensated Employee whose Actual Deferral
Percentage is determined under the family aggregation rules in Section
2.19(b)(vi) shall be accomplished by reducing the Actual Deferral
Percentage as required under Subsections (a) and (b) above and allocating
the excess Compensation Deferral Contributions for the family unit among
family members in proportion to the Compensation Deferral Contributions of
each family member that are combined to determine the Actual Deferral
Percentage.
(e) For purposes of satisfying the Actual Deferral Percentage test,
income allocable to a Participant's excess Compensation Deferral
Contributions shall be determined in accordance with any reasonable method
used by the Plan for allocating income to Participant Accounts, provided
such method does not discriminate in favor of Highly Compensated Employees
and is consistently applied to all Participants for all corrective
distributions under the Plan for a Plan Year. The Committee shall not be
liable to any Participant (or his Beneficiary, if applicable) for any
losses caused by misestimating the amount of any Compensation Deferral
Contributions in excess of the limitations of this Article V and any
income allocable to such excess.
(f) To the extent required by regulations under Section 401(k) or 415
of the Code, any excess Compensation Deferral Contributions with respect
to a Highly Compensated Employee shall be treated as Annual Additions
under Article XV for the Plan Year for which the excess Compensation
Deferral Contributions were made, notwithstanding the distribution of such
excess in accordance with the provisions of this Section.
5.9 LIMITATIONS ON PARTICIPANT VOLUNTARY CONTRIBUTIONS AND MATCHING
CONTRIBUTIONS.
With respect to each Plan Year, Participant Voluntary Contributions and
Matching Contributions under the Plan for the Plan Year shall not exceed the
limitations on contributions by or on behalf of Highly Compensated Employees
under Section 401(m) of the Code, as provided in this Section 5.9. In the event
that Participant Voluntary Contributions and Matching Contributions under the
Plan by or on behalf of Highly Compensated Employees for any Plan Year exceed
the limitations of this Section 5.9 for any reason, such excess Participant
Voluntary Contributions and Matching Contributions and any income allocable
thereto shall be disposed of in accordance with Section 5.10.
(a) The Participant Voluntary Contributions and Matching
Contributions for a Plan Year shall satisfy the Average Contribution
Percentage test set forth in (i)(A) below, or the Average Contribution
Percentage test set forth in (i)(B) below:
(i) (A) The "Average Contribution Percentage" for Eligible
Employees who are Highly Compensated Employees shall not be more
than the "Average Contribution Percentage" of all other Eligible
Employees multiplied by 1.25, or
24
(i) (B) The excess of the "Average Contribution Percentage"
for Eligible Employees who are Highly Compensated Employees over
the "Average Contribution Percentage" for the other Eligible
Employees shall not be more than two (2) percentage points, and
the "Average Contribution Percentage" for Eligible Employees who
are Highly Compensated Employees shall not be more than the
"Average Contribution Percentage" of all other Eligible
Employees multiplied by 2.00.
(ii) The Average Contribution Percentage for Highly
Compensated Employees eligible to participate in this Plan and a plan
of the Company or an Affiliated Company that satisfies the
requirements of Section 401(k) of the Code, including, if applicable,
this Plan, shall be reduced to the extent necessary to satisfy the
requirements of Treasury Regulations Section 1.401(m)-2 or similar
such rule.
(b) For purposes of Sections 5.9 and 5.10 the following definitions
shall apply:
(i) "Average Contribution Percentage" means, with respect to a
group of Eligible Employees for a Plan Year, the average of the
"Contribution Percentages," in such group.
(ii) The "Contribution Percentage" for any Eligible Employee is
determined by dividing the sum of The Eligible Employee's Participant
Voluntary Contributions and Matching Contributions under the Plan on
behalf of each such Eligible Employee for such Plan Year, by such
Eligible Employee's Compensation for such Plan Year. "Matching
Contributions" for purposes of the Average Contribution Percentage
test shall include a Matching Contribution only if it is allocated to
the Participant's Matching Contributions Account during the Plan Year
and is paid to the Trust Fund by the end of the twelfth month
following the close of the Plan Year. To the extent determined by the
Committee and in accordance with regulations issued by the Secretary
of the Treasury under Code Section 401(m)(3), the Compensation
Deferral Contributions on behalf of an Eligible Employee and any
"qualified nonelective contributions," within the meaning of Code
Section 401(m)(4)(c), on behalf of an Eligible Employee may also be
taken into account for purposes of calculating the Contribution
Percentage of such Eligible Employee, but shall not otherwise be
taken into account. However, any Matching Contributions taken into
account for purposes of determining the Actual Deferral Percentage of
an Eligible Employee under Section 5.6(a) shall not be taken into
account under this Section 5.9.
(c) In the event that as of the last day of a Plan Year this Plan
satisfies the requirements of Section 410(b) of the Code only if
aggregated with one or more other plans, or if one or more other plans
satisfy the requirements of Section 410(b) of the Code only if aggregated
with this Plan, then this Section 5.9 shall be applied by determining the
Contribution Percentages of Eligible Employees as if all such plans were a
single plan, in accordance with regulations prescribed by the Secretary of
the Treasury under Section 401(m) of the Code.
(d) For the purposes of this Section 5.9, the Contribution Percentage
for any Eligible Employee who is a Highly Compensated Employee under two
or more Code Section 401(a) plans of the Company or an Affiliated Company
shall to the extent required
25
by Code Section 401(m), be determined in a manner taking into account the
participant voluntary contributions and matching Company contributions for
such Eligible Employee under each of such plans.
(e) For purposes of determining the Contribution Percentage of an
Eligible Employee who is a Highly Compensated Employee, the Participant
Voluntary Contributions, Matching Contributions and Compensation of such
Eligible Employee shall include the Participant Voluntary Contributions,
Matching Contributions and Compensation of "family members," as such
individuals are described in Section 414(q)(6)(B) of the Code, and such
"family members" shall be disregarded in determining the Contribution
Percentage for Eligible Participants who are not Highly Compensated
Employees.
(f) The determination of the Contribution Percentage of any
Participant shall be made after first applying the provisions of Section
15.5 relating to certain limits on Annual Additions under Section 415 of
the Code, then applying the provisions of Section 5.7 relating to the
return of Compensation Deferral Contributions in excess of the Deferral
Limitation, then applying the provisions of Section 5.8 relating to
certain limits under Section 401(k) of the Code imposed on Compensation
Deferral Contributions of Highly Compensated Employees, and last, applying
the provisions of Section 6.5 relating to the forfeiture of Matching
Contributions attributable to excess Compensation Deferral or Participant
Voluntary Contributions.
(g) The determination and treatment of the Contribution Percentage of
any Participant shall satisfy such other requirements as may be prescribed
by the Secretary of the Treasury.
(h) The Committee shall keep or cause to have kept such records as
are necessary to demonstrate that the Plan satisfies the requirements of
Code Section 401(m) and the regulations thereunder, in accordance with
regulations prescribed by the Secretary of the Treasury.
(i) If pursuant to estimations by the Committee, Participant
Voluntary Contributions by Highly Compensated Employees for a Plan Year
can reasonably be expected to exceed the limitations of this Section 5.9,
solely for purposes of satisfying these limitations, the Committee may
establish a maximum percentage of Compensation that a Highly Compensated
Employee may contribute as Participant Voluntary Contributions for any
Plan Year.
5.10 PROVISION FOR DISPOSITION OF EXCESS PARTICIPANT VOLUNTARY CONTRIBUTIONS OR
MATCHING COMPANY CONTRIBUTIONS ON BEHALF OF HIGHLY COMPENSATED EMPLOYEES.
After application of the provisions of Sections 5.7 and 5.8, the following
provisions shall be implemented:
(a) The Committee shall determine, as soon as is reasonably possible
following the close of each Plan Year, the extent (if any) to which
contributions by or on behalf of Highly Compensated Employees may cause
the Plan to exceed the limitations of Section 5.8 for such Plan Year. If,
pursuant to the determination by the Committee,
26
contributions by or on behalf of a Highly Compensated Employee may cause
the Plan to exceed such limitations, then the Committee shall take the
following steps:
(i) First, any excess Participant Voluntary Contributions,
together with income allocable to such amount (determined in
accordance with (b) below) shall be returned to the Highly
Compensated Employee; provided that such amounts as are required to
be returned shall be returned within two and one-half (2-1/2) months
following the close of the Plan Year for which such excess
Participant Voluntary Contributions were made, but in no event later
than the end of the first Plan Year following the Plan Year for which
such excess contributions were made.
(ii) Second, if after the return of all Participant Voluntary
Contributions by the Highly Compensated Employee, and income
allocable thereto, an excess remains, any excess Matching Company
Contributions with respect to the Highly Compensated Employee shall
be forfeited, to the extent forfeitable under the Plan. Amounts of
excess Matching Company Contributions forfeited by Highly Compensated
Employees under this Section 5.10, including any income allocable
thereto shall be applied to reduce Matching Contributions by the
Participating Employer that made the Matching Company Contribution on
behalf of the Highly Compensated Employee for the Plan Year for which
the excess contribution was made.
(iii) If any excess remains after the provisions of (i) and (ii)
above are applied, any excess Matching Contributions which are
nonforfeitable under the Plan, and any income allocable thereto,
shall be distributed to the Highly Compensated Employee within two
and one-half (2-1/2) months following the close of the Plan Year for
which the excess Matching Contribution was made, but in no event
later than the end of the first Plan Year following the Plan Year for
which the excess Matching Contribution was made, notwithstanding any
other provision in this Plan.
(b) The Committee shall determine the amount of any excess
Participant Voluntary Contributions and Matching Contributions made by or
on behalf of Highly Compensated Employees for a Plan Year by application
of the leveling method set forth in Proposed Treasury Regulation Section
1.401(m)-1(e)(2) under which the Contribution Percentage of the Highly
Compensated Employee who has the highest such percentage for such Plan
Year is reduced, to the extent required (i) to enable the Plan to satisfy
the Average Contribution Percentage test, or (ii) to cause such Highly
Compensated Employee's Contribution Percentage to equal the Contribution
Percentage of the Highly Compensated Employee with the next highest
Contribution Percentage. This process shall be repeated until the Plan
satisfies the Average Contribution Percentage test. For each Highly
Compensated Employee, the amount of excess Participant Voluntary and
Matching Contributions shall be equal to the total Participant Voluntary
and Matching Contributions (plus any amounts treated as Matching
Contributions) made on behalf of such Highly Compensated Employee
(determined prior to the application of the foregoing provisions of this
Subsection (b)) minus the amount determined by multiplying the Highly
Compensated Employee's Contribution Percentage (determined after the
application of the foregoing provisions of this Subsection (b)) by his
Compensation.
27
(c) The determination and correction of excess Participant Voluntary
and Matching Contributions made by and on behalf of a Highly Compensated
Employee whose Average Contribution Percentage is determined under the
family aggregation rules in Section 2.19(b)(vi) shall be accomplished by
reducing the Average Contribution Percentage of the Highly Compensated
Employee as required under Subsections (a) and (b) above and allocating
the excess Participant Voluntary and Matching Contributions for the family
unit among the family members in proportion to the Participant Voluntary
and Matching Contributions of each family member that are combined to
determine the Average Contribution Percentage.
(d) For purposes of satisfying the Average Contribution Percentage
test, income allocable to a Participant's excess Participant Voluntary
Contributions or Matching Contributions, as determined under (b) above,
shall be determined by applying procedures comparable to those provided
under Section 5.8.
(e) To the extent required by regulations under Section 414(m) or 415
of the Code, any excess Participant Voluntary Contributions or Matching
Contribution forfeited by or distributed to a Highly Compensated Employee
in accordance with this Section shall be treated as an Annual Addition
under Article XV for the Plan Year for which the excess contribution was
made, notwithstanding such forfeiture or distribution.
5.11 FORFEITURE OF MATCHING CONTRIBUTIONS ATTRIBUTABLE TO EXCESS DEFERRALS OR
CONTRIBUTIONS.
To the extent any Matching Contributions allocated to a Participant's
Company Contributions Account are attributable to excess Compensation Deferral
Contributions required to be distributed to the Participant in accordance with
Section 5.7 or 5.8, such Matching Contributions, including any income allocable
thereto, shall be forfeited, notwithstanding that such Matching Contributions
may otherwise be nonforfeitable under the terms of the Plan. Any Matching
Contributions forfeited by a Participant in accordance with this Section 5.11
shall be applied to reduce future Matching Contributions by Participating
Employers.
5.12 PARTICIPANT ROLLOVER/TRANSFER CONTRIBUTIONS.
(a) Effective as of an Eligible Employee's Employment Commencement
Date, or such later date as may be determined by the Committee, the
account, if any, of such Participant held in trust under another plan that
satisfies the requirements of Code Section 401(a), or in an individual
retirement account which is attributable solely to a rollover contribution
within the meaning of Code Section 408(d)(3), may be rolled over to this
Plan and credited to the Participant's Rollover/Transfer Account in
accordance with rules which the Committee shall prescribe from time to
time; provided, however, the Committee determines that the continued
qualification of this Plan would not be adversely affected by such
rollover or would cause this Plan to become a "transferee plan," within
the meaning of Code Section 401(a)(11). If a Participant's account under a
Plan of an Affiliated Company is transferred to this Plan, such transfer
shall be made directly from the trustee of the plan of such Affiliated
Company to the Trustee of this Plan and shall be in cash. Amounts rolled
over or transferred to the Plan pursuant to this Section 5.12 shall not be
subject to withdrawal by a Participant prior to his/her termination of
employment
28
with the Company and all Affiliated Companies. Nothing in this Section
5.12, however, shall be construed to permit an Eligible Employee to
commence participation in this Plan solely by reason of such rollover or
transfer. Further, nothing in this Section 5.12 shall be construed to
permit an Eligible Employee to be an active Participant in this Plan
solely by reason of a rollover or transfer pursuant to the provisions
hereof.
29
ARTICLE VI
COMPANY CONTRIBUTIONS
6.1 AMOUNT OF CONTRIBUTIONS.
Subject to the requirements and restrictions of Article V, this Article
VI, and Article XIV, and subject also to the amendment or termination of the
Plan or the suspension or discontinuance of contributions as provided herein,
Participating Employers shall make contributions to the Plan as follows:
(a) For each month in which a Participant has elected pursuant to
Section 5.1 to make a Compensation Deferral Contribution, the Company
shall contribute an amount equal to such Compensation Deferral
Contribution to the Trust Fund, to be allocated to the Participant's
Compensation Deferral Account.
(b) For each month in which a Participant makes a Compensation
Deferral Contribution, the Company shall pay into the Trust Fund an amount
equal to seventy-five percent (75%) of the Participant's Compensation
Deferral Contributions, up to a maximum of six percent (6%) of such
Participant's total Compensation for the same period. Amounts contributed
to the Trust Fund under this Subsection (b) shall be allocated as set
forth in Subsection (a) above.
The Company may change the amount of such Matching Contributions from time
to time by resolution of the Board of Directors. Amounts contributed to
the Trust Fund under this Section 6.1(b) shall be allocated to the Company
Contribution Accounts of Participants as provided in Article VII.
(c) In addition to the contribution described above, the Company in
its sole discretion may make a contribution for each fiscal year in an
amount determined by the Board of Directors. Such contributions shall be
allocated to the Company Contribution Accounts of Participants as provided
in Article VII.
