EXHIBIT 10.6
HASTINGS ENTERTAINMENT, INC.
ASSOCIATES' STOCK OWNERSHIP PLAN
As Amended and Restated
Generally Effective as of February 1, 1997
TABLE OF CONTENTS
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PAGE
ARTICLE I PURPOSE AND AMENDMENT OF THE PLAN......................................................1
1.01 Amendment of the Plan...........................................................................1
1.02 Purpose.........................................................................................1
1.03 Trust Agreement.................................................................................1
ARTICLE II DEFINITIONS............................................................................2
ARTICLE III REQUIREMENTS FOR ELIGIBILITY AND PARTICIPATION........................................16
3.01 Eligibility....................................................................................16
(1) Service and Age.......................................................................16
(2) Reemployment Prior to Break in Service................................................16
(3) Reemployment After Break in Service...................................................16
(4) Transfer to Non-Participating Affiliated Company Prior to
Completion of Eligibility Requirements................................................16
(5) Transfer to Non-Participating Affiliated Company After Completion
of Eligibility Requirements...........................................................16
3.02 Employment with a Predecessor Employer.........................................................17
3.03 Eligibility Year of Service....................................................................17
3.04 Participation Upon Reemployment................................................................17
3.05 Change in Status of Eligible Associate.........................................................17
3.06 Participation in the Plan......................................................................18
ARTICLE IV CONTRIBUTIONS.........................................................................18
4.01 Company Contributions..........................................................................18
4.02 Date of Payment and Allocation of Company Contributions........................................18
4.03 Associate Contributions........................................................................18
4.04 Special Provisions for Participants Who Enter the Armed Forces.................................18
ARTICLE V ALLOCATION TO PARTICIPANTS' ACCOUNTS..................................................19
5.01 Method of Allocating Company Contributions.....................................................19
5.02 Suspense Account...............................................................................20
5.03 Allocation to a Participant Who Ceases to be an Eligible Associate or Who is Transferred to a
Non-Participating Affiliated Company...........................................................20
5.04 Allocation of Contributions and Qualifying Employer Securities Released
From Suspense Accounts - General...............................................................20
5.05 Method of Allocating and Crediting Contributions and Qualifying Employer Securities Released
from Suspense Accounts.........................................................................21
5.06 Limitation on Annual Additions.................................................................21
5.07 Limitations on Annual Additions for Employers or Affiliated Companies Maintaining Other
Defined Contribution Plans.....................................................................22
5.08 Limitations on Annual Additions for Employers or Affiliated Companies Maintaining Defined
Benefit Plans..................................................................................23
5.09 Definitions for Purposes of Determining the Annual Addition Limitations........................23
5.10 Dividend Pass-Through..........................................................................25
5.11 Cessation of Eligible Associate Status.........................................................26
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ARTICLE VI ACCOUNTS AND VALUATION OF TRUST FUND..................................................26
6.01 Participant's Accounts.........................................................................26
6.02 Accounts of Participants Transferred to a Non-Participating Affiliated Company.................26
6.03 Valuation of the Trust Fund and Account Statements.............................................26
6.04 Periodic Determination of Participant's Accounts...............................................27
(1) Allocations in General................................................................27
(2) Determination of Net Earnings and Adjustments In Value of the
Trust Fund............................................................................27
(3) Allocation of Net Earnings and Adjustments in Value of the Trust
Fund..................................................................................27
(4) Allocation of Forfeitures.............................................................28
(5) Computations..........................................................................28
6.05 Correction of Participants' Accounts...........................................................28
6.06 Investments....................................................................................28
(1) Funding Policy........................................................................28
(2) Investment of Cash....................................................................28
(3) Reservation of Cash...................................................................28
6.07 Voting of Company Stock........................................................................28
(1) Voting of Stock - Registered Stock....................................................28
(2) Voting of Company Stock - Non-Registered Stock........................................29
ARTICLE VII RETIREMENT BENEFITS...................................................................30
ARTICLE VIII DISABILITY BENEFITS...................................................................30
8.01 Disability Retirement Benefits.................................................................30
8.02 Determination of Disability....................................................................30
ARTICLE IX DEATH BENEFITS........................................................................30
9.01 Death Benefits.................................................................................30
9.02 Designation of Beneficiaries...................................................................31
ARTICLE X EMPLOYMENT TERMINATION BENEFITS.......................................................32
10.01 Vesting Upon Termination of Employment.........................................................32
10.02 Determination of Vesting Years of Service......................................................32
10.03 Breaks in Service..............................................................................32
10.04 Forfeiture - Qualifying Employer Securities....................................................33
10.05 Forfeiture of Nonvested Amount.................................................................33
10.06 Restoration of Forfeited Nonvested Amount......................................................34
10.07 Reemployment of Participant with Partially Vested Company Contribution Account.................34
ARTICLE XI PAYMENT OF BENEFITS...................................................................35
11.01 Methods of Payment of Benefits.................................................................35
11.02 Form of Payment................................................................................36
11.03 Securities Law Restrictions....................................................................36
11.04 Time for Distribution of Benefits..............................................................37
11.05 Limitations on Timing..........................................................................39
11.06 Payments on Personal Receipt Except in Case of Legal Disability................................42
11.07 Benefits Payable Pursuant to a Qualified Domestic Relations Order..............................42
11.08 Restrictions on Transfer of Company Stock......................................................42
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(1) Federal Securities Laws...............................................................42
(2) Other Restrictions....................................................................43
(3) Legends...............................................................................43
(4) Notices...............................................................................43
11.09 Distribution Following Diversification Election................................................43
11.10 Right to Require Repurchase of Shares of Company Stock.........................................44
11.11 Further Contributions..........................................................................45
11.12 Right of First Refusal.........................................................................45
11.13 Execution of Documents.........................................................................47
11.14 Distribution of More than One Class of Securities..............................................47
11.15 Direct Rollovers to Eligible Retirement Plans..................................................47
11.16 Diversification Requirements...................................................................48
(1) Delivery of Diversification Distribution..............................................48
(2) Delivery of Company Stock.............................................................48
(3) No Effect on Other Distributions......................................................48
11.17 Alternate Forms of Benefit.....................................................................48
11.18 In-Service Withdrawals.........................................................................49
11.19 Loans..........................................................................................49
ARTICLE XII EXEMPT LOANS..........................................................................49
12.01 Investment Committee Direction.................................................................49
12.02 Limitations....................................................................................49
(1) Primary Benefit Requirement...........................................................49
(2) Net Effect of Exempt Loan.............................................................49
(3) Arm's Length Standard.................................................................49
(4) Use of Loan Proceeds..................................................................49
(5) Puts, Calls, etc......................................................................49
(6) Interest Rate.........................................................................49
(7) Term..................................................................................49
12.03 Liability and Collateral.......................................................................49
12.04 Repayment of Exempt Loan.......................................................................50
12.05 Default........................................................................................50
12.06 Release of Collateral..........................................................................51
12.07 Leveraged Employee Stock Ownership Plan........................................................51
ARTICLE XIII INSURANCE CONTRACTS...................................................................52
13.01 General Insurance Investment...................................................................52
13.02 Insurance Company Not a Party to Agreement.....................................................52
13.03 Insurance Company Not Responsible for Trustee's Action.........................................52
13.04 Insurance Company Reliance on Trustee's Signature..............................................52
13.05 Acquittance....................................................................................53
13.06 Duties of Insurance Company....................................................................53
ARTICLE XIV MISCELLANEOUS PROVISIONS RESPECTING PARTICIPANTS......................................53
14.01 Participants to Furnish Required Information...................................................53
14.02 Participants' Rights in Trust Fund.............................................................53
14.03 Inalienability of Benefits.....................................................................54
(1) Restrictions on Assignment............................................................54
(2) Exception for Benefit Payable Pursuant to a Qualified Domestic Relations Order........54
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(3) Exception for Benefit Offset Pursuant to Code Section 401(a)(13)(C)...................55
14.04 Conditions of Employment Not Affected by Plan..................................................55
14.05 Address for Mailing of Benefits................................................................55
14.06 Unclaimed Account Procedure....................................................................56
ARTICLE XV ADMINISTRATION OF THE PLAN............................................................56
15.01 Appointment of Benefits Advisory Committee.....................................................56
15.02 Compensated Expenses of the Benefits Advisory Committee........................................57
15.03 Secretary and Agents of the Benefits Advisory Committee........................................57
15.04 Actions of Benefits Advisory Committee.........................................................57
15.05 Authority of Benefits Advisory Committee.......................................................58
15.06 General Administrative Powers..................................................................58
15.07 Plan Administrator.............................................................................58
15.08 Duties of Administrative Personnel.............................................................58
15.09 Designation of Named Fiduciaries and Allocation of Responsibility..............................59
15.10 Action by Fiduciaries..........................................................................59
15.11 Appointment of Professional Assistants and the Investment Manager..............................60
15.12 Bond...........................................................................................60
15.13 Indemnity......................................................................................60
15.14 Payment of Expenses............................................................................60
ARTICLE XVI INVESTMENT COMMITTEE..................................................................61
16.01 Appointment of Investment Committee............................................................61
16.02 Compensated Expenses of the Investment Committee...............................................61
16.03 Secretary and Agents of the Investment Committee...............................................61
16.04 Powers of the Investment Committee.............................................................61
16.05 Manner of Action...............................................................................62
16.06 Authorized Representative......................................................................62
16.07 Funding Policy.................................................................................62
16.08 Payment of Expenses............................................................................62
ARTICLE XVII PARTICIPATION BY EMPLOYERS............................................................62
17.01 Adoption of Plan by Affiliated Company.........................................................62
17.02 Rights and Obligations of the Sponsoring Company and the Employers.............................63
17.03 Withdrawal from Plan...........................................................................63
(1) Notice of Withdrawal..................................................................63
(2) Trustee Segregation of Trust Assets upon Withdrawal...................................63
(3) Exclusive Benefit of Participants.....................................................63
(4) Applicability of Withdrawal Provisions................................................63
ARTICLE XVIII AMENDMENT OF THE PLAN.................................................................63
18.01 Amendments by Sponsoring Company or Employer...................................................63
18.02 Effect of Amendments on Trustee................................................................64
18.03 Amendment to Vesting Schedule..................................................................64
18.04 Protected Benefits.............................................................................64
18.05 Amendment Necessary to Comply with Code or Federal Statute.....................................64
ARTICLE XIX PERMANENCY OF THE PLAN................................................................65
19.01 Right to Terminate Plan........................................................................65
19.02 Merger or Consolidation of Plan and Trust......................................................65
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19.03 Continuance by Successor Company...............................................................65
ARTICLE XX DISCONTINUANCE OF CONTRIBUTIONS AND TERMINATION.......................................65
20.01 Suspension of Contributions....................................................................65
20.02 Discontinuance of Contributions................................................................65
20.03 Termination of Plan and Trust..................................................................66
20.04 Participant's Rights to Benefits upon Termination or Partial Termination of Plan
or Complete Discontinuance of Contributions....................................................66
ARTICLE XXI EXCLUSIVE BENEFIT OF THE PLAN.........................................................66
21.01 Limitation on Reversions.......................................................................66
21.02 Unallocated Amounts upon Termination of Plan and Trust.........................................66
21.03 Mistake of Fact or Disallowance of Deduction...................................................67
21.04 Failure of Qualification of Plan and Trust.....................................................67
ARTICLE XXII TOP HEAVY PLAN RULES..................................................................67
22.01 Definitions....................................................................................67
22.02 Determination of Top Heaviness.................................................................69
22.03 Minimum Requirements...........................................................................71
(1) Vesting...............................................................................71
(2) Required Minimum Allocation of Company Contributions..................................71
22.04 Minimum Benefits for Employers or Affiliated Companies Maintaining
Defined Benefit Plans..........................................................................72
22.05 Minimum Benefits for Employers or Affiliated Companies Maintaining
Defined Contribution Plans.....................................................................72
22.06 Super Top Heavy Plans..........................................................................72
ARTICLE XXIII MISCELLANEOUS.........................................................................73
23.01 Effect of Bankruptcy and Other Contingencies Affecting an Employer.............................73
23.02 Benefits Payable by Trust......................................................................73
23.03 Withholding....................................................................................73
23.04 Interpretation of the Plan and Trust...........................................................73
23.05 Provisions Hereof for Sole Benefit of Parties Hereto and Participants..........................73
23.06 Article and Section Headings...................................................................73
23.07 Formal Action by Employer......................................................................73
23.08 Applicable Law.................................................................................74
SCHEDULE A Service with Predecessor Employer.....................................................75
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HASTINGS ENTERTAINMENT, INC.
ASSOCIATES' STOCK OWNERSHIP PLAN
ARTICLE I
PURPOSE AND AMENDMENT OF THE PLAN
1.01 Amendment of the Plan. Hastings Entertainment, Inc. (the "Sponsoring
Company") previously adopted and established a plan intended to be a
qualified stock bonus plan within the meaning of Section 401(a) of the
Code and Treasury Regulation Section 1.401-1(b)(iii) and an employee
stock ownership plan, within the meaning of Section 4975(e) of the Code
and Treasury Regulation Section 54.4975-11(a) for the exclusive benefit
of its Eligible Associates and their Beneficiaries, effective as of
June 1, 1993. Subsequent thereto, the plan was amended from time to
time. Effective as of February 1, 1997 (the "Effective Date"), except
where otherwise specifically provided herein, the Sponsoring Company
has by execution of this document, amended and restated the plan in its
entirety, subject to the terms and conditions hereinafter set forth.
The plan as hereby amended and restated shall be known as the "Hastings
Entertainment, Inc. Associates' Stock Ownership Plan" (the "Plan").
Except as otherwise provided herein, and subject to the following
sentence, the provisions of the amended and restated Plan as contained
herein are applicable to Associates and Participants who have died,
retired, suffered Total and Permanent Disability or Termination of
Employment on or after February 1, 1997, or who are reemployed by an
Employer or Affiliated Company on or after February 1, 1997, and while
they are still entitled to reinstatement of rights under the Plan.
Except as otherwise provided herein, any Associate or Participant who
died, retired, became disabled or terminated employment prior to
February 1, 1997, shall receive any benefits to which he or she is
entitled based upon the appropriate provisions of the Plan as in effect
prior to February 1, 1997 under the First 1997 Prior Plan or under the
Hastings Books Music & Video, Inc. Employee Stock Ownership Plan
effective June 1, 1993 (the "1993 Prior Plan").
1.02 Purpose. The purpose of the Plan is to provide certain benefits for the
Employers' Eligible Associates and their Beneficiaries. The Plan is
designed to invest primarily in Qualifying Employer Securities, as
defined herein.
It is the intention of the Employers that the Plan as amended and
restated herein shall continue to meet all of the requirements
necessary or appropriate to qualify it as a profit-sharing plan under
Code Sections 401(a) and that the Trust made a part hereof shall
continue to be exempt from tax under Code Section 501(a) and all
provisions hereof shall be interpreted accordingly. This Plan is
intended to be an employee stock ownership plan within the meaning of
Section 4975(e)(7) of the Code. The benefits provided by the Plan will
be paid from the Trust and will be in addition to the benefits Eligible
Associates are entitled to receive under any other programs of the
Employers and from the federal Social Security Act.
1.03 Trust Agreement. In furtherance of this Plan, the Employers have
amended and restated their previously executed trust agreement by
entering into the Trust Agreement effective as of __________ ___,
200__, which is made a part hereof, for the purpose of maintaining the
Trust to fund the benefits of this Plan as hereinafter set forth.
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ARTICLE II
DEFINITIONS
As used in the Plan:
2.01 "Account" or "Accounts" shall mean all or any of the Company
Contribution Account, the Employment Termination Account, the QDRO
Account, and any other account maintained by the Benefits Advisory
Committee under Article IV or any other Section of the Plan to record a
Participant's interest (or the undistributed interest of a Beneficiary
or Alternate Payee) in the Trust Fund to the extent any one or more of
such accounts have been created for a Participant, Beneficiary or
Alternate Payee.
2.02 "Affiliated Company" shall mean any of the following which, unless the
context otherwise requires, itself is not an Employer: (1) a member of
a controlled group of corporations of which the Sponsoring Company is a
member as defined in Code Section 414(b), (2) any trade or business
(whether or not incorporated) which is under common control with the
Sponsoring Company as determined in accordance with Code Section 414(c)
and regulations issued thereunder, (3) a member of an "affiliated
service group" (whether or not incorporated) as determined in
accordance with Code Section 414(m) and regulations issued thereunder,
of which the Sponsoring Company is a member, or (iv) any other entity
which is required to be aggregated with the Sponsoring Company in
accordance with Code Section 414(o) and the regulations issued
thereunder. "Affiliated Company" as defined in clauses (i) and (ii)
shall be modified as required by Code Section 415(h) when used in
Sections 5.06, 5.07 and 5.08 hereof with respect to limitations on
Annual Additions.
2.03 "Alternate Payee" shall mean an individual or trust entitled to
benefits under the Plan pursuant to a Qualified Domestic Relations
Order.
2.04 "Associate" shall mean any person who is employed by one or more
Employers, is on an Employer's payroll, and whose wages are subject to
FICA withholding, but shall exclude any person classified in the
Employer's records as an independent contractor, even if such person is
subsequently determined to be a person whose wages are subject to FICA
withholding. Associate also includes any person who is not employed by
an Employer but is performing services for an Employer pursuant to an
agreement between such Employer or an Affiliated Company and a leasing
organization and who is a "leased employee" as that term is defined in
Code Section 414(n). A "leased employee" shall not be an Associate,
however, if (1) such person is covered by a money purchase pension plan
qualified under Code Section 401(a) providing (a) a nonintegrated
employer contribution rate of at least ten percent (10%) of Limitation
Year Compensation as defined in Subsection 5.09(7) hereof, but
including amounts contributed pursuant to a salary reduction agreement
which are excludible from such person's gross income under Code
Sections 125, 402(e)(3), 402(h) or 403(b), (b) immediate participation,
and (c) full and immediate vesting, and (2) "leased employees" do not
constitute more than twenty percent (20%) of the Employer's or
Affiliated Company's workforce who are Non-Highly Compensated
Employees.
2.05 "Beneficiary" shall mean any person or entity entitled to receive
benefits which are payable upon or after a Participant's death pursuant
to Article IX hereof.
2.06 "Benefits Advisory Committee" shall mean the Benefits Advisory
Committee provided for in Section 15.01 hereof.
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2.07 "Board" shall mean the Board of Directors of the Sponsoring Company, as
from time to time constituted, or such other person or group of persons
referred to in Section 22.07 hereof in case of a Sponsoring Company
which is not a corporation.
2.08 "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time. References to any section of the Internal Revenue Code
shall include any successor provision thereto.
2.09 "Committees" shall mean, collectively, the Benefits Advisory Committee
and the Investment Committee as from time to time constituted.
2.10 "Company" shall mean Hastings Entertainment, Inc. or any successor
thereto which shall adopt this Plan.
2.11 "Company Contribution Account" shall mean the separate account
maintained for each Participant reflecting Company Contributions and
Forfeitures, if any, allocated to such Participant, as adjusted in
accordance with the provisions of Article VI hereof.
2.12 "Company Stock" shall mean shares of any class of capital common stock,
which are Qualifying Employer Securities issued by Hastings
Entertainment, Inc., a Texas corporation.
2.13 "Compensation" shall mean:
(1) the aggregate of all of the following for the Plan Year:
(a) The Associate's wages, salaries, fees for
professional services and other amounts received
(without regard to whether or not an amount is paid
in cash) for personal services actually rendered in
the course of employment with all Employers and
Affiliated Companies to the extent the amounts are
includable in gross income (including, but not
limited to, commissions paid salesmen, compensation
for services on the basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses,
fringe benefits, reimbursements, and expense
allowances) as more fully described in Code Section
415(c)(3) and the regulations thereunder, which are
actually paid or made available to an Associate who
is not a Self-Employed Individual;
(b) In the case of any Self-Employed Individual,
"Compensation" shall mean the individual's Earned
Income for such Plan Year;
(c) Amounts described in Code Sections 104(a)(3), 105(a)
and 105(h) but only to the extent that these amounts
are includable in the gross income of the Associate;
(d) Amounts paid or reimbursed by the Employer for moving
expenses incurred by an Associate, but only to the
extent that at the time of the payment it is
reasonable to believe that these amounts are not
deductible by the Associate under Code Section 217;
(e) The value of a non-qualified stock option granted to
an Associate by the Employer, but only to the extent
that the value of the option is includable in the
gross income of the Associate for the taxable year in
which granted; and
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(f) The amount includable in the gross income of an
Associate upon making the election described in Code
Section 83(b).
(2) Compensation shall not include the following:
(a) Contributions to a plan of deferred compensation to
the extent that, before the application of the
limitations of Code Section 415 to the Plan, the
contributions are not included in the gross income of
the Associate for the taxable year in which
contributed, or contributions under a simplified
employee pension plan to the extent the contributions
are deductible by the Associate, and any
distributions from a plan of deferred compensation
other than an unfunded nonqualified plan of deferred
compensation;
(b) Amounts realized from the exercise of a non-qualified
stock option, or amounts realized under Code Section
83 with respect to restricted property held by an
Associate that becomes freely transferable or is no
longer subject to a substantial risk of forfeiture
(pursuant to Code section 83 and the regulations and
rulings thereunder);
(c) Any distributions from a plan of deferred
compensation are not considered as Compensation,
regardless of whether such amounts are includable in
the gross income of the Participant when distributed.
However, any amounts received by a Participant
pursuant to an unfunded nonqualified plan shall be
considered as Compensation in the year such amounts
are includable in the gross income of the
Participant;
(d) Amounts realized from the sale, exchange or other
disposition of stock acquired under an incentive
stock option within the meaning of Code Section 422;
(e) Other amounts that receive special tax benefits
within the meaning of Treasury Regulation Section
1.415-2(d)(3), such as premiums for group term life
insurance (but only to the extent that premiums are
not includable in the gross income of the Associate),
or contributions made by the Employer (whether or not
under a salary reduction agreement) towards the
purchase of an annuity contract covered by Code
Section 403(b) (whether or not the contributions are
excludible from the gross income of the Associate).
In the event an Associate begins, resumes or ceases to be a Participant
during a Plan Year, the amount of the Associate's Compensation that
shall be taken into account shall not include any "Compensation" paid
for any period prior to the Entry Date on which an Associate first
becomes a Participant hereunder, or the date on which an Associate
resumes active participation hereunder, or after the date that an
Associate ceases to be an active Participant hereunder.
Notwithstanding the foregoing, Compensation shall include the amount of
an Associate's elective salary deferral under an Employer's cafeteria
plan established pursuant to Code Section 125 or any other Employer
plan established pursuant to Code Section 401(k).
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Effective for Plan Years beginning on or after January 1, 2001,
Compensation shall also include amounts that are not includable in the
gross income of the Associate by reason of Code Section 132(f)(4) as
qualified transportation fringe.
Compensation shall not include any Compensation in excess of One
Hundred Fifty Thousand Dollars ($150,000) or such larger amount as
results from the adjustment provided for in Code Section 401(a)(17)(B).
Notwithstanding any of the foregoing, for purposes of Section 5.04,
Allocation of Contributions and Qualifying Employer Securities Released
From Suspense Accounts - General, Compensation includes only base pay
and excludes commissions, bonuses, moving expenses, health club dues,
executive medical reimbursement and other similar perquisites; however,
Compensation for such Section will include the amount of an Associate's
elective salary deferral under an Employer's cafeteria plan established
pursuant to Code Section 125 or any other Employer plan established
pursuant to Code Section 401(k).
2.14 "Date of Employment" or "Date of Reemployment" shall mean the day on
which an Associate first commences employment or reemployment following
Termination of Employment, retirement after attaining his Retirement
Date or Early Retirement Date or recovery from Total and Permanent
Disability, as the case may be, with an Employer or an Affiliated
Company by performing an Hour of Service. All references to Date of
Employment or Date of Reemployment shall include periods of
self-employment for a Self-Employed Individual.
2.15 "Diversification Election Period" shall mean the six (6) Plan Year
period beginning with the first Plan Year in which the Participant
first became a Qualified Participant for all Participants entering the
Plan after December 31, 1986, and for all others the later of the first
Plan Year beginning after December 31, 1986, or the first Plan Year in
which the individual became a Qualified Participant.
2.16 "Earned Income" shall mean with respect to a Self-Employed Individual,
the net earnings from self-employment in the trade or business with
respect to which the Plan is established, for which the personal
services of the individual are a material income-producing factor. Net
earnings will be determined without regard to items not included in
gross income and the deductions allocable to such items as provided for
in Code Section 401(c)(2)(A). Net earnings are reduced by contributions
by the taxpayer to a qualified plan to the extent deductible under Code
Section 404. Additionally, for taxable years beginning after December
31, 1989, net earnings shall be determined with regard to the deduction
allowed to the taxpayer by Code Section 164(f).
2.17 "Eligible Associate" shall mean any Associate except the following
individuals: (1) any Associate who is included in a unit of employees
covered by an agreement that the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives
(within the meaning of Code Section 7701(a)(46)) and one (1) or more
Employers if retirement benefits were the subject of good faith
bargaining between such parties, unless the collective bargaining
agreement expressly provided for the inclusion of such employees as
Eligible Associates under this Plan, (2) a nonresident alien who
receives no earned income within the meaning of Code Section 911(b),
and (3) any Associate who is a "leased employee" as defined in Section
2.04 hereof.
2.18 "Employer" shall mean the Sponsoring Company or any Affiliated Company
which adopts the Plan pursuant to Article XVI hereof.
5
2.19 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time. References to any Section of ERISA shall
include any successor provision thereto.
2.20 "Exempt Loan" shall mean any direct or indirect loan made to the Trust
by a "Disqualified Person" (as defined in Section 4975(e)(2) of the
Code) or a "Party in Interest" (as defined in Section 3(14) of ERISA),
or any loan to the Trust the repayment of which is guaranteed by a
Disqualified Person or Party in Interest. The term "Exempt Loan"
includes, but is not limited to, a direct lending of cash, a
purchase-money transaction and an assumption of Trust obligations.
2.21 "Fiscal Year" shall mean the fiscal year of an Employer. The Fiscal
Year of the Sponsoring Company ends on January 31.
2.22 "Highly Compensated Employee" shall mean any Associate of an Employer
or Affiliated Company who is a highly compensated employee as defined
in Code Section 414(q) and the regulations thereunder. Generally, any
such Associate is considered a Highly Compensated Employee if such
Associate:
(1) was at any time during the current Plan Year or the prior Plan
Year, a "five percent owner," as defined in Code Section
416(i)(1), with respect to an Employer; or
(2) received Limitation Year Compensation from the Employer in
excess of Eighty Thousand Dollars ($80,000) (as adjusted by
the Secretary of Treasury pursuant to Code Section 414(q)(1))
during the prior Plan Year, and, if the Employer elects the
application of this clause for the prior Plan Year, was in the
top-paid group of Associates during the prior Plan Year.
An Associate is in the top-paid group of Associates for any
Plan Year if such Associate is in the group consisting of the
top twenty percent (20%) of the Associates when ranked on the
basis of Limitation Year Compensation paid during the Plan
Year. For purposes of determining the number of Associates in
the top-paid group, there shall not be included Associates who
have not completed six (6) months of service, normally work
less than seventeen and one-half (17-1/2) hours per week,
normally work during six (6) or less months per year, have not
attained the age of twenty-one (21), are nonresident aliens
with no earned income (within the meaning of Code Section
911(d)(2)) from the Employer constituting United States source
income (within the meaning of Code Section 861(a)(3)), or are
included in a unit of employees covered by a collective
bargaining agreement (except to the extent provided in
regulations);
For purposes of this Section, "Limitation Year Compensation" shall have
the same meaning as set forth in Subsection 5.09(7) hereof, subject to
the following: (a) the determination of "Limitation Year Compensation"
shall include amounts deferred pursuant to Code Sections 125, 401(k),
408(k)(6) and 403(b) which are otherwise excluded under Subsection
5.09(7) for Plan Years beginning prior to January 1, 1998, and (b)
Limitation Year Compensation shall include compensation paid by any
employer required to be aggregated with an Employer under Code Section
414(b), (c), (m) or (o).
