BALCHEM CORPORATION
401(k)/PROFIT SHARING PLAN
Balchem Corporation, a corporation organized under the laws of the State
of Maryland, having executive offices at Route 6 and Route 284, Slate Hill, New
York, hereby amends and restates its Employees 401(k) Savings Plan, to provide
supplemental retirement benefits exclusively for employees of the Company,
effective January 1, 1998.
ARTICLE I
DEFINITIONS
The following terms when used herein shall have the designated meaning
unless a different meaning is plainly required by the context.
1.01 Accrued Benefit. Accrued Benefit shall mean the balance in a
Participant's Profit Sharing, Elective, Matching Contribution, and Segregated
Accounts, calculated as provided in Article IV.
1.02 Annual Compensation. Annual Compensation shall mean all monies
received while a Participant, from the Company during a Plan Year; being the sum
of the amounts of salary or wages regularly payable during such Plan Year, also
including overtime pay and bonuses paid or accrued, but excluding any amounts
paid by the Company to the Trust Fund hereunder, or to any other employee
benefit plan now or hereafter adopted, with the exception of any amount
contributed by the Company pursuant to a salary reduction agreement, which
amount shall be included if such contributions are excluded from gross income by
reason of Code Sections 125, 402(a)(8), 402(h) or 403(b). Annual Compensation,
for purposes of this Plan, shall be limited to a maximum of $200,000, as
adjusted by the Secretary of the Treasury or his delegate at the same time and
in the same manner as under Section 415(d) of the Internal Revenue Code. In
determining the compensation of a Participant for purposes of this limitation,
the rules of Code Section 414(q)(6) shall apply, except that in applying such
rules the "family" shall only include the spouse and lineal descendants of the
Participant who have not attained age 19 before the close of the year. If the
$200,000 limitation (as adjusted) is exceeded due to the application of this
rule, then such limitation shall be prorated among the affected individuals'
compensation as determined without regard to this limitation. If the period for
determining compensation to be used in calculating an employee's allocation for
a determination period is a short Plan Year (less than 12 months), the $200,000
limitation (as adjusted) shall be multiplied by a fraction, the numerator of
which is the number of months in the short Plan Year and the denominator of
which is 12.
In addition to other applicable limitations set forth in the plan, and
notwithstanding any other provision of the plan to the contrary, for plan years
beginning on or after January 1, 1994, the annual compensation of each employee
taken into account under the plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner for increases in the cost of living in accordance
with section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-living
adjustment in effect for a calendar year applies to any period, not exceeding 12
months, over which compensation is determined (determination period) beginning
in such calendar year. If a determination period consists of fewer than 12
months, the OBRA '93 annual compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the determination period, and
the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any reference in
this plan to the limitation under section 401(a)(17) of the Code shall mean the
OBRA '93 annual compensation limit set forth in this provision.
If compensation for any prior determination period is taken into account
in determining an employee's benefits accruing in the current plan year, the
compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period. For
this purpose, for determination periods beginning before the first day of the
first plan year beginning on or after January 1, 1994, the OBRA '93 annual
compensation limit is $150,000."
1.03 Annuity Starting Date. The first date on which all events have
occurred which entitle the Participant to a benefit under this Plan, or, if the
benefit is payable in the form of an annuity, the first day of the first period
for which an amount is payable as an annuity.
1.04 Beneficiary. Beneficiary shall mean the person designated as
Beneficiary (or Beneficiaries) by the Participant for the purposes of Section
5.02.
1.05 Board. The Board of Directors of the Company.
1.06 Break-in-Service. An employee shall have a Break-in-Service if he
is credited with 500 or less Hours of Service in any Plan Year.
1.07 Committee. The Committee appointed under Article VII hereof to
administer the Plan. 1.08 Company. Balchem Corporation, and any
successor or successors of the aforesaid by merger, purchase,
or otherwise, and any corporation that is or becomes a subsidiary or an
affiliate thereof, and assumes the obligations of this Plan by action of its
Board of Directors with the approval of the Company.
1.09 Company Stock. Company Stock means the voting common stock of the
Company, or, if there are several classes of voting common stock, that class of
common stock issued by the Company having a combination of voting power and
dividend rights greater than or equal to (i) that class of common stock of the
Company having the greatest voting power, and (ii) that class of common stock of
the Company having the greatest dividend rights.
1.10 Direct Rollover. A direct rollover is a payment by the plan to the
eligible retirement plan specified by the distributee."
1.11 Distributee. A distributee includes an employee or former employee.
In addition, the employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in section 414(p)
of the Code, are distributees with regard to the interest of the spouse or
former spouse.
1.12 Eligible Retirement Plan. An eligible retirement plan is an
individual retirement account described in section 408(a)
of the Code, an individual retirement annuity described in section 408(b) of the
Code, an annuity plan described in section 403(a) of the Code, or a qualified
trust described in section 401(a) of the Code, that accepts the distributee's
eligible rollover distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.
1.13 Eligible Rollover Distribution. An eligible rollover distribution
is any distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent such distribution is
required under section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to employer
securities.
1.14 Employee. Each person who is employed by the Company or other
employer required to be aggregated with the Company under Sections 414(b), (c),
(m), or (o) of the Internal Revenue Code. The term "Employee" shall include
"leased employees". The term "leased employee" means any person (other than an
employee of the recipient) who pursuant to an agreement between the recipient
and any other person ("leasing organization") has performed services for the
recipient (or for the recipient and related persons determined in accordance
with section 414(n)(6) of the Code) on a substantially full time basis for a
period of at least one year, and such services are of a type historically
performed by employees in the business field of the recipient employer.
Contributions or benefits provided a leased employee by the leasing organization
which are attributable to services performed for the recipient employer shall be
treated as provided by the recipient employer. Notwithstanding the foregoing, if
such leased employees constitute less than twenty percent of the employer's
non-highly compensated work force within the meaning of Section 414(n)(5)(A)(ii)
of the Internal Revenue Code, the term "Employee" shall not include those leased
employees covered by a Plan which is a money purchase pension plan with a
non-integrated employer contribution rate for each Participant of at least 10
percent of compensation, which plan provides for full and immediate vesting and
for immediate participation (other than for employees who perform substantially
all their services for the leasing organization or employees who earned less
than $1,000 in each plan year during the four year period ending with the plan
year).
1.15 Forfeiture. A forfeiture is the non-vested portion of a terminated
Participant's accrued benefit calculated in accordance with Section 4.05.
1.16 Hour of Service: Each Employee will be credited with an hour of
service for:
(1) Each hour for which he is directly or indirectly
paid or entitled to payment by the Company for the performance of his duties.
These hours shall be credited to the computation period or periods in which the
duties are performed; and
(2) Each hour for which he is directly or indirectly
paid or entitled to payment by
the Company other than for the performance of his duties, such as vacation,
illness, disability leave, termination leave, jury duty, military duty and
authorized periods of absence (irrespective of the date services have
terminated). These hours shall be credited to the Plan Year or Years during
which such period of non-performance occurred. No more than five hundred and one
(501) hours of service shall be credited under this provision for any Employee
on account of any single continuous period in which the Employee performs no
duties. The Company shall not be considered to be making payments with respect
to any absence if the Employee receives funds solely under workmen's
compensation, unemployment or disability insurance required to be maintained
under appropriate statutes pertaining or payments limited to reimbursement of
medical expenses incurred by the Employee; and
(3) Each hour for which back pay, irrespective of
mitigation of damage, has been
either awarded or agreed to by the employer. These hours shall be credited to
the computation period or periods to which the award or agreement pertains
rather than the computation period in which the award, agreement, or payment was
made.
(4) In the event of a Maternity or Paternity Absence,
each hour of service which
otherwise would normally have been credited to such Employee but for such
Maternity or Paternity Absence, but limited to that number of hours necessary to
prevent a break in service in a Plan Year, up to a maximum of 501 hours of
service. In any case in which the Plan is unable to determine such number of
hours of service, eight hours of service per normal weekday of absence shall be
credited. The hours of service credited pursuant to this paragraph shall be
credited (l) in the computation period in which the absence begins, if the
crediting is necessary to prevent a break in service in that period, or (2) in
all other cases, in the following computation period.
(5) Labor Regulations Section 2530.200b-2(b) and (c)
shall be applicable in computing hours of service creditable for reasons other
than performance of duties.
(6) For purposes of this Section 1.11 the term Company
shall include all commonly controlled trades or businesses as that term is
defined in Code Sections 4l4(b), (c), (m) or (o) or regulations thereunder.
1.17 Limitation Year. The Limitation Year shall be the Plan Year.
1.18 Maternity or Paternity Absence. An absence from work by reason of
the pregnancy of an Employee, by reason of the birth of a child of the Employee,
in connection with the adoption of such child by such Employee, or for the
purpose of caring for such child for a period beginning immediately following
such birth or placement. No period of absence shall qualify as a Maternity or
Paternity Absence if (l) the placement of the child is with respect to a foster
home or (2) at the election of the Plan Committee the Employee is unable to
provide such documentary evidence as the Plan Committee shall reasonably require
proving that the absence was for any of the reasons identified above.
1.19 Retirement Date. The Normal Retirement Date shall be the
Participant's 65th birthday. 1.20 Participant: An Employee who satisfies the
requirements of Article II. 1.21 Plan. The 401(k)/Profit Sharing Plan of the
Company as herein set forth and as amended from time to time. The Plan may be
referred to as the Balchem Corporation 401(k)/Profit Sharing Plan.
1.22 Plan Administrator. The Plan Administrator shall be the Company.
1.23 Plan Year. The Plan Year shall be the calendar year.
1.24 Regular Account. Regular Account shall mean the bookkeeping account
kept for each Participant pursuant to Article IV, Section 4.01 reflecting his
portion of the Company's contribution to the Trust Fund and the earnings and
losses thereon.
1.25 Segregated Account. Segregated Account shall mean the Account kept
for each Participant, pursuant to Article VI, for assets contributed to the Plan
by a Participant by direct transfer of assets or rollover from another tax
qualified employee benefit plan, and the earnings and losses thereon.
1.26 Elective Account, Matching Contribution Account. Elective Account
shall mean the Account kept for each Participant, pursuant to Article VI, for
Elective Contributions to the Plan, and, Matching Contribution Account shall
mean the Account kept for each Participant, pursuant to Article VI, for Matching
Contributions to the Plan and all earnings and losses on such Accounts.
1.27 Total and Permanent Disability. Incapacity, physical or mental,
permanent in nature, resulting from bodily injury or disease, to perform the
requirements of an employee's job or position, provided, however, the term shall
not include any injury or disease which:
a. Results from or consists of habitual drunkenness,
addiction to narcotics, or
b. Was treated, suffered or occurred while the employee
was engaged in felonious enterprise, or
c. Was intentionally self-inflicted.
Whether an employee is totally and permanently disabled shall be
established by medical proof satisfactory to a physician appointed by the
Committee and his decision as to the competence of such medical proof, shall be
binding upon the Employee and all interested parties and in no manner subject to
review. With the exception of the provisions in a, b and c above, any employee
who has qualified to receive disability benefits for total and permanent
disability under the Social Security Act shall be deemed to be totally and
permanently disabled for purposes of the Plan.
1.28 Trust Agreement. The agreement made and entered into for the
establishment of a trust of all contributions which may be made under the Plan
and any and all amendments of such agreement.
1.29 Trust Fund. All contributions received by the Trustees under the
Plan and any and all securities and other property purchased or otherwise
acquired out of such funds, together with the income therefrom, less any and all
distributions made therefrom and any and all losses, expenses and amounts
chargeable thereto.
1.30 Year of Service For Eligibility: For the purposes of determining
eligibility for participation in the plan, a "Year of Service" shall mean the
completion of one thousand (1000) Hours of Service by an Employee during an
initial twelve (12) consecutive month period beginning on the Employee's
employment or re-employment commencement date, and thereafter in any Plan Year,
commencing with the Plan Year which includes the anniversary date of such
Employee's employment or re-employment date. Should an Employee complete 1,000
Hours of Service in both the initial 12 consecutive month period and in the Plan
Year which includes the anniversary date of the Employee's employment or
re-employment date, the Employee shall be credited with two (2) Years of Service
for Eligibility.
An Employee's employment date shall be the first date on which he earns
an Hour of Service. An Employee's reemployment commencement date shall be the
first day on which the Employee is entitled to be credited with an Hour of
Service after the Plan Year, or the initial 12 consecutive month period, in
which the Employee incurs a one year break-in-service following a Plan Year, or
initial 12 consecutive month period, in which the Employee is credited with more
than 500 Hours of Service. In the case of an Employee who is credited with no
Hours of Service in a Plan Year or initial 12 consecutive month period beginning
after the Employee's reemployment commencement date, the Employee shall be
treated as having a new reemployment commencement date as of the first day on
which the Employee is entitled to be credited with an Hour of Service after such
Plan Year or initial 12 consecutive month period.
1.31 Year of Service for Vesting: For the purposes of determining the
vesting of benefits, a "Year of Service" shall mean any Plan Year during which
an Employee completes at least one thousand (l000) Hours of Service, except that
the following Years of Service shall be excluded:
(a) Years of Service prior to any one year breakin-service until
the Employee has completed one (l) year of service after such break.
(b) For purposes of vesting and credited service, if a
Participant incurs a Break-In-Service in any Plan Year which begins before
January 1, 1985 and at the time of the Break-In-Service is not vested and later
becomes a Participant in the Plan, his pre-break Years of Service shall be
combined with his post-break Years of Service if the number of aggregate
pre-break Years of Service for vesting purposes exceeds his consecutive
break-in-service years. If his aggregate pre-break years of service for vesting
is less than his consecutive break-in-service years, his aggregate pre-break
years of service shall be ignored in computation of vesting and credited
service.
(c) If a non-vested Participant incurs a Break-in-Service in any
Plan Year beginning on or after January 1, 1985, and later becomes a Participant
in the Plan, then for purposes of vesting service his pre-break Years of Service
shall be combined with his post-break Years of Service if (1) his pre-break
Years of Service equals or exceeds the number of consecutive break-in-service
years or (2) the number of consecutive Break-In-Service years is less than five
(5).
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.01 Each Employee, other than a leased employee and employees included
in a unit of employees covered by a collective bargaining agreement between
employee representatives and one or more employers, if retirement benefits were
the subject of good faith bargaining between the parties, shall become a
Participant hereunder on the first day of the month coincident with or next
following the date on which he has first satisfied all of the following
conditions:
(a) He has completed 60 days of continuous, active service with the
Company;
(b) He has reached the age of 18.
