EXHIBIT (d)(1)
HOOKER FURNITURE CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
Amendment and Restatement
Effective as of January 1, 2000
TABLE OF CONTENTS
PAGE
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SECTION I
Definitions..............................................................................................2
1.1 Account................................................................................................2
1.2 Adjustment Date........................................................................................2
1.3 Allocable Shares.......................................................................................2
1.4 Beneficiary............................................................................................2
1.5 Board..................................................................................................2
1.6 Break in Service.......................................................................................2
1.7 Code...................................................................................................2
1.8 Committee..............................................................................................2
1.9 Company................................................................................................2
1.10 Company Stock..........................................................................................3
1.11 Compensation...........................................................................................3
1.12 Early Retirement Date..................................................................................3
1.13 Effective Date.........................................................................................3
1.14 Eligibility Computation Period.........................................................................3
1.15 Employee...............................................................................................3
1.16 Employer...............................................................................................3
1.17 ERISA..................................................................................................3
1.18 5% Owner...............................................................................................3
1.19 Highly Compensated Employee............................................................................4
1.20 Hours of Service.......................................................................................4
1.21 Ineligible Employee....................................................................................5
1.22 Key Employee...........................................................................................5
1.23 Normal Retirement Date.................................................................................5
1.24 One-Year Break in Service..............................................................................5
1.25 Participant............................................................................................5
1.26 Permanent Disability...................................................................................5
1.27 Plan...................................................................................................6
1.28 Plan Year..............................................................................................6
1.29 Pre-Loan Value.........................................................................................6
1.30 Price Stabilization Period.............................................................................6
1.31 Related Company........................................................................................6
1.32 Section 415 Compensation...............................................................................6
1.33 Suspense Account.......................................................................................7
1.34 Top Heavy..............................................................................................7
1.35 Trust, Trust Fund or Fund..............................................................................7
1.36 Trustee................................................................................................7
1.37 Valuation Date.........................................................................................7
1.38 Years of Service.......................................................................................7
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SECTION II
PARTICIPATION............................................................................................8
2.1 Eligibility Requirements...............................................................................8
2.2 Reemployment...........................................................................................8
2.3 Loss of Eligibility with Continued Employment..........................................................8
SECTION III
CONTRIBUTIONS............................................................................................9
3.1 Employer Contributions.................................................................................9
3.2 Limitation on Contribution.............................................................................9
3.3 No Right or Duty of Inquiry............................................................................9
3.4 Non-Reversion..........................................................................................9
SECTION IV
ACCOUNTS AND ALLOCATIONS................................................................................11
4.1 Accounts..............................................................................................11
4.2 Allocation of Company Stock, Cash Contributions and Forfeitures.......................................11
4.3 Ineligibility to Receive Allocations of Company Stock.................................................12
4.4 Valuation of Assets and Allocation of Earnings........................................................13
4.5 Segregated Accounts...................................................................................14
4.6 Annual Additions......................................................................................14
4.7 Correction of Error...................................................................................15
4.8 Trust as Single Fund..................................................................................15
SECTION V
VESTING.................................................................................................16
5.1 Vesting...............................................................................................16
5.2 Service Rules.........................................................................................16
5.3 Vested Benefits and Forfeitures.......................................................................17
SECTION VI
BENEFITS................................................................................................19
6.1 Normal Retirement.....................................................................................19
6.2 Early Retirement......................................................................................19
6.3 Disability Retirement.................................................................................19
6.4 Termination of Employment.............................................................................19
6.5 Death Benefits........................................................................................19
6.6 Commencement of Distribution..........................................................................19
6.7 Form of Benefit.......................................................................................21
6.8 Location of Former Participants.......................................................................22
6.9 Benefits to Minors and Incompetents...................................................................22
6.10 Eligible Rollover Distributions.......................................................................23
SECTION VII
DISTRIBUTION IN COMPANY STOCK...........................................................................25
7.1 Put Option............................................................................................25
7.2 Right of First Refusal................................................................................26
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7.3 Fair Market Value of Company Stock....................................................................26
7.4 Legends...............................................................................................26
7.5 Basis of Company Stock................................................................................27
SECTION VIII
ADMINISTRATION BY THE COMMITTEE.........................................................................28
8.1 Appointment of the Committee..........................................................................28
8.2 Powers of the Committee...............................................................................28
8.3 Operation.............................................................................................29
8.4 Meetings and Quorum...................................................................................29
8.5 Compensation..........................................................................................29
8.6 Qualified Domestic Relations Orders...................................................................30
8.7 Expenses of Plan Administration.......................................................................30
SECTION IX
DUTIES AND POWERS OF THE TRUSTEE........................................................................32
9.1 General...............................................................................................32
9.2 Trust Agreement.......................................................................................32
9.3 Limitation of Liability...............................................................................32
9.4 Power of Trustee to Carry Out the Plan................................................................32
9.5 Investment Directions.................................................................................32
SECTION X
AMENDMENT AND TERMINATION...............................................................................34
10.1 Amendment.............................................................................................34
10.2 Termination...........................................................................................34
10.3 Merger................................................................................................34
SECTION XI
CLAIMS PROCEDURE........................................................................................35
11.1 Right to File Claim...................................................................................35
11.2 Denial of Claim.......................................................................................35
11.3 Claims Review Procedure...............................................................................35
SECTION XII
ADOPTION OF PLAN BY RELATED COMPANIES AND
TRANSFERRED ASSETS......................................................................................37
12.1 Adoption of the Plan..................................................................................37
12.2 Withdrawal............................................................................................37
12.3 Sale of Employer's Assets.............................................................................37
SECTION XIII
MISCELLANEOUS...........................................................................................38
13.1 Indemnification.......................................................................................38
13.2 Exclusive Benefit Rule................................................................................38
13.3 No Right to the Fund..................................................................................38
13.4 Rights of Employer....................................................................................38
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13.5 Non-Alienation of Benefits............................................................................38
13.6 Construction and Severability.........................................................................38
13.7 Delegation of Authority...............................................................................39
13.8 Request for Tax Ruling................................................................................39
13.9 Amendment of Vesting Schedule.........................................................................39
APPENDIX A
EFFECTIVE DATES FOR CERTAIN PROVISIONS..................................................................41
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HOOKER FURNITURE CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN
BACKGROUND
Hooker Furniture Corporation (the "Company") established the Hooker
Furniture Corporation Employee Stock Ownership Plan (the "Plan"), effective
January 1, 1987, for the purpose of increasing the financial security of
faithful employees of the Company and to provide retirement benefits for them
and their beneficiaries by investing in Company stock. The Plan has been amended
several times since its original effective date.
The Plan is intended to meet the requirements of Section 401(a) of the
Internal Revenue Code (the "Code) and to be an "employee stock ownership plan,"
as that term is defined in Code Section 4975(e)(7). The Plan is designed to
invest primarily in Company stock.
The Company now wishes to amend and restate the Plan, effective as of
January 1, 2000, to comply with the Uruguay Round Agreements Act, the Uniformed
Services Employment and Reemployment Rights Act of 1994, the Small Business Job
Protection Act of 1996, the Taxpayer Relief Act of 1997, the Internal Revenue
Service Restructuring and Reform Act of 1998, other federal legislation
applicable to the Plan, and to make certain other changes to the Plan.
NOW, THEREFORE, the Company agrees as follows:
SECTION I
Definitions
Where indicated by initial capital letters, the following terms shall
have the following meanings:
1.1 Account: An account (or accounts) maintained for the benefit of a
Participant pursuant to Section 4.1.
1.2 Adjustment Date: Each December 31 subsequent to the effective date. The
Committee may establish more frequent Adjustment Dates, if the Committee deems
it appropriate.
1.3 Allocable Shares: The whole shares and fractional shares of Company
Stock contributed by the Employer to the Trust Fund, purchased by the Trust Fund
with cash contributions by the Employer or released from encumbrance, as
described in Section IV.
1.4 Beneficiary: The person or entity who is to receive any benefits
payable from the Plan on account of a Participant's death. If the Participant is
married, the Beneficiary is automatically the Participant's surviving spouse and
no written designation is required. If the Participant is not married, or if the
Participant is married and the Participant wishes to designate a Beneficiary
other than his spouse, the spouse must consent to the designation of another
person who will become the designated Beneficiary to receive benefits under the
Plan. If at the time of his death, the Participant has no surviving spouse or
designated Beneficiary, the Beneficiary is the personal representative of the
Participant's estate. A Participant may designate a person or entity to be his
Beneficiary by filing a properly completed and executed form provided by the
Committee. If a married Participant wishes to designate a Beneficiary other than
his spouse, the Beneficiary designation must be witnessed by a Plan
representative or a notary public and the spouse must (a) consent to the
designation in writing and (b) acknowledge the effect of such designation. A
Participant's Beneficiary is bound by the terms of the Plan.
1.5 Board: The Board of Directors of the Company.
1.6 Break in Service: Five consecutive One-Year Breaks in Service.
1.7 Code: The Internal Revenue Code of 1986, as amended, or any
subsequently enacted federal revenue law. A reference to a particular Section of
the Code shall include a reference to any regulations issued under the Section
and to the corresponding section of any subsequently enacted federal revenue
law.
1.8 Committee: The committee established pursuant to Section VIII to be
responsible for the general administration of the Plan and supervision of the
Trust Fund.
1.9 Company: Hooker Furniture Corporation and any successor by merger,
consolidation or otherwise.
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1.10 Company Stock: Common stock of the Company that meets the requirements
of a "qualifying employer security" under ERISA Section 407(d)(5) and "employer
securities" under Code Section 409(l).
1.11 Compensation: The earnings paid to an Employee by the Employer during
a Plan Year for personal services, prior to withholding as reported on Form W-2,
including bonuses, overtime pay, and commissions. Compensation shall not include
any of the following items (even if includible in gross income): reimbursements
or other expense allowances, fringe benefits (cash and noncash), moving
expenses, and welfare benefits. Notwithstanding anything in the Plan to the
contrary, Compensation shall include salary reduction contributions made under
Code Section 125 to a cafeteria plan maintained by the Company or a Related
Company or made under Code Section 402(e)(3) to a cash or deferred arrangement
maintained by the Company or a Related Company, and, if applicable, any other
elective contributions described in Code Section 402(h) or 403(b), deferred
compensation under an eligible deferred compensation plan described in Code
Section 457, and employee contributions described in Code Section 414(h)(2). The
amount of annual Compensation taken into account under the Plan for an Employee
may not exceed $150,000, or an adjusted amount determined pursuant to Code
Sections 401(a)(17) and 415(d). For convenience of administration, Compensation
may be rounded to the nearest $50.