A Former Associate who is a Participant shall be treated as a Highly
Compensated Employee if such Former Associate was a Highly Compensated
Employee when he separated from service with the Employer or was a
Highly Compensated Employee at any time after attaining age fifty-five
(55). "Former Associate" shall mean a person who has been an Associate,
but who ceased to be an Associate for any reason and later returned to
employment with an Employer.
6
2.23 "Hour of Service" shall have the meaning respectively indicated below:
(1) Performance of Duties. Each hour for which an Associate is
directly or indirectly paid, or entitled to payment by an
Employer or an Affiliated Company for the performance of
duties shall be an Hour of Service. Each such Hour of Service
shall be credited to the Employment Period (as defined in
Section 3.03 hereof) or the Plan Year, as the case may be, in
which the duties were performed. For purposes of this Section
2.23, the applicable Employment Period or Plan Year, as the
case may be, as the context requires, shall be referred to as
the "Computation Period."
(2) Back Pay. Each hour for which back pay (irrespective of
mitigation of damages) has been either awarded or agreed to by
an Employer or an Affiliated Company shall be an Hour of
Service. Each such Hour of Service shall be credited to the
Computation Period to which the agreement or award for back
pay pertains, rather than to the Computation Period in which
the award, agreement or payment is made. If back pay is either
awarded or agreed to for a period of time during which no
duties are performed, the provisions of Subsections 2.23(3)
(a) through (c) hereof shall apply to the calculation and
crediting of Hours of Service for such period of time.
(3) Non-Working Time. Each hour for which an Associate is directly
or indirectly paid, or entitled to payment, by an Employer or
an Affiliated Company for reasons other than the performance
of duties (irrespective of whether the employment relationship
with such Employer or Affiliated Company has terminated) (such
as vacations, holidays, illness, incapacity, disability,
layoff, jury duty, military duty, compensated Leave of Absence
or similar periods) shall be an Hour of Service. Each such
Hour of Service shall be calculated and credited on the
following basis:
(a) Units of Time. If payments for reasons other than the
performance of duties are calculated on the basis of
units of time, such as hours, days, weeks or months,
the number of Hours of Service to be credited shall
be the number of regularly scheduled working hours
included in the units of time on the basis of which
the payments are calculated. In the case of an
Associate without a regular work schedule, such
Associate shall be credited with Hours of Service on
the basis of the equivalency schedule set forth in
Subsection 2.23(7) below. Each such Hour of Service
shall be credited to the Computation Period in which
the period during which no duties are performed
occurs, beginning with the first unit of time to
which the payment relates.
(b) No Units of Time. If payments for reasons other than
the performance of duties are not calculated on the
basis of units of time (such as lump sum disability
payments for an injury), the number of Hours of
Service to be credited shall be equal to the amount
of the payment divided by the Associate's most recent
hourly rate of Compensation before the period during
which no duties are performed.
(i) In the case of an Associate whose
Compensation is determined on the basis of a
fixed rate for specified periods of time
(other than hours), such as days, weeks or
months, such Associate's hourly rate of
Compensation shall be such Associate's most
recent rate of Compensation for a specified
period of time (other than hours), divided
by the number of hours regularly scheduled
for the performance of duties during such
period. In the case of an Associate
7
without a regular work schedule, such
Associate's rate of Compensation shall be
calculated on the basis of the schedule of
equivalent hours set forth in Subsection
2.23(7) below.
(ii) In the case of an Associate whose
Compensation is not determined on the basis
of an hourly rate or on the basis of a fixed
rate for specified periods of time, such
Associate's hourly rate of Compensation
shall be the lowest hourly wage paid to
employees in the same job classification as
that of such Associate or, if no employees
in the same classification have an hourly
rate of Compensation, the minimum wage as
established from time to time under Section
6(a)(1) of the Fair Labor Standards Act of
1938, as amended.
(iii) Each such Hour of Service shall be credited
to the Computation Period in which the
period during which no duties are performed
occurs, except that if such period extends
beyond one of such Computation Periods such
Hours of Service shall be allocated by the
Benefits Advisory Committee, in its sole
discretion, between not more than the first
two (2) of such Computation Periods on a
reasonable basis which is consistently
applied with respect to all Associates
within the same job classification,
reasonably defined.
(c) Exclusions. Notwithstanding the foregoing:
(i) An Associate shall not be credited on
account of a period during which no duties
are performed with a number of Hours of
Service which is greater than the number of
hours regularly scheduled for the
performance of duties during such period.
(ii) In no event shall the number of Hours of
Service attributable to a single continuous
period (whether or not such period involves
more than one Computation Period) for which
no duties are performed exceed five hundred
one (501) Hours of Service.
(iii) Hours of Service shall not be credited to a
period for which payments are made to an
Associate where those payments solely
reimburse such Associate for medical or
medically related expenses incurred by such
Associate.
(iv) Hours of Service shall not be credited for a
period to which payments pertain if such
payments are made or due under a plan
maintained solely for the purpose of
complying with applicable workers'
compensation, unemployment compensation or
disability insurance laws.
(4) No Duplication of Credit. An Associate shall not be credited
with the same Hours of Service under both (a) Subsection
2.23(1) or 2.23(3), as the case may be, and (b) Subsection
2.23(2).
(5) Overlapping Payroll Period. In the case of Hours of Service to
be credited to an Associate for a period of no more than
thirty-one (31) days which overlap two (2) Computation
Periods, all such Hours of Service shall be credited to either
the first or the second of such Computation Periods as the
Benefits Advisory Committee, in its sole discretion, may
determine on a consistent basis with respect to all Associates
within the same job classification, reasonably defined.
8
(6) Uncompensated Leaves of Absence. Solely for purposes of
determining whether an Associate has a One-Year Break in
Service, Hour of Service shall include each hour (credited on
the basis of the schedule of equivalent hours set forth in
Subsection 2.23(7) below if any, or if not, on the basis of
eight (8) Hours of Service for each workday of such Leave of
Absence) for which an Associate is not paid but is on a Leave
of Absence.
(7) Determination of Hours of Service to be Credited to
Associates. The determination of the Hours of Service which
must be credited to an Associate in accordance with the
provisions of this Section 2.23 shall be made from records
maintained by an Employer or an Affiliated Company which
currently reflect the actual number of Hours of Service
required to be credited under this Section 2.23.
(8) Service with Predecessor Employer. Notwithstanding anything in
this Plan to the contrary, if an Associate becomes an
Associate of an Employer or Affiliated Company by reason of a
stock or asset acquisition of another company by such Employer
or Affiliated Company, such Associate's Hours of Service with
the acquired company will be taken into account as indicated
on Schedule A attached hereto.
2.24 "Investment Committee" shall mean the Plan Investment Committee
appointed to direct Plan investments pursuant to Section 16.01.
2.25 "Investment Manager" shall mean any fiduciary other than the trustee or
a Named Fiduciary that: (1) is either (a) registered as an investment
adviser under the Investment Advisers Act of 1940, or (b) a bank (as
defined in the Investment Advisers Act of 1940), or (c) an insurance
company qualified to manage, acquire or dispose of Plan assets under
the laws of more than one state, (2) acknowledges in writing that it is
a fiduciary with respect to the Plan, and (3) is granted the power to
manage, acquire or dispose of any asset of the Plan pursuant to Section
15.11 hereof.
2.26 "Leave of Absence" shall mean an absence from the active employment of
an Employer by reason of an approved absence granted by such Employer
on the basis of a uniform policy applied by such Employer without
discrimination.
2.27 "Non-Highly Compensated Employee" shall mean each Associate Participant
who is not a Highly Compensated Employee.
2.28 "One-Year Break in Service" shall mean, for purposes of eligibility to
participate, the Employment Period during which an Associate has five
hundred (500) or fewer Hours of Service and, for purposes of vesting, a
Plan Year during which an Associate has five hundred (500) or fewer
Hours of Service.
Notwithstanding any other provision of this Section 2.27 to the
contrary, solely for purposes of determining whether an Associate has a
One-Year Break in Service, Hours of Service shall include hours during
which an Associate is first absent from work for any period solely for
one of the following reasons: (1) by reason of (a) the Associate's
pregnancy, (b) the birth of the Associate's child, (c) the placement of
a child with the Associate in connection with the adoption of such
child by the Associate, or (2) for the purpose of caring for such child
for a period beginning immediately following such birth or placement.
Hours of Service shall be credited for purposes of this Subsection to
the Plan Year in which such absence from work begins, provided
crediting of such Hours of Service in such Plan Year would prevent the
Participant from incurring a One-Year Break in Service in such Plan
Year solely because of the crediting of hours in such Plan Year. In any
other case, Hours of
9
Service shall be credited for purposes of this Subsection to the
immediately following Plan Year. The Hours of Service credited for
purposes of this Subsection shall be those hours which otherwise
normally would have been credited but for such absence, or, in any case
in which the Benefits Advisory Committee is unable to determine the
hours normally credited, Hours of Service shall be calculated on the
basis of the schedule of equivalent hours set forth in Subsection
2.23(7), if any, or if not, on the basis of eight (8) Hours of Service
for each workday of such absence. The total number of Hours of Service
required to be credited for any absence described in this Subsection
shall not exceed five hundred one (501). Notwithstanding the foregoing
provisions of this Section, no Hours of Service credit shall be given
pursuant to this Subsection unless the Associate furnishes the Benefits
Advisory Committee with such information as the Benefits Advisory
Committee shall require to establish: (1) that the absence from work
was solely for the reasons referred to herein, and (2) the number of
days for which there was such an absence.
2.29 "Participant" shall mean an Eligible Associate who participates in the
Plan as provided in Article III hereof or a former Associate who has a
vested interest in the Plan. "Former Participant" shall mean an
individual who was previously a Participant in the Plan but who no
longer has any vested interest in the Plan.
2.30 "Plan" shall mean the Hastings Entertainment, Inc. Associates' Stock
Ownership Plan as set forth in this document, and as hereafter amended.
2.31 "Plan Year" shall mean the twelve (12) consecutive month period ending
on January 31.
If any Plan Year consists of less than twelve (12) consecutive months
(hereinafter referred to as the "Short Plan Year"), the following rules
shall apply:
(1) Where Hours of Service are relevant to the allocation of
Company Contributions, a Participant receives credit for the
requisite number of hours required for purposes of receiving
an allocation of Company Contributions if the Participant
receives credit for the Applicable Hours during the Short Plan
Year. For purposes of this paragraph, "Applicable Hours" shall
mean the product of (a) the requisite number of required hours
times (b) a fraction whose numerator is the number of complete
months in the Short Plan Year and whose denominator is twelve
(12).
(2) Where hours of service and years of service are relevant for
eligibility or vesting purposes under this Plan, an Associate
shall receive credit for one (1) Eligibility Year of Service
or Vesting Year of Service, as appropriate, for the Short Plan
Year, if the Associate completes one thousand (1,000) Hours of
Service in the twelve (12) consecutive-month period beginning
on the first day of the Short Plan Year (the "Short Year
Computation Period") and shall receive credit for another
Eligibility Year of Service or Vesting Year of Service, as
appropriate, for the Plan Year in which such Short Year
Computation Period ends (the "Succeeding Computation Period")
if the Associate completes one thousand (1,000) Hours of
Service in the Succeeding Computation Period. Hours of Service
completed during the period between the end of the Short Plan
Year and the end of the Short Year Computation Period shall be
credited to both the Short Year Computation Period and to the
Succeeding Computation Period.
2.32 "Publicly Traded" shall mean with respect to Company Stock, such a
security that is listed on a national securities exchange registered
under Section 6 of the Securities and Exchange Act of 1934
10
(the "Securities Exchange Act") or that is quoted on a system sponsored
by a national securities association registered under Section 15A(b) of
the Securities Exchange Act.
2.33 "QDRO Account" shall mean that part of any other Account which has been
isolated from such Account for the benefit of an Alternate Payee
pursuant to a Qualified Domestic Relations Order.
2.34 "Qualified Contributions" shall mean contributions of Company Stock to
a Participant's Employer Contribution Account under the Plan after
December 31, 1986, and any dividends in the form of Company Stock or in
cash or other property that is used to acquire Company Stock after such
date that have been transferred to the Participant's Account. Unless
the employer separately accounted for each Participant's Qualified
Contributions under the Plan, Qualified Contributions shall be traced
to each Participant's Account by treating allocations made under the
Plan after December 31, 1986, as consisting first of Qualified
Contributions and, secondly, of contributions that are not Qualified
Contributions.
2.35 "Qualified Domestic Relations Order" shall mean a judgment, order or
decree which:
(1) Relates to the provision of child support, alimony payments,
or marital property rights to a spouse, former spouse, child,
or other dependent of a Participant; and
(2) Is made pursuant to a state domestic relations law (including
a community property law); and
(3) Creates or recognizes the existence of an Alternate Payee's
right to, or assigns to an Alternate Payee the right to,
receive all or a portion of the benefits payable with respect
to a Participant under the Plan; and
(4) Is determined by the Plan Administrator to meet all applicable
requirements pursuant to the procedure established by the
Benefits Advisory Committee for determining whether an order
is a Qualified Domestic Relations Order pursuant to Code
Section 414(p).
2.36 "Qualifying Employer Security" shall mean, except as provided in
Section 12.07, a Company Stock which is (1) stock or otherwise an
equity security, or (2) a bond, debenture, note or certificate or other
evidence of indebtedness described in paragraphs (1), (2) and (3) of
Section 503(3) of the Code.
2.37 "Qualified Participant" shall mean a Participant who has completed at
least ten (10) years of participation in the Plan and has attained
fifty-five (55) years of age. In addition, such Participant's Account
which is derived from Qualified Contributions must have a fair market
value (as determined by the provisions of the Plan) in excess of five
hundred dollars ($500).
For purposes of determining whether the Participant's Account which is
derived from Qualified Contributions exceeds five hundred dollars
($500), all contributions shall be counted that meet the requirements
of a Qualified Contribution that are made on behalf of the Qualified
Participant to any other plan maintained by an Employer that is within
the same controlled group of corporations (within the meaning of Code
Section 414(b), (c), (m), or (o)) as the Company.
2.38 "Required Beginning Date" shall mean, for Plan Years beginning after
December 31, 1996, April 1 of the calendar year following the later of:
(1) the calendar year in which the Participant attains age seventy and
one-half (70-1/2), or (2) the calendar year in which the Participant
retires. Notwithstanding the preceding sentence, for a Participant who
is a five percent (5%) owner within the meaning of Code Section 416(i)
at any time during the calendar year in which such individual attains
11
age seventy and one-half (70-1/2), "Required Beginning Date" shall mean
April 1 of the calendar year following the calendar year in which the
Participant attains age seventy and one-half (70-1/2).
2.39 "Retirement Date" shall mean the date on which occurs the sixty-fifth
(65th) birthday of a Participant. "Early Retirement Date" shall mean
the first day of the Plan Year coincident with or following the date on
which occurs the later of: (1) the date on which occurs the fifty-fifth
(55th) birthday of a Participant, and (2) the Participant's completion
of ten (10) Vesting Years of Service.
2.40 "Self-Employed Individual" shall mean an individual who has Earned
Income for the taxable year from a trade or business which has
established the Plan, and, also, an individual who would have had
Earned Income but for the fact that the trade or business had no net
profits for the taxable year.
2.41 "Sponsoring Company" shall mean Hastings Entertainment, Inc., and any
successor thereto that continues to maintain the Plan.
2.42 "Suspense Account" shall mean the record maintained by the Benefits
Advisory Committee pursuant to Section 5.04 of shares of Company Stock
which have been acquired by the Trustee with an Exempt Loan and which
have not been allocated to the Accounts of Participants.
2.43 "Termination of Employment" shall mean the termination of employment
with all Employers and all Affiliated Companies, whether voluntarily or
involuntarily, other than by reason of a Participant's retirement after
attaining his Retirement Date or Early Retirement Date or after
sustaining Total and Permanent Disability, or death.
A Leave of Absence will not constitute a Termination of Employment
provided the Associate returns to the active employment of the Employer
at or prior to the expiration of his leave, or if not specified
therein, within the period of time which accords with such Employer's
policy with respect to permitted absences. If the Associate does not
return to the active employment of such Employer at or prior to the
expiration of his Leave of Absence, his employment will be considered
terminated as of the date on which his leave began. Notwithstanding the
above, any termination of employment must also qualify as a "separation
from service" as required in Code Section 409(d)(1) and the regulations
and rulings interpreting such Section before any distribution is made
to a Participant under this Plan.
Notwithstanding the foregoing provisions of this Section, absence from
the active Service of the Employer because of military Service will be
considered a Leave of Absence granted by an Employer and will not
terminate the employment of an Associate if he returns to the active
employment of an Employer within the period of time during which he has
reemployment rights under any applicable federal law or within sixty
(60) days from and after discharge or separation from such military
Service if no federal law is applicable. However, no provision of this
Section or of the remainder of the Plan shall require reemployment of
any Associate whose active Service with an Employer was terminated by
reason of military Service.
All references to Termination of Employment for a Self-Employed
Individual shall include termination of self-employment with all
Employers and Affiliated Companies.
2.44 "Total and Permanent Disability" shall mean a physical or mental
condition of a Participant resulting from bodily injury, disease, or
mental disorder which constitutes total disability under the federal
Social Security Act, and for which the Participant has submitted
evidence that he has actually been approved for Social Security
disability benefits.
12
2.45 "Trust" shall mean the legal entity resulting from the Trust Agreement
between the Sponsoring Company and the Trustee who receives the
contributions under the Plan, and holds, invests, and disburses funds
to or for the benefit of Participants and their Beneficiaries.
2.46 "Trust Agreement" shall mean the instrument establishing the Trust, as
amended from time to time.
2.47 "Trust Fund" shall mean all assets of whatsoever kind or nature from
time to time held by the Trustee pursuant to the Trust Agreement
without distinction as to income and principal.
2.48 "Trustee" shall mean the party or parties, individual or corporate,
named in the Trust Agreement and any duly appointed additional or
successor Trustee or Trustees acting thereunder.
2.49 "Valuation Date" shall mean each business day of the Plan Year on which
the New York Stock Exchange is open for business, and also the last day
of the Plan Year, if not such a business day. In the event that any
"Y2K" computer programming incompatibilities or issues arise which
prevent valuations from occurring on each business day, the Valuation
Date shall be the last day of each quarter of the Plan Year until such
programming incompatibilities or issues are resolved.
2.50 "Vesting Year of Service" shall mean a Plan Year, beginning with the
Plan Year in which the Associate commenced employment or reemployment
with an Employer or any Affiliated Company, during which a Participant
has completed one thousand (1,000) or more Hours of Service with an
Employer or Affiliated Company, subject to the provisions of Section
3.03 hereof.
2.51 Whenever a noun, or a pronoun in lieu thereof, is used in this Plan in
plural form and there be only one person, thing or institution within
the scope of the word so used, or in singular form and there be more
than one person, thing or institution within the scope of the word so
used, such word, or the pronoun used in lieu thereof, shall have a
plural or singular meaning, as the case may be. Pronouns of the
masculine gender may mean the feminine and vice versa.
2.52 The words "herein," "hereof," and "hereunder" shall refer to the Plan.
2.53 The expressions listed below shall have the meanings stated in the
Sections or Subsections hereof respectively indicated:
"1933 Act" Subsection 11.08(1)
"Annual Additions" Section 5.06
"Applicable Life Expectancy" Subsection 11.05(6)(a)
"Company Contribution" Section 4.01
"Compensation" Section 2.13
"Computation Period" Subsection 2.23(1)
"Current Value" Subsection 6.03(1)
"Defined Benefit Plan" Subsection 5.09(2);
Subsection 22.01(1)
13
"Defined Benefit Plan Fraction" Subsection 5.09(3)
"Defined Contribution Plan" Subsection 5.09(4);
Subsection 22.01(2)
"Defined Contribution Subsection 5.09(5)
Plan Fraction"
"Determination Date" Subsection 22.01(3)
"Direct Rollover" Subsection 11.16(2)(d)
"Distributee" Subsection 11.16(2)(c)
"Distribution Calendar Year" Subsection 11.05(6)(b)
"Early Retirement Date" Section 2.38
"Effective Date" Section 1.01
"Eligibility Year of Service" Section 3.03
"Eligible Participant" Section 5.01
"Eligible Retirement Plan" Subsection 11.16(2)(b)
"Eligible Rollover Distribution" Subsection 11.16(2)(a)
"Employment Period" Section 3.03
"Employment Termination Account" Section 10.07
"Entry Date" Section 3.01
"Forfeiture" Subsection 10.05(5)
"Former Associate" Section 2.22
"Former Participant" Section 2.28
"Indemnified Person" Section 15.13
"Key Employee" Subsection 22.01(4)
"Key Employee Participant" Subsection 22.01(5)
"Limitation Year" Subsection 5.09(6)
14
"Limitation Year Compensation" Section 2.22;
Subsection 5.09(7);
Subsection 22.01(6)
"Named Fiduciaries" Section 15.09
"Net Earnings and Adjustments Subsection 6.04(2)
in Value of the Trust Fund"
"Non-Key Employee" Subsection 22.01(7)
"Non-Participating Affiliated Subsection 3.01(4)
Company"
"Nonvested Amount" Subsection 10.05(2)
"Option Period" Section 11.10
"Option Price" Section 11.10
"Participant Offer" Section 11.12(1)
"Participant's Benefit" Subsection 11.05(6)(c)
"Permissive Aggregation Group" Subsection 22.01(8)
"Plan Administrator" Section 15.07
"Put" Section 11.10
"Qualified Consent" Subsection 9.02(2)
"Qualifying Employer Security" Section 12.07
"Required Aggregation Group" Subsection 22.01(9)
"Retirement Plan" Subsection 5.09(1)
"Super Top Heavy Plan" Subsection 22.02(2)
"Third Party Offer" Subsection 11.12(1)
"Top Heavy Plan" Subsection 22.02(1)
"Top Heavy Ratio" Subsection 22.02(3)
"Valuation Calendar Year" Subsection 11.05(6)(c)
"Valuation Date" Section 2.48;
Subsection 22.01(10)
15
ARTICLE III
REQUIREMENTS FOR ELIGIBILITY AND PARTICIPATION
3.01 Eligibility. An Eligible Associate who met the eligibility requirements
under the Plan and was a Participant in the Plan as it existed on the
date immediately prior to the Effective Date shall continue to be a
Participant in the Plan on the Effective Date. Each other Eligible
Associate shall become a Participant in accordance with the applicable
paragraph of this Section 3.01:
(1) Service and Age. An Eligible Associate shall become a
Participant as of the February 1 or August 1 (the "Entry
Date") coinciding with or next following the later of the date
upon which such Eligible Associate (a) completes an
Eligibility Year of Service, or (b) attains age twenty-one
(21), provided such Eligible Associate is so employed on such
Entry Date.
(2) Reemployment Prior to Break in Service. In the event an
Eligible Associate suffers a Termination of Employment after
completing the eligibility requirements of Subsection 3.01(1)
but prior to the Entry Date upon which such Eligible Associate
would have participated in the Plan, and such Eligible
Associate is reemployed by an Employer after the Entry Date
upon which the Eligible Associate would have participated in
the Plan but prior to a One-Year Break in Service, such
Eligible Associate shall participate in the Plan as of his
Date of Reemployment.
(3) Reemployment After Break in Service. In the event an Eligible
Associate suffers a Termination of Employment prior to or
after completing the eligibility requirements of Subsection
3.01(1) but prior to the Entry Date upon which such Eligible
Associate would have participated in the Plan, and such
Eligible Associate is reemployed by an Employer after
incurring a One-Year Break in Service, such Eligible Associate
shall be treated as a new Associate and shall become a
Participant as of the Entry Date coinciding with or next
following the date upon which such Eligible Associate
completes the eligibility requirements of Subsection 3.01(1),
provided such Eligible Associate is so employed on such Entry
Date.
(4) Transfer to Non-Participating Affiliated Company Prior to
Completion of Eligibility Requirements. In the event an
Eligible Associate transfers to an Affiliated Company that has
not adopted the Plan (a "Non-Participating Affiliated
Company") prior to completing the eligibility requirements of
Subsection 3.01(1) and is employed continuously with a
Non-Participating Affiliated Company until his transfer back
to an Employer, such Eligible Associate shall become a
Participant as of the Entry Date coinciding with or next
following the date upon which such Associate completes the
eligibility requirements of Subsection 3.01(1), provided such
Eligible Associate is so employed on such Entry Date.
(5) Transfer to Non-Participating Affiliated Company After
Completion of Eligibility Requirements. In the event an
Eligible Associate transfers to a Non-Participating Affiliated
Company after completing the eligibility requirements of
Subsection 3.01(1) but prior to the Entry Date upon which such
Eligible Associate would have participated in the Plan, and is
employed continuously with a Non-Participating Affiliated
Company until his transfer back to an Employer, such Eligible
Associate shall become a Participant as of (a) the date of his
transfer back to an Employer, if the transfer is after the
Entry Date upon which such Eligible Associate would have
participated in the Plan, or (b) the Entry Date coinciding
with or next
16
following the date upon which such Associate transfers back to
an Employer, provided such Eligible Associate is so employed
on such Entry Date.
3.02 Employment with a Predecessor Employer. If the Plan had previously been
maintained by a predecessor of an Employer, whether a corporation,
partnership, sole proprietorship or other business entity, any period
of employment with such predecessor shall be treated as a period of
employment with an Employer. If the Plan had not been previously
maintained by a predecessor of an Employer, employment with such
predecessor shall not be taken into account, except to the extent
required pursuant to regulations prescribed by the Secretary of the
Treasury or his delegate or as otherwise provided in the Plan.
3.03 Eligibility Year of Service. An "Eligibility Year of Service" shall
mean the Employment Period during which such Associate performs one
thousand (1,000) or more Hours of Service subject to the provisions of
Section 3.02 hereof. For purposes of determining an Associate's
Eligibility Year of Service, the "Employment Period" to be used shall
be the initial twelve (12) consecutive month period beginning on an
Associate's Date of Employment or Date of Reemployment and thereafter
the Plan Year, beginning with the Plan Year within which occurs the
Associate's first anniversary of his Date of Employment or Date of
Reemployment. Any Associate who is credited with one thousand (1,000)
or more Hours of Service with an Employer or any Affiliated Company in
both the initial twelve (12) month period beginning on such Associate's
Date of Employment or, if applicable, an Associate's Date of
Reemployment, and the Plan Year within which such initial twelve (12)
month period ends, shall be credited with two (2) Eligibility Years of
Service at the end of such Plan Year.
3.04 Participation Upon Reemployment. In the event that a Participant or
Former Participant who has suffered a Termination of Employment and has
a period of One-Year Breaks in Service is subsequently reemployed by an
Employer, for purposes of determining his eligibility to participate in
the Plan after his reemployment, he shall be treated as follows:
(1) If such Participant (a) had a vested amount in his Company
Contribution Account preceding the period of One-Year Breaks
in Service, or (b) had no vested benefit preceding such period
of One-Year Breaks in Service and did not have five (5) or
more consecutive One-Year Breaks in Service within such
period, he shall resume participation in the Plan effective as
of his Date of Reemployment.