6.2 INSUFFICIENT PROFITS.
Contributions authorized by Subsection 6.1(d) shall be made only to the
extent that net profits are available. If any Participating employer is
prevented from making a contribution which it would otherwise have made under
the Plan, by reason of having no current or accumulated earnings or profits or
because such earnings or profits are less than the contributions which it would
otherwise have made, then so much of the contribution which such Participating
Employer was so prevented from making may be made, for the benefit of the
employees of such Participating Employer, by the other Participating Employer,
to the extent of current or accumulated earnings or profits, except that such
contribution by each such other Participating Employer shall be limited, where
all Participating Employers do not file a consolidated return, to that
proportion of its total current and accumulated earnings or profits reaming
after adjustment for its contribution deductible without regard to this Section
6.2 which the total prevented
30
contribution bears to the total current and accumulated earnings or profits of
all the Participating Employers remaining after adjustment for all
contributions deductible without regard to this Section 6.2.
To the extent net profits are insufficient to permit Company contributions
to be made pursuant to the provisions of Section 6.1(d), Compensation Deferral
Contributions nevertheless may be made by Participants and contributions may
nevertheless be made by the Company in respect of Compensation Deferral
Contributions pursuant to Section 5.1(a).
6.3 TIME OF CONTRIBUTION.
A Compensation Deferral Contribution on behalf of a Participant for a Plan
Year shall in no event be made later than thirty (30) days following the last
day of such Plan Year. In no event shall contributions made under Section 6.1
above for any Plan Year be made later than the time prescribed by law for the
deduction of such contribution for purposes of the Company's Federal income
tax, as determined by the applicable provisions of the Internal Revenue Code.
6.4 IRREVOCABILITY.
The Company shall have no right or title to, nor interest in, the
contributions made to the Trust Fund, and no part of the Trust Fund shall
revert to the Company except that on and after the Effective Date funds may be
returned to the Company as follows:
(a) In the case of a Company contribution which is made by a mistake
of fact, that contribution (and any income allocable to such contribution)
may be returned to the Company within one (1) year after it is made. A
Company contribution which is made by a mistake of fact shall include any
Compensation Deferral Contributions on behalf of a Participant which are
not eligible for tax-deferred treatment under Code Section 401(k) and any
Matching Contributions attributable thereto.
(b) All Company contributions are hereby conditioned upon the Plan
initially satisfying all of the requirements of Code Section 401(a) and
Section 401(k). If the Plan does not initially qualify, at the Company's
written election the Plan or any portion thereof may be revoked and any or
all such contributions with respect to the portion revoked may be returned
to the Company within one year after the date of IRS denial of the initial
qualification of the Plan. Upon such a revocation the affairs of the Plan
and Trust shall be terminated and wound up as the Company shall direct.
(c) All contributions to the Trust Fund are conditioned on
deductibility under Code Section 404. In the event a deduction is
disallowed for any such contribution such contribution may be returned to
the Company.
(d) To the extent authorized pursuant to Section 5.7 or 5.8, excess
Compensation Deferral Contributions may be returned to the Company for
purposes of withholding any federal, state, or local taxes that may be due
on such amounts; provided that thereafter, the Company pays to the
Participant all remaining amounts.
31
ARTICLE VII
PARTICIPANT ACCOUNTS AND ALLOCATIONS
7.1 GENERAL.
(a) In order to account for the allocated interest of each
Participant in the Trust Fund, there shall be established and maintained
the Accounts described in Section 2.1.
(b) The fair market value of the Trust Fund shall be determined as of
the monthly Valuation Dates and such other Valuation Dates as the
Committee may determine.
(c) All gains, losses, dividends and other property acquisitions
and/or transfers that occur with respect to the Trust Fund shall be held,
charged, credited, debited or otherwise accounted for under said Fund on
an unallocated basis until allocated to Participants' Accounts as of the
applicable Valuation Date as provided under this Plan or otherwise used or
applied in accordance with the provisions of this Plan.
7.2 ALLOCATION OF PARTICIPATING EMPLOYER CONTRIBUTIONS.
(a) The Compensation Deferral Account of each Participant shall be
credited with Compensation Deferral Contributions made in accordance with
Section 5.1(a).
(b) The Company Contributions Account of each Participant shall be
credited with Matching Contributions made in accordance with Sections
6.1(b) and (c), and any discretionary contributions under Section 6.1(d),
if applicable.
(c) For the purpose of the allocation among the Plan Participants of
the Participating Employer's discretionary contribution for a Plan Year,
the Participating Employers' contribution shall be allocated as of the
last day of the Plan Year to the Participants on that date (excluding any
Participants whose service has terminated or who have retired or died, or
who became disabled prior to such Plan Year ending) in the ratio that each
Participant's Compensation Deferral Contributions during the Plan Year
bears to the total Compensation Deferral Contributions during the Plan
Year of all Participants.
7.3 INVESTMENT FUNDS.
Contributions by and on behalf of a Participant shall be invested in
accordance with the Participant's investment designations in one or more
Investment Funds established by the Committee for this purpose. As of July 1,
1993, the following Investment Funds shall be available for investment of
contributions by and on behalf of a Participant; provided, however, the
Committee, in its discretion, may from time to time establish Investment Funds
in addition to or in place of these funds:
32
(a) FIDELITY MONEY MARKET FUND. This Fund is invested in high-quality
U.S. Dollar-denominated money market instruments of U.S. and foreign
issuers. Investments include short-term corporate obligations, U.S.
Government obligations and certificates of deposit. This Fund is intended
to offer stability and carry the least risk of any of the Funds, since it
concentrates on preserving the value of Participants' savings, while
providing income. It is not intended to offer the growth potential of
stock funds.
(b) PACIFIC MUTUAL FIXED INCOME FUND. This Fund is invested in
high-quality bonds and mortgage loans, and is intended to provide
consistent income at a fixed interest rate, thereby incurring low risk. It
is expected that this Fund will be useful to Participants who are near
retirement and need regular income rather than growth in the value of
their Accounts.
(c) FIDELITY EQUITY-INCOME FUND. This is a balanced Fund that invests
Participants' contributions in a diversified portfolio of stocks, bonds
and convertible securities. It is a growth and income Fund that is
intended to provide long-term growth while earning income. It is expected
to offer a good return with less risk than a Fund that invests only in
growth stocks.
(d) FIDELITY MAGELLAN (EQUITY) FUND. This Fund is invested in an
aggressive stock portfolio that combines stocks from both well-known and
lesser-known companies. The risks of this Fund will parallel those of the
stock market. Although the Fund contains higher risks, its potential for
income is expected to be greater over time. It is intended to be useful
for Participants with long-term investment goals.
(e) COMPANY STOCK FUND. This fund is invested primarily in Company
Stock.
Investment Funds may, from time to time, hold cash or cash equivalent
investments (including interests in any fund maintained by the Trustee as
provided in the Trust Agreement) resulting from investment transactions
relating to the property of said Fund; provided, however, that neither the
Committee, the Company, the Participating Employer, the Trustee or any other
person shall have any duty or responsibility to cause such Funds to be held in
cash or cash equivalent investments for investment purposes. In the case of any
Investment Fund under the management and control of an Investment Manager
appointed by the Committee in accordance with Section 11.3, neither the
Committee, the Company, the Participating Employer, the Trustee, nor any other
person shall have any responsibility or liability for investment decisions made
by such Investment Manager.
7.4 ALLOCATION OF CONTRIBUTIONS TO INVESTMENT FUNDS.
In accordance with rules of uniform application which the Committee may
from time to time adopt and subject to any limitations set forth below in this
Section, each Participant shall have the right to designate one or more of the
Investment Funds described in Section 7.3
33
above for the investment of his Accounts and for the investment of
contributions under the Plan, in accordance with the following rules:
(a) Investment of contributions by and on behalf of a Participant in
any Investment Fund and transfer of a Participant's Account balances
between Investment Funds shall be made in increments of ten percent (10%).
(b) During an election period at the end of each calendar quarter
Participants shall be entitled to make investment designations. Each
election period shall begin on the day which is fifteen days before the
end of the calendar quarter and shall end on the day which is five days
before the end of the calendar quarter.
(c) Subject to the limitations of Paragraph (a) above, a Participant
may make a separate investment designation with respect to the amount
standing to the Participant's credit in all of his/her Accounts under the
Plan as of the last day of the relevant calendar quarter ("Existing
Account Balances"), and future contributions to his/her Accounts ("Future
Contributions"), as follows:
(i) Investment designations with respect to Existing Account
Balances shall apply to all of the Participant's Accounts (i.e., an
investment designation may not be made with respect to one or more of
the Participant's Accounts but fewer than all of the Participant's
Accounts) and shall be effective as of the last day of the calendar
quarter for which the designation is made.
(ii) Investment designations with respect to Future
Contributions shall apply to all Future Contributions (i.e., both
Company and Participant, including repayments of an outstanding
loan), and shall be effective as of the first day of the first
payroll period commencing on or after the first day of the calendar
quarter beginning after the designation is made. For purposes of the
allocation of Future Contributions to Participants' Company Stock
Fund subaccounts as of any Valuation Date after July 1, 1993, the
number of shares of Company Stock to be allocated as of such
Valuation Date shall be based on the average price paid by the
Trustee for all shares it purchased during the month ending on such
Valuation Date.
(d) Notwithstanding the foregoing, a Participant may not make an
investment designation as to Existing Account Balances which (i) directs a
transfer from the Pacific Mutual Fixed Income Fund directly to the
Fidelity Money Market Fund; (ii) directs a transfer from Existing Account
Balances to the Company Stock Fund. This restriction does not apply to an
investment designation pertaining to Future Contributions. Amounts in a
Participant's Rollover/Transfer Account may, if the Participant so
designates, be invested in the Company Stock Fund immediately after the
receipt of such funds by this Plan.
(e) Any investment designation shall be a continuing investment
designation until the Committee actually receives a completed investment
designation form satisfactory to the Committee requiring a change. In all
cases it shall be the responsibility
34
of each Participant to verify that his or her investment designation is
being implemented and that such investment designation is appropriate to
the Participant's circumstances.
(f) Any election or direction made under this Plan by an individual
who is or may become subject to liability under Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), may be
conditioned upon such restrictions as are necessary or appropriate to
qualify for an applicable exemption under Section 16) of the Exchange
Act, or any rule promulgated thereunder. To the extent required by Section
401(a)(4) of the Code, the rules under this Section 7.4(g) shall be
administered in a nondiscriminatory manner.
7.5 TREATMENT OF ACCOUNTS UPON TERMINATION OF EMPLOYMENT.
Upon a Participant's termination of employment, pending distribution of
the Participant's Distributable Benefit pursuant to the provisions of Articles
IX and X below, the vested value of a Participant's Accounts shall be
determined and that amount shall be transferred to the Pacific Mutual Fixed
Income Fund, where it shall be maintained until it is distributed to the
Participant.
7.6 ACCOUNTING PROCEDURES.
The Committee and the Trustee shall establish accounting procedures for
the purpose of making the allocations, valuations and adjustments to
Participants' Accounts provided for in this Article VII and Articles IX and X.
From time to time the Committee and Trustee may modify such accounting
procedures for the purpose of achieving equitable, nondiscriminatory, and
administratively feasible allocations among the Accounts of Participants in
accordance with the general concepts of the Plan and the provisions of this
Article VII and Article VIII.
35
ARTICLE VIII
SPECIAL PROVISIONS
CONCERNING COMPANY STOCK
EFFECTIVE AS OF JULY 1, 1993
8.1 SECURITIES TRANSACTIONS.
(a) The Trustee shall acquire Company Stock in the open
market or from the Company or any other person, including a party in
interest, pursuant to a Participant's election to invest any Company
contributions on his behalf (including Compensation Deferral
Contributions), or Participant Voluntary Contributions, or amounts in his
Rollover/Transfer Account in the Company Stock Fund established by the
Committee in accordance with Section 7.3, or to transfer amounts held in
other Investment Funds to such Company Stock Fund. No commission will be
paid in connection with the Trustee's acquisition of Company Stock from a
party in interest.
(b) Pending acquisition of Company Stock pursuant to a
Participant's investment election, elected amounts may be allocated to the
Participant's Company Stock Fund subaccount in cash and may be invested in
any short-term interest fund of the Trustee.
(c) Neither the Company, nor the Committee, nor any Trustee
have any responsibility or duty to time any transaction involving Company
Stock in order to anticipate market conditions or changes in Company Stock
value. Neither the Company, nor the Committee nor any Trustee have any
responsibility or duty to sell Company Stock held in the Trust Fund in
order to maximize return or minimize loss.
8.2 VALUATION OF COMPANY SECURITIES.
When it is necessary to value Company Stock held by the Plan, the
value will be the current fair market value of the Company Stock, determined
in accordance with this Section 8.2 and applicable legal requirements. In the
case of a transaction between the Plan and a party in interest, the fair
market value of the Company Stock must be determined as of the date of the
transaction rather than as of some other Valuation Date occurring before or
after the transaction. If the Company Stock is publicly traded, fair market
value will be based on the closing price in public trading on the relevant
date, as reported in THE WALL STREET JOURNAL or any other publication of
general circulation designated by the Committee, unless another method of
valuation is required by the standards applicable to prudent fiduciaries. If
the Company Stock cannot be valued on the basis of its closing price in
public trading on a relevant date, fair market value will be determined by
the Company in good faith based on all relevant factors for determining the
fair market value of securities. Relevant factors include an independent
appraisal by a person who customarily makes such appraisals, if an appraisal
of the fair market value of the Company Stock as of the relevant date was
obtained.
8.3 ALLOCATION OF STOCK DIVIDENDS AND SPLITS.
Company Stock received by the Trust as a result of a Company Stock
split or Company Stock dividend on Company Stock held in Participants'
Company Stock Fund subaccounts will be allocated as of the Valuation Date
coincident with or following the date of such split or dividend, to each
Participant who has such a subaccount. The amount allocated will
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bear substantially the same proportion to the total number of shares received
as the number of shares in the Participant's Company Stock Fund subaccount
bears to the total number of shares allocated to such subaccounts of all
Participants immediately before the allocation. The shares will be allocated
to the nearest thousandth of a share.
8.4 REINVESTMENT OF DIVIDENDS.
Upon direction of the Committee, cash dividends may be reinvested
as soon as practicable by the Trustee in shares of Company Stock for
Participants' Company Stock Fund subaccounts. Cash dividends may be
reinvested in Company Stock purchased as provided in this Article VIII.
8.5 VOTING OF COMPANY STOCK.
The Trustee shall have no discretion or authority to vote Company
Stock held in the Trust on any matter presented for a vote by the
stockholders of the Company except in accordance with timely directions
received by the Trustee from Participants.
(a) Each Participant shall be entitled to direct the
Trustee as to the voting of all Company Stock allocated and credited to
his Company Stock Fund subaccount.
(b) All Participants entitled to direct such voting shall be
notified by the Company, pursuant to its normal communications with
shareholders, of each occasion for the exercise of such voting rights
within a reasonable time before such rights are to be exercised. Such
notification shall include all information distributed to shareholders
either by the Company or any other party regarding the exercise of such
rights. If a Participant shall fail to direct the Trustee as to the
exercise of voting rights arising under any Company Stock credited to his
Company Stock Fund subaccounts, or if any Company Stock held in the Plan
has not been allocated to Participants' Company Stock Fund subaccounts,
the Trustee shall not be required to vote such Company Stock. The Trustee
shall maintain confidentiality with respect to the voting directions of
all Participants.
(c) No Participant shall be a "fiduciary" (as that term is
defined in ERISA Section 3(21)) with respect to Company Stock for which
he/she has the right to direct the voting under the Plan for the purpose
of exercising voting rights pursuant to this Section 8.5 or tender rights
pursuant to Section 8.6.