1.12 Early Retirement Date: The date upon which a Participant has both
completed 5 Years of Service and attained age 55.
1.13 Effective Date: January 1, 2000, the effective date of this amendment
and restatement of the Plan. The original effective date of the Plan was January
1, 1987.
1.14 Eligibility Computation Period: The 12 consecutive month period
beginning with the date on which an Employee first completes an hour of Service,
and each Plan Year beginning with the Plan Year in which occurs the first
anniversary of the date on which the Employee first completes an Hour of
Service.
1.15 Employee: Any person employed by the Employer as a common law employee
on the Employer's U.S. payroll, and not as an independent contractor. "Employee"
shall include leased employees within the meaning of Code Section 414(n)(2) to
the extent required under Code Section 414(n).
1.16 Employer: The Company and any Related Company that adopts the Plan as
provided in Section XII.
1.17 ERISA: The Employee Retirement Income Security Act of 1974, as amended
from time to time, and regulations issued thereunder.
1.18 5% Owner: If the Company or a Related Company is a corporation, any
person who owns (or is considered as owning within the meaning of Code Section
318) more than 5% of the outstanding stock of the Company or a Related Company
or stock possessing more than 5% of the total combined voting power of all stock
of the Company or a Related Company. If the Company or Related Company is not a
corporation, a 5% Owner is any person who owns more than 5% of the capital or
profits interest in the Company or a Related Company.
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1.19 Highly Compensated Employee: An Employee who:
(a) Was a 5% Owner at any time during the Plan Year or the preceding
Plan Year, or
(b) Received Section 415 Compensation from the Company and Related
Companies in excess of $80,000 for the preceding Plan Year, and, to the extent
elected by the Committee pursuant to applicable Treasury Regulations, was in the
top 20% of employees when ranked on the basis of Compensation. The $80,000 limit
shall be adjusted pursuant to Code Sections 414(q) and 415(d). The determination
of Highly Compensated Employee for a Plan Year shall be made in accordance with
Code Section 414(q), and applicable Treasury Regulations and Internal Revenue
Service rulings and other releases.
1.20 Hours of Service: An Employee shall be credited with one Hour of
Service for:
(a) Each hour for which the Employee is directly or indirectly paid,
or entitled to payment, by the Company or a Related Company for the performance
of duties. These hours shall be credited to the Employee for the computation
period in which the duties are performed.
(b) Each hour (up to a maximum of 501 hours during a single continuous
period) for which the Employee is paid or entitled to payment by the Company or
a Related Company for a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated) because of
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military duty or leave of absence. These hours shall be credited to the
Employee for the computation period in which the duties would have been
performed. Hours under this subparagraph shall be calculated and credited
pursuant to ss. 2530.200b-2 of the Department of Labor Regulations, which are
incorporated in the Plan by this reference.
(c) Each hour for which back pay, irrespective of mitigation of
damages, has been either awarded or agreed to by the Company or a Related
Company. The same Hours of Service shall not be credited both under subparagraph
(a), (b) or (d), as the case may be, and under this subparagraph (c). These
hours shall be credited to the Employee for the computation period to which the
award or agreement pertains, rather than the computation period in which the
award, agreement or payment is made.
(d) For purposes of determining whether an Employee has a One-Year
Break in Service, each hour (up to a maximum of 501 hours in a single continuous
period) for which the Employee is absent because of (i) the pregnancy of the
Employee, (ii) the birth of a child of the Employee, (iii) the placement of a
child with the Employee in connection with the Employee's adoption of the child,
or (iv) the Employee's caring for a child immediately after the birth or
placement of the child. These hours shall be credited to the Employee for the
computation period in which the absence begins only if the Employee would
otherwise incur a One-Year Break in Service in that computation period. In all
other cases, these hours shall be credited to the next following computation
period.
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(e) If the Company or a Related Company leases employees, Hours of
Service with the Company and Related Companies shall be credited for any leased
employee who is to be considered an Employee for purposes of the Plan under Code
Sections 414(n) and 414(o). In any case for which employment records do not
accurately reflect hours worked, Hours of Service shall be credited at the rate
of 45 hours per calendar week.
(f) Notwithstanding anything in the Plan to the contrary, Hours of
Service shall be determined in accordance with the Uniformed Services Employment
and Reemployment Rights Act of 1994 ("USERRA"), the special rules relating to
veterans' reemployment rights under USERRA pursuant to Code Section 414(u), and
the Family and Medical Leave Act of 1993.
1.21 Ineligible Employee: An Employee whose terms and conditions of
employment are covered by a collective bargaining agreement that does not
provide for his participation in the Plan or who, for any reason, at any time,
does not meet the requirements of Section 2.1 for participation.
1.22 Key Employee: An Employee, former Employee or beneficiary who, at any
time during the Plan Year or during any of the four preceding Plan Years, is or
was (a) an officer of the Company or a Related Company whose annual Section 415
Compensation from the Company and Related Companies exceeds 50% of the amount
described in Code Section 415(b)(1)(A) as in effect for the Plan Year, (b) one
of the ten employees who own (or are considered as owning within the meaning of
Code Section 318) the largest interests in the Company or a Related Company and
whose annual Section 415 Compensation from the Company and Related Companies
exceeds $30,000 (as that amount may be adjusted), (c) a 5% Owner, or (d) a 1%
owner of the Company or a Related Company whose annual Section 415 Compensation
from the Company and Related Companies exceeds $150,000. "Key Employee" shall
also include the beneficiary of a deceased Key Employee, as described above. The
determination of Key Employee status shall be made in accordance with Code
Section 416(i), and the number of persons who are considered Key Employees shall
be limited as provided under that Section. A "non-Key Employee" is any Employee
or former Key Employee who is not a Key Employee.
1.23 Normal Retirement Date: A Participant's 65th birthday.
1.24 One-Year Break in Service:
(a) For purposes of eligibility to participate in the Plan, an
Eligibility Computation Period during which the Employee does not perform more
than 500
Hours of Service; and
(b) For all other purposes, a Plan Year during which the Employee does
not perform more than 500 Hours of Service.
1.25 Participant: An Employee who meets the eligibility requirements of
Section II.
1.26 Permanent Disability: A physical or mental condition which entitles
the Participant to disability benefits under the Company's long term disability
program. The Committee shall determine whether a Participant has incurred a
5
Permanent Disability on the basis of a medical report of a physician acceptable
to the Committee.
1.27 Plan: The "Hooker Furniture Corporation Employee Stock Ownership
Plan," as set forth herein and as amended from time to time.
1.28 Plan Year: The 12 consecutive month period beginning on January 1 and
ending on December 31.
1.29 Pre-Loan Value: The fair market value of the Company Stock as of the
Valuation Date immediately prior to the date on which the Plan becomes party to
a loan secured by Company Stock held in the Trust Fund.
1.30 Price Stabilization Period: A period, established by the Company in
its discretion pursuant to Section 7.1(c), which begins on or after the date of
a loan secured by Company Stock held in the Trust Fund, and which ends on a date
no later than the fifth anniversary of the date of such loan.
1.31 Related Company: Any corporation or business organization that is
under common control with the Company (as determined under Code Section 414(b)
or (c)), that is a member of an affiliated service group with the Company (as
determined under Code Section 414(m)) or that is required to be aggregated with
the Company under Code Section 414(o) and applicable Treasury Regulations
thereunder.
1.32 Section 415 Compensation: An Employee's total annual compensation from the
Company and Related Companies, as defined in the Treasury Regulations issued
under Code Section 415. Under this definition, "Section 415 Compensation"
includes an Employee's wages, salaries, fees for professional services and other
amounts received for personal services actually rendered in the course of
employment with the Company and Related Companies (including, but not limited
to, commissions paid to salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips and bonuses).
"Section 415 Compensation" also shall include any elective deferral (as defined
in Code Section 402(g)(3)), and any amount which is contributed or deferred by
the Company and Related Companies at the election of the Employee and is not
includible in the gross income of the Employee by reason of Code Sections 125 or
457. "Section 415 Compensation" does not include the following:
(a) Contributions made by the Company or a Related Company
to a plan of deferred compensation to the extent that the
contributions are not includible in the Employee's gross income for
the taxable year in which they are contributed.
(b) Amounts received from the exercise of a non-qualified
stock option or from restricted property.
(c) Amounts realized from the sale, exchange or other
disposition of stock acquired under a statutory stock option.
6
(d) Other amounts that receive special tax benefits, such as
premiums for group term life insurance (but only to the extent that
the premiums are not includible in the gross income of the Employee).
The amount of an Employee's annual Section 415 Compensation that may be taken
into account under the Plan may not exceed $150,000 (or an adjusted amount
determined pursuant to Code Sections 401(a)(17) and 415(d)).
1.33 Suspense Account: The account established to hold Company Stock that
has been pledged as security for a loan, as described in Section 4.1(b).
1.34 Top Heavy: One or more plans that are qualified under Code Section
401(a) and under which the sum of the present value of accrued benefits of Key
Employees under defined benefit plans and the account balances of Key Employees
under defined contribution plans exceed 60% of the sum of the present value of
accrued benefits and account balances of all employees, former employees and
beneficiaries in the plans. The determination whether this Plan is Top Heavy for
a Plan Year shall be made as of the last day of the immediately preceding Plan
Year, except in the case of the first Plan Year, the last day of such Plan Year,
based on values as of that date, and shall be made in accordance with Code
Section 416(g). If the Company and Related Companies maintain more than one plan
qualified under Code Section 401, then (a) each such plan in which a Key
Employee is a participant and (b) each such plan that must be taken into account
in order for a plan described in the preceding clause to meet the requirements
of Code Section 401(a)(4) or 410 shall be aggregated with this Plan to determine
whether the plans, as a group, are Top Heavy. The Company and Related Companies
may, in their discretion, aggregate any other qualified plan with this Plan to
the extent that such aggregation is permitted by Code Section 416(g).
1.35 Trust, Trust Fund or Fund: The trust implementing the Plan and the
Plan assets held in the trust.
1.36 Trustee: The corporate entity appointed by the Company and accepting
the Trust, and any successor trustee appointed by the Company and accepting the
Trust.