(2) If such Participant had no vested amount in his Company
Contribution Account preceding such period of One-Year Breaks
in Service and he had five (5) or more consecutive One-Year
Breaks in Service within such period, he shall be treated the
same as a new Associate who had no prior employment before his
Date of Reemployment.
3.05 Change in Status of Eligible Associate.
(1) In the event an Associate, including an Associate who
previously was not defined as an Eligible Associate under
Section 2.17 hereof, becomes defined as an Eligible Associate,
such individual shall become a Participant in the Plan as of
the date he becomes defined as an Eligible Associate, provided
he has met the other requirements for eligibility set forth in
Section 3.01 hereof and previously would have begun to
participate in the Plan had he been defined as an Eligible
Associate. If such individual has not met the other
requirements for eligibility set forth in Section 3.01 hereof,
such individual shall be treated as if he had always been
defined as an Eligible Associate and shall become a
Participant in the Plan as of the
17
Entry Date coinciding with or next following the date the
individual meets the requirements for eligibility set forth in
Section 3.01 hereof.
(2) In the event a Participant who ceased to be defined as an
Eligible Associate under Section 2.17 hereof but who did not
incur a Termination of Employment with an Employer
subsequently becomes defined as an Eligible Associate again,
such Eligible Associate shall recommence participation in the
Plan for all purposes without regard to the limitations
imposed by Section 5.11 hereof, as of the date he again
becomes defined as an Eligible Associate.
3.06 Participation in the Plan. Each Eligible Associate shall be provided
with such information as is required by ERISA within the time
prescribed for providing such information. In addition, each
Participant shall be provided with a designation of Beneficiary form
which shall provide for a designation of one or more Beneficiaries to
receive benefits in the event of the Participant's death.
ARTICLE IV
CONTRIBUTIONS
4.01 Company Contributions. Each Plan Year, each Employer shall make a cash
contribution (the "Company Contribution") to the Trust in such amount
as its board of directors (or such other person or group of persons
referred to in Section 23.07 hereof in case of an Employer which is not
a corporation) in its sole discretion may authorize; provided, however,
that an Employer may determine that no Company Contribution shall be
made for a Plan Year. An Employer's Company Contribution may be made in
cash or shares of Company Stock or in a combination of cash and Company
Stock.
In no event, however, shall any Company Contribution exceed the maximum
deductible Company Contribution under Code Section 404(a) including any
amount which may be deductible by the Employer under the carryover
provisions of the Code. Notwithstanding the foregoing, to the extent
necessary to provide the required top heavy minimum allocation
described in Article XXII, an Employer shall make a contribution even
if it exceeds the amount which is deductible under Code Section 404.
4.02 Date of Payment and Allocation of Company Contributions. An Employer
shall make its Company Contributions to the Trust Fund for a Plan Year
on or before the last date, including any extensions thereof, for
filing its federal income tax return for its Fiscal Year ending with or
after the last day of such Plan Year. Company Contributions shall be
deemed to have been made and shall be allocated to the Company
Contribution Accounts of Eligible Participants in accordance with
Section 5.01 hereof as of the earlier of (1) the Valuation Date on or
next following the date on which they are made to the Trust Fund, or
(2) the last day of the Plan Year for which they are made.
4.03 Associate Contributions. No Associate contributions will be permitted
to or accepted by this Plan.
4.04 Special Provisions for Participants Who Enter the Armed Forces.
(1) If a Participant is absent from employment for voluntary or
involuntary military Service with the armed forces of the
United States and returns to employment within the period
required under the law pertaining to veterans' reemployment
rights, the Participant shall not be treated as having
incurred any One-Year Breaks in Service for the period of the
Participant's absence
18
from employment, in accordance with the Uniformed Services
Employment and Reemployment Rights Act of 1994 ("USERRA").
(2) The Employer shall contribute all Company Contributions
described in Section 4.01 for a Participant returning from a
"qualified military leave" (as defined in Code Section
414(u)(5)) in the amount, if any, that would have been
contributed for such individual during such qualified military
leave.
(3) In determining the amount of Company Contributions that would
be allocated to the Participant under Section 5.01,
"Compensation" for purposes of this Section 4.04 shall mean:
(a) the Compensation the Participant would have received
during the period of qualified military Service
determined based on the rate of pay the Participant
would have received but for the military Service
absence; or
(b) if the Compensation of the Participant during the
qualified military Service is not determinable under
Section 4.04(3)(a), then the Participant's average
Compensation from the Employer during the twelve (12)
month period immediately before the qualified
military Service (or, if shorter, the period of
employment with the Employer immediately before the
qualified military Service).
(4) Company Contributions made under Subsection 4.04(3) shall be
attributed to the Plan Year and Limitation Year to which they
relate.
(5) Company Contributions made pursuant to this Section 4.04 shall
not cause the Plan to fail to satisfy the requirements of Code
Sections 401(a)(4), 410(b) or 416 by reason of the fact these
contributions were made or a Participant had the right to
receive Company Contributions.
ARTICLE V
ALLOCATION TO PARTICIPANTS' ACCOUNTS
5.01 Method of Allocating Company Contributions. Subject to Sections 5.06,
5.07, 5.08, 5.09 and Subsection 22.03(2) hereof, the total Company
Contribution made for each Plan Year shall be allocated in accordance
with Section 4.02 among the Company Contribution Accounts of all
Participants (the "Eligible Participants") who: (1) have completed one
thousand (1,000) or more Hours of Service with one (1) or more
Employers for the Plan Year and are employed by an Employer on the last
day of the Plan Year, or (2) have died, retired or suffered Total and
Permanent Disability during such Plan Year, regardless of whether such
Participants have completed one thousand (1,000) or more Hours of
Service for such Plan Year, or (3) are on Leave of Absence on the last
day of the Plan Year who received Compensation form the Employer during
the Plan Year, regardless if such Participants performed one thousand
(1,000) Hours of Service during the Plan Year.
Each Eligible Participant's allocable share of Company Contributions
shall be in the proportion that his Compensation for such Plan Year
bears to the total Compensation of all Eligible Participants for such
Plan Year. In the event the Company Contribution consists of Company
Stock, the Company Stock should be allocated in this ratio according to
the number of shares contributed.
19
5.02 Suspense Account. The Benefits Advisory Committee shall establish a
Suspense Account for each Exempt Loan made pursuant to Article XII and
shall allocate thereto any Qualifying Employer Securities acquired with
the proceeds of such Exempt Loan provided, however, that the Benefits
Advisory Committee need not establish a separate Suspense Account for
each Exempt Loan that is made for purposes of repaying a prior Exempt
Loan. Any Qualifying Employer Securities allocated to a Suspense
Account shall be treated as if they were given as collateral for the
Exempt Loan as provided in Section 12.3 without regard to whether they
are actually given as collateral for such loan, and shall be released
from the Suspense Account in accordance with the provisions of Section
12.6 for allocation to the Participants and Beneficiaries in accordance
with Section 6.04(4).
5.03 Allocation to a Participant Who Ceases to be an Eligible Associate or
Who is Transferred to a Non-Participating Affiliated Company. If a
Participant who is an Eligible Associate ceases to be an Eligible
Associate or is transferred from an Employer to a Non-Participating
Affiliated Company, he shall participate in the allocation of Company
Contributions for the Plan Year in which the cessation or transfer took
place, provided the Associate either (1) completes one thousand (1,000)
Hours of Service with an Employer or a Non-Participating Affiliated
Company in such Plan Year and is employed by an Employer or a
Non-Participating Affiliated Company on the last day of the Plan Year
or (2) dies, retires or suffers Total and Permanent Disability during
such Plan Year, regardless of whether such Participant has completed
one thousand (1,000) or more Hours of Service for such Plan Year. Such
allocation shall be made upon the basis of such Participant's
Compensation from the Employer up to the date of the cessation of
Eligible Associate status or transfer. In any subsequent Plan Year,
such Participant shall receive no further allocations of any Company
Contributions under the Plan unless and until he subsequently becomes
an Eligible Associate.
5.04 Allocation of Contributions and Qualifying Employer Securities Released
From Suspense Accounts - General. As of the Valuation Date coinciding
with the last day of the Plan Year, the Benefits Advisory Committee
shall:
(1) First, determine the aggregate limitation prescribed by
Section 5.06 for all Participants described in Section 5.01.
To the aggregate limitation add any amounts described in
Section 4.01.
(2) Next, allocate (a) Company Contributions, if any, not used to
repay Exempt Loans, and (b) any Qualifying Employer Securities
released from Suspense Accounts that are not given as
collateral for a new Exempt Loan (the proceeds of which are
used to repay a prior Exempt Loan), to the Accounts of all
Associates entitled to share in the amount described in
Section 4.01 in the proportion that the amount required for
all entitled Associates until the amount described in Section
4.01 is fully allocated. Former Associates and Beneficiaries
shall be treated as Associates for purposes of this paragraph.
(3) Finally, allocate (a) any Qualifying Employer Securities
released from Suspense Accounts that are not given as
collateral for a new Exempt Loan, the proceeds of which are
used to repay a prior Exempt Loan, and (b) Company
Contributions, if any, not used to repay Exempt Loans, in
accordance with Section 5.05 to the Accounts of each
Participant entitled to an allocation under Section 5.01. The
allocation of Company Contributions for any such Participant
shall not exceed the amount determined pursuant to Section
5.06. If, after the first such allocation, any Company
Contributions remain, the remainder shall be allocated and
reallocated in the same manner prescribed in this paragraph
until exhausted.
20
5.05 Method of Allocating and Crediting Contributions and Qualifying
Employer Securities Released from Suspense Accounts. Subject to the
conditions of Section 5.06, as of the last day of the Plan Year, the
Company Contributions, if any, for the Plan Year ending on that date
that are not used to repay Exempt Loans, if any, which arose under the
Plan that year, and Qualifying Employer Securities, if any, released
from Suspense Accounts for that year that are not given as collateral
for an Exempt Loan, the proceeds of which are used to repay a prior
Exempt Loan, shall be allocated among and credited to the Accounts of
Participants entitled to share in the Company Contributions for that
Plan Year (as provided in Section 5.01) in the proportion that each
such Participant's Compensation for the Plan Year bears to the
Compensation of all such Participants for such Plan Year.
For purposes of this Section 5.05, "Compensation" includes only base
pay and excludes commissions, bonuses, moving expenses, health club
dues, and executive medical reimbursement, and other similar
perquisites; however, Compensation does include in base pay amounts
that have been deferred in connection with the Employer's 401(k) plan
and pursuant to a cafeteria plan for medical insurance premiums or
other benefit programs. For the purposes of determining Compensation,
as defined herein, amounts accrued to a Participant shall be equivalent
to qualifying amounts paid to a Participant hereunder.
5.06 Limitation on Annual Additions.
(1) Notwithstanding any other provision of the Plan, the sum of
the Annual Additions to a Participant's Account for any
Limitation Year shall not exceed the lesser of: (a) Thirty
Thousand Dollars ($30,000) (or such higher amount to which
such amount shall be adjusted by the Secretary of the Treasury
or his delegate pursuant to Code Section 415(d)), or (b)
twenty-five percent (25%) of such Participant's Limitation
Year Compensation for the entire Limitation Year (even though
such Participant may not have been a Participant for the
entire Limitation Year). For purposes of the preceding
sentence, if the Trustee enters into an Exempt Loan pursuant
to Article XII hereof and no more than one-third (1/3) of the
Company Contributions made to the Plan for the Plan Year are
allocated to the Accounts of Highly Compensated Employees
(within the meaning of Section 414(q) of the Code), the
Company Contributions that are used to pay the interest on the
Exempt Loan for the Plan Year, will not be included in
determining whether the Plan satisfies the limitations of this
Section 5.06(1). If a Limitation Year is less than a twelve
(12) consecutive month period, the above dollar limitations
for the short Limitation Year shall not exceed the amount
determined in the preceding sentence multiplied by a fraction,
the numerator of which is the number of whole months in the
short Limitation Year and the denominator of which is twelve
(12). The term "Annual Additions" to a Participant's Account
for any Limitation Year shall mean the sum of:
(a) such Participant's allocable share of the Company
Contributions credited to such Participant within
such Limitation Year; and
(b) such Participant's allocable share of Forfeitures, if
any, credited to such Participant within such
Limitation Year; and
(c) any amount allocated to an "individual medical
account," as defined in Code Section 415(l)(2), which
is part of a Defined Benefit Plan maintained by an
Employer; and
(d) any amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years
ending after such date, which are attributable to
post-retirement
21
medical benefits allocated to the separate account of
a key employee (as defined in Code Section
419A(d)(3)) under a welfare benefit fund (as defined
in Code Section 419(e)) maintained by an Employer.
Solely for purposes of this Section 5.06, the determination of
a Participant's allocable share of Company Contributions and
Forfeitures, if any, for a Limitation Year shall exclude any
Company Contributions, and Forfeitures, if any, allocated to
such Participant for any of the reasons set forth in Sections
1.415-6(b)(2)(ii)-(vi) of the Income Tax Regulations (except
as otherwise provided in such Sections).
(2) In the event that as a result of: (a) the allocation of
Forfeitures, (b) a reasonable error in estimating a
Participant's Limitation Year Compensation, or (c) other facts
and circumstances which the Internal Revenue Service finds
justify the availability of the provisions of this Subsection
and Subsection 5.06(3), it is determined that the Annual
Additions to a Participant's Account for any Limitation Year
would be in excess of the limitations contained in Subsection
5.06(1) herein, such Annual Additions shall be reduced to the
extent necessary to bring such Annual Additions within the
limitations contained in Subsection 5.06(1) by reducing such
Participant's allocable share of Forfeitures, if any, and
Company Contributions for the Plan Year ending within such
Limitation Year.
(3) If, and to the extent that the amount of any Participant's
allocable share of Forfeitures, if any, or Company
Contributions is reduced in accordance with the provisions of
Subsection 5.06(2) above, the amount of such reduction shall
be maintained in a separate suspense account under the Trust
to be used to reduce Company Contributions for that
Participant for the next succeeding Limitation Year (and
succeeding Limitation Years, as necessary), if that
Participant is employed as of the end of such Limitation Year.
If such Participant is no longer employed as of the end of
such next succeeding Limitation Year (or succeeding Limitation
Years, if applicable), then the amount in the suspense account
shall continue to be held in such suspense account for such
Limitation Year and shall reduce Company Contributions for
such next succeeding Limitation Year (and succeeding
Limitation Years, if applicable) and shall, subject to the
provisions of Subsection 5.06(1), be allocated and reallocated
in such next succeeding Limitation Year (and succeeding
Limitation Years, if applicable), among all of the remaining
Participants in the Plan. Any suspense account established
pursuant to this Subsection shall not be adjusted to reflect
net income, loss, appreciation or depreciation in the value of
the Trust Fund as provided for a Participant's regular
Accounts pursuant to Article VI hereof.
Notwithstanding any other provision of the Plan to the
contrary, in the event amounts are credited to a suspense
account, no Company Contributions shall be made to the Plan
for a Plan Year while there are any amounts in such separate
suspense account attributable to prior Plan Years which cannot
be allocated to Participants in accordance with the terms of
this Subsection.
5.07 Limitations on Annual Additions for Employers or Affiliated Companies
Maintaining Other Defined Contribution Plans. In the event that any
Participant in this Plan is also a participant under any other Defined
Contribution Plan maintained by an Employer or an Affiliated Company
(whether or not terminated), the total amount of Annual Additions to
such Participant's accounts under all such Defined Contribution Plans
shall not exceed the limitations set forth in Subsection 5.06(1)
hereof. If such total amount of Annual Additions to a Participant's
accounts under all such Defined
22
Contribution Plans does exceed the limitations set forth in Subsection
5.06(1) hereof, then the Annual Additions to such Participant's
Accounts in this Plan shall be reduced, and such reduction shall be
accomplished in accordance with the provisions of Section 5.06 hereof.
5.08 Limitations on Annual Additions for Employers or Affiliated Companies
Maintaining Defined Benefit Plans. For Limitation Years beginning prior
to December 31, 1999, in the event that any Participant under this Plan
is a participant under one or more Defined Benefit Plans maintained by
an Employer or an Affiliated Company (whether or not terminated), then
the sum of the Defined Benefit Plan Fraction for such Limitation Year
and the Defined Contribution Plan Fraction for such Limitation Year
shall not exceed one (1.0). If the sum of the Defined Benefit Plan
Fraction for any Limitation Year and the Defined Contribution Plan
Fraction for such Limitation Year does exceed one (1.0), then such
Participant's benefits under the Defined Benefit Plan shall be reduced
in accordance with the requirements of Code Section 415 and the
applicable regulations thereunder to the extent necessary to comply
with the limitations set forth in this Section. The provisions of this
Section 5.08 shall not apply for Limitation Years beginning on or after
January 1, 2000.
5.09 Definitions for Purposes of Determining the Annual Addition
Limitations. For purposes of Sections 5.06, 5.07, and 5.08 hereof and
this Section 5.09, the following definitions shall apply:
(1) "Retirement Plan" shall mean (a) any profit-sharing, pension
or stock bonus plan described in Code Sections 401(a) and
501(a), (b) any annuity plan or annuity contract described in
Code Section 403(a) or 403(b), and (c) any simplified employee
pension plan described in Code Section 408(k).
(2) "Defined Benefit Plan" shall mean any Retirement Plan which
does not meet the definition of a Defined Contribution Plan.
(3) "Defined Benefit Plan Fraction" shall mean a fraction
calculated in accordance with Code Section 415(e)(2).
Notwithstanding the preceding sentence, if the Participant was
a Participant as of the first day of the first Limitation Year
beginning after December 31, 1986, in one or more Defined
Benefit Plans maintained by an Employer or an Affiliated
Company which were in existence on May 6, 1986, the
denominator of the Defined Benefit Plan Fraction will not be
less than one hundred twenty-five percent (125%) of the sum of
the projected annual benefits under such plans which the
Participant had accrued as of the close of the last Limitation
Year beginning before January 1, 1987, disregarding any
changes in the terms and conditions of the plan after May 5,
1986. The preceding sentence applies only if the Defined
Benefit Plans individually and in the aggregate satisfied the
requirements of Code Section 415 for all Limitation Years
beginning before January 1, 1987.
(4) "Defined Contribution Plan" shall mean a Retirement Plan which
provides for an individual account for each participant and
for benefits based solely on the amount contributed to the
participant's account, and any income, expenses, gains or
losses, and any forfeitures of accounts of other participants
which may be allocated to such participant's account. For
purposes of Sections 5.06, 5.07 and 5.08, a Participant's
voluntary nondeductible contributions to a Defined Benefit
Plan shall be treated as being part of a separate Defined
Contribution Plan.
(5) "Defined Contribution Plan Fraction" shall mean a fraction
calculated in accordance with Code Sections 415(e)(3), (4) and
(6). If the Associate was a Participant as of the end of the
first day of the first Limitation Year beginning after
December 31, 1986, in one or more
23
Defined Contribution Plans maintained by an Employer or an
Affiliated Company which were in existence on May 6, 1986, the
numerator of the Defined Contribution Plan Fraction will be
adjusted if the sum of this fraction and the Defined Benefit
Fraction would otherwise exceed one (1.0) under the terms of
this Plan. Under the adjustment, an amount equal to the
product of (a) the excess of the sum of the fractions over one
(1.0) times (b) the denominator of the Defined Contribution
Plan Fraction, will be permanently subtracted from the
numerator of the Defined Contribution Plan Fraction. The
adjustment is calculated using the fractions as they would be
computed as of the end of the last Limitation Year beginning
before January 1, 1987, and disregarding any changes in the
terms and conditions of the plan made after May 5, 1986, but
using the Code Section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987.
(6) "Limitation Year" shall mean the Plan Year.
(7) "Limitation Year Compensation" shall mean:
(a) the aggregate of all of the following for the
Limitation Year:
(i) The Associate's wages, salaries, fees for
professional services and other amounts
received (without regard to whether or not
an amount is paid in cash) for personal
services actually rendered in the course of
employment with all Employers and Affiliated
Companies to the extent the amounts are
includable in gross income (including, but
not limited to, commissions paid salesmen,
compensation for services on the basis of a
percentage of profits, commissions on
insurance premiums, tips and bonuses, fringe
benefits, reimbursements, and expense
allowances) as more fully described in Code
Section 415(c)(3) and the regulations
thereunder, which are actually paid or made
available to an Associate who is not a
Self-Employed Individual;
(ii) In the case of any Self-Employed Individual,
"Compensation" shall mean the individual's
Earned Income for such Limitation Year;
(iii) Amounts described in Code Sections
104(a)(3), 105(a) and 105(h) but only to the
extent that these amounts are includable in
the gross income of the Associate;
(iv) Amounts paid or reimbursed by the Employer
for moving expenses incurred by an
Associate, but only to the extent that at
the time of the payment it is reasonable to
believe that these amounts are not
deductible by the Associate under Code
Section 217;
(v) The value of a non-qualified stock option
granted to an Associate by the Employer, but
only to the extent that the value of the
option is includable in the gross income of
the Associate for the taxable year in which
granted; and
(vi) The amount includable in the gross income of
an Associate upon making the election
described in Code Section 83(b).
(b) Limitation Year Compensation shall not include the
following:
24
(i) Contributions to a plan of deferred
compensation to the extent that, before the
application of the limitations of Code
Section 415 to the Plan, the contributions
are not included in the gross income of the
Associate for the taxable year in which
contributed, or contributions under a
simplified employee pension plan to the
extent the contributions are deductible by
the Associate, and any distributions from a
plan of deferred compensation other than an
unfunded nonqualified plan of deferred
compensation;
(ii) Amounts realized from the exercise of a
non-qualified stock option, or amounts
realized under Code Section 83 with respect
to restricted property held by an Associate
that becomes freely transferable or is no
longer subject to a substantial risk of
forfeiture;
(iii) Amounts realized from the sale, exchange or
other disposition of stock acquired under an
incentive stock option within the meaning of
Code Section 422;
(iv) Other amounts that receive special tax
benefits within the meaning of Treasury
Regulation Section 1.415-2(d)(3), such as
premiums for group term life insurance (but
only to the extent that premiums are not
includable in the gross income of the
Associate), or contributions made by the
Employer (whether or not under a salary
reduction agreement) towards the purchase of
an annuity contract covered by Code Section
403(b) (whether or not the contributions are
excludible from the gross income of the
Associate).
Effective for Plan Years beginning after December 31, 1997,
"Limitation Year Compensation" shall also include any elective
deferral (as defined in Code Section 402(g)(3)) and any amount
which is contributed or deferred by the Employer at the
election of the Participant and which is not includable in the
gross income of the Participant by reason of Code Sections 125
or 457.
5.10 Dividend Pass-Through. With respect to any cash dividend paid on
Qualifying Employer Securities held by the Trust, whether held in
Participant's Accounts or a Suspense Account, the Company shall have
the obligation to:
(1) Pay such dividend directly to the Participants or their
Beneficiaries;
(2) Pay such dividend to the Trust and direct the Trustee to
distribute the dividend to the Participants or their
Beneficiaries within ninety (90) days after the close of the
Plan Year in which paid;
(3) Direct the Trustee to use said dividend to make payments on an
Exempt Loan, the proceeds of which were used to acquire the
Qualifying Employer Securities; or
(4) Allocate such dividend to all Participants' Accounts as income
from the Trust Fund.
In the case of a payment of dividends to Participants and Beneficiaries
under (1) or (2) above, the payments shall be allocated as follows.
With respect to dividends paid on Qualifying Employer Securities held
in Participants' or Beneficiaries' Accounts, such dividends shall be
allocated in the ratio that the number of shares of Qualifying Employer
Securities credited to each Participants' or
25
Beneficiaries' Accounts bears to the total number of such shares
credited to all such Accounts. With respect to dividends paid on
Qualifying Employer Securities held in a Suspense Account, such
dividends shall be allocated in the ratio that each Participant's or
Beneficiary's total Account balance bears to the total of all such
Account balances. In the case of a payment of dividends under (3)
above, Qualifying Employer Securities with a fair market value of not
less than the amount of such dividends shall be released from the
Suspense Account and allocated to Participant's Accounts pursuant to
Section 5.05 for the Plan Year in which the dividend is paid. The
Company shall be allowed a federal income tax deduction for any
dividend paid pursuant to the terms of this Section 5.10.
5.11 Cessation of Eligible Associate Status. Subject to the exception at
Section 5.03, if any Participant does not incur a Termination of
Employment but ceases to be an Eligible Associate as defined in Section
2.17 hereof, then, during the period that such Participant is not an
Eligible Associate: (1) such Participant shall not receive any further
allocation of any Company Contributions and Forfeitures, if any, under
the Plan pursuant to Article IV, (2) such Participant's Accounts shall
continue to share in the earnings or losses of the Trust Fund, and (3)
such Participant shall receive credit for vesting purposes pursuant to
Section 10.01 hereof for any Vesting Years of Service completed during
such period.
ARTICLE VI
ACCOUNTS AND VALUATION OF TRUST FUND
6.01 Participant's Accounts. The assets of the Trust Fund shall constitute a
single fund in which each Participant, Beneficiary or Alternate Payee
shall have his proportionate interest as provided in this Plan. The
Benefits Advisory Committee shall maintain, or cause to be maintained,
with respect to each Employer, individual Accounts for each
Participant, Beneficiary or Alternate Payee. A Participant may have a
Company Contribution Account and an Employment Termination Account,
and, where appropriate, an Alternate Payee shall have a QDRO Account.
Each Account shall reflect the credits and charges allocable thereto in
accordance with the Plan. The Benefits Advisory Committee shall
maintain, or cause to be maintained, records which will adequately
disclose at all times the state of the Trust Fund and of each separate
interest therein. The books, forms and methods of accounting shall be
entirely in the hands of and subject to the supervision of the Benefits
Advisory Committee.
6.02 Accounts of Participants Transferred to a Non-Participating Affiliated
Company. If a Participant is transferred to a Non-Participating
Affiliated Company, the amount in the Trust which is credited to his
Accounts shall continue to share in the earnings or losses of the Trust
Fund, and such Participant's rights and obligations with respect to
such Accounts shall be governed by the provisions of the Plan and
Trust.
6.03 Valuation of the Trust Fund and Account Statements.
(1) Within a reasonable time after the Valuation Date that
coincides with the last day of the Plan Year, and at such
other times, if any, during the Plan Year as the Benefits
Advisory Committee may require, the Benefits Advisory
Committee shall have the Trustee prepare a statement of the
condition of the Trust Fund as of the close of business of
such Valuation Date or such other date setting forth: (a) the
assets of the Trust Fund as of such Valuation Date or other
date, and the cost and current value thereof as defined in
ERISA Section 3(26) (the "Current Value"), and (b) all
investments, receipts, disbursements and other transactions
26
effected by it during the Plan Year or other period. This
statement shall be delivered to the Benefits Advisory
Committee. The Benefits Advisory Committee shall then cause to
be prepared, and shall deliver to each Participant,
Beneficiary or Alternate Payee, a report disclosing the status
of each such individual's Accounts in the Trust Fund.
(2) The Trustee's determination of the Current Value of the assets
in the Trust Fund and the Benefits Advisory Committee's
charges or credits to the individual Accounts with respect to
Participants, Beneficiaries or Alternate Payees, as provided
in Section 6.04, shall be final and conclusive on all persons
ever interested hereunder.