(d) In the event a court of competent jurisdiction shall
issue an opinion or order to the Plan, the Company or the Trustee, which
shall, in the opinion of counsel to the Company or the Trustee, invalidate
under ERISA, in all circumstances or in any particular circumstances, any
provision or provisions of this Section regarding the manner in which
Company Stock held in the trust shall be voted or cause any such provision
or provisions to conflict with ERISA, then, upon notice thereof to the
Company or the Trustee, as the case may be, such invalid or conflicting
provisions of this Section shall be given no further force or effect. In
such circumstances the Trustee shall nevertheless have no discretion to
vote Company Stock held in the Trust unless required under such order or
opinion but shall follow instructions received from Participants, to the
extent such instructions have not been invalidated. To the extent required
to exercise any residual fiduciary responsibility with respect to voting,
the Trustee shall take into account in exercising its fiduciary judgment,
unless it is clearly imprudent to do so, directions timely received from
Participants, as such directions are most indicative of what is in the
best interests of Participants.
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8.6 CERTAIN OFFERS FOR COMPANY STOCK.
Notwithstanding any other provision of this Plan to the contrary,
in the event an offer shall be received by the Trustee (including, but not
limited to, a tender offer or exchange offer within the meaning of the
Securities Exchange Act of 1934, as from time to time amended and in effect),
to acquire any or all shares of Company Stock held by the Trust (an "Offer"),
whether or not such stock is allocated to Participants' Company Stock Fund
subaccounts, the discretion or authority to sell, exchange or transfer any of
such shares shall be determined in accordance with the following rules:
(a) The Trustee shall have no discretion or authority to
sell, exchange or transfer any of such stock pursuant to such Offer except
to the extent, and only to the extent that the Trustee is timely directed
to do so in writing with respect to any Company Stock held by the Trustee
subject to such Offer and allocated to the Company Stock Fund subaccount
of any Participant, by each Participant to whose Company Stock Fund
subaccount any of such shares are allocated. Upon timely receipt of such
instructions, the Trustee shall, subject to the provisions of Subsections
(c) and (k), sell, exchange or transfer pursuant to such Offer, only such
shares as to which such instructions were given. The Trustee shall use its
best efforts to communicate or cause to be communicated to each
Participant the consequences of any failure to provide timely instructions
to the Trustee. In the event, under the terms of an Offer or otherwise,
any shares of Company Stock tendered for sale, exchange or transfer
pursuant to such Offer may be withdrawn from such Offer, the Trustee shall
follow such instructions respecting the withdrawal of such securities from
such Offer in the same manner as shall be timely received by the Trustee
from the Participants entitled under this Subsection to give instructions
as to the sale, exchange or transfer of securities pursuant to such Offer.
(b) In the event that an Offer for fewer than all of the
shares of Company Stock held by the Trustee in the Trust shall be received
by the Trustee, each Participant shall be entitled to direct the Trustee
as to the acceptance or rejection of such Offer (as provided by Subsection
(a) above) with respect to the largest portion of such Company stock as
may be possible given the total number of amount of shares of Company
Stock the Plan may sell, exchange or transfer pursuant to the Offer based
upon the instructions received by the Trustee from all other Participants
who shall timely instruct the Trustee pursuant to this Section to sell,
exchange or transfer such shares pursuant to such Offer, each on a PRO
RATA basis in accordance with the maximum number of shares each such
Participant would have been permitted to direct under Subsection (a) above
had the Offer been for all shares of Company Stock held in the trust.
(c) In the event an Offer shall be received by the Trustee
and instructions shall be solicited from Participants in the Plan pursuant
to Subsection (a) above regarding such Offer, and prior to termination of
such Offer, another Offer is received by the Trustee for the securities
subject to the first Offer, the Trustee shall use its best efforts under
the circumstances to solicit instructions from the Participants to the
Trustee (i) with respect to securities tendered for sale, exchange or
transfer pursuant to the first Offer, whether to withdraw such tender, if
possible, and, if withdrawn, whether to tender any securities so withdrawn
for sale, exchange or transfer pursuant to the second Offer, and (ii) with
respect to securities not tendered for sale, exchange or transfer pursuant
to the first Offer, whether to tender or not to tender such securities for
sale, exchange or transfer pursuant to the second Offer. The Trustee shall
follow all such instructions received in a timely manner from Participants
in the same manner as provided in Subsection (a) above. With respect to
any further Offer for any Company Stock received by the Trustee and
subject to any earlier Offer (including successive Offers from one or more
existing offerors), the Trustee shall act in the same manner as described
above.
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(d) With respect to any Offer received by the Trustee, the
Trustee shall distribute, at the Company's expense, copies of all relevant
material, including, but not limited to, material filed with the
Securities and Exchange Commission with such Offer or regarding such
Offer, and shall seek confidential written instructions from each
Participant who is entitled to respond to such Offer pursuant to
Subsection (a) or (b) above. The identities of Participants, the amount of
Company Stock allocated to their Company Stock Fund subaccounts, and the
value of such account shall be determined from the list of Participants
delivered to the Trustee by the Recordkeeper (as defined below). The
Recordkeeper shall take all reasonable steps necessary to provide the
Trustee with the latest possible information. For purposes of this
Section, the "Recordkeeper" shall mean such person or entity appointed by
the Committee to receive Participant designations and instructions
pursuant to the provisions of this Plan and to carry out such other
administrative duties and responsibilities under the Plan as shall be
agreed to by the Committee and the Recordkeeper.
(e) The Trustee shall distribute and/or make available to
each Participant who is entitled to respond to an Offer pursuant to
Subsection (a) or (b) above an instruction form to be used by each such
Participant who wishes to instruct the Trustee. The instruction form shall
state that (i) if the Participant fails to return an instruction form to
the Trustee by the indicated deadline, the Company Stock for which he is
entitled to give instructions will not be sold, exchanged or transferred
pursuant to such Offer, (ii) the Participant will be a Named Fiduciary (as
described in Subsection (j) below) with respect to all shares for which he
is entitled to give instructions, and (iii) the Company acknowledges and
agrees to honor the confidentiality of the Participant's instructions to
the Trustee.
(f) Each Participant may choose to instruct the Trustee in
one of the following two ways: (i) not to sell, exchange or transfer any
shares of Company Stock for which he is entitled to give instructions, or
(ii) to sell, exchange or transfer all Company Stock for which he is
entitled to give instructions. The Trustee shall follow up with additional
mailings and postings of bulletins, as reasonable under the time
constraints then prevailing, to obtain instructions from Participants not
otherwise responding to such requests for instructions. The Trustee shall
then sell, exchange or transfer shares according to instructions from
Participants, and shares for which no instructions are received shall not
be sold, exchanged or transferred.
(g) The Company shall furnish former Participants who have
received distributions of Company Stock so recently as to not be
shareholders of record with the information given to Participants pursuant
to Subsections (d), (e) and (f) of this Plan. The Trustee is hereby
authorized to sell, exchange or transfer pursuant to an Offer any Company
Stock it may receive from such former Participants in accordance with
appropriate instructions from them.
(h) Neither the Committee nor the Trustee shall express any
opinion or give any advice or recommendation to any Participant concerning
the Offer, nor shall they have any authority or responsibility to do so.
The Trustee has no duty to monitor or police the party making the Offer;
provided, however, that if the Trustee becomes aware of activity which on
its face reasonably appears to the Trustee to be materially false,
misleading, or coercive, the Trustee shall demand promptly that the
offending party take appropriate corrective action. If the offending party
fails or refuses to take appropriate corrective action, the Trustee shall
communicate with affected Participants in such manner as it deems
advisable.
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(i) The Trustee shall not reveal or release a Participant's
instructions to the Company, its officers, directors, employees, or
representatives. If some, but not all, Company Stock held by the Trust is
sold, exchanged, or transferred pursuant to an Offer, the Company, with
the Trustee's cooperation, shall take such action as is necessary to
maintain the confidentiality of Participant's records, including, without
limitation, establishment of a security system and procedures which
restrict access to Participant records and retention of an independent
agent to maintain such records. If an independent record keeping agent is
retained, such agent must agree, as a condition of its retention by the
Company, not to disclose the composition of any Participant Accounts to
the Company, its officers, directors, employees, or representatives. The
Company acknowledges and agrees to honor the confidentiality of
Participants' instructions to the Trustee.
(j) Each Participant shall be a Named Fiduciary (as that
term is defined in ERISA Section 402(a)(2)) with respect to Company Stock
allocated to his Company Stock Fund subaccount under the Plan for which he
is entitled to issue instructions in accordance with Subsection (a) above
solely for purposes of exercising the rights of a shareholder with respect
to an Offer pursuant to this Section 8.6 and voting rights pursuant to
Section 8.5.
(k) In the event a court of competent jurisdiction shall issue
to the Plan, the Company or the Trustee an opinion or order, which shall,
in the opinion of counsel to the Company or the Trustee, invalidate, in
all circumstances or in any particular circumstances, any provision or
provisions of this Section regarding the determination to be made as to
whether or not Company Stock held by the Trustee shall be sold, exchanged
or transferred pursuant to an Offer or cause any such provision or
provisions to conflict with securities laws, then, upon notice thereof to
the Company or the Trustee, as the case may be, such invalid or
conflicting provisions of this Section shall be given no further force or
effect. In such circumstances the Trustee shall have no discretion as to
whether or not the Company Stock held in the Trust shall be sold,
exchanged, or transferred unless required under such order or opinion, but
shall follow instructions received from Participants, to the extent such
instructions have not been invalidated by such order or opinion. To the
extent required to exercise any residual fiduciary responsibility with
respect to such sale, exchange or transfer, the Trustee shall take into
account in exercising its fiduciary judgment, unless it is clearly
imprudent to do so, directions timely received from Participants, as such
directions are most indicative of what action is in the best interests of
Participants.
8.7 CONFIDENTIALITY PROCEDURES.
The Committee shall establish procedures intended to ensure the
confidentiality of information relating to Participant transactions involving
Company Stock, including the exercise of voting, tender and similar rights.
The Committee shall also be responsible for ensuring the adequacy of the
confidentiality procedures and monitoring compliance with such procedures.
The Committee may, in its sole discretion, appoint an independent fiduciary
to carry out any activities that it determines involve a potential for undue
Company influence on Participants with respect to the exercise of their
rights as shareholders.
8.8 SECURITIES LAW LIMITATION.
Neither the Committee nor the Trustee shall be required to engage
in any transaction, including, without limitation, directing the purchase or
sale of Company Stock, which it determines in its sole discretion might tend
to subject itself, its members, the Plan, the Company, or any Participant or
Beneficiary to a liability under federal or state securities laws.
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ARTICLE IX
VESTING; PAYMENT OF PLAN BENEFITS
9.1 VESTING.
(a) Each Participant shall at all times be one hundred percent
(100%) vested in his/her Accounts under the Plan other than his/her Company
Contribution Account. Each Participant shall become vested in his/her
Company Contribution Account according to the table set forth below:
Number of One-Year
Periods of Service Vested Interest
------------------ ---------------
Less than two 0%
Two but less than three 20%
Three but less than four 40%
Four but less than five 60%
Five but less than six 80%
Six or more 100%
(b) Notwithstanding the foregoing, a Participant shall become one
hundred percent (100%) vested in his/her Company Contribution Account upon
the occurrence of the following while he/she is employed by the Company or
an Affiliated Company: his/her attainment of age 65, his/her death, or
his/her termination of employment as a result of Total and Permanent
Disability.
9.2 DISTRIBUTION UPON RETIREMENT.
(a) A Participant may retire from the employment of the Company on
his/her Normal Retirement Date. If the Participant continues in the service
of the Company beyond his/her Normal Retirement Date, he/she shall continue
to participate in the Plan in the same manner as Participants who have not
reached their Normal Retirement Dates. At the subsequent termination of the
Participant's employment on his/her Postponed Retirement Date, his/her
Distributable Benefit shall be based upon the Vested Interest of his/her
Accounts as of the applicable Valuation Date determined with reference to
the date of his/her subsequent termination of employment. After a
Participant has reached his/her Normal Retirement Date, any termination of
the Participant's employment (other than by reason of death) shall be
deemed a Normal Retirement.
(b) Distribution as provided in Section 9.2(a) shall be made or
commence not later than sixty (60) days after the later of
(i) the close of the Plan Year in which occurs the
Participant's Normal Retirement Date or
(ii) the date the Participant's employment with the Company and
all Affiliated Companies terminates.
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(c) Notwithstanding the foregoing, effective for Plan Years
commencing on and after January 1, 1989, distribution of a Participant's
Distributable Benefit shall be made or commence not later than the
Participant's "Required Beginning Date" as determined in accordance with
this Subsection:
(i) Except as provided in (ii) below, a Participant's "Required
Beginning Date" shall mean the April 1 following the calendar year in
which the Participant attains age 70-1/2, whether or not such
Participant has incurred a Severance or whether or not the Participant
consents to the distribution. To the extent required under Code Section
401(a)(9), the Participant's Vested Interest in his/her Accounts
determined as of the December 31 of the calendar year in which occurs
his Required Beginning Date and the December 31 of each subsequent
calendar year shall be distributed no later than the December 31 of the
next following calendar year.
(ii) Except in the case of a Participant who is a "5-percent
owner" within the meaning of Section 401(a)(9) of the Code, "Required
Beginning Date" for a Participant who attained age 70-1/2 prior to
January 1, 1988 shall mean the April 1 following the later of the
calendar year in which the Participant attains age 70-1/2, or the
calendar year in which the Participant incurs a severance.
9.3 DISTRIBUTION UPON DEATH PRIOR TO COMMENCEMENT OF BENEFITS.
(a) Upon the death of a Participant prior to the commencement of
his/her benefits under this Plan, the Committee shall direct the Trustee to
make a distribution of the Participant's Distributable Benefit in the Trust
Fund in a lump sum (provided that his/her entire Distributable Benefit
shall be distributed within five (5) years of such Participant's death)
to the Beneficiary designated by the deceased Participant, except as
provided in Section 9.10.
(b) Distribution as provided in Section 9.3(a) shall be made or
commence to be made not later than sixty (60) days after the close of the
Plan Year in which all facts required by the Committee to be established as
a condition of payment shall have been established to the satisfaction of
the Committee.
9.4 DISTRIBUTION UPON DEATH AFTER COMMENCEMENT OF BENEFITS.
(a) Upon the death of a Participant after commencement of his/her
benefits but prior to the distribution of his/her entire Distributable
Benefit in the Trust Fund to which he/she is entitled, the Committee shall
direct the Trustee to make a distribution of the balance to which the
deceased Participant was entitled, to the Beneficiary designated by the
deceased Participant, except as provided in Section 9.10.
(b) Distributions as provided in Section 9.4(a) shall be made or
commence to be made not later than sixty (60) days after the close of the
Plan Year in which all facts required by the Committee to be established as
a condition of payment shall have been established to the satisfaction of
the Committee, and such distributions shall be paid for the remainder of
the period over which distributions were being made prior to the
42
Participant's death, unless the Committee determines in its discretion to
accelerate such payments.
9.5 DISTRIBUTION UPON DISABILITY PRIOR TO RETIREMENT DATE.
(a) Upon the termination of employment of a Participant as a result
of Total and Permanent Disability, which shall be certified by a physician
designated or approved by the Committee, his/her Distributable Benefit in
the Trust Fund shall be distributed to him/her in the manner provided in
Section 9.7.
(b) Subject to Section 9.6(d), distribution as provided in Section
9.5(a) shall be made or commence to be made not later than sixty (60) days
after the close of the Plan Year in which all facts required by the
Committee to be established as a condition of payment shall have been
established to the satisfaction of the Committee.
9.6 TERMINATION OF EMPLOYMENT PRIOR TO NORMAL RETIREMENT DATE.
(a) Subject to the provisions of Section 9.6(b) below, if a
Participant's employment for the Participating Employer and all Affiliated
Companies terminates prior to age 65, payment of his/her Distributable
Benefit shall be made or commence as soon as administratively feasible
following age 65 in accordance with Section 9.7, or prior to age 65 in
accordance with Subsection 9.6(b). Unless the Participant's Distributable
Benefit is payable prior to age 65 in accordance with (b), the Participant
shall be deemed to have elected to defer distribution until age 65. In no
event shall such distribution be later than sixty (60) days after the
close of the Plan Year in which occurs the Participant's age 65.