1.37 Valuation Date: Each November 30. The Committee may establish more
frequent Valuation Dates or change the Valuation Date, if the Committee deems it
appropriate.
1.38 Years of Service:
(a) For purposes of eligibility to participate in the Plan,
Eligibility Computation Periods during which the Employee completes at least
1,000 Hours of Service; and
(b) For all other purposes, Plan Years during which the Employee
completes at least 1,000 Hours of Service (including the last consecutive period
of service with the Company prior to the Effective Date recognized under any
other plan maintained by the Company that is qualified under Section 401(a) of
the Code).
7
SECTION II
PARTICIPATION
2.1 Eligibility Requirements:
(a) Each Employee who was a Participant in the Plan immediately before
January 1, 2000 and who is not an Ineligible Employee shall continue to be a
Participant as of January 1, 2000.
(b) Each Employee who is not an Ineligible Employee will become a
Participant on the first January 1 or July 1 coinciding with or next following
the latest of the following dates, if he is then an Employee:
(i) The date the Employee has completed one
Eligibility Computation Period in which he performed 1,000 Hours
of Service; or
(ii) The date the Employee has attained age 21.
(c) An Employee who becomes a Participant shall remain a Participant
until he retires, dies, otherwise terminates employment, or becomes an
Ineligible Employee and no longer has an Account balance in the Plan.
2.2 Reemployment:
(a) If an Employee who is not an Ineligible Employee terminates
employment after he has a vested interest in his Account and then is reemployed
by the Employer, the Employee will requalify as a Participant as of the date of
his reemployment.
(b) If an Employee who is not an Ineligible Employee terminates
employment before he has a vested interest in his Account, has a series of
consecutive One-Year Breaks in Service that equals or exceeds the greater of (i)
five or (ii) the number of his Years of Service before his termination of
employment, and then is reemployed by the Employer, the Employee must again
satisfy the requirements of Section 2.1 in order to qualify as a Participant. In
all other cases, if an Employee who is not an Ineligible Employee terminates
employment before he has a vested interest in his Account and then is
reemployed, the Employee will qualify as a Participant immediately upon his
reemployment, if he has met the requirements for participation, or, if not, he
will qualify as of the first January 1 or July 1 on which he has met the
requirements, if he is then an Employee.
2.3 Loss of Eligibility with Continued Employment: If a Participant who is
continuing in the employ of the Employer becomes an Ineligible Employee, he
shall cease to be a Participant, but his Account shall continue to be held for
his benefit and shall be adjusted and credited with earnings and losses pursuant
to Section 4.4. If the Participant ceases to be an Ineligible Employee, he shall
be immediately eligible to participate in the Plan, and, for purposes of
vesting, his Years of Service shall include his Years of Service as an
Ineligible Employee, to the extent otherwise creditable under the Plan.
8
SECTION III
CONTRIBUTIONS
3.1 Employer Contributions:
(a) For each Plan Year, the Employer may contribute to the Plan an
amount which the Board deems appropriate. In addition, if the Plan has entered
into a loan secured by Company Stock held in the Trust Fund, the Employer shall
make a contribution of not less than the amount of the current installments of
principal and interest that are due on such loan.
(b) The Employer's contribution may be made in cash, in Company Stock
or in a combination of the two; provided that the Employer shall contribute
annually an amount of cash that is at least equal to the current installments of
principal and interest that are due on any loan secured by Company Stock held in
the Trust Fund. The contribution of the Employer for any Plan Year may be made
in one or more payments at any time; provided that the total amount of the
contribution for any Plan Year shall be paid to the Trustee not later than the
date on which the Employer's income tax return is required to be filed,
including any extensions for filing obtained.
(c) The Employer's cash contribution, earnings on that contribution,
dividends attributable to Company Stock that is used as collateral for a loan to
acquire Company Stock and dividends on certain other shares of Company Stock
held in the Trust Fund (as described in Section 4.4(c)) shall be used to pay the
current installments of principal and interest on any outstanding loan that is
secured by Company Stock held in the Trust Fund. To the extent that the
Employer's contribution is not used to pay the current installments of principal
and interest on such a loan, the Employer contribution shall be allocated to
Participants' Accounts as described in Section IV, and used to purchase Company
Stock when available.
3.2 Limitation on Contribution: Notwithstanding the foregoing, the
Employer's contribution for any Plan Year shall not exceed the amount that may
be allowed as a deduction from the gross income of the Employer under Code
Section 404.
3.3 No Right or Duty of Inquiry: Neither the Trustee, the Committee, nor
any Participant shall have any right or duty to inquire into the amount of the
Employer's annual contribution or the method used in determining the amount of
the Employer's contribution. The Trustee shall be accountable only for funds
actually received by him.
3.4 Non-Reversion: It shall be impossible, at any time before satisfaction
of all liabilities with respect to Participants and their Beneficiaries, for any
part of the principal or income of the Trust Fund to be used for, or diverted
to, purposes other than for the exclusive benefit of such Participants and their
Beneficiaries. However, the Company' s contribution under the Plan for any Plan
Year shall be conditioned upon (i) the Plan initially being a qualified plan
under Code Section 401(a) for such Plan Year, and (ii) the contribution being
deductible under Code Section 404. If, after the Company's contribution has been
made, it is determined that a condition described in (i) or (ii) was not
satisfied with respect to such contribution, or that all or a portion of such
9
contribution was made under a mistake of fact, the Trustee shall refund to the
Company within one year of the date the contribution is remitted to the Trustee
by reason of a mistake of fact, or within one year of the denial of
qualification or disallowance of the deduction, the amount of the contribution
that was affected by the mistake of fact, or by a condition described in (i) or
(ii) not being satisfied, subject to the following rules:
(a) The Trustee shall be under no obligation to make such refund
unless a written direction to make the refund, signed by an authorized
representative of the Company, is submitted to the Trustee.
(b) Earnings attributable to the refundable amount shall not be
refunded, but the refundable amount shall be reduced by a proportionate share of
any losses from the Trust from the date of crediting by the Trustee to the date
of segregation.
(c) The Trustee shall be under no obligation to verify that the refund
is allowable or timely and shall be entitled to rely on the Company's written
direction to act.
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SECTION IV
ACCOUNTS AND ALLOCATIONS
4.1 Accounts:
(a) An Account shall be maintained for each Participant, to which
Employer contributions and earnings shall be credited.
(b) If Company Stock has been pledged as collateral for a loan, the
encumbered Company Stock will be held in a separate account (the "Suspense
Account") pending repayment of the loan. As the loan is repaid, the Company
Stock that was originally pledged as collateral for the portion of the loan that
is repaid shall be released from encumbrance. The number of shares of Company
Stock released from encumbrance for each Plan Year during the duration of the
loan shall equal the number of encumbered shares of Company Stock held by the
Plan immediately before the release, multiplied by the following fraction (which
fraction shall not exceed one):
(i) The numerator is the amount of principal and interest
paid for the Plan Year, and
(ii) The denominator is the sum of the numerator plus the
principal and interest to be paid for all future Plan Years
(determined without taking into account any possible extension or
renewal periods).
The amount of Company Stock released from encumbrance for each Plan Year shall
be allocated to Participants' Accounts in the manner described in Section 4.2.
4.2 Allocation of Company Stock, Cash Contributions and Forfeitures: As of
each Adjustment Date, the Committee shall allocate to Participants' Accounts all
shares and fractional shares of Company Stock contributed by the Employer to the
Trust Fund, purchased by the Trust Fund with cash contributions by the Employer
or released from encumbrance pursuant to Section 4.1 ("Allocable Shares"), plus
cash contributions, forfeitures and unallocated dividends due to distributions
during Plan Year, in the following manner:
(a) As of the Adjustment Date, the Committee shall allocate the total
number of Allocable Shares, plus cash contributions, forfeitures and unallocated
dividends due to distributions during the Plan Year, to the Accounts of all
Participants who are employed by the Employer on the Adjustment Date. An
allocation on the Adjustment Date shall also be made to a Participant who was
employed by the Employer on the immediately preceding Adjustment Date, but who
is not employed on the present Adjustment Date due to his retirement pursuant to
Section 6.1 or 6.2, death or Permanent Disability. The allocation shall be made
in the proportion that each such Participant's Compensation for the Plan Year
bears to the total Compensation of all such Participants for the Plan Year,
except that:
(i) Any Allocable Shares that were released from the
Suspense Account pursuant to Section 4.1 as a result of dividends paid
11
on Company Stock previously allocated to a Participant's Account will
be allocated to the Participant based on the ratio of (A) the balance
of the Participant's Account as of the previous Adjustment Date
(reduced by any distributions or forfeitures since that date), to (B)
the sum of the balance of the Accounts of all Participants as of such
Adjustment Date (reduced by any distributions or forfeitures since
that date); and
(ii) The fair market value of the Company Stock allocated to
each Participant's Account for the Plan Year must not be less than the
dividends that would have otherwise been allocated to the
Participant's Account for the Plan Year.
(b) Notwithstanding the provisions of subsection (a), if the Plan is
Top Heavy for a Plan Year, the allocation shall be made as of the Adjustment
Date as follows:
(i) Unless this minimum allocation is provided to the
Participants under another qualified plan maintained by the Employer,
the Committee shall first allocate the Allocable Shares, cash
contributions, forfeitures and unallocated dividends due to
distributions during the Plan Year, among the Accounts of the
Participants who are Employees on the Adjustment Date (whether or not
they completed 1,000 Hours of Service during the Plan Year ending on
the Adjustment Date), up to an amount equal to 3% of each such
Participant's Section 415 Compensation. The allocation shall be made
in the proportion that each such Participant's Compensation for the
Plan Year bears to the total Compensation of all such Participants for
the Plan Year.
(ii) The remainder, if any, of the Allocable Shares, cash
contributions, forfeitures and unallocated dividends due to
distributions during the Plan Year, shall be allocated to the Accounts
of those Participants who completed 1,000 Hours of Service during the
Plan Year and who are Employees on the Adjustment Date. The allocation
shall be made in the proportion that each such Participant's
Compensation for the Plan Year bears to all such Participants'
Compensation for the Plan Year.
(iii) For purposes of determining whether the Top Heavy
minimum allocation provided in section 4.2(b)(i) is required or has
been satisfied, salary reduction contributions made on behalf of Key
Employees pursuant to a qualified cash or deferred arrangement shall
be taken into account.