2.02 A Participant shall cease to be such hereunder upon his death,
retirement or other cessation of employment with the Company. A Participant must
have 1,000 Hours of Service in a Plan Year to be eligible for a Company
contribution under Section 4.02.
2.03 In the case of an Employee who commences participation in the Plan
(or recommences participation in the plan upon the Employee's return after one
or more one-year breaks in service) on a date other than the first day of a Plan
Year, all Hours of Service credited to the Employee for the portion of the Plan
Year before the date on which the Employee commences (or recommences)
participation, shall be taken into account in determining Hours of Service. If
such Employee's service is not less than 1,000 hours in such Plan Year, the
Employee must be credited with a partial year of participation which is
equivalent to a ratable portion of a full year of participation for service
credited to the Employee for the portion of the Plan Year after the date of
commencement (or recommencement) of participation.
2.04 If a Participant has a one-year break-in-service, he will be
required to complete a year of service for eligibility purposes before again
becoming a Participant. Upon satisfying such eligibility requirement he will be
deemed to be readmitted as of the date he again performs an Hour of Service.
2.05 Every Employee shall become a Participant as provided in this
Article unless he shall waive participation on a waiver form filed with the Plan
Administrator. An Employee who waives participation shall continue to accrue a
Year of Service for Eligibility and a Year of Service for Vesting purposes under
Sections 1.29 and 1.30.
ARTICLE III
CONTRIBUTIONS
3.01 All contributions under the Plan shall be made by the Company and
no contributions shall be required of any employee.
3.02 Subject to the provisions of Article IX hereof relating to
termination of the Plan and liability of the Company under the Plan, the Company
shall contribute to the Trust Fund whatever amount may be determined by the
Board, in its sole discretion.
3.03 The amount of the Company's contributions for each Plan Year shall
be paid to the Trustees in a single payment or in installments. Contributions
may be made in cash or other property. If made in other property the
contribution shall be valued at its fair market value determined at the time of
the contribution. Contributions for each Plan Year shall be made within the
period provided for in Section 404 (a) (6) of the Internal Revenue Code of l954
or other statute of similar import, or any rule or regulation thereunder.
3.04 The contributions of the Company hereunder and all computations of
any and all amounts relevant to such contributions shall be determined by the
Board. The determination of the Board shall be final and conclusive on all
persons. Neither the Trustees nor the Committee nor any other person shall be
under any duty to inquire into the correctness of the amount contributed and
paid over to the Trustees hereunder, nor shall the Trustees or the Committee or
any other person be under any duty to enforce the payment of the contributions
to be made hereunder by the Company.
3.05 All amounts contributed by the Company to the Trustees shall
represent irrevocable contributions of the Company to the Trust except as
provided in Article 9.05 hereof or the Trust Agreement. It shall be impossible
at any time under this Trust for any part of the Trust Fund to be used for or
diverted to purposes other than for the exclusive benefit of the Participants or
their beneficiaries.
ARTICLE IV
ACCOUNTS OF PARTICIPANTS
4.01 The Committee shall open a Profit Sharing Account in the name of
each Participant. A Participant's Profit Sharing Account shall be credited with
that portion of each contribution of the Company to the Trust as is provided by
Article III and Section 4.02.
4.02 The Company, as of the last day of each Plan Year for which the
Company shall have made a contribution or there shall have been a forfeiture,
shall allocate such contribution and forfeiture to those Participants who are
employed on the last day of the Plan Year, in proportion to Annual Compensation,
as follows:
(a) First, to all Participants, up to a maximum of 3.55% of
Annual Compensation.
(b) Second, if there are contributions and forfeitures remaining
to be allocated, to all Participants who are Senior Grade Employees, up to a
maximum of 7.45% of Annual Compensation.
(c) Third, if there are contributions and forfeitures remaining
to be allocated, to all Participants, up to a maximum of 1.2% of Annual
Compensation.
(d) Fourth, if there are contributions and forfeitures remaining
to be allocated, to all Participants who are Senior Grade Employees, up to a
maximum of 2.8% of Annual Compensation.
4.03(a) Notwithstanding the provisions of Section 4.02, the maximum
"Annual Addition" to any Participant's account for any Limitation Year shall not
exceed the lesser of $30,000 (or, if greater, one-fourth of the defined benefit
dollar limitation set forth in Section 415(b)(1) of the Internal Revenue Code)
or twenty-five percent (25%) of the Participant's compensation (as defined in
Section 1.415-2(d) of the regulations) for the Plan Year. For this purpose
"Annual Addition" means the total of (1) the Company's contribution and
forfeitures allocated to the Participant, (2) the Employee's contribution
(including excess contributions as defined in Section 401(k)(8)(B) of the
Internal Revenue Code, excess aggregate contribution as defined in Section
401(m)(6)(B) of the Internal Revenue Code and excess deferrals as described in
Section 402(g) of the Internal Revenue Code, whether such amounts are
distributed or forfeited), (3) contributions to the Participant's Individual
Medical Account as defined in Section 415(1)(2) of the Code, (4) amounts derived
from contributions paid or accrued after December 31, 1985, in taxable years
ending after such date, which are attributable to post-retirement medical
benefits, allocated to the separate account of a key employee, as defined in
Section 419A(d)(3) of the Code, under a welfare benefit fund, as defined in
Section 419(e) of the Code, maintained by the employer. Notwithstanding the
foregoing, for purposes of the twenty-five percent (25%) limitation described
above, any contribution attributable to medical benefits (within the meaning of
Section 401(h) or 419A(f)(2) of the Code) that is otherwise treated as an annual
addition under Code Sections 415(l)(1) or 419A(d)(2) shall not be considered.
When used with respect to contributions or allocations under any other plan
maintained by the Employer, the term "Annual Addition" has the meaning given it
in Section 415(c)(2) of the Code, subject to the special rules set forth under
Section 415(c)(6) of the Code. The term Individual Medical Account means any
separate account which is established for one Participant in a pension and
annuity plan maintained by the Company and from which benefits described in
Section 401(h) of the Code are payable solely to such Participant, his spouse or
his dependents.
To the extent necessary to limit Annual Additions to a Participant's
account to the amount provided in this Section, the Annual Additions arising
under this Plan shall be reduced in the following order:
(i) A Participant's contributions shall be repaid to him. Such
payment shall be made within two and one-half months after the end of the Plan
Year, and shall be made by the Company, if such sums have not yet been paid over
to the Trustee, or by the Trustee after notice of the required repayment by the
Employer.
(ii) Forfeitures allocated to the Participant's Account shall be
reallocated in accordance with Section 4.02 to all other Participants within the
limitations of this Section.
(iii) The Company's contributions for the Plan Year allocable to
such Participant shall be reduced to the extent necessary to alleviate such
excess. Any excess Company contribution made on behalf of such Participant shall
not be allocated for the Limitation Year for which such contribution was made
but shall be allocated for the next Limitation Year and (for each succeeding
year) to such Participant to the extent permitted by this section. In the event
that the Participant is not in the service of Company at the end of the next
Limitation Year, then any excess Company contribution shall be allocated in
accordance with subsection (iv) below.
(iv) Any remaining amount which cannot be allocated to
Participants as a result of the limitations specified in this subsection shall
be maintained in a separate account under the Trust to be allocated among
Participants in the next succeeding Plan Year prior to the allocation of any
contributions or forfeitures for such next Plan Year. Such separate account
shall not share in any investment gains, losses or other income earned by the
Trust. In the event the Plan is terminated or contributions completely
discontinued, the separate account shall be allocated pursuant to the terms of
this subsection, to the extent permitted by Section 415 of the Internal Revenue
Code. To the extent the separate account is not fully depleted by such
allocation it shall revert to the Company.
(v) The limitations on Annual Additions contained in this
subsection shall be applied as if (i) all defined contribution plans of those
companies which are commonly controlled trades or businesses, as that term is
defined in Code Sections 414(b), (c), (m) or (o) and the regulations thereunder,
were a single defined contribution plan; and (ii) all Annual Compensation earned
by an employee from all such companies were aggregated.
(b) If the Company maintains a defined benefit plan then in no event
shall a Participant be entitled to receive an annual allocation of contribution
hereunder in an amount which would cause the sum of the Defined Benefit Plan
Fraction and the Defined Contribution Plan Fraction to exceed 1.0 for any
calendar year. If the sum of the Defined Benefit Plan Fraction in the Company's
defined benefit plan and the Defined Contribution Plan Fraction in the Company's
defined contribution plan shall exceed 1.0 for any Participant in any year, the
Company shall reduce the contribution hereunder to the extent necessary to bring
the sum of such fractions to 1.00. If the Defined Contribution Plan Fraction
cannot be sufficiently reduced the Company shall adjust or freeze the rate of
benefit accrual under its defined benefit plan so that the sum of both fractions
shall not exceed 1.0 for such Participant for such year.
For purposes of this subsection (b):
(1) The "Defined Benefit Plan Fraction" for any
Limitation Year is a fraction, the numerator of which is the Participant's
projected annual retirement benefit under all defined benefit plans of the
employer, whether or not terminated (determined at the close of the Limitation
Year) and the denominator of which is the lesser of (i) 1.25 multiplied by
$90,000 (as increased by the Secretary of the Treasury under Code Section
415(d)(1)(A)) or (ii) 1.4 multiplied by 100% of the Participant's average
compensation as defined in Treasury Regulations Section 1.415-2(d)(1)(i) during
the three (3) consecutive calendar years when he had the greatest aggregate
compensation from the Company and during which he was a Participant in the Plan
or in any prior plan. The term "projected annual retirement benefit" shall mean
the annual retirement benefit (adjusted to an actuarially equivalent straight
life annuity if such benefit is expressed in a form other than a straight life
annuity or qualified joint and survivor annuity) to which the participant would
be entitled under the terms of the Plan, assuming: (a) the participant will
continue employment until normal retirement age under the Plan (or current age,
if later), and (b) the participant's compensation for the current limitation
year and all other relevant factors used to determine benefits under the Plan
will remain constant for all future limitation years.
(2) The "Defined Contribution Plan Fraction" for any
Limitation Year is a fraction, the numerator of which is the sum of the Annual
Additions to the Participant's account under all the defined contribution plans
(whether or not terminated) maintained by the employer for the current and all
prior limitation years (including the Annual Additions attributable to the
Participant's nondeductible employee contributions to all defined benefit plans,
whether or not terminated, maintained by the employer, and the Annual Additions
attributable to all welfare benefit funds, as defined in Section 419(e) of the
Code, and Individual Medical Accounts, as defined in Section 415(1)(2) of the
Code, maintained by the employer), and the denominator of which is the sum of
the maximum aggregate amounts for the current and all prior limitation years of
service with the employer (regardless of whether a defined contribution plan was
maintained by the employer). The maximum aggregate amount in any limitation year
is the lesser of 125 percent of the dollar limitation determined under Section
415(b) and (d) of the Code in effect under Section 415(c)(1)(A) of the Code or
35 percent of the Participant's compensation for such year.
If the employee was a Participant as of the end of the first day of the
first limitation year beginning after December 31, 1986, in one or more defined
contribution plans maintained by the employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum of this
fraction and the defined benefit fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount equal to the product of (1)
the excess of the sum of the fractions over 1.0 times (2) the denominator of
this fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they would be
computed as of the end of the last limitation year beginning before January 1,
1987, and disregarding any changes in the terms and conditions of the plan made
after May 5, 1986, but using the Section 415 limitation applicable to the first
limitation year beginning on or after January 1, 1987.
The Annual Addition for any limitation year beginning before January 1,
1987, shall not be recomputed to treat all employee contributions as Annual
Additions.
(3) All defined benefit plans of the Company, whether or
not terminated, are to be treated as one defined benefit plan and all defined
contribution plans of the Company, whether or not terminated, are to be treated
as one defined contribution plan.
(4) The term "Company" shall include:
(i) each corporation which is a member of a
controlled group of corporations (as defined in Section 414(b) of the Code and
as modified by Section 415(h) of the Code) of which the Company is a member,
(ii) each trade or business controlled by or
under common control (as defined in Section 414(c) of the Code and as modified
by Section 415(h) of the Code) with the Company; and (iii) each member of an
affiliated service group (as defined in Section 414(m) of the Code) of which the
Company is a member.
(iv) each employer that is required to be
aggregated with the Company by reason of Treasury Regulations under Section
414(o) of the Code.
4.04 (a) The Trustees shall value the Trust Fund at its fair market
value:
(i) at the end of each business day during of
the Plan Year, but with written statements to be limited to statements covering
each calendar quarter; and
(ii) on any other date (the Special Valuation
Date) in order to avoid prejudice either to continuing Participants or to
terminating Participants; provided such dates are chosen on a non-discriminatory
basis.
(b) Within a reasonable time after any such valuation the
Trustees shall notify the Committee of the amount of net earnings or losses of
the Trust Fund during the Plan Year. The Committee shall apportion such net
earnings or losses among those Participants who shall have a dollar and cents
credit on the books of the Trust. Net earnings or losses for each year shall be
credited or debited to such Participants proportionately in accordance with the
ratios which the dollar and cents credit of such Participant as of the beginning
of the Plan Year in which such earnings or losses are to be credited or debited
bears to the aggregate of all such dollars and cents credits as of such date.
For the purposes of this Article:
(1) the phrase "dollars and cents credit" shall mean the
dollars and cents value of all cash or investments credited to the account of an
individual Participant disregarding, however, the amount of any premiums which
shall have been paid on any Contract or the cash value thereof credited to the
account of the Participant.
(2) the term "net earnings or losses" shall mean gross
earnings less all expenses and taxes, and shall include any increases or
decreases in the market values of the investments of the Trust Fund during the
year. In the case of investments in a common trust fund, or similar investment
media, the valuation of such investments on the most recent valuation date of
such fund shall be taken as the value of such investments.
Anything hereinabove to the contrary notwithstanding, the allocation
among Participants shall also include retired Participants, disabled
Participants and terminated Participants for whom accounts are held by the
Trustee subject to the provisions of Article V.