6.04 Periodic Determination of Participant's Accounts.
(1) Allocations in General. For the purpose of making allocations
as of any Valuation Date, the Net Earnings and Adjustments in
Value of the Trust Fund shall be allocated pursuant to
Subsection 6.04(3); and Company Contributions shall be
allocated pursuant to Section 4.02 hereof. Whenever an
allocation or credit is required to be made hereunder, it
shall be made by the Benefits Advisory Committee, or at the
Benefits Advisory Committee's direction, and subject to its
supervision.
(2) Determination of Net Earnings and Adjustments In Value of the
Trust Fund. "Net Earnings and Adjustments in Value of the
Trust Fund" for a particular period means the Current Value
(determined pursuant to Section 6.03 hereof) of the Trust Fund
as of a Valuation Date, less the sum of:
(a) The total of all Account balances allocated to the
Trust Fund as of the close of the previous Valuation
Date of all Participants, Beneficiaries and Alternate
Payees as of such time; and
(b) Company Contributions for the period under
consideration, to the extent that such Company
Contributions were actually paid over to the Trustee
since the previous Valuation Date and allocated to
the Trust Fund.
(3) Allocation of Net Earnings and Adjustments in Value of the
Trust Fund. Subject to the provisions of Subsection 6.04(2)
hereof, the Net Earnings and Adjustments in Value of the Trust
Fund for a particular period shall be allocated as of the
Valuation Date to those Accounts allocated to the Trust Fund
the total value of which had not been distributed prior to the
Valuation Date, as follows: Each such Account shall be
credited with an amount equal to such Net Earnings and
Adjustments in Value of the Trust Fund multiplied by a
fraction:
(a) The numerator of which is the portion of the
particular Account balance allocated to the Trust
Fund as of the close of the previous Valuation Date
minus the amounts distributed or loaned, if
applicable, from such Account since such previous
Valuation Date plus any contributions pursuant to
Article IV made since such previous Valuation Date to
all such Accounts; and
(b) The denominator of which is the total of all portions
of the Account balances allocated to the Trust Fund
as of the close of the previous Valuation Date minus
the total amounts distributed or loaned, if
applicable, from all such portions of the Accounts
since such previous Valuation Date, plus all
contributions pursuant to Article IV made since such
previous Valuation Date to all such Accounts.
27
(4) Allocation of Forfeitures. The total of all Forfeitures under
this Plan shall be applied first to fund any restorations of
Forfeitures pursuant to Section 10.06 hereof, and thereafter
shall be applied to reduce the amount of each Employer's
Company Contributions under Section 4.01. Forfeitures shall be
applied to reduce each Employer's Company Contribution in the
proportion that each such Employer's Company Contributions for
such Plan Year bears to the total of all Employers' Company
Contributions for such Plan Year.
(5) Computations. All of the computations required to be made
under the provisions of this Article VI, when made, shall be
conclusive with respect thereto and shall be binding upon all
the Participants, Beneficiaries, Alternate Payees, and all
other persons ever having an interest in the Trust Fund.
6.05 Correction of Participants' Accounts. If an error or omission is
discovered in the Accounts of a Participant, or in the amount
distributed to a Participant, the Benefits Advisory Committee, as
authorized by Section 15.05 hereof, shall make such equitable
adjustments in the records of the Plan as may be necessary or
appropriate to correct such error or omission as of the Plan Year in
which such error or omission is discovered. Further, an Employer may,
in its discretion, make a special contribution to the Plan which shall
be allocated by the Benefits Advisory Committee only to the Accounts of
a Participant as is necessary to correct such error or omission.
6.06 Investments.
(1) Funding Policy. The Investment Committee shall establish a
funding policy and method consistent with the objectives of
the Plan, the investments authorized under the Trust Agreement
and the requirements of Title I of ERISA. The Benefits
Advisory Committee shall periodically review such funding
policy and method. In establishing and reviewing such funding
policy and method, the Benefits Advisory Committee shall
endeavor to determine the Plan's short-term and long-term
objectives and financial needs, taking into account the need
for liquidity to pay benefits and the need for investment
growth. All actions of the Benefits Advisory Committee taken
pursuant to this Subsection 6.06(1) shall be communicated to
the Trustee and to the Board of Directors of the Sponsoring
Company.
(2) Investment of Cash. Any cash received by the Trustee for the
Account of any Participant or credited to the Account of any
Participant shall be invested to the extent practicable in
common shares or other securities of the Employer. The Trustee
is authorized to invest and hold up to one hundred percent
(100%) of the Trust assets in Qualifying Employer Securities.
(3) Reservation of Cash. In the implementation of its duties under
Subsection 6.06(1), the Benefits Advisory Committee may
communicate to the Trustee the need to reserve from permanent
investment from time to time such amounts of cash as it deems
necessary or advisable in the administration of the Plan. Such
cash shall be reserved equally from all investment funds
administered as part of the Trust Fund.
6.07 Voting of Company Stock.
(1) Voting of Stock - Registered Stock. Each Participant and
Former Participant shall be entitled to instruct the Trustee
in the manner of voting the number of shares of Company Stock
held in the Trust Fund which have been allocated to his
Account. For all purposes of this Section 6.07(1), the shares
of Company Stock allocated to an active Participant's Account
(not
28
including Former Participants) shall be treated as including a
portion of the unallocated shares of Company Stock held in a
Suspense Account; for this purpose the unallocated shares
shall be considered allocated to active Participants' Accounts
by assuming that all such unallocated shares of Company Stock
had been allocated to active Participants in the Plan as of a
date selected by the Benefits Advisory Committee, based upon
such active Participants' comparative Company Stock Account
balances (i.e., Company Stock in an active Participant's
Account as a percentage of all Company Stock in the Accounts
of all active Participants). The Trustee shall establish
procedures to solicit instructions from Participants with
respect to voting shares of Company Stock allocated to their
Accounts. The Trustee shall be bound to follow the
instructions of Participants, acting as Named Fiduciaries
under Section 401(a)(1) of ERISA, with respect to voting
shares of Company Stock which have been allocated (or treated
as having been allocated) to Accounts with fractional shares
being voted on a combined basis to the extent possible to
reflect the directions of the voting Participants; provided,
however, that if a Participant does not respond in a timely
fashion to the solicitation of voting instructions, the shares
of Company Stock allocated (or treated as having been
allocated) to such Participant's Accounts shall, to the extent
consistent with ERISA, be voted by the Trustee in the same
manner (and in the same proportions) as the shares for which
the Trustee does receive instructions from Participants.
Reasonable means shall be employed by the Trustee to provide
confidentiality with respect to the voting by such
Participants and the Trustee shall hold such directions in
confidence and shall not divulge or release such directions to
any person, including all Employers or any director, officer,
employee or agent of an Employer, it being the intent of this
provision of this Section to ensure that the Employers (and
their directors, officers, employees and agents) cannot
determine the direction given by any Participant.
(2) Voting of Company Stock - Non-Registered Stock.
Notwithstanding the provisions of Section 6.07(1), if any
Company Stock allocated to a Participant's Account is not a
"registration type class of securities," the Participant shall
be entitled to instruct the Trustee with respect to voting
such Company Stock (in accordance with the provisions of
Section 6.07(1)) only with respect to any corporate matter
which involves the approval or disapproval of any corporate
merger or consolidation, recapitalization, reclassification,
liquidation, dissolution, sale of substantially all assets of
a trade or business, or such similar transaction as the
Secretary of the Treasury may prescribe in regulations
pursuant to the provisions of Section 409(e) of the Code.
If a matter is to be submitted to the holders of Company Stock
which is not a "registration type class of securities" and it
is not necessary that the Participant be entitled to instruct
the Trustee with respect to voting in accordance with this
Section, the Trustee, in its discretion, shall vote all shares
of Company Stock held by it (or exercise dissenter's rights,
if applicable) after consultation with the Benefits Advisory
Committee. "Registration type class of securities" shall mean
any class of securities required to be registered under
Section 12 of the Securities Exchange Act of 1934, or exempt
from such registration solely by reason of Section 12(g)(2)(h)
(concerning interests in pooled investment vehicles issued to
annuity plans or qualified pension, profit sharing, or stock
bonus plans.)
29
ARTICLE VII
RETIREMENT BENEFITS
A Participant's Company Contribution Account shall fully vest on his Retirement
Date or Early Retirement Date, provided such Participant is employed by an
Employer or an Affiliated Company on such date. A Participant who continues in
the Employer's employment after his Retirement Date or Early Retirement Date
shall continue to be a Participant in the Plan until his actual retirement. Upon
actual retirement on or after his Retirement Date or Early Retirement Date, a
Participant shall be entitled to the benefits provided for in this Article VII.
Subject to the provisions of Subsections 11.04(4), 11.05(1), 14.03(2) and
14.03(3) hereof, any Participant who becomes entitled to benefits under this
Article VII shall receive benefits equal to the total amounts in his Accounts
plus any contributions due and owing to such Participant pursuant to Article IV
for the Plan Year in which he retired but which have not been credited to his
respective Accounts. Payment upon retirement shall be made by the Trustee at the
direction of the Benefits Advisory Committee at the time and manner provided in
Article XI hereof.
ARTICLE VIII
DISABILITY BENEFITS
8.01 Disability Retirement Benefits. If a Participant retires by reason of
Total and Permanent Disability while in the employ of an Employer or an
Affiliated Company or on Leave of Absence, his Company Contribution
Account shall fully vest and, subject to the provisions of Subsections
11.04(4), 11.05(1), 14.03(2) and 14.03(3) hereof, he shall be entitled
to receive benefits equal to the total amounts in his Accounts plus any
contributions due and owing to such Participant pursuant to Article IV
for the Plan Year in which he retires on account of Total and Permanent
Disability but which have not been credited to his respective Accounts.
Payments resulting from a Participant's retirement on account of Total
and Permanent Disability shall be made by the Trustee at the direction
of the Benefits Advisory Committee at the time and in the manner
provided in Article XI hereof.
8.02 Determination of Disability. The Benefits Advisory Committee shall
determine whether a Participant has suffered Total and Permanent
Disability as provided for in Section 2.43 hereof, and its
determination in that respect is binding upon the Participant. The
provisions of this Article VIII shall be uniformly and consistently
applied to all Participants.
ARTICLE IX
DEATH BENEFITS
9.01 Death Benefits. Upon the death of a Participant while in the employ of
an Employer or an Affiliated Company or on Leave of Absence, subject to
the provisions of Subsections 11.04(4), 11.05(1), 14.03(2) and 14.03(3)
hereof, his Beneficiary, determined in accordance with Section 9.02
hereof, shall receive, provided proper proof of death has been filed
with the Benefits Advisory Committee, the full amount of his Accounts
plus any contributions due and owing to such Participant pursuant to
Article IV for the Plan Year in which he dies but which have not been
credited to his respective Accounts.
Upon the death of a Participant who is no longer employed by an
Employer or an Affiliated Company, his Beneficiary, determined in
accordance with Section 9.02, shall receive the vested balance of such
Participant's Accounts.
30
Payments resulting from the death of a Participant shall be made by the
Trustee at the direction of the Benefits Advisory Committee at the time
and in the manner provided in Article XI hereof.
9.02 Designation of Beneficiaries.
(1) Subject to the provisions of Subsections 9.02(2),14.03(2) and
14.03(3) hereof, each Participant may designate a Beneficiary
or Beneficiaries, and contingent Beneficiary or Beneficiaries,
if desired, including the executor or administrator of his
estate, to receive his interest in the Trust Fund in the event
of his death, but the designation of a Beneficiary shall not
be effective for any purpose unless and until it has been
filed with the Benefits Advisory Committee on the form
provided therefor. If the Participant has a surviving spouse
and the surviving spouse consented to the naming of another
Beneficiary in accordance with Subsection 9.02(2) hereof, but
the deceased Participant failed to name a Beneficiary in the
manner herein prescribed, or the Beneficiary or Beneficiaries
so named predecease the Participant, the amount, if any, which
is payable hereunder in respect of such deceased Participant
shall be paid to the surviving spouse. If the Participant does
not have a surviving spouse and the deceased Participant
failed to name a Beneficiary in the manner herein prescribed,
or the Beneficiary or Beneficiaries so named predecease the
Participant, the amount, if any, which is payable hereunder in
respect of such deceased Participant shall be paid to his
surviving children in equal shares, or, if he has no surviving
children at the time of his death, then to the estate of the
last to dies of the Participant and his Beneficiary, by
payment in a lump sum. Notwithstanding the foregoing, the
Benefits Advisory Committee may elect to have a court of
applicable jurisdiction determine to whom a payment or
payments should be made. Any payment made to any person
pursuant to the power and discretion conferred upon the
Benefits Advisory Committee by the preceding sentence shall
operate as a complete discharge of all obligations under the
Plan in respect of such deceased Participant and shall not be
subject to review by anyone, but shall be final, binding and
conclusive on all persons ever interested hereunder.
Subject to the provisions of Subsection 9.02(2) below, a
Participant may from time to time change any Beneficiary
designated by him without notice to such Beneficiary, under
such rules and regulations as the Benefits Advisory Committee
may from time to time promulgate, but the last Beneficiary
designation filed with the Benefits Advisory Committee shall
control.
(2) With respect to a Participant who has been credited with an
Hour of Service on or after August 23, 1984, notwithstanding
any other provision herein to the contrary, but subject to the
provisions of Subsection 14.03(2) hereof, if, as of such
Participant's death, such Participant is married, such
Participant's Accounts shall, on his death, be paid to the
surviving spouse to whom he was married at the date of his
death unless the surviving spouse has made a Qualified Consent
to the payment of any or all of said Accounts to a designated
Beneficiary other than the surviving spouse. "Qualified
Consent" means an irrevocable written consent executed by the
Participant's spouse which acknowledges the effect of the
consent and is witnessed by a Plan representative or a notary
public. A Participant may, after obtaining a Qualified
Consent, change his Beneficiary designation as permitted by
Subsection 9.02(1) above, but any such change is subject to
the requirements of this Subsection 9.02(2) and will require
another Qualified Consent should the spouse, if surviving, not
be the sole Beneficiary of all amounts in the Account, unless
a Qualified Consent previously executed by such spouse
expressly authorizes changes in the Beneficiary without
further consent of the spouse. A Qualified Consent is
effective only with respect to the spouse who executes it. If
the Plan Administrator is satisfied that there is no spouse,
or that the spouse cannot reasonably
31
be located, or in such other circumstances as permitted by
governmental regulations, no Qualified Consent shall be
required as a condition to payment, under Section 9.01 hereof,
to a Beneficiary who is not the surviving spouse.
ARTICLE X
EMPLOYMENT TERMINATION BENEFITS
10.01 Vesting Upon Termination of Employment. Subject to the provisions of
Section 10.05 and Subsections 11.04(4), 11.05(1), 14.03(2) and 14.03(3)
hereof, in the event of the Termination of Employment of a Participant,
such Participant shall be entitled to receive a percentage of the
amount in his Company Contribution Account plus any Company
Contributions due and owing to such Participant pursuant to Article IV
for the Plan Year in which he suffers a Termination of Employment but
which have not been credited to his Company Contribution Account and
shall also be entitled to receive the entire balance in his other
Accounts plus any other contributions due and owing to such Participant
pursuant to Article IV for the Plan Year but which have not been
credited to his Accounts. The percentage of Company Contributions to
which the Participant shall be entitled will be determined as follows:
<Table>
<Caption>
NONFORFEITABLE PERCENTAGE
VESTING YEARS OF SERVICE OF ACCOUNT
Less than 3 years 0%
3 years but less than 4 years 20%
4 years but less than 5 years 40%
5 years but less than 6 years 60%
6 years but less than 7 years 80%
7 years or more 100%
</Table>
Payment pursuant to this Article X shall be made by the Trustee, at the
direction of the Benefits Advisory Committee, at the time and manner
provided in Article XI hereof.
10.02 Determination of Vesting Years of Service. All Vesting Years of Service
(whether or not continuous) shall be taken into account, except as
follows:
(1) Vesting Years of Service with any Employer or any Affiliated
Company before the Participant attained age eighteen (18); and
(2) Vesting Years of Service not taken into account in accordance
with Section 10.03.
10.03 Breaks in Service. Except as otherwise provided in Section 10.02,
subject to the provisions of Section 10.06 hereof, Vesting Years of
Service shall be disregarded as follows:
(1) In the case of any Participant who suffers a Termination of
Employment and who has a One-Year Break in Service, Vesting
Years of Service before such break shall not be taken into
account until such Participant has completed a Vesting Year of
Service after such break.
(2) In the case of any Participant who suffers a Termination of
Employment and who has no vested amount in his Company
Contribution Account in accordance with the provisions of
32
Section 10.01 hereof, Vesting Years of Service before any
period of One-Year Breaks in Service shall not be taken into
account if such Participant had five (5) or more consecutive
One-Year Breaks in Service within such period. Such aggregate
number of Vesting Years of Service before such period shall be
deemed not to include any Vesting Years of Service not
required to be taken into account under this Section 10.03 by
reason of any prior break in Service.
(3) In the case of any Participant who has at least five (5)
consecutive One-Year Breaks in Service, Vesting Years of
Service after such five (5)-year period shall not be taken
into account for purposes of determining the vested amount in
his Company Contribution Account which accrued prior to such
five (5)-year period. However, Vesting Years of Service
accrued both before and after such five (5)-year period will
count for purposes of determining the vested amount in his
Company Contribution Account which accrues after such five
(5)-year period.
10.04 Forfeiture - Qualifying Employer Securities. If a portion of a
Participant's Account is forfeited, Qualifying Employer Securities
allocated to such account after being released from a Suspense Account
in accordance with the provisions of Section 5.04 shall be forfeited
only after all other assets allocated to such Account are forfeited. If
more than one (1) class of such Qualifying Employer Securities have
been allocated to the Participant's Account and such securities are
forfeited, the Participant shall forfeit the same proportion of each
such class.
10.05 Forfeiture of Nonvested Amount.
(1) If a Participant has a Termination of Employment at a time
when he has no vested amount in his Company Contribution
Account, the amount in his Company Contribution Account shall
be deemed cashed out and forfeited as of the date on which
such Participant incurs such Termination of Employment.
(2) If a partially vested Participant has a Termination of
Employment and has received a distribution of the vested
amount in his Company Contribution Account as provided for in
Sections 10.01 and 11.04 hereof on or prior to the close of
the second Plan Year following the Plan Year in which such
Termination of Employment occurs, the excess of the amount in
his Company Contribution Account over the vested amount (the
"Nonvested Amount") shall be forfeited as of the date on which
such Participant receives such cash-out distribution.
(3) If a partially vested Participant has a Termination of
Employment and has not received a distribution of the vested
amount in his Company Contribution Account on or prior to the
close of the second Plan Year following the Plan Year in which
such Termination of Employment occurs, the Nonvested Amount
shall be forfeited as of the earlier of: (a) the last day of
the Plan Year in which such Participant has incurred five (5)
consecutive One-Year Breaks in Service, or (b) the date on
which such Participant receives his distribution.
(4) If a partially vested Participant who has a Termination of
Employment and has not received a distribution of the vested
amount in his Company Contribution Account as provided in
Sections 10.01 and 11.04 hereof on or prior to the close of
the second Plan Year following the Plan Year in which such
Termination of Employment occurs, is reemployed prior to
incurring five (5) consecutive One-Year Breaks in Service,
such Participant shall not forfeit the Nonvested Amount, and
the vested amount in his Company Contribution Account shall
33
be determined in accordance with the provisions of this
Article X without regard to such Participant's cessation of
employment.
(5) All amounts forfeited as provided in this Section 10.05 are
herein referred to as "Forfeitures." Subject to the
restorations pursuant to Section 10.06 hereof, any Forfeitures
shall be allocated as provided in Subsection 6.04(4) hereof.
(6) If a portion of a Participant's Account is forfeited, Company
Stock allocated to his Account shall be forfeited only after
all other assets in his Account. If interests in more than one
(1) class of Company Stock have been allocated to the
Participant's Account, the Participant shall be treated as
forfeiting the same proportion of each such class.
10.06 Restoration of Forfeited Nonvested Amount.
(1) In the event a Participant: (a) who has received a
distribution of the vested amount in his Company Contribution
Account in accordance with Subsection 10.05(2) hereof, or (b)
who has no vested amount in his Company Contribution Account
at the time of his Termination of Employment as described in
Subsection 10.05(1) hereof is reemployed by an Employer prior
to the date on which such Participant has incurred five (5)
consecutive One-Year Breaks in Service, an amount equal to his
Nonvested Amount which was forfeited pursuant to Section 10.05
hereof (without adjustment for any gains or losses in the
Trust Fund subsequent to such Forfeiture) shall be restored to
such Company Contribution Account; provided, however, that if
a Participant received a distribution of the vested portion of
his Company Contribution Account, such restoration shall not
occur unless and until: (a) such Participant repays to the
Plan the full amount of his Company Contribution Account
previously distributed to him, and (b) such Participant's
repayment is made before the earlier of the end of (i) the
five (5)-year period beginning with the Participant's Date of
Reemployment or (ii) a period of five (5) consecutive One-Year
Breaks in Service commencing after the date on which such
Participant received such distribution. Upon the restoration
of a Company Contribution Account as provided for herein, the
vested amount in such Company Contribution Account (whether
attributable to amounts restored, amounts, if any, repaid by
the Participant, or additional amounts added to such Account
after such reemployment) shall thereafter be determined in
accordance with the provisions of this Article X without
regard to such Participant's original Termination of
Employment.
(2) The restoration of a Participant's Nonvested Amount in his
Company Contribution Account as provided for in Subsection
10.06(1) above, shall be made from the Forfeitures which
occurred during the Plan Year of such restoration before any
use of such Forfeitures as otherwise provided in Subsection
6.04(4) hereof. Should such Forfeitures be insufficient to
restore the aggregate Nonvested Amounts owing to any
Participant under Subsection 10.06(1) above, the additional
amount necessary for restoration shall be made from Net
Earnings of the Trust Fund for the Plan Year. Should such
Forfeitures and Net Earnings of the Trust Fund be insufficient
to restore the aggregate Nonvested Amounts, the additional
amount necessary for restoration shall be made from Company
Contributions, if any, for the Plan Year, which Company
Contributions shall be supplemented for the Plan Year by an
amount equal to such remainder.
10.07 Reemployment of Participant with Partially Vested Company Contribution
Account. This Section 10.07 shall apply to any Participant who: (1) has
a Termination of Employment, at a time when he is partially vested in
his Company Contribution Account, (2) does not receive a distribution
of the
34
vested portion of the Company Contribution Account, (3) has five (5) or
more consecutive One-Year Breaks in Service, and (4) is reemployed by
an Employer. After such reemployment, the vested portion of such
Participant's Company Contribution Account, valued as of the Valuation
Date immediately preceding the time of his reemployment, shall be
credited to a separate account (his "Employment Termination Account")
which shall be fully vested and nonforfeitable. Following such
Participant's reemployment, all subsequent Company Contributions and
Forfeitures, if any, allocated to such Participant shall be allocated
to his Company Contribution Account and shall be subject to the vesting
provisions of this Plan otherwise applicable to such Participant. Any
adjustments provided for in Article VI hereof shall be made separately
with respect to such Participant's Employment Termination Account and
his Company Contribution Account, and distribution of such Employment
Termination Account shall be made at such time and in the same manner
as provided in the Plan for the distribution of a Participant's other
Accounts in the Plan.
ARTICLE XI
PAYMENT OF BENEFITS
11.01 Methods of Payment of Benefits. The Trustee shall make a distribution
of benefits pursuant to Articles VII, VIII, IX, or X hereof, as the
case may be, in accordance with any one or a combination of the methods
of distribution set forth in this Section 11.01, as elected by the
Participant or Beneficiary on such forms as are provided by the
Benefits Advisory Committee. The available methods of distribution,
singly or in any combination, are as follows:
(1) Installment Payments. Benefits may be paid in the form of
approximately equal annual, semiannual or quarterly
installments, over a fixed period of time unrelated to the
life (but not the life expectancy) of any person. The
Participant or his Beneficiary may accelerate installment
payments by electing to have the unpaid balance distributed to
such Participant or Beneficiary in a single lump sum cash
payment.
(2) Lump-Sum Distribution. Benefits may be paid in the form of a
total distribution of the amount payable, in cash or in whole
shares of Company Stock and any fractional shares of Company
Stock in cash, to a Participant or Beneficiary within one
taxable year after the close of the Plan Year in which (a)
such Participant's Termination of Employment, attainment of
Normal Retirement Age or Disability occurs or within one
taxable year after the close of the Plan Year of the
Participant's death for a Beneficiary or (b) the fifth Plan
Year following the Plan Year in which the Participant
otherwise had a Termination of Employment and was not
subsequently reemployed by the Employer or an Affiliated
Employer.
(3) By transfer to another plan qualified under Section 401(a) of
the Code.
(4) By transfer to:
(a) an individual retirement account described in Section
408(a) of the Code, or
(b) an individual retirement annuity described in Section
408(b) of the Code.
(5) By payment in substantially equal periodic payments (not less
frequently than annually) over a period not longer than the
greater of five (5) years or, in the case of a Participant
with a vested Account balance in excess of Five Hundred
Thousand Dollars ($500,000), five (5)
35
years plus one (1) additional year (but no more than five (5)
additional years) for each One Hundred Thousand Dollars
($100,000) or fraction thereof by which such benefit exceeds
Five Hundred Thousand Dollars ($500,000).
(6) By direct transfer to a plan qualified under Section 401(a) of
the Code which accepts direct transfer contributions, an
individual retirement account describe in Section 408(a) of
the Code, an individual retirement annuity described in
Section 408(b) of the Code (other than an endowment contract)
or an annuity plan described in Section 403(a) of the Code;
provided, that the distribution form elected pursuant to this
Section 11.01(6) qualified for transfer pursuant to Section
401(a)(31) of the Code. The Benefits Advisory Committee shall
provide each Participant entitled to a distribution of his
vested Account balance with a written explanation of his
distribution options under the Plan and shall prescribe the
procedures a Participant must follow to request a direct
transfer pursuant to this Section 11.01(6).
(7) Notwithstanding any provision of this Plan to the contrary, a
Participant may not elect that his Accounts be paid in the
form of a life annuity.
If a Participant does not make an election hereunder, his vested
Account balance shall automatically be paid in the form specified in
Section 11.01(1) above. Notwithstanding the foregoing provisions of
this Section 11.01, the phrase "payment in a lump sum" as used herein
shall not include the distribution of an Insurance Contract providing
for (1) a life annuity to a Participant, (2) a joint and survivor
annuity to a Participant and his Beneficiary, or (3) any other form of
payment having the effect of (1) or (2) above.
11.02 Form of Payment. A Participant, Former Participant, or the Beneficiary
of a deceased Participant or Former Participant may elect to have his
vested Account balance distributed entirely in cash or in shares of
Company Stock; provided, however, that if Company Stock is elected, the
Benefits Advisory Committee shall direct the Trustee to pay the value
of any fractional shares of Company Stock in cash. Any whole shares of
Company Stock distributed pursuant to this Section 11.02 may be subject
to a right of first refusal in accordance with Section 11.12 hereof,
and may be eligible for put option rights in accordance with Section
11.10 hereof. However, if the Company's charter or bylaws restrict the
ownership of substantially all outstanding Company Stock to Associates
or to the Trust, any distribution hereunder may be made entirely in
cash without granting the right to demand a distribution of Company
Stock.
A Participant, Former Participant or Beneficiary shall make an election
under this Section 11.02 by filing an election form with the Benefits
Advisory Committee on or before the date that is sixty (60) days prior
to the date that the distribution of his vested Account balance
hereunder is to commence. If a Participant, Former Participant, or
Beneficiary does not make an election as to the form of distribution of
his vested Account balance, the Benefits Advisory Committee shall
direct the Trustee to distribute the Participant's vested Account
balance in cash as provided in Section 11.01.