4.3 Ineligibility to Receive Allocations of Company Stock:
(a) If the Trust acquires Company Stock in a sale to which Code
Section 1042 applies, no portion of the Company Stock acquired by the Trust in
the sale, or earnings attributable to the Company Stock acquired by the Trust in
the sale, may be allocated directly or indirectly to the Account of:
(i) Any person who made an election under Code Section
1042(a) with respect to Company Stock;
(ii) Any person who is related (within the meaning of Code
Section 267(b)) to a person described in clause (i) above, subject to
the conditions of Code Section 409(n)(3); or
12
(iii) Any person who owns (after application of Code Section
318(a) and without regard to Code Section 318(a)(2)(B)(i)) more than
25% of any class of stock of the Company or a Related Company or more
than 25% of the total value of outstanding stock of the Company or a
Related Company.
(b) The restrictions of this Section 4.3 shall apply to persons
described in clause (i) and (ii) for the period beginning on the date of the
sale of the Company Stock and ending on the later of (x) the date which is ten
years after the sale, or (y) the date of the allocation attributable to the
final payment of the loan in connection with the sale. There shall be no limit
on the period during which the restrictions apply to the persons described in
clause (iii).
4.4 Valuation of Assets and Allocation of Earnings:
(a) As of each Adjustment Date, the Trustee shall determine the
current fair market value of the assets of the Trust Fund. The fair market value
of the Company Stock as of such Adjustment Date shall be the fair market value
determined by the Trustee as of the Valuation Date immediately preceding the
Adjustment Date. The Trustee's determination of the fair market value of the
Company Stock shall be based on a valuation by an independent, disinterested
appraiser pursuant to the requirements of Treasury Regulations issued under Code
Section 170(a)(1). Before crediting the contributions and forfeitures allocated
under Section 4.2, the Committee shall adjust proportionately each Participant's
Account and the Suspense Account so as to reflect any increase or decrease in
value of the Trust Fund since the last Adjustment Date as it relates to the
assets actually invested.
(b) As of each Adjustment Date, before the allocations of Section 4.2
are made, the Committee shall allocate the net income or losses generated on any
investments other than Company Stock since the last Adjustment Date among
Participants' Accounts on the basis of the balance in each Participant's Account
attributable to investments other than Company Stock as of the preceding
Adjustment Date reduced by any distributions and forfeitures from the
Participant's Accounts since the preceding Adjustment Date.
(c) All cash dividends that (1) are paid on Company Stock allocated to
the Suspense Account or (2) are paid on Company Stock that was previously
allocated to the Suspense Account but which has since been allocated to a
Participant's Account, may be used to repay the loan for which such Company
Stock is or had been pledged as collateral. Cash dividends that are paid on
Company Stock that was acquired by the Trust prior to August 5, 1989 may, in the
discretion of the Company, be used to repay any loan incurred for the purpose of
acquiring Company Stock (as described in Code Section 404(a)(9)). Other cash
dividends shall be retained in Participants' Accounts. Notwithstanding the
foregoing, if a Participant is prohibited from receiving an allocation of
Company Stock due to the restrictions of Section 4.3, the cash dividends paid on
Company Stock allocated to the Participant, and which would have otherwise been
used to repay a loan for which Company Stock has been pledged as collateral,
shall be retained in the Participant's Account.
(d) All Company Stock received by the Trustee as a result of a stock
split or stock dividend or as a result of a reorganization or other
recapitalization of the Company shall be allocated among Participants' Accounts
and the Suspense Account by applying the applicable stock split or stock
13
dividend factor to the number of shares in each Participant's Account and the
Suspense Account on the record date for the stock split, stock dividend, or
recapitalization.
4.5 Segregated Accounts: Any account that has been segregated from the
Trust Fund pursuant to Section 6.7(b) shall not share in the adjustments and
allocations of Section 4.4. Each segregated account shall be credited with the
net income and increases and decreases in value attributable to that account
only.
4.6 Annual Additions:
(a) Notwithstanding the foregoing, the total amount of the Annual
Addition (defined below) that may be allocated to the Accounts of any
Participant for any Limitation Year (defined below) shall not exceed the lesser
of (i) $30,000 or (ii) 25% of the Participant's Section 415 Compensation. The
amount referred to in (i) above shall be adjusted from time to time to
correspond to the amount prescribed by law under Code Section 415(c)(1)(A) or by
the Secretary of the Treasury pursuant to Code Section 415(d), determined as of
the Adjustment Date of the Limitation Year to which the limitation applies.
(b) For purposes of this Section 4.6, the "Limitation Year" is the
Plan Year, the term "Employer" includes Related Companies and the term "Loan
Contributions" means Employer contributions that are applied by the Plan to the
repayment of a loan incurred for the purpose of acquiring Company Stock (as
described in Code Section 404(a)(9)). Except to the extent modified by
subsection (c), "Annual Addition" means the sum of:
(i) the lesser of (A) the Participant's share of Employer
contributions used to make principal and interest payments on a loan
secured by Company Stock, or (B) the fair market value of Company
Stock allocated to a Participant's Account, and
(ii) any forfeitures allocated to the Participant's Account.
(c) If not more than one-third of the Loan Contributions for a Plan
Year are allocated to the Accounts of Highly Compensated Employees, then Annual
Additions will not include (i) the portion of the Loan Contributions that are
applied to the payment of interest on the loan secured by Company Stock and
charged against a Participant's Account, and (ii) forfeitures of Company Stock
that was acquired with the proceeds of such a loan. The amount of any qualified
gratuitous transfer (as defined in Code Section 664(g)(1)) allocated to a
Participant for any Limitation Year shall not exceed the limitations imposed by
this Section 4.6, but such amount shall not be taken into account in determining
whether any other amount exceeds the limitations of this Section 4.6.
(d) If the Annual Additions to a Participant's Account in any
Limitation Year exceed the limitation of this Section 4.6, then the amounts that
would have been credited to his Account but for this Section 4.6 in excess of
the limitation shall be administered as follows:
(i) Any excess amount shall be deemed to be a forfeiture as
of the end of the Plan Year to which the limitation applies and shall
be reallocated among the Accounts of the Participants (other than
Participants to whom the limitation applies) as a forfeiture in such
14
manner that no allocation to an Account exceeds the limitation imposed
by this Section; and
(ii) If the allocation or reallocation of the excess amount
causes the limitation imposed by this Section to be exceeded with
respect to each Participant, then the excess amount as finally
determined shall be held unallocated in a separate suspense account.
The amount held in a suspense account shall be used to reduce Employer
contributions for the next Plan Year (and succeeding Plan Years, as
necessary). A suspense account shall not be subject to adjustment for
investment gains or losses.
(e) If the Employer and Related Companies maintain more than one
defined contribution plan qualified under Code Section 401, then this Section
4.6 shall be applied in such a way that the total Annual Additions under all
such plans shall not exceed the amount specified in subsection (a). If Annual
Additions in excess of the limitations are allocated, the Committee shall
instruct the Trustee to adjust the Annual Additions to this Plan before
adjustments are made to any other defined contribution plan maintained by the
Employer or a Related Company.
4.7 Correction of Error: If an error is made in the adjustment of a
Participant's Account, the error shall be corrected by the Committee in a manner
determined in its discretion. In no event shall the Accounts of other
Participants be adjusted on account of the error.
4.8 Trust as Single Fund: The creation of separate Accounts for accounting
and bookkeeping purposes shall not restrict the Trustee in operating the Trust
as a single Fund. Allocations to the Accounts of Participants in accordance with
this Section IV shall not vest any right of title to any part of the assets of
the Fund in such Participants, except as provided in Section V.
15
SECTION V
VESTING
5.1 Vesting:
-------
(a) A Participant shall become vested in his Account according to the
following schedule:
Years of Service Vested Percentage
---------------- -----------------
Less than 5 years 0%
Five years or more 100%
(b) For any Plan Year in which the Plan is Top Heavy, a Participant
will become vested in his Account according to the following schedule:
Years of Service Vested Percentage
---------------- -----------------
Less than 3 years 0%
Three years or more 100%
The vesting schedule described in this subsection (b) shall only apply to
Participants who perform an Hour of Service on or after the first day of the
Plan Year in which the Plan is Top Heavy. If the Plan becomes Top Heavy and then
ceases to be Top Heavy, the vesting schedule of this subsection (b) shall
continue to apply to all Participants who have then completed at least five
Years of Service (whether or not consecutive) and the vesting schedule of
subsection (a) shall apply to all other Participants; provided, however, that no
Participant's vested interest in his Account balance may be reduced as a result
of the change in vesting.
(c) Notwithstanding the foregoing, a Participant's Account shall
become fully vested on the first to occur of (i) his Normal Retirement Date,
(ii) his death, or (iii) his Permanent Disability, if he is then a Employee.
5.2 Service Rules:
(a) If an Employee terminates employment before he has a vested
interest in his Account, has a series of consecutive One-Year Breaks in Service
that equals or exceeds the greater of (i) five or (ii) the number of his Years
of Service before his termination of employment, and then is reemployed by the
Employer, his Years of Service performed before his termination of employment
shall be disregarded in applying the vesting schedule to his post-reemployment
Account. In all other cases, if an Employee terminates employment and then is
reemployed by the Employer, all of his Years of Service shall be counted for
purposes of applying the vesting schedule to his post-reemployment Account.
16
(b) If a former Participant incurs a Break in Service, again qualifies
as a Participant and has an Account balance attributable to his previous
employment, the Participant's Years of Service completed after his reemployment
shall not increase his vested interest in his pre-employment Account balance.
The Committee shall maintain records sufficient to determine the Participant's
vested interest in his pre-reemployment Account balance.
5.3 Vested Benefits and Forfeitures:
(a) If a Participant terminates employment for any reason other than
retirement on or after his Normal Retirement Date, Early Retirement Date, death
or Permanent Disability, the Committee shall determine his vested interest in
his Account. The terminated Participant's Account shall be valued as of the
Adjustment Date coinciding with or next preceding the date on which the
Participant terminates employment.
(b) If the Participant's vested Account balance does not exceed
$5,000, the vested Account shall be paid to the terminated Participant in a
single lump sum payment as soon as practicable after the Participant terminates
employment. The non-vested portion of the Account shall be forfeited as of the
last day of the Plan Year in which the Participant receives the distribution
provided in this Section 5.3. If the Participant terminates employment before he
has any vested interest in his Account, the vested percentage (0%) shall be
deemed to be distributed as of the last day of the Plan Year in which he
terminates employment and the non-vested portion (100%) shall be forfeited as of
that date.