(b) If the Participant makes a valid written election in accordance
with (c) below (and without regard to any such election if the distribution
is not more than $3,500), payment of his/her Distributable Benefit in
accordance with Section 9.7 may be made or commence on an earlier date
which is not later than sixty (60) days after the close of the Plan Year
in which occurs the Participant's termination of employment with the
Participating Employer and all Affiliated Companies, to the extent
administratively feasible.
(c) Any written election by a Participant to receive payment of
his/her Distributable Benefit prior to age 65 shall not be valid unless
such election is made both (A) after the Participant receives a written
notice advising him/her of his/her right to defer payment to age 65, and
(B) within the ninety (90) day period ending on the Participant's
"Benefit Starting Date." The notice to the Participant advising him/her of
his/her right to defer payment shall be given no less than thirty (30) nor
more than ninety (90) days prior to the Participant's Benefit Starting
Date or such fewer days prescribed by regulations issued under Code Section
411(a)(11). For purposes of this Subsection(c), "Benefit Starting Date"
shall mean the first day of the first period for which the Participant's
Distributable Benefit is paid.
(d) In the event a Participant is not 100% vested in his/her
Company Contributions Account under the Plan, the portion of such Account
which is not vested shall be forfeited as of the earlier of (i) the date
such Account is distributed to him/her (or, if the distribution is made in
periodic payments, on the date the first such payment is made) or (ii) the
date he/she incurs five (5) consecutive one-year Periods of Severance.
43
(e) Subject to the requirements of Section 13.7, if a Participant
ceases to be an Employee by reason of the disposition by the Participating
Employer or an Affiliated Company of either (i) substantially all of the
assets used by the Company or an Affiliated Company, as the case may be,
in a trade or business, or (ii) the interest of the Participating Employer
or an Affiliated Company, as the case may be, in a subsidiary, such
Participant shall be entitled to payment of his/her Distributable Benefit
as if, for purposes of this Plan only, such event constitutes a
termination of employment.
9.7 FORMS AND METHODS OF DISTRIBUTIONS.
(a) Distributions from the Plan shall be in cash, except that
effective as of July 1, 1993, any portion of a Participant's Distributable
Benefit held in the Company Stock Fund following the Participant's
termination of employment with the Company and all Affiliated Companies may
be paid in shares of Company Stock if the Participant elects in writing in
accordance with this Section 9.7(a) and such other procedures established
by the Committee, to have such payment made in shares of Company Stock in
lieu of cash (which election may apply to the payment of a direct rollover
in accordance with Section 9.8). Any fractional shares allocated to a
Participant's Company Stock Fund subaccount shall be distributable only in
cash.
(i) If the distribution is paid in cash, the Committee shall
direct the Trustee to sell such Company Stock as soon as
administratively practicable at the then prevailing purchase price.
The amount of a cash distribution to a Participant pursuant to the
sale of any shares of Company Stock allocated to a Participant's
Company Stock Fund subaccount shall be based on the actual proceeds
from the sale of such shares of Company Stock. Neither the Company,
the Committee, nor the Trustee shall be required to time the
distribution or sale of Company Stock to anticipate fluctuations in
the purchase price.
(ii) Within a reasonable period of time (at least thirty (30)
days) prior to the date such Participant's Participant's Distributable
Benefit is to be paid, the Committee shall notify the Participant of
his/her right to elect to have payment of the portion of his/her
Distributable Benefit held in the Company Stock Fund made in the form
of a Company Stock distribution in lieu of cash (with the value of
fractional shares paid in cash).
(iii) Upon being so notified, the Participant shall have a
reasonable time (ninety (90) days) in which to file a written election
to have such payment made in cash.
(iv) If, within ninety (90) days after receiving notification
of his/her right to elect the form of payment of the portion of
his/her Distributable Benefit held in the Company Stock Fund, the
Participant fails to file a written election as to the form of such
payment, payment shall be made in cash.
44
(b) Distributions under Sections 9.2, 9.5 and 9.6 shall be made by
one of the following methods, as the Participant may elect, within 60 days
after the date of the Participant's termination of service; or, in the case
of distributions under Section 9.3 or 9.4, as the Beneficiary may elect, if
the Participant has not previously designated the method of distribution:
(i) A lump sum as soon as is practicable after the amount
thereof is determined;
(ii) Monthly installments over a period certain only of equal
monthly payments on the first day of each month, commencing on the
applicable commencement date and ending with the last payment of the
period certain (sixty (60), one hundred twenty (120) or one hundred
eighty (180), whichever number the Participant elects);
(c) Payment of his/her Distributable Benefit in equal monthly
installments in accordance with Subsection (b) above may be made in monthly
installments, provided, however, that the amount to be distributed each
year must be at least an amount equal to the quotient obtained by dividing
the Participant's Distributable Benefit by the life expectancy of the
Participant or the joint and last survivor expectancy of the Participant
and designated Beneficiary. Life expectancy and joint and last survivor
expectancy are computed by the use of the return multiples contained in
Treasury Regulations Section 1.72-9. For purposes of this computation, a
Participant's life expectancy shall be recalculated no more frequently
than annually; provided, however, the life expectancy of a non-spouse
Beneficiary shall not be recalculated. If the Participant's Spouse is not
the designated Beneficiary, the method of distribution selected must
assure that at least 50 percent of the present value of the Participant's
Distributable Benefit is paid within the life expectancy of the
Participant.
9.8 ELECTION FOR DIRECT ROLLOVER OF VESTED INTEREST TO ELIGIBLE RETIREMENT PLAN.
(a) To the extent required by Section 401(a)(31) of the Code,
effective for Plan Years commencing on and after January 1, 1993, a
Participant whose Distributable Benefit becomes payable in an "eligible
rollover distribution" as defined in (b)(i) below, shall be entitled to
make a written election for a direct rollover of all or a portion of the
taxable portion of his/her Distributable Benefit to an "eligible
retirement plan," as defined in (b)(ii) below. Any non-taxable portion of
a Participant's Distributable Benefit shall be payable to the Participant,
as provided in 9.7 above. For purposes of this Article, a Participant who
makes a direct rollover election in accordance with this Section 9.8 shall
be deemed to have received payment of his/her Distributable Benefit as of
the date payment is made from the Plan.
(b) For purposes of this Section,
(i) an "eligible rollover distribution" shall mean any
distribution of all or any portion of the Participant's
Distributable Benefit, except that an eligible rollover
distribution does not include: any distribution that is one of a
series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
Participant or the joint lives (or joint life
45
expectancies) of the Participant and the Participants designated
Beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Section
401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities), and
(ii) an "eligible retirement plan" shall mean any plan
described in Code Section 402(c)(8)(B), except that such plan must be
a defined contribution plan, the terms of which permit the acceptance
of a direct rollover from a qualified plan.
(c) A Participant's direct rollover election under this Section
shall be made in accordance with rules and procedures established by the
Committee and shall specify the dollar or percentage amount of the direct
rollover, the name and address of the eligible retirement plan selected by
the Participant and such additional information as the Committee deems
necessary of appropriate in order to implement the Participant's election.
It shall be the Participant's responsibility to confirm that the eligible
retirement plan designated in the direct rollover election will accept the
direct rollover of the taxable portion of his/her Distributable Benefit.
The Committee shall be entitled to direct the rollover based on its
reasonable reliance on information provided by the Participant, and shall
not be required to independently verify such information, unless it is
clearly unreasonable not to do so.
(d) At least thirty (30) days, but nor more than ninety (90) days,
prior to the date a Participant's Distributable Benefit becomes payable, or
as otherwise required under Code Section 402(g), the Participant shall be
given written notice of any right he/she may have to elect a direct
rollover of the taxable portion of his/her Distributable Benefit to an
eligible retirement plan; provided, however, a Participant who attained
age 65 or whose Vested Interest in his/her Accounts does not exceed $3,500
may waive any thirty (30) day notice requirement by making an affirmative
election to make or not to make a direct rollover of all or a portion of
his/her Distributable Benefit.
(e) If a Participant who attained age 65 or whose Distributable
Benefit does not exceed $3,500 fails to file a properly completed direct
rollover election with the Committee within ninety (90) days after such
notice is given, or if the Committee is unable to effect the rollover
within a reasonable time after the election is filed with the Committee
due to the failure of the Participant to take such actions as may be
required by the eligible retirement plan before it will accept the
rollover, the Participant's Distributable Benefit shall be paid in
accordance with Section 9.7, after withholding any applicable income
taxes.
(f) If the transferee plan specified by the Participant will not
accept a direct transfer of any Company Stock includible in the taxable
portion of the Participant's Distributable Benefit, such Company Stock
will be distributed to the Participant.
(g) To the extent required by Section 401(a)(31) of the Code, if all
or a portion of a Participant's Distributable Benefit is payable in a
single sum distribution to the Participant's surviving Spouse, or to a
former Spouse in accordance with a "qualified domestic relations order,"
such surviving Spouse or former Spouse shall be entitled to elect a direct
rollover of all or a portion of such distribution to an individual
retirement account or an individual retirement annuity in accordance
with the provisions of this Section.
46
9.9 FORFEITURES/REPAYMENT.
(a) Amounts forfeited in accordance with Section 9.6(d) shall be
applied as soon as practicable to reduce future Matching Contributions.
(b) A Participant who elects to receive a distribution pursuant
to Subsection 9.6(b) may, in the case of his reemployment as an Eligible
Employee, repay the total amount distributed and shall in such case be
fully restored in amounts forfeited in accordance with Section 9.6(d);
provided, however, that no such repayment shall be permitted unless such
repayment is made prior to the date the Participant incurs five (5)
consecutive one-year Periods of Severance and prior to the fifth
anniversary of his Employment Commencement Date following the Period of
Severance.
9.10 WITHDRAWALS.
Except as provided in this Section 9.10, no amounts may be withdrawn by a
Participant prior to his/her termination of employment.
(a) Each Participant may twice each Plan Year make a withdrawal
from his/her Participant Voluntary Contribution Account for any reason by
written request to the Committee.
(b) Each Participant may once in each Plan Year make a
withdrawal from his/her Compensation Deferral Account in an amount
determined by the Committee after considering a written request by such
Participant and finding that the withdrawal is necessary to relieve
Hardship to the Participant or his/her family. For purposes of this
Section 9.10(b), a withdrawal may be considered to be necessary on account
of a Hardship of the Participant if the Committee determines that the
amount required to meet such Hardship is not readily available to the
Participant from other resources, in accordance with regulations prescribed
by the Secretary of the Treasury under Section 401(k) of the Code. A
distribution generally may be treated as necessary on account of a Hardship
of a Participant if the Committee reasonably relies on the Participant's
representations to the Committee, unless the Committee has actual knowledge
to the contrary, that the Hardship cannot be relieved
(i) through reimbursement or compensation by insurance or
otherwise,
(ii) by reasonable liquidation of assets, if such
liquidation would not itself cause an immediate and heavy financial
need,
(iii) by the cessation of Participant Compensation Deferral
Contributions to the Plan, or
(iv) by other distributions or non-taxable loans from plans
of the Company or any other employer, or by borrowing from commercial
sources on
47
reasonable commercial terms, unless the obligation to repay the loan
would be inconsistent with the purpose of the withdrawal.
For purposes of this Section 9.10(b), a Participant's resources shall be
deemed to include those assets of his spouse and minor children that are
reasonably available to the Participant.
(d) The amount of the Participant's Compensation Deferral
Contributions available for withdrawal under Section 9.10(b) shall be the
lesser of (i) the total of such Compensation Deferral Contributions, less
any such amounts previously withdrawn or (ii) the value of the
Participant's Compensation Deferral Contributions as of the Valuation Date
immediately preceding the Committee's determination authorizing such
withdrawal, subject to adjustment in accordance with the provisions of
Article X, paragraph (d). Withdrawals under Section 9.10(b) shall be
considered as made from the most recent contributions by Participants.
Payment of a withdrawal shall be made only in cash and shall be allocated
pro rata among the Participant's Investment Fund subaccounts, including any
Company Stock Fund subaccount. The amount of a cash distribution to a
Participant pursuant to the sale of any shares of Company Stock allocated
to a Participant's Company Stock Fund subaccount after July 1, 1993 shall
be based on the actual proceeds from the sale of such shares of Company
Stock. At the election of the Participant, the amount so withdrawn may be
paid to the Participant in a cash lump sum.
(e) A withdrawal from the Participant's Compensation Deferral
Contributions Account shall result in a 90-day suspension of any Matching
Contributions that would have otherwise been made on behalf of the
Participant. Matching Contributions, if applicable, shall recommence on the
first day of the month next following the 90-day suspension.
(f) While still an Employee, a Participant who has attained at
least age fifty-nine and one-half (59-1/2) may, upon at least thirty (30)
days written notice to the Committee, make an election to withdraw all or a
portion of his/her Accounts, to the extent he/she is vested in such
Accounts. The amount so withdrawn shall be paid to the Participant as
provided in (d) above, except that such payment shall be in a lump sum
only.
9.11 DESIGNATION OF BENEFICIARY.
(a) Subject to the provisions of Subsection 9.11(b) below, each
Participant shall have the right to designate a Beneficiary or
Beneficiaries to receive his/her interest in the Trust Fund in the event of
his/her death before receipt of his/her entire interest in the Trust Fund.
This designation is to be made on the form prescribed by and delivered to
the Committee. Subject to the provisions of Subsection 9.11(b) below,
a Participant shall have the right to change or revoke any such designation
by filing a new designation or notice of revocation with the Committee, and
no notice to any Beneficiary nor consent by any Beneficiary shall be
required to effect any such change or revocation.
48
(b) If a Participant designates a Beneficiary and on the date of
his/her death has a Spouse who is not such Beneficiary, no effect shall be
given to such designation unless such Spouse has consented or thereafter
consents in writing to such designation and such consent is witnessed by
a notary public. A Spouse's consent to a Beneficiary designation is not
required under the following circumstances:
(i) if it is established to the satisfaction of the
Committee that there is no Spouse; or
(ii) if the Participant's Spouse cannot be located; or
(iii) because of other circumstances under which a Spouse's
consent is not required in accordance with applicable Treasury or
Department of Labor Regulations.
The Committee shall have absolute discretion as to whether the consent of
a Spouse shall be required. The provisions of this Section 9.11 shall not
be construed to place upon the Company or the Committee any duty or
obligation to require the consent of a Spouse for the purpose of protecting
the rights or interests of present or former Spouses of Participants,
except to the extent required to comply with Code Section 401(a)(11) or
Section 205 of ERISA.
(c) If a deceased Participant shall have failed to designate a
Beneficiary, or if the Committee shall be unable to locate a designated
Beneficiary after reasonable efforts have been made, or if for any reason
(including but not limited to application of the rules in Subsection
9.11(b)) the designation shall be legally ineffective, or if the
Beneficiary shall have predeceased the Participant or dies within 30 days
of the death of the Participant without effectively designating a successor
Beneficiary, any distribution required to be made under the provisions of
this Plan shall commence within one (1) year after the Participant's death
to the person or persons included in the highest priority category among
the following, in order of priority:
(i) The Participant's surviving Spouse;
(ii) The Participant's surviving children, including adopted
children;
(iii) The Participant's surviving parents; or
(iv) The Participant's estate.