11.03 Securities Law Restrictions. If at the time shares of Company Stock are
to be distributed to a Participant (or, in the event of his death, his
Beneficiary), to the extent deemed necessary or desirable by the
Benefits Advisory Committee, the Benefits Advisory Committee may, as a
condition precedent to the distribution of such shares, require from
the Participant (or his Beneficiary) such written representations, if
any, concerning his or their intentions with regard to the retention or
disposition of the Company Stock being distributed or such written
covenants and agreements, if any, as to the manner of any such
disposition of such shares as, in the opinion of the Benefits Advisory
Committee, may be necessary to ensure that any such disposition by the
Participant or his Beneficiary will not
36
result in a violation of the Securities Act of 1933, as amended, or any
similar or superseding statute or statutes, or any other applicable
statute, statutes, or regulations then in effect. The Trustee may stamp
or imprint on the stock certificates issued to the Participant or his
Beneficiary pursuant to a distribution from the Trust a legend
referring to (1) the provisions of the immediately preceding sentence
and to any representations, covenants, or agreements made by the
Participant or his Beneficiary with respect thereto, and (2) the right
of first refusal provisions and restrictions of Section 11.12.
11.04 Time for Distribution of Benefits.
(1) Upon a Participant's: (a) retirement on or after his
Retirement Date or Early Retirement Date, (b) retirement due
to Total and Permanent Disability, (c) death, or (d)
Termination of Employment, subject to the provisions of this
Section 11.04 and Section 11.05, the Participant or his
Beneficiary shall be entitled to a distribution pursuant to
Article VII, VIII, IX or X, as the case may be. Such
distribution will be valued as of the Valuation Date
immediately preceding the actual date of distribution. A
Participant who remains in the employ of the Company past his
or her Retirement Date shall not be required to receive a
distribution hereunder until after such Participant's actual
retirement, except that payment of such Participant's Accounts
shall commence not later than the Required Beginning Date.
(2) Distribution forms will be sent to the Participant or his
Beneficiary on or shortly following the date of such
Participant's retirement on or after his Retirement Date or
Early Retirement Date, retirement due to Total and Permanent
Disability, death or Termination of Employment, and, except as
otherwise provided in Subsection 11.04(2) hereof, such amounts
shall be distributed within ninety (90) days following receipt
by the Benefits Advisory Committee of all completed
distribution forms from the Participant, or as soon as
administratively practicable thereafter, but in no event later
than the sixtieth (60th) day after the close of the Plan Year
in which occurs the latest of:
(a) The date on which the Participant attains or would
have attained sixty-five (65) years of age or if
earlier, his Retirement Date;
(b) The tenth (10th) anniversary of the year in which the
Participant commenced participation in the Plan; or
(c) The date the Participant terminates his employment
with the Employer for any reason.
(3) A Former Participant or a Beneficiary may be entitled to
receive more than one (1) distribution from the Plan. Account
balances will be valued as of the Valuation Date prior to the
actual date of distribution. If a Participant had not received
an allocation of contributions to which he was entitled under
Article IV or dividends to which he was entitled as of his
date of termination of employment, such Participant will be
entitled to an additional distribution, which will be made in
accordance with procedures established by the Benefits
Advisory Committee. Notwithstanding the foregoing, a
Participant or Beneficiary who is entitled to more than one
(1) distribution as described herein may elect to delay his or
her initial distribution and receive one (1) distribution that
includes the additional allocation, even if his initial
distribution is Five Thousand Dollars ($5,000) or less, if
such Participant or Beneficiary indicates this election on his
or her initial distribution forms.
37
(4) Notwithstanding the provisions of Subsection 11.04(1), and
subject to Section 11.05 below, for distributions occurring
prior to January 1, 1998 if a Participant has a Termination of
Employment or retires due to Total and Permanent Disability
and the vested portion of the Participant's Accounts at such
time exceeds or ever exceeded at the time of any prior
distribution Three Thousand Five Hundred Dollars ($3,500), the
amounts owing to such Participant will not be distributed
until such Participant attains age sixty-five (65) or dies,
unless such Participant delivers to the Plan Administrator his
written consent to an earlier distribution. For distributions
occurring in Plan Years beginning on or after January 1, 1998
and on or prior to March 22, 1999, notwithstanding the
provisions of Subsection 11.04(1), and subject to Section
11.05 below, if a Participant has a Termination of Employment
or retires due to Total and Permanent Disability and the
vested portion of the Participant's Accounts at such time
exceeds or at the time of any prior distribution exceeded Five
Thousand Dollars ($5,000), the amounts owing to such
Participant will not be distributed until such Participant
attains age sixty-five (65) or dies, unless the Participant
delivers to the Plan Administrator his written consent to an
earlier distribution. For distributions occurring after March
22, 1999, notwithstanding the provisions of Subsection
11.04(1), and subject to Section 11.05 below, if a Participant
has a Termination of Employment or retires due to Total and
Permanent Disability and the vested portion of the
Participant's Accounts at such time exceeds Five Thousand
Dollars ($5,000), the amounts owing to such Participant will
not be distributed until such Participant attains age
sixty-five (65) or dies, unless the Participant delivers to
the Plan Administrator his written consent to an earlier
distribution.
(5) (a) For distributions prior to January 1, 1998, if at the
time a distribution is to be made pursuant to
Subsection 11.04(1) or 11.05(1) to a Participant, or
in the case of his death, to his Beneficiary or
Beneficiaries, the value of the vested portion of his
Accounts does not exceed or did not ever exceed at
the time of a prior distribution Three Thousand Five
Hundred Dollars ($3,500), then his total Account
shall be paid to or for the benefit of the
Participant (or, in the case of his death, to or for
the benefit of his Beneficiary or Beneficiaries) as
provided in Subsection 11.04(1), and such Participant
or Beneficiary or Beneficiaries may not defer their
distribution.
(b) For distributions occurring in Plan Years beginning
on and after January 1, 1998 and on or prior to March
22, 1999, if at the time a distribution is to be made
pursuant to Subsection 11.04(1) or 11.05(1) to a
Participant, or in the case of his death, to his
Beneficiary or Beneficiaries, the value of the vested
portion of his Accounts does not exceed Five Thousand
Dollars ($5,000) at the time of the current
distribution or at the time of any prior
distribution, then his total Account shall be paid to
or for the benefit of the Participant (or, in the
case of his death, to or for the benefit of his
Beneficiary or Beneficiaries) as provided in
Subsection 11.04(1), and such Participant or
Beneficiary or Beneficiaries may not defer their
distribution. Notwithstanding the provisions of
Subsection 11.04(1), and subject to Section 11.05
below, if a Participant has a Termination of
Employment or retires due to Total and Permanent
Disability and the vested portion of the
Participant's Accounts at such time or at the time of
any previous distribution exceeds Five Thousand
Dollars ($5,000), the amounts owing to such
Participant will not be distributed until such
Participant attains age sixty-five (65) or dies,
unless the Participant delivers to the Plan
Administrator his written consent to an earlier
distribution.
(c) For distributions occurring after March 22, 1999, if
at the time a distribution is to be made pursuant to
Subsection 11.04(1) or 11.05(1) to a Participant, or
in the case of
38
his death, to his Beneficiary or Beneficiaries, the
value of the vested portion of his Accounts does not
exceed Five Thousand Dollars ($5,000) at the time of
the current distribution, then his total Account
shall be paid to or for the benefit of the
Participant (or, in the case of his death, to or for
the benefit of his Beneficiary or Beneficiaries) as
provided in Subsection 11.04(1), and such Participant
or Beneficiary or Beneficiaries may not defer their
distribution. Notwithstanding the provisions of
Subsection 11.04(1), and subject to Section 11.05
below, if a Participant has a Termination of
Employment or retires due to Total and Permanent
Disability and the vested portion of the
Participant's Accounts at such time exceeds Five
Thousand Dollars ($5,000), the amounts owing to such
Participant will not be distributed until such
Participant attains age sixty-five (65) or dies,
unless the Participant delivers to the Plan
Administrator his written consent to an earlier
distribution.
(6) If a distribution is one to which Code Sections 401(a)(11) and
417 do not apply, such distribution may commence less than
thirty (30) days after the notice required under Section
1.411(a)-11(c) of the Income Tax Regulations, provided that
the Benefits Advisory Committee clearly informs the
Participant that the Participant has a right to a period of at
least thirty (30) days after receiving the notice to consider
the decision of whether or not to elect a distribution (and a
particular distribution option) and the Participant, after
receiving the notice, affirmatively elects a distribution.
(7) Notwithstanding any provision contained herein to the
contrary, if any portion of a Participant's Account balance
consists of Qualifying Employer Securities acquired with the
proceeds of an Exempt Loan that has not been fully repaid, the
Benefits Advisory Committee may elect to defer the
distribution of such Qualifying Employer Securities until the
last day of the Plan Year following the Plan Year in which the
Exempt Loan is repaid. The Benefits Advisory Committee shall
apply the provisions of this Section 11.04(7) in a
nondiscriminatory and uniform manner.
11.05 Limitations on Timing. Notwithstanding any other provision of the Plan
to the contrary, distributions must occur at least as rapidly as
required under this Section 11.05.
(1) A Participant's entire interest in the Plan shall be
distributed to him no later than the Required Beginning Date
based on the balance in his Accounts as of the Valuation Date
coinciding with or immediately preceding the Required
Beginning Date.
If a Participant dies prior to the payment of benefits, the
Participant's benefits shall be distributed as soon as
practicable following the Participant's death, and, in any
event, within five (5) years of the Participant's death.
All distributions of or with respect to a Participant's
benefits shall be made in accordance with Code Section
401(a)(9) (including the regulations thereunder), and the
provisions of the Plan relating to the payment of such
distributions shall be interpreted and applied in accordance
with Code Section 401(a)(9). The provisions of Code Section
401(a)(9) shall control over any distribution option or other
provision of the Plan which is inconsistent with the
provisions of Code Section 401(a)(9).
(2) As of the first Distribution Calendar Year, distributions, if
not made in a lump sum, may only be made over one of the
following periods (or a combination thereof):
39
(a) a period certain not extending beyond the life
expectancy of the Participant, or
(b) a period certain not extending beyond the joint and
last survivor expectancy of the Participant and a
designated Beneficiary.
(3) If the Participant's interest is to be distributed in other
than a lump sum, the following minimum distribution rules
shall apply on or after the Required Beginning Date:
(a) If a Participant's Benefit is to be distributed over
(i) a period not extending beyond the life expectancy
of the Participant or the joint life and last
survivor expectancy of the Participant and the
Participant's designated beneficiary or (ii) a period
not extending beyond the life expectancy of the
designated Beneficiary, the amount required to be
distributed for each calendar year, beginning with
distributions for the first Distribution Calendar
Year, must at least equal the quotient obtained by
dividing the Participant's Benefit by the Applicable
Life Expectancy.
(b) The amount to be distributed each year, beginning
with distributions for the first Distribution
Calendar Year shall not be less than the quotient
obtained by dividing the Participant's Benefit by the
lesser of (i) the Applicable Life Expectancy or (ii)
if the Participant's spouse is not the designated
Beneficiary, the applicable divisor determined from
the table set forth in Q&A-4 of Section 1.401(a)(9)-2
of the Proposed Regulations. Distributions after the
death of the Participant shall be distributed using
the Applicable Life Expectancy in Subsection
11.05(3)(a) above as the relevant divisor without
regard to Proposed Regulations Section 1.401(a)(9)-2.
(c) The minimum distribution required for the
Participant's first Distribution Calendar Year must
be made on or before the Participant's Required
Beginning Date. The minimum distribution for other
calendar years, including the minimum distribution
for the Distribution Calendar Year in which the
Associate's Required Beginning Date occurs, must be
made on or before December 31 of that Distribution
Calendar Year.
(4) If a Participant dies after distribution of his or her benefit
under the Plan has commenced, the remaining portion of such
benefit will continue to be distributed at least as rapidly as
under the method of distribution being used prior to the
Participant's death.
If the Participant dies before distribution of his or her
benefit commences, the Participant's entire interest will be
distributed no later than the December 31 of the calendar year
which contains the fifth anniversary of the date of the
Participant's death except to the extent that an election is
made to receive the distribution in accordance with Subsection
11.05(4)(a) or (b) below:
(a) if any portion of the Participant's interest is
payable to a designated Beneficiary, distributions
may be made in substantially equal installments over
a period certain not greater than the life expectancy
of the designated Beneficiary commencing no later
than the December 31 of the calendar year following
the calendar year of the Participant's death;
40
(b) if the designated Beneficiary is the Participant's
surviving spouse, the date distributions are required
to begin shall not be earlier than the December 31 of
the calendar year in which the Participant would have
attained age seventy and one-half (70-1/2), or, if
later, the December 31 of the calendar year following
the calendar year in which the Participant died, and,
if the spouse dies before payments begin, subsequent
distributions shall be made as if the spouse had been
the Participant.
If the Participant's designated Beneficiary does not elect a
method of distribution by the earlier of (i) the December 31
of the calendar year in which distributions would be required
to begin under (a) or (b) of this Subsection 11.05(4), or (ii)
December 31 of the calendar year which contains the fifth
anniversary of the date of death of the Participant, the
Participant's entire interest will be distributed no later
than the December 31 of the calendar year which contains the
fifth anniversary of the Participant's death.
For purposes of this Subsection 11.05(4), any amount paid to a
child of the Participant will be treated as if it had been
paid to the surviving spouse if the amount becomes payable to
the surviving spouse when the child reaches the age of
majority.
(5) For purposes of this Section 11.05, payments will be
calculated by use of the return multiples specified in
Treasury Regulation Section 1.72-9. Life expectancy of a
Participant, or his surviving spouse, or both, may be
recalculated annually; provided, however, that if such
Participant or his surviving spouse do not elect to have his
or her life expectancy recalculated, it shall not be
recalculated; provided further, in the case of any other
designated Beneficiary, such life expectancy shall be
calculated at the time payment first commences without further
recalculation.
(6) For purposes of this Section 11.05, the following terms shall
have the following meanings:
(a) "Applicable Life Expectancy" means the life
expectancy (or joint and last survivor expectancy)
calculated using the attained age of the Participant
(or designated Beneficiary) as of the Participant's
(or designated Beneficiary's) birthday in the
applicable calendar year reduced by one (1) for each
calendar year which has elapsed since the date life
expectancy was first calculated. If life expectancy
is being recalculated, the Applicable Life Expectancy
shall be the life expectancy as so recalculated. The
applicable calendar year shall be the first
Distribution Calendar Year, and if life expectancy is
being recalculated such succeeding calendar year.
(b) "Distribution Calendar Year" shall mean a calendar
year for which a minimum distribution is required.
For distributions beginning before the Participant's
death, the first Distribution Calendar Year is the
calendar year immediately preceding the calendar year
which contains the Participant's Required Beginning
Date. For distributions beginning after the
Participant's death, the first Distribution Calendar
Year is the calendar year in which distributions are
required to begin pursuant to Subsection 11.05(4)
above.
(c) "Participant's Benefit" shall mean the Account as of
the last Valuation Date in the calendar year
immediately preceding the Distribution Calendar Year
("Valuation Calendar Year") increased by the amount
of any contributions or forfeitures allocated to the
Account as of dates in the Valuation Calendar Year
after the Valuation Date and decreased by
distributions made in the Valuation Calendar Year
after the
41
Valuation Date; provided, however, that if any
portion of the minimum distribution for the first
Distribution Calendar Year is made in the second
Distribution Calendar Year on or before the Required
Beginning Date, the amount of the minimum
distribution made in the second Distribution Calendar
Year shall be treated as if it had been made in the
immediately preceding Distribution Calendar Year.
11.06 Payments on Personal Receipt Except in Case of Legal Disability. All
payments to any Participant, Beneficiary or Alternate Payee from the
Trust Fund shall be made to the recipient entitled thereto in person or
upon his personal receipt, in a form satisfactory to the Benefits
Advisory Committee, except when the recipient entitled thereto shall be
under a legal disability, or, in the sole judgment of the Benefits
Advisory Committee, shall otherwise be unable to apply such payments in
furtherance of his own interests and advantage. The Benefits Advisory
Committee may, in such event, in its sole discretion, direct all or any
portion of such payments to be made in any one or more of the following
ways: (1) directly to such person, (2) to the guardian of his person or
of his estate, even though appointed by a court other than a Texas
state court, (3) to a custodian under any applicable Uniform Gifts to
Minors Act or Uniform Transfers to Minors Act, or (4) to a person
appointed as his personal representative.
Notwithstanding the foregoing, the Benefits Advisory Committee may
elect to have a court of applicable jurisdiction determine to whom a
payment or payments should be made. The decision of the Benefits
Advisory Committee, in each case, will be final, binding and conclusive
upon all persons ever interested hereunder, and the Benefits Advisory
Committee shall not be obliged to see to the proper application or
expenditure of any payments so made. Any payment made pursuant to the
power herein conferred upon the Benefits Advisory Committee shall
operate as a complete discharge of all obligations of the Trustee and
the Benefits Advisory Committee, to the extent of the amounts so paid.
11.07 Benefits Payable Pursuant to a Qualified Domestic Relations Order.
Notwithstanding any other provision of the Plan to the contrary,
immediate distribution of benefits payable to an Alternate Payee
pursuant to a Qualified Domestic Relations Order shall be permitted
even though the Participant whose benefits have been assigned to the
Alternate Payee would not be entitled to receive a distribution at such
time, if all of the following requirements are met: (a) the
Participant's Account is one hundred percent (100%) vested and
nonforfeitable at such time pursuant to Section 10.01 hereof, (2) the
entire amount payable to the Alternate Payee does not exceed Five
Thousand Dollars ($5,000), or the Alternate Payee has requested
immediate distribution in writing, (3) allocation pursuant to Section
6.04 hereof of all amounts required to be paid to the Alternate Payee
has been completed, and (4) the Qualified Domestic Relations Order
requires or permits immediate distribution.
In the event an Alternate Payee dies prior to distribution of the
amounts payable to the Alternate Payee pursuant to the Qualified
Domestic Relations Order, the amount payable shall be distributed as
provided in the Qualified Domestic Relations Order. If the Qualified
Domestic Relations Order does not specify how such amounts are to be
distributed in the event of the Alternate Payee's death, the Benefits
Advisory Committee may ascertain the requirements of applicable law by
filing an interpleader or declaratory judgment action in a court of
competent jurisdiction.
11.08 Restrictions on Transfer of Company Stock.
(1) Federal Securities Laws. The Company presently does not intend
to register under the Securities Act of 1993 (the "1993 Act")
the shares of Company Stock to be distributed to Participants
or their Beneficiaries. As a result, shares of Company Stock
distributed under
42
the Plan may be "restricted securities." Restricted securities
may not be sold unless they are registered under the 1933 Act
by the Company, or unless an exemption from registration is
available. If the Company does not register the shares of
Company Stock for resale by Participants or their
Beneficiaries, and if such persons desire to sell the shares
of Company Stock distributed to them, they will be required to
sell the shares of Company Stock in transactions exempt from
registration under the 1933 Act. The Company will not permit
shares of Company Stock to be transferred unless it is
satisfied that any proposed transfer of Company Stock is
exempt from the registration requirements of the 1933 Act.
(2) Other Restrictions. All transactions involving shares of
Company Stock, including distributions, purchases, and sales,
shall be made only in compliance with applicable federal and
state laws, regulations and rules. All such transactions shall
also be subject to all restrictions and limitations imposed on
all shares of Company Stock provided for in the Company's
articles of incorporation and bylaws, as amended from time to
time.
(3) Legends. The Company reserves the right to cause appropriate
legends to be imprinted on the certificates representing
shares of Company Stock distributed under this Plan to reflect
all restrictions and limitations referred to in this Section
11.08.
(4) Notices. The Benefits Advisory Committee and the Company shall
send all notices required with respect to shares of Company
Stock to the last known address of each Participant or
Beneficiary who is required to receive notices regarding such
Company Stock, and it shall be the duty of the Participant and
Beneficiary to inform the Benefits Advisory Committee of any
changes in address.
11.09 Distribution Following Diversification Election. A Participant who has
attained age fifty-five (55) and completed at least ten (10) years of
participation in the Plan may elect in writing, within ninety (90) days
after the close of each Plan Year during the applicable election
period, to diversify the investment of twenty-five percent (25%) of his
Account balance to the extent that such portion of his Account balance
exceeds the amount to which all prior elections under this Section
applies. However, this Section 11.09 shall only apply to that portion
of the Participant's Account balances attributable to Company Stock
acquired by or contributed to the Plan after December 31, 1986.
Further, this Section 11.09 shall only apply to a Participant if the
fair market value (determined at the Valuation Date immediately
preceding the first day on which the Participant would otherwise be
eligible to make an election hereunder) of Company Stock acquired by or
contributed to the Plan (and any other employee stock ownership plan
maintained by the Sponsoring Company or any affiliated company) after
December 31, 1986, and allocated to such Participant's Account, is more
than Five Hundred Dollars ($500) (or such larger de minimis amount as
may be designated by the Secretary of Treasury). If a Participant's
Account includes post-1986 Company Stock exceeding the above-described
de minimis amount at any time during the election period, then such
post-1986 Company Stock shall be subject to this Section 11.09 for all
subsequent years of the election period regardless of the value of such
Company Stock.
The portion of a Participant's Account balances subject to this Section
11.09 shall be determined by multiplying the number of shares of
Company Stock held in the Account by a fraction, the numerator of which
is the number of shares acquired by the Plan after December 31, 1986,
and allocated to the Participants' Accounts (not to exceed the number
of shares held by the Plan on the date the individual becomes eligible
to make an election under this Section) and the denominator of which is
the total number of shares held by the Plan at the date the individual
becomes eligible to make an election under this Section.
43
With respect to the last Plan Year during the election period, the
Participant may elect to diversity the investment of fifty percent
(50%) of his Account balances subject to this Section less the amount
subject to all prior elections. The applicable election period for
purposes of this Section shall be the six (6) Plan Year period
beginning with the Plan Year following the later of the Plan Year in
which the Participant attains age fifty-five (55) or the Plan Year in
which the Participant completes ten (10) years of participation in the
Plan. If a Participant elects to diversify his Account balances in
accordance with this Section, he shall receive a distribution of the
portion of his Account balances subject to the election, in whole
shares of Company Stock plus cash for any fractional shares, or an
equivalent amount of cash, no later than one hundred eighty (180) days
after the last day of the Plan Year to which the election applies. No
fractional shares shall be distributed under this Section 11.09.
11.10 Right to Require Repurchase of Shares of Company Stock. Subject to the
following provisions of this Section 11.10, if at the time of
distribution hereunder the shares of Company Stock distributed from the
Trust Fund to a Participant or his Beneficiary with respect to a Plan
Year are not publicly traded or are subject to a trading limitation (as
hereafter defined), the Former Participant or Beneficiary shall have an
option (the "Put") to require the Sponsoring Company to purchase all
shares of Company Stock distributed from the Trust Fund to the Former
Participant or Beneficiary for such Plan Year. For purposes of the
preceding sentence, a "trading limitation" is a restriction under any
federal or state securities law, or any regulation thereunder, or an
agreement, which would make the shares of Company Stock not as freely
tradeable as shares of Company Stock not subject to such restriction.
The Put may be exercised at any time during the Option Period (as
hereinafter defined) by giving the Sponsoring Company written notice of
the election to exercise the Put. The Option Price (as hereinafter
defined) shall be payable in cash and/or in installments (as provided
below) beginning not later than thirty (30) days after the Sponsoring
Company receives written notice of the election by the Former
Participant or Beneficiary to exercise the Put. The Put may be
exercised by a Former Participant or Beneficiary only during the Option
Period relating to a distribution of shares of Company Stock under
Section 11.01 to the Former Participant or Beneficiary.
The "Option Period" shall be the sixty (60) day period following the
day on which a Participant or his Beneficiary receives a distribution
of shares of Common Stock under Section 11.01; if the Put is not
exercised within this first sixty (60) day period, it may be exercised
during a second "Option Period" which shall be a sixty (60) day period
beginning on the first day of the third month of the Plan Year which
follows the Plan Year of distribution of such shares of Common Stock.
Notwithstanding the foregoing, the Option Period shall be extended by
the amount of time during which the Sponsoring Company is unable to
honor the Put by reason of applicable federal or state law.
The "Option Price" shall be the fair market value as determined
pursuant to Treasury Regulations Section 54.4975-11(d)(5) of each share
of Company Stock as determined by the Sponsoring Company as of the
Valuation Date immediately preceding the date the Put is exercised,
multiplied by the number of shares to be sold under the Put.
Notwithstanding the provisions of this paragraph, the Option Price
shall be determined on the date the Put is exercised if the transaction
involves a "Disqualified Person" within the meaning of Code Section
4975.
Payment of the Option Price for shares of Company Stock subject to the
Put shall be made either in a lump sum or in installments as determined
by the Sponsoring Company. In the event payments are made in
installments, the installment obligation shall (1) be adequately
secured as determined by the Sponsoring Company, (2) bear interest
equal to the Sponsoring Company's long-term debt borrowing rate from
its senior lenders or such other reasonable rate of interest as
determined by the Sponsoring
44
Company to be determined on a uniform and nondiscriminatory basis, but
in no event shall such rate of interest be greater than the maximum
non-usurious rate of interest permitted to be charged on such
indebtedness under Texas law, (3) require that the payments be made in
annual installments, (4) have a payment period of five (5) years from
the date the Put is exercised, (5) require that any payments pursuant
to the installment obligation must begin to be made no later than
thirty (30) days after the date the Put is exercised, and (6) permit
the Sponsoring Company to prepay the amount of any remaining
installments without penalty.
The Put granted to a Former Participant or Beneficiary hereunder shall
not be assignable, except that the Former Participant's donees or, in
the event of a Participant's death, his personal representative shall
be entitled to exercise the Put during the Option Period for which it
is applicable.
The Benefits Advisory Committee shall notify each Former Participant or
Beneficiary who is eligible to exercise the Put of the fair market
value of each share of Company Stock for the Valuation Date next
following the date the Participant receives a distribution as soon as
practicable following such determination.
The Benefits Advisory Committee and the Sponsoring Company shall send
all notices required under this Section to the last known address of a
Former Participant or Beneficiary, and it shall be the duty of such
persons to inform the Benefits Advisory Committee of any changes in
address.
The Trustee in its discretion may, with the Sponsoring Company's
consent, assume the Sponsoring Company's obligation under this Section
at the time a Former Participant or Beneficiary exercises the Put. If
the Trustee does assume the Sponsoring Company's obligations, the
foregoing provisions of this Section that apply to the Sponsoring
Company shall also apply to the Trustee.
The Put provided for in this Section shall also apply to shares of
Company Stock that are publicly traded without restriction when
distributed but which cease to be publicly traded or which become
subject to a trading limitation during the Option Period. In such
event, the Benefits Advisory Committee shall notify in writing each
Former Participant or Beneficiary to whom the Put becomes applicable
that the shares of Company Stock held by the Former Participant or
Beneficiary are subject to the Put for the remainder of such Option
Period and shall inform the Participant or Beneficiary of the terms of
the Put. If written notice is given pursuant to this Section later than
ten (10) days after the shares of Company Stock cease to be publicly
traded or become subject to a trading limitation, the period during
which the Put may be exercised shall be extended by the number of days
between such tenth day and the date such notice is actually given.