(c) If the Participant's vested Account balance exceeds $5,000, the
vested Account shall be paid to the terminated Participant in accordance with
the provisions of Section 6.7(b). Payments will commence as soon as practicable
after the Participant terminates employment. The non-vested portion of the
Account shall be forfeited as of the last day of the Plan Year in which the
Participant receives the last of such installment payments or the last day of
the Plan Year in which the Participant incurs his fifth consecutive One-Year
Break in Service, whichever occurs first.
(d) If the Participant's vested Account balance exceeds $5,000, the
Participant must consent to the distribution before it can be made. The
Participant's consent must be given in accordance with the provisions of
subsection 6.6(e). If the Participant does not consent to the distribution, the
Participant's vested interest in his Account will be held in the Trust Fund
until the Participant's Normal Retirement Date and then will be distributed in
accordance with Section VI. In such an event, the Participant's non-vested
Account balance will be forfeited upon the earlier of (i) the date the
Participant's vested interest is distributed or (ii) the date on which the
Participant incurs five consecutive One-Year Breaks in Service. If the
Participant's vested Account does not exceed $5,000, the Participant's consent
will not be necessary in order to make a distribution pursuant to this Section
5.3.
(e) If a Participant terminates employment before he has a 100% vested
interest in his Account, receives a distribution from his Account (including a
deemed distribution pursuant to subsection (b) above) and is reemployed before
he has a Break in Service, the amount that the participant previously forfeited
shall be restored to his Account, if the Participant repays any amount
previously distributed, as follows:
17
(i) The Participant must repay the amount distributed no
later than the earlier of (x) five years after the first date on which
the Participant is reemployed or (y) the close of the Participant's
first Break in Service beginning after the distribution.
(ii) The Employer shall restore the forfeiture out of
Employer contributions and forfeitures for the Plan Year in which the
restoration occurs by allocating the restored forfeiture to the
Participant's Account before the allocation of Section 4.2 is made.
If the Participant does not repay the amount distributed, the amount previously
forfeited will not be restored to the Participant's Account. A Participant
described above who had a deemed distribution pursuant to subsection (b) shall
be deemed to have repaid his or her deemed distribution upon reemployment.
(f) The Amount of a Participant's forfeiture shall first be deducted
from the investments in the Participant's Account other than Company Stock
before any amount is deducted from Company Stock held in his Account. All
amounts forfeited under the Plan shall be reallocated as described in Section
4.2 as of the Adjustment Date coinciding with or next following a distribution
or deemed distribution made pursuant to this Section 5.3.
18
SECTION VI
BENEFITS
6.1 Normal Retirement: A Participant may retire as of his Normal Retirement
Date or as of the first day of any month following his Normal Retirement Date.
The Participant's Account shall be valued as of the Adjustment Date coinciding
with or next following the date on which he retires and shall be distributed in
accordance with Sections 6.6 and 6.7.
6.2 Early Retirement: A Participant may retire as of his Early Retirement
Date or as of the first day of any month following his early Retirement Date.
The Participant's Account shall be valued as of the Adjustment Date coinciding
with or next following the date on which he retires and shall be distributed in
accordance with Sections 6.6 and 6.7.
6.3 Disability Retirement: If a Participant incurs a Permanent Disability,
his retirement shall be effective as of the date on which the Committee
determines that he is Permanently Disabled. The Participant's Account shall be
valued as of the Adjustment Date coinciding with or next following the date on
which he becomes entitled to receive a distribution (as provided in the
preceding sentence) and shall be distributed in accordance with Sections 6.6 and
6.7.
6.4 Termination of Employment: A Participant who terminates employment for
any reason other than death or retirement on or after his Normal retirement Date
or Early Retirement Date shall be entitled to receive his vested interest in his
Account, determined under Section V. His vested interest shall be distributed in
accordance with Sections 6.6 and 6.7.
6.5 Death Benefits: If a Participant or former Participant dies before his
vested interest in his Account has been distributed, the Participant's vested
interest in his Account will be paid to the Participant's Beneficiary in a form
selected pursuant to Section 6.7. The deceased Participant's Account shall be
valued as of the Adjustment Date of the Plan Year in which he dies. The
Committee may authorize advance payments to be made to the Beneficiary after the
Participant's death and before benefit payments begin.
6.6 Commencement of Distribution:
(a) Subject to subsections (b), (c), (d), (e) and (f), a retired or
deceased Participant's vested Account balance shall be distributed (or shall
begin to be distributed) as soon as is practicable following the date on which
the Participant retires or dies. Subject to the following subsections, a
terminated Participant's vested Account balance shall be distributed (or shall
begin to be distributed) according to the provisions of Section V.
(b) Except as otherwise provided in subsection (d), unless a
Participant elects otherwise, the distribution of the Participant's Account will
commence not later than one year after the close of:
19
(i) The Plan Year in which the Participant terminates
employment with the Company or a Related Company after his Normal
Retirement Date, death or Permanent Disability, or
(ii) The fifth Plan Year following the Plan Year in which
the Participant otherwise separates from Service with the Company or a
Related Company, provided that this subsection shall not apply if the
Participant is reemployed by the Company or a Related Company before
such fifth Plan Year.
(c) Notwithstanding the foregoing, and unless the Participant
otherwise consents, distributions must commence no later than 60 days following
the close of the Plan Year in which occurs the latest of:
(i) The date the Participant attains age 65,
(ii) The 10th anniversary of the date on which the
Participant first commenced participation in the Plan, or
(iii) The Participant's date of termination of employment.
(d) Each Participant's vested Account must begin to be distributed in
accordance with the following rules, except as otherwise permitted by law:
(i) If the Participant is not a 5% Owner, the Participant's
Account must be distributed (or must begin to be distributed) by April
1 of the calendar year following the later of (x) the calendar year in
which the Participant attains age 70 1/2, or (y) the calendar year in
which the Participant retires.
(ii) If the Participant is a 5% Owner, the Participant's
Account must be distributed (or must begin to be distributed) by April
1 of the calendar year following the calendar year in which the
Participant attains age 70 1/2.
(e) If a Participant becomes entitled to a distribution before his
Normal Retirement Date and the Participant's vested Account balance does not
exceed $5,000, the Account will be distributed in a lump sum payment without the
Participant's consent. If the Participant's vested Account balance exceeds
$5,000, the Participant must consent to the distribution before it may be made.
The Participant's consent must be given in writing on a form provided by the
Committee, or in any other manner permitted under applicable Treasury
Regulations that is authorized by the Committee. Such form, and a notice which
explains the optional forms of benefit available to the Participant under the
Plan and his right to defer the receipt of his benefits under subsection (f),
will be provided to the Participant no less than 30 days and no more than 90
days before the "annuity starting date." For purposes of this subsection,
"annuity starting date" shall mean the date on which the distribution to the
Participant is to commence. Notwithstanding the foregoing, a distribution may
commence less than 30 days after the date on which the notice described above is
given to the Participant, provided that:
20
(i) The Committee clearly informs the Participant that the
Participant has a right to a period of at least 30 days to consider
the decision whether or not to elect a distribution (and, if
applicable, a particular distribution option), and
(ii) The Participant, after receiving the notice,
affirmatively elects a distribution.
(f) If a Participant who becomes entitled to a distribution requiring
consent under subsection (e) does not consent to the distribution, the
Participant's vested Account balance will be held in the Trust Fund and will not
be distributed until the earlier of (i) the date the Participant consents to the
distribution, the Participant's Normal Retirement Date, or (iii) the
Participant's death.
6.7 Form of Benefit:
(a) Benefits from the Plan will be paid in cash or Company Stock, as
determined by the Committee in a non-discriminatory manner; provided that a
Participant or Beneficiary who is entitled to receive a distribution may elect
to receive his distribution in whole share of Company Stock, with fractional
shares paid in cash. Elections as to the form of distribution shall be made by
submitting a written election to the Committee before the distribution is made.
(b) Benefits may be paid in one of the following forms of payment
selected by the Committee in a non-discriminatory manner:
(i) The amount may be paid to the Participant or Beneficiary
in a lump sum payment.
(ii) The amount may be paid to the Participant or
Beneficiary, with earnings allocated and adjustments made pursuant to
Section 4.4, in substantially equal at least annual installments over
a term certain selected by the Committee. The Committee may adopt
rules whereby larger account balances are distributed over longer
periods than smaller account balances are distributed. The term
certain shall not extend beyond the normal life expectancies of the
Participant and his Beneficiary and, unless the Participant or
Beneficiary consents to a longer distribution, the term certain shall
not extend beyond the longer of:
A. Five years, or
B. In the case of a Participant whose vested
Account balance exceeds $755,000, five years plus one
additional year (up to five additional years) for each
$150,000 or fraction thereof by which the balance of the
Participant's vested Account exceeds $755,000. The dollar
amounts described herein shall be subject to cost-of-living
adjustments pursuant to Code Section 415(d).
If the Participant dies before the completion of installment payments, any
balance of the amount shall be paid to his Beneficiary as provided in Section
6.5. If a Beneficiary who is receiving payments dies, any remaining balance of
the Account shall be paid to the personal representative of the Beneficiary's
estate. If a Participant's Account is to be distributed in Company Stock, the
21
Participant's Account shall remain part of the Trust Fund and shall share in
earnings allocations and adjustments under Section 4.4. When establishing the
term of installment payments, at the time payments begin, the present value of
the payments projected to be paid to the Participant, based on his life
expectancy, must be more than 50% of the present value of the payments projected
to be paid to the Participant and his Beneficiary, based on their life
expectancies.
(c) If the installment method of distribution is selected, then, as of
any subsequent Adjustment Date, the Committee, with the consent of the
Participant, may cause the amount then credited to the Account of the
Participant to be paid in a lump sum.
(d) The following rules apply to payments after a Participant's death:
(i) If a Participant dies after payments have begun, then
his remaining vested Account balance, if any, must be distributed to
his Beneficiary at least as rapidly as under the method of
distribution elected by the Participant.
(ii) If a Participant dies before his vested Account balance
has begun to be distributed, then, except as provided below, his
vested Account balance, if any, must be distributed within five years
after the Participant's death. If the Participant's vested Account
balance is distributed in installment payments to (or for the benefit
of) an individual Beneficiary, then (subject to subsection (b)) the
Participant's vested Account balance may be distributed over the life
of the Beneficiary or over a period not extending beyond the
Beneficiary's life expectancy, and the payments must begin not later
than one year after the Participant's death (or such other date as may
be prescribed by Treasury Department regulations).