4.05 (a) Upon any distribution to a Participant or his beneficiaries
under Article V hereof, the Company shall debit the account of such Participant
by the amount of cash or fair market value of other property distributed. In the
event that any Participant shall, by reason of termination of his employment
with the Company other than by death, retirement or total and permanent
disability receive less than the full amount of his account, in accordance with
Article V, the balance shall remain in the account and share in the adjustments
provided for in Section 4.04 hereof.
(b) If during any Plan Year the Participant suffers a
Break-In-Service which prevents any post-Break-In-Service Years of Service for
Vesting to be combined with his pre-Break-In-Service Years of Service for
Vesting with respect to his pre-Break-In-Service Accrued Benefit, then as of the
last day of such Plan Year before the adjustments provided in Section 4.04
hereof, the Company shall debit that terminated Participant's account by an
amount equal to its credit balance and such amount shall be allocated in
accordance with provisions of Section 4.02.
(c) In the event the Participant's service after his termination
may be combined with his pre-termination service, then:
(i) The Participant shall be permitted to repay to the
Trustees the sum received, prior to the earlier of 5 years after the date the
Participant is re-employed by the Company or the end of the fifth consecutive
one year break in service after distribution of the benefit (if the distribution
was made on account of separation from service) or 5 years after the date of
distribution in all other events, and the Participant's Accrued Benefit
attributable to Company's contributions shall be restored to the amount of said
Accrued Benefit on the date the distribution of the vested portion of his
Accrued Benefit was made. If the value of a Participant's vested Accrued Benefit
was zero at the time of a deemed distribution under Article V, the Participant's
Accrued Benefit attributable to Company's contributions shall be restored to the
amount of said Accrued Benefits on the date of the deemed distribution, provided
the Participant is rehired before incurring five consecutive Breaks-in-Service
over five consecutive Plan Years.
(ii) If a distribution was made at a regular or Special
Valuation Date to a Participant who is less than l00 percent vested in the
Company's contributions, a separate account will be established for the
Participant's interest in the Plan as of the time of the distribution. At any
time thereafter the Participant's vested portion in the separate account will
not be less than an amount ("X") determined by the formula: X=P(AB+(RxD))-(RxD).
For purposes of applying the formula: P is the vested percentage at any time
after distribution; AB is the account balance at any time after distribution; D
is the amount of the distribution; and R is the ratio of the account balance at
any time after distribution to the account balance after distribution.
ARTICLE V
DISTRIBUTIONS
5.01 Distribution hereunder shall be made to Participants, their
beneficiaries and their estates only by reason of the following events and only
as herein provided:
(a) Death of a Participant;
(b) Retirement of a Participant on or after Normal
Retirement Date;
(c) Termination of employment due to total and permanent
disability; and
(d) Other cessation of employment.
5.02 (a) Within ninety (90) days following the date of death of a
Participant who did not earn an Hour of Service after August 23, 1984 or is not
married on the date of his death, provided the date of death is prior to the
Participant's Annuity Starting Date, the Participant's full Accrued Benefit as
of the Valuation Date coincident with or immediately preceding his date of
death, or a Special Valuation Date, shall be distributed to the Participant's
Beneficiary in a single lump sum, unless the Participant elects (as provided in
Section 5.03(a)(iii)) to have his death benefit paid in accordance with one of
the distribution methods described in Section 5.04(b).
(b) If insurance contracts are distributed, the modes of
settlement of the contracts shall be limited to the provisions of this Article.
Any annuity contract distributed from this Plan shall be nontransferable.
(c) If any part of the amount attributable to such accounts is
payable to a Beneficiary who shall have predeceased the Participant, or if the
Participant shall have failed to designate a Beneficiary, such amounts shall be
paid to the legal representative of such Participant, and the Trustees shall not
be responsible for the disposition of such amount in accordance with any Will or
other testamentary disposition made by such Participant or for a disposition in
accordance with the laws of intestacy or otherwise.
(d) Each Participant shall have the right, at any time, to
select the beneficiary or beneficiaries to receive the benefits payable by
reason of his death. Each such designation of beneficiary or beneficiaries may,
from time to time, be changed by the Participant by delivering written notice
thereof to the Trustees.
5.03 (a) In the event of the death of a Participant prior to his Annuity
Starting Date who was married on the date of his death and who earned an hour of
service after August 23, l984, the Beneficiary of such Participant shall be
entitled to a death benefit in accordance with the terms of this Section 5.03.
The death benefit payable pursuant to this Section shall commence within ninety
(90) days of the death of a Participant.
(i) In the event this Plan is not a direct or indirect
transferee of a defined benefit plan or a defined contribution plan subject to
the funding standards of Section 4l2 of the Code (all as defined in Section
40l(a)(ll) of the Code) or is not otherwise subject to Section 417 of the Code,
the benefit due hereunder shall be paid to the Participant's surviving spouse in
a lump sum, unless the provisions of subsections (iii) or (iv) below are
elected.
(ii) In the event this Plan is a direct or indirect
transferee of a defined benefit plan or a defined contribution plan subject to
the funding standards of Section 412 of the Code (all as defined in Section
401(a)(ll) of the Code) or is otherwise subject to Section 417 of the Code, the
death benefit shall be paid to the Participant's spouse in the form of a life
annuity, unless a Participant elects otherwise, in accordance with the
provisions of subsections (iii) or (iv). The amount of such annuity shall be the
amount that can be provided by the Participant's full Accrued Benefit,
determined as of the Valuation Date coincident with or immediately preceding his
date of death, or as of a Special Valuation Date. If the Participant's
beneficiary shall die before or after benefit distribution has commenced, but
prior to receiving the full amount of the death benefit, the remaining unpaid
death benefit amount, as of the Valuation Date coincident with or immediately
preceding the beneficiary's date of death, shall be paid in a lump sum, within
ninety (90) days of the beneficiary's date of death, to the Participant's
contingent beneficiary, if any, or otherwise to his estate.
(iii) A Participant may elect to have his death benefit
paid in accordance with one of the distribution methods described in Section
5.04(b), provided the time for completion of all payments will be no longer than
the life expectancy of the beneficiary, by filing a written election of the form
of distribution, on the form prescribed by the Committee. If the Participant is
married, the Participant's spouse must consent to such an alternative
distribution method in writing, in accordance with the procedure set forth
below.
(iv) A Participant may elect to waive the payment of a
death benefit to his spouse by
filing a written election on the form prescribed by the Committee. In the event
of a waiver of the death benefit to the spouse, any death benefit due hereunder
shall be paid to the Beneficiary in the form of a single lump sum within ninety
(90) days of the date of death of the Participant, unless the Participant has
elected an alternative distribution method under subparagraph (iii) above. Any
election to waive may be made at any time during the period which begins on the
first day of the Plan Year in which the Participant attains age 35 (or with
respect to a Participant who separates from service before attaining age 35,
beginning on the date of such separation of service, but only with respect to
his Accrued Benefit earned to such date) and which ends on the date of his
death. A Participant may elect to waive prior to age 35 provided such
Participant has received the explanation of benefits set forth in subparagraph
(vi) below; provided however, that any election prior to age 35 must be again
elected on or after the first day of the Plan Year in which the Participant will
attain age 35, or otherwise will be void on the first day of said Plan Year.
(v) Any election to waive the payment of a death
benefit to a spouse under subparagraph
(iv), above, and any election of an alternative distribution method under
subparagraph (iii), above must be consented to in writing by the Participant's
spouse. The spouse's consent to the election must acknowledge the effect of such
election and be witnessed by a member of the Committee or acknowledged before a
Notary Public. The spouse's consent to the election, and the Participant's
election itself shall name the specific beneficiary or beneficiaries, including
any contingent beneficiaries, or the spouse's consent to the election shall
state that the spouse consents to the election of an alternate distribution
method, acknowledges a right to restrict the beneficiary designation, and
voluntarily relinquishes the right to the spousal death benefit in annuity form
and the right to limit consent to a specific beneficiary. If the Participant
establishes to the satisfaction of the Committee that such consent may not be
obtained because there is no spouse or the spouse cannot be located, or if the
Participant has a court order declaring the Participant as abandoned or legally
separated from his spouse, the election will be deemed effective without spousal
consent. Any consent will be valid only with respect to a spouse who signs the
consent (or is identified in the consent in circumstances described in the
preceding sentence). A Participant may revoke an election to waive without the
consent of a spouse at any time. Any consent will be valid only to the extent
that it identifies a specific beneficiary. A Participant may not change a
beneficiary designation without complying with the spousal consent requirements
of this Section unless the original consent relinquishes the right of the spouse
to limit consent to a specific beneficiary.
(vi) The Plan Committee shall provide each Participant a
written explanation of the benefits described in this subsection. The written
explanation shall be comparable to the explanation provided pursuant to Section
5.04(e). Such a written explanation shall be provided within a period beginning
one year prior to the first day of the Plan Year in which the Participant
attains age 32 and ending with the close of the Plan Year preceding the Plan
Year in which the Participant attains age 35, or, if ending later, the period
beginning one year prior to and ending one year after the date the Participant
first entered participation in the Plan. If a Participant ceases to be an
Employee prior to the end of the Plan Year in which he attains age 35, the
written explanation shall be provided within the period beginning one year prior
to cessation of employment and ending one year after cessation of employment.
(b) In no event may the date all death benefits are fully
distributed be deferred to a date later than December 31 of the Plan Year in
which falls the fifth anniversary of the date of the Participant's death,
unless:
(i) If payable to a designated beneficiary other than
the Participant's spouse, the distribution is paid over the life of the
designated beneficiary (or over a period not extending beyond the life
expectancy of such beneficiary); provided that such distributions must begin not
later than December 31 of the Plan year following the Plan Year in which the
Participant dies; and
(ii) If payable to the spouse of the Participant,
distributions need not commence
prior to the later of December 31 of the Plan Year during which the Participant
would have attained age 70-1/2 or December 31 of the Plan Year immediately
following the Plan Year in which the Participant died; and if the surviving
spouse shall die before distributions begin then this provision shall apply as
if the surviving spouse were the Participant.
(iii) For purposes of this Section, the life expectancy
of a beneficiary shall be calculated pursuant to Section 5.04(b).
(c) The Committee may pay the present value of the life annuity
due pursuant to this Section in a single lump sum, within ninety (90) days of
the date of death of a Participant, if the value of a Participant's vested
account balance derived from employer and employee contributions does not exceed
(or at the time of any prior distribution did not exceed) $5,000, or, if the
benefit does exceed $5,000 as calculated above, with the written consent of the
spouse of the Participant. For purpose of this subsection the amount of a
benefit shall be determined as of the date of distribution. The benefit payable
hereunder shall be reduced by any death benefit payable to other than a
surviving spouse pursuant to the terms of any Qualified Domestic Relations Order
as that term is defined in Section 4l4(p) of the Code.
(d) In the event of the death of a Participant who has filed an
election effective pursuant to the terms of Section 242(d) of the Tax Equity and
Fiscal Responsibility Act of l982 the death benefit of such Participant shall be
paid at such time and in such form as such election provides.
5.04 (a) A Participant shall be fully vested on and entitled to retire
on his Normal Retirement Date. A Participant may continue in the service of the
Company beyond his Normal Retirement Date and shall be entitled to retire at any
time during such period. Until the actual retirement of a Participant he shall,
for all purposes of the Plan, continue to be a Participant hereunder.
(b) Within ninety (90) days of the termination of a
Participant's employment by reason of his retirement on or after his Normal
Retirement Date, the Participant's full Accrued Benefit as of the Valuation Date
coincident with or immediately preceding the date of such termination, or a
Special Valuation Date, shall be distributed to the Participant in one or more
of the following forms, as selected by the Participant, which form shall be
irrevocable on the date benefits commence:
1. One lump sum.
2. Equal payments over a specified period of years, not greater
than the life expectancy of the Participant or the joint life expectancy of the
Participant and a designated beneficiary. The amount to be distributed each
year, beginning with distributions for the first distribution calendar year
shall not be less than the quotient obtained by dividing the participant's
benefit by the lesser of (1) the applicable life expectancy or (2) if the
participant's spouse is not the designated beneficiary, the applicable divisor
determined from the table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the
proposed regulations. Distributions after the death of the participant shall be
distributed using the applicable life expectancy as the relevant divisor without
regard to Proposed Regulations Section 1.401(a)(9)-2. The applicable life
expectancy shall be the life expectancy (or joint and last survivor expectancy)
calculated using the attained age of the participant (or designated beneficiary)
as of the participant's (or designated beneficiary's) birthday in the applicable
calendar year reduced by one for each calendar year which has elapsed since the
date life expectancy was first calculated. If life expectancy is being
recalculated, the applicable life expectancy shall be the life expectancy as so
recalculated. The applicable calendar year shall be the first distribution
calendar year, and if life expectancy is being recalculated such succeeding
calendar year. Life expectancy and joint and last survivor expectancy are
computed by use of the expected return multiples in Tables V and VI of Section
1.72-9 of the income tax regulations.
Unless otherwise elected by the Participant or spouse, by the time
distributions are required to begin, life expectancies shall be recalculated
annually. Such election shall be irrevocable as to the Participant (or spouse)
and shall apply to all subsequent years. The life expectancy of a nonspouse
beneficiary may not be recalculated.
3. Any combination of lump sums and equal payments.
In the event a Participant elects to receive a benefit in one of the
above forms, and such benefit form utilizes a period of years not greater than
the life expectancy of the Participant, then if the Participant dies after
benefit distributions have commenced but prior to receiving the full amount due
him, distribution shall be made to the Participant's beneficiary in a lump sum
within ninety (90) days of the Participant's death, and the unpaid benefit
amount shall be valued as of the Valuation Date coincident with or immediately
preceding the Participant's death. If the Participant has not specified a
beneficiary the terms of Section 5.02(c) shall apply.
(c) Notwithstanding anything contained in Section 5.04(b), if
the Plan is a direct or indirect transferee of a defined benefit plan or a
defined contribution plan subject to the funding standards of Section 412 of the
Code (all as defined in Section 401(a)(11) of the Code) or is otherwise subject
to Section 417 of the Code, he shall be paid, within 90 days of his termination
of employment by reason of retirement as set forth in Section 5.04(a), in the
form of an immediate life annuity (i) for his life if he is not married on the
date his benefits commence; or (ii) for his life with payments equal to 1/2 the
Participant's individual annuity continuing to his spouse if he is married on
the date his benefits commence. Payments to the spouse shall end with the
monthly payment coinciding with or next following the later of the date of death
of the Participant or his spouse. The amount of the annuity shall be that amount
as can be provided by the Participant's Accrued Benefit. In lieu of the benefit
payable under this Section 5.04(c), a Participant may elect, under Section
5.04(d), to receive a benefit in one or more of the forms of benefit specified
in Section 5.04(b).