The determination by the Committee as to which persons, if any, qualify
within the foregoing categories shall be final and conclusive upon all
persons. Notwithstanding the preceding provisions of this Section 9.11(c),
distribution made pursuant to this Subsection 9.11(c) shall be made to
the Participant s estate if the Committee so determines in its discretion.
49
(d) In the event that the deceased Participant was not a
resident of California at the date of his/her death, the Committee, in its
discretion, may require the establishment of ancillary administration in
California. In the event that a Participant shall predecease his/her
Beneficiary and on the subsequent death of the Beneficiary a remaining
distribution is payable under the applicable provisions of this Plan, the
distribution shall be payable in the same order of priority categories as
set forth above but determined with respect to the Beneficiary, subject
to the same provisions concerning non-California residency, the
unavailability of an estate representative and/or the absence of
administration of the Beneficiary's estate as are applicable on the death
of the Participant.
(e) The Committee shall not be required to authorize any payment
to be made to any person following a Participant's death, whether or not
such person has been designated by the Participant as a Beneficiary, if the
Committee determines that the Plan may be subject to conflicting claims in
respect of said payment for any reason, including, without limitation, the
designation or continuation of a designation of a Beneficiary other than
the Participant's Spouse without the consent of such Spouse to the extent
such consent is required by Section 401(a)(11) of the Code. In the event
the Committee determines in accordance with this Section 9.11(e) not to
make payment to a designated Beneficiary, the Committee shall take such
steps as it determines appropriate to resolve such potential conflict.
9.12 FACILITY OF PAYMENT.
If any payee under the Plan is a minor or if the Committee
reasonably believes that any payee is legally incapable of giving a valid
receipt and discharge for any payment due him, the Committee may have the
payment, or any part thereof, made to the person (or persons or institution)
whom it reasonably believes is caring for or supporting the payee, unless it
has received due notice of claim therefor from a duly appointed guardian or
committee of the payee. Any payment shall be a payment from the Accounts of
the payee and shall, to the extent thereof, be a complete discharge of any
liability under the Plan to the payee.
9.13 PAYEE CONSENT.
A Participant's Accounts may not be distributed prior to
his/her attainment of age 65 without his/her written consent if his/her
Distributable Benefit exceeds $3,500.
9.14 ADDITIONAL DOCUMENTS.
(a) The Committee or Trustee, or both, may require the execution
and delivery of such documents, papers and receipts as the Committee or
Trustee may determine necessary or appropriate in order to establish the
fact of death of the deceased Participant and of the right and identity of
any Beneficiary or other person or persons claiming any benefits under
this Article IX.
(b) The Committee or the Trustee, or both, may, as a condition
precedent to the payment of death benefits hereunder, require an
inheritance tax release
50
and/or such security as the Committee or Trustee, or both, may deem
appropriate as protection against possible liability for state or federal
death taxes attributable to any death benefits.
9.15 LOANS.
(a) From time to time, the Committee may adopt procedures
whereby a Participant may borrow from his/her Accounts. In addition to such
other requirements as may be imposed by applicable law, any such loan shall
bear a reasonable rate of interest, shall be adequately secured by
proper collateral, and shall be repaid within a specified period of time
according to a written repayment schedule executed by the Participant and
Trustee under the Plan.
(b) In connection with the requirements set forth in (a) above,
the Committee shall establish the applicable interest rate at an annual
percentage rate. For loans certified by the Participant to be used for the
purchase of the Participant's principal residence, such interest rate shall
be equal to the prime rate for home loans as published in the WALL STREET
JOURNAL as of the first working day of the month (at the time the loan is
approved). For all other loans, such interest rate shall be equal to the
prime rate for home loans as published in the WALL STREET JOURNAL as of the
first working day of the month (at the time the loan is approved) plus two
percent (2%). Any loan shall by its terms require repayment within five
(5) years in substantially level payments made not less frequently than
quarterly, except that the repayment period may in the discretion of the
Committee be up to a maximum of fifteen (15) years in the case of a loan
certified by the Participant to be used in connection with the purchase of
any dwelling unit which within a reasonable time is to be used (determined
at the time the loan is made) as a principal residence of the Participant.
Without prejudice to the right of any Participant and the Trustee to enter
into other appropriate arrangements to secure repayment of a loan, a loan
to a Participant hereunder may be secured by an interest in such
Participant's Accounts.
(c) In no event shall the principal amount of a loan hereunder,
at the time the loan is made, together with the outstanding balance of all
other loans to the Participant under this Plan, exceed the lesser of:
(i) fifty percent (50%) of the value of the Participant's
Accounts under this Plan, determined as of the applicable Valuation Date
for each Investment Fund preceding the date on which the Participant's
loan application is completed in form satisfactory to the Committee
(provided, however, that notwithstanding the fifty percent (50%) limit,
a Participant's loan may not be greater than (A) fifty percent (50%) of
the value of all such Accounts of the Participant, or (B) ten thousand
dollars ($10,000)), or
(ii) fifty thousand dollars ($50,000) reduced by the excess
of the Participant's highest loan balance during the preceding 12-month
period, over the Participant s outstanding loan balance as of the date
of the new loan.
51
No loan less than five hundred dollars ($500) will be made. Unless
otherwise determined by the Committee, no Participant may have more than
one loan outstanding under this Plan on any date.
(d) Each Participant desiring to enter into a loan arrangement
pursuant to this Section 9.15 shall apply for a loan by filing a properly
completed application with the Committee. The Committee shall notify the
Participant within a reasonable time whether the application is approved or
denied. Upon approval of the application by the Committee, the Participant
shall enter into a loan agreement with the Trustee and the Company to make
payroll deductions to repay loan amount. Such a Participant shall execute
such further written agreements as may be necessary or appropriate to
establish a bona fide debtor-creditor relationship between such Participant
and the Trustee and to protect against the impairment of any security for
said loan.
(e) Any loan made to a Participant shall be secured by a
hierarchical portion of his vested Investment Fund subaccounts, including
any Company Stock Fund subaccount, as specified by the Committee and
explained in loan rules furnished to Participants. For purposes of
funding a loan to a Participant, if any shares of Company Stock allocated
to a Participant's Company Stock Fund subaccount after July 1, 1993 are
liquidated to fund such loan, the price per share of such Company Stock
shall be the closing price on the day the loan is processed. The Committee
may establish a monthly processing date for approved loan applications.
Repayments of a loan by a Participant shall be invested among the
Participant's Investment Fund subaccounts in accordance with the
Participant's Future Contributions investment election then in effect, as
provided in Section 7.4(c)(ii).
(f) Loans shall be repaid in accordance with the repayment
schedule provided under the terms of the loan agreement. Notwithstanding
the repayment schedule provided in a loan agreement, however, the amount of
any outstanding loan shall be due and payable upon the Participant's
termination of employment for any reason, including death. Upon a
Participant's termination of employment, the Participant's Distributable
Benefit shall be reduced by any outstanding loan amount which has become
due and payable under the foregoing rule or otherwise, and which is secured
by the Participant's Distributable Benefit, and such loan amount shall be
treated as distributed from the Plan to the Participant, or his
Beneficiary, if applicable. Notwithstanding the foregoing, upon a
Participant's termination of employment, the Participant may continue to
repay the loan by mailing a personal check or a money order to the Company
in accordance with the repayment schedule
(g) An existing loan may be reamortized one time, provided that
the other requirements of this Section 9.15 are satisfied at the time of
the reamortization. Except in the case of a loan used for the purchase of
the Participant's principal residence, at least one year must have elapse
after the date the original loan is funded before the loan is reamortized.
The reamortized loan must be repaid within five years of the date the
original loan was made, except that in the case of a loan used for the
purchase of the Participant s principal residence, the repayment period may
extend for up to fifteen years after the date the original loan was made.
(h) In the event a Participant fails to repay a loan in
accordance with the terms of a loan agreement, such loan shall be treated
as in default. The date of the enforcement of the security interest due to
a loan in default shall be determined by the Committee, provided no loss of
principal or income shall result due to any delay in the enforcement of the
security interest due to the default. As of the date of the Participant's
52
termination of employment for any reason, the Participant's Distributable
Benefit shall be reduced by the outstanding amount of a loan which is then
in default, including any accrued interest thereon, that is secured by the
Participant's Distributable Benefit. Any reasonable costs related to
collection of a loan made hereunder shall be borne by the Participant.
(h) To the extent required to comply with the requirements of
Section 401(a)(4) of the Internal Revenue Code, loans hereunder shall be
made in a uniform and nondiscriminatory manner.
53
ARTICLE X
VALUATION OF ACCOUNTS
For purposes of this Plan, the value of a Participant's Accounts shall
be determined in accordance with rules prescribed by the Committee, subject,
however, to the following provisions:
(a) Subject to adjustments in accordance with Subsection (d) below,
in the case of Normal Retirement or other termination of employment
other than death, the value of a Participant's Accounts under the Plan
shall be determined by reference to the Valuation Date coinciding with
or most recently preceding the date on which distribution of such
Participant's Accounts is made.
(b) Subject to adjustments in accordance with Subsection (d)
below, in the case of a Participant's death, the value of a
Participant's Accounts under the Plan shall be determined by
reference to the Valuation Date coinciding with or most recently
preceding the date on which the Committee has been furnished with
all documents and information (including but not limited to proof
of death, facts demonstrating the identity and entitlement of any
Beneficiary or other payee, and any and all releases) necessary to
distribute such Participant's Accounts.
(c) Subject to adjustments in accordance with Subsection (d)
below, in the case of any withdrawal, the value of a Participant's
Accounts under the Plan shall be determined by reference to the
Valuation Date coinciding with or most recently preceding the date
on which the Participant completes a request for such withdrawal in
form satisfactory to the Committee.
(d) For purposes of the payment of all or a portion of the
value of a Participant's Accounts under the Plan, determined by
reference to the applicable Valuation Date, the value of a
Participant's Accounts as of such Valuation Date shall be adjusted
(i) for any contributions, withdrawals or distributions
properly allocable under the terms of this Plan to his/her
Accounts that occurred on or after the applicable Valuation Date
or which, for any other reason were not otherwise reflected in
the valuation of his/her Accounts on such Valuation Date, and
(ii) effective as of July 1, 1993, for the proceeds from the
sale by the Trustee of any Company Stock held in the
Participant's Company Stock Fund subaccount as of the applicable
Valuation Date, if the value of such Company Stock is to be
distributed in cash, as provided in Article IX.
Neither the Committee, the Company, nor the Trustee shall have any
responsibility for any increase or decrease in the value of a Participant's
Accounts as a result of any valuation made under the terms of this Plan after
the date of his/her termination of employment and before the date of the
distribution of his/her Accounts to him. Also, neither the Committee, the
54
Company, nor the Trustee shall have any responsibility for failing to make
any interim valuation of a Participant's Accounts between the date of
distribution to the Participant of his/her Accounts and the applicable
Valuation Date, even though the Plan assets may have been revalued in that
interim for a purpose other than to revalue the Accounts under this Plan.
55
ARTICLE XI
OPERATION AND ADMINISTRATION OF THE PLAN
11.1 PLAN ADMINISTRATION.
(a) Authority to control and manage the operation and
administration of the Plan shall be vested in a committee
("Committee") as provided in this Article XI.
(b) The members of the Committee (the number of which shall be
determined by the Board of Directors) shall be appointed by the
Board of Directors and shall hold office until resignation, death
or removal by the Board of Directors. Members of the Committee may,
but need not be, appointed by appropriate designation of a
Committee heretofore constituted pursuant to the provisions of
another employee benefit plan maintained by the Company.
(c) For purposes of ERISA Section 402(a), the members of the
Committee shall be the Named Fiduciaries of this Plan.
(d) Notwithstanding the foregoing, a Trustee with whom Plan
assets have been placed in trust or an Investment Manager appointed
pursuant to Section 11.3 may be granted exclusive authority and
discretion to manage and control all or any portion of the assets
of the Plan.
11.2 COMMITTEE POWERS.
The Committee shall have all powers necessary to supervise the
administration of the Plan and control its operations. In addition to any
powers and authority conferred on the Committee elsewhere in the Plan or by
law, the Committee shall have, by way of illustration but not by way of
limitation, the following powers and authority:
(a) To allocate fiduciary responsibilities (other than trustee
responsibilities) among the Named Fiduciaries and to designate one
or more other persons to carry out fiduciary responsibilities
(other than trustee responsibilities). However, no allocation or
delegation under this Section 11.2(a) shall be effective until the
person or persons to whom the responsibilities have been allocated
or delegated agree to assume the responsibilities. The term
"trustee responsibilities" as used herein shall have the meaning
set forth in Section 405(c) of ERISA. The preceding provisions of
this Section 11.2(a) shall not limit the authority of the Committee
to appoint one or more Investment Managers in accordance with
Section 11.3.
(b) To designate agents to carry out responsibilities relating
to the Plan, other than fiduciary responsibilities.
(c) To employ such legal, actuarial, medical, accounting,
clerical and other assistance as it may deem appropriate in
carrying out the provisions of this Plan,
56
including one or more persons to render advice with regard to any
responsibility any Named Fiduciary or any other fiduciary may have
under the Plan.
(d) To establish rules and regulations from time to time for
the conduct of the Committee's business and the administration and
effectuation of this Plan.
(e) To administer, interpret, construe and apply this Plan and
to decide all questions which may arise or which may be raised
under this Plan by any Employee, Participant, former Participant,
Beneficiary or other person whatsoever, including but not limited
to all questions relating to eligibility to participate in the
Plan, the amount of service of any Participant, and the amount of
benefits to which any Participant or his/her Beneficiary may be
entitled.
(f) To determine the manner in which the assets of this Plan,
or any part thereof, shall be disbursed.
(g) To direct the Trustee, in writing, from time to time, to
invest and reinvest the Trust Fund, or any part thereof, or to
purchase, exchange, or lease any property, real or personal, which
the Committee may designate. This shall include the right to direct
the investment of all or any part of the Trust in any one security
or any one type of securities permitted hereunder. Among the
securities which the Committee may direct the Trustee to purchase
are "employer securities" as defined in Code Section 409(l) or any
successor statute thereto or "qualifying employer securities"
within the meaning of Section 407 of ERISA.
(h) To perform or cause to be performed such further acts as
it may deem to be necessary, appropriate or convenient in the
efficient administration of the Plan.
Any action taken in good faith by the Committee in the exercise of
authority conferred upon it by this Plan shall be conclusive and binding upon
the Participants and their Beneficiaries. All discretionary powers conferred
upon the Committee shall be absolute. However, all discretionary powers shall
be exercised in a uniform and nondiscriminatory manner.
11.3 INVESTMENT MANAGER.
(a) The Committee, by action reflected in the minutes thereof,
may appoint one or more Investment Managers, as defined in Section
3(38) of ERISA, to manage all or a portion of the assets of the
Plan.
(b) An Investment Manager shall discharge its duties in
accordance with applicable law and in particular in accordance with
Section 404(a)(1) of ERISA.
(c) An Investment Manager, when appointed, shall have full
power to manage the assets of the Plan for which it has
responsibility, and neither the Company nor the Committee shall
thereafter have any responsibility for the management of those
assets.
57
11.4 PERIODIC REVIEW.
(a) At periodic intervals, not less frequently than annually,
the Committee shall review the long-run and short-run financial
needs of the Plan and shall determine a funding policy for the Plan
consistent with the objectives of the Plan and the minimum funding
standards of ERISA, if applicable. In determining the funding
policy the Committee shall take into account, at a minimum, not
only the long-term investment objectives of the Trust Fund
consistent with the prudent management of the assets thereof, but
also the short-run needs of the Plan to pay benefits.
(b) All actions taken by the Committee with respect to the
funding policy of the Plan, including the reasons therefor, shall
be fully reflected in the minutes of the Committee.