6.8 Location of Former Participants: If a former Participant who is
entitled to a distribution cannot be located and the Committee has made
reasonable efforts to locate the former Participant, then the former
Participant's vested interest shall be forfeited. The former Participant's
Account shall be forfeited as of the last day of the Plan Year in which the
Committee determines that it has been unable to locate the former Participant
after having made reasonable efforts to do so. If the former Participant or
Beneficiary makes a written claim for the Account after it has been forfeited,
the Company shall cause the Account to be reinstated as set forth in Section
5.3.
6.9 Benefits to Minors and Incompetents:
(a) If any person entitled to receive payment under the Plan is a
minor, the Committee, in its discretion may dispose of such amount in any one or
more of the following ways:
(i) By payment of the amount directly to the minor;
(ii) By application of the amount for the benefit of the
minor;
(iii) By payment of the amount to a parent of the minor or
to any adult person with whom the minor is living at the time or to
22
any person who is legally qualified and is acting as guardian of the
minor or of the property of the minor, provided that the parent or
adult person to whom any amount is to be paid has advised the
Committee in writing that he will hold or use the amount for the
benefit of the minor;
(iv) By payment of the amount to a custodian selected by the
Trustee under the appropriate Uniform Gifts to Minors Act.
(b) If a person who is entitled to receive payment under the Plan is
physically or mentally incapable of personally receiving and giving a valid
receipt for any payment due (unless a previous claim has been made by a duly
qualified committee or other legal representative), the payment may be made to
the person's spouse, son, daughter, parent, brother, sister or other person
deemed by the Committee to have incurred expense for the person otherwise
entitled to payment.
(c) The selection of a method of distribution under this Section shall
be in the discretion of the Committee, and the Committee may not be compelled to
select any method that it does not deem to be in the best interest of the
distributee.
6.10 Eligible Rollover Distributions:
(a) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this section, a distributee
may elect, at the time and in the manner prescribed by the Committee, to have
any portion of an eligible rollover distribution paid directly to an eligible
retirement plan specified by the distributee in a direct rollover.
(b) Definitions.
(i) 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 Code Section 401(a)(9); the
portion of any distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to Employer securities); and any hardship
distribution described in Code Section 401(k)(2)(B)(i)(IV).
(ii) Eligible retirement plan: An eligible retirement plan
is an individual retirement account described in Code Section 408(a),
an individual retirement annuity described in Code Section 408(b); an
annuity plan described in Code Section 403(a), or a qualified trust
described in Code Section 401(a), that accepts the distributee's
eligible rollover distribution. However, in the case of an eligible
rollover distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual retirement
annuity.
23
(iii) 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 Code Section 414(p), are distributees
with regard to the interest of the spouse or former spouse.
(iv) Direct rollover: A direct rollover is a payment by the
Plan to the eligible retirement plan specified by the distributee.
24
SECTION VII
DISTRIBUTION IN COMPANY STOCK
7.1 Put Option:
(a) If Company Stock is distributed from the Plan at a time when the
Company Stock is not readily tradable on an established securities market, then
the Participant or Beneficiary receiving the Company Stock shall have the right
to require that the Company repurchase the Company Stock. The Participant or
Beneficiary may exercise this put option for a period of 60 days following the
date on which the Company Stock is distributed and, if the Participant or
Beneficiary does not exercise the put option at that time, for an additional
period of 60 days during the next following Plan Year. The period during which
the put option is exercisable shall not include any period during which the
Participant or Beneficiary is unable to exercise the put option because the
Company is prohibited from honoring it by federal or state law. In order to
exercise the put option, the Participant or Beneficiary must notify the Company
in writing, during the exercise period, that the put option is being exercised.
As of the Effective Date, the Company Stock is not readily tradable on an
established securities market.
(b) If a Participant or Beneficiary exercises a put option, the
Company (or, if the Trustee deems it appropriate and the Company consents, the
Trustee) shall purchase the Company Stock that was distributed to the
Participant or Beneficiary at a purchase price equal to the fair market value of
the Company Stock as of the most recent Adjustment Date; provided that, if the
Participant or Beneficiary exercising the put option is a "disqualified person",
as defined in Code Section 4975, the purchase price shall equal the fair market
value of the Company Stock as of the date of the purchase. If the Company
repurchases Company Stock that was distributed to the Participant as part of a
total distribution (defined below), the purchase price shall be paid in
substantially equal annual installments over a five-year period (or over a
shorter period, if the Company or Trustee deems it appropriate), with interest
payable at a reasonable interest rate and with adequate security. The Company or
Trustee shall determine what constitutes a reasonable interest rate and adequate
security, based on interest terms in effect in the community at the time of the
purchase. A total distribution is a distribution within one taxable year of the
balance to the credit of the Participant's vested Account.
(c) Notwithstanding any provision of subsection (b) to the contrary,
the Company (but not the Trustee) may elect to purchase Company Stock from
Participants and Beneficiaries who exercise their put option during a Price
Stabilization Period at a price equal to the Pre-Loan Value. The Company may
make purchases pursuant to this subsection (c) only if the following conditions
are met:
(i) The purchase by the Company is made in connection with
the Participant's or Beneficiary's exercise of his or her put right
under this Section 7.1 during the Price Stabilization Period;
(ii) The Company's election to make purchases pursuant to
this subsection (c) is communicated to Participants and Beneficiaries
prior to commencement of the Price Stabilization Period; and
25
(iii) All purchases are made at the Pre-Loan Value during
the Price Stabilization Period, except to the extent the Pre-Loan
Value is less than the fair market value of Company Stock as of the
most recent Adjustment Date or the date of purchase (as applicable).
7.2 Right of First Refusal:
(a) All Company Stock distributed from the Plan shall be subject to a
right of first refusal in favor of the Company and the Trustee. A Participant or
Beneficiary who receives Company Stock under this Plan may not dispose of the
Company Stock under any circumstances without first offering it to the Company
and the Trustee as described in subparagraph (b).
(b) If a Participant or Beneficiary receives a good faith offer to
purchase Company Stock that the Participant or Beneficiary received from the
Plan, the Participant or Beneficiary must offer to sell the Company Stock to the
Company and the Trustee. The Company and the Trustee shall have the right to
purchase the Company Stock at a purchase price equal to the higher of (i) the
fair market value of the Company Stock as of the most recent Adjustment Date
(or, if the Participant or Beneficiary is a "disqualified person," as defined in
Code Section 4975, the fair market value as of the date of the purchase), or
(ii) the purchase price offered by a buyer who is making a good faith offer to
purchase the Company Stock. The Company or Trustee (in that order of priority)
may exercise the right within 14 days after the Participant gives written notice
to the Company and the Trustee that an offer to purchase the Company Stock has
been made by a third party.
(c) If neither the Company nor the Trustee exercises its right of
first refusal, the Participant or Beneficiary may sell the Company Stock to the
third party on the terms that were described to the Company and the Trustee. If
the Participant or Beneficiary does not sell the Company Stock to the third
party on such terms within 14 days after the right of first refusal lapses, then
the Company Stock shall again become subject to the right of first refusal.
(d) If the Company or the Trustee exercises the right of first
refusal, the purchase price shall be paid in substantially equal annual
installments over a five-year period (or over a shorter period, if the Company
or Trustee deems it appropriate), with interest payable at a reasonable interest
rate and with adequate security. The Company or Trustee shall determine what
constitutes a reasonable interest rate and adequate security, based on interest
terms in effect in the community at the time of the purchase.
7.3 Fair Market Value of Company Stock: The fair market value of the
Company Stock must be determined by a disinterested independent appraiser chosen
by the Trustee. An independent appraiser is an appraiser meeting requirements
similar to the requirements of regulations prescribed under Code Section
170(a)(1).
7.4 Legends: The Committee shall direct the Trustee to cause shares of
Company Stock that are distributed to bear a legend setting forth such
representations as the Committee deems appropriate, which may include, without
being limited to, representations that (a) the shares are subject to the right
of first refusal described in Section 7.2, (b) the shares have not been
26
registered under federal or state securities law, and (c) under the law, the
transferability of the shares is restricted. In addition, the Committee may
require the recipient of a distribution of Company Stock to sign a letter
agreeing that the Company Stock received shall not be transferred except in
compliance with federal and state securities law and making such other
agreements and representations as the Committee deems appropriate.
7.5 Basis of Company Stock: The basis of Company Stock held in the Trust
Fund shall be determined as follows:
(a) The basis of Company Stock purchased by the Trustee shall be the
actual cost of the Company Stock to the Trustee. The basis of all other Company
Stock acquired by the Trustee (including Company Stock contributed by the
Company to the Trust Fund) shall be the fair market value of the Company Stock
on the date of the acquisition.
(b) Any shares of Company Stock that are held unallocated in a
suspense account pursuant to Section 4.1 or 4.6 shall retain their original
basis, without regard to when the shares are released and allocated to
Participants' Accounts.
(c) As of each Adjustment Date, the basis of all Company Stock that is
made available for allocation shall be calculated as of that date, as determined
pursuant to subsections (a) and (b).
(d) The basis of all Company Stock allocated to a Participant's
Account for a Plan Year shall be averaged with the basis of all Company Stock
previously allocated to the Participant's Account, and the resulting average, as
adjusted annually, shall be the Participant's basis with respect to
distributions of Company Stock from the Participant's Account.
27
SECTION VIII
ADMINISTRATION BY THE COMMITTEE
8.1 Appointment of the Committee: The members of the Committee shall
consist of one or more persons appointed from time to time by the Company to
serve until their death, resignation or removal by the Company. A person shall
not be ineligible to be a member of the Committee because he is or may be
Participant in the Plan. The Company from time to time may increase or decrease
the number of members of the Committee. The Committee and each of its members
shall be named fiduciaries with respect to the Plan, and shall be indemnified by
the Employer against any and all liabilities incurred by reason of any action
taken in good faith pursuant to the provisions of the Plan.