(d) If subsection (c) applies, any election by a Participant to
have benefits payable in any form other than the life annuity or joint and
survivor annuity described in subsection (c) shall be made by filing a written
election, on a form prescribed by the Committee, which shall specify the form of
distribution under Section 5.04(b) which is to apply. Any election superceding a
joint and survivor annuity shall not take effect unless the spouse of the
Participant consents in writing to such election, such consent acknowledges the
effect of the election, and is witnessed by a member of the Committee or
acknowledged before a notary public. The spouse's consent to the election, and
the Parti-cipant's election itself, shall name the specific beneficiary or
beneficiaries, including any contingent beneficiaries, or the spouse's consent
to the election shall state that the spouse consents to the election of an
alternate distribution method, acknowledges a right to restrict the beneficiary
designation, and voluntarily relinquishes the right to the spousal death benefit
in annuity form and the right to limit consent to a specific beneficiary. If the
Participant establishes to the satisfaction of the Committee that such consent
may not be obtained because there is no spouse or the spouse cannot be located,
or if the Participant has a court order declaring the Participant as abandoned
or legally separated from his spouse, the election will be deemed effective
without spousal consent. Any consent will be valid only with respect to the
spouse who signs the consent (or is identified in the consent described in the
preceding sentence). A married Participant may revoke an election without the
consent of the spouse at any time before the commencement of benefits. Elections
shall be made at any time within the ninety (90) day period ending on the
Annuity Starting Date, but not before the Participant has received the
explanation described in Section 5.04(e). Any written consent of the spouse will
be valid only to the extent that it identifies a specific beneficiary. A
Participant may not change a beneficiary designation without complying with the
spousal consent requirements of this Section, unless the original written
consent of spouse voluntarily relinquishes the right to limit consent to a
specific beneficiary.
(e) If subsection (c) requires the payment of a joint and
survivor annuity, 90 days prior to the Participant's Annuity Starting Date the
Plan Committee will provide each Participant with a written explanation of (i)
the terms and conditions of the qualified joint and survivor annuity described
in subsection (c); (ii) the Participant's right to make and the effect of an
election to waive the qualified joint and survivor annuity form of benefit;
(iii) the rights of a Participant's spouse with respect to the consent to
receive benefits in other than a qualified joint and survivor annuity format;
and (iv) the right to make, and the effect of, a revocation of a previous
election to waive the qualified joint and survivor annuity. Upon written request
the Committee will supply a Participant with a written explanation in
non-technical language of the financial effect upon the particular Participant's
annuity of making any election of benefits.
(f) Subject to subparagraphs (1) and (2) below, the retirement
benefit payments of a Participant shall be lost and forfeited during each month
of Suspendible Employment resulting from his (i) continued employment after his
Normal Retirement Date or (ii) reemployment with the Company on or after the
date his retirement benefit commenced. On his subsequent cessation of
employment, payment of the previously suspended amounts shall resume not later
than the first day of the third month following the Participant's cessation of
Suspendible Employment or such later date at which he complies with such
procedures as the Committee establishes to notify it of such cessation. In the
event the Participant continues in or is reemployed (as described in clauses (i)
and (ii) above) in employment other than Suspendible Employment, he shall be
deemed to have ceased employment or not to have been reemployed, as the case may
be, for purposes of his present right to any retirement benefit. Any disputes
arising hereunder shall be subject to the claims procedure described in Section
7.08.
(1) Amount of Resumed Payments. The monthly amount of a
Participant's resumed retirement benefit payments shall be in the amount in
effect immediately before such suspension provided in the foregoing paragraph,
increased to reflect any adjustment in his Regular Account during the period of
Suspendible Employment under the then current terms of the Plan. However, such
resumed payments shall be reduced to take account of retirement benefit payments
previously received by the Participant, and shall be reduced to the extent
allowed by applicable law to offset payments erroneously made during such period
of Suspendible Employment.
(2) Suspendible Employment. "Suspendible Employment"
means the completion of 40 or more Hours of Service with the Company during any
calendar month or four or five week payroll period; provided the Committee
notifies the Participant of the suspension in the manner, form and at such time
as is required by applicable law.
(g) Notwithstanding anything to the contrary, if the value of
the Participant's vested account balance derived from employer and employee
contributions exceeds (or at the time of any prior distribution exceeded)
$5,000, no distribution may be made to the Participant prior to the later of age
62 or normal retirement age without the approval of the Participant, and, if he
is then married, his spouse, in the manner provided in Section 5.04(c). If the
Participant's vested account balance is less than $5,000, calculated as stated
above, then the Committee shall make a distribution of the Participant's benefit
in a lump sum, at the time specified herein. If the value of a Participant's
vested Accrued Benefit is zero, the Participant shall be deemed to have received
a distribution of his vested Accrued Benefit.
5.05 (a) Within ninety (90) days of the cessation of a Participant's
employment otherwise than by death or retirement, if such cessatopm is found by
the Committee to be by reason of the Total and Permanent Disability of the
Participant, the Participant's full Accrued Benefit shall be distributed to the
Participant in the same manner as provided in Sections 5.04(b) or (c), as the
case may be.
(b) Notwithstanding anything to the contrary, if the value of
the Participant's vested account balance derived from employer and employee
contributions exceeds (or at the time of any prior distribution exceeded)
$5,000, no distribution may be made to the Participant prior to the later of age
62 or normal retirement age without the approval of the Participant, and, if he
is then married, his spouse, in the manner provided in Section 5.04(c). If the
Participant's vested account balance is less than $5,000, calculated as stated
above, then the Committee shall make a distribution of the Participant's benefit
in a lump sum, at the time specified herein. If the value of a Participant's
vested Accrued Benefit is zero, the Participant shall be deemed to have received
a distribution of his vested Accrued Benefit.
5.06 (a) Within ninety (90) days of a Participant's cessation of
employment, otherwise than by death, normal retirement, or Total and Permanent
Disability, the vested amount of his Accrued Benefit, if any, as of the
Valuation Date coincident with or immediately preceding the termination of
employment, or a Special Valuation Date, shall be distributed to the Participant
in the manner provided in Sections 5.04(b) or (c), as the case may be.
(b) The vested amount of the Participant's Regular Account shall be that
percentage of the Participant's Regular Account determined by the number of
Years of Service for Vesting of the Participant as indicated in the following
schedule:
Years of Service for Vesting % of Account Vested
---------------------------- -------------------
Less than 2 years of service 0%
2 years of service 100%
If the Plan's vesting schedule is amended, or the Plan is amended in any
way that directly or indirectly affects the computation of the Participant's
nonforfeitable percentage, or if the Plan is deemed amended by an automatic
change to or from a top-heavy vesting schedule, each Participant with at least
three (3) Years of Service for Vesting may elect, within a reasonable period
after the adoption of the amendment or change, to have the nonforfeitable
percentage computed under the Plan without regard to such amendment or change.
For Participants who do not have at least one (1) hour of service in any Plan
Year beginning after December 31, 1988, the preceding sentence shall be applied
by substituting "5 years of service" for "3 years of service" where such
language appears. If the vesting schedule of the Plan is amended, in the case of
an Employee who is a Participant as of the later of the date the amendment is
adopted or the date the amendment is effective, the Participant's nonforfeitable
percentage under this Plan (as of such date) will not be less than his
nonforfeitable percentage under the Plan prior to such amendment.
The period during which the election may be made shall commence with the
date the amendment is adopted or deemed to be made and shall end on the latest
of:
1. 60 days after the amendment is adopted;
2. 60 days after the amendment becomes effective; or
3. 60 days after the Participant is issued written notice
of the amendment by the Company.
(c) Notwithstanding anything to the contrary, if the value of
the Participant's vested account balance derived from employer and employee
contributions exceeds (or at the time of any prior distribution exceeded)
$5,000, no distribution may be made to the Participant prior to the later of age
62 or normal retirement age, without the approval of the Participant, and, if he
is then married, his spouse, in the manner provided in Section 5.04(c). For
purposes of this paragraph, a Participant's vested account balance shall not
include accumulated deductible employee contributions, within the meaning of
Code Section 72(o)(5)(B), for Plan Years beginning prior to January 1, 1989. If
the Participant's vested account balance is less than $5,000, calculated as
stated above, then the Committee shall make a distribution of the Participant's
benefit in a lump sum, at the time specified herein. If the value of a
Participant's vested Accrued Benefit is zero, the Participant shall be deemed to
receive a distribution of his vested Accrued Benefit.
5.07 Distribution in respect of any Participant's Profit Sharing,
Elective, Matching Contribution, or Segregated Account may be made in cash or by
distribution in kind of any property held by the Trust Fund valued at its then
fair market value. Participants whose Accounts are invested in Company Stock may
elect to receive all whole shares of Company Stock in which their Accounts have
an interest, with cash for fractional shares. All references to the amounts
allocated to a Participant's Profit Sharing, Elective, Matching Contribution, or
Segregated Account as of a date other than a date which coincides with a
business day of a Plan Year shall mean the amounts allocated to the
Participant's account as of the last business day of the Plan Year preceding the
date or at a Special Valuation Date, if any. The Trustees shall be under no
obligation to make any distribution except as directed by the Committee and
shall be fully protected in relying upon any such direction.
5.08 If a Participant or Beneficiary directs that a distribution be made
in other than a lump sum, the vested amount of his benefit shall be held as part
of the Trust and shall be subject to adjustment as provided in Section 4.04.
5.09 Notwithstanding anything to the contrary stated herein, with the
exception stated below, unless the Participant makes a written election to have
benefits commence at a later date, payment of benefits will commence not later
than the sixtieth (60th) day after the latest of (1) the close of the Plan Year
in which the Participant attains the earlier of age 65 or his Normal Retirement
Date specified under the Plan, (2) the close of the Plan Year during which
occurs the tenth (10th) anniversary of the year in which the Participant
commenced participation or (3) the close of the Plan Year in which the
Participant ceases to be employed with the Company. There shall be an exception
to the above requirement if the Participant, and if the Participant is married,
the Participant's spouse, fail to approve a distribution prior to the later of
age 62 or normal retirement age, as required by Sections 5.04(g), 5.05(b), and
5.06(c), in which case the Participant shall be deemed to have made a written
election to have benefits commence at age 65.
5.10 Notwithstanding any provision in this Article V to the contrary,
with the exception noted below, benefits shall begin no later than April 1 of
the Plan Year following the Plan Year in which a Participant attains age 70 l/2.
If more than one benefit payment is to be made, the second payment shall be made
no later than December 31 of such year, with subsequent payments, if any, to be
made no later than December 31 of each following year until the benefit is paid
in full. Notwithstanding the above, benefits need not begin until the later of
April 1 of the Plan Year following the date of retirement or April 1 of the Plan
Year following the calendar year in which the Participant attains age 70 1/2, if
the Participant attains age 70 1/2 before January 1, 1988 and is not a 5 percent
owner. A 5 percent owner is a Participant who meets the definition of 5 percent
owner in Section 416(i) of the Code in the Plan Year within which the
Participant attains age 66 1/2, or in any subsequent Plan Year.
If a Participant's benefit is to be distributed over (1) a period not
extending beyond the life expectancy of the Participant or the joint life and
last survivor expectancy of the Participant and the Participant's designated
beneficiary or (2) a period not extending beyond the life expectancy of the
designated beneficiary, the amount required to be distributed for each calendar
year, beginning with distributions for the first distribution calendar year,
must at least equal the quotient obtained by dividing the Participant's benefit
by the applicable life expectancy. The amount to be distributed each year,
beginning with distributions for the first distribution Plan Year shall not be
less than the quotient obtained by dividing the Participant's benefit by the
lesser of (1) the applicable life expectancy or (2) if the Participant's spouse
is not the designated beneficiary, the applicable divisor determined from the
table set forth in Q&A-4 of Section 1.401(a)(9)-2 of the proposed regulations.
Distributions after the death of the Participant shall be distributed using the
applicable life expectancy above as the relevant divisor without regard to
Proposed Regulations Section 1.401(a)(9)-2.
5.11 Payment Under Qualified Domestic Relations Order. Notwithstanding
any provisions of the Plan to the contrary, if there is entered any Qualified
Domestic Relations Order that affects the payment of benefits hereunder, such
benefits shall be paid in accordance with the applicable requirements of such
Order and the amounts due any Participant or Beneficiary shall be reduced
accordingly. For purposes of this Section the term Qualified Domestic Relations
Order means any judgment, decree or order (including approval of a property
settlement agreement) which:
(a) relates to the provision of child support, alimony payments,
or marital property rights to a spouse, former spouse, child or other
dependent of a Participant;
(b) is made pursuant to a state domestic relations law
(including a community property law); and
(c) constitutes a "qualified domestic relations order" within
the meaning of Code Section 414(p) and ERISA Section 206(d)(3)(B), as
added by the Retirement Equity Act of 1984. 5.12 Grandfather Rules. The
restrictions imposed by this Section with respect to benefit
commencement
dates and benefit forms shall not apply if a Participant has filed an election
effective pursuant to the terms of Section 242(d) of the Tax Equity and Fiscal
Responsibility Act of l982. In any such case the provisions of such election
shall apply.
5.13 Lost Beneficiary. If any benefit is payable under this Plan, and
the beneficiary cannot be located after reasonable efforts by the Company,
including registered mail to the last known address of the beneficiary, said
benefit shall no longer be payable and will be forfeited. However, if a claim is
made for the benefit by the beneficiary, the legal representative of the
beneficiary, or any other person to whom a benefit is payable, and said benefit
has not been paid because the beneficiary could not be located, then the benefit
shall be fully restored and shall again be payable, under the terms of the Plan
which may apply.
5.14 Direct Rollover. This section applies to distributions made on or
after January 1, 1993. Nowithstanding any provision of the Plan to the contrary
that would otherwise limit a distributee's election under this section, a
distributee may elect, at the time and in the manner prescribed by the plan
administrator, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover.