11.11 Further Contributions. Except as otherwise provided in Section 11.07,
shares of Company Stock acquired with an Exempt Loan shall not be
subject to any other Put, call, or other option, or buy-sell or similar
arrangement while held under the Plan or when distributed from the Plan
to a Participant or Beneficiary, whether or not the Plan then
constitutes an "employee stock ownership plan" within the meaning of
Section 4975(e)(7) of the Code. In addition, the provisions of the
preceding sentence and of Section 11.10 shall continue to apply to
shares of Company Stock acquired with an Exempt Loan after the Exempt
Loan has been satisfied and after the Plan ceases to constitute an
"employee stock ownership plan" as described above.
11.12 Right of First Refusal.
(1) Except as provided in this Section 11.12, any Participant,
Beneficiary, or other person to whom shares of Company Stock
have been distributed shall, prior to any sale or other
transfer
45
of such shares (whether voluntary, involuntary, or by
operation of law, or bequest and whether for consideration or
gratuitous), first offer such shares to the Trustee in
writing, and then, if the offer is refused by the Trustee, to
the Company (such offer being hereinafter referred to as a
"Participant Offer"). In the event that the shares are offered
because the Distributee has received a bona fide offer from a
prospective purchaser (such offer being hereinafter referred
to as a "Third Party Offer"), then the Participant Offer shall
state the terms of the Third Party Offer received by the
Distributee, including the number of shares and price offered
for such shares. Subject to the provisions of Subsection
11.12(2), if the Trustee shall determine that there are
sufficient Trust assets, it may purchase the shares in
accordance with the written Participant Offer to the Trust. If
the Trustee elects not to purchase the shares, the Trustee
shall notify the Company of the written Participant Offer. If
the Trustee does not purchase the shares, the Company shall
have the right to purchase the shares upon the terms provided
above.
(2) Notwithstanding the terms of any offer to purchase shares of
Company Stock under this Section 11.12, the purchase price to
the shares so offered shall be deemed to be the greater of (a)
the fair market value of the shares of Company Stock as
determined pursuant to Section 54.4975-11(d)(5) of the
Treasury Regulations or (b) the price set out in the
Participant's Offer.
Payment for the Company Stock shall be paid for by the Trustee
(or if the Trustee refuses the Participant Offer, by the
Company) in a lump sum or in installments as determined by the
Company. In the event payments are made in installments, the
installment obligation shall (a) be adequately secured as
determined by the Company, (b) bear interest equal to the
Company's long-term debt borrowing rate from its senior
lenders or such other reasonable rate of interest as
determined by the Company to be determined on a uniform and
nondiscriminatory basis, but in no event shall such rate of
interest be greater than the maximum non-usurious rate of
interest permitted to be charged on such indebtedness under
Texas law, (c) require that the payments be made in annual
installments, (d) have a payment period of five (5) years from
the date the Company Stock is purchased, (e) require that any
payments pursuant to the installment obligation must begin to
be made no later than thirty (30) days after the date the
Company Stock is purchased, and (f) permit the Company to
prepay the amount of any remaining installments without
penalty.
(3) If neither the Trustee nor the Company purchases the shares as
set forth above within fourteen (14) days after receipt of
notice of the offer, then the Distributee shall be free to
sell or otherwise dispose of the shares for the price, on the
terms and for the reason stated in the written Participant
Offer to the Trustee.
(4) Any certificate issued by the Company representing shares of
Company Stock to be distributed pursuant to this Plan shall
bear (together with any other legend customarily placed on
certificates representing such stock) a conspicuous legend
describing the right of first refusal provided under this
Section 11.12 and identifying the restrictions upon the
transfer of such shares imposed under federal and state
securities laws and regulations. The legend shall state that
the shares have been issued without registration under the
federal or state securities laws, (and, if applicable, are
"restricted securities" as that term is defined in Rule 144
(promulgated pursuant to the Securities Act of 1933)) and may
be transferred only in compliance with the restrictions on
resale set forth in Rule 144. Anything to the contrary herein
notwithstanding, no purchase of Company Stock shall be made
pursuant to this Article if such purchase would violate
federal or state law, statutes, regulations or rulings.
46
(5) Notwithstanding anything to the contrary herein contained,
shares of Company Stock originally purchased by the Trustee
with the proceeds of an Exempt Loan shall be subject to a
right of first refusal only on the following conditions:
(a) the Company Stock must not be publicly traded at the
time the right of first refusal is to be exercised;
(b) the total period of time during which the Trustee or
the Sponsoring Company may exercise the right of
first refusal will be fourteen (14) days after
notification of the offer is received by the Trustee;
and
(c) the purchase price paid for the Company Stock shall
not be less than the greater of (i) the fair market
value of the Company Stock determined pursuant to
Section 54.4975-11(d)(5) of the Treasury Regulations
or (ii) the price offered for the Company Stock by a
third party.
11.13 Execution of Documents. In the event that a purchase of shares is made
by the Trustee or the Company as provided for in Article XI, the
Distributee shall execute, at such time as requested by the Trustee,
such stock powers or other documents required by the Trustee to
transfer and convey ownership of the shares purchased to the Trustee or
the Company.
11.14 Distribution of More than One Class of Securities. If interests in more
than one (1) class of Company Stock have been allocated to the
Participant's Account, each distribution to the Participant shall be
made in substantially the same proportion of each such class.
11.15 Direct Rollovers to Eligible Retirement Plans.
(1) 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 Benefits Advisory 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.
(2) For purposes of this Section 11.15, the following terms shall
have the following meanings:
(a) "Eligible Rollover Distribution" means 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: (i)
any distribution that is one (1) 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 (10) years or more; (ii) any
distribution to the extent such distribution is
required under Code Section 401(a)(9); (iii) the
portion of any distribution that is not includable in
gross income (determined without regard to the
exclusion for net unrealized appreciation with
respect to employer securities); and (iv) for Plan
Years beginning on or after January 1, 1999, any
hardship distribution described in Code Section
401(k)(2)(B)(i)(IV).
47
(b) "Eligible Retirement Plan" means 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.
(c) "Distributee" means an Associate or former Associate.
In addition, the Associate's or former Associate's
surviving spouse and the Associate's or former
Associate's spouse or former spouse who is the
Alternate Payee under a Qualified Domestic Relations
Order are Distributees with regard to the interest of
the spouse or former spouse.
(d) "Direct Rollover" means a payment by the Plan to the
Eligible Retirement Plan specified by the
Distributee.
11.16 Diversification Requirements. Subject to paragraph (d) of this Section
11.16, to the extent required by Section 401(a)(28)(B) of the Code, and
notwithstanding the provisions of Section 16.04, each Qualified
Participant may elect, within ninety (90) days after the end of each
Plan Year that is within the Diversification Election Period, to
receive a distribution from the Plan of up to (a) twenty-five percent
(25%) of Qualified Contributions that have ever been allocated to the
Qualified Participant's Account, less (b) the number of shares of
Company Stock previously distributed, transferred or diversified
pursuant to a diversification election. However, in the last year of
the Diversification Election Period, the preceding sentence shall be
applied by substituting "fifty percent (50%)" for "twenty-five percent
(25%)."
(1) Delivery of Diversification Distribution. A Qualified
Participant shall receive a distribution elected pursuant to
this Section 11.16 within ninety (90) days after the last day
of the period during which an election can be made.
(2) Delivery of Company Stock. The number of shares of Company
Stock that are delivered to a Participant who makes an
election hereunder shall be the whole number of shares elected
to be received hereunder with any fractional amount paid in
cash, based upon fair market value of the shares. Such shares
of Company Stock delivered to the Participant must consist of
Company Stock that, immediately prior to distribution
hereunder, is subject to the Put option requirements of
Section 11.10.
(3) No Effect on Other Distributions. Any distribution that is
made pursuant to this Section 11.16 shall not be taken into
consideration in determining whether or not subsequent
distribution is a lump sum distribution, as defined in Section
402(d)(4)(A) of the Code.
11.17 Alternate Forms of Benefit. Notwithstanding anything to the contrary
herein, any Plan provision which restricts or would deny a Participant
through the withholding of consent or the exercise of discretion by
some person or persons other than the Participant (and where relevant,
other than the Participant's spouse) of an "alternate form of benefit"
is hereby amended by the deletion of the consent or discretion
requirement. An "alternate form of benefit" encompasses the different
forms of benefit payment available under the Pan which provides that:
(a) a Participant's benefits under the Plan may be paid in more than
one (1) form, or (b) payment of a particular form of benefit may
commence at some time earlier than the normal date for the commencement
of such benefit.
48
11.18 In-Service Withdrawals. In-Service withdrawals to Participants are not
allowed under the Plan for any reason.
11.19 Loans. Loans to Participants are not allowed under the Plan for any
reason.
ARTICLE XII
EXEMPT LOANS
12.01 Investment Committee Direction. Subject to the limitations of Section
12.02, the Investment Committee may direct the Trustee to make Exempt
Loans, the proceeds of which are to be used for acquiring Qualifying
Employer Securities or repaying a prior Exempt Loan.
12.02 Limitations.
(1) Primary Benefit Requirement. An Exempt Loan must be made
primarily for the benefit of Participants and Beneficiaries.
(2) Net Effect of Exempt Loan. At the time that an Exempt Loan is
made, the interest rate charged therefor and the price of the
Qualifying Employer Securities to be acquired with the
proceeds thereof must not be such that the assets of the Trust
Fund might be drained off.
(3) Arm's Length Standard. The terms of an Exempt Loan must, at
the time such loan is made, be at least as favorable to the
Trust as the terms of a comparable loan resulting from arm's
length negotiations between independent parties.
(4) Use of Loan Proceeds. The proceeds of an Exempt Loan must be
used within a reasonable time after their receipt by the
Trustee only for any or all of the following purposes:
(a) To acquire Qualifying Employer Securities;
(b) To repay such loan; or
(c) To repay a prior Exempt Loan.
(5) Puts, Calls, etc. Except as provided in Sections 11.10 and
11.12 hereof, no Qualifying Employer Security acquired with
the proceeds of an Exempt Loan may be subject to a Put, call
other option, or buy-sell or similar arrangement while held by
the Trustee and when distributed from the Trust.
(6) Interest Rate. The interest rate charged under an Exempt Loan
must not be in excess of a reasonable rate of interest.
(7) Term. An Exempt Loan must be for a specific term, and may not
be payable at the demand of any person, except in the case of
default.
12.03 Liability and Collateral. All Exempt Loans shall be without recourse
against the Trust. Furthermore, the only Trust assets that may be given
as collateral for an Exempt Loan are Qualifying Employer
49
Securities acquired with the proceeds of the Exempt Loan and Qualifying
Employer Securities that were given as collateral for a prior Exempt
Loan that is to be repaid out of the proceeds of a current Exempt Loan.
Any Qualifying Employer Securities given as collateral for an Exempt
Loan shall be allocated to a Suspense Account created pursuant to
Section 5.02. No person entitled to payment under an Exempt Loan shall
have any right to Trust assets other than the following:
(1) Collateral given for the Exempt Loan;
(2) Company Contributions (other than contributions of Qualifying
Employer Securities) that are made hereunder for purposes of
being applied by the Trustee to satisfy its obligations under
the Exempt Loan; and
(3) Earnings attributable to Qualifying Employer Securities given
as collateral for the Exempt Loan and earnings attributable to
the investment of Company Contributions described in paragraph
(1) of this Section 12.03.
12.04 Repayment of Exempt Loan. Principal and interest payable under an
Exempt Loan shall be satisfied out of:
(1) Company Contributions (other than contributions of the Trustee
to satisfy its obligations under the Exempt Loan);
(2) Earnings attributable to the investment of such contributions;
and
(3) Earnings attributable to Qualifying Employer Securities
purchased with the proceeds of the Exempt Loan;
provided, however, that the payments made under an Exempt Loan by the
Trustee during any Plan Year shall not exceed an amount equal to the
sum of such contributions and earnings received during the Plan Year
and prior Plan Years minus payments that may be used by the Trustee to
make payments under an Exempt Loan and shall be accounted for
separately in the books and records of the Trust until the Exempt Loan
is repaid in full.
Notwithstanding any provision to the contrary, all Company
Contributions (except contributions of Qualifying Employer Securities)
made hereunder during the term of an Exempt Loan shall be deemed to be
made for purposes of being used by the Trustee to satisfy its
obligations under the Exempt Loan. Furthermore, all payments made by
the Trustee under an Exempt Loan shall be first charged against Company
Contributions available for making such payments. Earnings that may be
used under this Section 12.04 to make payments under an Exempt Loan
shall be deemed to have been used for that purpose only to the extent
that payments made under the Exempt Loan during any Plan Year are in
excess of the total Company Contributions available to the Trustee for
making payments under the Exempt Loan.
12.05 Default. In the event of default upon an Exempt Loan, the value of
Trust assets transferred in satisfaction of such loan shall not exceed
the amount of default. In addition, if the payee under an Exempt Loan
is a Disqualified Person or a Party in Interest, Trust assets will be
transferred in satisfaction of the loan upon default only upon and to
the extent of the failure of the Trustee to meet the payment schedule
under the loan.
50
12.06 Release of Collateral. A portion of any Qualifying Employer Securities
purchased with the proceeds of an Exempt Loan and given as security
therefore shall be released from the Suspense Account established with
respect to such loan each Plan Year during which the payment of amounts
due under the loan is made. For each Plan Year during the term of the
Exempt Loan the number of Qualifying Employer Securities to be released
from the Suspense Account relating to such loan shall equal the number
of Qualifying Employer Securities allocated to such account immediately
before the lease for the current Plan Year multiplied by a fraction,
the numerator of which is the amount of principal and interest paid
under the Exempt Loan for the current Plan Year and the denominator of
which is the sum of the numerator plus the principal and interest to be
paid under the Exempt Loan for all future years. For purposes of
computing the denominator of the above fraction, the number of future
years under the Exempt Loan shall be determined without taking into
account any possible extension or renewal periods. If the interest rate
under the Exempt Loan is variable, the interest to be paid in future
years shall be computed by using the interest rate applicable as of the
end of the current Plan Year.
Notwithstanding the preceding provisions of this Section 12.06, the
Benefits Advisory Committee, in its sole and absolute discretion, may
determine the number of Qualifying Employer Securities to be released
from the Suspense Account for any Plan Year by reference to principal
payments only; provided, however, that if this method of determination
is used, the following requirements must be satisfied:
(1) The Exempt Loan must provide for annual payments of principal
and interest at a cumulative rate that is not less rapid at
any time than level payments of such amounts for ten (10)
years.
(2) The interest included in any payment under the Exempt Loan is
disregarded only to the extent that it would be determined to
be interest under standard loan amortization tables.
This alternative method of determining the number of Qualifying
Employer Securities to be released from the Suspense Account for any
Plan Year may not be used if, by reason of a renewal, extension, or
refinancing, the sum of the expired duration of the Exempt Loan, the
renewal period, the extension period, and the duration of a new Exempt
Loan (the proceeds of which are to be used to repay the Exempt Loan)
exceeds ten (10) years.
If more than one (1) class of Qualifying Employer Securities is given
as collateral for the Exempt Loan, the number of Qualifying Employer
Securities of each class to be released from the Suspense Account for
any Plan Year shall be determined by applying the same fraction to each
class.
12.07 Leveraged Employee Stock Ownership Plan. If an Exempt Loan is made by
the Trustee pursuant to Section 12.01, concurrently therewith the Plan
shall become a "Leveraged Employee Stock Ownership Plan" (as defined in
Section 4975(e)(7) of the Code).
Notwithstanding any provision contained herein to the contrary, upon
the making of an Exempt Loan by the Trustee, the term "Qualifying
Employer Security" shall mean:
(1) Common stock issued by the Employer (or by a corporation which
is a member of the same controlled group as defined in Section
1563(a) of the Code determined without regard to Section 1563
(a)(4) and Section 1563(e)(3)(C) of the Code) which is readily
tradeable on an established stock market; or
51
(2) If there is no common stock which meets the requirements of
subparagraph (1), common stock issued by the Employer (or by a
corporation which is a member of the same controlled group as
defined in Section 1563(a) of the Code determined without
regard to Section 1563(a)(4) and Section 1563(e)(3)(C) of the
Code) having a combination of voting power and dividend rights
equal to or in excess of:
(a) that class of common stock of the Employer (or of any
other such corporation) having the greatest voting
power; and
(b) that class of stock of the Employer (or of any other
such corporation) having the greatest dividend
rights; or
(3) Noncallable preferred stock issued by the Employer (or by a
corporation which is a member of the same controlled group as
defined in Section 1563(a) of the Code determined without
regard to Section 1563(a)(4) and Section 1563(e)(3)(C) of the
Code) if:
(a) such stock is convertible at any time into common
stock which is readily tradeable on an established
securities market; and
(b) such conversion is set at a conversion price which
(as of the date of the acquisition by the Plan) is
reasonable.
ARTICLE XIII
INSURANCE CONTRACTS
13.01 General Insurance Investment. Upon the written direction of the
Investment Committee, the Trustee shall apply for and pay premiums on
Insurance Contracts for the benefit of the Trust Fund as a whole, and
such contract may be on the lives of any persons in whom there is an
insurable interest, including Participants. Insurance Contracts held
for the benefit of the Trust Fund as a whole shall be treated as
investments of the Trust Fund and the cash value thereof shall be used
in valuing the Trust Fund. All premiums paid thereon by the Trustee
shall be charged against the Trust Fund as a whole and not to any
specific Accounts. All dividends, death benefits, and other payments
received by the Trustee by reason of such Insurance Contracts shall be
credited to the Trust Fund the same as proceeds derived from the sale
of an asset held thereunder. The Investment Committee may, in its sole
discretion, authorize the Trustee to use any amount of dividends to pay
premiums; or borrow against the cash surrender value of an Insurance
Contract on the Participant's life in order to pay the premiums.
13.02 Insurance Company Not a Party to Agreement. No insurance company is a
party to this Plan nor shall any insurance company be responsible for
its validity.
13.03 Insurance Company Not Responsible for Trustee's Action. No insurance
company is required to examine the terms of this Plan nor be
responsible for any action taken by the Trustee.
13.04 Insurance Company Reliance on Trustee's Signature. For the purpose of
making application to any insurance company and in the exercise of any
right or option contained in any policy or annuity, the insurance
company may rely upon the signature of the Trustee and shall be saved
harmless and completely discharged in acting at the direction and
authorization of the Trustee.
52
13.05 Acquittance. An insurance company shall be discharged from liability
for any amount paid to the Trustee or paid in accordance with the
direction of the Trustee, and it shall not be obligated to see to the
distribution or further application of any monies it so pays.
13.06 Duties of Insurance Company. Each insurance company shall keep such
records; make such identification of contracts, funds and accounts
within funds; and supply such information as may be necessary for the
proper administration of the Plan under which it is carrying Insurance
Contracts.
ARTICLE XIV
MISCELLANEOUS PROVISIONS RESPECTING PARTICIPANTS
14.01 Participants to Furnish Required Information.
(1) Each Participant shall furnish to the Benefits Advisory
Committee such information as the Benefits Advisory Committee
considers necessary or desirable for purposes of administering
the Plan, and the provisions of the Plan respecting any
payments hereunder are conditional upon the Participant's
furnishing promptly such true, full and complete information
as the Benefits Advisory Committee may reasonably request.
(2) Each Participant shall submit proof of such Participant's age
to the Benefits Advisory Committee. The Benefits Advisory
Committee shall, if such proof of age is not submitted as
required, use as conclusive evidence thereof, such information
as is deemed by it to be reliable, regardless of the source of
such information. Any adjustment required by reason of lack of
proof or the misstatement of the age of persons entitled to
benefits hereunder, by the Participant or otherwise, shall be
in such manner as the Benefits Advisory Committee deems
equitable.
(3) Any notice or information which according to the terms of the
Plan or the rules of the Benefits Advisory Committee must be
filed with the Benefits Advisory Committee, shall be deemed so
filed if addressed and either delivered in person or mailed,
postage fully prepaid, to the Benefits Advisory Committee.
Whenever a provision herein requires that a Participant (or
the Participant's Beneficiary) give notice to the Benefits
Advisory Committee within a specified number of days or by a
certain date, and the last day of such period, or such date,
falls on a Saturday, Sunday, or Employer holiday, the
Participant (or the Participant's Beneficiary) will be deemed
in compliance with such provision if notice is delivered in
person to the Benefits Advisory Committee or is mailed,
properly addressed, postage prepaid, and postmarked on or
before the business day next following such Saturday, Sunday
or Employer holiday. The Benefits Advisory Committee may, in
its sole discretion, modify or waive any specified notice
requirement; provided, however, that such modification or
waiver must be administratively feasible, must be in the best
interest of the Participant, and must be made on the basis of
rules of the Benefits Advisory Committee which are applied
uniformly to all Participants.
14.02 Participants' Rights in Trust Fund. No Participant or other person
shall have any right, title or interest in, to or under the Trust Fund,
or any part of the assets thereof, except and to the extent expressly
provided in the Plan.
53
14.03 Inalienability of Benefits.
(1) Restrictions on Assignment. The benefits provided hereunder
are intended for the personal security of persons entitled to
payment under the Plan, and are not subject in any manner to
the debts or other obligations of the persons to whom they are
payable. The interest of a Participant or such Participant's
Beneficiary or Beneficiaries may not be sold, transferred,
assigned or encumbered in any manner, either voluntarily or
involuntarily, and any attempt so to anticipate, alienate,
sell, transfer, assign, pledge, encumber, or charge the same
shall be null and void; neither shall the Trust Fund nor any
benefits thereunder or hereunder be liable for or subject to
the debts, contracts, liabilities, engagements or torts of any
person to whom such benefits or funds are payable, nor shall
they be subject to garnishment, attachment, or other legal or
equitable process nor shall they be an asset in bankruptcy.
All of the provisions of this Section 14.03, however, are
subject to Section 11.06 to withholding of any applicable
taxes and to assignments permitted by Code Section 401(a)(13).
(2) Exception for Benefit Payable Pursuant to a Qualified Domestic
Relations Order.
(a) The prohibitions contained in Subsection 14.03(1)
hereof shall not apply to the creation, assignment or
recognition of a right to any benefit payable with
respect to a Participant pursuant to a Qualified
Domestic Relations Order.
(b) The Plan Administrator shall establish written
procedures for the determination of the qualified
status of a domestic relations order.
(c) Upon receiving a domestic relations order, the Plan
Administrator shall notify the Participant and
Alternate Payee named in the order, in writing, of
the receipt of the order and the Plan's procedures
for determining the qualified status of the order.
Within a reasonable period of time after receiving
the domestic relations order, the Plan Administrator
shall determine the qualified status of the order and
shall notify the Participant and the Alternate Payee,
in writing, of its determination. The Plan
Administrator shall provide notice under this
paragraph by mailing such notice to the individual's
address specified in the domestic relations order, or
in a manner consistent with Department of Labor
regulations.
(d) During any period in which the issue of whether a
domestic relations order is a Qualified Domestic
Relations Order is being determined, notwithstanding
any other provision of the Plan to the contrary, the
Benefits Advisory Committee shall separately account
for the amounts which would have been payable during
such period to an Alternate Payee pursuant to a
Qualified Domestic Relations Order, if such order had
been determined to be a Qualified Domestic Relations
Order. During the period such amounts are separately
accounted for under the Plan, such amounts shall
remain subject to the general investment provisions
of the Plan. If within the eighteen (18) month period
beginning with the date on which the first payment
would be required to be made under such domestic
relations order, the domestic relations order is
determined to be a Qualified Domestic Relations
Order, the Benefits Advisory Committee shall direct
the Trustee to distribute to the Alternate Payee the
separately accounted for amounts including any
earnings (or losses) thereon in accordance with
Section 11.07 and the order. However, if within such
eighteen (18) month period, it is determined that
such order is not qualified, or if by the end of such
eighteen (18) month period the issue of qualification
is not resolved, then the
54
Benefits Advisory Committee shall pay the separately
accounted for amounts including any earnings (or
losses) thereon to the person or persons who would
have been entitled to such amounts if there had been
no such order.
(e) Notwithstanding any other provision of the Plan to
the contrary, all rights and benefits, including
rights to make elections or to give directions,
provided to a Participant under this Plan shall be
subject to the rights, benefits and elections or
directions afforded to an Alternate Payee, pursuant
to a Qualified Domestic Relations Order, and this
Plan shall be interpreted and administered by the
Benefits Advisory Committee in such manner as to
effectuate the provisions of any such Qualified
Domestic Relations Order as they relate to the
rights, benefits and elections or directions afforded
to such Alternate Payee under such Qualified Domestic
Relations Order. Furthermore, to the extent provided
in any such Qualified Domestic Relations Order, a
former spouse of a Participant shall be treated as a
spouse or surviving spouse for all applicable
purposes under the Plan.
(f) The Trustee shall make any payments or distributions
required under this Subsection 14.03(2) by separate
benefit checks or other separate distribution to the
Alternate Payee(s).
(3) Exception for Benefit Offset Pursuant to Code Section
401(a)(13)(C). The prohibitions contained in Subsection
14.03(1) hereof shall not apply to any offset of a
Participant's benefits provided under the Plan in an amount
that the Participant is ordered or required to pay to the Plan
in accordance with the provisions of Code Section
401(a)(13)(C).
14.04 Conditions of Employment Not Affected by Plan. Neither the Plan nor the
Trust nor the Trust Agreement shall confer on any Associate, including
any Participant, any right to be retained in the Service of any
Employer or any Affiliated Company, and nothing contained herein or in
the Trust Agreement shall be construed in any way to limit or restrict
the right of any Employer or any Affiliated Company to discharge any
Associate, regardless of whether such Associate is a Participant, or to
change such Associate's position or the basis or amount of such
Associate's compensation.
14.05 Address for Mailing of Benefits.
(1) Each Participant and each other person entitled to benefits
hereunder shall file with the Benefits Advisory Committee from
time to time in writing such Participant's post office address
and each change of address. Any check representing payment
hereunder and any communication addressed to a Participant, an
Associate or Beneficiary, at such person's last address filed
with the Benefits Advisory Committee, or if no such address
has been filed, then at such person's last address as
indicated on the records of an Employer, shall be deemed to
have been delivered to such person on the date on which such
check or communication is deposited, postage prepaid, in the
United States mail.
(2) If the Benefits Advisory Committee is in doubt as to whether
payments are being received by the person entitled thereto, it
shall, by registered mail addressed to the person concerned,
at his address last known to the Benefits Advisory Committee,
notify such person that all unmailed and future payments shall
be withheld until he provides the Benefits Advisory Committee
with a sworn statement, properly notarized, evidencing his
continued life and his proper mailing address.
55
14.06 Unclaimed Account Procedure.
(1) Neither the Trustee nor the Benefits Advisory Committee shall
be obliged to search for, or ascertain the whereabouts of any
Participant, Beneficiary or Alternate Payee. The Benefits
Advisory Committee, by certified or registered mail addressed
to such Participant's, Beneficiary's or Alternate Payee's last
known address, shall notify the Participant, Beneficiary or
Alternate Payee that such Participant, Beneficiary or
Alternate Payee is entitled to a distribution under this Plan,
and the notice shall quote the provisions of this Section
14.06. The Benefits Advisory Committee may, but is not
required to, utilize the services of the Internal Revenue
Service (pursuant to Revenue Procedure 94-22 or any successor
thereto) in attempting to ascertain the current mailing
address of a Participant, Beneficiary or Alternate Payee.
(2) If any distribution or payment is not claimed by the person
entitled thereto within one (1) year from the date of the
mailing of the notice referred to in subsection (1) above, the
Participant's, Beneficiary's or Alternate Payee's Accounts,
valued as of the Valuation Date coinciding with or immediately
preceding the date such one (1) year period ends, shall be
forfeited. If a Participant, Beneficiary or Alternate Payee
makes a claim, at any time, such forfeited amount shall be
restored and the Benefits Advisory Committee shall direct the
Trustee to distribute such amount to the individual entitled
to the distribution. Such restorations shall be made as
provided for in Subsection 10.06(2).