8.2 Powers of the Committee:
(a) The Committee shall be responsible for the general administration
and interpretation of the Plan and for carrying out its provisions and shall
have such powers as may be necessary to discharge its duties hereunder,
including, but not by way of limitation, the following powers and duties:
(i) To construe and interpret the Plan, to decide all
questions of eligibility and to determine the amount, manner and time
of payment of any benefits hereunder;
(ii) To prescribe procedures to be followed by Employees in
filing applications for benefits;
(iii) To make a determination as to the right of any person
to a benefit and to afford any person dissatisfied with such
determination the right to a hearing;
(iv) To request and receive from the Employer, and from
Employees, such information as shall be necessary for the proper
administration of the Plan, including but not limited to, such
information as the Committee may reasonably require to determine each
Participant's eligibility to participate in the Plan and the benefits
payable to each Participant upon his death, retirement or termination
of employment;
(v) To prepare and distribute, in such manner as it
determines to be appropriate, information explaining the Plan;
(vi) To furnish the Employer, upon request, with such annual
reports with respect to the administration of the Plan as are
reasonable and appropriate;
(vii) To direct the Trustee as to the method in which and
persons to whom Plan assets will be distributed; and
28
(viii) To receive and review reports on the financial
condition of the Trust Fund and statements of the receipts and
disbursements of the Trust Fund from the Trustee.
The Committee shall not have the power to add to, subtract from or modify any of
the terms of the Plan, nor to change or add to any benefits provided by the
Plan, nor to waive or fail to apply any requirement for eligibility for the
receipt of benefits under the Plan.
(b) Notwithstanding anything to the contrary, the Committee may adopt
such rules, regulations and bylaws and may make such decisions as it deems
necessary or desirable for the proper administration of the Plan, and all rules
and decisions of the Committee shall be uniformly and consistently applied to
all Participants in similar circumstances. The Committee shall have the express
discretionary authority to determine eligibility for benefits and to interpret
the provisions of this Plan. Any rule or decision that is not inconsistent with
the provisions of the Plan shall be conclusive and binding upon all persons
affected by it, and there shall be no appeal from any ruling by the Committee
that is within its authority, except as otherwise provided herein. When making a
determination or calculation, the Committee shall be entitled to rely upon
information furnished by an Employer or anyone acting on behalf of an Employer.
(c) The Committee shall have the power to (i) establish a funding
policy for the Trust Fund and (ii) receive and review reports on the financial
condition of the Trust Fund and statements of the receipts and disbursements of
the Trust Fund from the Trustee.
8.3 Operation: The members of the Committee shall elect a Chairman. They
shall also elect a Secretary who may, but need not, be a member of the
Committee. The Committee shall have the power to (a) appoint from its membership
such sub-committees with such powers as the Committee shall determine, (b)
authorize one or more of its members or any agent to execute or deliver any
instrument or to make any payment on behalf of the Committee, and (c) employ
counsel and agents and such clerical and other services as the Committee shall
deem requisite or desirable in carrying out the provisions of the Plan. The
Committee shall be fully protected in relying on data, information or statistics
furnished it by persons performing ministerial and limited discretionary
functions as long as the Committee has had no reason to doubt the competence,
integrity or responsibility of any such person.
8.4 Meetings and Quorum: The Committee shall hold meetings upon such
notice, at such places, and at such intervals as it may from time to time
determine. A majority of the members of the Committee at the time in office
shall constitute a quorum for the transaction of business. All resolutions or
other actions taken by the Committee at any meeting shall be by the vote of a
majority of those present at any such meeting. Action may be taken by the
Committee without a meeting by a written consent signed by a majority of the
members of the Committee.
8.5 Compensation: The members of the Committee shall not be entitled to any
compensation for their services with respect to the Plan, but the Committee
members shall be entitled to reimbursement for any and all necessary expenses
that each member may incur. The expenses shall be paid by the Employer or from
the Trust Fund. Any such payments from the Trust Fund shall be deemed to be for
the exclusive benefit of Participants.
29
8.6 Qualified Domestic Relations Orders:
-----------------------------------
(a) If the Trustee or the Committee receives a domestic relations
order that purports to require the payment of a Participant's benefits to a
person other than the Participant, the Committee shall take the following steps:
(i) If benefits are in pay status, the Committee shall
direct the Trustee to account separately for the amounts that will be
payable to the Alternate Payees (defined below) if the order is a
Qualified Domestic Relations Order (defined below).
(ii) The Committee shall promptly notify the named
Participant and any Alternate Payees of the receipt of the domestic
relations order and of the Committee's procedures for determining if
the order is a Qualified Domestic Relations Order.
(iii) The Committee shall determine whether the order is a
Qualified Domestic Relations Order under the provisions of Code
Section 414(p).
(iv) The Committee shall notify the named Participant and
any Alternate Payees of its determination as to whether the order
meets the requirements of a Qualified Domestic Relations Order.
(b) If, within the 18 months beginning on the date the first payment
would be made under the domestic relations order (the "18-Month Period"), the
order is determined to be a Qualified Domestic Relations Order, the Committee
shall direct the Trustee to pay the specified amounts to the persons entitled to
receive the amounts pursuant to the order.
(c) If, within the 18-Month Period (i) the order is determined not to
be a Qualified Domestic Relations Order or (ii) the issue as to whether the
order is a Qualified Domestic Relations Order has not been resolved, the
Committee shall direct the Trustee to pay the amounts (and any interest thereon)
to the Participant or other person who would have been entitled to such amounts
if there had been no order.
(d) If an order is determined to be a Qualified Domestic Relations
Order after the end of the 18-Month Period, the determination shall be applied
prospectively only.
(e) For the purposes of this Section, the following terms shall have
the following definitions:
Alternate Payee - Any spouse, former spouse, child or other
dependent of a Participant who is recognized by a domestic relations
order as having a right to all or a portion of the benefits payable
under the Plan to the Participant.
Qualified Domestic Relations Order - Any domestic relations
order or judgment that meets the requirements set forth in Code
Section 414(p).
8.7 Expenses of Plan Administration: All reasonable expenses that shall
arise in connection with the administration of the Plan shall be charged to the
Trust and paid by the Trustee, unless otherwise paid by the Company.
30
Participants' Accounts may be charged for all or part of the reasonable expenses
of administration of the Plan, consistent with applicable law.
31
SECTION IX
DUTIES AND POWERS OF THE TRUSTEE
9.1 General: The Trustee shall receive, hold, manage, convert, sell,
exchange, invest, disburse and otherwise deal with such contributions as may
from time to time be made to the Trust Fund and the income and profits
therefrom, in the manner and for the uses and purposes of the Plan as provided
in the Plan and in the trust agreement described in Section 9.2.
9.2 Trust Agreement: The Company has entered into a trust agreement with
the Trustee under which the Trustee will receive, invest and administer the
Trust fund. The trust agreement is incorporated by reference as a part of the
Plan, and the rights of all persons under the Plan are subject to the terms of
the trust agreement. The trust agreement provides for the investment and
reinvestment of the Trust Fund, the management of the Trust Fund, the
responsibilities and immunities of the Trustee, the removal of the Trustee and
appointment of a successor, the accounting by the Trustee and the disbursement
of the Trust Fund.
9.3 Limitation of Liability: The Trustee shall hold in trust and administer
the Trust Fund subject to all the terms and conditions of the Plan and of the
trust agreement described in Section 9.2. The Trustee shall not be responsible
for the administration of this Plan unless employed by the Company to serve in
such capacity. The Trustee's responsibility shall be limited to holding,
investing and reinvesting the assets of the Trust Fund from time to time in its
possession or under its control as Trustee and to disbursing funds as shall be
directed by the Committee. The Trustee shall not be responsible for the
correctness of any payment or disbursement or action if made in accordance with
the instruction of the Committee.
9.4 Power of Trustee to Carry Out the Plan: If, at any time, the Company or
the Committee shall be incapable, for any reason, of giving direction,
instructions or authorizations to the Trustee, as herein provided, the Trustee
may act, without such directions, instructions or authorizations, as it, in its
discretion, shall deem appropriate and advisable under the circumstances for
carrying out the provisions of the Plan.
9.5 Investment Directions:
(a) During the period described in subsection (c), each Participant
who has completed at least 10 years of participation in the Plan and has
attained age 55 shall have the right to direct the Plan as to the investment of
25% of the portion of his Account attributable to Company Stock in the manner
described in subsection (b) below. In the Plan Year in which such a Participant
is entitled to make his last investment direction, he may direct the Plan as to
the investment of 50% of the portion of his Account attributable to Company
Stock.
(b) The Committee shall offer each Participant described in subsection
(a) the opportunity to either (i) direct the investment of the applicable
portion of his Account among three investment options under the Plan other than
Company Stock, (ii) transfer the applicable portion of his Account to another
tax-qualified defined contribution plan of the Employer that provides at least
three investment options other than Company Stock, or (iii) permit the
32
Participant to elect to receive an immediate distribution of the amount for
which the Participant may direct investments.
(c) Each Participant described in subsection (a) may make an election
under subsection (b) within 90 days after the close of each Plan Year during the
six-year period beginning with the Plan Year in which the Participant attains
age 55 and completes 10 years of participation in the Plan. For purposes of this
Section 9.5, a "year of participation" shall mean a Plan Year in which the
Participant was eligible to receive an allocation of Employer contributions
under the Plan pursuant to Section 4.2, and without regard to whether the
Employer actually made a contribution to the Plan for that Plan Year or whether
the Participant was prohibited from receiving an allocation pursuant to Section
4.3.
(d) The provisions of this Section 9.5 shall be administered in
accordance with applicable Treasury Regulations and Internal Revenue Service
rulings and other releases.
33
SECTION X
AMENDMENT AND TERMINATION
10.1 Amendment: This Plan shall be irrevocable and binding as to all
contributions made by an Employer to the Trust, but this Plan may be amended
from time to time by the Company. No amendment shall be made to the Plan that
(a) would have the effect of diverting any of the Trust from Participants or
their Beneficiaries as provided in the Plan, (b) would prevent the allowance as
a deduction for federal income tax purposes, and particularly under Code Section
404, of any contribution made by an Employer to the Trust, (c) would take the
Plan and Trust out of the scope of Code Sections 401, 402 and 501(a), (d) would
increase the duties of the Trustee without its consent, (e) would decrease a
Participant's vested interest in his Account in the Trust Fund, or (f) would
eliminate and optional form of benefit in violation of Code Section 411(d)(6).
10.2 Termination: This Plan may be terminated at any time by the Company.
If the Plan is terminated, or if a partial termination occurs (through a
complete discontinuance of contributions or otherwise), each affected
Participant shall have a 100% vested interest in his Account, and his Account
shall be paid to him (or to his Beneficiary, in the event of his death) in a
lump sum as soon as is practicable after the termination.