ARTICLE VI
CONTRIBUTIONS BY PARTICIPANT
6.01 Definition. The following definitions shall apply for purposes of
this Article VI. (a) "Compensation" with respect to any Employee means his
Deferred Compensation plus Compensation as defined in Section 4.03(a), paid
during a Plan Year. The amount of "414(s) Compensation" with respect to any
Employee shall include "414(s) Compensation" during the entire twelve (12) month
period ending on the last day of such Plan Year, except that for Plan Years
beginning prior to the later of January 1, 1992 or the date that is sixty (60)
days after the date final Regulations are issued, "414(s) Compensation" shall
only be recognized as of an Employee's effective date of participation. For
purposes of this Section, the determination of "414(s) Compensation" shall be
made by including salary reduction contributions made on behalf of an Employee
to a plan maintained under Code Section 125. "414(s) Compensation" in excess of
$200,000 shall be disregarded. Such amount shall be adjusted at the same time
and in such manner as permitted under Code Section 415(d). Notwithstanding the
foregoing, for Plan Years beginning prior to January 1, 1989, the $200,000 limit
shall apply only for Top Heavy Plan Years and shall not be adjusted.
(b) "Deferred Compensation" with respect to any Participant
means that portion of the Participant's total Compensation which has been
contributed to the Plan in accordance with the Participant's deferral election.
(c) "Elective Contribution" means the Company's contributions to
the Plan that are made pursuant to the Participant's deferral election. Any such
contributions deemed to be Elective Contributions shall be subject to the
requirements of this Article VI and shall further be required to satisfy the
discrimination requirements of Regulation 1.401(k)-1(b), the provisions of which
are specifically incorporated herein by reference.
(d) "Excess Aggregate Contributions" means, with respect to any
Plan Year, the excess of the aggregate amount of the Matching Contributions made
pursuant to Section 6.02(b) over the maximum amount of such contributions
permitted under the limitations of Section 6.04 and 6.06.
(e) "Excess Contributions" mean, with respect to a Plan Year,
the excess of Elective Contributions made on behalf of Highly Compensated
Participants for the Plan Year over the maximum amount of such contributions
permitted under Section 6.04(a). Excess Contributions shall be treated as an
"annual addition" pursuant to Section 4.03.
(f) "Excess Deferred Compensation" means, with respect to any
year of a Participant, the excess of the aggregate amount of such Participant's
Deferred Compensation and the elective deferrals specified in Section 6.03(e)
actually made on behalf of such Participant for such taxable year, over the
dollar limitation provided for in Code Section 402(g), which is incorporated
herein by reference. Excess Deferred Compensation shall be treated as an "annual
addition" pursuant to Section 4.03, unless such amounts are distributed no later
than the first April 15th following the close of the Participant's taxable year.
(g) "415 Compensation" means the compensation defined by Regulation
1.415-2(d). (h) "Highly Compensated Employee" means highly compensated active
Employees and highly compensated former Employees. A highly compensated active
Employee includes any Employee who performs service for the Company during the
determination year and who, during the look-back year: (1) received compensation
from the Company in excess of $75,000 (as adjusted pursuant to Section 415(d) of
the Code); (ii) received compensation from the Company in excess of $50,000 (as
adjusted pursuant to Section 415(d) of the Code) and was a member of the
top-paid group for such year; or (iii) was an officer of the Company and
received compensation during such year that is greater than 50 percent of the
dollar limitation in effect under Section 415(b)(1)(A) of the Code. The term
highly compensated Employee also includes: (i) Employees who are both described
in the preceding sentence if the term "determination year" is substituted for
the term "look-back year" and the Employee is one of the 100 Employees who
received the most compensation from the Company during the determination year;
and (ii) Employees who are 5 percent owners at any time during the look-back
year or determination year. If no officer has satisfied the compensation
requirement of (iii) above during either a determination year or look-back year,
the highest paid officer for such year shall be treated as a highly compensated
Employee. For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the twelve-month period immediately preceding the
determination year. A highly compensated former Employee includes any Employee
who separated from service (or was deemed to have separated) prior to the
determination year, performs no service for the Company during the determination
year, and was a highly compensated active Employee for either the separation
year or any determination year ending on or after the Employee's 55th birthday.
(i) "Income" means the income allocable to "excess amounts"
which shall equal the sum of the allocable gain or loss for the "applicable
computation period" and the allocable gain or loss for the period between the
end of the "applicable computation period" and the date of distribution ("gap
period"). The income allocable to "excess amounts" for the "applicable
computation period" and the "gap period" is calculated separately and is
determined by multiplying the income for the "applicable computation period" or
the "gap period" by a fraction. The numerator of the fraction is the "excess
amount" for the "applicable computation period". The denominator of the fraction
is the total "Accrued Benefit" attributable to Company contributions as of the
end of the "applicable computation period" or the "gap period", reduced by the
gain allocable to such total amount for the "applicable computation period" or
the "gap period" and increased by the loss allocable to such total amount for
the "applicable computation period' or the "gap period". The provisions of this
Section shall be applied:
(i) For purposes of Section 6.03(e), by
substituting: (1) "Excess Deferred Compensation"
for "excess amounts"; (2) "taxable year of the
Participant" for "applicable computation
period"; (3) "Deferred Compensation" for
"Company contributions"; and (4) "Participant's
Elective Account" for "Accrued Benefit".
(ii) For purposes of Section 6.05, by substituting:
(1) "Excess Contributions" for excess amount;
(2) "Plan Year" for "applicable computation
period"; (3) "Elective Contributions" for
"Company contributions"; and (4) "Participant's
Elective Account" for "Accrued Benefit"
(iii) For purposes of Section 6.07, by substituting:
(1) "Excess Aggregate Contributions" for "excess
amounts"; (2) "Plan Year" for "applicable
computation period"; (3) Matching Contributions
made pursuant to Section 6.02(b) and any
qualified non-elective contributions or elective
deferrals taken into account pursuant to Section
6.02(c)" for "Company contributions"; and
(4) "Matching Contribution Account" for "Accrued Benefit". In
lieu of the "fractional method" described above, a "safe harbor method" may be
used to calculate the allocable Income for the "gap period". Under such "safe
harbor method", allocable Income for the "gap period" shall be deemed to equal
ten percent (10%) of the Income allocable to "excess amounts" for the
"applicable computation period" multiplied by the number of calendar months in
the "gap period". For purposes of determining the number of calendar months in
the "gap period", a distribution occurring on or before the fifteenth day of the
month shall be treated as having been made on the last day of the preceding
month and a distribution occurring after such fifteenth day shall be treated as
having been made on the first day of the next subsequent month.
Income allocable to any distribution of Excess Deferred
Compensation on or before the last day of the taxable year of the Participant
shall be calculated from the first day of the taxable year of the Participant to
the date on which the distribution is made pursuant to either the "fractional
method" or the "safe harbor method".
Notwithstanding the above, for "applicable computation periods"
which began in 1987, Income during the "gap period" shall not be taken into
account.
"Participant's Elective Account" means the account established
and maintained by the Committee for each Participant with respect to his total
interest in the Plan and Trust resulting from Company's Elective Contributions.
6.02 Contributions.
(a) Each Participant shall have the right, at his option, to
make an Elective Contribution to the Trust Fund. No such contribution shall be
required of any Employee as a condition of his participation in the Plan. The
Company shall maintain an account for each Participant who shall have made a
contribution to the Trust Fund pursuant to this Section, which account shall be
appropriately designated as an "Elective Account".
(b) For each Plan Year, the Company shall contribute to the Plan
on behalf of each Participant a Matching Contribution, payable in Company Stock,
equal to thirty-five percent (35%) of the Participant's Elective Contributions
for the Plan Year.
The amount contributed pursuant to this subsection shall be
deemed a Company contribution and shall be credited to the Participant's
Matching Contribution Account. The Matching Contribution Account shall be
subject to the vesting schedule of Section 5.06(b).
(c) The Trustees shall establish a Segregated Account containing assets
contributed to the plan by any direct transfer of assets or qualified rollover
from another qualified trust to the extent permitted by the Code. The Segegated
Account shall reflect the transfer of assets to this Plan by reason of the
merger of the Money Purchase Pension Plan into the 401(k) Savings Plan as of
December 31, 1997. Any distribution from the Segregated Account must comply with
the annuity rules of Section 5.04(c), (d), (e), and (g), and the death benefit
payable from the Segregated Account is subject to the pre-retirement survivor
annuity rules of Section 5.03(a)(ii), (iii), (iv), (v), (vi), and Section
5.03(c).
(d) The accounts created pursuant to this Article VI shall be
increased by contributions and shall be decreased in the event of distribution
out of such account to the Participant or his Beneficiaries. Such accounts shall
share in the allocation based on the valuation of the assets of the Trust Fund
prescribed in Section 4.04 of the Plan, subject to investment self-direction
under Section 8.04 but shall not share in the allocations with respect to
Company contributions or allocation of forfeitures under the Plan.
(e) The interest of each Participant in his Segregated Account
and Elective Account shall be non-forfeitable at all times. Distribution of the
Participant's interest in such Accounts shall be made to the Participant or his
Beneficiaries only upon the circumstances provided for in Article V or VI
hereof.
6.03 Deferral Elections.
(a) Each Participant may elect to defer a portion of his
Compensation which would have been received in the Plan Year (except for the
deferral election) by up to the maximum amount which will not cause the Plan to
violate the provisions of Sections 6.04 and 4.03, or cause the Plan to exceed
the maximum amount allowable as a deduction to the Company under Code Section
404. Notwithstanding Section 2.01 of this Plan, if section 2.01 (a) requires
more than 1 Year of Service for Eligibility to become a Participant, then for
purposes of this Section 6.03 the requirements of Section 2.01(a) shall be 1
Year of Service for Eligibility. A deferral election (or modification of an
earlier election) may not be made with respect to Compensation which is
currently available on or before the date the Participant executed such
election.
Additionally, each Participant may elect to defer and have
allocated for a Plan Year all or a portion of any cash bonus attributable to
services performed by the Participant for the Company during such Plan Year and
which would have been received by the Participant on or before two and one-half
months following the end of the Plan Year but for the deferral election. A
deferral election may not be made with respect to cash bonuses which are
currently available on or before the date the Participant executed such
election. Notwithstanding the foregoing, cash bonuses attributable to services
performed by the Participant during a Plan Year but which are to be paid to the
Participant later than two and one-half months after the close of such Plan Year
will be subjected to whatever deferral election is in effect at the time such
cash bonus would have otherwise been received.
The amount by which Compensation and/or cash bonuses are reduced
shall be that Participant's Deferred Compensation and be treated as a Company
Elective Contribution and allocated to that Participant's Elective Account.
(b) The balance in each Participant's Elective Account shall be
fully vested at all times and shall not be subject to forfeiture for any reason.
(c) Amounts held in the Participant's Elective Account may not
be distributable earlier than: (1) a Participant's cessation of employment,
Total and Permanent Disability, or death;
(2) a Participant's attainment of age 59 1/2;
(3) the termination of the Plan without the
establishment of another defined contribution plan
(other than an employee stock ownership plan as defined
in Code Section 4975(e)(7) or a simplified employee
pension plan as defined in Code Section 408(k);
(4) The date of disposition by the Company of
substantially all of the assets (within the meaning of
Code Section 409(d)(2)) used in a trade or business if
the Company continues to maintain this Plan with
respect to a Participant who continues employment with
the corporation acquiring such assets and such
corporation does not maintain this Plan; or
(5) the date of disposition by the Company who
maintains the Plan of its interest in a subsidiary
(within the meaning of Code Section 409(d)(3)) but only
with respect to a Participant who continues employment
with such subsidiary.
All of the above distributions, if available, are subject to the
spousal consent requirements of Section 5.04(d) if section 5.04(c) applies,
within the 90 day period prior to the proposed date of distribution. If Section
5.04(c) does not apply, a distribution under paragraphs 3, 4 and 5 may only be
made in a lump sum. Notwithstanding the above, a Participant shall be entitled
to a distribution of his Elective Account only when a distribution is expressly
provided in this Plan, other than in Section 6.03(c).
(d) In any Plan Year beginning after December 31, 1987, a
Participant's Deferred Compensation under this Plan and all other plans,
contracts or arrangements of the Company maintaining this Plan shall not exceed,
during any taxable year, the limitation imposed by Code Section 402(g), as in
effect at the beginning of such taxable year. This dollar limitation shall be
adjusted annually pursuant to the method provided in Code Section 415(d) in
accordance with Regulations.
(e) If a Participant's Deferred Compensation under this Plan
together with any elective deferrals (as defined in Regulation 1.402(g)-1(b))
under another qualified cash or deferred arrangement (as defined in Code Section
401(k)), a simplified employee pension (as defined in Code Section 408(k)), a
salary reduction arrangement (within the meaning of Code Section 3121(a)(5)(D)),
a deferred compensation plan under Code Section 457, or a trust described in
Code Section 501(c)(18) cumulatively exceed the limitation imposed by Code
Section 402(g) (as adjusted annually in accordance with the method provided in
Code Section 415(d) pursuant to Regulations) for such Participant's taxable
year, the Participant may, not later than March 1 following the close of his
taxable year, notify the Committee in writing of such excess and request that
his Deferred Compensation under this Plan be reduced by an amount specified by
the Participant. In such event, the Committee may direct the Trustee to
distribute such excess amount (and any Income allocable to such excess amount)
to the Participant not later than the first April 15th following the close of
the Participant's taxable year. Any distribution of less than the entire amount
of Excess Deferred Compensation and Income shall be treated as a pro rata
distribution of Excess Deferred Compensation and Income. The amount distributed
shall not exceed the Participant's Deferred Compensation under the Plan for the
taxable year. Any distribution on or before the last day of the Participant's
taxable year must satisfy each of the following conditions:
(1) the Participant shall designate the
distribution as Excess Deferred Compensation;
(2) the distribution must be made after the date
on which the Plan received the Excess Deferred
Compensation; and
(3) the Plan must designate the distribution as
a distribution of Excess Deferred Compensation.
(f) Notwithstanding Section 6.03(e) above, a Participant's
Excess Deferred Compensation shall be reduced, but not below zero, by any
distribution of Excess Contributions pursuant to Section 6.05 for the Plan Year
beginning with or within the taxable year of the Participant.
(g) At Normal Retirement Date, or such other date when the
Participant shall be entitled to receive benefits, the fair market value of the
Participant's Elective Account shall be used to provide additional benefits to
the Participant or his Beneficiary in accordance with the terms of Article V.