(3) Notwithstanding Subsection 14.06(1) or 14.06(2) above, if upon
termination of the Plan and the liquidation of the Trust, all
or any distribution payable to a Participant or his
Beneficiary has not been claimed after sending the notice
described in Subsection 14.06(1) above, the Benefits Advisory
Committee shall establish an Individual Retirement Account or
an interest-bearing, federally insured account in a bank or
savings and loan association in the name of the Participant or
Beneficiary, shall purchase a deferred annuity providing the
form(s) of benefit prescribed in Article XI or, if the
Benefits Advisory Committee is unable to accomplish any of the
foregoing, shall dispose of the Participant's Account in any
other method permitted by the Code and ERISA. If a
Participant's Account has been forfeited pursuant to
Subsection 14.06(2) above, it shall be restored upon Plan
termination and distributed as provided in the preceding
sentence. The Benefits Advisory Committee shall direct the
Trustee to distribute the Participant's Account valued as of
the last Valuation Date, or special valuation date as provided
in Section 20.03 hereof, preceding distribution.
ARTICLE XV
ADMINISTRATION OF THE PLAN
15.01 Appointment of Benefits Advisory Committee. The administration of the
Plan will be the responsibility of the Benefits Advisory Committee
which shall be appointed by the Board and shall consist of one (1) or
more members. Each member of the Benefits Advisory Committee shall
serve for a term of one (1) year and until his successor shall be
appointed. A member may serve for more than one (1) term. If the
Benefits Advisory Committee consists of more than one (1) member, the
Board shall appoint one (1) of the members as Chairman. The Board shall
be authorized to remove any member of the Benefits Advisory Committee
with or without cause by notifying such member and the Chairman, in
writing, and may fill vacancies in the Benefits Advisory Committee,
however caused. A member of the Benefits Advisory Committee may resign
upon ten (10) days' prior notice by
56
delivery of his written resignation to the Board and other members of
the Benefits Advisory Committee. The Benefits Advisory Committee shall
have the sole power, duty and responsibility for directing the
administration of the Plan in accordance with its provisions.
15.02 Compensated Expenses of the Benefits Advisory Committee. The members of
the Benefits Advisory Committee shall serve without compensation for
their services as such, but the reasonable and necessary expenses of
the Benefits Advisory Committee shall be paid as provided in Section
15.14. When, in its discretion, the Benefits Advisory Committee, or any
Employer, deems it advisable, the Benefits Advisory Committee shall be
authorized to have the records of the Benefits Advisory Committee and
the Trustee audited by an independent auditor, and reasonable and
necessary expenses thereby incurred shall be paid as provided in
Section 15.14 hereof.
15.03 Secretary and Agents of the Benefits Advisory Committee. The Benefits
Advisory Committee may appoint a Secretary who may, but need not, be a
member of the Benefits Advisory Committee, and may employ such agents
and such clerical and other administrative personnel as reasonably may
be required for the purpose of administering the Plan. Such
administrative personnel shall carry out the duties and
responsibilities assigned to them by the Benefits Advisory Committee.
Expenses necessarily incurred for such purpose shall be paid by the
Trust Fund unless paid by the Employers, as provided in Section 15.14.
15.04 Actions of Benefits Advisory Committee.
(1) A majority of the members of the Benefits Advisory Committee
shall constitute a quorum for the transaction of business, and
shall have full power to act hereunder. Action by the Benefits
Advisory Committee shall be official if approved by a vote of
a majority of the members present at any official meeting. The
Benefits Advisory Committee may, without a meeting, authorize
or approve any action by written instrument signed by a
majority of all of the members. Any written memorandum signed
by the Chairman, or any other member of the Benefits Advisory
Committee, or by any other person duly authorized by the
Benefits Advisory Committee to act, in respect of the subject
matter of the memorandum, shall have the same force and effect
as a formal resolution adopted in open meeting. The Benefits
Advisory Committee shall give to the Trustee any order,
direction, consent, certificate or advice required or
permitted under the terms of the Trust Agreement, and the
Trustee shall be entitled to rely on, as evidencing the action
of the Benefits Advisory Committee, any instrument delivered
to the Trustee when: (a) if a resolution, it is certified by
the Chairman and Secretary, or (b) if a memorandum, it is
signed by a majority of all of the members of the Benefits
Advisory Committee, or by a person who shall have been
authorized to act for the Benefits Advisory Committee in
respect of the subject matter thereof.
(2) A member of the Benefits Advisory Committee may not vote or
decide upon any matter relating solely to him or vote in any
case in which his individual right or claim to any benefit
under the Plan is specifically involved. If, in any case in
which a Benefits Advisory Committee member is so disqualified
to act, the remaining members then present cannot, by majority
vote, act or decide, the Board will appoint a temporary
substitute member to exercise all of the powers of the
disqualified member concerning the matter in which he is
disqualified.
(3) The Benefits Advisory Committee shall maintain minutes of its
meetings and written records of its actions, and as long as
such minutes and written records are maintained, members may
participate and hold a meeting of the Benefits Advisory
Committee by means of conference telephone or similar
communications equipment which permits all persons
participating in
57
the meeting to hear each other. Participation in such a
meeting constitutes presence in person at such meeting.
15.05 Authority of Benefits Advisory Committee. The Benefits Advisory
Committee is authorized to take such actions as may be necessary to
carry out the provisions and purposes of the Plan, including complying
in all respects with the requirements of ERISA Section 404(c) and the
regulations thereunder to the extent it is applicable, and shall have
the discretionary authority to control and manage the operation and
administration of the Plan, including the discretionary authority to
determine whether the Participant, Beneficiary or Alternate Payee is
entitled to payment of benefits under this Plan. In order to effectuate
the purposes of the Plan, the Benefits Advisory Committee shall have
the fiduciary power to construe and interpret the Plan, to supply any
omissions therein, to reconcile and correct any errors or
inconsistencies, to decide any questions in the administration and
application of the Plan, and to make equitable adjustments for any
mistakes or errors made in the administration of the Plan. All such
actions or determinations made by the Benefits Advisory Committee, and
the application of rules and regulations to a particular case or issue
by the Benefits Advisory Committee, in good faith, shall not be subject
to review by anyone, but shall be final, binding and conclusive on all
persons ever interested hereunder. In construing the Plan and in
exercising its fiduciary power under provisions requiring Benefits
Advisory Committee approval, the Benefits Advisory Committee shall
attempt to ascertain the purpose of the provisions in question and when
such purpose is known or reasonably ascertainable, such purpose shall
be given effect to the extent feasible. Likewise, the Benefits Advisory
Committee is, in the exercise of its fiduciary powers, authorized to
determine all questions with respect to the individual rights of all
Participants and their Beneficiaries and Alternate Payees under this
Plan, including, but not limited to, all issues with respect to
eligibility, Compensation, Service, valuation of Accounts, allocation
of consolidated contributions and Trust Fund earnings, and retirement
or Termination of Employment, and shall direct the Trustee concerning
the allocation, payment and distribution of all funds held in trust for
purposes of the Plan. The Benefits Advisory Committee, in the exercise
of any discretionary powers hereunder, shall not exercise that
discretion so as to discriminate in favor of Associates who are
officers, shareholders, or Highly Compensated Employees. The Benefits
Advisory Committee shall establish investment objectives and monitor,
or cause to be monitored, the investment performance of the Trustee or
any Investment Manager which may be appointed with respect to any
assets of the Plan, and shall make such reports and give such
recommendations to the Board as it requests with respect thereto.
15.06 General Administrative Powers. The Benefits Advisory Committee shall
have authority to make, and from time to time, revise, rules and
regulations for the administration of the Plan.
15.07 Plan Administrator. "Plan Administrator" (as defined in Section
3(16)(A) of ERISA) shall mean the Benefits Advisory Committee. The Plan
Administrator shall be responsible for the performance of all reporting
and disclosure obligations under ERISA and all other obligations
required or permitted to be performed by the Plan Administrator under
ERISA and not otherwise delegated to other parties under the terms of
the Plan or the Trust Agreement. The Plan Administrator is hereby
designated as the agent for Service of process unless the Benefits
Advisory Committee designates another person or entity.
15.08 Duties of Administrative Personnel. Administrative personnel appointed
pursuant to Section 15.03 hereof, shall be responsible for such matters
as the Benefits Advisory Committee shall delegate to them by written
instrument, including, but not limited to communications to Associates
at the direction of the Benefits Advisory Committee, reports to the
Benefits Advisory Committee involving questions of eligibility and the
amount of Compensation of Participants, assisting Participants,
Beneficiaries and Alternate Payees in the completion of forms
prescribed by the Benefits Advisory Committee,
58
maintenance of records concerning terminated vested Participants,
Participants who have retired and Beneficiaries. Administrative
personnel may not make any decision as to Plan policy, interpretations,
practices or procedures unless the authority to make such decisions has
been delegated to them in writing by the Benefits Advisory Committee
and they accept fiduciary responsibilities in accordance with the
provisions of Section 15.09 hereof. All administrative personnel shall
perform their allocated function within the policies, interpretations,
rules, practices and procedures established by the Benefits Advisory
Committee, except that administrative personnel shall coordinate
matters related to the Plan with the appropriate departments of each
Employer as the Benefits Advisory Committee directs.
15.09 Designation of Named Fiduciaries and Allocation of Responsibility.
ERISA requires that certain persons, who are deemed to be
"fiduciaries," as defined in ERISA Section 3(21)(A), be designated as
"Named Fiduciaries" in the Plan. The Board, the Benefits Advisory
Committee, the Investment Committee and the Plan Administrator are
hereby designated Named Fiduciaries. Each Named Fiduciary shall have
only the powers, duties and responsibilities specifically allocated to
such fiduciary pursuant to the terms of this Plan. The Board shall not
have any power or fiduciary responsibility hereunder other than (1) the
power to name and to remove the persons who shall comprise the Benefits
Advisory Committee and to continue to those persons such allocation of
fiduciary responsibilities, (2) the power to appoint (and remove), or
cause the Investment Committee to appoint (and remove), one (1) or more
Investment Managers, (3) the power to establish or change the
Investment Funds, and (4) the power to appoint (and remove) the
Trustee. Each Named Fiduciary may, by written instrument, allocate some
or all of its responsibilities to another fiduciary or designate
another person to carry out some or all of its fiduciary
responsibilities. The Benefits Advisory Committee, the Investment
Committee, Plan Administrator and each other fiduciary under the Plan
(including fiduciaries to whom responsibilities are allocated by a
Named Fiduciary) will be furnished a copy of the Plan, and their
acceptance of such responsibility will be made by agreeing in writing
to act in the capacity designated. No Named Fiduciary shall be liable
for an act or omission of any person who is allocated a fiduciary
responsibility or who is designated to carry out such responsibility by
a Named Fiduciary, except to the extent that the Named Fiduciary did
not act in accordance with the standards contained in Subsection
15.10(2) hereof with respect to the allocation or designation of a
fiduciary duty. Any person or group of persons may serve in more than
one (1) fiduciary capacity with respect to the Plan.
15.10 Action by Fiduciaries.
(1) Any action herein permitted or required to be taken by an
Employer shall, subject to the provisions of Section 23.07
hereof, be by resolution of its board of directors or by
written instrument signed by a person or group of persons who
has been authorized by resolution of such board of directors
as having authority to take such action. Any action herein
permitted or required to be taken by the Benefits Advisory
Committee shall be in the manner specified in Section 15.04
hereof.
(2) Each fiduciary with respect to the Plan shall perform all of
his duties and responsibilities and exercise his powers
hereunder with the care, skill, prudence, and diligence under
the circumstances then prevailing that a prudent man acting in
like capacity and familiar with such matters would use in the
conduct of an enterprise of like character and with like aims,
and no fiduciary shall be liable for any act or failure to act
on his part (including reliance on the advice of counsel)
which conforms to that standard, unless: (a) he knowingly
participates in or knowingly undertakes to conceal an act or
omission of another fiduciary of the Plan, with the knowledge
that such act or omission is a breach of fiduciary
responsibility, or (b) knowing of a breach of fiduciary
responsibility, he fails to make reasonable efforts under the
circumstances to remedy the breach, or (c) by failing to carry
out his specific responsibilities,
59
in accordance with such standard, he has enabled another
fiduciary of the Plan to commit a breach.
(3) Each fiduciary shall furnish or cause to be furnished to each
other fiduciary all information needed for the proper
performance of its duties. Each fiduciary warrants that any
directions given, information furnished or action taken by it
shall be in accordance with the provisions of the Plan or the
Trust Agreement, as the case may be, authorizing or providing
for such direction, information or action.
15.11 Appointment of Professional Assistants and the Investment Manager. A
Named Fiduciary may appoint such accountants, counsel, and actuaries
and other advisers as it deems necessary or desirable in connection
with the administration of the Plan. The Board in its sole discretion,
may appoint, or cause the Investment Committee to appoint, one or more
Investment Managers to manage (including the power to acquire or
dispose of) all or any of the assets of the Trust Fund. A Named
Fiduciary shall be entitled to rely upon and shall not be liable for
any act or failure to act in reliance, on any opinion or reports, which
shall be furnished to such Named Fiduciary by any such accountant with
respect to accounting matters, counsel in respect to legal matters, or
actuary in respect of actuarial matters as long as the Named
Fiduciary's reliance is in accordance with the standard set forth in
Subsection 15.10(2) hereof. The fees and costs of such services are an
administrative expense to the Plan to be paid out of the Trust Fund
except to the extent that such fees and costs are paid by any of the
Employers.
15.12 Bond. The Plan Administrator shall see that the appropriate fiduciaries
are bonded as required by federal law or regulation. Except as required
by the Board or by state or federal statute, irrespective of this
provision, no bond or other security shall be required of any
fiduciary.
15.13 Indemnity. In the event and to the extent not insured against under any
contract of insurance with an insurance company, the Sponsoring Company
shall indemnify and hold harmless each "Indemnified Person," as defined
below, against any and all claims, demands, suits, proceedings, losses,
damages, interest, penalties, expenses (specifically including, but not
limited to counsel fees to the extent approved by the Board of
Directors of the Sponsoring Company or otherwise provided by law, court
costs and other reasonable expenses of litigation), and liability of
every kind, including amounts paid in settlement, with the approval of
the Board of Directors, arising from any action or cause of action
related to the Indemnified Person's act or acts or failure to act. Such
indemnity shall apply regardless of whether such claims, demands,
suits, proceedings, losses, damages, interest, penalties, expenses, and
liability arise in whole or in part from (1) the negligence or other
fault of the Indemnified Person, except when the same is judicially
determined to be due to gross negligence, fraud, recklessness, willful
or intentional misconduct of such Indemnified Person or (2) from the
imposition on such Indemnified Person of any penalties imposed by the
Secretary of Labor, pursuant to Section 502(1) of ERISA, relating to
any breaches of fiduciary responsibility under Part 4 of Title I of
ERISA. "Indemnified Person" shall mean each member of the Board of
Directors of the Company and the Benefits Advisory Committee, each
other individual who is allocated fiduciary responsibility hereunder,
and each individual otherwise acting in an administrative capacity with
respect to the Plan.
15.14 Payment of Expenses. The expenses of agents or advisers, and any other
reasonable expenses of the Benefits Advisory Committee approved by the
Sponsoring Company or as otherwise provided for in Section 15.02 shall
be paid by the Plan out of the Trust Fund unless paid by the Employers.
If such expenses are to be paid by the Employers, the portion thereof
payable by each shall be determined by the ratio that the number of
Participants who are Associates of each Employer bears to the total of
all such Participants; provided, that if any expense is incurred solely
on account of a single Employer or
60
group of Employers, such expense shall be paid by such Employer or
Employers to the extent and in such proportion as the Sponsoring
Company may determine.
ARTICLE XVI
INVESTMENT COMMITTEE
16.01 Appointment of Investment Committee. The Board of Directors shall
appoint an Investment Committee to direct Plan investments, the members
of which may or may not be Participants in the Plan, and shall consist
of one (1) or more members. Each member of the Investment Committee
shall serve for a term of one (1) year and until his successor shall be
appointed. A member may serve for more than one (1) term. If the
Investment Committee consists of more than one (1) member, the Board
shall appoint one (1) of the members as Chairman. The Board shall be
authorized to remove any member of the Investment Committee with or
without cause by notifying such member and the Chairman, in writing,
and may fill vacancies in the Investment Committee, however caused. A
member of the Investment Committee may resign upon ten (10) days' prior
notice by delivery of his written resignation to the Board and other
members of the Investment Committee.
16.02 Compensated Expenses of the Investment Committee. The members of the
Investment Committee shall serve without compensation for their
services as such, but the reasonable and necessary expenses of the
Investment Committee shall be paid as provided in Section 16.08.
16.03 Secretary and Agents of the Investment Committee. The Investment
Committee may appoint a Secretary who may, but need not, be a member of
the Investment Committee, and may employ such agents and such clerical
and other administrative personnel as reasonably may be required. Such
administrative personnel shall carry out the duties and
responsibilities assigned to them by the Investment Committee. Expenses
necessarily incurred for such purpose shall be paid by the Trust Fund
unless paid by the Employers.
16.04 Powers of the Investment Committee. The Investment Committee shall have
the following powers and duties:
(1) To direct the Trustee in the investment, reinvestment and
disposition of the Trust Fund, including the investment of the
Trust Fund in Qualifying Employer Securities without regard to
the limitations set for in Sections 407(a)(2), (3), or (4) of
ERISA, as provided in the Trust Agreement.
(2) To direct the Trustee to make Exempt Loans, the proceeds of
which are to be used for the purposes enumerated in Section
12.02.
(3) To furnish the Employer with information which the Employer
may require for tax or other purposes.
(4) To engage the services of counsel (who may, if appropriate, be
counsel for the Employer) and agents whom it may deem
advisable to assist it with the performance of its duties.
(5) To receive and review reports of the financial condition and
of the receipts and disbursements of the Trust Fund from the
Trustee.
61
(6) To select the issuing company or companies from which
Insurance Contracts shall be purchased as provided herein, and
to determine the form, type and kind of such contract.
(7) To engage the services of an Investment Manger or Managers (as
defined in Section 3(38) of ERISA), each of whom shall have
full power and authority to manage, acquire or dispose (or
direct the Trustee with respect to acquisition or disposition)
of any Plan assets under its control.
(8) To select a secretary, who need not be a member of the
Investment Committee.
(9) To interpret and construe the Plan with respect to the
investment, reinvestment, and disposition of Plan assets.
16.05 Manner of Action. The decision of a majority of the members of the
Investment Committee shall control. In the case of a vacancy in the
membership of the Investment Committee, the remaining members may
exercise any and all of the powers, authorities, duties and discretions
conferred upon the Investment Committee pending the filling of the
vacancy. The Investment Committee may, but need not, call or hold
formal meetings. Any decisions made or action taken pursuant to written
approval of a majority of the then members shall be sufficient. The
Investment Committee shall maintain adequate records of its decisions.
16.06 Authorized Representative. The Investment Committee may authorize any
one (1) of its members, or its secretary, to sign on its behalf any
notices, directions, applications, certificates, consents, approvals,
waivers, letters or other documents.
16.07 Funding Policy. The Investment Committee shall review, not less often
than annually, all pertinent Employer information and Plan data in
order to establish the funding policy of the Plan and to determine the
appropriate methods of carrying out the Plan's objectives. The
Investment Committee shall communicate annually to the Trustee and to
any Plan Investment Manager, if any, the Plan's short-term and
long-term financial needs so investment policy can be coordinated with
Plan financial requirements.
16.08 Payment of Expenses. The expenses of agents or advisers, and any other
reasonable expenses of the Investment Committee approved by the
Sponsoring Company or as otherwise provided for in Section 16.02 shall
be paid by the Plan out of the Trust Fund unless paid by the Employers.
If such expenses are to be paid by the Employers, the portion thereof
payable by each shall be determined by the ratio that the number of
Participants who are Associates of each Employer bears to the total of
all such Participants; provided, that if any expense is incurred solely
on account of a single Employer or group of Employers, such expense
shall be paid by such Employer or Employers to the extent and in such
proportion as the Sponsoring Company may determine.
ARTICLE XVII
PARTICIPATION BY EMPLOYERS
17.01 Adoption of Plan by Affiliated Company. Any Affiliated Company, whether
or not presently existing, may adopt this Plan, effective as of the
date indicated in the instrument of adoption, if such Affiliated
Company and the Sponsoring Company execute an instrument in writing
allowing for the Affiliated Company's adoption of this Plan and the
Trust forming a part hereof. The provisions of this Plan
62
shall apply only to each Employer severally, except as otherwise
specifically provided herein or in such Employer's instrument of
adoption.
17.02 Rights and Obligations of the Sponsoring Company and the Employers.
Throughout this instrument, a distinction is purposely drawn between
rights and obligations of the Sponsoring Company and rights and
obligations of each other Employer. The rights and obligations
specified as belonging to the Sponsoring Company shall belong only to
the Sponsoring Company. Each Employer shall have the obligation, as
hereinafter provided, to make Company Contributions for its own
Participants, and no Employer shall have the obligation to make Company
Contributions for the Participants of any other Employer. Any failure
by an Employer to fulfill its own obligations under this Plan shall
have no effect upon any other Employer. An Employer may withdraw from
this Plan without affecting any other Employer.
17.03 Withdrawal from Plan.
(1) Notice of Withdrawal. Any Employer may, as of any date,
withdraw from the Plan upon giving the Benefits Advisory
Committee, the Sponsoring Company and the Trustee at least
sixty (60) days' notice in writing of its intention to
withdraw.
(2) Trustee Segregation of Trust Assets upon Withdrawal. Upon the
withdrawal by an Employer pursuant to this Article, the
Trustee shall segregate the share of the assets in the Trust
Fund, the value of which shall equal the total credited to the
Accounts of Participants of the withdrawing Employer. The
determination as to which assets are to be so segregated shall
be made by the Trustee in its sole discretion.
(3) Exclusive Benefit of Participants. Neither the segregation and
transfer of any Trust assets upon the withdrawal of an
Employer nor the execution of a new agreement and declaration
of trust by such withdrawing Employer shall operate to permit
any part of the Trust Fund to be used for or diverted to
purposes other than for the exclusive benefit of the
Participants.
(4) Applicability of Withdrawal Provisions. The withdrawal
provisions contained in this Section 17.03 shall be applicable
only if the withdrawing Employer continues to cover its
Participants and eligible Associates in another defined
contribution plan and trust qualified under Code Sections 401
and 501. Otherwise, the termination provisions of the Plan and
Trust shall apply.
ARTICLE XVIII
AMENDMENT OF THE PLAN
18.01 Amendments by Sponsoring Company or Employer. The Sponsoring Company
reserves the right to amend the Plan with respect to all Employers at
any time and from time to time. Each Employer may amend the Plan with
respect to such Employer at any time, and from time to time, provided
the Sponsoring Company approves such amendment. No amendment shall
permit any part of the Trust Fund to revert to or be recoverable by an
Employer or be used for or diverted to purposes other than the
exclusive benefit of the Participants or their Beneficiaries, or
deprive any Participant of any interest he might have in the Trust Fund
at the time of the amendment to the extent that such interest would be
available to the Participant under Article X hereof were he to
voluntarily resign as of the effective date of the amendment.
63
18.02 Effect of Amendments on Trustee. Under no condition shall any amendment
increase the duties or responsibilities, or decrease the compensation,
privileges, and immunities of the Trustee without the Trustee's written
consent.
18.03 Amendment to Vesting Schedule. Under no condition shall any amendment
change the vesting schedule to one which would result in the
nonforfeitable percentage of the accrued benefit derived from Company
Contributions (determined as of the later of the date of the adoption
of the amendment or of the effective date of the amendment) of any
Participant being less than such nonforfeitable percentage computed
under the Plan without regard to such amendment. No amendment shall
change the vesting schedule unless each Participant with three (3) or
more Vesting Years of Service (determined without regard to the
provisions of Section 10.02) as of the expiration date of the election
period described below, is permitted to elect, within the election
period described below, to have his nonforfeitable percentage computed
under the Plan without regard to the amendment.
The election period described herein shall begin no later than the date
upon which the amendment is adopted and shall end no later than the
latest of the following dates:
(a) the date which is sixty (60) days after the day the amendment
is adopted,
(b) the date which is sixty (60) days after the day the amendment
becomes effective, or
(c) the date which is sixty (60) days after the day the
Participant is issued a written notice of the amendment by the
Sponsoring Company.
Any election made pursuant to this Section 18.03 shall be irrevocable.
The Benefits Advisory Committee, as soon as practicable, shall forward
a true copy of any amendment to the vesting schedule to each affected
Participant, together with an explanation of the effect of the
amendment, the appropriate form upon which the Participant may make an
election to remain under the vesting schedule provided under the Plan
prior to the amendment, and notice of the time within which the
Participant must make an election to remain under the prior vesting
schedule.
18.04 Protected Benefits. Subject to the above stated limitations and the
requirement that no amendment shall eliminate, except with respect to
any future contributions or future accrual of benefits, any
nondiscretionary optional form of payment (as provided in Treasury
Regulation Section 1.411(d)-4, and Treasury Regulation Section
1.401(a)(4)-4(d) with respect to Plan Years beginning after January 1,
1992, and Code Section 411(d)(6)) with respect to any Participant who
is a Participant immediately prior to the amendment, the Sponsoring
Company shall have the power to amend the Plan and Trust Agreement,
retroactively or otherwise, in any manner in which it deems desirable,
including, but not by way of limitation, the power to change any
provisions relating to the administration of the Plan and Trust Fund,
and to change any provisions relating to the benefits or payment of any
of the assets of the Trust Fund. Each such amendment shall become
effective when executed by the Sponsoring Company unless a different
effective date is specified in the amendment.
18.05 Amendment Necessary to Comply with Code or Federal Statute.
Notwithstanding anything herein to the contrary, this Plan may be
amended at any time by the Sponsoring Company if necessary or desirable
in order to have it conform to the provisions and requirements of the
Code or any federal statute with respect to qualified employees' plans
and trusts, and no such amendment shall be considered prejudicial to
the rights of any Participant hereunder or of any Beneficiary,
Alternate Payee or Associate. Further, it is understood that any
provisions of this Plan as herein contained which are
64
contrary to the requirements of the Code for a qualified tax exempt
employees' plan and trust shall be deemed void and of no effect,
without affecting the validity of other provisions hereof.
ARTICLE XIX
PERMANENCY OF THE PLAN
19.01 Right to Terminate Plan. Each Employer contemplates that the Plan shall
be permanent and that it shall be able to make contributions to the
Plan. Nevertheless, in recognition of the fact that future conditions
and circumstances cannot now be entirely foreseen, the Sponsoring
Company reserves the right to terminate the Plan and each Employer
reserves the right to terminate the Plan as to such Employer.
19.02 Merger or Consolidation of Plan and Trust. Neither the Plan nor the
Trust may be merged or consolidated with, nor may its assets or
liabilities be transferred to, any other plan or trust, unless each
Participant would (if the Plan then terminated) receive a benefit
immediately after the merger, consolidation, or transfer which is equal
to or greater than the benefit he would have been entitled to receive
immediately before the merger, consolidation, or transfer (if the Plan
had then terminated). Additionally, another plan or trust may be merged
into or consolidated with, or its assets or liabilities may be
transferred to, this Plan, provided that the conditions of the
preceding sentence are satisfied with respect to such other plan.