10.3 Merger: In the event of merger or consolidation with, or transfer of
assets or liabilities to, any other plan, each Participant shall be entitled to
a benefit under such other plan immediately after the merger, consolidation, or
transfer that is equal to or greater than his Account balance determined under
this Plan immediately before the merger, consolidation or transfer.
34
SECTION XI
CLAIMS PROCEDURE
11.1 Right to File Claim: Every Participant, former Participant, retired
Participant, or Beneficiary of a Participant or former Participant shall be
entitled to file with any member of the Committee a claim for benefits under the
Plan. The claim is required to be in writing.
11.2 Denial of Claim: If the claim is denied by the Committee member, in
whole or in part, the claimant shall be furnished within 90 days after the
Committee member's receipt of the claim (or within 180 days after such receipt
if special circumstances require an extension of time) a written notice of
denial of the claim containing the following:
(a) Specific reason or reasons for denial,
(b) Specific reference to pertinent Plan provisions on which the
denial is based,
(c) A description of any additional material or information
necessary for the claimant to perfect the claim, and an explanation of
why the material or information is necessary, and
(d) An explanation of the claims review procedure.
11.3 Claims Review Procedure:
(a) Review may be requested any time within 60 days following the
date the claimant received written notice of the denial of his claim.
For purposes of this Section, any action required or authorized to be
taken by the claimant may be taken by a representative authorized to
be taken by the claimant may be taken by a representative authorized
in writing by the claimant to represent him. The Committee shall
afford the claimant a full and fair review of the decision denying the
claim and, if so requested shall:
(i) Permit the claimant to review any documents that are
pertinent to the claim;
(ii) Permit the claimant to submit to the Committee issues
and comments in writing; and
(iii) Afford the claimant an opportunity to meet with a
quorum of the Committee as a part of the review procedure.
(b) The decision on review by the Committee shall be in writing
and shall be issued within 60 days following receipt of the request
for review. The period for decision may be extended to a date not
later than 120 days after such receipt if the Committee determines
that special circumstances require extension. The decision on review
shall include specific reasons for the decision and specific reference
35
to the pertinent Plan provisions on which the decision of the
Committee is based.
36
SECTION XII
ADOPTION OF PLAN BY RELATED COMPANIES
AND TRANSFERRED ASSETS
12.1 Adoption of the Plan: A Related Company may become an Employer, with
the approval of the Company, by adopting the Plan for its Employees. A Related
Company that becomes a party to the Plan shall promptly deliver to the Trustee a
certified copy of the resolutions or other documents evidencing its adoption of
the Plan. Notwithstanding anything in the Plan to the contrary, a Related
Company adopting the Plan may determine whether and to what extent periods of
employment with the Related Company before the Related Company adopted the Plan
shall be included as service under the Plan.
12.2 Withdrawal: A Related Company may withdraw from the Plan at any time
by giving advance notice in writing of its intention to withdraw to the Company
and to the Committee. Upon the receipt of notice of a withdrawal, the Committee
shall certify to the Trustee the equitable share of the Related Company in the
Trust Fund, and the Trustee shall thereupon set aside from the Trust Fund such
securities and other property as it shall, in its sole discretion, deem to be
equal in value to the Related Company's equitable share. If the Plan is to be
terminated with respect to the Related Company, the amount set aside shall be
administered according to Section 10.2. If the Plan is not to be terminated with
respect to the Related Company, the Trustee shall turn over the Related
Company's equitable share to a trustee designated by the Related Company, and
the securities and other property shall thereafter be held and invested as a
separate trust of the Related Company.
12.3 Sale of Employer's Assets: If all or any portion of the Employer's
assets are sold to another corporation that adopts a defined contribution plan
as a continuation of this Plan, then the Committee shall certify to the Trustee
the equitable share in the Trust Fund of the Participants who become
participants in the other plan immediately following the transfer. The Trustee
shall transfer that share of the Trust Fund to the trustee of the other plan, to
be held in accordance with the terms of the other plan.
37
SECTION XIII
MISCELLANEOUS
13.1 Indemnification: The Employer shall indemnify each Committee member
and each other Employee who is involved in the administration of the Plan
against all costs, expenses and liabilities, including attorney's fees, incurred
in connection with any action, suit or proceeding instituted against any of them
alleging any act of omission or commission performed while acting in good faith
in discharging their duties with respect to the Plan. Promptly after receipt by
an indemnified party of notice of the commencement of any action, the
indemnified party shall notify the Employer of the action. The Employer shall be
entitled to participate at it own expense in the defense or to assume the
defense of any action brought against any indemnified party. If the Employer
elects to assume the defense of any such suit, the defense shall be conducted by
counsel chosen by the Employer, and the indemnified party shall bear the fees
and expenses of any additional counsel retained by him.
13.2 Exclusive Benefit Rule: The Plan shall be administered for the
exclusive benefit of the Employees of an Employer and for the payment to
Participants out of the income and principal of the Trust Fund of the benefits
provided under the Plan. No part of the income or principal of the Trust Fund
shall be used for or diverted to purposes other than the exclusive benefit of
the Participants or their Beneficiaries, as provided in the Plan.
13.3 No Right to the Fund: No person shall have any interest in, or right
to, any part of the assets of the Trust Fund or any rights under the Plan,
except as to the extent expressly provided in the Plan.
13.4 Rights of Employer: The establishment of this Plan shall not be
construed as conferring any legal or other rights upon any Employee or any other
person for continuation of employment, nor shall it interfere with the right of
the Employer to discharge any Employee or to deal with him without regard to the
effect thereof under the Plan.
13.5 Non-Alienation of Benefits: No amount payable to or held under the
Plan for the account of any Participant, former Participant, retired
Participant, or Beneficiary of a Participant or former Participant shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge, and any attempt so to anticipate, alienate,
sell, transfer, assign, pledge, encumber or charge the same shall be void. No
amount payable to or held under the Plan for the account of any Participant,
former Participant, retired Participant, or Beneficiary may be in any manner
liable for his debts, contracts, liabilities, engagements or torts, or be
subject to any legal process, levy or attachment. The provisions of this Section
shall not preclude distributions made by the Trustee in accordance with a
Qualified Domestic Relations Order, or pursuant to any judgment, decree, order,
or settlement as permitted under Code Section 401(a)(13)(C).
13.6 Construction and Severability: Except as otherwise provided by federal
law, the provisions of this Plan shall be construed and enforced according to
Virginia laws, and all of the provisions of the plan shall be administered in
38
accordance with the laws of the Commonwealth of Virginia. For simplicity of
expression, pronouns and other terms are sometimes expressed in a particular
number and gender; however, where appropriate to the context, such terms shall
be deemed to include each of the other numbers and the other gender. Each
provision of this Plan shall be considered to be severable from all other
provisions so that if any provision or any part of a provision shall be declared
void, then the remaining provisions of the Plan that are not declared void shall
continue to be effective.
13.7 Delegation of Authority: Whenever the Employer, under the terms of
this Plan, is permitted or required to do or perform any act, the act may be
done or performed by any officer of the Employer, and such officer shall be
presumed to be duly authorized by the Board.
13.8 Request for Tax Ruling: This Plan is based upon the condition
precedent that it shall meet the requirements of the Code with respect to
qualified employees' trusts so as to permit the Employer to deduct for federal
income tax purposes the amounts of its contributions and so that its
contributions will not be taxable to the Participants as income in the year in
which the contributions are made. The Employer shall apply for a determination
by the Internal Revenue Service that this plan is so qualified. If the Internal
Revenue Service rules that this Plan is not so qualified, the then current value
of all contributions made by the Employer before the initial determination as to
qualification shall be returned to the Employer, and this Plan shall be of no
further force or effect.
13.9 Amendment of Vesting Schedule: If the Employer adopts an amendment to
the Plan that directly or indirectly affects the computation of a Participant's
vested interest in his Account, any Participant with three or more Years of
Service shall have a right to have his vested interest in his Account continue
to be determined under the vesting provisions in effect prior to the amendment
rather than under the new vesting provisions, unless the vested interest of the
Participant in his Account under the Plan as amended is not at any time less
than such vested interest determined without regard to the amendment. A
Participant shall exercise his right under this Section 13.9 by giving written
notice of his exercise thereof to the Employer within 60 days after the latest
of (i) the date he receives notice of the amendment from the Employer, (ii) the
effective date of the amendment, or (iii) the date the amendment is adopted.
* * * * *
39
IN WITNESS WHEREOF the Company has caused this Plan to be executed as
of the 3rd day of July, 2000.
HOOKER FURNITURE CORPORATION
By: /s/ Edwin L. Ryder
-------------------------------------------------------
Title: Senior Vice President - Finance and Administration
40
APPENDIX A
EFFECTIVE DATES FOR CERTAIN PROVISIONS
This Appendix A sets forth certain provisions of the Plan that are
effective for specified periods prior to the Effective Date:
1. The definition of "Highly Compensated Employee" contained in
Section 1.19 shall apply for Plan Years beginning on or after January 1,
1997.
2. The provisions of Section 1.20(e) (regarding special rules that
relate to military service) shall apply for Plan Years beginning on or
after December 12, 1994.
3. The definition of "Section 415 Compensation" contained in Section
1.32 shall apply for Limitation Years beginning on or after January 1,
1998.
4. The provisions of Section 4.6(a) (regarding the limit on Annual
Additions) shall apply for Plan Years beginning on or after January 1,
1995.
5. The last sentence of Section 4.6(c) shall apply to qualified
gratuitous transfers to the Plan after August 5, 1997.
6. The provisions of Sections 5.3(d) and 6.6(e) (regarding the $5,000
limit for distributions without the consent of the Participant) shall be
effective as of November 1, 1999.
7. For Plan Years beginning on or after January 1, 1997 but before
January 1, 2001, the following provision shall apply in addition to the
provisions contained in Section 6.6(c):
Notwithstanding the provisions of subsection (i) to the contrary, any
Participant who is not a 5% Owner and attains age 70 1/2 on or after
January 1, 1996 but prior to January 1, 2001 shall begin to receive
distribution of his or her vested Account no later than April 1 of the
calendar year following the calendar year in which the Participant
attains age 70 1/2, unless the Participant elects to defer distribution
of his or her Account until no later than April 1 of the calendar year
following the calendar year in which the Participant retires. The
provisions of this Section 6.6 shall be administered in accordance with
applicable Treasury Regulations and Internal Revenue Service rulings
and other releases.
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