(h) The Company and the Committee shall implement the salary
reduction elections provided for herein in accordance with the following:
(1) A Participant must make his initial salary deferral
election within a reasonable time, not to exceed thirty (30)
days, after entering the Plan. An election to defer a cash bonus
shall be made prior to the date that the bonus is currently
available. If the Participant fails to make an initial salary
deferral election within such time, then such Participant may
thereafter make an election in accordance with the rules
governing modifications. The Participant shall make such an
election by entering into a written salary reduction agreement
with the Company and filing such agreement with the Committee.
Such election shall initially be effective beginning with the
pay period following the acceptance of the salary reduction
agreement by the Committee, shall not have retroactive effect
and shall remain in force until revoked.
(2) A Participant may modify a prior election
quarterly, during election periods established by the Committee.
Any modification shall not have retroactive effect and shall
remain in force until revoked.Elections may be made in any
quarter percentage up to 15%.
(3) A Participant may elect to prospectively revoke his
salary reduction agreement in its entirety at any time during
the Plan Year by providing the Committee with thirty (30) days
written notice of such revocation (or upon such shorter notice
period as may be acceptable to the Committee). Such revocation
shall become effective as of the beginning of the first pay
period coincident with or next following the expiration of the
notice period. Furthermore, the cessation of the Participant's
employment, or the cessation of participation for any reason,
shall be deemed to revoke any salary reduction agreement then in
effect, effective immediately following the close of the pay
period within which such termination or cessation occurs.
6.04 Maximum Annual Allocation.
(a) For each Plan Year, the annual allocation derived from
Company Elective Contributions to a Participant's Elective Account shall satisfy
one of the following tests:
(1) The "Actual Deferral Percentage" for the Highly
Compensated Participant group shall not be more than the "Actual
Deferral Percentage" of the Non-Highly Compensated Participant
group multiplied by 1.25; or
(2) The excess of the "Actual Deferral Percentage" for
the Highly Compensated Participant group over the "Actual
Deferral Percentage" for the Non-Highly Compensated Participant
group shall not be more than two percentage points.
Additionally, the "Actual Deferral Percentage" for the Highly
Compensated Participant group shall not exceed the "Actual
Deferral Percentage" for the Non-Highly Compensated Participant
group multiplied by 2. The provisions of Code Section 401(k)(3)
and Regulation 1.401(k)-1(b) are incorporated herein by
reference.
Notwithstanding the foregoing, the Plan Years beginning
after December 31, 1988, in order to prevent the multiple use of
the alternative method described in (2) above and in Code
Section 401 (m)(9)(A)1 any Highly Compensated Participant
eligible to make elective deferrals pursuant to Section 6.03 and
to make voluntary contributions under this Plan or under any
other plan maintained by the Company shall have his actual
contribution ratio reduced pursuant to Regulation 1.401(m)-2,
the provisions of which are incorporated herein by reference.
(b) For the purposes of this Section "Actual Deferral
Percentage" shall mean, for a specified group of participants for a Plan Year,
the average of the ratios (calculated separately for each participant in such
group) of (1) the amount of employer contributions actually paid over to the
trust on behalf of such participant for the Plan Year to (2) the participant's
Compensation for such Plan Year. Employer contributions on behalf of any
participant shall include: (1) any Elective Deferrals made pursuant to the
participant's deferral election (including Excess Elective Deferrals of Highly
Compensated Employees), but excluding (a) Excess Elective Deferrals of
Non-Highly Compensated Employees that arise solely from Elective Deferrals made
under the plan or plans of this employer and (b) Elective Deferrals that are
taken into account in the Contribution Percentage test (provided the ADP test is
satisfied both with and without exclusion of these Elective Deferrals); and (2)
at the election of the Company, Qualified Non-elective Contributions and
Qualified Matching Contributions. For purposes of computing Actual Deferral
Percentages, an Employee who would be a participant but for the failure to make
Elective Deferral shall be treated as a participant on whose behalf no Elective
Deferrals are made.
(c) For the purpose of determining the actual deferral ratio of
a Highly Compensated Employee who is subject to the Family Member aggregation
rules of Code Section 414(q)(6) because such Participant is either a "five
percent owner" of the Company or one of the ten (1) Highly Compensated Employees
paid the greatest "415 Compensation" during the year, the following shall apply:
(1) The combined actual deferral ratio for the family
group (which shall be treated as one Highly Compensated
Participant) shall be determined by aggregating Company Elective
Contributions and "414(s) Compensation" of all eligible Family
Members (including Highly Compensated Participants).
Notwithstanding the foregoing, in applying the $200,000 limit to
"414(s) Compensation", Family Members shall include only the
affected Employee's spouse and any lineal descendants who have
not attained age 19 before the close of the Plan Year.
Notwithstanding the foregoing, with respect to Plan Years
beginning prior to January 1, 1990, compliance with the
Regulations then in effect shall be deemed to be compliance with
this paragraph.
(2) The Company Elective Contributions and "414(s)
Compensation" of all Family Members shall be disregarded for
purposes of determining the "Actual Deferral Percentage" of the
Non-Highly Compensated Participant group except to the extent
taken into account in paragraph (1) above.
(3) If a Participant is required to be aggregated as a
member of more than one family group in a plan, all Participants
who are members of those family groups that include the
Participants are aggregated as one family group in accordance
with paragraphs (1) and (2) above. (d) For the purposes of
Sections 6.04 and 6.05, a Highly Compensated participant and a
Non-Highly Compensated participant shall include any Employee eligible to make a
deferral election pursuant to Section 6.03, whether or not such deferral
election was made or suspended pursuant to Section 6.03.
(e) For the purposes of this Section and Code Sections
401(a)(4), 410(b) and 401(k), if two or more plans which include cash or
deferred arrangements are considered one plan for the purposes of Code Section
401(a)(4) or 410(b) (other than Code Section 410(b)(2)(A)(ii) as in effect for
Plan Years beginning after December 31, 1988), the cash or deferred arrangement
included in such plans shall be treated as one arrangement. In addition, two or
more cash or deferred arrangements may be considered as a single arrangement for
purposes of determining whether or not such arrangements satisfy Code Sections
401(a)(4), 410(b) and 401(k). In such a case, the cash or deferred arrangements
included in such plans and the plans including such arrangements shall be
treated as one arrangement and as one plan for purposes of this Section and Code
Sections 401(a)(4), 410(b) and 401(k). For Plan Years beginning after December
31, 1989, plans may be aggregated under this paragraph (d) only if they have the
same plan year.
Notwithstanding the above, for Plan Years beginning after
December 31, 1988, an employee stock ownership plan described in Code Section
4975(e)(7) may not be combined with this Plan for purposes of determining
whether the employee stock ownership plan or this Plan satisfies this Section
and Code Sections 401(a)(4), 410(b) and 401(k).
(f) For the purposes of this Section, if a Highly Compensated
Employee is a Participant under two or more cash or deferred arrangements (other
than a cash or deferred arrangement which is part of an employee stock ownership
plan of the Company as defined in Code Section 4975(e)(7) for Plan Years
beginning after December 31, 1988, all such cash or deferred arrangements shall
be treated as one cash or deferred arrangement for the purpose of determining
the actual deferral ratio with respect to such Highly Compensated participant.
For Plan Years beginning after December 31, 1988, if the cash or deferred
arrangements have different Plan Years, this paragraph shall be applied by
treating all cash or deferred arrangements ending with or within the same
calendar year as a single arrangements.
6.05 Actual Deferral Percentage Tests. In the event that the initial
allocations of the Company's Elective Contributions made pursuant to Section
6.03 do not satisfy one of the tests set forth in Section 6.04 for Plan Years
beginning after December 31, 1986, the Committee shall adjust Excess
Contributions pursuant to the options set forth below:
(a) On or before the fifteenth day of the third month following
the end of each Plan Year, the Highly Compensated participant having the highest
actual deferral ratio shall have his portion of Excess Contributions distributed
to him until one of the tests set forth in Section 6.04 is satisfied, or until
his actual deferral ratio equals the actual deferral ratio of the Highly
Compensated participant having the second highest actual deferral ratio. This
process shall continue until one of the tests set forth in Section 6.04 is
satisfied. For each Highly Compensated participant, the amount of Excess
Contributions is equal to the Elective Contributions on behalf of such Highly
Compensated Participant (determined prior to the application of this paragraph)
minus the amount determined by multiplying the Highly Compensated participant's
actual deferral ratio (determined after application of this paragraph) by his
"414(s) Compensation". However, in determining the amount of Excess
Contributions to be distributed with respect to an affected Highly Compensated
participant as determined herein, such amount shall be reduced by any Excess
Deferred Compensation previously distributed to such affected Highly Compensated
participant for his taxable year ending with or within such Plan Year.
(b) With respect to the distribution of Excess Contributions
pursuant to (a) above, such distribution:
(i) may be postponed but not later than the
close of the Plan Year following the Plan Year to which
they are allocable;
(ii) shall be adjusted for Income; and
(iii) shall be designated by the Company as a
distribution of Excess Contributions (and income).
(c) Any distribution of less than the entire amount of Excess
Contributions shall be treated as a pro rata distribution of Excess
Contributions and Income.
(d) If the determination and correction of Excess Contributions
is of a Highly Compensated participant whose actual deferral ratio is determined
under the family aggregation rules, then the actual deferral ratio shall be
reduced as required herein, and the Excess Contributions for the family unit
shall be allocated among the family Members in proportion to the Elective
Contributions of each family Member that were combined to determine the group
actual deferral ratio. Notwithstanding the foregoing with respect to Plan Years
beginning prior to January 1, 1990, compliance with the regulations then in
effect shall be deemed to be compliance with this paragraph.
(e) Within twelve (12) months after the end of a Plan Year,
Company may make a special contribution of behalf of Non-Highly Compensated
participants in an amount sufficient to satisfy one of the tests set forth in
Section 6.04. Such contribution shall be allocated to each Participant's
Elective Account in the same proportion that each Non-Highly Compensated
Participant's Compensation for the year bears to the total Compensation of all
Non-Highly Compensated Participants.
6.06 Actual Contribution Percentage Tests.
(a) The "Actual Contribution Percentage" for Plan Years
beginning after December 31, 1986 for the Highly Compensated participant group
shall not exceed the greater of:
(1) 125 percent of such percentage for the Non-Highly
Compensated participant group; or
(2) the lesser of 200 percent of such percentage for the
Non-Highly Compensated Participant group, or such percentage for
the Non-Highly Compensated participant group plus 2 percentage
points. However, for Plan Years beginning after December 31,
1988, to prevent the multiple use of the alternative method
described in this paragraph and Code Section 401(m)(9)(A), the
Highly Compensated Participant eligible to make elective
deferrals pursuant to Section 6.03 or any other cash or deferred
arrangement maintained by the Company shall have his actual
contribution ratio reduced pursuant to Regulation 1.401(m)-2.
The provisions of Code Section 401(m) and Regulations
1.401(m)1(b) and 1.401(m)-2 are incorporated herein by
reference. (b) For the purposes of this Section and Section
6.07, "Actual Contribution Percentage" for a Plan Year means,
with respect to the Highly Compensated Participant group and
Non-Highly Compensated Participant group, the average of the
ratios (calculated separately for each participant in each
group) of:
(1) the sum of Matching Contributions, and Qualified
Matching Contributions (to the extent not taken into account for
purposes of the ADP test) made under the plan on behalf of the
participant for the Plan Year. Such Contribution Percentage
Amounts shall not include Matching Contributions that are
forfeited either to correct Excess Aggregate Contributions or
because the contributions to which they relate are Excess
Deferrals, Excess Contributions, or Excess Aggregate
Contributions. The employer may include Qualified Non-elective
Contributions in the Contribution Percentage Amounts. The
employer also may elect to use Elective Deferrals so long as the
ADP test is met before the Elective Deferrals are used in the
ACP test and continues to be met following the exclusion of
those Elective Deferrals that are used to meet the ACP test; to
(2) the participant's "414(s) Compensation" for such
Plan Year. (c) For the purposes of determining the actual
contribution ratio of a Highly Compensated Employee who is
subject to the Family Member aggregation rules of Code Section
414(q)(6) because such Employee is either a "five percent owner"
of the Company or one of the ten (10) Highly Compensated
Employees paid the greatest "415 Compensation" during the year,
the following shall apply:
(1) The combined actual contribution ratio for the
family group (which shall be treated as one Highly Compensated
Participant) shall be determined by aggregating Matching
Contributions made pursuant to Section 6.02(a) and "414(s)
Compensation" of all eligible Family Members (including Highly
Compensated Participants). However, in applying the $200,000
limit to "414(s) Compensation" for Plan Years beginning after
December 31, 1988, Family Members shall include only the
affected Employee's spouse and any lineal descendents who have
not attained age 19 before the close of the plan Year.
Notwithstanding the foregoing, with respect to Plan Years
beginning prior to January 1, 1990, compliance with the
Regulations then in effect shall be deemed to be compliance with
this paragraph.
(2) The "414(s) Compensation" of all Family Members
shall be disregarded for purposes of determining the "Actual
Contribution Percentage" of the Non-Highly Compensated
Participant group except to the extent taking into account in
paragraph (1) above.
(3) If a Participant is required to be aggregated as a
member of more than one family group in a plan, all participants
who are members of those family groups that include the
participant are aggregated as one family group in accordance
with paragraphs (1) and (2) above. (d) For purposes of this
Section and Code Sections 401(a)(4), 410(b) and 401(m), if two
or more plans of the Employer to which Employee contributions
are made are treated as one plan for purposes of Code Sections
401(a)(4) or 410(b) (other than the average benefits test under
Code Section 4l0(b)(2)(A)(ii) as in effect for Plan Years
beginning after December 31, 1988), such plans shall be treated
as one plan. In addition, two or more plans of the Company to
which Employee contributions are made may be considered as a
single plan for purposes of determining whether or not such
plans satisfy Code Sections 401(a)(4), 410(b) and 401(m). In
such a case, the aggregated plans must satisfy this Section and
Code Sections 401(a)(4)), 410(b) and 401(m) as though such
aggregated plans were a single plan. For Plan Years beginning
after December 31, 1989, plans may be aggregated under this
paragraph (d) only if they have the same Plan Year.
Notwithstanding the above, for Plan Years beginning after
December 31, 1988, an employee stock ownership plan described in Code Section
4975(e)(7) may not be aggregated with this Plan for purposes of determining
whether the employee stock ownership plan or this Plan satisfies this Section
and Code Sections 401(a)(4), 410(b) and 401(m).