11.5 COMMITTEE PROCEDURE.
(a) A majority of the members of the Committee as constituted
at any time shall constitute a quorum, and any action by a majority
of the members present at any meeting, or authorized by a majority
of the members in writing without a meeting, shall constitute the
action of the Committee.
(b) The Committee may designate certain of its members as
authorized to execute any document or documents on behalf of the
Committee, in which event the Committee shall notify the Trustee of
this action and the name or names of the designated members. The
Trustee, Company, Participants, Beneficiaries, and any other party
dealing with the Committee may accept and rely upon any document
executed by the designated members as representing action by the
Committee until the Committee shall file with the Trustee a written
revocation of the authorization of the designated members.
11.6 COMPENSATION OF COMMITTEE.
(a) Members of the Committee shall serve without compensation
unless the Board of Directors shall otherwise determine. However,
in no event shall any member of the Committee who is an Employee
receive compensation from the Plan for his/her services as a member
of the Committee.
(b) All members shall be reimbursed for any necessary or
appropriate expenditures incurred in the discharge of duties as
members of the Committee.
(c) The compensation or fees, as the case may be, of all
officers, agents, counsel, the Trustee, or other persons retained
or employed by the Committee shall be fixed by the Committee.
58
11.7 RESIGNATION AND REMOVAL OF MEMBERS.
Any member of the Committee may resign at any time by giving written
notice to the other members and to the Board of Directors effective as
therein stated. Any member of the Committee may, at any time, be removed by
the Board of Directors.
11.8 APPOINTMENT OF SUCCESSORS.
(a) Upon the death, resignation, or removal of any Committee
member, the Board of Directors may appoint a successor.
(b) Notice of appointment of a successor member shall be given
by the Secretary of the Company in writing to the Trustee and to
the members of the Committee.
(c) Upon termination, for any reason, of a Committee member's
status as a member of the Committee, the member's status as a Named
Fiduciary shall concurrently be terminated, and upon the
appointment of a successor Committee member the successor shall
assume the status of a Named Fiduciary as provided in Section 11.1.
11.9 RECORDS.
(a) The Committee shall keep a record of all its proceedings
and shall keep, or cause to be kept, all such books, accounts,
records or other data as may be necessary or advisable in its
judgment for the administration of the Plan and to properly reflect
the affairs thereof.
(b) However, nothing in this Section 11.9 shall require the
Committee or any member thereof to perform any act which, pursuant
to law or the provisions of this Plan, is the responsibility of the
Plan Administrator, nor shall this Section 11.9 relieve the Plan
Administrator from such responsibility.
11.10 RELIANCE UPON DOCUMENTS AND OPINIONS.
(a) The members of the Committee, the Board of Directors, the
Company and any person delegated under the provisions hereof to
carry out any fiduciary responsibilities under the Plan ("delegated
fiduciary"), shall be entitled to rely upon any tables, valuations,
computations, estimates, certificates and reports furnished by any
consultant, or firm or corporation which employs one or more
consultants, upon any opinions furnished by legal counsel, and upon
any reports furnished by the Trustee. The members of the Committee,
the Board of Directors, the Company and any delegated fiduciary
shall be fully protected and shall not be liable in any manner
whatsoever for anything done or action taken or suffered in
reliance upon any such consultant or firm or corporation which
employs one or more consultants, Trustee, or counsel.
(b) Any and all such things done or actions taken or suffered
by the Committee, the Board of Directors, the Company and any
delegated fiduciary shall be
59
conclusive and binding on all Employees, Participants,
Beneficiaries, and any other persons whomsoever, except as
otherwise provided by law.
(c) The Committee and any delegated fiduciary may, but are not
required to, rely upon all records of the Company with respect to
any matter or thing whatsoever, and may likewise treat those
records as conclusive with respect to all Employees, Participants,
Beneficiaries, and any other persons whomsoever, except as
otherwise provided by law.
11.11 REQUIREMENT OF PROOF.
The Committee or the Company may require satisfactory proof of any
matter under this Plan from or with respect to any Employee, Participant, or
Beneficiary, and no person shall acquire any rights or be entitled to receive
any benefits under this Plan until the required proof shall be furnished.
11.12 RELIANCE ON COMMITTEE MEMORANDUM.
Any person dealing with the Committee may rely on and shall be fully
protected in relying on a certificate or memorandum in writing signed by any
Committee member or other person so authorized, or by the majority of the
members of the Committee, as constituted as of the date of the certificate or
memorandum, as evidence of any action taken or resolution adopted by the
Committee.
11.13 MULTIPLE FIDUCIARY CAPACITY.
Any person or group of persons may serve in more than one fiduciary
capacity with respect to the Plan.
11.14 LIMITATION ON LIABILITY.
(a) Except as provided in Part 4 of Title I of ERISA, no
person shall be subject to any liability with respect to his/her
duties under the Plan unless he/she acts fraudulently or in bad
faith.
(b) No person shall be liable for any breach of fiduciary
responsibility resulting from the act or omission of any other
fiduciary or any person to whom fiduciary responsibilities have
been allocated or delegated, except as provided in Part 4 of Title
I of ERISA.
(c) No action or responsibility shall be deemed to be a
fiduciary action or responsibility except to the extent required by
ERISA.
11.15 INDEMNIFICATION.
(a) To the extent permitted by law, the Company shall
indemnify each member of the Board of Directors and the Committee,
and any other Employee of the Company with duties under the Plan,
against expenses (including any amount paid in
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settlement) reasonably incurred by him in connection with any
claims against him by reason of his/her conduct in the performance
of his/her duties under the Plan, except in relation to matters as
to which he/she acted fraudulently or in bad faith in the
performance of such duties. The preceding right of indemnification
shall pass to the estate of such a person.
(b) The preceding right of indemnification shall be in
addition to any other right to which the Board member or Committee
member or other person may be entitled as a matter of law or
otherwise.
11.16 BONDING.
(a) Except as is prescribed by the Board of Directors, as
provided in Section 412 of ERISA, or as may be required under any
other applicable law, no bond or other security shall be required
by any member of the Committee, or any other fiduciary under this
Plan.
(b) Notwithstanding the foregoing, for purposes of satisfying
its indemnity obligations under Section 11.15, the Company may (but
need not) purchase and pay premiums for one or more policies of
insurance. However, this insurance shall not release the Company of
its liability under the indemnification provisions.
11.17 PROHIBITION AGAINST CERTAIN ACTIONS.
(a) To the extent prohibited by law, in administering this
Plan the Committee shall not discriminate in favor of any class of
Employees and particularly it shall not discriminate in favor of
highly compensated Employees, or Employees who are officers or
shareholders of the Company.
(b) The Committee shall not cause the Plan to engage in any
transaction that constitutes a nonexempt prohibited transaction
under Section 4975(c) of the Code or Section 406(a) of ERISA.
(c) All individuals who are fiduciaries with respect to the
Plan (as defined in Section 3(21) of ERISA) shall discharge their
fiduciary duties in accordance with applicable law, and in
particular, in accordance with the standards of conduct contained
in Section 404 of ERISA.
11.18 PLAN EXPENSES.
All expenses incurred in the establishment, administration and operation
of the Plan, including but not limited to the expenses incurred by the
members of the Committee in exercising their duties, shall be charged to the
Trust Fund and allocated to Participants' Accounts as determined by the
Committee, but shall be paid by the Company if not paid by the Trust Fund.
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ARTICLE XII
MERGER OF COMPANY; MERGER OF PLAN
12.1 EFFECT OF REORGANIZATION OR TRANSFER OF ASSETS.
In the event of a consolidation, merger, sale, liquidation, or other
transfer of the operating assets of the Company to any other company, the
ultimate successor or successors to the business of the Company shall
automatically be deemed to have elected to continue this Plan in full force
and effect, in the same manner as if the Plan had been adopted by resolution
of its board of directors, unless the successor(s), by resolution of its
board of directors, shall elect not to so continue this Plan in effect, in
which case the Plan shall automatically be deemed terminated as of the
applicable effective date set forth in the board resolution.
12.2 MERGER RESTRICTION.
Notwithstanding any other provision in this Article, this Plan shall not
in whole or in part merge or consolidate with, or transfer its assets or
liabilities to any other plan unless each affected Participant in this Plan
would receive a benefit immediately after the merger, consolidation, or
transfer (if the Plan then terminated) which is equal to or greater than the
benefit he/she would have been entitled to receive immediately before the
merger, consolidation, or transfer (if the Plan had then terminated).
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ARTICLE XIII
PLAN TERMINATION AND
DISCONTINUANCE OF CONTRIBUTIONS
13.1 PLAN TERMINATION.
(a) (i) Subject to the following provisions of this Section 13.1,
the Company may terminate the Plan and the Trust Agreements at any
time by an instrument in writing executed in the name of the
Company by an officer or officers duly authorized to execute such
an instrument, and delivered to the Trustee.
(ii) The Plan and Trust Agreements may terminate if the Company
merges into any other corporation, if as the result of the merger the
entity of the Company ceases, and the Plan is terminated pursuant to
the rules of Section 12.1.
(b) Upon and after the effective date of the termination, the
Company shall not make any further contributions under the Plan and
no contributions need be made by the Company applicable to the Plan
Year in which the termination occurs, except as may otherwise be
required by law.
(c) The rights of all affected Participants to benefits accrued to
the date of termination of the Plan, to the extent funded as of the
date of termination, shall automatically become fully vested as of
that date.
13.2 DISCONTINUANCE OF CONTRIBUTIONS.
(a) In the event the Company decides it is impossible or
inadvisable for business reasons to continue to make Company
contributions under the Plan, the Company by resolution of its
Board of Directors may discontinue contributions to the Plan. Upon
and after the effective date of this discontinuance, the Company
shall not make any further Company contributions under the Plan and
no Company contributions need be made by the Company with respect
to the Plan Year in which the discontinuance occurs, except as may
otherwise be required by law.
(b) The discontinuance of Company contributions on the part of the
Company shall not terminate the Plan as to the funds and assets
then held by the Trustee, or operate to accelerate any payments of
distributions to or for the benefit of Participants or
Beneficiaries, and the Trustee shall continue to administer the
Trust Fund in accordance with the provisions of the Plan until all
of the obligations under the Plan shall have been discharged and
satisfied.
(c) However, if this discontinuance of Company contributions shall
cause the Plan to lose its status as a qualified plan under Code
Section 401(a), the Plan shall be terminated in accordance with the
provisions of this Article XIII.
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(d) On and after the effective date of a discontinuance of Company
contributions, the rights of all affected Participants to benefits
accrued to that date, to the extent funded as of that date, shall
automatically become fully vested as of that date.
13.3 RIGHTS OF PARTICIPANTS.
In the event of the termination of the Plan, for any cause
whatsoever, ail assets of the Plan, after payment of expenses, shall be used
for the exclusive benefit of Participants and their Beneficiaries and no part
thereof shall be returned to the Company, except as provided in Section 6.3
of this Plan.
13.4 TRUSTEE'S DUTIES ON TERMINATION.
(a) On or before the effective date of termination of this Plan, the
Trustee shall proceed as soon as possible, but in any event within six
months from the effective date, to reduce all of the assets of the
Trust Fund to cash and/or common stock and other securities in such
proportions as the Committee shall determine (after approval by the
Internal Revenue Service, if necessary or desirable, with respect to
any portion of the assets of the Trust Fund held in common stock or
securities of the Company).
(b) After first deducting the estimated expenses for liquidation and
distribution chargeable to the Trust Fund, and after setting aside a
reasonable reserve for expenses and liabilities (absolute or
contingent) of the Trust, the Committee shall make required
allocations of items of income and expense to the Accounts.
(c) Following these allocations, the Trustee shall promptly, after
receipt of appropriate instructions from the Committee, distribute in
accordance with Section 9.7 to each former Participant a benefit equal
to the amount credited to his/her Accounts as of the date of
completion of the liquidation.
(d) The Trustee and the Committee shall continue to function as such
for such period of time as may be necessary for the winding up of this
Plan and for the making of distributions in accordance with the
provisions of this Plan.
(e) Notwithstanding the foregoing, distributions to Participants upon
Plan termination in accordance with this Section 13.4 shall not be
made if the Company establishes or maintains a "successor plan" as
defined in regulations issued under Section 401(k)(10) of the Code. In
the event benefits are not distributable upon the termination of the
Plan, the Committee shall direct the Trustee to hold the assets until
benefits become distributable under the Plan, or to transfer such
benefits to the "successor plan" in accordance with regulations
prescribed by the Secretary of the Treasury.
13.5 PARTIAL TERMINATION.
(a) In the event of a partial termination of the Plan within the
meaning of Code Section 411(d)(3), the interests of affected
Participants in the Trust Fund, as of the date of the partial
termination, shall become nonforfeitable as of that date.
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(b) That portion of the assets of the Plan affected by the partial
termination shall be used exclusively for the benefit of the affected
Participants and their Beneficiaries, and no part thereof shall
otherwise be applied.
(c) With respect to Plan assets and Participants affected by a partial
termination, the Committee and the Trustee shall follow the same
procedures and take the same actions prescribed in this Article XIII
in the case of a total termination of the Plan.
13.6 FAILURE TO CONTRIBUTE.
The failure of the Company to contribute to the Trust in any year, if
contributions are not required under the Plan for that year, shall not
constitute a complete discontinuance of contributions to the Plan.
13.7 DISTRIBUTIONS UPON SALE OF ASSETS OR SALE OF SUBSIDIARY.
(a) Subject to the requirements of (b) below, upon the sale, to an
entity that is not an Affiliated Company with respect to the
Participating Employer, of either
(i) substantially all of the assets used by the Participating
Employer in the trade or business in which the Participant is
employed, or
(ii) the incorporated Participating Employer's interest in a
subsidiary that is also a Participating Employer,
a Participant shall be entitled to payment of his Distributable
Benefit in accordance with Article IX.
(b) Payment of a Participant's Distributable Benefit upon a
Participating Employer's sale of assets or subsidiary that satisfies
the requirements of (a) above may only be made if
(i) the Participating Employer continues to maintain the Plan
after the sale and the purchaser does not adopt the Plan;
(ii) the Participant continues employment with the purchaser; and
(iii) payment is made by the end of the second calendar year after
the calendar year in which the sale occurred.
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ARTICLE XIV
APPLICATION FOR BENEFITS
14.1 APPLICATION FOR BENEFITS.
The Committee may require any person claiming benefits under the Plan to
submit an application therefor, together with such documents and information
as the Committee may require. In the case of any person suffering from a
disability which prevents the claimant from making personal application for
benefits, the Committee may, in its discretion, permit another person acting
on his/her behalf to submit the application.
14.2 ACTION ON APPLICATION.
(a) Within ninety days following receipt of an application and all
necessary documents and information, the Committee's authorized
delegate reviewing the claim shall furnish the claimant with
written notice of the decision rendered with respect to the
application.
(b) In the case of a denial of the claimant's application, the
written notice shall set forth:
(i) The specific reasons for the denial, with reference to the
Plan provisions upon which the denial is based;
(ii) A description of any additional information or material
necessary for perfection of the application (together with an
explanation why the material or information is necessary); and
(iii) An explanation of the Plan's claim review procedure.
(c) A claimant who wishes to contest the denial of his/her
application for benefits or to contest the amount of benefits
payable to him shall follow the procedures for an appeal of
benefits as set forth in Section 14.3 below, and shall exhaust such
administrative procedures prior to seeking any other form of relief.
14.3 APPEALS.
(a) (i) A claimant who does not agree with the decision rendered
with respect to his/her application may appeal the decision to the
Committee.
(ii) The appeal shall be made, in writing, within sixty-five days
after the date of notice of the decision with respect to the
application.
(iii) If the application has neither been approved nor denied
within the ninety day period provided in Section 14.2 above, then
the appeal shall be made within sixty-five days after the
expiration of the ninety day period.