19.03 Continuance by Successor Company. In the event of the liquidation,
dissolution, merger, consolidation or reorganization of an Employer,
the successor company may adopt the Plan and Trust for the benefit of
the Associates of such Employer. If such successor company does adopt
the Plan and Trust, it shall, in all respects, be substituted for such
Employer under the Plan and Trust. Any such substitution of such
successor company shall constitute an assumption of Plan liabilities by
such successor company, and such successor company shall have all of
the powers, duties and responsibilities of such Employer under the Plan
and Trust. If such successor company does not adopt the Plan and Trust,
the Plan and Trust shall be terminated with respect to such Employer in
accordance with the provisions of the Plan and Trust Agreement.
ARTICLE XX
DISCONTINUANCE OF CONTRIBUTIONS AND TERMINATION
20.01 Suspension of Contributions. Should an Employer fail for any reason to
make Company Contributions in any one (1) or more years, such failure
shall not, of itself, terminate or discontinue this Plan and Trust as
to the Employer and its Participants, nor shall the Employer incur any
obligation to make up such Company Contributions in whole or in part.
20.02 Discontinuance of Contributions. Whenever an Employer determines that
it is impossible or inadvisable for it to make further Company
Contributions, such Employer may, without terminating the Trust,
permanently discontinue all further Company Contributions by such
Employer. A certified copy of such Employer's resolution or other
formal written instrument pursuant to Section 23.07 hereof, shall be
delivered to the Benefits Advisory Committee and the Trustee.
Thereafter, the Benefits Advisory Committee and the Trustee shall
continue to administer all the provisions of the Plan which are
necessary and remain in force, other than the provisions relating to
Company
65
Contributions by such Employer. Unless otherwise provided by such
resolutions, the Trust shall remain in existence with respect to such
Employer and all of the provisions of the Trust Agreement shall remain
in force.
20.03 Termination of Plan and Trust. If an Employer determines to terminate
(as to such Employer) the Plan and Trust completely, they shall be
terminated insofar as they are applicable to such Employer as of the
date specified in certified copies of resolutions or other formal
written instrument pursuant to Section 23.07 hereof, delivered to the
Benefits Advisory Committee and the Trustee. Upon such termination of
the Plan and Trust and before liquidation of the Trust, the Benefits
Advisory Committee shall require a special valuation of the Trust, if
the liquidation is not to occur as of a Valuation Date. After payment
of all expenses and proportional adjustment of Accounts of Participants
with respect to such Employer to reflect such expenses, Trust Fund
profits or losses, and subject to the limitations contained in Section
5.06 hereof, allocations of any previously unallocated funds to the
date of termination, such Employer's Participants shall be entitled to
receive the amount then credited to their respective Accounts in the
Trust Fund in a lump sum payment. If, in the opinion of the Benefits
Advisory Committee, assets in the Trust Fund or certain of them may
possibly not be readily salable (1) because of federal or state
securities laws, or the rules and regulations thereunder, or (2) at
their fair market value, the Benefits Advisory Committee may direct and
the Trustee shall effect, a distribution of such assets in kind. If the
entire Plan is terminating, upon completion of liquidation and
distribution of the assets of the Trust to the Participants as provided
for herein, the Trustee shall thereby complete the Trustee's duties,
and the Trust shall terminate.
20.04 Participant's Rights to Benefits upon Termination or Partial
Termination of Plan or Complete Discontinuance of Contributions. Upon
the termination or partial termination (as determined by the Internal
Revenue Service) of the Plan or the complete discontinuance of Company
Contributions by an Employer, the rights of each such Employer's
Associates who are then Participants (or, in the case of a partial
termination, who are then Participants affected by the partial
termination) and the rights of each other person, other than a person
who has forfeited his Nonvested Amounts pursuant to Section 10.05
hereof prior to the effective date of such termination (or partial
termination) or complete discontinuance, to the amounts credited to his
Accounts at such time shall be nonforfeitable without reference to any
formal action on the part of such Employer, the Benefits Advisory
Committee or the Trustee.
ARTICLE XXI
EXCLUSIVE BENEFIT OF THE PLAN
21.01 Limitation on Reversions. Except as otherwise provided in this Article
XXI, it shall be impossible, at any time, for any part of the Trust
Fund, other than such part as is required to pay taxes and
administration expenses or such part as may otherwise be permitted by
law to be returned to the Employer, to be recoverable by an Employer,
or to be used for, or diverted to, purposes other than for the
exclusive benefit of the Participants, Beneficiaries and Alternate
Payees.
21.02 Unallocated Amounts upon Termination of Plan and Trust. In the event
the Plan and Trust are terminated, any previously unallocated amounts
maintained in the suspense account in accordance with the provisions of
Section 5.06 hereof which cannot be allocated to Participants upon the
termination of the Plan and Trust pursuant to Section 20.03 hereof
because of the limitations contained in Sections 5.06 through 5.09
hereof, shall revert to the Employer or Employers employing the
Participant at the time of such termination.
66
21.03 Mistake of Fact or Disallowance of Deduction. If the Benefits Advisory
Committee in good faith determines that (1) a Company Contribution was
made by reason of a mistake of fact, or (2) a Company Contribution is
conditioned on its being deductible under Code Section 404, but the
Internal Revenue Service disallows such deduction, the Trustee shall,
upon direction of the Benefits Advisory Committee, return the amount of
the excess Company Contribution to the contributing Employer. All
payments of returned Company Contributions under this Section shall be
made within one (1) year from the date of the payment of such mistaken
Company Contribution or the disallowance by the Internal Revenue
Service of the deduction, whichever is applicable. The amount of the
excess Company Contribution shall be the excess of (1) the amount
contributed over (2) the amount that would have been contributed had
there not occurred a mistake of fact or had the deduction not been
disallowed. Earnings attributable to the excess Company Contribution
shall not be returned to the contributing Employer, but losses
attributable thereto shall reduce the amount of such Company
Contribution to be so returned. Furthermore, if the withdrawal of the
amount attributable to the mistaken Company Contribution would cause
the balance of a Participant's Account to be reduced to an amount which
is less than the balance which would have been in said Account had the
mistaken amount not been contributed, then the amount to be returned to
the Employer under this Section will be reduced so as to avoid any such
reduction.
21.04 Failure of Qualification of Plan and Trust. The initial establishment
of the Plan and Trust by any Employer is contingent upon obtaining the
approval of the Internal Revenue Service. In the event that the
Internal Revenue Service fails initially to approve the Plan and Trust
as to any Employer and the application for determination of the initial
qualification of the Plan was made within the time prescribed by law
for filing the Employer's federal income tax return for the taxable
year in which the Plan was adopted, or such later date as the Secretary
of the Treasury may prescribe, the Trustee shall, after paying any
expenses attributable to such initial establishment, return to such
Employer any remaining Company Contribution made by such Employer. Such
remaining Company Contribution shall be returned as promptly as
practicable, but in no event later than one (1) year after the date of
the final denial of qualification of the Plan as to such Employer,
including the final resolution of any appeals before the Internal
Revenue Service or the courts.
ARTICLE XXII
TOP HEAVY PLAN RULES
22.01 Definitions. As used in this Article XIX:
(1) "Defined Benefit Plan" shall have the meaning set forth in
Subsection 5.09(2) hereof.
(2) "Defined Contribution Plan" shall have the meaning set forth
in Subsection 5.09(4) hereof.
(3) "Determination Date" shall mean with respect to any Plan Year,
the last day of the preceding Plan Year, except that in the
case of the first Plan Year of any plan, the last day of such
first Plan Year.
(4) "Key Employee" shall mean any person employed or formerly
employed by any Employer or Affiliated Company (and the
beneficiaries of any such person) who is, at any time during
the Plan Year, or who was, during any one or more of the four
(4) preceding Plan Years, any one or more of the following:
67
(a) An officer of an Employer or an Affiliated Company
having Limitation Year Compensation for the
applicable Plan Year greater than fifty percent (50%)
of the maximum dollar limitation under Code Section
415(b)(1)(A) (as in effect for the calendar year in
which the Determination Date for such Plan Year
falls).
(b) One of the ten (10) persons employed by an Employer
or an Affiliated Company having Limitation Year
Compensation for the applicable Plan Year greater
than the maximum dollar limitation under Code Section
415(c)(1)(A) as in effect for the calendar year in
which the Determination Date for such Plan Year
falls, and owning (or considered as owning within the
meaning of Code Section 318) both more than one-half
of one percent (1/2 of 1%) interest and the largest
interests in the Employer or an Affiliated Company.
For purposes of this Subsection (b): (i) a person who
has some ownership interest is considered to be one
of the top ten (10) owners unless at least ten (10)
other persons own a larger interest than that person,
and (ii) if two (2) or more persons have the same
ownership interest in the Employer or an Affiliated
Company, the person having greater annual Limitation
Year Compensation from all Employers and Affiliated
Companies shall be treated as having the larger
interest.
(c) Any person owning (or considered as owning within the
meaning of Code Section 318) more than five percent
(5%) of the outstanding stock of an Employer or an
Affiliated Company or stock possessing more than five
percent (5%) of the total combined voting power of
such stock or more than five percent (5%) of the
capital or profits interest of an Employer or an
Affiliated Company which is not a corporation.
(d) A person who would be described in Subsection (c)
above if "one percent (1%)" were substituted for
"five percent (5%)" each place it appears in said
Subsection (c), and whose aggregate annual Limitation
Year Compensation from all Employers and Affiliated
Companies is more than One Hundred Fifty Thousand
Dollars ($150,000).
(e) Notwithstanding any other provision in this Plan to
the contrary, for purposes of determining ownership
under this Subsection 22.01(4) the rules of Code
Sections 414(b), (c) and (m) shall not apply in
defining who is an Employer.
The determination of who is a Key Employee hereunder shall be
made in accordance with the provisions of Code Section
416(i)(1) and the regulations thereunder.
(5) "Key Employee Participant" shall mean a Participant in this
Plan who is a Key Employee.
(6) "Limitation Year Compensation" shall have the meaning set
forth in Subsection 5.09(7) hereof but including amounts
contributed by an Employer or Affiliated Company pursuant to a
salary reduction agreement which are excludible from the
Associate's gross income under Code Sections 125, 402(a)(8),
402(h) or 403(b) which are otherwise excluded under Subsection
5.09(7) for Plan Years beginning prior to January 1, 1998,
except that if the Limitation Year and the Plan Year under the
applicable plan are not the same, then for purposes of this
Article XXII, "Plan Year" shall be substituted for "Limitation
Year" every place it occurs in said Subsection 5.09(7).
68
(7) "Non-Key Employee" shall mean any person employed or formerly
employed by any Employer or Affiliated Company, including the
Beneficiaries of any such person, who is not a Key Employee.
(8) "Permissive Aggregation Group" shall mean the Required
Aggregation Group, plus any other plan or plans of any
Employer or Affiliated Company selected by the Sponsoring
Company, provided that such selected plans, when considered as
a group with the Required Aggregation Group, would continue to
satisfy the requirements of Code Sections 401(a)(4) and 410.
(9) "Required Aggregation Group" shall mean the group of plans
consisting of: (a) all tax qualified plans maintained by the
Employers or Affiliated Companies in which at least one Key
Employee participates, and (b) any other tax qualified plan
maintained by the Employers or Affiliated Companies which
enables a plan described in clause (a) above to meet the
requirements of Code Sections 401(a)(4) or 410.
(10) "Valuation Date" shall mean: (a) in the case of a Defined
Contribution Plan, the last day of the Plan Year for the
appropriate plan, and (b) in the case of a Defined Benefit
Plan, the date used for computing plan costs for minimum
funding, regardless of whether a valuation is performed that
year.
(11) All of the definitions set forth in Article II hereof and not
set forth herein shall have the same meaning in this Article.
22.02 Determination of Top Heaviness.
(1) This Plan shall be a "Top Heavy Plan" with respect to any Plan
Year if, as of the Determination Date for said Plan Year, any
of the following conditions exists:
(a) The Top Heavy Ratio for this Plan exceeds sixty
percent (60%), and this Plan is not part of a
Required Aggregation Group or a Permissive
Aggregation Group.
(b) This Plan is part of a Required Aggregation Group,
but not part of a Permissive Aggregation Group, and
the Top Heavy Ratio for the Required Aggregation
Group exceeds sixty percent (60%).
(c) This Plan is part of a Required Aggregation Group and
part of a Permissive Aggregation Group, and the Top
Heavy Ratio for the Permissive Aggregation Group
exceeds sixty percent (60%).
(2) This Plan shall be a "Super Top Heavy Plan" if it would be a
Top Heavy Plan under the provisions of Subsection 22.02(1)
above if "ninety percent (90%)" were substituted for "sixty
percent (60%)" everywhere sixty percent (60%) appears in said
Subsection 22.02(1).
(3) The "Top Heavy Ratio" referred to in Subsection 22.02(1) above
shall be determined as follows:
(a) If the Employers or Affiliated Companies maintain or
have maintained one or more Defined Contribution
Plans but have never maintained a Defined Benefit
Plan which during the five (5) year period ending on
the Determination Date(s) has covered or could cover
a Participant in this Plan, the Top Heavy Ratio for
this Plan alone or for
69
the Required Aggregation Group or the Permissive
Aggregation Group, as appropriate, is a fraction, the
numerator of which is the sum of the account balances
under the Defined Contribution Plans for all Key
Employees as of the Determination Date (including any
part of any such account balance distributed in the
five (5) year period ending on the Determination
Date), and the denominator of which is the sum of all
account balances under the Defined Contribution Plans
for all participants as of the Determination Date
(including any part of any such account balance
distributed in the five (5) year period ending on the
Determination Date), both computed in accordance with
Code Section 416 and the regulations thereunder.
Both the numerator and the denominator of the Top
Heavy Ratio shall be increased to reflect any
contribution not actually made as of the appropriate
Determination Date but which is required to be taken
into account on that date under Code Section 416 and
the regulations thereunder. In determining the
account balances which have been distributed in the
five (5) year period ending on the Determination
Date, distributions under a terminated plan shall be
included, provided such terminated plan, if it had
not been terminated, would have been included in a
Required Aggregation Group.
(b) If the Employers or Affiliated Companies maintain one
or more Defined Contribution Plans and maintain or
have maintained one or more Defined Benefit Plans
which during the five (5) year period ending on the
Determination Date(s) have covered or could cover a
Participant in this Plan, the Top Heavy Ratio for any
Required Aggregation Group or Permissive Aggregation
Group is a fraction, the numerator of which is the
sum of account balances under the aggregated Defined
Contribution Plans for all Key Employees determined
in accordance with Subsection 22.02(3)(a) above, and
the present value of accrued benefits under the
aggregated Defined Benefit Plans for all Key
Employees, both calculated as of the Determination
Date, and the denominator of which is the sum of the
account balances under the aggregated Defined
Contribution Plans for all participants determined
under Subsection 22.02(3)(a) above, and the present
value of accrued benefits under the Defined Benefit
Plans for all participants, both calculated as of the
Determination Date, all determined in accordance with
Code Section 416 and the regulations thereunder.
The accrued benefits under a Defined Benefit Plan in
both the numerator and denominator of the Top Heavy
Ratio are increased for any distribution of an
accrued benefit made in the five (5) year period
ending on the appropriate Determination Date. In
determining the account balances or accrued benefits
which have been distributed in the five (5) year
period ending on the Determination Date,
distributions under a terminated plan shall be
included, provided such terminated plan, if it had
not been terminated would have been included in a
Required Aggregation Group.
(c) For purposes of Subsections (a) and (b) above, the
value of account balances and the present value of
accrued benefits shall be determined as of the most
recent Valuation Date that falls within or ends with
the twelve (12) month period ending on the
Determination Date except as provided in Code Section
416 and the regulations thereunder for the first and
second plan years of a Defined Benefit Plan. The
present value of accrued benefits under Defined
Benefit Plans shall be determined using the single
accrual method used for all plans of the Employers
and Affiliated Companies, or if no such single method
exists, using a method which results in benefits
accruing
70
not more rapidly than the slowest accrual rate
permitted under Code Section 411(b)(1)(C) as of said
Valuation Date as if the person voluntarily
terminated employment as of such Valuation Date.
For Plan Years beginning prior to January 1, 1987,
the present value of accrued benefits shall be
determined under the provisions of the applicable
Defined Benefit Plan without regard to the preceding
sentence. If any Participant was a Key Employee as
set forth in Subsection 22.01(4) above for any prior
Plan Year, but such Participant ceases to be a Key
Employee for any Plan Year, such Participant's
account balances and accrued benefits shall not be
taken into account for purposes of determining
whether or not this Plan is a Top Heavy Plan or a
Super Top Heavy Plan as of the Determination Date of
said Plan Year. Accounts and accrued benefits shall
be calculated to include all amounts attributable to
both contributions by an Employer or an Affiliated
Company and contributions by persons employed by the
Employer or Affiliated Company, but shall exclude
amounts attributable to voluntary deductible
contributions by said persons.
The calculation of the Top Heavy Ratios, and the
extent to which distributions, rollovers and
transfers are taken into account shall be made in
accordance with Code Section 416 and the regulations
thereunder. When aggregating plans for purposes of a
Permissive Aggregation Group or a Required
Aggregation Group, the value of account balances and
accrued benefits will be calculated with reference to
the Determination Dates that fall within the same
calendar year. Notwithstanding the provisions of
Subsections (a) and (b) above, in determining the
fractions referred to therein, there shall not be
taken into account the accrued benefits or account
balances of any person who has not performed services
for any Employer or Affiliated Company maintaining
any Defined Contribution Plan or Defined Benefit Plan
referred to in such Subsections at any time during
the five (5) year period ending on the Determination
Date.
22.03 Minimum Requirements. Notwithstanding any other provision of this Plan
to the contrary, if the Plan is a Top Heavy Plan for any Plan Year,
then the following provisions shall apply:
(1) Vesting. Any Participant who is credited with an Hour of
Service in the first Plan Year in which the Plan is a Top
Heavy Plan, or in any subsequent Plan Year after such first
Plan Year (whether or not the Plan is a Top Heavy Plan in such
subsequent Plan Year) shall have his percentage of vested
benefits owing upon a Termination of Employment determined
pursuant to the following schedule, in lieu of the schedule
set forth in Section 10.01 hereof:
<Table>
<Caption>
VESTING YEARS OF SERVICE PERCENTAGE
Less than 2 years 0%
2 years but less than 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 years or more 100%
</Table>
(2) Required Minimum Allocation of Company Contributions. Except
as otherwise provided in this Article XXII and notwithstanding
any other provision of this Plan to the contrary, for any
71
Plan Year in which the Plan is a Top Heavy Plan, the Company
Contributions and Forfeitures, if any, allocated on behalf of
each Participant who is a Non-Key Employee shall not be less
than the lesser of: (a) three percent (3%) of such
Participant's Limitation Year Compensation, or (b) the largest
percentage of Company Contributions and Forfeitures, if any,
as a percentage of the Key Employee Participant's
Compensation, allocated on behalf of any Key Employee
Participant for that Plan Year; provided, however, that the
provisions of clause (b) hereof shall not apply to any plan
included in a Required Aggregation Group if such plan enables
a Defined Benefit Plan included in such Required Aggregation
Group to meet the requirements of Code Section 401(a)(4) or
410. The minimum allocation provided for herein shall be
determined without taking into account any Social Security
contributions, and shall be made without regard to any
contrary provisions of the Plan regarding the allocation of
Company Contributions and Forfeitures to affected Participants
which might otherwise result in such Participant being
entitled to no allocation or a lesser allocation due to the
Participant's failure to complete one thousand (1,000) Hours
of Service (or the equivalent) during the Plan Year, the
Participant's failure to make mandatory employee
contributions, or, in the case of a cash or deferred
arrangement, elective contributions, or the Participant's
failure to earn a stated amount of Compensation; provided,
however, that such minimum allocation shall not be required to
be made on behalf of any Participant who is not actively
employed by an Employer on the last day of the applicable Plan
Year. For purposes of this Section 22.03, all Defined
Contribution Plans required to be included in a Required
Aggregation Group shall be treated as one plan.
22.04 Minimum Benefits for Employers or Affiliated Companies Maintaining
Defined Benefit Plans. If any Participant who is a Non-Key Employee is
also a participant under a Defined Benefit Plan maintained by an
Employer or Affiliated Company which is also a Top Heavy Plan, then
Subsection 22.03(2) shall not apply, and such Participant shall receive
an allocation of Company Contributions and Forfeitures in an amount no
less than five percent (5%) of such Participant's Compensation under
the Plan for the applicable Plan Year. Such allocation shall be made
without regard to the amount allocated under the Plan on behalf of any
Key Employee Participant for such Plan Year. For purposes of this
Section 22.04, all Defined Contribution Plans required to be included
in a Required Aggregation Group shall be treated as one plan.
22.05 Minimum Benefits for Employers or Affiliated Companies Maintaining
Defined Contribution Plans. If any Participant who is a Non-Key
Employee is also a participant under another Defined Contribution Plan
maintained by an Employer or Affiliated Company which is also a Top
Heavy Plan, the minimum allocation required under Code Section 416
shall be made in this Plan pursuant to Subsection 22.03(2).
22.06 Super Top Heavy Plans. If in any Plan Year in which the Plan is a Top
Heavy Plan: (1) it is also a Super Top Heavy Plan, or (2) it does not
provide minimum benefits under Subsection 22.03(2) after substituting
"four percent (4%)" for "three percent (3%)" contained in clause (1) of
the first sentence of said Subsection, or (3) if Section 22.04 hereof
applies, it does not provide minimum benefits under said Section 22.04
after substituting "seven and one-half percent (7 1/2%)" for "five
percent (5%)" contained in the first sentence of said Section, then, in
any such event, for purposes of the definitions set forth in
Subsections 5.09(3) and 5.09(5) hereof, the dollar limitations
contained in Code Sections 415(e)(2)(B) and 415(e)(3)(B) shall be
multiplied by 1.0 rather than 1.25.
Notwithstanding the foregoing provisions of this Section 22.06, for
Limitation Years beginning prior to December 31, 1999, if the
application of said provisions would cause any individual to exceed the
combined limits of Section 5.08 hereof, if applicable, then the
requirements of this Section 22.06 shall
72
be suspended as to such individual until such time as he no longer
exceeds the limitations of said Section 5.08 as modified by this
Section 22.06, and during the period of such suspension, said
individual shall receive no allocation of Company Contributions or
Forfeitures, if any, and shall be entitled to make no voluntary
employee contributions, if any, under this Plan or any other Defined
Contribution Plan, maintained by an Employer or an Affiliated Company,
and there shall be no accruals of benefits for such individual under
any Defined Benefit Plan maintained by an Employer or an Affiliated
Company. The provisions of this paragraph shall not apply for
Limitation Years beginning on or after January 1, 2000.
ARTICLE XXIII
MISCELLANEOUS
23.01 Effect of Bankruptcy and Other Contingencies Affecting an Employer.
Neither the bankruptcy, receivership, insolvency, liquidation,
dissolution, merger, consolidation or reorganization of an Employer, or
any other eventuality affecting the Employer, shall terminate the Trust
or render ineffectual this Plan or discharge any Employer from any
liabilities to the Trust for which it shall already have become
obligated, but the same shall continue in full force and effect as
though such eventuality had not occurred; however, the Benefits
Advisory Committee shall in such event be authorized hereby to make any
and all rules and regulations not inconsistent with the purposes of the
Plan as shall be necessary to deal with such change in the situation of
the Plan and Trust.
23.02 Benefits Payable by Trust. All benefits payable under the Plan shall be
paid or provided for solely from the Trust Fund. No Employer assumes
any liability or responsibility therefor.
23.03 Withholding. The Plan Administrator shall determine whether or not
federal income tax withholding is required with respect to any
distribution or withdrawal hereunder, shall direct the Trustee to
withhold any amounts required by law to be withheld, and shall furnish
the Trustee with any information required by Treasury regulations
regarding withholding. Notwithstanding any other provision of this Plan
to the contrary, all rights and benefits of a Participant, Beneficiary
or Alternate Payee are subject to withholding of any tax required by
law to be withheld.
23.04 Interpretation of the Plan and Trust. It is the intention of the
Employers that the Plan, and the Trust established by the Employers to
implement the Plan, shall comply with the provisions of Code Sections
401 and 501 and the requirements of ERISA, and the corresponding
provisions of any subsequent laws, and the provisions of the Plan and
Trust Agreement shall be construed to effectuate such intention.
23.05 Provisions Hereof for Sole Benefit of Parties Hereto and Participants.
All of the covenants, stipulations and agreements contained in this
Plan are and shall be for the sole and exclusive benefit of and binding
upon the parties hereto, their successors and assigns, and the
Participants and their Beneficiaries.
23.06 Article and Section Headings. The titles or headings of the respective
Articles and Sections in this Plan are inserted merely for convenience
and shall be given no legal effect.
23.07 Formal Action by Employer. Any formal action herein permitted or
required to be taken by an Employer shall be:
73
(1) if and when a partnership, by written instrument executed by
one or more of its general partners or by written instrument
executed by a person or group of persons who has been
authorized by written instrument executed by one or more
general partners as having authority to take such action;
(2) if and when a proprietorship, by written instrument executed
by the proprietor or by written instrument executed by a
person or group of persons who has been authorized by written
instrument executed by the proprietor as having authority to
take such action;
(3) if and when a corporation, by resolution of its board of
directors or other governing board, or by written instrument
executed by a person or group of persons who has been
authorized by resolution of its board of directors or other
governing board as having authority to take such action;
(4) if and when a joint venture, by written instrument executed by
one of the joint venturers or by written instrument executed
by a person or group of persons who has been authorized by
written instrument executed by one of the joint venturers as
having authority to take such action; or
(5) if and when a limited liability company, by written instrument
executed by one of more of its members or by written
instrument executed by a person or group of persons who has
been authorized by written instrument executed by one or more
of its members as having authority to take such action.
23.08 Applicable Law. This Plan shall be governed by the laws of the State of
Texas to the extent not preempted by applicable federal law.
IN WITNESS WHEREOF, Hastings Entertainment, Inc. has caused this Plan
to be executed by its duly authorized representative this 7th day of February,
2002.
HASTINGS ENTERTAINMENT, INC.
By: /s/ Dan Crow
Name: Dan Crow
Title: Vice President and Chief
Financial Officer
74
SERVICE WITH PREDECESSOR EMPLOYER
None
75
PARTICIPATION AGREEMENT
The undersigned Affiliated Company, by executing this Participation
Agreement, elects to become a participating employer in the Hastings
Entertainment, Inc. Associates' Stock Ownership Plan and Trust Agreement
("Plan") as provided for in Section 17.01 of the Plan, as if the Affiliated
Company were a signatory to that Plan. The Affiliated Company accepts, and
agrees to be bound by, all of the elections granted under the provisions of the
Plan as made by Hastings Entertainment, Inc., the Sponsoring Company.
1. The Effective Date of the undersigned Affiliated Company's
participation in the designated Plan is April 1, 2000.
2. The undersigned Affiliated Company's adoption of this Plan
constitutes the adoption of an amendment and restatement of a this Plan as it is
currently maintained by the Plan Sponsor, and having an original effective date
of June 1, 1993.
Dated this 7th day of February, 2002.
AFFILIATED COMPANY:
HASTINGS INTERNET, INC.
------------------------------
EIN: 85-0450809
By: /s/ Dan Crow
Name: Dan Crow
Title: Vice President and Chief
Financial Officer
SPONSORING COMPANY:
HASTINGS ENTERTAINMENT, INC.
EIN: 75-1386375
By: /s/ Dan Crow
Name: Dan Crow
Title: Vice President and Chief
Financial Officer
76