(e) If a Highly Compensated participant is a participant under
two or more plans (other than an employee stock ownership plan as defined in
Code Section 4975(e)(7) for Plan Years beginning after December 31, 1988 which
are maintained by the Company to which Employee contributions are made, all such
contributions on behalf of such Highly Compensated participant shall be
aggregated for purposes of determining Company to which Employee contributions
are made, all such contributions on behalf of such Highly Compensated
participant's actual contribution ratio. However, for Plan Years beginning after
December 31, 1988, if the plans have different plan years, this paragraph shall
be applied by treating all plans ending with or within the same calendar year as
a single plan.
(f) For purposes of Section 6.06 and 6.07, a Highly Compensated
participant and Non-Highly Compensated participant shall include any Employee
eligible to have a deferral election made pursuant to Section 6.03 allocated to
his account for the Plan Year.
6.07 Adjustment to Actual Contribution Percentage Tests.
(a) In the event that, for Plan Years beginning after December
31, 1986, the "Actual Contribution Percentage" for the Highly Compensated
participant group exceeds the "Actual Contribution Percentage" for the
Non-Highly Compensated participant group pursuant to Section 6.07, the Committee
(on or before the fifteenth day of the third month following the end of the Plan
Year, but in no event later than the close of the following Plan Year) shall
direct the Trustee to distribute to the Highly Compensated participant having
the highest actual contribution ratio, his portion of Excess Aggregate
Contributions (and Income allocable to such contributions) until either one of
the tests set forth in Section 6.06 is satisfied, or until his actual
contribution ratio equals the actual contribution ratio of the Highly
Compensated participant having the second highest actual contribution ratio.
This process shall continue until one of the tests set forth in Section 6.06 is
satisfied.
(b) Any distribution of less than the entire amount of Excess
Aggregate Contributions (and Income) shall be treated as a pro rata distribution
of Excess Aggregate Contributions and Income. Distribution of Excess Aggregate
Contributions shall be designated by the Company as a distribution of Excess
Aggregate Contributions (and Income).
(c) Excess Aggregate Contributions shall be treated as Company
contributions for purposes of Code Sections 404 and 415 even if distributed from
the Plan.
(d) For each Highly Compensated participant, the amount of
Excess Aggregate Contributions is equal to the total Matching Contributions made
pursuant to Section 6.02(b) minus the amount determined by multiplying the
Highly Compensated Participant's actual contribution ratio, as adjusted by
Section 6.07(a) above, by his "414(s) Compensation". The actual contribution
ratio must be rounded to the nearest one-hundredth of one percent for Plan Years
beginning after December 31, 1988. In no case shall the amount of Excess
Aggregate Contribution with respect to any Highly Compensated participant exceed
the amount of Matching Contributions made pursuant to Section 6.02.
(e) If the determination and correction of Excess Aggregate
Contributions is of a Highly Compensated participant whose actual contribution
ratio is determined under the family aggregate Contributions for the family unit
shall be allocated among the Family Members in proportion to the sum of Matching
Contributions made pursuant to Section 6.02 of each Family Member that were
combined to determine the group actual contribution ratio. Notwithstanding the
foregoing with respect to Plan Years beginning prior to January 1, 1990,
compliance with the Regulations then in effect shall be deemed to be compliance
with this paragraph.
(f) Notwithstanding the above, within twelve (12) months after
the end of the Plan Year, the Company may make a special contribution on behalf
of Non-Highly Compensated participants in an amount sufficient to satisfy one of
the tests set forth in Section 6.06. Such contribution shall be allocated to the
participant's Elective Account of each Non-Highly Compensated participant in the
same proportion that each Non-Highly Compensated participant's compensation for
the year bears to the total compensation of all Non-Highly Compensated
participants. A separate accounting shall be maintained for the purpose of
excluding such contributions from the "Actual Deferral Percentage" tests
pursuant to Section 6.04.
6.08 The total of a Participant's Company Elective Contributions under
Section 6.03, but not the earnings thereon, shall be eligible for hardship
withdrawal under this provision. Hardship distributions are subject to the
spousal consent requirements contained in Sections 401(a)(11) and 417 of the
Code, if applicable. The conditions are set forth in Section 5.04(c). If Section
5.04(c) would apply, the spousal consent rules of Section 5.04(d) must be
followed.
(a) The Committee, at the election of the Participant, shall
direct the Trustee to distribute to any Participant in any one Plan Year up to
the lesser of 100% of his Participant's Elective Account valued as of the last
valuation date or the amount necessary to satisfy the immediate and heavy
financial need of the Participant. Withdrawal under this Section shall be
authorized only if the distribution is on account of:
(1) Medical expenses described in Code Section 213(d)
incurred by the Participant, his spouse, or any of his dependents (as defined in
Code Section 152);
(2) The purchase (excluding mortgage payments) of a
principal residence for the
Participant;
(3) Payment of tuition and related educational fees
for the next 12 months of post-secondary education for the Participant, his
spouse, children, or dependents; or
(4) The need to prevent the eviction of the
Participant from his principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(b) No distribution shall be made pursuant to this Section
unless the Committee, based upon the Participant's representation and other
facts known to the Committee, determines that all of the following conditions
are satisfied:
(1) The distribution is not in excess of the amount
of the immediate and heavy financial need of the Participant (including the
amount needed to pay taxes on the distribution);
(2) The Participant has obtained all distributions,
other than hardship distributions, and all nontaxable loans currently available
under all plans maintained by the Company;
(3) The Plan, and all other plans maintained by the
Company, provide that the Participant's elective deferrals and voluntary
contributions will be suspended for at least twelve (12) months after receipt of
the hardship distribution; and
(4) The Plan, and all other plans maintained by the
Company, provide that the Participant may not make elective deferrals for the
Participant's taxable year immediately following the taxable year of the
hardship distribution in excess of the applicable limit under Code Section
402(g) for such next taxable year less the amount of such Participant's elective
deferrals for the taxable year of the hardship distribution.
ARTICLE VII
COMMITTEE
7.01 The Board may appoint a Committee to administer the Plan, but in
the absence thereof the Company shall administer the Plan. The Committee shall
serve at the pleasure of the Board. The members of the Committee shall be
individuals and may but need not be directors of the Company or Participants.
The members of the Committee shall serve in such capacity without compensation.
7.02 The Committee shall act by a majority vote of its members at a
meeting or in writing without a meeting.
7.03 The Committee shall appoint a secretary who may, but need not be,
one of its own members. He shall keep complete records of the administration of
the Plan.
7.04 The Committee may authorize each or any one of its members or its
secretary to perform routine acts and to sign documents on its behalf. No
member, however, shall vote or act upon or sign any documents relating to his
own participation hereunder.
7.05 The Committee may appoint agents and may employ an accountant and
legal counsel who may, but need not be, counsel for the Company. The Company
shall pay all expenses authorized and incurred by the Committee in the
administration of the Plan.
7.06 The Committee may provide rules and regulations not inconsistent
with the terms and provisions hereof for the administration of the Plan and from
time to time may amend or supplement such rules and regulations. Any
construction or interpretation of the Plan or any determination of fact in
applying the Plan made in good faith by the Committee shall be final and
conclusive. The Committee will instruct the Trustees on all matters within its
discretion as provided in the Trust Agreement.
7.07 Any member of the Committee may resign by giving written notice
addressed to the chief executive officer of the Company. Vacancies shall be
filled by the Board, but interim appointments may be made by the chief executive
officer of the Company.
7.08 The Company or the Committee shall notify each Participant or
Beneficiary upon the Participant's cessation of employment as to what benefits
he is entitled to from the Plan, and also advise him as to what arrangements
have been made to pay the benefits.
If the benefits and/or the arrangements to pay them are not satisfactory
to the Participant or Beneficiary, he may file a written request with the
Company or the Committee as the case may be for a review of such decision. Such
request must be made within sixty (60) days following the Participant's
notification. In connection with any request for review, the applicant may at
any time review pertinent documents and may submit issues and comments in
writing. The Committee shall notify the applicant of its determination within
sixty (60) days following the receipt of the request for review.
ARTICLE VIII
TRUSTEES
8.01 All contributions made by the Company hereunder shall be paid to
the Trustee designated in the Trust Agreement, to be held by it as Trust Funds
in accordance with the terms of the Trust Agreement between the Trustee and the
Company. The Trustee may make such investments as it deems advisable (including
life insurance and annuity contracts) in accordance with the terms of said Trust
Agreement and the provisions of this Plan.
8.02 There shall be at least one Trustee acting hereunder at all times.
The actual number of Trustees shall be set by the Board from Time to time. The
Trustees may be corporations having authority to act as such in the State of New
York or individuals who may but need not be Directors of the Company or members
of the Committee or participating employees. The Trustee shall have the rights,
privileges, duties and immunities conferred upon it by the Trust Agreement.
8.03 This Plan is intended to acquire and hold "qualifying employer
securities", as that term is defined in Section 407 of the Employee Retirement
Income Security Act of 1974, as amended. Company Stock may be contributed to the
Plan by the Company, or the investment of Trust Funds in Company Stock may be
authorized by the Company. Any securities received by the Trustees as a stock
split or dividend or as a result of a reorganization or other recapitalization
of the Company shall be allocated as of each accounting date in the same manner
as the stock to which it is attributable is then allocated. In the event any
rights, warrants or options are issued on Company Stock held in the Trust, the
Trustees shall exercise them for the acquisition of additional Company Stock to
the extent that cash is then available. Any Company Stock acquired in this
fashion shall be treated as Company Stock bought by the Trustees for the net
price paid. Any rights, warrants or options on common shares or other securities
of the Employer which cannot be exercised for lack of cash may be sold by the
Trustees and the proceeds treated as a current cash dividend received on Company
Stock.
8.04 Every Participant under the Plan may request that all of his
Accounts be invested in any form of investment selected by the Participant from
the choice of mutual fund or portfolio investments currently offered by the
Trustee. Up to 10% of the total of balances in the Profit Sharing and Elective
Accounts may be invested in Company Stock as an investment option. For Matching
Contribution Accounts, the Participant may elect to have the contribution of
Company Stock remain as an investment choice, or may elect to have some or all
of the Matching Contribution Account invested in another investment choice,
provided, however, that if any Participant is permitted to self-direct
investments in his accounts in any particular form or type of investment, all
Participants shall have the same right. The right to self-direct investments
shall be administered in such a manner as meets the requirements of Section
404(c) of the Employee Retirement Income Security Act of 1974, as amended, and
the Labor Regulations thereunder.
Such accounts shall be called Self-Directed Accounts. Requests
to change investments in Self-Directed Accounts shall be made to the Plan
Administrator, and shall be limited in frequency to one request for each period
of time which the Plan Administrator determines is reasonable for the type of
investment offered.
When a Participant has self-directed his Accounts, or any
portion thereof, the Plan Administrator shall so direct the Trustee. The Trustee
shall segregate on its books the amount in each Self-Directed Account, and the
amount so segregated shall not share in the net income, or losses, net
appreciation or depreciation of the Trust Fund. All costs attributable to each
Self-Directed Account shall be charged to such Self-Directed Account.
In the event a Participant elects to self-direct the invest-ment of his
accounts, he shall not be deemed to be a Fiduciary with respect to the Plan by
reason of such self-direction and neither the Trustee, the Plan Administrator
nor any other Fiduciary with respect to the Plan shall be liable for any loss or
breach resulting from the exercise of such Participant's right to self-direct
his accounts. Plan loans shall constitute a self-directed investment under this
Section.
ARTICLE NINTH
AMENDMENT, TERMINATION, MERGER
9.01 The Company reserves the right at any time and from time to time by
action of the Board to modify, suspend, amend or terminate the Plan and/or Trust
Agreement in whole or in part. Any such modification, suspension, amendment or
termination shall be made by delivering to the Trustee and the Committee, if
any, written notice executed by an officer of the Company at the direction of
the Board. The Company shall have no power to modify, suspend, amend or
terminate the Plan or Trust Agreement in such manner as will (i) reduce the
Accrued Benefit of an Participant (except to the extent permitted under Section
412(c)(8)) (ii) cause or permit any part of the Trust Fund to be diverted to
purposes other than for the exclusive benefit of Participants or their
Beneficiaries or estate or (iii) will cause or permit any portion of the Trust
Fund to revert to or become the property of the Company (except as provided in
Section 9.05 hereof). No amendment shall substantially increase the duties or
responsibilities of the Trustee without his or its written consent. For purpose
of this paragraph, a plan amendment which has the effect of (1) eliminating or
reducing an early retirement benefit or a retirement-type subsidy, or (2)
eliminating an optional form of benefit, with respect to benefits attributable
to service before the amendment shall be treated as reducing accrued benefits.
In the case of a retirement-type subsidy, the preceding sentence shall apply
only with respect to a Participant who satisfies (either before or after the
amendment) the preamendment conditions for the subsidy. In general, a
retirement-type subsidy is a subsidy that continues after retirement, but does
not include a qualified disability benefit, a medical benefit, a social security
supplement, a death benefit (including life insurance), or a plant shutdown
benefit (that does not continue after retirement age).
9.02 Notwithstanding anything to the contrary herein contained, the
Company, upon any such termination of the Plan, shall have no obligation or
liability whatsoever to make any further payments to the Trustee and neither the
Trustee, the Committee nor any Participant or other person shall have any right
to compel the Company to make any payments after the termination of the Plan.
9.03 In the event of termination or partial termination of this Plan or
upon the complete discontinuance of contributions under the Plan, the rights of
each Participant to the amounts credited to his account at such time shall be
nonforfeitable. In the case of a partial termination only the account balances
of Participants affected by the partial termination shall be non-forfeitable.
The cash and other property attributable to such Participant shall remain in the
Trust Fund until they shall become distributable pursuant to the provisions of
Article V or until the termination of the Trust, as provided in Section 9.04
hereof.
9.04 Upon termination of the Trust, unless the Board provides otherwise,
the Committee shall direct the Trustee to distribute all assets remaining in the
Trust Fund, after payment of any expenses properly chargeable against the Trust,
to the Participants, or their Beneficiaries. Such distributions shall be made in
accordance with the value of their accounts determined as of the date of
termination of the Trust and in such manner as the Committee shall determine.
The Committee's determination shall be final and conclusive upon all persons.