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(b) The claimant may request that his/her application be given full
and fair review by the Committee. The claimant may review all
pertinent documents and submit issues and comments in writing in
connection with the appeal.
(c) The decision of the Committee shall be made promptly, and not
later than sixty days after the Committee's receipt of a request
for review, unless special circumstances require an extension of
time for processing, in which case a decision shall be rendered as
soon as possible, but not later than one hundred twenty days after
receipt of a request for review.
(d) The decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner calculated
to be understood by the claimant with specific reference to the
pertinent Plan provisions upon which the decision is based.
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ARTICLE XV
LIMITATIONS ON CONTRIBUTIONS
15.1 GENERAL RULE.
(a) Notwithstanding anything to the contrary contained in this
Plan, and except as provided in paragraph (b) below, the total
Annual Additions under this Plan to a Participant's Plan Accounts
for any Plan Year shall not exceed the lesser of:
(i) the Defined Contribution Dollar Limitation; or
(ii) Twenty-five percent of the Participant s total Compensation
(within the meaning of Section 415(c)(3) of the Code) from the
Company and any Affiliated Companies for the Limitation Year.
(b) For purposes of Section 15.1, "Defined Contribution Dollar
Limitation" shall mean Thirty Thousand Dollars ($30,000) or, if
greater, one-fourth (1/4) of the defined benefit dollar limitation
set forth in Section 415(b)(1) of the Code as in effect for the
Limitation Year.
(c) For purposes of this Article XV, the Company has elected a
"Limitation Year" corresponding to the Plan Year.
(d) The compensation limitation referred to in Section 15.1(a)(ii)
shall not apply to:
(i) any contribution for medical benefits (within the meaning of
Section 419A(f)(2) of the Code) after separation from service which
is otherwise treated as an Annual Addition; or
(ii) any amount otherwise treated as an Annual Addition under
Section 415(1)(1) of the Code.
15.2 ANNUAL ADDITIONS.
For purposes of Section 15.1, the term "Annual Additions" shall mean the
amount allocated to a Participant's Account under the Plan during the
Limitation Year that constitutes (a) Company contributions, (b) Employee
contributions, (c) forfeitures, and (d) amounts described in Sections
415(1)(1) and 419A(d)(2) of the Code. The term "Employee Contributions," for
purposes of the preceding sentence, shall mean amounts considered contributed
by the Employee and which do not qualify for tax deferral treatment under
Section 401(k) of the Code. The Annual Addition for any Limitation Year
beginning before January 1, 1987 shall not be recomputed to treat all
Employee contributions as an Annual Addition.
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15.3 OTHER DEFINED CONTRIBUTION PLANS.
If the Company or an Affiliated Company is contributing to any other
defined contribution plan (as defined in Section 415(i) of the Code) for its
Employees, some or all of whom may be Participants in this Plan, then
contributions to the other plan shall be aggregated with contributions under
this Plan for the purposes of applying the limitations of Section 15.1.
15.4 COMBINED PLAN LIMITATION (DEFINED BENEFIT PLAN}.
In the event a Participant hereunder also is a participant in any
qualified defined benefit plan (within the meaning of Section 415(k) of the
Internal Revenue Code) of the Company or an Affiliated Company, then the
benefit payable under such other defined benefit plan, or any of them, shall
be reduced for so long and to the extent necessary to provide that the sum of
the "defined benefit fraction" as defined in subsection (a) below and the
"defined contribution fraction" as defined in subsection (b) below, for any
Plan Year shall not exceed 1.
(a) "Defined Benefit Fraction" shall be a fraction, the numerator
of which is the projected benefit of a Participant under all
qualified defined benefit plans adopted by the Company or an
Affiliated Company expressed as either an annual straight life
annuity or a qualified joint and survivor annuity providing the
maximum permissible survivor benefit (determined as of the close of
the Plan Year), and the denominator of which is the lesser of (i)
the maximum dollar amount otherwise allowable for such Plan Year
under applicable law times 1.25 or (ii) the Percentage of
compensation limit for such Plan Year times 1.4.
(b) "Defined Contribution Fraction" shall be a fraction, the
numerator of which is the sum of the annual addition of the
Participant s account under this Plan and any other defined
contribution plans adopted by the Company or an Affiliated Company
for each Plan Year, and the denominator of which is the lesser for
each such Plan Year of (i) maximum Annual Addition which could have
been made under this Plan and. any other defined contribution plans
adopted by the Company or an Affiliated Company for such Plan Year
and for each prior Plan Year of service with the Company or an
Affiliated Company times 1.25 or (ii) the amount determined under
the percentage of compensation limit for such Plan Year times 1.4.
Notwithstanding anything to the contrary in this Plan, in the case of a
Participant who was also a participant before January 1, 1982 in a defined
benefit plan which was in existence on July 1, 1982, and with respect to
which the requirements of Section 415(b) of the Internal Revenue Code had
been met for all Plan Years, if such Participant's current accrued benefit
under such plan exceeds the limitation of Section 415(b) of the Internal
Revenue Code for Plan Years commencing after January 1, 1983, then for
purposes of that plan and for purposes of this Section 15.4, the limitations
of Section 415(b) and (c) of Internal Revenue Code with respect to such
individual shall be equal to the Participant's current accrued benefit under
said plan. Solely for purposes of determining the amount of such limitation,
the term "current accrued benefit" shall mean the Participant's accrued
benefit under the defined benefit plan as of the close of the last Plan Year
beginning before January 1, 1983 when expressed as an annual benefit, within
the
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meaning of Section 415(b)(2) of the Internal Revenue Code as in effect for
such Plan Years; provided, however, that such Participant's current accrued
benefit is not changed after July 1, 1982, and no cost of living adjustment
occurring after July 1, 1982 is taken into account.
In applying the provisions of this Section 15.4 in the case of a defined
benefit plan which satisfied the requirements of Section 415 of the Internal
Revenue Code for the last Plan Year commencing prior to January 1, 1983, any
reduction in a Participant's benefit shall be in accordance with Section
415(e) of the Internal Revenue Code, and any regulations promulgated
thereunder by the Secretary of the Treasury. The reduction of a Participant's
benefit due from qualified defined benefit plans shall be made in accordance
with uniform rules adopted jointly by the parties responsible for the control
and management of the operation and administration of such plans.
If the Plan satisfied the applicable requirements of Section 415 of the
Code as in effect for all Limitation Years beginning before January 1, 1987,
an amount shall be subtracted from the numerator of the Defined Contribution
Fraction (not exceeding the numerator) as prescribed by the Secretary of the
Treasury so that the sum of the Defined Benefit Fraction and Defined
Contribution Fraction computed under Section 415(e)(1) of the Code does not
exceed 1.0 for such Limitation Year.
15.5 ADJUSTMENTS FOR EXCESS ANNUAL ADDITIONS.
In general, Annual Additions for any Plan Year under this Plan and any
other defined contribution plan (as defined in Code Section 414(i)) or
defined benefit plan (as defined in Code Section 414(j)) maintained by the
Company or an Affiliated Company will be determined so as to avoid Annual
Additions in excess of the limitations set forth in Sections 15.1 through
15.4. However, if as a result of a reasonable error in estimating the amount
of the Annual Additions to a Participant's Accounts under this Plan, such
Annual Additions (after giving effect to the maximum permissible adjustments
under the other plans) exceed the applicable limitations described in
Sections 15.1 through 15.4, for Plan Years commencing on and after January 1,
1993, such excess Annual Additions shall be corrected as follows:
(a) If the Participant made any voluntary after-tax contributions to
this or any other defined contribution plan that is maintained by the
Company or an Affiliated Company, which after-tax contributions were
not matched by matching contributions, within the meaning of Code
Section 401(m), such after-tax contributions shall be returned to the
Participant, to the extent of any excess Annual Additions.
(b) If excess Annual Additions remain after the application of the
above rule, if the Participant made any Compensation Deferral
Contributions to this or any other defined contribution plan that is
maintained by the Company or an Affiliated Company, which Compensation
Deferral Contributions were not matched by matching contributions,
within the meaning of Code Section 401(m), such Compensation Deferral
Contributions shall be returned to the Participant, to the extent of
any excess Annual Additions.
(c) If excess Annual Additions remain after the application of the
above rule, if the Participant made any after-tax contributions to
this or any other defined contribution plan that is maintained by the
Company or an Affiliated Company, which after-tax contributions were
matched by matching contributions, within the meaning of Code Section
401(m), any such after-tax contributions shall be returned to the
Participant
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and any matching contributions attributable thereto shall be reduced,
to the extent necessary to eliminate any remaining excess Annual
Additions.
(d) If excess Annual Additions remain after the application of the
above rule, if the Participant made any Compensation Deferral
Contributions to this or any other defined contribution plan that is
maintained by the Company or an Affiliated Company, which Compensation
Deferral Contributions were matched by matching contributions, within
the meaning of Code Section 401(m), any such Compensation Deferral
Contributions shall be returned to the Participant and any matching
contributions attributable thereto shall be reduced, to the extent
necessary to eliminate any remaining excess Annual Additions.
(e) If excess Annual Additions remain after the application of the
above rule, any other Company contributions shall be reduced to the
extent necessary to eliminate any remaining excess Annual Additions.
15.6 DISPOSITION OF EXCESS COMPANY CONTRIBUTION AMOUNTS.
Any excess Annual Additions attributable to Company contributions on
behalf of a Participant for any Plan Year, other than Compensation Deferral
Contributions returned to the Participant in accordance with Section 15.5,
shall be held unallocated in a suspense account for the Plan Year and applied
to reduce the Company contributions for the succeeding Plan Year, or Years,
if necessary. No investment gains or losses shall be allocated to a suspense
account established for this purpose.
15.7 AFFILIATED COMPANY.
For purposes of this Article XV, the status of an entity as an
Affiliated Company shall be determined by reference to the percentage tests
set forth in Code Section 415(h).
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ARTICLE XVI
RESTRICTION ON ALIENATION
16.1 GENERAL RESTRICTIONS AGAINST ALIENATION.
(a) The interest of any Participant or Beneficiary in the income,
benefits, payments, claims or rights hereunder, or in the Trust Fund
shall not in any event be subject to sale, assignment, hypothecation,
or transfer. Each Participant and Beneficiary is prohibited from
anticipating, encumbering, assigning, or in any manner alienating his
or her interest under the Trust Fund, and is without power to do so,
except as may otherwise be provided for in the Trust Agreement. The
interest of any Participant or Beneficiary shall not be liable or
subject to his/her debts, liabilities, or obligations, now contracted,
or which may be subsequently contracted. The interest of any
Participant or Beneficiary shall be free from all claims, liabilities,
bankruptcy proceedings, or other legal process now or hereafter
incurred or arising; and the interest or any part thereof, shall not
be subject to any judgment rendered against the Participant or
Beneficiary.
(b) In the event any person attempts to take any action contrary to
this Article XVI, that action shall be void and the Company, the
Committee, the Trustees and all Participants and their Beneficiaries,
may disregard that action and are not in any manner bound thereby, and
they, and each of them separately, shall suffer no liability for any
disregard of that action, and shall be reimbursed on demand out of the
Trust Fund for the amount of any loss, cost or expense incurred as a
result of disregarding or of acting in disregard of that action.
(c) The preceding provisions of this Section 16.1 shall be interpreted
and applied by the Committee in accordance with the requirements of
Code Section 401(a)(13) as construed and interpreted by authoritative
judicial and administrative rulings and regulations.
16.2 NONCONFORMING DISTRIBUTIONS UNDER COURT ORDER.
(a) In the event that a court with jurisdiction over the Plan and the
Trust Fund shall issue an order or render a judgment requiring that
all or part of a Participant's interest under the Plan and in the
Trust Fund be paid to a spouse, former spouse and/or children of the
Participant by reason of or in connection with the marital dissolution
and/or marital separation of the Participant and the spouse, and/or
some other similar proceeding involving marital rights and property
interests, then notwithstanding the provisions of Section 16.1 the
Committee may, in its absolute discretion, direct the applicable
Trustee to comply with that court order or judgment and distribute
assets of the Trust Fund in accordance therewith.
(b) The Committee's decision with respect to compliance with any such
court order or judgment shall be made in its absolute discretion and
shall be binding upon the Trustee and all Participants and their
Beneficiaries, provided, however, that the
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Committee in the exercise of its discretion shall not make payments in
accordance with the terms of an order which is not a qualified
domestic relations order as defined in Code Section 414(p) or which
the Committee determines would jeopardize the continued qualification
of the Plan and Trust under Section 401 of the Code.
(c) Neither the Plan, the Company, the Committee nor the Trustee shall
be liable in any manner to any person, including any Participant or
Beneficiary, for complying with any such court order or judgment.
(d) Nothing in this Section 16.2 shall be interpreted as placing upon
the Company, the Committee or any Trustee any duty or obligation to
comply with any such court order or judgment. The Committee may, if in
its absolute discretion it deems it to be in the best interests of the
Plan and the Participants, determine that any such court order or
judgment shall be resisted by means of judicial appeal or other
available judicial remedy, and in that event the Trustee shall act in
accordance with the Committee s directions.
(e) The Committee shall adopt procedures and provide notifications to
a Participant and alternate payees in connection with a qualified
domestic relations order, to the extent required under Code Section
414(p).
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ARTICLE XVII
PLAN AMENDMENTS
17.1 AMENDMENTS. The Board of Directors may at any time, and from
time to time, amend the Plan by an instrument in writing executed in the name
of the Company by an officer or officers duly authorized to execute such
instrument, and delivered to the applicable Trustee. However, no amendment
shall be made at any time, the effect of which would be:
(a) To cause any assets of the Trust Fund to be used for or
diverted to purposes other than providing benefits to the Participants
and their Beneficiaries, and defraying reasonable expenses of
administering the Plan (except as provided in Section 6.3);
(b) To have any retroactive effect so as to deprive any
Participant or Beneficiary of any accrued benefit to which he/she
would be entitled under this Plan if his/her employment were
terminated immediately before the amendment, to the extent so doing
would contravne Code Section 411(d)(6);
(c) To eliminate or reduce a subsidy or early retirement
benefit or an optional form of benefit to the extent so doing would
contravene Code Section 411(d)(6); or
(d) To increase the responsibilities or liabilities of a
Trustee or an Investment Manager without his/her written consent.
17.2 RETROACTIVE AMENDMENTS.
Notwithsanding any provisions of this Article XVII to the
contrary, the Plan may be amended prospectively or retroactively (as
provided in Section 401(b) of the Code) to make the Plan conform to any
provision of ERISA, any Code provisions dealing with tax-qualified employees'
trusts, or any regulation under either.
17.3 AMENDMENT OF VESTING PROVISIONS.
If the Plan is amended in any way that directly or indirectly
affects the computation of a Participant's Distributable Benefit, each
Participant who has completed at least three (3) one-year Periods of Service
may elect, within a reasonable time after the adoption of the amendment, to
continue to have his/her vested interest computed under the Plan without
regard to such amendment. The period during which the election may be made
shall commence when the date of the amendment is adopted and shall end on the
latest of: (i) 60 days after the amendment is adopted; (ii) 60 days after
the amendment is effective; or (iii) 60 days after the Participant is issued
written notice of the amendment.
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ARTICLE XVIII
MISCELLANEOUS
18.1 NO ENLARGEMENT OF EMPLOYEE RIGHTS.
(a) This Plan is strictly a voluntary undertaking on
the part of the Company and shall not be deemed to constitute a
contract between the Company and any Employee, or to be consideration
for, or an inducement to, or a condition of, the employment of any
Employee.
(b) Nothing contained in this Plan or the Trust shall
be deemed to give any Employee the right to be retained in the employ
of the Company or to interfere with the right of the Company to
discharge or retire any Employee at any time.
(c) No Employee, nor any other person, shall have any
right to or interest in any portion of the Trust Fund other than as
specifically provided in this Plan.
18.2 MAILING OF PAYMENTS: LAPSED BENEFITS.
(a) All payments under the Plan shall be delivered in
person or mailed to the last address of the Participant (or, in the
case of the death of the Participant, to the last address of any
other person entitled to such payments under the terms of the Plan)
furnished pursuant to Section 18.3 below.
(b) In the event that a benefit is payable under this
Plan to a Participant or any other person and after reasonable
efforts such person cannot be located for the purpose of paying the
benefit for a period of seven (7) consecutive years, the person
conclusively shall be presumed dead and upon the termination of such
seven (7) year period the benefit shall be forfeited and as soon
thereafter as practicable shall be allocated, on a per capita basis,
among the Matching Accounts of all Participants for whom such
Accounts are maintained on the date of such allocation.
(c) For purposes of this Section 18.2, the term
"Beneficiary" shall include any person entitled under Section 9.9 to
receive the interest of a deceased Participant or deceased designated
Beneficiary. It is the intention of this provision that the benefit
will be distributed to an eligible Beneficiary in a lower priority
category under Section 9.9 if no eligible Beneficiary in a higher
priority category can be located by the Committee after reasonable
efforts have been made.
(d) The Accounts of a Participant shall continue to be
maintained until the amounts in the Accounts are paid to the
Participant or his/her Beneficiary. Notwithstanding the foregoing,
in the event that the Plan is terminated, the following rules shall
apply:
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(i) All Participants (including Participants who have not
previously claimed their benefits under the Plan) shall be
notified of their right to receive a distribution of their
interests in the Plan;
(ii) All Participants shall be given a reasonable length of
time, which shall be specified in the notice, in which to claim
their benefits;
(iii) All Participants (and their Beneficiaries) who do not
claim their benefits within the designated time period shall be
presumed to be dead. The Accounts of such Participants shall be
forfeited at such time. These forfeitures shall be disposed of
according to rules prescribed by the Committee, which rules shall
be consistent with applicable law.
(iv) The Committee shall prescribe such rules as it may deem
necessary or appropriate with respect to the notice and forfeiture
rules stated above.
(e) Should it be determined that the preceding rules relating to
forfeiture of benefits upon Plan termination are inconsistent with any of
the provisions of the Code and/or ERISA, these provisions shall become
inoperative without the need for a Plan amendment and the Committee shall
prescribe rules that are consistent with the applicable provisions of the
Code and/or ERISA.
18.3 ADDRESSES.
Each Participant shall be responsible for furnishing the
Committee with his/her correct current address and the correct current name
and address of his/her Beneficiary or Beneficiaries.
18.4 NOTICES AND COMMUNICATIONS.
(a) All applications, notices, designations,
elections, and other communications from Participants shall be in
writing, on forms prescribed by the Committee and shall be mailed or
delivered to the office designated by the Committee, and shall be
deemed to have been given when received by that office.
(b) Each notice, report, remittance, statement and
other communication directed to a Participant or Beneficiary shall be
in writing and may be delivered in person or by mail. An item shall
be deemed to have been delivered and received by the Participant when
it is deposited in the United States Mail with postage prepaid,
addressed to the Participant-or Beneficiary at his/her last address
of record with the Committee.
18.5 REPORTING AND DISCLOSURE.
The Plan Administrator shall be responsible for the reporting and
disclosure of information required to be reported or disclosed by the Plan
Administrator pursuant to ERISA or any other applicable law.
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18.6 GOVERNING LAW.
All legal questions pertaining to the Plan shall be determined
in accordance with the laws of the State of California to the extent not
superseded by ERISA. All contributions made hereunder shall be deemed to have
been made in California.
18.7 INTERPRETATION.
(a) Article and Section headings are for convenient
reference only and shall not be deemed to be part of the substance of
this instrument or in any way to enlarge or limit the contents of any
Article or Section. Unless the context clearly indicates otherwise,
masculine gender shall include the feminine, and the singular shall
include the plural and the plural the singular.
(b) The provisions of this Plan shall in all cases be
interpreted in a manner that is consistent with this Plan satisfying
the requirements (of Code Sections 401(a) and 401(k) and related
statutes) for qualification as a qualified cash or deferred
arrangement.
18.8 WITHHOLDING FOR TAXES.
Any payments out of the Trust Fund may be subject to withholding
for taxes as may be required by any applicable federal or state law.
18.9 LIMITATION ON COMPANY; COMMITTEE AND TRUSTEE LIABILITY.
Any benefits payable under this Plan shall be paid or provided
for solely from the Trust Fund and neither the Company, the Committee nor the
Trustee assume any responsibility for the sufficiency of the assets of the
Trust to provide the benefits payable hereunder.
18.10 SUCCESSORS AND ASSIGNS.
This Plan and the Trust established hereunder shall inure to
the benefit of, and be binding upon, the parties hereto and their successors
and assigns.
18.11 COUNTERPARTS.
This Plan document may be executed in any number of identical
counterparts, each of which shall be deemed a complete original in itself and
may be introduced in evidence or used for any other purpose without the
production of any other counterparts.
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ARTICLE XIX
TOP-HEAVY PLAN RULES
19.1 APPLICABILITY.
(a) Notwithstanding any provision in this Plan to the
contrary, the provisions of this Article XIX shall apply in the case
of any Plan Year in which the Plan is determined to be a Top-Heavy
Plan under the rules of Section 19.3.
(b) Except as is expressly provided to the contrary,
the rules of this Article XIX shall be applied after the application
of the Affiliated Company rules of Section 2.2.
19.2 DEFINITIONS.
(a) For purposes of this Article XIX, the term "Key
Employee" shall mean any Employee or former Employee who, at any time
during the Plan Year or any of the four (4) preceding Plan Years, is
or was --
(i) An officer of the Company having an
annual compensation greater than one hundred fifty percent
(150%) of the amount in effect under Code Section 415(c)(1)(A)
for this Plan Year. However, no more than fifty (50) Employees
(or, if lesser, the greater of three (3) or ten percent (10%)
of the Employees) shall be treated as officers;
(ii) One of the ten (10) employees having
annual compensation from the Company of more than the
limitation in effect under Code Section 415(c)(1)(A) and
owning (or considered as owning within the meaning of Code
Section 318) the largest interests in the Company. For this
purpose, if two (2) Employees have the same interest in the
Company, the employee having greater annual compensation from
the Company shall be treated as having a larger interest;
(iii) A Five Percent Owner of the Company; or
(iv) A One Percent Owner of the Company
having an annual compensation from the Company of more than
one hundred fifty thousand dollars ($150,000).
(b) For purposes of this Section 19.2, the term "Five
Percent Owner" means any person who owns (or is considered as owning
within the meaning of Code Section 318) more than five percent (5%)
of the outstanding stock of the Company or stock possessing more than
five percent (5%) of the total combined voting power of all stock of
the Company. The rules of Subsections (b), (c), and (m) of Code
Section 414 shall not apply for purposes of applying these ownership
rules. Thus, this ownership test shall be applied separately with
respect to every Affiliated Company.
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(c) For purposes of this Section 19.2, the term "One
Percent Owner" means any person who would be described in Paragraph
(b) if "one percent (1%)" were substituted for "five percent (5%)"
each place where it appears therein.
(d) For purposes of this Section 19.2, the rules of
Code Section 318(a)(2)(C) shall be applied by substituting "five
percent (5%)" for "fifty percent (50%)."
(e) For purposes of this Article XIX, the term
"Non-Key Employee" shall mean any Employee who is not a Key Employee.
(f) For purposes of this Article XIX, the terms "Key
Employee" and "Non-Key Employee" include their Beneficiaries.
19.3 TOP-HEAVY STATUS.
(a) The term "Top-Heavy Plan" means, with respect to
any Plan Year --
(i) Any defined benefit plan if, as of
the Determination Date, the present value of the cumulative
accrued benefits under the Plan for Key Employees exceeds
sixty percent (60%) of the present value of the cumulative
accrued benefits under the plan for all Employees, and
(ii) Any defined contribution plan if, as
of the Determination Date, the aggregate of the account
balances of Key Employees under the Plan exceeds sixty percent
(60%) of the present value of the aggregate of the account
balances of all Employees under the plan.
For purposes of this Paragraph (a), the term "Determination
Date" means, with respect to any Plan Year, the last day of the preceding
Plan Year. In the case of the first Plan Year of any plan, the term
"Determination Date" shall mean the last day of that Plan Year.
The present value of account balances under a defined
contribution plan shall be determined as of the most recent valuation date
that falls within or ends on the Determination Date. The present value of
accrued benefits under a defined benefit plan shall be determined as of the
same valuation date used for computing plan costs for minimum funding.
(b) Each plan maintained by the Company required to be included
in an Aggregation Group shall be treated as a Top-Heavy Plan if the
Aggregation Group is a Top-Heavy Group. If the Aggregation Group is not a
Top-Heavy Group no plan in such group shall be a Top-Heavy Plan.
(i) The term "Aggregation Group" means --
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(A) Each Plan of the Company in which a Key Employee is
a Participant, and
(B) Each other plan of the Company which enables any
plan described in Subdivision (A) to meet the requirements of
Code Sections 401(a)(4) or 410.
Also, any plan not required to be included in an Aggregation Group
under the preceding rules may be treated as being part of such group
if the group would continue to meet the requirements of Code Sections
401(a)(4) and 410 with the plan being taken into account.
(ii) The term "Top-Heavy Group" means any Aggregation Group
if the sum (as of the Determination Date) of --
(A) The present value of the cumulative accrued
benefits for Key Employees under all defined benefit plans
included in the group, and
(B) The aggregate of the account balances of Key
Employees under all defined contribution plans included in the
group exceeds sixty percent (60%) of a similar sum determined
for all Employees.
(iii) For purposes of determining --
(A) The present value of the cumulative accrued benefit
of any Employee, or
(B) The amount of the account balance of any Employee,
such present value or amount shall be increased by the aggregate
distributions made with respect to the Employee under the plan during
the five (5) year period ending on the Determination Date. The
preceding rule shall also apply to distributions under a terminated
plan which, if it had not been terminated, would have been required
to be included in an Aggregation Group. Also, any rollover
contribution or similar transfer initiated by the Employee and made
after December 31, 1983 to a plan shall not be taken into account
with respect to the transferee plan for purposes of determining
whether such plan is a Top-Heavy Plan (or whether any Aggregation
Group which includes such plan is a Top-Heavy Group).
(c) If any individual is not a Non-Key Employee with respect
to any plan for any Plan Year, but the individual was a Key Employee with
respect to the plan for any prior Plan Year, any accrued benefit for the
individual (and the account balance of the individual) shall not be taken
into account for purposes of this Section 19.3.
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(d) If any individual has not received any Compensation
from the Company (other than benefits under the Plan) or has not
performed any services for the Company at any time during the
five (5) year period ending on the Determination Date, any accrued
benefit for such individual (and the account balance of the
individual) shall not be taken into account for purposes of this
Section 19.3. If such individual returns after the five (5) year
period, such Employee's total accrued benefit shall be included in
determining whether the Plan is Top-Heavy.
19.4 MINIMUM CONTRIBUTIONS.
For each Plan Year in which the Plan is Top-Heavy, the minimum
contributions for that year shall be determined in accordance with the rules of
this Section 19.4.
(a) Except as provided in (b) below, the minimum contribution
for each Non-Key Employee who has not separated from service as of
the last day of the Plan Year (excluding amounts deferred under a cash
or deferred arrangement under Section 401(k) of the Code and any
employer contributions taken into account under Section 401(k)(3) or
401(m)(3) of the Code) shall be not less than three percent (3%) of
his/her Compensation, regardless of whether the Non-Key Employee has
less than 1,000 Hours of Service during such Plan Year, his/her level
of Compensation, or elected to make Compensation Deferral Contributions
to the Plan Year for such year.
(b) Subject to the following rules of this Paragraph (b),
the percentage set forth in Paragraph (a) above shall not be required
to exceed the percentage at which contributions (including amounts
deferred under a cash or deferred arrangement under Section 401(k)
of the Code and any employer contributions taken into account under
Section 401(k)(3) or 401(m)(3) of the Code) are made (or are required
to be made) under the Plan for the year for the Key Employee for whom
the percentage is the highest for the year. This determination shall be
made by dividing the contributions for each Key Employee by so much of
his/her total compensation for the year as does not exceed two hundred
thousand dollars ($200,000), as adjusted in the same time and in the
same manner as under Section 415(d) of the Code. For purposes of this
Paragraph (b), all defined contribution plans required to be included
in an Aggregation Group shall be treated as one plan. However, the rules
of this Paragraph (b) shall not apply to any plan required to be included
if an Aggregation Group if the plan enables a defined benefit plan to
meet the requirements of Code Section 401(a)(4) or 410.
(c) The requirements of this Section 19.4 must be
satisfied without taking into account contributions under chapters 2
or 21 of the Code, Title II of the Social Security Act, or any other
Federal or State law.
(d) In the event a Participant is covered by both a
defined contribution and a defined benefit plan maintained by the
Company, both of which are determined to be Top-Heavy Plans, the
defined benefit minimum, offset by the benefits provided under the
defined contribution plan, shall be provided under the defined
benefit plan.
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(e) In no instance may the Plan take into account an
Employee's compensation in excess of the first two hundred thousand
dollars ($200,000), as adjusted in the same time and in the same
manner as under Section 415(d) of the Code. For purposes of this
Section 19.4, an Employee's Compensation shall be as defined in
Section 2.9(b) for purposes of this Article XIX.
19.5 MAXIMUM ANNUAL ADDITION.
(a) Except as set forth below, in the case of any
Top-Heavy Plan the rules of Code Section 415(e)(2)(B) and (3)(B)
shall be applied by substituting "1.0" for "1.25."
(b) The rule set forth in Paragraph (a) above shall
not apply if the requirements of both Subparagraphs (i) and (ii),
below, are satisfied.
(i) The requirements of this Subparagraph (i)
are satisfied if the rules of Section 18.4(a) above would be
satisfied after substituting "four percent (4%)" for "three
percent (3%)" where it appears therein with respect to
Participants covered only under a defined contribution plan.
(ii) The requirements of this Subparagraph (ii)
are satisfied if the Plan would not be a Top-Heavy Plan if
"ninety percent (90%)" were substituted for "sixty percent
(60%)" each place it appears in Section 18.3(a)(ii).
(c) The rules of Paragraph (a) shall not apply with respect
to any Employee as long as there are no --
(i) Company Contributions, forfeitures, or
voluntary nondeductible contributions allocated to the
Employee under a defined contribution plan maintained by the
Company, or
(ii) Accruals by the Employee under a defined benefit plan
maintained by the Company.
19.6 VESTING RULES.
The Plan at all times satisfies the minimum vesting
requirements of Section 416 of the Code.
19.7 NON-ELIGIBLE EMPLOYEES.
The rules of this Article XIX shall not apply to any Employee
included in a unit of employees covered by an agreement which the Secretary
of Labor finds to be a collective bargaining agreement between employee
representatives and one or more employers if there is evidence that
retirement benefits were the subject of good faith bargaining between such
employee representatives and the employer or employers.
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IN WITNESS WHEREOF, in order to record the adoption of this
Plan, 20th Century Industries Has caused this instrument to be executed by
its duly authorized officers this 27TH day of OCTOBER, 1993 effective,
however, as of January 1, 1989 except as otherwise expressly provided herein.
20TH CENTURY INDUSTRIES
By: /s/ RICHARD A. ANDRE
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By: /s/ CHARLES I. PETIT
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