9.05 If the Internal Revenue Service determines that this Plan and the
Trust Agreement hereunder do not qualify initially under Section 401 (a) of the
Internal Revenue Code of 1954 or any Statute or similar import, any
contributions made by the Company, together with any other property in the Trust
Fund shall be returned to the Company, by the Trustee, within one (1) year of
the date of denial of qualification; provided that the application for
determination relating to initial qualification was filed by the due date of
Company's return for the taxable year in which the Plan was adopted. Upon the
return of the contributions and other property in the Trust Fund to the Company,
the Trust shall terminate and the Trustee shall be discharged from all
obligations under the Trust Agreement. No Participant or beneficiary shall have
any right or claim to any asset of the Trust Fund or to any benefit under the
Plan before the Internal Revenue Service determines that this Plan is so
qualified.
9.06 The Company or Trustee shall notify each Employee who is an
interested party of the Request for Determination filed with the Internal
Revenue Service.
9.07 In the event this Plan and/or the Trust which is a part of the Plan
merges or consolidates with, or there is a transfer of assets or liabilities to
any other Plan or Trust, each Participant in the Plan would (if the Plan then
terminated) receive a benefit immediately after the merger, consolidation or
transfer which is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation or transfer (if
the Plan had then terminated).
ARTICLE X
MISCELLANEOUS
10.01 Neither the establishment of the Plan and Trust nor a modification
thereof nor the creation of any fund or account nor the payment of any benefits
shall be construed as giving to any Participant or any other person any legal or
equitable rights against the Company or any officer or employee or the Trustee
or the Committee, unless the same shall be specifically provided for in this
Plan or conferred by affirmative action of the Committee or the Company in
accordance with this Plan, nor as giving any Participant the right to be
retained in the service of the Company, the right to information concerning the
operations or financial affairs of the Company, or as otherwise affecting the
terms of employment of any Participant. All Participants shall remain subject to
discharge to the same extent as if the Plan had never been created.
10.02 No right of any Participant or Beneficiary to any payment or to
any account created under this Plan shall be subject to any claim or any
creditor of the Participant or Beneficiary, and shall not be subject to
attachment, garnishment or other legal process by any creditor of the
Participant or Beneficiary. No Participant or Beneficiary shall have any right
to alienate, anticipate, commute, pledge, encumber or assign any beneficial
right to payment or in any account created hereunder, except to secure any loan
made to him hereunder. The limitations on the alienability of benefits described
in this Section 11.02 shall not apply with respect to Qualified Domestic
Relations Orders as that term is defined in Section 4l4(p) of the Internal
Revenue Code.
10.03 Any payment or distribution to any Participant or his legal
representative or Beneficiary in accordance with the provisions of this Plan,
shall be in full satisfaction of all claims against the Trust Fund, the Trustee,
the Committee and the Company.
10.04 Whenever any words are used herein in the masculine, they shall be
construed as though they were in the feminine in all cases where they would so
apply. Whenever any words herein are used in the singular or in the plural, they
shall be construed as though they were in the plural, or the singular, as the
case may be, in all cases where they would so apply. To the extent not
pre-empted by ERISA, this Plan and every provision hereof shall be construed and
its validity determined according to the laws of the State of New York.
ARTICLE XI
TOP-HEAVY PROVISIONS
11.01 Applicability. Notwithstanding any other provisions of this Plan,
this Article shall apply if the Plan is a Top Heavy Plan.
11.02 Top-Heavy Status.
(a) Top-Heavy plan: For any plan year beginning after December
31, 1983, this Plan is top-heavy if any of the following conditions exists:
(1) If the top-heavy ratio for this Plan exceeds 60
percent and this Plan is not part of any required aggregation group or
permissive aggregation group of plans.
(2) If this Plan is a part of a required aggregation
group of plans but not part of a permissive aggregation group and the top-heavy
ratio for the group of plans exceeds 60 percent. (3) If this Plan is a part of a
required aggregation group and part of a permissive aggregation group of plans
and the top-heavy ratio for the permissive aggregation group exceeds 60 percent.
(b) Top-heavy ratio:
(1) If the Company maintains one or more defined
contribution plans (including any Simplified Employee Pension Plan) and the
employer has not maintained any defined benefit plan which during the 5-year
period ending on the determination date(s) has or has had accrued benefits, the
top-heavy ratio for this Plan alone or for the required or permissive
aggregation group as appropriate is a fraction, the numerator of which is the
sum of the account balances of all key employees as of the determination date(s)
(including any part of any account balance distributed in the 5-year period
ending on the determination date(s)), and the denominator of which is the sum of
all account balances (including any part of any account balance distributed in
the 5-year period ending on the determination date(s)), both computed in
accordance with section 416 of the Code and the regulations thereunder. Both the
numerator and denominator of the top-heavy ratio are increased to reflect any
contribution not actually made as of the determination date, but which is
required to be taken into account on that date under section 416 of the Code and
the regulations thereunder.
(2) If the Company maintains one or more defined
contribution plans (including any Simplified Employee Pension Plan) and the
employer maintains or has maintained one or more defined benefit plans which
during the 5-year period ending on the determination date(s) has or has had any
accrued benefits, the top-heavy ratio for any required or permissive aggregation
group as appropriate is a fraction, the numerator of which is the sum of account
balances under the aggregated defined contribution plan or plans for all key
employees, determined in accordance with (1) above, and the present value of
accrued benefits under the aggregated defined benefit plan or plans for all key
employees as of the determination date(s), and the denominator of which is the
sum of the account balances, under the aggregated defined contribution plan or
plans for all participants, determined in aaccordance with (a) above, and the
present value of accrued benefits under the defined benefit plan or plans for
all participants as of the determination date(s), all determined in accordance
with section 416 of the Code and the regulations thereunder. The accrued
benefits under a defined benefit plan in both the numerator and denominator of
the top-heavy ratio are increased for any distribution of an accrued benefit
made in the five-year period ending on the determination date.
(3) For purposes of (1) and (2) above the value of
account balances and the present value of accrued benefits will be determined as
of the most recent valuation date that falls within or ends with the 12-month
period ending on the determination date, except as provided in section 416 of
the Code and the regulations thereunder for the first and second plan years of a
defined benefit plan. The account balances and accrued benefits of a participant
(1) who is not a key employee but who was a key employee in a prior year, or (2)
who has not been credited with at least one hour of service with any employer
maintaining the plan at any time during the 5-year period ending on the
determination date will be disregarded. The calculation of the top-heavy ratio,
and the extent to which distributions, rollovers, and transfers are taken into
account will be made in accordance with section 416 of the Code and the
regulations thereunder. Deductible employee contributions will not be taken into
account for purposes of computing the top-heavy ratio. When aggregating plans
the value of account balances and accrued benefits will be calculated with
reference to the determination dates that fall within the same Plan Year.
The accrued benefit of a Participant other than a key
employee shall be determined under (a) the method, if any, that uniformly
applies for accrual purposes under all defined benefit plans maintained by the
Company, or (b) if there is no such method, as if such benefit accrued not more
rapidly than the slowest accrual rate permitted under the fractional rule of
section 411(b)(1)(C) of the Code.
(4) The term "Required Aggregation Group" means:
(x) Each present or terminated plan of the
Company in which a Key Employee is or was a participant; and
(y) Each present or terminated other plan of the
Company hereof which enables any plan described in (x) above to meet the
requirements of Section 40l(a)(4) or 4l0 of the Code.
(5) The term "Permissive Aggregation Group" means a
Required Aggregation Group plus one or more plans of the Company that are not
part of the Required Aggregation Group but which satisfy the requirements of
Section 40l(a)(4) and 4l0 of the Code when considered together with the Required
Aggregation Group.
(6) The term "Top-Heavy Group" means any aggregation
group if the sum as of the last day of the prior Plan Year (or the last day of
the first Plan Year if later) of:
(x) The present value of the Accrued Benefits of
Key Employees under all defined benefit plans included such group, and
(y) The aggregate of the accounts of
Participants who are Key Employees under all defined contribution plans included
in such group exceed sixty percent (60%) of a similar sum determined for all
Participants.
(7) The term "Non-Key Employee" means any Eligible
Employee who is not a "Key Employee".
11.03 Minimum Contribution.
(a) Notwithstanding the provisions of Articles II, III and IV
the minimum contribution for any Plan Year for each non-Key Employee Participant
who has not ceased to be an Employee by the last day of a Plan Year
(irrespective of whether the Participant completed a Year of Service for vesting
purposes, his level of Compensation, or his refusal to make any mandatory
contributions which may be required) shall be equal to 3% of his Compensation
for such Plan Year. If no Key-Employee receives a contribution of 3% of Annual
Compensation for a Plan Year then the minimum contribution for each non-Key
Employee Participant shall equal the highest percentage contribution made on
behalf of a Key Employee for such Plan Year. For purposes of this Section
11.03(a), the term Compensation shall mean the first $200,000 of the lesser of
(i) the amount shown as wages on the Participant's Form W-2 for the calendar
year ending during the Plan Year or (ii) the amount defined in Treasury
Regulation 1.415-2(d)(l)(i). For purposes of meeting this minimum contribution
requirement, any Elective Deferrals or Matching Contributions may not be taken
into account.
(b) If a Participant in this Plan also participates in a
defined benefit plan or another defined contribution plan which is part of a
required aggregation group or a permissive aggregation group, then the top heavy
minimum benefit shall be provided by this Plan at the 3% contribution rate
specified above for defined contribution plans.
(c) For any Plan Year in which the Plan is a Top-Heavy Plan,
the number 1.25 wherever it appears in Section 3.05(b) shall be reduced to "1.0"
and the "$51,875" amount referenced in Subparagraph (3) thereof shall be reduced
to "$4l,500".
Notwithstanding the foregoing this section shall not apply if:
(i) The present value of the cumulative Accrued Benefits for Key
Employees is less than ninety percent (90%) of the present value of the
cumulative Accrued Benefits determined as provided in Section 11.02; and
(ii) The minimum contribution provided by Section 11.03 is equal
to 4%. (iii) If a Participant in this Plan also participates in a defined
benefit plan or another defined contribution plan which is part of a required
aggregation group or a permissive aggregation group and such other plan does not
provide the Participant with an accrued benefit which satisfies the minimum
benefit requirements of Section 416 and regulations thereunder respecting
employers maintaining both defined benefit and defined contribution plans, then
the minimum contribution provided in subsection (a) is equal to seven and
one-half percent (7-1/2%).
11.05 Definition of Key Employee. A Key Employee shall mean any employee
or former employee of the Company (and the beneficiaries of such employee) who
at any time during the determination period was an officer of the employer if
such individual's annual compensation exceeds 50 percent of the dollar
limitation under section 415(b)(1)(A) of the Code, an owner (or considered an
owner under Section 318 of the Code) of one of the ten largest interests in the
employer if such individual's compensation exceeds 100 percent of the dollar
limitation under Section 415(c)(1)(A) of the Code, a 5-percent owner of the
employer, or a 1-percent owner of the employer who has an annual compensation of
more than $150,000. Annual compensation means compensation as defined in Section
415(c)(3) of the Code, but including amounts contributed by the employer
pursuant to a salary reduction agreement which are excludible from the
employee's gross income under Section 125, Section 402(a)(8), Section 402(h) or
Section 403(b) of the Code. The determination period is the Plan Year containing
the determination date and the 4 preceding Plan Years.
The determination of who is a Key Employee will be made in accordance
with Section 416(i)(1) of the Code and the regulations thereunder.
ARTICLE XII
LOANS
12.01 Loans for Participants shall be allowed. Upon the application in
writing of any Participant to the Committee, the Committee, in accordance with
its uniform non-discriminatory policy, may direct the Trustee to make a loan to
such Participant. Loans shall not be made to highly compensated employees in an
amount which is greater than that permitted for non-highly compensated
employees. Loans shall meet the following conditions:
(a) All loans shall bear interest at a rate reflecting
current commercial banking charges in light of the purpose of the loan and the
creditworthiness of the borrower.
(b) Loans shall be secured by the Participant's vested
interest in the fund, if any, and by the pledge of such further collateral as
the Trustee in its sole discretion deems necessary or desirable to assure
repayment of the principal and interest in accordance with the terms of the
loan.
(c) The loan shall be for a term reflecting current
commercial bank loans for similar purposes, provided that all loans shall have a
term not exceeding five years, with the exception of loans provided for the
purpose of acquiring the principal residence of the borrower.
(d) If the Participant is married, the loan and pledge
of the Participant's vested interest in the fund must be made with the consent
of the Participant's spouse, in the manner provided for consent of spouse in
Section 5.04, within 90 days prior to the date the loan amount is to be paid to
the participant.
(e) In no event shall the amount of the loan, when added
to the outstanding balance of all other loans from the Plan, any other plan of
the Company, or any plan of a related entity which is the same "employer" by
reason of Section 414 of the Code, on the date the loan is to be made, exceed
the lesser of:
(i) $10,000.00 or 50% of a Participant's vested
interest in the fund, whichever is greater; or
(ii) $50,000.00, reduced by the excess (if any)
of the highest outstanding balance of loans from the Plan during the one year
period ending on the day before the date on which the loan is to be made over
the outstanding balance of loans from the Plan on the date the loan is to be
made.
(f) Unless otherwise permitted in Treasury Regulations,
the repayment of any loan provided by this Plan shall be made by substantially
level amortization payment of such loan over the term of such loan, with
payments to be made not less frequently than quarterly.
(g) The Trustee may assess a loan fee for processing the
Plan loan, which shall be disclosed to the loan applicant prior to consummation
of the Plan loan.
12.02 The Trustee with the consent of the Committee, may extend or renew
loans if the conditions qualifying the participant for the initial loan continue
beyond the loan due date, provided, however, if the Participant is married, that
the consent of the Participant's spouse is obtained in the manner provided in
Section 5.04, within 90 days prior to the date the loan is extended or renewed.
12.03 To the extent that a Participant or Beneficiary becomes entitled
to payment or benefits or otherwise receives all or a portion of its vested
interest in his benefit, the payments or withdrawals, as the case may be, shall
be immediately applied against the outstanding balance, including interest on
the loan, and such amount shall then be deemed due and payable.
To record the amendment and restatement of this Plan, the Company has
caused its duly authorized officer to affix its corporate name.
BALCHEM CORPORATION
By: \s\Dino A. Rossi
----------------
Dino A. Rossi
President
Dated: January 9, 1998